SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Diasys Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] 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:________________________________________________________________
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SCAN IN B&W LOGO
NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
To be Held February 23, 2000
The 1999 Annual Meeting of Shareholders of DiaSys Corporation (the
"Company") will be held on Wednesday, February 23, 2000 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 ratify amendment of the Company's 1993 Incentive Stock Option Plan
(the "Plan") for the purpose of increasing the number of the Company's
common shares reserved for issuance thereunder from 300,000 to
500,000;
3. To ratify appointment of Wiss & Company, LLP as the independent public
accountants of the Company for the fiscal year ending June 30, 2000;
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 December 31, 1999 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
January 25, 2000 to the date of the meeting on February 23, 2000.
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
December 31, 1999
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND
RETURNED PROMPTLY.
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SCAN IN B&W LOGO
PROXY STATEMENT
December 31, 1999
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 Wednesday, February 23, 2000 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, 1999, 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 December 31, 1999.
VOTING SECURITIES
The Company has one class of voting securities outstanding: common stock,
par value $.001 per share ("Common Stock"). As of October 1, 1999, 3,008,890
shares of Common Stock were issued and outstanding. At the meeting, each
shareholder of record as at the close of business on December 31, 1999 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
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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 42 President,Chief Executive Officer,
Director
Conard R. Shelnut 64 Secretary, Director
Robert P. Carroll 67 Director
Dr. Robert H. Engel 62 Director
Anthony P. Towell 67 Director
Todd M. DeMatteo is a co-founder, the President, Chief Executive Officer
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 is a co-founder, the Secretary and a Director of the
Company. After more than 30 years in corporate management positions throughout
Asia, Mr. Shelnut established Shelnut Consulting which advises United States
manufacturer's in export management and protocols for Pacific Asia. Prior to
that, Mr. Shelnut served as Vice President of International Sales for T-Bar Inc.
(AMEX: TBR), a manufacturer of electronic matrix switches. Mr. Shelnut served as
Group Vice President, Director of International Marketing and in other key
management positions during more than 20 years with Litton Industries in South
Korea. A captain in the United States Air Force Reserve, Mr. Shelnut served with
the Strategic Air Command (SAC) and taught avionics in China. He is fluent in
Mandarin Chinese.
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 (McLean, VA), 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 an efficiency
consultant to clinical reference laboratories and a Senior Consultant with Chi
Laboratories Inc., a national clinical laboratory consulting firm. From 1977 to
1993, Dr. Engel was employed by Damon Clinical Laboratories (Needam Heights,
MA), most recently as the Vice President of Technical Affairs. From 1971 to
1977, Dr. Engel was employed by SmithKline Beecham Clinical Laboratories
(Waltham, MA). 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 Chemist at Lederle Laboratories, a division of American Cyanmid Inc.
(Pearl River, NY).
Anthony P. Towell joined the Company's Board of Directors in October, 1999.
He is a director of a number of public companies in the United Kingdom and the
United States. He also served on the Board of AmeriData Technologies Inc. a New
York Stock Exchange company, until its sale to General Electric Capital in 1996.
Prior to retirement, Mr. Towell held various senior management positions with
Royal
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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 Crown 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. Shelnut. 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
awards under the Company's 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 1999 fiscal year, the Board of Directors held three regular
meetings and two special meetings. The Executive Compensation Committee and the
Audit Committee met once. 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 10,000 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.
Michael F. Primini, age 51, 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 January, 1995. From 1993 to 1995, Mr. Primini
was Controller for Albert Brothers, a metal recycling company (Waterbury, CT).
For six years prior thereto, Mr. Primini was employed by Heminway and Bartlett
in the position of Senior Vice President. For 13 years prior thereto, Mr.
Primini was the Controller of two manufacturing plants for TRW Inc. (NY:TRW).
For information with respect to Messers. DeMatteo and Shelnut who are also
executive officers of the Company, see "Election of Directors - Information
Concerning Directors and Nominees"
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.
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Executive Compensation
The following table sets forth information with respect to the Chief
Executive Officer for the year ended June 30, 1999. 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
All Other
Name and Principal Annual
Position Year Salary Commissions Compensation
-------- ---- ------ ----------- ------------
$ $ $
Todd M. DeMatteo 1999 150,000 21,365 0(3)
President, CEO 1998 142,500 2,237 20,000(2)
1997 135,000 8,825 50,000(1)
(1) Represents a sign-on bonus under the terms of an employment agreement
effective January 1, 1997.
(2) Represents a performance bonus under the terms of an employment agreement
effective January 1, 1998.
(3) Dose not include $40,000 of deferred compensation accrued but not paid as
of September 30, 1999.
