NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1999
MSI
Mining Services International
TO THE SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of Mining
Services International Corporation ("the Company") which will be held at the
Hampton Inn, 10690 South Holiday Park Drive, Sandy, Utah on Wednesday, May 19,
1999, commencing at 3:00 p.m. (Mountain Daylight Savings Time) for the following
purposes:
1. To elect five (5) Directors to serve until the next Annual Meeting
of Shareholders or until their successors shall be elected and duly qualified;
2. To consider and vote upon a proposal to ratify the amendment of the
Mining Services International Corporation 1987 Nonqualified Stock Option Plan to
increase the number of shares of Common Stock available for issuance pursuant to
grants thereunder by 233,199 shares, to extend the term thereof by an additional
10 years to December 31, 2007 and to restrict the Company's right to repurchase
certain of the Common Shares issued in connection with the exercise of options,
as described below;
3. To consider and vote upon a proposal to ratify the appointment of
Tanner + Co. to be the Company's independent public accountant for the year
ending 1999; and
4. To transact such other business as may properly come before the
Annual Meeting of Shareholders or at any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 16,
1999 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting of Shareholders and any
adjournment or postponement thereof. A list of those entitled to vote will be
available for inspection for ten (10) days prior to the meeting at the offices
of the Company.
By Order of the Board of Directors
Lex L. Udy
Vice Chairman and Secretary
Salt Lake City, Utah
April 16, 1999
IMPORTANT
Whether or not you expect to attend the Annual Meeting in person, to assure
that your shares will be represented, please complete, date, sign and return the
enclosed proxy without delay in the enclosed envelope, which requires no
<PAGE>
additional postage if mailed in the United States. Your proxy will not be used
if you are present at the Annual Meeting and desire to vote your shares
personally.
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MINING SERVICES INTERNATIONAL CORPORATION
8805 South Sandy Parkway
Sandy, UT 84070-6408
-----------------------
PROXY STATEMENT
-----------------------
Annual Meeting of Shareholders
May 19, 1999
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of Mining
Services International, a Utah Corporation (the "Company" or "MSI") in
connection with the solicitation by the Board of Directors of the Company of
proxies from holders of outstanding shares of the Company's Common Stock for use
at the Annual Meeting of Shareholders of the Company to be held Wednesday, May
19, 1999, and at any adjournment or postponement thereof (the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting of Shareholders and the
accompanying form of proxy are first being mailed to shareholders of the Company
on or about April 16, 1999.
The Company will bear all costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and mailing
to shareholders this Proxy Statement and accompanying material. In addition to
the solicitation of proxies by mail, the directors, officers and employees of
the Company, without receiving additional compensation therefore, may solicit
proxies personally or by telephone. Arrangements will be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of the shares of Common Stock
held by such persons, and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
VOTING
Record Date
The Board of Directors has fixed the close of business on April 16,
1999 as the record date for determination of shareholders entitled to notice of
and to vote at the Annual Meeting (the "Record Date"). As of the Record Date,
there were issued and outstanding 7,339,760 shares of common stock, par value
$.001 per share. The holders of record of the shares of Common Stock on the
Record Date entitled to be voted at the Annual Meeting are entitled to cast one
vote per share on each matter submitted to a vote at the Annual Meeting.
Accordingly, a total of 7,339,760 shares are entitled to be cast on each matter
submitted to a vote at the Annual Meeting.
Proxies
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted (i) FOR the election of each of the
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five director nominees; (ii) FOR the ratification of the amendment of the Mining
Services International Corporation 1987 Nonqualified Stock Option Plan (the
"Plan") to increase the number of shares of Common Stock available for issuance
pursuant to grants thereunder by 233,199 shares, to extend the term of the Plan
by an additional 10 years to December 31, 2007 and to restrict the Company's
right to repurchase certain of the Common Shares issued in connection with the
exercise of options, as described below; (iii) FOR the ratification of the
appointment by the Board of Directors of Tanner + Co. to be the independent
public accountant for the company for the year ending December 31, 1999; and
(iv) in the discretion of the proxy holders as to any other matters which may
properly come before the Annual Meeting.
A shareholder who has executed and returned a proxy may revoke it at
any time prior to its exercise at the Annual Meeting by executing and returning
a proxy bearing a later date, by filing with the Secretary of the Company, at
the address set forth above, a written notice of revocation bearing a later date
than the proxy being revoked, or by voting the Common Stock covered thereby in
person at the Annual Meeting.
Required Vote
A majority of the outstanding shares of the Company's common stock
entitled to vote, represented in person or properly executed proxy, is required
to constitute a quorum. Abstentions and broker non-votes, which are indications
by a broker that it does not have discretionary authority to vote on a
particular matter, will be counted as "represented" for the purpose of
determining the presence or absence of a quorum. Under Utah corporate law, once
a quorum is established, shareholder approval with respect to a particular
proposal is generally obtained when the votes cast in favor of the proposal
exceed the votes cast against such proposal.
In the election of Directors, shareholders will not be allowed to
cumulate their votes. The five nominees receiving the highest vote totals will
be elected as Directors of the Company. For approval of (i) the amendment of the
Plan and (ii) the proposed ratification of the independent public accountant,
the votes cast in favor of the proposal must exceed the votes cast against the
proposal. Accordingly, abstentions and broker non-votes will not have the effect
of being considered as votes cast against the nominees or the proposed
ratification.
ELECTION OF DIRECTORS
At the Annual Meeting five directors of the Company are to be elected
to serve until the next Annual Meeting of shareholders and until their
successors shall be duly elected and qualified. Each of the nominees for
director identified below is currently a director of the Company. If any of the
nominees should be unavailable to serve, which is not now anticipated, the
proxies solicited hereby will be voted for such other persons as shall be
designated by the present Board of Directors. The five nominees receiving the
highest number of votes at the Annual Meeting will be elected.
Nominees for Election as Directors
Certain information with respect to each nominee is set forth below:
Edward Neff (Ted) Bagley, 86, has been associated with the investment
banking firm of Smith Barney and predecessor companies since 1971, where he is
presently a Vice President. Mr. Bagley was elected a member of the Board of
Directors in October 1983, and has served as Chairman of the Board of Directors
from 1989 to the present. Mr. Bagley is also a Director of Gentner
Communications Corporation.
Dr. Lex L. Udy, 65, has been Vice Chairman of the Company since April
1993 and Secretary since March 1995. He was a founder of the Company and has
served as a Director since 1979. From 1979 to 1984 he was Vice President of
Research for the Company with responsibility for new product development, patent
development and field test operations. From 1985 to 1993 he was President and
Chief Executive Officer for the Company. Dr. Udy obtained a B.S. degree in
Physics from the University of Utah in 1955 and a Ph.D. from the University of
Utah in Metallurgy in 1960. Upon his retirement on March 31, 1999, Dr. Udy
became an outside technical consultant to the Company.
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Dr. John T. Day, 59, has been President and Chief Executive Officer
since April 1993. He was one of the founders of the Company and from 1979 to
1993 was Executive Vice President with responsibility for plant design,
operations, equipment design and construction, and new product development. Dr.
Day was appointed a member of the Board of Directors on November 10, 1986 and
was appointed the Chief Executive Officer of the Company in 1993. Dr. Day
obtained a B.S. degree in Chemical Engineering from the University of Utah in
1964 and obtained a Sc.D. degree from MIT in 1972.
Stephen Fleischer, 44, has been a Director of the Company since
December 1997. Since 1993, Mr. Fleischer has been involved in purchasing,
restructuring and financing (including public financing) under-valued companies
for his own account. From 1990 to 1993, Mr. Fleischer was managing director,
Energy Division, Westinghouse Credit Corporation. Previously, he was vice
President of the Bank of New England and also for The First National Bank of
Chicago. Mr. Fleischer obtained a B.A. degree in Spanish and Business
Administration from Gonzaga University in 1977.
