-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F5YRYeNizLN6g42C1ExpR9DAfqywXDgYETxgn3hRebebZD8+dvTJgS33ed6wfA0H AOUvwQj1wjSxbMc4g4YgkA== 0000950152-97-002109.txt : 19970325 0000950152-97-002109.hdr.sgml : 19970325 ACCESSION NUMBER: 0000950152-97-002109 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970424 FILED AS OF DATE: 19970324 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METATEC CORP CENTRAL INDEX KEY: 0000203200 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 591698890 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-09220 FILM NUMBER: 97561285 BUSINESS ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147612000 MAIL ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: SILCO INVESTORS CORP DATE OF NAME CHANGE: 19900801 DEF 14A 1 METATEC CORPORATION DEFINITIVE PROXY 1 ================================================================================ SCHEDULE 14A (RULE 14a) 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 sec.240.14a-11(c) or sec.240.14a-12
METATEC CORPORATION (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (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)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ....... (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 (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: ........................................................... ================================================================================ 2 [Metatec Logo] METATEC CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 1997 To the Shareholders of METATEC CORPORATION Notice is hereby given that the Annual Meeting of Shareholders of Metatec Corporation (the "Company") will be held at the Company's principal executive offices located at 7001 Metatec Boulevard, Dublin, Ohio 43017, on Thursday, April 24, 1997, at 1:00 p.m., local time, for the following purposes: 1. To consider and vote upon an amendment to the Company's 1992 Directors' Stock Option Plan which would (a) provide for the annual option grants to directors to continue through the 2000 annual meeting of the shareholders, (b) provide for the one-time grants to directors to continue through the 2000 annual meeting of the shareholders, (c) increase the number of shares available for which options may be granted under such plan from 160,000 to 210,000, and (d) permit future amendments to be made to such plan without shareholder approval; 2. To elect three Class I directors; and 3. To transact such other business as may properly come before the meeting or any adjournment thereof. The close of business on February 24, 1997, has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the meeting and any adjournment thereof. In order that your shares may be represented at this meeting and to assure a quorum, please sign and return the enclosed proxy promptly. A return addressed envelope, which requires no postage, is enclosed. In the event you are able to attend and wish to vote in person, at your request we will cancel your proxy. By Order of the Board of Directors WILLIAM H. LARGENT Secretary Dated: March 21, 1997 3 METATEC CORPORATION PROXY STATEMENT GENERAL This Proxy Statement is being furnished to the holders of common shares, $.10 par value, of Metatec Corporation, a Florida corporation (the "Company"), in connection with the solicitation of proxies by the Board of Directors of the Company to be used at the Company's Annual Meeting of Shareholders to be held at the Company's principal executive offices located at 7001 Metatec Boulevard, Dublin, Ohio 43017, on Thursday, April 24, 1997, at 1:00 p.m., local time, for the purposes set forth on the accompanying Notice of Annual Meeting. The approximate date on which this Proxy Statement and the form of proxy will be first sent to shareholders is March 21, 1997. All shares represented by properly executed proxies will be voted at the Annual Meeting in accordance with the choices indicated on the proxy. If no choices are indicated, the shares will be voted in favor of the proposals set forth in the Notice of Annual Meeting as more fully described in this Proxy Statement. Any proxy may be revoked at any time prior to its exercise by delivery to the Company of a subsequently dated proxy or by giving notice of revocation to the Company in writing or in open meeting. A shareholder's presence at the Annual Meeting does not by itself revoke the proxy. The close of business on February 24, 1997, has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. On the record date, there were 6,979,438 of the Company's common shares outstanding and entitled to vote. Each common share is entitled to one vote. ADOPTION OF AMENDMENT TO 1992 DIRECTORS' STOCK OPTION PLAN The directors and shareholders of the Company have adopted the Metatec Corporation 1992 Directors' Stock Option Plan and three amendments to such Plan (collectively, the "Directors' Plan"). The purposes of the Directors' Plan are to encourage directors of the Company who are not employees of the Company or any of its subsidiaries (each an "Eligible Director") to acquire a proprietary interest in the Company, to further promote the interest of such directors in the development and financial success of the Company, and to assist the Company in attracting and retaining highly qualified directors through the granting of stock options to purchase common shares of the Company. The options provided for under the Directors' Plan are not intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended (the "Code"). Currently five directors are eligible to participate in the Directors' Plan. At the Annual Meeting, shareholders will be asked to approve Amendment No. 4 to the Directors' Plan, which was adopted by the directors on January 29, 1997. Pursuant to the requirements of the Directors' Plan, the proposed amendment must be approved by the Company's shareholders within 12 months after its adoption by the Board of Directors. At the Annual Meeting, unless otherwise indicated, proxies will be voted for the adoption of the proposed amendment. The following discussion of the Directors' Plan and of Amendment No. 4 are qualified in their entirety by reference to the full text of the Directors' Plan, including the proposed amendment, which are attached hereto as Appendix A. Under the Directors' Plan, following each annual meeting of shareholders of the Company, each Eligible Director is automatically granted an option to purchase 2,500 common shares. These options are fully vested -1- 4 at the time of grant. In addition, each person who was an Eligible Director immediately following the 1994 annual meeting of shareholders and each person who for the first time becomes an Eligible Director after the 1994 annual meeting of shareholders and before the day after the 1996 annual meeting of shareholders is automatically granted an option, on a one-time basis, to purchase 10,000 common shares (the "One-Time Options"). The One-Time Options have five-year terms and vest in equal annual installments over a four-year period. The annual option