May 14, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of CASCO INTERNATIONAL, INC. on Wednesday, June 16, 1999. The meeting will begin
at 9:00 a.m., Eastern Standard Time, at the Company's executive offices located
at 13900 Conlan Circle, Suite 150, Charlotte, North Carolina 28277.
Information regarding the matters to be voted upon at the Annual
Meeting is contained in the attached Proxy Statement. We urge you to read the
Proxy Statement carefully.
Because it is important that your shares be voted at the Annual
Meeting, whether or not you plan to attend in person, we urge you to complete,
date and sign the enclosed proxy card and return it as promptly as possible in
the accompanying envelope. If you do attend the meeting and wish to vote your
shares in person, even after returning your proxy, you still may do so.
We look forward to seeing you in Charlotte, North Carolina on June 16,
1999.
Very truly yours,
/S/ Charles R. Davis
Charles R. Davis
President
CASCO INTERNATIONAL, INC.
4205 East Dixon Boulevard
Shelby, North Carolina 28150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 16, 1999
To the Stockholders of CASCO INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CASCO
INTERNATIONAL, INC. (the "Company") will be held at the Company's executive
offices located at 13900 Conlan Circle, Suite 150, Charlotte, North Carolina
28277, on June 16, 1999 at 9:00 a.m., Eastern Standard Time, to consider and
take action on the following matters:
1. To elect five Directors to serve on the Board of Directors of the
Company for one year and until their successors are duly elected and
shall qualify;
2. To approve the Company's 1999 Stock Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Stockholders of record at the close of business on May 12, 1999 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof. Information relating to the matters to be considered and
voted on at the Annual Meeting is set forth in the proxy statement accompanying
this notice. A list of stockholders entitled to notice of and to vote at the
meeting may be examined at the executive offices of the Company at 13900 Conlan
Circle, Suite 150, Charlotte, NC 28277.
So that we may be sure your vote will be included, please date, sign and
return the enclosed proxy promptly. For your convenience, a postage paid return
envelope is enclosed for your use in returning your proxy. If you attend the
meeting, you may revoke your proxy and vote in person. If you would like to
attend the meeting and your shares are held by a broker, bank or other nominee,
you must bring to the meeting a recent brokerage statement or a letter from the
nominee confirming your beneficial ownership of the shares. You must also bring
a form of personal identification. In order to vote your shares at the meeting,
you must obtain from the nominee a proxy issued in your name.
Dated May 14, 1999 By Order of the Board of Directors
/s/ Jeffrey A. Ross
Jeffrey A. Ross, Secretary
CASCO INTERNATIONAL, INC.
PROXY STATEMENT
For Annual Meeting of Stockholders
To be held on June 16, 1999
Summary
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of CASCO INTERNATIONAL, INC. (the
"Company") for use at its Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Wednesday, June 16, 1999 at 9:00 a.m., Eastern Standard at the
Company's executive offices located at 13900 Conlan Circle, Suite 150,
Charlotte, North Carolina 28277, as set forth in the accompanying Notice of
Annual Meeting of Stockholders and at any adjournments thereof. This Proxy
Statement, the form of proxy and the Company's annual report on Form 10-K for
the fiscal year ended December 31, 1998 are first being mailed to Stockholders
entitled to vote at the meeting on or about May 14, 1999.
The Annual Meeting has been called to consider and take action on the
election of six Directors to serve on the Board of Directors of the Company for
one year and until their successors have been duly elected and shall qualify and
to approve the Company's 1999 Stock Option Plan (the "Plan").
The close of business on May 12, 1999 (the "Record Date"), has been
fixed as the record date for the determination of Stockholders entitled to
notice of, and to vote at, the Annual Meeting and any adjournments thereof. The
stock transfer books will not be closed.
Solicitation and Revocation of Proxies
This Proxy Statement is being furnished to Stockholders in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held at the time, place, and for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders and at any adjournments thereof.
As of the Record Date, there were 1,783,200 of the Company's Common
Stock, $.01 par value ("Common Stock") issued and outstanding. As of the Record
Date, all of the present directors and executive officers of the Company, a
group of seven persons, owned beneficially 674,550 shares of Common Stock. The
Company believes that such officers and directors intend to vote their shares of
Common Stock for each of the nominees to be elected as Directors named in this
Proxy and for the approval of the Company's 1999 Stock Option Plan.
The Company's Bylaws provide that a quorum is present if the holders of
a majority of the issued and outstanding shares of Common Stock entitled to vote
at the meeting are present in person or represented by proxy. Under Delaware
law, if a quorum exists, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election. The
proposal set forth herein to approve the Plan will be adopted if a majority of
the shares present in person or represented by proxy at the meeting and entitled
to vote at the Annual Meeting vote in favor of such proposal.
Proxies given by Stockholders for use at the meeting may be revoked at
any time prior to the exercise of the powers conferred by giving notice of
revocation to the Company in writing or at the meeting or by delivering to the
Company a later appointment which supersedes the earlier one. Abstentions and
broker non-votes will be counted only for the purpose of determining the
existence of a quorum, but have the affect of a no vote on matters other than
director elections. Votes cast by proxy or in person at the Annual Meeting will
be tabulated by the Inspector of Elections appointed for that purpose.
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED IN SUCH PROXIES. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
COME BEFORE THE MEETING.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails, by
directors, officers and regular employees of the Company without additional
compensation therefor. The Company may reimburse brokerage firms and others for
their expenses in forwarding proxy materials to the beneficial owners and
soliciting them to execute proxies.
Voting Rights
Stockholders of record at the close of business on the Record Date, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. Each Common Share of record as of the Record Date is entitled to one
vote in all matters properly brought before the meeting.
Item 1. Election of six directors to serve for one year and until their
successors have been duly elected and shall qualify.
The Board of Directors has concluded that the re-election of S. Robert
Davis, Charles R. Davis, David J. Richards, Michael P. Beauchamp, Randall J.
