CANISCO RESOURCES, INC.
300 Delaware Avenue, Suite 714
Wilmington, Delaware 19801
PRELIMIARY NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 11, 1998
To the Shareholders of Canisco Resources, Inc.
The Annual Meeting of the Shareholders of Canisco Resources, Inc. (the
"Company") will be held at the Brandywine Suites Hotel, 707 North King Street,
Wilmington, Delaware on Tuesday, August 11, 1998, at 10:00 AM, prevailing time,
for the following purposes:
(1) To elect six Directors for the ensuing year as proposed in the
attached Proxy Statement;
(2) To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP, as the independent auditors of the Company for the fiscal
year commencing April 1, 1998;
(3) To consider and act upon a proposal to create a Stock
Option/Incentive Plan as proposed in the attached Proxy Statement.
(4) To consider and act upon a proposal to amend the Certificate of
Incorporation to increase the number of authorized shares from ten (10)
million to twenty (20) million and to create a class of authorized capital
stock of 5,000,000 Preferred Shares, $1.00 par value, as proposed in the
attached Proxy Statement.
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 30, 1998, as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting. Accordingly, only shareholders of record at the
close of business on that date will be entitled to vote at the meeting.
Management of the Company extends a cordial invitation to all shareholders to
be present at the meeting.
The Annual Report for 1998 is enclosed herewith.
By Order of the Board of Directors
Ralph A. Trallo
President and Chief Executive Officer
Wilmington, Delaware
July 7, 1998
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE FILL IN, DATE, SIGN AND
RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PAID, PRE-ADDRESSED ENVELOPE
ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND THE MEETING IN PERSON, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
CANISCO RESOURCES, INC.
300 Delaware Avenue, Suite 714
Wilmington, Delaware 19801
PRELIMINARY PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on August 11, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Canisco Resources, Inc., (the "Company") of proxies
for use at the Annual Meeting of Shareholders to be held on Tuesday, August 11,
1998, at the Brandywine Suites Hotel, 707 North King Street, Wilmington,
Delaware, at 10 AM, prevailing time, and at any adjournment thereof. This
Proxy Statement and the accompanying form of proxy are being mailed to
shareholders on or about July 15, 1998.
A proxy is enclosed for use at the Annual Meeting. When the enclosed proxy
is signed, dated and returned, the shares represented thereby will be voted in
accordance with the instructions specified thereon. Any shareholder executing
a proxy may revoke that proxy by written notice delivered to the Company's
Secretary at any time before it is voted.
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by mail, proxies may, if necessary, be solicited by Directors,
Officers, or regular employees of the Company personally or by telephone or
telegram. It is contemplated that brokerage houses, nominees, and other
custodians and fiduciaries will be requested to send proxy material to their
principals, and the Company will reimburse them for their charges and expenses
in so doing.
The Company's Annual Report for the fiscal year ended March 31, 1998,
accompanies this Proxy Statement, the meeting notice and the proxy.
VOTING SHARES
The Board of Directors has fixed the close of business on June 30, 1998, as
the record date for determination of the shareholders entitled to notice of
and to vote at the Annual Meeting of Shareholders or any adjournment thereof.
Shareholders of record as of that date will receive the notice of Annual
Meeting of Shareholders, the Proxy Statement, the proxy and the Annual Report
of the Company. As of June 30, 1998, there were 2,526,565 shares of common
stock, par value $.0025 per share, outstanding and entitled to notice of and
to vote at the Annual Meeting. The Company has no other class of stock
outstanding. Each share of common stock is entitled to one vote on each
matter properly submitted to the shareholders for action at the Annual
Meeting. There are no cumulative voting rights.
A broker holding shares of record for customers is not entitled to vote on
certain matters unless it receives voting instructions from its customers under
applicable Nasdaq rules. As used herein, "uninstructed shares" means shares
held by a broker who has not received instructions from its customers on such
matters and the broker has so notified the Company on a proxy form in
accordance with industry practice or has otherwise advised the Company that it
lacks voting authority. Uninstructed shares with respect to any matter are
considered to be present for quorum purposes. As used herein, "broker non-
votes" means the votes that could have been cast on the matter in question by
brokers with respect to uninstructed shares if they had received their
customers' instructions.
VOTE REQUIRED
Election of Directors: Directors are elected by a plurality and the six
nominees who receive the most votes will be elected. Abstentions and broker
non-votes will not be taken into account in determining the outcome of the
election.
Approval of Auditors: To be approved, this matter must receive the
affirmative vote of the majority of the shares present in person or by proxy
at the meeting and entitled to vote. Uninstructed shares are entitled
to vote on this matter. Therefore, abstentions and broker non-votes
have the effect of negative votes.
Approval of the 1998 Stock Option/Incentive Plan: To be adopted, the Plan must
receive the affirmative vote of the majority of the shares present in person or
by proxy at the meeting and entitled to vote. Uninstructed shares are not
entitled to vote on this matter, and therefore broker non-votes do not affect
the outcome. Abstentions have the effect of negative votes.
Approval of the 1998 Amendment of the Certificate of Incorporation: To be
adopted, the Amendment must receive the affirmative vote of the majority of the
shares entitled to vote. Uninstructed shares are not entitled to vote on this
matter, and therefore do not affect the outcome. Abstentions have the effect
of negative votes.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 30, 1998
(unless otherwise noted), with respect to persons with beneficial ownership of
more than five percent (5%) of the Company's outstanding common stock:
Name and Address Shares Beneficially Owned(1) Percentage of Class
ROI Capital
Management, Inc. 212,200(2) 8.39%
One Bush Street,
Suite 1150
San Francisco, CA 94104
Joe C. Quick 182,683(3) 8.25%
83 Almond Avenue
Hershey, PA 17022
Ted Mansfield 156,000(4) 6.17%
3251 E. Kingsfield Road
Pensacola, FL 32514
Ralph A. Trallo 132,187(5) 5.23%
2363 Sanibel Blvd.
St. James City, FL 33956
(1) The shares reported may be deemed to be beneficially owned under rules and
regulations of the U.S. Securities and Exchange Commission, but the
inclusion of these shares in this table does not constitute an admission of
beneficial ownership.
(2) ROI Capital Management, Inc. and affiliates ROI Partners, L.P., ROI & Lane,
L.P., Mark T. Boyer and Mitchell Soboleski, report shared voting and
investment power over 212,200 shares. The information shown has been
derived from ROI Capital Management, Inc.'s form 13G filed with the SEC on
or about June 16, 1998.
(3) The shares shown include 84,490 shares over which Mr. Quick exerts sole
voting and investment power and 25,167 shares subject to stock options in
favor of Mr. Quick. Mr. Quick shares voting and investment power over the
remaining shares which are held by his spouse or certain relatives
(excluding adult children).
(4) 150,000 of these shares were part of the purchase consideration paid by
the Company for the acquisition of Mansfield Industrial Coatings, Inc. which
occurred on April 22, 1998.
(5) The shares shown include 104,905 shares over which Mr. Trallo exerts sole
voting and investment power and 27,282 shares subject to stock options in
favor of Mr. Trallo.
The following table gives certain information as of June 30, 1998,
with respect to the beneficial ownership, direct or indirect, of the
Company's common stock by each present Director and Nominee for Director
and executive officer and by all Directors and executive officers
as a group, as reported by each person.
Name Sole Voting Shared
and Investment Voting and Percentage
Power Investment Aggregate of
Power Other Total Class
Joe C.
Quick 84,490 73,026 25,167 182,683 7.23%
Ralph A.
Trallo 104,905 -0- 27,282 132,187 5.23%
Dale L.
Ferguson 19,000 30,000 11,022 60,022 2.38%
Michael J.
Olson(4) 35,913 -0- 10,000 45,913 1.81%
Wm. Lawrence
Petcovic 10,886 -0- 25,005 35,891 1.42%
Donald E.
Lyons 11,350 -0- 13,396 24,746 0.98%
Thomas P.
McShane 18,300 -0- 2,406 20,706 0.82%
All
Directors
and Officers
as a Group
( 7 Persons) 223,819 103,026 114,278 441,123 19.87%
(1) Included are shares held by the Director (or Officer) and his spouse or
certain relatives (excluding adult children).
(2) Shares subject to options in favor of the respective individual.
(3) The shares reported may be deemed to be beneficially owned under
rules and regulations of the U.S. Securities and Exchange Commission, but the
inclusion of these shares in this table does not constitute an admission of
beneficial ownership.
(4) Executive officers who are neither directors or nominees.
ELECTION OF DIRECTORS
(Item No. I)
Unless otherwise instructed, the persons named in the accompanying form of
proxy intend to vote the shares represented by the proxies for the election of
the six nominees listed below to the Board of Directors. All nominees are
presently Directors of the Company and were elected by the shareholders at the
last Annual Meeting. Directors elected at the Annual Meeting will hold office
until the next Annual Meeting of Shareholders or until their respective
successors are elected and qualified. In the event that any one or more of
the nominees should become unavailable for election at the time of the Annual
Meeting, for any reason, an event that the Board of Directors does not
anticipate, the persons named in the accompanying form of proxy will vote for
the remaining nominees and for such substitute nominee or nominees, if any, as
may be designated by the Board of Directors.
