SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
Strategia Corporation
(Name of Registrant as Specified in Its Charter)
Strategia Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required
(1) Title of each class of securities to which
transactions applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price of other underlying value of transaction
computer pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
STRATEGIA CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held December 16, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Strategia Corporation (the "Corporation"),
will be held at the Corporation's offices at 10301 Linn
Station Road, Louisville, Kentucky, on Tuesday,
December 16, 1997, at 2:00 p.m., local time, for the
purposes of:
(1) Electing four directors.
(2) Acting on a proposal to approve amendments to the
Corporation's 1988 Stock Option Plan.
(3) Transacting such other business as may properly be
brought before the meeting or any adjournments thereof.
All shareholders are cordially invited to attend the
meeting, but whether or not you expect to attend the
meeting in person, please sign and date the enclosed
proxy form and return it promptly so that your shares
may be voted.
By Order of the Board of Directors
Richard W. Smith
President
Louisville, Kentucky
November 17, 1997
YOUR VOTE IS IMPORTANT
Please date, sign and promptly return the enclosed
proxy card in the accompanying postage paid envelope.
STRATEGIA CORPORATION
10301 Linn Station Road
Louisville, Kentucky 40223
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD DECEMBER 16, 1997
This Proxy Statement is furnished in connection with
the solicitation by the Board of Directors of Strategia
Corporation (the "Corporation"), a Kentucky corporation, of
the accompanying proxy card for use at the Annual Meeting
of Shareholders to be held on December 16, 1997, and at any
adjourned meeting thereof (the "Annual Meeting").
The close of business on November 6, 1997, has been
fixed as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting
(the "Record Date"). On the Record Date, the Corporation
had 4,664,893 shares of Common Stock outstanding. A majority
of the shares entitled to vote, represented in person or
by proxy, will constitute a quorum for the Annual Meeting.
This Proxy Statement and enclosed proxy card are
first being sent or given to shareholders on or about
November 17, 1997.
ACTION TO BE TAKEN BY PROXIES
When the enclosed proxy card is properly executed
and returned in the envelope provided, the shares
represented by the proxy card will be voted at the Annual
Meeting in accordance with the shareholder's instructions.
If no instructions are specified, such shares will be voted
in favor of management's nominees to the Board of Directors
and the proposed amendments to the Corporation's 1988 Stock
Option Plan, and in management's discretion on such other
matters as may be properly brought before the Annual Meeting.
Each shareholder has one vote per share on all matters
coming before the Annual Meeting, but in the election of
directors, each shareholder may vote in the aggregate the
number of shares held by him on the Record Date multiplied
by the number of directors to be elected at the election.
A shareholder may cast all his votes for one nominee, or
he may distribute his votes among as many nominees as he
chooses. The Board of Directors is soliciting discretionary
authority for the proxy holders to cumulate votes in this
fashion.
A shareholder may revoke a proxy card at any time
before its exercise by filing a written notice of
revocation or a duly executed proxy card bearing a later
date with the Secretary of the Corporation. The powers
of proxy holders will be suspended if the person executing
the proxy card attends the Annual Meeting in person and
so requests. Attendance at the Annual Meeting will not
in itself constitute a revocation of the proxy appointment.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information
as of November 6, 1997 with respect to the shares of Common
Stock owned (i) by each person known to the Corporation to
own beneficially more than 5% of the outstanding shares of
Common Stock (ii) by each of the Corporation's directors and
executive officers, and (iii) by all directors and officers
as a group. As of November 6, 1997, there were 4,664,893
outstanding shares of Common Stock, which is the Company's
only class of voting shares.
Directors and Executive Officers Number of Shares
Percent of Class(2)
John P. Snyder 1,397,937 (3) 28.9%
Richard W. Smith 216,425 (4) 4.5%
James P. Buren 194,409 (5) 4.1%
John A. Brenzel 84,544 (6) 1.8%
James A. Huguenard 0 (7) *
Roland Esnis 0 (8) *
All current directors and officers as a group (8 persons)
1,894,860 (9) 37.6%
5% Beneficial Owners
TSF Investment Group LLC
9707 Shelbyville Road
Louisville, KY 40223 279,780 (10) 5.9%
EPI Corporation
9707 Shelbyville Road
Louisville, KY 40223 1,363,903 (11) 28.3%
EPI Corporation,
John P. Snyder,
Max G. Baumgardner,
James E. Buchart,
J. Ben Cress,
Robert H. Loeffler,
Henry A. Schumpf,
Grace W. Wilkins
9707 Shelbyville Road
Louisville, KY 40223 1,576,085 (11)(12) 32.5%
*Indicates less than 1%
(1) Based on information furnished to the Company by the
named person, and information contained in filings with
the Commission. Under the rules of the Commission, a
person is deemed to beneficially own shares over which the
person has or shares voting or investment power or has the
right to acquire beneficial ownership within 60 days.
Except as otherwise noted, each person or entity named in
the table has sole voting and investment power with respect
to all shares of Common Stock shown as beneficially owned.
(2) Shares of Common Stock subject to options or warrants
that are or will become exercisable within 60 days have
been deemed outstanding for computing the percentage of
class of the listed person or the group, but are not
deemed outstanding for computing the percentage of
class for any other person.
(3) Includes 1,363,903 shares of Common Stock beneficially
owned by EPI Corporation. (See footnote 12.) Mr. Snyder is
President, a director, and largest single shareholder of EPI
Corporation. Mr. Snyder shares voting and investment power
with respect to, and disclaims beneficial ownership of, the
shares owned by EPI Corporation, which are included once in
the shares beneficially owned by all directors and officers
as a group. Mr. Snyder's total also includes 4,000 shares
subject to currently exercisable stock options, and 7,885
shares issuable upon the exercise of warrants. The total
does not include 2,000 shares subject to option grants
contingent upon approval of the proposed amendments to
the 1988 Option Plan.
(4) Includes 110,000 shares subject to currently
exercisable stock options, 3,710 shares issuable upon
the conversion of warrants, and 500 shares owned
individually by Mr. Smith's wife.
(5) Includes 90,000 shares subject to currently
exercisable stock options, and 3,710 shares issuable
upon the exercise of warrants.
(6) Includes 4,000 shares subject to currently
exercisable stock options, and 1,855 shares issuable
upon the exercise of warrants. The total does not
include 2,000 shares subject to option grants
contingent upon approval of the proposed amendments
to the 1988 Option Plan.
(7) Does not include 35,000 shares subject to stock
options that are not currently exercisable.
(8) Does not include 15,000 shares subject to stock
options that are not currently exercisable.
(9) Includes 16,950 shares subject to currently
exercisable stock options held by nonexecutive officers
in addition to shares beneficially owned by the five
directors and executive officers listed in the table.
Does not include shares subject to options contingent
upon approval of the proposed amendment to the 1988
Stock Option Plan.
(10) Includes 45,403 shares issuable upon the exercise
of warrants.
(11) Includes 153,271 shares issuable upon the exercise
of warrants.
(12) Includes 1,363,903 shares of Common Stock
beneficially owned by EPI Corporation, for which the
named individuals, as directors of EPI Corporation,
share voting and investment power. The individual
members of this group together own the majority of
shares of EPI Corporation. Also includes 25,870 shares
issuable upon the exercise of warrants, 3,000 shares
issuable upon the exercise of options, respectively,
held by group members other than EPI Corporation.
Also includes 2,500 shares held by members of the
immediate family of a group member for which beneficial
ownership is disclaimed. The total does not include
2,000 shares subject to option grants contingent upon
approval of the proposed amendments to the 1988 Option Plan.
ELECTION OF DIRECTORS
The Corporation's Board of Directors consists of
four members, all of whose terms expire at the Annual
Meeting. The Corporation's four present directors,
John A. Brenzel, James P. Buren, Richard W. Smith,
and John P. Snyder, have been nominated for reelection
as directors.
Article 4 of the Corporation's Articles of
Incorporation provides that the Board of Directors may
consist of four to nine directors, the exact number to
be fixed by the Board of Directors or the shareholders.
The term of any director elected by the Board to vacant
directorships, whether created by increasing the number
of directors or otherwise, between meetings of the
shareholders to elect directors will expire at the next
shareholders meeting at which the directors are elected.
If any named nominee should refuse or be unable to
serve, the Board of Directors believes the proxy holders
will vote the shares represented by the enclosed proxy
card for such substitute nominee, if any, as may be
proposed by the Board of Directors. No circumstances
are known, however, that would prevent any of the
nominees from serving. The four candidates receiving
the four highest vote totals under cumulative voting will
be elected as directors at the Annual Meeting.
