NOTICE OF THE 2000 ANNUAL MEETING OF SHAREHOLDERS
To be Held January 19, 2001
The 2000 Annual Meeting of Shareholders of DiaSys Corporation (the "Company")
will be held on Friday, January 19, 2001 at 10:00 A.M. at the Sheraton Hotel,
3580 East Main Street, Waterbury, Connecticut to conduct the following business:
1.To elect a Board of five directors;
2.To approve the Company's 2000 Incentive Stock Option Plan (the "Plan);
3.To ratify appointment of Wiss & Company, LLP as the independent public
accountants of the Company for the fiscal year ending June 30, 2001; and,
4.To transact such other business as may properly come before the meeting or
any adjournment thereof:
Only shareholders of record at the close of business on November 30, 2000 will
be entitled to vote at the meeting. A list of shareholders eligible to vote
will be available for inspection at the meeting and during business hours from
December 19, 2000 to the date of the meeting on January 19, 2001.
Whether you expect to attend the Annual Meeting or not, your proxy vote is
very important. To assure your representation at the meeting, please sign
and date the enclosed proxy card and return it promptly in the enclosed
envelope, which requires no additional postage if mailed within the United
States.
By Order Of The Board Of Directors
Conard R. Shelnut
Secretary
49 Leavenworth Street
Waterbury, Connecticut 06702
November 30, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND
RETURNED PROMPTLY.
PROXY STATEMENT
November 30, 2000
This Statement is furnished in connection with the solicitation of proxies by
the Board of Directors of DiaSys Corporation (the "Company") for use at the
Annual Meeting of its shareholders to be held on Friday, January 19, 2001
at 10:00 A.M. at the Sheraton Hotel, 3580 East Main Street, Waterbury,
Connecticut.
Shareholders may cast their vote at the meeting either in person or by proxy.
All properly executed and unrevoked proxies on the accompanying form that are
received in time for the meeting will be voted at the meeting or any
adjournment thereof in accordance with any specification thereon, or if no
specification is made, will be voted "FOR" the election of the named nominees
and approval of the other proposals set forth in the Notice of Annual Meeting
of shareholders of the Company. The Board of Directors of the Company knows
of no other matters which may be brought before the meeting. However, if any
other matters are properly presented for action, it is the intention of the
named proxies to vote on them according to their best judgment. Any person
giving a proxy may revoke it by written notice to the Company at any time
prior to exercise of the proxy. In addition, although mere attendance at the
meeting will not revoke the proxy, a person present at the meeting may
withdraw his or her proxy and vote in person.
The Annual Report of the Company as filed with the Securities and Exchange
Commission on report Form 10-KSB (which does not form a part of the proxy
solicitation material), including the financial statements of the Company for
the fiscal year ended June 30, 2000, is enclosed herewith.
The mailing address of the principal executive office of the Company is 49
Leavenworth Street, Waterbury, Connecticut, 06702. This Statement and the
accompanying form of proxy are being mailed to the shareholders of the
Company on or about November 30, 2000.
VOTING SECURITIES
The Company has one class of voting securities outstanding: common stock, par
value $.001 per share ("Common Stock"). As of November 16, 2000, 6,285,644
shares of Common Stock were issued and outstanding. At the meeting, each
shareholder of record as at the close of business on November 30, 2000 will
be entitled to one vote for each share of Common Stock owned on that date as
to each matter presented at the meeting.
ELECTION OF DIRECTORS
Unless otherwise directed, the person named in the accompanying form of proxy
intends to vote at the Annual Meeting for the election of the following named
nominees as Directors of the Company who will serve in such capacity until
the next Annual Meeting and until their successors are duly elected and
qualified.
If any nominee is unable to be a candidate when the election takes place, the
shares represented by valid proxies will be voted in favor of the remaining
nominees and for such person, if any, designated by the present Board of
Directors to replace such nominee. The Board of Directors does not presently
anticipate that any nominee will be unable to be a candidate for election.
Set forth below is certain information concerning each nominee for Director
of the Company. All of the nominees are currently Directors of the Company.