The nominees this year are:
Dale L. Ferguson, Age 64. Employed by the Company since 1974 through fiscal
year 1996 (retired 1996). Director of the Company since 1974.
Donald E. Lyons (1), Age 68. Former President and CEO of the Power Systems
Group of Combustion Engineering (retired 1987). Director of Salient 3
Communications, Inc. Director of the Company since 1993.
Thomas P. McShane (1)(2), Age 45. 1987 to present, President of McShane
Group, Inc., (a financial and management consulting firm) Timonium, MD.
Director of the Company since 1991.
Wm. Lawrence Petcovic (1), Age 53. Director of Employment & Training
of The Ryland Group, Inc., Columbia, MD from 1989 to January 1993 and
Director of Continuous Improvement until December 1993. Business
consultant for L.P. Associates, Columbia, MD, 1994 to September, 1996.
Currently Vice President, Training of Chevy Chase Bank.
Director of the Company since 1981.
Joe C. Quick (2), Age 63. Employed by the Company from 1974 through
December 31, 1996 (retired 1996). Chairman of the Board of Directors
from 1974 through fiscal year 1996. President from February 1990 to
December 1994 and Chief Executive Officer from February 1990 to October
1995. Currently an agent for New York Life Insurance Company.
Director of the Company since 1974.
Ralph A. Trallo, Age 53. President and CEO of Cannon Sline of
Philadelphia, PA; from 1987 to May 31, 1998. Named Senior Vice
President of the Company in April 1994. Named President and Chief
Operating Officer of Company in December 1994 and Chief
Executive Officer in October 1995. Mr. Trallo has an employment contract
with Company. Director of the Company since 1993.
(1)Member of the Compensation Committee
(2)Member of the Audit Committee
On September 1, 1995, Oliver B. Cannon & Son, Inc., a wholly owned subsidiary
of the Company (Nuclear Support Services, Inc., predecessor in interest to
Canisco Resources, Inc.), filed a voluntary petition under chapter 11 of the
Bankruptcy Code. On September 5, 1995, the Company and its other subsidiaries
also filed for protection under chapter 11. Those subsidiaries were Sline
Industrial Painters, Inc., NSS Numanco, Inc., NSS of Delaware, Inc., IceSolv,
Inc. and Henze Services, Inc. All cases were filed in the United States
Bankruptcy Court for the Middle District of Pennsylvania in Harrisburg. A
number of first day orders were presented to the Court, including an order
allowing joint administration under the style and case of the parent,
Canisco Resources, Inc. at case number 1-95-01767.
On January 31, 1996, the Company filed its Joint Plan of Reorganization. The
Amended Joint Plan of Reorganization was filed and confirmed by the Court on
April 24, 1996. On June 28, 1996, the Company met all the requirements of
the Amended Plan by executing the necessary banking documents for securing
exit financing. The Effective Date for the Company's exit from bankruptcy
was July 1, 1996. On March 24, 1998, the Court administratively closed
the bankruptcy proceedings pending the resolution of two contested matters.
COMMITTEES AND MEETINGS
The Board of Directors meets on a regularly scheduled basis and, during the
fiscal year ended March 31, 1998, met on five occasions. During fiscal year
1998, each Director was present for all of the meetings of the Board of
Directors. Outside Directors of the Company were paid an annual retainer of
$7,500. All non-employee Directors except the Chairman of the Board, were
paid $800 for each meeting attended; the Chairman was paid $1,200 for
each meeting. Employee Directors receive no compensation for meetings.
The Audit and Compensation committees were active in fiscal year 1998. Each
committee member was present for all the meetings of the Board Committees on
which such Director served. Outside Board members appointed to serve on the
Compensation and Audit Committees were paid an annual retainer of $1,500. In
addition, outside Board members serving on Committees, except the Committee
Chairman, were paid $750 for each Committee meeting; the Chairman was paid
$1,000.
The Audit Committee was created by the Board of Directors in October 1986.
The function of the Audit Committee is to recommend an accounting firm to
conduct an annual audit engagement to include audit scope and results of such
audit. The Audit Committee reviews the adequacy of internal controls, Company
policies and procedures, and reports its findings to the Board of Directors.
The Audit Committee met two times during fiscal year 1998.
The Compensation Committee was created by the Board of Directors in
February 1989. The function of the Compensation Committee is to administer
the Company's 1990 Stock Option Plan, the Director's Stock Option Program
and the proposed 1998 Stock Option/Incentive Plan. In July 1993, the Salary
and Incentive Committee, whose functions included determination and
administration of plans for salary and incentives for Company management and
employees, including directors' fees, was consolidated with the Compensation
Committee. The Compensation Committee met three times during fiscal year 1998.
The Board of Directors does not have a nominating committee or any other
committee performing similar functions.
EXECUTIVE OFFICERS
The following table identifies the Company's present executive officers,
sets forth their ages, principal occupation or employment of each during the
past five years, positions and offices held with the Company and the terms
served as such.
Name Age Principal Occupation or Employment
Ralph A. Trallo 53 See Election of Directors.
Michael J. Olson 44 Vice President, Secretary/Treasurer
and Chief Financial Officer
of Cannon Sline, Inc. since 1986.
Named Acting Chief Financial
Officer of Nuclear Support
Services, Inc. in January, 1995.
Named Chief Financial Officer,
Vice President and Secretary/
Treasurer of the Company
in April, 1995.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash compensation
paid or accrued by the Company and its subsidiaries in respect to the
three fiscal years for 1996, 1997 and 1998 to or for the chief executive
officer and each of the executive officers of the Company whose cash
compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
Long-Term
Fiscal Year Compensation Compensation
Name and Awards
Principal Other Securities
Position Year Salary Bonus Compensation Underlying
($) ($)(2) ($)(3) Option/SARs (#)
Ralph A.
Trallo 1998 185,000 115,000 47,590(4) -0-
President,
CEO and
Director: 1997 185,000 77,700 7,210 50,000(5)
also
President
and CEO of 1996(1) 75,000 82,154 5,200 10,000(5)
Cannon
Sline
Michael J.
Olson 1998 105,000 85,000 37,820(4) -0-
Vice-
President,
Secretary/ 1997 105,000 44,100 5,469 30,000(5)
Treasurer,
and CFO 1996(1) 45,000 49,292 2,675 10,000(5)
SAR (Stock Appreciation Rights)
(1) Fiscal year 1996 was a six month period from October 1, 1995
through March 31, 1996.
(2) Mr. Trallo and Mr. Olson did not participate in the Senior Executive Group
Compensation Program for 1995 or 1996 but were covered under separate
incentive arrangements with Cannon Sline. Under those arrangements,
Mr. Trallo and Mr. Olson were awarded cash bonuses for 1995 and 1996.
(3) Included in Other Compensation are Board of Director fees, automobile
allowances, and excess life insurance benefits provided by the Company.
(4) Mr. Trallo and Mr. Olson were awarded discretionary bonuses in FY1998.
Their bonuses were in the form of Company stock issued at fair market value.
(5) A Stock Appreciation Program for Key Executives was established in fiscal
year 1995. Mr. Trallo and Mr. Olson were awarded SAR's under this Program in
1995 and 1996.
STOCK OPTIONS
At the 1990 Annual Meeting, the shareholders approved the Nuclear Support
Services, Inc. 1990 Stock Option Plan (the "1990 Plan"), which is designed to
promote continuity of management and increased incentive to those key employees
and consultants responsible for the Company's long-range financial success.
The 1990 Plan terminated on December 31, 1994, although outstanding options at
that time were not canceled by such termination.
The 1990 Plan is administered by the Compensation Committee formed by the
Board of Directors, which extended rights to selected employees or consultants
to purchase shares of stock in the Company at stated option prices. The
aggregate number of shares available for grant under the 1990 Plan was
416,897. As of June 30, 1998, options for 174,251.15 shares were
outstanding to approximately 24 employees and/or consultants, including
Company directors. No options were exercised during the fiscal year.
Options may be incentive stock options, which qualify for certain tax
benefits (relating primarily to the deferral of gain recognition until the
underlying stock is sold and the treatment of same as a capital gain as
opposed to ordinary income), or non-qualified options, which do not qualify as
incentive stock options. Incentive stock options must be granted at not less
than the fair market value of the stock on the date granted, and non-qualified
stock options must be granted at not less than one-half of the fair market
value of the stock on the date granted. The Company may take a deduction for
gain realized by its employees upon the exercise of a non-qualified option.