Abstentions and broker non-votes will not be counted as
a vote for any candidate.
MANAGEMENT
The following information is furnished as of the
Record Date, with respect to each person nominated for
election as a director at the 1997 Annual Meeting and
each of the Corporation's executive officers who are
not directors. If elected, all directors will hold
office until the Corporation's next annual meeting
of shareholders to be held in 1998, and until their
successors are elected and qualified.
Directors Age Position with the Corporation
Richard W. Smith 43 President and Director
James P. Buren 58 Director
John P. Snyder 58 Secretary and Director
John A. Brenzel 56 Director
Executive Officers
James A. Huguenard 43 Vice President and General
Counsel
Roland Esnis 31 Directeur Generale, Twinsys
Dataguard SA
Richard W. Smith has been President and a director of the
Corporation since its inception in September 1984. Mr.
Smith previously served as General Manager of PDW
Computer Systems, Inc., which markets computer systems.
James P. Buren has been a director of the Corporation
since its inception in September 1984. Mr. Buren, who
served as Executive Vice President - Technology of the
Corporation for thirteen years prior to his retirement
in October 1997, also provides consulting services to
the Corporation. From 1980 to 1984, Mr. Buren was
President and sole shareholder of Buren & Company, Inc.,
a data processing consulting firm.
John P. Snyder has been a director of the Corporation
since November 1984 and Secretary since 1985. During
the past five years, Mr. Snyder has served as President
and Chairman of EPI Corporation, which currently
operates 20 nursing homes.
John A. Brenzel, a director of the Corporation since
November 1984, is a business consultant. From January
1991 until June 1994, Mr. Brenzel was President and
Chief Executive Officer of Commonwealth Bank & Trust
Company, Middletown, Kentucky. From 1984 to 1990,
he was Chairman and Chief Executive Officer of Shelby
County Trust Bank, Shelbyville, Kentucky.
James A. Huguenard has served as Vice President and
General Counsel of the Corporation since August 1997.
Prior to August 1997, Mr. Huguenard was a member of the
law firm Brown, Todd & Heyburn PLLC, where he had
practiced since 1983.
Roland Esnis has served as Directeur Generale of Twinsys
of Dataguard SA ("Twinsys"), the Corporation's Paris,
France subsidiary since August 1995. Mr. Esnis joined
Twinsys in a marketing position when it was established
in February 1995. From July 1993 to February 1995 he
held a similar position with Twinsys SA, and unrelated
computer services firm whose operating assets were
acquired by Twinsys. Mr. Esnis held marketing positions
with Systar, a software company, from November 1991 to
June 1993 and with the disaster recovery division of
Telesystemes, a computer services affiliate of France
Telecom, from January 1990 to November 1992.
Meetings and Committees
The Corporation's Board of Directors has three standing
committees, the Audit Committee, the Executive Compensation
Committee, and the Stock Option Committee. The members of
each of these committees are John A. Brenzel and John P.
Snyder. The Audit Committee had two meetings in 1996.
This committee reviews the audit plans and the results
of audits performed by its independent certified public
accountants. The Executive Compensation Committee, which
determines the compensation of the Corporation's executive
officers, and the Stock Option Committee, which administers
the 1988 Stock Option Plan and the 1990 Stock Grant Plan,
met one time in 1996.
The Corporation's Board of Directors had five meetings
during 1996. All directors attended these meetings.
The Board of Directors considers the nomination of
directors but does not have a standing committee. The
following is the provision in the Corporation's Bylaws
regarding the nomination of directors by shareholders:
2.4 Nominations for election to the Board of
Directors may be made by the Board of Directors or by
any shareholder. Any shareholder who intends to nominate
or to cause to have nominated any candidate for election
to the Board of Directors (other than a candidate nominated
by the Board of Directors) shall deliver or mail written
notification of the nomination to the Secretary of the
Corporation not less than three days after the giving
of the notice of the meeting nor more than fifty days
before any meeting of shareholders held for the
election of directors. Any such notification shall
contain the following information to the extent known to
the notifying shareholder or shareholders:
(a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee;
(c) the total number of shares that to the knowledge of
the notifying shareholder or shareholders will be voted
for each proposed nominee;
(d) the name and residence address of each notifying
shareholder; and
(e) the number of shares owned by each notifying shareholder.
The chairman of any meeting of shareholders held for the
election of directors may in his discretion disregard any
votes cast for any nominee whose nomination was not made
in accordance with these nomination provisions.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation
earned by the Corporation's executive officers for each
of the last three fiscal years.
Annual Compensation Long-Term
Name and
Principal Position Year Salary Bonus
Other Annual Compensation Long-Term Compensation..
Stock Options#
Richard W. Smith, President
1996 $117,000 $0 $6,000 75,664
1995 103,500 28,437 6,000 25,000
1994 99,000 366 6,000 0
James P. Buren, Executive Vice President
1996 $105,000 $0 $6,000 64,631
1995 93,000 14,788 6,000 17,500
1994 89,000 0 6,000 0
Roland Esnis, Directeur Generale, Twinsys Dataguard SA
1996 $68,716 $40,647 $ - $15,000
1995* 56,864 23,530 - -
*Mr. Esnis joined Twinsys on February 1, 1995.
The Corporation currently does not have a retirement plan
for its officers and employees.
Stock Options
The following table sets forth information relating
to grants of stock options to the Corporation's executive
officers during 1996. The option exercise price is at
the market price of the Common Stock on the date of the
grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Name
Number of Securities % of Total Options/ Exercise
Underlying Options/ SARS Granted to or Base
SARs Granted Employees Price
($/sh)
Expiration Date
Richard W. Smith 75,664 44.4% $7.00
10/14/2006
James P. Buren 64,631 38.0% $7.00
10/14/2006
Roland Esnis 15,000 8.8% $7.00
10/14/2006
The following table sets forth as of December 31, 1996
the value of unexercised options granted to the
Corporation's executive officers. In 1996, no options
were exercised under the 1988 Plan. The average of the
closing bid and asked price of the Common Stock on
December 31, 1996 was $7.125 per share.
Number of Shares Subject Value of
to Unexercised Options Unexercised
Name Exercisable Unexercisable In-the-Money
Options
Richard W. Smith 110,000 0 $ 193,126
James P. Buren 25,369 64,631 $141,379
Roland Esnis 0 15,000 $ 26,335
Director Compensation
Under the Corporation's 1988 Stock Option Plan,
nonemployee directors first elected after May 15, 1989
are awarded options for 2,500 shares of Common Stock on
the May 15th following election to the Board by the
Corporation's shareholders, and each nonemployee
director in office on May 15, 1989 or May 15th of
any succeeding year automatically receives an option
for 500 shares of Common Stock. The exercise price
for options granted to nonemployee directors is the
fair market value of the Common Stock on the date of
grant, and options for approximately one-third of the
shares become exercisable on May 15th of each of the
first three years following grant. Options granted to
nonemployee directors have a term of ten years.
During 1996, Mr. Brenzel and Mr. Snyder each
received an automatic grant of options to acquire 500
shares of Common Stock at an exercise price of $3.00
per share under the 1988 Plan. No options were
exercised in 1996.
The proposed amendment to the 1988 Stock Option
Plan would provide for a grant of 1,000 shares of Common
Stock per quarter to each nonemployee director. See
"Proposed Amendment to 1988 Stock Option Plan."
In addition to the annual grant of stock options, in
1997 the Corporation paid its nonemployee directors an
annual retainer of $1,000 plus $750 per meeting for five
regularly scheduled Board meetings. The Corporation plans
to discontinue cash payments to its nonemployee directors
if the proposed amendment to the 1988 Stock Option Plan
is approved at the Annual Meeting.
CONSULTING AGREEMENT
James P. Buren, a director of the Corporation,
entered into a consulting and non-competition agreement
with the Corporation upon his retirement as Executive
Vice President-Technology on October 24, 1997. The
agreement provides that Mr. Buren will provide consulting
services to the Corporation, including technical product
development, quality control and marketing, for a term
through March 31, 2000. For his consulting services,
Mr. Buren is paid a fixed daily rate based on services
actually performed, subject to minimum weekly compensation
based on his availability for service. The agreement
provides that an option for 64,631 shares granted to
Mr. Buren in 1996 will become exercisable in eight
equal installments from April 1998 to January 2000.
Mr. Buren also agreed to certain restrictions on the
timing of any sale by him of shares of Common Stock
currently subject to options and warrants and is entitled
to certain rights to have his shares registered in
an underwritten offering of Common Stock by the Company.