Name Age Company Position
Todd M. DeMatteo 43 President, Chief Executive Officer, Director
Conard R. Shelnut 65 Secretary, Director
Robert P. Carroll 68 Director
Dr. Robert H. Engel 63 Director
Anthony P. Towell 68 Director
Todd M. DeMatteo is a co-founder, the President, Chief Executive Officer,
Director of DiaSys Europe Ltd., and a Director of the Company. He has been
active with the Company since inception. From 1988 to 1991, Mr. DeMatteo was
Vice President and General Manager of Oracle Industries, a private company
that manufactured and distributed proprietary medical and industrial
laboratory equipment. After returning the company to profitability, Mr.
DeMatteo successfully negotiated its acquisition by American Trading And
Product Company of Baltimore, Maryland. For more than five years prior
thereto, Mr. DeMatteo held several key management positions with Data Switch
Corporation (NASD:DASW) where his most recent title was Vice President - OEM
and Distributor Operations. Mr. DeMatteo holds a law degree from Qunnipiac
Law School and is a member of the bar in the State of Connecticut.
Conard R. Shelnut, Corporate Secretary and a Director is also co-founder of the
Company. After more than 30 years in corporate management positions throughout
the United States and Asia, Mr. Shelnut established GPL, Ltd., a consulting
firm which advises United States manufacturer's in export management,
marketing, and sales for Pacific Asia. Prior to that, Mr. Shelnut served as
Vice President of National Sales and Vice President of Asia for T-Bar Inc.
(AMEX: TBR), a manufacturer of electronic matrix switches. Mr. Shelnut
served as Group Vice President for Korea, Director of International
Marketing, Senior Advanced Program Manager and other key management positions
during more than 20 years with Litton Industries (NYSE: LIT). As captain in
the United States Air Force Reserve, Mr. Shelnut served as a Navigator in the
Strategic Air Command (SAC). He speaks Mandarin Chinese, and as an
electrical engineer, taught avionics in China.
Robert P. Carroll joined the Company's Board of Directors in February, 1994.
Mr. Carroll is a senior level management consultant for large-scale computer
manufacturers and system integrators. From 1977 until his retirement in 1998,
Mr. Carroll held several senior management positions with Unisys Corporation
(NYSE: UIS) and most recently as Vice President of Federal Systems. From
1951 to 1977 Mr. Carroll was a member of the United States Air Force assigned
to information systems, retiring with the rank of Colonel.
Dr. Robert H. Engel, Ph.D. joined the Company's Board of Directors in February,
1994. From 1993 to present, Dr. Engel has been Director of Advanced Systems
Development with Chi Laboratories Inc., a national laboratory consulting
firm. From 1977 to 1993, Dr. Engel was employed by Damon Clinical
Laboratories, acquired by Quest/SmithKline Beecham Clinical Laboratories
(NYSE: DGX), most recently as the Vice President, Technical Affairs. From
1971 to 1977, Dr. Engel was employed by Quest/SmithKline Beecham Clinical
Laboratories. From 1968 to 1971, Dr. Engel was a Senior Marine Biochemist at
Batelle Memorial Institute (Duxbury, MA); and, from 1962 to 1968 he was a
Research Biochemist at Lederle Laboratories, a division of American Cyanmid
Inc. (Pearl River, NY). Dr. Engel holds a Ph.D. in biochemistry from Yale
University.
Anthony P. Towell joined the Company's Board of Directors in October, 1999 and
is also Director of DiaSys Europe Ltd. He is also a director of a number of
Worksafe Industries, Inc., Windswept Environmental Remediation, Inc.,
GulfWest Oil Company, and Biosign, Inc. Mr. Towell also served on the Board
of AmeriData Technologies Inc. until its sale to General Electric Capital in
1996. Prior to retirement, Mr. Towell held various senior management
positions with Royal Dutch Shell, including that of Managing Director of the
Shell Group in Columbia, Vice President of Shell International Trading
Company London, and Director of Asiatic Petroleum in New York. Mr. Towell
was born in the United Kingdom and was awarded the Military Cross for his
outstanding service in Korea.