Asmo and Rodney L. Taylor as Directors is in the best interests of the Company
and recommends their election. The Board of Directors has no reason to believe
that the nominees named below will be unavailable, or if elected, will decline
to serve. Biographical information concerning Messrs. S. Robert Davis, Charles
Davis, Richards, Beauchamp, Asmo and Taylor can be found under "Directors and
Executive Officers of the Company."
Unless otherwise instructed or unless authority to vote is withheld,
the enclosed proxy will be voted for the election of the nominees listed herein.
Although the Board of Directors of the Company does not contemplate that any of
such nominees will be unable to serve, if such situation exists prior to the
Annual Meeting, the persons named in the enclosed proxy will vote for the
election of such other persons as may be nominated by the Board of Directors.
The Board of Directors unanimously recommends a vote FOR the election
of the nominees listed above. Unless indicated to the contrary, the enclosed
Proxy will be voted "FOR" such nominees.
Directors and Executive Officers of the Company.
The following table sets forth certain information concerning the
directors and executive officers of the Company:
Director or
Executive
Name Age Position Officer Since
- ---- --- -------- -------------
S. Robert Davis (1) 60 Chairman of the Board 1990 (2)
Charles R. Davis (1) 37 President and Director 1990 (2)
Jeffrey A. Ross 31 Chief Financial Officer and Secretary 1996
David J. Richards 46 Director 1997
Michael P. Beauchamp 52 Director 1997
Randall J. Asmo 34 Director 1999
Rodney L. Taylor 43 Director 1999
(1) S. Robert Davis is the father of Charles R. Davis.
(2) Including the period prior to the Company's domicile change merger in 1996.
Executive officers are appointed by the Board of Directors and serve until their
successors are duly elected and qualify, subject to earlier removal by the Board
of Directors. Directors are elected at the annual meeting of shareholders to
serve for one year and until their respective successors are duly elected and
qualify, or until their earlier resignation, removal from office, or death. The
remaining directors may fill any vacancy in the Board of Directors for an
unexpired term.
Business Experience Of Directors And Executive Officers
S. ROBERT DAVIS is the Chairman of the Board and President of Media Source,
Inc. (formerly known as Pages, Inc.), a Company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 ("Media
Source") and the former parent of the Company. Prior to his election to the
Board of Directors of Media Source, he served as Assistant to the President of
Media Source from January 1988, to March 1990, on a part-time basis.
Additionally, during the past five years Mr. Davis has operated several private
businesses involving the developing, sale, and/or leasing of real estate.
CHARLES R. DAVIS was elected President of the Company in September 1992.
Additionally, during the past five years Mr. Davis has operated several private
businesses involving the developing, sale and/or leasing of real estate but
devotes substantially all of his business time to the Company.
JEFFREY A. ROSS is a certified public accountant. He joined the Company as
its controller in June 1993 and was promoted to Chief Financial Officer in
November 1996. Mr. Ross was employed as an accountant by a large public
accounting and consulting firm from September 1989, until June 1993.
DAVID J. RICHARDS has been the President and a director of NetMed, Inc. for
over five years. NetMed is not a parent, subsidiary or other affiliate of the
Company. NetMed is a company with a class of securities registered pursuant to
section 12 of the Securities Exchange Act of 1934.
MICHAEL P. BEAUCHAMP has been the President of Beauvestco, a management
consulting firm, since 1989. Beauvestco is not a parent, subsidiary, or other
affiliate of the Company.
RANDALL J. ASMO was elected Director on February 19, 1999. He currently
serves as Executive Vice President, Secretary and Director of Media Source, Inc.
Since 1992, Mr. Asmo has served as Vice President of Media Source, Inc. and
Director since 1997. Prior to that, he served as Assistant to the President for
two years. Additionally, since 1987, Mr. Asmo has served as Vice President of
Mid-States Development Corp., a privately-held real estate development and
leasing company, as Vice President of American Home Building Corp., a
privately-held real estate development company, and as an officer of several
other small business enterprises.
RODNEY L. TAYLOR was elected Director on February 19, 1999. He currently
serves as General Manager of Family Ford Lincoln Mercury in Columbus, Ohio. From
1994 to 1997 Mr. Taylor was General Sales Manager at Bobb Chevrolet.
Additionally, Mr. Taylor also owned an automotive and equipment leasing company
based out of Columbus, OH.
The Board of Directors
The Company's Bylaws provide that the number of Directors which shall
constitute the whole Board of Directors shall be as from time to time determined
by resolution of the Board of Directors, but the number shall not be less than
three. The Board of Directors currently consists of six members. The Board of
Directors held three meetings during the fiscal year ended December 31, 1998.
There are no material proceedings to which any Director, officer or
affiliate of the Company, any owner of record or beneficially of more than five
percent of any class of voting securities of the Company, or any associate of
any such Director, officer, affiliate of the Company, or security holder is a
party adverse to the Company or any of its subsidiaries or has a material
interest adverse to the Company or any of its subsidiaries.
Committees of the Board of Directors
Audit Committee. The Company intends to establish an Audit Committee
immediately after the Annual Meeting. The Audit Committee will be responsible
for making recommendations to the Board of Directors concerning the selection
and engagement of the Company's independent certified public accountants and
reviewing the scope of the annual audit, audit fees, and results of the audit.
The Audit Committee will also review and discuss with management and the Board
of Directors such matters as accounting policies and internal accounting
controls, and procedures for preparation of financial statements.
Compensation Committee. The Compensation Committee consisted of S. Robert
Davis, David J. Richards, and Michael P. Beauchamp during the last fiscal year.
Neither Mr. Davis, Mr. Richards or Mr. Beauchamp serves as an employee of the
Company. The Compensation Committee is responsible for establishing the
compensation of the Company's directors and executive officers. The Compensation
Committee held one meeting during 1998.
