<PAGE> 1
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 a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CASCO INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[CASCO INTERNATIONAL, INC. LETTERHEAD]
April 17, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of CASCO INTERNATIONAL, INC. on Wednesday, May 20, 1998. The
meeting will begin at 9:00 a.m., Eastern Standard Time, at the Holiday Inn, 212
Woodlawn Road, Charlotte, North Carolina 28217.
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 May 20,
1998.
Very truly yours,
/s/ Charles R. Davis
---------------------------
Charles R. Davis
President
<PAGE> 3
CASCO INTERNATIONAL, INC.
4205 East Dixon Boulevard
Shelby, North Carolina 28150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 20, 1998
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 Holiday Inn, 212
Woodlawn Road, Charlotte, North Carolina 28217, on May 20, 1998 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 1997 Employee 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 April 15, 1998 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 4205 East
Dixon Boulevard, Shelby, North Carolina 28150.
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 April 17, 1998 By Order of the Board of Directors
Jeffrey A. Ross, Secretary
<PAGE> 4
CASCO INTERNATIONAL, INC.
PROXY STATEMENT
For Annual Meeting of Stockholders
To be held on May 20, 1998
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, May 20, 1998 at 9:00 a.m., Eastern Standard Time at the
Holiday Inn, 212 Woodlawn Rd., Charlotte, North Carolina 28217, as set forth in
the accompanying Notice of Annual Meeting of Stockholders and at any
adjournments thereof. This Proxy Statement and the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1997 are first being mailed to
Stockholders entitled to vote at the meeting on or about April 17, 1998.
The Annual Meeting has been called to consider and take action on the
election of five 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 1997 Employee Stock Option Plan.
The close of business on April 15, 1998 (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 PROXIESAND 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 six persons, owned beneficially 420,843 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 1997 Employee 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
<PAGE> 5
plurality of the votes cast by the shares entitled to vote in the election. The
proposal set forth herein to approve the Company's 1997 Employee Stock Option
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.
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 RIGHTSRIGHTS
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 FIVE 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, Robert V. Boylan, David J. Richards and Michael
P. Beauchamp 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,
Boylan, Richards and Beauchamp 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.
2
<PAGE> 6
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:
<TABLE>
<CAPTION>
DIRECTOR OR
EXECUTIVE
NAME AGE POSITION OFFICER SINCE
- ---- --- -------- -------------
<S> <C> <C> <C>
S. Robert Davis (1) 59 Chairman of the Board 1990 (2)
Charles R. Davis (1) 36 President and Director 1990 (2)
Robert V. Boylan 34 Chief Operating Officer and Director 1997
Jeffrey A. Ross 30 Chief Financial Officer and Secretary 1996
David J. Richards 45 Director 1997
Michael P. Beauchamp 51 Director 1997
</TABLE>
(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 EXPERIENCE OF DIRECTORS
AND EXECUTIVE OFFICERS
S. ROBERT DAVIS is the Chairman of the Board and President of Pages,
Inc., a Company with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 ("Pages") and the former parent of the
Company. Prior to his election to the Board of Directors of Pages, he served as
Assistant to the President of Pages 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
3
<PAGE> 7
the developing, sale and/or leasing of real estate but devotes substantially all
of his business time to the Company.
ROBERT V. BOYLAN joined the Company in August, 1996, as Executive Vice
President of Sales, and was promoted to Chief Operating Officer in March of
1997. He was elected to the Board of Directors in May, 1997. Prior to joining
the Company, Mr. Boylan served in various sales and marketing capacities with
Certainteed Corporation, a diversified building products manufacturer.
Certainteed is not a parent, subsidiary, or other affiliate of the Company. Mr.
Boylan has also served as a contract consultant for the American Management
Association, as well as Beauvestco Consulting, specializing in sales development
and sales management. Mr. Boylan received his MBA from Wake Forest University.
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.
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 five members. The Board of
Directors held two meetings during the fiscal year ended December 31, 1997.
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
reviews the scope of the annual audit, audit fees, and results of the
4
<PAGE> 8
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. In May of 1997 the Company formed a
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.
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
Prior to the distribution by Pages of the common stock of the Company
to the Pages shareholders, effective at the close of business on December 31,
1996, Pages owned all of the outstanding shares of the Company's common stock.
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 CASCO Common Stock, (ii) each director of the Company, (iii) the
President and Chief Operating Officer of the Company (the only executive
officers of the Company whose cash and non-cash compensation for services
rendered to the Company for the year ended December 31, 1997, exceeded $100,000)
and (iv) directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP (1) CLASS (2)
- --------------------------- ------------------------ ---------
<S> <C> <C>
S. Robert Davis 213,020 (3) 11.9%
94th Avenue North
St. Petersburg, Florida 33702
Charles R. Davis 140,016 (4) 7.9%
4205 East Dixon Blvd.
Shelby, North Carolina 28150
Robert V. Boylan 17,036 1%
4205 East Dixon Blvd.
Shelby, North Carolina 28150
All directors and executive 420,843 (5) 23.6%
officers as a group (4 persons)
</TABLE>
5
<PAGE> 9
(1) Represents sole voting and investment power unless otherwise indicated.
