Filed On 5/30/01 3:28pm ET · SEC Files 0-27023, 814-00233 · Accession Number 950129-1-501104
This Filing's "Filed As Of" Date was Corrected by the SEC on 5/27/03.
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
5/30/01 Technest Holdings Inc PRE 14A® 6/28/01 1:56 Bowne of Houston...01/FA
Preliminary Proxy Solicitation Material · Schedule 14A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: PRE 14A Financialintranet,Inc. 56 308K
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FINANCIAL INTRANET, INC.
--------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(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.
(6) Amount Previously Paid:
(7) Form, Schedule or Registration Statement No.:
(8) Filing Party:
(9) Date Filed:
FINANCIAL INTRANET, INC.
90 GROVE STREET, SUITE 01
RIDGEFIELD, CONNECTICUT 06877
, 2001
To the Financial Intranet, Inc. Stockholders:
I would like to take this opportunity to invite you to attend our 2001
Annual Meeting of Stockholders of Financial Intranet, Inc., which we will hold
at Technest.com, Inc., One Capital City Plaza, 3350 Peachtree Road, Suite 1050,
Atlanta, Georgia 30326, at 8:00 a.m., Atlanta time, on Thursday, June 28, 2001.
This letter is accompanied by the formal notice of Financial Intranet,
Inc.'s annual meeting and the proxy statement. The proxy statement tells you
more about the agenda and procedures for the meeting. The proxy statement also
describes how the board of directors operates and gives information about our
proposed amendments to Financial Intranet's Restated Articles of Amendments and
bylaws, our director candidates, and our proposed stock incentive plan. Included
also is a form of proxy for voting at the meeting and our 2000 annual report to
stockholders on Form 10-KSB.
We look forward to greeting personally those of you who are able to be
present at the annual meeting and sharing with you more information about
Financial Intranet.
YOUR VOTE IS VERY IMPORTANT AND IT IS IMPORTANT THAT YOUR SHARES ARE
REPRESENTED, WHETHER OR NOT YOU ARE ABLE TO BE WITH US AT THE MEETING. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, EVEN IF YOU ANTICIPATE ATTENDING IN PERSON,
WE URGE YOU TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. IF YOU
ATTEND, YOU WILL, OF COURSE, BE ENTITLED TO REVOKE YOUR PROXY AND VOTE IN
PERSON. I WOULD LIKE TO STRESS THE IMPORTANCE OF YOU SUBMITTING YOUR VOTE AS
EARLY AS POSSIBLE.
Sincerely,
/s/ MICHAEL SHEPPARD
Michael Sheppard
Director and President
FINANCIAL INTRANET, INC.
90 GROVE STREET, SUITE 01
RIDGEFIELD, CONNECTICUT 06877
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
, 2001
To Our Stockholders,
The 2001 annual meeting of the stockholders of Financial Intranet, Inc.
will take place at Technest.com, Inc., One Capital City Plaza, 3350 Peachtree
Road, Suite 1050, Atlanta, Georgia 30326, at 8:00 a.m., Atlanta time, on
Thursday, June 28, 2001, for the purpose of considering and acting upon the
following matters described in more detail in the accompanying proxy statement:
- an amendment to Financial Intranet Inc.'s Restated Articles of
Incorporation to (1) increase the number of authorized shares of all
classes of capital stock of the Company to 500,000,000 of which
495,000,000 shares, $.001 par value, will be common stock and 5,000,000
shares, $.001 par value, will be preferred stock, (2) limit the personal
liability of the Company's directors and officers, (3) elect that
Financial Intranet, Inc. shall not be governed by Nevada's Control Share
and Business Combination statutes, Nev. Rev. Stat. sec.sec. 78.378 to
78.3793, inclusive, and Nev. Rev. Stat. sec.sec. 78.411 to 78.444,
inclusive, and (4) change the name of the Company from "Financial
Intranet, Inc." to "Technest Holdings, Inc.";
- the approval of the Amended and Restated Bylaws of Financial Intranet,
Inc.;
- the election of three directors, to serve until the next meeting of the
stockholders;
- the approval of the Financial Intranet, Inc. 2001 Stock Option Plan; and
- such other business as may properly come before the annual meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FIRST FOUR
MATTERS OUTLINED ABOVE. OUR BOARD OF DIRECTORS HAS GRANTED THE PROXY HOLDERS
DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER MATTER THAT PROPERLY COMES BEFORE
THE ANNUAL MEETING.
Our board of directors has fixed June 11, 2001, as the "record date" for
determining stockholders entitled to notice of and to vote at the annual
meeting. Only stockholders of record as of the record date will be entitled to
notice of and to vote at the annual meeting or any adjournment of the annual
meeting.
All stockholders are cordially invited to attend the annual meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. Stockholders who attend the annual meeting,
and so request, may revoke their proxy and vote their shares in person even if
they have already returned a proxy card.
FOR ENTRY TO THE ANNUAL MEETING, EACH STOCKHOLDER MAY BE ASKED TO PRESENT
VALID PICTURE IDENTIFICATION, SUCH AS A DRIVER'S LICENSE OR PASSPORT.
STOCKHOLDERS HOLDING STOCK IN BROKERAGE ACCOUNTS ("STREET NAME" HOLDERS) WILL
NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF
THE RECORD DATE. CAMERAS, RECORDING DEVICES AND OTHER ELECTRONIC DEVICES WILL
NOT BE PERMITTED AT THE MEETING.
PLEASE NOTE -- IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission has adopted a new rule that allows
us to send a single annual report to two or more of our stockholders sharing the
same address, subject to certain conditions. This new "householding" rule will
provide greater convenience for investors and cost savings for us by reducing
the number of duplicate documents that stockholders receive. The commission is
also proposing an amendment to the new rule to include deliveries of proxy
statements as well.
Unless we receive contrary instructions, if you have the same last name as
any other stockholder who shares the same address, your household will receive
only one copy of our next annual report. If the proposed amendment to the rule
is adopted, you will also receive only one copy of each future proxy statement,
although you will receive a separate proxy card for each stockholder in the
household.
If you wish to continue to receive separate annual reports and proxy
statements for each household account, you may notify us by facsimile at (203)
431-8301 or in writing at Financial Intranet, Inc., 90 Grove Street, Suite 01,
Ridgefield, Connecticut 06877. Your withdrawal from "householding" status will
be effective 30 days after we receive your notification. If we do not receive
instructions to remove your account from this service, your account will
continue to be "householded" until you notify us otherwise.
If you have stock in multiple accounts, you may be receiving more than one
copy of our annual report and proxy statement. To reduce the number of reports
and statements that you receive in connection with our annual meeting and save
us the cost of producing and mailing these extra materials, you can mark the
designated box on the appropriate proxy card(s). Please make sure however that
at least one account continues to receive these materials. Eliminating these
duplicate mailings will not affect your receipt of future proxy cards for any
account. If you choose this option and change your mind at a later date, we may
resume mailing these materials within 30 days after notification by you in the
manner provided above.
If you own our common stock beneficially through a nominee (such as a bank
or broker) and receive more than one of our annual reports and proxy statements,
please consider giving permission to your nominee to eliminate duplicate
mailings.
We encourage your participation in these programs as it not only allows us
to reduce costs, but is more environmentally friendly by reducing the
unnecessary use of materials.
By order of our board of directors,
/s/ MICHAEL SHEPPARD
Michael Sheppard
Director and President
FINANCIAL INTRANET, INC.
90 GROVE STREET, SUITE 01
RIDGEFIELD, CONNECTICUT 06877
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
, 2001
TABLE OF CONTENTS
[Download Table]
ABOUT THE ANNUAL MEETING.................................... 1
What is the purpose of the annual meeting?................ 1
Who is entitled to notice of and to vote at the annual
meeting?............................................... 1
What are the voting rights of the stockholders?........... 1
How do I vote and who will vote my proxy?................. 1
May I revoke my proxy?.................................... 2
What does it mean if I receive more than one proxy
card?.................................................. 2
Can I vote by telephone or electronically via the
internet?.............................................. 2
What constitutes a quorum?................................ 2
What vote is required to approve each item?............... 2
How will votes be tabulated?.............................. 3
What are our board of directors' recommendations?......... 3
Does Financial Intranet have any standing committees of
its board of directors?................................ 3
Who is paying the cost for this proxy solicitation and how
is the solicitation process conducted?................. 3
Do I have dissenter's rights?............................. 3
How do I make a stockholder proposal at the next annual
meeting?............................................... 4
How do I obtain more information about Financial
Intranet?.............................................. 4
STOCK OWNERSHIP............................................. 5
How much common stock do our directors and our executive
officer own and who are the largest owners of our
common stock?.......................................... 5
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION................. 6
How is the compensation determined for our executive
officers?.............................................. 6
What is the current summary compensation for our executive
officers?.............................................. 6
What is our philosophy behind our granting of stock
options to our executive officers?..................... 7
How many stock options were granted in the last fiscal
year to individuals who during the past fiscal year
served as our executive officers?...................... 7
How many stock options do the individuals who served as
our executive officers during the past fiscal year own
as of December 31, 2000?............................... 7
Do we currently have any employment agreements with any of
our executive officers?................................ 8
Have any employment agreements with our executive officers
been terminated in the last fiscal year?............... 8
How are our directors compensated?........................ 9
How many times did our board of directors meet during this
past fiscal year?...................................... 9
Who are the current members of our board of directors?.... 9
Are there any of our executive officers who are not
members of our board of directors?..................... 9
Have our directors, officers and 10% beneficial owners
complied with the beneficial ownership reporting
requirements of Section 16(a)?......................... 10
Who are our current independent accountants?.............. 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 10
Certain Relationships and Related Transactions............ 10
Has there been a change in control of Financial Intranet
since the beginning of our last fiscal
year?.................................................. 11
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[Download Table]
PROPOSAL 1 AMENDMENT TO THE RESTATED ARTICLES OF
INCORPORATION................................... 12
Why does the board of directors recommend that the
stockholders approve the amendments contained in the
Certificate of Change?................................. 12
PROPOSAL 2 APPROVAL OF THE AMENDED AND RESTATED BYLAWS..... 15
What are the most significant differences between the
proposed amended and restated bylaws and the current
bylaws?................................................ 15
PROPOSAL 3 ELECTION OF DIRECTORS........................... 17
PROPOSAL 4 APPROVAL OF THE FINANCIAL INTRANET CORPORATION
2001 STOCK INCENTIVE PLAN....................... 18
What is the purpose of our 2001 Stock Option Plan?........ 18
When will the plan be effective and what will its duration
be?.................................................... 18
How will the plan be administered?........................ 18
What types of awards are to be granted under the plan?.... 19
What shares of ours are subject to the plan?.............. 19
To whom can stock options be granted?..................... 20
What is the exercise price for each option granted?....... 20
When are the awards exercisable?.......................... 20
Can the options granted under the plan be transferred?.... 20
Can the plan be amended or terminated?.................... 20
Can the terms of awards already granted be adjusted or
changed?............................................... 20
What are the federal income tax consequences of the
issuance and exercise of awards granted under the
plan?.................................................. 21
How many options will allocated under the plan if the plan
is approved?........................................... 22
Can I review the Financial Intranet 2001 Stock Option
Plan?.................................................. 22
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FINANCIAL INTRANET, INC.
90 GROVE STREET, SUITE 01
RIDGEFIELD, CONNECTICUT 06877
PROXY STATEMENT
This proxy statement contains information and is furnished in connection
with the solicitation by the board of directors of Financial Intranet, Inc., a
Nevada corporation, of proxies for use at the 2001 annual meeting of
stockholders of Financial Intranet, Inc. ("Financial Intranet" or the "Company")
to be held at Technest.com, Inc., One Capital City Plaza, 3350 Peachtree Road,
Suite 1050, Atlanta, Georgia 30326, at 8:00 a.m., Atlanta time, on Thursday,
June 28, 2001, and any adjournment of the annual meeting. This proxy statement
and accompanying proxy card are first being mailed to stockholders on or about
June 12, 2001.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, the stockholders will act upon the matters outlined
in the Notice of 2001 Annual Meeting of Stockholders on the cover page of this
proxy statement, including:
- an amendment to Financial Intranet Inc.'s Restated Articles of
Incorporation to (1) increase the number of authorized shares of all
classes of capital stock of the Company to 500,000,000 of which
495,000,000 shares, $.001 par value, will be common stock and 5,000,000
shares, $.001 par value, will be preferred stock, (2) limit the personal
liability of the Company's directors and officers, (3) elect that
Financial Intranet shall not be governed by Nevada's Control Share and
Business Combination statutes, Nev. Rev. Stat. sec.sec. 78.378 to
78.3793, inclusive, and Nev. Rev. Stat. sec.sec. 78.411 to 78.444,
inclusive, and (4) change the name of the Company from "Financial
Intranet, Inc." to "Technest Holdings, Inc.";
- the approval of the Amended and Restated Bylaws of Financial Intranet,
Inc.;
- the election of three directors, to serve until the next meeting of the
stockholders;
- the approval of the Financial Intranet, Inc.'s 2001 Stock Option Plan;
and
- such other business as may properly come before the annual meeting.
In addition, our management will report on the current operations of
Financial Intranet and respond to questions from stockholders.
WHO IS ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING?
Our board of directors has fixed the close of business on June 11, 2001, as
the "record date" for the determination of stockholders who are entitled to
notice of the meeting and who are entitled to vote at the annual meeting. As of
the record date we had 12,433,240 outstanding shares of common stock and
stockholders of record. Only holders of our common stock as of the
record date will be entitled to notice of and to vote at the annual meeting.
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
The holders of our common stock will vote together as a single class on all
matters to be acted upon at the annual meeting and each holder of a full share
of common stock will be entitled to one vote per each full share held.
HOW DO I VOTE AND WHO WILL VOTE MY PROXY?
If you properly complete, sign and return the accompanying proxy card, it
will be voted as you direct. Michael Sheppard, the person named as proxy on the
proxy card accompanying this proxy statement, will vote
1
each properly executed and returned proxy as indicated on the directions of the
returned proxy, or if you do not indicate a direction, the proxy will be voted
in accordance with the recommendations of our board of directors contained in
this proxy statement. The board of directors selected Mr. Sheppard to serve in
this capacity. Even if you plan to attend the annual meeting, your plans may
change, so it is a good idea to complete, sign and return your proxy card in
advance of the annual meeting. "Street name" stockholders who wish to vote at
the meeting will need to obtain a proxy form from the institution that holds
their shares. If you attend the annual meeting, you will of course be allowed to
vote in person.
MAY I REVOKE MY PROXY?
Yes. Each stockholder giving a proxy has the power to revoke it at any time
before the shares it represents are voted. Revocation of a proxy is effective
upon receipt by Mr. Sheppard at or prior to the annual meeting of either an
instrument revoking the proxy or a duly executed proxy bearing a later date.
Additionally, a stockholder may change or revoke a previously executed proxy by
attending the annual meeting and requesting to vote in person. Please note that
attendance at the annual meeting will not by itself revoke a previously granted
proxy.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
If you receive more than one proxy card, it means you have multiple
accounts at the transfer agent and/or with stockbrokers. Please sign and return
all proxy cards to ensure that all your shares are voted.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY VIA THE INTERNET?
You may not vote by telephone, but you may vote electronically through the
internet. You may also vote by returning a properly executed proxy card or by
voting in person at the annual meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting of at least a majority of the outstanding
shares of our common stock entitled to vote, whether present in person or by
proxy, will constitute a quorum. A quorum must be present at the annual meeting
to permit the conduct of business.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. If you do not give your broker
or nominee specific instructions, your shares may not be voted on those matters
and will not be counted in determining the number of shares necessary for
approval. Shares represented by such "broker non-votes" will be counted to
determine whether there is a quorum.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the annual meeting is required to elect directors. A properly executed
proxy marked "WITHHOLD AUTHORITY" with respect to the election of one or more
directors will not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is a
quorum. "Broker non-votes" are not included in the tabulation of the vote
concerning the election of our directors and, therefore, do not have the effect
of votes in opposition to that election. Cumulative voting in the election of
our directors is not provided for by our Bylaws. Proxies cannot be voted for a
greater number of persons than the number of nominees named in this proxy
statement.
OTHER MATTERS. The affirmative vote of the holders of a majority of the
shares present and entitled to vote, whether in person or by proxy, at the
annual meeting is required to approve the proposed amendment to Financial
Intranet's Restated Articles of Incorporation, the Amended and Restated Bylaws,
and the Financial Intranet, Inc. 2001 Stock Option Plan. A properly executed
proxy marked "ABSTAIN" with respect to any of these proposals will not be voted,
although it will be counted to determine whether there is a quorum. Accordingly,
an abstention will have the effect of a negative vote. "Broker non-votes" are
not included in the
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tabulation of the vote concerning these matters and, therefore, do not have the
effect of votes in opposition to such appointment and approval.
HOW WILL VOTES BE TABULATED?
The election inspectors appointed for the annual meeting will tabulate the
votes cast in person or by proxy at the annual meeting and will determine
whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote to determine the
presence of a quorum but as unvoted to determine the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter but will be counted for purposes of
determining the presence of a quorum.
WHAT ARE OUR BOARD OF DIRECTORS' RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named
above will vote in accordance with the recommendations of our board of
directors. Our board of directors recommendations are set forth together with
the description of each item in this proxy statement. In summary, our board of
directors recommends a vote:
- for the proposed amendments to Financial Intranet's Restated Articles of
Incorporation;
- for the approval of the proposed Amended and Restated Bylaws of Financial
Intranet, Inc.;
- for the election of the three nominated directors, each for a term of one
year; and
- for the approval of the Financial Intranet, Inc. 2001 Stock Option Plan.