Mr. Buren has agreed to continue to serve as a director
of the Corporation so long as he is nominated and
elected each year and to resign as a director upon the
request of the other members of the Board of Directors.
The agreement also contains certain non-competition and
confidentiality covenants.
CERTAIN TRANSACTIONS
In 1992, EPI Corporation loaned $300,000 to the
Corporation to finance the Corporation's purchase of
certain equipment to be installed in its computer center.
On January 17, 1995, EPI extended an additional $500,000
in credit under the loan to assist in financing the
organization of, and purchase of certain assets by its
French subsidiary. The annual interest rate paid on the
loan was 1.5% above the "prime rate" as published in The
Wall Street Journal. Each term of the loan was for 90
days, and the loan was renewed for additional 90-day terms
through April 5, 1997, until repaid in full with proceeds
from the sale of Common Stock in March 1997. The loan was
secured by a second mortgage on the Corporation's real
estate. The Corporation also issued 15,000 shares of
Common Stock to EPI Corporation when the loan was
originally made in 1992, and an additional 1,000 shares
of Common Stock per $100,000 outstanding principal balance
upon each renewal of the loan for an additional 90-day term.
John P. Snyder, a director of the Corporation, is
President, a director and the largest shareholder of EPI
Corporation.
On June 30, 1996, the Corporation issued a total of
64,546 shares of newly authorized Series AA Preferred
and a warrant to purchase one share of Common Stock
("New Preferred Warrants") in connection with a plan
to restructure certain of its current obligations to
founding shareholders and preferred shareholders,
including directors of the Corporation, EPI Corporation
and certain of EPI's directors. The Corporation issued
one share of Series AA Preferred and a New Preferred
Warrant in payment of each $10.00 in outstanding
principal and interest due on loans made in 1985 by
founding shareholders, or a total of 23,427 shares in
payment of $234,344 in principal and interest on the
shareholder loans. The interest rate on the retired
shareholder loans was 10% per year. The Corporation
also issued one share of Series AA Preferred and a
New Preferred Warrant to holders of Series A Preferred
Stock ("Series A Preferred") in payment of each $10.00
of accrued, unpaid dividends payable on the Series A
Preferred, or a total of 6,952 shares in payment of
dividend obligations totaling $69,552 as of June 30,
1996. In addition, the Corporation issued one share
of Series AA Preferred and one new Preferred Warrant
in exchange for each of the 34,167 shares of Series A
Preferred outstanding as of June 30, 1996 and the
warrant to purchase one share of Common Stock that was
originally issued with each Series A Preferred share
(an "Old Preferred Warrant").
By restructuring its preferred stock and shareholder
loans, the Corporation eliminated its outstanding
obligations for accrued, unpaid dividends, reduced the
principal balance of loans from shareholders, and reduced
the rate of dividends and interest payable to preferred
shareholders. As a result of these transactions, the
Corporation's preferred shareholders, who have provided
capital necessary for the expansion of the Corporation's
business in past years, effectively extended the period
for converting their preferred stock and exercising their
warrants, and reduced the current exercise price per
share on their warrants. The New Preferred Warrant issued
with each share of Series AA Preferred, like the Old
Preferred Warrant accompanying the Series A Preferred,
has an initial exercise price of $2.50 per share of
Common Stock, which increases by $.50 per year to $4.50
per share during the fifth year after issuance. However,
the Old Preferred Warrants would have expired at December
31, 1996, compared to the June 30, 2001 expiration date
of the New Preferred Warrant, and the exercise price then
in effect was reduced from $4.50 to $2.50 per share.
The Company called all of the outstanding shares
of Series AA Preferred for redemption on June 30, 1997.
Holders of all of the Series AA Preferred elected to
convert their shares of Common Stock, and a total of
258,184 shares of Common Stock were issued to them as of
June 30, 1997.
In September and October 1996, the Corporation
issued a total of 500,000 units comprised of one share
of Common Stock and a warrant to purchase one share of
Common Stock at a price of $3.75 per share (the "1996
Warrants") in a private placement. The offering price
was $2.50 per unit, and placement proceeds totaled
$1,250,000. Directors, five percent beneficial owners
of Common Stock and their affiliates who purchased
units in the placement included John P. Snyder (5,097
units), EPI Corporation (126,106 units), directors of
EPI Corporation other than Mr. Snyder (12,409 units)
and TSF Investment Group LLC (37,967 units).
Effective as of July 1996, Twinsys began offering
disaster recovery and other services to users of
Unix-based computer systems in France through Twin-X
SA, a newly organized subsidiary. Twinsys holds a
59.9% interest in Twin-X, and Roland Esnis and
Francois Domine, Directeur Generale and Sales Manager
of Twinsys, respectively, each holds an approximate
20% interest in Twin-X. Twinsys and Messrs. Esnis
and Domine made proportional cash contributions to
Twin-X for their respective interests in Twin-X.
It is the Corporation's policy that all
material affiliated transactions and loans will be
made or entered into on terms that are no less
favorable to the Corporation than those that can
be obtained from unaffiliated third parties. All
future material affiliated transactions and loans
must be approved by a majority of the independent
directors who do not have an interest in the transactions.
PROPOSED AMENDMENTS TO 1988 STOCK OPTION PLAN
The Corporation's shareholders originally approved
the 1988 Stock Option Plan (the "Plan") at the 1988
Annual Meeting. Amendments to the Plan approved by
shareholders at the 1989 Annual Meeting authorized
automatic annual grants of stock options to its
nonemployee directors and made certain other changes.
On November 13, 1997, the Board of Directors adopted
proposal to further amend and restate the Plan and
directed that the proposal be submitted for shareholder
approval at the 1997 Annual Meeting. The following
summary of the Plan and the proposed amendments to
it is qualified in its entirety by reference to the
text of the Plan, as most recently amended and
restated, which is included as Appendix A to this
Proxy Statement.
The proposed amendments to the Plan (the "Plan
Amendment") would: (1) extend the term of the Plan to
April 7, 2008; (2) increase the number of shares of
Common Stock reserved for issuance under the Option
Plan from 10% of the number of shares of Common Stock
outstanding from time to time to the greater of 900,000
shares or 15% of the number of shares of Common Stock
outstanding from time to time; (3) increase the number
of shares subject to options automatically granted
to the Corporation's nonemployee directors ("Independent
Directors"); (4) modify provisions governing the
exercise of options after termination of employment; and
5) refine and clarify certain provisions of the Plan to
improve the administration of the Plan. The Amendment
is intended to permit the Corporation to continue to
include stock-based incentive awards as an important
component of executive and director compensation, which
the Board of Directors believes can contribute to a
greater mutuality of interest in the Corporation's
performance among employees, directors and shareholders.
The following summary of provisions of the Plan
and the changes proposed to be made by the Plan Amendment,
is qualified in its entirety by reference to the text
of the amended and restated Plan.
Purpose
The purposes of the Plan are to encourage ownership
of Common Stock by employees who are in a position to
contribute to the Corporation's progress, to provide
them with an incentive to put forth maximum efforts
for the Corporation's success, and to provide a
valuable means of retaining key personnel as well as
attracting new personnel when needed for future
operations and growth. The Plan also provides for
automatic grants of options to the Corporation's
Independent Directors to assist in attracting and
retaining talented individuals to serve as directors.
Shares Issuable Under the Plan
The Plan currently authorizes grants of options
to purchase up to the greater of 150,000 shares or 10%
of the issued and outstanding shares of Common Stock.
Options for up to 85% of the shares authorized under
the Plan may be granted to key employees of the Corporation,
and options for up to 15% of such shares may be
granted to nonemployee directors.
The Plan Amendment would increase the number of
shares available for option awards under the Plan to
the greater of 900,000 shares or 15% of the shares of
Common Stock outstanding from time to time. At any time
when there were 6,000,000 or more shares of Common Stock
outstanding, the number of shares available under the
Plan would increase automatically whenever new shares
were issued. However, the number of shares available
under the Plan would not decrease if shares were redeemed
or the number of shares of Common Stock outstanding
were otherwise to decrease, except in the case of a
proportional decrease in the number of shares of
Common Stock held by all shareholders as a result
of a reverse stock split or other similar change
in the Common Stock. The allocation of a maximum number
of shares to employee and director options would be
eliminated. The increase in the number of shares
available under the Plan will allow the Corporation to
continue to make stock-based incentive compensation a
significant component of compensation for key employees,
which enhances the Corporation's ability to attract
experienced technical and other personnel at a time
when these individuals are in high demand in the
computer services industry.
