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 Material under Rule 14a-12
SYSTEMS MANAGEMENT SOLUTIONS, INC.
FORMERLY SUPREME HOLDINGS, INC.
(Name of Registrant as specified in its charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed per Exchange Act Rules.
SYSTEMS MANAGEMENT SOLUTIONS, INC.
7550 IH-10 West - 14th Floor
San Antonio, Texas 78229
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
To be held on December 17, 2004
To the Shareholders of SYSTEMS MANAGEMENT SOLUTIONS, INC.
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Shareholders of SYSTEMS
MANAGEMENT SOLUTIONS, INC. (the "Company") will be held at 7550 IH-10 West, 14th
Floor, San Antonio, Texas 78229 on December 17, 2004, at 2:00 p.m., local time,
for the following purposes:
1. To vote on the proposal to adopt the Systems Management Solutions,
Inc. 2004 Incentive Stock Plan;
2. To elect one Director to the Company's Board of Directors to serve
as a Class I director to hold office for a term of three years, or
until his successor is duly elected and qualified;
3. To ratify the appointment of Malone & Bailey, P.L.L.C. as the
independent accountants of the Company for the fiscal year ending
June 30, 2005; and
4. To transact such other business as may be properly brought before
the meeting or an adjournment thereof.
The foregoing items of business, including the nominee for director, are more
fully described in the Proxy Statement, which is attached to and made a part of
this Notice.
The close of business on October 7, 2004 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
meeting and any adjournment thereof.
You are cordially invited to attend the meeting in person. Whether or not you
plan to attend in person, please complete, date and sign the accompanying proxy
and return it promptly in the enclosed envelope to assure that your shares are
represented at the meeting. If you do attend, you may revoke any prior proxy and
vote your shares in person if you wish to do so. Any prior proxy will
automatically be revoked if you execute the accompanying proxy or if you notify
the Secretary of the Company, in writing, prior to the Annual Meeting of
Shareholders, of your desire to revoke your proxy.
By order of the Board of Directors
James Karlak
President
San Antonio, Texas
December 2, 2004
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
SYSTEMS MANAGEMENT SOLUTIONS, INC.
7550 IH - 10 West - 14th Floor
San Antonio, Texas 78229
PROXY STATEMENT
FOR
2004 ANNUAL MEETING OF SHAREHOLDERS
To be held on December 17, 2004
This proxy statement and the accompanying form of proxy were mailed on or
about December 3, 2004 to the stockholders of record on October 7, 2004 of
SYSTEMS MANAGEMENT SOLUTIONS, INC. (the "Company), a Nevada corporation, in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the 2004 Annual Meeting to be held at 2:00 p.m. local time,
on December 17, 2004, at 7550 IH-10 West, 14th Floor, San Antonio, Texas 78229,
and at any adjournment thereof (the "Meeting"). The Company's Annual Report on
Form 10-KSB for the period ended June 30, 2004 is being mailed together with
this proxy statement to all stockholders entitled to vote at the Meeting.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Company's common stock, par value $0.0001 per share (the
"Common Stock") represented by an effective proxy in the accompanying form will,
unless contrary instructions are specified in the proxy, be voted FOR (i) the
proposal to adopt the 2004 Incentive Stock Plan; (ii) the election of the person
nominated by the Board of Directors as Director; and (iii) the ratification of
the Company's independent accountants. The proxy holders may vote effective
proxies, as they deem advisable on other matters that may properly come before
the Annual Meeting unless contrary instructions are specified in the proxy.
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy by notifying the Secretary of the Company
either in writing prior to the Annual Meeting or in person at the Annual
Meeting, by submitting a proxy bearing a later date or by voting in person at
the Annual Meeting. Any written notice of revocation or subsequent proxy should
be sent so as to be delivered to Systems Management Solutions, Inc., 7550 IH -
10 West, 14th Floor, San Antonio, Texas 78229, Attention: Corporate Secretary,
at or before the taking of the vote at the Annual Meeting on December 17, 2004.
To approve Proposals 1 and 3, an affirmative vote of a majority of the votes
represented by the shares of Common Stock present in person or represented by
proxy at the Annual Meeting is required. The Director will be elected by a
plurality of the votes cast by the holders of the Company's Common Stock voting
in person or by proxy at the Annual Meeting. A stockholder voting through a
proxy who abstains with respect to the election of Directors is considered to be
present and entitled to vote on the election of Directors at the meeting, and is
in effect a negative vote, but a stockholder (including a broker) who does not
give authority to a proxy to vote, or withholds authority to vote, on the
election of Directors shall not be considered present and entitled to vote on
the election of Directors. A stockholder voting through a proxy who abstains
with respect to approval of any other matter to come before the meeting is
considered to be present and entitled to vote on that matter and is in effect a
negative vote, but a stockholder (including a broker) who does not give
authority to a proxy to vote, or withholds authority to vote, on any such matter
shall not be considered present and entitled to vote thereon.
The Company will bear the cost of the solicitation of proxies by the Board
of Directors. The Board of Directors may use the services of its executive
officers and certain Directors to solicit proxies from stockholders in person
and by mail, telegram, and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy statements
and other material to the beneficial owners of the Company's Common Stock held
of record by such persons, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing.
1
RECORD DATE; VOTING SECURITIES
The securities entitled to vote at the meeting are the Company's Common
Stock, $0.0001 par value per share and the Company's Series A Preferred Stock,
$0.0001 par value per share. The presence, in person or by proxy, of a majority
of shares entitled to vote will constitute a quorum for the meeting. Each share
of Common Stock (including each share of Common Stock into which the Series A
Preferred Stock was convertible as of the record date) entitles its holder to
one vote on each matter submitted to stockholders. The close of business on
October 7, 2004 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting and any
adjournment thereof. At that date, 15,236,355 shares of Common Stock were
outstanding (and the Series A Preferred Stock was convertible into 27,635,000
shares of Common Stock). Voting of the shares of Common Stock is on a
non-cumulative basis.
PROPOSAL NO. 1
ADOPTION OF THE COMPANY'S 2004 INCENTIVE STOCK PLAN
On September 15, 2004, the Board of Directors adopted, subject to the
approval of the stockholders of the Company, the 2004 Long Term Incentive Plan
(the "Plan"). The Board believes that stock and stock option plans provide an
important means of attracting, retaining and motivating key employees and
consultants and recommends that stockholders approve the Plan. As a result of
employee directors being eligible to receive options under the Plan, each
employee director has a personal interest in the approval of the Plan.
A copy of the Plan is attached to this Proxy Statement as Appendix A. The
following is a summary of the Plan only and is qualified in its entirety by the
copy of the Plan attached to this Proxy Statement.
SUMMARY OF THE PLAN
Purpose. The Plan is intended to promote the interests of the Company, by
providing the employees and consultants of the Company, who are largely
responsible for the management, growth and protection of the business of the
Company, with a proprietary interest in the Company.
Incentives Available under the Plan. Under the Plan, the Committee may
grant to participants (i) options, (ii) shares of restricted stock, (iii) shares
of phantom stock (sometimes referred to as stock appreciation rights), (iv)
stock bonuses and (v) cash bonuses (collectively, "Incentive Awards").
The Committee may grant options, shares of restricted stock, shares of
phantom stock and stock bonuses under the Plan with respect to a number of
shares of common stock that in the aggregate at any time does not exceed
6,000,000 shares of common stock; provided, however, that the maximum number of
shares of common stock for which options, shares of restricted stock, shares of
phantom stock, or stock bonuses in the aggregate granted under the Plan to any
one participant during a calendar year shall not exceed 1,000,000. The grant of
a cash bonus shall not reduce the number of shares of common stock with respect
to which options, shares of restricted stock, shares of phantom stock or stock
bonuses may be granted pursuant to the Plan.
If any outstanding option expires, terminates or is canceled for any
reason, the shares of common stock subject to the unexercised portion of such
option shall again be available for grant under the Plan. If any shares of
restricted stock or phantom stock, or any shares of common stock granted in a
stock bonus are forfeited or canceled for any reason, such shares shall again be
available for grant under the Plan.
