SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use Of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Underss.240.14a-12
CVF TECHNOLOGIES CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: ....
(2) Aggregate number of securities to which transaction applies: ....
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ....
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: .................................
(2) Form, Schedule or Registration Statement No.: ...........
(3) Filing Party: ...........................................
(4) Date Filed: .............................................
-2-
CVF TECHNOLOGIES CORPORATION
916 CENTER STREET
LEWISTON, NEW YORK 14092
NOTICE OF 2000 ANNUAL STOCKHOLDERS' MEETING
To the Stockholders:
Notice is hereby given that the 2000 Annual Meeting of Stockholders (the
"Meeting"), of CVF Technologies Corporation (the "Company"), will be held at the
Buffalo Marriott Hotel, 1340 Millersport Highway, Amherst, New York (immediately
north of Route I-290), at 11:00 a.m., New York time, on June 22, 2000 for the
following purposes:
1. To elect four directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified; and
2. To approve the CVF Technologies Corporation 2000 Stock Option Plan;
and
3. To consider and take action upon such other matters as may properly
come before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on May 12, 2000 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Robert B. Nally
Secretary
Date: May 22, 2000
STOCKHOLDERS ARE URGED TO VOTE BY SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY
IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
May 22, 2000
CVF TECHNOLOGIES CORPORATION
916 CENTER STREET
LEWISTON, NEW YORK 14092
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 2000
The following information is furnished in connection with the Annual
Meeting of Stockholders (the "Meeting"), of CVF Technologies Corporation (the
"Company"), to be held on June 22, 2000 at 11:00 a.m., New York time, at the
Buffalo Marriott Hotel, 1340 Millersport Highway, Amherst, New York (immediately
north of Route I-290). A copy of the Company's Annual Report to Stockholders for
the fiscal year ended December 31, 1999 is enclosed with this Proxy Statement
and Form of Proxy. Additional copies of the Annual Report, Notice, Proxy
Statement and Form of Proxy may be obtained from the Company's Secretary, 916
Center Street, Lewiston, New York 14092. This Proxy Statement and Form of Proxy
will be first sent to stockholders on or about May 22, 2000.
SOLICITATION AND REVOCABILITY OF PROXIES
THE ENCLOSED PROXY FOR THE MEETING IS BEING SOLICITED BY THE DIRECTORS OF
THE COMPANY. The proxy may be revoked by a stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a stockholder attending the Meeting, withdrawing such proxy and
voting in person. The cost of soliciting the proxies on the enclosed form will
be paid by the Company. In addition to the use of the mails, proxies may be
solicited by the directors and Company employees (who will receive no additional
compensation therefor) by means of personal interview, telephone or facsimile,
and it is anticipated that banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward the soliciting material to
their principals and to obtain authorization for the execution of proxies. The
Company may, upon request, reimburse banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding proxy
material to their principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determining shares of common stock, $0.001 par value
per share, of the Company ("Shares"), entitled to vote at the Meeting has been
fixed at the close of business on May 12, 2000. On such date there were
7,785,953 Shares outstanding, entitled to one vote each.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of May 9, 2000, the approximate number
of Shares beneficially owned by each person known by the Company to be the
beneficial owner of more than 5% of the Shares, and the name and shareholdings
of each executive officer and director, and all executive officers and directors
as a group. Unless otherwise stated, each person has sole voting and investment
power with respect to the Shares set forth in the table.
NAME AND ADDRESS AMOUNT PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------- ------------------ --------
Jeffrey I. Dreben (1)....................... 608,524 7.8%
916 Center Street
Lewiston, New York 14092
Robert B. Nally (1)......................... 609,524 7.8%
189 Mary Street
Waterloo, Ontario N2J 1S1
Brant Investments Limited................... 1,235,731 15.8%
c/o Royal Trust Company -- Pension Dept.
Royal Trust Tower, 7th Floor
77 King Street West
Toronto, Ontario M5W 1P9
Prudential Insurance Company of America..... 610,750 7.8%
c/o Canada Trust Pension Trust Services
320 Bay Street West, 3rd Floor
Toronto, Ontario M5H 2P6
Directors and Officers as a Group .......... 1,617,048 20.7%
(5 persons) (1)(2)(3)(4)(5)(6)
-2-
- -----------------
(1) Each of Messrs. Dreben and Nally owns 207,880 Shares underlying a warrant
(the "Warrant") exercisable by Canadian Venture Founders Management
Limited, of which Messrs. Dreben and Nally each owns 21.8%. The wives of
Mr. Dreben and Mr. Nally are the registered holders of their husbands'
interests in Canadian Venture Founders Management Limited. Accordingly, Mr.
Dreben and Mr. Nally expressly disclaim beneficial ownership of the 207,880
Shares underlying the Warrant. Messrs. Dreben and Nally also each hold
100,000 options to acquire Shares at an option price of $3.25 per share and
100,000 options to acquire Shares at an option price of $2.88 per share.
Also includes with respect to Mr. Dreben 200,644 Shares owned by Mr.
Dreben's wife as to which Mr. Dreben disclaims beneficial ownership and,
with respect to Mr. Nally, 201,644 Shares owned by Mr. Nally's wife as to
which Mr. Nally disclaims beneficial ownership.
(2) Mr. Khouri has been issued 45,000 options to acquire Shares of the Company
at an option price of $3.25 per share, exercisable up to September 30,
2002. On March 4, 1999, Mr. Khouri was issued an additional 30,000 options
to acquire Shares at an option price of $2.88 per share.
(3) Robert Glazier has been issued 20,000 options to acquire Shares of the
Company at an option price of $3.25. On March 4, 1999, Mr. Glazier was
issued an additional 30,000 options to acquire Shares at an option price of
$2.88 per share.
(4) Mr. Lawrence Casse, a Vice President of the Company, has been issued 20,000
options to acquire Shares of the Company at an option price of $3.25 per
share.
(5) Mr. J. Murray Kierans, a Vice President of the Company, has been issued
180,000 options to acquire Shares of the Company at an exercise price of
$2.88 per share.
(6) Mr. Robert L. Miller, Chief Financial Officer of the Company, has been
issued 75,000 options to acquire Shares of the Company at an exercise price
of $2.88 per Share.
-3-
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors has nominated four candidates for election at the
Meeting. If a quorum is present, those nominees receiving a plurality of the
votes cast at the Meeting will be elected as directors. A "plurality" means that
the nominees who receive the greatest number of votes at the Meeting are elected
as directors. Any Shares not voted "FOR" a particular nominee (whether as a
result of a direction to withhold authority or a broker non-vote) will not be
counted to determine a plurality. Each person so elected shall serve until the
next Annual Meeting of Stockholders and until his successor is elected and
qualified.