Compensation Committee Interlocks and Insider Participation. Neither
Messrs. Davis, Richards or Beauchamp, the Compensation Committee members, are or
have been officers or employees of the Company and none had interlocking
relationships with any other entities, including any of the type that would be
required to be disclosed herein.
The Company has no nominating committee or any committee performing a
similar function.
Stock Ownership
The following table sets forth, to the best of the Company's knowledge,
certain information with respect to the beneficial ownership of shares of the
Company's common stock (i) each person who beneficially owns more than 5% of the
outstanding Company Common Stock, (ii) each director of the Company, (iii) the
President of the Company (the only executive officer of the Company whose cash
and non-cash compensation for services rendered to the Company for the year
ended December 31, 1998, exceeded $100,000) and (iv) directors and executive
officers of the Company as a group:
Amount and Nature of Percent of
Name and Address Beneficial Ownership(1) Class (2)
- ---------------- ------------------------ ---------
S. Robert Davis 275,820 13.7%
801 94th Avenue North
St. Petersburg, Florida 33702
Charles R. Davis 242,066 12.0%
4205 East Dixon Blvd
Shelby, North Carolina 28150
David J. Richards 48,109 2.4%
6189 Memorial Drive
Dublin, OH 43017
Michael P. Beauchamp 31,480 1.6%
7422 Carmel Executive Park
Suite 107
Charlotte, NC 28226
Randall J. Asmo 77,075 3.8%
5720 Avery Road
Dublin, OH 43016
Rodney L. Taylor 0 0%
P. O. Box 725
Marietta, OH 45750
All directors and executive officers 674,550 33.4%
as a group (7 persons)
(1) Represents sole voting and investment power unless otherwise indicated.
(2) Based on 1,783,200 shares of Company common stock outstanding as of the
Record Date, plus, as to each person listed, that portion of the 233,580
unissued shares of Company common stock subject to outstanding options
which may be exercised by such person within the next 60 days; and as to
all directors and executive officers as a group, unissued shares of
common stock as to which the members of such group have the right to
acquire beneficial ownership upon the exercise of stock options within
the next 60 days.
(3) Includes 4,066 shares owned by Mr. Davis' wife as to which Mr. Davis
disclaims beneficial ownership and includes 15,000 unissued shares of
Company Common Stock as to which Mr. Davis has the right to acquire
beneficial ownership upon the exercise of stock options within the next
60 days.
(4) Includes 10,936 shares owned by Mr. Davis' wife and 1,475 shares owned
by Mr. Davis' children as to which Mr. Davis disclaims beneficial
ownership and includes 117,800 unissued shares of Company common stock
as to which Mr. Davis has the right to acquire beneficial ownership upon
the exercise of stock options within the next 60 days.
(5) The number of shares of Common Stock beneficially owned by all directors
and executive officers as a group includes all the shares of Common
Stock listed above including 43,500 unissued shares of Common Stock as
to which the Company's three non-employee directors have the right to
acquire beneficial ownership upon the exercise of stock options within
the next 60 days, 27,709 shares of Common Stock owned by Mr. Richards, a
director of the Company, and 11,080 shares of Common Stock owned by Mr.
Beauchamp, a director of the Company, and 74,375 shares of Common Stock
owned by Mr. Asmo, a director of the Company, and 2,095 shares of Common
Stock owned by Jeffrey A. Ross, an executive officer of the Company and
includes 26,480 unissued shares of Company Common Stock as to which Mr.
Ross has the right to acquire beneficial ownership upon the exercise of
stock options within the next 60 days.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership of equity
securities of the Company with the Securities and Exchange Commission ("SEC").
Officers, directors, and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of such forms furnished to the Company
pursuant to Rule 16a-3 under the Exchange Act, the Company believes that all
such forms required to be filed pursuant to Section 16(a) of the Exchange Act
were timely filed, as necessary, by the officers, directors and security holders
required to file the same. Compensation of Executive Officers and Directors
Compensation of Executive Officers and Directors
Director Compensation - Each director who is not an officer of the Company
receives a fee of $500 for attendance at each Board meeting, a fee of $250 for
attendance at each telephonic Board meeting, and a fee of $250 for attendance at
each meeting of a Board committee of which he is a member. Directors who are
also officers of the Company receive no additional compensation for their
services as directors. The Company has adopted a Non-Employee Director Stock
Option Plan, which provides for the grant, at the discretion of the Company's
Board of Directors, of options to purchase up to 90,000 shares of Company common
stock upon such terms as are determined by the Board in its discretion. In June,
1997, options to purchase 10,800 shares of common stock at a purchase price of
$4.17 per share were granted under the Director Option Plan.
In January 1998 and September 1998 options to purchase 20,000 and
10,000 shares of common stock, respectively at a purchase price of $2.8125 and
$2.000, respectively were granted under the Non-Employee Director Stock Option
Plan.
The 1999 Stock Option Plan described in this Proxy Statement also
permits the grant of options to the Company's directors.
Executive Compensation - The following table shows, for the fiscal years ended
December 31, 1998; 1997; and 1996 the cash compensation paid by the Company, as
well as certain other compensation paid for those years to the Company's
President and C.E.O. No other executive officers had total salary and bonus that
exceeded $100,000 during the years ended 1998, 1997 and 1996. None of the
Company's executive officers have employment agreements with the Company.
Summary Compensation Table
Annual Long-Term
Compensation Compensation Awards
------------------------- ------------
Securities
Name and Other Annual Underlying
Principal Position Year Salary Bonus Compensation Options (1)
Charles R. Davis 1998 $178,325 $ 0 $0 80,000
President and 1997 $155,000 $25,000 $0 37,800(2)
Chief Executive Officer 1996 $132,315 $ 0 $134,040(3) 0
(1) Stock options previously granted to the named Executive Officer,
by their terms, automatically adjust to reflect certain changes
in the outstanding Common Shares of the Company, including stock
dividends.