Shares of common stock issued under the Plan may be either newly issued or
treasury shares, at the discretion of the Committee.
Administration. The Plan shall be administered by the compensation
committee of the Board of Directors, or such other committee as the Board of
Directors shall appoint from time to time, consisting of two or more persons
(the "Committee"), provided that each member of the Committee must be both (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and (ii) an "outside director"
2
within the meaning of Treasury Regulation Section 1.162-27(e)(3) interpreting
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor definitions that may be adopted. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors. The Committee shall from time to time designate the
employees and consultants of the Company who shall be granted incentive awards
and the amount and type of such incentive awards.
The Committee shall have full authority, subject to express provisions of
the Plan, to administer the Plan, to interpret the Plan, to adopt rules and
regulations relating to the Plan, to determine the terms and provisions of
Incentive Awards granted under the Plan and to make all other determinations and
perform such actions as the Committee deems necessary or advisable to administer
the Plan.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
Eligibility. The persons who shall be eligible to receive Incentive Awards
pursuant to the Plan shall be such full-time employees and consultants (whether
full or part time) of the Company as the Committee, in its absolute discretion,
shall select from time to time. Notwithstanding the generality of the foregoing,
no employee or consultant of the Company shall be eligible to receive Incentive
Awards pursuant to this Plan, the employee or consultant is also entitled to
receive an Incentive Award under the terms of his employment or consulting
agreement with the Company, or any specialty incentive stock plan adopted after
the date hereof, unless such employment or consulting agreement or specialty
plan expressly provides otherwise.
Options. The Committee may grant options pursuant to the Plan, which
options shall be evidenced by agreements in such form as the Committee shall
from time to time approve. All options granted under the Plan shall be clearly
identified in the agreement evidencing such options as either incentive stock
options or as non-qualified stock options.
The exercise price of any non-qualified stock option granted under the
Plan shall be such price as the Committee shall determine on the date on which
such non-qualified stock Option is granted; provided, that such price may not be
less than the greater of (i) 25% of the fair market value of a share of Common
Stock on the date on which such non-qualified stock option is granted or (ii)
the minimum price required by law. Except as specifically provided in the Plan,
the exercise price of any incentive stock option granted under the Plan shall be
not less than 100% of the fair market value of a share of common stock on the
date on which such incentive stock option is granted. Each option shall be
exercisable on such date or dates, during such period and for such number of
shares of common stock as shall be determined by the Committee; provided,
however, that no option shall be exercisable after the expiration of ten years
from the date such option was granted; and, provided, further, that each option
shall be subject to earlier termination, expiration or cancellation as provided
in the Plan.
An option shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no fewer than five (5)
business days in advance of the effective date of the proposed exercise. Payment
for shares of Common Stock purchased upon the exercise of an option shall be
made on the effective date of such exercise either (i) in cash, by certified
check, bank cashier's check or wire transfer or (ii) subject to the approval of
the Committee, in shares of Common Stock owned by the participant and valued at
their fair market value on the effective date of such exercise, or (iii) partly
in shares of Common Stock with the balance in cash, by certified check, bank
cashier's check or wire transfer. A broker-dealer acting on behalf of a
participant may also exercise any option granted under the Plan. Options expire
immediately upon the death of the participant.
Restricted Stock. The Committee may grant shares of restricted stock
pursuant to the Plan. Each grant of shares of restricted stock shall be
evidenced by an agreement in such form as the Committee shall from time to time
3
approve. At the time of the grant of shares of restricted stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
of the Plan, to the vesting of such shares as it in its absolute discretion
deems appropriate.
Phantom Stock. The Committee may grant shares of phantom stock pursuant to
the Plan. Each grant of shares of phantom stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. At the
time of the grant of shares of phantom stock, the Committee may impose such
restrictions or conditions, not inconsistent with the provisions of the Plan, to
the vesting of such shares as it in its absolute discretion deems appropriate.
Stock Bonuses. The Committee may, in its absolute discretion, grant stock
bonuses in such amounts as it shall determine from time to time. A stock bonus
shall be paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such stock bonus.
Cash Bonuses. The Committee may, in its absolute discretion, grant in
connection with any grant of restricted stock or stock bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such restricted stock or stock bonus, in such amounts as the
Committee shall determine from time to time; provided, however, that in no event
shall the amount of a cash bonus exceed the fair market value of the related
shares of restricted stock or stock bonus on such date. A cash bonus shall be
subject to such conditions as the Committee shall determine at the time of the
grant of such cash bonus.
Amendment. The Board of Directors may at any time suspend or discontinue
the Plan or revise or amend it in any respect whatsoever, provided, however,
that without approval of the stockholders no revision or amendment shall (i)
except as specifically provided in the Plan, increase the number of shares of
common stock that may be issued under the Plan, (ii) materially increase the
benefits accruing to individuals holding Incentive Awards granted pursuant to
the Plan or (iii) materially modify the requirements as to eligibility for
participation in the Plan.
Effective Date and Term of Plan. The Plan was adopted by the Board of
Directors effective September 15, 2004, subject to approval by the stockholders
of the Company in accordance with applicable law, the requirements of Sections
162(m) and 422 of the Code and the requirements of Rule 16b-3 under Section
16(b) of the Exchange Act. No Incentive Award may be granted under the Plan
after September 15, 2006.
New Plan Benefits. Benefits to be received by the Company's employees as a
result of the proposed Plan are not determinable, as the Incentive Awards are
discretionary.
Stockholders Entitled to Vote and Vote Required for Approval. The
affirmative vote of the holders of a majority of all shares of Common Stock (and
shares of Preferred Stock on an as-converted basis) represented at the Meeting,
in person or by proxy, will be required to approve the proposed 2004 Incentive
Stock Plan. For the purposes of determining the number of votes cast with
respect to this proposal, abstentions and broker non-votes will be treated as
votes against the proposal.
The Board unanimously recommends a vote FOR the adoption of the proposed
revised Bylaws of the Company.
PROPOSAL NO. 2
ELECTION OF DIRECTOR
Steven L. Goldberg has been nominated by the Board, as provided in the
Company's Bylaws, to fill the one Class I director's position to be elected at
this Meeting and unless authority is withheld, proxies received will be voted
FOR the election of the nominee named below to serve as a member of the Board.
Charles Phillips, the only current Class I director, has elected not to stand
for reelection. If the nominee should be unavailable for election or unable to
serve as a director if elected, the proxy may be voted for a substitute nominee
designated by the Board; however, the Board is not aware of any circumstances
likely to render the nominee unavailable or unable to serve.
4
Nominee and Other Directors: Certain information concerning the director
nominee, each director whose term of office will continue after the annual
meeting, and our executive officers is set forth below. There are no family
relationships among any directors or executive officers.
CLASS I DIRECTOR NOMINEE
(to be elected for a term expiring at the 2007 annual shareholders' meeting)
--------------------------------------------------------------------------
Common Stock Beneficially Owned
as of May 17, 2004 Number of
Name Position Age Shares/Percent of Class
--------------------------------------------------------------------------
Steven L. Goldberg Director 51 -0-
--------------------------------------------------------------------------
Steven L. Goldberg is President of Employment Management Services, LLC, a
Dallas, Texas based consultant to Financial Insurance Company of America. He was
born on August 8, 1953, in Queens, New York. Mr. Goldberg graduated from Drexel
University in Philadelphia, Pennsylvania in May, 1976, with a Bachelor of
Science degree in Mathematics. Mr. Goldberg has 26 years experience in various
management roles in the insurance industry, including Executive Vice President
of General Insurance Managers in Dallas, Texas and assistant Vice President of
Domestic Brokerage for AIG.