The directors of the Company recommend a vote FOR the nominees listed
below. All nominees are currently serving as directors of the Company and were
elected directors at the 1999 Annual Meeting of Stockholders.
Unless instructed otherwise, proxies will be voted FOR the nominees listed
below. Although the directors do not contemplate that any of the nominees will
be unable to serve prior to the Meeting, if such a situation arises, the
enclosed proxy will be voted in accordance with the best judgment of the person
or persons voting the proxy.
The table below sets forth certain information regarding the nominees for
election to the Company's Board of Directors.
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND POSITION AGE EXPERIENCE FOR PAST FIVE YEARS (1)
- ----------------- --- ----------------------------------
Jeffrey I. Dreben 55 Director, Chairman, President and Chief Executive
Officer of the Company since 1995; Director, Vice
President and Treasurer of CVF Management from
1989 to 1995.
Robert H. Glazier 51 Director of the Company since 1998; President and
Chief Executive Officer of Donatech Corporation
(computer software consulting company) since 1986.
Robert B. Nally 52 Director and Consultant to the Company since
1995; Treasurer and Secretary of the Company
since 1997; Chief Operating Officer and Chief
Technology Officer since January 1, 1999;
Chairman of RDM Corporation (technologies for
check processing and electronic commerce
solutions) since 1995; Vice President and
Secretary of CVF Management from 1989 to 1995.
-4-
George A. Khouri 53 Director and Special Consultant to the Company
since 1997; Managing Director -- Capital Markets
for Nomura Securities International Inc. from
1993 to 1996; Vice President of Trigon Group (an
investment banking boutique) from 1992 to 1993.
- -----------------
(1) Unless otherwise stated, each nominee has held the position indicated for
at least the past five years.
OTHER DIRECTORSHIPS AND TRUSTEESHIPS
No members of the Board of Directors, except Mr. Nally, serve on the Boards
of Directors or the Boards of Trustees of any other publicly-held companies. Mr.
Nally serves on the Board of Directors of Virtek Vision International Inc. and
RDM Corporation, both of which are publicly-held Canadian corporations.
COMMITTEES AND MEETING DATA
During the year ended December 31, 1999, the full Board of Directors met on
two occasions. Each director attended all of the meetings of the Board. The
Company has a standing Audit Committee consisting of Messrs. Dreben, Glazier,
Khouri and Nally which met on two occasions during the year ended December 31,
1999. The function of the Audit Committee is to recommend to the Board of
Directors the firm of independent public accountants to audit the Company's
financial statements each fiscal year, review with the independent auditor the
general scope of this service, review the nature and extent of the nonaudit
services to be performed by the independent auditors, and consult with
management on the activities of the Company's independent auditors and the
Company's system of internal control.
-5-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors, executive
officers and more than 10 percent stockholders of the Company file reports with
the Securities and Exchange Commission within the first 10 days of the month
following any purchase or sale of Shares. During 1999, none of the executive
officers and directors of the Company, to the knowledge of the Company, were
late in filing a report under Section 16(a) of the Exchange Act.
EXECUTIVE OFFICERS
The following is a list of the Company's executive officers.
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND POSITION AGE EXPERIENCE FOR PAST FIVE YEARS
- --------------------- --- ---------------------------------
Jeffrey I. Dreben 55 See table under "Nominees." Chairman,
President and Chief Executive Officer.
Robert B. Nally 52 See table under "Nominees." Chief Operating
Officer and Chief Technology Officer,
Treasurer and Secretary.
Robert L. Miller 48 Chief Financial Officer since June 1999;
Vice President of Finance/Controller of U.S.
Appraisal, Inc. from March 1998 to April
1999; Vice President/Controller of Pratt &
Lambert United, Inc. from 1985 to 1996.
J. Murray Kierans 55 Vice President Corporate Development since
January 1999; Vice President Corporate
Development of U.S.-based venture capital
company from 1995 until December 1998;
Business and Tax Attorney practicing
privately from 1976 until 1995.
Lawrence M. Casse 43 Consultant to Company since March 1997;
appointed Vice President of Company in
April 1998; President of Resonance Capital
Corporation from 1993 to 1997.
-6-
EXECUTIVE COMPENSATION
The following table summarizes, for the fiscal years ended December 31,
1999, 1998 and 1997, the amount of the compensation paid by the Company to its
Chief Executive Officer and all other executive officers whose cash compensation
during the year ended December 31, 1999 exceeded $100,000 (the "Named
Officers").
OTHER
ANNUAL COMPENSATION OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION
- ----------------- ---- ------ ------------ ------------
Jeffrey I. Dreben 1999 $200,000 $25,000 --
Chairman, President and 1998 200,000 20,000 --
Chief Executive Officer 1997 200,000 500,000(1) $638,863(1)
Robert B. Nally 1999 134,762(2)(4) 25,000 --
Chief Operating Officer, 1998 133,571(3)(4) 13,492(3)(4) --
Chief Technology Officer, 1997 140,000(4) 500,000(1)(4) 622,952(1)
Treasurer and Secretary
J. Murray Kierans 1999 120,000 4,000
Vice President
Corporate Development
- -----------------
(1) During 1997, the Company repurchased 601,932 of its Shares for an aggregate
consideration of $10 from a corporation owned by officers of the Company.
The Company simultaneously issued to these officers options to purchase an
equal number of Shares for $0.05 per Share. The Company recorded no expense
effect on this exchange. During 1997, the options were exercised at a time
when the quoted market price of the Shares was $3.00 per Share. On this
sequence of transactions the Company recorded a $727,163 tax benefit as an
increase in additional paid in capital. Bonuses were paid to these officers
as compensation for the related personal tax liabilities. The total net
after tax cash disbursement cost to the Company for these bonuses was
approximately $250,000. Bonuses of this nature are not expected to reoccur
in the future.
(2) Paid in Canadian currency but translated in the table to U.S. currency
based on the average exchange rate for 1999 of Canadian $1.00 = U.S.
$.6738.
(3) Paid in Canadian currency but translated in the table to U.S. currency
based on the exchange rate of Canadian $1.00 = U.S. $.6746.
-7-
(4) Paid under Mr. Nally's Consulting Arrangement with the Company which is
discussed under "Certain Transactions and Relationships."
Option Grants and Exercises. The following table sets forth grants of stock
options to acquire Shares with respect to the Named Officers during the year
ended December 31, 1999.
