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:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PACEL CORP.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies: __________________________
2) Aggregate number of securities to which transaction
applies: __________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): ____________________________
4) Proposed maximum aggregate value of transaction:
$_________________________________
5) Total fee paid: _____________________________________________
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PACEL CORP.
October 24, 2000
Dear Fellow Stockholder:
On behalf of the board of directors and management of Pacel Corp.
("Pacel"), we cordially invite you to attend the annual meeting of Pacel
stockholders. The meeting will be held at 2:00 p.m., local time, on November 28,
2000, at the Holiday Inn, 10800 Vandor Lane, Manassas, Virginia. The annual
meeting will include management's report to you on our fiscal year 1999
financial and operating performance.
The matters expected to be acted upon at the meeting are described in
the accompanying notice of annual meeting of stockholders and proxy statement.
An important aspect of the annual meeting process is the annual stockholder vote
on corporate business items. I urge you to exercise your rights as a stockholder
to vote and participate in this process.
Whether or not you plan to attend the annual meeting, please read the
enclosed proxy statement and then complete, sign and date the enclosed proxy and
return it in the accompanying postpaid return envelope as promptly as possible.
This will save Pacel additional solicitation expenses and will ensure that your
shares are represented at the annual meeting.
On behalf of your board of directors and management, I want to thank
you for your attention to this important matter and express my appreciation for
your confidence and support.
Very truly yours,
David E. Calkins
President and Chief Executive Officer
<PAGE>
PACEL CORP.
8870 Rixlew Lane
Suite 201
Manassas, Virginia 20109
(703) 257-4759
-----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 28, 2000
-----------------------------------------
Notice is hereby given that the annual meeting of stockholders of Pacel
will be held at the Holiday Inn, 10800 Vandor Lane, Manassas, Virginia, on
November 28, 2000, at 2:00 p.m., local time.
At the annual meeting, stockholders will be asked to consider and vote
on the following proposals:
Proposal I. Election of five directors, each for a term of one year;
Proposal II. The adoption of an amendment to Pacel's Articles
of Incorporation, as amended, to increase the number
of authorized shares of common stock from 40,000,000
shares, no par value, to 150,000,000 shares, no par
value;
Proposal III. Ratification of the adoption of Pacel's 1999 Stock Option
and Incentive Plan;
Proposal IV. Ratification of the appointment of Peter C. Cosmas Co.,
CPA, as independent accountants for Pacel for the year
ending December 31, 2000;
and any other business that may properly come before the annual meeting and any
adjournments thereof. As of the date of this proxy statement, we are not aware
of any other business to come before the annual meeting. Your board of directors
recommends that you vote "FOR" each of the proposals.
The board of directors has fixed the close of business on October 19,
2000, as the record date for the annual meeting. This means that stockholders of
record at the close of business on that date are entitled to receive notice of
and to vote at the annual meeting and any adjournments thereof.
This notice of annual meeting of stockholders, proxy statement and form
of proxy are first being mailed to stockholders on or about October 24, 2000. To
ensure that your shares are represented at the meeting, please take the time to
vote by signing, dating and mailing the enclosed proxy card which is solicited
on behalf of the board of directors. The proxy will not be used if you attend
and vote at the annual meeting in person. Regardless of the number of shares you
own, your vote is very important. Please act today.
Thank you for your continued interest and support.
By Order of the board of directors
F. Kay Calkins
Corporate Secretary
<PAGE>
Pacel Corp.
8870 Rixlew Lane
Suite 201
Manassas, Virginia 20109
(703) 257-4759
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
To be held on November 28, 2000
--------------------
INTRODUCTION
The board of directors of Pacel is using this proxy statement to
solicit proxies from the holders of common stock of Pacel for use at Pacel's
annual meeting of stockholders and any adjournments thereof. The notice of
annual meeting of stockholders, this proxy statement and the enclosed form of
proxy are first being mailed to our stockholders on or about October 24, 2000.
INFORMATION ABOUT THE ANNUAL MEETING
Time and Place of the Annual Meeting
Our annual meeting will be held as follows:
Date: November 28, 2000
Time: 2:00 p.m., local time
Place: Holiday Inn
10800 Vandor Lane
Manassas, Virginia 20109
Matters to Be Considered at the Annual Meeting
At the annual meeting, stockholders are being asked to consider and
vote on the following proposals:
Proposal I. Election of five directors, each for a term of one year;
Proposal II. The adoption of an amendment to Pacel's Articles
of Incorporation, as amended, to increase the
number of authorized shares of common stock from
40,000,000 shares, no par value, to 150,000,000
shares, no par value;
Proposal III. Ratification of the adoption of Pacel's 1999 Stock
Option and Incentive Plan;
Proposal IV. Ratification of the appointment of Peter C. Cosmas Co.,
CPA, as independent accountants for Pacel for the year
ending December 31, 2000;
1
<PAGE>
and any other business that may properly come before the annual meeting and any
adjournments thereof. As of the date of this proxy statement, we are not aware
of any other business to be presented for consideration at the annual meeting
other than the matters described in this proxy statement.
Who is Entitled to Vote?
The board of directors has fixed the close of business on October 19,
2000, as the record date for the annual meeting. Only stockholders of record of
Pacel are entitled to receive notice of and to vote at the annual meeting and
any adjournments thereof. Each stockholder of record on October 19, 2000, will
be entitled to one vote for each share of Pacel common stock held. On October
19, 2000, [31,094,981] shares of Pacel common stock were issued and outstanding
and entitled to vote at the annual meeting.
What If My Shares Are Held in "Street Name" by a Broker?
If you are the beneficial owner of shares held in "street name" by a
broker, your broker, as the record holder of the shares, is required to vote the
shares in accordance with your instructions. If you do not give instructions to
your broker, your broker may nevertheless vote the shares with respect to
"discretionary" items, but will not be permitted to vote your shares with
respect to "non-discretionary" items, pursuant to current industry practice. In
the case of non-discretionary items, the shares will be treated as "broker
non-votes." Pacel believes that Proposal II - the adoption of an amendment to
our Articles of Incorporation - and Proposal III - ratification of the stock
option plan - may be treated as non-discretionary items.
How Many Shares Must Be Present to Hold the Meeting?