INCUMBENT CLASS II AND III DIRECTORS; EXECUTIVE OFFICERS
--------------------------------------------------------------------------
Name Age Position and Term
--------------------------------------------------------------------------
Cliff Hagler 52 Director - Since May 30, 2003
--------------------------------------------------------------------------
Bruce C. Culver 51 Director - Since May 2002
--------------------------------------------------------------------------
Jim Karlak 52 President, Chief Executive Officer and Director
- Since July 2004
--------------------------------------------------------------------------
Jesse L. Whittenton 50 Director - Since July 2004
--------------------------------------------------------------------------
Cliff Hagler has served on the Board of Directors of the Company since May
30, 2003. Mr. Hagler is the Co-founder, President and CEO of Aquilan, Inc., a
proprietary software company in Austin, Texas. Mr. Hagler has over 25 years in
the software and computer services industries with a primary focus in the life
insurance and financial services sectors. Before joining Aquilan, Mr. Hagler
served as Vice President & General Manager for US Operations at Cedar, Inc., a
provider of complex data management solutions for the insurance industry. Prior
to Cedar, Mr. Hagler served as Vice President of the Financial Services Division
for Computer Sciences Corporation where he held responsibility for life
insurance administration systems development and ongoing enhancements. Mr.
Hagler is a frequent presenter at industry seminars and executive meetings and a
regular contributor to leading industry publications.
Bruce Culver has been a member of the Board of Directors of Diamond C
Stables and Ranch since 2001. Mr. Culver is also presently the President of
Speedway Erection Service Company, a position he has held since 1983. Mr. Culver
has served on the Board of Directors of the Company since May 2002 and has
served on the Board of Directors of System Builders Association, Erectors
Division.
Jesse L. Whittenton graduated from Rice University in December of 1976
with a Bachelor of Commerce degree. Mr. Whittenton graduated from the University
of Texas School of Law in December of 1979, and was admitted to the Texas Bar in
1980. From 1993 until March 2000, Mr. Whittenton was a partner of Walker, Bright
& Whittenton, P. C. in Austin, Texas. Mr. Whittenton was one of three managing
partners who supervised personnel, budget development and management, project
development and objectives, and client development. Mr. Whittenton specialized
in defending municipal and county officials primarily in law enforcement federal
civil rights and employment law litigation in Texas, Indiana, Tennessee and
Mississippi. From March 2000 until the present, Mr. Whittenton has been managing
partner of Whittenton & Hurst, L.L.P. in Austin, Texas.
5
Jim Karlak comes to the company with over 20 years of finance, operations
and senior executive experience, most recently as Chief Operating Officer of
Applied Science Fiction. Mr. Karlak created and implemented operating and
financial processes for this young start-up company and led internal operations.
With an annual budget of $30M, 160 employees and as Board Secretary, he directed
the company to the creation of sustainable outsourced manufacturing and service
operations. Mr. Karlak successfully raised $13 million in bridge financing,
resulting in a successful acquisition of the company by Eastman Kodak
Corporation. Mr. Karlak began his career with Texas Instruments ("TI") and held
a number of key financial positions at TI. Mr. Karlak left TI in 1985 and joined
Shared Resource Exchange, Inc. as Chief Financial Officer. In 1991, Mr. Karlak
joined Image Data Corporation ("IDC") as Vice President of Operations. Under his
leadership, IDC was sold to E-Systems Corporation which merged with a second
medical imaging company purchased earlier by E-Systems and an internal software
group to form the new company E-Systems Medical Electronics ("EMED"). Karlak led
EMED as President into the high-end hospital imaging network market, as well as
military medical applications including systems aboard several aircraft carriers
and one stationed in Antarctica. In 2000, Mr. Karlak, as CEO of DynaTouch Corp.,
moved the company to a higher level through the development and launch of a new
medical product line to augment the company's existing leadership position as
one of the largest providers of kiosk information systems to the U.S. military.
Mr. Karlak is a graduate of the University of Texas at Austin, where he received
a Bachelor of Arts in Economics, with honors. He received his Masters of
Business Administration, also from the University of Texas at Austin, in 1978.
Board Committees, Meetings and Compensation. The Company's business
affairs are managed by the Board. During fiscal 2004, the Board of Directors
held one meeting. Directors of the Company generally do not generally receive
any compensation for their service on the Board. The Company does not currently
have any standing committees; however, the Board anticipates designating an
Executive Committee, a Compensation Committee and an Audit Committee after the
Annual Meeting. As of the date of this filing, the entire Board fulfills the
functions of the Audit Committee. The Company does not have a nominating
committee, and the Board believes such a committee is not necessary due to the
small size of the Board and the absence to date of any director candidates
recommended by shareholders. Currently, the entire Board participates in the
consideration of director nominees. The Board of Directors does not have a
formal policy with regard to the consideration of any director candidates
recommended by stockholders, the minimum qualification of director candidates or
the process for identifying and evaluating director nominees. To date, the
Company has not received any director candidates recommended by its stockholders
and consequently the Board of Directors has believed that it could appropriately
address any such recommendations received without a formal policy. The Board has
determined that none of the directors are "audit committee financial experts" as
such term is defined in Item 401(e) of Regulation S-B. The Board believes an
audit committee financial expert is not necessary for the Company at this stage,
but will consider adding such an expert if, in the future, the Company's needs
change. Although the Company does not have a formal policy regarding attendance
by members of the Board of Directors at annual meetings of stockholders,
directors are encouraged to attend annual meetings. Three directors attended the
2003 annual meeting of stockholders.
Stockholder Communications with the Board of Directors. Stockholders may
communicate with the full Board, or any individual directors, by sending such
written communication to the following address:
Corporate Secretary
7550 IH-10 West - 14th Floor
San Antonio, Texas 78229
Any written communications received by the Corporate Secretary will be forwarded
to the appropriate directors.
Executive Officer Compensation and Certain Other Compensation. The
following table provides certain summary information concerning the compensation
earned by the Company's Chief Executive Officer for services rendered in all
capacities to the Company and its subsidiaries for the fiscal years ended June
30, 2004, June 30, 2003, and December 31, 2002. No other employee of the Company
received more than $100,000 in compensation during any of the fiscal years
listed above. The following information includes the dollar value of base
salaries, bonus awards, the number of stock options granted and certain other
compensation, if any, whether paid or deferred. The listed individuals shall be
hereinafter referred to as the "Named Officers."
6
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
--------------------- --------------------------------
Awards Payouts
- ------------------------------------------------------------------------------------------------
Securities
Restricted Underlying
Stock Options/ LTIP All Other
Name and Principal Year Salary Bonus Awards SARs Payouts Compensation
Position End ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
Charles T. Phillips 6/30/04 0 0 0 0 0 200,000(2)
Former Chief Executive ----------------------------------------------------------------------------------
Officer & President (1) 6/30/03 0 0 0 0 0 0
----------------------------------------------------------------------------------
12/31/02 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
James Karlak 6/30/04 0 0 0 0 0 0
Current Chief Executive ----------------------------------------------------------------------------------
Officer & President, and 6/30/03 0 0 0 0 0 0
Current Chief Executive ----------------------------------------------------------------------------------
Officer of ASPECT (3) 12/31/02 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
Michael A. Gort 6/30/04 0 0 0 0 0 0
Former President & Chief ----------------------------------------------------------------------------------
Executive Officer (4) 6/30/03 0 0 0 0 0 0
----------------------------------------------------------------------------------
12/31/02 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
Thomas John Cloud, Jr. 6/30/04 0 0 0 0 0 0
Former President and ----------------------------------------------------------------------------------
Chief Executive Officer 6/30/03 24,500 0 0 0 0 0
(5) ----------------------------------------------------------------------------------
12/31/02 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
(1) Mr. Phillips served as the Company's CEO and President from October 2003
until his resignation in July 2004.
(2) Represents fees paid to Mr. Phillips for legal services rendered to the
Company and its subsidiaries.
(3) Mr. Karlak became CEO and President of the Company in July 2004. He has
served as CEO of ASPECT since February, 2004.
(4) Mr. Gort served as the Company's CEO and President from June 2003 until
his resignation in October 2003.
(5) Mr. Cloud served as the Company's CEO from May 2002 until June 2003.
The Company does not have any employment agreements with the individuals
listed in the table above, or other executive officers of the Company.
Disclosure With Respect to the Company's Equity Compensation Plans. The
Company has no equity compensation plans.
Security Ownership of Certain Beneficial Owners and Management. The
following tabulates holdings of shares of the Company by each person who,
subject to the above, as of October 7, 2004, holds of record or is known by
management to own beneficially more than 5.0% of any class of voting shares and,
in addition, by all directors and officers of SMS individually and as a group.