Generally this is not so in the case of an incentive stock option. Options
generally are nontransferable, conditioned upon continued employment with the
Company and expire within five years of grant or upon stated occurrences.
Other option terms may vary depending upon provisions of the specific option
agreement. On January 26, 1990, the Company filed an initial S-8 Registration
Statement for Company stock subject to the 1990 Plan and on September 8, 1993,
filed an amendment to its registration statement for additional shares subject
to the Plan. The closing market price of the Company's common stock as of
June ___, 1998 was $______ per share.
DIRECTORS STOCK OPTION PROGRAM
The Directors' Stock Option Program (as Amended), was approved by
shareholder vote at the Annual Meeting in February 1992. The Program provides
a mechanism for compensating Directors for their services by means other than
cash payment, promotes Director stock ownership and increases the incentive
for those responsible for the long-range success of the Company. Pursuant
to the Program, each Director may elect to take non-qualified stock options
for Company stock issued under the 1990 Stock Option Plan in lieu of all or a
portion of the normal cash retainer and/or fee for Board or Committee meetings
attended. Directors who select options pursuant to the Program make a
standing election to do so (or to rescind such election) at least six (6)
months in advance of the meeting for which the election (or rescission) is
to be effective. For the purpose of this election, options are valued at 17%
of the market price of the stock on grant date (i.e., date set for payment
of retainer or meeting fees as the case may be) and applied against the
fees to be earned.
The Company's 1990 Stock Option Program expired in December 1994, thus fees
and retainers for Board and Committee participation are being paid to Directors
in cash. As of June 30, 1998, Messrs. Petcovic, McShane, Lyons and Trallo had
acquired options for 25,005; 2,406; 13,396; and 27,282, respectively, pursuant
to the Program with exercise prices ranging from $3.38 to $5.50.
SENIOR EXECUTIVE GROUP COMPENSATION PROGRAM
There were no stock options and stock appreciation rights (SAR) granted to
or exercised by the Company's executive officers in respect to its last
fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY END OPTION/SAR VALUES
Number of Value of
securities unexercised
underlying in-the money
unexercised options/
options/SARs SARs at
Shares at FY end (#) FY end (#)
acquired on Value exercisable/ exercisable/
Name exercise (#) realized($) unexercisable(1) unexercisable
Ralph A.
Trallo -0- -0- 97,282(2) $1,200/-0-
Michael
J. Olson -0- -0- 60,000(3) $1,200/-0-
(1) Options include those granted under the Company's Senior Executive
Compensation Program, the Company's Stock Option Program, the Directors Stock
Option Program, and the Company's Stock Appreciation Plan.
(2) Mr. Trallo's options include 27,282 shares under the Company's Stock
Option Program and the Director's Stock Option Program and 70,000 shares
under the Company's Stock Appreciation Plan.
(3) Mr. Olson's options include 10,000 shares under the Company's Stock
Option Program and 50,000 shares under the Company's Stock Appreciation
Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and makes recommendations to the Board
of Directors on matters of Executive Officer compensation. The current members
of the committee are William Lawrence Petcovic (Chairman), Thomas P. McShane
and Donald E. Lyons, all of whom are non-employee "outside" directors as noted
in this proxy statement. The committee establishes the Company's policies and
performance requirements for Executive Officer compensation and the total
compensation paid for each fiscal year. The committees report for fiscal year
1998 is set forth below.
The Committee formulated the 1998 Executive Compensation program to
support the business growth strategy and to maintain performance in company
operations. The Committee limited the Executive Compensation Program to Ralph
Trallo and Mike Olson. Subsidiary officer compensation was delegated to the
executive group. Under the 1998 Senior Executive Program, the total
compensation for executives is managed utilizing four (4) components - base
pay, short term incentives, long term incentives and special equity grants.
(1) Base salaries for FY 1998 did not change for Mr. Trallo and Mr.
Olson. These salaries were reviewed and considered within the median position
guidelines for the companies with whom we compare as outlined in the Conference
Board Research Report (1204-97RR) on Top Executive Compensation. The base pay
for the executives in FY 1998 was maintained at $185,000 for Mr. Trallo and
$105,000 for Mr. Olson. This base salary was established in FY 1997 and is
applicable through FY 1999 or until designated revenue goals are achieved.
(2) Short Term Incentive pay available to be earned for FY 1998 was
linked directly to earnings per share, net earnings, banking relationships and
bank covenants. Successful accomplishment of the performance objectives
resulted in Mr. Trallo receiving short term incentives of $115,000 and Mr.
Olson receiving $85,000.
(3) Long Term Incentives were provided as a method of extending
ownership throughout the company. The Cannon Sline Incentive Agreement for
the executive team assumed in the acquisition of Cannon Sline was converted
into Canisco common stock effective FY 1999. The committee valued the
conversion of long term incentives at 48,820 shares for Mr. Trallo and
12,205 shares for Mr. Olson.
(4) Special Equity Grants were provided in FY 1998. These grants took
the form of shares of Canisco stock at market value for cash bonuses earned
in 1995 and 1996.
The committee anticipates a total redesign of the Executive Compensation
Program for FY 1999 as acquisitions are aligned with business strategy and
financial goals. The committee will continue the use of the four components
of a total compensation program and will incorporate the Stock Option/
Incentive program as approved by the shareholders.
The Compensation Committee
William Lawrence Petcovic
Thomas P. McShane
Donald E. Lyons
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than Board and Committee fees, there was no other compensation paid.
CERTAIN TRANSACTIONS
Dale Ferguson and Joe C. Quick received $50,000.00 and $65,000,
respectively, in fiscal year 1998 pursuant to the Company's Founders
Retirement Plan.
COMPLIANCE WITH SECTION 16(a)
For 1998 fiscal year, no late Form 4 filings were submitted.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its common stock with (i) the
cumulative total return of a broad market index (the NASDAQ MARKET INDEX)
and (ii) the cumulative total return of the Standard Industrial
Classification Index, Code 1799 - Specialty Contractors. Cumulative
return for the Company and both indices were calculated assuming dividend
reinvestment. For fiscal year 1998, the Standard Industrial Classification
Index, Code 1799 - Specialty Contractors was comprised of the following
nine (9) publicly traded companies: Canisco Resources, Inc.; Cerbco Inc.
CL A; Chicago Bride & Iron NV; Heist C.H. Corporation; IDM Environmental
Corp. Insituform East, Inc.; Leak-X Environmental CP; National Environ
Service Co.; and U.S. Bridge Construction.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
Fiscal Year Ending
1993 1994 1995 1996 1997 1998
Canisco
Resources, Inc. 100 84.78 32.61 43.48 45.65 44.57
Industry Index 100 102.91 56.14 66.36 36.66 40.33
Broad Market 100 115.57 122.61 164.91 184.50 278.82
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS
(Item No. 2)
The Board of Directors selects each year the accounting firm to perform the
financial audit and related work for the Company for that year. KPMG Peat
Marwick LLP has been selected by the Board of Directors as the independent
auditors for the Company's current fiscal year commencing April 1, 1998.
Selection of this firm will be submitted for ratification at the Annual
Meeting. In the event the shareholders do not ratify the appointment of KPMG
Peat Marwick LLP, the selection of other independent accountants will be
considered by the Board of Directors.
A representative of KPMG Peat Marwick LLP, expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS.
APPROVAL OF THE 1998 STOCK OPTION/INCENTIVE PLAN
(Item No. 3)
The Board of Directors and the Compensation Committee of the Company propose
to adopt the Canisco Resources, Inc. 1998 Stock Option/Incentive Plan (the
"Plan"). The following is a summary of certain features of the Plan.
Reference is made to the full text of the Plan attached as Appendix A for
additional information.
The Plan is intended as an additional incentive to directors and employees of
the Company to serve the Company and to devote themselves to the future
success of the Company by providing them with an opportunity to acquire or
increase their proprietary interest in the Company through the receipt of
rights to acquire Common Stock.
Options granted under the Plan to employees, including directors who are
employees, may be designated as "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or may be designated as options not intended to be ISOs ("non-
qualified stock options").
The key provisions of the Plan are as follows:
Number of Shares. The aggregate maximum number of shares for which
options or awards may be granted under the Plan is 750,000 shares of
Common Stock increased each March 31 by an additional number, equal to 2%
of the number of shares outstanding on that date, commencing March 31,
1999. Such shares are subject to adjustment if the outstanding shares of
Common Stock are changed by reason of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up,
combination or exchange of shares and the like or dividends payable in
shares. No optionee may receive options for more than 200,000 shares in
any calendar year.
Administration. The Plan will be administered by the Board of Directors
or by a committee of two or more directors who are Non-Employee Directors
(as such term is defined in the Plan). The Board of Directors or any
committee administering the Plan is referred to herein as the
"Committee." The Committee has the authority to (i) determine the
optionees to whom, the times at which, and the price at which options
shall be granted, (ii) the number of shares subject to the option and
whether the option is an ISO or a non-qualified stock option, (iii)
approve the form and terms and conditions of the option grants. The
Committee has similar authority to approve awards of shares under the
Plan. The Committee also has certain powers to amend or interpret the
Plan and options and awards thereunder.
