<PAGE> 1
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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to 14a-11(c) or Rule 14a-12
DIDAX INC.
----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than 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:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
<PAGE> 2
/ / 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:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 3
DIDAX INC.
4501 DALY DR. SUITE 103
CHANTILLY, VIRGINIA 20151
April 10, 1998
TO OUR STOCKHOLDERS:
You are hereby cordially invited to attend the Annual Meeting of
Shareholders of DIDAX INC. (the "Company") to be held at Conference Room B at
the Eastern Loudoun Regional Library located at 21030 Whitfield Place Sterling,
Virginia at 10:30 a.m. local time on Wednesday, April 29, 1998.
At the Annual Meeting, shareholders will be asked to consider and vote
upon the following:
1. The election of the members of the Board of Directors;
2. To ratify the decision of the Company's Board of Directors to retain
Hoffman, Morrison & Fitzgerald, P.C. as the Company's Independent
Auditors for fiscal year 1998;
3. To ratify and approve the adoption of the DIDAX INC. 1998 Stock Option
Plan.
Details of the foregoing proposals and the Annual Meeting are contained
in the attached Notice of Annual Meeting and Proxy Statement. Your vote is
important, as is the vote of every shareholder, and the Board of Directors of
DIDAX INC. appreciates the cooperation of shareholders who are unable to attend
in person in directing proxies to vote at the meeting. Therefore, it is
important that your shares be represented at the meeting in person or, should
you be unable to attend the Annual Meeting, by your signing and returning the
enclosed proxy in the accompanying envelope for receipt prior to the meeting
date.
Sincerely,
/s/ James G. Buick
---------------------
James G. Buick
Chairman of the Board
DIDAX INC.
<PAGE> 4
DIDAX INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on Wednesday, April 29, 1998
To the stockholders of April 10, 1998
DIDAX INC.
Notice is hereby given that the Annual Meeting of Shareholders of DIDAX
INC. (the "Company") will be held at Conference Room B at the Eastern Loudoun
Regional Library located at 21030 Whitfield Place Sterling, Virginia at 10:30
a.m. local time on Wednesday, April 29, 1998 for the following purposes:
1. To seek shareholder election of the members of the Board of
Directors;
2. To ratify the decision of the Company's Board of Directors to
retain Hoffman, Morrison & Fitzgerald, P.C. as the Company's
Independent Auditors for fiscal year 1998;
3. To ratify and approve the adoption of the DIDAX INC. 1998
Stock Option Plan.
Only DIDAX INC. shareholders of record as of the close of business on
March 20, 1998, are entitled to notice of and to vote at the Annual Meeting. A
list of stockholders entitled to vote at the Annual Meeting will be available
for examination during normal business hours by any of the Company's
shareholders, for a period of ten days prior to the Annual Meeting at the
principal executive offices of the Company at the address set forth above.
Your vote is important -- as is the vote of every shareholder -- and
the Board of Directors of DIDAX INC. appreciates the cooperation of shareholders
who are unable to attend in person in directing proxies to vote at the meeting.
Therefore, it is important that your shares be represented at the meeting in
person or, should you be unable to attend the meeting, by your signing and
returning the enclosed proxy in the accompanying envelope for receipt prior to
the meeting date.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY.
ATTENDANCE IN PERSON WILL AUTOMATICALLY REVOKE A PROXY, THEREFORE
PLEASE RETURN AND COMPLETE THE PROXY ONLY IF YOU ARE CERTAIN YOU WILL NOT BE
ABLE TO ATTEND THE MEETING.
If you have any questions, please do not hesitate to contact Gary
Struzik, Chief Financial Officer and Secretary at 703-968-4808.
By order of the Board of Directors,
/s/ James G. Buick
- - ---------------------
James G. Buick
Chairman of the Board
DIDAX INC.
<PAGE> 5
PROXY STATEMENT
DIDAX INC.
4501 Daly Drive, Suite 103
Chantilly, Virginia 20151
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DIDAX INC. It is
furnished to DIDAX INC. (DIDAX or the "Company") stockholders of record as of
the close of business on March 20, 1998 (the "Record Date"), for use at the
Annual Meeting of Stockholders to be held at Conference Room B of the Eastern
Loudoun Regional Library, 21030 Whitfield Place, Sterling, Virginia on
Wednesday, April 29, 1998, at 10:30 a.m., local time. The enclosed proxy is
being solicited by the Board of Directors of the Company and is subject to
revocation at any time prior to the voting of the proxy. This proxy, when
properly executed, will be voted in the manner directed by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR or IN FAVOR
of the Proposal, in accordance with the instructions on the proxy card. This
Proxy Statement and the enclosed proxy card are being sent or given to
stockholders on or about April 10, 1998.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each stockholder of record at
the close of business on the Record Date to vote with respect to the election of
directors, and the ratification of the Company's independent auditors, and on
any other proposal properly brought before the Annual Meeting. The proxy card
provides space for a stockholder to vote in favor of or to withhold voting for
each nominee for the Board of Directors, or to vote for, against or abstain from
voting on the ratification of the independent auditors. Votes of attending
stockholders will be taken by voice or show of hands and accounted for at the
Annual Meeting, unless someone entitled to vote objects, in which case written
ballots shall be used. The election of directors will be decided by a plurality
of the votes cast at the Annual Meeting by the holders of the Common Stock. In
all other matters, the affirmative vote of a majority of the votes present or
represented by proxy and entitled to be cast at the Annual Meeting by the
holders of the Common Stock is required to take stockholder action.
The presence at the Annual Meeting, in person or by proxy, of the holders of a
majority of the votes entitled to be cast by all holders of the Common Stock
will constitute a quorum for the transaction of business at the Annual Meeting.
If a quorum is not present, in person or by proxy, the Annual Meeting may be
adjourned from time to time until a quorum is obtained. Shares as to which
authority to vote has been withheld with respect to any matter brought to a vote
before the stockholders will not be counted as a vote in favor of such matter.
Abstentions and broker nonvotes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business. With respect to
all matters other than the election of directors, an abstention will have the
same effect as a vote against any specified proposal. A broker nonvote will have
no effect on the outcome of any vote of the stockholders. Stockholders are urged
to sign the accompanying proxy card and return it promptly.
<PAGE> 6
When a signed proxy card is returned with choices specified with respect to
voting matters, the shares represented will be voted by the proxies designated
on the proxy card in accordance with the stockholder's instructions. The proxies
for the stockholders are James G. Buick and Robert C. Varney. A stockholder
wishing to name another person as his or her proxy may do so by designating
another proxy by inserting the name(s) of such other person(s) to act as his or
her proxy(ies). In that case, it will be necessary for the stockholder to sign
the proxy card and deliver it to the person named as his or her proxy and for
the person so named to be present and vote at the Annual Meeting. Proxy cards so
marked should not be mailed to the Company.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted (a) for
the election of the nominees for the Board of Directors and, (b) for the
ratification of Hoffman, Morrison & Fitzgerald, P.C. as the Company's
independent auditors for fiscal 1998, and (c) for the adoption of the DIDAX INC.
1998 Stock Option Plan and (d) at the discretion of the proxies, on any other
matter that may properly come before the Annual Meeting or any adjournment(s) of
the Annual Meeting. Valid proxies will be voted at the Annual Meeting and at any
adjournment(s) of the Annual Meeting in the manner specified.
Any stockholder giving a proxy has the unconditional right to revoke it at any
time before it is voted by any act inconsistent with the proxy, including
notifying the Secretary of the Company in writing, executing a subsequent proxy
or personally appearing at the Annual Meeting and casting a contrary vote.
However, no revocation will be effective unless notice of such revocation has
been received by the Company at or prior to the Annual Meeting.
As of the Record Date, the total issued and outstanding shares of Common Stock,
$.01 par value per share (the "Common Stock"), consisted of 3,672,880 shares.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act") and, in accordance therewith,
is required to file periodic reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission") pursuant to the
Exchange Act relating to its business, financial statements and other matters.
Such reports, proxy statements and other information are available for
inspection and copying at the Commission's principal office, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; the Northeast
Regional Office of the Commission at 7 World Trade Center, Suite 1300, New York,
New York 10048; and the Midwest Regional Office of the Commission, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611, where
copies may be obtained upon payment of the fees prescribed by the Commission
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such documents may also be obtained through the website
maintained by the Commission at http://www.sec.gov.
2
<PAGE> 7
MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE--ELECTION OF BOARD OF DIRECTORS
Ten individuals, JAMES G. BUICK, WILLIAM M. PARKER, DR. ROBERT C. VARNEY, DANE
B. WEST, WILLIAM H. BOWERS, BRUCE E. EDGINGTON, JOHN J. MEINDL JR., CLAY T.
WHITEHEAD, EARL E. GJELDE, AND WILLIAM RUSSELL 'MAX' CAREY, JR. all of whom
currently serve as directors of the Company, are proposed to be re-elected as
directors at the Annual Meeting. If elected, each director will hold office
until the annual meeting of stockholders in the year 1999 or until his successor
is duly elected and qualified. The election of directors will be decided by a
plurality of the votes entitled to be cast at the meeting by the holders of the
Common Stock. All nominees have consented to serve if elected, but, if any
nominee becomes unable to serve, the persons named as proxies may exercise their
discretion to vote for a substitute nominee. Management has no reason to believe
that any of the nominees will be unable to serve.