grants to Eligible Directors under the Directors' Plan will terminate after options are granted to Eligible Directors following the 1998 annual meeting of shareholders. Management desires to have the Directors' Plan continue after that date in order to continue to incentivize directors because the grant of options serves to link each director's interest in the Company with that of each shareholder's, namely to see the value of his or her shares appreciate. If approved, Amendment No. 4 will provide, among other things, for the continuation of these annual option grants through the Company's 2000 annual meeting of shareholders. A total of 160,000 common shares have been reserved for issuance (subject to anti-dilution adjustments) under the Directors' Plan. As of February 24, 1997, options for 129,925 shares had been granted under the Directors' Plan, of which options for 102,791 shares had not been exercised. As of February 24, 1997, the market value of the unexercised options was $501,106. Because options have already been granted for a substantial portion of the common shares reserved under the Directors' Plan, management recommends that additional common shares be added at this time in order to avoid any concerns regarding the Plan's ability to function in the future. Again, management desires to have the Directors' Plan available to incentivize current and future directors. If approved, Amendment No. 4 will, among other things, increase the total number of common shares reserved for issuance under the Directors' Plan by 50,000 shares to a total of 210,000. The price to be paid to purchase common shares upon exercise of an option granted under the Directors' Plan is the fair market value of the common shares at the time the option is granted. For purposes of the Directors' Plan, the fair market value of the common shares means, as of any given date: (a) the mean between the highest and lowest bid and ask prices, as reported by the National Association of Securities Dealers, Inc., on the most recent previous reporting day, (b) the last reported sale price in the Nasdaq National Market system on the most recent previous reporting day, or (c) the last reported sale price on any stock exchange on which the common shares are listed on the most recent previous reporting day, whichever is applicable. Each option granted under the Directors' Plan must be evidenced by a written stock option agreement between the Eligible Director to whom such option was granted and the Company. Each option, other than a One-Time Option, is fully vested on the date such option is granted. One-Time Options vest over a four-year period at the rate of 25% on each anniversary of the date the option was granted. However, if a director who has reached the age of 70 thereafter ceases to be an Eligible Director for any reason other than death or discharge for cause, then any unvested portion of the One-Time Option previously granted to that director will automatically vest and become exercisable at any time prior to the expiration of the term of that option. If a tender offer or exchange offer for shares (other than such an offer by the Company or approved by the Company's Board of Directors) is commenced, or if the shareholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly owned entity or for a sale or other disposition of all or substantially all the assets of the Company, and such event had not been approved by the Company's Board of Directors, then all One-Time Options theretofore granted and not fully exercisable will thereupon become exercisable in full. -2- 5 The One-Time Option feature of the Directors' Plan expired on the day after the 1996 annual meeting of shareholders. Management believes that it is desirable to have this feature continue as described above to incentivize directors and link directors and shareholder interests in the Company. If approved, Amendment No. 4 will, among other things, extend the One-Time Option feature through the day after the 2000 annual meeting of the shareholders. As currently in effect, the Directors' Plan may not be amended without shareholder approval if the amendment would (a) materially increase the benefits accruing to participants under the Directors' Plan, (b) materially increase the number of common shares which could be issued under the Directors' Plan, or (c) materially modify the requirements as to eligibility for participation in the Directors' Plan. Furthermore, the Directors' Plan cannot be amended more than once every six months except in limited circumstances. The primary purpose of these amendment provisions was to enable the Directors' Plan to qualify under Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act") so that option grants to directors would be exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act. However, because of recent rule changes, Rule 16b-3 no longer strictly requires shareholder approval of plans, such as the Directors' Plan, or amendments to such plans in order for option grants to be exempt from Section 16(b) of the Exchange Act. If approved, Amendment No. 4 will, among other things, permit future amendments to be made to the Directors' Plan without shareholder approval. Any such amendments would only require approval by the directors. Management believes that, by giving directors more flexibility to modify the Directors' Plan, modifications can be made more expediently, if necessary, to attract or retain highly qualified directors, which is one of the purposes of the Plan. Directors will remain accountable to shareholders, though, because their fiduciary duties against self-dealing will be invoked each time any action is taken with respect to the Directors' Plan. Management believes that this will safeguard the interests of the shareholders. No option may be exercised more than five years after the date of grant. An option may only be exercised by the grantee to whom it was granted during such grantee's lifetime. Upon the death of the grantee, the option will be exercisable (subject to any other applicable restrictions on exercise) by the executor or administrator of the grantee's estate, and such option must be exercised within one year of the grantee's death (but not later than the original expiration date of the option). If a grantee of an option ceases to be an Eligible Director for any reason other than death or discharge for cause, then the option must be exercised within six months after the date the grantee ceases to be an Eligible Director. However, if a director who has reached the age of 70 thereafter ceases to be an Eligible Director for any reason other than death or discharge for cause, then any options which are then exercisable by that director (including the One-Time Option which became automatically vested, as described above) will not terminate six months thereafter as originally provided under the Directors' Plan, but will continue to be exercisable for the original remaining terms of the respective options. However, if a former director thereafter dies, then