With respect to any other matter that properly comes before the annual
meeting, the proxy holders will vote in their own discretion.
DOES FINANCIAL INTRANET HAVE ANY STANDING COMMITTEES OF ITS BOARD OF
DIRECTORS?
Yes. We currently have a standing audit committee that recommends the
appointment of independent public accountants to conduct audits, reviews the
plan and results of an auditing engagement and reviews our internal auditing
procedures. Joseph Engelberger and Steve Weller are members of the audit
committee. The audit committee met informally several times during the past
fiscal year. We also have a compensation committee that sets the compensation
for our directors and officers and administers our stock option plans. Michael
Sheppard, Joseph Engelberger and Steve Weller are all members of the
compensation committee and have met informally a few times during the past
fiscal year. We do not have a nominating committee as our board of directors
nominates candidates to stand for election as directors.
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE
SOLICITATION PROCESS CONDUCTED?
We will pay the expense of this proxy solicitation. We do not anticipate
that the costs and expenses incurred in connection with this proxy solicitation
will exceed those normally expended for a proxy solicitation relating to the
matters to be voted on in this annual meeting. We will, upon request, reimburse
brokers, banks and similar organizations for out-of-pocket and reasonable
clerical expenses incurred in forwarding proxy material to their principals.
In addition to the solicitation of proxies by use of the mails,
solicitation also may be made by telephone, telegraph or personal interview by
our directors, officers and regular employees, none of whom will receive
additional compensation for any such solicitation.
DO I HAVE DISSENTER'S RIGHTS?
No. The taking of the actions proposed at the annual meeting will not
entitle any stockholder to dissent and demand a right of appraisal or payment
for its shares under the Nevada Revised Statutes.
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HOW DO I MAKE A STOCKHOLDER PROPOSAL AT THE NEXT ANNUAL MEETING?
Proposals of stockholders that are intended to be presented by those
stockholders at our 2002 annual meeting and are intended to be included in our
proxy materials relating to our 2002 annual meeting must be received by us at
least 120 calendar days prior to the one year anniversary of the mailing date of
this proxy statement. That date is February 27, 2002. The submitted proposals
must be in compliance with applicable laws and regulations and follow the
procedures prescribed in the Securities and Exchange Commission's Rule 14a-8 to
be considered for possible inclusion in the proxy materials.
If a stockholder wishes to present a proposal at our 2002 annual meeting
and the proposal is not intended to be included in our proxy statement relating
to that meeting, the stockholder must provide us with advance notice of the
proposal. Any stockholder proposals submitted to us after February 27, 2002,
will be considered untimely and will be subject to discretionary voting
authority by the proxy holders.
We have not been notified by any stockholder of his or her intent to
present a stockholder proposal from the floor at this year's annual meeting. The
enclosed proxy card grants the proxy holder discretionary authority to vote on
any matter properly brought before the annual meeting.
HOW DO I OBTAIN MORE INFORMATION ABOUT FINANCIAL INTRANET?
We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read and copy any of these
documents at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference room. You may also read and copy any of
these documents at either of the following Regional Offices of the Commission:
New York Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048 and Chicago Regional Office, Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may
be obtained by mail at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
You may read and download the filings of Financial Intranet over the internet at
the Commission's web site at http://www.sec.gov. You may also request copies of
our filings by sending a facsimile request to Financial Intranet Investor
Relations at (203) 431-8301 or by sending a written request to c/o Financial
Intranet, Inc., 90 Grove Street, Suite 01, Ridgefield, Connecticut 06775. Our
common stock is listed on the NASDAQ Over-the-Counter Bulletin Board under the
symbol "FNIT."
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STOCK OWNERSHIP
HOW MUCH COMMON STOCK DO OUR DIRECTORS AND OUR EXECUTIVE OFFICER OWN AND
WHO ARE THE LARGEST OWNERS OF OUR COMMON STOCK?
The following table sets forth information as of May 30, 2001, regarding
our common stock that is beneficially owned, on a fully diluted basis, by:
- each of our current directors and director nominees;
- all of our current directors and our executive officer as a group; and
- each person or entity that beneficially owns, directly or together with
affiliates, more than 5% of our common stock. The 5% threshold is based
on information available to us and based upon a review of statements
filed with the Securities and Exchange Commission pursuant to the
Securities Act.
Please note that the following table reflects that on April 2, 2001, we
effected a 35 to 1 reverse split whereby the number of shares of our common
stock outstanding immediately before the reverse split were converted into a
number of "new" shares of common stock equal to the quotient of 1 divided by 35.
We believe each person or entity listed has sole voting and investment
power over the shares beneficially owned by them. Each person's address is c/o
Financial Intranet, Inc., 90 Grove Street, Suite 01, Ridgefield, Connecticut
06877.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
[Enlarge/Download Table]
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF CLASS
NAME OF BENEFICIAL OWNER POSITIONS HELD OWNERSHIP OWNERSHIP
-----------------------------------------------------------------------------------------------------
Michael Sheppard President, Chief Executive 163,080 1.1%
Officer and Director
Steven Weller Director 286 0%
Joseph Engelberger Director 286 0%
Garth, LLC Stockholder 1,112,348 8.9%
Southshore Capital Fund, Ltd. Stockholder 926,441 7.45%
Greenfield Investment
Consultants, LLC Stockholder 3,646,120 29.3%
The Four Life Trust Stockholder 3,459,243 27.8%
The Rearden Trust Stockholder 710,735 5.71%
All executive officers and
directors as a group (3
people) 142,831 1.1%
The percentage of class ownership column is based on 12,433,240 shares of
common stock outstanding. As mentioned above, this number is based on the
effects of the 35 to 1 reverse split. This number also reflects the number of
shares of our common stock issuable upon the exercise or conversion of options
and warrants exercisable on or within 60 days of May 30, 2001.
Mr. Sheppard's shares include options to purchase 63,753 shares at an
exercise price of $6.65 per share and 91,349 shares at an exercise price of $.35
per share.
Mr. Weller's shares include options to purchase 286 shares at an exercise
price of $21.00 per share.
Mr. Engelberger's shares include options to purchase 286 shares at an
exercise price of $25.38 per share.
5
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
HOW IS THE COMPENSATION DETERMINED FOR OUR EXECUTIVE OFFICERS?
Our compensation committee determines the compensation of our executive
officers based on the following philosophy and criteria. Our executive
compensation and benefit programs are designed to attract and retain the best
people available in the industry and to provide incentives for those senior
members of management who bear responsibility for our goals and achievements.
These programs are also intended to recognize corporate, business unit,
individual and team performance through the use of incentives, including
equity-based incentives, that reward for the creation of stockholder value and
the achievement of key financial, strategic, individual, and team objectives.
The key components of our compensation and benefit programs are a base salary
and a stock incentive plan.
Our board of directors relates total compensation levels for our executive
officers to the total compensation paid to similarly situated executives of
companies with which we compete for customers and executive talent. Their total
compensation is targeted to approximate the median of these companies. Yet,
because of the performance-oriented nature of our incentive program, total
compensation may at times potentially exceed market norms when our targeted
performance goals are exceeded. Likewise, total compensation may lag the market
when our performance goals are not achieved.
WHAT IS THE CURRENT SUMMARY COMPENSATION FOR OUR EXECUTIVE OFFICERS?
The following table sets forth compensation information for services
rendered to us by our chief executive officer for the last three (3) fiscal
years by our most highly compensated executive officers who served as such
during the last fiscal year. The following table indicates the dollar value of
base salaries, any draws and bonus awards, the number of stock options granted
and other compensation whether paid or deferred. With respect to the stock
options reflected in this table, please note that these figures are based on the
effects of the 35 to 1 reverse split mentioned above.
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
LONG TERM
ANNUAL COMPENSATION COMPENSATION
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SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING
SALARY BONUS COMPENSATION STOCK OPTIONS
NAME AND POSITION YEAR $ $ $ AWARDS #
Michael Sheppard, 2000 173,575 -0- -0- -0- 71,429
Current director, President and 1999 143,739 -0- 77,184 63,753 -0-
Chief Executive Officer 1998 150,000 -0- -0- -0- 20,598
Corey Rinker 2000 146,073 -0- -0- -0- 71,429
Chief Financial Officer 1999 49,326 -0- -0- -0- -0-
Maura Marx 2000 118,699 -0- -0- -0- 85,714
Executive Vice President 1999 97,098 -0- 154,369 -0- -0-
1998 100,000 -0- -0- -0- 12,785
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"Other Annual Compensation" reflects the fair market value of shares
granted for payment in lieu of cash for services rendered.
Mr. Sheppard has served as our President and director since April of 1997.
6
WHAT IS OUR PHILOSOPHY BEHIND OUR GRANTING OF STOCK OPTIONS TO OUR
EXECUTIVE OFFICERS?
We believe that we will only retain executives of caliber and experience if
we offer competitive compensation packages. As we are unable currently to afford
to pay high cash salaries, our grant of options is a critical component of the
overall compensation paid to our officers. We believe it is uncompetitive and a
disincentive to set the exercise price of options at unreasonable premiums over
the market price of the shares on the date of grant. Similarly, we believe a
decline in the price of the shares over a period when both our business
operations and prospects are improving, and our executives have made significant
contributions, that is not offset by a reduction in the exercise price, is
unfair to those executives. A decline in our share price results in an effective
increase in the premium of the exercise price over the market price which
penalizes the executives, and is potentially harmful to us if the executive then
takes the view that their overall compensation package is uncompetitive. We will
continue to review the exercise prices and vesting dates of options granted to
our employees and may reprice and/or change vesting dates as we deem appropriate
based on the prevailing price of our shares and our business operations and
prospects.
HOW MANY STOCK OPTIONS WERE GRANTED IN THE LAST FISCAL YEAR TO INDIVIDUALS
WHO DURING THE PAST FISCAL YEAR SERVED AS OUR EXECUTIVE OFFICERS?
During our fiscal year ending December 31, 2000, the following stock
options were granted to the named executive officers listed below. The following
information also includes the number of shares of common stock underlying
options granted during the year, the percentage that such options represent of
all options granted to employees during the year, the exercise price and the
expiration date. Please note that these figures are based on the effects of the
35 to 1 reverse split mentioned above.
[Enlarge/Download Table]
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Percent of Total
Number of Options Granted to
Securities Employees In Exercise or
Underlying Fiscal Year Ended Base Price
Name Options Granted December 31, 2000 Per($/Share) Expiration Date
-------------------------------------------------------------------------------------------------
Michael Sheppard 71,429 31.25% $.35 12/31/05
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Corey Rinker 71,429 31.25% $.35 12/31/05
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Maura Marx 85,714 37.50% $.35 12/31/05
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HOW MANY STOCK OPTIONS DO THE INDIVIDUALS WHO SERVED AS OUR EXECUTIVE
OFFICERS DURING THE PAST FISCAL YEAR OWN AS OF DECEMBER 31, 2000?
The following table shows the number of options that our executive officers
owned, and the values of such options, as of December 31, 2000. None of the
executive officers named below exercised options or warrants during our last
fiscal year. Please note that these figures are based on the effects of the 35
to 1 reverse split mentioned above.
AGGREGATED OPTION VALUES ON DECEMBER 31, 2000
[Enlarge/Download Table]
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Value of
Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options at
Options at 12/31/00 12/31/00(1)
Name Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------
Maura Marx 124,297 0 $90,000.00 0
----------------------------------------------------------------------------------------------------
Michael Sheppard 142,258 0 $75,000.00 0
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Corey Rinker 121,429 0 $75,000.00 0
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7
The option values contained in the above table are calculated by subtracting the
exercise price from the fair market value of the underlying common stock. For
purposes of this table, fair market value is deemed to be $0, the average of the
high and low bids for our common stock price on the OTCBB on December 31, 2000.
DO WE CURRENTLY HAVE ANY EMPLOYMENT AGREEMENTS WITH ANY OF OUR EXECUTIVE
OFFICERS?
Yes. Financial Intranet is party to an employment agreement with Michael
Sheppard (the "Employment Agreement"), dated as of January 1, 1998, as amended
by the Amendment to Employment Agreement dated December 15, 1998, between
ourselves and Michael Sheppard and as further amended by the Amendment to
Employment Agreement dated March 15, 1999, between ourselves and Michael
Sheppard, pursuant to which Mr. Sheppard serves as the President and Chief
Executive Officer of Financial Intranet, with overall responsibility for its
operations.
The compensation payable to Mr. Sheppard under the Employment Agreement
consists of (i) an annual base salary of $150,000 and (ii) an option, which has
vested, to acquire 63,753 shares of Financial Intranet's common stock at an
exercise price of $6.65 per share (these figures reflect the effects of the 35
to 1 reverse split), provided the option is exercised before the earlier to
occur of December 31, 2002 or 90 days after the termination of Mr. Sheppard's
employment without cause or immediately after termination with cause. This
option is not assignable. The Employment Agreement further provides that if a
"change of control" occurs, Mr. Sheppard is entitled to receive (a) a lump sum
amount equal to his annual compensation pro-rated for the remaining term of the
Employment Agreement; (b) a lump sum amount equal to twice his average annual
compensation for the prior two years preceding such event; and (c) an extension
to the exercise date for the options granted under the Employment Agreement for
a period of five years from the grant date. Upon a change of control, Mr.
Sheppard shall also be allowed to encumber, sell or transfer the options.
HAVE ANY EMPLOYMENT AGREEMENTS WITH OUR EXECUTIVE OFFICERS BEEN TERMINATED
IN THE LAST FISCAL YEAR?
Yes. Financial Intranet was a party to an employment agreement with Corey
Rinker dated August 23, 1999, pursuant to which Mr. Rinker served as Chief
Financial Officer of the Company. By letter dated December 5, 2000, Mr. Rinker
notified the Company that he considered the conversion to common stock of
certain convertible securities held by Garth LLC to constitute a "change of
control" resulting in a termination without cause under the employment
agreement. Pursuant to a subsequent Letter Agreement dated December 15, 2000,
between Mr. Rinker and the Company, Mr. Rinker agreed to waive certain cash
compensation and modify other benefits he was entitled to receive as a result of
such termination. The Letter Agreement provides for: (a) full vesting of all
unvested options in the Company previously granted, with such options being
exercisable through December 31, 2005, (b) an additional grant of 285,714
options of the Company exercisable through December 31, 2005 at an exercise
price of $.35 (these figures reflect the effects of the 35 to 1 reverse split),
(c) use of the Company's Sony laptop computer and printer used by Mr. Rinker
during his employment with the Company, and (d) indemnification by the Company
against claims against Mr. Rinker in his capacity as an officer of the Company.
Financial Intranet was also a party to an employment agreement with Maura
Marx dated September 27, 1997, as amended by the Amendment to Employment
Agreement dated December 15, 1998, between Financial Intranet and Maura Marx and
as further amended by the Amendment to Employment Agreement dated March 15,
1999, between Financial Intranet and Maura Marx, pursuant to which Ms. Marx
served as senior Vice President -- Sales and Marketing of the Company. Ms. Marx
voluntarily terminated her employment agreement pursuant to a Letter Agreement
dated July 1, 2000. The Letter Agreement provides the following voluntary
termination benefits to Ms. Marx: (a) payment of salary through September 15,
2000, (b) full vesting of all unvested options in the Company previously
granted, with such options being exercisable through December 31, 2002, (c) an
additional grant of 85,714 options of the Company exercisable through December
31, 2002, at an exercise price of $.35 (these figures reflect the effects of the
35 to 1 reverse split), (d) forgiveness of $25,000, plus accrued interest, due
to the Company, (e) use of Company's desktop computer, laptop computer and
printer used by Ms. Marx's during her employment, and (f) indemnification by the
Company against claims against Ms. Marx in her capacity as an officer of the
Company.
8
HOW ARE OUR DIRECTORS COMPENSATED?
We have reimbursed our directors for expenses actually incurred in
connection with attending meetings of the board of directors and paid each of
them who is not an officer or employee of the Company $350 per meeting.
Directors who are employees or officers of the Company have not been compensated
for their services. We are unsure how directors will be compensated in the
future.
HOW MANY TIMES DID OUR BOARD OF DIRECTORS MEET DURING THIS PAST FISCAL
YEAR?
During the fiscal year ending December 31, 2000, there were three (3)
regularly scheduled meetings of our board of directors. All of our directors
participated in these meetings.
WHO ARE THE CURRENT MEMBERS OF OUR BOARD OF DIRECTORS?
As of May 30, 2001, there are three (3) members on our board of directors.
Of the three (3) current members, only Mr. Sheppard has been nominated to stand
for re-election. The three current members are as follows, and the biographical
and background information for Mr. Sheppard may be found within the section
entitled "Proposal 3:"
[Download Table]
NAME AGE POSITION
President, Chief Executive Officer and
Michael Sheppard 51 Director
Steve Weller 45 Director
Joseph Engelberger 75 Director
ARE THERE ANY OF OUR EXECUTIVE OFFICERS WHO ARE NOT MEMBERS OF OUR BOARD OF
DIRECTORS?
No.
STEVE WELLER -- DIRECTOR
Mr. Weller, age 45, became a director of Financial Intranet in November
1998. Since 1989, Mr. Weller has been the Senior Vice President of
Fujistu/Siemens Information and Communication Products LLC. He is responsible
for all sales and technical support personnel. He was previously the Vice
President of Sales for the North American Key Accounts.