(2) On July 17, 1997, the Company agreed to grant to Mr. Davis
performance options to purchase 200,000 shares of Company common
stock, 50,000 of which will be granted if the Company has pre-tax
earnings of at least $1 million in any fiscal year, 75,000 of
which will be granted if the Company has pre-tax earnings of at
least $1.5 million in any fiscal year, and 75,000 of which will
be granted if the Company has pre-tax earnings of at least $2
million in any fiscal year, in each case as long as Mr. Davis was
employed by the Company at the end of the applicable fiscal year.
The performance options are exercisable at the market price of
the common stock at the date of grant, which will be the date the
Company files its Form 10-K with its audited financial statements
showing that the required earnings plateau is satisfied. No
performance options have been granted.
(3) Reflects the difference between the fair market value of the
Common Shares received and the stock option exercise price on the
date of exercise.
The following table sets forth all options to acquire shares of the Company's
Common Stock granted to the Company's President and Chief Executive Officer.
Stock Option Grants in Last Fiscal Year
Individual Grants
----------------------------------
Potential Realized Value
Number Percent of Total at Assumed Annual Rates of Stock
of Options Exercise Price Appreciation
Options Granted to Price Expiration for Option Term (1)
Name Granted Employees per Share Date 5% 10%
- ---- ------- --------- --------- ---- -- ---
Charles R. Davis 50,000 26.5% $2.8750 01/20/03 39,715 87,760
30,000 15.9% 2.0000 09/02/03 16,576 36,631
(1) These assumed appreciation rates are not derived from the
historical or projected prices of the Company's Common Stock or
results of operations or financial condition and they should not
be viewed as a prediction of possible prices or value for the
Company's Common Stock in the future.
(2) The stock options were granted under the Company's 1997 Incentive
Stock Option Plan, and were exercisable commencing July 20, 1998,
September 3, 1998 and March 2, 1999.
(3) The stock options were granted under the Company's 1997 Incentive
Stock Option Plan, and were exercisable commencing March 2, 1999
and April 10, 1999.
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year End Option Values
Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options at FY End Options at FY End
Name on Exercised Realized Exercisable Unexercisable Exerc.Unexerc
Charles R. Davis None N/A 117,800 0 N/A N/A
Robert V. Boylan None N/A 33,500 0 N/A N/A
No options at year end were in-the-money options.
Incentive Stock Option Plans - The Company has adopted a 1996 Incentive
Stock Option Plan and a 1997 and 1998 Employee Stock Option Plan (the "Incentive
Plans") which provide for the grant, at the discretion of the Board of
Directors, of options to purchase up to 85,000 and 150,000 and 100,000 shares,
respectively, of Common Stock to key employees of the Company. It is intended
that options granted under the Incentive Plans qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended. The
selection of participants, allotment of shares, determination of exercise price
and other considerations relating to the grant of options under the Incentive
Plans is determined by the Board of Directors, at its discretion. Options
granted under the Incentive Plans are exercisable for a period of up to ten
years and five years, respectively, after the date of grant at an exercise price
which is not less than the fair market value of the shares on the date of grant,
except that the term of an incentive stock option granted under the Incentive
Plans to a shareholder owning more than 10% of the outstanding shares may not
exceed five years and its exercise price may not be less than 110% of the fair
market value of the shares on the date of grant. In January 1997, the Company
granted options under the 1996 Incentive Plan to purchase 29,500 shares of
Common Stock at a purchase price of $3.7037 per share. Options granted under the
1996 Incentive Plan were not exercisable until the expiration of one year after
the date of grant. On two different occasions in March 1997, the Company granted
options under the 1997 Employee Plan to purchase 40,000 shares of Common Stock
at a purchase price of $3.50 per share and 5,000 shares of Common Stock at a
purchase price of $3.7037 per share. In December 1997, the Company granted
options under the Incentive Plan to purchase 13,000 shares of Common Stock at a
purchase price of $3.0625 per share. On four different occasions in 1998 the
Company granted options under the 1997 Incentive Stock Option Plan. In January
1998, the Company granted options to purchase 70,000 shares of Common Stock at a
purchase price of $2.875 per share. On March 3, 1998, the Company granted
options to purchase 40,000 shares of Common Stock at a purchase price of $2.8125
per share. On March 10, 1998, the Company granted options to purchase 3,000
shares of Common Stock at a purchase price of $3.00 per share. On April 1, 1998,
the Company granted options to purchase 6,000 shares of Common Stock at a
purchase price of $3.50 per share. On two different occasions in 1998 the
Company granted options under the 1998 Incentive Stock Option Plan. In
September, the Company granted options to purchase 65,000 shares of Common Stock
at a purchase price of $2.00 per share. In October, the Company granted options
to purchase 5,000 shares of Common Stock at a purchase price of $1.00 per share.
Options currently outstanding under the 1997 Incentive Plan are exercisable
based on the following schedule:
Cumulative Percentage of Aggregate
Number of Shares of Stock Covered
Exercise Period by an Option Which May be Exercised
- --------------- -----------------------------------
Beginning on the one year anniversary date
after date of grant 33%*
Beginning on the second anniversary date
after date of grant 33%*
Beginning on the third anniversary date
after date of grant 33%*
*less, in the case of each exercise period, the number of Shares, if any,
previously purchased under the Option.
Certain Transactions
On January 23, 1998, the Company redeemed, at a discount of $1.5 million
and in advance of its January 1, 2002 maturity, the subordinated debenture due
to Media Source, Inc. (formally known as Pages, Inc.), the Company's former
parent. S. Robert Davis is the Chairman of the Board of Media Source, Inc. and
the beneficial owner of 21.62% of the outstanding shares of common stock of
Media Source, Inc. and Charles R. Davis is the beneficial owner of 8.15% of the
outstanding shares of common stock of Media Source, Inc.
xecutive Compensation Committee's Report on Executive Compensation
Under the Rules of the Securities and Exchange Commission, the Company
is required to provide certain information concerning compensation provided to
the Company's Chief Executive Officer and its executive officers. The Executive
Compensation Committee of the Board of Directors has prepared the following
report for inclusion in this Proxy Statement.