such director's options will terminate unless exercised as provided under the Directors' Plan with respect to the death of a director. Upon the discharge of a grantee as a director of the Company for cause, all unexercised options granted to such grantee will immediately lapse and be of no further force or effect. Shares purchased upon exercise of an option may not be sold before at least six months has elapsed from the date the option was granted. In general, for federal income tax purposes under present law: (a) The grant of an option, by itself, will not result in income to the optionee. -3- 6 (b) Except as provided in (e) below, the exercise of an option (in whole or in part, according to its terms) will result in ordinary income to the optionee at that time in an amount equal to the excess (if any) of the fair market value of the common shares on the date of exercise over the exercise price. (c) Except as provided in (e) below, the optionee's tax basis of the shares acquired upon the exercise of an option, which will be used to determine the amount of any capital gain or loss on a future taxable disposition of such shares, will be the fair market value of the shares on the date of exercise. (d) No deduction will be allowable to the Company upon the grant of an option, but upon the exercise of an option, a deduction will be allowable to the Company at that time in an amount equal to the amount of ordinary income realized by the optionee exercising such option. (e) With respect to the exercise of an option and the payment of the exercise price by the delivery of shares, to the extent that the number of shares received does not exceed the number of shares surrendered, no taxable income will be realized by the optionee at that time, the tax basis of the shares received will be the same as the tax basis of the shares surrendered, and the holding period of the optionee in the shares received will include his or her holding period in the shares surrendered. To the extent that the number of shares received exceeds the number of shares surrendered, ordinary income will be realized by the optionee at that time in the amount of the fair market value of such excess shares, the tax basis of such excess shares will be equal to the fair market value of such shares at the time of exercise, and the holding period of the optionee in such shares will begin on the date such shares are transferred to the optionee. Set forth below is the number of common shares which may be received by each nominee for election as a director and by all directors (including such nominees) as a group upon the exercise of options which have been granted under the Directors' Plan and were outstanding as of December 31, 1996. Such option grants are not subject to shareholder approval of Amendment No. 4 to the Directors' Plan.
NUMBER OF SHARES TO BE NAME SUBJECT TO OPTION GRANTS ---------------------------------------------------- ------------------------ E. David Crocket 17,500 Peter J. Kight 17,500 All Directors who are not Executive Officers (as a group) 86,290
Set forth below is the number of common shares which may be received by each nominee for election as a director, assuming they are each elected, and by all directors (including such nominees) as a group upon the exercise of options which are to be granted under the Directors' Plan following the 1997 Annual Meeting of Shareholders. Such option grants will not be effected by whether or not Amendment No. 4 to the Directors' Plan is approved by shareholders:
NUMBER OF SHARES TO BE NAME SUBJECT TO OPTION GRANTS ---------------------------------------------------- ------------------------ E. David Crocket 2,500 Peter J. Kight 2,500 All Directors who are not Executive Officers (as a group) 12,500
The affirmative vote of the holders of at least a majority of the outstanding common shares present or represented at the Annual Meeting and entitled to vote thereat is necessary to adopt the proposed amendment. -4- 7 Abstentions and non-votes by brokers holding common shares in street name will have the same effect as shares cast against the proposed amendment. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE DIRECTORS' PLAN. ELECTION OF DIRECTORS The number of directors currently is fixed at nine. The Board of Directors is divided into three classes, Class I, Class II, and Class III, with three directors in each class. The directors in each class are elected to three-year terms. The terms of office of one class of directors expire each year at the annual meeting of shareholders and at such time as their successors are duly elected and qualified. The term of office of the Class I directors expires concurrently with the holding of the Annual Meeting, and the three incumbent directors in such Class have been nominated for re-election. There is no cumulative voting in the election of directors, and those nominees receiving the highest number of votes will be elected. Abstentions and broker non-votes will not be counted in determining the votes cast in the elections of director and will not have a positive or negative effect on the election. At the Annual Meeting, common shares represented by proxies, unless otherwise specified, will be voted to elect the nominees named below as Class I directors for a three-year term expiring in 2000. In the event that any nominee named below as a Class I director is unable to serve (which is not anticipated), the persons named in the proxy may vote for another nominee of their choice. -5- 8 CLASS I DIRECTORS (NOMINEES FOR ELECTION)
COMMON SHARES NAME OF BENEFICIALLY NOMINEE/DIRECTOR A DIRECTOR OF OWNED AS OF AND POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE COMPANY FEBRUARY 24, % OF WITH COMPANY AGE THE PAST FIVE YEARS SINCE 1997(1) CLASS - ---------------------------- ---- -------------------------------- ------------- ------------- ----- William H. Largent, 41 Chief Financial Officer of the 1990 72,711 1.0 % Executive Vice President, Company since March 1993, Treasurer, Chief Financial Treasurer of the Company since Officer, Secretary and May 1993, and Executive Vice Director President and Secretary of the Company since October 1995; President of Liebert Capital Management Corporation, an investment management company, from October 1992 to March 1993; Executive Vice President of L Corporation, an affiliate of Liebert Capital Management Corporation, from April 1990 to September 1992. Mr. Largent is also a director of AmeriLink Corporation. E. David Crockett, 60 General Partner of Aspen 1994 19,000 * Director Venturers, a venture capital firm for high technology start-up companies, since April 1991; Vice President of 3i Ventures, which provided similar services, from December 1987 to April 1991. Mr. Crockett is also a director of Herman Miller, Inc. and chairman of Cornerstone Imaging, Inc. Peter J. Kight, 40 Chairman, Chief Executive 1994 15,000 * Director Officer and President of Checkfree Corporation, a company that provides a nationwide electronic bill paying system, since January 1981.
