SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GEOGRAPHICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GEOGRAPHICS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6j(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(45) and
0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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2
<PAGE>
GEOGRAPHICS, INC.
1555 ODELL ROAD, BLAINE, WASHINGTON 98231
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on August 28, 1996
TO THE SHAREHOLDERS OF GEOGRAPHICS, INC:
PLEASE TAKE NOTICE that the 1996 Annual Meeting of Shareholders of Geographics,
Inc., a Wyoming corporation (the "Company"), will be held at Aspen Room, Four
Seasons Hotel, 791 West Georgia Street, Vancouver, British Columbia on
Wednesday, August 28, 1996 at 10:00 A.M., Pacific Standard Time, or at any and
all adjournments thereof, for the following purposes:
1. To increase the number of members of the Board of Directors from seven
directors to eight directors.
2. To elect eight directors to the Board of Directors until the next
annual meeting of shareholders of the Company and until their
successors have been elected and qualified;
3. To adopt the Geographics, Inc. 1996 Stock Option Plan;
4. To approve the issuance of 180,000 incentive stock options to certain
employees, officers and directors of the Company;
5. To increase the authorized common stock of the Company from 10,000,000
shares of Common Stock, no par value per share to 100,000,000 shares of
Common Stock, no par value per share;
6. To ratify the appointment of Moss Adams LLP as auditors of the
Company's financial statements for the fiscal year ending March 31,
1997; and
7. To transact such other business as may properly come before the
meeting or any adjournment or postponements thereof.
The Board of Directors has fixed the close of business on July 12, 1996 as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the meeting. Whether or not you expect to be present, please sign,
date and return the enclosed proxy card in the enclosed pre-addressed envelope
as promptly as possible. No postage is required if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ RONALD S. DEANS
--------------------------------------
RONALD S. DEANS
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND PRESIDENT
Blaine, Washington
July 26, 1996
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE
A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE>
GEOGRAPHICS, INC.
1555 Odell Road
Blaine, Washington 98231
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Geographics, Inc., a Wyoming corporation (the "Company"),
of proxies for use at the 1996 Annual Meeting of Shareholders ("Annual Meeting")
to be held at Aspen Room, Four Seasons Hotel, 791 West Georgia Street,
Vancouver, British Columbia on Wednesday, August 28, 1996, at 10:00 a.m.,
Pacific Standard Time, or at any and all adjournments thereof (the "Annual
Meeting"), pursuant to the foregoing Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the form of proxy are first
being sent to shareholders is July 26, 1996. The cost of this solicitation will
be borne by the Company. The Company's principal executive offices are located
at 1555 Odell Road, Blaine Washington 98231. Directors, officers and employees
of the Company may solicit proxies by telephone, telegraph or personal
interview. The Annual Report on Form 10-KSB of the Company for the fiscal year
ended March 31, 1996, along with the financial statements for the period ended
March 31, 1996 are being mailed with this Notice of Annual Meeting, Proxy
Statement and Proxy.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of Directors.
The giving of a proxy does not preclude the right to vote in person should any
shareholder giving the proxy so desire. Shareholders have an unconditional right
to revoke their proxy at any time prior to the exercise thereof, either in
person at the Annual Meeting or by filing with the Company's Secretary at the
Company's headquarters a written revocation or duly executed proxy bearing a
later date; however, no such revocation will be effective until written notice
of the revocation is received by the Company at or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the Notice
of Annual Meeting of Shareholders and the enclosed proxy is to be borne by the
Company. In addition to the use of mail, employees of the Company may solicit
proxies personally and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. The Company may reimburse such
persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote upon
the following matters:
1. To increase the number of members of the Board of Directors
from seven directors to eight directors.
2. To elect eight (8) directors to the Board of Directors until
the next annual meeting of shareholders of the Company and
until their successors have been elected and qualified;
3. To adopt the Geographics, Inc. 1996 Stock Option Plan;
4. To approve the issuance of 180,000 incentive stock options to
certain employees, officers and directors of the Company;
5. To increase the authorized common stock of the Company from
10,000,000 shares of Common Stock, no par value per share to
100,000,000 shares of Common Stock, no par value per share;
<PAGE>
6. To ratify the appointment of Moss Adams LLP as auditors of
the Company's financial statements for the fiscal year ending
March 31, 1997; and
7. To transact such other business as may properly come before
the meeting or any adjournment or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked in accordance with the procedures set forth above) will
be voted for the election of the eight nominees for director named below. In the
event a shareholder specifies a different choice by means of the enclosed proxy,
his shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on July 12, 1996 as the
record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 9,381,877 shares of Common Stock issued and outstanding, all of which
are entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter submitted to shareholders for approval at
the Annual Meeting. Shareholders do not have the right to cumulate their votes
for directors.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected (Proposal 2) by a
plurality of the votes cast by the shares of Common Stock represented in person
or by proxy at the Annual Meeting . Under applicable Wyoming state law, if a
quorum exists, action on a matter other then the election of directors is
approved if a majority of shares voting at the Annual Meeting in person or proxy
favor the proposed action. If less than a majority of outstanding shares
entitled to vote are represented at the Annual Meeting, a majority of the shares
so represented may adjourn the Annual Meeting to another date, time or place,
and notice need not be given of the new date, time or place if the new date,
time or place is announced at the meeting before an adjournment is taken.
Abstentions and "broker non-votes" (as defined below) are counted as shares
eligible to vote at the Annual Meeting in determining whether a quorum is
present, but do not represent votes cast with respect to any Proposal. "Broker
non-votes" are shares held by a broker or nominee as to which instructions have
not been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power.
Prior to the Annual Meeting, the Company will select one or more inspectors of
election for the meeting. Such inspector(s) shall determine the number of shares
of Common Stock represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive, count and tabulate ballots
and votes and determine the results thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the common stock ownership information, based on
9,376,877 shares of common stock outstanding as of June 14, 1996, information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each director and nominee for director, (iii) each Named
Executive Officer (as defined herein), and (iv) all directors and executive
officers as a group:
3
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) SHARES OWNED(2)
- ---------------------- ----------------------- -------------------------
<S> <C> <C>
Ronald S. Deans(3) 697,395 7.4%
Mark G. Deans(4) 442,279 4.7%
R. Scott Deans(5) 444,518 4.7%
Fidel Garcia Carrancedo(6) 1,426,968 15.2%
Moises Cosio(7) 169,600 1.8%
Alan D. Tucks, Jr.(8) 140,756 1.5%
Robert Parker(9) 30,000 *
Luis Alberto Morato(10) 20,000 *
Terry A. Fife(11) 57,589 *
All directors and executive officers
as a group (nine persons) 3,429,105 36.8%
- ----------------------------
</TABLE>
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the listed
beneficial owners identified is 1555 Odell Road, Blaine, Washington
98231. Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with respect
to all the shares of Common Stock beneficially owned by them.