(2) Based on 1,783,200 shares of Company common stock outstanding as of
December 31, 1997, plus, as to each person listed, that portion of the
63,500 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.
(4) Includes 936 shares owned by Mr. Davis' wife and 725 shares owned by
Mr. Davis' children as to which Mr. Davis disclaims beneficial
ownership and includes 35,000 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.
(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 10,000 unissued shares of Common
Stock as to which the Company's two non-employee directors have the
right to acquire beneficial ownership upon the exercise of stock
options within the next 60 days, 26,709 shares of Common Stock owned by
Mr. Richards, a director of the Company, and 5,967 shares of Common
Stock owned by Mr. Beauchamp, a director of the Company, 4,536 shares
of Common Stock owned by Robert V. Boylan, an executive officer and
director of the Company, and includes 12,500 unissued shares of Company
Common Stock as to which Mr. Boylan has the right to acquire beneficial
ownership upon the exercise of stock options within the next 60 days
and 2,095 shares of Common Stock owned by Jeffrey A. Ross, an executive
officer of the Company and includes 6,000 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.
6
<PAGE> 10
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
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 40,000 shares of Company common
stock upon such terms as are determined by the Board in its discretion. In June,
1997, options to purchase 10,000 shares of common stock at a purchase price of
$4.50 per share were granted under the Director Option Plan.
EXECUTIVE COMPENSATION - The following table sets forth, for the fiscal years
ended December 31, 1997; 1996; and 1995 the cash compensation paid by the
Company, as well as certain other compensation paid for those years to the
Company's President and Chief Executive Officer and to the Chief Operating
Officer. No other executive officers had total salary and bonus that exceeded
$100,000 during the years ended 1997, 1996 and 1995. None of the Company's
executive officers have employment agreements with the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation
Name and Other Annual Number of
Principal Position Year Salary Bonus Compensation Options Awarded (1)
- ------------------ ---- ------ ----- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Charles R. Davis, 1997 $155,000 $25,000 $ 0 35,000 (3)
President & C.E.O. 1996 $132,315 $ 0 $134,040 (2) 0
1995 $147,896 $ 0 $103,389 (2) 0
Robert V. Boylan, 1997 $107,000 $ 1,000 $ 0 12,500
Chief Operating Officer
</TABLE>
7
<PAGE> 11
(1) Stock options previously granted to the named Executive Officers, by
their terms, automatically adjust to reflect certain changes in the
outstanding Common Shares of the Company, including stock dividends.
(2) Reflects the difference between the fair market value of the Common
Shares received and the stock option exercise price on the date of
exercise.
(3) 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.
8
<PAGE> 12
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 and
to the Company's Chief Operating Officer.
<TABLE>
<CAPTION>
Stock Option Grants in Last Fiscal Year
- ------------------------------------------------------------------------------------------------------------------
Individual Grants Potential Realizable Value
----------------------------------------------------- Price Appreciation for Option Terms
Percent of Total at Assumed Annual Rate of Stock
Options Options Granted to or ------------------------------------
Name in 1997 Employees in 1997 per Share Date 5% 10%
---- ------- ----------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Charles R. Davis 35,000 (2) 40% $3.50 3/12/07 42,000 195,300
Robert V. Boylan 7,500 (2) 8.60% $4.00 1/17/07 18,900 47,850
5,000 5.70% $3.50 3/12/07 6,000 27,900
</TABLE>
(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 of value for the Company's Common Stock in the future.
(2) The stock options were granted under the Company's 1996 Incentive Stock
Option Plan, and are exercisable commencing January 17, 1998 and March
12, 1998.
<TABLE>
<CAPTION>
Aggregated Options/SAR Exercises with Last Fiscal Year
and Fiscal Year End Options/SAR Values
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options/SAR's at FY End Options/SAR's at FY End
Shares ------------------------------ -------------------------------
Name or Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Davis None N/A 35,000 0 N/A N/A
Robert V. Boylan None N/A 12,500 0 N/A N/A
</TABLE>
No options at year end were in-the-money options.