Committees of the Board
The Board of Directors has two standing committees: the Executive Compensation
Committee and the Audit Committee. The members of each Committee are Dr.
Engel, Mr. Carroll and Mr. Towell. The function of the Executive
Compensation Committee is to review compensation of the Chief Executive
Officer and the executive staff. In addition, the Committee has the
authority to grant options under the Company's current 1993 Incentive Stock
Option Plan. The function of the Audit Committee is to review the Company's
policies and practices, especially with regard to financial reporting.
Attendance at the Board and Committee Meetings
During the 2000 fiscal year, the Board of Directors held two regular meetings
and three special meetings. The Executive Compensation Committee and the
Audit Committee met twice. During such fiscal year each Director attended
100% of the aggregate of (i) the regular meetings of the Board and (ii) the
meetings of the committees of the Board on which such Director served.
Compensation of Directors
Directors are not compensated for attending Board or Committee meetings. They
are however reimbursed for expenses incurred for attendance. Each Director
who is not an employee receives a non-discretionary, annual grant of options
to purchase 20,000 shares of the Company's Common Stock pursuant to the
Company's 1993 Stock Incentive Plan (see "Plan").
Voting
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting and entitled to vote on
the election of Directors. An automated system administered by the Company's
transfer agent tabulates the votes. Abstentions and shares held of record by
a broker or its nominees that are not voted ("broker non-votes") are each
included in the determination of the number of shares present and voting.
Abstentions and broker non-votes are not included for purposes of determining
whether a proposal has been approved.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the Executive Officers of the
Company.
Marshall A. Smith, age 29, is the Company's Vice President of Finance and
Administration, Chief Financial Officer, and the Assistant Secretary. He has
been employed by the Company since February, 2000. Mr. Smith's most recent
position was with Chase Securities Inc. in London, U.K., where he specialized
in mergers and acquisitions in the global investment banking division. Prior
to joining Chase, he was a corporate financial analyst at GulfWest Oil
Company. Mr. Smith is a graduate of the University of Texas, and holds an MBA
from the Owen Graduate School of Management at Vanderbilt University.
For information with respect to Messers. DeMatteo and Shelnut who are also
executive officers of the Company, see "Election of Directors.
There are no family relationships by and among any Director, executive officer,
or person nominated or chosen by the registrant to become a Director or
executive officer of the Company.
Executive Compensation
The following table sets forth information with respect to the Chief Executive
Officer for the year ended June 30, 2000. Other than the Chief Executive
Officer, no employee received in excess of $100,000 in compensation in any
of the prior three years.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and All Other Annual Number of Shares
Principal Year Salary Bonus Compensation Underlying Options
Position
Todd M.
DeMatteo 2000 $175,000 $38,113 $20,000(3) 100,000(4)
President,
CEO 1999 $150,000 $21,365 $0(2) 0
1998 $142,500 $2,237 $20,000(1) 0
1.Represents a performance bonus under the terms of an employment agreement
effective January 1, 1998.
2.Does not include $40,000 of deferred compensation accrued but not paid as of
September 30, 1999.
3.Represents a performance bonus under the terms of an employment agreement
effective January 1, 2000.
4.Represents 50,000 under the 1993 Incentive Stock Option Plan and 50,000 under
the 2000 Nonqualified Plan.
Stock Option Grants During 2000
The following table sets forth information with respect to grants of options
pursuant to the Company's 1993 Incentive Stock Option Plan (see below) to the
Named Executive Officers. No stock appreciation rights were granted during
such fiscal year.
% of Total Potential Realizable
Options Options Exercise Value at Assumed Rate
Granted Granted To or Base of Stock Price
# Employees in Price Expiration Appreciation
Name Fiscal Year ($/sh) Date 5%($) 10%($)
T. DeMatteo 50,000 18% $9.188 04/18/10 $288,914 $732,165
M. Smith 20,000 7% $9.125 03/24/10 $114,773 $290,858
C. Shelnut 20,000 7% $6.250 02/24/10 $78,612 $199,218
Based on the assumption that the market price of the underlying shares of
common stock appreciate in value from the date grant to the date of
expiration at the annualized rates indicated. These rates are hypothetical
rates mandated by the Securities and Exchange Commission, and the Company
does not make any representations regarding future appreciation in the market
price of the common stock.