A quorum must be present at the meeting for any business to be
conducted. The presence at the meeting, in person or by proxy, of the holders of
a majority of the shares of Pacel common stock outstanding on the record date
will constitute a quorum. Proxies received but marked as abstentions or broker
non-votes will be included in the calculation of the number of shares considered
to be present at the meeting.
What If a Quorum Is Not Present at the Meeting?
If a quorum is not present at the scheduled time of the meeting, a
majority of the stockholders present or represented by proxy may adjourn the
meeting until a quorum is present. The time and place of the adjourned meeting
will be announced at the time the adjournment is taken, and no other notice will
be given. An adjournment will have no effect on the business that may be
conducted at the meeting.
Vote Required to Approve Proposal I: Election of Five Directors
Five directors are to be elected to serve for a one-year term expiring
at the annual meeting of stockholders held in 2001, or until their successors
are duly elected in accordance with the Articles of Incorporation.
Directors are elected by a plurality of the votes cast, in person or by
proxy, at the annual meeting by holders of Pacel common stock. This means that
the five director nominees with the most affirmative votes will be elected to
fill the available seats. Shares that are represented by proxy which are not
voted whether by broker non-vote or votes withheld will have no effect on the
election of directors.
2
<PAGE>
If a director nominee is unable to stand for election, the board of
directors may either reduce the number of directors to be elected or select a
substitute nominee. If a substitute nominee is selected, the proxy holders will
vote your shares for the substitute nominee, unless you have withheld authority.
The Pacel board of directors unanimously recommends that you vote "FOR" election
of each of the
director nominees.
Vote Required to Approve Proposal II: The Adoption of An Amendment to Our
Articles of Incorporation
Adoption of an amendment to Pacel's Articles of Incorporation to increase
the number of authorized shares of common stock requires the affirmative vote of
more than two-thirds of the shares outstanding and entitled to vote as of the
record date. Stockholder abstentions and broker non-votes on the proposal to
adopt an amendment to our Articles of Incorporation will have the same effect as
a vote against the proposal. The Pacel board of directors unanimously recommends
that you vote "FOR" the proposal to amend our Articles of Incorporation.
Vote Required to Approve Proposal III: The Ratification of the Adoption of
Pacel's 1999 Stock Option and Incentive Plan
The ratification of the adoption of Pacel's 1999 Stock Option and
Incentive Plan requires the affirmative vote of the majority of shares cast, in
person or by proxy, at the annual meeting by holders of Pacel common stock.
Stockholder abstentions on the proposal to approve and adopt the stock option
plan will have the same effect as a vote against the proposal, while broker
non-votes will have no effect on the outcome of the vote. The Pacel board of
directors unanimously recommends that you vote "FOR" the proposal to ratify the
adoption of the 1999 Stock Option and Incentive Plan.
Vote Required to Approve Proposal IV:Ratification of Our Independent Accountants
Ratification of the appointment of Peter C. Cosmas Co., CPA as our
independent accountants for the fiscal year ending December 31, 2001 requires
the affirmative vote of the majority of shares cast, in person or by proxy, at
the annual meeting by holders of Pacel common stock. Stockholder abstentions on
the proposal to ratify the appointment of Peter C. Cosmas Co., CPA as our
independent accountants will have the same effect as a vote against the
proposal, while broker non-votes will have no effect on the outcome of the vote.
The Pacel board of directors unanimously recommends that you vote "FOR" the
proposal to ratify Peter C. Cosmas Co., CPA as our independent accountants for
the fiscal year ending December 31, 2000.
How to Vote at the Annual Meeting
You may vote in person at the annual meeting or by proxy. To ensure
your representation at the annual meeting, we recommend you vote by proxy even
if you plan to attend the annual meeting. You can always change your vote at the
meeting. See "How to Revoke Your Proxy" below.
Directors are elected by a plurality of the votes cast, in person or by
proxy, at the annual meeting by holders of Pacel common stock. This means that
the five director nominees with the most affirmative votes will be elected to
fill the available seats. Shares that are represented by proxy which are not
voted whether by broker non-vote or votes withheld will have no effect on the
election of directors.
The persons named in the proxy will have the discretion to vote on any
other business properly presented for consideration at the annual meeting in
accordance with their best judgment. As of the date
3
<PAGE>
of the proxy statement, we are not aware of any other matters to be presented at
the annual meeting other than those described in this proxy statement and the
notice of annual meeting of stockholders accompanying the proxy statement.
You may receive more than one proxy card depending on how your shares
are held. For example, you may hold some of your shares individually, some
jointly with your spouse and some in trust for your children -- in which case
you will receive three separate proxy cards to vote. Please sign and return all
proxy cards you receive.
How to Revoke Your Proxy
You may revoke your proxy before it is voted by:
o submitting a new proxy with a later date,
o notifying the Corporate Secretary of Pacel in writing before the
annual meeting that you have revoked your proxy, or
o voting in person at the annual meeting.
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the annual meeting. However, if your shares are held
in the name of your broker, bank or other nominee, you must bring a letter from
the nominee indicating that you were the beneficial owner of Pacel common stock
on October19, 2000, the record date for voting at the annual meeting.
Proxy Solicitation Costs
Pacel will pay the costs of soliciting proxies. Pacel has retained
____________ to assist in the distribution of proxy materials and solicitation
of votes for a fee of $_____, plus reimbursement of reasonable out-of-pocket
expenses. In addition to this solicitation by mail, our directors, officers and
employees may also solicit proxies personally, electronically or by telephone
but will not be specially compensated for such solicitation activities. We will
also reimburse brokers and other custodians, fiduciaries and nominees for their
reasonable expenses in sending these materials to you.
STOCK OWNERSHIP OF PACEL COMMON STOCK
Stock Ownership of Directors and Executive Officers
The following table presents information regarding the beneficial
ownership of Pacel common stock as of October 19, 2000 by:
o each director of Pacel;
o the Chief Executive Officer of Pacel; and
o all of the executive officers and directors of Pacel as a group.
No other person or entities (or group of affiliated persons or entities) are
known by management to beneficially own more than five percent of the
outstanding common stock of Pacel.