Administration
The Plan is administered by the Corporation's
Stock Option Committee (the "Committee"), consisting
of two or more persons appointed by the Board of
Directors who are not employees of the Corporation.
Option Grants to Key Employees
Eligibility. Options may be granted to
employees of the Corporation who have substantial
responsibility in the direction and management of the
Corporation or its subsidiaries or have otherwise
contributed to the Corporation's financial success.
The Committee is authorized to determine the employees
to receive a grant of options, the number of shares
subject to each option, and the terms and conditions
of each option.
Exercise Price. The exercise price of any option
cannot be less than 75% of the fair market value of
the Common Stock on the date of the grant, as determined
in good faith by the Committee. If at the time of the
grant of an option, the Common Stock is traded on a
national securities exchange or market system on which
sales prices are regularly reported, the fair market
value of the Common Stock will not be less than the
mean of the high and low asked or closing sales prices
reported for the Common Stock on the date of the grant
or the most recent trading day proceeding the date of
the grant.
Exercise of Option. Each option granted to
employees can be exercised in one or more installments
during its term and the right to exercise may be
cumulative, as determined by the Committee. The Committee
determines the expiration date of each option, but no
option may expire later than ten years from the date
of the grant, and no option may be exercised for a
fraction of a share of Common Stock.
Duration of Options. Currently, no option may be
granted under the Plan later than April 7, 1998, but options
granted before that date may extend beyond that date in
accordance with the terms and provisions of the Plan. The
Plan Amendment would extend the termination date of the Plan
to April 7, 2008.
Termination of Employment. The Plan currently provides
that options granted to an employee who has been employed by
the Corporation or a subsidiary for less than three years
generally will terminate immediately upon termination of
employment. Employees who have been employed by the Corporation
or a subsidiary for three years or more have the right to
exercise their options after termination of employment in
the following circumstances. When termination of employment
is due to death or disability, without regard as to whether the
options were exercisable immediately before termination,
options may be exercised within 24 months following termination
of employment. When an employee retires, the employee can
exercise any options that were exercisable immediately before
the date of retirement within the following 24 months. When
termination of employment is involuntary and without cause, as
determined by the Committee, an employee can exercise any
options that were exercisable immediately before the date of
termination within the following 18 months. The Committee has
discretion to provide longer or shorter termination periods for
options in the option agreement with an employee.
The Plan Amendment would eliminate the requirement that
an employee be employed by the Corporation for three years to
have the right to exercise options after termination of
employment in the circumstances listed above.
Option Grants to Independent Directors
Automatic Grant of Options. The Plan provides for
automatic grants of stock options to the Corporation's Independent
Directors. Currently, each Independent Director first elected
after 1989 is automatically granted options for 2,500 shares of
Common Stock on the May 15th following his initial election to
the Board by the Corporation's shareholders ("Initial Grant").
After the first year in office, each Independent Director is
automatically granted options for 500 shares of Common Stock on
May 15 of each year the Independent Director continues in
office ("Annual Grant").
The Plan Amendment would retain the number of shares subject
to the Initial Grant of options at 2,500 shares. In lieu of
the Annual Grant, the Plan Amendment would grant options for
1,000 shares of Common Stock to each Independent Director on
the 15th day of the second month of each calendar quarter,
beginning with the third quarter of 1997. The Board of
Directors believes the increase in the number of shares
subject to options granted to Independent Directors is
appropriate, given that the Company is now traded on the American
Stock Exchange and that it is currently anticipated that
option grants under the Plan will be the sole compensation paid
to the Corporation's Independent Directors for their services.
Exercise Price. The exercise price per share for options
granted to an Independent Director is the fair market value
of the Common Stock on the grant date.
Exercise and Duration of Options. An Independent Director
may not exercise any option before the first anniversary of
the grant. On and after the first anniversary of the grant,
options for all the shares subject to an Annual Grant and
options for no more than 33% of the shares subject to the
Initial Grant can be exercised. On or after the second
anniversary of the grant, options for no more than 67% of the
shares subject to the Initial Grant could be exercised. On or
after the third anniversary of the grant options for all of the
shares subject to the Initial Grant could be exercised. An
Independent Director can exercise his options at any time
during the 12 months following the end of his service as a
director to the extent that the options were exercisable
immediately prior to the end of his service. If the Plan
Amendment is approved, options granted each quarter would
become exercisable on the first anniversary of the grant.
General Provisions
Shares Subject to Options. The shares that may be issued
upon the exercise of options granted under the Plan will be
authorized and unissued shares of Common Stock. When options
are for any reason canceled, or expire or terminate unexercised,
the shares subject to such options will again be available for
option grants.
In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the
corporate structure of the Corporation, the Corporation will
make such adjustments, if any, as are appropriate in the number
and kind of shares authorized by the Plan, the number and kind
of shares covered by the options granted, and in the exercise
price.
Payment of Exercise Price. The exercise price for options
granted pursuant to the Plan may be paid in cash or in shares of
Common Stock held for at least six months, or a combination of
both.
Change in Control. The Plan currently provides that upon a
"change in control" of the Corporation, all options previously
granted but not exercisable will immediately become fully
exercisable. The Plan currently defines a "change in control"
as occurring whenever such a change would be required to be
reported under certain federal securities laws, and specifically
when (a) a shareholder or group acquires 30% of the Corporation's
voting stock, (b) a substantial change occurs in the composition
of the Board of Directors, (c) there is a substantial transfer
of the Corporation's assets, (d) a change in control is
contemplated by agreement, or (e) the Board of Directors adopts
a resolution to the effect that a potential change of control
has occurred. This definition is set forth in Section 2.2(b) of
the Plan, as amended and restated, in Appendix A.
The Committee currently has discretion to provide in
option agreements with employees that options would not become
immediately exercisable upon a change in control. Thus, the
Committee could limit application of the change in control
provisions to those employees involved in the Corporation's
strategic planning for whom certain transactions in the best
interest of the Corporation might otherwise result in the
termination of their own unexercised options. In addition,
the Plan currently provides that the change-in-control
provisions do not apply to transactions approved by a
majority of the Corporation's directors who were in office at
the beginning of the two-year period preceding the Board's vote
on the transaction, or whose nomination or election was
approved by a vote of two-thirds of such directors ("Continuing
Directors").
The Plan Amendment provides that options granted on or
after the effective date of the Plan Amendment may become
immediately exercisable upon a change in control if the
Committee elects to include a provision to that effect in the
option agreement relating to the option. The Plan Amendment
provides that the acceleration of the exercisability of
options granted on or after the effectiveness of the Plan
Amendment will be governed by the definition of "change in
control" set forth in Section 2.2(a) of the Plan, as amended
and restated, in Appendix A. The events that would constitute
a "change in control" under each of the two definitions that
would be included in the Plan are similar. The exclusion of
transactions approved by a majority of the Continuing Directors
from the definition of change in control would not apply to
options granted after the effective date of the Plan Amendment.
In addition, the definition of "change in control" set forth
in Section 2.2(a) of the Plan provides that any shareholder
or group of shareholders who currently hold securities
representing 30% of the Corporation's voting power would trigger
the occurrence of a change in control by increasing the relative
percentage of the Corporation's voting power of the shareholder
or group by 5% through the acquisition of additional securities of
the Corporation.
The foregoing summary of the provisions of the Plan and
the Plan Amendment with respect to a change of control of the
Corporation is brief and qualified in its entirety by reference
to the Plan, as amended and restated, included in Appendix A.
Amendment. The Board of Directors may discontinue the Plan
at any time and may amend the Plan as may be permitted by law,
except the Board may not revoke or alter, in any manner
unfavorable to the holders, any options then outstanding,
nor may the Board amend the Plan without the approval of the
Corporation's shareholders so as to (a) increase the maximum
number of shares as to which options may be granted under the
Plan; (b) decrease the minimum exercise price; (c) extend
the term of the Plan beyond 20 years of the maximum term of
the options granted beyond 10 years; (d) withdraw the
administration of the Plan from the Stock Option Committee;
(e) decrease, directly or indirectly, the exercise price
applicable to any option.
Nontransferability of Options. No option granted under
the Plan may be transferred except by will or the laws of
descent and distribution.
Tax Withholding. The Plan Amendment adds a provision
giving the Committee discretion to permit an option holder to
satisfy any withholding obligation by directing the
Corporation to retain shares of stock from the option being
exercised that have a fair market value equal to the amount
required to be withheld. See "Federal Income Tax Consequences."