JOSEPH F. ENGELBERGER -- DIRECTOR
Mr. Engelberger, age 75, became a director of Financial Intranet in August
1998. Mr. Engelberger founded Helpmate Robotics, Inc. and since 1984 has been
the Chairman and Chief Executive Officer of Helpmate Robotics, Inc. He received
B.S. and M.S. degrees from Columbia University in 1946 and 1949, respectively,
and he has authored numerous articles in the instrumentation and robotics
fields. Mr. Engelberger's honors include the Progress Award of the Society of
Manufacturing Engineers, the Leonardo da Vinci Award of the American Society of
Mechanical Engineers and the 1982 American Machinist Award. The University of
Liverpool bestowed the first McKechnie Award on Mr. Engelberger in 1983. In
1984, Mr. Engelberger was elected to the National Academy of Engineering, and he
received the Egleston Medal for distinguished engineering achievement from
Columbia University. The University of Bridgeport, Spring Garden College,
Briarwood College, Trinity College and Carnegie-Mellon University have all
granted him honorary doctorates. In January 1997, Mr. Engelberger received the
Beckman Award for pioneering and original research in the general field of
automation. Mr. Engelberger has also served on the board of directors of EDO
Corporation (NYSE:EDO). EDO Corporation supplies highly engineered products for
governments and industry worldwide.
9
HAVE OUR DIRECTORS, OFFICERS AND 10% BENEFICIAL OWNERS COMPLIED WITH THE
BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS OF SECTION 16(a)?
Section 16(a) of the Securities and Exchange Act requires our officers,
directors and persons beneficially owning more than 10% of a registered class of
our equity securities to file reports of beneficial ownership and changes in
beneficial ownership with the Securities and Exchange Commission. Our officers,
directors and greater than 10% beneficial owners are also required to furnish us
with copies of these reports. Based solely on our review of the copies of these
reports received by us or written representations from the reporting persons
that no Annual Statement of Beneficial Ownership of Securities on Form 5 were
required for those persons, we believe that during our fiscal year 2000, all
filing requirements applicable to our officers, directors and greater than 10%
beneficial owners were filed in a timely manner.
WHO ARE OUR CURRENT INDEPENDENT ACCOUNTANTS?
Feldman, Sherb & Co. P.C. were our independent accountants for our 2000
fiscal year and will continue to serve as our independent accountants.
Representatives of Feldman, Sherb & Co. are not expected to be present at the
annual meeting and will not be available to respond to questions but will be
available to answer questions by telephone.
In conjunction with the Company's reorganization of its operations, the
board of directors approved on November 15, 2000, the dismissal of the Company's
former independent accountants, Richard A. Eisner & Company, LLP and engaged
Feldman, Sherb and Company, P.C. as the Company's independent accountants.
During the Company's last fiscal year there were no disagreements between the
Company and its former independent accountants on any matters related to
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the satisfaction of the former
independent accountants, would have caused them to make reference to the subject
matter of the disagreement in their report.
When issued, the former independent accountants qualified their report on
the Company's financial statements for the year ended December 31, 1999, with
respect to an explanatory paragraph describing a going concern issue. Such
report, however, did not contain any adverse opinion or disclaimer of opinion
nor was it modified as to audit scope, accounting principles or any other
uncertainties.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain relationships and related
transactions among us, our subsidiaries and our directors, executive officers
and greater than 5% stockholders during our past two fiscal years. Unless
otherwise stated, all references to our common stock are based on post reverse
split numbers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 8, 1999, Financial Intranet issued a 7% convertible promissory
note in the principal amount of $600,000. The principal amount of $240,000 was
payable on demand on March 10, 1999, and the principal amount of $360,000 was
payable on demand on May 9, 1999. The promissory note was convertible into
common stock at a conversion price equal to the lesser of:
75% of the average of the five lowest closing bid prices of common stock
during the 30 trading days ending on the trading day immediately preceding the
conversion date, or $14 per share. Mr. Ben Stein personally guaranteed Financial
Intranet's obligations under the convertible promissory note in the principal
amount of $600,000 issued in February 1999 and pledged 42,857 restricted shares
of common stock as collateral security for such obligations. The lender received
17,143 of the pledged shares in March 1999 in satisfaction of payment of the
principal amount of $240,000 and 25,714 of the pledged shares in May 1999 in
satisfaction of payment of the principal amount of $360,000 based on a
conversion price of $14 per share. Financial Intranet issued 42,857 shares of
common stock to Mr. Stein in May 1999 to replace the pledged shares.
10
On March 3, 1999, Mr. Stein applied $167,140 owed to him by Financial
Intranet in lieu of cash payment to purchase 25,134 shares of common stock under
options with an exercise price of $6.65 per share. The $167,140 owed to Mr.
Stein consisted of $109,500 in accrued compensation from 1998 and two promissory
notes in the principal amount of $56,889 and all accrued interest.
Messrs. Stein and Sheppard and Ms. Marx personally guaranteed Financial
Intranet's obligations under the convertible promissory note issued in July 1999
in the principal amount of $500,000. Mr. Stein pledged 26,415 restricted shares
of common stock, Mr. Sheppard pledged 2,747 restricted shares of common stock
and Ms. Marx pledged 2,910 restricted shares of common stock as collateral
security for such obligations. In January 2000, the pledged stock was released
upon conversion of the principal amount of the note and all accrued interest.
The Company also granted Messrs. Stein and Sheppard and Ms. Marx 5,640,
5,881 and 5,955 shares of stock, respectively, in January 1999 for services
rendered. During the year 2000, Mr. Sheppard received an option for 9,134 shares
at a price of $.35 per share for waiving 63,753 options granted during a funding
in 2000 and for selling a portion of his shares of Financial Intranet common
stock to fund the Company in 1999 and 2000. Mr. Sheppard has not exercised any
of his options to acquire any shares of common stock. In January 1999, the
Company granted Mr. Sheppard an additional 5,881 shares of stock in replacement
of those shares he sold in 1998 to fund the Company. The Company also loaned Mr.
Sheppard $46,000 to pay a tax indebtedness for 1999 for the stock he sold to
fund Financial Intranet. The Company then forgave this loan.
Beginning January 12, 2000, Financial Intranet entered into a series of
private financings totaling $1,215,000 with Garth LLC ("Garth"). The Company
issued convertible promissory notes to Garth on January 12, 2000, January 22,
2000, February 7, 2000, May 20, 2000 and October 30, 2000, in the principal
amounts of $150,000, $75,000, $200,000, $600,000 and $190,000, respectively,
with each note bearing interest at 8% per annum. On November 1, 2000, Garth
exercised its right to convert the promissory notes issued on January 12, 2000,
February 7, 2000, May 20, 2000, and October 30, 2000, in the aggregate principal
amount of $1,114,000, plus accrued interest, according to their respective
terms. The Company paid these notes in full with interest on such date by the
issuance of 91,566 restricted shares, 121,451 restricted shares, 356,474
restricted shares and 542,857 restricted shares of common stock, respectively,
to Garth. The principle amount of $75,000 of the convertible promissory note
issued on January 22, 2000, remains outstanding and is due and payable on August
31, 2001, unless Garth exercises its right to convert such note into shares of
the Company's common stock as provided in the note.
On January 22, 2001, we issued an unsecured 8% convertible promissory note
in the principle amount of $75,000 due on August 31, 2001, and on April 2, 2001,
we issued an unsecured 8% convertible promissory note in the principle amount of
$20,000 due also on August 31, 2001. On April 2, 2001, we changed our OTCBB
symbol to "FNIT."
Mr. Sheppard is currently a defendant in a lawsuit H&H Acquisition
Corporation ("H&H") filed on July 23, 1998, in the United States District Court,
Southern District of New York. In this lawsuit, H&H claims that Mr. Stein
wrongfully took ownership of Financial Intranet stock that belongs to H&H and
that Mr. Sheppard and Ms. Marx assisted Mr. Stein in converting H&H's stock, and
thereby defrauded H&H.
H&H also claims that Financial Intranet and its former transfer agent
transferred shares belonging to H&H to a third party. Financial Intranet, Mr.
Sheppard, and Ms. Marx have all filed responses denying H&H's material
allegations. Discovery is currently in its early stages, and we cannot at this
time make any assurances regarding the outcome of this litigation.
CHANGE OF CONTROL
HAS THERE BEEN A CHANGE IN CONTROL OF FINANCIAL INTRANET SINCE THE
BEGINNING OF OUR LAST FISCAL YEAR?
Yes. On April 5, 2001, Financial Intranet acquired all the outstanding
capital stock of Technest.com, Inc., a Delaware corporation ("Technest"),
pursuant to an Agreement and Plan of Reorganization, dated March 21, 2001, among
Financial Intranet, Technest and the stockholders of Technest (the
11
"Agreement"). Under the terms of the Agreement, the stockholders of Technest
will receive a total of 33,450,000 shares of our common stock (this figure
reflects the effect of the 35 to 1 reverse split), which is equivalent to 90% of
the total number of our shares of common stock outstanding, in exchange for all
the outstanding shares of Technest common stock they delivered to Financial
Intranet.
As mentioned previously, on March 19, 2001, our board of directors approved
a 35 to 1 reverse split of our common stock in accordance with Chapter 78 of the
Nevada Revised Statutes, and we effected this reverse split by filing a
Certificate of Change with the Secretary of State of the State of Nevada on
March 30, 2001. This reverse split did not affect any stockholder's
proportionate equity interest in Financial Intranet, and the par value of the
common stock remained at $.001 per share.
After this reverse split took place on April 2, 2001, we had only
10,000,000 shares of common stock available to deliver to Technest's
stockholders. To complete this transaction, on May 21, 2001, our board of
directors unanimously approved, and recommended to our stockholders, an
amendment to our Restated Articles of Incorporation to increase the number of
our authorized shares of all classes of capital stock to 500,000,000 of which
495,000,000 shall be designated common stock and 5,000,000 shall be designated
preferred stock. Upon the effectiveness of this amendment, we will be able to
deliver the remaining 23,450,000 shares of our common stock that we owe the
Technest stockholders under the Agreement. If the stockholders approve this
amendment, upon the closing of this transaction, the aggregate number of
Financial Intranet shares of common stock outstanding will be 37,735,714.
Technest is an Internet technology company that invests in development
stage companies with promising technology designed for commercial applications.
Technest furnishes such companies with seed capital and provides them access to
professional business services and additional support, including necessary
financing, as they develop and deliver their products to market. Upon the
closing of this transaction, Technest will become a wholly-owned subsidiary of
Financial Intranet. By virtue of the Technest acquisition, Financial Intranet
became an investment company governed by the Investment Company Act of 1940 and,
on April 5, 2001, we filed with the Securities and Exchange Commission our
election to be deemed a "business development company" under the Investment
Company Act of 1940.
For more information with respect to the terms of the acquisition of
Technest, we reference the Agreement.
PROPOSAL 1
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
BACKGROUND
On May 21, 2001, the board of directors unanimously approved, and
recommended to the stockholders for approval, an amendment to Financial
Intranet's Restated Articles of Incorporation to (1) increase the number of
authorized shares of all classes of capital stock of the Company to 500,000,000
of which 495,000,000 shares, $.001 par value, will be common stock and 5,000,000
shares, $.001 par value, will be preferred stock, (2) limit the personal
liability of the Company's directors and officers, (3) elect that Financial
Intranet shall not be governed by Nevada's Control Share and Business
Combination statutes, Nev. Rev. Stat. sec.sec. 78.378 to 78.3793, inclusive, and
Nev. Rev. Stat. sec.sec. 78.411 to 78.444, inclusive, and (4) change the name of
the Company from "Financial Intranet, Inc." to "Technest Holdings, Inc.," in
substantially the form of the Certificate of Amendment to Articles of
Incorporation of Financial Intranet, Inc. attached hereto as Exhibit "A" (the
"Certificate of Change").
WHY DOES THE BOARD OF DIRECTORS RECOMMEND THAT THE STOCKHOLDERS APPROVE THE
AMENDMENTS CONTAINED IN THE CERTIFICATE OF CHANGE?
INCREASE OF THE AUTHORIZED SHARES OF CAPITAL STOCK OF THE COMPANY
After the reverse split that took effect on April 2, 2001, we had only
14,285,714 shares of authorized common stock. On April 5, 2001, we delivered
10,000,000 of those shares to the Technest stockholders in
12
accordance with the Agreement, and as of May 30, 2001, 12,433,240 shares of
common stock are outstanding, and 339,466 shares of common stock are held in
treasury.
In Section 6.12 of the Agreement, the Company agreed to submit to its
stockholders for approval an amendment to its Restated Articles of Incorporation
to increase the number of its authorized shares so as to permit the issuance of
the remaining 23,450,000 shares of our common stock that we owe the Technest
stockholders -- and thereby close this transaction. The acquisition of Technest
pursuant to the Agreement will allow us to achieve our goal of acquiring new and
innovative companies to enhance our future profitability. This acquisition will
allow us to take full advantage of the marketplace to invest in valuable
portfolio companies, and it is a key element of our plan to achieve long term
growth. The board of directors thus believes it is in the best interests of the
Company and its stockholders to increase the number of its authorized shares,
among other reasons, in order to comply with the Agreement. A failure to fulfill
the terms of the Agreement, and the ensuing failure to close this transaction,
could have an adverse material effect on the Company.
In addition, the increase in authorized shares of all classes of capital
stock will allow for the continued equity financing of the Company, particularly
as the Company will be able to attract investors by offering issuance of
preferred stock with rights and preferences attractive to investors. The
issuance of additional common stock will also allow for employee compensation
through grants of equity interests in the Company and will allow the Company to
issue stock in connection with other beneficial, growth enhancing, strategic
relationships.
The newly authorized shares, however, will be issuable at any time by
action of the board of directors, without further authorization from our
stockholders and such shares will be issued at such consideration as the board
of directors determines (except as otherwise required by applicable law or rules
and regulations to which the Company may be subject). The holders of our common
or preferred stock will have no preemptive rights to acquire or subscribe to any
of the additional shares.
Possible Disadvantages of An Increase in the Company's
Authorized Shares of Capital Stock
The issuance of additional shares of common or preferred stock may dilute
the voting power or the equity interest of all the then existing stockholders of
the Company to the extent that any of the authorized but unissued shares are
subsequently issued. Such issuances could also make a change a control of the
Company more difficult. For example, the board of directors, under certain
circumstances, could issue additional shares of common or preferred stock to
dilute the stock ownership of persons seeking to take control of the Company.
The board of directors could also potentially issue shares of preferred stock
with rights and preferences superior to the rights and preferences of the common
stock as to liquidation, dividends, voting or otherwise and further dilute the
voting power of the holders of outstanding shares of common stock. Nevertheless,
the board of directors has concluded that the benefits to the stockholders of
being able to complete the Technest acquisition and the facilitation of
additional equity financing that could result from the increase in the Company's
authorized shares of capital stock outweighs any possible adverse effects of the
increase in authorized shares.
LIMITATION OF THE LIABILITY OF DIRECTORS AND OFFICERS
The increasing frequency of claims and litigation has greatly expanded the
risks facing corporate directors and officers in exercising their respective
duties, and the amount of time and resources required to respond to these claims
and to defend such litigation could be substantial. As a result, the board of
directors believes it is in the best interests of the Company to reduce the
risks to its directors and officers and to limit situations in which monetary
damages may be recovered against its directors and officers so as to enable us
to continue to attract and retain qualified individuals who otherwise might be
unwilling to serve as directors or officers given the risks involved.
13
Under the Nevada Revised Statutes, a Nevada corporation may include in its
articles of incorporation a provision that limits or eliminates the personal
liability of directors and officers to the corporation and its stockholders for
damages for breaches of their fiduciary duty provided such a provision does not
eliminate or limit the liability of a director or officer for acts or omissions
that involve intentional misconduct, fraud or a knowing violation of law -- or
the payment of distributions in violation of the Nevada statutes governing
distributions. The Certificate of Change thus provides that the personal
liability of the directors and officers of the Company is eliminated to the
fullest extent permitted by the Nevada Revised Statutes. Such an amendment to
the Company's Restated Articles of Incorporation, that limits the risks
directors and officers face, will encourage individuals who possess the
requisite background and skills to serve as directors and officers of the
Company.
ELECTION TO OPT OUT OF THE NEVADA CONTROL SHARE AND BUSINESS COMBINATION
STATUTES
Nevada law provides that an acquiring person who acquires a controlling
interest in a corporation may only exercise voting rights on any control shares
if these voting rights are conferred by a majority vote of the corporation's
disinterested stockholders at a special meeting held upon the request of the
acquiring person. If the acquiring person is accorded full voting rights and
acquires control shares with at least a majority of all voting power, any of our
stockholders, who did not vote in favor of authorizing voting rights for the
control shares, are entitled to payment for the fair value of their shares. A
"controlling interest" is an interest that is sufficient to enable the acquiring
person to exercise at least one-fifth of the voting power of the corporation in
the election of directors. "Control shares" are outstanding voting shares that
an acquiring person or associated persons acquire or offer to acquire in an
acquisition and those shares acquired during the 90-day period before the person
involved became an acquiring person.