The Compensation Committee has designed its executive compensation
policies to provide incentives to its executives to focus on both current and
long-term Company goals, with an overriding emphasis on the ultimate objective
of enhancing stockholder value. The Compensation Committee has followed an
executive compensation program, comprised of cash and equity-based incentives,
which recognizes individual achievement and encourages executive loyalty and
initiative. The Compensation Committee considers equity ownership to be an
important factor in providing executives with a closer orientation to the
Company and its shareholders. Accordingly, the Compensation Committee encourages
equity ownership by its executives through the grant of options to purchase
Common Stock.
The Company believes that providing attractive compensation
opportunities is necessary to assist the Company in attracting and retaining
competent and experienced executives. Base salaries for the Company's executives
are established on a case-by-case basis by the Compensation Committee, based
upon current market practices and the executive's level of responsibility, prior
experience, breadth of knowledge, and salary requirements. The base salaries of
executive officers are reviewed annually by the Compensation Committee.
Adjustments to such base salaries have been made considering: (a) historical
compensation levels; (b) the overall competitive environment for executives; and
(c) the level of compensation necessary to attract and retain executive talent.
Stock options have historically been awarded upon hiring, promotion, or based
upon merit considerations. As the value of a stock option is directly related to
the market price of the Company's Common Stock, the Compensation Committee
believes the grant of stock options to executives encourages executives to take
a view toward the long-term performance of the Company. Other benefits offered
to executives are generally the same as those offered to the Company's other
employees.
The Compensation Committee utilizes the same policies and consideration
enumerated above with respect to compensation decisions regarding the President,
Charles R. Davis and the Chief Operating Officer, Robert V. Boylan. Mr. Davis'
and Mr. Boylan's 1998 base salaries were determined primarily by reference to
historical compensation, scope of responsibility, and the Company's desire to
retain their services. The Compensation Committee believes its compensation
policies with respect to the Company's executive officers promote the interests
of the Company and its shareholders through current motivation of the executive
officers coupled with an emphasis on the Company's long-term success.
Compensation Committee:
S. Robert Davis
David J. Richards
Michael P. Beauchamp
The following graph represents a comparison of the cumulative total
shareholder return on the Common Stock, assuming dividend reinvestment, with The
NASDAQ Composite Index and The NASDAQ Industrial Index. This graph assumes that
$100 was invested on January 15, 1997, the first day of trading after the
effective date of the spin-off of the Company from Media Source, Inc. The
Company paid an 8 percent stock dividend on August 1, 1997, which is included in
the 1997 total shareholder return. The stock price performance shown below is
not necessarily indicative of future performance.
Stock Price Performance Graph
1/15/97 12/31/97 12/31/98
CASCO 100 90.000 52.000
Nasdaq Composite 100 117.691 164.393
Nasdaq Industrials 100 106.731 113.986
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such acts.
Item 2. Approval of the 1999 Stock Option Plan
General. The Plan provides for the grant of options in the form of
incentive stock options ("incentive stock options") meeting the applicable
statutory requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), and options not meeting such requirements ("nonqualified stock
options"). Each option granted under the Plan will be evidenced by a written
stock option grant and agreement. The Plan is attached to this Proxy Statement
as Attachment A. The summary of the Plan set forth herein is qualified in its
entirety by reference to the Plan. The purposes of shareholder approval of the
Plan were: (i) to permit the options to purchase 600,000 shares of Common Stock
under the Plan to qualify for incentive stock option treatment pursuant to
Section 422 of the Code; and (ii) to satisfy the applicable requirements of The
Nasdaq Stock Market.
Shares Subject to Options. The Plan permits options to be granted to
purchase up to 600,000 shares of Common Stock in the aggregate. At this time, it
is not known which eligible directors, officers, employees and consultants, if
any, will receive grants under the Plan or the number of shares which will be
covered by any such grants. Such determinations will be made from time to time
by the Administrator (as hereinafter defied). To the extent that options granted
under the Plan expire or terminate without having been exercised in full, the
Common Stock subject thereto will become available for further options under the
Plan. Provision is made under the Plan for appropriate adjustment in the number
of shares of Common Stock covered by each option granted thereunder and the
related option price, in the event of any change in the Common Stock by reason
of a reorganization, recapitalization, stock split, stock dividend, combination
of shares, merger, consolidation, issuance of rights, or any other change in the
capital structure of the Company.
Administration. The Plan will be administered by the Company's Board of
Directors (the "Board") or a committee (the "Committee") appointed by the Board
(the "Administrator") which must be constituted to comply with applicable laws.
Subject to the provisions of the Plan and, in the case of a Committee,
the specific duties delegated by the Board to the Committee, and subject to the
approval of any relevant authorities, the Administrator has the authority in its
discretion to determine the fair market value of the Company's Common Stock, to
select the persons to whom options may from time to time be granted under the
Plan, to determine the number of shares to be covered by each option, to approve
forms of option grants for use under the Plan, and to determine the terms and
conditions of options granted under the Plan. Such terms and conditions include,
but are not limited to, the exercise price, the time or times when options may
be exercised (which may be based on performance criteria), any vesting,
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any option or the Common Stock relating thereto, based in
each case on such factors as the Administrator, in its discretion, will
determine. The Administrator also has the authority to determine whether and
under what circumstances an option may be settled in cash instead of Common
Stock, to reduce the exercise price of any option to the then fair market value
if the fair market value of the Common Stock covered by the option has declined
since the date the option was granted, to initiate an option exchange program,
to prescribe, amend and rescind rules and regulations relating to the Plan, to
allow optionees to satisfy withholding tax obligations by electing to have the
Company withhold from the shares to be issued upon exercise of an option that
number of shares having a fair market value equal to the amount required to be
withheld and to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan. All decisions, determinations and interpretations of the
Administrator are final and binding on all optionees.