Set forth below is information relating to directors whose terms will continue after the Annual Meeting: -6- 9 CLASS II DIRECTORS (TERMS EXPIRING IN 1998)
COMMON SHARES NAME OF BENEFICIALLY DIRECTOR A DIRECTOR OF OWNED AS OF AND POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE COMPANY FEBRUARY 24, % OF WITH COMPANY AGE THE PAST FIVE YEARS SINCE 1997(1) CLASS - ---------------------------- ---- -------------------------------- ------------- ------------- ----- Jerry D. Miller, 61 President of D&D Properties, 1976 85,800 1.2 % Director Inc. and President of MGB, Inc., two companies engaged in the real estate business since May 1992; President and Treasurer of the Company from the Company's incorporation in 1976 to May 1993, and Chairman of the Board from June 1978 to August 1989. Gregory T. Tillar, 43 President of the Company since 1995 110,286 1.6 %* President, Chief Operating February 1995, and Chief Officer and Director Operating Officer of the Company since April 1993; Vice President with Company, responsible for various operating and sales functions, from May 1990 to April 1993. James V. Pickett, 55 Vice Chairman of Banc One 1995 26,100 * Director Capital Corp., a subsidiary of Banc One Holding Corporation, since February 1993; President of Pickett Realty Advisors, Inc., an asset management firm for hotel owners, since December 1991; President of a group of affiliated companies and partnerships, collectively known as The Pickett Companies, involved in the development, management, and ownership of hotels, since 1965. Mr. Pickett is also a Director of Wendys International, Inc. and Karrington Health, Inc.
-7- 10 CLASS III DIRECTORS (TERMS EXPIRING IN 1999)
COMMON SHARES NAME OF BENEFICIALLY DIRECTOR A DIRECTOR OF OWNED AS OF AND POSITION(S) PRINCIPAL OCCUPATION(S) DURING THE COMPANY FEBRUARY 24, % OF WITH COMPANY AGE THE PAST FIVE YEARS SINCE 1997(1) CLASS - ---------------------------- ---- -------------------------------- ------------- ------------- ----- A. Grant Bowen, 66 Financial Consultant since March 1991 29,873 * Director 1986. Mr. Bowen is a director of W. W. Williams Co. and State Savings Bank. Jeffrey M. Wilkins, 52 Chairman of the Board and Chief 1989 638,119 9.1 % Chairman of the Board, Executive Officer of the Company Chief Executive Officer since 1989. Mr. Wilkins is also and Director a Director of CheckFree Corporation and Holophane Corporation. - --------------- *Less than 1%. (1) Except as otherwise indicated in the notes to this table, the persons named in the table have sole voting and investment power with respect to all common shares owned by them. This table does not include options for common shares which are not currently exercisable or not exercisable within 60 days of February 24, 1997. As of February 24, 1997, the number of common shares owned by all directors and executive officers of the Company as a group (11 persons) was 1,114,991 (16.0%).