(2) A person is deemed to be the beneficial owner of securities that can
be acquired by such person within 60 days from the date of this Proxy
Statement upon the exercise of warrants or options. Each beneficial
owner's percentage ownership is determined by assuming that warrants or
options that are held by such person (but not those held by any other
person) and that are exercisable within 60 days from the date of this
Proxy Statement have been exercised.
(3) Mr. Ronald Deans is Chairman of the Board, President, and Chief
Executive Officer of the Company. Includes 43,000 shares held in the
name of his wife, Ann Deans, and 28,775 shares held by the Geographics,
Inc. 401(K) Plan for which Mr. Deans has voting control. The
beneficially owned shares for Mr. Deans Also includes 30,000 shares of
Common Stock issuable upon exercise of certain stock options by Mr.
Deans. His options are exercisable at Cdn$2.30 and expire on August 18,
2000.
(4) Mr. Mark Deans is a Director and Executive Vice President-Marketing of
the Company. Includes 20,000 shares of Common Stock issuable upon
exercise of certain stock options by Mr. Deans. His options are
exercisable at $4.15 Cdn. and expire October 10, 2000.
(5) Mr. Scott Deans is a Director and Executive Vice President-Operations
of the Company. Includes 20,000 shares of Common Stock issuable upon
exercise of certain stock options by Mr. Deans. His options are
exercisable at $4.15 Cdn. and expire October 10, 2000.
(6) Mr. Carrancedo is a Director of the Company. Includes 30,000 shares
of Common Stock issuable upon exercise of certain stock options by Mr.
Carrancedo. His options are exercisable at $2.30 Cdn. and expire
August 18, 2000.
(7) Mr. Cosio is a Director of the Company.
(8) Mr. Tuck is a Director of the Company. Includes 30,000 shares of
Common Stock issuable upon exercise of certain stock options by Mr.
Tuck. His options are exercisable at $2.30 Cdn. and expire August 18,
2000.
(9) Mr. Parker is a Director of the Company.
4
<PAGE>
(10) Mr.Morato is a Director of the Company. Includes 20,000 shares of
Common Stock issuable upon exercise of certain stock options by Mr.
Morato. His options are exercisable at $4.15 Cdn. and expire October
10, 2000.
(11) Mr. Fife is Vice President-Finance, Chief Financial Officer and
Secretary of the Company. Includes 2,089 shares owned by the
Geographics, Inc. 401(k) Plan of which Mr. Fife has voting control.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's outstanding Common Stock to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
complied with.
PROPOSAL 1
INCREASE THE NUMBER OF DIRECTORS FROM SEVEN TO EIGHT
The Company's Bylaws provides that the number of directors
constituting the Company's Board of Directors shall consist of one or more
members to be determined from time to time by a majority vote of the
shareholders. The shareholders of the Company have previously voted that the
Board of Directors shall consist of seven (7) directors. The Company has
proposed that this number be increased from seven to eight directors in order
to elect an additional outside director who is also well-versed in the paper
products industry. The Company believes that this increase will provide the
Company with additional expertise in the paper products area and additional
objective leadership.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE INCREASE N THE NUMBER OF MEMBERS OF THE BOARD OF DIRECTORS
FROM SEVEN (7) TO EIGHT (8) MEMBERS.
PROPOSAL 2
ELECTION OF DIRECTORS
NOMINEES
As discussed above, the Company's Bylaws provide that the number of directors
constituting the Company's Board of Directors shall consist of one or more
members to be determined from time to time by a majority vote of the
shareholders. Currently the number of directors that constitute the Board for
the ensuing year shall be eight, assuming Proposal 1 is approved. Each director
elected at the Annual Meeting will serve for a term expiring at the Company's
1997 Annual Meeting of Shareholders or when his successor has been duly elected
and qualified.
The Company has nominated each of Ronald S. Deans, Mark G. Deans, R. Scott
Deans, Fidel Garcia Carrancedo, Moises Cosio, Alan D. Tuck Jr., Robert Parker
and Luis Alberto Morato to be elected as a director at the Annual Meeting. The
Board of Directors has no reason to believe that any nominee will refuse or be
unable to accept election; however, in the event that one or more nominees are
unable to accept election, or if any other unforeseen contingencies should
arise, each proxy that does not direct otherwise will be voted for the
remaining nominees, if any, and for such other persons as may be designated by
the Board of Directors.
5
<PAGE>
The following table gives certain information as to each person nominated for
election as a director:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS
- ---- --- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald S. Deans 63 1973 Chairman of the Board, President and Chief
Executive Officer
Mark G. Deans 31 1994 Director, Executive Vice President - Marketing
R. Scott Deans 34 1995 Director, Executive Vice President - Operations
Fidel Garcia Carrancedo 63 1989 Director
Moises Cosio 65 1995 Director
Alan D. Tuck Jr. 53 1995 Director
Robert S. Parker 50 1996 Director
Luis Alberto Morato 36 1995 Director
</TABLE>
RONALD S. DEANS has served as the Chief Executive Officer, Chairman and
President of the Company since he founded the Company in 1973. Mr. Deans has
over thirty years experience in the graphics art and office products retailing
industry. Prior to founding the Company, Mr. Deans served as sales manager of
Letraset Canada Ltd. Mr. Deans is responsible for the strategic planning and
business development of the Company.
MARK G. DEANS joined the Company in May 1985, was promoted to its Vice
President-marketing in April 1990 and to Executive Vice President-Marketing in
September 1995. Mr. Deans has served as a director of the Company since November
1994. He is responsible for the development of new products, sales programs, and
marketing programs including relationships with the Company's major customers.
R. SCOTT DEANS joined the Company in February 1985 in the marketing and
operations department. Mr. Deans was promoted to Vice President-Operations in
January 1990 and to Executive Vice President-Operations in September 1995. Mr.
Deans has served as a director of the Company since October 1995. He is
responsible for all manufacturing operations of the Company.
FIDEL GARCIA CARRANCEDO has been a director of the Company since August 1989.
Mr. Carrancedo has served as Director General of Alimentos, S.A. de. C.V., a
food products manufacturer and distributor in Mexico since 1972.
MOISES COSIO has served on the Company's board of directors since January 1995.
Mr. Cosio is an international financier residing in Mexico. Mr. Cosio also
serves on the board of directors of Telefonos de Mexico, a publicly traded
company. He is an international financier residing in Mexico and has investment
interests in Grupo Carso, InverMexico, Mexican subsidiaries of Kimberly-Clark
and John Deere. Mr. Cosio also owns luxury hotels in Ixtapa, Acapulco, and
Mexico City.
ALAN D. TUCK JR. has been a director of the Company since August 1995. Mr. Tuck
is President of Greenway Pump, Inc., a privately held company performing
research and development of hydraulic pumps since March 1992. Mr. Tuck is also
an inventor and holds several U.S. patents. From July 1989 to March 1992, Mr.