Eligibility. Directors and employees of the Company, including officers
and directors employed by any parent or subsidiary of the Company and persons
who are engaged by the Company or any parent or subsidiary of the Company to
render consulting or advisory services are eligible to receive awards under the
Plan. Such persons are referred to in the Plan as "Service Providers."
Non-statutory stock options may be granted to Service Providers. Incentive stock
options may only be granted to employees and are subject to certain limitations
set forth in the Plan.
Term of Plan. The Plan became effective upon its adoption by the Board and
continues in effect for a term of 10 years unless sooner terminated under the
provisions of the Plan.
Term of Options. The term of each option granted under the Plan must be
stated in the option grant. However, the term can be no more than 10 years after
the date of grant, subject to certain limitations in the case of incentive stock
options.
Option Exercise Price and Consideration. The per share exercise price
for the shares to be issued upon exercise of an option will be such price as is
determined by the Administrator, but in the case of an incentive stock option
granted to an employee who at the time of grant owns stock representing more
than 10% of the voting power of all classes of stock of the Company or any
parent or subsidiary, the exercise price must be no less than 110% of the fair
market value per share on the date of grant. Incentive stock options granted to
other employees must be at a purchase price not less than 100% of the fair
market value per share on the date of grant.
In the case of a non-statutory stock option the exercise price must be
no less than 100% of the fair market value per share on the date of grant.
Notwithstanding the foregoing, options may be granted with a per share exercise
price other than as described above pursuant to a merger or other corporate
transaction.
The consideration to be paid for the shares to be issued upon exercise
of an option, including the method of payment, is determined by the
Administrator. Such consideration may consist of cash, check, promissory note,
other shares of Company Common Stock, consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or any combination of the foregoing.
Exercise of Options. Options granted under the Plan are exercisable
according to the terms of the Plan at such times and under such conditions as
determined by the Administrator and set forth in the option grant. Unless the
Administrator determines otherwise, vesting of options is tolled during any
unpaid leave of absence.
If an optionee ceases to be a service provider under the Plan, such
optionee may exercise his or her option within such period of time as is
specified in the option grant (at least 30 days) to the extent that the option
is vested on the date of termination, but in no event later than the expiration
of the term of the option as set forth in the option grant. In the absence of a
specified time in the option grant, the option remains exercisable for three
months following the optionee's termination. If, on the date of termination, the
optionee is not vested as to his or her entire option, the shares covered by the
unvested portion of the option revert to the Plan. If, after termination, the
optionee does not exercise his or her option within the time specified by the
administrator, the option terminates and the shares covered by the option revert
to the Plan.
If an optionee ceases to be a service provider as a result of the
optionee's disability, as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended, the optionee may exercise his or her option within
such period of time as is specified in the option grant (at least six months) to
the extent the option is vested on the date of termination, but in no event
later than the expiration of the term of the option as set forth in the option
grant. In the absence of a specified time in the option grant, the option
remains exercisable for 12 months following the optionee's termination. If on
the date of termination, the optionee is not vested as to his or her entire
option, the shares covered by the unvested portion of the option revert to the
Plan. If after termination, the optionee does not exercise his or her option
within the time specified in the Plan, the option terminates and the shares
covered by the option revert to the Plan.
If an optionee dies while a service provider, the option may be
exercised within such period of time as is specified in the option grant (at
least six months) to the extent that the option is vested on the date of death
(but in no event later than the expiration of the term of the option as set
forth in the option grant) by the optionee's estate or by a person who acquires
the right to exercise the option by bequest or inheritance. In the absence of a
specified time in the option grant, the option remains exercisable for 12 months
following the optionee's termination. If, at the time of death, the optionee is
not vested as to the entire option, the shares covered by the unvested portion
of the option immediately revert to the Plan. If the option is not so exercised
within the time specified in the Plan, the option terminates and the shares
covered by the option revert to the Plan.
Amendment and Termination of the Plan. The Board may at any time amend,
alter, suspend or terminate the Plan, but no such action will impair the rights
of any optionee, unless mutually agreed otherwise between the optionee and the
Administrator in writing.
Federal Income Tax Considerations. Under current federal tax law, the
holder of an option that qualifies as an incentive stock option under Section
422 of the Code generally does not recognize income for federal income tax
purposes at the time of the grant or exercise of an incentive stock option (but
the spread between the exercise price and the fair market value of the
underlying shares on the date of exercise generally will constitute a tax
preference item for purposes of the alternative minimum tax). The optionee
generally will be entitled to long-term capital gain treatment upon the sale of
shares acquired pursuant to the exercise of an incentive stock option if the
shares have been held for more than two years from the date of grant of the
option and for more than eighteen months after exercise, and the Company will
not be entitled to any deduction for federal income tax purposes. If the
optionee disposes of the stock before the expiration of either of these holding
periods (a :disqualifying disposition"), the gain realized on disposition will
be compensation income to the optionee to the extent the fair market value of
the underlying stock on the date of exercise (or, if less, the amount realized
on disposition of the underlying stock) exceeds the applicable exercise price
and a corresponding deduction will be allowed to the Company.
Under current federal tax law, an optionee does not recognize income
for federal income tax purposes upon the grant of a nonqualified stock option
but must recognize ordinary income upon exercise to the extent of the excess of
the fair market value of the underlying shares on the date of exercise over the
exercise price of the option. The Company generally will be entitled to a
deduction in the same amount and at the same time as ordinary income is
recognized by the optionee. A subsequent disposition of the shares acquired
pursuant to the exercise of a nonqualified option typically will give rise to
capital gain or loss to the extent the amount realized for the sale differs from
the fair market value of the shares on the date of exercise. This capital gain
or loss will be long-term gain or loss if the shares sold had been held for more
than eighteen months after the date of exercise.