INDIVIDUAL GRANTS
-----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE
- ---- ----------- --------------- ----------- -----------
Jeffrey I. Dreben 100,000 18.9% $2.88 3/4/04
Robert B. Nally 100,000 18.9% $2.88 3/4/04
J. Murray Kierans 180,000 34.0% $2.88 3/4/04
Option Exercises and Year End Values. The following table shows the options
which were outstanding for the Named Officers during the year ended December 31,
1999. No options were exercised by the Named Officers during the year ended
December 31, 1999.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ------------- -------------
Jeffrey I. Dreben -0- $-0- 200,000/0 $174,500/0
Robert B. Nally -0- $-0- 200,000/0 $174,500/0
J. Murray Kierans -0- $-0- 60,000/120,000 $ 63,450/126,900
-8-
Director's Fees. The Company does not currently pay any additional fees to
the directors who are also officers of or consultants to the Company. Mr. Khouri
became a consultant to the Company in June 1997 and is paid $5,802 per month in
consulting fees. See "Certain Transactions and Relationships." Robert Glazier,
appointed a director in January 1998, is entitled to receive $750 per Board of
Directors meeting attended in person and $375 per telephonic board meeting in
which he participates. As additional compensation as directors, in March 1999,
Messrs. Khouri and Glazier were each issued options to acquire 30,000 Shares at
an exercise price of $2.88 per share.
Employment Agreement. In February, 1999 CVF Technologies International, Inc., a
wholly owned subsidiary of the Company, entered into an employment agreement
with J. Murray Kierans for his employment as Managing Director and Vice
President Corporate Development of the Company. The term of the agreement is
indefinite subject to either parties' right to terminate the agreement with
three months prior notice. Compensation under the agreement is as stated under
"Executive Compensation" above.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Arrangements with Mr. Gissing. In connection with the resignation of Mr.
Malcolm Gissing in May 1997, the Company agreed to pay Mr. Gissing a deferred
retirement benefit of $6,000 CDN per month for life.
Transactions with CVF, Inc. Pursuant to a stock purchase agreement dated
February 5, 1997, the Company repurchased 601,932 Shares from CVF, Inc. for an
aggregate purchase price of $10.00. The stockholders of CVF, Inc. at that time
included Messrs. Dreben and Nally, current directors and nominees for directors
of the Company. Also on February 5, 1997, the Company issued options to purchase
an aggregate of 601,932 Shares for $.05 per Share to Messrs. Dreben, Nally and a
former director. The transactions of February 5, 1997 were structured to be a
like-kind exchange with no effect on earnings. On May 30, 1997, these options
were exercised.
Service Agreement with D and N Consulting Corporation. The Company entered
into a Service Agreement dated February 10, 1997 with D and N Consulting
Corporation ("D and N"), identical to the agreement the Company formerly had
with CVF, Inc., the predecessor to D and N, pursuant to which D and N would
provide a variety of administrative, managerial and clerical services to the
Company. Under the Service Agreement, D and N would be responsible for all
administrative requirements of the Company, including, but not limited to,
maintaining the books of the Company, preparing periodic reports to the Board of
Directors of the Company and providing office facilities and travel expenses. In
return for the above services, D and N is to be paid a service fee based on an
annual budget prepared by D and N and approved by the Board of Directors of the
Company. Messrs. Dreben and Nally are each officers and 50% stockholders of D
and N. D and N and the Company have mutually agreed to defer operation of the
Service Agreement. Instead, the services continue to be provided by the
officers, employees and consultants of the Company, and the Company has neither
paid nor accrued service fees under the Service Agreement. In March 2000, the
Service Agreement was extended for an additional period and now runs through
March 27, 2005.
-9-
Consulting Arrangement with Mr. Khouri. Pursuant to an Independent
Consultant Agreement, for the months of April and May 1997, Mr. Khouri, a
director of the Company, provided the Company with consulting services, as well
as services as a director, in exchange for which Mr. Khouri received consulting
fees of $750 per day and director fees of $1,000 per month. Effective June 1,
1997 the Company reached a new agreement with Mr. Khouri with a one-year term
which was renewable if mutually agreed to by the parties pursuant to which Mr.
Khouri provided the Company with consulting services and reported directly to
the President of the Company in exchange for which Mr. Khouri received $10,500
per month and no additional fees, other than options to acquire Shares, as a
director. This consulting agreement, which was renewed for another year
effective June 1998, was terminable by either party upon 90 days notice of the
intent to so terminate. Effective December 1, 1999, the Company reached a new
agreement with Mr. Khouri with a one-year term which is renewable if mutually
agreed to by the parties pursuant to which Mr. Khouri provides the Company with
consulting services and reports directly to the President of the Company in
exchange for which Mr. Khouri receives $5,802 per month and receives no other
compensation other than options to acquire Shares as a director. Upon
termination, Mr. Khouri will resign as a director. Periodically, the President
of the Company will review Mr. Khouri's performance and determine whether to
continue Mr. Khouri's consulting arrangement.
Consulting Arrangement with Mr. Nally. The Company has an oral
understanding with Mr. Nally, a director and an officer of the Company, pursuant
to which Mr. Nally provides the Company with certain consulting services,
particularly with respect to technology management, in exchange for which Mr.
Nally receives compensation as determined by the Board of Directors. In 1998 and
1999, Mr. Nally received $147,063 and $159,762, respectively, for his services
as a consultant to the Company.
Transaction with RDM Corporation. In December 1997, the Company purchased
1,428,572 special warrants in RDM Corporation for a total purchase price of
$1,000,000 CDN ($659,400 US) based on the conversion price on August 5, 1998 of
$1.00 (US) to $1.52 (CDN). The special warrants were exercised in June 1998 and
were exchanged for 1,428,572 common shares of RDM Corporation. During 1998 the
Company purchased 339,500 additional common shares of RDM Corporation and
270,000 special warrants were granted to the Company. The special warrants
include an exercise price of $1.32 (CDN) per share ($.89 US) exercisable until
September 30,2000. In 1999, 100,000 additional common shares of RDM Corporation
were purchased bringing the total number of shares owned by the Company in RDM
Corporation to 1,868,072 shares (approximately 16% of the outstanding shares).
RDM Corporation is a Canadian corporation which develops and supplies
technologies for check processing and electronic e-commerce solutions. Mr.
Nally, an officer, director and nominee of the Company has been Chairman of RDM
Corporation since 1995 and beneficially owns 1,957,183 common shares
(approximately 17% of the outstanding shares) of RDM Corporation.
PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S 2000 STOCK OPTION PLAN
The Company is asking for stockholder approval of the 2000 Stock Option
Plan (the "2000 Plan"), which was adopted by the Board of Directors on February
24, 2000. The affirmative vote of a majority of the votes cast by all
stockholders entitled to vote thereon is required for approval of the 2000 Plan.
Any grants made under the 2000 Plan will be canceled unless the stockholders
approve the 2000 Plan. The full text of the 2000 Plan is attached to this Proxy
Statement as Exhibit A. The following description of the 2000 Plan is qualified
in its entirety by reference to such text.
-10-
General
The Board of Directors has determined to adopt the 2000 Plan to provide
additional shares for the grant of options.
Grants Under 2000 Plan
As of February 24, 2000, the Board of Directors granted options under the
2000 Plan, subject to stockholder approval, to each of Jeffrey I. Dreben,
Chairman, President and Chief Executive Officer of the Company, Robert B. Nally,
Chief Operating Officer and Chief Technology Officer to the Company, George A.
Khouri, a consultant to the Company, Robert H. Glazier, a director of the
Company, Lawrence M. Casse, a Vice President of the Company, and Diana
Sutherland, Teresa Bono and Kelly Crystal, each an employee of the Company. Each
of Messrs. Dreben and Nally received options to acquire 100,000 shares of the
Company's common stock, each of Messrs. Khouri and Glazier received options to
acquire 30,000 shares of the Company's common stock, Mr. Casse received an
option to acquire 20,000 shares of the Company's common stock, and each of Mmes.
Sutherland, Bono and Crystal received options to acquire 5,000 shares of the
Company's common stock, all at an exercise price of $2.875 (U.S.) per share,
which was the closing price of the Company's Shares on the AMEX on the date of
the grant. The options granted to Messrs. Dreben, Nally, Khouri, Glazier, and
Casse and Mmes. Sutherland, Bono and Crystal will vest and become exercisable as
provided for by the Board of Directors. A vote to approve the 2000 Plan also
constitutes a vote to approve the option grants to Messrs. Dreben, Nally,
Khouri, Glazier, and Casse and Mmes. Sutherland, Bono and Crystal. In the event
stockholder approval of the 2000 Plan is not obtained, the grants to Messrs.
Dreben, Nally, Khouri, Glazier, and Casse and Mmes. Sutherland, Bono and Crystal
thereunder will be canceled.
Purpose
The 2000 Plan is intended to provide long term incentives and rewards to
directors, officers and other key employees or persons responsible for the
success and growth of the Company, to attract and retain such persons on a
competitive basis and to associate the interests of such persons with those of
the Company.
Duration, Modification and Termination of the 2000 Plan
The Company's Board of Directors, or other committee designated to
administer the 2000 Plan, may at any time and from time to time alter, amend,
suspend or terminate the 2000 Plan in whole or in part, except that no amendment
may adversely affect any of the material rights of any optionee, without such
optionee's consent, under any option theretofore granted under the 2000 Plan.
The power to grant options under the 2000 Plan will automatically terminate ten
years following the approval of the 2000 Plan by the stockholders of the
Company, or June 22, 2010. In the event that the 2000 Plan is terminated, any
unexercised options shall continue to be exercisable in accordance with their
terms and the terms of this 2000 Plan in effect immediately prior to such
termination; provided, however, that in no event may any option be exercised
more than ten years from its date of grant.
-11-
Administration
The 2000 Plan provides that it is to be administered by the Board or such
other committee as the Board may designate (the "Committee"). Subject to the
requirements set forth above, the Board has the authority to remove and add
members of the Committee and fill all vacancies. The Board has the authority in
its sole discretion, subject to and not inconsistent with the express provisions
of the 2000 Plan, to administer the 2000 Plan and to exercise all the powers and
authorities either specifically granted to it under the 2000 Plan or necessary
or advisable in administration of the 2000 Plan, including, without limitation,
the authority to grant and to modify options, to determine the persons to whom
and the time or times at which options shall be granted, to determine the type
and number of options to be granted and the terms, conditions and restrictions
relating to any option, to determine whether, to what extent, and under what
circumstances an option may be settled, cancelled, forfeited, exchanged or
surrendered, to construe and interpret the 2000 Plan and any option, to
prescribe, amend and rescind rules and regulations relating to the 2000 Plan, to
determine the terms and provisions of agreements evidencing options granted
under the 2000 Plan, to correct any defect, supply any deficiency and reconcile
any inconsistency in the 2000 Plan or any option granted under the 2000 Plan, to
amend the 2000 Plan, and to make all other determinations deemed necessary or
advisable for the administration of the 2000 Plan. The Board may designate one
or more persons to implement its rules, regulations and determinations made with
respect to the 2000 Plan, to execute and deliver instruments and documents
related thereto and take certain other actions.
All decisions, determinations and interpretations of the Board are final
and binding on all persons, including the Company, any optionee (or any person
claiming any rights under the 2000 Plan from or through any optionee). The
Committee (if any), from time to time, and whenever requested, will report to
the Board on its administration of the 2000 Plan and the actions it has taken.
All expenses of administering the 2000 Plan will be paid by the Company.
Securities Offered Under the 2000 Plan
The 2000 Plan authorizes the offer and sale of 750,000 Shares pursuant to
the exercise of stock options. The Shares to be purchased pursuant to the
exercise of options under the 2000 Plan will be issued from either authorized
and unissued Shares or any issued Shares reacquired by the Company, including
Shares purchased in the open market, in private transactions or otherwise. In
the event any Shares subject to an option are forfeited, cancelled, exchanged or
surrendered or if an option otherwise terminates or expires without a
distribution of Shares to the optionee, the Shares with respect to such option
will, to the extent of any such forfeiture, cancellation, exchange, surrender,
termination or expiration, again be available for grants of options under the
2000 Plan.
Eligibility
Persons eligible for the grant of options under the 2000 Plan are the
officers, directors (including non-employee directors) and employees of the
Company, and other persons responsible for the success of the Company in the
sole discretion of the Board. There are currently approximately twenty-five (25)
persons eligible for the grant of options under the 2000 Plan. The Board
determines those persons to whom and the time or times at which options shall be
granted, the type and number of options to be granted and the terms, conditions
and restrictions relating to any option. Under the 2000 Plan, no participant may
be granted options to acquire more than 200,000 shares of Common Stock in any
year.