INCENTIVE STOCK OPTION PLANS - The Company has adopted a 1996 Incentive Stock
Option Plan (the "1996 Plan") and a 1997 Employee Stock Option Plan (the "1997
Plan") which provide for the grant, at the discretion of the Board of Directors,
of options to purchase up to 85,000 and 150,000 shares respectively, of Common
Stock to key employees of the Company. The 1996 Plan and the 1997 Plan are
referred to herein together as the "Incentive Plans". 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,
9
<PAGE> 13
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 Plan to purchase 29,500 shares of Common Stock at a
purchase price of $4.00 per share. On two different occasions in March, 1997,
the Company granted options under the 1997 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 $4.00 per share. In December, 1997, the Company
granted options under the 1997 Plan to purchase 13,000 shares of Common Stock at
a purchase price of $3.0625 per share. Options currently outstanding under the
1996 Plan are not exercisable until the expiration of one year after the date of
grant. Options currently outstanding under the 1997 Plan are exercisable based
on the following schedule:
<TABLE>
<CAPTION>
Cumulative Percentage of Aggregate
Number of Shares of Stock Covered
Exercise Period by an Option Which May be Exercised
- --------------- -----------------------------------
<S> <C>
Beginning on the one year anniversary date
from date of grant 33%*
Beginning on the second anniversary date
from date of grant 33%*
Beginning on the third anniversary date
from date of grant 33%*
</TABLE>
*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 Pages, Inc., the Company's former parent. S. Robert Davis is
the Chairman of the Board of Pages, Inc. and the beneficial owner of 21.62% of
the outstanding shares of common stock of Pages, Inc. and Charles R. Davis is
the beneficial owner of 8.15% of the outstanding shares of common stock of
Pages, Inc.
EXECUTIVE 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 disclosure
requirements for the executive officers include the use of tables in a report of
the committee responsible for compensation decisions for the named executive
officers, explaining the rationale and
10
<PAGE> 14
considerations that lead to those compensation decisions. Therefore, 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
have historically been established on a case-by-case basis by the Board, 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 have historically been reviewed annually by the Board.
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. The Compensation Committee, formed in 1997, has
assumed the Board's functions with respect to the matters described above. 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 1997 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
11
<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH
The following graph represents a comparison of the cumulative total
shareholder return on the Common Stock, assuming divided reinvestment, with The
NASDAQ Stock Market (U.S. Index) and The NASDAQ Non-Financial Stocks 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 Pages, Inc.
The Company paid and 8 percent stock dividend on August 1, 1997, which was
included in the 1997 total shareholder return. The stock price performance shown
below is not necessarily indicative of future performance. [OBJECT OMITTED]
1997 PERFORMANCE GRAPH
CASCO Nasdaq Stock Market (US) Nasdaq Non-Financials
15-Jan-97 100 100.000 100.000
31-Mar-97 127 91.436 89.774
30-Jun-97 149 108.197 106.396
30-Sep-97 172 126.502 124.649
31-Dec-97 90 118.661 112.982
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 1997 STOCK OPTION PLAN
GENERAL
The company currently has in effect the 1996 Incentive Stock Option
Plan (the "1996 Plan"), pursuant to which no options to purchase shares of
Common Stock currently are available for grant. To allow for additional option
awards to be made by the Company, the Employee Stock Option Plan (the "1997
Plan") was approved by the Company's Board of Directors on November 21, 1997.
The 1997 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 1997 Plan will be evidenced by a written stock option
agreement. The 1997 Plan is attached to this Proxy Statement as Exhibit A and
12
<PAGE> 16
the summary of the 1997 Plan set forth herein is qualified in its entirety by
reference to the Plan. The purposes of shareholder approval of the 1997 Plan
are: (i) to permit the options to purchase 150,000 shares of Common Stock under
the 1997 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.
PURPOSE
The purpose of the 1997 Plan is to further the success of the Company
by making available Common Stock of the Company for purchase by certain officers
and employees of the Company and its affiliates, and thus to provide an
additional incentive to such individuals to continue in the service of the
Company or its affiliates and to give them a greater interest as stockholders in
the success of the Company.
SHARES SUBJECT TO OPTIONS
The 1997 Plan permits options to be granted to purchase up to 150,000
shares of Common Stock in the aggregate. As of the date hereof, options to
purchase 83,000 shares of Common Stock have been granted to employees under the
1997 Plan. Of those grants, options to purchase 50,000 and 5,000 shares,
respectively, were granted to Messrs. Charles R. Davis and Boylan, respectively,
at exercise prices of $2.875 per share and $2.875 per share, respectively. On
April 1, 1998, the closing sale price of the Common Stock as represented by the
Nasdaq Stock Market was $4.1875 per share.
A this time, it is not known which eligible employees, if any, will
receive grants in the future under the 1997 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 Committee (as hereinafter defied). To the extent that options
granted under the 1997 Plan expire or terminate without having been exercised in
full, the Common Stock subject thereto will become available for further options
under the 1997 Plan. Provision is made under the 1997 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 AND DURATION OF THE 1997 PLAN
The 1997 Plan is administered by a committee (the "Committee") of the
Company's Board of Directors (the "Board"), consisting of two or more directors,
each of whom shall qualify as a "non-employee director" within the meaning of
Rule 16b-3 ("Rule 16b-3") promulgated pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended ("the 1934 Act") or any successor
provision.
13
<PAGE> 17
Subject to the terms of the 1997 Plan and applicable law, the
Committee has full and final authority in its discretion to determine the
participants to whom, and the time or times at which options shall be granted
and the number of shares and purchase price of Common Stock covered by each
option, to construe and interpret the 1997 Plan and any agreements made pursuant
to the 1997 Plan, to determine the terms and provisions (which need not be
identical or consistent with respect to each participant) of the respective
option agreements and any agreement ancillary thereto including, but without
limitation, terms covering the payment of the option price, and to make all
other determinations and to take all other actions deemed necessary or advisable
for the proper administration of the Plan. All actions and determinations of the
Committee are conclusively binding for all purposes and upon all persons.