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
PROPOSAL TWO--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
HOFFMAN, MORRISON AND FITZGERALD, P.C., independent certified public
accountants, has served as independent auditors for the Company for the fiscal
year ended December 31, 1997 and has reported on the Company's financial
statements. The Board of Directors, has selected HOFFMAN, MORRISON AND
FITZGERALD, P.C., as the Company's independent auditors for fiscal year 1998 and
recommends that the stockholders ratify this selection. The Board of Directors
has been advised that HOFFMAN, MORRISON AND FITZGERALD, P.C., has no
relationship with the Company or its subsidiaries.
A representative of HOFFMAN, MORRISON AND FITZGERALD, P.C., is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
he desires to do so and is expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF HOFFMAN,
MORRISON AND FITZGERALD, P.C., AS THE COMPANY'S INDEPENDENT AUDITORS
PROPOSAL THREE--RATIFICATION AND APPROVAL OF THE ADOPTION OF THE DIDAX INC. 1998
STOCK OPTION PLAN
Effective as of April 6, 1998, the Board of Directors adopted the DIDAX INC.
1998 Stock Option Plan (the "1998 Plan"). A summary of the material features of
the 1998 Plan follows.
3
<PAGE> 8
GENERAL. The purpose of the 1998 Plan is to advance the interests of the Company
by providing an opportunity to its directors, selected key employees and
consultants to purchase shares of the Common Stock of the Company (the
"Shares"). By encouraging stock ownership, the Company seeks to attract, retain
and motivate directors, key employees, and consultants including ministry
partners. The 1998 Plan will be administered by the Compensation Committee of
the Board of Directors or by the Board of Directors as a whole.
At March 31, 1998, the Company had options outstanding under its 1997 Stock
Option Plan (the "1997 Plan") to purchase a total of 1,959,546 shares, and an
additional 98,391 shares were available for future grants under the 1997 Plan.
The Board is recommending adoption of the 1998 Plan in order to ensure that
sufficient shares are available in the future to reward and motivate existing
employees and to attract new employees and consulting arrangements.
STOCK SUBJECT TO THE 1998 PLAN. The Shares that may be purchased (through the
exercise of options) under the 1998 Plan shall not exceed in the aggregate
400,000 Shares. If any stock options granted under the 1998 Plan shall
terminate, expire or be canceled as to any Shares, new stock options may
thereafter be granted covering such Shares. In addition, any Shares purchased
under this 1998 Plan subsequently repurchased by the Company pursuant to the
terms hereof may again be granted under the 1998 Plan. The Shares issued upon
exercise of stock options under this 1998 Plan may, in whole or in part, be
either authorized but unissued Shares or issued Shares reacquired by the
Company.
ADMINISTRATION OF THE 1998 PLAN. The Board of Directors or the Compensation
Committee will administer the 1998 Plan as delegated by the Board. The Board of
Directors will have sole authority to select the participants that will be
granted stock options, based on its own determination and the recommendations of
the Compensation Committee and Company management with respect to the
contributions of each participant to the success of the Company. No single
participant may receive options to purchase more than the total number of shares
authorized for issuance under the 1998 Plan. The Compensation Committee will
make recommendations to the Board for approval of actions including, but not
limited to determining the nature, extent, timing, exercise price, vesting and
duration of stock options to the termination of the 1998 Plan or acceleration of
stock option vesting. The Board of Directors independently, or at the advice of
the Compensation Committee, also has discretion to prescribe all other terms and
conditions consistent with the 1998 Plan, to interpret the 1998 Plan, to
establish any rules or regulations relating to the 1998 Plan that it determines
to be appropriate, and to make any other; determination that it believes
necessary or advisable for the proper administration of the 1998 Plan.
GRANT OF STOCK OPTIONS. The Compensation Committee, upon approval of the Board
of Directors, may grant nonqualified stock options or incentive stock options to
purchase shares of Common Stock. The grant of stock options will be evidenced by
Board resolutions documenting their approval, and option agreements containing
such terms and provisions as are determined and approved by the Board of
Directors, including, but not limited to, the term of the stock option, vesting
of the stock option, and the exercise price of the stock option. The stock
option exercise price may be paid in cash, or, at the Company's option, in
shares of Common Stock.
4
<PAGE> 9
STOCK OPTION EXPIRATION AND TERMINATION. Subject to the expiration and
termination provisions of individual option agreements, qualified incentive
stock options expire ten years after the date of grant. The expiration and
termination periods of nonqualified stock options will be determined by the
Board of Directors based on recommendation of the Compensation Committee and set
forth in the individual stock option agreements. Subject to the expiration and
termination provisions of individual option agreements, if a participant dies or
becomes disabled, all vested stock options may be exercised at any time within
one year (or the remaining term of the stock option, if less). If a participant
ceases to be a Company employee for any other reason, other than for cause, he
or she must exercise any vested stock options within thirty days (or the
remaining term of the stock option, if less). The Compensation Committee may
recommend to extend nonqualified option exercise dates on a cases by case basis,
subject to Board approval.
AMENDMENTS TO THE 1998 PLAN. The Board of Directors may amend or discontinue the
1998 Plan at any time, subject to certain restrictions set forth in the 1998
Plan, including the ability to revise the number of shares reserved for issuance
thereunder. Except in limited circumstances, no amendment or discontinuance may
adversely affect any previously granted stock option award without the consent
of the recipient thereof.
FEDERAL INCOME TAX CONSEQUENCES. The following general description of federal
income tax consequences is based upon current statutes, regulations and
interpretations and does not purport to be complete. Reference should be made to
the applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"). There also may be state, local and foreign income tax consequences
applicable to transactions involving stock options. In addition, the following
description does not address specific tax consequences applicable to an
individual participant who receives an incentive stock option and does not
address special rules that may be applicable to directors and officers.
Under existing federal income tax provisions, a participant who receives stock
options will not normally realize any income, nor will the Company normally
receive any deduction for federal income tax purposes, upon the grant of an
stock option. When a non-qualified stock option granted pursuant to the 1998
Plan is exercised, the employee generally will realize ordinary income
(compensation) measured by the difference between the aggregate purchase price
of the Common Stock as to which the option is exercised and the aggregate fair
market value of the Common Stock on the exercise date, and the Company generally
will be entitled to a deduction in the year the stock option is exercised equal
to the amount the employee is required to treat as ordinary income. Any taxable
income recognized in connection with a non-qualified stock option exercised by
an optionee who is also an employee of the Company will be subject to tax
withholding by the Company. The basis for determining gain or loss upon a
subsequent disposition of Common Stock acquired upon the exercise of a
non-qualified stock option will be the purchase price paid to the Company for
the Common Stock increased by an amount included in the optionee's taxable
income resulting from the exercise of such option. The holding period for
determining whether gain or loss on such subsequent disposition is short-term or
long-term generally begins on the date on which the optionee acquires the Common
Stock.
5
<PAGE> 10
An employee generally will not recognize any income upon the exercise of an
incentive stock option, but the exercise may, depending on particular factors
relating to the employee, subject the employee to the alternative minimum tax.
An employee will recognize capital gain or loss in the amount of the difference
between the exercise price and the sale price on the sale or exchange of stock
acquired pursuant to the exercise of an incentive stock option, provided that
the employee does not dispose of such stock within two years from the date of
grant and one year from the date of exercise of the incentive stock option (the
"Required Holding Periods"). An employee disposing of such shares before the
expiration of the Required Holding Periods will recognize ordinary income equal
to the lesser of (i) the difference between the option price and the fair market
value of the stock on the date of exercise, or (ii) the total amount of gain
realized. The remaining gain or loss is generally treated as short term or long
term gain or loss depending on how long the shares are held. The Company will
not be entitled to a federal income tax deduction in connection with the
exercise of an incentive stock option, except where the employee disposes of the
shares of Common Stock received upon exercise before the expiration of the
Required Holding Periods.