<PAGE>
Eligibility. All Company employees and members of the Board of Directors as
well as employees of Affiliates (as defined in the Plan) are eligible to
receive options and/or awards under the Plan.
Term of Plan. No ISO may be granted under the Plan after March 31, 2008.
Term of Option. All options terminate on the earliest of: (a) the
expiration of the term specified in the option document, which, in the
case of an ISO, may not exceed ten years from the date of grant or five
years after the date of grant if the optionee on the date of grant owns,
directly or by attribution, shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company; (b) except
as otherwise provided in the optionee's option document, a finding by the
Committee, after full consideration of the facts presented on behalf of
the Company and the optionee, that the optionee has been engaged in
disloyalty to the Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the
course of his employment or services, or has disclosed trade secrets or
confidential information of the Company; (c) the date, if any, set by the
Board of Directors as an accelerated expiration date in the event of the
liquidation or dissolution of the Company; (d) the occurrence of such
other event or events as may be set forth in the option document as
causing an accelerated expiration of the option; or (e) except as
otherwise set forth in the option document and subject to the foregoing,
three months after the optionee's employment or service with the Company
or its Affiliates terminates for any reason other than disability or
death or one year after such termination due to optionee's disability or
death.
Option Price. The option price for non-qualified stock options may be
less than, equal to or greater than the fair market value of the shares
subject to the option on the date that the option is granted, and for
ISOs will be at least 100% of the fair market value of the shares subject
to the option on the date that the option is granted. If an ISO is
granted to an employee who then owns, directly or by attribution under
the Code, shares possessing more than 10% of the total combined voting
power of all classes of shares of the Company, the option price will be
at least 110% of the fair market value of the shares on the date that the
option is granted.
Stock Appreciation Rights (SARs). The Committee may grant to an optionee
rights to surrender an option to the Company, in whole or in part, and to
receive in exchange thereof payment by the Company of an amount equal to the
excess of the fair market value of the shares of Common Stock subject to such
option, or portion thereof, so surrendered over the exercise price to acquire
such shares. The Committee has the sole discretion to determine whether
payment is to be made in shares of Common Stock, in cash, or in a combination
of Common Stock and cash. Each SAR will relate to a specific option granted
under the Plan and will be granted to the optionee concurrently with the grant
of the option.
Payment. An option holder may pay for shares covered by an option in
cash or by certified or cashier's check payable to the order of the
Company or by such other mode of payment as the Committee may approve,
including the optionee's note and payment through a broker in accordance
with rules and regulations of the Federal Reserve Board. If any payment
is required by a grantee of an award, such payment may be made in cash or
by certified check payable to the order of the Company or by such other
mode of payment that the Committee may approve.
Awards. Shares may be awarded under the Plan with or without payment of
consideration in such amount as the Committee may determine. Shares may
be awarded subject to various conditions and forfeiture provisions e.g.,
that the shares may be reacquired by the Company in return for the
consideration (if any) paid by the recipient of the award upon the
recipient's termination of employment with the Company, with such
reacquisition rights of the Company lapsing in installments over time.
Option and Award Documents. All options and awards will be evidenced by
a written option document containing provisions consistent with the Plan
and such other provisions as the Committee deems appropriate.
Transfers. Except as otherwise provided below, no option granted under
the Plan may be transferred, except by will or by the laws of descent and
distribution, and, during the lifetime optionee, may be exercised only by
the optionee. Notwithstanding the foregoing, an option, other than an
ISO, shall be transferable pursuant to a "domestic relations order" as
defined in the Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder, and also shall be transferable, without
payment of consideration, to (a) immediate family members of the holder
(i.e., spouse or former spouse, parents, issue, including adopted and
"step" issue, or siblings), (b) trusts for the benefit of immediate
family members, (c) partnerships whose only partners are such family
members, and (d) to any transferee permitted by a rule adopted by the
Committee or approved by the Committee in an individual case. Any
transferee will be subject to all of the conditions set forth in the
option prior to its transfer.
Provisions Relating to a "Change of Control." Notwithstanding any other
provision of the Plan, in the event of a Change of Control (as defined in the
Plan), the Committee may accelerate the expiration and/or exercisability of
individual options.
Amendments to the Plan or Option or Award Documents. Subject to certain
limitations in the Plan, the Board of Directors may amend the Plan or an
option or award from time to time in such manner as it may deem
advisable, provided that no option or award document may be amended in a
manner adverse to the interest of the holder without the consent of the
holder.
Tax Aspects of the Plan. The following discussion is intended to
summarize briefly the general principles of federal income tax law
applicable to options granted under the Plan. A recipient of an ISO will
not recognize taxable income upon either the grant or exercise of the
ISO. The option holder will recognize long-term capital gain or loss on
a disposition of the shares acquired upon exercise of an ISO, provided
the option holder does not dispose of those shares within two years from
the date the ISO was granted or within one year after the shares were
transferred to such option holder. Currently, for regular federal income
tax purposes, long-term capital gain is taxed at a maximum rate of 20%,
while ordinary income is generally subject to a maximum effective rate of
39.6%. If the option holder satisfies both of the foregoing holding
periods, then the Company will not be allowed a deduction by reason of
the grant or exercise of an ISO.
As a general rule, if the option holder disposes of the shares before
satisfying both holding period requirements (a "disqualifying disposition"),
the gain recognized by the option holder on the disqualifying disposition will
be taxed as ordinary income to the extent of the difference between (a) the
lesser of the fair market value of the shares on the date of exercise or the
amount received for the shares in the disqualifying disposition, and (b) the
adjusted basis of the shares, and the Company will be entitled to a deduction
in that amount. The gain (if any) in excess of the amount recognized as
ordinary income on a disqualifying disposition will be long-term or short-term
capital gain, depending on the length of time the option holder held the shares
prior to the disposition.
The amount by which the fair market value of a share at the time of exercise
exceeds the option price will be included in the computation of such option
holder's "alternative minimum taxable income" in the year the option holder
exercises the ISO. Currently, for a taxpayer subject to the alternative
minimum tax, the alternative minimum tax rate varies between 26% and 28%
depending upon the amount of alternative minimum taxable income. If an option
holder pays alternative minimum tax with respect to the exercise of an ISO,
then the amount of such tax paid will be allowed as a credit against regular
tax liability in subsequent years. The option holder's basis in the shares
for purposes of the alternative minimum tax will be adjusted when income is
included in alternative minimum taxable income.
A recipient of a non-qualified stock option will not recognize taxable income
at the time of grant, and the Company will not be allowed a deduction by
reason of the grant. Such an option holder will recognize ordinary income
in the taxable year in which the option holder exercises the non-qualified
stock option, in an amount equal to the excess of the fair market value of
the shares received upon exercise at the time of exercise of such options
over the exercise price of the option, and the Company will be allowed a
deduction in that amount. Upon disposition of the shares subject to the
option, an option holder will recognize long-term or short-term capital gain
or loss, depending upon the length of time the shares were held prior to
disposition, equal to the difference between the amount realized on
disposition and the option holder's basis in a share subject to the
option (which basis ordinarily is the fair market value of the shares
subject to the option on the date the option was exercised).
In the case of SARs, the Company is of the opinion that the holder will not
realize any compensation income at the time of grant. However, the fair
market value of stock or cash delivered pursuant to the exercise of such
SARs will be treated as compensation income taxable to the employee at the
time of exercise, and the Company will be entitled to a deduction under the
Code at the time and equal to the amount of compensation income that is
realized by the holder.
Section 162(m) of the Code generally limits the deductibility of compensation
paid to certain employees ("Covered Employees") of any publicly held company
to the extent such compensation exceeds $1 million per year (the "Million
Dollar Cap"). Income recognized as a result of the exercise of a stock
option by a Covered Employee would normally be taken into account for this
purpose. However, if an option is granted pursuant to a plan which meets
certain requirements, relating both to the terms of the plan and to its
administration by "outside directors," any income attributable to the
exercise of the option will be treated as "performance-based compensation"
to which the Million Dollar Cap does not apply. The Plan has been
established in a manner that is intended to satisfy these requirements.
Other Plans
The Company's prior stock option plan, known as the Nuclear Support
Services, Inc. 1990 Stock Option Plan terminated on December 31, 1994.
As of June 30, 1998, there were 174,251 options outstanding with
exercise prices ranging from $3.38-$5.50.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE PROPOSAL TO
APPROVE THE PLAN.