In addition, Nevada law restricts the ability of a corporation to engage in
any combination with an interested stockholder for three years from when the
interested stockholder acquires shares that cause the stockholder to become an
interested stockholder, unless the combination or the purchase of shares by the
interested stockholder is approved by the board of directors before the
stockholder became an interested stockholder. If the combination was not
previously approved, the interested stockholder may only effect a combination
after the three-year period if the stockholder receives approval from a majority
of the disinterested shares or the offer meets certain fair price criteria. An
"interested stockholder" is a person who is a beneficial owner, directly or
indirectly, of 10% or more of the voting power of the outstanding voting shares
of the corporation or an affiliate or associate of the corporation and, at any
time within three years immediately before the date in question, was the
beneficial owner, directly or indirectly, of 10% or more of the voting power of
the then outstanding shares of the corporation.
These restrictions are intended to discourage some types of transactions
that may involve an acquisition proposal that would cause a change of control of
the Company. Our board of directors, however, deems it in the best interests of
the Company to exclude us from these restrictions because an acquisition in the
future, coupled with our long-term growth, could maximize stockholder value in
the future.
CHANGE OF THE COMPANY'S NAME FROM "FINANCIAL INTRANET" TO "TECHNEST HOLDINGS,
INC."
The board of directors deems it in the best interests of the Company and
its stockholders that the name of the Company reflect the Company's present
intention to acquire Technest and continue with the operation of Technest's
business. Upon the change of the Company's name, the Company's OTCBB symbol
shall also change.
The affirmative vote of the holders of a majority of shares present and
entitled to vote, whether in person or by proxy, at the annual meeting is
required to approve this proposal to amend the Company's Restated Articles of
Incorporation in the form contained in the Certificate of Change.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION IN THE FORM CONTAINED IN
THE CERTIFICATE OF CHANGE, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED
PROXY CARD.
14
PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED BYLAWS
WHAT ARE THE MOST SIGNIFICANT DIFFERENCES BETWEEN THE PROPOSED AMENDED AND
RESTATED BYLAWS AND THE CURRENT BYLAWS?
On May 21, 2001, the board of directors unanimously approved, and
recommended to the stockholders for approval, the adoption of Amended and
Restated Bylaws substantially in the form attached hereto as Exhibit "B." Below
is a summary of the most significant differences between the provisions of the
Amended and Restated Bylaws (the "New Bylaws") and the Company's current bylaws
(the "Current Bylaws") as well as the reasons for, and certain possible effects
of, the implementation of certain of these provisions. This discussion also
identifies some important provisions in the New Bylaws which are unchanged from
the Current Bylaws.
COMPARISON OF THE NEW BYLAWS TO THE CURRENT BYLAWS
Size of Board of Directors. The Current Bylaws provide that there shall be
at least three (3) directors unless the number of stockholders is less than
three (3). The New Bylaws provide that the number of directors shall be fixed by
the board but at no time shall be less than (3) or more than (7). Our board of
directors recommends a board of directors of this size because smaller to
mid-size boards are more cohesive, work better together and tend to be more
effective monitors than larger boards.
Annual Meeting. The Current Bylaws do not provide a stated time for the
annual meeting of stockholders; the New Bylaws expressly give the board of
directors authority to designate the time and place of the annual meeting of
stockholders.
Written Consent of Stockholders. The Current Bylaws prohibit stockholders'
actions by written consent unless each stockholder entitled to vote on the
matter signs a unanimous written consent and each stockholder not entitled to
vote on the matter executes a written waiver of any right to dissent. The New
Bylaws provide that any action required or permitted to be taken at an annual or
special meeting of stockholders may be taken by the stockholders without a
meeting, without prior notice, and without a vote if a consent in writing,
setting forth the action so taken, is signed by a majority of the holders of
shares issued and outstanding and entitled to vote on the subject matter. Our
board of directors has determined that allowing stockholders to more easily take
action through written consents in lieu of a meeting will allow for a greater
measure of flexibility and simplicity in our corporate governance and action.
Removal of Directors. The Current Bylaws state that directors may be
removed for cause by a vote of the stockholders or by action of the board of
directors or, without cause, by vote of the stockholders. The New Bylaws specify
that any director may be removed, either with or without cause, by the
affirmative vote of the holders of at least two-thirds of the shares then
entitled to vote.
Appointment of Officers. Under the Current Bylaws, directors elect
officers of the Company at the first meeting of directors held after each annual
stockholder meeting and such officers hold office until their duly elected
successor has been elected or appointed. Under the New Bylaws the board of
directors shall elect a President of the Company at its annual meeting, and the
President shall appoint the other officers of the Company; provided, however,
the Company may not enter into any employment agreement with any person without
the prior approval of the board of directors. Each officer of the Company shall
hold office until his or her successor is elected, qualified or appointed or
until his or her earlier resignation or approval. Both the board of directors
and the President have the authority under the New Bylaws to remove any officer
of the Company, with or without cause.
Amendment of Bylaws. The Current Bylaws provide that the bylaws of the
Company may be altered, amended or repealed, and new bylaws adopted, by a vote
of the stockholders representing a majority of all the shares issued and
outstanding at any annual or special meeting of the stockholders. Nevada law,
however, allows for the bylaws of a corporation to be amended by a vote of at
least two-thirds of the members of the
15
board of directors. To allow for this additional flexibility in corporate
governance that the Nevada Revised Statutes provide, the New Bylaws state that a
majority of the board of directors at any regular or special meeting of the
board may amend or repeal in whole or in part the New Bylaws and adopt new
bylaws, subject to the bylaws, if any, adopted by the stockholders.
Indemnification of Directors and Officers. Nevada law provides that a
Nevada corporation may indemnify any person against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement, other than in
an action by or in the right of the corporation, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation in any such capacity for
another enterprise; provided that he or she acted in good faith and in a manner
that he or she reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to a criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was unlawful. For actions or
suits by or in the right of the corporation, the Nevada Revised Statues provide
that a person may be indemnified if he or she acted in good faith and in a
manner that he or she reasonably believed to be in or not opposed to the best
interests of the corporation, except that in such an action or suit by or in the
right of the corporation, the corporation may not indemnify a person for any
claim, issue or matter as to which the person has been adjudged by a court,
after exhaustion of all appeals, to be liable to the corporation or for amounts
paid in settlement to the corporation, unless and only to the extent that the
court determines that in view of all of the circumstances of the case, the
person is fairly and reasonably entitled to indemnification. To the extent that
a director, officer, employee or agent of the corporation has been successful on
the merits or otherwise in defense of the matter or any claim, issue or matter
therein, the corporation must indemnify him or her against all expenses,
including attorneys' fees actually and reasonably incurred in the defense. The
Nevada Revised Statues provide that the determination of whether indemnification
is proper must be made by the stockholders; by the board of directors by a vote
of a quorum consisting of directors who were not parties to the action, suit or
proceeding; or by independent legal counsel if a majority of a quorum of
directors who were not parties so orders or if a quorum of directors who were
not parties may be obtained.
The New Bylaws provide that the Company will indemnify the directors and
officers of the Company to the fullest extent permitted by the Nevada Revised
Statutes with respect to expenses, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) actually and reasonably incurred
in connection with any proceeding. Although it currently has no plans to do so,
under the New Bylaws, the Company may also provide the same indemnification to
its employees and agents.
The New Bylaws further specify that the right to indemnification is a
contract right and provide that a person seeking indemnification from the
Company may bring suit against the Company to recover any and all amounts
entitled to such person, provided such person has filed a written claim with the
Company, and the Company has failed to pay such claim within thirty (30) days.
Such provisions in the New Bylaws will allow the Company to continue to offer
its directors and officers greater protection against the risk of losses
associated with being involved in a legal proceeding as a result of his or her
service to the Company. The board of directors believes that such protection is
reasonable and desirable in order to enhance the Company's ability to attract
and retain qualified directors and officers as well as to encourage directors
and officers to continue to make good faith decisions on behalf of the Company
with regard to the best interests of the Company and its stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
ADOPT THE AMENDED AND RESTATED BYLAWS WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON
THE ENCLOSED PROXY CARD.
16
PROPOSAL 3
ELECTION OF DIRECTORS
Our board of directors is currently comprised of three (3) directors and we
will again elect three (3) directors at our annual meeting.
Our directors are elected at an annual meeting of stockholders and hold
office until our next annual meeting and until their successors are duly elected
and qualified or until their earlier resignation or removal. Vacancies on our
board of directors are filled by our board of directors. Our board of directors
unanimously proposes that the nominees described below be elected for a new term
as directors until our next annual meeting of stockholders and until their
successors are duly elected and qualified. The board of directors unanimously
approved these nominees for submission to a vote by our stockholders at the
annual meeting.
If, for any reason, the nominees become unable or unwilling to serve at the
time of the meeting, the person named in the enclosed proxy card will have
discretionary authority to vote for substitute nominees. We do not anticipate
that the nominees will be unavailable for election.
The following information sets forth biographical and background
information as to each nominee for election at the annual meeting, including his
age, present principal occupation, other business experience during the last
five years, directorships in other publicly held companies, period of service as
one of our directors and any legal proceedings during the past five years that
are material to that person's evaluation as a director or nominee for director.
DIRECTOR NOMINEES: The director nominees, their ages, and the positions
our board of directors recommends for these individuals are as follows:
[Download Table]
NAME AGE POSITION
Michael Sheppard 51 Director and President
W. Dale Smith 54 Director
Rollin M. Shouse 59 Director, Chief Operating Officer and
Executive Vice President
MICHAEL SHEPPARD, 51, joined Financial Intranet as a consultant in February
1997 and became President, Chief Operating Officer and Director in April 1997.
Mr. Sheppard has been involved in setting up the corporate infrastructure of
several early stage development companies and undertaking their day-to-day
operations as chief executive and chief operating officer. From January 1996
through January 1997, Mr. Sheppard was Chief Operating Officer of Freeling
Communications, formerly Televideo Corporation, based in New York City. Freeling
offers real time video-on-demand via ATM/XDSL technology with high-speed
Internet transmission and advertiser supported free theatrical films delivered
through twisted pair telephone lines. From 1995 to 1996 he was chief operating
officer for Lee Communications Ltd., which is a laser development and
transmission company. From 1993 to 1995, he was Chief Executive Officer for MLS
Lighting Ltd. In 1980 he founded Belden Communications and served as its
President and Chief Executive Officer until it was acquired in 1985. Belden
Communications was engaged in the sale and distribution of proprietary products
used in the motion picture and television markets, and was merged in 1985 into
Lee America Ltd., which was bought by Lee Lighting Ltd., a United Kingdom
company, in 1986. At this time, Mr. Sheppard was one of the founding directors
that took this company public on the London Stock Exchange.
W. DALE SMITH, 57, has served as President and a director of Lecstar
Communications Corporation, a corporation that transports and delivers
traditional and advanced communication services to wholesale and retail markets
throughout the Southeastern United States, since January of 2001. Mr. Smith has
over 30 years experience in management in the public and private sectors. Mr.
Smith began his career with Sonoco Products Company and for twelve years
advanced through various executive management positions serving as National
Accounts Sales Manager, New York City, and Southeastern Regional Marketing and
Sales Manager. Mr. Smith resigned from Sonoco to become Kentucky Governor John
Y. Brown's Commissioner of
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Commerce and Deputy Secretary of the Commerce Cabinet. During these years Mr.
Smith managed five departments, maintained offices for Kentucky on four
continents and was instrumental in bringing in over $2 billion in new
investments, ranking Kentucky in the top five states in the nation.
ROLLIN M. SHOUSE, 59, joined Technest.com, Inc. as Chief Operating Officer
in April 2000. Mr. Shouse brings over 30 years of operating experience from the
convenience food store industry. From 1996 to 1999, Mr. Shouse served as Chief
Executive Officer and President of Shouse Enterprises, Inc., a convenience store
chain comprised of 26 stores. Mr. Shouse served as Chief Executive Officer and
President of Sunshine Jr. Stores, Inc. from 1993 to 1996. Sunshine Jr. Stores
was a publicly traded company with 232 convenience stores and six supermarkets.
The affirmative vote of a plurality of the stockholders present and
entitled to vote, whether in person or by proxy, is required for the election of
the nominees for directors named above. Proxies cannot be voted for a greater
number of persons than the number of nominees named above.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE THREE (3) NOMINEES FOR DIRECTORS NAMED ABOVE, EACH FOR A TERM OF ONE YEAR,
WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY CARD.
PROPOSAL 4
APPROVAL OF THE FINANCIAL INTRANET CORPORATION 2001 STOCK INCENTIVE PLAN
Our board of directors has unanimously approved for submission to a vote of
our stockholders entitled to vote on such matter, a proposal to approve the
Financial Intranet 2001 Stock Option Plan.
WHAT IS THE PURPOSE OF OUR 2001 STOCK OPTION PLAN?
The purpose of our 2001 Stock Option Plan is to grant our officers,
directors and other employees as well as non-employee consultants and advisors
an opportunity to acquire our common stock and to create an incentive for these
people to remain in our employ our and to continue to provide services to the
Company.
WHEN WILL THE PLAN BE EFFECTIVE AND WHAT WILL ITS DURATION BE?
The plan will become effective on the date upon which the stockholders
approve the plan. Any awards granted under the plan prior to stockholder
approval, however, will be contingent on approval of the plan by the
stockholders at the annual meeting. The plan will have a duration of ten years
and any award granted under the plan will remain in effect only so long as the
plan is in effect.
HOW WILL THE PLAN BE ADMINISTERED?
The plan will be managed and administered by a committee to be selected by
our board of directors (the "Committee"). The members of the Committee will
consist of two or more of our directors who are non-employee directors and are
outside directors, as those terms are defined under the Securities Exchange Act
and the Internal Revenue Code. If for any reason the Committee does not exist,
or for any other reason determined by our board of directors, our board of
directors is allowed to take any action under the plan.
Subject to the express provisions of the plan, the Committee will have, in
its sole discretion, the authority to determine all terms and conditions
relating to awards granted under the plan and to make all other determinations
necessary or advisable in the administration of the plan including:
- the selection of individuals to be granted awards;
- when such awards are to be granted;
- the number of shares to be subject to each award;
18
- the fair market value of the shares subject to the plan and the exercise
price;
- the terms and type of award to be granted;
- the terms, conditions and restrictions of any shares issued pursuant to
the exercise of an option or stock appreciation right; and
- the ability to cancel or suspend awards.
Grants under the plan to eligible persons do not need be identical in any
respect, even when made simultaneously. The Committee may adopt, amend and
rescind rules and regulations relating to the administration of the plan. The
interpretation and construction by the Committee of any terms or provisions of
the plan or any award issued thereunder, or of any rule or regulation
promulgated in connection with the plan is conclusive and binding on all
interested parties.
WHAT TYPES OF AWARDS ARE TO BE GRANTED UNDER THE PLAN?
The plan allows the granting of:
- stock options, both incentive stock options within the meaning of Section
422 of the Internal Revenue and "non-qualified stock options" that do not
qualify for treatment as incentive stock options;
- stock appreciation rights; and
- stock awards, including restricted stock awards and performance share
awards;
Stock options entitle the holder to purchase a specified number of shares
during a specified period at a price per share.
The stock appreciation rights entitle the holder to receive payment in cash
or stock or a combination thereof, as determined by the Committee, having an
aggregate value equal to the product of the excess of the fair market value on
the exercise date of one share over the exercise price per share, multiplied by
the number of shares called for by the stock appreciation right or portion
thereof that is exercised.
A stock award is the grant of the right to receive shares of stock in the
future.
Restricted stock awards are grants of stock and rights to receive shares of
stock in the future where such grants or rights to delivery are subject to
forfeiture or other restrictions based upon the completion of a certain period
of service by the holder of the award or other objectives as determined by the
Committee.
A performance share award is the grant of a right to receive shares of
stock in the future which is contingent on the achievement of a certain
performance or other objective by the holder of the award.
WHAT SHARES OF OURS ARE SUBJECT TO THE PLAN?
The stock subject to the plan is a portion of our common stock presently
authorized but unissued. The cumulative aggregate number of shares of common
stock to be issued under the plan shall not exceed 10,000,000.
The Committee may adjust the aggregate number of shares on which options
may be granted due to changes in our capitalization or upon certain types of
transactions entered into by us including our common stock being changed into or
exchanged for cash or a different number or kind of shares of securities of the
Company or of another corporation through a reorganization, merger,
recapitalization, reclassification, stock split-up, reverse stock split, stock
dividend, stock consolidation, stock combination, stock reclassification or
similar transaction. If any option granted under the plan expires or terminates
for any reason without having been exercised in full, the unpurchased shares
will be returned to the plan and become available for future grant. As of
, 2001, the closing market value of our common stock, as quoted on
the NASDAQ Over-the Counter Bulletin Board, was $ per share.
19
TO WHOM MAY STOCK OPTIONS BE GRANTED?
The plan authorizes us to grant awards to our officers, directors,
employees and consultants. As of May 30, 2001, approximately 7 people would be
eligible for participation in the plan. The basis for eligibility, the extent of
eligibility and the number of options to be granted to any participant is
determined by the Committee as set forth under the terms and conditions of the
plan.
WHAT IS THE EXERCISE PRICE FOR EACH OPTION GRANTED?
Options and stock appreciation rights granted under the plan are
exercisable at a price determined by the Committee at the time of the grant. In
no event, however, will the exercise price of an incentive stock option be lower
than 100% of the fair market value for our common stock on the date of the grant
and the exercise price of an incentive stock option granted to an employee who
at the time of the grant owns more than 10% of the voting power of all classes
of our capital stock shall not be lower than 110% of the fair market value of
our common stock. The exercise price of a non-statutory option shall not be less
than 80% of the fair market value of our common stock. In the discretion of the
Committee, the exercise price of any option may be paid in full in cash, by
check, by the optionee's intent bearing promissory note or in certificates of
our common stock valued at their fair market value.