Federal Income Tax Consequences
Options granted under the Plan are nonqualified stock
options ("NSO") under the Internal Revenue Code of 1986,
as amended. The holder of an NSO does not recognize taxable
income as a result of the grant of an NSO. However, upon
the exercise of an NSO (whether the purchase price is paid
in cash or partly or entirely with shares of Common Stock
already owned by the optionee), an optionee recognizes
ordinary income in an amount equal to the difference between
the fair market value on the date of exercise of the shares
received on exercise and the option exercise price. Such
amount is subject to applicable withholding requirements
and is deductible for tax purposes by the Corporation.
The tax basis of shares purchased is the fair market
value of the shares on the date of exercise, except that to
the extent already owned shares are tendered as part of the
purchase price, a like number of shares received upon
exercise will have the same tax basis and holding period
as the shares tendered. If the shares purchased pursuant
to the exercise of an NSO are held as a capital asset for
more than one year (including in the holding period of any
shares received in exchange for shares surrendered, the
holding period of the surrendered shares), any gain or loss
recognized upon the sale of the shares will be taxed as a
long-term capital gain or loss.
When an officer or director who is subject to Section 16(b)
of the Exchange Act exercises an NSO, the optionee will
recognize ordinary income for federal income tax purposes on
the first date that sale of such shares would not be subject
to potential liability under Section 16(b) of the Exchange Act.
The optionee may make an appropriate election within thirty
days after the date of exercise, in which case the optionee
is taxed at the date of exercise as if he were not an insider.
The ordinary income recognized will be the excess, if any,
of the fair market value of the Common Stock on such later
date over the option price, and the Corporation's deduction
also will be deferred until such later date.
New Plan Benefits
The table below sets forth the amounts that would have
been received if the Plan Amendment had been in effect in
1996 by the executive officers named in the summary compensation
table on page 6 and the Corporation's executive officers,
Independent Directors, and non-executive officers, in each
case taken as a group. Awards to employees under the Plan will
continue to be at the discretion of the Executive Committee
and therefore any benefit to employees from the Plan
Amendment cannot be determined.
NEW PLAN BENEFITS
1988 Stock Option Plan
Name and Position Dollar Value ($)(1) Number of
Units (2)
Richard W. Smith
President and Chief Executive Officer $0 0
James P. Buren
Former Executive Vice President - Technology $0 0
Roland Esnis.....$0.....0
Executive Group.....$0.....0
Non-Executive Director Group $77,000 8,000
(Independent Directors)
Non-Executive Officer Employee Group $0 0
(1) Based on the closing market price of the Common Stock on
November 7, 1997.
(2) Represents number of shares underlying stock options.
The Plan Amendment will be approved if the number of
votes cast for the Plan Amendment exceeds the number of votes
cast against it at a shareholders meeting at which a majority
of the shares of Common Stock outstanding are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL AND RATIFICATION OF THE AMENDMENTS TO THE
1988 STOCK OPTION PLAN.
INFORMATION CONCERNING INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, Certified Public Accountants,
served as independent auditors for the Corporation in 1996.
Representatives of Ernst & Young LLP, will be present at the
1997 Annual Meeting and will have the opportunity to make a
statement, if they desire to do so, and to respond to
appropriate questions.
GENERAL
Proposals of Shareholders
It is anticipated that the 1998 Annual Meeting will be
held during the second quarter of 1998. Any proposals by
shareholders to be presented at the 1998 Annual Meeting must
be received by the Secretary of the Corporation prior to
February 10, 1998, to be included in the Proxy Statement
for the 1998 Annual Meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Corporation's executive officers and directors and persons
who beneficially own more than 10% of the Corporation's
Common Stock (collectively, "Reporting Persons") to file
reports of ownership and changes in ownership of the Common
Stock with the Securities and Exchange Commission.
Reporting Persons are required by SEC regulations to furnish
the Corporation with copies of all Section 16(a) forms
that they file. Based solely on its review of the copies
of such forms received or written representations from certain
Reporting Persons that no Form 5s were required, the
Corporation believes that during fiscal 1996, all the
Reporting Persons complied with all applicable filing
requirements, except as noted below, EPI Corporation,
John P. Snyder, Max G. Baumgardner, J. Ben Cress, Robert
H. Loeffler, Grace B. Wilkins, James E. Buchart and Henry
Schumpf each filed a Form 4 report with respect to nine
transactions by EPI Corporation in June, July, August,
September and October 1996 after the reports were due.
Roland Esnis filed a Form 3 report after the report was due.
Other Matters
All expenses of preparing, printing, mailing, and
delivering the proxy card and all materials used in the
solicitation of proxy cards will be borne by the Corporation.
In addition to the use of the mail, proxy cards may be
solicited by personal interview, telephone, and telegraph by
directors, officers, and other employees of the Corporation,
none of whom will receive additional compensation for such
services. The Corporation will also request brokerage
houses, custodians, and nominees to forward soliciting
materials to the beneficial owners of the Corporation's
Common Stock held of record by them and will pay reasonable
expenses of these persons for forwarding the soliciting
materials.
The officers and directors of the Corporation do not
know of any matters to be presented for shareholder
approval at the meeting other than those described in
this Proxy Statement. If any other matters should come
before the meeting, the Board of Directors intends that
the persons named in the enclosed proxy card, or their
substitutes, will vote the shares represented by the proxy
card in accordance with their best judgment on such matters.
By Order of the Board of Directors
John P. Snyder, Secretary
Louisville, Kentucky
November 17, 1997
APPENDIX A
STRATEGIA CORPORATION
1988 STOCK OPTION PLAN
As Amended and Restated As of November 13, 1997
This is the 1988 Stock Option Plan (the "Plan"),
as amended and restated as of November 13, 1997 (the
"Effective Date"), of Strategia Corporation (formerly
Dataguard Recovery Services, Inc.), a Kentucky
corporation (the "Corporation"), pursuant to which
the Corporation may grant options to purchase
shares of the Corporation's common stock.
Section 1 - PURPOSE
The Corporation adopts this compensation program
for certain employees and directors to (a) increase
the profitability and growth of the Corporation;
(b) provide competitive executive compensation while
obtaining the benefits of tax deferral; (c) attract
and retain exceptional personnel and encourage
excellence in the performance of individual
responsibilities; and (d) motivate employees to
contribute to the Corporation's success.
Section 2 - DEFINITIONS
For purposes of the Plan, the following terms
shall have the meanings below unless the context clearly
indicates otherwise:
2.1 "Beneficial Owner" or "Beneficial Ownership" shall
have the meaning set forth in Rule 13d-3 under the
Exchange Act.
2.2 "Board" shall mean the Board of Directors
of the Corporation.
2.3 "Change of Control" of the Corporation shall mean
(a) for Options granted on or after the Effective Date,
(i) an event or series of events which have the effect
of any "Person" as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), other than any trustee or other
fiduciary holding securities of the Corporation under
any employee benefit plan of the Corporation, becoming
the Beneficial Owner, directly or indirectly, of
securities of the Corporation representing 30% or more
of the combined voting power of the Corporation's then
outstanding stock; (ii) during any period of two
consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to
constitute a majority thereof, unless the appointment
or election, or the nomination for election by the
stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the
period; or (iii) the business of the Corporation is
disposed of pursuant to a partial or complete liquidation,
sale of assets, or otherwise. A Change in Control shall
also be deemed to occur if (i) the Corporation enters
into an agreement, the consummation of which would result
in the occurrence of a Change in Control, (ii) any Person
(including the Corporation) publicly announces an
intention to take or to consider taking actions which
if consummated would constitute a Change in Control, or
(iii) the Board adopts a resolution to the effect that
a potential Change in Control for purposes of this Plan
has occurred. Notwithstanding the forgoing, (i) if, as
of the Effective Date, any Person is the Beneficial Owner,
directly or indirectly, of securities of the Corporation
representing 30% or more of the combined voting power of
the Corporation's then outstanding stock, then the
ownership of stock in the Corporation by that person
will not constitute a Change in Control unless and until
such time as such Person has increased his relative
percentage of voting power by 5% or more by acquiring
Beneficial Ownership of additional securities of the
Corporation; and (ii) if, as the result of the Corporation's
acquisition of securities of the Corporation, the number of
shares of stock of the Corporation outstanding decreases
and the proportionate percentage of voting power of the
securities of the Corporation Beneficially Owned by a
Person increases to 30% or more, then the ownership of
securities in the Corporation by that Person will not
constitute a Change in Control unless and until such time
as such Person has increased his relative percentage of
voting power by 5% or more by acquiring Beneficial
Ownership of additional securities of the Corporation.
