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<SEC-DOCUMENT>0000950144-03-005145.txt : 20030418
<SEC-HEADER>0000950144-03-005145.hdr.sgml : 20030418
<ACCEPTANCE-DATETIME>20030418130436
ACCESSION NUMBER:		0000950144-03-005145
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20030530
FILED AS OF DATE:		20030418
EFFECTIVENESS DATE:		20030418

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INTELLIGENT SYSTEMS CORP
		CENTRAL INDEX KEY:			0000320340
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-HOSPITALS [8060]
		IRS NUMBER:				581964787
		STATE OF INCORPORATION:			GA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-09330
		FILM NUMBER:		03655513

	BUSINESS ADDRESS:	
		STREET 1:		4355 SHACKLEFORD RD
		CITY:			NORCROSS
		STATE:			GA
		ZIP:			30093
		BUSINESS PHONE:		4043812900

	MAIL ADDRESS:	
		STREET 1:		4355 SHACKLEFORD ROAD
		CITY:			NORCROSS
		STATE:			GA
		ZIP:			30093
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>g81882def14a.htm
<DESCRIPTION>INTELLIGENT SYSTEMS CORPORATION
<TEXT>
<HTML>
<HEAD>
<TITLE>INTELLIGENT SYSTEMS CORPORATION</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">SCHEDULE 14A</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Rule 14a-101)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">INFORMATION REQUIRED IN PROXY
STATEMENT</FONT></B>

<P align="center">
<B><FONT size="2">SCHEDULE 14A INFORMATION</FONT></B>

<P align="center">
<B><FONT size="2">Proxy Statement Pursuant to Section 14(a) of
the Securities</FONT></B>

<DIV align="center">
<B><FONT size="2">Exchange Act of 1934</FONT></B>
</DIV>

<div align="left">
<FONT size="2">Filed by the Registrant&nbsp;
<FONT face="wingdings">&#120;</FONT>
</FONT></div>

<P align="left">
<FONT size="2">Filed by a Party other than the Registrant&nbsp;
<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left"><font face="2">
Check the appropriate box:
</font>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Preliminary
        Proxy Statement
        </FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Confidential,
        for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
        </FONT></DIV>
        </TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp;Definitive
        Proxy Statement
        </FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Definitive
        Additional Materials
        </FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Soliciting
        Material under Rule 14a-12
        </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">


<DIV align="CENTER">
<font size="2">INTELLIGENT SYSTEMS CORPORATION</FONT>
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="center">
<FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
</DIV>

<P align="center">


<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="center">
<FONT size="2">(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
</FONT>
</DIV>

<P align="left">
<FONT size="2">Payment of Filing Fee (Check the appropriate box):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2"><FONT face="wingdings">&#120;</FONT></FONT></TD>
        <TD align="left">
        <FONT size="2">No fee required.
        </FONT></TD>
</TR>


<TR valign="top">
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></TD>
        <TD align="left">
        <FONT size="2">Fee computed on table below per Exchange Act
        Rules&nbsp;14a-6(i)(1) and 0-11.
        </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</FONT></TD>
        <TD align="left">
        <FONT size="2">Title of each class of securities to which
        transaction applies:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</FONT></TD>
        <TD align="left">
        <FONT size="2">Aggregate number of securities to which
        transaction applies:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</FONT></TD>
        <TD align="left">
        <FONT size="2">Per unit price or other underlying value of
        transaction computed pursuant to Exchange Act Rule&nbsp;0-11
        (set forth the amount on which the filing fee is calculated and
        state how it was determined):
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</FONT></TD>
        <TD align="left">
        <FONT size="2">Proposed maximum aggregate value of transaction:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)</FONT></TD>
        <TD align="left">
        <FONT size="2">Total fee paid:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></TD>
        <TD align="left">
        <FONT size="2">Fee paid previously with preliminary materials.
        </FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></TD>
        <TD align="left">
        <FONT size="2">Check box if any part of the fee is offset as
        provided by Exchange Act Rule&nbsp; 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.
        </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</FONT></TD>
        <TD align="left">
        <FONT size="2">Amount Previously Paid:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</FONT></TD>
        <TD align="left">
        <FONT size="2">Form, Schedule or Registration Statement No.:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</FONT></TD>
        <TD align="left">
        <FONT size="2">Filing Party:
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="9%"></TD>
        <TD width="91%"></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</FONT></TD>
        <TD align="left">
        <FONT size="2">Date Filed:<br>April&nbsp;18, 2003
        </FONT></TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="91%" align="right" noshade>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">PROXY STATEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">PROPOSAL 1 &#151; THE ELECTION OF TWO DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">PROPOSAL 2 &#151; APPROVAL OF THE INTELLIGENT SYSTEMS CORPORATION 2003 STOCK INCENTIVE PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PERFORMANCE GRAPH</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">INDEPENDENT PUBLIC ACCOUNTANTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">CERTAIN TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">SHAREHOLDERS&#146; PROPOSALS FOR ANNUAL MEETING IN 2004</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">OTHER MATTERS WHICH MAY COME BEFORE THE MEETING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">ADDITIONAL INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">Appendix&nbsp;A</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">ARTICLE I<BR> PURPOSE; DEFINITIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">ARTICLE II</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">ARTICLE III</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">ARTICLE IV</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">ARTICLE V</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">ARTICLE VI</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">ARTICLE VII</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">ARTICLE VIII</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">ARTICLE IX</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">ARTICLE X</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">ARTICLE XI</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">ARTICLE XII</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">ARTICLE XIII</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">Appendix&nbsp;B</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="center"><FONT size="2"><IMG src="g81882g8188201.gif" alt="(INTELLIGENT SYSTEMS LOGO)"></FONT>

<P align="center"><FONT size="2"><B>4355 Shackleford Road<BR>
Norcross, Georgia 30093</B></FONT>

<P align="center"><FONT size="2"><B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B></FONT>

<!-- link1 "NOTICE OF ANNUAL MEETING OF SHAREHOLDERS" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>YOU ARE INVITED TO </B>attend the Annual Meeting of Shareholders of
Intelligent Systems Corporation on Friday, May&nbsp;30, 2003 at 4:00 p.m., local
time, at our corporate offices located at 4355 Shackleford Road, Norcross,
Georgia 30093. At the Annual Meeting, shareholders will consider and vote on:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The election of two directors to the Board of Directors to serve
until the 2006 Annual Meeting;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The adoption of the Intelligent Systems Corporation 2003 Stock
Incentive Plan;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">Other matters that may properly come before the meeting or any
adjournment thereof.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only shareholders of record at the close of business on Friday, April&nbsp;11,
2003 will receive notice of and be entitled to vote at the meeting or any
adjournment thereof.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed with this mailing. To ensure a quorum for the meeting and that your
vote may be recorded, please sign, date and return the proxy promptly in the
enclosed business reply envelope. If you attend the meeting, you may revoke
your proxy and vote in person. Our 2002 Annual Report to Shareholders is
enclosed.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="50%"><FONT size="2">By order of the Board of
Directors,<BR>&nbsp;<BR>
<IMG src="g81882g8188203.gif" alt="(-s- Bonnie L. Herron)"></FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="50%"><FONT size="2">Bonnie L. Herron<BR>
<I>Secretary</I></FONT></TD>
</TR>
</TABLE>
<P><FONT size="2"><I>April&nbsp;18, 2003</I>
</FONT>
<P align="center"><FONT size="2"><B>Please complete and return the enclosed proxy promptly so that your vote may be recorded.</B></FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<P align="center"><FONT size="2"><IMG src="g81882g8188201.gif" alt="(INTELLIGENT SYSTEMS LOGO)"></FONT>

<P align="center"><FONT size="2"><B>4355 Shackleford Road<BR>
Norcross, Georgia 30093</B></FONT>

<!-- link1 "PROXY STATEMENT" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="center"><FONT size="2"><B>PROXY STATEMENT</B></FONT>

<P align="center"><FONT size="2"><B>FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 30, 2003</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are sending this Proxy Statement to the shareholders of Intelligent
Systems Corporation (the &#147;company&#148;) in connection with the solicitation of
proxies by the Board of Directors to be voted at the 2003 Annual Meeting of
Shareholders of Intelligent Systems Corporation and any adjournment thereof.
The Annual Meeting will be held on May&nbsp;30, 2003 at our corporate offices
located at 4355 Shackleford Road, Norcross, Georgia 30093 at 4:00 p.m. local
time. We expect to first mail this Proxy Statement and the accompanying proxy
to shareholders on or about April&nbsp;18, 2003.
</FONT>
<P align="center"><FONT size="2"><B>VOTING</B></FONT>