STOCKHOLDER APPROVAL. The affirmative vote of the holders of a majority of the
total votes cast with respect to the 1998 Plan proposal is required to approve
the 1998 Plan. For stock options granted under the 1998 Plan to qualify as
incentive stock options, the 1998 Plan must be approved by the affirmative votes
of the holders of a majority of the shares of Common Stock issued and
outstanding as of the Record Date. If the 1998 Plan is approved by a vote that
does not constitute a majority of the shares of Common Stock issued and
outstanding, then any stock option granted under the 1998 Plan will be a
nonqualified stock option. The Board of Directors believes that the 1998 Plan is
in the best interest of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE DIDAX INC. 1998 STOCK OPTION PLAN
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying notes thereto sets forth certain
information, with respect to the beneficial ownership of the Company's Common
Stock as of March 20, 1998 by (a) the Company's chief executive officer ("CEO"),
(b) each director of the Company, (c) each person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, and (d) all
executive officers and directors of the Company as a group. Except as otherwise
indicated, each of the stockholders named below has sole voting and investment
power with respect to the shares of Common Stock beneficially owned:
6
<PAGE> 11
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) SHARES(2)
- - ------------------------------------ ------------ ---------
<S> <C> <C>
Bruce E. Edgington 444,782(3) 11.7%
7857 Heritage Drive
Annandale, VA 22003
Robert C. Varney, Ph.D 275,281(4) 7.1%
4501 Daly Drive
Chantilly, VA 20151
Dane B. West 130,032(5) 3.5%
4501 Daly Drive
Chantilly, VA 20151
William H. Bowers 124,417(6) 3.4%
4501 Daly Drive
Chantilly, VA 20151
William M. Parker 120,000(7) 3.1%
PO Box 307
Philomont, Virginia 20131
John J. Meindl, Jr 105,000(8) 2.9%
5 Old Tyler Court
Greenville, SC 29615
James G. Buick 15,000(9) .4%
10081 East Rivershore Dr.
Alto, MI 49302
Clay T. Whitehead 14,000(10) .4%
1320 Old Chain Bridge Rd
McLean, VA 22101
Earl J. Gjelde 13,500(11) .4%
42 Bristlecone Crt
Keystone, CO 80435
William R. 'Max' Carey 9,000(12) .3%
665 River Knoll Drive
Marietta. GA 30067
All officers and directors
as a group (11 persons) 1,279,037 30.0%
</TABLE>
7
<PAGE> 12
(1) Unless otherwise noted, all persons named in the table have sole voting and
sole investment power with respect to all shares of Common Stock beneficially
owned by them, and no persons named in the table are acting as nominees for any
persons or are otherwise under the control of any person or group of persons. As
used herein, the term "beneficial ownership" with respect to a security is
defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as
consisting of sole or shared voting power (including the power to vote or direct
the vote) or sole or shared investment power (including the power to dispose or
direct the disposition) with respect to the security through any contract,
arrangement, understanding, relationship or otherwise, including a right to
acquire any such power during the period 60 days from the record date of March
20, 1998.
(2) Based upon 3,672,880 shares of Common Stock outstanding as of the
record date.
(3) Includes 117,282 shares of Common Stock issuable to Mr. Edgington upon
exercise of currently exercisable stock options.
(4) Includes 210,031 shares of Common Stock issuable to Dr. Varney upon
exercise of currently exercisable stock options, and 15,000 shares of
Common Stock issuable to Dr. Varney upon exercise of Purchase Warrants.
(5) Includes 40,031 shares of Common Stock issuable to Mr. West upon
exercise of currently exercisable stock options. Does not include
24,000 shares of Common Stock owned by Mr. West's parents and Mr.
West's spouse's parents, over which Mr. West disclaims beneficial
ownership.
(6) Includes 19,225 shares of Common Stock issuable to Mr. Bowers upon
exercise of currently exercisable stock options.
(7) Includes 114,000 shares of Common Stock issuable to Mr. Parker upon
exercise of currently exercisable stock options.
(8) Includes 10,000 shares of Common Stock issuable to Mr. Meindl upon
exercise of currently exercisable stock options, and 20,000 shares of
Common Stock issuable to Mr. Meindl upon exercise of Purchase Warrants.
(9) Includes 11,000 shares of Common Stock issuable to Mr. Buick upon
exercise of currently exercisable stock options.
(10) Includes 11,000 shares of Common Stock issuable to Mr. Whitehead upon
exercise of currently exercisable stock options.
(11) Includes 11,000 shares of Common Stock issuable to Mr. Gjelde upon
exercise of currently exercisable stock options.
(12) Represents 9,000 shares of Common Stock issuable to Mr. Carey upon
exercise of currently exercisable stock options. Does not include
17,145 shares of Common Stock issuable to Corporate Resource
Development Inc., (as part of compensation to Mr. Carey's employer, for
providing management consulting services to the Company commencing in
February of 1998), upon exercise of options exercisable within 60 days.
8
<PAGE> 13
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 executive officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of these reports. The Company believes that all
filings required to be made by the Reporting Persons during the fiscal year
ended December 31, 1997 were made on a timely basis.
MANAGEMENT
The following table sets forth the names, ages and positions of the Named
Executive Officers and directors of the Company as of March 20, 1998. Their
respective backgrounds are described following the table:
<TABLE>
<CAPTION>
Name Age Title
- - ---- --- -----
<S> <C> <C>
James G. Buick(2)(3) 65 Chairman of the Board of Directors
William M. Parker(4) 44 Chief Executive Officer, President and director
Dane B. West 43 Senior Executive and director
William H. Bowers 37 Chief Operating Officer and director
Gary A. Struzik 42 Chief Financial Officer and Secretary
Robert C. Varney, Ph.D.(1) 53 director
Bruce E. Edgington(1)(3) 40 director
John J. Meindl, Jr.(1)(3) 41 director
Clay T. Whitehead(2) 59 director
Earl E. Gjelde(2) 53 director
W.R. 'Max' Carey(3) 50 director
</TABLE>
- - ------------
(1) Members of Compensation Committee
(2) Members of Audit Committee
(3) Members of Executive Committee
(4) Pursuant to the Employment Agreement between Mr. Parker and the Company, Mr.
Parker will become the CEO and President of the Company effective April 14,
1998.
JAMES G. BUICK has been Chairman of the Board of Directors since
January 15, 1998, and a director of the Company since April 1997. Since 1993 he
has been self employed as a management consultant in the area of business
strategic long range financial planning. From 1984 to 1993, he was President and
Chief Executive Officer of the Zondervan Corporation, a firm engaged in the
distribution of Bibles, books, computer software, and religious gifts. He
currently is on the Board of Directors of Spartan Stores, a firm engaged in food
wholesale and operations, and is Chairman of the Board of the Dove Foundation, a
not-for-profit foundation engaged in the creation, promotion, production and
distribution of wholesome family entertainment.
9
<PAGE> 14
WILLIAM M. PARKER, is the newly appointed Chief Executive Officer,
President and a director of the Company. Since 1996, Mr. Parker has been
Executive Vice President and Manager of the $70 million Information Systems
Division of CACI International Inc., an international information technology
product and services company. From 1992 to 1996, he was Executive Vice President
and Director of Business Development for CACI International Inc., where he was
instrumental in winning over $775 million of new business, leading to
significant corporate growth. Mr. Parker received a B.S. degree from the U.S.
Naval Academy.
ROBERT C. VARNEY, PH.D. has been a director of the Company and its
predecessor entities since July 1995. From July 1995 to January of 1998, Dr.
Varney also served as Chairman of the Board of Directors of the Company. From
July 1995 to April of 1998, Dr. Varney also served as Chief Executive Officer of
the Company. From 1993 to 1995, he managed his personal real estate holdings.
Dr. Varney was Chairman and Chief Executive Officer of International Telesystems
Corporation ("ITC"), a firm engaged in outbound call center automation, from
1985 through 1993. Dr. Varney received a B.S. degree from the University of
Rochester in June, 1966 and an M.S. and a Ph.D. degree in Computer Science from
Pennsylvania State University in 1969 and 1971, respectively.
DANE B. WEST has been a Senior Executive and a director of the Company
and its predecessor entities since the Company's inception in 1993. From January
1992 through April, 1993, Mr. West was a student at the University of Virginia.
Mr. West is an ordained minister with 15 years of ministry leadership
experience. As a pastor, he recruited, trained and managed a volunteer staff of
more than 300 persons. He has completed doctoral studies in educational
administration at the University of Virginia. He received a B.A. in Biblical
Studies from The Washington Bible College in 1978, and an M.A. in Christian
Education from Talbot Theological Seminary in 1981.
WILLIAM H. BOWERS has been the Chief Operating Officer and a director
of the Company and its predecessor entities since the Company's inception. Mr.
Bowers was a Branch Chief of the Central Intelligence Agency from April, 1990
until May, 1993, where his responsibilities included providing engineering and
technical support services. Mr. Bowers received a B.S. degree in Engineering
from Virginia Polytechnic Institute in 1983.
GARY A. STRUZIK has been the Chief Financial Officer and Secretary of
the Company since April 1997 and was Vice President Finance and Administration
of the Company's predecessor entities from February 1996 until April 1997. Mr.
Struzik was Director of Accounting for Loral Defense Systems (formally Unisys
Defense Systems) from February 1995 through February 1996 and Director of
Accounting for Unisys Defense Systems from October 1987 through February 1995,
where his responsibilities included financial statement preparation, external
audit liaison, policy and procedures. Mr. Struzik received a B.A. degree in
Economics from the State University of New York at Oswego in May 1977 and an
M.B.A. from Chapman College in October 1984.
10
<PAGE> 15
BRUCE E. EDGINGTON has been director of the Company and its
predecessors since November 1995. From 1979 through 1988, Mr. Edgington was a
registered representative with Johnston Lemon & Co., a securities broker-dealer,
where his responsibilities included the management of retail securities accounts
and administration. In 1988 he founded and continues to be an officer, director
and shareholder of DiBiasio & Edgington, a firm engaged in providing software to
investment firms and money managers.
JOHN J. MEINDL, JR. has been director of the Company since April 1997,
has been self employed as a management consultant to medium and large firms in
the area of electronic records management, Internet strategies and business
reengineering since 1996. From 1993 through 1996 Mr. Meindl was Chief Operating
Officer of OTG Software, Inc., a firm engaged in the development of electronic
imaging and optical disk storage management software. Since 1988, he has been
Chief Executive Officer of GeneSys Data Technologies, Inc., a firm engaged in
providing software and services in the area of electronic records management.