BOARD OF DIRECTORS COMMITTEES AND MEETINGS The Board of Directors has established an Executive Committee, a Compensation Committee, and a Finance and Audit Committee. The Board of Directors has no standing nominating committee or committee performing similar functions. The members of the Executive Committee are Jeffrey M. Wilkins, Gregory T. Tillar, William H. Largent, and James V. Pickett. The Executive Committee, which may exercise all of the authority of the Board of Directors between its meetings, did not take any action or hold any meetings during 1996. The members of the Compensation Committee are E. David Crockett, Jerry D. Miller, and James V. Pickett. The Compensation Committee, which is responsible for administering the Company's two stock option plans and which may exercise the authority of the Board of Directors with respect to the compensation of employees of the Company, held four meetings during 1996. The members of the Audit and Finance Committee are A. Grant Bowen, Peter J. Kight, and Jerry D. Miller. The Audit and Finance Committee, which is responsible for the appointment of the independent auditors, the annual audit of the Company's accounts by the independent auditors, and all related matters, along with other activities undertaken by such committee, held three meetings during 1996. The Board of Directors held five meetings during 1996. Each director attended at least 75% of the meetings held by the Board of Directors and the committees on which he served during 1996. -8- 11 COMPENSATION OF DIRECTORS Employee directors receive no additional compensation for service on the Board of Directors or its committees. Directors of the Company who are not also employees of the Company receive a fee of $1,250 per board meeting attended in person, $500 per board meeting attended through telephonic communication and a quarterly retainer of $1,250. In addition, directors of the Company who are not officers or employees of the Company do not receive any additional compensation for committee meetings attended, unless the committee meets on a date different from a board meeting, in which case they receive $500 per committee meeting attended. All committee meetings were held on the same dates as board meetings in 1996. In addition, directors of the Company who are not officers or employees of the Company or any of its subsidiaries receive stock options pursuant to the Directors' Plan. See "Adoption of Amendment to 1992 Directors' Stock Option Plan." SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors, and greater than 10% shareholders are required by the Securities and Exchange Commission's regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company, the Company believes that during 1996 all Section 16(a) filing requirements applicable to its officers and directors were complied with by such persons. PRINCIPAL HOLDERS OF VOTING SECURITIES The following table sets forth certain information as of December 31, 1996, with respect to the only persons known by the Company to be the beneficial owners of 5% or more of the Company's common shares:
AMOUNT AND NATURE PERCENT NAME AND ADDRESS OF OF BENEFICIAL OF BENEFICIAL OWNER OWNERSHIP OWNERSHIP - ------------------------------- ----------------- --------- Jeffrey M. Wilkins 638,119 9.1% 7001 Metatec Boulevard Dublin, Ohio 43017 Wellington Management 658,000 9.4% Company, LLP 75 State Street Boston, Massachusetts 02109
-9- 12 EXECUTIVE COMPENSATION Set forth below is summary information regarding the annual and long-term compensation of the Company's chief executive officer and its only other executive officers whose annual compensation exceeded $100,000 during 1996: SUMMARY COMPENSATION TABLE
LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS ------------------- ALL NAME AND -------------------- SHARES UNDERLYING OTHER PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS GRANTED(2) COMPENSATION(3) - ---------------------------- ----- -------- -------- ------------------- ------------- Jeffrey M. Wilkins 1996 $250,000 $178,885 $ 7,963 Chairman of the 1995 $250,000 $225,544 25,000 $ 2,149 Board and Chief 1994 $250,000 $127,286 $ 1,230 Executive Officer Gregory T. Tillar 1996 $175,000 $ 51,750 $ 4,472 President and 1995 $158,692 $105,165 50,000 $ 2,044 Chief Operating 1994 $125,231 $ 82,000 20,000 $ 1,622 Officer William H. Largent 1996 $145,000 $ 31,050 $ 4,493 Executive Vice 1995 $123,846 $ 64,268 25,000 $ 1,811 President, 1994 $108,231 $ 65,000 20,000 $ 900 Treasurer, Chief Financial Officer and Secretary Christopher L. Winslow 1996 $ 94,231 $ 38,850 $ 3,934 Vice President, 1995 $ 84,000 $ 34,276 32,500 $ 1,168 Manufacturing Services 1994 $ 72,846 $ 32,000 7,500 $ 958 - --------------- (1) Bonuses, other than for Mr. Wilkins which are paid pursuant to his employment agreement with the Company, were earned pursuant to an Incentive Compensation Plan for certain key executives of the Company selected by the chief executive officer. Pursuant to this plan, an individual target incentive amount for each executive and a target amount for the Company's pre-tax income was established. Each participating executive was paid a bonus in an amount ranging from 40% to 140% of his target incentive amount based on his percentage of the target pre-tax income actually achieved by the Company. (2) This column sets forth the number of common shares subject to options granted during the indicated year pursuant to the Company's employee stock option plan. (3) Represents amounts contributed by the Company as matching contributions to its 401(k) retirement plan and excess group term life insurance.
-10- 13 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES The following table sets forth stock option exercises during 1996 by the executive officers named in the Summary Compensation Table and the value of in-the-money stock options held by those individuals as of December 31, 1996:
NUMBER OF SHARES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS 12/31/96 AT 12/31/96(2) SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE (#) REALIZED(1) UNEXERCISABLE UNEXERCISABLE - ----------------------------- ---------------- ---------- -------------- ---------------- Jeffrey M. Wilkins........... -0- -0- -0-/-0- $ -0-/$-0- Gregory T. Tillar............ -0- -0- 30,000/-0- $ 112,500/$-0- William H. Largent........... -0- -0- 20,000/-0- $ 25,000/$-0- Christopher L. Winslow....... -0- -0- 5,000/-0- $ 16,250/$-0- - --------------- (1) Aggregate market value of the common shares covered by the option less the aggregate price paid by the executive officer. (2) The value of in-the-money options was determined by subtracting the exercise price from the closing price of the Company's common shares as of December 31, 1996.