<P align="left"><FONT size="2"><B>General</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The securities that can be voted at the Annual Meeting consist of common
stock of Intelligent Systems Corporation, $.01 par value per share. Each share
entitles its owner to one vote on each matter submitted to the shareholders.
The record of shareholders entitled to vote at the Annual Meeting was taken as
of the close of business on Friday, April&nbsp;11, 2003. On that date, we had
outstanding and entitled to vote 4,489,821 shares of common stock with each
share entitled to one vote.
</FONT>
<P align="left"><FONT size="2"><B>Quorum</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A majority of the outstanding shares of our common stock must be present,
in person or by proxy, to constitute a quorum at the Annual Meeting. We will
treat shares that are withheld or abstain from voting as present at the Annual
Meeting for purposes of determining a quorum. If a broker, bank, custodian,
nominee or other record holder of our common stock indicates on a proxy that it
does not have discretionary authority to vote certain shares on a particular
matter, the shares held by that record holder (referred to as &#147;broker
non-votes&#148;) will also be counted as present in determining whether we have a
quorum.
</FONT>
<P align="left"><FONT size="2"><B>Proxies</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the Annual Meeting, the persons named as proxies will vote all properly
executed proxy cards delivered in connection with this solicitation and not
revoked in accordance with the directions given. Shareholders should specify
their choices with regard to the proposal to be voted upon on the accompanying
proxy card. <B>If no specific instructions are given with regard to the matter to
be voted upon, then the shares represented by a signed proxy card will be voted
&#147;FOR&#148; the election of the director nominees and &#147;FOR&#148; the adoption of the
Intelligent Systems 2003 Stock Incentive Plan. </B>If any other matters properly
come before the Annual Meeting, the persons named as proxies will vote upon
such matters according to their judgment.
</FONT>
<P align="center"><FONT size="2">-1-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our shareholders hold their shares through a broker, bank,
custodian or other nominee, rather than directly in their own name. This is
commonly referred to as holding shares in &#147;street name.&#148; If you hold shares in
street name, these proxy materials are being forwarded to you by your broker,
bank, custodian or other nominee, which is considered, with respect to such
shares, to be the shareholder of record. As the beneficial owner of shares
held in street name, you have the right to direct the nominee how such shares
should be voted. You also have the right to attend the Annual Meeting.
However, since you are not the shareholder of record, you must first obtain a
signed proxy from the shareholder of record giving you the right to vote the
shares at the Annual Meeting. Your broker, bank, custodian or other nominee
has enclosed or provided you a voting instruction card for you to use in
directing the nominee how to vote your shares or obtain a proxy from the
nominee.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may revoke your proxy card or voting instructions delivered in
connection with this solicitation at any time prior to voting at the Annual
Meeting by:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">giving written notice to the Secretary of the company at 4355
Shackleford Road, Norcross, Georgia 30093, for shareholders of record,
or</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">executing and delivering to the Secretary a later dated proxy or, for
shares held in street name, by submitting new voting instructions to
your nominee, or</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">voting in person at the Annual Meeting.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You cannot revoke your proxy or voting instructions as to any matter upon
which, prior to such revocation, a vote has been cast in accordance with the
authority conferred by such proxy or voting instructions.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay all expenses incurred in connection with the solicitation of
proxies. Such costs include charges by brokers, fiduciaries and custodians for
forwarding proxy materials to beneficial owners of stock held in their names.
We may solicit proxies by mail, telephone and personal contact by directors,
officers, and employees of the company without additional compensation.
</FONT>
<P><FONT size="2"><B>Security Ownership of Principal Shareholders, Directors and Certain Executive
Officers and Related Stockholder Matters</B>
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table contains information concerning the only persons who
are known to us to be beneficial owners of more than 5&nbsp;percent of our common
stock as of March&nbsp;15, 2003, and the ownership of our common stock as of that
date by each director, each executive officer named in the Summary Compensation
Table and by all directors and officers as a group.
</FONT>
<P align="center"><FONT size="2">-2-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Beneficial Owner</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Address</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Owned<sup>a</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Class<sup>a</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">J. Leland Strange</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
4355 Shackleford Road</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Chairman of the Board, President, CEO</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Norcross, GA 30093
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">727,794
</FONT></TD>
    <TD><FONT size="2"><sup>b</sup></FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">16.2%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Wallace R. Weitz &#038; Company<B><sup>c</sup></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
1125 South 103rd St., Suite&nbsp;600
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">584,766
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">13.0%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Omaha, NE 68124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Donald A. McMahon</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Director</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8,500
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James V. Napier</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Director</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,100
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">John B. Peatman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Director</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8,280
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Parker H. Petit</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Director</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,327
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Francis A. Marks</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Vice President</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">111,900
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2.5%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Bonnie L. Herron</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>Vice President, Chief Financial Officer</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><I>and Corporate Secretary</I></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">63,825
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1.4%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">All Directors and Executive Officers</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">as a Group (8 persons)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1,047,986
</FONT></TD>
    <TD><FONT size="2"><sup>d</sup></FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">23.1%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Except as otherwise noted, beneficial ownership is determined on the
basis of 4,489,821 shares of common stock issued and outstanding plus
securities deemed outstanding pursuant to Rule&nbsp;13d-3(d)(1) of the
Securities Exchange Act of 1934, as amended. An asterisk indicates
beneficial ownership of less than 1&nbsp;percent.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes 96,953 shares owned by Jane H. Strange, Mr.&nbsp;Strange&#146;s wife. Rule
13d-3(d)(1) of the Exchange Act, deems Mr.&nbsp;Strange to be the beneficial
owner of such shares owned by his wife. Mr.&nbsp;Strange disclaims any
beneficial interest in the shares.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">c.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">In a Schedule&nbsp;13G filed January&nbsp;17, 2003, Wallace R. Weitz and Company,
an investment adviser registered under Section&nbsp;203 of the Investment
Advisers Act of 1940, reported beneficial ownership of 584,766 shares of
common stock, of which the firm has the sole power to vote and to dispose.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">d.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes 47,014 shares reserved for issuance to officers and directors
pursuant to stock options that were exercisable at March&nbsp;15, 2003 or
within sixty days of such date which are deemed beneficially owned by such
person pursuant to Rule&nbsp;13d-3(d)(1) of the Exchange Act. The amounts
reported above for Messrs.&nbsp;McMahon, Napier, Peatman and Petit include
7,000 shares each for shares underlying stock options exercisable at March
15, 2003.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Securities Authorized for Issuance Under Equity Compensation Plan</B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(a) Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(c) Number of securities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>securities to be</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>remaining available</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>issued upon</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(b) Weighted-average</B></FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>for future issuance</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise price of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>under equity</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>compensation plans</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>options, warrants</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>options, warrants</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(excluding securities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Plan category</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and rights</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and rights</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>reflected in column (a))</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity compensation
plans approved by
security holders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity compensation
plans not approved
by security holders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">148,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">104,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">148,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective August&nbsp;22, 2000, the company adopted the Non-Employee Director
Stock Option Plan (the &#147;Director Plan&#148;). Up to 200,000 shares of common stock
may be issued under the Director Plan to non-employee directors with each
director receiving an initial grant of 5,000 options followed by annual grants
of 4,000 options on the date of each subsequent Annual Meeting. Non-qualified
stock options are granted at fair market value on the date of grant and vest
50% on each of the first and second anniversaries of the date of grant.
</FONT>
<P align="center"><FONT size="2">-3-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "PROPOSAL 1 &#151; THE ELECTION OF TWO DIRECTORS" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="center"><FONT size="2"><B>PROPOSAL 1 &#151; THE ELECTION OF TWO DIRECTORS</B></FONT>

<P align="left"><FONT size="2"><B>Nominees</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the Annual Meeting of Shareholders, shareholders will elect two
directors to the Board of Directors to serve a three-year term until the 2006
Annual Meeting of Shareholders. The other directors&#146; terms expire at the
Annual Meeting of Shareholders listed below for each category of directors or
until their earlier death, resignation or removal from office. Directors are
elected by a plurality of the shares present and voting at the meeting. A
&#147;plurality&#148; means that the individual who receives the largest number of votes
cast is elected as director up to the maximum number of directors to be chosen
at the meeting. Therefore, shares that are withheld or abstain from voting and
broker non-votes will have no effect on the outcome of the vote. Unless
contrary instructions are given, the persons named as proxies will vote the
shares represented by a signed proxy card &#147;FOR&#148; the nominees.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If either of the nominees withdraws or for any reason or is not able to
serve as a director, the proxy will be voted for another person designated by
the Board of Directors as substitute nominee, but in no event will the proxy be
voted for more than two nominees. The Board of Directors has no reason to
believe that either nominee will not serve if elected.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors has nominated the persons named below to serve as
directors of the company. The nominees are currently directors of the company.
The nominees and other directors gave us the following information concerning
their current age, other directorships, positions with the company, principal
employment and shares of our common stock beneficially owned as of March&nbsp;15,
2003.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The Board of Directors recommends that shareholders vote &#147;FOR&#148; the
proposal to elect the nominees listed below as directors of the company.</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares of Common Stock</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position / Principal Occupation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(Percent of Class)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top"><FONT size="2"><B><I>Nominees for election to serve
until the 2006 Annual Meeting</I></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James Napier<sup>1.2.</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
66
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director, former Chairman of
the Board of Scientific
Atlanta, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,100
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">J. Leland Strange</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
61
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director, Chairman of the
Board, President, and Chief
Executive Officer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">727,794
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">16.2%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="5" valign="top"><FONT size="2"><B><I>Incumbent directors elected to
serve until the 2004 Annual
Meeting</I></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">John B. Peatman<sup>2.</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
68
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director, Professor of
Electrical Engineering at
Georgia Institute of
Technology
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8,280
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="5" valign="top"><FONT size="2"><B><I>Incumbent directors elected to
serve until the 2005 Annual
Meeting</I></B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Donald A. McMahon<sup>1.2.</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
72
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director, Retired
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8,500
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Parker H. Petit<sup>1.</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
63
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director, Chairman, President
and Chief Executive Officer of
Matria Healthcare, Inc.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18,327
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">*</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Less than one percent; share amount includes 7,000 shares pursuant to stock options exercisable at March&nbsp;15, 2003</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Audit Committee</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Compensation Committee</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;McMahon </I>has served as a director since 1981. He retired in 1984 from
the position of President and Chief Executive Officer of Royal Crown Companies,
a soft drink beverage firm.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;Napier </I>has served as a director since 1982. Mr.&nbsp;Napier served as
Chairman of the Board of Scientific-Atlanta, Inc., a firm involved in cable
television electronics and satellite-based communication networks, from 1993
until November 2000. He serves as a director of Scientific-Atlanta, McKesson
Corporation, Vulcan Materials Company, Engelhard Corporation, Personnel Group
of America, Inc. and Wabtec Corporation.
</FONT>
<P align="center"><FONT size="2">-4-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dr.&nbsp;Peatman </I>has served as a director since 1979 and has been a Professor
of Electrical Engineering at the Georgia Institute of Technology since 1964.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;Petit </I>has served as a director since 1996. Mr.&nbsp;Petit has served as
Chairman of the Board and a director of Matria Healthcare, Inc., a
comprehensive disease management services company, since March 1996 and he has
served as President and CEO of Matria since October 2000. Mr.&nbsp;Petit was
founder and Chairman of the Board of Directors of Healthdyne, Inc., Matria&#146;s
predecessor, from 1970 to 1996. He also serves as a director of Logility, Inc.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;Strange </I>has served as our President since 1983 and our Chief Executive
Officer and Chairman of the Board of Directors since 1985. He serves as a
director of Allied Holdings, Inc.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships among any of the company&#146;s directors and
executive officers.
</FONT>
<P align="left"><FONT size="2"><B>Meetings and Committees of the Board of Directors</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors met six times during the year ended December&nbsp;31,
2002. The Board of Directors has established an audit committee, a compensation
committee, and a plan committee, but has no nominating committee. The Audit
Committee of the Board of Directors, which met five times during the last
fiscal year, consists of Messrs.&nbsp;McMahon, Napier and Petit. In 2002, the Audit
Committee recommended the appointment of the company&#146;s independent auditors,
met with the independent auditors to review their report on the financial
operations of the company and carried out a number of other responsibilities,
as outlined in the Amended Audit Committee Charter, attached hereto as Appendix
B. Each of the members of the Audit Committee is independent, as such term is
defined in Section&nbsp;121(A) of the listing standards of the American Stock
Exchange (the &#147;AMEX&#148;), and the Audit Committee meets the composition
requirements of Section&nbsp;121(B)(b) of the AMEX&#146;s listing standards.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board has a Compensation Committee consisting of Messrs.&nbsp;McMahon,
Napier and Peatman, which met once during the last year. The Compensation
Committee reviews and makes recommendations concerning the appropriate
compensation level for the officers of the company and any changes in the
company&#146;s various benefit plans.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan Committee, which did not meet in 2002, was responsible for
administering the 1991 Stock Option Plan (the &#147;1991 Plan&#148;), which expired in
2001, and will be administering the 2003 Stock Incentive Plan (the &#147;2003
Incentive Plan&#148;), if Proposal 2 is approved by the shareholders at the Annual
Meeting. The Plan Committee has the same members as the Compensation
Committee. All directors attended all of the meetings of the Committees of the
Board on which they serve and at least 80&nbsp;percent of the meetings of the Board
of Directors.
</FONT>
<P align="left"><FONT size="2"><B>Executive Officers</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information is provided about our non-director executive
officers as of March&nbsp;15, 2003.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="29%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position / Principal Occupation</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">J. William Goodhew, III</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
65
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Bonnie L. Herron</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
55
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Chief Financial Officer and Secretary</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Francis A. Marks</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
69
</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;Goodhew </I>joined the company in 1997 as Vice President. He was
President of Peachtree Software, Inc. from 1985 through 1996. He is former
Chairman of the Board of Navision Software A/S and serves as director of Ross
Systems, Inc.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mr.&nbsp;Marks </I>joined the company in May 1982 as Vice President of Product Line
Programs after 26&nbsp;years with IBM Corporation in a variety of managerial and
executive positions. He was appointed Vice President in 1983 and also serves
as President of ChemFree Corporation, one of our wholly owned subsidiaries.
</FONT>
<P align="center"><FONT size="2">-5-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ms.&nbsp;Herron </I>joined the company in 1982 as Director of Planning at one of
our subsidiaries and subsequently at the corporate level. She was elected
Corporate Secretary in 1987, Vice President in 1990, and Chief Financial
Officer in 1999. She also serves as Executive Director of the Intelligent
Systems Incubator.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors elects the executive officers to serve until they
are removed, replaced or resign.
</FONT>
<P align="left"><FONT size="2"><B><I>Executive Compensation</I></B></FONT>