GeneSys Data Technologies, Inc. has been dormant and inactive since 1992 but was
not liquidated because of its pursuit of a claim which was successfully awarded
in 1996. In connection with winding up the affairs of GeneSys Data Technologies,
Inc. GeneSys Data Technologies, Inc. filed for bankruptcy protection in June
1996 (Case No. 96-5-50118-SD, U.S. Bankruptcy Court Baltimore, Maryland
District) and as of the date hereof has not been discharged.
CLAY T. WHITEHEAD, has been a director of the Company since April 1997
and, since 1987, has been the President of Clay Whitehead Associates, a
consulting firm in the areas of strategic planning and business development
concentrating on the telecommunications and media industries. Mr. Whitehead
holds a B.S. and M.S. in Electrical Engineering and a Ph.D. in Management, all
from the Massachusetts Institute of Technology and from 1969 through 1974 held
various federal government positions, including Director of the U.S. Office of
Telecommunications Policy.
EARL E. GJELDE has been a director of the Company since April 1997.
From 1989 through 1993, he was Vice President, Chemical Waste Management, Inc.
and from 1991 to 1993 was Vice President, Waste Management Inc. (currently WMX
Technologies, Inc.). Since 1991, Mr. Gjelde has been Managing Director, Summit
Group International, Ltd., an energy and natural resource consulting firm with
Internet based security controlled document systems and Managing Director,
Summit Energy Group, Ltd., an energy development company and since 1996, a
partner in Pipeline Power Partners, LP, a natural gas services company. From
1980 through 1989, Mr. Gjelde held various federal government positions
including Under Secretary and Chief Operating Officer of the U.S. Department of
Interior from 1985 through 1989 and Special Assistant to the Secretary, Chief
Operating Officer, U.S. Department of Energy from 1982 through 1985. He is a
member of the Board of Directors of The United States Energy Association, The
World Energy Congress, the National Wilderness Institute, Allied Technologies
Group, Inc., and publicly held Electrosource, Inc.
W.R. 'MAX' CAREY has been a director of the Company since June 1997.
Since 1981, he has been Chairman and Chief Executive Officer of Corporate
Resource Development, Inc., a sales and marketing consulting and training firm
based in Atlanta. He currently is also a member of the Board of Directors of
Outback Steakhouse, Inc., a restaurant franchiser and ROMAC International, a
leading specialty staffing services firm, both public companies.
11
<PAGE> 16
The Board of Directors at DIDAX INC. is currently in the process of
considering an additional Board member for appointment in the third or fourth
quarter of 1998. Such appointment, if any, will be rendered in a manner
consistent with the Company's By-Laws and will be announced at the time of
appointment.
Each director serves until the next annual meeting of shareholders and
the election and qualification of their successors. In February 1997, the
Company agreed that an advisor to the Company's Board of Directors appointed by
Barron Chase Securities, Inc., would be invited to attend all meetings of the
Board of Directors. Executive officers are elected by the Board of Directors
annually and serve at the discretion of the Board.
In February 1998, the Board of Directors accepted the resignation of
Robert C. Varney, Ph.D., as Chief Executive Officer of the Company, effective
upon the hire of his replacement. In March 1998, the Company entered into an
Employment Agreement with William M. Parker, whereby Mr. Parker has agreed to
serve as the Company's Chief Executive Officer and President effective April 14,
1998. Since March 23, 1998, Mr. Parker has served as a member of the Company's
Board of Directors. Dr. Varney has agreed to continue to serve as a member of
the Company's Board of Directors as Vice Chairman of the Board, a position which
the Board will vote on some time after the Annual Meeting. (See "EMPLOYMENT
AGREEMENTS.")
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The business of the Company is managed under the direction of the Board of
Directors. The Board meets during the Company's fiscal year to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors held four formal meetings and acted by
unanimous written consent six times during the fiscal year ended December 31,
1997. Mr. Meindl attended two, and Mr. Gjelde attended three of the formal Board
meetings held during 1997, and the other directors attended all of the meetings
held subsequent to their election to the Board.
The Board of Directors has established an Audit Committee, a Compensation
Committee, and an Executive Committee to devote attention to specific subjects
and to assist the Board in the discharge of its responsibilities. The functions
of these committees and their current members are described below.
AUDIT COMMITTEE. During the fiscal year, the Audit Committee was
comprised of James G. Buick, Clay T. Whitehead and Earl E. Gjelde. The Audit
Committee reviews, acts on and reports to the Board of Directors with respect to
various auditing and accounting matters, including the selection of the
Company's independent accountants, the scope of the annual audits, fees to be
paid to the independent accountants and the accounting practices of the Company.
The Audit Committee had no formal meetings in 1997.
COMPENSATION COMMITTEE. During the fiscal year, the Compensation
Committee was comprised of Robert C. Varney, Ph.D., John J. Meindl and Bruce E.
Edgington. The Compensation Committee advises the Board of Directors and
consults with management concerning salaries, incentives and other forms of
compensation for the officers and other employees of the Company and administers
to the Company's existing Stock Option Plan. The Compensation Committee held one
formal meeting in April of 1997.
12
<PAGE> 17
EXECUTIVE COMMITTEE. In January 1998, the Executive Committee was
formed and comprised of James G. Buick, John J. Meindl, Bruce E. Edgington and
W. Max Carey, responsible to the Board of Directors for reviewing the Company's
strategic framework and design, operations, organizational structure, merger and
acquisition opportunities and such other responsibilities as the Board may from
time delegate. The Executive Committee held formal meetings in January and
February of 1998.
SEARCH COMMITTEE. In January 1998, an adhoc Search Committee was formed
and comprised of Earl E. Gjelde, W. Max Carey, and Clay T. Whitehead,
responsible to the Board of Directors for the purpose of activating a search for
a replacement for Dr. Varney whose role in the Company, pending Board approval,
will be that of Vice Chairman of the Board of Directors after a replacement has
been named. Given the hiring of Mr. Parker as Chief Executive Officer and
President, the search committee has been disbanded.
The Board of Directors does not have a standing nominating committee or any
other committee performing a similar function. The function customarily
attributable to a nominating committee is performed by the Board of Directors as
a whole.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
No person employed by the Company received salary and bonus exceeding in the
aggregate $100,000 during the fiscal years 1995, 1996 and 1997. The following
Summary Compensation Table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company in all capacities during 1996 and 1997
by the Company's Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards
Name and Principal Position Year Salary($) Bonus($) Other Annual Securities All Other
Compensation Underlying Compensation
($)(1) Options/ ($) (3)
SARs (2)
<S> <C> <C> <C> <C> <C> <C>
Robert C. Varney, Ph.D., Chief 1996 38,203 0 4,271 162,836 140
Executive Officer
1997 17,349 0 5,845 21,807 390
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Other Annual Compensation represents medical insurance premiums paid by
the Company for Dr. Varney.
(2) See "OPTION GRANTS IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
(3) All Other Compensation represents life insurance premiums paid by the
Company for Dr. Varney.
The following table sets forth information concerning stock option grants made
during 1997 to the executive officer of the Company named in the Summary
Compensation Table, and the fiscal year-end value of unexercised options. No
options were exercised during 1997 by Dr. Varney or any other director or
officer of the Company.
13
<PAGE> 18
OPTION GRANTS TABLE
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees or Base Price
Name Granted (1) in 1997 Per Share ($)
---- ----------- ------- -------------
Expiration Date
---------------
<S> <C> <C> <C> <C>
Robert C. Varney, Ph.D. 5,657 2.6% $4.00 September 25, 2005
8,075 3.8% $5.00 March 31, 2007
8,075 3.8% $5.00 June 30, 2007
- - --------------------------------------------------------------------------------------------
</TABLE>
(1) All options are non-qualified options.
DIRECTOR COMPENSATION
In April 1997, the Company's (i) non-employee directors, other than Bruce E.
Edgington and (ii) an advisor to the Company's Board appointed by Barron Chase
Securities, Inc. (the "Advisor") each were granted under the Company's 1997
Stock Option Plan options to acquire an aggregate of 37,000 shares of the
Company's Common Stock at an exercise price of $5.00 per share, exercisable for
the following number of shares for a period of five years subsequent to the
satisfaction of the following conditions precedent (collectively the
"Non-Employee Director Options):
<TABLE>
<CAPTION>
NUMBER OF SHARES CONDITIONS PRECEDENT TO EXERCISE
---------------- --------------------------------
<S> <C>
1,000 shares per Board of Director Attendance at Board meeting
meeting for the first three years as a
member of the Board up to a maximum
of 4,000 shares per year.
5,000 shares Closing of the Company's IPO.
5,000 shares CCN's use exceeding one million hits per day.
5,000 shares The Company's quarterly earnings per share equaling
or exceeding $.05.
5,000 shares The Company's quarterly earnings per share equaling
or exceeding $.10.
5,000 shares The Company's quarterly earnings per share equaling
or exceeding $.15.
</TABLE>
As of the date hereof, non-employee directors excluding Bruce Edgington and
including the Advisor have the right to acquire an aggregate of 222,000 shares
of the Company's common Stock pursuant to the Non-Employee Director Options. In
addition, non-employee directors receive reimbursement of reasonable expenses
incurred in attending Board meeting.