EMPLOYMENT AGREEMENT WITH MR. WILKINS The Company and Mr. Wilkins are parties to an Amended and Restated Employment Agreement (the "Employment Agreement") pursuant to which Mr. Wilkins is serving as Chairman of the Board and Chief Executive Officer of the Company. The Employment Agreement continues until terminated by the parties. The Employment Agreement may be terminated by the Company for "Cause" (defined as dishonesty constituting a felony) or because of Mr. Wilkins' "Long-Term Disability," by Mr. Wilkins for "Good Reason" (defined as any material reduction in authority, title, or responsibility, any reduction in compensation or benefits or any assignment of additional duties), or by either party upon at least one year's notice. Under the Employment Agreement, Mr. Wilkins is entitled to an annual base salary of $250,000, fringe benefits to be determined by the Board of Directors of the type which are typically provided to chief executive officers of similarly situated companies, and an annual bonus equal to five percent of the net pre-tax profit of the Company (calculated without consideration of any such bonuses paid or payable to Mr. Wilkins) during each fiscal year beginning with fiscal year 1993. Upon termination of the Employment Agreement, unless the termination is by the Company for Cause or unless the termination is a voluntary termination by Mr. Wilkins without Good Reason, Mr. Wilkins is entitled to receive a single payment equal to his full annual salary in effect at the time, he is entitled to continue receiving the annual bonuses for the three fiscal years of the Company ending after the date of termination, and the Company is to continue providing group life and group health insurance coverage for a one-year period after the date of termination. The Company has the option to purchase all of Mr. Wilkins' common shares at fair market value upon Mr. Wilkins' death or Long-Term Disability or upon his voluntary termination other than for Good Reason or upon the Company's termination for Cause. For a period of three years after termination of his employment, Mr. Wilkins is prohibited from competing against the Company unless he is terminated by the Company without Cause or he voluntarily resigns for Good Reason. -11- 14 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Company's Compensation Committee are E. David Crockett, Jerry D. Miller, and James V. Pickett. Until May 1993, prior to his appointment to the Compensation Committee, Mr. Miller served as President of the Company. There are no interlocking relationships between any executive officers of the Company and any entity whose directors or executive officers serve on the Company's board or Compensation Committee. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors regularly reviews executive compensation policies and levels and evaluates the performance of management in the context of the Company's performance. The Compensation Committee is composed entirely of independent outside directors. The Committee believes that compensation must be designed to attract, retain, reward, and motivate highly qualified individuals to manage the Company to meet corporate growth and earnings objectives and maximize shareholder value. BASE SALARY. The major component of compensation for executive officers of the Company is their annual base salaries. With respect to executive officers, other than the chief executive officer, the Committee reviews the recommendation of the chief executive officer with respect to the annual base salary to be paid to each such officer and then makes a subjective determination based upon various factors, including the position held by such executive officer, his or her accomplishments during the year, level of responsibility and experience, and the relationship of such salary to the salaries of other managers and associates of the Company, in establishing the amount of such salary. The annual base salary of Mr. Wilkins, chairman and chief executive officer, which is paid pursuant to his employment agreement, was $250,000 for 1996. The Board of Directors has the authority to increase Mr. Wilkins' annual base salary. The Committee believes that Mr. Wilkins' base salary is currently adequate and has not recommended to the Board of Directors an increase in his base salary for 1997. ANNUAL INCENTIVE. The Compensation Committee also believes it is desirable to provide selected significant employees with incentive compensation based on the Company's actual performance during a fiscal year. Mr. Wilkins, in addition to his base salary, is paid pursuant to his employment agreement an annual bonus equal to five percent of the net pre-tax profit of the Company (calculated without consideration of any such bonuses paid or payable to Mr. Wilkins) during each fiscal year beginning with fiscal year 1993. In addition, in February 1992, the Company instituted an Incentive Compensation Plan for certain key employees of the Company selected by the chief executive officer of the Company. At the beginning of each year, the chief executive officer establishes an individual target incentive amount for the selected employee and a target amount for the Company's pre-tax income. Each selected employee is to receive a bonus in an amount ranging from 40% to 140% of this target incentive amount based on the percentage of the pre-tax income actually earned by the Company. No amounts will be paid if actual pre-tax income is less than 40% of the target pre-tax income and maximum amounts will be paid for results equaling or exceeding 140% of pre- tax income. All bonuses under the Incentive Compensation Plan require approval by the Compensation Committee. LONG-TERM STOCK INCENTIVES. In addition to the Incentive Compensation Plan, the Company has established the 1990 Stock Option Plan which is designed to align a portion of the executive and key associates compensation package with the long-term interests of shareholders. The 1990 Stock Option Plan has been approved by the Company's shareholders. All options are granted by the Compensation Committee, whose members are not eligible to participate in such Plan. The Company's associates are