Except as indicated by footnotes to the following table, to the Company's
knowledge, the persons named in the table have sole voting and investment power
with respect to all shares of stock beneficially owned by them.
7
- -------------------------------------------------------------------------------------------------------------
Name & Address Amount of Shares Owned Percentage
Title of Class of Beneficial Owner (1) of Class (2)
- -------------------------------------------------------------------------------------------------------------
Series A Preferred United Managers Group, Inc. 55,270 100%
Stock 12001 Network
Building F, Suite 200
San Antonio, TX 78249
- -------------------------------------------------------------------------------------------------------------
Common Stock United Managers Group, Inc. 2,265,000 14.87%
12001 Network
Building F, Suite 200
San Antonio, TX 78249
- -------------------------------------------------------------------------------------------------------------
Common Stock John D. Walker II 5,011,460 32.89%
- -------------------------------------------------------------------------------------------------------------
Common Stock American Continental Management Inc.(3)(4) 500,000 3.28%
c/o Charles T. Phillips, P.C.
3027 Marina Bay Drive, Suite 105
League City, TX 77573
- -------------------------------------------------------------------------------------------------------------
Common Stock Bruce Culver (4) 500,000 3.28%
- -------------------------------------------------------------------------------------------------------------
Common Stock Cliff Hagler (4) 100,000 0.66%
- -------------------------------------------------------------------------------------------------------------
Common Stock James Karlak (4) 0 n/a
- -------------------------------------------------------------------------------------------------------------
Common Stock Sandra Livney (4) 0 n/a
- -------------------------------------------------------------------------------------------------------------
Common Stock All directors and executive officers as a 1,100,000 7.2%
group (5 persons)
- -------------------------------------------------------------------------------------------------------------
(1) Unless otherwise indicated, the address for each of these individuals is
c/o Systems Management Solutions, Inc., 7550 IH-10-West - 14th Floor, San
Antonio, TX 78229.
(2) The "Percentage Beneficially Owned" is calculated by dividing the "Number
of Shares Beneficially Owned" by the sum of the total outstanding shares
of stock of the class listed in the Company as of October 7, 2004.
(3) The shares held by American Continental Management Inc. are beneficially
owned by Charles Phillips, the Company's Chairman and former Chief
Executive Officer and President.
(4) Indicates shares beneficially owned by a director or executive officer of
the Company.
Certain Relationships and Related Transactions. United Managers Group,
Inc., the major shareholder of the Company, continued to fund substantial sums
to the Company during the fiscal year ending June 30, 2004 pursuant to the terms
of a promissory note in the original principal sum of up to $2,000,000. In
February 2004, United Managers Group, Inc. agreed to convert $2,719,100 due at
that time under this note into 27,191 shares of Series A Preferred Stock, and to
continue to make advances under the note. On June 3, 2004, the Company and
United Managers Group, Inc. agreed to extend the maturity date of the note to
April 15, 2005. The note bears interest at ten percent and is unsecured. As of
June 30, 2004, the balance owed was $121,500.
Certain stockholders of the Company advance money to ASPECT on an
as-needed basis. The advances are due on demand, bear no interest and have no
collateral. Imputed interest expense at 10% was added as a contribution to
capital each year. As of June 30, 2004, the balance owed was $698,215.
Section 16 Beneficial Ownership Reporting Compliance. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of the Company's Stock (collectively, "Reporting Persons")
to file with the SEC initial reports of ownership and changes in ownership of
the Company's Common Stock. Reporting Persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports they file. To the
Company's knowledge, based solely on its review of the copies of such reports
received or written representations from certain Reporting Persons that no other
reports were required, the Company believes that during its fiscal year ended
June 30, 2004, all Reporting Persons complied with all applicable filing
requirements except as follows: Charles Phillips - one Form 3; Bruce Culver -
one Form 3; Cliff Hagler - one Form 3; United Managers Group, Inc. - one Form 3
and four Form 4s; John D. Walker II - one Form 3; Sandra Livney - one Form 3;
Douglas Dickey - one Form 3; Jimmy Pyle - one Form 3. Mr. Phillips, Mr. Culver,
Mr. Hagler, Mr. Walker and United Managers Group, Inc. have filed their
delinquent Forms 3.
8
Stockholders Entitled to Vote and Vote Required for Election. Director(s)
will be elected by a plurality of the votes cast by the holders of all shares of
Common Stock (and shares of Preferred Stock on an as-converted basis) entitled
to vote at the Annual Meeting. Abstentions and broker non-votes will be
disregarded in the tabulation of votes for the election of Directors.
The Board unanimously recommends a vote FOR the Director Nominee. The
proxy enclosed herewith will be voted FOR the Director Nominee identified above
unless the stockholder withholds authority to vote for the named nominee.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Malone & Bailey, P.L.L.C. has served as the Company's independent
accountants since August 2003 and has been appointed by the Board of Directors
to continue as the Company's independent accountants for the fiscal year ending
June 30, 2005. In the event that ratification of this selection of accountants
is not approved by a majority of the shares of Common Stock of the Company
voting at the Annual Meeting in person or by proxy, management will review its
future selection of accountants. However, because of the difficulty and expense
of making any substitution of auditors after the beginning of a fiscal year,
Malone & Bailey's appointment for the 2005 fiscal year will be permitted to
stand unless the Board finds other reasons for making a change.
The Board unanimously recommends a vote FOR ratification of the
appointment of Malone & Bailey, P.L.L.C. as the Company's independent
accountants for the fiscal year ending June 30, 2005.
Independent Auditors. The Board of Directors has retained the firm of
Malone & Bailey, P.L.L.C., independent certified public accountant, to serve as
auditor for the fiscal year ending June 30, 2005.
Fees and Services. The following table presents fees for professional
services rendered by Malone & Bailey, PLLC for the audit of the Company's annual
consolidated financial statements for fiscal 2004 and 2003, and fees billed for
other services rendered by Malone & Bailey, PLLC.
2004 2003
--------- ---------
Audit Fees $ 124,850 $ 8,000
Audit related fees $ 0 $ 0
Tax fees $ 0 $ 0
All other fees $ 0 $ 0
Total fees $ 124,850 $ 8,000
The Board pre-approves all auditing and permitted non-audit services to be
performed for the Company by its independent auditor, including the fees and
terms of those services.
STOCKHOLDER PROPOSALS FOR 2005 ANNUAL STOCKHOLDER'S MEETING
Proposals of stockholders intended to be included in the Company's proxy
statement for the 2005 Annual Meeting of Stockholders must be received by
Systems Management Solutions, Inc., Attn: Corporate Secretary, at 7550 IH-10 -
14th Floor, San Antonio, Texas 78229, no later than December 31, 2004.
9
OTHER BUSINESS
As of the date of this proxy statement, the only business that the Board
of Directors intends to present and knows that others will present, at the
Annual Meeting is that herein above set forth. If any other matter or matters
are properly brought before the Annual Meeting, or any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy on such manners in accordance with their judgment.
By Order of the Board of Directors,
James Karlak
President
San Antonio, Texas
December 2, 2004
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES
10
APPENDIX A
SYSTEMS MANAGEMENT SOLUTIONS, INC.
2004 INCENTIVE STOCK PLAN
1. Purpose of the Plan. This 2004 Incentive Stock Plan is intended to promote
the interests of Systems Management Solutions, Inc., a Nevada corporation,
by providing the employees and consultants of the Company, who are largely
responsible for the management, growth and protection of the business of
the Company, with a proprietary interest in the Company.
2. Definitions. As used in the Plan, the following definitions apply to the
terms indicated below:
Board of Directors shall mean the Board of Directors of Systems Management
Solutions, Inc., a Nevada corporation.