14
<PAGE> 19
EMPLOYMENT AGREEMENTS
In June 1997 the Company entered into an employment agreement with Robert C.
Varney, Ph.D., for a term expiring on June 30, 1999. The employment agreement
provides an annual base salary of $90,000 with incremental increases based on
meeting revenue objectives, resulting in a maximum of salary of $130,000, if the
Company achieves one or more performance thresholds contemplated to be
determined by the Board of Directors in 1998. If at any time during the term of
his employment agreement, a change in ownership of more than 33% of the
outstanding voting shares of the Company occurs, or within two years after a
transaction involving the Company or a contested election of a director, or a
tender or exchange offer for voting securities of the Company, the individuals
who were directors of the Company immediately prior thereto cease to constitute
a majority of the Company's Board of Directors, ("Change in Control"), then
employee has the option to terminate his employment agreement (the "Change in
Control Termination"). In the event of a Change in Control Termination, the
Company is obligated to pay to the employee a lump sum equal to 24 times the
compensation (base salary plus bonus) paid to such employee for the month prior
to the Change in Control. Further, pursuant to the employment agreement, Dr.
Varney has agreed, during the term of his employment with the Company and for
six months after his voluntary withdrawal from employment with the Company or
the Company's termination of his employment for cause, not to compete with the
Company wherever the Company has revenue-producing customers or activities, and
for one year after his voluntary withdrawal form employment with the Company or
the Company's termination of his employment for cause not to interfere with the
Company's relationships with its stockholders, lenders, directors, officers,
employees, agents, lessors or other persons that have had a business
relationship with the Company within 12 months before the incident in question
(or within six months, in the case of employment of the Company's agent or
employee), except in the event of a Change in Control Termination.
The agreement with Dr. Varney provides that, if his employment is terminated by
the Company for cause (as defined in the agreement) or by voluntary unilateral
decision by the employee without cause, then the employee is entitled to his
base salary under the agreement earned, accrued vacation, and reimbursement of
expenses, through the date of termination. In addition, the agreements provide,
that, if employment is otherwise terminated, the employee is entitled to
receive, in one-lump sum payment, the employee's then current monthly
compensation for a minimum of eighteen months, or the number of months remaining
in the contract, whichever is greater, and all applicable allowances and
reimbursements and, he shall be entitled to receive accident and health
insurance for himself and his family until his death subject to Dr. Varney's
eligibility to receive such insurance from another employer.
Pursuant to the resignation of Robert C. Varney, Ph.D., as the Company's Chief
Executive Officer, the Company has entered into a Conclusion of Employment
Agreement with Mr. Varney, dated February 27, 1998, Under the terms of this
Conclusion of Employment Agreement, Dr. Varney will maintain the right to
acquire 194,986 shares of the Company's Common Stock granted to him during the
course of his employment with the Company, at exercise prices ranging from $2.00
to $5.00 per share. Dr. Varney shall also have full rights to continue, at the
Company's expense, health care benefits comparable to group coverage provided by
DIDAX from
15
<PAGE> 20
time to time to its employees. This benefit coverage will cease upon the date
Dr. Varney is eligible for coverage by a succeeding employer, or under other
health care coverage such as medicare. Upon the conclusion of his employment
with the Company, Dr. Varney shall continue to receive as severance payment his
current salary for an additional eighteen (18) months. In addition, both Dr.
Varney and the Company waived and released each other of and from any and all
claims and causes of action for damages or other relief that either Dr. Varney
or the Company may have against the other (or their personal representatives,
agents, assigns, attorneys, and their officers, directors, employees, agents or
representatives) based on Dr. Varney's employment or other association with the
Company, the conclusion of employment, or any event or transaction that occurred
before February 27, 1998.
In March, 1998, the Company entered into employment agreements with William M.
Parker, Dane B. West, William H. Bowers and Gary A. Struzik. These employment
agreements, which may be terminated by the employee or the Company upon thirty
days prior written notice, provide for annual base salaries of $115,000 to Mr.
Parker and $90,000 each for Messrs. West, Bowers and Struzik, with incremental
increases based on meeting revenue objectives as determined by the Board of
Directors, resulting in a maximum of salary of $130,000, $120,000, $120,000, and
$110,000 for Messrs. Parker, West, Bowers, and Struzik respectively, when
quarterly revenues exceed $400,000. The agreement with each of Messrs. Parker,
Bowers, West and Struzik provides that, if his employment is terminated by the
Company, then the employee is entitled to an additional six (6) months of
severance pay, health and group life coverage. Further, pursuant to the
employment agreements, each of Messrs. Parker, West, Bowers and Struzik have
agreed during the term of his respective employment with the Company and for six
months thereafter not to compete with the Company. For Messrs. West, Bowers and
Struzik, these employment agreements supersede a previous June 1997 set of
employment agreements.
In addition to their employment agreements, executive officers of the Company
may participate in the Option Plan, as defined below and if approved by the
Company's stockholder's, the 1998 Plan. The Company does not currently have any
compensation plans or similar arrangements under which an executive officer is
entitled to benefits, except group life, a Company 401K plan, and a medical
insurance plan.
1997 STOCK OPTION PLAN
In April 1997, the Board of Directors adopted, and the stockholders approved the
Company's 1997 Stock Option Plan (the "Option Plan"), The Option Plan provides
for the issuance of up to 2,057,937 shares of the Company's Common Stock. As of
December 31, 1997, options to purchase 1,778,271 shares of the Company's Common
Stock were granted and will be outstanding under the Option Plan of which
options to purchase 762,799 shares are exercisable. If any options granted under
the Option Plan shall terminate, expire or be canceled as to any shares, new
options may thereafter be granted covering such shares. In addition, any shares
purchased under this Option Plan subsequently repurchased by the Company
pursuant to the terms hereof may again be granted under the Option Plan. The
shares issued upon exercise of options under the Option Plan may, in whole or in
part, may be either authorized but unissued shares or issued shares reacquired
by the Company.
16
<PAGE> 21
The purpose of the Option Plan is to advance the interests of the Company by
providing an opportunity to its directors, employees and consultants, including
ministry partners, to purchase shares of the Company's Common Stock. By
encouraging stock ownership, the Company seeks to attract, retain and motivate
directors, employees and consultants. The Option Plan provides for the grant of
(i) incentive stock options ("Incentive Options") as described in Section 422A
of the Internal Revenue Code of 1986, as amended (the "Code"); (ii) nonqualified
stock options ("Nonqualified Options," and, together with the Incentive Options,
the "Options"); and (iii) rights to purchase shares of Common Stock ("Restricted
Stock") of the Company pursuant to restricted stock agreements and subscription
agreements. The Option Plan is administered by the Board of Directors, or at its
discretion, by a committee which is appointed by the Board to perform such
function. Under the terms of the Option Plan, the exercise price for Incentive
Options may not be less than the fair market value of the underlying stock at
the time the Incentive Option is granted.
The Option Plan has a provision which limits the number of shares of the
Company's Common Stock for which options may be granted to any individual during
any year. With this provision, options granted under the Option Plan qualify as
performance-based compensation for purposes of Section 162(m) of the Code and
the regulation thereunder, and the Company will be entitled to deduct the
compensation paid to certain executives pursuant to the Option Plan,
notwithstanding the deduction limit contained in Section 162(m).
Under the Option Plan, the price payable upon exercise of options may be paid in
cash or check acceptable to the Company, or by any other consideration that the
Board deems acceptable. The exercise price may also be paid in shares of the
Company's Common Stock, duly owned by the optionee having a fair market value
equal to the option price on the date of exercise.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, Mr. Edgington and Dr. Varney, both directors of the Company,
advanced $212,000 to the Company to cover operating costs for certain periods,
which advances bear interest in the amount of 9.75% and were repaid from the
proceeds of the Company's private placement closed in February 1997.
Four separate promissory notes ("Officer Notes") aggregating $623,000 principal
amount of debt owed by the Company to Dr. Varney ($201,000) and Mr. Edgington
($422,000), the Chairman of the Company's Board of Directors and Chief Executive
Officer, and a director of the Company, respectively. The Officer Notes bear
interest at 9.75% per annum. The Officer Notes were issued on July 10, 1996,
July 30, 1996, September 26, 1996 and October 30, 1996, and the proceeds
received by the Company from the issuance of the Officer Notes were used for
working capital. The Company satisfied the Officer Notes at the Closing of the
Company's IPO. In connection with the satisfaction of the Officer Notes, the
Company issued to Dr. Varney and Mr. Edgington, options to purchase up to 60,357
shares and 112,282 shares of the Company's Common Stock, respectively, at a
purchase price of $4.00 per share, exercisable at any time and from time to time
for a period commencing with the satisfaction of the Officer Notes and for a
period of eight years thereafter.
17
<PAGE> 22
In January 1997, John G. Meindl Jr., a director of the Company purchased from
the Company Junior Notes in the aggregate principal amount of $300,000. The
Company satisfied the Junior Notes at the Closing of the Company's IPO. In
connection with the satisfaction of the Junior Notes, the Company issued 60,000
shares of Common Stock to Mr. Meindl.