<P><FONT size="2"><B><I>Summary Compensation Table</I></B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Annual Compensation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other Annual</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Salary</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Bonus</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Compensation</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name and Principal Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>$</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>$</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>$</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">J. Leland Strange</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,750</FONT></TD>
    <TD><FONT size="2"><sup>1.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>President &#038; Chief Executive Officer</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,750</FONT></TD>
    <TD><FONT size="2"><sup>1.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">239,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">485,226</FONT></TD>
    <TD><FONT size="2"><sup>1.2.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Francis A. Marks</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Vice President</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">975</FONT></TD>
    <TD><FONT size="2"><sup>1.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,133</FONT></TD>
    <TD><FONT size="2"><sup>1.3.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bonnie L. Herron</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,996</FONT></TD>
    <TD><FONT size="2"><sup>1.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Vice President, Chief Financial Officer &#038; Secretary</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,875</FONT></TD>
    <TD><FONT size="2"><sup>1.</sup></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">122,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55,099</FONT></TD>
    <TD><FONT size="2"><sup>1.3</sup></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes matching contributions by the company to the respective accounts
of the executive officers pursuant to the terms of our Tax-Deferred
Savings and Protection Plan (the &#147;401(k) Plan&#148;). Such amounts are fully
vested.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes $482,500 non-cash compensation representing the difference
between the market price and the exercise price of non-qualified stock
options on the date of exercise.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Includes $53,333 non-cash compensation representing the difference
between the market price and the exercise price of non-qualified stock
options on the date of exercise.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Stock Options</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, none of the named executive officers had any
unexercised options to purchase shares of the company&#146;s common stock and none
of such persons exercised any options during 2002.
</FONT>
<P align="left"><FONT size="2"><B><I>Compensation of Directors</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-employee directors earn $8,000 per year plus a fee of $2,000 per
meeting day. Total compensation is capped at $16,000 annually. Effective
January&nbsp;1, 1992, the company adopted the Outside Directors&#146; Retirement Plan
which provides for each non-employee director, upon resignation from the Board
after reaching the age of 65, to receive a lump sum cash payment equal to
$5,000 for each full year of service as a director of the company (and its
predecessors and successors) up to $50,000. Effective August&nbsp;22, 2000, the
company adopted the Non-Employee Director Stock Option Plan which provides for
an initial grant to each director of 5,000 options to purchase common stock of
the company and annual grants of 4,000 options on the date of each subsequent
Annual Meeting. Options are granted at fair market value on the date of grant.
</FONT>
<P align="left"><FONT size="2"><B><I>Change-in-Control Arrangements</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 1992, we adopted the Change in Control Plan for
Officers so that if control of the company changes in the future, management
would be free to act on behalf of the company and its shareholders without
undue concern for the possible loss of future compensation. A &#147;change in
control&#148; means either: (i)&nbsp;the accumulation by an unrelated person of
beneficial ownership of more than 25&nbsp;percent of the company&#146;s common stock,
(ii)&nbsp;the sale of all or substantially all of the company&#146;s assets to an
unrelated person, in a merger or otherwise, or (iii)&nbsp;a change of control within
the meaning of any rules promulgated by the Securities and Exchange Commission.
</FONT>
<P align="center"><FONT size="2">-6-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Change in Control Plan, if the employment of an officer of the
company terminates for any reason within 12&nbsp;months of a change in control, the
officer would receive a lump sum cash payment in an amount equal to twice the
total of (i)&nbsp;such officer&#146;s base annual salary at the time of termination, (ii)
the cash value of annual benefits, and (iii)&nbsp;such officer&#146;s bonus for the most
recent year, if any. Additionally, upon a change in control, all options shall
vest and the exercise period for all options becomes the longer of (i)&nbsp;one year
after the date of termination or (ii)&nbsp;the exercise period specified in the
officer&#146;s option agreement. The right to such benefits would lapse one year
after the occurrence of the last change in control event to occur if there were
no actual termination during that period. Currently, J. Leland Strange,
Francis A. Marks and Bonnie L. Herron are the only officers designated by the
Board to participate in the Change in Control Plan.
</FONT>
<P align="left"><FONT size="2"><B><I>Compensation Committee Report on Executive Compensation</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of the Board of Directors reviews and approves
compensation paid by the company to its executive officers. The Compensation
Committee reviews compensation of the executive officers annually (other than
the Chief Executive Officer), with input from the Chief Executive Officer. The
Plan Committee is responsible for administering the 1991 Plan, including
selecting individuals who will receive stock option grants and determining the
timing, pricing and amounts of the options granted. There have been no stock
option grants to executive officers since 1996 and the 1991 Plan expired in
2001. If Proposal 2 is approved, the Plan Committee will be responsible for
administering the 2003 Incentive Plan. Both committees are comprised of three
non-employee directors of the company.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Given our current level of executive compensation, it was not necessary
for the Compensation Committee to consider the cap on deductibility of
compensation over $1&nbsp;million for named executive officers.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The basic goal of our compensation program for executive officers is to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">fairly compensate executive officers in line with their
responsibilities and contributions to the company;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">reward management for achievement of financial or other measurable
goals of the company and specified subsidiaries, where the
contribution of the executive can be tied to operations under his/her
control; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">align management&#146;s compensation with shareholder interests as measured
by stock price appreciation.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The compensation of executive officers consists of a base salary, a cash
incentive and long-term compensation consisting of stock options. Because the
company does not have readily identifiable comparative companies, the
Compensation Committee determines the base salary for non-CEO executive
officers with input from the Chief Executive Officer. The Committee intends
the base salary to be in the median range for persons with similar experience
and scope of responsibility. The Committee considers a number of subjective
factors including the nature, scope and variety of responsibilities of each
executive as well as the company&#146;s financial results and condition. The
Committee considers an individual executive&#146;s performance in a variety of
functions which may include line responsibility for established as well as
start-up companies, corporate development activities (including acquisitions
and investments), completion of significant transactions, contribution to and
management of the company&#146;s minority-owned businesses and other corporate
functions.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash incentives are earned by the named executives based on achievement of
goals of the company as a whole or those subsidiaries or projects for which the
named executive has management responsibility.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our long-term incentive compensation plan has historically been based on
the 1991 Plan and, if approved, will be based on the 2003 Incentive Plan, which
are designed to reward executives for increases in the market price of our
stock, thus linking the interest of executives and shareholders. The Plan
Committee, in its sole discretion, grants options to those individuals whose
contribution is most likely to have an impact on our overall performance and
price of the company&#146;s common stock. The Committee
</FONT>
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<P><FONT size="2">intends for the number of options granted to an individual executive to provide
an adequate financial incentive over a three to five year time frame and to
provide the executives with an equity interest in the company. The number of
options granted to an executive officer depends upon a subjective evaluation of
the individual&#146;s contribution to the company. The Committee did not award any
options to executives in the three years ended December&nbsp;31, 2002 and the 1991
Plan expired in December 2001. The named executive officers each exercised all
of their stock options in 2000 and currently do not have any unexercised stock
options under the 1991 Plan. The Plan Committee has awarded 100,000 stock
options to executive officers subject to shareholder approval of the 2003 Stock
Incentive Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is our policy to provide executives with the same benefits provided to
all other employees with respect to medical, dental, life insurance and 401(k)
plans.
</FONT>
<P align="left"><FONT size="2"><B><I>Chief Executive Officer Compensation</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee reviews the compensation of the Chief Executive
Officer annually. Mr.&nbsp;Strange, the largest shareholder of the company, does not
have an employment agreement with the company. Since there have not been
directly comparable peer group companies, the Committee considers a number of
subjective factors in setting Mr.&nbsp;Strange&#146;s compensation. The Compensation
Committee considered the nature, scope and variety of his responsibilities; his
contribution to increasing the value of the company&#146;s majority and
minority-owned companies; and the company&#146;s financial results and condition.
The Compensation Committee believes Mr.&nbsp;Strange&#146;s compensation is appropriate
in consideration of the scope of his position, the performance of the company
and the value of his contribution to the company&#146;s operations and affiliate
companies. Mr.&nbsp;Strange was awarded stock options in 1991 and 1996 under the
same conditions as described above for all executive officers. In determining
the number of options granted, the Plan Committee considered his base salary,
the number of shares owned by Mr.&nbsp;Strange, and the number of options granted to
other executives.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">COMPENSATION COMMITTEE</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PLAN COMMITTEE</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Donald A. McMahon</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Donald A. McMahon</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James V. Napier</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
James V. Napier</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">John B. Peatman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
John B. Peatman</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B><I>Compensation Committee Interlocks and Insider Participation</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.&nbsp;McMahon, Napier and Peatman served as members of the Compensation
Committee and the Plan Committee in 2002. None of these individuals is a
present or former officer or employee of the company.
</FONT>
<P align="left"><FONT size="2"><B><I>Audit Committee Report</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2002, the Board of Directors amended the company&#146;s Audit
Committee Charter. A copy of the amended Audit Committee Charter is attached
hereto as Appendix&nbsp;B. The provisions of the Audit Committee Charter, as
amended, meet the current requirements of the AMEX. The Audit Committee Charter
includes organization and membership requirements, a statement of policy and
the Committee&#146;s authority and responsibilities. All members of the Audit
Committee currently meet the independence and qualification standards set forth
in the AMEX listing standards.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is responsible for our company&#146;s internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the company&#146;s consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and for issuing a report thereon. As outlined in more detail in
the Audit Committee Charter, the Audit Committee&#146;s responsibility is generally
to approve all services provided by and compensation paid to the independent
auditors; review the adequacy of the company&#146;s internal and disclosure controls
and risk management practices; review and monitor the annual audit of the
financial statements including the financial statements produced and notes
thereto; review SEC filings containing the company&#146;s financial
</FONT>
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<P><FONT size="2">statements; regularly meet with the independent auditors and management in
separate sessions; and authorize investigations into any matter within the
scope of their responsibilities. During fiscal year 2002, among its other
activities, the Audit Committee:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">engaged the independent auditors and established their compensation;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">reviewed and discussed with management and the independent auditors
the audited financial statements of the company as of December&nbsp;31,
2002 and for the year then ended;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">discussed with the independent auditors the matters required to be
discussed by auditing standards generally accepted in the United
States (SAS 61); and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">received from the independent auditors the written disclosures and
written affirmation of their independence required by Independence
Standards Board Standard No.&nbsp;1 and discussed with the auditors the
firm&#146;s independence.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon the reviews and discussions summarized above, the Audit
Committee recommended to the Board of Directors (and the Board of Directors has
approved) that the audited financial statements be included in the Annual
Report on Form&nbsp;10-K for the year ended December&nbsp;31, 2002 for filing with the
Securities and Exchange Commission.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="50%"><FONT size="2">AUDIT COMMITTEE<BR>
James V. Napier <I>(Chair)</I><BR>
Parker H. Petit<BR>
Donald A. McMahon</FONT></TD>
</TR>
</TABLE>
<!-- link1 "PROPOSAL 2 &#151; APPROVAL OF THE INTELLIGENT SYSTEMS CORPORATION 2003 STOCK INCENTIVE PLAN" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="center"><FONT size="2"><B>PROPOSAL 2 </B><I>&#151; </I><B>APPROVAL OF THE INTELLIGENT SYSTEMS CORPORATION<BR>
2003 STOCK INCENTIVE PLAN</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;4, 2003, the Board of Directors adopted the Intelligent Systems
Corporation 2003 Stock Incentive Plan (the &#147;2003 Incentive Plan&#148;), subject to
shareholder approval at the Annual Meeting. The full text of the 2003
Incentive Plan is attached as Appendix&nbsp;A to this Proxy Statement. The
following summary of the material provisions of the 2003 Incentive Plan is
qualified, in its entirety, by reference to the 2003 Incentive Plan as set
forth in Appendix&nbsp;A. Capitalized terms not otherwise defined herein shall have
the meaning set forth in the 2003 Incentive Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rules of the AMEX require that this proposal be approved by the
holders of a majority of the votes cast on this proposal. Because a vote to
abstain on this proposal would be a vote cast, an abstention would have the
same effect as a vote AGAINST the proposal. However, because a broker non-vote
does not result in a vote cast, a broker non-vote would have no effect on the
outcome of the vote. Unless contrary instructions are given, the persons named
as proxies will vote the shares represented by a signed proxy card FOR approval
of this proposal.
</FONT>