4
<PAGE>
The persons named in this table have sole voting power for all shares
of common stock shown as beneficially owned by them, subject to community
property laws where applicable and except as indicated in the footnotes to this
table. Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to
outstanding options held by that person that are currently exercisable, or
exercisable within 60 days after October 19, 2000, are deemed outstanding. These
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. As of October 19, 2000 there were
[31,094,981] shares of Pacel common stock outstanding.
<TABLE>
<CAPTION>
Amount and Nature of
Common Stock
Beneficially Owned
---------------------------------
Number of
Shares Percent
Beneficially of
Name of Beneficial Owner Owned(1) Class
------------------------------------------------------- ---------------- -------------
<S> <C> <C>
Directors:
David E. Calkins(2) 4,024,031
F. Kay Calkins(2) 4,024,031
Keith P. Hicks(3) 320,091
Corey M. LaCross 28,983
Christine Schoen ______
All officers and directors as a group (7 persons)
----------------------------------
</TABLE>
(1) Except as otherwise noted in these footnotes, the nature of beneficial
ownership for shares reported in this table is sole voting and investment
power. Included in the shares beneficially owned are options to purchase
1,290,000 shares of Pacel common stock granted to directors and executive
officers.
(2) David E. Calkins and F. Kay Calkins are husband and wife. In the aggregate
they beneficially own 8,048,062 shares of Pacel common stock. Included in
their individual amounts is the right of each of Mr. and Ms. Calkins to
acquire 500,000 shares of common stock upon conversion of their 500,000
shares of 1997 Class A preferred stock and the right to acquire 2,024,031
shares upon exercise of outstanding stock options.
(3) Includes 4,375 shares held solely by Mr. Hick's spouse.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Pacel
directors and executive officers, and persons who own more than 10% of Pacel's
common stock to report their initial ownership of Pacel's common stock and any
subsequent changes in that ownership to the SEC. Specific due dates for these
reports have been established by the SEC and Pacel is required to disclose in
this proxy statement any late filings or failures to file.
Pacel believes, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required
during the fiscal year ended December 31, 2000, all Section 16(a) filing
requirements applicable to our executive officers, directors and greater than
10% beneficial owners were complied with.
5
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
Our board of directors is presently composed of five members. Directors
of the Company are generally elected to serve for a one year term or until their
respective successors shall have been elected and shall qualify.
The table below sets forth information regarding our board of
directors, including their age, position with Pacel and term of office. Each
director nominee has consented to being named in this proxy statement and has
agreed to serve if elected. If a nominee is unable to stand for election, the
board of directors may either reduce the number of directors to be elected or
select a substitute nominee. If a substitute nominee is selected, the proxy
holders will vote your shares for the substitute nominee, unless you have
withheld authority. At this time, we are not aware of any reason why a nominee
might be unable to serve if elected.
Except as disclosed in this proxy statement, there are no arrangements
or understandings between any nominee and any other person pursuant to which
such nominee was selected. The board of Directors recommends you vote "FOR" each
of the director nominees.
<TABLE>
<CAPTION>
Age as
of the Elected Term
Name Record Date Position(s) Held Director Expires
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nominees
David E. Calkins 54 Chief Executive Officer 1994 2001
F. Kay Calkins 39 Vice President and COO 1998 2001
Keith P. Hicks 75 Director 1998 2001
Corey Michael LaCross 35 Director nominee --- 2001
Christine Schoen __ Director nominee --- 2001
----------------------
</TABLE>
Set forth below is the principal occupation of each of the nominees for
director of Pacel All nominees have held their present positions for at least
five years unless otherwise indicated.
David E. Calkins. David E. Calkins founded Pacel in 1994 and is its
Chairman, President and Chief Executive Officer. From 1992 until founding Pacel,
Mr. Calkins was the Regional Manager of three divisions of Pacific Nuclear (now
known as Vectra Technologies, Inc.), an engineering and information services
company and a Nasdaq Stock Market listed company. Vectra Technologies provides
power plant modifications, maintenance support and nuclear fuel handling to
utility companies and the United States Department of Energy (DOE). From 1987 to
1993, Mr. Calkins served as Project Manager, Program Director, Vice
President-Operations, and Executive Vice President Business Development for PRC
Inc., an information systems development and services company. PRC provides
support services to the Federal government and the utility industry.
F. Kay Calkins. F. Kay Calkins is currently a Director of Pacel and was
Chief Operating Officer, Treasurer and Secretary until September 1, 1999,
positions she held since 1996. Ms. Calkins is also a Director and the President
and Chief Executive Officer of Pacel's 80 percent-owned subsidiary, E-
Business-Stor.Com. Prior to joining Pacel, Ms. Calkins was the President and
Chief Executive Officer of CMC Services, Inc., a consulting company offering
technical support to industry and 8(a) firms from 1993 to 1996.
Keith P. Hicks. Keith P. Hicks is a retired Captain of the U.S. Army with
over 20 active years of service. Mr. Hicks served as an Ordinance Advisor to the
British and French Free Army during World War II. He was a Squadron Commander in
Korea in 1955 and 1956, and served in the Executive Office to the Inspector
General and the Office of Special Investigations in 1960 and 1961. Upon retiring
from the military in 1961, Mr. Hicks started a private investigation business in
the Commonwealth of Virginia, which became one of the top investigative firms in
the state with over 60 agents. Mr. Hicks also served as the Chief Deputy Sheriff
of Fairfax County from 1962 to 1969. Mr. Hicks has owned and managed Hicks
Cattle Company since 1962, running over 200 head of beef cattle. In 1972 he
formed and continues to manage Hicks Bonding Company and has been the
owner/operator of Hick's Auctioning Company since 1991. Mr. Hicks is also a
25-year co-owner in a successful real estate company, C&H Properties
Investments. He has been on the board of directors of Xybernaut, Inc. a high
technology computer manufacturer of body worn, voice activated computers since
July 1994. He is a graduate of the University of Denver (BA 1954) and LaSalle
University School of Law (LL.B. 1969).