Nathan L. Wade, 70, has been a Director of the Company since June 1989.
Since 1953 Mr. Wade has been the president and principal owner of Nate Wade,
Inc., a Salt Lake City, Utah automobile dealership for new and used automobiles.
Board of Directors Meetings and Committees
There were seven (7) regular meetings of the Board of Directors held
during 1998. All of the Directors attended all of the meetings or were present
via teleconferencing.
The Company presently has standing audit and compensation committees of
the Board of Directors. The audit committee periodically makes recommendations
concerning the engagement of the Company's independent public accountant and
reviews the results and independence of the accountants and the scope, adequacy
and results of the internal auditing procedures. The Company's audit committee
consists of Stephen Fleischer and Nathan L. Wade. Functions of the compensation
committee include making recommendations concerning Director and senior
management remuneration and overseeing the Company's stock option and other
compensation plans. The compensation committee consists of Nathan L. Wade,
Stephen Fleischer and Ted Bagley. All committee members attended at least 75% of
the meetings of their respective committees. Each of the committees met seven
times during the year. No separate compensation is paid for committee attendance
or assignments.
Director Compensation
During 1998 the non-employee directors received $5,000 per year as
compensation for serving on the Board of Directors. Employee members of the
Board of Directors received no compensation for attendance at meetings of the
Board of Directors.
EXECUTIVE OFFICERS
In addition to Dr. Day and Dr. Udy, certain information is furnished
with respect to the following executive officers of the Company:
Richard M. Clayton, 58, was first employed by the Company from 1981 to
1983. Mr. Clayton joined the Company again in 1986 as Director of Marketing and
was appointed Vice President in 1991. Prior to joining the Company, Mr. Clayton
held key management and marketing positions with Texaco Petroleum Corporation
and Nitrate Services Corporation, an explosives company.
David P. Reddick, 43, has been employed by the Company since 1985 as
Director of Operations. In 1991 Mr. Reddick was appointed Vice President. Prior
to joining the Company, Mr. Reddick was associated with Cyprus Minerals in
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operations management. Mr. Reddick obtained a B.S. degree in Resource Economics
from the University of California at Berkeley.
Duane W. Moss, 51, has been employed by the Company since December 1994
as Chief Financial Officer and Legal Counsel. Prior to joining the Company, Mr.
Moss was a self-employed consultant and from 1989 to 1992 was the Secretary,
Treasurer and Chief Financial Officer of Alta Gold Co. Mr. Moss obtained a Juris
Doctorate in 1976 and a B.A. degree in Accounting in 1973 from the University of
Utah.
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company and its affiliates
for the fiscal years ended December 31, 1998, 1997 and 1996 of those persons who
were, as of March 12, 1999, (i) the Chief Executive Officer and (ii) the other
executive officers whose total annual salary and bonus exceeded $100,000 during
the fiscal year ended December 31, 1998 (the "Named Executive Officers").
Compensation of Executive Officers
The following table summarizes compensation received by the Named
Executive Officers of the Company for the three fiscal years ended December 31,
1998.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Position Other Annual All Other
Salary Bonus Compensation Compensation
Year $ $(1) $(2) $(3)
- ------------------------ ---------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Dr. John T. Day 1998 120,000 132,000 20,601 3,600
President and Chief 1997 120,000 125,500 16,049 3,600
Executive Officer 1996 119,231 75,000 18,474 4,340
Dr. Lex Udy 1998 120,000 88,000 13,391 3,600
Vice Chairman and 1997 120,000 80,000 10,691 3,700
Secretary 1996 119,231 50,000 10,243 3,715
Richard M. Clayton 1998 77,700 12,500 9,542 2,331
Vice President 1997 77,700 15,000 7,361 2,331
Marketing 1996 77,633 5,000 7,436 2,031
Duane W. Moss 1998 80,000 10,000 6,110 2,255
Chief Financial 1997 77,150 27,500 3,915 2,255
Officer and Legal 1996 73,500 5,000 7,580 2,672
Counsel
</TABLE>
(1) Includes all cash and non-cash bonuses paid on a discretionary basis by the
Compensation Committee.
(2) Includes life and disability insurance premiums and tax services paid on
behalf of Dr. Udy and Dr. Day and medical reimbursement payments and
personal mileage on company-owned vehicles on the part of the Named
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Executive Officers.
(3) Includes matching contributions made by the company on behalf of the Named
Executive Officers pursuant to the Mining Services International Profit
Sharing 401(k) Plan.
Option Grants in Last Fiscal Year
No individual grants of stock options were made to the Named Executive
Officers during the fiscal year ended December 31, 1998.
Aggregated Option/SAR Exercises and Fiscal Year End Option/SAR Value
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1998 and the value realized upon the exercise of
options during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Number of
Shares Unexercised Value of Unexercised
Acquired Options/SARs In-the-Money Options/SARs
On Value At FY-End (#) at FY-End ($)(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------- ----------- ----------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Clayton 13,283 $50,826 13,283 79,698 $33,252 $160,139
(Vice President Marketing)
Duane W. Moss 13,283 $50,826 13,283 79,698 $33,252 $160,139
(CFO and Legal Counsel)
(1) Reflects the difference between the exercise price of the options granted
and the value of the Common Stock on December 31, 1998. The closing price
of the Common Stock on December 31, 1998, as reported by NASDAQ was $5.50
per share. The options granted are subject to risks of forfeiture and a
vesting schedule. In the case of Mr. Clayton and Mr. Moss, 13,283 options
each may vest yearly on the anniversary date of the option grant, subject
to Board of Directors approval.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulation shows as of March 12, 1999 the number of
shares of the Company's common stock, par value $0.001, owned beneficially by:
(a) all persons known to be the holders of more than five percent (5%) of the
Company's voting securities, (b) Directors, (c) named Executive Officers and (d)
all Officers and Directors of the Company as a group:
Amount and Natures of
Beneficial ownership (1)
------------------------
Name and Address of Beneficial Owner Shares Percent
Edward Dallin Bagley --------------------------- 1,941,065(2) 26.4%
2350 Oak Hills Drive
Salt Lake City, UT 84121
Dr. Lex L. Udy* --------------------------------- 585,706(3) 8.0%
4597 Ledgemont Drive
Salt Lake City, Utah 84124
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Dr. John T. Day* -------------------------------- 574,304 7.8%
5 Dawn Hill
Sandy, Utah 84092
Edward N. Bagley* ------------------------------- 583,834 8.0%
8987 St. Ives Drive
Los Angeles, California 90069
Nathan L. Wade* ------------------------------- 219,628(4) 3.0%
1207 South Main Street
Salt Lake City, Utah 84111
Richard M. Clayton ----------------------------- 26,581(5) .4%
5875 W. Quail Creek Lane
Highland, UT 84003
Duane W. Moss ---------------------------------- 51,548(5) .7%
7952 So. Siesta Drive
Sandy, UT 84093
All Officers and Directors
as a group (8 persons) -------------------------- 4,034,552(6) 55.0%
- --------------------------------------------------------------------------
</TABLE>
(*) Director of the Company.
(1) Unless otherwise indicated, each person identified in the table has sole
voting and investment power with respect to the Company's common stock
beneficially owned by such person.
(2) Includes shares held in the name of Mr. Bagley's spouse. Pursuant to an
agreement signed on behalf of Mr. Bagley and his spouse, the shares
included in this table are voted by the management of the Company.
(3) Includes shares owned solely by Dr. Udy's wife and shares in a family
limited partnership.