Aggregated Option Exercises in Last Fiscal Year and Year-end Option Value
The following table sets forth information with respect to the Named Officers
concerning the exercise of stock options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
Shares Number of Unexercised Value of Unexercised
Acquired Options at in-the-money Options
On Value Year-End(#) at Year End($)(1)
Exercise Realized (Exercised/Unexercise) (Exercised/Unexercised)
DeMatteo 0 0 0/50,000 0/15,625
Smith 0 0 0/20,000 0/7,500
Shelnut 0 0 90,000/50,000 607,495/233,125
(1) Represents the difference between the closing price of DiaSys Common Stock
on June 30, 2000 and the exercise price of the options.
Employment Agreements
Mr. DeMatteo has an employment agreement with the Company. The agreement: (i)
is for a one year term effective January 1, 2000, renewable upon the mutual
consent of the parties; (ii) requires that the employee devote substantially
all of his professional time to performing the duties defined in his
agreement or as such duties may from time to time be modified by the Company;
(iii) contains provisions for termination of the employee for "Cause" and
"Without Cause"; (iv) entitles the employee to participate in any and all
employee benefits programs and/or plans sponsored by the Company including
but not limited to stock option plans, stock bonus plans, profit sharing
plans and other such programs as and if adopted; and, (v) as a condition to
employment, requires that the employee: (a) keep in confidence and trust all
Proprietary Information of the Company; (b) will not use or disclose
the Proprietary Information of the Company or anything related to it without the
prior written consent of the Company; and, (c) pledge and warrant that during
the term of employment with the Company, such employee will not engage in any
activity, employment, consultation, or otherwise which directly or indirectly
competes with the business of the Company.
In addition to the above, in the event that the employee is terminated due to an
acquisition, merger, or other change in control of the Company, the employee is
entitled to receive severance compensation in an amount equal to two and
one-half times the amount of compensation received in the twelve month period
immediately preceding the effective date of such change. Through the term of
the agreement, Mr. DeMatteo's base compensation is fixed at $175,000 per year.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
Directors, certain officers and persons holding ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
Common Stock and other equity securities of the Company. Directors, officers
and greater than ten percent shareholders are required to furnish the Company
with copies of all Section 16(a) form that they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports
were required during the fiscal year ended June 30, 2000, all Section 16(a)
filing requirements applicable to officers, directors and greater than ten
percent beneficial owners have been met.
PRINCIPAL SHAREHOLDERS
The following tables set forth, as of November 16, 2000, the number of shares
beneficially owned: (i) by each person known by the Company to be a
beneficial owner of more than five percent of the outstanding shares of
Common Stock; (ii) by each Director of the Company; and, (iii) by all
executive officers and Directors of the Company as a group. Unless otherwise
indicated, each of the following persons has sole voting and investment
powers with respect to the shares of Common Stock set forth opposite their
respective names.
Ownership of common stock by management
The following table gives information concerning the beneficial ownership of
Common Stock as of November 16, 2000 by all Directors and each of the
executive officers named in the compensation table and all Directors and
executive officers as a group:
Name and Address of
Beneficial Owners(1) Ownership(2) Percent Of Class
Todd M. DeMatteo 630,666(3) 10.03%
Conard R. Shelnut 256,666(4)(5) 4.08%
Dr. Robert H. Engel 90,000(5) 1.43%
Robert P. Carroll 90,000(5) 1.43%
All Directors and officers
as a group, four persons 1,067,332 16.98%
(1)c/o the Company, 49 Leavenworth Street, Waterbury, Connecticut
(2)For the purposes of the above table and the following notes, the Common
Stock shown as "beneficially owned" includes all securities which pursuant
to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, may be
deemed to be "beneficially owned" including, without limitation, all
securities which the "beneficial owner" has the right to acquire within 60
days, as for example through the exercise of any option, warrant or right,
the conversion of convertible securities or pursuant to the power to revoke a
trust discretionary account or similar arrangement.