Independent Public Accountants
The accounting firm of Hausser + Taylor LLP, Columbus, Ohio, is the
Company's principal auditor and accountant for the year ended December 31, 1998.
The Company has not selected an auditor and accountant for the next fiscal year.
Management expects that a representative of Hausser + Taylor LLP will be present
at the Annual Meeting of Stockholders. The Hausser + Taylor representative will
be afforded an opportunity to make a statement at the meeting if desired and is
expected to be available to respond to appropriate questions.
Annual Report
The Company's annual report on Form 10-K for the fiscal year ended
December 31, 1998, which includes financial statements, was mailed to each
shareholder receiving this Proxy Statement.
The Company will provide, without charge, to any person receiving a
copy of this Proxy Statement, upon written or oral request of such person, by
first class mail a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, including the financial statements and the
financial statement schedules thereto. Such request should be addressed to
Jeffrey A. Ross, Chief Financial Officer, CASCO INTERNATIONAL, INC., 4205 East
Dixon Boulevard, Shelby, North Carolina 28150.
Other Proposed Action
The Board of Directors does not intend to bring any other matters
before the meeting nor does the Board of Directors know of any matters which
other persons intend to bring before the meeting. If, however, other matters not
mentioned in this Proxy Statement properly come before the meeting, the persons
named in the accompanying form of proxy will vote thereon in accordance with the
recommendation of the Board of Directors.
Stockholder Proposals and Submission
If any Stockholder wishes to present a proposal for inclusion in the
proxy materials to be solicited by the Company's Board of Directors with respect
to the next Annual Meeting of Stockholders, such proposal must be received by
the Company no later than December 18, 1999 to be eligible for inclusion in the
proxy material for that meeting. Notice to the Company of a stockholder proposal
submitted other than pursuant to Securities and Exchange Commission Rule 14a-8
will be considered untimely and you may not bring it before the 2000 Annual
Meeting, if we receive it after March 3, 1999.
Exhibit A
CASCO INTERNATIONAL, INC.
1999 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan (the
"Plan") are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Non-Statutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed
or quoted and the applicable laws of any other country or
jurisdiction where Options are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended. (e)
"Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means CASCO International, Inc., a Delaware
corporation.
(h) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory
services to such entity.
(i) "Director" means a member of the Board of Directors of the
Company.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the
Company. A Service Provider (defined below) shall not cease to be
an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave
may exceed ninety days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive
Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a
Non-Statutory Stock Option. Neither service as a director nor
payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source as the
Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior
to the day of determination; or
(iii)In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of
the Code.
(o) "Non-Statutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Grant" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Grant is subject to the terms and
conditions of the Plan.
(s) "Option Exchange Program" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.
(t) "Optioned Stock" means the Common Stock subject to an Option.
(u) "Optionee" means the holder of an outstanding Option granted
under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this CASCO International, Inc. 1999 Stock Option
Plan.
(x) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(y) "Service Provider" means an Employee, Director or Consultant.
(z) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.
(aa) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 600,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of an Option, shall not be returned to the Plan and shall not
become available for future distribution under the Plan.
4. Administration of the Plan.
(a) Administrator. The Plan shall be administered by the Board
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion: (i)
to determine the Fair Market Value; (ii) to select the Service Providers to whom
Options may from time to time be granted hereunder; (iii) to determine the
number of Shares to be covered by each such award granted hereunder; (iv) to
approve forms of Option Grants for use under the Plan; (v) to determine the
terms and conditions of any Option granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting, acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the Common Stock relating thereto, based
in each case on such factors as the Administrator, in its sole discretion, shall
determine; (vi) to determine whether and under what circumstances an Option may
be settled in cash under subsection 9(e) instead of Common Stock; (vii) to
reduce the exercise price of any Option to the then current Fair Market Value if
the Fair Market Value of the Common Stock covered by such Option has declined
since the date the Option was granted; (viii) to initiate an Option Exchange
Program; (ix) to prescribe, amend and rescind rules and regulations relating to
the Plan; (x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by Optionees to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and (xi) to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. Eligibility.
(a) Non-Statutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.
(b) Each Option shall be designated in the Option Grant as
either an Incentive Stock Option or a Non-Statutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Non-Statutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate such relationship at any time,
with or without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be stated in the
Option Grant; provided, however, that the term shall be no more than ten (10)
years after the date of grant thereof. In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years after the date of grant or such shorter term as may be
provided in the Option Grant.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of grant of such Option, owns stock representing
more than 10% of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Non-Statutory Stock
Option, the exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (l) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Options.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Grant. Unless the Administrator provides otherwise, vesting
of Options granted hereunder shall be tolled during any unpaid leave of absence.
An Option may not be exercised for a fraction of a Share. An Option shall be
deemed exercised when the Company receives:
(i) written or electronic notice of exercise
(in accordance with the Option Grant) from the person
entitled to exercise the Option, and
(ii) full payment for the Shares with respect to
which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Grant and the Plan. Shares issued upon
exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 11 of the Plan. Exercise of an Option in any manner shall
result in a decrease in the number of Shares thereafter available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Grant (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Grant). In the absence of a specified time in the
Option Grant, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Grant (of at least six (6) months) to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Option Grant). In the absence of a specified
time in the Option Grant, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Grant (of at least six (6) months) to the extent that the Option
is vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Grant) by the Optionee's estate
or by a person who acquires the right to exercise the Option by bequest or
inheritance. In the absence of a specified time in the Option Grant, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options. The Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of all or substantially
all of the assets of the Company, each outstanding Option shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully exercisable for a period of fifteen (15) days after the
date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option or right confers
the right to purchase or receive, for each Share of Optioned Stock subject to
the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee to whom an Option is
so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
14. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
15. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
18. Restriction on Disposition of Shares. Shares acquired upon the
exercise of Options shall not be disposed of by an Optionee before the
expiration of six months after the Option was acquired.