<P align="left"><FONT size="2"><B><I>Purpose and Administration</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan Committee believes that the 2003 Incentive Plan is an important
part of the company&#146;s overall compensation program. The 2003 Incentive Plan
supports the company&#146;s ongoing efforts to develop and retain qualified
executives to lead the company and to permit the company to provide incentives
that are more directly linked to the profitability of the company&#146;s businesses
and to increases in shareholder value. In addition, the company may grant
awards outside the 2003 Incentive Plan. Awards granted under the 2003
Incentive Plan may be in the form of incentive stock options, non-qualified
stock options, restricted stock awards, stock appreciation rights and other
stock-based awards.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Eligibility</I>. The Plan Committee will determine the persons eligible to
receive awards under the 2003 Incentive Plan. Under the 2003 Incentive Plan,
all employees of the company, its parents, subsidiaries and affiliates, as well
as non-employee officers and non-employee directors and key consultants and
advisors of the company or its parents, subsidiaries or affiliates are eligible
to be granted awards under the 2003 Incentive Plan. Approximately 125
employees and four non-employee directors are eligible to
</FONT>
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<P><FONT size="2">participate in the 2003 Incentive Plan. The company cannot presently
determine the number of key consultants, advisors or non-employee officers that
may be eligible to participate in the future.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Administration</I>. The Plan Committee administers the 2003 Incentive Plan,
except that with respect to options or awards granted to the company&#146;s
executive officers or directors, the Board of Directors or a committee
comprised solely of two or more non-employee directors (if the Plan Committee
is not so comprised) is responsible for granting awards. The Plan Committee
will determine the amount, type and terms of any awards granted under the 2003
Incentive Plan, within limitations specified therein, which will be set forth
in an award agreement that may be amended by the Plan Committee as provided in
the 2003 Incentive Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shares Reserved</I>. Up to 450,000 shares of common stock may be issued under
the 2003 Incentive Plan, subject to adjustments for stock splits, dividends and
other dilution events. Shares of common stock underlying options, stock
appreciation rights or other stock-based awards that have expired or have been
cashed out, exercised or terminated without any payment being made in the form
of common stock will be available for reissuance under the 2003 Incentive Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock-Based Awards</I>. The 2003 Incentive Plan permits the company to grant
incentive stock options, which qualify for special tax treatment, and
non-qualified stock options, as well as restricted stock awards, stock
appreciation rights and other stock-based awards. Stock appreciation rights
may be granted either singly or in combination with underlying stock options.
The exercise price for incentive stock options cannot be less than the fair
market value of a share of common stock on the date of grant, as determined
under the 2003 Incentive Plan. Further, an incentive stock option must comply
with all of the other requirements of the Code and the 2003 Incentive Plan with
respect to incentive stock options. The total number of shares of restricted
stock and shares subject to options, stock appreciation rights and other
stock-based awards granted to a single person in a three year period under the
2003 Incentive Plan may not exceed 67,500, or 15% of the number of shares of
common stock originally reserved for issuance under the 2003 Incentive Plan.
Also, no more than 25% of the shares of common stock originally reserved for
issuance under the 2003 Incentive Plan may be issued pursuant to restricted
stock awards and other stock-based awards, not including awards with values
based on the spread between the fair market value of the common stock and the
exercise or grant price, if any, of such award. These limitations are to
ensure that incentive awards issued under the 2003 Incentive Plan are exempt
from the limitations of Section&nbsp;162(m) of the Code and to provide the company
with flexibility over the life of the 2003 Incentive Plan. However, the
company does not intend in the foreseeable future to issue awards that might
approach or reach these limits. Incentive stock options may not be granted
under the 2003 Incentive Plan after February&nbsp;28, 2013.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock</I>. Under the 2003 Incentive Plan, the company may award
shares of restricted common stock. Each award agreement will set forth
conditions that must be satisfied before the restricted stock vests and becomes
transferable. For example, restricted stock awards may be forfeited to the
extent that the award did not vest before the recipient&#146;s employment
terminated. Except as specified in the 2003 Incentive Plan and at the time of
grant, holders of restricted stock will have voting rights and the right to
receive dividends on such stock.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect of Change in Control</I>. The 2003 Incentive Plan provides that in
certain circumstances, a &#147;change in control&#148; (as defined in the 2003 Incentive
Plan) may be deemed to occur. In the event of a change in control, all stock
options and stock appreciation rights will become immediately exercisable, the
restrictions applicable to outstanding restricted stock and other stock-based
awards will immediately lapse, and (unless otherwise determined by the
Committee at or after the grant of the award) the value of outstanding stock
options, stock appreciation rights, restricted stock and other stock-based
awards will be cashed out on the basis of the maximum price paid for any shares
of stock acquired as part of the change in control.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment and Termination</I>. The 2003 Incentive Plan may be terminated by
the Board at any time, and it may be amended by the Committee or the Board of
Directors, in each case without shareholder
</FONT>
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<P><FONT size="2">approval, unless shareholder approval would be required under applicable
law or stock exchange rules to effect such amendment. Except as set forth in
an award agreement, no termination or amendment of the 2003 Incentive Plan may
materially and adversely affect any outstanding awards without the recipient&#146;s
consent.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-Transferability of Awards</I>. Except as permitted by an award agreement,
awards shall not be transferable or assignable other than by will or the laws
of descent and distribution, and shall be exercisable during the lifetime of
the recipient only by him or her.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Unfunded Status</I>. The 2003 Incentive Plan shall constitute an &#147;unfunded&#148;
plan for incentive compensation. The company may authorize the creation of
trusts or other arrangements to meet its obligations under the 2003 Incentive
Plan, but such trusts or other arrangements must be consistent with the
unfunded status of the 2003 Incentive Plan unless the Committee otherwise
determines.
</FONT>
<P align="left"><FONT size="2"><B><I>Federal Income Tax Consequences</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a brief summary of the U.S. Federal income tax
consequences generally associated with awards under the 2003 Incentive Plan.
The following summary is for general information only, and interested parties
should consult their own advisors as to specific tax consequences applicable to
them, including the application and effect of foreign, state and local tax
laws. This summary does not address the tax consequences of the receipt or
exercise of any award by a person who is not an employee of the company.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nonqualified Stock Options</I>. Nonqualified stock options granted under the
2003 Incentive Plan will not be taxable to an employee on the date of grant but
generally will result in taxation when exercised. At that time, the employee
will recognize ordinary income in an amount equal to the excess of the fair
market value of the stock acquired upon exercise over the option price paid for
the stock. The company will be entitled to a corresponding deduction when the
employee must recognize the income and in the amount of the income recognized.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incentive Stock Options</I>. An employee will not recognize income upon the
grant of an incentive stock option. An employee also generally will not
recognize income upon exercise of an incentive stock option provided that he
had been an employee of the company or its subsidiaries at all times from the
date of grant of the incentive stock option until three months before exercise
of the incentive stock option (or one year, in the case of an exercise after
becoming disabled). The amount by which the fair market value of the stock at
exercise exceeds the exercise price, however, is an adjustment in computing the
employee&#146;s alternative minimum tax in the year of exercise. If the employee
holds the shares of common stock acquired upon exercise of an incentive stock
option at least until the first anniversary of the date of exercise or, if
later, the second anniversary of the date of grant of the incentive stock
option, upon disposition of the shares the employee will have long-term capital
gain equal to the excess of the amount realized upon the disposition over the
amount paid for the shares. If the employee holds the shares for this period,
the company will not be entitled to a deduction with respect to the incentive
stock option.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an employee disposes of shares acquired upon exercise of an incentive
stock option before the expiration of the holding period described above, the
employee is considered to have engaged in a &#147;disqualifying disposition,&#148; as a
consequence of which the employee will generally recognize ordinary income in
the year of the disqualifying disposition equal to the excess, if any, of the
lesser of the amount realized upon disposition of the shares and the fair
market value of the shares on the date of exercise over the exercise price paid
for the shares. If the amount realized upon disposition is greater than the
fair market value of the shares on the date of exercise, the difference will be
taxable to the employee as capital gain. The company will be entitled to a
deduction in the year of the disqualifying disposition in an amount equal to
the amount of ordinary income recognized as a result of the disqualifying
disposition.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Appreciation Rights</I>. The grant of a stock appreciation right does
not result in taxable income to an employee. Instead, upon exercise, the
employee recognizes ordinary income equal to the amount
</FONT>
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<P><FONT size="2">of cash or the fair market value of any shares of common stock the
employee receives. The company will be entitled to a corresponding deduction.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock</I>. The recognition of income for federal tax purposes
relating to an award of restricted stock depends on the restrictions imposed on
the shares. Generally, taxation occurs in the first taxable year in which the
shares cease to be subject to a substantial risk of forfeiture. When the
restrictions lapse, the employee will recognize taxable income equal to the
excess of the fair market value of the stock at that time over the amount, if
any, paid for the stock. The employee may, however, make an election to
include in income when the shares are first transferred to him an amount equal
to the excess of the fair market value of the stock at that time over the
amount, if any, paid for the stock. The company is generally entitled to a
deduction corresponding to the employee&#146;s income inclusion.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Stock-Based Awards</I>. Any cash payments or the fair market value of
any common stock or other property an employee receives in connection with
other stock-based awards will be taxable as ordinary income to the employee in
the year received. The company will generally be entitled to a corresponding
deduction.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Federal Income Tax Considerations</I>. As noted above, Section&nbsp;162(m)
of the Code places a $1,000,000 annual limit on the compensation paid to
certain of its executives that is deductible by the company. The limit,
however, does not apply to &#147;qualified performance-based compensation.&#148; The
company believes that its awards of stock options, stock appreciation rights
and other incentive compensation awards under the 2003 Incentive Plan will
qualify for this exception to the deduction limitation.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also, awards that are granted, accelerated or enhanced upon the occurrence
of a change in control may give rise, in whole or in part, to &#147;excess parachute
payments&#148; within the meaning of Section&nbsp;280G of the Code and, to such extent,
will be non-deductible by the company and subject to a 20% excise tax by the
participant.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State tax consequences may in some cases differ from the federal tax
consequences. In addition, awards under the 2003 Incentive Plan may in some
instances be made to employees who are subject to tax in jurisdictions other
than the United States and may result in consequences different from those
described above.
</FONT>
<P align="left"><FONT size="2"><B>New Plan Benefits</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides certain information with respect to all
options under the 2003 Incentive Plan that have been granted or will be
received by or allocated to the specified persons, subject to the approval of
the 2003 Incentive Plan by the company&#146;s shareholders at the Annual Meeting:
</FONT>
<P align="left"><FONT size="2"><B><I>2003 Incentive Plan</I></B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="85%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Shares of Common Stock</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Group or Name and Principal Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Underlying Award <sup>1.</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">J. Leland Strange</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>President and CEO</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bonnie L. Herron</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Vice President, CFO and Secretary</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">All Executive Officers as a Group (4 persons)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
      <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Awards reported in this table were granted, subject to shareholder
approval at the Annual Meeting, as incentive stock options (except for
awards granted Mr.&nbsp;Strange which were granted as nonqualified stock
options), each with an exercise price of $1.51 per share, which is equal
to the closing price of a share of common stock on the date of grant, and
each shall vest and become exercisable in 3 equal installments beginning
on the first anniversary of the date of grant.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">-12-</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No options or other awards under the 2003 Incentive Plan have been
received by any other person, including (i)&nbsp;any other director nominee of the
company, or (ii)&nbsp;any associate of a director, executive officer or director or
officer nominee of the company. The company cannot presently determine the
amounts and recipients of any options or other awards that may be received in
the future under the 2003 Incentive Plan.
</FONT>
<P align="left"><FONT size="2"><B><I>Effective Date</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon approval of the 2003 Incentive Plan by the shareholders of the
company, the 2003 Incentive Plan will be effective as of March&nbsp;4, 2003, the
date of approval by the Board of Directors.
</FONT>
<P align="left"><FONT size="2"><B><I>Shareholder Vote</I></B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2003 Incentive Plan will be approved and adopted if a majority of the
votes cast vote FOR such approval and adoption. <B>THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE &#147;FOR&#148; THE ADOPTION AND
APPROVAL OF THE INTELLIGENT SYSTEMS CORPORATION 2003 STOCK INCENTIVE PLAN AS
SET FORTH IN APPENDIX A ATTACHED HERETO.</B>
</FONT>
<!-- link1 "PERFORMANCE GRAPH" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="center"><FONT size="2"><B>PERFORMANCE GRAPH</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following line graph compares the cumulative total shareholder return
on our common stock since December&nbsp;31, 1997, based on the market price of our
common stock together with dividends paid to holders of our common stock, with
the cumulative total return of the companies on the AMEX Market Value Index and
the S&#038;P Technology Sector Index.
</FONT>
<P align="center"><FONT size="2"><B>Comparison of Five Year Cumulative Total Return*<BR>
Among Intelligent Systems, the S&#038;P Technology Sector Index and the AMEX Market Value Index</B></FONT>