Tuck operated Fluid Systems Engineering, a privately held company performing
research and development of hydraulic pumps. Mr. Tuck is a graduate of the
United States Air Force Academy and a Former U.S. Air Force Officer. Mr. Tuck
received his Juris Doctor from the University of California School of Law in
Davis, California.
ROBERT S. PARKER has served on the Company's board of directors since April
1996. Mr. Parker has been the President of Sanford Corporation since December
1990. Sanford Corporation is a manufacturer of writing instruments and office
supplies and is a subsidiary of Newell Co., a public company.
LUIS ALBERTO MORATO has been a director of the Company since October 1995. From
March 1993 to the present, Mr. Morato has been an independent civil engineering
consultant. From June 1982 to March 1993, Mr. Morato was a budget manager with
Bytsa De. C.V.
6
<PAGE>
Mr. Ronald S. Deans, the Company's Chairman, President and CEO, is the father of
Mark G. Deans, the Company's Executive Vice President-Marketing and a director
of the Company and R. Scott Deans, the Company's Executive Vice
President-Operations and a director of the Company. Fidel Garcia Carrancedo, a
director of the Company, is the father-in-law of Luis Alberto Morato, also a
director of the Company.
The Company's officers are elected annually by the Company's Board of Directors.
The Company pays each non-employee director a fee of $500 per month plus $750
for each Board of Directors meeting attended. Directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with attendance of Board of Directors meetings.
Directors of the Company who are also employees of the Company do not receive
additional compensation for their services as directors.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 1996, there were two (2) Meetings of the
Company's Board of Directors. Each Board member attended 75% or more of the
aggregate of the Meetings of the Board of Directors and the Meetings of all
Committees of the Board of Directors on which he served.
The Audit Committee was established in April 1991. The members of the Audit
Committee are Alan D. Tuck Jr., Chairman, Ronald S. Deans, and Fidel Garcia
Carrancedo. Mr. Deans is the President, CEO and Chairman of the Company. The
functions of the Audit Committee are to define the scope of the audit, review
the auditor's reports and comments, and monitor the internal auditing procedures
of the Company. The Audit Committee met one time during fiscal year 1996 and all
members attended the meeting.
The Compensation Committee was established in April 1991. The members of the
Compensation Committee are Robert S. Parker, Chairman, Ronald S. Deans and Alan
D. Tuck Jr. Mr. Deans is the President, CEO and Chairman of the Company. The
Compensation Committee makes recommendations with respect to compensation of
senior officers and granting of stock options and stock awards. The Compensation
Committee met one time during fiscal year 1996 and all members attended the
meeting.
The Company does not have a nomination committee.
In addition to the Directors described above, Terry Fife has served as the
Company's Vice President-Finance, Chief Financial Officer and since October
1994. From May 1991 to October 1994, Mr. Fife served as Manager of Finance &
Administration at Alf Christianson Seed Co. From September 1985 to May, 1991,
he served as Vice-President-Finance & Administration at Dealer Information
Systems Corporation. He also worked for the Seattle office of the Certified
Public Accounting firm of KPMG Peat Marwick. Mr. Fife is responsible for all
accounting and finance functions of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE ELECTION OF THE NOMINEES FOR DIRECTORS SET FORTH ABOVE
EXECUTIVE COMPENSATION
CASH COMPENSATION
Total cash compensation paid to all executive officers as a group for services
provided to the Company in all capacities during the year ended March 31, 1996
aggregated to $696,781. Set forth below is a summary compensation table. As
indicated below, no officer of the Company or any of its subsidiaries, except
for Messrs. Ronald S. Deans, Mark G. Deans and R. Scott Deans received total
salary and bonus which exceeded $100,000 during the periods reflected.
7
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
OTHER ALL
NAME AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN STOCK OPTIONS/ LTIP COMPEN
POSITION PERIOD SALARY BONUS SATION* AWARD(S) SARS(#) PAYOUTS SATION
- --------- ------ ------ ----- ------- --------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald S. Deans, 1996 $234,000 $87,629 - - 30,000 - -
Chairman, President 1995 $181,666 - - - - - -
and CEO 1994 $180,000 - - - 20,000 - -
Mark G. Deans 1996 $111,694 $28,184 - - 32.000 - -
Director, Executive 1995 $79,243 - - - 30,000 - -
Vice President-Marketing 1994 $75,000 - - - 14,000 - -
R. Scott Deans 1996 $111,694 $28,184 - - 32.000 - -
Director, Executive 1995 $79,243 - - - 30,000 - -
Vice President-Operations 1994 $75,000 - - - 14,000 - -
Terry Fife* 1996 $86,914 $8,482 - - - - -
Vice President-Finance 1995 $31,911 - - - 54,000 - -
CFO & Secretary 1994 - - - - - - -
</TABLE>
- -----------------
*Mr. Fife was hired in October 1994.
The Company has no written employment agreements with any of its officers or
directors as of the date of this Proxy, although the Company intends to
establish written agreements with its officers and directors in the future.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
- --------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS/
SECURITIES SARS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE OR
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED (#) YEAR ($/SH) (1) DATE
- --------------------------------------------------------------------------------
Ronald S. Deans 6.0% 30,000 Cdn$2.30 8/18/00
Mark G. Deans 6.5% 12,000 Cdn$2.00 4/25/00
20,000 Cdn$4.15 10/10/00
R. Scott Deans 6.5% 12,000 Cdn$2.00 4/25/00
20,000 Cdn$4.15 10/10/00
(1) The exchange rate on July 23, 1996 was U.S$.7289 =Cdn$1.00.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTION/SARS OPTION/SARS
SHARES AT FY-END (#) AT FY-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
---- ------------ -------- ------------- -------------
Ronald S. Deans 90,000 $373,543 0/30,000 $0/92,347
Mark G. Deans 86,000 $353,253 0/20,000 $0/34,671
R. Scott Deans 86,000 $353,253 0/20,000 $0/34,671
Terry A Fife 54,000 $207,127 0 0
As of March 31, 1996, the Company had reserved 220,000 shares of common stock
for issuance to key employees, officers and directors. Options to purchase the
Company's common stock are granted at a price equal to the market price of the
stock at the date of grant, and are exercisable upon issuance and regulatory
approval. All options expire no more than five years after the date of grant.
Option prices per share are expressed in Canadian dollars. The rate of exchange
as of July 23, 1996 was US$.7289=Cdn.$1.00.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
DEBT AND EQUITY INSTRUMENTS ISSUED TO OFFICERS AND DIRECTORS
During fiscal year 1996, the Company concluded several transactions involving
officers and directors of the Company. These transactions included the issuance
of convertible debentures, the conversion of debentures into common shares and
private placement of common shares.