In August and September of 1997, the Company issued Promissory Notes for the
purpose of working capital, to Dr. Varney and Mr. Edgington in the aggregate of
$130,000 and $90,000 respectively, bearing 11.5% interest per annum. These
Promissory Notes were satisfied from the proceeds of the Company's IPO in
October 1997.
In October of 1997, the Board of Directors approved the issuance of notes
receivable in the amount of $75,000 and $18,000 to Dane B. West and William H.
Bowers respectively. The Company is collecting interest on these notes
receivable through payroll deductions at the minimum federal statutory rate at
the time of issuance of 5.7%. The notes are due to be repaid to the Company on
October 31, 1999.
In February of 1998, the Board of Directors authorized the Company to enter into
an agreement for management consulting services with Corporate Resource
Development Inc. W. Max Carey, a director of the Company, is Chairman and Chief
Executive Officer of this firm. The terms of the agreement provide for $25,000
due upon signing and $25,000 per month, half payable in cash and half payable in
options to purchase 5,715 shares of the Company's Common Stock at $2.185 per
share. The Company has the ability to terminate the agreement at any time, upon
30 days written notice, beginning with the first day of the following month the
notice is given.
For the fiscal years ended December 31, 1995 through March 20, 1998, there were
no other material transactions between the Company and any of its officers
and/or directors which involved $60,000 or more.
Although the Company has no present intention to do so, it may in the future
enter into other transactions and agreements incident to its business with its
directors, officers, principal stockholders and other affiliates. The Company
intends for all such transactions and agreements to be on terms no less
favorable to the Company than those obtainable from unaffiliated third parties
on an arm's-length basis. In addition, the approval of a majority of the
company's directors will be required for any such transactions or agreements.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with applicable rules
and regulations for presentation at the Company's next annual meeting that is
received at the Company's principal executive office by December 01, 1998 will
be included in the Company's proxy statement and form of proxy for that meeting.
18
<PAGE> 23
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The cost of soliciting proxies in the accompanying form will be paid by
the Company. Officers of the Company may solicit proxies by mail, telephone or
telegraph. Upon request, the Company will reimburse brokers, dealers, banks and
trustees, or their nominees, for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of shares of the Common Stock.
FINANCIAL INFORMATION
Incorporated by reference from the Registrant's 1997 Form 10-KSB filed on March
20, 1998, pursuant to Section 13 or 15(d) of the Exchange Act. The Company has
also provided a copy of the Company's annual report, additional copies of which
are available, without charge, by contacting the Company at the address provided
herein.
INDEPENDENT PUBLIC ACCOUNTANTS
HOFFMAN, MORRISON & FITZGERALD, P.C., independent certified public accountants,
has been selected by the Board of Directors as the Company's independent auditor
for the current year. A representative of HOFFMAN, MORRISON & FITZGERALD, P.C.,
is expected to be present at the Annual Meeting, will have an opportunity to
make a statement if he or she desires to do so and is expected to be available
to respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action at
the meeting other than the matters set forth herein. Should any other matter
requiring a vote of stockholders arise, the proxies in the enclosed form confer
upon the person or persons entitled to vote the shares represented by such
proxies discretionary authority to vote the same in accordance with their best
judgment in the interest of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
GARY A. STRUZIK
CHIEF FINANCIAL OFFICER AND SECRETARY
DIDAX INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
10:30 A.M., WEDNESDAY, APRIL 29, 1998,
CONFERENCE ROOM "B" OF THE EASTERN LOUDOUN REGIONAL LIBRARY,
21030 WHITFIELD PLACE STERLING, VIRGINIA 20165
The undersigned stockholder of DIDAX INC. (the "Company") hereby appoints James
G. Buick and William M. Parker, or either of them, as proxies, each with full
powers of substitution, to vote the shares of the undersigned at the
above-stated Annual Meeting and at any adjournment(s) thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE THEREIN. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (4). THIS PROXY IS
REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
19
<PAGE> 24
Receipt herewith of the Company's Annual Report and Notice of Meeting and Proxy
Statement, dated April 10, 1998, is hereby acknowledged.
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: /X/
1. ELECTION OF JAMES G. BUICK, WILLIAM M. PARKER, DR. ROBERT C. VARNEY,
DANE B. WEST, WILLIAM H. BOWERS, BRUCE E. EDGINGTON, JOHN J. MEINDL JR., CLAY T.
WHITEHEAD, EARL E. GJELDE, AND WILLIAM RUSSELL 'MAX' CAREY, JR. TO THE COMPANY'S
BOARD OF DIRECTORS.
IN FAVOR OF ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ]
WITHHOLD THE FOLLOWING:
2. RATIFICATION OF SELECTION OF HOFFMAN, MORRISON & FITZGERALD, P.C. AS
INDEPENDENT AUDITORS FOR FISCAL YEAR 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION AND APPROVAL OF THE ADOPTION OF THE DIDAX INC. 1998
STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
or IN FAVOR of the Proposal.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
ATTENDANCE IN PERSON WILL AUTOMATICALLY REVOKE A PROXY.
THEREFORE PLEASE RETURN AND COMPLETE PROXY ONLY IF
YOU ARE CERTAIN YOU WILL NOT BE ABLE TO ATTEND THE
MEETING.
______________________________ ______________________________
Stockholder Signature(s) Date
______________________________
Stockholder Printed Name(s)
Please sign and date as requested above. When shares are held by joint tenants,
both should sign. When signing as attorney, as executor, administrator, trustee
or guardian, please give full indication as such. If a corporation, please sign
in full corporate name as President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
20
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DIDAX INC.
1998 STOCK OPTION PLAN
1.PURPOSE. The purpose of this Plan is to advance the interests of DIDAX,
INC. (the "Company") by providing an opportunity to its selected directors,
key employees (as defined in Paragraph 2(b)) and consultants (as defined in
Paragraph 2(a)) to purchase shares (the "Shares") of the Common Stock, par
value $.01 per share (the "Common Stock"), of the Company. By encouraging
stock ownership, the Company seeks to attract, retain and motivate key
employees, consultants and ministry partners. It is intended that this
purpose will be effected by the granting of (i) incentive stock options
("Incentive Options") as described in Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code"); and (ii) nonqualified stock options
("Nonqualified Options," and, together with the incentive options, the
"Options") as provided herein. (Collectively, the "Stock Incentives").
2.DEFINITIONS.
(a) The term "consultants" means those persons, other than employees of
the Company, who provide services to the Company, including nonemployee
directors of the Company, and who are determined by the Compensation
Committee to be eligible for Stock Incentives under this Plan.
(b) The term "key employees" means those executive, administrative,
operational, engineering or managerial employees who are determined by
the Compensation Committee to be eligible for Stock Incentives under
this Plan.
(c) The term "ministry partners" means those organizations or
individuals. other than employees and consultants, whose relationship
with DIDAX is critical to meeting the Company's business objectives and
who are determined by the Compensation Committee to be eligible for
stock incentives under this plan.
(d) The term "optionee" means an individual to whom an option is
granted under this Plan.
(e) The term "grantee" means an individual to whom a purchase right is
granted under this Plan.
3. EFFECTIVE DATE. This Plan becomes effective April 6, 1998, as so adopted
by the Board of Directors of the Company.
4. STOCK SUBJECT TO THE PLAN. The Shares that may be purchased (through the
exercise of options) under this Plan shall not exceed in the aggregate
400,000 Shares. If any Stock Incentives granted under the Plan shall
terminate, expire or be canceled as to any Shares, new Stock Incentives may
thereafter be granted covering such Shares. In addition, any Shares
purchased under this Plan subsequently repurchased by the Company pursuant
to the terms hereof may again be granted under the Plan. The Shares issued
upon exercise of Stock Incentives under this Plan may, in whole or in part,
be either authorized but unissued Shares or issued Shares reacquired by the
Company. Notwithstanding any other provisions of this Plan, the aggregate
number of Shares subject to outstanding options granted under the Plan,
plus the aggregate number of shares issued upon the exercise of all options
granted under the Plan, shall never be permitted to exceed the number of
Shares specified in the first sentence of section 4, except in accordance
with subsection 8(a) below.
5. ADMINISTRATION. The Plan shall be administered by the Board of Directors
of the Company (the "Board"), or by a committee appointed by the Board
which shall not have less than two (2) members (in either case, the
"Compensation Committee"). No single participant may receive options to
purchase more than the total number of shares authorized for issuance under
the 1998 Plan. The Compensation Committee is tasked with the responsibility
of recommending option grants for approval by the Board of Directors and
the Compensation Committee or the Board of Directors may delegate
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administrative duties to such employees of the Company as it deems proper.
However, it is only through a majority vote of the Board of Directors,
either acting on its own or via the recommendation of the Compensation
Committee, that nonqualified stock options or incentive stock options to
purchase shares of Common Stock may be granted, and thus it is ultimately
the Board of Directors, subject to the provisions of the 1997 Plan, that
shall have the sole authority, in its discretion:"
(a) to determine to which of the eligible individuals, and the time or
times at which, options to purchase Common Stock of the Company shall
be granted;
(b) to determine the number of shares of Common Stock to be subject to
options granted to each eligible individual;
(c) to determine the price to be paid for the shares of Common Stock
upon the exercise of each option;
(d) to terminate the Plan or accelerate Option vesting, and to
determine the vesting and duration of each option granted;
(e) to determine the terms and conditions of each stock option
agreement (which need not be identical) entered into between the
Company and any eligible individual to whom the Board of Directors has
granted an option;
(f) to interpret the Plan; and
(g) to make all determinations deemed necessary or advisable for the
administration of the Plan.