<P align="center"><FONT size="2"><IMG src="g81882g8188202.gif" alt="(PERFORMANCE GRAPH)"></FONT>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Cumulative Total Return</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/97</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/98</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/99</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/00</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/01</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>12/02</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INTELLIGENT SYSTEMS CORPORATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">82.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">AMEX COMPOSITE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">128.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123.81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">S &#038; P INFORMATION TECHNOLOGY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">178.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">318.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">188.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">139.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2">Copyright(C)2002 Standard &#038; Poor&#146;s, a division of The McGraw-Hill Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&#038;P.htm
</FONT>

<P align="center"><FONT size="2">-13-</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>



<!-- link1 "SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="center"><FONT size="2"><B>SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require our
executive officers and directors and persons who own more than ten percent of
our common stock, as well as certain affiliates of these persons, to file
initial reports of ownership of our common stock and changes in such ownership
with the Securities and Exchange Commission. The Securities and Exchange
Commission also requires executive officers, directors and persons owning more
than ten percent of our common stock to furnish us with copies of all Section
16(a) forms they file. Based solely on our review of the copies of such forms
received by us, we believe that, during the fiscal year ended December&nbsp;31,
2002, our executive officers, directors, and owners of more than ten percent of
our common stock complied with all applicable filing requirements in a timely
manner.
</FONT>
<!-- link1 "INDEPENDENT PUBLIC ACCOUNTANTS" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="center"><FONT size="2"><B>INDEPENDENT PUBLIC ACCOUNTANTS</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;10, 2002, the company dismissed Arthur Andersen LLP as its
independent public accountants. The audit reports issued by Arthur Andersen on
the consolidated financial statements of Intelligent Systems Corporation as of
and for the fiscal years ended December&nbsp;31, 2001 and December&nbsp;31, 2000 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope or accounting principles. During our
two most recent fiscal years and through the date of their dismissal, there
were no disagreements between us and Arthur Andersen on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to Arthur Andersen&#146;s satisfaction,
would have caused Arthur Andersen to make reference to the subject matter of
the disagreements in connection with its reports on our consolidated financial
statements for such periods, nor have there been any reportable events as
listed in Item&nbsp;304 (a)(1)(v) of Regulation&nbsp;S-K. We provided Arthur Andersen
with a copy of the foregoing disclosures, and a letter from Andersen confirming
its agreement with these disclosures was filed on May&nbsp;13, 2002 on Form&nbsp;8-K.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective July&nbsp;3, 2002, the Board of Directors of the company, upon the
recommendation of the Audit Committee, appointed BDO Seidman, LLP as its new
independent accountants. During 2000, 2001 and through the date of its
engagement of BDO Seidman in 2002, the company did not consult with BDO Seidman
with respect to any of the matters or reportable events set forth in Item
304(a)(2)(i) and (ii)&nbsp;of Regulation&nbsp;S-K. BDO Seidman, Atlanta, Georgia, acted
as our principal independent public accountants for the fiscal year ended
December&nbsp;31, 2002. We expect that representatives of BDO Seidman will be
present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions. The
Audit Committee has not yet selected auditors for the current fiscal year
ending December&nbsp;31, 2003 because historically this decision is made in the
second quarter of the year.
</FONT>
<P align="left"><FONT size="2"><B>Audit Fees</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal year ended December&nbsp;31, 2002, we were billed an
aggregate of $94,850 for audit and review services rendered by Arthur Andersen,
LLP, our former independent auditors, with respect to the audit of our 2001
financial statements and $25,750 by BDO Seidman, our current independent
auditors, for audit and review services.
</FONT>
<P align="left"><FONT size="2"><B>Financial Information Systems Design and Implementation Fees; All Other Fees</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal year ended December&nbsp;31, 2002, neither BDO Seidman nor
Arthur Andersen performed or billed the company for any services other than the
audit and review services described above.
</FONT>
<P align="center"><FONT size="2">-14-</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "CERTAIN TRANSACTIONS" -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="center"><FONT size="2"><B>CERTAIN TRANSACTIONS</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;14, 2002, the shareholders of Risk Laboratories, a former
affiliate of the company, sold their remaining ownership interests to the same
buyer that had purchased majority control of Risk in March of 2000. The
company and J. William Goodhew, a vice president of the company and minority
shareholder in Risk, each sold their respective ownership interests along with
all other minority shareholders in the $6&nbsp;million transaction. Mr.&nbsp;Goodhew&#146;s
pro rata share of the sale proceeds was $429,600 and the company&#146;s pro rata
share was $474,000. The company previously sold most of its ownership in Risk
in several transactions totaling $10.7&nbsp;million in proceeds.
</FONT>
<!-- link1 "SHAREHOLDERS&#146; PROPOSALS FOR ANNUAL MEETING IN 2004" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="center"><FONT size="2"><B>SHAREHOLDERS&#146; PROPOSALS FOR ANNUAL MEETING IN 2004</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders who wish to submit a proposal for inclusion in our proxy
statement for the 2004 Annual Meeting of Shareholders must submit such
proposals so that they are received by the company no later than December&nbsp;13,
2003. Such proposals must comply with Exchange Act Rule&nbsp;14a-8 and all other
applicable proxy rules and requirements contained in our bylaws relating to
shareholder proposals to be included in our proxy materials. Shareholders
intending to present proposals at the Annual Meeting of Shareholders in 2004
but who do not wish to submit the proposal for inclusion in our proxy statement
pursuant to Rule&nbsp;14a-8 should submit these proposals to the Secretary of the
company by certified mail, return receipt requested, at our offices in
Norcross, Georgia on or before January&nbsp;30, 2004. Our bylaws contain an advance
notice provision that states that, among other things, in order for business to
be brought properly before an annual meeting of shareholders by a shareholder,
the shareholder must have given timely notice of the business in writing to the
Secretary of the company. To be timely under the Bylaws, a shareholder&#146;s
notice must be received at our principal offices by January&nbsp;30, 2004.
</FONT>
<!-- link1 "OTHER MATTERS WHICH MAY COME BEFORE THE MEETING" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="center"><FONT size="2"><B>OTHER MATTERS WHICH MAY COME BEFORE THE MEETING</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors is not aware of any matter other than those stated
above that are to be brought before the meeting. However, if any other matter
should be presented for consideration and voting, the persons named in the
enclosed form of proxy intend to vote the proxy in accordance with their
judgment of what is in the best interest of the company.
</FONT>
<!-- link1 "ADDITIONAL INFORMATION" -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="center"><FONT size="2"><B>ADDITIONAL INFORMATION</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Any record or beneficial owner of our common stock as of April&nbsp;11, 2003
may request a copy of our Annual Report on Form&nbsp;10-K filed with the Securities
and Exchange Commission for the fiscal year ended December&nbsp;31, 2002, including
financial statements and schedules. Any request for the Form&nbsp;10-K should be in
writing addressed to: Bonnie L. Herron, Intelligent Systems Corporation, 4355
Shackleford Road, Norcross, Georgia 30093. If the person requesting the Form
10-K is not a shareholder of record on April&nbsp;11, 2003, the person must state
that he or she is a beneficial owner of our common stock on that date.
Shareholders may also view and download a copy of our Annual Report on Form
10-K from our web site at www.intelsys.com. We will provide copies of any
exhibits to the Form&nbsp;10-K upon request and upon the payment of our reasonable
expenses in furnishing such exhibits.</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="50%"><FONT size="2">By order of the Board of Directors,</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>

<TD width="50%"><FONT size="2"><IMG src="g81882g8188203.gif" alt="(-s- Bonnie L. Herron)"><BR>
Bonnie L. Herron<BR>
<I>Secretary</I></FONT></TD>
</TR>
</TABLE>
<P><FONT size="2"><I>Norcross, Georgia<BR>
April&nbsp;18, 2003</I>
</FONT>
<P align="center"><FONT size="2">-15-</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "Appendix&nbsp;A" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="center"><FONT size="2"><B>Appendix&nbsp;A</B></FONT>

<P align="center"><FONT size="2"><B>INTELLIGENT SYSTEMS CORPORATION<BR>
2003 STOCK INCENTIVE PLAN<BR>
As adopted by the Board of Directors on and to be effective as of March&nbsp;4, 2003</B></FONT>