Corey M. LaCross. Corey LaCross is currently an Industrial Engineer Manager
for United Parcel Service. Mr. LaCross joined UPS in 1984 where he has held
various operation assignments. His most recent assignment has been as the
Southeast Region Industrial Engineer Planning Manager. In this position he is in
charge of managing the corporate and region cost initiatives for all production
elements. This job also involves planning, technology training, vehicle
management, and logistics. In 1987, Mr. LaCross received his B.S. degree in
Business from Francis Marion University. In 1996 he received an A.T. degree from
ICS College in Industrial Engineering Technology. In 1998 he began working on
his M.B.A. at Charleston Southern University. He is also an active member on the
Institute of Industrial Engineers and was recently nominated to the Lexington
Who's Who of executive employees. Mr. LaCross is the grandson of Keith Hicks, a
director of Pacel.
MEETINGS AND COMMITTEES
Meetings
Meetings of the board of directors of Pacel are generally held every
two months. Meetings of the board of directors of E-Business-Stor.Com, of which
Pacel owns 80%, are generally held monthly. The Pacel board of directors
conducted 5 regular meetings and no special meetings during 1999. Each director
attended at least 75% of Pacel's board meetings and any committees on which he
or she served.
Committees
The board of directors of Pacel has two standing committees: the audit
committee and the compensation committee.
The audit committee reviews, acts on and reports to the board of
directors with respect to various auditing and accounting matters. These matters
include the selection of Pacel's auditors, the scope of the annual audits, fees
to be paid to the auditors, the performance of Pacel's independent auditors and
Pacel's accounting practices. The audit committee consisted of Mr. Hicks and Mr.
Willett during 1999.
6
<PAGE>
The compensation committee determines the salaries and incentive
compensation of Pacel's officers and provides recommendations for the salaries
and inventive compensation of other employees and consultants. The compensation
committee also administers Pacel's various incentive compensation, stock and
benefit plans. The compensation committee consisted of Messrs. Hicks and
Southerly and Dr. Willett during 1999.
DIRECTOR COMPENSATION
Pacel does not currently separately compensate its directors who are
employees of Pacel. Non- employee directors of Pacel were entitled to receive an
annual retainer of $5,400 for service on Pacel's board of directors during 1999,
payable quarterly in arrears. To date, our non-employee directors have not been
paid for their board service. We anticipate issuing restricted shares of Pacel
common stock equal to, and in lieu of, the amount of fees they are currently
owed.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth summary information concerning
compensation awarded to, earned by or paid to our chief executive officer for
the year ended December 31, 1999. Mr. Calkins received perquisites and other
personal benefits in addition to salary and bonus during the periods stated. The
aggregate amount of these perquisites and other personal benefits, however, did
not exceed the lesser of $50,000 or 10% of the total of his annual salary and
bonus and, therefore, has been omitted as permitted by the rules of the SEC.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Awards
------------------
Securities
Underlying All Other
Fiscal Salary Bonus Options Compensation
Name and Principal Position Year ($) ($) (#) ($)
----------------------------- ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
DAVID E. CALKINS 1999 $94,250 $ --- 625,000 $ ---
Chief Executive Officer
1998 84,000 --- --- ---
1997 73,333 --- --- $ ---
</TABLE>
7
<PAGE>
Option Grants in Fiscal Year 1999
The following table shows information with respect to the grant of
options to Mr. Calkins for the year ended December 31, 1999. The options were
granted under Pacel's existing Stock Option Plan.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options Granted to
Underlying Employees Exercise Price Expiration
Name Options Granted (#) in Fiscal Year ($/Share) Date
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David E. Calkins 625,000(1) 42% $.16 September 30, 2009
----------------------
(1) Granted at the fair market value on the date of grant, vested immediately and expire 10 years from
the date of grant.
</TABLE>
1999 Fiscal Year-End Option Values
The following table summarizes certain information relating to stock
options held by Mr. Calkins during 1999 and the value of such options at
December 31, 1999. Value realized upon exercise is the difference between the
fair market value of the underlying stock on the exercise date and the exercise
price of the option. The value of an unexercised, in-the-money option at fiscal
year-end is the difference between its exercise price and the fair market value
of the underlying stock on December 31, 1999, which was $0.09 per share, based
on the closing price of Pacel common stock as reported on the Over-the- Counter
Electronic Bulletin Board. These values have not been, and may never be,
realized. These options have not been, and may never be, exercised. Actual
gains, if any, on exercise will depend on the value of Pacel common stock on the
date of exercise. Unexercisable options are those which have not yet vested.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
David E. Calkins 625,000 --- $0.00 ---
</TABLE>
Employment Agreement
David Calkins, Pacel's Chairman, President and Chief Executive Officer
has an employment agreement with Pacel. The employment agreement is for an
initial term of two years, which commenced on August 1, 1999, with the right of
the parties to extend the agreement for two one-year periods by mutual consent
of the parties. Under his employment agreement, Mr. Calkin is entitled to
receive an annual base salary of $125,000 per year and annual increases at least
equal to the increase in the cost of living index. In addition, following the
termination of his employment, the agreement provides for
8
<PAGE>
continuation of medical insurance benefits for a period of ten years and the
assignment of key man life insurance, if any. The agreement also contains
various provisions for the protection of Pacel, including non-solicitation and
non-competition provisions, and provides for the grant of options for 625,000
shares of stock with an exercise price of $.16 per share (in lieu of previous
compensation owed to Mr. Calkins but not paid).
PROPOSAL II - APPROVAL OF AMENDMENT TO PACEL'S ARTICLES OF
INCORPORATION
The board of directors of Pacel has approved and recommends to the
stockholders an amendment to the Articles of Incorporation which would increase
the number of shares of the common stock authorized for issuance from 40 million
to 150 million shares. As of October 19, 2000 [31,094,981] shares of common
stock were issued and outstanding and 4,298,062 shares were reserved for options
of Pacel common stock.
The principal purpose for the proposed amendment is to give Pacel
greater flexibility in its financial affairs by making these additional shares
of common stock available for issuance by Pacel in such transactions and at such
times as the board of directors considers appropriate, whether in public or
private offerings, as stock splits or dividends or in connection with mergers
and acquisitions or otherwise. The stockholders of Pacel may or may not be given
the opportunity to vote on such a transaction, depending on the nature of the
transaction, applicable law, and the judgment of the Pacel's board of directors
regarding the submission of such transaction to a vote of the stockholders.