granted options in amounts -12- 15 subjectively determined by the Compensation Committee to be appropriate given the relative positions and responsibilities of such persons. DEDUCTIBLE COMPENSATION. In 1993, the Revenue Reconciliation Act of 1993 was adopted. Under Section 162(m) of the Code, as amended by this Act, certain compensation of executives in excess of $1,000,000 is not deductible by public companies. Under Section 162(m), the Company could attempt to qualify certain of its compensation plans and arrangements for exceptions from this provision by amendments adopted by the shareholders. Although the Committee may decide to do so in the future, it has not currently recommended that action be taken to qualify for exceptions from Section 162(m), because applicable compensation arrangements appear to be either grandfathered, due to their adoption prior to the Act, or not currently a significant difficulty. Jerry D. Miller, Chairman E. David Crockett James V. Pickett PERFORMANCE GRAPH The following graph provides a comparison of the five-year cumulative total return (assuming reinvestment of dividends) from the Company, the NASDAQ Computer and Data Processing Services Index, and the NASDAQ Stock Market Index--United States:
Measurement Period METATEC NASDAQ NASDAQ STOCK (Fiscal Year Covered) CORPORATION COMPUTER & DP MRKT - US 12/91 100 100 100 12/92 182 108 116 12/93 527 114 134 12/94 350 138 131 12/95 400 211 185 12/96 245 260 227
The foregoing graph and above amounts assume $100 invested on December 31, 1991, in the Company's common shares or applicable stock index, including reinvestment of dividends with the year ending December 31. The foregoing graph is not, nor is it intended to be, indicative of future performance of the Company's common shares. -13- 16 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In connection with the Company's 1990 acquisition of all of the shares of Metatec/Discovery Systems, Inc. ("Discovery") held by two former directors of the Company and by Mr. Wilkins, and in exchange for Mr. Wilkins' surrender of an option to purchase 48% of the shares of Discovery, the Company agreed to issue an indefinite number of common shares of the Company to Mr. Wilkins on a deferred basis pursuant to an escrow arrangement intended to continue until the first quarter of 1996. In March 1993, the Company and Mr. Wilkins agreed to terminate this deferred share arrangement and effectively cap the number of shares which could be received by Mr. Wilkins as a result of the termination of his original option by issuing 600,000 common shares to him. These shares were issued to Mr. Wilkins subject to a risk that he will forfeit the shares if his employment is terminated by the Company for Cause or by Mr. Wilkins without Good Reason (as these terms are defined in Mr. Wilkins' employment agreement with the Company) on or before February 29, 1996, and subject to a risk that he will forfeit all or part of the shares under a formula based primarily on the pre-tax profits of Discovery. As of December 31, 1995, which was the end of the formula period, all 600,000 common shares had been earned by Mr. Wilkins. All of these shares became fully vested on March 1, 1996. In addition, the Company has agreed to (a) register any unforfeited shares at Mr. Wilkins' request, (b) pay Mr. Wilkins a bonus in an amount equal to any tax savings resulting to the Company from the issuance of the shares and the payment of such bonus, up to the amount of Mr. Wilkins' individual tax liability with respect to the issuance of the shares to him, and (c) use its best efforts to effect an underwriting of a number of the unforfeited shares sufficient to enable Mr. Wilkins to cover any related tax liability to the extent not covered by the bonus described in (b), above. However, the Company does not anticipate the need to pay Mr. Wilkins the above described bonus or to effect an underwriting with respect to the issuance of the unforfeited shares. In January 1996, the Company purchased from Olde Poste Properties, an Ohio general partnership, approximately five acres of land adjacent to the Company's office and manufacturing facility located in Dublin, Ohio (the "Dublin Facility"), for the purpose of expanding the Dublin Facility. The purchase price for the land was $451,1000, and the Company paid expenses in connection with the purchase totaling approximately $33,800, including the commission payable to the seller's broker, the conveyance fee, and the premium for owner's title insurance. Mr. Wilkins is a general partner in Olde Poste Properties; however, Mr. Wilkins did not participate in the negotiations of any of the terms of the acquisition. Such terms were established by other partners of Olde Poste Properties and other officers of the Company, and the Company believes the terms of the transaction were no less favorable to it than it could obtain from independent third parties. INDEPENDENT PUBLIC ACCOUNTANTS Deloitte & Touche LLP has been selected by the Board of Directors as the independent public accountants for the Company for its fiscal year ending December 31, 1997. It is expected that a representative of Deloitte & Touche LLP will be present at the Annual Meeting and will be given an opportunity to make a statement if desired and to respond to appropriate questions. -14- 17 SHAREHOLDER PROPOSALS Proposals of shareholders intended to be presented at the 1998 annual meeting of shareholders must be received by the Company for inclusion in the proxy statement and form of proxy on or prior to 120 days in advance of the first anniversary of the date of this Proxy Statement. OTHER MATTERS Management does not know of any other matters which may come before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy in accordance with their judgment on such matters. The Company will bear the cost of solicitation of proxies. In addition to the use of the mails, proxies may be solicited by officers, directors, and regular employees, personally or by telephone or telegraph, and the Company will reimburse banks, brokers, and nominees for their out-of-pocket expenses incurred in sending proxy materials to the beneficial owners of