<!-- link1 "ARTICLE I<BR> PURPOSE; DEFINITIONS" -->
<DIV align="left"><A NAME="012"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE I<BR>
PURPOSE; DEFINITIONS</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Plan is to support the Company&#146;s ongoing efforts to
develop and retain leaders of exceptional talent and to provide the Company
with the ability to provide incentives more directly linked to the
profitability of the Company&#146;s businesses and to increases in shareholder
value.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the Plan, the following terms are defined as set forth
below:
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; &#147;Awards&#148; mean grants under this Plan of Stock Options, Stock
Appreciation Rights, Restricted Stock or Other Stock-Based Awards.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; &#147;Board&#148; means the Board of Directors of the Company.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; &#147;Code&#148; means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; &#147;Commission&#148; means the Securities and Exchange Commission or any
successor agency.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp; &#147;Committee&#148; means a committee of at least two directors of the Company
appointed from time to time by the Board, having the duties and authority set
forth herein in addition to any other authority granted by the Board; provided,
however, that with respect to any Awards granted to an individual who is also a
Section&nbsp;16 Insider, the Committee shall consist of either the entire Board or a
committee of at least two directors who are Non-Employee Directors, and all
authority and discretion shall be exercised by such Non-Employee Directors, and
references herein to the &#147;Committee&#148; means such Non-Employee Directors insofar
as any actions or determinations of the Committee shall relate to or affect
Awards made to or held by any Section&nbsp;16 Insider. In selecting the Committee,
the Board shall also consider the benefits under Section&nbsp;162(m) of the Code of
having a Committee composed of &#147;outside directors&#148; (as that term is defined in
the Code) for certain grants of Awards to highly-compensated executives. At
any time that the Board shall not have appointed a committee that meets the
above requirements, any reference herein to the Committee shall refer to the
Board.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp; &#147;Common Stock&#148; or &#147;Stock&#148; means the Common Stock of the Company.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp; &#147;Company&#148; means Intelligent Systems Corporation, a corporation
organized under the laws of the State of Georgia, or any successor thereto.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp; &#147;Exercise Period&#148; means the 60-day period from and after a Change in
Control.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp; &#147;Exchange Act&#148; means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp; &#147;Fair Market Value&#148; means, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the American
Stock Exchange&#151;Composite Transactions or, if no such sale of Common Stock is
reported on such date, the fair market value of the Stock as determined by the
Committee in good faith.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp; &#147;Incentive Stock Option&#148; means any Stock Option that complies with
Section&nbsp;422 of the Code.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) &#147;Nonqualified Stock Option&#148; means any Stock Option that is not an
Incentive Stock Option.
</FONT>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp; &#147;Non-Employee Director&#148; shall have the meaning set forth in Rule&nbsp;16b-3
under the Exchange Act, as the same may be in effect from time to time, or in
any successor rule thereto, and shall be determined for all purposes under the
Plan according to interpretative or &#147;no-action&#148; positions with respect thereto
issued by the Commission.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp; &#147;Other Stock-Based Award&#148; means an Award made pursuant to paragraph
(a)(iv) of Article&nbsp;V.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp; &#147;Plan&#148; means this 2003 Intelligent Systems Corporation 2003 Stock
Incentive Plan, as amended from time to time.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp; &#147;Restricted Period&#148; means the period during which an Award may not be
sold, assigned, transferred, pledged or otherwise encumbered.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp; &#147;Restricted Stock&#148; means an Award of shares of Common Stock pursuant
to paragraph (a)(iii) of Article&nbsp;V.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp; &#147;Section&nbsp;16 Insider&#148; means any person who is subject to the provisions
of Section&nbsp;16 of the Exchange Act, as provided in Rule&nbsp;16a-2 promulgated
pursuant to the Exchange Act.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp; &#147;Spread Value&#148; means, with respect to a share of Common Stock subject
to an Award, an amount equal to the excess of the Fair Market Value, on the
date such value is determined, over the Award&#146;s exercise or grant price, if
any.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp; &#147;Stock Appreciation Right&#148; or &#147;SAR&#148; means a right granted pursuant to
paragraph (a)(ii) of Article&nbsp;V.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp; &#147;Stock Option&#148; means an option granted pursuant to paragraph (a)(i) of
Article&nbsp;V.
</FONT>
<P><FONT size="2">In addition, the terms &#147;Business Combination,&#148; &#147;Change in Control,&#148; &#147;Change in
Control Price,&#148; &#147;Incumbent Board,&#148; &#147;Outstanding Company Common Stock,&#148;
&#147;Outstanding Company Voting Securities&#148; and &#147;Person&#148; have the meanings set
forth in Article&nbsp;VI.
</FONT>
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<DIV align="left"><A NAME="013"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE II</B></FONT>

<DIV align="center"><FONT size="2"><B>ADMINISTRATION</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and to adopt such rules and guidelines for carrying
out the Plan as it may deem appropriate. The Committee shall have the
authority to adopt such modifications to the Plan, procedures and subplans as
may be necessary or desirable to comply with the laws, regulations,
compensation practices and tax and accounting principles of the countries in
which the Company, a subsidiary or an affiliate may operate to assure the
viability of the benefits of Awards made to individuals employed in such
countries and to meet the objectives of the Plan. The Committee shall also
have the authority to determine the details and provisions of each Award
agreement, and to make all other determinations necessary or advisable for the
administration of the Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms of the Plan, the Committee shall have the authority
to determine those individuals eligible to receive Awards and the amount, type
and terms of each Award, but, at the discretion of the Committee or the Board,
such determinations may be made subject to ratification by the Board.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any determination made by the Committee with respect to any Award shall be
made in the sole discretion of the Committee, and all decisions made by the
Committee shall be final and binding on all persons, including the Company and
Plan participants, but subject to ratification by the Board if the Committee or
the Board so provides.
</FONT>
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<DIV align="left"><A NAME="014"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE III</B></FONT>

<DIV align="center"><FONT size="2"><B>ELIGIBILITY</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All employees of the Company, its parents, subsidiaries and affiliates, as
well as non-employee officers and non-employee members of the Board of
Directors and key consultants and advisors of the Company or its parents,
subsidiaries or affiliates, are eligible to be granted Awards under the Plan.
However, only persons who are employees of the Company or its parents or
subsidiaries may be eligible to receive an Incentive Stock Option.
</FONT>
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<DIV align="left"><A NAME="015"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE IV</B></FONT>

<DIV align="center"><FONT size="2"><B>COMMON STOCK SUBJECT TO PLAN</B>
</FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <B>Shares Reserved</B>. The total number of shares of Common Stock reserved
and available for distribution pursuant to the Plan shall be 450,000 shares,
all of which may be issued pursuant to the exercise of Stock Options awarded
under the Plan. If any Award is exercised, cashed out or terminates or expires
without a payment being made to the participant in the form of Common Stock,
the shares subject to such Award, if any, shall again be available for
distribution in connection with Awards under the Plan. Any shares of Common
Stock that are issued or issuable under the Plan and used by a participant as
full or partial payment of withholding or other taxes or as payment for the
exercise or conversion price of an Award shall be available for distribution in
connection with Awards under the Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <B>Antidilution Adjustments</B>. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend, stock
split, or similar corporate change involving the Common Stock, the aggregate
number and kind of shares subject to Awards outstanding or to be granted under
the Plan shall be appropriately adjusted or modified, and the terms of any
outstanding Award shall be adjusted or modified accordingly.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; <B>Liquidation or Dissolution</B>. If the Company is to be liquidated or
dissolved in connection with a transaction described in Article&nbsp;VI, the
provisions of such Article shall apply. In all other instances, the adoption
of a plan of dissolution or liquidation of the Company shall, except as may be
provided by the Committee, cause all then-remaining restrictions pertaining to
Awards under the Plan to lapse, and shall cause every Stock Option outstanding
under the Plan to terminate to the extent not exercised prior to the adoption
of the plan of dissolution or liquidation by the shareholders, provided that,
notwithstanding other provisions hereof, the Committee may declare all Stock
Options granted under the Plan to be exercisable at such time or times as the
Committee may determine, notwithstanding the provisions of the respective Stock
Option agreements regarding exercisability.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; <B>Application of Adjustments</B>. The adjustments described in paragraphs
(b)&nbsp;through (d)&nbsp;of this Article&nbsp;IV, and the manner of their application, shall
be determined solely by the Committee, and any such adjustment may provide for
the elimination of fractional share interests; provided, however, that any
adjustment made by the Committee shall be made, to the greatest extent
possible, in a manner that will not cause an Incentive Stock Option to be other
than an Incentive Stock Option under applicable statutory and regulatory
provisions. The adjustments required under this Article&nbsp;IV shall apply to any
successors of the Company and shall be made regardless of the number or type of
successive events requiring such adjustments.
</FONT>
<!-- link1 "ARTICLE V" -->
<DIV align="left"><A NAME="016"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE V</B></FONT>

<DIV align="center"><FONT size="2"><B>AWARDS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; <B>General</B>. The types of Awards that may be granted under the Plan are
set forth below. Awards may be granted singly, in combination or in tandem with
other Awards.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <I>Stock Options</I>. A Stock Option represents the right to purchase a
share of Stock at a predetermined exercise price. Stock Options granted under
this Plan may be in the form of Incentive Stock Options or Nonqualified Stock
Options, as specified in the Award agreement. The term of each Stock Option
shall be set forth in the Award agreement, but no Incentive Stock Option shall
be exercisable more than ten years after the grant date. The exercise price
per share of Common Stock purchasable under an Incentive Stock Option shall not
be less than 100% of the Fair Market Value on the date of grant. Subject to the
</FONT>
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<P><FONT size="2">applicable Award agreement, Stock Options may be exercised, in whole or in
part, by giving written notice of
exercise to the Company specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the exercise price by
certified or bank check or, if permitted by applicable law, such other
instrument as the Company may accept (including a copy of instructions to a
broker or bank acceptable to the Company requesting that such broker deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay
the aggregate exercise price). As determined by the Committee, payment in full
or in part may also be made in the form of Common Stock already owned by the
optionee valued at the Fair Market Value on the date the Stock Option is
exercised; provided, however, with respect to a Section&nbsp;16 Insider, that such
Common Stock shall not have been acquired within the preceding six months upon
the exercise by such Section&nbsp;16 Insider of a Stock Option or Award granted
under the Plan, or a similar award granted under any other plan maintained at
any time by the Company or any parent or subsidiary. Notwithstanding any
provision of the Plan or any Award agreement to the contrary, in no event shall
the Company be permitted to arrange for or extend credit to (as such terms are
defined in Section&nbsp;13(k) of the Exchange Act) any director or officer of the
Company in connection with the exercise of any Award if such arrangement or
extension of credit would violate applicable law.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <I>Stock Appreciation Rights</I>. An SAR represents the right to receive a
payment, in cash, shares of Common Stock or both (as determined by the
Committee), equal to the Spread Value on the date the SAR is exercised. The
grant price of an SAR shall be set forth in the applicable Award agreement.
Subject to the terms of the applicable Award agreement, an SAR shall be
exercisable, in whole or in part, by giving written notice of exercise to the
Company.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <I>Restricted Stock</I>. Shares of Restricted Stock are shares of Common
Stock that are awarded to a participant and that during the Restricted Period
may be forfeitable to the Company upon such conditions as may be set forth in
the applicable Award agreement. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Restricted Period.
Except as provided in this subsection (iii)&nbsp;and in the applicable Award
agreement, a participant shall have all the rights of a holder of Common Stock,
including the rights to receive dividends and to vote during the Restricted
Period. Dividends with respect to Restricted Stock that are payable in Common
Stock shall be paid in the form of Restricted Stock and shall be subject to all
of the terms and conditions of the Restricted Stock agreement pursuant to which
the underlying shares of Restricted Stock were issued.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <I>Other Stock-Based Awards</I>. Other Stock-Based Awards are Awards, other
than Stock Options, SARs or Restricted Stock, that are denominated in, valued
in whole or in part by reference to, or otherwise based on or related to,
Common Stock. The purchase, exercise, exchange or conversion of Other
Stock-Based Awards granted under this subsection (iv)&nbsp;shall be on such terms
and conditions and by such methods as shall be specified by the Committee.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <B>Maximum Awards</B>. The total number of shares of Restricted Stock and
other shares of Common Stock subject to or underlying Stock Options, SARs and
Other Stock-Based Awards awarded to any participant during the term of this
Plan shall not exceed 15 % of the shares of Common Stock originally reserved
for distribution pursuant to the Plan. An amount not in excess of 25 % of the
shares of Common Stock originally reserved for distribution pursuant to the
Plan may be issued pursuant to Restricted Stock Awards and Other Stock-Based
Awards, except that Other Stock-Based Awards with values based on Spread Values
shall not be included in this limitation.
</FONT>
<!-- link1 "ARTICLE VI" -->
<DIV align="left"><A NAME="017"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE VI</B></FONT>