(4) Includes shares held by a partnership of which Mr. Wade is a partner,
shares held in an IRA account for the benefit of Mr. Wade's spouse and
shares held by Mr. Wade's family members residing in his home.
(5) Includes options for 13,283 shares which are presently exercisable or will
become exercisable within 60 days.
(6) Includes shares owned by Mr. Bagley and his spouse which are voted by
Company's management by agreement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
stock, to file reports of initial ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Executive officers, directors
and persons who own more than ten percent of the Company's stock, are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company noted that all required forms, including amendments
thereto, were timely filed during the past fiscal year, except the Company has
no record that Mr. Stephen Fleischer, director, has filed an initial report of
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ownership on Form 3. The Company is not aware of any transactions in the Common
Stock of the Company made by Mr. Fleischer since becoming a director of the
Company. In addition, forms 4 were not timely filed for Mr. Lex L. Udy regarding
a distribution to him of Common Stock of the Company for 2,037 shares and for
Mr. Duane W. Moss regarding a gift made by him of 1,833 shares, both made on or
about December 30, 1998. The failure to timely file was due to procedural
oversights made during an employee's absence. The procedural corrections have
been made in order to ensure timely filing of reports promulgated under Section
16(a) of the Exchange Act.
Certain Relationships and Related Transactions
On April 10, 1998, the Company provided John T. Day and Lex L. Udy a
five-year loan of $75,000 and $100,000, respectively, at LIBOR 30-day rate plus
1% adjusted annually each year on the anniversary date. Interest is payable
annually with principle due on the date of maturity. The loans are secured with
shares of Company stock owned by Dr. Day and Dr. Udy of 15,000 and 20,000
shares, respectively. (See note 4 to the Company's financial statements).
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RATIFICATION OF AMENDMENT OF PLAN
The Board of Directors has unanimously adopted a resolution setting
forth the amendment to the Plan to increase by 233,199 shares to 828,207 shares,
the number of shares of Common Stock, available for issuance pursuant to grants
under the Plan.
Description of the Plan
General. The Plan, was adopted by the Board of Directors and
stockholders of the Company, in 1988. The Plan was amended by the Board of
Directors on May 20, 1998 to increase by 233,199 shares, the number of shares of
Common Stock, available for issuance pursuant to grants under the Plan. Also by
resolution of the Board of Directors on May 20, 1998, the Plan was amended to
extend the term thereof by an additional 10 years to December 31, 2007 and to
modify the Company's right to repurchase certain of the Common Shares issued in
connection with the exercise of options, as explained under "Termination of
Employment" below.
As a result of the amendment there were, as of December 31, 1998,
828,207 shares of the Common Stock subject to the Plan. Of those, 359,747 shares
were subject to issued and outstanding options. The remainder, or 463,460
shares, were available for grant under the Plan. Of the 359,747 options issued
and outstanding, options respecting 305,509 were held by executive officers of
the Company and options to purchase 54,238 shares were held by non-executive
employees. No options were held by any directors of the Company as of December
31, 1998. Shares of the Common Stock of the Company closed on the Nasdaq Stock
Market (National Market) at $4.625 per share on April 12, 1999.
As of December 31, 1998, the total number of shares of the Common Stock
that had been subject to options awarded or otherwise available for issuance
under the Plan was 1,315,130. Of the options that were issued but are no longer
outstanding, respecting a total of 725,122 shares of the Common Stock, the
significant majority were issued to current executive officers and directors.
Purpose. The purposes of the Plan are to encourage stock ownership in
the Company by eligible employees and directors of the Company, to provide an
incentive for eligible employees, directors and others to expand and improve the
growth, profitability and general prosperity of the Company in attracting and
retaining qualified employees, directors and others through stimulating their
efforts by giving suitable recognition, in the form of compensation, to their
abilities and industry, which contribute materially to the growth and
profitability of the Company. The Plan seeks to achieve these purposes by
providing for the issuance of options (the "Options") to purchase shares of the
Common Stock and certain corresponding stock appreciation rights ("SARs"). The
Options are not "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") and are not eligible
for the favorable tax treatment provided therein.
Administration of the Plan. The Plan is administered by an
Administrative Committee (the "Committee") consisting of at least three (3)
members of the Board of Directors. The Board of Directors appoints the members
of the Committee, and may from time to time remove members from or add members
to the Committee. Among other things, the Committee has all powers necessary to
administer the Plan, including without limitation, the power to interpret the
Plan and the power to determine the eligibility, status and rights of all
participants under the Plan. The Plan provides that the Board of Directors has
the power by appropriate action to reverse or modify any action by the
Committee. The Plan further provide that except with respect to actions of
Committee members which constitute gross negligence or willful misconduct, the
Company shall defend, indemnify and hold harmless each member of the Committee
against any and all claims, loss, damage, expense and liability arising from any
actual or alleged action or failure to act in connection with the Plan.
Duration of the Plan. The Plan became effective upon its adoption by
the Board of Directors in 1988, and, pursuant to the amendment to the Plan
proposed for ratification herein, shall expire on December 31, 2007 unless it is
terminated prior to such expiration in accordance with the terms thereof.
Notwithstanding the expiration or earlier termination of the Plan, the Plan
shall continue in effect after such expiration or earlier termination for
purposes of the administration of any Option granted prior to such expiration or
earlier termination.
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Shares Subject to the Plan. The Plan provides for the issuance of
Options and certain corresponding SARs. As a result of the amendment to the Plan
proposed to be ratified by the shareholders, the maximum number of shares of
Common Stock which could be issued, from and after December 31, 1998, upon
exercise of Options granted under the Plan, based upon the number of Options
issued and outstanding as of December 31, 1998, were 828,207. Shares of Common
Stock issued under the Plan may be either authorized and unissued shares of
Common Stock, or shares of Common Stock that have been reacquired by the
Company.
In the event the number of outstanding shares of Common Stock should be
increased or decreased, or if Common Stock underlying Options issued under the
Plan should be changed into or exchanged for a different number or kind of
shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock dividend stock split or reverse stock
split, an appropriate or proportionate adjustment shall be made in the terms and
conditions of all Options issued pursuant to the Plan, including the exercise
price of each Option issued thereunder. However, should the Committee determine,
upon the advice of counsel, that any such adjustment could result in the
recognition of federal taxable income by holders of Options granted under the
Plan, or by holders of Common Stock or other securities of the Company, no such
adjustment need be made.
Eligibility. Options may be granted to directors or employees of the
Company who are determined by the Committee to be an officer or to be employed
in a managerial, professional or other key position on the basis of the special
importance of their services in the management, development and operations of
the Company ("Key Employees"). The Committee may also grant Options to other
individuals who the Committee determines have made or are expected to make
significant contributions to the Company. The Committee shall have sole and
absolute discretion in identifying and selecting individuals for nomination to
receive Options under the Plan.
Options. Under the Plan, the Committee, in its sole discretion, may
grant Options from time to time. The Committee shall have complete authority,
subject to the terms of the Plan, to nominate individuals to receive grants of
Options and to select the time or times at which grants of Options shall be
made; provided, however, that the terms of all Options granted pursuant to the
Plan shall comply with all terms and provisions of the Plan. The Plan provides
that the exercise price of any Option shall be determined by the Committee,
except that the exercise price of any Option shall be not less than the value,
as determined pursuant to the Plan, of a share of Common Stock as of the date
which the Option is granted.
Subject to the provisions regarding termination of employment discussed
below, each Option shall be for a term of not more than ten years from the date
of grant. Each Option shall become exercisable in such installments, at such
time or times, and subject to such conditions, as the Committee, in its
discretion, may recommend and approve at or before the time the Option is
granted.