Pacel has no present plans, understandings or agreements for the issuance or use
of the proposed additional shares of common stock. Because stockholders do not
have preemptive rights under Pacel's Articles of Incorporation, the interests of
existing stockholders may (depending on the particular circumstances in which
additional capital stock is issued) be diluted by any such issuance.
It is possible that additional shares of Pacel's common stock could be
issued for the purpose of making an acquisition by an unwanted suitor of a
controlling interest in Pacel more difficult, time-consuming or costly or to
otherwise discourage an attempt to acquire control of Pacel. Under such
circumstances, the availability of authorized and unissued shares may make it
more difficult for stockholders to obtain a premium for their shares. Such
authorized and unissued shares could be used to create voting or other
impediments or to frustrate a person or other entity seeking to obtain control
of Pacel by means of a merger, tender offer, proxy contest or other means. For
instance, such shares could be privately placed with purchasers who might
cooperate with the Pacel board of directors in opposing an attempt by a third
party to gain control of Pacel by voting such shares against the transaction
with the third party or could be used to dilute the stock ownership or voting
rights of a person or entity seeking to obtain control of Pacel. Although the
Company's board of directors does not currently anticipate issuing additional
shares of common stock for purposes of preventing a takeover of the Company, the
Company's board of directors reserves its right (consistent with its fiduciary
responsibilities) to issue shares for such purpose.
Adoption of the proposed amendment requires the affirmative vote of
two-thirds of the total shares outstanding and entitled to vote at the Annual
Meeting. As soon as practicable after such affirmative vote has been taken and
certified, the amendment will be filed with the Virginia State Corporation
Commission and will thereupon become effective. Pacel currently has no plans for
a public offering of its common stock, but has indicated the possible need to
raise additional capital in the near
9
<PAGE>
future and will make application to list the additional shares at such time
and in such manner as may be required by the Over-the-Counter Electronic
Bulletin Board. If stockholders do not approve this amendment, Pacel will be
limited in its ability to raise additional capital in the future, which could
have an adverse effect on the future results of the company. The board of
directors recommends that stockholders vote "FOR" approval of the amendment to
Pacel's Articles of Incorporation.
PROPOSAL III - RATIFICATION OF THE 1999 STOCK OPTION AND INCENTIVE PLAN
We are asking for your approval of Pacel's 1999 Stock Option and
Incentive Plan. Pacel's board of directors has adopted the stock option plan and
directed that it be submitted to you for approval at the 2000 Annual Meeting.
Reasons for the Proposal
The purpose of the 1999 stock option plan is to promote the long-term success of
Pacel and increase shareholder value by:
o attracting and retaining key employees and directors;
o encouraging directors and key employees to focus on long-
range objectives; and
o further linking the interests of directors, officers and
employees directly to the interests of the shareholders.
In furtherance of these objectives, Pacel's board of directors has adopted the
stock option plan to be effective upon ratification by the shareholders at the
annual meeting. A summary of the stock option plan is set forth below. This
summary is, however, qualified by and subject to the more complete information
set forth in the stock option plan, a copy of which is attached to this document
as Appendix A.
Administration of the Stock Option Plan
The stock option plan will be administered by a committee of two or more
members, each of whom must be a "non-employee director" and an "outside
director," as those terms are defined in the stock option plan. The stock
benefit plan committee will:
o select persons to receive options or stock appreciation
rights from among the eligible participants;
o determine the types of awards and the number of shares to be
awarded to participants;
o set the terms, conditions and provisions of the options or
stock appreciation rights consistent with the terms of the
stock option plan; and
o establish rules for the administration of the stock option
plan.
The committee has the power to interpret the stock option plan and to make all
other determinations necessary or advisable for its administration.
10
<PAGE>
In granting awards under the stock option plan, the committee will consider,
among other factors, the position and years of service of the individual, the
value of the individual's services to Pacel and its subsidiaries and the added
responsibilities of these individuals as employees, directors and officers of a
public company.
Number of Shares That May Be Awarded
Under the stock option plan, the committee may grant awards for an
aggregate of 5,000,000 shares of Pacel common stock. This amount represents 15
percent of the shares outstanding as of October 19, 2000. The 5,000,000 shares
of Pacel common stock available under the stock option plan are subject to
adjustment in the event of certain corporate reorganizations. The stock option
plan also provides that no person may be granted options for more than 250,000
shares during any year.
The stock option plan provides for the use of authorized but unissued shares or
treasury shares. Treasury shares are previously issued and outstanding shares of
Pacel common stock which are no longer outstanding as a result of having been
repurchased or otherwise reacquired by the company. Pacel intends to fund the
exercise of stock options with treasury shares to the extent available. To the
extent Pacel uses authorized but unissued shares, rather than treasury shares,
to fund exercise of stock options under the plan, the exercise of stock options
will have the effect of diluting the holdings of persons who own our common
stock. Assuming all options under the stock option plan are awarded and
exercised through the use of authorized but unissued common stock, current
shareholders would be diluted by approximately __ percent.
Eligibility to Receive Awards
The committee may grant options to directors, advisory directors, officers and
employees of Pacel and its subsidiaries. The committee will select persons to
receive options among the eligible participants and determine the number of
shares underlying the options to be granted.
Exercise Price of Awards
Under the terms of the stock option plan, the committee may grant options to
purchase shares of Pacel common stock at a price which may not be less than the
fair market value of the common stock, as determined by the mean between the
closing bid and asked quotations on the Nasdaq Stock Market on the date the
option is granted.
Exercisability of Awards and Other Terms and Conditions
Stock Options. Generally, options under the stock option plan may not be
exercised later than 15 years after the grant date. Subject to the limitations
imposed by the provisions of the Internal Revenue Code, certain of the options
granted under the stock option plan may be designated "incentive stock options."
Incentive stock options may not be exercised later than ten years after the
grant date. Options which are not designated and do not otherwise qualify as
incentive stock options in this document are referred to as "non-qualified stock
options."
The committee will determine the time or times at which a stock option may be
exercised in whole or in part and the method or methods by which, and the form
or forms in which, payment of the exercise price with respect to the stock
option may be made. Unless otherwise determined by the committee and set forth
in the written award agreement evidencing the grant of the stock option, upon
termination of
11
<PAGE>
service of the participant for any reason other than for cause, all stock
options then currently exercisable by the participant shall remain exercisable
for the lesser of (i) three years following such termination of service or (ii)
until the expiration of the stock option by its terms. Upon termination of
service for cause, all stock options not previously exercised shall immediately
be forfeited.