The Compensation Committee, if any, shall be appointed by and shall serve
at the pleasure of the Board of Directors of the Company. No member of the
Compensation Committee shall be liable for any action or determination made
with respect to the Plan.
6. ELIGIBLE EMPLOYEES, CONSULTANTS AND MINISTRY PARTNERS. Incentive Options
may be granted to such key employees of the Company, including members of
the Board of Directors who are also employees of the Company, as are
selected by the Compensation Committee and approved by Board of Directors.
Nonqualified Options may be granted to such key employees, consultants and
ministry partners, including members of the Board of Directors, as are
selected by the Compensation Committee and approved by the Board of
Directors. The term "employee" includes an officer or director who is an
employee of the Company or a parent or subsidiary of it, as well as a
nonofficer, nondirector employee of the Company or a parent or subsidiary
or it.
7. DURATION OF THE PLAN. This Plan shall terminate ten (10) years from the
effective date of this Plan, unless terminated earlier pursuant to
Paragraph 13 hereof, and no Stock Incentives may be granted after such
termination.
8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options (but not
Nonqualified Options) granted under this Plan shall be subject to the
following restrictions:
(a) Limitation on Number of Shares. The aggregate fair market value,
determined as of the date the Incentive Option is granted, of the
Shares with respect to which Incentive Options are exercisable for the
first time by an employee during any calendar year shall not exceed
$100,000. If an employee is eligible to participate in any other
incentive stock option plans of the Company which are also intended to
comply with the provisions of Section 422A of the Code, the applicable
annual limitation shall apply to the aggregate number of Shares for
which Incentive Options may be granted under all such plans. An
Incentive Option may be granted which exceeds the $100,000 limitation,
as long as under then applicable law the portion of such option which
is exercisable for shares in excess of the $100,000 limitation shall be
treated as a nonqualified option. No Incentive
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Options may be exercised until and unless the Plan is approved by the
shareholders within one year of the date hereof, such approval to be
expressed in any legal way under Delaware law.
(b) 10% Stockholder. If any employee to whom an Incentive Option is
granted pursuant to the provisions of the Plan is on the date of grant
the owner of stock (as determined under Section 425(d) of the Code)
possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or of any parent or subsidiary of the
Company), then the following special provisions shall be applicable to
the Incentive Option granted to such individual:
(i) The option price per Share subject to such Incentive Option
shall not be less than 110% of the fair market value of one Share on
the date of grant; and
(ii) The Incentive Option shall not have a term in excess of five
(5) years from the date of grant.
In determining stock ownership, an Optionee shall be considered as
owning the voting capital stock owned, directly or indirectly, by or
for his brother and sisters, spouse, ancestors, and lineal
descendants. Voting capital stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders,
partners, or beneficiaries, as applicable. Common Stock with respect
to which any such Optionee holds an option shall not be counted.
Additionally, outstanding capital stock shall include all capital
stock actually issued and outstanding immediately after the grant of
the option to the optionee. Outstanding capital stock shall not
include capital stock authorized for issue under outstanding options
held by the Optionee or by any other person.
9. TERMS AND CONDITIONS OF OPTIONS. Incentive and Nonqualified Options
granted under this Plan shall be evidenced by stock option agreements in
such form and not inconsistent with the Plan as the Compensation Committee
may recommend and the Board of Directors shall approve from time to time,
which agreements shall evidence the following terms and conditions:
(a) Price.
(i) Incentive Options. Subject to the condition of subparagraph
(b)(i) of Paragraph 8, if applicable, with respect to each Incentive
Option, the purchase price per Share payable upon the exercise of
each Incentive Option granted hereunder shall be recommended by the
Compensation Committee and approved by the Board of Directors and
shall be not less than 100% of the fair market value of one Share on
the day the option is granted.
(ii) Nonqualified Options. With respect to each Nonqualified Option,
the purchase price per Share payable upon the exercise of each
Nonqualified Option granted hereunder shall be recommended by the
Compensation Committee and approved by the Board of Directors at the
time the Nonqualified Option is granted, but shall not be less than
40% of fair market value at the time of grant.
(b) Number of Shares. Each option agreement shall specify the number of
Shares to which it pertains.
(c) Exercise. Subject to the conditions of subparagraphs (a) and (b)
(ii) of Paragraph 8, if applicable, each option shall be exercisable
for the full amount or for any part thereof and at such intervals or in
such installments as the Compensation Committee recommends and the
Board of Directors determines at the time it grants such option;
provided, however, that no option shall be exercisable with respect to
any Shares later than ten (10) years after the date of the grant of
such option.
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(d) Notice of Exercise and Payment. An option shall be exercisable only
by delivery of a written notice to the Compensation Committee or the
Board of Directors, any member of the Compensation Committee or the
Board of Directors, the Company's Secretary, or any other officer of
the Company designated by the Compensation Committee and approved by
the Board of Directors to accept such notices on its behalf, specifying
the number of Shares for which it is exercised. If such Shares are not
at the time effectively registered under the Securities Act of 1933, as
amended, the Optionee shall include with such notice a letter, in form
and substance satisfactory to the Company confirming that such Shares
are being purchased for the optionee's own account for investment and
not with a view to the resale or distribution thereof. Payment shall be
made in full at the time of delivery to the optionee of a certificate
or certificates covering the number of Shares for which the option was
exercised. Payment shall be made (i) by cash or check, (ii) if
permitted by the Compensation Committee and approved by the Board of
Directors, by delivery and assignment to the Company of shares of the
Company's stock having a fair market value (as determined by the
Compensation Committee) equal to the exercise price, (iii) if permitted
by the Compensation Committee and approved by the Board of Directors,
by a promissory note, or (iv) by a combination of (i), (ii), and (iii).
The value of the shares of the Company's stock for such purpose shall
be its fair market value as of the date the option is exercised, as
determined in accordance with procedures to be established by the
Compensation Committee and approved by the Board of Directors.
(e) Withholding Taxes; Delivery of Shares. The Company's obligation to
deliver Shares upon exercise of a Nonqualified Option, in whole or in
part, shall be subject to the Optionee's satisfaction of all applicable
federal, state, and local income and employment tax withholding
obligations. The Optionee may satisfy the obligation, in whole or in
part, by electing to have the Company withhold Shares having a value
equal to the amount required to be withheld. The value of Shares to be
withheld shall be based on the fair market value of the Shares on the
date the amount of tax to be withheld is to be determined. If Common
Stock acquired by exercise of an incentive stock option granted
pursuant to this Plan is disposed of within two (2) years from the date
of grant of the option or within one (1) year after the transfer of the
Common Stock to the optionee, the holder of the Common Stock
immediately prior to the disposition shall promptly notify the Company
in writing of the date and terms of the disposition and shall provide
such other information regarding the disposition as the Company may
reasonably require.
(f) Nontransferability. No option shall be transferable by the Optionee
otherwise than by will or the laws of descent or distribution, and each
option shall be exercisable during his lifetime only by him (except as
otherwise provided for in subparagraph (g) below).
(g) Termination of Options. Each option shall terminate and may no
longer be exercised if the Optionee ceases for any reason to be an
employee of, or consultant to, or ministry partner with the Company,
except that:
(i) if the Optionee's performance of services shall have terminated
for any reason other than cause, resignation or other voluntary
action before his eligibility to retire, disability (as defined
below) or death, he may at any time within a period of thirty (30)
days after such termination of the performance of services exercise
his option to the extent that the option was exercisable by him on
the date of termination of his performance of services;
(ii) if the Optionee's performance of services shall have been
terminated because of disability within the meaning of Section
22(e)(3) of the Internal Revenue Code, the Optionee may, at any time
within a period of one (1) year after the termination of performance
of services, exercise his option to the extent that the option was
exercisable by him on the date of termination of his employment or
performance of services; and
(iii) if the Optionee dies at a time when the option was exercisable
by him, then his estate, personal representative or beneficiary to
whom it has been transferred may, at any time within a
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period of one (1) year following his death if the Optionee's
performance of services shall have been terminated by his death, or
for the period following the termination of his performance of
services during which the option would have remained exercisable
under clauses (i) or (ii) above if the Optionee's performance of
services shall have been terminated prior to his death, exercise the
option to the extent the Optionee might have exercised it at the
time of his death; provided, however, that no option may be
exercised to any extent by anyone after the date of expiration of
the option.
(iv) The Board of Directors determines to extend the option exercise
date for the nonqualified portion of the plan on a case by case
basis.
(h) Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Shares covered by his option until the
date of issuance of a stock certificate to him for such Shares.
(i) Repurchase of Shares by the Company. Any Shares purchased by an
Optionee upon exercise of an option may in the discretion of the
Compensation Committee and approved by the Board of Directors be
subject to repurchase by the Company if and to the extent
specifically set forth in the agreement pursuant to which the Shares
were purchased.