On September 15, 1995, Ronald S. Deans, the Company's Chairman of the Board,
President and Chief Executive Officer and Fidel Carrancedo, a director of the
Company each converted debentures in the amount of US$100,000 into 109.589
common shares (for an aggregate face amount of US$200,000 into 219,178 common
shares). The debentures were convertible at each holder's option into common
shares of the Company at Cdn.$1.25 per share, to a maximum of 219,178 common
shares. There is no remaining balance of these debentures outstanding as of
March 31, 1996.
On September 26, 1995, the Company issued US$996,000 of convertible debentures
payable to certain officers and directors and directors of the Company including
Ronald S. Deans, the Company's Chairman of the Board, President and Chief
Executive Officer (whose principal amount of debenture equaled $527,881.86,
convertible into 145,344 common shares), Fidel Carrancedo, a director of the
Company (whose principal amount of debenture equaled $328,680.40, convertible
into 90,497 common shares, Mark G. Deans, a director and Executive Vice
President-Marketing of the Company (whose principal amount of debenture equaled
$69,718.87, convertible into 19,196), and R. Scott Deans, a director and
Executive Vice President-Operations (whose principal amount of debenture equaled
$69,718.87, convertible into 19,196). The debentures were convertible at the
holders option into common shares of the Company at Cdn$4.45 per share, to a
maximum 274,233 common shares. On December 22, 1995, these debentures were
converted into 273,233 common shares, and are no longer outstanding.
On January 23, 1996, the Company completed a private placement of 500,000 common
shares certain officers and directors of the Company including Ronald S. Deans
(136,000 shares, of which 43,000 shares were purchased by Mr. Dean's wife, Ann),
Fidel Carrancedo (200,000 shares), Mark G. Deans (65,000 shares), and R. Scott
Deans (79,000 shares). Each share was purchased at a price of Cdn.$5.75. Total
9
<PAGE>
cash proceeds received by the Company were US$2,117,092 and the net cash
proceeds to the Company were US$1,906,100.
At March 31, 1996, Ronald S. Deans ($1,212,706) and Fidel Carrancedo ($52,005)
advanced an aggregate of $1,264,711 in the form of uncollateralized notes
payable. The notes are payable on demand and are classified as current
liabilities of the Company. Interest on these notes are payable monthly at a
rate of prime plus 1%. The total interest costs associated with these notes and
debentures was approximately $60,000 during the year ended March 31, 1996.
MARTIN DISTRIBUTION
Martin Distribution Inc. ("Martin") has acted as the national distributor of the
Company's products in Canada since September 1990. Martin is owned by the estate
of Martin Carrancedo, a former director of the Company. Martin imports the
Company's products into Canada, facilitates customs clearing and distributes the
Company's products to customers in Canada. All sales of the Company's products
within Canada are sold through Martin. Sales to Martin amounted to $2,854,935
and $1,056,750 during the years ended March 31, 1996 and 1995 respectively.
Trade receivables due from Martin amounted to $899,422 and $338,875 at March 31,
1996 and 1996, respectively.
Martin sold product valued at $118,659 and $261,765 during the years ended March
31, 1996 and 1995, respectively to International Geographics of Ontario ("IGO").
IGO is a partnership which is 70% owned by the Company and 30% owned by a
marketing agent of the Company. IGO was dissolved during fiscal 1996 and its
functions will be assumed by Geographics Marketing Canada Inc., a wholly owned
subsidiary of the Company.
Mark G. Deans, a director and executive officer of the Company serves as a
director of Martin. Fidel Garcia Carrancedo, a current director of the Company,
is the brother of the late Martin Carrancedo. There is no relationship, however,
between Fidel Garcia Carrancedo and Martin. Effective April 1, 1996, the Company
will replace Martin as its Canadian national distributor with Geographics
Marketing Canada Inc., a wholly owned subsidiary of the Company. The Company
does not expect the substitution of Geographics Marketing Canada Inc. in place
of Martin to have any material effect on the sales or profits of the Company.
PROPOSAL 3
TO ADOPT THE GEOGRAPHICS, INC. 1996 STOCK OPTION PLAN
On July 8, 1996, the Board of Directors adopted, subject to the
approval by the shareholders, a stock option plan called the "Geographics, Inc.
1996 Stock Option Plan." A copy of the 1996 Stock Option Plan is attached to
this proxy statement as Appendix A. Shareholders will be asked at the meeting to
vote on a proposal to adopt the Plan. The following summary describes features
of the Plan. This summary is qualified in its entirety by reference to the
specific provisions of the Plan, the full text of which is set forth as Appendix
A.
The Board of Directors have determined that the Plan will work to
increase the employees', consultants' and non-employee directors' proprietary
interest in the Company and to align more closely their interests with the
interests of the Company's shareholders. The Plan will also maintain the
Company's ability to attract and retain the services of experienced and highly
qualified employees and non- employee directors. The Board of Directors believes
that the Plan is in the Company's best interests and therefore recommends
adoption of the Plan on essentially the terms and conditions as are set forth
below.
10
<PAGE>
Under the Plan, the Company has reserved an aggregate of 1,000,000
shares of Common Stock for issuance pursuant to options granted under the Plan
("Plan Options"). The Board of Directors or Compensation Committee of the Board
of Directors (the "Committee") of the Company administers the Plan including,
without limitation, the selection of the persons who will be granted Plan
Options under the Plan, the type of Plan Options to be granted, the number of
shares subject to each Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying
as incentive stock options ("Incentive Options") under Section 422 of the
Internal Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of Common Stock owned
by the eligible person and receive a new Plan Option to purchase shares of
Common Stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the Company's Common Stock must be at least 110% of such
fair market value as determined on the date of the grant. The term of each Plan
Option and the manner in which it may be exercised is determined by the Board of
the Directors or the Committee, provided that no Plan Option may be exercisable
more than 10 years after the date of its grant and, in the case of an Incentive
Option granted to an eligible employee owning more than 10% of the Company's
Common Stock, no more than five years after the date of the grant.
The exercise price of Non-Qualified Options shall be determined by the
Board of Directors or the Committee. The per share purchase price of shares
subject to Plan Options granted under the Plan may be adjusted in the event of
certain changes in the Company's capitalization, but any such adjustment shall
not change the total purchase price payable upon the exercise in full of Plan
Options granted under the Plan.
Officers, directors, key employees and consultants of the Company and
its subsidiaries are eligible to receive Non-Qualified Options under the Plan.
Only employees of the Company (or by any subsidiary thereof) are eligible to
receive Incentive Options.