WHEN ARE THE AWARDS EXERCISABLE?
Awards become exercisable at times and in installments as the Committee
provides in the terms of each individual award agreement. The Committee, in its
discretion, will determine the affect of all matters related to the termination
of employment of the award holder and some transactions entered into by us or
changes in control, all outstanding and unexercised awards may accelerate all
outstanding and unexercised awards so that each award would become fully vested.
CAN THE OPTIONS GRANTED UNDER THE PLAN BE TRANSFERRED?
Options granted under the plan and the rights and privileges conferred by
the plan are not subject to execution, attachment or similar process and may not
be assigned, alienated, pledged, sold or transferred in any manner other than by
will or by the laws of descent and distribution.
CAN THE PLAN BE AMENDED OR TERMINATED?
Yes. The Committee may amend and rescind any rules and regulations relating
to the plan. Our board of directors or the Committee may suspend, amend or
terminate the plan at any time, provided though that no amendment or termination
may adversely affect the rights of the person or beneficiary holding the award
without the consent of each of those persons or beneficiaries to whom any option
has previously been granted.
CAN THE TERMS OF AWARDS ALREADY GRANTED BE ADJUSTED OR CHANGED?
Yes. The Committee may adjust number and kind of shares as to which options
and restricted stock may be granted upon outstanding shares of our common stock
being changed into or exchanged for cash or a different number and kind of
shares or securities of the Company or another corporation as a result of a
reorganization, merger, recapitalization or reclassification. Shares on which
awards may be granted under the plan, the number of shares covered by each
outstanding award and the exercise price per share of each award will each be
proportionately adjusted for any increase or decrease in the number of issued
shares of our common stock resulting from any increase or decrease in the number
of shares of our common stock without the receipt of consideration by us. The
Committee shall also have the discretion, pursuant to a sale, merger,
consolidation, liquidation, change in control or other disposition that affects
us, to declare that all options and other awards will be exercisable in full.
SARs shall become fully exercisable upon a change in control.
20
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE
OF AWARDS GRANTED UNDER THE PLAN?
STOCK OPTIONS
As stated above, options granted under the plan may be either incentive
stock options, as defined in the Internal Revenue Code, or non-qualified stock
options.
If an option granted under the plan is an incentive stock option, the
holder of the option will generally recognize no income upon the grant of the
incentive stock option and incur no tax liability due to the exercise of the
option provided the option holder is an employee of ours or a subsidiary at all
times from the date of grant until three months prior to its exercise. The
amount by which the fair market value of the shares on the date of exercise
exceeds the exercise price, however, will be includable for purposes of
determining any alternative minimum taxable income of an option holder. We will
not be allowed a deduction for federal income tax purposes as a result of the
exercise of an incentive stock option regardless of the applicability of the
alternative minimum tax. Upon the sale or exchange of the shares at least two
years after grant of the option and one year after receipt of the shares by the
holder of the option, any gain will be treated as long-term capital gain. If
these holding periods are not satisfied, the holder of the option will recognize
ordinary income equal to the difference between the exercise price and the lower
of the fair market value of the stock at the date of the option exercise or the
sale price of the stock. We would then be entitled to a take a deduction at the
same time the holder of the option recognizes the ordinary income and in the
same amount as the ordinary income recognized. Any gain or loss recognized by
the holder of the option on such a premature disposition of the shares in excess
of the amount treated as ordinary income will generally be characterized as
capital gain or loss.
All other stock options which do not qualify as incentive stock options are
referred to as non-qualified stock options. A holder of this type of option will
generally not recognize any taxable income at the time he or she is granted a
this type of option. Upon its exercise, however, the holder of the non-qualified
option will generally recognize ordinary income for tax purposes measured by the
excess of the then fair market value of the shares over the exercise price. The
income recognized by a holder of this type of option who is also an employee of
ours will be subject to tax withholding by us. The tax basis of the shares in
the hands of the option holder will equal the exercise price paid for the shares
plus the amount of ordinary compensation income the option holder recognizes
upon exercise of the option, and the holding period for the shares for capital
gains purposes will commence on the day the option is exercised. An option
holder who sells any of the shares will recognize capital gain or loss measured
by the difference between the tax basis of the shares and the amount realized on
the sale. We will be entitled to a federal income tax deduction equal to the
amount of ordinary compensation income recognized by the option holder. The
deduction will be allowed at the same time the option holder recognizes the
income.
OTHER AWARDS
The current federal income tax consequences of other awards authorized
under the plan are generally in accordance with the following:
- stock appreciation rights are generally subject to ordinary income tax at
the time of exercise;
- restricted stock awards are subject to a substantial risk of forfeiture
and generally result in income recognition by the participant of the
excess of the fair market value of the shares covered by the award over
the purchase price paid only at the time the restrictions lapse, unless
the recipient elects to accelerate recognition as of the date of grant;
and
- stock awards and performance share awards are generally subject to
ordinary income tax at the time of payment.
In each of the foregoing cases, we will generally be entitled to a
corresponding federal income tax deduction at the same time the participant
recognizes ordinary income.
21
Please note that the compensation of persons who are named as our
executives are subject to the tax deduction limits of Section 162(m) of the
Internal Revenue Code. Stock options and stock appreciation rights, however,
that qualify as "performance-based compensation" are exempt from Section 162(m),
thus allowing us the full tax deduction otherwise permitted for such
compensation. If approved by you, the plan will enable the Committee to grant
stock options and stock appreciation rights that may be exempt from the
deduction limits of Section 162(m).
The preceding discussion is based on Federal tax laws and regulations
presently in effect and which are subject to change. The discussion does not
purport to be a complete description of the Federal income tax aspects of the
plan. A participant may also be subject to state, local and possibly foreign
taxes in connection with the grant of awards under the plan. We suggest that
participants consult with their individual tax advisors to determine the
applicability of the tax rules to the awards granted to them in their personal
circumstances.
HOW MANY OPTIONS WILL ALLOCATED UNDER THE PLAN IF THE PLAN IS APPROVED?
We may not determine the exact number of options to be granted in the
future to the following groups of people:
- those executive officers named within the summary compensation table;
- all current executive officers as a group;
- all current directors who are not executive officers as a group;
- all other employees (including current officers who are not executive
officers) as a group; or
- all advisors and consultants as a group.
CAN I REVIEW THE FINANCIAL INTRANET 2001 STOCK OPTION PLAN?
Yes. A copy of the proposed plan is included in this booklet as Exhibit C.
The affirmative vote of the holders of a majority of shares present and
entitled to vote, whether in person or by proxy, at the annual meeting is
required to approve the Financial Intranet 2001 Stock Option Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
ADOPT THE FINANCIAL INTRANET 2001 STOCK INCENTIVE PLAN WHICH IS DESIGNATED AS
PROPOSAL NO. 4 ON THE ENCLOSED PROXY CARD.
OTHER BUSINESS
Our board of directors is not aware of any matters to be presented at the
annual meeting other than those set forth in the notice and this proxy
statement. If any other matters do come before the meeting, it is intended that
the holders of the proxies will vote, with respect to such matters, at that time
and in their discretion. The approval of any other matters will require the
affirmative vote of the majority of the stockholders present and entitled to
vote, whether in person or by proxy, at the annual meeting where a quorum is
present, or such greater vote as may be required by our Restated Articles of
Incorporation, our Current Bylaws or the Nevada Revised Statutes.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH DIFFERENT INFORMATION. THIS PROXY STATEMENT IS
DATED MAY 30, 2001. YOU SHOULD ASSUME THAT THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF THAT
DATE ONLY, UNLESS OTHERWISE STATED. OUR BUSINESS FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE
CHANGED SINCE THAT DATE. WE UNDERTAKE NO OBLIGATION
22
TO PUBLISH THE RESULTS OF ANY ADJUSTMENTS TO THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT THAT MAY
OCCUR AFTER THE DATE OF THIS PROXY STATEMENT OR TO REFLECT
THE OCCURRENCE OF UNEXPECTED EVENTS OCCURRING AFTER THE
DATE OF THIS PROXY STATEMENT.
Whether you expect to be present in person at the annual meeting, please
MARK, SIGN, DATE and RETURN THE ENCLOSED PROXY CARD in the accompanying envelope
as promptly as possible. You may revoke your proxy, in the manner specified
within this proxy statement, at any time before the shares it represents are
voted.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference into this Proxy Statement the
information in the Company's annual report on Form 10-KSB for the fiscal year
ended December 31, 2000, found under the captions Item 6. Management's
Discussion and Analysis of Plan of Operation and Item 7. Financial Statements.
The Company's annual report on Form 10-KSB, as filed with the Securities and
Exchange Commission, accompanies this Proxy Statement.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
This Proxy Statement refers to certain documents of the Company that are
not presented herein or delivered herewith. Such documents are available to any
person, including any beneficial owner to whom this Proxy Statement is
delivered, upon facsimile or written request, without charge, directed to
Financial Intranet, Inc., 90 Grove Street, Suite 01, Ridgefield, Connecticut
06877, facsimile (203) 431-8301. In order to ensure timely delivery of the
documents, such requests should be made by June 19, 2001.
By order of the Board of Directors,
/s/ MICHAEL SHEPPARD
Michael Sheppard
Director and President
23
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FINANCIAL INTRANET, INC.
(PURSUANT TO NEV. REV. STAT. SEC.SEC. 78.385 AND 78.390)
Michael Sheppard certifies that:
1. He is the duly elected and acting president and secretary of Financial
Intranet, Inc., a Nevada corporation (the "Corporation").
2. Stock of the Corporation has been issued and capital has been paid to the
Corporation.
3. This certificate is made and filed on the behalf of the Corporation pursuant
to and in accordance with Nev. Rev. Stat. sec.sec. 78.385 and 78.390.
4. Article I of the Restated Articles of Incorporation of the Corporation shall
be amended to read in its entirety as follows:
"I
The name of the Corporation shall be "Technest Holdings, Inc."
and shall be governed by Chapter 78 of the Nevada Revised
Statutes."
5. Article IV of the Restated Articles of Incorporation of the Corporation
shall be further amended to read in its entirety as follows:
"IV
SECTION 1. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
500,000,000 shares, of which 495,000,000 shares of a par value
of $0.001 per share shall be designated "Common Shares" and
5,000,000 shares of a par value of $.001 per share shall be
designated "Preferred Shares."
SECTION 2. The Board of Directors is authorized, from time to
time, to issue the Preferred Shares as Preferred Shares of any
series and, in connection with the creation of each such series,
to fix by resolution or resolutions providing for the issue of
such shares thereof, the number of shares of such series, and
the powers, designations, privileges, preferences, limitations,
restrictions, price and relative rights of such series, to the
full extent now or hereafter permitted by the laws of the State
of Nevada.
SECTION 3. The capital stock of the Corporation, after the
amount of capital has been paid in money, property or services,
as the Board of Directors shall determine, shall not be subject
to assessment to pay the debts of the Corporation, nor for any
other purpose, and no stock issued as fully paid shall ever be
assessable or assessed and the articles of incorporation shall
not be amended in this respect."
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6. The Restated Articles of Incorporation of the Corporation shall be further
amended by the addition of Article VIII as follows:
"VIII
No director or officer of the Corporation will be personally
liable to the Corporation or its stockholders for damages for
breach of a fiduciary duty as an officer or director except for
acts or omissions which involve intentional misconduct, fraud,
or a knowing violation of law, or the payment of distributions
in violation of Nev. Rev. Stat. sec. 78.300. No amendment or
repeal of this Article VIII applies to or has any effect on the
liability or alleged liability of any officer or director of the
Corporation for or with respect to any acts or omissions of the
director or officer occurring prior to the amendment or repeal,
except as otherwise required by law."
7. The Restated Articles of Incorporation of the Corporation shall be further
amended by the addition of Article IX as follows:
"IX
The provisions of Nev. Rev. Stat. sec.sec. 78.378 to 78.3793,
inclusive, do not apply to the Corporation or to an acquisition
of a controlling interest specifically by types of existing or
future stockholders, whether or not identified. Further, the
Corporation expressly elects not to be governed by Nev. Rev.
Stat. sec.sec. 78.411 to 78.444, inclusive."
8. The foregoing amendments were duly adopted by a resolution of the Board of
Directors of the Corporation.
9. The foregoing amendments were approved by the required vote of the
stockholders of the Corporation. The total number of outstanding shares entitled
to vote with respect to the amendments were shares of common stock;
and the number of common shares voting in favor of the foregoing amendments were
which exceeds the minimum number of common shares necessary to vote in
favor of the foregoing amendments.
IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of
Amendment of the Articles of Incorporation of Financial Intranet, Inc. this
day of May, 2001.
------------------------------------------------------
Michael Sheppard, President and Secretary
STATE OF
COUNTY OF
This instrument was acknowledged before me on the day of May, 2001, by
MICHAEL SHEPPARD, as President and Secretary, of Financial Intranet, Inc., a
Nevada corporation.
------------------------------------
Notary Public
ss.
A-2
EXHIBIT B
AMENDED AND RESTATED
BYLAWS OF
FINANCIAL INTRANET, INC.
B-1
FINANCIAL INTRANET, INC.
(A NEVADA CORPORATION)
BYLAWS
ARTICLE I
OFFICES
Section 1.1 REGISTERED OFFICE
The registered office of Financial Intranet, Inc. (the "Corporation") in
the State of Nevada shall be located at the principal place of business in that
state of the corporation or individual acting as the Corporation's registered
agent in the State of Nevada.
Section 1.2 PRINCIPAL EXECUTIVE OFFICE
The principal executive office of the corporation for the transaction of
the business of the Corporation shall be at 90 Grove Street, Suite 01,
Ridgefield, Connecticut 06877, or such other place as may be established by the
Board of Directors of the Corporation (the "Board"). The Board is granted full
power and authority to change said principal executive office from one location
to another.
Section 1.3 OTHER OFFICES
The Corporation may have other offices, either within or without the State
of Nevada, at such place or places as the Board from time to time may designate
or the business of the Corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.1 DATE, TIME AND PLACE
Meetings of stockholders of the Corporation shall be held on such date and
at such time and place, either within or without the State of Nevada, as shall
be designated by the Board and stated in the written notice of the meeting or in
a duly executed written waiver of notice of the meeting.
Section 2.2 ANNUAL MEETINGS
Annual meetings of stockholders for the election of directors to the Board
and for the transaction of such other business as may be stated in the written
notice of the meeting or as may properly come before the meeting shall be held
on such date and at such time and place, either within or without the State of
Nevada, as shall be designated by the Board and stated in the written notice of
the meeting.
Section 2.3 SPECIAL MEETINGS
Special meetings of stockholders for any purpose or purposes, unless
otherwise prescribed by Chapter 78 of the Nevada Revised Statutes (the "Nevada
General Corporation Law"), the Articles of Incorporation of the Corporation (the
"Articles of Incorporation"), as amended, or these Bylaws, may be called by a
majority of Board or the President. Special meetings of stockholders shall be
called by the Board or the Secretary at the written request of one or more
stockholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes of shares of the capital stock of the Corporation
issued and outstanding and entitled to vote at such meeting. Such written
request shall state the purpose or purposes for which the special meeting is
called. The place, date and time of a special meeting shall be fixed by the
Board or the officer calling the meeting and shall be stated in the written
notice of such meeting, which notice shall state the purpose or purposes stated
in the written notice of meeting and matters germane thereto.
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Section 2.4 NOTICE OF MEETINGS
Written notice of the place, date and time of, a meeting of stockholders
shall be given to each stockholder of record entitled to vote at such meeting,
in the manner prescribed by Section 6.1 of these Bylaws, not less than ten (10)
nor more than sixty (60) days prior to the date of the meeting. Notice of
meetings shall be in writing and signed by the President or Vice President, or
the Secretary or an Assistant Secretary, if any, or by such other persons as the
Board shall designate.
Section 2.5 STOCKHOLDER LIST
The Secretary or other officer in charge of the stock ledger of the
Corporation shall prepare and make, at least ten (10) days prior to a meeting of
stockholders, a complete list of stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares of stock of the Corporation registered in the name of each
stockholder. Such list shall be open to examination by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list also shall be produced and kept at the place and time of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 2.6 VOTING RIGHTS
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders or at any adjournment(s)
thereof or to express consent or dissent to corporate action in writing without
a meeting, the Board may fix a record date in the manner prescribed by Section
9.1 of these Bylaws. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy in the manner prescribed by Section 2.7 of these Bylaws.
Except as specifically provided otherwise by Nevada General Corporation Law, the
Articles of Incorporation, as amended, or these Bylaws, each holder of capital
stock entitled to vote at a meeting of stockholders or to express consent or
dissent to corporate action in writing without a meeting shall be entitled to
one vote for each share of such stock registered in such stockholder's name on
the books and records of the Corporation as of the record date.
Section 2.7 PROXIES
Each proxy shall be in writing and shall be executed by the stockholder
giving the proxy or by such stockholder's duly authorized officer, director,
employee or agent by causing the signatures of the stockholder to be applied to
the writing by any reasonable manner, including facsimiles. No proxy is valid
after the expiration of six months from the date of its execution, unless
otherwise provided in the proxy. Unless and until voted, every proxy shall be
revocable at the pleasure of the person who executed it or of his or her legal
representative or assigns, except in those cases where an irrevocable proxy
permitted by Nevada General Corporation Law shall have been given.