During the lifetime of the employee receiving the Option (the
"Optionee"), Options may not be sold, pledged, assigned, hypothecated,
encumbered or transferred in any manner, except by will, by applicable laws of
descent and distribution. Options may be exercised during an Optionee's lifetime
only by the Optionee, his legal representative. In the event of the Optionee's
death, any Options that were granted to the Optionee and exercisable at the time
of the Optionee's death will continue to be exercisable in accordance with such
Options' terms. Any Option that is exercisable after the date of the Optionee's
death may be exercised only by the person or persons to whom the Optionee's
rights under the Option have passed by will, by applicable laws of descent or
distribution. Any Options that are not exercisable as of the date of death of an
Optionee shall expire and shall not thereafter be exercisable.
Payment. Options granted pursuant to the Plan shall be deemed to have
been exercised when written notice of exercise has been given to the Company by
the person entitled to exercise the Option and full payment in cash or cash
equivalents for the shares of Common Stock with respect to which the Option is
exercised has been received by the Company. The Committee may, in its
discretion, permit an Optionee to purchase shares of Common Stock upon exercise
of an Option with shares of Common Stock previously acquired and owned at the
time of such exercise, provided that the Optionee agrees to make such written
representations and warranties concerning such shares as may be requested by the
Committee.
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Stock Appreciation Rights. In connection with the grant of any Option
pursuant to the Plan, the Board of Directors, upon recommendation of the
Committee, may also grant a SAR, which shall relate to a specific Option granted
to the Optionee. The number of SARs granted to an Optionee shall be less than or
equal to the number of Options granted to such Optionee. Upon exercise, each SAR
entitles an Optionee to receive from the Company an amount equal to the excess
of the fair market value of a share of the Common Stock, determined at the time
the Option is exercised, over the Exercise Price of the related Option. The
failure of an Optionee to exercise a SAR at the time the related option is
exercised shall cause the SAR to lapse. The Committee shall not be obligated to
grant any SARs. Payment by the Company of any amount owing pursuant to the
exercise of a SAR may be made in shares of Common Stock, in cash, or any
combination of cash and shares, as determined in the sole discretion of the
Committee. In the event adjustments are made to the terms of Options granted
under the Plan, comparable adjustments shall be made to the terms of the SARs
associated with such Options.
Termination of Employment. An Optionee may exercise an Option granted
under the Plan only if the Optionee has been continuously in the service of the
Company as a Key Employee, director, independent contractor or otherwise, at all
times from the date on which the Option sought to be exercised was granted to
such Optionee, and continuing through a date which is not more than ninety days
prior to the date on which the Option is sought to be exercised.
The Optionee shall be deemed to have been in the service of the Company
during the first twelve months of a leave of absence approved by the Company and
during the first twelve months of a period of time in which the Optionee is
Disabled (as defined below) and all Options and SARs held by such Optionee may
be exercised in full, in accordance with all applicable vesting or installment
provisions, by the Optionee. "Disabled" with respect to an Optionee of the
Company and for purposes of the Plan is defined as when such Optionee, in the
judgment of an impartial physician selected by the Company, has a physical or
mental condition that presumably permanently prevents such Optionee from
satisfactorily performing such Optionee's usual duties in the service of the
Company, and when such condition has continued substantially uninterrupted for a
period of twelve consecutive months.
In connection with a Registration Statement filed on Form S-8 on July
3, 1997 with respect to certain shares of the Common Stock underlying certain
Options, the Company adopted an amendment to the Plan, which amendment was
ratified by the Board of Directors on May 20, 1998 and is proposed herein for
ratification by the Shareholders. Prior to such amendment, when an Optionee left
the service of the Company for any reason other than the Optionee's death, the
Company had the right to purchase the shares of Common Stock purchased by the
Optionee through exercise of Options during the two year period before the
effective date of the termination of such Optionee's period of service. The
Company could purchase such shares at the Exercise Price for such shares paid by
the Optionee. Following such amendment, the Company may only purchase such
shares to the extent that they are not sold for the purpose of paying the
Exercise Price and related taxes. In addition to the foregoing, the Options
awarded to executive officers of the Company under the Plan are subject to
forfeiture at any time prior to exercise thereof at the discretion of the Board
of Directors.
Corporate Capital Transactions. In the event the Company, its
shareholders, or both, enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company by means of a Corporate
Capital Transaction (as defined below), all Options issued pursuant to the Plan
shall become immediately exercisable, whether or not such Options were
exercisable prior to such event, during the period of time beginning with the
date upon which the Company agrees in writing to enter into such transaction,
and ending on the earlier of the date the Option would otherwise have expired or
the date on which the Corporate Capital Transaction is consummated. Upon
consummation of the Corporate Capital Transaction, any unexercised Options
issued pursuant to the Plan shall terminate and cease to be effective. In the
event the Company's agreement to enter into a Corporate Capital Transaction is
terminated, all unexercised Options shall revert to their status prior to the
Company's agreement to enter into such transaction. Any exercise of Options made
prior to the termination of such agreement shall remain effective after such
termination, notwithstanding that the Option may have become exercisable solely
by reason of the Company entering into such agreement. For purposes of the Plan
a Corporate Capital Transaction includes a sale, merger, consolidation,
reorganization, liquidation or similar transaction other than a reorganization,
merger or consolidation effected solely to change the Company's state of
incorporation.
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Restrictions on Resale. All participants in the Plan are subject to
certain resale restrictions regarding shares of Common Stock acquired upon
exercise of an Option, as contemplated by the insider trading restrictions which
prohibit transactions while in possession of material nonpublic information.
Insiders of the Company are also restricted by the short-swing liability
provisions of Section 16(b), as discussed above. A participant is not subject to
any additional resale restrictions, unless the participant is an affiliate of
the Company, as such term is defined in regulations under the Securities Act.
Affiliates of a corporation are generally considered to include Insiders
thereof. Shares of Common Stock issued to affiliates of the Company pursuant to
the Plan may not be resold unless they are registered under the Securities Act
or sold pursuant to an applicable exemption, including the exemption provided by
Rule 144 under the Securities Act. Pursuant to Rule 144, an affiliate of the
Company is entitled to sell, within any three-month period, a number of shares
of Common Stock that does not exceed the greater of one percent (1%) of the
outstanding shares of such class or the average weekly trading volume of such
shares during the four calendar weeks preceding such sale. Although Rule 144
imposes certain manner of sale and other restrictions, affiliates of the Company
are not subject to the one-year holding period under the rule with respect to
shares of Common Stock acquired in connection with the exercise of Options.
Amendments to the Plan. The Board of Directors may, insofar as
permitted by law, amend, suspend and/or terminate the Plan at any time. No
amendment, suspension or termination of the Plan shall adversely effect Options
granted on or prior to the effective date of such amendment, suspension or
termination without the written consent of the Optionee, except as may be
necessary in the judgment of legal counsel to the Company, to comply with any
applicable law.
Withholding Tax Obligations. The exercise of an Option by an Optionee
shall constitute the Optionee's agreement that the Company may withhold federal,
state and other taxes attributable to taxable income realized under the Plan
from any other compensation or other payment payable to such Optionee by the
Company.
General Provisions. Neither the Plan nor any grant of Options or SARs
thereunder shall be deemed to give any individual the right to remain employed
by the Company. Participants in the Plan shall have no rights with respect to
dividends, voting or any other privileges accorded to the Company's shareholders
prior to the issuance of stock certificates for shares of Common Stock.
Recipients of Options under the Plan shall have no obligation to exercise such
Options. All costs and expenses of administering the Plan shall be borne by the
Company.