Acceleration of Vesting Requirements. The committee has the right to determine
the terms and conditions upon which an award shall be granted. Accordingly, the
committee may provide in the applicable award agreement, among other provisions
not inconsistent with the stock option plan, that upon the occurrence of certain
events, like the involuntary termination of an employee, a holder of any
unexpired option under the stock option plan will have the right to exercise the
option in whole or in part without regard to the date the option would be first
exercisable. In addition, the stock option plan provides that, unless otherwise
provided in the applicable award agreement, upon the occurrence of a change in
control of Pacel a holder of any unexpired option under the stock option plan
will have the right to exercise the option in whole or in part without regard to
the date the option would be first exercisable.
Transferability of Awards
An incentive stock option awarded under the stock option plan may be transferred
only upon the death of the holder to whom it has been granted, by will or the
laws of inheritance. An award other than an incentive stock option may be
transferred during the lifetime of the holder to whom it was awarded pursuant to
a qualified domestic relations order or by gift to any member of the holder's
immediate family or to a trust for the benefit of any member of the holder's
immediate family.
Effect of Merger on Option or Right
Upon a merger or other business combination of Pacel in which it is not the
surviving entity, the stock option plan provides that each holder of an
unexpired award will have the right, after consummation of the transaction and
during the remaining term of the award, to receive upon exercise of the award an
amount equal to the excess of the fair market value on the date of exercise of
the securities or other consideration receivable in the merger in respect of a
share of common stock over the exercise price of the award, multiplied by the
number of shares of common stock with respect to which the award is exercised.
This amount may be payable fully in cash, fully in one or more of the kind or
kinds of property payable in the merger, consolidation or combination, or partly
in cash and partly in one or more of the kind or kinds of property, all in the
discretion of the committee.
Amendment and Termination
The stock option plan shall continue in effect for a term of 15 years, after
which no further awards may be granted under the stock option plan. The board of
directors may at any time amend, suspend or terminate the stock option plan or
any portion of the stock option plan, except to the extent shareholder approval
is necessary or required for purposes of any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which our common stock may then be listed or quoted. Shareholder approval will
generally be required with respect to an amendment to the stock option plan that
will (i) increase the aggregate number of securities which may be issued under
the plan, except as specifically set forth under the stock option plan, (ii)
materially increase the benefits accruing to participants under the stock option
plan, (iii) materially change the requirements as to eligibility for
participation in the stock option plan, or (iv) change the class of persons
eligible to participate in the stock option plan. No amendment, suspension or
termination of the stock option plan,
12
<PAGE>
however, will impair the rights of any participant, without his or her consent,
in any award made under the stock option plan.
Federal Income Tax Consequences
Under current federal tax law, the non-qualified stock options granted under the
stock option plan will not result in any taxable income to the optionee or any
tax deduction to Pacel at the time of grant. Upon the exercise of a
non-qualified stock option, the excess of the market value of the shares
acquired over their cost is taxable to the optionee as compensation income and
is generally deductible by Pacel. The optionee's tax basis for the shares is the
market value of the shares at the time of exercise.
Neither the grant nor the exercise of an incentive stock option under the stock
option plan will result in any federal tax consequences to either the optionee
or Pacel. Except as described below, at the time the optionee sells shares
acquired pursuant to the exercise of an incentive stock option, the excess of
the sale price over the exercise price will qualify as a long-term capital gain.
If the optionee disposes of the shares within two years of the date of grant or
within one year of the date of exercise, an amount equal to the lesser of (i)
the difference between the fair market value of the shares on the date of
exercise and the exercise price, or (ii) the difference between the exercise
price and the sale price will be taxed as ordinary income and Pacel will be
entitled to a deduction in the same amount. The excess, if any, of the sale
price over the sum of the exercise price and the amount taxed as ordinary income
will qualify as long-term capital gain if the applicable holding period is
satisfied. If the optionee exercises an incentive stock option more than three
months after his or her termination of employment, he or she generally is deemed
to have exercised a non-qualified stock option. The time frame in which to
exercise an incentive stock option is extended in the event of the death or
disability of the optionee.
Vote Required for Approval
The affirmative vote of a majority of the shares present at the meeting in
person or by proxy and entitled to vote is required to approve the stock option
plan. The Pacel board of directors recommends that you vote "FOR" ratification
of the 1999 Stock Option and Incentive Plan.
PROPOSAL IV - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
ACCOUNTANTS
The Pacel board of directors has renewed arrangements for Peter C.
Cosmas, CPA, to be its independent accountants for the year ending December 31,
2000, subject to ratification of the appointment by stockholders. A
representative of Peter C. Cosmas, CPA is expected to attend the meeting to
respond to appropriate questions and will have an opportunity to make a
statement if he or she so desires. The board of directors recommends that
stockholders vote "FOR" the ratification of the appointment of Peter C. Cosmas,
CPA, as Pacel's independent accountants for the year ending December 31, 2000.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in next year's proxy materials
for the annual meeting of stockholders, any stockholder proposal to take action
at such meeting must be received at our main office located at 8870 Rixlew Lane,
Suite 201, Manassas, Virginia 20109, on or before December 22, 2000. To be
considered for presentation at next year's annual meeting, although not included
in the proxy statement, any stockholder proposal must be received at our main
office not less than 45 days prior to the
13
<PAGE>
annual meeting; provided, however, if less than 30 days notice of the date of
next year's annual meeting is given to stockholders, the stockholder proposal
must be received on or before the close of business on the 10th day following
the day on which the notice of the date of the annual meeting was mailed.
All stockholder proposals for inclusion in Pacel's proxy materials may
be subject to the requirements of the proxy rules adopted under the Securities
Exchange Act 1934 and, as with any stockholder proposal, regardless of whether
it is included in our proxy materials, Pacel's articles of incorporation and
bylaws and Virginia law.