The Board may at any time suspend or terminate the 1997 Plan, or
amend the 1997 Plan as it shall deem advisable, in order that the options
granted thereunder may conform to any changes in the law or in any other respect
that the Board may deem to be in the best interests of the Company. However,
without approval by the stockholders of the Company voting the proper percentage
of its voting power, no such amendment shall make any change in the Plan for
which stockholder approval is required of the Company in order to comply with
the Internal Revenue Code or regulatory provisions dealing with incentive stock
options, any rules for listed companies promulgated by any national stock
exchange on which the Company's Common Stock is traded; or any other applicable
rule of law.
The 1997 Plan will terminate on November 21, 2007, unless sooner
terminated. Such termination does not impair or negate any of the rights or
obligations under any option theretofore granted, without the optionee's
consent.
ELIGIBILITY AND EXTENT OF PARTICIPATION
Employees eligible to receive options pursuant to the 1997 Plan are
persons who are employees of the Company or any subsidiary of the Company,
including officers or directors of the Company or such subsidiary. As of the
date hereof, there were approximately 140 such eligible employees. No incentive
stock option may be granted to any employee who immediately after such option is
granted, owns capital stock of the Company possessing more than 10% of the total
combined voting power or value of all classes of capital stock of the Company
unless the option price at the time such incentive stock option is granted is at
least 110% of the fair market value of the shares subject to the incentive stock
option and such incentive stock option is not exercisable by its terms after the
expiration of five years from the date of its grant. Directors who are not also
employees of the Company or a subsidiary of the Company are not eligible to
participate under the 1997 Plan. An incentive stock option may be granted under
the 1997 Plan to an optionee only if the aggregate fair market value (determined
as of the date the option is granted) of the Common Stock for which options are
exercisable for the first time by such optionee during any calendar year does
not exceed $100,000.
14
<PAGE> 18
OPTION PRICE
Except for options granted to shareholders owning 10% or more of the
voting power of all classes of the Company's capital stock as described in the
preceding paragraph, the per share option price of an incentive stock option
granted or to be granted pursuant to the 1997 Plan, as determined by the
Committee, shall be an amount not less than the fair market value of the Common
Stock, as determined by the Committee. The Committee is obligated to determine
the fair market value based upon any reasonable method of valuation adopted by
the Committee, or such other method as may be permitted by the Internal Revenue
Code, or regulations or rulings promulgated thereunder.
METHOD OF PAYMENT
The Committee may permit the payment of the option price in cash or
by check, or by delivery of shares of Common Stock, or by requesting that the
Company withhold whole shares of Common Stock then issuable upon exercise of the
option, or by a combination thereof, at the election of the optionee and subject
to the terms of the applicable stock option agreement.
METHOD OF EXERCISE AND PAYMENT TERMS
Subject to the terms of each stock option agreement, options granted
under the 1997 Plan may be exercised in whole or in part, but not at any time as
to less than twenty-five shares. Upon exercise of an option, the employee must
pay in full the option price for the shares of Common Stock being purchased. If
approved by the Board, the Company may lend money or guarantee loans by third
parties to an individual to finance the exercise of any option granted under the
1997 Plan to carry Common Stock thereby acquired.
LIMITATIONS ON TRANSFERABILITY AND EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT
Options granted under the 1997 Plan are not transferable other than
by will or by the laws of descent and distribution.
In the event of the retirement with the written consent of the
Company, or other termination of the employment of an employee to whom an option
has been granted under the 1997 Plan other than: (i) a termination that is
either (a) for cause or (b) voluntary on the part of the employee and without
the written consent of the Company; or a termination by reason of death, the
employee may, unless otherwise provided in his or her option agreement, exercise
his or her option at any time within three months after such retirement or other
termination of employment (or within one year after termination of employment
due to disability within the meaning of Code Section 422(c)(6), or within such
other time as the Committee may authorize, but in no event five years after the
date of granting thereof, or such lesser period as may be specified in the Stock
Option
15
<PAGE> 19
Agreement), but only to the extent that the number of shares of which his or her
options were exercisable by him or her on the date of the termination of his or
her employment. If the termination of employment of an employee to whom an
option has been granted under the 1997 Plan is either for cause or voluntary on
the part of the employee and without the written consent of the Company, any
option held by him or her under the 1997 Plan, to the extent not previously
exercised, forthwith terminates on the date of such termination of employment.
If an employee to whom an option has been granted under the 1997 Plan
dies during or within three months after the termination of his or her
employment by the Company or a subsidiary or parent, such option, unless it
shall have been previously terminated pursuant to the provisions of the 1997
Plan, or unless otherwise provided in his or her option agreement, may be
exercised to the extent of the entire number of shares covered by the option
whether or not purchasable by the employee at the date of his or her death, by
the executor or administrator of the optionee's estate or by the persons to whom
the optionee shall have transferred such option by will or by the laws of
dissent and distribution, at any time within a period of one year after death,
but not after the exercise termination date set forth in the relevant stock
option agreement.