Federal Income Tax Consequences. The following tax discussion is a
brief summary of current federal income tax law. The discussion is intended
solely for general information and does not make specific representations to any
recipient. A taxpayer's particular situation may be such that some variation of
the basic rules is applicable to him or her. In addition, the federal income tax
laws and regulations have been revised frequently and may be changed again at
any time in the future. Therefore, each recipient is urged to consult a tax
advisor before exercising any Option or before disposing of any shares of Common
Stock acquired under the Incentive Plan with respect to both federal income tax
consequences as well as any foreign, state or local tax consequences.
Options.
Initial Grant of Options. A recipient of Options incurs no income tax
liability, and the Company obtains no deduction, from the grant of Options.
Exercise of Options. Upon the exercise of an Option, the amount by
which the fair market value of the shares on the date of exercise exceeds the
exercise price will be taxed to the Optionee as ordinary compensation income.
The Company will be entitled to a deduction in the same amount, provided it
makes all required wage withholdings on, or properly reports, the compensation
element of the exercise. In general, the Optionee's tax basis in the shares
acquired by exercising an Option is equal to the fair market value of such
shares on the date of exercise. Upon a subsequent sale of any such shares in a
taxable transaction, the Optionee will realize capital gain or loss (long-term
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or short-term, depending on whether the shares were held for more than twelve
months before the sale) in an amount equal to the difference between the sale
price and his or her basis in the shares.
Special rules apply if an Optionee pays the exercise price upon
exercise of Options with previously acquired shares of Common Stock. Such a
transaction is treated as a tax-free exchange of the old shares for the same
number of new shares. To that extent, the Optionee's basis in the new shares is
the same as his or her basis in the old shares, and the capital gain holding
period runs without interruption from the date when the old shares were
acquired. The value of any new shares received by the Optionee in excess of the
number of old shares surrendered will be taxed as ordinary compensation income.
The Optionee's basis in the additional shares is equal to the fair market value
of such shares on the date the shares were transferred, and the capital gain
holding period commences on the same date. The effect of these rules is to defer
the date when any gain in the old shares that are used to buy new shares must be
recognized for tax purposes. Stated differently, these rules allow an Optionee
to finance the exercise of an Option by using shares of Common Stock that he
already owns, without paying current tax on any unrealized appreciation in the
value of all or a portion of those old shares.
Stock Appreciation Rights. Upon the exercise of a SAR, the recipient
will recognize ordinary compensation income in the amount of both the cash and
the fair market value of the shares of Common Stock received upon the exercise
of the SAR, and the Company will be entitled to a corresponding deduction. In
the event a recipient receives shares of Common Stock upon the exercise of the
SAR, any shares so acquired will have a tax basis equal to their fair market
value on the date of such exercise or payment, and the holding period of the
shares will commence on the day following that date. Upon a subsequent sale of
such shares a recipient will recognize capital gain or loss (long-term or
short-term, depending on whether the shares were held for more than twelve
months before the sale) in an amount equal to the difference between the sale
price and his or her basis in the shares.
Recommendation
The Board of Directors recommends that shareholders vote FOR the
proposal to ratify the amendment to the Plan.
Certain Interests of Directors
In considering the recommendation of the Board of Directors with
respect to the amendment of the Plan, shareholders should be aware that the
members of the Board of Directors have certain interests which may present them
with conflicts of interest in connection with such proposal. As discussed above,
all directors are eligible to participate in the Plan. The Board of Directors
recognizes that adoption of the proposed amendment to the Plan may benefit
individual directors of the Company and their successors, but it believes that
approval of the amendment of the Plan will strengthen the Company's ability to
continue to attract, motivate and retain qualified employees, officers and
directors. As of March 12, 1999, current members of the Board of Directors
owned, in the aggregate, approximately 53.9% of the outstanding shares of Common
Stock. See "Security Ownership of Certain Beneficial Owners and Management."
RATIFICATION OF SELECTION OF AUDITOR
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of Tanner +Co., independent certified public accountants, to
audit the financial statements of the Company for the year ending December 31,
1999. Tanner + Co. has audited the financial statements of the Company since
1993. Representatives of Tanner + Co. are expected to be present at the Annual
Meeting of Shareholders, will have an opportunity to make a statement, if they
desire to do so, and are expected to be available to respond to appropriate
questions.
The Board of Directors unanimously recommends that the shareholders
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vote FOR ratification of the appointment of Tanner + Co. as the Company's
independent public accountant.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other
matters to be presented at the Annual Meeting. If any further business should
properly come before the meeting, the persons named as proxies in the
accompanying form will vote on such business in accordance with their best
judgment.
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders intend to present at the Annual Meeting to
be held in 2000 must be received by Lex L. Udy, Secretary, at the Company's
executive offices, 8805 South Sandy Parkway, Sandy, UT 84070-6408, no later than
December 31, 1999.
ADDITIONAL INFORMATION
The Company will provide without charge to any person from whom a Proxy
is solicited by the Board of Directors, upon the written request of such person,
a copy of the Company's 1998 Annual Report on Form 10-K, including the financial
statements and schedules thereto (as well as exhibits thereto, if specifically
requested) required to be filed with the SEC. Written requests for such
information should be directed as set forth below:
THE CORPORATE SECRETARY
MINING SERVICES INTERNATIONAL CORPORATION
8805 S. Sandy Parkway
Sandy, UT 84070-6408
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Appendix I
MINING SERVICES INTERNATIONAL CORPORATION
1988 NONQUALIFIED STOCK OPTION PLAN
(As amended through May 20, 1998)
<PAGE>
MINING SERVICES INTERNATIONAL CORPORATION
1988 NONQUALIFIED STOCK OPTION PLAN
(As amended through May 20, 1998)
ARTICLE I
Purposes
--------
The purposes of this Plan are to encourage stock ownership in the Company by
eligible employees and directors of Mining Services International Corporation, a
Utah corporation (the "Company"), to provide an incentive for eligible
employees, directors and others to expand and improve the growth, profitability
and general prosperity of the Company in attracting and retaining qualified
employees, directors and others through stimulating their efforts by giving
suitable recognition, in the form of compensation, to their abilities and
industry, which contribute materially to the growth and profitability of the
Company.
ARTICLE II
2.01 Board of Directors: Unless otherwise indicated, the term "Board of
Directors" shall mean the Board of Directors of the Company.
2.02 Code shall mean the Internal Revenue Code of 1986, as amended.
2.03 Committee shall mean the Administrative Committee established pursuant to
Article III of this document.
2.04 Common Stock shall mean the common stock of the Company, par value $.001
per share.
2.05 Company shall mean Mining Services International Corporation, a Utah
corporation.
2.06 Director shall mean a duly elected and acting member of the Board of
Directors of the Company.
2.07 Disabled or Disability: For purposes of this Agreement, a Shareholder
shall be deemed to be Disabled if, in the judgment of an impartial
physician selected by the Company, such Shareholder has a physical or
mental condition that, based upon medical report and other evidence
satisfactory to the physician making the determination, presumably
permanently prevents such Shareholder from satisfactorily performing his
usual duties in the service of the Company, and when such condition has
continued substantially uninterrupted for a period of twelve consecutive
months.
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2.08 Effective Date shall mean the date established pursuant to Section 4.01
hereof.
2.09 Exercise Price shall mean the price for which an Option granted hereunder
may be executed, determined pursuant to this Plan.
2.10 Holder or Optionee shall mean a Key Employee, Director or other
individual to whom an Option has been granted under this Plan.
2.11 Key Employees means an employee of the Company who is an officer, or who
is employed in a managerial, professional or other key position.
2.12 Option shall mean the right to purchase one share of the Common Stock of
the Company, granted pursuant to this Plan.
2.13 Option Agreement shall mean the Stock Option Agreement referred to in
Section 6.07 of this document.
2.14 Plan shall mean this Mining Services International Corporation 1988
Nonqualified Stock Option Plan as amended from time to time.