-12-
Option Agreements
Stock options granted pursuant to the 2000 Plan will be evidenced by a
written stock option agreement instrument or certificate ("Option Agreement") in
such form and containing such terms and conditions as the Board from time to
time approve, subject to the 2000 Plan. Each Option Agreement will state the
number of shares to which it relates, whether the option constitutes an
incentive stock option ("ISO") qualified under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") or a non-qualified stock option,
and the option price. In the case of an ISO granted to a person owning more than
10% of the voting stock of the Company, the option price will not be less than
110% of the fair market value of the common stock on the date of grant. The fair
market value of a Share as of a particular date means the closing price of a
Share as reported on the AMEX on the last preceding day on which such Shares
were sold.
An Option Agreement may require that the optionee agree to remain in the
employ of, or otherwise maintain his, her or its relationship with, the Company
for a specified period of time from the date of grant of the option. The 2000
Plan and any Option Agreement will confer no right on any person to continue in
the employ of or to be entitled to any remuneration or benefits not set forth in
the 2000 Plan or any Option Agreement or otherwise limit the Company's right to
terminate the optionee's employment with or service to the Company.
Payment for Shares Offered Under the 2000 Plan
Payment for Shares purchased pursuant to the exercise of options granted
under the 2000 Plan is to be made in full, at the time of exercise (i) in cash,
or (ii) in Shares already owned by the optionee having a fair market value equal
to the option exercise price or in a combination of cash and Shares or (iii) in
the sole discretion of the Board, through a cashless exercise procedure whereby
the optionee pays the exercise price by directing that the Shares otherwise
deliverable on exercise of the option be withheld, or through delivery of a
notice instructing the Company to deliver the Shares deliverable upon exercise
of the option to a broker against delivery by the broker of the exercise price
in cash or through a promissory note. All required state and federal withholding
taxes are also payable by the optionee.
Term and Exercise of Options
The Board has discretion to determine the term of an option; provided,
however, that under the 2000 Plan an option may never be exercised more than 10
years from its date of grant. In the case of an ISO granted to a person owning
-13-
more than 10% of the voting stock of the Company, the term may not exceed five
years from the date of grant. Options may be exercised in full at any time or in
part from time to time in accordance with the 2000 Plan and the provisions of
any applicable Option Agreement. The Board may require in its discretion that
any option granted becomes exercisable only in installments or after some
minimum period of time, or both. The Board has the authority to accelerate the
exercisability of any outstanding option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An option is
exercised under the 2000 Plan by written notice delivered in person or by mail
to the Secretary of the Company, specifying the number of Shares with respect to
which the option is being exercised. Options may not be transferred by an
optionee except by will or the laws of descent and distribution and shall be
exercisable during the lifetime of an optionee only by such optionee or such
optionee's guardian or legal representatives.
With respect to ISOs, the aggregate fair market value (determined as of the
date the ISO is granted) of the Shares with respect to which ISOs granted under
this 2000 Plan and all other plans of the Company become exercisable for the
first time by each optionee during any calendar year may not exceed $100,000.
Effect of Termination of Employment, Disability, Death
The Board has exclusive authority to determine if, and for how long, and
under what conditions any option may be exercised after termination of an
optionee's employment with or service to the Company, including by reason of the
optionee's death; provided, however, that in no event will an option continue to
be exercisable beyond the expiration date of such option.
Certain Adjustments
In the event the Board determines that any dividend or other distribution
(whether in the form of cash, stock or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Shares such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of optionees under the
2000 Plan, then the Board shall make such equitable changes or adjustments as it
deems necessary or appropriate to any or all of (i) the number and kind of
shares of stock of the Company which may thereafter be issued in connection with
options, (ii) the number and kind of shares of stock of the Company issued or
issuable in respect of outstanding options, and (iii) the exercise price, grant
price or purchase price relating to any option. With respect to ISOs, any such
adjustments will be made in accordance with the applicable requirements of the
Code.
No person has any claim to be granted any option under the 2000 Plan and
there is no obligation for uniformity of treatment among optionees. No optionee
nor any transferee of an option has any rights as a stockholder with respect to
any shares of Shares covered by an option until the date of issuance of a stock
certificate for such Shares.
-14-
Certain U.S. Federal Income Tax Consequences
The following discusses certain of the U.S. federal income tax consequences
associated with (i) the grant of a stock option under the 2000 Plan, (ii) the
exercise of such option and (iii) the disposition of shares received upon the
exercise of an option. This description of tax consequences is based upon
present U.S. federal tax laws and regulations, but does not purport to be a
complete description of the U.S. federal income tax consequences under the 2000
Plan.
Non-Qualified Stock Options. The grant of a non-qualified stock option
(including any option that exceeds the limitations on incentive stock options
described below) to an optionee will not be a taxable event so long as the
option does not have a readily ascertainable fair market value. Options granted
pursuant to the 2000 Plan will not be regarded as having a readily ascertainable
fair market value. Accordingly, the optionee will not be subject to any income
tax consequences with respect to such option unless and until the option is
exercised.
Upon the exercise of a non-qualified stock option, the optionee generally
will recognize ordinary compensation income equal to the "spread" between the
exercise price and the fair market value of the Shares on the date of exercise.
Generally, the Company will be entitled to a federal income tax deduction in the
amount of the "spread" recognized by the optionee as ordinary compensation
income. However, if the Shares received by the optionee are not "vested"--that
is, the optionee's right to enjoy the full benefits of ownership of the Shares
are conditioned on rendering further services or are subject to other
restrictions that constitute a substantial risk of forfeiture--then the optionee
will not be required to include such "spread" in income upon exercise, unless
the optionee elected to do so under Section 83(b) of the Code.
On the delivery by an optionee of Shares already owned by the optionee as
payment for the exercise price of a non-qualified stock option, the number of
Shares received on exercise of the option equal to the number of Shares
surrendered is a tax-free exchange with no resulting recognition of income to
the optionee. Any additional Shares the optionee receives on exercise of the
option in excess of the number of Shares surrendered will be recognized by the
optionee as ordinary compensation income in an amount equal to the fair market
value of such Shares. The tax basis of the Shares received on surrender of the
previously owned Shares is the tax basis of the Shares so surrendered, and the
tax basis of the additional Shares received is the amount recognized as ordinary
compensation income by the optionee, that is, the fair market value of such
additional Shares.
The payment by an optionee of the exercise price of a non-qualified stock
option by means of surrender of the existing option will result in the optionee
recognizing ordinary compensation income on the "spread" between the exercise
price of the option surrendered and the fair market value of the Shares on the
date of exercise. Generally, the Company will be entitled to a deduction in the
amount of this "spread." The tax basis of the Shares the optionee receives on
exercise will be the fair market value of such Shares on the date of exercise.