(3)Includes 166,666 shares of Common Stock owned by Mr. DeMatteo through
PPC, an inactive corporation as shareholder nominee (see: OWNERSHIP OF COMMON
STOCK BY CERTAIN BENEFICIAL OWNERS, below)
(4)Includes 166,666 shares of Common Stock owned by Mr. Shelnut through PPC,
an inactive corporation as shareholder nominee (see: OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS, below)
(5)Includes vested but unexercised options to purchase 90,000 shares of
Common Stock pursuant to the Company's 1993 Incentive Stock Option Plan.
Ownership of common stock by certain beneficial owners
The following table sets forth information with respect to the only persons who,
to the best knowledge of the Company's management as derived from schedules
13D and 13G, beneficially owned more than five percent of the Common Stock as
of October 1, 1999:
Name and Address of
Beneficial Owners Ownership Percent Of Class
PPC(1)(2) 166,668 2.65%
J. Virgil Waggoner 1,415,710 22.52%
(1)c/o the Company, 49 Leavenworth Street, Waterbury, Connecticut
(2)Professional Profile Corporation (PPC) is an inactive corporation and a
shareholder nominee for three individuals of whom Messers. DeMatteo and
Shelnut are two. Each individual owns 166,666 Common Shares but votes the
total of the Common Shares together. (see: OWNERSHIP OF COMMON STOCK BY
MANAGEMENT, above)
RESOLUTION TO APPROVE THE COMPANY'S 2000 INCENTIVE STOCK OPTION PLAN
The Company maintains one incentive stock option plan which is entitled the
1993 Incentive Stock Option Plan. Under this plan, 1,000,000 shares were
reserved for issuances to employees of the Company. Of the 1,000,000 shares
reserved, 862,500 have been granted leaving 137,500 shares for future grants.
In an effort to attract and keep qualified personnel, the Board of Directors
has approved the 2000 Incentive Stock Option Plan ("2000 Plan") in which
500,000 shares will be reserved for future grants (See SCHEDULE A for a copy
of the 2000 Plan, below).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPANY'S
2000 INCENTIVE STOCK OPTION PLAN.
RESOLUTION TO RATIFY WISS & COMPANY LLP AS THE COMPANY'S INDEPENDENT AUDITORS
The Board of Directors has selected Wiss & Company LLP, as the Company's
independent auditors for the fiscal year ending June 30, 2001.
Representatives of Wiss & Company LLP are not expected to be present at the
Annual Meeting of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT.
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit all shareholders of
the Company, after appropriate notice to the Company, to present proposals
for shareholder action in the Company's Proxy Statement if such proposals are
consistent with applicable law, pertain to matters appropriate for
shareholder action, and are not properly omitted by Company action in
accordance with the proxy rules published by the Securities and Exchange
Commission. The Company's 2001 Annual Meeting of shareholders is expected to
be held on or about January 19, 2002, and proxy materials in connection with
that meeting are expected to be mailed on or about November 30, 2001.
Shareholder proposals prepared in accordance with the proxy rules must be
received by the Company on or before June 25, 2001.
OTHER PROPOSALS
The Board of Directors of the Company does not intend to present any business at
the meeting other than the matters specifically set forth in this Proxy
Statement and knows of no other business to come before the meeting.
COSTS AND METHOD OF SOLICITATIONS
Solicitations of proxies will be made by preparing and mailing the Notice of
Annual Meeting, Proxy and Proxy Statement to shareholders of record as of the
close of business on November 30, 2000. The cost of making the solicitation
includes the cost of preparing and mailing the Notice of Annual Meeting,
Proxy and Proxy Statement, and the payment of charges incurred by brokerage
houses and other custodians, nominees, and fiduciaries for forwarding
documents to shareholders. In certain instances, officers of the Company may
make special solicitations and proxies either in person or by telephone.
Expenses incurred in connection with special solicitations are expected to be
nominal. The Company will bear all expenses incurred in connection with the
solicitation of proxies for the annual meeting.