AMENDMENT TO CERTIFICATION OF INCORPORATION
REGARDING AUTHORIZED CAPITAL STOCK
(Item 4)
Article Third of the Company's Certificate of Incorporation provides that
its authorized capital stock is 10,000,000 shares of Common Stock, $.0025 par
value per share. The Board of Directors recommends this Article be amended to
provide for an authorized capital stock of 5,000,000 shares of Preferred Stock,
$1.00 par value per share, and 20,000,000 shares of Common Stock, $.0025 par
value per share.
The terms of the Preferred Stock will not be fixed by the Certificate of
Incorporation. Rather, the Board of Directors of the Company will be
authorized to issue shares of Preferred Stock, in one or more classes or
series, with full, limited, multiple, fractional or no voting rights, and with
such designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights or other special or relative rights as
shall be fixed from time to time by the Board of Directors. The text of
Article Third, as it is proposed to be amended, is set forth as Exhibit B
hereto.
The Company currently has 2,526,565 shares of Common Stock outstanding.
In addition 174,251 shares are reserved for issuance upon the exercise of
currently outstanding options held by employees and directors and
______ shares are reserved for the exercise of warrants held under current
commitments.
The Company intends to follow an aggressive acquisition program. It
believes it is the largest contractor in the United States specializing in the
painting of industrial facilities and related activities for such facilities
including surface preparation, coating, specialty cleaning, decontamination,
asbestos abatement and related janitorial and maintenance services. The
industry is highly fragmented and many of the participants provide a limited
range of services and limit their activities to a relatively few adjacent
states. The Company believes it has significant growth opportunities and can
achieve significant economies of scale if it can acquire smaller contractors
in its field to better serve its major customers, many of whom would prefer a
single contractor that can serve facilities throughout the country.
The Company anticipates that the increased availability of its capital
stock will assist in its acquisition program. Either Common or Preferred
Stock, or the rights to acquire such stock (for example, through the
conversion of convertible debt or the exercise of warrants), may supply all
or part of the consideration for acquisitions. Additionally, options to
acquire stock or awards of stock may provide a significant incentive for
key personnel of acquired businesses and other prospective new hires to
induce them to join the Company and to motivate their performance as
Company employees.
The Company's general growth plans will also require it to raise
additional capital from time to time in order to acquire companies and
to provide working capital and equipment for acquired businesses as well
as the Company's current activities. It believes that the availability of
Preferred Stock and additional Common Stock will be useful in generating
such financing.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE PROPOSAL TO AMEND
ARTICLE THIRD TO INCREASE THE NUMBER OF AUTHORIZED CAPITAL STOCK TO TWENTY (20)
MILLION SHARES AND TO PROVIDE FOR FIVE (5) MILLION SHARES OF PREFERRED STOCK AT
$1.00 PAR VALUE.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
If a shareholder intends to present a proposal at the next Company's Annual
Meeting of Shareholders, the proposal must be submitted in writing and received
by the Secretary of the Company at its executive offices located at 300
Delaware Avenue, Suite 714, Wilmington, Delaware no later than March 15, 1999,
in order to be considered for inclusion in the Company's Proxy Statement and
form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the notice of the
Annual Meeting and knows of no matters to be brought before the meeting by
others. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy, or their substitutes, to
vote said proxy in accordance with their best judgment on such matters to the
extent allowed by SEC Rule 14a-4(c) which limits the purpose for which
discretionary authority may be granted.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION WILL BE AVAILABLE AT THE ANNUAL MEETING.
ANY SHAREHOLDER, UPON WRITTEN REQUEST TO THE SECRETARY, MAY OBTAIN A COPY OF
THE COMPANY'S FORM 10-K WITHOUT CHARGE.
By Order of the Board of Directors
Ralph A. Trallo
President and Chief Executive Officer
Wilmington, Delaware
July 7, 1998
This Proxy is Solicited on Behalf of the Board of Directors of
CANISCO RESOURCES, INC.
300 Delaware Avenue, Suite 714
Wilmington, Delaware 19801
The undersigned hereby appoints Joe C. Quick, Dale L. Ferguson,
or Ralph A. Trallo as proxy (and if the undersigned is a proxy, as
substitute proxy), each with the power to appoint his substitute,
and hereby authorizes any one of them to vote as designated on the
reverse side all the shares of common stock of Canisco Resources, Inc.,
held of record by the undersigned on June 30, 1998, at the Annual Meeting
of Shareholders to be held on Tuesday, August 11, 1998, at 10:00 AM at
the Brandywine Suites Hotel, 707 North King Street, Wilmington, Delaware,
and at any adjournment thereof.
(continued on reverse side)
============================================================================
ALL PROXIES WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS NOTED HEREON.
1.
FOR all nominees listed WITHHOLD AUTHORITY Dale L. Ferguson
to the right (except as to vote for nominees Donald E. Lyons
marked to the contrary) listed to the right Thomas P. McShane
Wm. Lawrence Petcovic
Joe C. Quick
Ralph A. Trallo
INSTRUCTION: To withhold authority to vote
for any individual nominee, write that
nominee's name in the space provided below.
2.
FOR AGAINST ABSTAIN With respect to the ratification of
the selection by the Board of Directors
of KPMG Peat Marwick as Certified
Public Accountants, as independent auditors
of the Company for the fiscal year
commencing April 1, 1998.
3.
FOR AGAINST ABSTAIN With respect to the ratification of the
proposal to adopt the Stock Option/Incentive
Plan as proposed in the attached Proxy
Statement.
4.
FOR AGAINST ABSTAIN With respect to the ratification of the
proposal to amend the Certificate of
Incorporation to increase the number
of authorized shares from ten (10)
million to twenty (20) million and to
create a class of authorized capital stock
of 5,000,000 Preferred Shares, $1.00
par value, as proposed in the attached
Proxy Statement.
5.
FOR AGAINST ABSTAIN OTHER BUSINESS: In their discretion,
the proxies are authorized to vote upon
such other business as may properly come
before the meeting.
The undersigned hereby acknowledges receipt of the
Proxy Statement dated July 7, 1998 and hereby revokes any proxy
or proxies heretofore given to vote shares at said meeting or any
adjournments thereof.
_______________________________________________________
_______________________________________________________
Sign here exactly as name(s) appear on left
Dated:___________________
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED, ADDRESSED ENVELOPE
Exhibiit A
Exhibit B
STOCK OPTION/INCENTIVE PLAN
CANISCO RESOURCES, INC.
1998 STOCK OPTION/INCENTIVE PLAN
As Adopted by the Board of Directors __________, 1998
1. Purpose. Canisco Resources, Inc., a Delaware corporation ("Company"),
hereby adopts this 1998 Stock Option/Incentive Plan (the "Plan"). The Plan is
intended to recognize the contributions made to Company by employees
(including employees who are members of the Board of Directors) of Company
or any Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of Company or an Affiliate and to improve
the ability of Company or an Affiliate to attract, retain and motivate
individuals upon whom Company's sustained growth and financial success
depend. Through the Plan, Company will provide such persons with an
opportunity to acquire or increase their proprietary interest in Company,
and to align their interest with the interests of stockholders, through
receipt of rights to acquire Company's Common Stock, par value $.0025 per
Share (the "Common Stock") and through the transfer or issuance of Common
Stock or other Awards. In addition, the Plan is intended as an
additional incentive to directors of Company who are not employees of
Company or an Affiliate to serve on the Board of Directors and to devote
themselves to the future success of Company by providing them with an
opportunity to acquire or increase their proprietary interest in Company
through the receipt of rights to acquire Common Stock. Furthermore,
the Plan may be used to encourage consultants and advisors of Company
to further the success of Company.
2. Definitions. Unless the context clearly indicates otherwise, the following
terms shall have the following meanings:
"Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to Company within the meaning of
Section 424(e) or (f) of the Code, of any successor provision.
"Award" shall mean a transfer of Common Stock made pursuant to the terms of
the Plan or the grant to a person of performance units, "phantom" units,
SARs or other rights containing such terms, benefits or restrictions as the
Committee shall specify in the Award Agreement.
"Award Agreement" shall mean the agreement between Company and a Grantee
with respect to an Award made pursuant to the Plan.
"Board" means the Board of Directors of Company.
"Change of Control" shall have the meaning as set forth in Section 9 of the
Plan.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.
"Committee" shall have the meaning set forth in Section 3 of the Plan.
"Common Stock" shall have the meaning set forth in Section 1 of the Plan.
"Company" means Canisco Resources, Inc., a Delaware corporation.
"Disability" means the inability of an Optionee or Award holder to perform
the essential duties of his or her position with Company as determined in
good faith by the Board.
"Employee" means an employee of Company or an Affiliate.
"Fair Market Value" shall have the meaning set forth in Subsection 8(b) of
the Plan.
"Grantee" shall mean a person to whom an Award has been granted pursuant to
the Plan.
"ISO" means an Option granted under the Plan which qualifies and is
intended to qualify as an "incentive stock option" within the meaning of
Section 422(b) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations issued pursuant to
that statute or any successor statute.