Adopted by the Board of Directors on ______________, 1999.
CASCO INTERNATIONAL, INC.
1999 STOCK OPTION PLAN STOCK OPTION GRANT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this "Option Grant".
I. Notice of Stock Option Grant. The undersigned Optionee has been
granted an Option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Option Grant, as follows:
Optionee _______________
Date of Grant _______________
Exercise Price per Share $______________
Total Number of Shares Granted _______________
Type of Option: Incentive Stock Option/Non-Statutory Stock Option
Stock Option Expiration Date: The Option shall terminate with respect
to the vested portions thereof three (3) months following termination of
Optionee's employment with the Company; provided, however, that in the case of
termination of employment by reason of death or disability, the Option shall
terminate with respect to the vested portions thereof three (3) years following
termination of employment. The Option shall be cancelled with respect to the
non-vested portion thereof on the date of termination of employment.
Vesting Schedule: This Option shall be exercisable, in whole or
in part, according to the following vesting schedule: [HOLD].
II. AGREEMENT
1. Grant of Option. The Administrator of the Company hereby grants to
______________ the Optionee named in the Notice of Grant (the "Optionee"), an
option (the "Option") to purchase the number of Shares set forth in the Notice
of Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Grant, the terms and conditions of the Plan shall prevail. If designated in the
Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section
422(d), this Option shall be treated as a Non-Statutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Grant.
(b) Method of Exercise. This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit "A" (the
"Exercise Notice") which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as may be required by the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of
an Option unless such issuance and such exercise complies with Applicable laws.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
"B."
4. Method of Payment. Payment of the aggregate Exercise Price shall be:
(a) by cash or check; or
(b) in the sole discretion of the Administrator and upon
request of the Optionee, by either of the following, or a combination thereof:
(1) consideration received by the Company under a formal cashless exercise
program adopted by the Company in connection with the Plan; or (2) surrender of
other Shares which, (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date
of surrender, and (ii) have a Fair Market Value on the date of surrender equal
to the aggregate Exercise Price of the Exercised Shares.
5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Grant shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
7. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
8. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of Non-Statutory Stock Option. There may be a
regular federal income tax liability upon the exercise of a Non-Statutory Stock
Option. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price. If
Optionee is an Employee or a former Employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares
are held for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax purposes. In
the case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and for at least two years after the Date of
Grant, any gain realized on disposition of the Shares will also be treated as
long-term capital gain for federal income tax purposes. If Shares purchased
under an ISO are disposed of within one year after exercise or two years after
the Date of Grant, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (1) the Fair Market
Value of the Shares on the date of exercise, or (2) the sale price of the
Shares. Any additional gain will be taxed as capital gain, short-term or
long-term depending on the period that the ISO Shares were held. In addition to
the holding periods described above, in order to realize the lowest capital
gains tax rates under the Taxpayer Relief Act of 1997, the Shares must be held
for at least eighteen months.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
9. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Grant constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of Delaware.
10. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION GRANT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all of the terms and provisions thereof
Optionee has reviewed the Plan and this Option Grant in their entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option Grant.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE: CASCO INTERNATIONAL, INC.
By:
Signature
Title
Print Name
Residence Address:
Exhibit A to Plan Stock Option Grant
1999 STOCK OPTION PLAN EXERCISE NOTICE
CASCO International, Inc.
Attention: President
1. Exercise of Option. Effective as of today, _____________________,
the undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase __________ shares of the Common Stock (the "Shares") of CASCO
International, Inc. (the "Company") under and pursuant to the 1999 Stock Option
Plan (the "Plan") and the Stock Option Grant dated _______________ (the "Option
Grant").
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Grant.
3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Grant and agrees to abide
by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares shall be issued to
the Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop Transfer Orders.
(a) Legends. Optionee understands and agrees that, unless
registered under the Securities Act of 1933, the Company shall cause the legends
set forth below or legends substantially equivalent thereto, to be placed upon
any certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by the Company or by state or federal securities
laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
(b) Stop Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, unless registered
under the Securities Act of 1933, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
7. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
9. Governing Law Severability. This Agreement is governed by the
internal substantive laws but not the choice of law rules of Delaware.
10. Entire Agreement. The Plan and Option Grant are incorporated herein
by reference. This Agreement, the Plan, the Option Grant and, unless registered
under the Securities Act of 1933, the Investment Representation Statement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee.
Submitted by: Accepted by:
OPTIONEE: CASCO INTERNATIONAL, INC.
By:
Signature
Title:
Print Name
Date Received:
Residence Address:
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: COMPANY: CASCO INTERNATIONAL, INC.
SECURITY: COMMON STOCK
AMOUNT: $
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities. Optionee is acquiring these Securities for investment for
Optionee's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among
other things, the bona fide nature of Optionee's investment intent as
expressed herein. In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory
basis for such exemption may be unavailable if Optionee's
representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one
year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption
from such registration is available. Optionee further acknowledges and
understands that the Company is under no obligation to register the
Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to
the Company, a legend prohibiting their transfer without the consent
of the Commissioner of Corporations of the State of Delaware and any
other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. Because the Company is
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable. In the event that the Company does not
qualify under Rule 701 at the time of grant of the Option, then the Securities
may be resold in certain limited circumstances subject to the provisions of Rule
144, which requires the resale to occur not less than one year after the later
of the date the Securities were sold by the Company or the date the Securities
were sold by an affiliate of the Company, within the meaning of Rule 144; and,
in the case of acquisition of the Securities by an affiliate, or by a
non-affiliate who subsequently holds the Securities less than two years, the
satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of
this paragraph.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee
Print Name