Cause, when used in connection with the termination of a Participant's
employment with the Company, shall mean the termination of the
Participant's employment by the Company by reason of (i) the conviction of
the Participant by a court of competent jurisdiction as to which no
further appeal can be taken of a crime involving moral turpitude; (ii) the
proven commission by the Participant of an act of fraud upon the Company;
(iii) the willful and proven misappropriation of any funds or property of
the Company by the Participant; (iv) the willful, continued and
unreasonable failure by the Participant to perform duties assigned to him
and agreed to by him; (v) the knowing engagement by the Participant in any
direct, material conflict of interest with the Company without compliance
with the Company's conflict of interest policy, if any, then in effect;
(vi) the knowing engagement by the Participant, without the written
approval of the Board of Directors of the Company, in any activity which
competes with the business of the Company or which would result in a
material injury to the Company; or (vii) the knowing engagement in any
activity which would constitute a material violation of the provisions of
the Company's Policies and Procedures Manual, if any, then in effect.
Cash Bonus shall mean an award of a bonus payable in cash pursuant to
Section 10 hereof.
Change in Control shall mean (1) Change in control of the Company, as that
term is contemplated in the federal securities laws; or (2) the occurrence
of any of the following events:
(a) Any Person becomes, after the effective date of this Plan, the
beneficial owner (as defined in
1
Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding
securities; provided, that the acquisition of additional voting
securities, after the effective date of this Plan, by any Person who
is, as of the effective date of this Plan, the beneficial owner,
directly or indirectly, of 20% or more of the combined voting power
of the Company's then outstanding securities, shall not constitute a
`Change in Control of the Company for purposes of this Section 2(a).
(b) A majority of individuals who are nominated by the Board of
Directors for election to the Board of Directors on any date, fail
to be elected to the Board of Directors as a direct or indirect
result of any proxy fight or contested election for positions on the
Board of Directors, or
(c) Code shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) Committee shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall
appoint from time to time to administer the Plan.
(e) Common Stock shall mean the Company's Common Stock, par value $.01
per share.
(f) Company shall mean Systems Management Solutions, Inc., a Nevada
corporation, and each of its Subsidiaries, and its successors.
(g) Exchange Act shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(h) Fair Market Value of a share of Common Stock on any date shall be
(i) the closing sales price on the immediately preceding business
day of a share of Common Stock as reported on the principal
securities exchange on which shares of Common Stock are then listed
or admitted to trading or (ii) if not so reported, the average of
the closing bid and asked prices for a share of Common Stock on the
immediately preceding business day as quoted on the National
Association of Securities Dealers Automated Quotation System
(NASDAQ) or (iii) if not quoted on NASDAQ, the average of the
closing bid and asked prices for a share of Common Stock as quoted
by the National Quotation Bureau's Pink Sheets or the National
Association of Securities Dealers OTC Bulletin Board System. If the
price of a share of Common Stock shall not be so reported, the
Committee in its absolute discretion shall determine the Fair Market
Value of a share of Common Stock.
(k) Incentive Award shall mean an Option, a share of Restricted Stock, a
share of Phantom Stock, a Stock Bonus or Cash Bonus granted pursuant
to the terms of the Plan.
(l) Incentive Stock Option shall mean an Option which is an incentive
stock option within the meaning of Section 422 of the Code and which
is identified as an Incentive Stock Option in the agreement by which
it is evidenced.
(m) Issue Date shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 7(d) hereof.
(n) Non-Qualified Stock Option shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified
Stock Option in the agreement by which it is evidenced.
(o) Option shall mean an option to purchase shares of Common Stock of
the Company granted pursuant to Section 6 hereof. Each Option shall
be identified as either an Incentive Stock Option or a Non-Qualified
Stock Option in the agreement by which it is evidenced.
(p) Participant shall mean a full-time employee of the Company who is
eligible to participate in the Plan and to whom an Incentive Award
is granted pursuant to the Plan, and, upon his death, his
successors, heirs, executors and administrators, as the case may be,
to the extent permitted hereby.
2
(q) Person shall mean a person, as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, and the rules and regulations in
effect from time to time thereunder.
(r) A share of Phantom Stock shall represent the right to receive in
cash the Fair Market Value of a share of Common Stock of the
Company, which right is granted pursuant to Section 8 hereof and
subject to the terms and conditions contained therein.
(s) Plan shall mean the Systems Management Solutions, Inc. 2004
Incentive Stock Plan, as it may be amended from time to time.
(t) Qualified Domestic Relations Order shall mean a qualified domestic
relations order as defined in the Code, in Title I of the Employee
Retirement Income Security Act, or in the rules and regulations as
may be in effect from time to time thereunder.
(u) A share of Restricted Stock shall mean a share of Common Stock which
is granted pursuant to the terms of Section 7 hereof and which is
subject to the restrictions set forth in Section 7 (c) hereof for so
long as such restrictions continue to apply to such share.
(v) Securities Act shall mean the Securities Act of 1933, as amended
from time to time.
(w) Stock Bonus shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.
(x) Subsidiary or Subsidiaries shall mean any and all corporations in
which at the pertinent time the Company owns, directly or
indirectly, stock vested with 50% or more of the total combined
voting power of all classes of stock of such corporations within the
meaning of Section 424(f) of the Code.
(y) Vesting Date shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. Stock Subject to the Plan. Under the Plan, the Committee may grant to
Participants (i) Options, (ii) shares of Restricted Stock, (iii) shares of
Phantom Stock, (iv) Stock Bonuses and (v) Cash Bonuses.
The Committee may grant Options, shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses under the Plan with respect to a number of
shares of Common Stock that in the aggregate at any time does not exceed
1,000,000 shares of Common Stock. The grant of a Cash Bonus shall not
reduce the number of shares of Common Stock with respect to which Options,
shares of Restricted Stock, shares of Phantom Stock or Stock Bonuses may
be granted pursuant to the Plan.
If any outstanding Option expires, terminates or is canceled for any
reason, the shares of Common Stock subject to the unexercised portion of
such Option shall again be available for grant under the Plan. If any
shares of Restricted Stock or Phantom Stock, or any shares of Common Stock
granted in a Stock Bonus are forfeited or canceled for any reason, such
shares shall again be available for grant under the Plan.
Shares of Common Stock issued under the Plan may be either newly issued or
treasury shares, at the discretion of the Committee.
4. Administration of the Plan. The Plan shall be administered by a Committee
of the Board of Directors consisting of two or more persons, each of whom
shall be a "disinterested person within the meaning of Rule 16b-3(c)(2)(i)
promulgated under Section 16 of the Exchange Act. The Committee shall from
time to time designate the employees of the Company who shall be granted
Incentive Awards and the amount and type of such Incentive Awards.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any
3
provision of the Plan and the terms of any Incentive Award issued under it
and to adopt such rules and regulations for administering the Plan as it
may deem necessary. Decisions of the Committee shall be final and binding
on all parties.
The Committee may, in its absolute discretion (i) accelerate the date on
which any Option granted under the Plan becomes exercisable, (ii) extend
the date on which any Option granted under the Plan ceases to be
exercisable, (iii) accelerate the Vesting Date or Issue Date, or waive any
condition imposed pursuant to Section 7(b) hereof, with respect to any
share of Restricted Stock granted under the Plan and (iv) accelerate the
Vesting Date or waive any condition imposed pursuant to Section 8 hereof,
with respect to any share of Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise
prices) as the Committee specifies. Notwithstanding Section 3 hereof,
Incentive Awards granted on the condition of surrender of outstanding
Incentive Awards shall not count against the limits set forth in such
Section 3 until such time as such Incentive Awards are surrendered.
The Committee in its absolute discretion shall determine whether an
authorized leave of absence, or absence in military or government service,
shall constitute termination of employment.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and
hold harmless each member of the Committee and each other director or
employee of the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been delegated from and
against any cost or expense (including attorneys' fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Committee) arising out of any action, omission or determination relating
to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in
bad faith and without reasonable belief that it was in the best interests
of the Company.
5. Eligibility. The persons who shall be eligible to receive Incentive Awards
pursuant to the Plan shall be such full-time employees of the Company, as
the Committee, in its absolute discretion, shall select from time to time.
Notwithstanding the generality of the foregoing, no employee of the
Company shall be eligible to receive Incentive Awards pursuant to this
Plan if the employee is also entitled to receive an Incentive Award under
the terms of his employment agreement with the Company, or any specialty
Incentive Stock Plan adopted after the date hereof, unless such employment
agreement or specialty plan expressly provides otherwise.