FEDERAL INCOME TAX CONSIDERATIONS
Incentive Stock Options. 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.
Nonqualified Stock Options. 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
16
<PAGE> 20
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.
The Board of Directors recommends the approval of the 1997 Plan and
urges each shareholder to vote FOR the 1997 Plan. Executed and unmarked proxies
in the accompanying form will be voted at the Annual Meeting FOR the approval of
the 1997 Plan.
INDEPENDENT PUBLIC ACCOUNTANTSPUBLIC ACCOUNTANTS
The accounting firm of Hausser + Taylor LLP, Columbus, Ohio, is the
Company's principal auditor and accountant for the year ended December 31, 1997.
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, 1997, 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, 1997, 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 ACTIONPROPOSED 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.
17
<PAGE> 21
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 14, 1998 to be eligible for inclusion in the
proxy material for that meeting.
18
<PAGE> 22
APPENDIX A
CASCO INTERNATIONAL, INC.
1997 EMPLOYEE STOCK OPTION PLAN
SECTION 1 - PURPOSE:
1.1 The purpose of this Employee Stock Option Plan ("Plan") is to further
the success of CASCO International, Inc., a Delaware corporation
("Company") by making available Common Stock of the Company for
purchase by certain officers and employees of the Company and its
affiliates, and thus to provide an additional incentive to such
individuals to continue in the service of the Company or its
affiliates and to give them a greater interest as Stockholders in the
success of the Company. Subject to compliance with the provisions of
the Plan and the Internal Revenue Code of 1986, as amended, Incentive
Stock Options as authorized by Section 422 of the Code and stock
options which do not qualify under Section 422 of the Code are
authorized and may be granted under the Plan.
SECTION 2 - DEFINITIONS:
2.1 As used in this Plan, the following terms shall have the meanings
indicated as follows:
2.1.1 "Board" means the Board of Directors of the Company.
2.1.2 "Code" means the Internal Revenue Code of 1986, as
amended.
2.1.3 "Committee" means the Committee administering the Plan
described in Section 3 hereof.
2.1.4 "Common Stock" means the Company's Common Stock, par value
$.01 per share.
2.1.5 "Date of Grant" means the date on which an option is
granted under a written option agreement executed by the
Company and a Participant pursuant to the Plan.
2.1.6 "Effective Date" means the effective date of this Plan
specified in Paragraph 13 hereof.
2.1.7 "Exchange Act" means the Securities Exchange Act of 1934,
as it may be amended from time to time.
2.1.8 "Incentive Stock Option" means an option qualifying under
Section 422 of the Code.
2.1.9 "Non-Employee Director" means a person who meets the
definition of a "non-Employee Director" as defined in Rule
16b-3 promulgated under the Exchange Act or any successor
provision.
2.1.10 "Parent" means a parent corporation of the Company as
defined in Section 424(e) of the Code.
2.1.11 "Participants" means the employees and officers of the
Company, its Subsidiaries and its Parents, and those
directors of the Company who are also employees of the
Company, its subsidiaries or its Parents.
2.1.12 "Subsidiary" means a subsidiary corporation of the Company
as defined in Section 424(f) of the Code.
SECTION 3 - ADMINISTRATION OF THE PLAN:
3.1 The Board of Directors of the Company shall appoint a committee
("Committee") comprised of two (2) or more directors to administer
the Plan. Only directors who are Non-Employee Directors shall be
eligible to serve as members of the Committee. The Committee shall
report all action taken by it to the Board which shall review and
ratify or approve those actions that are, by law, required to be so
reviewed and ratified or
<PAGE> 23
APPENDIX A
approved by the Board. The Committee shall have full and final
authority in its discretion, subject to the provisions of the Plan,
to determine the Participants to whom, and the time or times at which
options shall be granted and the number of shares and purchase price
of Common Stock covered by each option; to construe and interpret the
Plan and any agreements made pursuant to the Plan; to determine the
terms and provisions (which need not be identical or consistent with
respect to each Participant) of the respective option agreements and
any agreement ancillary thereto including, but without limitation,
terms covering the payment of the option price; and to make all other
determinations and to take all other actions deemed necessary or
advisable for the proper administration of the Plan. All such actions
and determinations shall be conclusively binding for all purposes and
upon all persons.
SECTION 4 - OPTIONS AUTHORIZED:
4.1 The options granted under this Plan may be Incentive Stock Options or
stock options that do not qualify as Incentive Stock Options
(sometimes referred to as "non-qualified options" or "non-qualified
stock options"). The Committee shall have the full power and
authority to determine which options shall be non-qualified stock
options and which shall be Incentive Stock Options; to grant only
Incentive Stock Options or, alternatively, only non-qualified stock
options; and to, in its sole discretion, grant to the holder of an
outstanding option in exchange for the surrender and cancellation of
such option, a new option having purchase price lower than that
provided in the option so surrendered and cancelled and containing
such other terms and conditions as the Committee may prescribe in
accordance with the provisions of the Plan. No options may be granted
under the Plan prior to the Effective Date. In addition to any other
limitations set forth herein, the aggregate fair market value,
determined in accordance with Paragraph 7(A) of the Plan as of the
time the option is granted, of the stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant in any calendar year (under all plans of the Company and
of any Parent or Subsidiary) shall not exceed $100,000.