Section 2.8 QUORUM AND ADJOURNMENT(S) OF MEETINGS
Except as specifically provided otherwise by Nevada General Corporation
Law, the Articles of Incorporation, as amended, or these Bylaws, a majority of
the stock issued and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at a meeting of stockholders. If such majority shall not be present in person or
represented by proxy at a meeting of stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time until holders of the requisite number of
shares of stock entitled to vote at the meeting shall be present in person or
represented by proxy. When a meeting of stockholders is adjourned to another
place, date or time, notice need not be given of the adjourned meeting if the
place, date, and time of such adjourned meeting are announced at the meeting at
which the adjournment is taken. At any such adjourned meeting at which a quorum
shall be present in person or represented by proxy,
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stockholders may transact any business that might have been transacted at the
meeting as originally noticed, but only those stockholders entitled to vote at
the meeting as originally noticed shall be entitled to vote at any
adjournment(s) thereof. If the adjournment is for more than thirty (30) days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. Stockholders may participate in a meeting by
means of a telephone conference call or similar method of communication by which
all persons participating in the meeting can hear each other.
Section 2.9 REQUIRED VOTE
Except as specifically provided otherwise by Nevada General Corporation
Law, the Articles of Incorporation, as amended, or these Bylaws, the affirmative
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy at a meeting of stockholders at which a quorum is
present and entitled to vote on the subject matter (including, but not limited
to, the election of directors to the Board) shall be the act of the stockholders
with respect to the matter voted upon.
Section 2.10 ACTION WITHOUT MEETING
Notwithstanding contrary provisions of these Bylaws covering notices and
meetings, any action required or permitted to be taken at an annual or special
meeting of stockholders may be taken by the stockholders without a meeting,
without prior notice, and without a vote if a consent in writing, setting forth
the action so taken, shall be signed by a majority of the holders of shares of
capital stock issued and outstanding and entitled to vote on the subject matter,
except that if a different proportion of voting power is required for such an
action at a meeting, then that proportion of written consents is required. The
written consents shall be filed with the minutes of the proceedings.
ARTICLE III
DIRECTORS
Section 3.1 BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by, or under
the direction of, a Board. The Board may exercise all such powers of the
Corporation and do all such lawful acts and things on its behalf as are not by
Nevada General Corporation Law, the Articles of Incorporation, as amended, or
these Bylaws directed or required to be exercised or done by stockholders.
Section 3.2 NUMBER, ELECTION AND TENURE
The number of directors which shall constitute the whole Board shall be
fixed from time to time by the resolution of the Board. Except as otherwise
provided by law, in no event shall the total number of directors which shall
constitute the whole Board be fixed by the Board at less than three (3) or more
than seven (7). Except as provided otherwise in these Bylaws, directors shall be
elected at the annual meeting of stockholders. Each director shall hold office
until the annual meeting of stockholders next succeeding his or her election or
appointment and until his or her successor is elected and qualified or until his
or her earlier resignation or removal.
Section 3.3 RESIGNATION AND REMOVAL
Any director or member of a committee of the Board may resign at any time
upon written notice to the Board, the Chairman of the Board, or the President.
Unless specified otherwise in the notice, such resignation shall take effect
upon receipt of the notice by the Board, the Chairman of the Board, or the
President. The acceptance of a resignation shall not be necessary to make it
effective. Any director may be removed, either with or without cause by the
affirmative vote of the holders of at least two-thirds of the shares then
entitled to vote.
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Section 3.4 VACANCIES AND NEWLY CREATED DIRECTORSHIPS
Vacancies occurring for any reason and newly-created directorships
resulting from an increase in the authorized number of directors which shall
constitute the whole Board, as fixed pursuant to Section 3.2 of these Bylaws,
shall be filled by the election of a new director or directors by a majority of
the remaining members of the Board, although such majority is less than a
quorum. Any director so chosen shall hold office until the annual meeting of
stockholders next succeeding his or her election or appointment and until his or
her successor shall be elected and qualified, or until his or her earlier
resignation or removal.
Section 3.5 FEES AND COMPENSATION.
Directors and members of any committees of the Board may receive such
compensation, if any, for their services, and such reimbursement for expenses,
as may be fixed or determined by the Board.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 DATE, TIME AND PLACE
Meetings of the Board shall be held on such date and at such time and
place, either within or without the state of Nevada, as shall be determined by
the Board pursuant to these Bylaws.
Section 4.2 ANNUAL MEETINGS
After the annual meeting of stockholders, the newly-elected Board may hold
a meeting, on such date and at such time and place as shall be determined by the
Board, for the purpose of organization, election of officers and such other
business that may properly come before the meeting. Such meeting may be held
without notice.
Section 4.3 REGULAR MEETINGS
Regular meetings of the Board may be held without notice on such date and
at such time and place as shall be determined from time to time by the Board.
Section 4.4 SPECIAL MEETINGS
Special meetings of the Board may be held at any time upon the call of any
director, the President or the Secretary by means of oral, telephonic, written
facsimile or other similar notice, duly given, delivered, sent or mailed to each
director at least 48 hours prior to the special meeting, in the manner
prescribed by Section 6.1 of these Bylaws. Special meetings of the Board may be
held at any time without notice if all of the directors are present or if those
directors not present waive notice of the meeting in writing either before or
after the date of the meeting.
Section 4.5 QUORUM
A majority of the whole Board as fixed pursuant to Section 3.2 of these
Bylaws shall constitute a quorum for the transaction of business at a meeting of
the Board. If a quorum shall not be present at a meeting of the Board, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 4.6 REQUIRED VOTED
Except as specifically provided otherwise by Nevada General Corporation
Law, the affirmative vote of a majority of the directors present at a meeting of
the Board at which a quorum is present shall be the act of the Board with
respect to the matter voted upon.
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Section 4.7 ACTION WITHOUT MEETING
Any action required or permitted to be taken at a meeting of the Board, or
committee thereof, may be taken by the directors without a meeting if all of the
members of the Board, or committee thereof, consent thereto in writing and such
writing is filed with the minutes of proceedings of the Board, or committee
thereof.
Section 4.8 TELEPHONE MEETING
Members of the Board, or any committee thereof, may participate in a
meeting of the Board, or committee thereof, by means of a telephone conference
or similar method of communication by which all of the members participating in
the meeting can hear each other. Participation by members of the Board, or
committee thereof, by such means shall constitute presence in person of such
members at such meeting.
ARTICLE V
COMMITTEES OF THE BOARD OF DIRECTORS
Section 5.1 DESIGNATION AND POWERS
The Board may designate one or more committees from time to time in its
discretion, by resolution passed by the affirmative vote of a majority of the
whole Board as fixed pursuant to Section 3.2 of these Bylaws. Each committee
shall consist of one or more of the directors on the Board and the Board may
appoint other persons who are not directors to serve on committees. The Board
may designate one or more directors as alternate members on any committee who
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members constitute a quorum and may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all of the powers and authority of the Board
in the management of the business and affairs of the corporation and may
authorize the corporate seal of the Corporation affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Articles of Incorporation or these bylaws, adopting an agreement
of merger or consolidation, recommending to stockholders the sale, lease, or
exchange of all or substantially all of the Corporation's assets, or
recommending to stockholders a dissolution of the Corporation, a revocation of a
dissolution or the filing of a petition in bankruptcy; and, unless the
resolution of the Board expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock
of the corporation or any class or series of stock. Each committee shall keep
regular minutes of its meetings and shall report the same to the Board when
requested to do so.
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ARTICLE VI
NOTICES
Section 6.1 DELIVERY OF NOTICE
Notices to stockholders and, except as permitted below, to directors on the
board shall be in writing and may be delivered by mail or messenger. Notice by
mail shall be deemed to be given at the time when such notice is deposited in a
United States post office or letter box, enclosed in postpaid sealed wrapper,
and addressed to a stockholder or director at his or her respective address
appearing on the books and records of the Corporation, unless such stockholder
or director shall have filed with the Secretary a written request that notices
intended for such stockholder or director be mailed or delivered to some other
address, in which case the notice shall be mailed to or delivered to the address
designated in such request. Notice by messenger shall be deemed to be given when
such notice is delivered to the address of a stockholder or director as
specified above. Notices to directors also may be given orally, in person or by
telephone, or by telex, overnight courier or facsimile transmission (promptly
confirmed in writing) or other similar means, or by leaving the notice at the
residence or usual place of business of a director. Notice by oral
communication, telex, overnight courier or facsimile transmission (properly
confirmed in writing) or other similar means shall be deemed to be given upon
such dispatch of such notice. Notice by messenger shall be deemed to be given
when such notice is delivered to a director's residence or usual place of
business. Notices, requests, and other communications required or permitted to
be given or communication to the Corporation by the Articles of Incorporation,
as amended, these Bylaws or any other agreement shall be in writing and may be
delivered by messenger, United States mail, telex, overnight courier or
facsimile transmission (promptly confirmed in writing) or other similar means.
Notice to the Corporation shall be deemed to be given upon actual receipt of
such notice by the Corporation.
Section 6.2 WAIVER OF NOTICE
Whenever notice is required to be given by the Nevada General Corporation
Law, the Articles of Incorporation, as amended, or these Bylaws, a written
waiver of notice signed by the person entitled thereto, whether before or after
the time stated in the notice, shall be deemed equivalent to notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when a person attends the meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, or the purpose of, any regular or special meeting of
stockholders, the Board, or a committee of the Board need be specified in any
written waiver of notice.
ARTICLE VII
OFFICERS
Section 7.1 OFFICERS
The officers of the Corporation shall be a President, a Secretary and a
Treasurer. At its annual meeting, or such other meeting as it may determine, or
by unanimous written consent of the directors without meeting, the Board shall
elect a President of the Corporation, and the President so elected shall appoint
a Secretary and a Treasurer. The Chairman of the Board, if any, shall be
selected from among the directors on the Board, but no other executive officer
need be a member of the Board. Any number of offices may be held by the same
person.
Section 7.2 OTHER OFFICERS AND AGENTS
The President also may appoint such other officers and agents as he or she
from time to time may determine to be advisable and as the business of the
Corporation may require; provided, however, the Company shall not enter into any
employment agreement without the prior approval of the Board. Such
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officers and agents shall serve for such terms, exercise such powers, and
perform such duties as are prescribed by these Bylaws.
Section 7.3 TENURE, RESIGNATION, REMOVAL AND VACANCIES
Each officer of the Corporation shall hold his office until his or her
successor is elected and qualified or appointed in accordance with these Bylaws,
or until his or her earlier resignation or removal. Any officer elected by the
Board may be removed at any time, with or without cause, by the Board and any
officer appointed by the President may be removed at any time, with or without
cause, by the President and the Board; provided, that any such removal shall be
without prejudice to the rights, if any, of the officer so employed under any
employment contract or other agreement with the Corporation. Any officer may
resign at any time upon written notice to the Board, the Chairman of the Board
or the President. Unless specified otherwise in the notice, such resignation
shall take effect upon receipt of the notice by the Board, the Chairman of the
Board or the President. The acceptance of the resignation shall not be necessary
to make it effective. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise shall be filled by the President and
such successor or successors shall hold office for such term as may be specified
by the President.
Section 7.4 AUTHORITY AND DUTIES
All officers and agents, as between themselves and the Corporation, shall
have such authority and perform such duties in the management of the Corporation
as may be provided in these Bylaws and as generally pertain or are necessarily
incidental to the particular office or agency. In addition to the powers and
duties hereinafter specifically prescribed for certain officers of the
Corporation, the Board or the President from time to time may impose or confer
any or all duties and powers hereinafter specifically prescribed for any officer
upon any other officer or officers. The Board may give general authority to any
officer to affix the corporate seal of the Corporation and to attest the
affixing by his or her signature.
Section 7.5 THE CHAIRMAN OF THE BOARD
If the Board shall designate a Chairman of the Board, such Chairman of the
Board shall act as chairman at all meetings of the stockholders at which he is
present and shall preside at all meetings of the Board at which he is present.
Such Chairman of the Board shall provide general leadership in matters of policy
and long-term programs and shall have the right to delegate authority to the
other officers of the Corporation. Except when by law the signature of the
President is required, such Chairman of the Board shall possess the same power
as the President to sign all certificates, contracts and other instruments of
the Corporation which may be authorized by the Board.
Section 7.6 THE PRESIDENT
The president, subject to the control of the Board, shall have general and
active supervision of the business and affairs of the Corporation, shall sign
certificates, contracts and other instruments of the Corporation as authorized,
and shall perform all such other duties as are properly required of him by the
Board.
Section 7.7 THE VICE PRESIDENT(S)
The Vice President, or in the event there is more than one vice president,
the Vice Presidents, shall perform the duties and have the powers as may, from
time to time, be assigned to them by the Board or the President.
Section 7.8 THE TREASURER
The Treasurer shall have the care and custody of all the funds of the
Corporation and shall deposit the same in such banks or other depositories as
the Board, or any officer or officers thereunder duly authorized by the Board,
shall, from time to time, direct or approve. He or she shall keep a full and
accurate account of all
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monies received and paid on account of the Corporation, and shall render a
statement of his or her accounts whenever the Board shall require. He shall
perform all other necessary acts and duties in connection with the
administration of the financial affairs of the Corporation, and shall generally
perform all the duties usually appertaining to the affairs of the treasurer of a
corporation. When required by the Board, he shall give bonds for the faithful
discharge of his duties in such sums and with such sureties as the Board shall
approve. In the absence of disability of the Treasurer, the person designated by
the President shall perform his duties.
Section 7.9 THE SECRETARY
The Secretary shall attend to the giving of notice of all meetings of
stockholders and of the Board and committees thereof, and shall keep minutes of
all proceedings at meetings of the stockholders, of the Board and of all
meetings of such other committees as the Board shall designate. The Secretary
shall have charge of the corporate seal and shall have authority to attest any
and all instruments or writings to which the same may be affixed. He or she
shall keep and account for all books, documents, papers and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He or she shall generally perform all the duties usually
appertaining to the office of secretary of a corporation. In the absence or
disability of the Secretary, the person designated by the President shall
perform his or her duties.
Section 7.10 THE ASSISTANT SECRETARY(IES)
The Assistant Secretary, if any be so appointed by the Board, or if there
be more than one, the Assistant Secretaries, shall perform such duties as may be
specifically assigned to them from time to time by the Board or the President.
In case of the absence or disability of the Secretary, and if the Board or the
President has so authorized, the Assistant Secretary, or if there be more than
one Assistant Secretary, such Assistant Secretaries as the Board or the
President shall designate, shall perform the duties of the office of the
Secretary.
ARTICLE VIII
CERTIFICATES OF STOCK
Section 8.1 FORM AND SIGNATURE
The stock certificates representing the stock of the Corporation shall be
in such form or forms not inconsistent with Nevada General Corporation Law, the
Articles of Incorporation, as amended, and these Bylaws and as the Board shall
approve from time to time. Stock certificates shall be numbered consecutively
and shall be entered in the books and records of the Corporation as such
certificates are issued. No certificate shall be issued for any share until the
consideration therefor has been fully paid. Stock certificates shall exhibit the
holder's name, certify the class and series of stock and the number of shares in
such class and series of stock owned by the holder and shall be signed by the
President, Vice President, Treasurer, Secretary, or any Assistant Secretary. Any
or all of the signatures on a stock certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar on the date of issuance.
Section 8.2 LOST, STOLEN OR DESTROYED CERTIFICATES
The President may direct that a new stock certificate be issued in place of
any certificate theretofore issued by the Corporation which is alleged to have
been lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the person or his or her legal representative claiming the certificate of stock
to be lost, stolen or destroyed. When authorizing such issuance of a new
certificate, the President, in his discretion and as a condition precedent to
the issuance thereof, may require the owner of the lost, stolen or destroyed
certificate, or his or her legal representative, to advertise the same in such
manner as the President shall require and/or to give the Corporation a bond in
such sum as the President shall direct as indemnity against any claim that may
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be made against the Corporation, any transfer agent or any registrar on account
of the alleged loss, theft, or destruction of any such certificate or the
issuance of such new certificate.
Section 8.3 REGISTRATION OF TRANSFER
Shares of common stock of the Corporation shall be transferable only upon
the transfer by the holders thereof in person or by their duly authorized
attorneys or legal representatives, and upon such transfer the old certificates
shall be surrendered to the Corporation by the delivery thereof to the person in
charge of the stock and transfer books and ledgers of the Corporation or to such
other person as the Board may designate. Upon surrender to the Corporation of a
certificate for shares, duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, the Corporation shall issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction on its books and records.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 RECORD DATE
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders, or to express consent or
dissent to corporate action in writing without meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the Board may
fix, in advance, a record date which shall not be more than sixty (60) nor less
than ten (10) days prior to the date of such meeting nor more than sixty (60)
days prior to any other action. A determination of stockholders of record
entitled to notice of, and to vote at, a meeting of stockholders shall apply to
any adjournment(s) of such meeting; provided, however, that the Board may, in
its discretion, and shall if otherwise required by these Bylaws, fix a new
record date for the adjourned meeting.
Section 9.2 REGISTERED STOCKHOLDERS
Except as specifically provided otherwise by Nevada General Corporation
Law, the Corporation shall be entitled (i) to recognize the exclusive right of a
person registered on its books and records as the owner of shares of stock of
the Corporation to receive dividends and to vote as such owner, (ii) to hold
such person liable for calls and assessments and (iii) to recognize any
equitable or other claim to, or interest in, such stock on the part of any other
person, whether or not the Corporation shall have express or other notice
thereof.