Stock Option Grants During 1999
The following table sets forth information with respect to grants of
options pursuant to the Company's 1993 Incentive Stock Option Plan (see below)
to the Named Executive Officers. No stock appreciation rights were granted
during such fiscal year.
<TABLE>
<CAPTION>
% of Total Potential Realizable
Options Options Exercise or Value at Assumed Rate
Granted Granted to Base of Stock Price
# Employees in Price Expiration Appreciation
Name Fiscal Year ($/sh) Date 5% ($) 10%($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Shelnut 10,000 9.2% $8.75 02/25/09 55,208 139,452
M. Primini 10,000 9.2% $10.00 05/07/09 62,889 159,374
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Year-end Option Value
The following table sets forth information with respect to the Named
Officers concerning the exercise of stock options during the last fiscal year
and unexercised options held as of the end of the fiscal year:
Shelnut Primini
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Share acquired on exercise 0 0
Value Realized 0 0
Number of Unexercised Options at
Fiscal year-end (#)
Exercisable/Unexercisable 25,000/25,000 5,000/17,500
Value of Not Vested in the Money
Options at Fiscal year-end ($)(1)
Exercisable/Unexercisable 115,938/82,188 11,719/4,219
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(1) Represents the difference between the closing price of DiaSys Common Stock
on June 30, 1999 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, 1999, 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 $150,000 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, 1999, 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 October 1, 1999, 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 October 1, 1999 by all Directors and each of the executive
officers named in the compensation table and all Directors and executive
officers as a group:
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Name and Address of
Beneficial Owners (1) Ownership(2) Percent Of Class
- --------------------- ------------ ----------------
Todd M. DeMatteo 315,333 (3) 10.48%
Conard R. Shelnut 118,333 (4)(5) 3.93%
Dr. Robert H. Engel 35,000 (5) 1.17%
Robert P. Carroll 35,000 (5) 1.17%
All Directors and officers
as a group, four persons 503,666 16.75%
(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 83,333 shares of Common Stock owned by Mr. DeMatteo through
Professional Profile Corporation (see: OWNERSHIP OF COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, below)
(4) Includes 83,333 shares of Common Stock owned by Mr. Shelnut through
Professional Profile Corporation (see: OWNERSHIP OF COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, below)
(5) Includes vested but unexercised options to purchase 35,000 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
- ----------------- --------- ----------------
Professional Profile Corp.(1)(2) 83,334 2.77%
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(1) c/o the Company, 49 Leavenworth Street, Waterbury, Connecticut
(2) Professional Profile Corporation is a shareholder nominee for three
individuals of whom Messers. DeMatteo and Shelnut are two. Each individual
owns 83,333 Common Shares but votes the total of the Common Shares
together. (see: OWNERSHIP OF COMMON STOCK BY MANAGEMENT, above)
RESOLUTION TO RATIFY THE AMENDMENT OF THE COMPANY'S 1993 INCENTIVE STOCK OPTION
PLAN FOR PURPOSE OF INCREASING THE NUMBER OF THE COMPANY'S COMMON SHARES
RESERVED FOR ISSUANCE THEREUNDER FROM 300,000 TO 500,000.
The Company maintains one stock option plan. It is entitled the 1993 Incentive
Stock Option Plan ("Plan"), and was approved at the 1993 Annual Meeting of
Shareholders. The Plan is as follows:
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1. Purpose Of The Plan. On November 14, 1993, the Shareholders of DiaSys
Corporation, a Delaware Corporation , (the "Company") approved a plan
("Plan") whereby 100,000 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"). On
November 26, 1996 the Shareholders of the Company amended the Plan whereby
the number of Shares of the Company's common stock reserved under the Plan
for issuance would be increased to 300,000 shares.
2. Grant of Option. The Company may from time to time grant to 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 November 13, 2003 ("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. Terms 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
Exercise Date Percent * Percent *
Beginning of the: Exercisable Exercisable
- ----------------- ----------- -----------
24th month 50% 50%
36th month 50% 100%
* Fraction 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.
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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 by 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 by 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
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 of 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 Opitionee'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.
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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 the 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
otherwise disposed 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE AMENDMENT TO
THE 1993 INCENTIVE STOCK OPTION PLAN FOR THE PURPOSE OF INCREASING THE NUMBER OF
SHARES OF COMMON STOCK RESERVED THEREUNDER FROM 300,000 TO 500,000.
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, 2000. 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
2000 Annual Meeting of shareholders is expected to be held on or about January
15, 2001, and proxy materials in connection with that meeting are expected to be
mailed on or about November 20, 2000. Shareholder proposals prepared in
accordance with the proxy rules must be received by the Company on or before
June 25, 2000.
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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 December 31, 1999. 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: December 31, 1999