6. Options. The Committee may grant Options pursuant to the Plan, which
Options shall be evidenced by agreements in such form, as the Committee
shall from time to time approve. Options shall comply with and be subject
to the following terms and conditions:
(a) Identification of Options. All Options granted under the Plan shall
be clearly identified in the agreement evidencing such Options as
either Incentive Stock Options or as Non-Qualified Stock Options.
(b) Exercise Price. The exercise price of any Non-Qualified Stock Option
granted under the Plan shall be such price as the Committee shall
determine on the date on which such Non-Qualified Stock Option is
granted; provided, that such price may not be less than the minimum
price required by law. Except as provided in Section 6(d) hereof,
the exercise price of any Incentive Stock Option granted under the
Plan shall be not less than 100% of the Fair Market Value of a share
of Common Stock on the date on which such Incentive Stock Option is
granted.
(c) Term and Exercise of Options.
(1) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Common Stock as
shall be determined by the Committee on the day on which such
Option is granted and set forth in the agreement evidencing
the Option; provided, however, that no Option shall be
4
exercisable after the expiration of ten years from the date
such Option was granted; and, provided, further, that each
Option shall be subject to earlier termination, expiration or
cancellation as provided in the Plan.
(2) Each Option shall be exercisable in whole or in part with
respect to whole shares of Common Stock. The partial exercise
of an Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the
partial exercise of an Option, the agreement evidencing such
Option shall be returned to the Participant exercising such
Option together with the delivery of the certificates
described in Section 6(c)(5) hereof.
(3) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary,
no fewer than five business days in advance of the effective
date of the proposed exercise. Such notice shall be
accompanied by the agreement evidencing the Option, shall
specify the number of shares of Common Stock with respect to
which the Option is being exercised and the effective date of
the proposed exercise, and shall be signed by the Participant.
The Participant may withdraw such notice at any time prior to
the close of business on the business day immediately
preceding the effective date of the proposed exercise, in
which case such agreement shall be returned to the
Participant. Payment for shares of Common Stock purchased upon
the exercise of an Option shall be made on the effective date
of such exercise either
(i) in cash, by certified check, bank cashier's check or
wire transfer; or
(ii) subject to the approval of the Committee, in shares of
Common Stock owned by the Participant and valued at
their Fair Market Value on the effective date of such
exercise; or
(iii) partly in shares of Common Stock with the balance in
cash, by certified check, bank cashier's check or wire
transfer. Any payment in shares of Common Stock shall be
effected by the delivery of such shares to the Secretary
of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any
other documents and evidences as the Secretary of the
Company shall require from time to time.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the
broker-dealer has received from the Participant or the Company
a duly endorsed agreement evidencing such Option and
instructions signed by the Participant requesting the Company
to deliver the shares of Common Stock subject to such Option
to the broker-dealer on behalf of the Participant and
specifying the account into which such shares should be
deposited, (ii) adequate provision has been made with respect
to the payment of any withholding taxes due upon such exercise
and (iii) the broker-dealer and the Participant have otherwise
complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part
220.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the
Participant and delivered to the Participant as soon as
practicable following the effective date on which the Option
is exercised; provided, however, that such delivery shall be
effected for all purposes when a stock transfer agent of the
Company shall have deposited such certificates in the United
States mail, addressed to the Participant.
(6) During the lifetime of a Participant each Option granted to
him shall be exercisable only by him. No Option shall be
assignable or transferable otherwise than by will or by the
laws of descent and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning
of Section 422, without regard to Section 422(d) of the Code)
are exercisable for the first time by a Participant during any
calendar year under the Plan (and any other stock option plan
of the Company, or any subsidiary of the Company shall not
exceed $100,000. Such Fair Market Value shall be determined as
of the date on which each such Incentive Stock Option is
5
granted. If such aggregate Fair Market Value of shares of
Common Stock underlying such Incentive Stock Options exceeds
$100,000, then Incentive Stock Options granted hereunder to
such Participant shall, to the extent and in the order
required by Regulations promulgated under the Code (or any
other authority having the force of Regulations),
automatically be deemed to be Non-Qualified Stock Options, but
all other terms and provisions of such Incentive Stock Options
shall remain unchanged. In the absence of such Regulations
(and authority), or if such Regulations (or authority) require
or permit a designation of the options which shall cease to
constitute Incentive Stock Options, Incentive Stock Options
shall, to the extent of such excess and in the order in which
they were granted, automatically be deemed to be Non-Qualified
Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant, such individual owns,
directly or indirectly (based on the attribution rules in
Section 424(d) of the Code) stock possessing more than ten
percent of the total combined voting power of all classes of
stock of the Company or any of its subsidiaries, unless (i)
the exercise price of such Incentive Stock Option is at least
110% of the Fair Market Value of a share of Common Stock at
the time such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the expiration
of five years from the date such Incentive Stock Option is
granted.
(e) Effect of Termination of Employment
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause, "permanent and
total disability (within the meaning of Section 22(e)(3) of
the Code) or the death of the Participant (i) Options granted
to such Participant, to the extent that they were exercisable
at the time of such termination, shall remain exercisable
until the expiration of one month after such termination, on
which date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at
the time of such termination, shall expire at the close of
business on the date of such termination; provided, however,
that no Option shall be exercisable after the expiration of
its term.
(2) If the employment of a Participant with the Company shall
terminate as a result of the "permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) of the
Participant, the voluntary retirement of the Participant in
accordance with the Company's retirement policy as then in
effect or the death of the Participant (i) Options granted to
such Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable until
the expiration of one year after such termination, on which
date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at
the time of such termination, shall expire at the close of
business on the date of such termination; provided, however,
that no Option shall be exercisable after the expiration of
its term.
(3) In the event of the termination of a Participant's employment
for Cause, all outstanding Options granted to such Participant
shall expire at the commencement of business on the date of
such termination.
(f) Acceleration of Exercise Date Upon Change in Control. Upon the
occurrence of a Change in Control, each Option granted under the
Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.
7. Restricted Stock. The Committee may grant shares of Restricted Stock
pursuant to the Plan. Each grant of shares of Restricted Stock shall be
evidenced by an agreement in such form as the Committee shall from time to
time approve. Each grant of shares of Restricted Stock shall comply with
and be subject to the following terms and conditions:
(a) Issue Date and Vesting Date. At the time of the grant of shares of
Restricted Stock, the Committee shall establish an Issue Date or
Issue Dates and a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign
a different Issue Date and/or Vesting Date for
6
each class. Except as provided in Sections 7(c) and 7(f) hereof,
upon the occurrence of the Issue Date with respect to a share of
Restricted Stock, a share of Restricted Stock shall be issued in
accordance with the provisions of Section 7(d) hereof. Provided that
all conditions to the vesting of a share of Restricted Stock imposed
pursuant to Section 7(b) hereof are satisfied, and except as
provided in Sections 7(c) and 7(f) hereof, upon the occurrence of
the Vesting Date with respect to a share of Restricted Stock, such
share shall vest and the restrictions of Section 7(c) hereof shall
cease to apply to such share.
(b) Conditions to Vesting. At the time of the grant of shares of
Restricted Stock, the Committee may impose such restrictions or
conditions, not inconsistent with the provisions hereof, to the
vesting of such shares as it in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the
Committee may require, as a condition to the vesting of any class or
classes of shares of Restricted Stock, that the Participant or the
Company achieve certain performance criteria, such criteria to be
specified by the Committee at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting. Prior to the vesting of a
share of Restricted Stock, no transfer of a Participant's rights
with respect to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any
interest or right in or with respect to such share, but immediately
upon any attempt to transfer such fights, such share, and all of the
rights related thereto, shall be forfeited by the Participant and
the transfer shall be of no force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 7(c) or 7(f) hereof, reasonably
promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom
such shares were granted, evidencing such shares: provided,
that the Company shall not cause to be issued such a stock
certificates unless it has received a stock power duly
endorsed in blank with respect to such shares. Each such stock
certificate shall bear the following legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture and restrictions
against transfer) contained in the Systems Management
Solutions, Inc.--2004 Incentive Stock Plan and an Agreement
entered into between the registered owner of such shares and
Systems Management Solutions, Inc. A copy of the Plan and
Agreement is on file in the office of the Secretary of Systems
Management Solutions, Inc., at 7550 IH-10 West, 14th Floor,
San Antonio, Texas 78229.