-15-
The amount and character (whether long-term or short-term) of any gain or
loss realized on a subsequent disposition of Shares by the optionee generally
will depend on, among other things, whether such disposition occurred before or
after such Shares vested, whether an election under Code Section 83(b) with
respect to such Shares had been made, and the length of time such shares were
held by the optionee.
Incentive Stock Options. Pursuant to the Code, ISOs may be granted only to
employees of the Company. There are no federal income tax consequences
associated with the grant of an ISO to an employee. However, in contrast to the
exercise of a non-qualified stock option, the exercise of an ISO will not cause
an employee to recognize taxable income for regular income tax purposes. If the
employee holds the Shares acquired upon exercise of the ISO for a minimum of two
years from the date of the grant of the ISO, and for at least one year after
exercise, any gain realized on the subsequent sale or exchange of such Shares
generally will be treated as long-term capital gain. If the Shares are sold or
otherwise disposed of prior to the expiration of such periods (a "disqualifying
disposition"), then a portion of any gain recognized by the employee which would
otherwise be characterized as capital gain will instead be taxable as ordinary
compensation income and the Company would be entitled to a federal income tax
deduction in such amount. The amount of such gain which would be characterized
as ordinary income will not exceed an amount equal to the excess of (i) the fair
market value of such Shares as of the date the option was exercised over (ii)
the amount paid for such Shares. Any loss recognized upon a taxable disposition
of the Shares generally will be characterized as a capital loss.
On the delivery by an optionee of Shares already owned by the optionee as
payment of the exercise price of an ISO, the number of Shares received on
exercise of the ISO equal to the Shares surrendered is a tax-free exchange with
no resulting recognition of income to the optionee. Any additional Shares the
optionee receives on exercise of the ISO in excess of the number of Shares
surrendered will be treated as the exercise of an ISO and will not cause the
optionee to recognize taxable income for regular income tax purposes. The tax
basis of the Shares received on surrender of the previously owned Shares is the
tax basis of the Shares so surrendered, and the basis of any additional Shares
received on exercise of the ISO is the amount of any cash or other property paid
on such exercise. However, if stock received on exercise of an ISO is used in
connection with the exercise of an ISO when the holding period with respect to
such stock is not met, such use will be considered a disqualifying disposition.
The payment by an optionee of the exercise price of an ISO by means of
surrender of such ISO will result in the optionee recognizing ordinary
compensation income on the spread between the exercise price and the fair market
value with respect to that number of options so surrendered less the number of
options exercised for Shares. Generally, the Company will be entitled to a
deduction in the amount of this "spread." The tax basis of the Shares the
optionee receives on exercise of the option in this manner will be the amount
paid for such Shares.
Withholding Taxes. The Company may require any optionee or such other
person entitled to receive Shares pursuant to the exercise of an option, to pay
to the Company the amount of any taxes which the Company may be required to
withhold before delivery to such optionee or other person of a certificate
representing such option Shares. Each optionee shall have the right to pay any
or all required withholding taxes by delivering to the Company Shares already
owned. The Company may authorize the optionee to pay any or all required
withholding taxes by directing that Shares otherwise deliverable upon exercise
of the option be withheld.
-16-
On any disqualifying disposition of Shares acquired pursuant to the
exercise of an ISO, the Company shall have the right to require the payment of
the amount of any taxes which are required by law to be withheld with respect to
such disqualifying disposition. The optionee has the right to pay any or all of
such required withholding taxes by delivering to the Company Shares already
owned.
Limitation on Deductibility of Certain Change in Control Payments. Under
Section 280G of the Code, the Company may not deduct certain compensation
payable in connection with a change of control. The acceleration of existing
stock options could give rise to non-deductible payments under Section 280G.
Reasons for Authorization and Vote Required
Reason for Authorization. The 2000 Plan is being submitted for stockholder
approval pursuant to the provisions of the Code governing incentive stock
options and the rules of the American Stock Exchange. It is intended that awards
under the 2000 Plan may constitute qualified performance based compensation for
purposes of Section 162(m) of the Code.
Vote Required. The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to approve and adopt the 2000 Plan.
PROPOSAL NO. 3
OTHER MATTERS
So far as management of the Company is aware, no matters other than those
outlined in this Proxy Statement will be presented at the Meeting for action on
the part of the stockholders. If any other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote thereon the Shares to which the proxy relates in accordance with their
best judgment.
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP, has audited the financial statements of the Company
since 1997. A representative of Ernst & Young LLP is expected to be present at
the Meeting and will have an opportunity to make a statement, if he so desires,
and will be available to respond to appropriate questions.
-17-
STOCKHOLDER PROPOSALS
A stockholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2001 Annual Meeting must deliver a proposal so it is
received at the Company's offices no later than the close of business on January
23, 2001 in order to be considered for inclusion in the Company's proxy
materials for the 2001 Annual Meeting of Stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
Robert B. Nally
Secretary
Lewiston, New York
May 22, 2000
-18-
EXHIBIT A
CVF TECHNOLOGIES CORPORATION
2000 STOCK OPTION PLAN
I. Purpose.
The purpose of the CVF Technologies Corporation 2000 Stock Option Plan (the
"Plan") is to provide, through options to purchase shares of common stock, par
value of $.001, of CVF Technologies Corporation long term incentives and rewards
to directors, officers and other key employees or persons responsible for the
success and growth of CVF Technologies Corporation (the "Company"), to attract
and retain such persons and to associate the interests of such persons with the
interests of the Company.
II. Effective Date.
The Plan was approved by the Board of Directors on February 24, 2000 (the
"Effective Date") and shall be submitted to the stockholders of the Company for
approval at a meeting to be held on or about June 22, 2000, or at any
adjournment thereof. Options granted hereunder prior to stockholder approval of
the Plan shall be canceled in the event shareholder approval is not obtained.
III. Definitions.
The following terms, as used herein, shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Closing Price", as of a particular date, shall mean (i) if the shares
of Stock are then listed or admitted to trading on a national securities
exchange, the last reported sales price of a share of Stock sold in the regular
way on the principal national securities exchange on which such Stock is listed
or admitted to trade, or if no sales occurred on such date, the last sales price
on the last preceding day on which such shares of Stock were sold on such
exchange or (ii) if the shares of Stock are not then listed or admitted to
trading on any national securities exchange, the last reported sale price for a
share of Stock as reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on the last preceding day on which such
shares of Stock were reported sold.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean such committee, if any, as the Board, in its
discretion, designates to administer the Plan, which Committee shall be composed
of not less than two directors each of whom is a "disinterested person" as
defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
(e) "Company" shall mean CVF Technologies Corporation and its subsidiaries
now held or hereafter acquired.