SECTION 5 - COMMON STOCK SUBJECT TO OPTIONS:
5.1 The aggregate number of shares of the Company's Common Stock which
may be issued upon the exercise of options shall not exceed one
hundred fifty thousand (150,000), subject to adjustment under the
provisions of Paragraph 8. The shares of Common Stock to be issued
upon the exercise of options may be authorized but unissued shares,
or shares issued and reacquired by the Company. In the event any
option shall, for any reason, terminate or expire or be surrendered
without having been exercised in full, the shares subject to such
option shall again be available for options to be granted under the
Plan, except that shares for which relinquished options (or portions
thereof) are exercisable shall not again be available for options
under the Plan.
SECTION 6 - PARTICIPANTS:
6.1 Except as hereinafter provided, options may be granted under the Plan
to any Participant. In determining the Participants to whom options
shall be granted and the number of shares to be covered by such
option, the Committee may take into account the nature of the
services rendered by the respective Participants, their present and
potential contributions to the Company's success, and such other
factors as the Committee, in its discretion, shall deem relevant. A
participant who has been granted an option under the Plan may be
granted an additional option(s) under the Plan, in the Committee's
discretion.
SECTION 7 - TERMS AND CONDITIONS OF OPTIONS:
7.1 The grant of an option under the Plan shall be evidenced by a written
agreement executed by the Company and the applicable participant and
shall contain such terms and be in such form as the Committee may,
from time to time, approve, subject to the following limitations and
conditions:
7.1.1 OPTION PRICE: The option price per share with respect to
each option shall be determined by the Committee, but
shall in no instance be less than the par value of the
shares subject to the option. In addition, the option
price per share with respect to Incentive Stock Options
granted hereunder shall in no instance be less than the
fair market value of the shares of Common Stock subject to
<PAGE> 24
APPENDIX A
the option as determined by the Committee. The Committee
shall, in good faith, determine the fair market value of
the shares of Common Stock (without regard to any
restrictions other than a restriction which, by its terms,
will never lapse) based upon a reasonable method of
valuation adopted by the Committee, or such other method
as may be permitted by the Code, or regulations or rulings
promulgated thereunder. The Committee may permit the
option purchase price to be payable by any of the
following means or any combination thereof: (i) cash; (ii)
certified or cashier's check payable to the Company; (iii)
the delivery of whole shares of Common Stock owned by the
Option holder; or (iv) by requesting that the Company
withhold whole shares of Common Stock then issuable upon
exercise of the Option (for purposes of such a transaction
the value of the shares of Common Stock shall be deemed to
be equal to the fair market value, as determined by the
Committee in good faith, of the shares on the date of the
exercise of the Option) in which case the Option with
respect to the shares withheld shall be deemed to be
surrendered and cancelled.
7.1.2 PERIOD OF OPTION: The expiration date of each option shall
be fixed by the Committee but, notwithstanding any
provision of the Plan to the contrary, such expiration
date shall not be more than five (5) years after the Date
of Grant.
7.1.3 VESTING OF STOCKHOLDER RIGHTS: Neither the optionee nor
his/her successor in interest shall have any of the rights
of a Stockholder of the Company until the shares relating
to the option hereunder are issued by the Company and are
properly delivered to such optionee or successor.
7.1.4 EXERCISE OF OPTION: Each option shall be exercisable from
time to time, but not less than six (6) months after the
Date of Grant, over such period and upon such terms and
conditions as the Committee shall determine, but not at
any time as to less than twenty-five (25) shares unless
the remaining shares which have become so purchasable are
less than twenty-five (25) shares. After the death of the
optionee, an option may be exercised as provided in
Paragraph 15 hereof.
7.1.5 NON-TRANSFERABILITY OF OPTION: No option shall be
transferable or assignable by an optionee, other than by
will or the laws of descent and distribution or pursuant
to a qualified domestic relations order and each option
shall be exercisable, during the optionee's lifetime, only
by him/her or, during periods of legal disability, by
his/her legal representative. No option shall be subject
to execution, attachment, or similar process.
7.1.6 DISQUALIFYING DISPOSITION: The option agreement evidencing
any Incentive Stock Options granted under this Plan shall
provide that if the optionee makes a disposition, within
the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any share(s) of Common Stock
issued to him/her pursuant to exercise of the option
within the two (2) year period commencing on the day after
the date of issuance of the share(s) to him/her pursuant
to the exercise of such option, he/she shall, within ten
(10) days after such disposition date, notify the company
of the sales price or other value ascribed to or used to
measure the disposition of the share(s) thereof and
immediately deliver to the Company any amount of federal
income tax withholding required by law.