All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, or if an optionee is not an employee of the Company but is a member of
the Company's Board of Directors and his service as a director is terminated for
any reason, other than death or disability, the Plan Option granted to him shall
lapse to the extent unexercised on the earlier of the expiration date or 30 days
following the date of termination. If the optionee dies during the term of his
employment, the Plan Option granted to him shall lapse to the extent unexercised
on the earlier of the expiration date of the Plan Option or the date one year
following the date of the optionee's death. If the optionee is permanently and
totally disabled within the meaning of Section 22(c)(3) of the Internal Revenue
Code of 1986, the Plan Option granted to him lapses to the extent unexercised on
the earlier of the expiration date of the option or one year following the date
of such disability.
The Board of Directors or Committee may amend, suspend or terminate the
Plan at any time, except that no amendment shall be made which (i) increases the
total number of shares subject to the Plan or changes the minimum purchase price
therefor (except in either case in the event of adjustments due to changes in
the Company's capitalization), (ii) affects outstanding Plan Options or any
exercise right thereunder, (iii) extends the term of any Plan Option beyond ten
years, or (iv) extends the termination date of the Plan. Unless the Plan shall
theretofore have been suspended or terminated by the Board of
11
<PAGE>
Directors, the Plan shall terminate on March 31, 2006. Any such termination of
the Plan shall not affect the validity of any Plan Options previously granted
thereunder.
The following discussion is based on federal income tax laws and
regulations in effect on March 31, 1996. It does not purport to be a complete
description of the federal income tax consequences of the Plan, nor does it
describe the consequences of state, local or foreign tax laws which may be
applicable. Accordingly, any person receiving a grant under the Plan should
consult with his own tax adviser.
An employee granted an Incentive Stock Option does not recognize
taxable income either at the date of grant or at the date of its timely
exercise. However, the excess of the fair market value of Common Stock received
upon exercise of the Incentive Stock Option over the Option exercise price is an
item of adjustment under Section 56(b)(3) of the Code and may be subject to the
alternative minimum tax imposed by Section 55 of the Code. Upon disposition of
stock acquired on exercise of an Incentive Stock Option, long-term capital gain
or loss is recognized in an amount equal to the difference between the sales
price and the Incentive Stock Option exercise price, provided that the option
holder has not disposed of the stock within two years from the date of grant and
within one year from the date of exercise. If the Incentive Stock Option holder
disposes of the acquired stock (including the transfer of acquired stock in
payment of the exercise price of an Incentive Stock Option) without complying
with both of these holding period requirements ("Disqualifying Disposition"),
the option holder will recognize ordinary income at the time of such
Disqualifying Disposition to the extent of the difference between the exercise
price and the lesser of the fair market value of the stock on the date the
Incentive Stock Option is exercised (the value six months after the date of
exercise may govern in the case of an employee whose sale of stock at a profit
could subject him to suit under Section 16(b) of the Securities Exchange Act of
1934) or the amount realized on such Disqualifying Disposition. Any remaining
gain or loss is treated as a short-term or long- term capital gain or loss,
depending on how long the shares are held. In the event of a Disqualifying
Disposition, the Incentive Stock Option tax preference described above may not
apply (although, where the Disqualifying Disposition occurs subsequent to the
year the Incentive Stock Option is exercised, it may be necessary for the
employee to amend his return to eliminate the tax preference item previously
reported). The Company and its subsidiary are not entitled to a tax deduction
upon either exercise of an Incentive Stock Option or disposition of stock
acquired pursuant to such an exercise, except to the extent that the Option
holder recognized ordinary income in a Disqualifying Disposition.
In respect to the holder of Non-Qualified Options, the option holder
does not recognize taxable income on the date of the grant of the Non-Qualified
Option, but recognizes ordinary income generally at the date of exercise in the
amount of the difference between the option exercise price and the fair market
value of the Common Stock on the date of exercise. However, if the holder of
Non-Qualified Options is subject to the restrictions on resale of Common Stock
under Section 16 of the Securities Exchange Act of 1934, such person generally
recognizes ordinary income at the end of the six-month period following the date
of exercise in the amount of the difference between the option exercise price
and the fair market value of the Common Stock at the end of the six-month
period. Nevertheless, such holder may elect within 30 days after the date of
exercise to recognize ordinary income as of the date of exercise. The amount of
ordinary income recognized by the option holder is deductible by the Company in
the year that income is recognized.
If the Plan is approved by the shareholders, the Company will have
granted no Plan Options.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE ADOPTION OF THE GEOGRAPHIC INC'S, STOCK OPTION PLAN
12
<PAGE>
PROPOSAL 4
TO APPROVE THE ISSUANCE OF 180,000 INCENTIVE STOCK OPTIONS
TO CERTAIN EMPLOYEES, OFFICERS AND DIRECTORS OF THE COMPANY;
The Company has granted a number of incentive stock options (the
"options") to certain employees, officers and directors, which options have
received conditional approval from the Toronto Stock Exchange, subject to
shareholder approval being obtained. These options were granted to the
employees, officers and directors of the Company described below in order to
compensate these individuals for adhesional services provided by each of them to
the Company. Additionally, these options were granted in order to increase each
of these's individual's proprietary interest in the Company and to align more
closely their interests with the interests of the Company's shareholders. The
Board of Directors believes that the granting of these stock options are in the
Company's best interests.
The particulars of these options are set forth as follows (all figures are in
U.S. Dollars):
<TABLE>
<CAPTION>
MARKET VALUE
SHARES OF SHARES ON
UNDERLYING EXERCISE PRICE THE DATE OF GRANT EXPIRATION
NAME OPTIONS (CDN$/SHARE) (CDN$/SECURITY) DATE
- ---- ---------- -------------- ----------------- ----------
<S> <C> <C> <C> <C>
Ronald S. Deans 30,000 $2.30 $2.30 8-18-00
Fidel Garcia Carrancedo 30,000 $2.30 $2.30 8-18-00
Mark G. Deans 20,000 $4.15 $2.30 10-10-00
R. Scott Deans 20,000 $4.15 $4.15 10-10-00
Luis Alberto Morato Ichaso 20,000 $4.15 $4.15 10-10-00
Alan Tuck, Jr. 30,000 $2.30 $2.30 8-18-00
Ted Graziano 10,000 $4.15 $4.15 10-10-00
Fulvio Bondi 10,000 $4.15 $4.15 10-10-00
Bruce Tipton 2,500 $4.15 $4.15 10-10-00
Collon Peppar 2,500 $4.15 $4.15 10-10-00
Kent Bradley 2,500 $4.15 $4.15 10-10-00
Jo Bechard 2,500 $4.15 $4.15 10-10-00
</TABLE>
Each of the option agreements provide for early termination in the event that
the optionee ceases to be an employee, director or officer of the Company. This
Proposal must be passed by a simple majority of the votes cast by shareholders
other than the 3,248,241 votes entitled to be cast by insiders of the Company
and their affiliates which will not be counted.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE ISSUANCE OF THE INCENTIVE STOCK OPTIONS TO THE EMPLOYEES,
OFFICERS, AND DIRECTORS ENUMERATED ABOVE
PROPOSAL 5
TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY FROM
10,000,000 SHARES OF COMMON STOCK, NO PAR VALUE TO
100,000,000 SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE.