Section 9.3 DIVIDENDS
The Board shall declare and pay dividends ratably, share for share, on the
Corporation's capital stock in all sums so declared, out of funds legally
available therefore in accordance with Nevada General Corporation Law.
Section 9.4 DIVIDEND DECLARATIONS
Dividends on the capital stock of the Corporation may be declared
quarterly, semiannually or annually as the Board may from time to time, in its
discretion, determine.
Section 9.5 CHECKS AND NOTES
All checks and drafts on the bank accounts of the Corporation, all bills of
exchange and promissory notes of the Corporation, and all acceptances,
obligations, and other instruments for the payment of money drawn, signed, or
accepted by the Corporation shall be signed or accepted, as the case may be, by
such officer or officers, agent or agents, and in such manner as shall be
thereunto authorized from time to time by the Board or by officers of the
Corporation designated by the Board to make such authorization.
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Section 9.6 LOANS
No loans shall be contracted on behalf of the Corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the Board. Such authority may be general or confined to specific instances.
Section 9.7 FISCAL YEAR
The fiscal year of the Corporation shall commence on January 1 and end on
December 31 of each year, unless otherwise fixed by resolutions of the Board.
Section 9.8 CORPORATE SEAL
The Corporation may adopt a corporate seal as authorized by the Board. The
use of a seal or stamp by the Corporation on any corporate documents is not
necessary; such use or nonuse shall not in any way affect the legality of the
document.
Section 9.9 VOTING OF SECURITIES OF OTHER ISSUERS
In the event that the Corporation shall own and/or have power to vote any
securities (including, but not limited to, shares of stock) of any other issuer,
such securities shall be voted by the President or by such other person or
persons to such extent and in such manner as may be determined by the Board. If
the Corporation shall be a general partner in any partnership, the acts of the
Corporation in such capacity may be approved by the Board and taken by the
officers as may be authorized or determined by the Board from time to time.
Section 9.10 TRANSFER AGENTS
The Board may make such rules and regulations as it may deem expedient
concerning the issuance, transfer, and registration of securities (including,
but not limited to, stock) of the Corporation. The Board may appoint one or more
transfer agents and/or one or more registrars and may require all stock
certificates and other certificates evidencing securities of the Corporation to
bear the signature of either or both.
Section 9.11 BOOKS AND RECORDS
Except as specifically provided otherwise by Nevada General Corporation
Law, the books and records of the Corporation may be kept at such place or
places, either within or without the State of Nevada, as may be designated by
the Board.
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ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION AND INSURANCE
(a) RIGHT TO INDEMNIFICATION. To the fullest extent permitted by Nevada
General Corporation Law, as the same exists or may hereafter be amended, the
Corporation shall indemnify and hold harmless each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent for another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, against all
costs, charges, expenses, liabilities and losses (including attorneys' fees,
judgments, fines, ERISA, excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director or officer of the Corporation or to a person who has ceased to
serve as a director, officer, employee or agent at the request of the
Corporation for another corporation, partnership, joint venture, trust or other
enterprise and shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred in this Section 10.1
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that if Nevada General Corporation Law
requires the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, payment of such expenses shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section 10.1 or otherwise. The rights set forth herein shall not be
exclusive of any other rights to which any director or officer may be entitled
as a matter of law. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 10.1(a) of
this Article is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Nevada General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because he
or she has met such standard of conduct, nor an actual determination by the
Corporation (including its Board, independent legal counsel, or its
stockholders) that the claimant has not met such standard of conduct, shall be a
defense to the action or create a presumption that the claimant has failed to
meet such standard of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section 10.1 shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, as amended, bylaw, agreement, vote
of stockholder or disinterested directors or otherwise.
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(d) INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Nevada General Corporation Law.
(e) WITNESS. To the extent that any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise is by reason of such position a witness in any action, suit or
proceeding, he or she shall be indemnified against all costs and expenses
actually and reasonably incurred by him or her on his or her behalf in
connection therewith.
(f) INDEMNITY AGREEMENTS. The Corporation may enter into indemnity
agreements with the persons who are members of the Board from time to time, and
with such officers, employees and agents as the Board may designate, such
indemnity agreements to provide in substance that the Corporation will indemnify
such persons to the full extent contemplated by this Article.
ARTICLE XI
AMENDMENTS TO THESE BYLAWS
Section 11.1 BY THE BOARD OF DIRECTORS
These Bylaws may be amended or repealed in whole or in part and new Bylaws
may be adopted by a majority of the Board at any regular or special meeting of
the Board, subject to the Bylaws, if any, adopted by the stockholders.
Approved by the Board of Directors
Date:
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Secretary of the Company
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EXHIBIT C
FINANCIAL INTRANET INC.
2001 STOCK OPTION PLAN
1. PURPOSE OF PLAN; ADMINISTRATION
1.1 Purpose.
The Financial Intranet Inc. 2001 Stock Option Plan (hereinafter, the
"Plan") is hereby established to grant to officers, directors and other
employees of Financial Intranet Inc. or of its parents or subsidiaries (as
defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended (the "Code"), if any (individually and collectively, the
"Company"), and to non-employee consultants and advisors and other persons who
may perform significant services for or on behalf of the Company, a favorable
opportunity to acquire common stock ("Shares" or "Common Stock"), of the Company
and, thereby, to create an incentive for such persons to remain in the employ of
or provide services to the Company and to contribute to its success. This Plan
is an amendment and restatement of the 2000 Stock Option Plan of the Company;
provided, however, this plan shall not alter or impair any rights or obligations
under any option granted under the 2000 Stock Option Plan of the Company prior
to the adoption of this Plan.
1.2 Administration.
The Plan shall be administered by members of the Board of Directors of the
Company (the "Board"), if each such member administering the Plan is a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"), or a committee (the
"Committee") of two or more directors, each of whom is a disinterested person.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
A majority of the members of the Committee shall constitute a quorum for
the purposes of the Plan. Provided a quorum is present, the Committee may take
action by affirmative role or consent of a majority of its members present at a
meeting. Meetings may be held telephonically as long as all members are able to
hear one another, and a member of the Committee shall be deemed to be present
for this purpose if he or she is in simultaneous communication by telephone with
the other members who are able to hear one another. In lieu of action at a
meeting, the Committee may act by written consent of a majority of its members.
Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan and all Stock Option Agreements (as
defined in Section 4.4) entered into pursuant hereto and to define the terms
used therein, to prescribe, adopt, amend, and rescind rules and regulations
relating to the administration of the Plan and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that the Committee may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper; and provided, further, in its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan. Subject to the
express limitations of the Plan, the Committee shall designate the individuals
from among the class of persons eligible to participate as provided in Section
1.3 who shall receive Awards (as described in Section 2), whether an optionee
will receive Incentive Stock Options or Nonstatutory Options, or both, or
another type of Award, and the amount, price, restrictions and all other terms
and provisions of such Awards (which need not be identical).
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company's officers and directors
shall be entitled to rely upon the advise, opinions or valuations of any such
persons. No members of the Committee or Board shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, and all members of the
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Committee shall be fully protected by the Company in respect of any such action,
determination or interpretation.
1.3 Participation.
Officers, Directors, employees of the Company and consultants shall be
eligible for selection to participate in the Plan upon approval by the
Committee; provided, however that only "employees" (within the meaning of
Section 3401(c) of the Code) of the Company shall be eligible for the grant of
Incentive Stock Options. An individual who has been granted an option may, if
otherwise eligible, be granted additional options if the Committee shall so
determine, provided that no recipient may be granted options to purchase more
than 20% of the shares of Common Stock initially reserved for issuance under the
Plan. No person is eligible to participate in the Plan by matter of right; only
those eligible persons who are selected by the Committee in its discretion shall
participate in the Plan.
1.4 Stock Subject to the Plan.
Subject to adjustment as provided in Section 4.5, the stock to be offered
under the Plan shall be shares of authorized but unissued Common Stock,
including any shares repurchased under the terms of the Plan or any Stock Option
Agreement entered into pursuant hereto. The cumulative aggregate number of
shares of Common Stock to be issued under the Plan shall not exceed 10,000,000,
subject to adjustment as set forth in Section 4.5.
If any options granted hereunder shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan. For purposes of this
Section 1.4, where the exercise price of options is paid by means of the
grantee's surrender of previously owned shares of Common Stock, only the net
number of additional shares issued and which remain outstanding in connection
with such exercise shall be deemed "issued" for purposes of the Plan.
2. TYPES OF AWARDS
2.1 General. An award may be granted singularly, in combination with another
award(s) or in tandem whereby exercise or vesting of one award held by a
participant cancels another award held by the participant. Subject to the
limitations of the Plan, an award may be granted as an alternative to or
replacement of an existing award under the Plan or under any other compensation
plans or arrangements of the Company, including the plan of any entity acquired
by the Company. The types of Awards that may be granted under the Plan include:
(a) Stock Option. A stock option represents a right to purchase a
specified number of Shares during a specified period at a price per Share. The
Company may grant under the Plan both incentive stock options within the meaning
of Section 422 of the Code ("Incentive Stock Options") and stock options that do
not qualify for treatment as Incentive Stock Options ("Nonstatutory Options").
Unless expressly provided to the contrary herein, all references herein to
"options," shall include both incentive Stock Options and Nonstatutory Options.
(b) Stock Appreciation Right. A stock appreciation right ("SAR") is a
right to receive a payment in cash, Shares or a combination, equal to the excess
of the aggregate market price at time of exercise of a specified number of
Shares over the aggregate exercise price of the stock appreciation right being
exercised. The longest term a stock appreciation right may be outstanding shall
be ten years. Such exercise price shall be based on one hundred percent (100%)
of the Fair Market Value stipulated by Section 3.1.
(c) Stock Award. A stock award is a grant of Shares or of a right to
receive Shares (or their cash equivalent or a combination of both) in the
future. Except in cases of certain terminations of employment or an
extraordinary event, each stock award shall be earned and vest over at least
three years and shall be governed by such conditions, restrictions and
contingencies as the Committee shall determine. These may include continuous
service and/or the achievement of performance goals. The performance goals that
may be used by the Committee for such Awards shall consist of: operating profits
(including EBITDA), net profits,
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earnings per Share, profit returns and margins, revenues, shareholder return
and/or value, stock price and working capital. Performance goals may be measured
solely on a corporate, subsidiary or business unit basis, or a combination
thereof. Further, performance criteria may reflect absolute entity performance
or a relative comparison of entity performance to the performance of a peer
group of entities or other external measure of the selected performance
criteria. Profit, earnings and revenues used for any performance goal
measurement shall exclude: gains or losses on operating asset sales or
dispositions; asset write-downs; litigation or claim judgments or settlements;
effect of changes in tax law or rate on deferred tax liabilities; accruals for
reorganization and restructuring programs; uninsured catastrophic property
losses; the cumulative effect of changes in accounting principles; and any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
performance appearing in the Company's annual report to stockholders for the
applicable year.
3. STOCK OPTIONS
3.1 Option Price.
The exercise price of each Incentive Stock Option granted under the Plan
shall be determined by the Committee, but shall not be less than 100% of the
"Fair Market Value" (as defined below) of Common Stock on the date of grant. If
an Incentive Stock Option is granted to an employee who at the time such option
is granted owns (within the meaning of section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of capital stock of the
Company, the option exercise price shall be at least 110% of the Fair Market
Value of Common Stock on the date of grant and the option by its terms shall not
be exercisable after the expiration of 5 years from the date such option is
granted. The exercise price of each Nonstatutory Option also shall be determined
by the Committee, but shall not be less than 80% of the Fair Market Value of
Common Stock on the date of grant. The status of each option granted under the
Plan as either an Incentive Stock Option or a Nonstatutory Option shall be
determined by the Committee at the time the Committee acts to grant the options,
and shall be clearly identified as such in the Stock Option Agreement relating
thereto.
"Fair Market Value" for purposes of the Plan shall mean, except as
otherwise determined by the Committee: (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any, on the day previous to such date, or, if shares were not traded
on the day previous to such date, then on the next preceding trading day during
which a sale occurred; or (ii) if Common Stock is not traded on an exchange but
is quoted on Nasdaq or a successor quotation system, (1) the last sales price
(if Common Stock is then listed on the Nasdaq Stock Market) or (2) the mean
between the closing representative bid and asked price (in all other cases) for
Common Stock on the day prior to such date as reported by Nasdaq or such
successor quotation system; or (iii) if there is no listing or trading of Common
Stock either on a national exchange or over-the-counter, that price determined
in good faith by the Committee to be the fair value per share of Common Stock,
based upon such evidence as it deems necessary or advisable.
In the discretion of the Committee exercised at the time the option is
exercised, the exercise price of any options granted under the Plan shall be
paid in full in cash, by check or by the optionee's interest-bearing promissory
note (subject to any limitations of applicable state corporations law) delivered
at the time of exercise; provided, however, that subject to the timing
requirements of Section 3.7, in the discretion of the Committee and upon receipt
of all regulatory approvals, the person exercising the options may deliver as
payment in whole or in part of such exercise price certificates for Common Stock
of the Company (duly endorsed or with duly executed stock powers attached),
which shall be acceptable to the Committee and which shall be valued at their
Fair Market Value on the day of exercise of the option, or other property deemed
appropriate by the Committee; and, provided further, that subject to Section 422
of the Code so-called cashless exercises as permitted under applicable rules and
regulations of the Securities and Exchange Commission and the Federal Reserve
Board shall be permitted in the discretion of the Committee or the Board.
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3.2 Tax Withholding.
All distributions under the Plan are subject to withholding of all
applicable taxes, and the Committee may condition the delivery of any Shares or
other benefits under the Plan on satisfaction of the applicable withholding
obligations. The Committee, in its discretion, and subject to such requirements
as the Committee may impose prior to the occurrence of such withholding, may
permit such withholding obligations to be satisfied through cash payment by the
optionee, through the surrender of Shares which the optionee already owns, or
through the surrender of Shares to which the optionee is otherwise entitled
under the Plan; provided, however, that such Shares may be used to satisfy not
more than the Company's minimum statutory withholding obligation (based on
minimum statutory withholding rates for Federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income).
3.3 Option Period.
(a) The Committee shall provide, in the terms of each Stock Option
Agreement, when the option subject to such agreement expires and becomes
unexercisable, but in no event will an Incentive Stock Option granted under the
Plan be exercisable after the expiration of ten years from the date it is
granted. Without limiting the generality of the foregoing, the Committee may
provide in the Stock Option Agreement that the option thereto expires 30 days
following a Termination of Employment for any reason other than the death or
disability or six months following a Termination of Employment for disability or
following an optionee's death.
(b) Notwithstanding any provision of this Section 3.3, in no event shall
any option granted under the Plan be exercised after the expiration date of such
option set forth in the applicable Stock Option Agreement.
3.4 Exercise of Options.
Each option granted under the Plan shall become exercisable and the total
number of shares subject thereto be purchasable, in a lump sum or in such
installments, which need not be equal, as the Committee shall determine;
provided, however, that each option shall become exercisable in full no later
than ten years after such option is granted, and each option shall become
exercisable as to at least 10% of the shares of Common Stock covered thereby on
each anniversary of the date such option is granted; and provided, further, that
if the holder of an option shall not in any given installment period purchase
all of the shares which such holder is entitled to purchase in such installment
period, such holder's right to purchase any shares not purchased in such
installment period shall continue until the expiration or sooner termination of
such holder's option. The Committee may, at any time after grant of the option
and from time to time, increase the number of shares purchasable in any
installment, subject to the total number of shares subject to the option and the
limitations set forth in Section 3.4. At any time and from time to time prior to
the time when any exercisable option or exercisable portion thereof becomes
unexercisable under the Plan or the applicable Stock Option Agreement, such
option or portion thereof may be exercised in whole or in part; provided,
however, that the Committee may, by the terms of option, require any partial
exercise to be with respect to a specified minimum number of shares. No option
or installment thereof shall be exercisable except with respect to whole shares.
Fractional share interests shall be disregarded, except that they may be
accumulated as provided above and except that if such a fractional share
interest constitutes the total shares of Common Stock remaining available for
purchase under an option at the time of exercise, the optionee shall be entitled
to receive on exercise a certified or bank cashier's check in an amount equal to
the Fair Market Value of such fractional share of stock.
3.5 Transferability of Options.
Except as the Committee may determine as aforesaid, an option granted under
the Plan shall, by its terms, be nontransferable by the optionee other than by
will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order (as defined by the Code), and shall be exercisable
during the optionee's lifetime only by the optionee or by his or her guardian or
legal representative. More particularly, but without limiting the generality of
the immediately preceding sentence, an option may not be assigned, transferred
(except as provided in the preceding sentence), pledged or hypothecated (whether
by operation of
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law or otherwise), and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of any option contrary to the provisions of the Plan and the
applicable Stock Option Agreement, and any levy of any attachment or similar
process upon an option, shall be null and void, and otherwise without effect,
and the Committee may, in its sole discretion, upon the happening of any such
event, terminate such option forthwith.
3.6 Limitation on Exercise of Incentive Stock Options.
To the extent that the aggregate Fair Market Value (determined on the date
of grant) of the Common Stock with respect to which Incentive Stock Options
granted hereunder (together with all other Incentive Stock Option plans of the
Company) are exercisable for the first time by an optionee in any calendar year
under the Plan exceeds $100,000, such options granted hereunder shall be treated
as Nonstatutory Options to the extent required by Section 422 of the Code. The
rule set forth in the preceding sentence shall be applied taking options into
account in the order in which they were granted.