It is important that your shares are represented and voted at the meeting,
whether or not you plan to attend. Accordingly, we respectfully request that
you sign, date and mail your proxy in the enclosed envelope as promptly as
possible.
By Order of the Board of Directors
Conard R. Shelnut
Secretary
Date: November 30, 2000
SCHEDULE A
2000 Incentive Stock Option Plan
1.Purpose Of The Plan. On October 6, 2000, the Board of Directors of DiaSys
Corporation, a Delaware Corporation, (the "Company") approved a plan ("Plan")
whereby 500,000 shares of the Company's common stock, par value $.001 per
share, ("Shares") would be held in reserve by the Company for the purpose of
granting Incentive Stock Options ("Options") to its employees, officers and
Directors all in accordance with and under the meaning of Section 422A of the
Internal Revenue Code and its progeny ("IRC").
2.Grant of Option. The Company may from time to time grant to the any or all
of its employees, officers and Directors (the "Optionee") an Option to
purchase the Shares, at an Exercise Price, exercisable on the terms and
subject to the conditions of an Option Agreement to be made by and between the
Company and the Optionee ("Option Agreement") at any time to and until the
Expiration Date of the Plan. Any Option granted under the Plan shall be
deemed to be an "Incentive Stock Option" within the meaning of Section 422A
of the IRC and shall be construed, for all purposes, within the meaning of
such provision.
Notwithstanding anything to the contrary in this Plan or in the Option
Agreement to which this Plan applies, no Option may be granted pursuant to
the Plan after October 6, 2010 ("Expiration Date") and any such attempt to
grant such an Option shall be null and void ab initio.
3.Stock Option Plan and Administration. Prior to executing the Option
Agreement, the Optionee shall acknowledge that he/she has read a copy of the
Plan and the Company's most recent Annual Report. The Plan shall be
incorporated by reference into the Option Agreement and shall be made a part
thereof as though the Plan were fully set forth therein. The terms of the
Plan shall control in the event there is any conflict between the terms of
the Plan and the Option Agreement, and the terms of the Plan shall control as
to other such matters as are not contained in the Option Agreement. The
Board shall administer the Plan and resolve all disputes and disagreements as
set forth in the Plan.
In granting an Option under the Plan, the Board will set the price to be paid to
the Company by Optionee upon exercise of the Option ("Exercise Price") equal to
the fair market value of the same number of Shares of the Company's common
stock as at the day of the grant.
4.Payment and Rights as a Shareholder. The purchase price of any Shares as to
which the Option shall be exercised shall be paid at the principal office of
the Company in full by cash or check subject to collection at the time of such
exercise. No Shares will be issued until full payment is made to the Company
for Shares for which the Option is exercised. The Optionee shall not be
deemed to have acquired the Shares as to which the Option is exercised or to
have any rights as a shareholder with respect thereto until the date of issue
is imprinted on the certificate representing said Shares and said certificate
is delivered to the Optionee.
5.Term and Exercise of Option. The Option may not be exercised prior to the
beginning of the twenty-forth (24th) month from the date that the Option was
granted and the Option shall be exercisable thereafter only as follows:
Cumulative
Percent* Percent*
Exercise Date Exercisable Exercisable
Beginning of the:
24th month 50% 50%
36th month 50% 100%
*Fractional share resulting from the application of the percentages in
paragraph 5 of the Plan shall be rounded up or down so that the total Shares
that become exercisable equal the total share approved by the Board for the
Optionee under the Option Agreement. Notwithstanding anything to the contrary
contained in this Plan or in the Option Agreement to which this Plan applies,
any and all Options which are unexercised as of the tenth (10th.) anniversary
of the date upon which such Option was granted shall lapse, expire and
otherwise have no legal effect or existence thereafter.
6.Method of Exercising Option. The Option shall be exercised by written
notice from the Optionee to the Company, signed by the Optionee, and setting
forth the number of Shares with respect to which the Option is being
exercised. Such notice must be delivered to the principal office of the
Company, accompanied by a check payable to the Company for the full purchase
price for the Shares for which the Option is being exercised. As soon as
practicable after the receipt of payment, the Company shall issue and deliver
to the Optionee a certificate or certificates for the Shares so purchased as
provided in the Plan. The Option may not be exercised for fractional, but
only for full Shares.