The Board of Directors has voted to increase the authorized shares of
Common Stock, no par value per share from 10,000,000 to 100,000,000, no par
value per share, subject to approval by the Shareholders of the Company. The
Board of Directors determined that such Amendment is advisable and directed that
the proposed Amendment be considered at the Annual Meeting of Shareholders to be
held
13
<PAGE>
on August 30, 1996. There are no present plans, understandings, arrangements or
discussions for the issuance of additional shares of Common Stock that would be
authorized by this Amendment. The full text of the proposed Amendment to the
Certificate of Incorporation is set forth in Appendix A to this Proxy Statement.
The Board of Directors believe that this increase is desirable for a
number of reasons, including but not limited to facilitating the ability of the
Company to effect growth through future acquisition and future financings, stock
splits or dividends for other corporate purposes. The Company seeks to avoid the
delay and expense incurred in holding special meetings of the Shareholders to
approve amendments to the Articles of Incorporation.
On May 1, 1996, the Company completed a private placement of 1,268,293
units at a price of $5,125 per unit. Total proceeds from this transaction were
approximately $6,500,000. Each unit included one common share of the Company and
a warrant to purchase one additional common share of the Company at $6.50. The
warrants are exercisable upon issuance and regulatory approval, and expire June
1, 1999.
Other than the private placement described above, there are no
outstanding obligations of the Company to issue any shares of its Common Stock
as of the date herein.
The affirmative vote of the holders of a majority of the outstanding
shares of the Company Common Stock is required for approval of the amendment to
the Articles of Incorporation. If the Amendment is approved by the Shareholders,
the Amendment will become effective upon the filing with the secretary of state
of the State of Wyoming.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION.
PROPOSAL 6
TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Moss Adams LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997 and has further
directed that management submit the selection of auditors for ratification by
the shareholders at the Meeting. Moss Adams LLP was first appointed independent
auditors of the Company in November 30, 1994. Representatives of Moss Adams LLP
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire, and will be available to respond to
appropriate questions.
Shareholder ratification of the selection of Moss Adams LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Moss Adams LLP to
the shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if the Board determines that such a change would be
in the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMENDS THAT YOU VOTE "FOR"
THE RATIFICATION OF MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
14
<PAGE>
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
SHAREHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented at the 1996 Annual
Meeting of Shareholders of the Company must be received by the Company, at its
principal executive offices not later than March 31, 1997, for inclusion in the
Proxy Statement and Proxy relating to the 1996 Annual Meeting of Shareholders.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
Copies of the Company's Annual Report on Form 10-KSB for the year ended
March 31, 1996, including related exhibits as filed with the Securities and
Exchange Commission, are available without charge to shareholders upon request
to Investor Relations, P.O. Box 1750, 1555 Odell Road, Blaine, Washington 98231.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RONALD S. DEANS
----------------------------------
RONALD S. DEANS
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND PRESIDENT
Blaine, Washington
July 26, 1996
15
<PAGE>
GEOGRAPHICS, INC.
FORM OF 1996 STOCK OPTION PLAN
1. GRANT OF OPTIONS; GENERALLY. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the
GEOGRAPHICS, INC. 1996 STOCK OPTION PLAN (the "Plan"), the Board of Directors
(the "Board") or, the Compensation Committee (the "Stock Option Committee") of
Geographics, Inc. (the "Corporation") is hereby authorized to issue from time
to time on the Corporation's behalf to any one or more Eligible Persons, as
hereinafter defined, options to acquire shares of the Corporation's no par
value common stock (the "Stock").
2. TYPE OF OPTIONS. The Board or the Stock Option Committee is
authorized to issue options which meet the requirements of Section ss.422 of
the Internal Revenue Code of 1986, as amended (the "Code"), which options are
hereinafter referred to collectively as ISOs, or singularly as an ISO. The
Board or the Stock Option Committee is also, in its discretion, authorized to
issue options which are not ISOs, which options are hereinafter referred to
collectively as NSOs, or singularly as an NSO. The Board or the Stock Option
Committee is also authorized to issue "Reload Options" in accordance with
Paragraph 8 herein, which options are hereinafter referred to collectively as
Reload Options, or singularly as a Reload Option. Except where the context
indicates to the contrary, the term "Option" or "Options" means ISOs, NSOs and
Reload Options.
3. AMOUNT OF STOCK. The aggregate number of shares of Stock which may
be purchased pursuant to the exercise of Options shall be 1,000,000 shares. Of
this amount, the Board or the Stock Option Committee shall have the power and
authority to designate whether any Options so issued shall be ISOs or NSOs,
subject to the restrictions on ISOs contained elsewhere herein. If an Option
ceases to be exercisable, in whole or in part, the shares of Stock underlying
such Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the Corporation as payment for shares of Stock
purchased by the exercise of an Option granted under this Plan, such shares of
Stock shall also be available under this Plan. If there is any change in the
number of shares of Stock on account of the declaration of stock dividends,
recapitalization resulting in stock split-ups, or combinations or exchanges of
shares of Stock, or otherwise, the number of shares of Stock available for
purchase upon the exercise of Options, the shares of Stock subject to any
Option and the exercise price of any outstanding Option shall be appropriately
adjusted by the Board or the Stock Option Committee. The Board or the Stock
Option Committee shall give notice of any adjustments to each Eligible Person
granted an Option under this Plan, and such adjustments
<PAGE>
shall be effective and binding on all Eligible Persons. If because of one or
more recapitalizations, reorganizations or other corporate events, the holders
of outstanding Stock receive something other than shares of Stock then, upon
exercise of an Option, the Eligible Person will receive what the holder would
have owned if the holder had exercised the Option immediately before the first
such corporate event and not disposed of anything the holder received as a
result of the corporate event.
4. ELIGIBLE PERSONS.
(a) With respect to ISOs, an Eligible Person means any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or by any subsidiary of the Corporation or (iii)
any consultant of the Corporation or by any subsidiary of the Corporation.
5. GRANT OF OPTIONS. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in a writing
signed on behalf of the Corporation or by a majority of the members of the
Stock Option Committee. The writing shall identify whether the Option being
granted is an ISO or an NSO and shall set forth the terms which govern the
Option. The terms shall be determined by the Board or the Stock Option
Committee, and may include, among other terms, the number of shares of Stock
that may be acquired pursuant to the exercise of the Options, when the Options
may be exercised, the period for which the Option is granted and including the
expiration date, the effect on the Options if the Eligible Person terminates
employment and whether the Eligible Person may deliver shares of Stock to pay
for the shares of Stock to be purchased by the exercise of the Option. However,
no term shall be set forth in the writing which is inconsistent with any of the
terms of this Plan. The terms of an Option granted to an Eligible Person may
differ from the terms of an Option granted to another Eligible Person, and may
differ from the terms of an earlier Option granted to the same Eligible Person.