<DIV align="center"><FONT size="2"><B>CHANGE IN CONTROL PROVISIONS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; Impact of Change in Control. Notwithstanding any other provision of
the Plan to the contrary, in the event of a Change in Control:
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <I>Stock Options and Stock Appreciation Rights</I>. All Stock Options and
Stock Appreciation Rights outstanding as of the date such Change in Control
occurs shall become immediately fully vested and exercisable.
</FONT>
<P align="center"><FONT size="2">A-4</FONT>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <I>Restricted Stock and Other Stock-Based </I>Awards. The restrictions and
other conditions applicable to any Restricted Stock or Other Stock-Based
Awards, including vesting requirements, shall lapse, and such Awards shall
become immediately free of all restrictions and fully vested.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <I>Cash-Out of Stock-Based Awards</I>. Unless otherwise determined by the
Committee at or after grant, the value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock and Other Stock-Based Awards shall be
cashed out on the basis of the &#147;Change in Control Price,&#148; as defined in
paragraph (c)&nbsp;of this Article&nbsp;VI, as of the date such Change in Control occurs
or such other date as the Committee may determine.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; <B>Definition of Change in Control</B>. A &#147;Change in Control&#148; means the
happening of any of the following:
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The acquisition, other than in a transaction approved by the Incumbent
Board, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (a &#147;Person&#148;)) of beneficial ownership
(within the meaning of Rule&nbsp;13d-3 promulgated under the Exchange Act) of 20% or
more of either (A)&nbsp;the then outstanding shares of Common Stock (the
&#147;Outstanding Company Common Stock&#148;) or (B)&nbsp;the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the &#147;Outstanding Company Voting Securities&#148;);
provided, however, that the following acquisitions shall not constitute a
Change in Control: (1)&nbsp;any acquisition directly from the Company, (2)&nbsp;any
acquisition by the Company, (3)&nbsp;any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (4)&nbsp;any acquisition by any corporation pursuant to
a transaction satisfying all of the requirements of clauses (A), (B)&nbsp;and (C)&nbsp;of
subparagraph (b) (iii)&nbsp;of this Article&nbsp;VI; or
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;Individuals who, as of the effective date of the Plan, constitute the
Board (the &#147;Incumbent Board&#148;) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to such effective date whose election, or nomination for
election by the shareholders of the Company, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Approval by the shareholders of the Company of a reorganization,
merger, share exchange or consolidation (a &#147;Business Combination&#148;), unless, in
each case following such Business Combination, (A)&nbsp;all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of such transaction owns the
Company through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B)&nbsp;no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such Person owned 25% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the Business Combination and (C)
at least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;Approval by the shareholders of the Company of (A)&nbsp;a complete
liquidation or dissolution of the Company or (B)&nbsp;the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation with respect to which, following such sale or other disposition,
(1)&nbsp;more
</FONT>
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<P><FONT size="2"> than 50% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2)&nbsp;less than 25%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by any Person
(excluding any employee benefit plan (or related trust) of the Company or such
corporation), except to the extent that such Person owned 25% or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities prior
to the sale or disposition and (3)&nbsp;at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such sale or other disposition of assets of the Company or
were elected, appointed or nominated by the Board.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; <B>Change in Control Price</B>. &#147;Change in Control Price&#148; means the maximum
price paid for any shares of Stock acquired as part of the Change in Control
except that, in the case of Incentive Stock Options, unless the Committee
otherwise provides, such price shall be based only on transactions reported for
the date on which such Incentive Stock Options are cashed out.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; <B>Surrender Election. </B>Notwithstanding any other provision of this Plan,
upon a Change in Control, unless the Committee shall determine otherwise at
grant, or after grant but before the Change in Control occurs, an Award
recipient shall have the right, by giving notice to the Company within the
Exercise Period, to elect to surrender all or part of the Stock Option, SAR or
Other Stock-Based Award to the Company and to receive in cash, within 30&nbsp;days
of such notice, an amount equal to the amount by which the Change in Control
Price on the date of such notice shall exceed the exercise or grant price under
such Award, multiplied by the number of shares of Stock as to which the right
granted under this Article&nbsp;VI shall have been exercised.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp; <B>Accounting Treatment</B>. Notwithstanding the foregoing, if any right
granted pursuant to this Article&nbsp;VI would make a Change in Control transaction
ineligible for pooling of interests accounting under generally accepted
accounting principles that but for this Article&nbsp;VI would otherwise be eligible
for such accounting treatment, the Committee shall have the ability to
substitute the cash payable pursuant to this Article&nbsp;VI with Common Stock with
a Fair Market Value equal to the cash that would otherwise be payable
hereunder.
</FONT>
<!-- link1 "ARTICLE VII" -->
<DIV align="left"><A NAME="018"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE VII</B></FONT>

<DIV align="center"><FONT size="2"><B>PLAN AMENDMENT AND TERMINATION</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board or the Committee may amend the Plan at any time, and the Board
may terminate the Plan at any time, provided that no such amendment or
termination shall be made without shareholder approval if such approval (a)
would be required under applicable law or the applicable rules of any stock
exchange, market or inter-dealer quotation system, or if (b)&nbsp;such amendment
would (1)&nbsp;increase the total number of shares of Common Stock issuable pursuant
to Incentive Stock Options granted under the Plan or (2)&nbsp;change the class of
employees eligible to receive Incentive Stock Options under the Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as set forth in any Award agreement, no amendment or termination of
the Plan may materially and adversely affect any outstanding Award under the
Plan without the Award recipient&#146;s consent.
</FONT>
<!-- link1 "ARTICLE VIII" -->
<DIV align="left"><A NAME="019"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE VIII</B></FONT>

<DIV align="center"><FONT size="2"><B>PAYMENTS AND PAYMENT DEFERRALS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Awards may be in the form of cash, Stock, other Awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. Subject to the limitations set forth in
paragraph (a)&nbsp;of Article&nbsp;V and except as prohibited by applicable law, the
Committee, either at the time of grant or by subsequent amendment, may require
or permit deferral of the payment of Awards under such rules and
</FONT>
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<P><FONT size="2">procedures as
it may establish. It also may provide that deferred settlements include the
payment or crediting of
interest or other earnings on the deferred amounts, or the payment or
crediting of dividend equivalents where the deferred amounts are denominated in
Common Stock equivalents.
</FONT>
<!-- link1 "ARTICLE IX" -->
<DIV align="left"><A NAME="020"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE IX</B></FONT>

<DIV align="center"><FONT size="2"><B>DIVIDENDS AND DIVIDEND EQUIVALENTS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may provide that any Awards under the Plan earn dividends or
dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant&#146;s Plan account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
shares of Common Stock or Common Stock equivalents.
</FONT>
<!-- link1 "ARTICLE X" -->
<DIV align="left"><A NAME="021"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE X</B></FONT>

<DIV align="center"><FONT size="2"><B>TRANSFERABILITY</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except to the extent permitted by the Award agreement, either initially or
by subsequent amendment, Awards shall not be transferable or assignable other
than by will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the recipient only by him.
</FONT>
<!-- link1 "ARTICLE XI" -->
<DIV align="left"><A NAME="022"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE XI</B></FONT>

<DIV align="center"><FONT size="2"><B>AWARD AGREEMENTS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Award under the Plan shall be evidenced by a written agreement (which
need not be signed by the recipient unless otherwise specified by the
Committee) that sets forth the terms, conditions and limitations for each
Award. Such terms may include, but are not limited to, the term of the Award,
vesting and forfeiture provisions, and the provisions applicable in the event
the recipient&#146;s employment terminates. Such agreement shall contain such
additional terms and conditions not inconsistent with the Plan as the Committee
may, in its discretion, prescribe. The Committee may amend an Award agreement,
provided that no such amendment may materially and adversely affect an Award
without the Award recipient&#146;s consent.
</FONT>
<!-- link1 "ARTICLE XII" -->
<DIV align="left"><A NAME="023"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE XII</B></FONT>

<DIV align="center"><FONT size="2"><B>UNFUNDED STATUS OF PLAN</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is presently intended that the Plan constitute an &#147;unfunded&#148; plan for
incentive compensation. The Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to deliver
Common Stock or make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the &#147;unfunded&#148; status of the Plan.
</FONT>
<!-- link1 "ARTICLE XIII" -->
<DIV align="left"><A NAME="024"></A></DIV>
<P align="center"><FONT size="2"><B>ARTICLE XIII</B></FONT>

<DIV align="center"><FONT size="2"><B>GENERAL PROVISIONS</B></FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp; Notwithstanding any other provision of the Plan, the Company shall not
be obligated to issue any Award or shares of Common Stock under the Plan unless
such issuance is in compliance with all applicable laws and any applicable
requirements of any securities exchange or market on which the Common Stock is
traded. Prior to the issuance of any Award or shares of Common Stock under the
Plan, the Company may require a written statement from the recipient as
evidence of such compliance, including, in some cases, an acknowledgment by the
recipient that the recipient is acquiring the securities for investment and not
for the purpose or with the intent of engaging in any distribution thereof.
All certificates for shares of Common Stock or other securities delivered under
the Plan shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Commission, any stock exchange or market upon which the
Common Stock is then listed or traded and any applicable Federal, state or
foreign securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
</FONT>
<P align="center"><FONT size="2">A-7</FONT>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp; Nothing contained in this Plan shall prevent the Company, a parent, a
subsidiary or an affiliate from adopting other or additional compensation
arrangements for its employees, officers or directors.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp; The adoption of the Plan shall not confer upon any employee any right
to continued employment nor shall it interfere in any way with the right of the
Company, a subsidiary or an affiliate to terminate the employment of any
employee at any time. The grant of an Award under the Plan shall not confer
upon the holder thereof any right as a shareholder of the Company. In the case
of shares of Common Stock that may be issuable upon the exercise of an Award
granted under the Plan, no person entitled to exercise such Award shall have
any of the rights or privileges of a shareholder of record with respect to any
such shares of Common Stock until such Award is exercised and certificates
representing such shares have been issued and delivered to such person.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp; No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the immediate
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. If permitted by the Award
agreement, withholding obligations arising from an Award may be settled with
Common Stock, including Common Stock that is part of, or is received upon
exercise or conversion of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company, its subsidiaries and its
affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including the making of
irrevocable elections, for the settling of withholding obligations with Common
Stock.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp; On receipt of written notice of exercise, the Committee may elect to
cash out all or a portion of the shares of Common Stock for which a Stock
Option is being exercised by paying the optionee an amount, in cash or Common
Stock, equal to the Spread Value of such shares on the date such notice of
exercise is received.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp; The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Georgia.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp; If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the
Plan, and the Plan shall be enforced and construed as if such provision had not
been included.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;The Plan shall be effective on March&nbsp;4, 2003. Except as otherwise
provided by the Board, no Incentive Stock Option shall be granted after
February&nbsp;28, 2013, but any Awards granted theretofore may extend beyond that
date.
</FONT>

<P align="center"><FONT size="2">A-8</FONT>
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<!-- link1 "Appendix&nbsp;B" -->
<DIV align="left"><A NAME="025"></A></DIV>
<P align="center"><FONT size="2"><B>Appendix&nbsp;B</B></FONT>