2.15 Stock Appreciation Right shall mean a right to receive cash or Common
Stock of the Company upon the occurrence of the events set forth in
Article VIII of this Plan.
2.16 Value of a share of the Common Stock of the Company shall mean the
reported closing price of a share of the Company's Common Stock on any
national registered securities exchange on which the Company's Common
Stock may be listed. If a reported closing price is not available for the
date on which the Company" Common Stock is sought to be valued, the
reported closing price for the next receding business day shall be used.
If the Company's Common Stock is not listed on a national registered
securities exchange, the Value of a share of the Company's Common Stock
shall be the "bid" price of the Company's Common Stock, as published by
the National Association of Securities Dealers, Inc., as of the date on
which the Company's Common Stock is sought to be valued. If a reported
"bid" price is not available as of the day on which the Company's common
stock is sought to be valued, then the reported "bid" price as of the
next preceding business day shall be used. If the Value cannot be
determined under the preceding rules of this Section 2.16, the Value
shall be the fair market value of the Company's Common Stock, determined
under the method selected by the Committee. Unless modified by the Board
of Directors, the Committee's good faith determination of the Value of a
share of the Company's Common Stock shall be conclusive, and shall be
valid and binding upon all persons having any interest in any Option
granted hereunder.
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ARTICLE III
Administration
--------------
3.01 Administrative Committee: This Plan shall be administered by an
Administrative Committee composed of not fewer than three members of the
Company's Board of Directors. If for any reason the Company's Board of
Directors does not appoint a Committee, or if for any reason a Committee
is not acting hereunder, the Board of Directors shall act as the
Committee. The members of the Committee shall hold office at the pleasure
of the Board of Directors, and shall serve without compensation. All
determinations, decisions, interpretations and other action made or taken
by the Committee shall be final and binding on all persons having any
interest in any Option granted hereunder, unless otherwise determined by
the Board of Directors. The Board of Directors shall have the power by
appropriate actin to reverse or modify any action by the Committee.
3.02 Committee to Construe Plan: The Committee shall administer this Plan, and
shall have all powers necessary for that purpose, including but not
limited to the power to interpret the Plan and the power to determine the
eligibility, status and rights hereunder of all persons. The Committee
shall maintain the records of the Plan and shall have the power to adjust
the Plan's records as necessary to correct errors and rectify omissions,
in the manner that the Committee believes will best result in the
equitable administration of the Plan.
3.03 Organization of the Committee: The Committee may elect a chairman, and
may adopt such rules as it deems desirable for the conduct of its affairs
and for the administration of this Plan. The Committee may appoint
agents, who need not be members of the Committee, to whom it may delegate
such powers as it deems appropriate. The action of a majority of the
members of the Committee shall be action of the Committee.
3.04 Indemnification of Committee Members: The Company shall defend, indemnify
and hold harmless each member of the Committee against any and all
claims, loss, damages, expense and liability arising from any actual or
alleged actin or failure to act in connection with this Plan, except when
the same is judicially determined to be due to the gross negligence or
willful misconduct of such Committee member.
ARTICLE IV
Effective and Expiration Dates of Plan
4.01 Effective Date: This Plan shall become effective upon its adoption by the
Company's Board of Directors, in accordance with the applicable Bylaws of
the Company, and shall continue in effect until December 31, 2007, unless
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sooner terminated in accordance with the provisions hereof.
4.02 Continuation of Plan: Notwithstanding the expiration or termination
hereof, this Plan shall continue in effect after the expiration of its
term or other termination for purposes of the administration of any
Option that may have been granted before the effective date of the
expiration or termination. No Option granted during the term hereof shall
be adversely affected by the expiration or termination of this Plan.
ARTICLE V
Participation; Grant of Options
-------------------------------
5.01 Eligibility: Each Director of the Company and each employee of the
Company who is determined by the Committee to be a Key Employee shall be
eligible to receive Options and to participate in the Plan. The Committee
may also, in its discretion, select other individuals who, in the
discretion of the Committee, have made or are expected to make
significant contributions to the Company, to receive Options and to
participate in this Plan. The Committee shall have sole and absolute
discretion in identifying and selecting Key Employees, Directors and
other individuals for nomination to receive Options hereunder.
5.02 Nomination and Approval: The Committee shall, as often as it determines,
nominate for approval by the Board of Directors one or more eligible Key
Employees, Directors and other individuals to receive Options under this
Plan. The Committee shall present to the Board of Directors a schedule
showing the name of each proposed Optionee, the number of Options the
Committee recommends to be granted to such Optionee, the proposed
effective date of the grant of each Option, the periods of time during
which such Options shall be exercisable, and the Value of the Company's
Common Stock as of the proposed effective date of the grant of each
Option. Subject to the provisions of this Plan and to approval by the
Board of Directors, the terms and conditions of Options issued hereunder
need not be the same. The Board of Directors may make such changes in the
schedule submitted by the Committee as it determines, and may approve, in
its discretion, the grant of all, none, or any part of the Options
recommended by the Committee; provided however, that the terms of all
Options granted hereunder shall comply with all terms and provisions of
this Plan.
5.03 Discretion of Committee: The Committee shall have sole and absolute
discretion in selection Key Employees, Directors and other individuals
for nomination to receive Options hereunder and in determining questions
of eligibility to participate hereunder. Subject to the provisions and
restrictions contained in this document, the Committee shall have the
sole authority, in its absolute discretion, to determine the terms and
conditions of Options, the number of Options to be issued, and the means
of payment of the exercise price of any Option.
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5.04 Date of Grant: Each Option shall be deemed to be granted on the date on
which is taken the final vote of the Board of Directors to approve the
grant of such Option.
5.05 Maximum Number of Options: The cumulative number of Options that may be
granted hereunder is 1,315,130 of which, at December 31, 1998, 828,207
options remained subject to the Plan, with 359,747 options issued, but
unexercised and 463,460 options remained ungranted. If Options that have
been granted under this Plan terminate or expire without having been
exercised, new Options may be granted hereunder to replace the expired
Options. The shares to be optioned may be either authorized but unissued
shares of Common Stock of the Company, or may be shares held in treasury.
ARTICLE VI
Terms of Options
----------------
6.01 Exercise Price: The Exercise Price of each Option granted pursuant to
this Plan shall be not less than the Value of a share of the Common Stock
of the Company as of the date on which the Option is granted.
6.02 Expiration of Options: Each Option granted pursuant to this Plan will
expire not later than ten years after the date on which such Option was
granted.
6.03 Restrictions on Transfers and Encumbrance: During the lifetime of an
Optionee, Options granted hereunder may not be sold, pledged, assigned,
hypothecated, encumbered, or transferred in any manner, either
voluntarily or involuntarily, by operation of law or otherwise, except by
will or by applicable laws of descent and distribution, and may be
exercised during an Optionee's lifetime only by the Optionee or by his
legal representative. Any Option that is exercisable under the terms of
this document and of the Option Agreement entered into with respect to
such Option pursuant to Section 6.07 hereof after the date of the
Optionee's death may be exercised only by the person or persons to whom
the Optionee's rights under the Option have passed by will or by
applicable laws of descent and distribution.
6.04 Exercise of Options After Death of Optionee: In the event of the death of
an Optionee, Options granted to such Optionee that are, as of the date of
the Optionee's death, otherwise exercisable under the terms of this
document and of the applicable Option Agreement entered into with respect
to such Option pursuant to Section 6.07, shall continue to be exercisable
in accordance with their terms, subject to compliance with all terms and
provisions of this document and of the applicable Stock Option Agreement.
Options that are not exercisable as of the date of the Optionee's death
shall expire and shall not thereafter be exercisable.