6. OPTION PRICE. The option price per share shall be determined by the
Board or the Stock Option Committee at the time any Option is granted, and
shall be not less than (i) in the case of an ISO, the fair market value,
(ii) in the case of an ISO granted to a ten percent or greater stockholder, 110
percent of the fair market value, or (iii) in the case of an NSO, not less than
<PAGE>
75% of the fair market value (but in no event less than the par value) of one
share of Stock on the date the Option is granted, as determined by the Board or
the Stock Option Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of
Stock on such exchange or over-the-counter market on which such shares shall be
traded on that date, or if such exchange or over-the-counter market is closed
or if no shares shall have traded on such date, on the last preceding date on
which such shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee.
7. PURCHASE OF SHARES. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise. The purchase price
of the Stock shall be in United States dollars, payable in cash or by check, or
in property or Corporation stock, if so permitted by the Board or the Stock
Option Committee in accordance with the discretion granted in Paragraph 5
hereof, having a value equal to such purchase price. The Corporation shall not
be required to issue or deliver any certificates for shares of Stock purchased
upon the exercise of an Option prior to (i) if requested by the Corporation,
the filing with the Corporation by the Eligible Person of a representation in
writing that it is the Eligible Person's then present intention to acquire the
Stock being purchased for investment and not for resale, and/or (ii) the
completion of any registration or other qualification of such shares under any
government regulatory body, which the Corporation shall determine to be
necessary or advisable.
8. GRANT OF RELOAD OPTIONS. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 and 21 herein. A
Reload Option provision provides that if the Eligible Person pays the exercise
price of shares of Stock to be purchased by the exercise of an ISO, NSO or
another Reload Option (the "Original Option") by delivering to the Corporation
shares of Stock already owned by the Eligible Person (the "Tendered Shares"),
the Eligible Person shall receive a Reload Option which shall be a new Option
to purchase shares of Stock equal in number to the tendered shares. The terms
of any Reload Option shall be determined by the Board or the Stock Option
Committee consistent with the provisions of this Plan.
9. STOCK OPTION COMMITTEE. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of
<PAGE>
Directors. The Board may from time to time remove members from or add members
to the Stock Option Committee. The Stock Option Committee shall be constituted
so as to permit the Plan to comply in all respects with the provisions set
forth in Paragraph 20 herein. The members of the Stock Option Committee may
elect one of its members as its chairman. The Stock Option Committee shall hold
its meetings at such times and places as its chairman shall determine. A
majority of the Stock Option Committee's members present in person shall
constitute a quorum for the transaction of business. All determinations of the
Stock Option Committee will be made by the majority vote of the members
constituting the quorum. The members may participate in a meeting of the Stock
Option Committee by conference telephone or similar communications equipment by
means of which all members participating in the meeting can hear each other.
Participation in a meeting in that manner will constitute presence in person at
the meeting. Any decision or determination reduced to writing and signed by all
members of the Stock Option Committee will be effective as if it had been made
by a majority vote of all members of the Stock Option Committee at a meeting
which is duly called and held.
10. ADMINISTRATION OF PLAN. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Stock Option Committee is granted the full right and authority to interpret and
construe the provisions of this Plan, promulgate, amend and rescind rules and
procedures relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options granted or
awarded pursuant to the Plan comply with the provisions of Paragraph 20 and 21
herein. All determinations made by the Board or the Stock Option Committee
shall be final, binding and conclusive on all persons including the Eligible
Person, the Corporation and its stockholders, employees, officers and directors
and consultants. No member of the Board or the Stock Option Committee will be
liable for any act or omission in connection with the administration of this
Plan unless it is attributable to that member's willful misconduct.
11. PROVISIONS APPLICABLE TO ISOS. The following provisions shall apply
to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from
January 2, 1996, the date that this Plan was originally adopted by the
Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of ten (10)
years from the date the ISO is granted.
(c) The option price may not be less than the fair
<PAGE>
market value of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to whom
it is granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time of
the grant stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the employer corporation or of its
parent or subsidiary corporation (as those terms are defined in the Code), then
the option price shall be at least 110% of the fair market value of the Stock,
and the ISO shall not be exercisable after the expiration of five (5) years
from the date the ISO is granted.
(f) The aggregate fair market value (determined at the time the
ISO is granted) of the Stock with respect to which the ISO is first exercisable
by the Eligible Person during any calendar year (under this Plan and any other
incentive stock option plan of the Corporation) shall not exceed $100,000.
(g) Even if the shares of Stock which are issued upon exercise
of an ISO are sold within one year following the exercise of such ISO so that
the sale constitutes a disqualifying disposition for ISO treatment under the
Code, no provision of this Plan shall be construed as prohibiting such a sale.
(h) This Plan was adopted by the Corporation on _______________,
1995 by virtue of its approval by the Corporation's Board of Directors.
Approval by the stockholders of the Corporation is to occur prior to
_________________, 1996.
12. DETERMINATION OF FAIR MARKET VALUE. In granting ISOs under this
Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. RESTRICTIONS ON ISSUANCE OF STOCK. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such
exercise it is his or her then present intention to acquire the shares of Stock
for investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be
<PAGE>
defined to exclude distribution by will or under the laws of descent and
distribution. Prior to issuing any shares of Stock pursuant to the exercise of
an Option, the Corporation shall take such steps as it deems necessary to
satisfy any withholding tax obligations imposed upon it by any level of
government.
14. EXERCISE IN THE EVENT OF DEATH OF TERMINATION OR EMPLOYMENT.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of
his employment with the Corporation or a Subsidiary because of his disability,
or retirement or otherwise, his Options may be exercised, to the extent that
the optionee shall have been entitled to do so on the date of his death or such
termination of employment, by the person or persons to whom the optionee's
right under the Option pass by will or applicable law, or if no such person has
such right, by his executors or administrators, at any time, or from time to
time. In the event of termination of employment because of his death while an
employee or because of disability, his Options may be exercised not later than
the expiration date specified in Paragraph 5 or one year after the optionee's
death, whichever date is earlier, or in the event of termination of employment
because of retirement or otherwise, not later than the expiration date
specified in Paragraph 5 hereof or one year after the optionee's death,
whichever date is earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such optionee has not
died within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the termination
of his employment, at any time, or from time to time, but not later than the
expiration date specified in Paragraph 5 hereof or one year after termination
of employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans or with the consent of the Board or the Stock Option Committee
or involuntarily other than by termination for cause, and such optionee has not
died within the following three months, he may exercise his Option to the
extent he shall have been entitled to do so at the date of the termination of
his employment, at any time and from to time, but not later than the expiration
date specified in Paragraph 5 hereof or thirty (30) days after termination of
employment, whichever date is earlier. For purposes of this Paragraph 14,
termination for cause shall mean termination of employment by reason of the
optionee's commission of a felony, fraud or willful misconduct which has
resulted, or is likely to result, in substantial and material damage to the
Corporation or a Subsidiary, all as the Board or the Stock Option Committee in
its sole discretion may determine.