(f) "Fair Market Value", as of a particular date, shall mean (i) if the
shares of Stock are then listed or admitted to trading on a national securities
exchange or reported on NASDAQ, the Closing Price or (ii) if the shares of Stock
are not then listed or admitted to trading on a national securities exchange or
reported on NASDAQ, such value as the Board, acting in good faith and in its
sole discretion, shall determine.
(g) "Incentive Stock Option" shall mean an Option that meets the
requirements of Section 422 of the Code, or any successor provision, and that is
designated by the Board or the Committee as an Incentive Stock Option.
(h) "Nonqualified Stock Option" shall mean an Option other than an
Incentive Stock Option.
(i) "Option" shall mean the right, granted pursuant to this Plan, of a
holder thereof to purchase shares of Stock under the Plan at a price and upon
the terms to be specified by the Board or the Committee.
(j) "Option Agreement" shall mean any written agreement, contract, or other
instrument or document between the Company and a Participant evidencing an
Option.
(k) "Participant" shall mean an officer, director, employee or independent
contractor of the Company who is, pursuant to Section 4 of the Plan, selected to
participate herein.
(l) "Plan" shall mean the CVF Technologies Corporation 2000 Stock Option
Plan.
(m) "Stock" shall mean shares of common stock, par value of $.001, of the
Company.
(n) "Ten Percent Stockholder" shall mean a Participant who, at the time an
Incentive Stock Option is to be granted to such Participant, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
within the meaning of Sections 422(e) and 422(f), respectively, of the Code.
IV. Administration.
The Plan shall be administered by the Board. The Board shall have the
authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to modify the terms of any Options
granted under the Plan; to determine the persons to whom and the time or times
at which Options shall be granted; to determine the type and number of Options
to be granted and the terms, conditions and restrictions relating to any Option;
to determine whether, to what extent, and under what circumstances an Option may
be settled, canceled, forfeited, exchanged, or surrendered; to construe and
interpret the Plan and any Option; to prescribe, amend and rescind rules and
-2-
regulations relating to the Plan; to determine the terms and provisions of
Option Agreements; to correct any defect, supply any deficiency and reconcile
any inconsistency in the Plan or any Option granted hereunder; to amend the Plan
to reflect changes in applicable law; and to make all other determinations
deemed necessary or advisable for the administration of the Plan. The Board may
designate one or more persons to implement its rules, regulations and
determinations and to execute and deliver documents and instruments and
otherwise act on its behalf in accordance with guidelines established by the
Board from time to time.
All decisions, determinations and interpretations of the Board shall be
final and binding on all persons, including the Company, the Participant (or any
person claiming any rights under the Plan from or through any Participant) and
any stockholder. The expenses of administering the Plan shall be paid by the
Company.
No member of the Board shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
All references herein to the "Board" shall, if the context so requires,
also be deemed to refer to any Committee designated by the Board to administer
the Plan. Any Committee from time to time, and whenever requested, shall report
to the Board on its administration of the Plan and the actions it has taken.
V. Eligibility.
Options may be granted to officers, directors and employees of the Company
and other persons responsible for the success of the Company in the sole
discretion of the Board and as otherwise set forth herein. In determining the
persons to whom Options shall be granted and the type of Option, the Board shall
take into account such factors as the Committee shall deem reasonable and
appropriate in connection with accomplishing the purposes of the Plan.
VI. Stock Subject to the Plan; Adjustments.
The maximum number of shares of Stock that may be optioned or purchased
pursuant to the Plan shall be 750,000 shares, subject to adjustment as provided
herein. Such shares may, in whole or in part, be authorized but unissued shares
or shares that shall have been or may be reacquired by the Company in the open
market, in private transactions or otherwise. If any shares subject to an Option
are forfeited, canceled, exchanged or surrendered or if an Option otherwise
terminates or expires without a distribution of shares to the Participant, the
shares of Stock with respect to such Option shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for grants of Options under the Plan.
-3-
In the event that the Board shall determine that any dividend or other
distribution (whether in the form of cash, stock, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Board shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock which may thereafter be issued in
connection with Options, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Options, and (iii) the exercise price, grant
price, or purchase price relating to any Option; provided that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with
applicable requirements of the Code.
VII. Option Grants.
Each Option granted pursuant to this Plan shall be evidenced by an Option
Agreement, in such form and containing such terms and conditions as the Board
shall from time to time approve, which Option Agreement shall comply with and be
subject to the following terms and conditions, as applicable.
(a) Number of Shares. Each Option Agreement shall state the number of
shares of Stock to which the Option relates. In no event shall any Participant
receive grants of Options in any one calendar year to acquire in excess of
200,000 shares of Stock.
(b) Type of Option. Each Option Agreement shall specifically state that the
Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
(c) Option Price. Each Option Agreement shall state the Option price. The
Option price shall be subject to adjustment as provided in Section 6 hereof. The
date as of which the Board adopts a resolution expressly granting an Option
shall be considered the day on which such Option is granted, unless a different
grant date is specified in such resolution.
(d) Method and Time of Payment. The Option price shall be paid in full, at
the time of exercise, in cash or in shares of Stock having a Fair Market Value
on the date of exercise equal to such Option price or in a combination of such
cash and Stock or, in the sole discretion of the Board (i) through a cashless
exercise procedure whereby the Participant may pay the exercise price by
directing that shares otherwise deliverable upon exercise of the Option (valued
at the at Fair Market Value of such shares as of the date of exercise) be
withheld, (ii) through the delivery of an irrevocable written notice instructing
the Company to deliver the shares deliverable upon exercise of the Option to a
broker selected by the Company, subject to the broker's written guarantee to
deliver cash to the Company in the full amount of the exercise price due on the
Option exercise or (iii) delivery of a promissory note in form specified by the
Company. The portion of any Option relating to Stock being withheld in payment
of the exercise price shall be deemed surrendered and canceled.
(e) Term and Exercisability of Options. Each Option shall be exercisable in
the manner determined by the Board and as provided in the Option Agreement;
-4-
provided, however, that the Board shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. The exercise
period shall be ten (10) years from the date of the grant of the Option or such
shorter period as is determined by the Board. The exercise period shall be
subject to earlier termination as provided in Section 7(f) hereof. An Option may
be exercised, as to any or all full shares of Stock as to which the Option has
become exercisable, by written notice delivered to the Company, specifying the
number of shares of Stock with respect to which the Option is being exercised.
For purposes of the preceding sentence, the date of exercise will be deemed to
be the date upon which the Company receives such notice.