3.7 Disqualifying Dispositions of Incentive Stock Options.
If Common Stock acquired upon exercise of any Incentive Stock Option is
disposed of in a disposition that, under Section 422 of the Code, disqualifies
the option holder from the application of Section 421(a) of the code, the holder
of the Common Stock immediately before the disposition shall comply with any
requirements imposed by the Company in order to enable the Company to secure the
related income tax deduction to which it is entitled in such event.
3.8 Certain Timing Requirements.
At the discretion of the Committee, shares of Common Stock issuable to the
optionee upon exercise of an option may be used to satisfy the option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
optionee to use shares of Common Stock issuable to the optionee upon exercise of
the option to pay all or part of the option price or the withholding taxes made
at least six months prior to the payment of such option price or withholding
taxes.
3.9 No Affect on Employment.
Nothing in the Plan or in any Stock Option Agreement hereunder shall confer
upon any optionee any right to continue in the employ of the Company, any Parent
Corporation or any subsidiary or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporation and its Subsidiaries, which are
hereby expressly reserved, to discharge any optionee at any time for any reason
whatsoever, with or without cause.
For purposes of the Plan, "Parent Corporation" shall mean any corporation
in an unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then 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. For purposes of the Plan, "Subsidiary" shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if, at the time of granting of the award, each of the corporations other than
the last corporation in the unbroken chain then 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.
4. OTHER PROVISIONS
4.1 Sick Leave and Leaves of Absence.
Unless otherwise provided in the Stock Option Agreement, and to the extent
permitted by Section 422 of the Code, an optionee's employment shall not be
deemed to terminate by reason of sick leave, military leave or
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other leave of absence approved by the Company if the period of any such leave
does not exceed a period approved by the Company, or, if longer, if the
optionee's right to reemployment by the Company is guaranteed either
contractually or by statute. A Stock Option Agreement may contain such
additional or different provisions with respect to leave of absence as the
Committee may approve, either at the time of grant of an option or at a later
time.
4.2 Termination of Employment.
For purposes of the Plan "Termination of Employment," shall mean the time
when the employee-employer relationship between the optionee and the Company,
any Subsidiary or any Parent Corporation is terminated for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an optionee by
the Company, any Subsidiary or any Parent corporation, (ii) at the discretion of
the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company, a Subsidiary or any Parent Corporation
with the former employee. Subject to Section 3.1, the Committee, in its absolute
discretion, shall determine the affect of all matters and questions relating to
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that such leave of absence or other change interrupts employment for the
purposes of Section 422(a)(2) of the code and then-applicable regulations and
revenue rulings under said Section.
4.3 Issuance of Stock Certificates.
Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common Stock
acquired upon exercise. Notwithstanding the foregoing, the Committee in its
discretion may require the Company to retain possession of any certificate
evidencing stock acquired upon exercise of an option which remains subject to
repurchase under the provisions of the Stock Option Agreement or any other
agreement signed by the optionee in order to facilitate such repurchase
provisions.
4.4 Terms and Conditions of Options.
Each option or SAR granted under the Plan shall be evidenced by a written
Stock Option Agreement ("Stock Option Agreement") between the option holder and
the Company providing that the option is subject to the terms and conditions of
the Plan and to such other terms and conditions not inconsistent therewith as
the Committee may deem appropriate in each case.
4.5 Adjustments Upon Changes in Capitalization; Merger and Consolidation.
If the outstanding shares of Common Stock are changed into, or exchanged
for cash or a different number or kind of shares or securities of the Company or
of another corporation through reorganization, merger, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation, stock combination, stock reclassification or similar transaction,
an appropriate adjustment shall be made by the Committee in the number and kind
of shares as to which options and restricted stock may be granted. In the event
of such a change or exchange, other than for shares or securities of another
corporation or by reason of reorganization, the Committee shall also make a
corresponding adjustment changing the number or kind of shares, and the exercise
price per share allocated to unexercised options or portions thereof, which
shall have been granted prior to any such change, shall likewise be adjusted.
Any such adjustment, however, shall be made without change in the total price
applicable to the unexercised portion of the option but with a corresponding
adjustment in the price for each share (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).
C-6
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
the Common Stock, the Committee in its discretion shall make an appropriate and
equitable adjustment to the exercise prices of options then outstanding under
the Plan.
Where an adjustment under this Section 4.5 of the type described above is
made to an Incentive Stock Option, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(b)(3) of the Code.
In connection with the dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the Company, a
reorganization of the Company in which another entity is the survivor, a merger
or reorganization of the Company under which more than 50% of the Common Stock
outstanding prior to the merger or reorganization is converted into cash or into
another security, a sale of more than 50% of the Company's assets, or a similar
event that the Committee determines, in its discretion, would materially alter
the structure of the Company, or its ownership, the Committee, upon 30 days
prior written notice to the option holders, may, in its discretion, do one or
more of the following: (i) shorten the period during which options are
exercisable (provided they remain exercisable for at least 30 days after the
date the notice is given); (ii) accelerate any vesting schedule to which an
option is subject; (iii) arrange to have the surviving or successor entity grant
replacement options with appropriate adjustments in the number and kind of
securities to each option to the extent then exercisable (including any options
as to which the exercise has been accelerated as contemplated in clause (ii)
above), of any amount that is the equivalent of the Fair Market Value of the
Common Stock (at the effective time of the dissolution, liquidation, merger,
reorganization, sale or other event) or the fair market value of the option.
In the event of a Change of Control (as defined below), the Committee may,
in considering the advisability or the terms and conditions of any acceleration
of the exercisability of any option pursuant to this Section 4.5, take into
account the penalties that may result directly or indirectly from such
acceleration to either the Company or the option holder, or both, under Section
280G of the Code, and may decide to limit such acceleration to the extent
necessary to avoid or mitigate such penalties or their effects. The term "Change
of Control" means a change in the beneficial ownership of the Company's voting
stock or a change in the composition of the Board which occurs as follows: (a)
any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities and Exchange Act of 1934) is or becomes a beneficial owner, directly
or indirectly, of stock of the Company representing 25 percent or more of the
total voting power of the Company's then outstanding stock; (b) a tender offer
(for which a filing has been made with the Securities and Exchange Commission
which purports to comply with the requirements of Section 14(d) of the
Securities Exchange Act of 1934 and the corresponding Securities and Exchange
rules) is made for the stock of the Company (in the case of such tender offer,
the Change of Control shall be deemed to have occurred upon the first to occur
of (i) any time during the offer when the person (using the definition in (a)
above) making the offer owns or has accepted for payment stock of the Company
with 25 percent or more of the total voting power of the Company's outstanding
stock or (ii) three business days before the offer is to terminate unless the
offer is withdrawn first, if the person making the offer could own, by the terms
of the offer plus any shares owned by this person, stock with 50 percent or more
of the total voting power of the Company's outstanding stock when the offer
terminates) or (c) individuals who were the Board's nominees for election as
directors of the Company immediately prior to a meeting of the stockholders of
the Company involving a contest for the election of directors shall not
constitute a majority of the Board following the election.
At the time of a Change of Control, any outstanding SARs of a participant
under this plan shall become fully exercisable on and after the date of the
Change in Control (subject to the expiration provisions otherwise applicable to
the SARs) and any cash or stock acquired by the participant under such SAR
following such Change of Control shall be fully vested upon exercise.
No fractional share of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 4.5.
C-7
4.6 Rights of Participants and Beneficiaries.
The Company shall pay all amounts payable hereunder only to the option
holder or beneficiaries entitled thereto pursuant to the Plan. The Company shall
not be liable for the debts, contracts or engagements of any optionee or his or
her beneficiaries, and rights to cash payments under the Plan may not be taken
in execution by attachment or garnishment, or by any other legal or equitable
proceeding while in the hands of the Company.
4.7 Government Regulations.
The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under options granted hereunder, shall be
subject to compliance with all applicable federal and state laws, rules and
regulations including but not limited to state and federal securities law) and
federal margin requirements and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.
4.8 Amendment and Termination.
The Board or the Committee may at any time suspend, amend or terminate the
Plan and may, with the consent of the option holder, make such modifications of
the terms and conditions of such option holder's option as it shall deem
advisable, provided, however, that, without approval of the Company's
stockholders given within twelve months before or after the action by the Board
or the Committee, no action of the Board or the Committee may, (A) materially
increase the benefits accruing to participants under the Plan; (B) materially
increase the number of securities which may be issued under the Plan; or (C)
materially modify the requirements as to eligibility for participation in the
Plan. No option may be granted during any suspension of the Plan or after such
termination. The amendment, suspension or termination of the Plan shall not,
without the consent of the option holder affected thereby, alter or impair any
rights or obligations under any option theretofore granted under the Plan. No
option may be granted during any period of suspension nor after termination of
the Plan, and in no event may any option be granted under the Plan after the
expiration of ten years from the date the Plan is adopted by the Board.
4.9 Time of Grant and Exercise of Option.
An option shall be deemed to be exercised when the Secretary of the Company
receives written notice from an option holder of such exercise, payment of the
purchase price determined pursuant to Section 3.1 of the Plan and set forth in
the Stock Option Agreement, and all representations, indemnifications and
documents reasonably requested by the Committee.
4.10 Privileges of Stock Ownership; Non-Distributive Intent; Reports to Option
Holders.
A participant in the Plan shall be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to the optionee.
Upon exercise of an option at a time when there is not in effect under the
Securities Act of 1933, as amended, a Registration Statement relating to the
Common Stock issuable upon exercise or payment therefor and available for
delivery a Prospectus meeting the requirements of Section 10(a)(3) of said Act,
the optionee shall represent and warrant in writing to the Company that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof.
The Company shall furnish to each optionee under the Plan the Company's
annual report and such other periodic reports, if any, as are disseminated by
the Company in the ordinary course to its stockholders.
C-8
4.11 Legending Share Certificates.
In order to enforce any restrictions imposed upon Common Stock issued upon
exercise of an option granted under the Plan or to which such Common Stock may
be subject, the Committee may cause a legend or legends to be placed on any
share certificates representing such Common Stock, which legend or legends shall
make appropriate reference to such restrictions, including, but not limited to,
a restriction against all or such Common Stock for any period of time as may be
required by applicable laws or regulations. If any restriction with respect to
which a legend was placed on any certificate ceases to apply to Common Stock
represented by such certificate, the owner of the Common Stock represented by
such certificates may require the Company to cause the issuance of a new
certificate not bearing the legend.
Additionally, and not by way of limitation, the Committee may impose such
restrictions on any Common Stock issued pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the requirements of
any stock exchange or market upon which Common Stock is then traded.
4.12 Use of Proceeds.
Proceeds realized pursuant to the exercise of options under the Plan shall
constitute general funds of the Company.
4.13 Changes in Capital Structure; No Impediment to Corporate Transactions.
The existence of outstanding options under the Plan shall not affect the
Company's right to effect adjustment, recapitalization, reorganizations or other
changes in its or any other corporation's capital structure or business, any
merger or consolidation, any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting Common Stock, the dissolution or
liquidation of the Company's or any other corporations assets or business, or
any other corporate act, whether similar to the events described above or
otherwise.
4.14 Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the
stockholders of the Company within twelve months after the date of the Board's
initial adoption of the Plan. Options may be granted but not exercised prior to
stockholder approval of the Plan. If any options are so granted and stockholder
approval shall not have been obtained within twelve months of the date of
adoption of this Plan by the Board of Directors, such options shall terminate
retroactively as of the date they were granted.
4.15 Termination.
The Plan shall terminate automatically as of the close of business on the
day preceding the tenth anniversary date of its adoption by the Board or earlier
as provided in Section 4.8. Unless otherwise provided herein, the termination of
the Plan shall not affect the validity of any option agreement outstanding at
the date of such termination.
4.16 Limitation of Implied Rights.
Neither an option holder nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to any assets, funds or
property of the Company or any Subsidiary whatsoever, including, without
limitation, any specific funds, assets, or other property which the Company or
any Subsidiary, in its sole discretion, may set aside in anticipation of a
liability under the Plan. An option holder shall have only a contractual right
to the Shares or amounts, if any, payable under the Plan, unsecured by any
assets of the Company or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any Subsidiary shall be
sufficient to pay any benefits to any person. Except as otherwise provided in
the Plan, no award under the Plan shall confer upon the holder thereof any
rights as a stockholder of the Company prior to the date on which the individual
fulfills all conditions for receipt of such rights.
C-9
4.17 Other Compensation.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the company, any Subsidiary or any Parent Corporation or (ii) to
grant or assume options or other rights otherwise than under the Plan in
connection with any proper corporation purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
C-10
PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF FINANCIAL INTRANET, INC.
PROXY
FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS OF
FINANCIAL INTRANET, INC.
TO BE HELD THURSDAY, JUNE 28, 2001
The undersigned stockholder(s) of Financial Intranet, Inc., a Nevada
corporation, hereby acknowledges receipt of the Notice of 2001 Annual Meeting of
Stockholders and Proxy Statement each dated May 30, 2001. The undersigned hereby
appoints Michael Sheppard, proxy and attorney-in-fact, with full power of
substitution for each, on behalf of and in the name of the undersigned, to
represent the undersigned at the 2001 Annual Meeting of Stockholders of
Financial Intranet, Inc. to be held on June 28, 2001, at Technest.com, Inc. One
Capital City Plaza, 3350 Peachtree Road, Suite 1050, Atlanta, Georgia, 30326 at
8:00 a.m., Atlanta time, and at any adjournment(s) of the annual meeting, and to
vote all shares of common stock that the undersigned would be entitled to vote
as if they were personally present, on the matters set forth on the reverse
side.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS LISTED
BELOW AND FOR PROPOSALS 1, 2 AND 4, AND AS THE PROXY DEEMS ADVISABLE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OF THE
MEETING.
FOR AGAINST ABSTAIN
1. The approval of the amendments to [ ] [ ] [ ]
Financial Intranet Inc.'s Restated Articles
of Incorporation.
2. The approval of the Amended and [ ] [ ] [ ]
Restated Bylaws of Financial Intranet,
Inc.
3. The election of three directors, to serve until the next meeting of the
stockholders.
NOMINEES: FOR WITHHOLD AUTHORITY
Michael Sheppard [ ] [ ]
Rollin M. Shouse [ ] [ ]
W. Dale Smith [ ] [ ]
[ ]
--------------------------------
FOR all nominees except those listed on the line immediately above.
4. The approval of the Financial Intranet, [ ] [ ] [ ]
Inc., 2001 Stock Option Plan.
[ ] Please check this box if this proxy card represents a duplicate account.
Checking the box will discontinue Annual Report and Proxy Statement mailings to
this account. Proxy Cards though will continue to be mailed to this account.
Please make sure that at least one account continues to receive these materials.
This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears on the proxy card, 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.
Each stockholder giving a proxy has the power to revoke it at any time
before the shares it represents are voted. Revocation of a proxy is effective
upon receipt by Michael Sheppard, at or prior to the annual meeting, of either
(i) an instrument revoking the proxy or (ii) a duly executed proxy bearing a
later date. Additionally, a stockholder may change or revoke a previously
executed proxy by attending the annual meeting and requesting to vote in person.
Please note that attendance at the annual meeting will not by itself revoke a
previously granted proxy.
Stockholder Signature(s):
-----------------------------
Date:
-----------------------------
Dates Referenced Herein and Documents Incorporated By Reference
| Referenced-On Page |
|---|
| This PRE 14A Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 9/27/97 | | 14 |
| | 1/1/98 | | 14 |
| | 7/23/98 | | 17 |
| | 12/15/98 | | 14 |
| | 2/8/99 | | 16 |
| | 3/3/99 | | 17 |
| | 3/10/99 | | 16 |
| | 3/15/99 | | 14 |
| | 5/9/99 | | 16 |
| | 8/23/99 | | 14 |
| | 12/31/99 | | 16 | | | | | NT 10-K, 10KSB |
| | 1/12/00 | | 17 |
| | 1/22/00 | | 17 |
| | 2/7/00 | | 17 | | | | | 8-K |
| | 5/20/00 | | 17 |
| | 7/1/00 | | 14 |
| | 9/15/00 | | 14 |
| | 10/30/00 | | 17 |
| | 11/1/00 | | 17 |
| | 11/15/00 | | 16 | | | | | 8-K, 8-K/A |
| | 12/5/00 | | 14 |
| | 12/15/00 | | 14 |
| | 12/31/00 | | 13 | | 29 | | | NT 10-K, NTN 10Q, 10KSB, 5 |
| | 1/22/01 | | 17 |
| | 3/19/01 | | 18 |
| | 3/21/01 | | 17 |
| | 3/30/01 | | 18 |
| | 4/2/01 | | 11 | | 18 | | | NTN 10Q |
| | 4/5/01 | | 17 | | 18 | | | 8-K/A, N-54A, 8-K, 3 |
| | 5/21/01 | | 18 | | 21 |
| Filed On / Filed As Of | | 5/30/01 | | 11 | | 55 |
| Corrected On | | 5/31/01 |
| | 6/11/01 | | 3 | | 7 |
| | 6/12/01 | | 7 |
| | 6/19/01 | | 29 |
| For The Period Ended | | 6/28/01 | | 2 | | 55 | | | DEF 14A, 3 |
| | 8/31/01 | | 17 |
| | 2/27/02 | | 10 |
| | 12/31/02 | | 14 | | | | | 10KSB, NT 10-K, PRE 14C, DEF 14C, 8-K |
| Corrected On | | 5/27/03 |
| | 12/31/05 | | 14 | | | | | 10QSB, NT 10-Q, 10-Q |
| |
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