"Non-Employee Director" shall mean a member of the Board who is a "non-
employee director" as that term is deined in paragraph (b)(3) of Rule 16b-3
and an "outside director" as that term is defined in Treasury Regulations
Section 1.162-27 promulgated under the Code.
"Non-qualified Stock Option" means an Option granted under the Plan which
is not intended to qualify, or otherwise does not qualify, as an ISO.
"Option" means either an ISO or a Non-qualified Stock Option granted under
the Plan.
"Optionee" means a person to whom an Option has been granted under the Plan,
which Option has not been exercised and has not expired or terminated.
"Option Document" means the document described in Section 8 of the Plan,
which sets forth the terms and conditions of each grant of Options.
"Option Price" means the price at which Shares may be purchased upon
exercise of an Option, as calculated pursuant to Subsection 8(b) of the Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.
"SAR" shall have the meaning set forth in Section 11 of the Plan.
"Section 16 Officers" means any personn who is an "officer" within the
meaning of Rule 16a-1(f) promulgated under the Exchange Act or any successor
rule, and who is subject to the reporting requirements under Section 16 of
the Exchange Act with respect to the Company's Common Stock.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.
"Shares" means the shares of Common Stock of Company which are the subject
of Options or granted as Awards under the Plan.
3. Administration of the Plan. The Board may administer the Plan and/or it
may, in its discretion, designate a committee or committees composed of two or
more of directors to operate and administer the Plan with respect to all or a
designated portion of the participants. To the extent that the Committee is
empowered to grant options to Section 16 Officers or persons whose
compensation might have limits on deductibility under Code Section 162(m),
each member of a Committee designated by the Board shall be a Non-Employee
Directors. Any such committee designated by the Board, and the Board itself
in its administrative capacity with respect to the Plan, is referred to as
the "Committee."
(a) Meetings. The Committee shall hold meetings at such times and places
as it may determine and shall keep minutes of its meetings. The Committee
may take action only upon the agreement of a majority of the whole
Committee. Any action which the Committee shall take through a written
instrument signed by all of its members shall be as effective as though it
had been taken at a meeting duly called and held.
(b) Exculpation. No member of the Committee shall be personally liable
for monetary damages for any action taken or any failure to take any action
in connection with the administration of the Plan or the granting of
Options or Awards under the Plan, provided that this provision shall not
apply to any breach of the member=s duty of loyalty, for acts or omissions
not in good faith or which involve intentional misconduct or a known
violation of law, for any violation of Section 174 of the Delaware General
Corporation Law or for any transaction from which the member derived an
improper personal benefit.
(c) Indemnification. Service on the Committee shall constitute service as
a member of the Board. Each member of the Committee shall be entitled,
without further act on the member's part, to indemnity from Company and
to limitation of liability, to the fullest extent provided by applicable
law and by Company's Certificate of Incorporation and/or Bylaws, in
connection with or arising out of any action, suit or proceeding with
respect to the administration of the Plan or the granting of Options or
Award thereunder in which the member may be involved by reason of the member
being or having been a member of the Committee, whether or not the member
continues to be a member of the Committee at the time of the action, suit
or proceeding.
(d) Interpretation. The Committee shall have the power and authority to
(i) interpret the Plan, (ii) adopt, amend and revoke rules and regulations
for its administration that are not inconsistent with the express terms of
the Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to
be granted by Options and Awards or constitute a material amendment for any
purpose under the Code. Any such actions by the Committee shall be final,
binding and conclusive on all parties in interest.
(e) Amendment of Options and Awards. Subject to the provisions of the
Plan, the Committee shall have the right to amend any Option Document or
Award Agreement issued to an Optionee or Award holder, subject to the
Optionee's or Award holder's consent, if such amendment is not favorable to
the Optionee or Award holder or if such amendment has the effect of
changing an ISO to a Non-Qualified Stock Option; provided, however, that
the consent of the Optionee or Award holder shall not be required for any
amendment made pursuant to Subsection 8(e)(i)(C) or Section 9 of the Plan,
as applicable.
4. Grants of Options under the Plan. Grants of Options under the Plan may be
in the form of a Non-qualified Stock Option, an ISO or a combination thereof,
at the discretion of the Committee.
5. Eligibility. All Employees, members of the Board and consultants and
advisors to Company shall be eligible to receive Options and Awards hereunder.
Consultants and advisors shall be eligible only if they render bona fide
services to Company unrelated to the offer or sale of securities. The
Committee, in its sole discretion, shall determine whether an individual
qualifies as an Employee.
6. Shares Subject to Plan. The aggregate maximum number of Shares for which
Awards or Options may be granted pursuant to the Plan is 750,000, increased on
March 31 of each year from and including March 31, 1999, by a number of shares
equal to two percent (2%) of the number of shares of Common Stock outstanding
on each such date; provided, however, that any such increase shall be made
only to the extent that Company has sufficient authorized and unreserved
Common Stock for such purpose. Such increase shall be made each March 31,
regardless of the number of shares remaining available for issuance under
the Plan on such date. The number of shares which may be issued under the
Plan shall be further subject to adjustment in accordance with Section 10.
The Shares shall be issued from authorized and unissued Common Stock or
Common Stock held in or hereafter acquired for the treasury of Company.
If an Option terminates or expires without having been fully exercised
for any reason or if Shares subject to an Award have been conveyed back
to Company pursuant to the terms of an Award Agreement, the
Shares for which the Option was not exercised or the Shares that were
conveyed back to Company shall again be available for issuance pursuant
to the terms of one or more Options, or one or more Awards, granted
pursuant to the Plan.
7. Term of the Plan. The Plan is effective as of _____ , 1998, the date on
which it was adopted by the Board, subject to the approval of the Plan within
one year after such date by the stockholders in the manner required by state
law. If the Plan is not so approved by the stockholders, all Options granted
under the Plan shall be null and void. No ISO may be granted under the Plan
after _____, 2008.
8. Option Documents and Terms. Each Option granted under the Plan shall be a
Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO. If any Option designated an ISO is
determined for any reason not to qualify as an incentive stock option within
the meaning of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the
Plan. Options granted pursuant to the Plan shall be evidenced by the Option
Documents in such form as the Committee shall approve from time to time,
which Option Documents shall comply with and be subject to the following
terms and conditions and such other terms and conditions as the Committee
shall require from time to time which are not inconsistent with the terms
of the Plan.
(a) Number of Option Shares. Each Option Document shall state the number
of Shares to which it pertains. An Optionee may receive more than one
Option, which may include Options which are intended to be ISOs and Options
which are not intended to be ISOs, but only on the terms and subject to the
conditions and restrictions of the Plan. Notwithstanding anything herein to
the contrary, no Optionee shall be granted Options during one fiscal year
of Company for more than Two Hundred Thousand (200,000) Shares (such number
to be subject to adjustment in accordance with Section 10).
(b) Option Price. Each Option Document shall state the Option Price,
which, for a Non-qualified Stock Option, need not be the Fair Market Value
of the Shares on the date the Option is granted and, for an ISO, shall be
at least 100% of the Fair Market Value of the Shares on the date the Option
is granted as determined by the Committee in accordance with this
Subsection 8(b); provided, however, that if an ISO is granted to an
Optionee who then owns, directly or by attribution under Section 424(d) of
the Code, shares possessing more than ten percent of the total combined
voting power of all classes of stock of Company or an Affiliate, then, to
the extent required by Section 424(d) of the Code, the Option Price shall
be at least 110% of the Fair Market Value of the Shares on the date the
Option is granted. If the Common Stock is traded in a public market, then
the Fair Market Value per share shall be: (i) if the Common Stock is listed
on a national securities exchange or included in the NASDAQ System, the
last reported sale price thereof on the relevant date, (ii) if the Common
Stock is not so listed or included, the mean between the last reported
"bid" and "asked" prices thereof on the relevant date, as reported on
NASDAQ, or (iii) if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.
(c) Exercise. No Option shall be deemed to have been exercised prior to
the receipt by Company of written notice of such exercise and, unless
arrangements satisfactory to Company have been made for payment through a
broker in accordance with procedures permitted by rules or regulations of
the Federal Reserve Board, receipt of payment in full of the Option Price
for the Shares to be purchased. Each such notice shall specify the number
of Shares to be purchased and, unless the Shares are covered by a then
current registration statement or a Notification under Regulation A under
the Securities Act, shall contain the Optionee's acknowledgment, in form
and substance satisfactory to Company, that (i) such Shares are being
purchased for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to
Company, may be made without violating the registration provisions of the
Securities Act), (ii) the Optionee has been advised and understands that
(A) the Shares have not been registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities
Act and are subject to restrictions on transfer, and (B) Company is under
no obligation to register the Shares under the Securities Act or to take
any action which would make available to the Optionee any exemption from
such registration, (iii) such Shares may not be transferred without
compliance with all applicable federal and state securities laws, and
(iv) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the Option Documents
may be endorsed on the certificates. Notwithstanding the foregoing, if
Company determines that the issuance of Shares should be delayed pending
registration under federal or state securities laws, the receipt of an
opinion of counsel satisfactory to Company that an appropriate exemption
from such registration is available, the listing or inclusion of the
Shares on any securities exchange or an automated quotation system or the
consent or approval of any governmental regulatory body whose consent or
approval is necessary in connection with the issuance of such Shares,
Company may defer exercise of any Option granted hereunder until any of
the events described in this sentence has occurred.