(f) Termination. The Board shall have the exclusive authority to determine
if, and for how long, and under what conditions the Option may be exercised
after termination of a Participant's employment with or service to the Company,
including by reason of the Participant's death; provided, however, that in no
event will an Option continue to be exercisable beyond the expiration date of
such Option.
(g) Incentive Stock Options. Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions, in addition to
the general terms and conditions specified in this Section 7.
(i) Option Price. The Option price shall not be less than one hundred
percent (100%) of the Fair Market Value of the shares of Stock covered by the
Option on the date of grant of such Incentive Stock Option.
(ii) Value of Shares. The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of the shares
of Stock with respect to which Incentive Stock Options granted under this Plan
and all other plans of the Company become exercisable for the first time by each
Participant during any calendar year shall not exceed $100,000.
(iii) Ten Percent Stockholder. In the case of an Incentive Stock
Option granted to a Ten Percent Stockholder, (x) the Option Price shall not be
less than one hundred ten percent (110%) of the Fair Market Value of the shares
of Stock on the date of grant of such Incentive Stock Option and (y) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
VIII. General Provisions.
(a) Compliance with Legal Requirements. The Plan and the granting and
exercising of Options, and the other obligations of the Company under the Plan
and any Option Agreement or other agreement shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Stock under any Option as
the Company may consider appropriate, and may require any Participant to make
such representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of Stock in compliance with
applicable laws, rules and regulations.
-5-
(b) Nontransferability. Options shall not be transferable by a Participant
except by will or the laws of descent and distribution and shall be exercisable
during the lifetime of a Participant only by such Participant or such
Participant's guardian or legal representative.
(c) No Right To Continued Employment. Nothing in the Plan or in any Option
or any Option Agreement or other agreement entered into pursuant hereto shall
confer upon any Participant the right to continue in the employ of the Company
or to be entitled to any remuneration or benefits not set forth in the Plan or
such Option Agreement or other agreement or to interfere with or limit in any
way the right of the Company to terminate such Participant's employment.
(d) Withholding Taxes. Where a Participant or other person is entitled to
receive shares of Stock pursuant to the exercise of an Option, the Company shall
have the right to require the Participant or such other person to pay to the
Company the amount of any taxes which the Company may be required to withhold
before delivery to such Participant or other person of cash or a certificate or
certificates representing such shares. Each Participant shall have the right to
pay any or all required withholding taxes by delivering to the Company shares of
Stock already owned. The Company may authorize the Participant to pay any or all
required withholding taxes by directing that shares otherwise deliverable upon
exercise of the Option be withheld.
Upon the disposition of shares of Stock acquired pursuant to the exercise
of an Incentive Stock Option, the Company shall have the right to require the
payment of the amount of any taxes which are required by law to be withheld with
respect to such disposition. Each Participant shall have the right to pay any or
all of such required withholding taxes by delivering to the Company shares of
Stock already owned.
(e) Amendment and Termination of the Plan. The Board or any Committee may
at any time and from time to time alter, amend, suspend, or terminate the Plan
in whole or in part. Notwithstanding the foregoing, no amendment shall affect
adversely any material rights of any Participant, without such Participant's
consent, under any Option theretofore granted under the Plan. The power to grant
Options under the Plan will automatically terminate ten years after the earlier
of the adoption of the Plan by the Board or the approval of the Plan by
stockholders of the Company. If the Plan is terminated, any unexercised Options
shall continue to be exercisable in accordance with its terms and the terms of
the Plan in effect immediately prior to such termination.
(f) Participant Rights. No Participant shall have any claim to be granted
any Option under the Plan, and there is no obligation for uniformity of
treatment for Participants. Except as provided specifically herein, a
Participant or a transferee of an Option shall have no rights as a stockholder
with respect to any shares covered by any Option until the date of the issuance
of a stock certificate for such shares.
(g) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Option. The Board shall determine whether
cash, other Options, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
-6-
(h) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Nevada without
giving effect to the conflict of laws principles thereof.
(i) Beneficiary. A Participant may file with the Board a written
designation of a beneficiary on such form as may be prescribed by the Board and
may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Participant, the executor or administrator of the
Participant's estate shall be deemed to be the grantee's beneficiary.
(j) Interpretation. With respect to Participants subject to Section 16 of
the Exchange Act, the Plan is intended to comply with all applicable provisions
of Rule 16b-3 promulgated thereunder (as such Rule may be amended from time to
time) and all provisions hereof shall be construed in a manner to so comply.
With respect to Participants subject to Section 16, all Options granted
hereunder shall be granted and may be exercised only in such a manner as to
conform to such Rule. To the extent permitted by applicable law, the Plan and
Options granted hereunder shall be deemed amended to the extent necessary to
conform to the applicable provisions of such Rule.
-7-
CVF TECHNOLOGIES CORPORATION PROXY
916 Center Street
Lewiston, New York 14092
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey I. Dreben and Robert B. Nally, and
each or either of them, proxies for the undersigned, with full power of
substitution, to vote all Shares, $0.001 par value per share ("Shares") of CVF
Technologies Corporation (the "Company") which the undersigned would be entitled
to vote at the ANNUAL MEETING OF STOCKHOLDERS OF THE COMPANY (THE "MEETING") TO
BE HELD AT THE BUFFALO MARRIOTT HOTEL, 1340 MILLERSPORT HIGHWAY, AMHERST, NEW
YORK ON JUNE 22, 2000, AT 11:00 A.M., NEW YORK TIME, and directs that the Shares
represented by this Proxy shall be voted as indicated below:
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
below
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through his name in the list below:
Jeffrey I. Dreben; Robert H. Glazier; Robert B. Nally; and George A. Khouri.
2. APPROVAL OF 2000 STOCK OPTION PLAN
[ ] FOR APPROVAL OF 2000 STOCK OPTION PLAN
[ ] AGAINST APPROVAL OF 2000 STOCK OPTION PLAN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. THE BOARD OF DIRECTORS FAVORS A VOTE FOR PROPOSALS 1 AND 2. IF NO
DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 ABOVE AND WILL
BE VOTED IN THE DISCRETION OF THE PROXIES NAMED HEREIN WITH RESPECT TO ANY
MATTER REFERRED TO IN 3 ABOVE. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY
MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
Dated: ________________, 2000
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK CERTIFICATE(S).
A corporation is requested to sign its name by its President
or other authorized officer, with the office held so
designated. A partnership should sign in the partnership name
by an authorized person. Executors, administrators, trustees,
guardians and corporate officers are requested to indicate the
capacity in which they are signing. JOINT TENANTS SHOULD BOTH
SIGN.
-----------------------------------------
-----------------------------------------
(Signature of Stockholder(s))
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.