(b) for Options granted before the Effective Date,
a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A
promulgated under the Exchange Act; provided that,
without limitation, such a change in control shall be
deemed to have occurred if: (A) any Person is or
becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation representing 30% or
more of the combining voting power of the
Corporation's then outstanding stock; (B) during any
period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease
for any reason to constitute a majority thereof, unless
the election, or the nomination for election by the
shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the
period; or (C) the business of the Corporation for
which the Optionee's services are principally performed
is disposed of by the Corporation pursuant to a partial
or complete liquidation of the Corporation, a sale of
assets of the Corporation, or otherwise. A Change in
Control shall also be deemed to occur if (A) the
Corporation enters into an agreement, the consumption
of which would result in the occurrence of a Change
in Control of the Corporation, (B) any Person (including
the Corporation) publicly announces an intention to
take or to consider taking actions which if consummated
would constitute a Change in Control of the
Corporation, or (C) the Board adopts a resolution to
the effect that a Change in Control of the Corporation
for purposes of this Plan has occurred. Notwithstanding
the forgoing, a Change in Control shall not be deemed
to occur under this Section 2.3(b) in the case of any
transaction approved by a majority of the directors still
in office who were in office two years prior to such
vote on such transaction, or whose election or nomination
for election by the Corporation's shareholders was
approved by two-thirds of the directors then in office
who were in office at the beginning of the period.
The Committee may provide in an amended Stock Option
Agreement governing an Option granted before the Effective
Date that the definition of Change in Control in Section
2.3(a) shall apply to particular Options, rather than the
definition in this Section 2.3(b).
2.4 "Code" shall mean the Internal Revenue Code of
1986, as it may be amended from time to time.
2.5 "Committee" shall mean the Corporation's Stock
Option Committee appointed by the Board pursuant to
Section 4.1.
2.6 "Disability" shall mean a physical or mental
condition of an Optionee resulting from bodily injury or
disease or mental disorder which renders an Optionee
incapable of continuing the further performance of the
Optionee's normal employment activities with the
Corporation and which is expected to be permanent and
continuous for the remainder of the Optionee's life,
provided that Disability shall not include any disability
that results from the Optionee's engagement in a
criminal enterprise, habitual drunkenness, addiction to
narcotics or intentionally self-inflicted injury.
The determination of the Committee on any question
involving disability shall be conclusive and binding.
2.7 "Employee" shall mean an employee of the Corporation
or any of its Subsidiaries who has been designated by
the Committee, under the criteria in Section 5, as
eligible to participate in the Plan.
2.8 "Fair Market Value" shall have the meaning
specified in Section 6.1.
2.9 "Independent Director" shall mean a Director
who has been elected by the Corporation's shareholders
and who is not an Employee.
2.10 "Option" shall mean an option to purchase Stock
granted under Sections 6 or 7 of the Plan.
2.11 "Option Period" shall mean the period from the
date of the grant of an Option to the date when the
Option expires as stated in the terms of the Stock Option
Agreement.
2.12 "Optionee" shall mean an Employee or Independent
Director who has been granted an Option to purchase
shares of Stock under the provisions of the Plan.
2.13 "Plan" shall mean this Strategia Stock Option Plan.
2.14 "Retirement" shall mean Termination of Employment
with the Corporation or any of its Subsidiaries after
attaining age 65 (or earlier with the Corporation's or
the Subsidiary's consent).
2.15 "Stock" shall mean the Corporation's voting common
stock of no par value per share.
2.16 "Stock Option Agreement" shall mean an agreement
between an Optionee and the Corporation covering the
specific terms and conditions of an Option.
2.17 "Subsidiary" or "Subsidiaries" shall mean any
corporation which at the time qualifies as a subsidiary
of the Corporation under the definition of "subsidiary
corporation" in Section 424(f) of the Code.
2.18 "Termination of Employment" shall be deemed to have
occurred at the close of business on the last day on
which an Employee is carried as an active employee on the
records of the Corporation or any of its Subsidiaries.
The Committee shall determine whether an authorized
leave of absence, or other absence on military or
government service, constitutes severance of the
employment relationship between the Corporation or a
Subsidiary and the Employee.
Section 3 -- STOCK SUBJECT TO THE PLAN
3.1 Authorized Stock. Subject to adjustment as
provided in this Section 3, the maximum aggregate number
of shares of Stock that may be subject to Options under
the Plan shall be the greater of 900,000 shares or 15%
of the shares of Stock outstanding from time to time
(the "Aggregate Maximum"). If a change in the number of
outstanding shares of Stock occurs that both (i) is not
provided for in Section
3.3 of this Plan and (ii) would cause the foregoing
calculation to result in a number of shares greater
than the Aggregate Maximum in effect immediately
prior to the change, the Aggregate Maximum shall
be immediately and automatically increased to that
greater number. The Aggregate Maximum shall not be
decreased except pursuant to Section 3.3 or an amendment
to this Plan.
3.2 Effect of Expirations and Terminations. If any
Option granted under the Plan expires or terminates
without being exercised in full, any shares of Stock
for which the Option was not exercised shall be available
to be rewarded under the Plan. In other words, the
unexercised shares will be treated as if they were
never made subject to an Option for purposes of
determining whether the aggregate number of shares
made subject to Options exceeds the Aggregate Maximum.
3.3 Adjustments in Authorized Shares. In the event
of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock
dividend, split-up, share combination, or other change
in the corporate structure of the Corporation affecting
the number of shares of Stock or the kind of shares or
securities issuable upon exercise of an Option, an
appropriate and proportionate adjustment shall be made
by the Committee in the number and kind of shares which
may be delivered under the Plan, and in the number and
kind of or price of shares subject to outstanding
Options; provided that the number of shares subject to
any Option shall always be a whole number.
If the Corporation shall at any time merge, consolidate
with or into another corporation or association, or enter
into a statutory share exchange or any other similar
transaction in which shares of Stock are converted as a
matter of law into securities and/or other property,
each Optionee will thereafter receive, upon the exercise
of an Option, the securities or property to which a
holder of the number of shares of Stock then deliverable
upon the exercise of such Option would have been entitled
if such Option had been exercised immediately prior to
such merger, consolidation, or share exchange and the
Corporation shall take such steps in connection with such
merger, consolidation or share exchange as may be
necessary to assure that the provisions of this Plan shall
thereafter be applicable, as nearly as is reasonably
possible, in relation to any securities or property
thereafter deliverable upon the exercise of such Option.
A sale of all or substantially all the assets of the
Corporation for a consideration (apart from the
assumption of obligations) consisting primarily of
securities shall be deemed a merger or consolidation
for the foregoing purposes, and any merger or
consolidation shall be deemed a Change in Control as
defined in Section 2.3.
Section 4 -- ADMINISTRATION
4.1 Committee Governance. This Plan shall be
administered by a Stock Option Committee, which shall
consist of two or more persons appointed by the Board,
who are not employees of the Corporation or a Subsidiary.
The number of Committee members shall be determined
by the Board. The Board shall add or remove members
from the Committee as the Board sees fit, and vacancies
shall be filled by the Board. The Committee shall
select one of its members as the chairperson of the
Committee and shall hold meetings at such times and
places as it may determine. The Committee may appoint
a secretary and, subject to the provisions of the Plan
and to policies determined by the Board, may make such
rules and regulations for the conduct of its business
as it shall deem advisable. Written action of the
Committee may be taken by a majority of its members,
and actions so taken shall be fully effective as if
taken by a vote of a majority of the members at a
meeting duly called and held. A majority of Committee
members shall constitute a quorum for purposes of
meeting. The act of a majority of the members present
at any meeting for which there is a quorum shall be a
valid act of the Committee.
4.2 Committee to Interpret Plan. Subject to the
express terms and conditions of the Plan, the Committee
shall have sole power to (i) construe and interpret the
Plan; (ii) to establish, amend or waive rules and
for its administration; (iii) to determine and
accelerate the exercisability of any Option; (iv)
to correct inconsistencies in the Plan or in any Stock
Option Agreement, or any other instrument relating to
an Option; and (v) subject to the provisions of
Section 9, to amend the terms and conditions of any
outstanding Option, to the extent such terms and
conditions are within the discretion of the Committee
as provided in the Plan. Notwithstanding the foregoing,
no action of the Board or the Committee may, without the
consent of the person or persons entitled to exercise
any outstanding Option, adversely affect the rights of
such person or persons.