ANNUAL REPORTS
Stockholders of record on October 19, 2000 should have received a copy
of our 1999 annual report to stockholders with this proxy statement. If, upon
receipt of this proxy material, you have not received the annual report to
stockholders, please write to the Corporate Secretary at the address below and a
copy will be sent to you. Although the annual report is being mailed to
stockholders with this proxy statement, it does not constitute a part of the
proxy solicitation materials and is not incorporated herein by reference.
IN ADDITION, A COPY OF PACEL'S ANNUAL REPORT FILED PURSUANT TO RULE
15d-2 WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 2000 IS AVAILABLE
TO EACH RECORD AND BENEFICIAL OWNER OF PACEL'S COMMON STOCK WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE CORPORATE SECRETARY, PACEL, 8870 RIXLEW LANE, SUITE 201,
MANASSAS, VIRGINIA 20109.
OTHER MATTERS
We are not aware of any business to come before the annual meeting
other than the matters described above in this proxy statement. However, if any
other matters should properly come before the meeting, it is intended that
holders of the proxies will act in accordance with their best judgment.
14
<PAGE>
REVOCABLE PROXY REVOCABLE PROXY
PACEL CORP.
ANNUAL MEETING OF STOCKHOLDERS
November 28, 2000
The undersigned hereby appoints the Board of Directors of Pacel Corp. (the
"Company"), with full powers of substitution, to act as attorneys and proxies
for the undersigned to vote all shares of capital stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on November 28, 2000, at 2:00 p.m., local time, at the Holiday Inn, 10800 Vandor
Lane, Manassas, Virginia 20109, and at any and all adjournments thereof, as
follows:
I. The election as directors of all nominees listed below (except as marked
to the contrary)
o FOR o VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE IN
THAT NOMINEE'S NAME BELOW.
DAVID E. CALKINS F. KAY CALKINS KEITH P. HICKS
COREY M. LaCROSS CHRISTINE SCHOEN
II. The approval of an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of common stock from 40,000,000
to 150,000,000.
o FOR o AGAINST o ABSTAIN
III. The ratification of the adoption of the 1999 Stock Option and Incentive
Plan.
o FOR o AGAINST o ABSTAIN
IV. The ratification of the appointment of Peter C. Cosmas, CPA's as
independent public accountants for the Company for the fiscal year ending
December 31, 2000.
o FOR o AGAINST o ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
--------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS AND THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS
AND THE ELECTION OF THE NOMINEES LISTED ABOVE.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a proxy statement and an
annual report to stockholders.
Dated: _______________________ _______________________Signature of Stockholder
_______________________Signature of Stockholder
Please sign exactly as your name(s) appear(s) below. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
--------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
--------------------------------------------------------------------------------
<PAGE>
Appendix A
PACEL CORP.
1999 Stock Option and Incentive Plan
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee of an Incentive Stock Option,
a Non-Qualified Stock Option, a Right, or any combination thereof, as provided
in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an Award
made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Cause" -- means Termination of Service by reason of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or gross negligence.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means Pacel Corp., a Virginia chartered corporation, and
any successor thereto.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee which is intended to qualify as an incentive stock option under
Section 422(b) of the Code. Unless otherwise set forth in the Award Agreement,
any Option which does not qualify as an Incentive Stock Option for any reason
shall be deemed ab initio to be a Non-Qualified Stock Option.
"Market Value" -- means the average of the high and low quoted sales
price on the date in question (or, if there is no reported sale on such date, on
the last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if on such date
the Shares are not quoted on the Composite Tape, on the New York Stock Exchange,
or if the Shares are not listed or admitted to trading on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 (the "Exchange Act") on which the Shares are listed or
admitted to trading, or, if the Shares are not listed or admitted to trading on
any such exchange, the mean between the closing high bid and
1
<PAGE>
low asked quotations with respect to a Share on such date on the Nasdaq Stock
Market, or any similar system then in use, or, if no such quotations are
available, the fair market value on such date of a Share as the Committee shall
determine.
"Non-Qualified Stock Option" -- means an option to purchase Shares
granted by the Committee which does not qualify, for any reason, as an Incentive
Stock Option.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any director, advisory director or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this Pacel Corp. 1999 Stock Option and Incentive Plan.
"Related" -- means (i) in the case of a Right, a Right which is granted
in connection with, and to the extent exercisable, in whole or in part, in lieu
of, an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof.
"Right" -- means a stock appreciation right with respect to Shares
granted by the Committee pursuant to the Plan.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not either
(i) an employee of the Corporation or any Affiliate for purposes of an Incentive
Stock Option, or (ii) a director, advisory director or employee of the
Corporation and any Affiliate for purposes of any other Award.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board, each of whom (i) shall be an
"outside director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) shall be a "non-employee director," as defined
under Rule 16(b) of the Securities Exchange Act of 1934 or any similar or
successor provision. The members of the Committee shall be appointed by the
Board. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board, the Committee shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of Award Agreements; (v) establish from time to time regulations
for the administration of the Plan; and (vi) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan.
2
<PAGE>
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
4. Shares Subject to Plan.
(a) Subject to adjustment by the operation of Section 6, the
maximum number of Shares with respect to which Awards may be made under the Plan
is 5,000,000, plus (i) the number of Shares repurchased by the
Corporation in the open market or otherwise with an aggregate price no greater
than the cash proceeds received by the Corporation from the exercise of Options
granted under the Plan; plus (ii) any Shares surrendered to the Corporation in
payment of the exercise price of Options granted under the Plan. The Shares with
respect to which Awards may be made under the Plan may be either authorized and
unissued Shares or previously issued Shares reacquired and held as treasury
Shares. Shares which are subject to Related Rights and Related Options shall be
counted only once in determining whether the maximum number of Shares with
respect to which Awards may be granted under the Plan has been exceeded. An
Award shall not be considered to have been made under the Plan with respect to
any Option or Right which terminates, and new Awards may be granted under the
Plan with respect to the number of Shares as to which such termination has
occurred.
(b) During any calendar year, no Participant may be granted Awards
under the Plan with respect to more than 250,000 Shares, subject to adjustment
as provided in Section 6.