6.05 Exercise During Service: An Optionee may exercise an Option granted
hereunder only if the Optionee has remained continuously in the service
6
<PAGE>
of the Company as a Key Employee, Director, Independent contractor or
otherwise, since the date on which the Option sought to be exercised was
granted to such Optionee, and continuing through a date that is not more
than ninety days prior to the date on which the Option is sought to be
exercised. For purposes of this Section 6.05, an Optionee shall be deemed
to be in the service of the Company during the first twelve months of a
leave of absence approved by the Company and during the first twelve
months of a period of time during which the Optionee is Disabled. The
provisions of this Section 6.05 shall not prevent the exercise of an
Option that is exercisable by a person other than the Optionee (for
example, after the death of an Optionee, as provided in Sections 6.03 and
6.04) under the provisions of this Agreement.
6.06 Sale to Company After Termination of Service: Each Optionee shall, as a
condition of receiving Options, agree with the Company that , if such
Optionee for any reason, other than on account of the death of the
Optionee, leaves the service of the Company (whether as a Key Employee,
Director, Independent contractor or otherwise), within two years after
the date on which such Optionee exercises an Option granted to him
pursuant to this Plan, the Company shall have the right, exercisable
within sixty days after the effective date of the termination of the
Optionee's period of service with the Company, to purchase for the
Exercise Price all of the shares of Common Stock purchased by the
Optionee through exercise of Options within two years before the
effective date of the termination of the Optionee's period of service.
Provided, however, any shares of the Common Stock acquired through the
exercise of an Option and utilized to pay the exercise price in a
"cashless exercise" or to pay any associated income taxes shall not be
subject to the Company's right to repurchase the shares from the Option
pursuant to this paragraph 6.06. The right herein granted to the Company
shall be exercisable by the Company at any time within sixty days after
the effective date of the termination of the Optionee's period of
service. For purposes of this Section 6.06, an Optionee shall be deemed
to be in the service of the Company during the first twelve months of a
leave of absence approved by the Company and during the first twelve
months of a period of time during which the Optionee is Disabled.
6.07 Stock Option Agreement: The terms and conditions of all Options granted
pursuant to this Plan shall be evidenced by a Stock Option Agreement,
executed by the Company and the Key Employee, Director or other
individual to whom the Option has been granted. Each Stock Option
Agreement shall contain the following provisions:
a. A provision fixing the number of Options to be granted.
b. A provision establishing the Exercise Price.
c. A provision establishing the times and the installments in which
Options may be exercised.
d. A provision incorporating this Plan document by reference.
e. A provision fixing the time period within which Options may be
exercised.
f. A provision referencing the right of the Company to repurchase the
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<PAGE>
shares of Common Stock purchased by the Optionee through exercise of
Options under the circumstances described in Section 6.06, above.
g. Any other representations, warranties and restrictions deemed
necessary by the Board of Directors or Committee in the exercise of
their reasonable discretion.
ARTICLE VII
Procedure for Exercise
----------------------
7.01 Time for Exercise: Subject to the provisions of this Article VII, Options
shall become exercisable at such time and in such installments as the
Committee may recommend, and as the Board of Directors may approve at the
time an Option is granted; provided, however, that the Board of Directors
may, upon such terms and conditions as it may determine to be
appropriate, and subject to the provisions of this Article VII,
accelerate the time within which and Option must be exercised.
7.02 Exercise Upon Corporate Capital Transaction: In the event that the
Company, its shareholders, or both, enter into an agreement to dispose of
all or substantially all of the assets or stock of the Company by means
of a sale, merger, consolidation, reorganization, liquidation or similar
transaction (other than a reorganization, merger or consolidation
effected solely to change the Company's state of incorporation), all
Options issued pursuant to the Plan established hereby shall become
immediately exercisable, whether or not such Options were exercisable
prior to such event, during the period of time beginning with the date on
which the Company agrees in writing to enter into such transaction, and
ending on the earlier of the date the Option would otherwise have expired
or the date on which the transaction is consummated. Upon the
consummation of the transaction, any unexercised Options issued hereunder
shall terminate and cease to be effective. In the event that the
Company's agreement to enter into any such transaction is terminated, all
unexercised Options shall revert to the status they had before the
Company agreed to enter into the transaction in question. Any exercise of
Options made before the agreement to enter into the transaction was
terminated shall remain effective after the termination of the agreement,
notwithstanding that the Option may have become exercisable solely by
reason of the Company entering into the agreement.
7.03 Withholding of Taxes: The exercise of an Option by an Optionee shall
constitute the Optionee's agreement that the Company may withhold
federal, state, and other taxes attributable to taxable income realized
under this Plan from any compensation or other payment payable to such
Optionee by the Company.
7.04 Exercise: Subject to all terms and provisions of this Plan document,
Options granted hereunder shall be deemed to have been exercised when
written notice of exercise has been given to the Company by the person
entitled to exercise the Option and when full payment in cash or cash
equivalents (or with Common Stock of the company if approved under
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Section 7.07) for the shares of Common Stock with respect to which the
Option is exercised has been received by the Company. Until certificates
have been issued (but not necessarily until expiration of the period of
time set forth in Section6.06) for the number of shares represented by
the exercise of an Option, no right to vote, to receive dividends, or
other right as a stockholder shall exist with respect to shares of Common
Stock purchased through the exercise of an Option. Except as provided in
Section 9.01, no adjustment shall be made for dividends or other rights
declared or paid with respect to stock acquired through the exercise of
Options for which the record date is prior to the date on which a stock
certificate for such shares is issued.
7.05 Exercise in Installments: Options may be exercised in installments, but
only in units of whole shares of the Common Stock of the Company.
7.06 Issuance of Certificates: As soon as practicable after an Option has been
exercised in accordance with the provisions of this document, the company
shall, without transfer or issue tax or other charge to the Optionee,
cause to be issued in the name of the Optionee certificates representing
the number of shares of Common Stock as to which Options have been
exercised. The Company may, however, postpone the time of delivery of
certificates for such period of time as the Company may determine to be
necessary for it with reasonable diligence to or regional securities
exchange, of the National Association of Securities Dealers, Inc., or
with any law or regulation applicable to the issuance or delivery of
shares of the Company's Common Stock.
7.07 Payment of Exercise Price with Company Stock: The Committee may, if it so
elects, permit an Optionee to pay Exercise Price upon exercise of an
Option with shares of common Stock of the Company previously acquired and
owned at the time of exercise by the Optionee, provided that the Optionee
agrees to make such written representations and warranties concerning
such shares as may be requested by the Committee, including without
limitation representations and warranties that such Optionee has good and
marketable title to such shares, free and clear of all liens,
encumbrances, security interests, claims, options and restrictions, and
that such Optionee has full power to deliver such shares without
obtaining the consent of any individual entity or governmental authority
that has not been obtained. The shares used to pay the Exercise Price
upon exercise of an Option shall be valued by the Committee.
ARTICLE VIII
Stock Appreciation Rights
-------------------------
8.01 Grant of Rights: The Board of Directors may, upon recommendation of the
Committee, grant Stock Appreciation Rights to eligible Key Employees,
Directors or other individuals at the time Options are granted to such
Key Employees, Directors or other individuals. Each Stock Appreciation
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Right shall relate to a specific Option granted to a Key Employee or
Director hereunder. The number of Stock Appreciation Rights granted to a
Key employee, Director or other individual shall be less than or equal to
the number of Options granted to such Key Employee, Director or other
individual. Neither the Committee nor the Board of Directors shall be
obligated to grant any Stock Appreciation Rights hereunder.