Such legend shall not be removed from the certificate
evidencing such shares until such shares vest pursuant to the
terms hereof.
(2) Each certificate issued pursuant to Paragraph 7 (d)(1) hereof,
together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be held
by the Company. The Company shall issue to the Participant a
receipt evidencing the certificates held by it, which are
registered in the name of the Participant.
(e) Consequences Upon Vesting. Upon the vesting of a share of Restricted
Stock pursuant to the terms hereof, the restrictions of Section 7(c)
hereof shall cease to apply to such share. Reasonably promptly after
a share of Restricted Stock vests pursuant to the terms hereof, the
Company shall cause to be issued and delivered to the Participant to
whom such shares were granted, a certificate evidencing such share,
free of the legend set forth in Paragraph 7 (d)(1) hereof, together
with any other property of the Participant held by Company pursuant
to Section 7(d) hereof, provided, however, that such delivery shall
be effected for all purposes when the Company shall have deposited
such certificate and other property in the United States mail,
addressed to the Participant.
(f) Effect of Termination of Employment
7
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting
of shares of Restricted Stock granted to such Participant, a
portion of such shares, to the extent not forfeited or
canceled on or prior to such termination pursuant to any
provision hereof, shall vest on the date of such termination.
The portion referred to in the preceding sentence shall be
determined by the Committee at the time of the grant of such
shares of Restricted Stock and may be based on the achievement
of any conditions imposed by the Committee with respect to
such shares pursuant to Section 7(b). Such portion may equal
zero.
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Restricted Stock granted to such
Participant, which have not vested as of the date of such
termination, shall immediately be forfeited.
(g) Effect of Change in Control. Upon the occurrence of a Change in
Control, all shares of Restricted Stock which have not theretofore
vested (including those with respect to which the Issue Date has not
yet occurred) shall immediately vest.
8. Phantom Stock. The Committee may grant shares of Phantom Stock pursuant to
the Plan. Each grant of shares of Phantom Stock shall be evidenced by an
agreement in such form, as the Committee shall from time to time approve.
Each grant of shares of Phantom Stock shall comply with and be subject to
the following terms and conditions:
(a) Vesting Date. At the time of the grant of shares of Phantom Stock,
the Committee shall establish a Vesting Date or Vesting Dates with
respect to such shares. The Committee may divide such shares into
classes and assign a different Vesting Date for each class. Provided
that all conditions to the vesting of a share of Phantom Stock
imposed pursuant to Section 8(c) hereof are satisfied, and except as
provided in Section 8(d) hereof, upon the occurrence of the Vesting
Date with respect to a share of Phantom Stock, such share shall
vest.
(b) Benefit Upon Vesting. Upon the vesting of a share of Phantom Stock,
a Participant shall be entitled to receive in cash, within 90 days
of the date on which such share vests, an amount in cash in a lump
sum equal to the sum of (i) the Fair Market Value of a share of
Common Stock of the Company on the date on which such share of
Phantom Stock vests and (ii) the aggregate amount of cash dividends
paid with respect to a share of Common Stock of the Company during
the period commencing on the date on which the share of Phantom
Stock was granted and terminating on the date on which such share
vests.
(c) Conditions to Vesting. At the time of the grant of shares of Phantom
Stock, the Committee may impose such restrictions or conditions, not
inconsistent with the provisions hereof, to the vesting of such
shares as it, in its absolute discretion deems appropriate. By way
of example and not by way of limitation, the Committee may require,
as a condition to the vesting of any class or classes of shares of
Phantom Stock, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee
at the time of the grant of such shares.
(d) Effect of Termination of Employment.
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting
of shares of Phantom Stock granted to such Participant a
portion of such shares, to the extent not forfeited or
canceled on or prior to such termination pursuant to any
provision hereof, shall vest on the date of such termination.
The portion referred to in the preceding sentence shall be
determined by the Committee at the time of the grant of such
shares of Phantom Stock and may be based on the achievement of
any conditions imposed by the Committee with respect to such
shares pursuant to Section 8(c). Such portion may equal zero.
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Phantom Stock granted to such
Participant, which have not vested as of the date of such
termination, shall immediately be forfeited.
8
(e) Effect of Change in Control. Upon the occurrence of a Change in
Control, all shares of Phantom Stock, which have not theretofore
vested, shall immediately vest.
9. Stock Bonuses. The Committee may, in its absolute discretion, grant Stock
Bonuses in such amounts as it shall determine from time to time. A Stock
Bonus shall be paid at such time and subject to such conditions as the
Committee shall determine at the time of the grant of such Stock Bonus.
Certificates for shares of Common Stock granted as a Stock Bonus shall be
issued in the name of the Participant to whom such grant was made and
delivered to such Participant as soon as practicable after the date on
which such Stock Bonus is required to be paid.
10. Cash Bonuses. The Committee may, in its absolute discretion, grant in
connection with any grant of Restricted Stock or Stock Bonus or at any
time thereafter, a cash bonus, payable promptly after the date on which
the Participant is required to recognize income for federal income tax
purposes in connection with such Restricted Stock or Stock Bonus, in such
amounts as the Committee shall determine from time to time; provided,
however, that in no event shall the amount of a Cash Bonus exceed the Fair
Market Value of the related shares of Restricted Stock or Stock Bonus on
such date. A Cash Bonus shall be subject to such conditions, as the
Committee shall determine at the time of the grant of such Cash Bonus.
11. Adjustment Upon Changes in Common Stock
(a) Outstanding Restricted Stock and Phantom Stock. Unless the Committee
in its absolute discretion otherwise determines, if a Participant
receives any securities or other property (including dividends paid
in cash) with respect to a share of Restricted Stock, the Issue Date
with respect to which occurs prior to such event, but which has not
vested as of the date of such event, as a result of any dividend,
stock split recapitalization, merger, consolidation, combination,
exchange of shares or otherwise, such securities or other property
will not vest until such share of Restricted Stock vests, and shall
be held by the Company pursuant to Paragraph 7 (d) (2) hereof. The
Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has
not occurred as of the date of the occurrence of any of the
following events, or any grant of shares of Phantom Stock, to
reflect any dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or similar corporate
change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of Participants under the grant.
(b) Outstanding Options, Increase or Decrease in Issued Shares Without
Consideration. Subject to any required action by the shareholders of
the Company, in the event of any increase or decrease in the number
of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock
dividend (but only on the shares of Common Stock), or any other
increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Committee shall
proportionally adjust the number of shares and the exercise price
per share of Common Stock subject to each outstanding Option.
(c) Outstanding Options, Certain Mergers. Subject to any required action
by the shareholders of the Company, if the Company shall be the
surviving corporation in any merger or consolidation (except a
merger of consolidation as a result of which the holders of shares
of Common Stock receive securities of another corporation), each
Option outstanding on the date of such merger or consolidation shall
entitle the Participant to acquire upon exercise the securities
which a holder of the number of shares of Common Stock subject to
such Option would have received in such merger or consolidation.
(d) Outstanding Options, Certain Other Transactions. In the event of a
dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation or a merger or consolidation involving the Company in
which the Company is the surviving corporation but the holders of
shares of Common Stock receive securities of another corporation
and/or other property, including cash, the Committee shall, in its
absolute discretion, have the power to:
9
(1) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration
of such cancellation, pay to the Participant to whom such
Option was granted an amount in cash, for each share of Common
Stock subject to such Option equal to the excess of (A) the
value, as determined by the Committee in its absolute
discretion, of the property (including cash) received by the
holder of a share of Common Stock as a result of such event
over (B) the exercise price of such Option; or
(2) provide for the exchange of each Option outstanding
immediately prior to such event (whether or not then
exercisable) for an option on some or all of the property for
which such Option is exchanged and, incident thereto, make an
equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option, or
the number of shares or amount of property subject to the
option or, if appropriate, provide for a cash payment to the
Participant to whom such Option was granted in partial
consideration for the exchange of the Option.