7.1.7 LIMITATION ON GRANTS TO CERTAIN STOCKHOLDERS: An Incentive
Stock Option may be granted to a participant only if such
Participant, at the time the option is granted, does not
own, after application of the attribution rules of Code
Section 424, stock possessing more than ten percent (10%)
of the total combined voting power of all classes of
Common Stock of the company or of its parent or
Subsidiary. The preceding restriction shall not apply if
at the time the option is granted, the option price is at
least one hundred ten percent (110%) of the fair market
value, as defined in Paragraph 7(A) above, of the common
Stock subject to the option and such option by its terms
is not exercisable after the expiration of five (5) years
after the Date of Grant.
7.1.8 CONSISTENCY WITH CODE: Notwithstanding any other provision
in this Plan to the contrary, the provisions of all
agreements granting incentive stock options pursuant to
the Plan shall not violate the requirements of the Code
applicable to the Incentive Stock Options authorized
hereunder.
<PAGE> 25
APPENDIX A
SECTION 8 - ADJUSTMENTS:
8.1 The Committee, in its discretion, may make such adjustments in the
option price and the number of shares covered by outstanding options
that are required to prevent any dilution or enlargement of the
rights of the holders of such options that would otherwise result
from any 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.
The Committee, in its discretion, may also make such adjustments in
the aggregate number of shares that may be the subject of options
which are appropriate to reflect any transaction or event described
in the preceding sentence.
SECTION 9 - RESTRICTION OF ISSUING SHARES:
9.1 The exercise of each option shall be subject to the condition that if
at any time the company shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange
or under any state or federal law, or that the consent or approval of
any regulatory body is necessary or desirable as a condition of, or
in connection with, such exercise or the delivery or purchase of
shares pursuant thereto, then in any such event, such exercise shall
not be effective unless such withholding, listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
SECTION 10 - USE OF PROCEEDS:
10.1 The proceeds received by the Company from the sale of Common Stock
pursuant to the exercise of options granted under the Plan shall be
added to the Company's general funds and used for general corporate
purposes.
SECTION 11 - AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN:
11.1 The Board may, at any time, suspend or terminate the Plan or may
amend it from time to time in such respects as the Board may deem
advisable in order that the options granted thereunder may conform to
any changes in the law or in any other respect that the Board may
deem to be in the best interests of the Company provided, however,
that without approval by the Stockholders of the Company voting the
proper percentage of its voting power, no such amendment shall make
any change in the Plan for which Stockholder approval is required of
the Company in order to comply with:
11.1.1 The Code or regulatory provisions dealing with Incentive
Stock Options;
11.1.2 Any rules for listed companies promulgated by any national
stock exchange on which the Company's stock is traded; or
11.1.3 Any other applicable rule of law.
11.2 Unless sooner terminated hereunder, the Plan shall terminate ten (10)
years after the Effective Date. No option may be granted during any
suspension or after the termination of the Plan. Except as provided
in Paragraph 12, no amendment, suspension, or termination of the Plan
shall, without an optionee's consent, impair or negate any of the
rights or obligations under any option theretofore granted to such
optionee under the Plan.
<PAGE> 26
APPENDIX A
SECTION 12 - TAX WITHHOLDING:
12.1 The Committee may, in its sole discretion:
12.1.1 Require an optionee to remit to the Company a cash amount
sufficient to satisfy, in whole or in part, any federal,
state, or local withholding tax requirements prior to the
delivery of any certificate for shares pursuant to the
exercise of an option hereunder; or,
12.1.2 Satisfy such withholding requirements through another
lawful method.
SECTION 13 - EFFECTIVE DATE OF PLAN:
13.1 This Plan shall become effective (the "Effective Date") upon adoption
by the Board, and in the case of Incentive Stock Options, subject to
approval within twelve (12) months after such adoption by holders of
a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at a duly held Stockholders meeting.
Options, including Incentive Stock Options, may be granted under the
Plan prior to the receipt of such approval.
SECTION 14 - TERMINATION OF EMPLOYMENT:
14.1 In the event of the retirement, with the written consent of the
Company, or other termination of the employment of an employee to
whom an option has been granted under the Plan other than:
14.1.1 A termination that is either (i) for cause or (ii)
voluntary on the part of the employee and without the
written consent of the Company; or,
14.1.2 A termination by reason of death.
14.2 The employee may, unless otherwise provided in his/her option
agreement, exercise his/her option at any time within three (3)
months after such retirement or other termination of employment (or
within one (1) year after termination of employment due to disability
within the meaning of Code Section 422(c)(6), or within such other
time as the Committee shall authorize, but in no event after five (5)
years after the date of granting thereof, or such lesser period as
may be specified in the stock option agreement), but only to the
extent of the number of shares of which his/her options were
exercisable by him/her at the date of the termination of his/her
employment.