5. Awards.
(a) Options. The Committee is hereby authorized to grant Options
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan and the
requirements of applicable law as the Committee shall determine, including the
granting of Options in tandem with other Awards under the Plan:
(i) Exercise Price. The exercise price per Share for an
Option shall be determined by the Committee; provided, however, that such
exercise price shall not be less than 100% of the Market Value of a Share on the
date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee, but shall be no greater than 10 years in the case of an Incentive
Stock Option or 15 years in the case of a Non-Qualified Stock Option.
(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, other Awards or any combination thereof,
having a fair market value on the exercise date equal to the relevant exercise
price) in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.
3
<PAGE>
(iv) Incentive Stock Options. Incentive Stock Options may be
granted by the Committee only to employees of the Corporation or its Affiliates.
(v) Termination of Service. Unless otherwise determined by
the Committee and set forth in the Award Agreement evidencing the grant of the
Option, upon Termination of Service of the Participant for any reason other than
for Cause, all Options then currently exercisable shall remain exercisable for
the lesser of (A) three years following such Termination of Service or (B) until
the expiration of the Option by its terms. Upon Termination of Service for
Cause, all Options not previously exercised shall immediately be forfeited.
(b) Rights. A Right shall, upon its exercise, entitle the
Participant to whom such Right was granted to receive a number of Shares or cash
or combination thereof, as the Committee in its discretion shall determine, the
aggregate value of which (i.e., the sum of the amount of cash and/or Market
Value of such Shares on date of exercise) shall equal (as nearly as possible, it
being understood that the Corporation shall not issue any fractional Shares) the
amount by which the Market Value per Share on the date of such exercise shall
exceed the exercise price of such Right, multiplied by the number of Shares with
respect to which such Right shall have been exercised. A Right may be Related to
an Option or may be granted independently of any Option as the Committee shall
from time to time in each case determine. In the case of a Related Option, such
Related Option shall cease to be exercisable to the extent of the Shares with
respect to which the Related Right was exercised. Upon the exercise or
termination of a Related Option, any Related Right shall terminate to the extent
of the Shares with respect to which the Related Option was exercised or
terminated.
6. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares and exercise price of the Award, if any, as to which Awards
may be granted under the Plan and the number and class of shares and exercise
price of the Award, if any, with respect to which Awards have been granted under
the Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. Except as otherwise provided herein, any Award which is
adjusted as a result of this Section 6 shall be subject to the same terms and
conditions as the original Award.
7. Effect of Merger on Options or Rights. In the case of any merger,
consolidation or combination of the Corporation (other than a merger,
consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being converted
into or exchanged for different securities, cash or other property, or any
combination thereof), any Participant to whom an Option or Right has been
granted shall have the additional right (subject to the provisions of the Plan
and any limitation applicable to such Option or Right), thereafter and during
the term of each such Option or Right, to receive upon exercise of any such
Option or Right an amount equal to the excess of the fair market value on the
date of such exercise of the securities, cash or other property, or combination
thereof, receivable upon such merger, consolidation or combination in respect of
a Share over the exercise price of such
4
<PAGE>
Right or Option, multiplied by the number of Shares with respect to which such
Option or Right shall have been exercised. Such amount may be payable fully in
cash, fully in one or more of the kind or kinds of property payable in such
merger, consolidation or combination, or partly in cash and partly in one or
more of such kind or kinds of property, all in the discretion of the Committee.
8. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 8 shall be deemed a "change
in control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board may be cast, (ii) as a
result of, or in connection with, any cash tender offer, merger or other
business combination, sale of assets or contested election, or combination of
the foregoing, the persons who were directors of the Corporation shall cease to
constitute a majority of the Board, or (iii) the stockholders of the Corporation
shall approve an agreement providing either for a transaction in which the
Corporation will cease to be an independent publicly-owned corporation or for a
sale or other disposition of all or substantially all the assets of the
Corporation. If a tender offer or exchange offer for Shares (other than such an
offer by the Corporation) is commenced, or if a change in control shall occur,
the Committee shall have the discretion to allow all Options and Rights granted
and not fully exercisable to become exercisable in part or in full as determined
by the Committee upon the happening of such event; provided, however, that no
Option or Right which has previously been exercised or otherwise terminated
shall become exercisable.
9. Assignments and Transfers. No Incentive Stock Option granted under the
Plan shall be transferable other than by will or the laws of descent and
distribution. Any other Award shall be transferable by will, the laws of descent
and distribution, a "domestic relations order," as defined in Section
414(p)(1)(B) of the Code, or a gift to any member of the Participant's immediate
family or to a trust for the benefit of one or more of such immediate family
members. During the lifetime of an Award recipient, an Award shall be
exercisable only by the Award recipient unless it has been transferred as
permitted hereby, in which case it shall be exercisable only by such transferee.
For the purpose of this Section 9, a Participant's "immediate family" shall mean
the Participant's spouse, children and grandchildren.
10. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again as
a Participant, and no employee or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive or similar plan
of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any Affiliate.
11. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other federal, state or local
securities legislation. It may be provided that any representation requirement
shall become inoperative upon
5
<PAGE>
a registration of the Shares or other action eliminating the necessity of such
representation under such Securities Act or other securities legislation. The
Corporation shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such Shares to listing on any stock exchange on which
Shares may then be listed and (ii) the completion of such registration or other
qualification of such Shares under any state or federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
12. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, or, in lieu thereof, to retain, or sell
without notice, a number of such Shares sufficient to cover the amount required
to be withheld. All withholding decisions pursuant to this Section 12 shall be
at the sole discretion of the Committee or the Corporation.
13. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or terminate
the Plan without the consent of shareholders or Participants, except that any
such action will be subject to the approval of the Corporation's shareholders
if, when and to the extent such shareholder approval is necessary or required
for purposes of any applicable federal or state law or regulation or the rules
of any stock exchange or automated quotation system on which the Shares may then
be listed or quoted, or if the Board, in its discretion, determines to seek such
shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation or modify or amend the terms of any outstanding Award. The Committee
may not, however, amend, alter, suspend, discontinue or terminate any
outstanding Award without the consent of the Participant or holder thereof,
except as otherwise provided herein.
14. Effective Date and Term of Plan. The Plan shall become effective upon
the later of its adoption by the Board or its approval by the shareholders of
the Corporation. It shall continue in effect for a term of fifteen years
thereafter unless sooner terminated under Section 13 hereof.
6