(e) Outstanding Options. Other Changes. In the event of any change in
the capitalization of the Company or corporate change other than
those specifically referred to in Sections 11(b), (c) or (d) hereof,
the Committee may, in its absolute discretion, make such adjustments
in the number and class of shares subject to Options outstanding on
the date on which such change occurs and in the per share exercise
price of each such Option as the Committee may consider appropriate
to prevent dilution or enlargement of rights.
(f) No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any
dividend, any increase or decrease in the number of shares of stock
of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as
expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of
Common Stock subject to an Incentive Award or the exercise price of
any Option.
12. Rights as a Shareholder. No person shall have any rights as a shareholder
with respect to any shares of Common Stock covered by or relating to any
Incentive Award granted pursuant to this Plan until the date of the
issuance of a stock certificate with respect to such shares. Except as
otherwise expressly provided in Section 11 hereof, no adjustment to any
Incentive Award shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.
13. No Special Employment Rights; No Right to Incentive Award. Nothing
contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment
by the Company or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement to the contrary,
at any time to terminate such employment or to increase or decrease the
compensation of the Participant from the rate in existence at the time of
the grant of an Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant
at any time shall neither require the Committee to grant an Incentive
Award to such Participant or any other Participant or other person at any
time nor preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.
10
14. Securities Matters.
(a) The Company shall be under no obligation to affect the registration
pursuant to the Securities Act of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state
laws. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to cause to be issued or delivered any
certificates evidencing shares of Common Stock pursuant to the Plan
unless and until the Company is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common
Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Common
Stock pursuant to the terms hereof, that the recipient of such
shares make such covenants, agreements and representations, and that
such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that
the issuance and delivery of shares of Common Stock pursuant to such
exercise is in compliance with all applicable laws, regulations of
governmental authorities and the requirements of any securities
exchange on which shares of Common Stock are traded. The Company
may, in its sole discretion, defer the effectiveness of any exercise
of an Option granted hereunder in order to allow the issuance of
shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for
compliance available under federal or state securities laws. The
Company shall inform the Participant in writing of its decision to
defer the effectiveness of the exercise of an Option granted
hereunder. During the period that the effectiveness of the exercise
of an Option has been deferred, the Participant may, by written
notice, withdraw such exercise and obtain the refund of any amount
paid with respect thereto.
15. Withholding Taxes. Whenever shares of Common Stock are to be issued upon
the exercise of an Option, the occurrence of the Issue Date or Vesting
Date with respect to a share of Restricted Stock or the payment of a Stock
Bonus, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy federal,
state and local withholding tax requirements, if any, attributable to such
exercise, occurrence or payment prior to the delivery of any certificate
or certificates for such shares. In addition, upon the grant of a Cash
Bonus or the making of a payment with respect to a share of Phantom Stock,
the Company shall have the right to withhold from any cash payment
required to be made pursuant thereto an amount sufficient to satisfy the
federal, state and local withholding tax requirements, if any,
attributable to such exercise or grant.
16. Amendment of the Plan. The Board of Directors may at any time suspend or
discontinue the Plan or revise or amend it in any respect whatsoever,
provided, however, that without approval of the shareholders no revision
or amendment shall (i) except as provided in Section 11 hereof, increase
the number of shares of Common Stock that may be issued under the Plan,
(ii) materially increase the benefits accruing to individuals holding
Incentive Awards granted pursuant to the Plan or (iii) materially modify
the requirements as to eligibility for participation in the Plan.
17. No Obligation to Exercise. The grant to a Participant of an Option shall
impose no obligation upon such Participant to exercise such Option.
18. Transfers Upon Death. Upon the death of a Participant, outstanding
Incentive Awards granted to such Participant may be exercised only by the
executors or administrators of the Participant's estate or by any person
or persons who shall have acquired such right to exercise by will or by
the laws of descent and distribution. No transfer by will or the laws of
descent and distribution of any Incentive Award, or the right to exercise
any Incentive Award, shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and
with a copy of the will and/or such evidence as the Committee may deem
necessary to establish the validity of the transfer and (b) an agreement
by the transferee to comply with all the terms and conditions of the
Incentive Award that are or would have been applicable to the Participant
and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Incentive Award.
11
19. Expenses and Receipts. The Company shall pay the expenses of the Plan. Any
proceeds received by the Company in connection with any Incentive Award
will be used for general corporate purposes.
20. Failure to Comply. In addition to the remedies of the Company elsewhere
provided for herein, failure by a Participant to comply with any of the
terms and conditions of the Plan or the agreement executed by such
Participant evidencing an Incentive Award, unless such failure is remedied
by such Participant within ten days after having been notified of such
failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part as the Committee,
in its absolute discretion, may determine.
21. Effective Date and Term of Plan. The Plan was adopted by the Board of
Directors effective _____________, 2004, subject to approval by the
shareholders of the Company in accordance with applicable law, the
requirements of Section 422 of the Code and the requirements of Rule 16b-3
under Section 16(b) of the Exchange Act. No Incentive Award may be granted
under the Plan after _____________, 2006. Incentive Awards may be granted
under the Plan at any time prior to the receipt of such shareholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option may be exercised
prior to the receipt of such approval, no share certificate shall be
issued pursuant to a grant of Restricted Stock or Stock Bonus prior to the
receipt of such approval and no Cash Bonus or payment with respect to a
share of Phantom Stock shall be paid prior to the receipt of such
approval. If the Plan is not approved by the Company's shareholders, then
the Plan and all Incentive Awards then outstanding hereunder shall
forthwith automatically terminate and be of no force and effect.
IN WITNESS WHEREOF, this 2004 Incentive Stock Plan has been executed in
Houston, Texas this ____ day of __________________, 2004.
SYSTEMS MANAGEMENT SOLUTIONS, INC. ATTEST
- ---------------------------------- ----------------------------
12
Proxy for 2004 Annual Meeting of Shareholders
Of
SYSTEMS MANAGEMENT SOLUTIONS, INC.
This PROXY is solicited by the management of the Company.
The undersigned shareholder of SYSTEMS MANAGEMENT SOLUTIONS, INC., a
Nevada corporation, (the "Company"), hereby acknowledges receipt of the "Notice
of 2004 Annual Meeting of Shareholders" and "Proxy Statement", each dated
December 2, 2004, and hereby appoints James Karlak with full power on behalf of
and in the name of the undersigned, to represent the undersigned at the 2004
Annual Meeting of Stockholders of the Company to be held at 7550 IH-10 West,
14th Floor, San Antonio, Texas 78229 on December 17, 2004 at 2:00 p.m., local
time, and at any adjournment or adjournments thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO
DIRECTION IS GIVEN WILL BE VOTED "FOR" ALL OF THE FOLLOWING:
1. To adopt the Company's 2004 Incentive Stock Plan as described in the Proxy
Statement.
FOR AGAINST ABSTAIN
|_| |_| |_|
- --------------------------------------------------------------------------------
2. To elect nominee Steven L. Goldberg to the Company's Board of Directors to
hold office for three years or until his successor is duly elected and
qualified.
FOR AGAINST ABSTAIN
|_| |_| |_|
- --------------------------------------------------------------------------------
3. To ratify the appointment of Malone & Bailey, P.L.L.C. as the Company's
independent accountants for the fiscal year ending June 30, 2005.
FOR AGAINST ABSTAIN
|_| |_| |_|
- --------------------------------------------------------------------------------
4. In their discretion upon such other matters as may properly come before
the meeting.
================================================================================
(This proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name(s) appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
- ------------------------------- ----------------------------------
Signature 1 Signature 2 (Joint Owner)
- ------------------------------- ----------------------------------
Printed Name Printed Name
- ------------------------------- ----------------------------------
Date Date
PLEASE NOTE - THE TOTAL AMOUNT OF
SYSTEMS MANAGEMENT SOLUTIONS, INC.
SHARES HELD IN THIS ACCOUNT IS THE
LAST SET OF NUMBERS LISTED ON THE
TOP ROW OF THE ADDRESS LABEL ABOVE
THE HOLDER NAME.