<PAGE>
(d) If an optionee's employment shall terminate for any reason
other than death, disability, retirement or otherwise, all right to exercise
his Option shall terminate at the date of such termination of employment.
15. CORPORATE EVENTS. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and
each such Eligible Person shall have the right, during the period of thirty (30)
days preceding such termination, to exercise his Option as to all or any part of
the shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall
extend the term set for purchasing the shares of Stock set forth in the Option.
16. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue
in the employ of the Eligible Person's employer, or will interfere with or
restrict in any way the right of the Eligible Person's employer to discharge
such Eligible Person at any time for any reason whatsoever, with or without
cause.
17. NONTRANSFERABILITY. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
18. NO RIGHTS AS STOCKHOLDER. No optionee shall have any rights as
a stockholder with respect to any shares subject to
his Option prior to the date of issuance to him of a certificate or
certificates for such shares.
19. AMENDMENT AND DISCONTINUANCE OF PLAN. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this
Plan which has the effect of (a) increasing the aggregate number of shares of
Stock subject to this Plan (except for adjustments pursuant to Paragraph 3
herein), or (b) changing the definition of Eligible Person under this Plan, may
be effective unless and until approval of the stockholders of the Corporation
is obtained in the same manner as approval of this Plan is required. The
Corporation's Board of Directors is authorized to seek the approval of the
Corporation's stockholders for any other changes it proposes to make to this
Plan which require such approval, however, the Board of Directors may
<PAGE>
modify the Plan, as necessary, to effectuate the intent of the Plan as a result
of any changes in the tax, accounting or securities laws treatment of Eligible
Persons and the Plan, subject to the provisions set forth in this Paragraph 19,
and Paragraphs 20 and 21.
20. COMPLIANCE WITH RULE 16B-3. This Plan is intended to comply in all
respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to participants who are subject to Section 16 of
the Exchange Act, and any provision(s) herein that is/are contrary to Rule
16b-3 shall be deemed null and void to the extent appropriate by either the
Stock Option Committee or the Corporation's Board of Directors.
21. COMPLIANCE WITH CODE. The aspects of this Plan on ISOs is intended
to comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed
to incorporate by reference such modification. Any stock option agreement
relating to any Option granted pursuant to this Plan outstanding and
unexercised at the time any modifying statute or regulation becomes effective
shall also be deemed to incorporate by reference such modification and no notice
of such modification need be given to optionee.
If any provision of the aspects of this Plan on ISOs is
determined to disqualify the shares purchasable pursuant to the Options granted
under this Plan from the special tax treatment provided by Code Section 422,
such provision shall be deemed null and void and to incorporate by reference
the modification required to qualify the shares for said tax treatment.
22. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant
and exercise of Options thereunder, and the obligation of the Corporation to
sell and deliver Stock under such options, shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation shall not
be required to issue or deliver any certificates for shares of Stock prior to
(a) the listing of such shares on any stock exchange or over-the- counter
market on which the Stock may then be listed and (b) the completion of any
registration or qualification of such shares under any federal or state law, or
any ruling or regulation of any government body which the Corporation shall, in
its sole discretion, determine to be necessary or advisable. Moreover, no
Option may be exercised if its exercise or the receipt of Stock pursuant
thereto would be contrary to applicable laws.
23. DISPOSITION OF SHARES. In the event any share of Stock acquired by
an exercise of an Option granted under the Plan shall
<PAGE>
be transferable other than by will or by the laws of descent and distribution
within two years of the date such Option was granted or within one year after
the transfer of such Stock pursuant to such exercise, the optionee shall give
prompt written notice thereof to the Corporation or the Stock Option Committee.
24. NAME. The Plan shall be known as the "Geographics, Inc. 1996
Stock Option Plan."
25. NOTICES. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office, 1555 Odell Road, Blaine,
Washington 98230 and when addressed to the Committee shall be sent to it at
1555 Odell Road, Blaine, Washington 98230, subject to the right of either party
to designate at any time hereafter in writing some other address, facsimile
number or person to whose attention such notice shall be sent.
26. HEADINGS. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and
shall not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
27. EFFECTIVE DATE. This Plan, the Geographics, Inc. 1996 Stock
Option Plan, was adopted by the Board of Directors of the Corporation on
________________, 1995. The effective date of the Plan shall be the same date.
Dated as of ______________.
GEOGRAPHICS, INC.
By:___________________________
Its: President
<PAGE>
GEOGRAPHICS, INC.
1555 ODELL ROAD
BLAINE, WASHINGTON 98231
PROXY
The undersigned hereby constitutes and appoints Ronald S. Deans as Proxy, with
the power to appoint his substitute, and hereby authorizes him to represent and
to vote as designated below, all shares of common stock of the Company held of
record by the undersigned on July 12, 1996, at the Annual Meeting of
Shareholders to be held on August 28, 1996, or any adjournment thereof.
1. To increase the number of members of the Board of Directors from seven
(7) members to eight (8) members.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
2. Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary) [ ] below [ ]
Ronald S. Deans Mark G. Deans
R. Scott Deans Fidel Garcia Carrancedo
Moises Cosio Alan D Tuck Jr.
Robert Parker Luis Alberto Morato
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE PLEASE
DRAW A LINE THROUGH THAT NOMINEE'S NAME)
3. To ratify the appointment of Moss Adams LLP as auditors of the
Company's financial statements for the fiscal year ending March 31,
1997;
[ ]FOR [ ]AGAINST [ ]ABSTAIN
4. To approve the issuance of 180,000 incentive stock options to certain
employees, officers and directors of the Company;
[ ]FOR [ ]AGAINST [ ]ABSTAIN
5. To adopt the Geographics, Inc. 1996 Stock Option Plan;
[ ]FOR [ ]AGAINST [ ]ABSTAIN
16
<PAGE>
6. To amend the Company's Articles of Incorporation to effect an increase
of the Company's authorized common stock from 10,000,000 shares of
common stock, no par value to 100,000,000 shares of common stock, no
par value.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
7. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GEOGRAPHICS, INC.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this Proxy will be voted
FOR the nominees listed in Proposal 1 and FOR Proposals 2, 3, 4, 5, 6 and 7.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a Corporation, please
sign in the Corporate name by President or other authorized officer. If a
Partnership, please sign in Partnership name by authorized person.
----------------------------------
Signature
----------------------------------
Signature If Held Jointly
----------------------------------
(Please Print Name)
----------------------------------
Number of Shares Subject to Proxy
Dated:____________________ , 1996