14.3 In the event of the termination of the employment of an employee to
whom an option has been granted under the Plan that is either for
cause, or voluntary on the part of the employee and without the
written consent of the company, any option held by him/her under the
Plan, to the extent not previously exercised, shall forthwith
terminate on the date of such termination of employment. Options
granted under the Plan shall not be affected by any change of
employment so long as the holder continues to be an employee of the
Company, a Subsidiary, or Parent. The option agreement may contain
such provisions as the Committee shall approve with respect to the
effect of approved leaves of absence. Nothing in the Plan, or in any
option granted pursuant to the Plan, shall confer on any individual
any right to continue in the employ of the Company or any of its
Subsidiaries or Parents, or interfere in any way with the right of
the Company or any of its Subsidiaries or Parents to terminate his
employment at any time.
SECTION 15 - DEATH OF HOLDER OF OPTION:
15.1 In the event an employee to whom an option has been granted under the
Plan dies during or within three (3) months after the termination of
his/her employment by the Company or a subsidiary or Parent, such
option, unless it shall have been previously terminated pursuant to
the provision of the Plan, or unless otherwise provided in his/her
option agreement, may be exercised to the extent of the entire number
of shares covered
<PAGE> 27
APPENDIX A
by the option whether or not purchasable by the employee at the date
of his/her death, by the executor or administrator of the optionee's
estate or by the person(s) to whom the optionee shall have
transferred such option by will or by the laws of descent and
distribution, at any time within a period of one (1) year after this
death, but not after the exercise termination date set forth in the
relevant stock option agreement.
SECTION 16 - LOANS TO ASSIST IN EXERCISE OF OPTIONS:
16.1 If approved by the Board, the Company or any Parent or Subsidiary may
lend money or guarantee loans by third parties to an individual to
finance the exercise of any option granted under the Plan to carry
Common Stock thereby acquired. No such loans to finance the exercise
of an Incentive Stock Option shall have an interest rate or other
terms that would cause any part of the principal amount to be
characterized as interest for purpose of the Code.
SECTION 17 - RULE 16B-3 PLAN:
17.1 This Plan is intended and has been drafted to comply in all respects
with Rule 16b-3, as amended, under the Exchange Act. If any provision
of this Plan does not comply with Rule 16b-3, as amended, this Plan
shall be automatically amended to comply with Rule 16b-3, as amended.
SECTION 18 - INDEMNIFICATION:
18.1 The members of the Committee shall be indemnified by the Corporation
against the reasonable expenses incurred in connection with the
defense of any action, suit or proceeding, or in connection with any
appeal thereof, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the
Plan or any Option, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by legal
counsel selected by the Corporation) or paid by them in satisfaction
of a judgment in any such action, suit or proceeding. A member of the
Committee shall not be entitled to indemnification with respect to
any matter or claim arising out of gross negligence or willful
misconduct by such member in the performance of his duties. As a
condition of any indemnification, a Committee member shall in writing
offer the Corporation the opportunity, at its own expense, to handle
and defend any suit or claim against him/her.
<PAGE> 28
APPENDIX B
CASCO INTERNATIONAL, INC.
4205 East Dixon Boulevard
Shelby, North Carolina 28150
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints S. Robert Davis and Charles R. Davis, and
each of them, proxies, with full power of substitution in each of them, in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of CASCO INTERNATIONAL, INC. on May 20, 1998 at 9:00 A.M., Eastern
Standard Time, or at any adjournment thereof according to the number of votes
that the undersigned would be entitled to vote if personally present, upon the
following matters.
(TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 29
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
CASCO INTERNATIONAL, INC.
MAY 20, 1998
<TABLE>
<CAPTION>
- Please Detach and Mail in the Envelope Provided -
- ---------------------------------------------------------------------------------------------------------------------------
[ X ] Please mark your
vote as in this
example
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for
contrary below) nominees listed
at right
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Election of [ ] [ ] Nominees: S. Robert Davis 2. Approval of the [ ] [ ] [ ]
Directors Charles R. Davis Company's 1997
Robert V. Boylan Employee Stock Option
(Instructions: To withhold authority to vote David J. Richards Plan.
for any nominee, write that nominee's name in Michael P. Beauchamp 3. In their discretion, the proxies are
the space below. Do not mark "Withhold authorized to vote upon such other business
Authority" above unless you intend to withhold as may properly come before the Annual
authority to vote for all nominees) Meeting or any adjournment thereof.
This proxy, when properly executed, will be
voted in accordance with the instructions
given above. If no instructions are given,
- ---------------------------------------------------- this proxy will be voted FOR all nominees and
FOR the approval of the Company's 1997
Employee Stock Option Plan.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE
PAID ENVELOPE.
Signature Signature if held jointly Dated , 1998
----------------------------------- ------------------------------ ----------------
NOTE: Please sign exactly as your name appears hereon. If shares are owned by more than one person, all owners should sign.
Persons signing as executors, trustees or in similar capacities should so indicate. If a corporation, please sign full
corporate name by the president or other authorized officer. If a partnership, please sign in partnership name by
authorized person
</TABLE>