<P align="center"><FONT size="2"><B>INTELLIGENT SYSTEMS CORPORATION<BR>
Audit Committee Charter, as Amended November&nbsp;5, 2002</B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Purpose:</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The Audit Committee is a committee of the Board of Directors of
Intelligent Systems Corporation. Its primary function is to assist
the Board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the
Shareholders, the Securities and Exchange Commission, and others,
the Company&#146;s systems of internal controls which management and
the Board have established, and the Audit Process.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2"><B>Responsibilities: </B>In meeting its responsibilities, the Audit Committee is expected to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Provide an open avenue of communication between the audit committee, the independent accountant, and the Board of Directors.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Annually review and update the Committee&#146;s charter as may be required.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Appoint the independent accountant and review and approve the discharge of the independent accountant.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Determine and approve funding for and oversee the independent accountant.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Approve in advance all audit services and non-audit services provided to the Company by the independent accountant.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Confirm and assure the independence of the independent accountant</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">7.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Inquire of management and the independent accountant about significant
risks or exposures and assess the steps management has taken to
minimize such risk to the Company.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">8.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Consider, in consultation with the independent accountant and the Company&#146;s financial management, the external audit scope and plan.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">9.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Consider with management and the independent accountant the rationale for employing audit firms other than the principal independent accountant.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">8.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Consider and review with the independent accountant:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">A.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The adequacy of the Company&#146;s internal controls.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">B.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The adequacy of the Company&#146;s disclosure controls.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">C.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The adequacy of the Company&#146;s risk management and cost of insurance in connection thereto.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">D.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">Any significant findings and recommendations of the independent accountant together with management&#146;s responses thereto.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">9.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Meet with management and the independent accountants at the completion of the annual examination to review:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">A.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The Company&#146;s annual financial statements and footnotes, including their accuracy, completeness and overall quality.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">B.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">The independent accountant&#146;s audit of the financial statements and their report thereon.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">C.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">Any significant changes required in the independent accountant&#146;s audit plan.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">D.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">Any serious difficulties or disputes with management encountered during the course of the audit.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">E.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="90%"><FONT size="2">Other matters related to the conduct of the audit, which are to be communicated to the Committee under generally accepted auditing standards.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">10.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Review filings with the SEC and other published documents containing
the Company&#146;s financial statements and consider whether the information
contained in these documents is consistent with the information
contained in the financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">B-1</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">11.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">On a quarterly basis, as necessary, review and discuss with the
independent auditors any significant changes, transactions, events or
changes in accounting estimates, if any.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">12.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Review with the independent accountant the results of their review of
the Company&#146;s monitoring compliance with the Company&#146;s code of conduct
when established by the Company.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">13.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Review legal and regulatory matters that may have a material impact on
the financial statements, related Company compliance policies, and
programs and reports received from regulators.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">14.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Meet with the independent accountant and management in separate
executive sessions to discuss any matters that the Committee or these
groups believe should be discussed privately with the Audit Committee.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">15.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">Report Committee actions to the full Board of Directors with such recommendations as the Committee may deem appropriate.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">16.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the Committee&#146;s scope of
responsibilities. The Committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the conduct
of any investigation.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">17.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The Committee shall meet at least one time per year or more frequently
as circumstances require. The Committee may ask members of management
or others to attend the meeting and provide pertinent information as
necessary.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">18.</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">The Committee will perform such other functions as assigned by law, the Company&#146;s charter or by-laws or the Board of Directors.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="78%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Membership:</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The membership of the Audit Committee shall consist of at
least three members, each of whom shall be independent members
of the Board of Directors and financially literate.
Furthermore, at least one member of the Audit Committee shall
have accounting or related financial management experience.
Members of the Audit Committee serve at the pleasure of the
Board and Audit Committee members and the Committee chairman
shall be designated by the full Board of Directors.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">B-2</FONT>



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<P align="center"><FONT size="2"><IMG src="g81882g8188201.gif" alt="(INTELLIGENT SYSTEMS LOGO)"></FONT>

<P align="center"><FONT size="2">Notice of Annual Meeting<BR>
and<BR>
Proxy Statement</FONT>

<P align="center"><FONT size="2">Annual Meeting of Shareholders<BR>
4355 Shackleford Road<BR>
Norcross, Georgia 30093</FONT>

<P align="center"><FONT size="2">Friday, May&nbsp;30, 2003<BR>
4:00 P.M.</FONT>


<P align="center"><FONT size="2">&nbsp;</FONT>



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<P align="center"><FONT size="3"><B>INTELLIGENT SYSTEMS CORPORATION</B></FONT>
<P align="center"><FONT size="2"><B>PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned, a
shareholder of common stock, $.01 par value (the &#147;Common
Stock&#148;) of Intelligent Systems Corporation, a Georgia
corporation (the &#147;Company&#148;) hereby appoints J. Leland
Strange and Bonnie L. Herron, and each of them with full power of
substitution, proxies to vote at the Annual Meeting of Stockholders
of the Company to be held on May&nbsp;30, 2003 at 4:00&nbsp;p.m.,
local time, and at any adjournment or adjournments thereof, hereby
revoking any proxies heretofore given, to vote all shares of Common
Stock of the Company held or owned by the undersigned as of the
record date, April&nbsp;11, 2003 as directed on the reverse, and in
their discretion, upon such other matters as may come before the
meeting.
</FONT>

<P align="center"><FONT size="2"><B>(Continued and to be signed on
the reverse side)</B></FONT>

<TABLE align="right" cellspacing="0" cellpadding="0" border="0" width="10%">
<TR>
  <TD width="10%" align="center"><FONT size="1"><HR noshade size="2" width="100%" align="center">
SEE REVERSE<BR>
SIDE<BR>
<HR noshade size="2" width="100%" align="center"></FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2"><B>ANNUAL MEETING OF SHAREHOLDERS OF</B></FONT><BR>
<BR>
<FONT size="4"><B>INTELLIGENT SYSTEMS CORPORATION</B></FONT><BR>
<BR>
<FONT size="2"><B>May&nbsp;30, 2003</B></FONT>

<P>
<P>
<P>
<P align="center"><FONT size="3"><B>Please date, sign and mail<BR>
your proxy card in  the<BR>
envelope provided as soon<BR>
as possible.</B></FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>

<TABLE align="center" cellspacing="0" cellpadding="0" border="0" width="100%">
<TR>
  <TD width="32%" align="right"><FONT size="2">&#916;</FONT></TD>
  <TD width="2%">&nbsp;</TD>
  <TD width="32%" align="center"><FONT size="1"><B>Please detach and mail in the envelope provided.</B></FONT></TD>
  <TD width="2%">&nbsp;</TD>
  <TD width="32%" align="left"><FONT size="2">&#916;</FONT></TD>
</TR>
</TABLE>

<p>
<HR noshade size="2" width="100%" align="center">

<DIV align="center"><FONT size="2"><B>PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS
SHOWN HERE <FONT face="wingdings">&#120;</FONT></B></FONT></DIV>

<HR noshade size="2" width="100%" align="center">

<TABLE align="center" cellspacing="0" cellpadding="0" border="0" width="100%">
<TR>
  <TD width="1%">&nbsp;</TD>

  <TD width="2%">&nbsp;</TD>
  <TD width="40%">&nbsp;</TD>

  <TD width="1%">&nbsp;</TD>
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  <TD width="2">&nbsp;</TD>
  <TD width="40%">&nbsp;</TD>

  <TD width="3">&nbsp;</TD>
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  <TD width="1%">&nbsp;</TD>

  <TD width="3%">&nbsp;</TD>
  <TD width="1%">&nbsp;</TD>
</TR>

<TR>
  <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="left"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="left"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center" valign="top"><FONT size="1">FOR</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center" valign="top"><FONT size="1">AGAINST</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center" valign="top"><FONT size="1">ABSTAIN</FONT></TD>
</TR>

<TR>
  <TD align="right" valign="top"><FONT size="2">1.</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="left" valign="top"><FONT size="2">Election of Directors:
The following persons are being nominated to the Company&#146;s Board
of Directors:</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="right" valign="top"><FONT size="2">2.</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="left" valign="top"><FONT size="2">Adoption of Intelligent
Systems Corporation 2003 Stock Incentive Plan</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center"><FONT face="wingdings" size="4">&#111;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center"><FONT face="wingdings" size="4">&#111;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="center"><FONT face="wingdings" size="4">&#111;</FONT></TD>
</TR>
</TABLE>

<TABLE align="center" cellspacing="0" cellpadding="0" border="0" width="100%">
<TR>
  <TD width="1%">&nbsp;</TD>
  <TD width="20%">&nbsp;</TD>

  <TD width="3%">&nbsp;</TD>
  <TD width="16%">&nbsp;</TD>

  <TD width="2">&nbsp;</TD>
  <TD width="58%">&nbsp;</TD>
</TR>

<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD colspan="2" align="left" valign="top"><FONT size="1">NOMINEES:</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>

<TD align="left" valign="middle"><FONT face="wingdings" size="4">&#111;&nbsp;</FONT></TD>
  <TD align="left" valign="middle"><FONT size="1">FOR ALL NOMINEES</FONT></TD>
  <TD align="left" valign="middle"><FONT face="wingdings" size="1">&#111;</font><BR>
<FONT face="wingdings" size="1">&#111;</FONT></TD>
  <TD align="left" valign="middle"><FONT size="1">James V. Napier<BR>
J. Leland Strange</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD align="left" valign="top"><FONT size="2">This proxy
will be voted as directed. If no instructions are specified the proxy
will be voted &#147;<B>FOR</B>&#148; Proposal 1 &#38; 2.</FONT></TD>
</TR>

<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
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  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>

<TD align="left" valign="middle"><FONT face="wingdings" size="4">&#111;&nbsp;</FONT></TD>
  <TD align="left" valign="middle"><FONT size="1">WITHHOLD AUTHORITY<BR>
FOR ALL NOMINEES</FONT></TD>
  <TD align="left" valign="middle"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>

<TD align="left" valign="middle"><FONT face="wingdings" size="4">&#111;&nbsp;</FONT></TD>
  <TD align="left" valign="middle"><FONT size="1">FOR ALL EXCEPT<BR>(See instructions below)</FONT></TD>
  <TD align="left" valign="middle"><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
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  <TD><FONT size="2">&nbsp;</FONT></TD>
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</TR>
<TR>
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</TR>
</TABLE>

<TABLE align="center" cellspacing="0" cellpadding="0" border="0" width="100%">
<TR>
  <TD width="1%">&nbsp;</TD>
  <TD width="20%">&nbsp;</TD>

  <TD width="3%">&nbsp;</TD>
  <TD width="16%">&nbsp;</TD>

  <TD width="2">&nbsp;</TD>
  <TD width="58%">&nbsp;</TD>
</TR>

<TR>
  <TD align="left" valign="top"><FONT size="1">INSTRUCTION:&nbsp;&nbsp;</FONT></TD>
  <TD align="left" valign="bottom" colspan="3"><FONT size="1">To
withhold authority to vote for any individual nominee(s), mark
&#147;FOR ALL EXCEPT&#148; and fill in the circle next to each nominee
you wish to withhold, as shown
here;&nbsp;&nbsp;<FONT face="wingdings">n</FONT></FONT></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
  <TD colspan="4" align="left" valign="top"><HR noshade size="2"></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
  <TD><FONT size="2">&nbsp;</FONT></TD>
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</TR>
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  <TD><FONT size="2">&nbsp;</FONT></TD>
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</TR>
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</TR>

<TR>
  <TD colspan="4" align="left" valign="top"><HR noshade size="2"></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
  <TD colspan="4" align="left" valign="top"><FONT size="1">To change
the address on your account, please check the box at right and
indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method.</FONT></TD>
  <TD><FONT face="wingdings" size="4">&#111;&nbsp;</FONT></TD>
</TR>

<TR>
  <TD colspan="4" align="left" valign="top"><HR noshade size="2"></TD>
  <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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<P align="left"><FONT size="1">Signature of Shareholder
__________________________ Date: _____________ Signature of Shareholder
__________________________ Date: _____________
</FONT>
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