<COVER>
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
RE: Canisco Resources, Inc.
Definitive Proxy Statement
Gentlemen/Ladies:
Enclosed please find the Definitive Proxy Statement of Canisco
Resources, Inc. If you have any questions regarding the same, please feel
free to contact me at (302) 777-5050.
Sincerely,
Lauralee A. Snyder
Corporate Counsel
CANISCO RESOURCES, INC.
300 Delaware Avenue, Suite 714
Wilmington, Delaware 19801
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 Common
shares from ten (10) million to twenty (20) million as proposed
in the attached Proxy Statement.
(5) To consider and act upon a proposal to amend the Certificate of
Incorporation to authorize 5,000,000 shares of Preferred
Shares, $1.00 par value, as proposed in the attached Proxy
Statement.
(6) 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 27, 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
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 30, 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. 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
the brokers 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 and Approval of the 1998 Amendment of the
Certificate of Incorporation for an increase in authorized Common
shares: To be approved, these matters 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 and Approval of the
Preferred Shares: To be adopted, these matters 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.
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:
Shares Percentage of
Name and Address Beneficially Owned(1) 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.
<TABLE>
<CAPTION>
Sole
Voting Shared
and Voting and
Investment Investment Aggregate
Power Power(1) Other(2) Total(3) of Class
<S> <C> <C> <C> <C> <C>
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 223,819 103,026 114,278 441,123 19.87%
A Group
(7 persons)
</TABLE>
(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 from 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
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.
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.
<PAGE>
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 $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
Name Securities
And Other Underlying
Principal Salary Bonus compensation Options/
Position Year ($) ($)(2) ($)(3) SARS (#)
<S> <C> <C> <C> <C> <C>
Ralph A.Trallo
President,
Chief Executive
Officer and
Director; also
President 1998 185,000 115,000 47,590(4) 0
and CEO of 1997 185,000 77,700 7,210 50,000(5)
Cannon Sline 1996(1) 75,000 82,154 5,200 10,000(5)
Michael J. Olson
Vice President,
Secretary/
Treasurer and 1998 105,000 85,000 37,820(4) 0
Chief Financial 1997 105,000 44,100 5,469 30,000(5)
Officer 1996(1) 45,000 49,292 2,675 10,000(5)
</TABLE>
(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 1996 but were covered under separate
incentive arrangements with Cannon Sline. Under those arrangements,
Mr. Trallo and Mr. Olson were awarded cash bonuses for 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 FY
1998. 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 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 July 15, 1998
was $3.25 per share.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PROGRAM
The 1998 Stock Option/Incentive Plan described below, which is
being submitted for stockholder approval as Item No. 3, provides that a
Non-Employee Director may elect to receive stock options in lieu of cash
fees for attendance at meetings of the Board and committees thereof.
Options will be issued in the following ratio: for each dollar of fee
not taken in cash, the Director shall receive five year Options with an
exercise price per share equal to one-half of the Fair Market Value of
the Common Stock on the date of the meeting and a total exercise price
equal to the amount of fee not taken in cash. The number of Options
will equal the dollar amount of the fee not taken in cash dividend by
the option exercise price per share. Unless the Director makes the
election to receive Options in lieu of cash with respect to each meeting
by the meeting date, the Director's fee will be paid in cash.
The Company recognizes that the Options to be received by Directors
under this provision will have an in -the-money value at the time of
their issuance equal to the amount of the fee not taken in cash.
Because the Options themselves will have an independent value
(representing the right to elect whether or not to purchase the shares
at a future date) in excess of their in-the-money value at the time of
their issuance, a Director who elects to receive Options in lieu of cash
will receive a greater value in the form of Options than the cash which
the Director would otherwise receive. The Company believes that this
feature of the Plan is desirable from its perspective, because it will
permit the Company to preserve cash and it will encourage the Non-
Employee Directors to increase their equity interest in the Company.
Under prior plans relating to directors' stock options, the following
options are currently outstanding 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 $5.50. No further options will be issued
under these prior plans.
SENIOR EXECUTIVE GROUP COMPENSATION PROGRAM
There were no stock options and stock appreciation rights (SAR)
granted to or exercised by the Company's executive officers in respect
to its last fiscal year.
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FY END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
securities
underlying Value of
unexercised unexercised
options/SARs in-the-money
Shares at FY end (#) options/SARs
Acquired Value exercisable/ at FY end ($)
On realized unexercisable exercisable/
Name Exercise(#) ($) (1) unexercisable
<S> <C> <C> <C> <C>
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 B 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, provided the aggregate number of shares issuable under the
plan shall not exceed 1,000,000. 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.
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.