Notwithstanding the above paragraph, in the presence of a public market for the
Shares of the Company, if the Optionee is not then an officer or Director of
the Company, and already owns Shares of the Company, the Optionee may,
subject to the consent of the Board of Directors of the Company, use
currently owned Shares to pay for the Shares being acquired pursuant to an
exercise of the Option under the Option Agreement. The value assigned to the
Shares owned by the Optionee to be exchanged for the Shares exercised under
the Option shall be the fair market value as set and determined by the Board.
7.Non-transferability of Option. The Option may not be transferred or
assigned other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee. Any attempted transfer or assignment of the Option contrary to the
provisions hereof shall be null and void and without effect. The Company
shall have the right to terminate the Option in the event of any such attempted
transfer or assignment, upon notice to the Optionee.
8.Effect of Termination of Employment or Death. If prior to the date 24
months from the date of grant, the Optionee shall voluntarily or
involuntarily cease to be employed by the Company (other than be reason of
death), then the Optionee's right to exercise the Option shall terminate and
all rights under the Option Agreement shall cease.
If, on or after 24 months from the date of the grant of an Option, the Optionee
shall voluntarily or Involuntarily cease to be employed or retained as a
Director by the Company (other than be reason of death), then the Optionee
shall have the right within the ninety day period following such cessation of
employment (but in no event later than the Expiration Date) to exercise that
portion of the Option which became exercisable, but was not exercised, as of
the date at such cessation of employment. If, however, the Optionee shall
die while employed at the Company or within the ninety day period following
such cessation of such employment, then the legal representative of the
Optionee shall have the right to exercise that portion of the Option which
became exercisable, but was not exercised, as of the date of death.
For the purposes hereof, the transfer of the Optionee between the Company and a
subsidiary, or from one subsidiary to another, or the taking of a leave of
absence authorized in writing by the Company, shall not be deemed a
termination of employment of the Optionee.
Notwithstanding anything to the contrary contained in this paragraph or
elsewhere in the Plan or the Option Agreement, if the employment of the
Optionee with the Company shall be terminated due to the Optionee's violation
of the duties of loyalty to the Company or fiduciary care with respect to its
business, including but not limited to Optionee's obligations with respect to
non-competition and protection of proprietary rights and trade secrets of the
Company, then all unexercised portions of the Option shall terminate
immediately upon such termination of employment.
9.Not an Employment Agreement. It is expressly understood that neither the
Plan nor the Option Agreement shall confer upon the Optionee the right to
continue or be continued in the employ of the Company or any subsidiary for
any fixed or indefinite term.
10.Adjustment of Shares. In the event of any recapitalization, stock split,
stock dividend, combination of Shares, or reorganization, the number and/or
kind of securities covered by the Option, the maximum amount of securities with
respect to which the Option may be exercised, and the Exercise Price of the
Option shall be appropriately and equitably adjusted by the Committee.
11.Compliance with Securities Laws. The Option Agreement will require the
Optionee to comply with all Securities laws and provide that any Shares
acquired under the Option may not be sold, transferred, hypothecated or other
wise disposed of by him/her except in compliance with applicable securities
laws, and that he/she will execute such documents and abide by such
restrictions as the Company's counsel may reasonable deem appropriate from
time to time to assure compliance with such laws.
12.Sale of Shares by the Optionee. In the absence of a public market for the
Shares of the Company, the Optionee shall first offer the Shares to the
Company. The Company will then have the Option, within ninety (90) days of
such offer, to purchase the Shares for cash. The price of such purchase by
the Company shall be the fair market value as determined by the Board of
Directors of the Company, or a Committee designated by the Board of Directors.
13.Government Regulations. This Plan, the Option Agreement to which it
applies, and the obligation of the Company to sell and deliver Shares under
the Option shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
14.Amendments. This Plan may be amended only in accordance with the
appropriate provisions of section 422A of the IRC.