10. STOCK DIVIDENDS; STOCK SPLITS; STOCK COMBINATIONS; RECAPITALIZATIONS.
Appropriate adjustment shall be made in the maximum number of Shares of
Common Stock subject to the Plan and in the number, kind and price of
Shares covered by any Stock Incentive granted hereunder to give effect to
any stock dividends or other distributions, stock splits, stock
combinations, recapitalizations and other similar changes in the capital
structure of the Company after the effective date of the Plan.
11. MERGER; SALE OF ASSETS; DISSOLUTION. In the event of a change of the
Common Stock resulting from a merger or similar reorganization as to which
the Company is the surviving corporation, the number and kind of shares
which thereafter may be subject to Stock Incentives granted under this Plan
and the number, kind and price of Shares then subject to Stock Incentives
shall be appropriately adjusted in such manner as the Compensation
Committee recommends and the Board of Directors may deem equitable to
prevent substantial dilution or enlargement of the rights available or
granted hereunder. Except as otherwise determined by the Board of Directors
of the Company, a merger or a similar reorganization that the Company does
not survive, or a sale of all or substantially all of the assets of the
Company, shall cause every nonvested Incentive Option and Nonqualified
Option outstanding hereunder to terminate, to the extent not then
exercised, unless any surviving entity agrees to assume the obligations
hereunder.
12. NO RIGHTS. Except as hereinabove expressly provided in Sections 10, no
optionee shall have any rights by reason of any subdivision or
consolidation of shares of the capital stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of
shares of any class or by reason of any dissolution, liquidation, merger or
consolidation or spin-off of assets or stock of another corporation, and
any issue by the Company of shares of stock of any class or of securities
convertible into shares of stock of any class shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to any option granted hereunder. The grant of an
option pursuant to this Plan shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or consolidate or
to dissolve, liquidate, sell, or transfer all or any part of its business
or assets.
13. COMPLIANCE WITH APPLICABLE LAWS. Notwithstanding any other provision of
the Plan, the Company shall have no liability to issue any shares under the
Plan unless such issuance would comply with all applicable laws and the
applicable requirements of any securities exchange or similar entity. Prior
to the issuance of any shares under the Plan, the Company may require a
written statement that the recipient is acquiring the shares for investment
and not for the purpose or with the intention of distributing the shares.
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14. DEATH OF A PARTICIPANT. In the event of the death of an Optionee, any
options which the Optionee was entitled to exercise on the date immediately
preceding his death shall be exercisable by the person or persons to whom
those rights pass by will or by the laws of descent and distribution. Any
such exercise shall be by written notice thereof filed with the Secretary
of the Company at the Company's corporate headquarters prior to the
option's expiration date, and any person exercising such an option shall be
treated as an Optionee for purposes of the provisions of this Plan.
15. EMPLOYMENT AND SHAREHOLDER STATUS. The Plan does not constitute a
contract of employment, and selection as an Optionee will not give any
employee the right to be retained in the employ of the Company. The grant
of an option under the Plan shall not confer upon the holder thereof any
right as a shareholder of the Company. As of the date on which an Optionee
exercises an option, the Optionee shall have all rights of a stockholder of
record with respect to the number of shares of Common Stock as to which the
option is exercised, irrespective of whether certificates to evidence the
shares of stock have been issued on such date. If the redistribution of
shares is restricted pursuant to Paragraph 12, certificates representing
such shares may bear a legend referred to such restrictions.
16. TERMINATION OR AMENDMENT OF PLAN. The Board of Directors may at any
time terminate this Plan or make such changes in or additions to the Plan
as it deems advisable without further action on the part of the
stockholders of the Company, including revising the number of shares
reserved for issuance hereunder, provided that no such termination or
amendment shall adversely affect or impair any then outstanding Stock
Incentive without the consent of the person holding such Stock Incentive.
17. TERMINATION. The Plan shall terminate automatically on April 6, 2008,
and may be terminated at any earlier date by the Board. No option shall be
granted hereunder after the termination of the Plan, but such termination
shall not affect the validity of any option then outstanding.
18. TIME OF GRANTING OPTIONS. The date of grant of an option hereunder
shall, for all purposes, be the date on which the Board of Directors makes
the determination granting such option.
19. RESERVATION OF SHARES. The Company, during the terms of this Plan, will
at all times reserve and keep available such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the Plan.
20. EFFECTIVE DATE. This Plan was adopted by the Board of Directors,
pursuant to shareholder approval in accordance with the requirements of the
Internal Revenue Code and the Delaware General Corporation Law of the
Company, on April 6, 1998, and shall be effective on said date, provided
the Plan is approved within twelve (12) months of said date. Options may be
granted, but may not be exercised, prior to the date of such shareholder
approval.
21. CORPORATION FINANCIAL INFORMATION. The Company shall provide all
optionees on an annual basis with a balance sheet and income statement for
the then ending fiscal year.
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DIDAX INC.
STOCK OPTION AGREEMENT
For value received, and subject to all the provisions hereof and to all of the
terms and conditions of the 1998 Stock Option Plan ("The Plan"), incorporated by
this reference herein, DIDAX INC., a Delaware corporation (the "Company"),
hereby grants to the Optionee named below (the "Optionee") a(n) Stock Option
("option") to purchase shares of its Common Stock, par value $.01 per share (the
"Common Stock"), at the option price set forth as follows:
Optionee
Number of shares of Common Stock
as to which the option is granted
Option Price per Share of Common Stock
Date of option grant
Expiration of option
Date of Exercise:
Number of shares of Common Stock and dates exercisable under the option as
determined by the Compensation Committee and approved by the Board of Directors
are as follows:
shares commencing .
shares commencing .
shares commencing .
shares commencing .
1. Relationship to Plan: This option is granted pursuant to the Company's 1998
Stock Option Plan effective April 6, 1998, and is in all respects subject to the
terms, conditions and definitions of the Plan (including, but not limited to,
provisions concerning exercise, restrictions on options, termination,
nontransferability and adjustment of the number of shares subject to this option
and the exercise price thereof). The Optionee hereby accepts this option subject
to all the terms and provisions of the Plan. The Optionee further agrees that
all decisions under and interpretations of the Plan by the Board of Directors
(the "Board") or the Compensation Committee (the "Committee") if so designated
by the Board of Directors, established under the Plan shall be final, binding
and conclusive upon the Optionee and his or her heirs.
2. Time of Exercise. This option may be exercised on or after the Date of
Exercise from time to time in full or in part and shall remain exercisable
(subject to the provisions of the Plan) until the earlier of (i) the date as of
which the Optionee has exercised the option as to all shares subject hereto, or
(ii) the expiration of 10 years following the Option Date.
3. Methods of Exercise. This option shall be exercisable, in whole or in part,
by a written notice to the Company that specifies the date of grant of the
option being exercised, and the number of shares to be purchased. The notice
shall be accompanied by payment of the full amount of the option price by either
(i) cash or check payable to the Company, or (ii) by the delivery to the Company
of shares of the Company's stock having a value equal to the exercise price and
having been owned by the optionee for a minimum of six months. Upon receipt of
such payment, the Company will thereafter deliver or cause to be delivered to
the Optionee (or if any other individual or individuals are exercising this
option, to such individual or individuals) at the office of the Company, a
certificate or certificates for the number of shares with respect to which this
option is being exercised, registered in the name or names of the individual or
individuals exercising the option; provided, however, that if any law or
regulation or order of the Securities and Exchange Commission or other body
having jurisdiction in the premises shall require the Company or Optionee (or
other individual or individuals exercising this option) to take any action in
connection with the shares being purchased, the delivery of the certificate or
certificates for such shares shall be delayed until such action has been taken.
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4. Purchase For Investment. This option is granted on the condition that the
purchase of shares of Common Stock hereunder shall be for the account of the
Optionee (or other individual or individuals exercising this option) for
investment purposes and not with a view to the resale or distribution thereof,
except that such condition shall be inoperative if the offering and sale of
shares subject to the option is registered under the Securities Act of 1933, as
amended, or if in the opinion of counsel for the Company such shares may be
resold without registration. At the time of any exercise of the option, the
Optionee (or other individual or individuals exercising this option) will
execute such further agreements as the Company may require to implement the
foregoing condition and to acknowledge the Optionee's (or such other
individual's) familiarity with restrictions on the resale of the shares under
applicable securities laws.
5. Nontransferability of Option. Except as provided in Section 9(g) of the Plan,
options shall not be transferable by the Optionee otherwise than by will or the
laws of descent or distribution, and options shall be exercisable during the
Optionee's lifetime only by him or her.
6. Termination. Except as provided in Section 9 (g) of the Plan, this option
shall terminate and may no longer be exercised if the Optionee ceases for any
reason to be an employee of the Company.
7. Governing Law and Interpretation. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. It shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives.
8. Miscellaneous. The Optionee shall have no rights as a stockholder with
respect to the shares subject to this option until the exercise of the option
and the issuance of a stock certificate for the shares with respect to which the
option shall have been exercised. Nothing herein contained shall impose any
obligation on the Company or the Optionee with respect to the Optionee's
employment by the Company. Nothing herein contained shall impose any obligation
upon the Optionee to exercise the option.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Optionee has accepted the
terms described herein and executes this Agreement in duplicate.
DIDAX INC.
By ___________________
Title ________________
OPTIONEE
______________________
Signature
______________________
Social Security Number
_____________________________________________________
Optionee Address