4.3 Exculpation. No member of the Board or the Committee
shall be liable for actions or determination made in
good faith with respect to the Plan, or for awards
under it.
4.4 Selection of Employee Optionees. The Committee
shall have the authority to grant Options from time to
time to such Employees as may be selected by it in its
sole discretion in accordance with Section 5.
4.5 Decisions Binding. All determinations and
decisions made by the Board or the Committee pursuant
to the provisions of the Plan shall be final,
conclusive and binding on all persons, including the
Corporation, its shareholders, Optionees and their
estates and beneficiaries.
4.6 Stock Option Agreements. Each Option under the
Plan shall be evidenced by a Stock Option Agreement
which shall be signed by the chairman of the Committee
and by the Optionee, and shall contain such terms and
conditions as may be approved by the Committee, which
need not be the same in all cases. Any Stock Option
Agreement may be supplemented or amended in writing from
time to time as approved by the Committee, provided
that the terms of such Agreements as amended or
supplemented, as well as the terms of the original
Stock Option Agreement, are not inconsistent with
the provisions of the Plan. An Employee or
Independent Director who receives an Option under
the Plan shall not, with respect to the Option, be deemed
to have become an Optionee, or to have any rights
with respect to the Option, unless and until the
Employee or Independent Director has executed a Stock
Option Agreement or other instrument evidencing the
Option and shall have delivered an executed copy
thereof to the Corporation, and has otherwise
complied with the applicable terms and conditions
of the Option. The Committee may condition any Option
grant upon the agreement by the Optionee to such
confidentiality, non-competition and non-solicitation
covenants as the Committee deems appropriate.
Section 5 -- ELIGIBILITY
Employees of the Corporation and its Subsidiaries
who are expected to contribute substantially to the
growth and profitability of the Corporation and its
Subsidiaries are eligible for selection by the
Committee under Section 4.4 to receive Options.
Independent Directors shall also receive Options
as provided in Section 7.
Section 6 -- GRANT OF OPTIONS TO EMPLOYEES
6.1 Option Price. The purchase price per share of
Stock covered by an Option granted to an Employee
shall be determined by the Committee but shall
not be less than 75% of the fair market value
(the "Fair Market Value") of such Stock on the
date the Option is granted. The Fair Market Value
shall be determined by the Committee in its sole
discretion, provided that, if the Corporation's Stock
is publicly traded on an established securities
market, the Fair Market Value shall be the closing
market price of the Corporation's Stock as reported
on the date of grant, or, if no trades were reported
on that date, the closing price on the most recent
trading day immediately preceding the date of the grant.
6.2 Option Period. The Option Period shall be
determined by the Committee, but no Option shall be
exercisable later than ten years from the date of grant.
No Option may be exercised at any time unless such
Option is valid and outstanding as provided in this Plan.
6.3 Nontransferability of Options. No Option shall be
transferable by the Optionee otherwise than by will or
by the laws of descent and distribution, and such option
shall be exercisable, during the Optionee's lifetime,
only by the Optionee.
Section 7 -- OPTION GRANTS TO INDEPENDENT DIRECTORS
7.1 Grant of Option. (i) Each Independent Director who
was not a director of the Corporation on May 15, 1989,
will automatically be granted an Option for 2,500
shares of Stock on the May 15th following his election
to the Board by the Corporation's shareholders; (ii)
each Independent Director in office on May 15, 1989 or
on May 15th of any succeeding year through May 15, 1996
will automatically be granted an Option for 500 shares of
Stock; and (iii) each Independent Director in office
on May 15, 1997 or on any subsequent May 15, August 15,
November 15, or February 15 will automatically be granted
an Option for 1,000 shares of Stock on each such
quarterly date.
7.2 Exercise Price. The exercise price per share for
an Option granted to an Independent Director shall be
the Fair Market Value of the Stock on the date the
Option is granted, determined in accordance with
Section 6.1.
7.3 Exercise. An Independent Director shall not
exercise any Option before the first anniversary of
the date the Option is granted. Thereafter, Options
for no more than 33% of the shares subject to Options
granted pursuant to Section 7.1(i) shall be exercisable
on and after the first anniversary of the date the Option
is granted. Options for no more than 67% of the shares
subject to such Options may be exercised on and after
the second anniversary of the date the Option is granted.
Options for 100% of the shares subject to such
Options may be exercised on or after the third anniversary
of the date the Option is granted. Options granted under
Section 7.1(ii) shall be exercisable immediately on and
after the first anniversary of the date the Option is
granted.
7.4 Duration of Options. If an Independent Director
shall cease to serve as a director of the Corporation,
the Independent Director shall have the right to exercise
his Options at any time within 12 months of the end of his
service as a director to the extent that he was entitled
to exercise his Options immediately prior to the end of
his service.
7.5 Other Terms and Conditions. Options granted to
Independent Directors shall be subject to all other terms
and conditions of the Plan except those set forth in
Sections 6.2, 8.1 and 8.3.
Section 8 -- EXERCISE OF OPTIONS
8.1 Exercise. An Option may be exercised, so long as
it is valid and outstanding, from time to time in part
or as a whole, subject to any limitations with respect
to the number of shares for which the Option may be
exercised at a particular time and to such other
conditions (e.g., exercise could be conditioned on
performance) as the Committee in its discretion may
specify upon granting the Option or as otherwise
provided in this Section 8.
8.2 Method of Exercise. To exercise an Option, the
Optionee or the other person(s) entitled to exercise
the Option shall give written notice of exercise to
the Committee, specifying the number of full shares
to be purchased. Such notice shall be accompanied
by payment in full in cash for the Stock being
purchased plus any required withholding tax as provided
in Section 11. Alternatively, payment for the Stock,
in full or in part, may be made in the form of Stock
owned by the Optionee for at least 6 months (based on
the Fair Market Value of the Stock on the date the
Option is exercised) evidenced by negotiable Stock
certificates registered either in the sole name of
the Optionee or the names of the Optionee and spouse,
or by any combination of cash or shares. No shares
of Stock shall be issued unless the Optionee has fully
complied with the provisions of this Section 8.2.
8.3 Termination of Employment. Unless the Committee
provides in a Stock Option Agreement that options
granted to an Employee shall terminate after longer
or shorter periods than those set forth in this Section
8.3, if the Optionee's employment by the Corporation or
a Subsidiary shall terminate, his Option shall terminate
immediately thereupon, except that:
(i) If an involuntary Termination of Employment is
without cause, the Employee shall have the right, subject
to Section 6.2, to exercise his Option at any time within
18 months after such termination to the extent that he
was entitled to exercise the same immediately prior
to such termination.
(ii) If any Termination of Employment is due to
Retirement with the consent of the Corporation, the
Employee shall have the right, subject to Section 6.2,
to exercise his Option at any time within 24 months
after such Retirement to the extent that he was entitled
to exercise the same immediately prior to Retirement.
(iii) If any Termination of Employment is due to
Disability, the Employee's Options shall become
exercisable without regard to whether they were
exercisable immediately prior to such termination,
and the Employee shall have the right, subject to
Section 6.2, to exercise his Options at any time
within 24 months from the date of his Termination of
Employment.
(iv) If the Optionee shall die in the employment of
the Corporation or a Subsidiary, his Options shall
become immediately exercisable without regard to
whether they were exercisable immediately prior to
his death, and his estate, personal representative,
or beneficiary shall have the right, subject to
Section 6.2, to exercise his Options at any time
within 24 months from the date of the death of the
Employee.
Whether any Termination of Employment is to be
considered involuntary and without cause or a
Retirement with the consent of the Corporation so as
not to constitute termination of the Options granted
under this Plan shall be determined by the Committee,
and the Committee's determination shall be final.
Section 9 -- AMENDMENTS AND TERMINATION
9.1 Amendments and Termination. The Committee may
terminate, suspend, amend or alter the Plan, but no
action of the Committee may:
(a) Impair or adversely affect the rights of an
Optionee under an Option, without the Optionee's
consent; or,
(b) Without the approval of the shareholders:
(i) Increase the total amount of Stock which may be
delivered under the Plan except as is provided in
Section 3 of the Plan;
(ii) Decrease the option price of any Option to less
than the option price on the date the Option was
granted;
(iii) Extend the maximum Option Period, or
(iv) Extend the period during which Options may be
granted, as specified in Section 13.