8.02 Manner of Exercise: A Key Employee, Director or other individual shall
exercise Stock Appreciation Rights by giving written notice of such
exercise to the Company at the same time the Key Employee, Director or
other individual exercises the Options to which the Stock Appreciation
Rights relate. A Stock Appreciation Right may be exercised only at the
time the related Option is exercised. The failure of a Key Employee,
Director or other individual to exercise a Stock Appreciation Right at
the time the related Option is exercised shall cause the Stock
Appreciation Right to laps.
8.03 Appreciation Available: Each Stock Appreciation Right shall entitle a Key
Employee or Director to receive from the Company, upon exercise of the
Option to which it relates, an amount equal to the excess of the fair
market value of a share of the Company's Common Stock, determined at the
time the Option is exercised, over the Exercise Price of the related
Option.
8.04 Payment of Stock Appreciation: In the discretion of the committee, the
total payment to be made to the Key Employee, Director, or other
individual by reason of the exercise of Stock Appreciation Rights may be
made either in Common Stock or in cash, or partly in each. If paid in
cash, the amount of the payment shall be the excess of the Value of a
share of Common Stock, determined at the time the Option is exercised,
over the Exercise Price of the related Option, multiplied by the number
of Stock Appreciation Rights being exercised. If paid in Common Stock,
the number of shares of Common Stock to be issued shall be determined by
dividing the amount of cash that would have been paid if the payment had
been made in cash by the Value of a share of Common Stock on the date of
exercise, rounded up or down to the nearest whole share.
8.05 Limitations Upon Exercise of Stock Appreciation Rights: Key Employees,
Directors, and other individuals may exercise Stock Appreciation Rights
at and during the times and under the conditions under which Options may
be exercised under this Plan and only in conjunction with the exercise of
Options. In the event that adjustments are made to the terms of Options
pursuant to Section 9.01 hereof, comparable adjustments shall be made to
the terms of the Stock Appreciation Rights with which the Options are
associated.
8.06 Termination: Any termination, expiration, amendment or revision of the
terms of Options pursuant to Section 7.02, Article IX, or any other
termination, expiration, amendment or revision of the related Stock
Appreciation Rights.
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ARTICLE IX
Restrictions and Additional Requirements
----------------------------------------
9.01 Adjustments Upon Changes in Capitalization: If the number of outstanding
shares of the Common Stock of the Company is increased or decreased, or
if the Common Stock of the Company underlying Options issued pursuant to
the provisions of this document is changed into or exchanged for a
different number or kind of shares or securities of the Company through a
reorganization, merger, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, upon authorization by the
Committee, an appropriate or proportionate adjustment shall be made in
the terms and conditions of all Options issued hereunder, including the
Exercise Price of each Option issued hereunder; provided, however, that
no such adjustment need be made if, upon the advice of counsel to the
Company, the Committee determines that any such adjustment could result
in the recognition of federal taxable income by holders of Options
granted hereunder, or by holders of Common Stock or other securities of
the Company.
9.02 Reservation of Shares of Common Stock: The Company shall, at all times
during the term of existence of this Plan, reserve and keep available for
issuance to holder of Options a number of shares of its Common Stock
sufficient to satisfy all obligations of the Company hereunder.
9.03 Restrictions on Issuance of Shares: During the term of this Plan, the
Company shall use its best efforts to seek and to obtain from appropriate
regulatory agencies any requisite authorization in order to issue and
sell such number of shares of its Common Stock as shall be sufficient to
satisfy the obligation of the Company under this Plan. The inability of
the Company's legal counsel to the lawful issuance and sale of any shares
of the Company's Common Stock shall relieve the Company of any liability
for the nonissuance or sale of any Common Stock as to which the requisite
approval or authorization shall not have been obtained.
9.04 Representation and Warranties: As a condition to the exercise of any
Option granted under this Plan, the Committee may require the person
exercising such Option to make any representation or warranty to the
Company as legal counsel to the Company may determine to be required or
advisable under any applicable law or regulation, including without
limitation a representation and warranty that the shares of the Company's
Common Stock being acquired are being acquired only for investment and
without any present intention or view to sell or distribute any such
shares.
9.05 Employee Rights: While the Company expects to continue this Plan
throughout its entire term, neither the adoption nor the continuance of
this Plan shall create a contractual obligation of the Company. The
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Company may terminate this Plan or discontinue or suspend the grant of
Options hereunder at any time. Adoption and continuation of the Plan is
purely voluntary on the part of the Company, and no provision of this
document shall be deemed to constitute consideration for or a condition
of the employment of any employee or of the service or status of any
Director or other individual. No provision of this document shall be
deemed to give to any employee, Director or other individual any rights
to be retained in the service of the Company, or to interfere in any way
with the right of the Company to discharge any employee or other
individual, or to remove any Director at any time. No employee, Director,
or other individual shall have any right or interest hereunder in any
Option or share of the Company's Common Stock prior to the grant of an
Option to such employee, Director or other individual. Upon the grant of
an Option, the Optionee shall have only such rights and interests as are
expressly provided herein or in an Option Agreement entered into pursuant
to Section 6.07 hereof.
9.06 Amendment or Termination of Plan: The Board of Directors may amend,
suspend, and/or terminate this Plan at any time. No amendment, suspension
or termination hereof shall adversely affect Options granted on or prior
to the effective date of such amendment, suspension or termination
without the written consent of the Optionee, except as may be necessary,
in the judgement of counsel to the Company, to comply with any applicable
law.
9.07 Legends on Stock Certificates: Unless an appropriate registration
statement is on file and effective with appropriate federal, state and
local governmental authorities, each certificate representing Common
Stock of the Company issued pursuant to the exercise of an Option shall
be endorsed on its face with a legend similar to the following:
Neither the Option pursuant to which the shares represented by this
certificate are issued nor the shares represented hereby have been
registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or with any state securities agency.
The transfer or sale of the shares represented hereby without appropriate
registration, or pursuant to an exemption from registration, is unlawful.
ARTICLE X
Miscellaneous Provisions
------------------------
10.01 Notices:
a. All notices, demands or request provided for or permitted to be given
pursuant hereto must be in writing. All notices, demands and requests
shall be deemed to have properly given or served when deposited in the
United States mail, addressed to the individual or entity to whom notice
is given, postage prepaid and registered or certified with return receipt
requested, at the last known address of such individual or entity.
b. By giving at least fifteen (15) days prior written notice, the Company or
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an Optionee shall have the right from time to time and at any time during
the term of this Plan to change their addresses and to specify any other
address within the United States of America.
10.02 Titles and Captions: All Article and Section titles and captions in this
document are for convenience or reference only, and shall not be deemed
part of this document, and in no way define, limit, extend or describe
the scope or intent of any provisions hereof.
10.03 Pronouns and Plurals: Whenever the context may require, any pronoun
herein shall include the corresponding masculine, feminine or neuter
forms and the singular form of nouns, pronouns and verbs shall include
the plural an vice versa.
10.04 Applicable Law: The Plan Document shall be construed in accordance with
and shall be governed by the laws of the State of Utah.
10.05 Binding Effect: This Plan document shall be binding upon each Optionee
and upon such Optionee's heirs, executors, administrators, successors,
legal representatives and assigns.
10.06 Creditors: None of the provisions of this document shall be for the
benefit of or shall be enforceable by any creditor of any Optionee.
10.07 Severability: In the event that any condition, covenant or other
provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the
remainder of this document and shall in no way affect any other covenant
or condition herein contained. If such condition, covenant or other
provision shall be deemed valid to the extent of the scope or breadth
permitted by law.
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IN WITNESS WHEREOF, this document is executed this 7th day of January,1988, to
be effective as of the Effective Date specified above.
MINING SERVICES INTERNATIONAL
CORPORATION, A Utah corporation
By Lex L. Udy
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Title President
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Attest:
Barry Garnder
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Secretary
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