(d) Medium of Payment. Subject to the terms of the applicable Option
Document, an Optionee shall pay for Shares (i) in cash, (ii) by certified
or cashier's check payable to the order of Company, or (iii) by such other
mode of payment as the Committee may approve, including the Optionee=s note
in form approved by the Committee and payment through a broker in
accordance with procedures permitted by rules or regulations of the Federal
Reserve Board. The Optionee may also exercise the Option in any manner
contemplated by Section 11. Furthermore, the Committee may provide in an
Option Document that payment may be made in whole or in part in shares of
Company's Common Stock held by the Optionee. If payment is made in whole or
in part in shares of Company's Common Stock, then the Optionee shall
deliver to Company certificates registered in the name of such Optionee
representing the shares owned by such Optionee, free of all liens, claims
and encumbrances of every kind and having an aggregate Fair Market Value on
the date of delivery that is at least as great as the Option Price of the
Shares (or relevant portion thereof) with respect to which such Option is
to be exercised by the payment in shares of Common Stock, endorsed in blank
or accompanied by stock powers duly endorsed in blank by the Optionee. In
the event that certificates for shares of Company's Common Stock delivered
to Company represent a number of shares in excess of the number of shares
required to make payment for the Option Price of the Shares (or relevant
portion thereof) with respect to which such Option is to be exercised by
payment in shares of Common Stock, the stock certificate or certificates
issued to the Optionee shall represent (i) the Shares in respect of which
payment is made, and (ii) such excess number of shares. Notwithstanding the
foregoing, the Committee may impose from time to time such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option
as it deems appropriate.
(e) Termination of Options.
(i) No Option shall be exercisable after the first to occur of the
following:
(A) Expiration of the Option term specified in the Option
Document, which, in the case of an ISO, shall not occur after
(1) ten years from the date of grant, or (2) five years from
the date of grant if the Optionee on the date of grant owns,
directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent of the total combined
voting power of all classes of stock of Company or of an
Affiliate;
(B) Except to the extent otherwise provided in an Optionee's
Option Document, a finding by the Committee, after full
consideration of the facts presented on behalf of both Company
and the Optionee, that the Optionee has been engaged in
disloyalty to Company or an Affiliate, including, without
limitation, fraud, embezzlement, theft, commission of a felony
or proven dishonesty in the course of employment or service, or
has disclosed trade secrets or confidential information of
Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which Company has not yet
delivered the share certificates upon refund by Company of the
Option Price. Notwithstanding anything herein to the contrary,
Company may withhold delivery of share certificates pending the
resolution of any inquiry that could lead to a finding
resulting in a forfeiture;
(C) The date, if any, set by the Committee as an accelerated
expiration date in the event of the liquidation or dissolution
of Company;
(D) The occurrence of such other event or events as may be
set forth in this Plan or the Option Document as causing an
accelerated expiration of the Option; or
(E) Except as otherwise set forth in the Option Document and
subject to the foregoing provisions of this Subsection 8(e),
three months after the Optionee's employment or service with
Company or its Affiliates terminates for any reason other than
Disability or death or one year after such termination due to
Optionee's Disability or death. With respect to this
Subsections 8(e)(i)(E), the only Options that may be exercised
during the three-month or one-year period, as the case may be,
are Options which were exercisable on the last date of such
employment or service and not Options which, if the Optionee
were still employed or rendering service during such
three-month or one-year period, would become exercisable,
unless the Option Document specifically provides to the
contrary or the Committee otherwise approves. The terms of an
executive severance agreement or other agreement between
Company and an Optionee, approved by the Committee or the
Board, whether entered into prior or subsequent to the grant of
an Option, which provide for Option exercise dates later than
those set forth in Subsection 8(e)(i) shall be deemed to be
Option terms approved by the Committee and consented to by the
Optionee.
(ii) Notwithstanding the foregoing, the Committee may extend the
period during which all or any portion of an Option may be exercised,
provided that any change pursuant to this Subsection 8(e)(ii) which
would cause an ISO to become a Non-qualified Stock Option may be made
only with the consent of the Optionee.
(iii) Notwithstanding anything to the contrary contained in the Plan
or an Option Document, an ISO shall be treated as a Non-qualified
Stock Option to the extent such ISO is exercised at any time after
the expiration of the time period permitted under the Code for the
exercise of an ISO.
(f) Transfers. Except as otherwise provided in this Subsection 8(f), no
Option granted under the Plan may be transferred, except by will or by the
laws of descent and distribution, and, during the lifetime of the person to
whom an Option is granted, such Option may be exercised only by the
Optionee. Notwithstanding the foregoing, an Option, other than an ISO,
shall be transferrable pursuant to a "domestic relations order" as defined
in the Code or Title I of the Employee Retirement Income Security Act, or
the rules thereunder, and also shall be transferrable, without payment of
consideration, to (a) immediate family members of the holder (i.e., spouse
or former spouse, parents, issue, including adopted and "step" issue, or
siblings), (b) trusts for the benefit of immediate family members, (c)
partnerships whose only partners are such family members, and (d) to any
transferee permitted by a rule adopted by the Committee or approved by the
Committee in an individual case. Any transferee will be subject to all of
the conditions set forth in the Option prior to its transfer.
(g) Limitation on ISO Grants. To the extent that the aggregate fair
market value of the shares of Common Stock (determined at the time the ISO
is granted) with respect to which ISOs under all incentive stock option
plans of Company or its Affiliates are exercisable for the first time by
the Optionee during any calendar year exceeds $100,000, such ISOs shall, to
the extent of such excess, be treated as Non-qualified Stock Options.
(h) Other Provisions. Subject to the provisions of the Plan, the Option
Documents shall contain such other provisions, including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the
Plan, additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee deems advisable.
(i) Specific Grants for Non-Employee Directors. A Non-Employee Director
may elect to receive stock options in lieu of board fees at a rate of 50%
of the market value of Canisco Common Stock on the date of the meeting.
The election to take options in lieu of cash director's fees shall be made
for each meeting immediately prior to the same. Failure to make such an
affirmative election will result in cash payment.
9. Change of Control. In the event of a Change of Control, the Committee may
take whatever actions it deems necessary or desirable with respect to any of
the Options outstanding or Award Shares not yet fully vested or paid for,
all of which need not be treated identically, including, without limitation,
accelerating (a) the expiration or termination date in the respective Option
Documents to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionees, or (b) the exercisability of the
Option.
A "Change of Control" shall be deemed to have occurred upon the earliest to
occur of any of the following events, each of which shall be determined
independently of the others:
(i) any Person (as defined below) becomes a "beneficial owner," as such
term is used in Rule 13d-3 promulgated under the Exchange Act, of twenty-
five percent (25%) or more (as determined by the Committee) of Company's
stock entitled to vote in the election of directors. For purposes of this
Plan, the term "Person" is used as such term is used in Sections 13(d) and
14(d) of the Exchange Act; provided, however that, unless the Committee
determines to the contrary, the term shall not include Company, any trustee
or other fiduciary holding securities under an employee benefit plan of
Company, or any corporation owned, directly or indirectly, by the
stockholders of Company in substantially the same proportions as their
ownership of stock of Company, or a Continuing Director (as defined below),
whether the Continuing Director acts individually or in concert with
others.
(ii) individuals who are Continuing Directors cease to constitute a
majority of the members of the Board ("Continuing Directors" for this
purpose being the members of the Board on the date of adoption of this
Plan, provided that any person becoming a member of the Board subsequent to
such date whose election or nomination for election was supported by
two-thirds of the directors who then comprised the Continuing Directors
shall be considered to be an Continuing Director);
(iii) stockholders of Company adopt a plan of complete or substantial
liquidation or an agreement providing for the distribution of all or
substantially all of its assets;
(iv) Company is party to a merger, consolidation, other form of business
combination or a sale of all or substantially all of its assets, unless the
business of Company is continued following any such transaction by a
resulting entity (which may be, but need not be, Company) and the
stockholders of Company immediately prior to such transaction (the "Prior
Stockholders") hold, directly or indirectly, at least two-thirds of the
voting power of the resulting entity (there being excluded from the voting
power held by the Prior Stockholders, but not from the total voting power
of the resulting entity, any voting power received by Affiliates of a party
to the transaction (other than Company) in their capacities as stockholders
of Company);
(v) there is a Change of Control of Company of a nature that would be
required to be reported in response to item 1(a) of Current Report on Form
8-K or item 6(e) of Schedule 14A of Regulation 14A or any similar item,
schedule or form under the Exchange Act, as in effect at the time of the
change, whether or not Company is then subject to such reporting
requirement;
(vi) the Company is a subject of a "Rule 13e-3 transaction" as that term
is defined in Exchange Act Rule 13e-3; or
(vii) there has occurred a "change of control," as such term (or any term
of like import) is defined in any of the following documents which is in
effect with respect to Company at the time in question: any note, evidence
of indebtedness or agreement to lend funds to Company, any option,
incentive or employee benefit plan of Company or any employment, severance,
termination or similar agreement with any person who is then an employee of
Company.