9.2 Conditions on Options. In granting an Option,
the Committee may establish any conditions that it
determines are consistent with the purposes and
provisions of the Plan, including, without limitation,
a condition that the granting of an Option is subject
to the surrender for cancellation of any or all
outstanding Options held by the Optionee. Any new
Option made under this Section may contain such terms
and conditions as the Committee may determine, including
an exercise price that is lower than that of any
surrendered Option.
9.3 Selective Amendments. Any amendment or alteration
of the Plan may be limited to, or may exclude from its
effect, particular classes of Optionees.
Section 10 -- GENERAL PROVISIONS
10.1 Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive compensation,
and the Plan is not intended to constitute a plan subject
to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, and shall not extend,
with respect to any payments not yet made to an Optionee,
any rights that are greater than those of a general creditor
of the Corporation.
10.2 Transfers, Leaves of Absence and Other Changes in
Employment Status. For purposes of the Plan (i) a
transfer of an Employee from the Corporation to a
Subsidiary, or vice versa, or from one Subsidiary to
another; or (ii) a leave of absence, duly authorized in
writing by the Corporation or a Subsidiary, for military
service or sickness, or for any other purpose approved by
the Corporation or a Subsidiary if the period of such leave
does not exceed 90 days; or (iii) any leave of absence in
excess of 90 days approved by the Corporation, shall not
be deemed a Termination of Employment. The Committee,
in its sole discretion subject to the terms of the Stock
Option Agreement, shall determine the disposition of all
Options made under the Plan in all cases involving any
substantial change in employment status other than as
specified herein.
10.3 Restrictions on Distribution of Stock. The Committee
may require Optionees receiving Stock pursuant to any Option
under the Plan to represent to and agree with the Corporation
in writing that the Optionee is acquiring the shares for
investment without a view to distribution thereof.
No shares shall be issued or transferred pursuant to an
Option unless the Committee determines, in its sole
discretion, that such issuance or transfer complies with
all relevant provisions of law, including but not limited
to, the (i) limitations, if any, imposed in the state of
issuance or transfer, (ii) restrictions, if any, imposed
by the Securities Act of 1933, as amended, the Exchange Act,
and the rules and regulations promulgated thereunder, and
(iii) requirements of any stock exchange upon which the
Corporation's shares may then be listed. The certificates
for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
10.4 Assignment Prohibited. Subject to the provisions
of the Plan and the Stock Option Agreement, no Option shall
be assigned, transferred, pledged or otherwise encumbered
by the Optionee otherwise than by will or by the laws of
descent and distribution, and such Options shall be
exercisable, during the Optionee's lifetime, only by the
Optionee. Options shall not be pledged or hypothecated
in any way, and shall not be subject to any execution,
attachment, or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of
an Option contrary to the provisions of the Plan, or the
levy of any process upon an Option, shall be null,
void and without effect.
10.5 Other Compensation Plans. Nothing contained in the
Plan shall prevent the Corporation from adopting other
compensation arrangements.
10.6 Limitation of Authority. No person shall at any time
have any right to receive an Option hereunder and no
person shall have authority to enter into an agreement
on behalf of the Corporation for the granting of an Option
or to make any representation or warranty with respect
thereto, except as granted by the Board or the Committee.
Optionees shall have no rights in respect to any Option
except as set forth in the Plan and the applicable Stock
Option Agreement.
10.7 No Right to Employment. Neither the action of the
Corporation in establishing the Plan, nor any action taken
by it or by the Board or the Committee under the Plan or
any Stock Option Agreement, or any provision of the Plan,
shall be construed as giving to any person the right to be
retained in the employ of the Corporation or any Subsidiary.
10.8 Change of Control. For Options granted on or after
the Effective Date, the Committee may provide in the Stock
Option Agreement that in the event of a Change of Control,
Options granted under the Plan shall become exercisable in
full whether or not otherwise exercisable at such time, and
any such Option shall remain exercisable in full thereafter
until it expires pursuant to its terms.
For Options granted prior to the Effective Date, unless
the Committee otherwise provides in a Stock Option Agreement,
upon a Change in Control of the Corporation, all Options
granted under the Plan and not previously exercisable shall
become fully exercisable to the same extent and in the same
manner as if they had become exercisable by the passage of
time in accordance with the provisions of Sections 6.2 of
the Plan relating to periods of exercisability.
10.9 Option Period. No Option granted under the Plan
shall be exercisable or payable more than 10 years from
the date of grant.
10.10 Not a Shareholder. The person or persons entitled to
exercise, or who have exercised, an Option shall not be
entitled to any rights as a shareholder of the Corporation
with respect to any shares subject to the Option until such
person or persons shall have become the holder of record of
such shares.
10.11 Headings. The headings in this Plan have been
inserted solely for convenience of reference and shall not
be considered in the interpretation or construction of this
Plan.
10.12 Governing Law. The validity, interpretation,
construction and administration of this Plan shall be governed
by the laws of the Corporation's state of incorporation, as
it may change from time to time.
Section 11 -- TAXES
11.1 Tax Withholding. All Optionees shall make arrangements
satisfactory to the Committee to pay to the Corporation, at
the time of exercise in the case of a Nonqualified Stock Option,
any federal, state or local taxes required to be withheld with
respect to such shares. If such Optionee shall fail to make
such tax payments as are required, the Corporation and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to the Optionee.
11.2 Share Withholding. If permitted by the Committee, the
tax withholding obligation may be satisfied by the Corporation
retaining shares of Stock with a fair market value equal to
the amount required to be withheld.
Section 12 -- EFFECTIVE DATE OF PLAN
This Amended and Restated Plan shall be effective on the
Effective Date when the Board adopts the Plan, subject to
approval of the Plan by a majority of the total votes
eligible to be cast at a meeting of shareholders following
adoption of the Plan by the Board; provided, however, that
Options may be granted before obtaining shareholder
approval of the Plan, but any such Options shall be
contingent upon such shareholder approval being obtained
and may not be exercised before such approval.
Section 13 -- TERM OF PLAN
Unless terminated earlier by the Committee, no Option shall
be granted under the Plan more than twenty years after the
original effective date of the Plan of April 7, 1988.
EXHIBIT 99
STRATEGIA CORPORATION
Proxy Card for 1997 Annual Meeting of Shareholders
THIS PROXY CARD IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Marcia G. Bishop and
Leigh Ann Dauphinais or either of them (with full power
to act alone), as proxy, with the President of Strategia
Corporation (the "Corporation"), having the power to
appoint a proxy's substitute, to represent me and to vote
all of the shares of the Corporation held of record or
which I am otherwise entitled to vote, at the close of
business on November 6, 1997, at the 1997 Annual
Meeting of Shareholders to be held at the Corporation's
main offices at 10301 Linn Station Road, Louisville,
Kentucky, on Tuesday, December 16, 1997, at 2:00 p.m.,
local time, and at any adjournments thereof, with all
the powers the undersigned would possess if personally
present, as indicated herein.
THIS PROXY CARD IS SOLICITED BY THE BOARD OF
DIRECTORS AND WILL BE VOTED AS SPECIFIED AND IN
ACCORDANCE WITH THE ACCOMPANYING PROXY STATEMENT. IF
NO INSTRUCTION IS INDICATED, THE SHARES REPRESENTED
BY THIS PROXY CARD WILL BE VOTED "FOR" THE NOMINEES
LISTED IN ITEM 1 OR CUMULATIVELY, IN THE BOARD OF
DIRECTORS' DISCRETION, AND "FOR" ITEM 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ALL OF THE NOMINEES LISTED IN ITEM 1, AND Please mark _______
"FOR" ITEMS 2,3 AND 4. your votes as
indicated in X
this example. _____
1. ELECTION OF DIRECTORS John A. Brentzel, James P. Buren,
Richard W. Smith, and John P.
Snyder
FOR all nominees WITHHOLD
(except otherwise AUTHORITY
indicated on the to vote for all nominees.
line at right). (INSTRUCTION: To withhold authority
_________ to vote for any individual nominee,
write the nominee's name on the line
below.)
______________
____________________________________
2. AMENDMENT OF STOCK OPTION PLAN. Proposal to amend
and restate the 1988 Stock Option Plan, as described
in the accompanying proxy statement.
FOR AGAINST ABSTAIN
______ ________ ________
3. OTHER BUSINESS. In their discretion, the proxies are
authorized to act upon such other matters as may
properly be brought before the Annual Meeting or any
adjournment thereof.
FOR AGAINST ABSTAIN
______ ________ _________
Please sign exactly as name appears at left. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name
by authorized person.
Date: __________________________, 1997
_______________________________________
Signature
_______________________________________
Additional signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