Non-Employee Directors Options - For information on the
plan provision, see "Non-Employee Directors' Stock Option".
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 under the
1990 plan with exercise prices ranging from $3.38-$5.50. This 1990 plan
has expired by its terms, and no further options will be granted under
it or any other pre-1998 plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE
PROPOSAL TO APPROVE THE PLAN.
AMENDMENT TO CERTIFICATION OF INCORPORATION
REGARDING AUTHORIZED COMMON 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 Common
Stock of 20,000,000 shares, $.0025 par value per share.
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 110,000 shares are reserved for the exercise of warrants
held by the others.
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
common stock will assist in its acquisition program. Either Common or
the rights to acquire such stock (for example, through the conversion of
convertible debt or equity securities 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. At the present time, the Company is
investigating various opportunities for financing its growth strategy.
However, there are no pending transactions to which these shares have
been committed.
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 .
AMENDMENT TO CERTIFICATION OF INCORPORATION
REGARDING AUTHORIZED PREFERRED STOCK
(Item 5)
Article Third of the Company's Certificate of Incorporation
provides for no preferred stock. The Board of Directors recommends this
Article be amended to authorize 5,000,000 shares of Preferred Stock,
$1.00 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 follows:
The Company anticipates that the issuance of Preferred Stock will
assist in its aggressive acquisition program and for capital raising
transactions, as described above. 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 and capital raising transactions. At
the present time, the Company is investigating various opportunities for
financing its growth strategy. However, there are no pending
transactions to which these shares have been committed. There is no
transaction pending involving the shares to be newly authorized for
issuance. The Company has discussed from time to time acquisitions and
financing transactions that may involve the issuance of common or
preferred shares. Any transaction that would increase the common stock
by more than twenty percent on a fully diluted basis will be submitted
to shareholders for their approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR
THE PROPOSAL TO AMEND ARTICLE THIRD TO PROVIDE FOR FIVE (5) MILLION
SHARES OF PREFERRED STOCK AT $1.00 PAR VALUE.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
All proposals of any shareholder of the Company that such
shareholder wishes to be presented at the Annual Meeting of Shareholders
in 1999 must be received by March 29, 1999 in order to be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to
that Meeting. Shareholder proposals should be directed to Ralph A.
Trallo, President and Chief Executive Officer at 300 Delaware Avenue,
Suite 714, Wilmington, Delaware.
A shareholder of the Company may wish to have a proposal presented
at the Annual Meeting of Shareholders in 1999, but not to have such
proposal included in the Company's Proxy Statement and form of proxy
relating to that Meeting. If notice of any such proposal is not
received by the Company prior to June 12, 1999, such shall be deemed
"untimely" for purpose of SEC Rule 14a-4(c), and, therefore, the Company
will have the right to exercise discretionary voting authority with
respect to such proposal. Any such notice should be directed to Mr.
Trallo in accordance with the preceding paragraph.
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 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 27, 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
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 WITHHOLD Dale L. Ferguson, Donald E. Lyons,
listed to the right AUTHORITY Thomas P. McShane, Wm. Lawrence
(except as marked to vote Petcovic, Joe C. Quick, Ralph A.
to the contrary) for nominees Trallo listed to
the right
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
as proposed in the attached Proxy
Statement.
5. FOR AGAINST ABSTAIN
With respect to the ratification of
( ) ( ) ( ) the proposal to amend the Certificate
of Incorporation 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.
6. 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 27, 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 Date: _________
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED, ADDRESSED
ENVELOPE.
STOCK OPTION/INCENTIVE PLAN
CANISCO RESOURCES, INC.
1998 STOCK OPTION/INCENTIVE PLAN
As Adopted by the Board of Directors April 24, 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 defined 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 person 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 including, without limitation
interpretations to determine the number of shares remaining available
for issuance under 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; and further provided that the maximum aggregate number of
shares to be issued under the plan shall not exceed 1,000,000 shares.
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 April 24,
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 April 24, 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.
(e) 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 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.
(f) 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.
(g) 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.
(h) Specific Grants for Non-Employee Directors. A Non-
Employee Director may elect to receive Options in lieu of cash fees for
attendance at meetings of the Board and committees thereof at the
following ratio: for each dollar of fee not taken in cash, the Director
shall receive five year Options with an exercise price per share equal
to one-half of the Fair Market Value of the Common Stock on the date of
the meeting and a total exercise price equal to the amount of fee not
taken in cash. The number of Options will equal the dollar amount of
the fee not taken in cash dividend by the option exercise price per
share. Unless the Director makes the election to receive Options in
lieu of cash with respect to each meeting by the meeting date, the
Director's fee will be paid in cash.
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.
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