10. Adjustments on Changes in Capitalization.
(a) In the event that the outstanding Shares are changed by reason of a
reorganization, merger, consolidation, recapitalization, reclassification,
stock dividend in excess of five percent, stock split-up, combination or
exchange of shares and the like (not including the issuance of Common Stock
on the conversion of other securities of Company which are convertible into
Common Stock), an equitable adjustment may be made by the Committee as it
deems appropriate in the aggregate number of shares available under the
Plan and in the number of Shares and price per Share subject to outstanding
Options. Unless the Committee makes other provisions for the equitable
settlement of outstanding Options, if Company shall be reorganized,
consolidated, or merged with another corporation, or if all or
substantially all of the assets of Company shall be sold or exchanged, an
Optionee shall at the time of issuance of the stock under such corporate
event be entitled to receive, upon the exercise of this Option in
accordance with its terms, the same number and kind of shares of stock or
the same amount of property, cash or securities as the Optionee would have
been entitled to receive upon the occurrence of any such corporate event as
if the Optionee had been, immediately prior to such event, the holder of
the number of shares covered by his or her Option.
(b) Any adjustment under this Section 10 in the number of Shares subject
to Options shall apply proportionately to only the unexercised portion of
any Option granted hereunder. If a fraction of a Share would result from
any such adjustment, the fraction shall be eliminated, unless the Committee
otherwise determines.
(c) The Committee shall have authority to determine the adjustments to be
made under this Section, and any such determination by the Committee shall
be final, binding and conclusive.
11. Stock Appreciation Rights (SARs).
(a) In General. Subject to the terms and conditions of the Plan, the
Committee may, in its sole and absolute discretion, grant to an Optionee
the right (which right shall be referred to as an "SAR") to surrender an
Option to Company, in whole or in part, and to receive in exchange therefor
payment by Company of an amount equal to the excess of the Fair Market
Value of the Shares subject to such Option, or portion thereof, so
surrendered (determined in the manner described in section 8(b) as of the
date the SARs are exercised) over the exercise price to acquire such
Shares. Except as may otherwise be provided in an Option Document, such
payment may be made, as determined by the Committee in accordance with
Subsection 11(c) below and set forth in the Option Agreement, either in
Shares or in cash or in any combination thereof.
(b) Grant. Each SAR shall relate to a specific Option granted under the
Plan and shall be granted to the Optionee concurrently with the grant of
such Option by inclusion of appropriate provisions in the Option Agreement
pertaining thereto. The number of SARs granted to an Optionee shall not
exceed the number of Shares which such Optionee is entitled to purchase
pursuant to the related Option. The number of SARs held by an Optionee
shall be reduced by (i) the number of SARs exercised under the provisions
of the Option Agreement pertaining to the related Option, and (ii) the
number of Shares purchased pursuant to the exercise of the related Option.
(c) Payment. The Committee shall have sole discretion to determine
whether payment in respect of SARs exercised by any Optionee shall be made
in shares of Common Stock, in cash, or in a combination thereof. If payment
is made in Common Stock, the number of shares which shall be issued
pursuant to the exercise of SARs shall be determined by dividing (i) the
total number of SARs being exercised, multiplied by the amount by which the
Fair Market Value (as determined under Section 8(b)) of a share of Common
Stock on the exercise date exceeds the exercise price for shares covered by
the related Option, by (ii) the Fair Market Value of a share of Common
Stock on the exercise date of the SARs. No fractional share of Common Stock
shall be issued on exercise of an SAR; cash may be paid by Company to the
person exercising an SAR in lieu of any such fractional share, if the
Committee so determines. If payment on exercise of an SAR is to be made in
cash, the person exercising the SAR shall receive, in respect of each SAR
to which such exercise relates, an amount of money equal to the difference
between the Fair Market Value of a share of Common Stock on the exercise
date and the then-applicable exercise price for Shares covered by the
related Option.
(d) Limitations. SARs shall be exercisable at such times and under such
terms and conditions as the Committee, in its sole and absolute discretion,
shall determine; provided, however, that an SAR may be exercised only at
such times and by such individuals as the related Option may be exercised
under the Plan and the Option Agreement.
12. Terms and Conditions of Awards. Awards granted pursuant to the Plan shall
be evidenced by written Award Agreements in such form as the Committee shall
approve from time to time, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the Committee shall require from time to time which are
not inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall state the number of
Shares or other units or rights to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the purchase
price, if any, which applies to the Award. If the Board specifies a
purchase price, the Grantee shall be required to make payment on or before
the payment date specified in the Award Agreement. A Grantee shall make
payment (i) in cash, (ii) by certified check payable to the order of
Company, or (iii) by such other mode of payment as the Committee may
approve.
(c) Grant. In the case of an Award which provides for a grant of Shares
without any payment by the Grantee, the grant shall take place on the date
specified in the Award Agreement. In the case of an Award which provides
for a payment, the grant shall take place on the date the initial payment
is delivered to Company, unless the Committee or the Award Agreement
otherwise specifies. Notwithstanding the foregoing, as a precondition to a
grant, Company may require an acknowledgment by the Grantee as required
with respect to Options under Subsection 8(c).
(d) Conditions. The Committee may specify in an Award Agreement any
conditions under which the Grantee of that Award shall be required to
convey to Company the Shares covered by the Award. Upon the occurrence of
any such specified condition, the Grantee shall forthwith surrender and
deliver to Company the certificates evidencing such Shares as well as
completely executed instruments of conveyance. The Committee, in its
discretion, may provide that certificates for Shares transferred pursuant
to an Award be held in escrow by Company or its designee until such time as
every condition has lapsed and that the Grantee be required, as a condition
of the Award, to deliver to such escrow agent or Company officer stock
transfer powers covering the Award Shares duly endorsed by the Grantee.
Unless otherwise provided in the Award Agreement or determined by the
Committee, dividends and other distributions made on Shares held in escrow
shall be deposited in escrow, to be distributed to the party becoming
entitled to the Shares on which the distribution was made. Stock
certificates evidencing Shares subject to conditions shall bear a legend to
the effect that the Shares evidenced thereby are subject to repurchase by,
or conveyance to, Company in accordance with the terms applicable to such
Shares under an Award made pursuant to the Plan, and that the Shares may
not be sold or otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of all forfeiture
conditions, Company shall cause certificates without the legend referring
to Company's repurchase or acquisition right (but with any other legends
that may be appropriate) evidencing the Shares covered by the Award to be
issued to the Grantee upon the Grantee's surrender to Company of the
legended certificates held by the Grantee.
(f) Rights as Stockholder. Upon payment of the purchase price, if any,
for Shares covered by an Award and compliance with the acknowledgment
requirement of subsection 12(c), the Grantee shall have all of the rights
of a stockholder with respect to the Shares covered thereby, including the
right to vote the Shares and (subject to the provisions of Subsection
12(d)) receive all dividends and other distributions paid or made with
respect thereto, except to the extent otherwise provided by the Committee
or in the Award Agreement.
13. Amendment of the Plan. The Board may amend the Plan from time to time in
such manner as it may deem advisable. Nevertheless, the Board may not change
the class of persons eligible to receive an ISO or increase the maximum
number of Shares as to which Options may be granted under the Plan, or to
any individual under the Plan in any year, without obtaining approval,
within twelve months before or after such action, by the stockholders in
the manner required by state law. No amendment to the Plan shall adversely
affect any outstanding Option or Award, however, without the consent of
the Optionee or Grantee, as the case may be.
14. No Commitment to Retain. The grant of an Option or Award pursuant to the
Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of Company or any Affiliate to
retain the Optionee or Grantee as an employee, director, consultant or
advisor of Company or any Affiliate, or in any other capacity.
15. Withholding of Taxes. In connection with any event relating to an Option or
Award, Company shall have the right to (a) require the recipient to remit or
otherwise make available to Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the
delivery or transfer of any certificates for such Shares, or (b) take
whatever other action it deems necessary to protect its interests with
respect to tax liabilities, including, without limitation, withholding
any Shares, funds or other property otherwise due to the Optionee or
Grantee. The Company's obligations under the Plan shall be conditioned
on the Optionee's or Grantee's compliance, to Company's satisfaction,
with any withholding requirement.