shares held by them. If there are follow-up requests for proxies, the Company may employ other persons for such purpose. WILLIAM H. LARGENT Secretary -15- 18 APPENDIX A METATEC CORPORATION 1992 DIRECTORS' STOCK OPTION PLAN Section 1. PURPOSE. The purposes of the METATEC Corporation 1992 Directors' Stock Option Plan (the "Plan") are to encourage directors of METATEC Corporation (the "Company") who are not employees or officers of the Company or any of its subsidiaries to acquire a proprietary interest in the Company, to further promote the interest of such directors in the development and financial success of the Company, and to assist the Company in attracting and retaining highly qualified directors. Section 2. ADMINISTRATION OF PLAN. The Plan shall be administered by the Company's Compensation Committee (the "Committee") which shall consist of not less than three directors of the Company appointed by the Company's Board of Directors (the "Board"). The members of the Committee shall serve at the pleasure of the Board, which may remove members from the Committee or appoint new members to the Committee from time to time, and members of the Committee may resign by written notice to the Chairman of the Board or the Secretary of the Company. The Committee may adopt any rules it considers appropriate for the conduct of its business or the administration of the Plan, make interpretations of the Plan, and take any other actions it considers appropriate in connection with the Plan, all in a manner consistent with the other provisions of the Plan, and shall have such additional authority as the Board may determine to be desirable from time to time. The decisions of the Committee on matters within its jurisdiction under the Plan shall be conclusive and binding. No member of the Board or the Committee shall be liable for any action or determination relating to the Plan made in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Each member of the Board or the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by him in connection with any action, suit, or proceeding to which he may be a part by reason of any action taken or failure to act under or in connection with the Plan, or any Option (defined in Section 5, below) granted thereunder, and against all amounts paid by him in satisfaction of a judgement in any such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Upon the institution of any such action, suit, or proceeding, the Board or Committee member shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof at its expense. The provisions of this paragraph with respect to the liability and indemnification of members of the Board and the Committee are in addition to, and not in limitation of, the provisions with respect to the liability and indemnification of members of the Board and the Committee (a) contained in the Articles of Incorporation or ByLaws of the Company, (b) contained in any indemnification agreements between Directors and the Company, or (c) provided by law; provided that all of the foregoing provisions of this paragraph shall be construed in a manner consistent with applicable law. Section 3. SHARES SUBJECT TO PLAN. The maximum aggregate number of Class A Common Shares, par value $.10 a share, of the Company (the "Shares") allocated to the Plan and available for Options shall be 130,000 Shares. Such Shares may be authorized but unissued Shares or issued Shares reacquired by the Company and held as treasury Shares. If an Option granted under the Plan expires or terminates, the Shares subject to such expired or terminated option A-1 19 shall again be available for other Options to be granted under the Plan. The aggregate number of Shares allocated to the Plan shall be subject to adjustment under Section 6. Section 4. ELIGIBILITY. The persons eligible to receive Options under the Plan shall include only individuals who are directors of the Company and not employees or officers of the Company or any subsidiary of the Company (each such individual an "Eligible Director"). Section 5. GRANT AND TERMS OF OPTIONS. Immediately following each of the first five annual meetings of shareholders of the Company following the effective date of the Plan, each person who is then an Eligible Director automatically shall be granted an option (an "Option") to purchase that number of Shares which is equal to the lesser of: (a) 2,850; or (b) the result obtained when (i) $10,000 is divided by the fair market value of one Share on the date the Option is granted, and (ii) the quotient is rounded to the nearest whole number. For purposes of the Plan, the fair market value of the Shares shall mean, as of any given date: (A) the mean between the highest and lowest bid and ask prices, as reported by the National Association of Securities Dealers, Inc., on the most recent previous reporting day, (B) the last reported sale price in the NASDAQ National Market System on the most recent previous reporting day, or (C) the last reported sale price on any stock exchange on which the Shares are listed on the most recent previous reporting day, whichever shall be applicable. No additional Options shall be granted under the Plan following the granting of the Options described in this paragraph. The Options shall be stock options not intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Each Option shall be evidenced by a written agreement (an "Option Agreement") in such form as the Committee shall from time to time approve, and each Option Agreement shall be dated as of the date on which the Option is granted, signed by an officer of the Company authorized by the Committee, and signed by the Eligible Director to whom such Option is granted (Eligible Directors granted Options hereunder, "Grantees"). All Option Agreements shall be consistent with the Plan and comply with and be subject to the following terms and conditions: (i) VESTING. All Options shall be fully vested on the date of grant. (ii) OPTION PRICE. The option price of Shares subject to an Option shall be the fair market value of the Shares on the date the Option is granted, as determined in accordance with the provisions set forth in the first paragraph of this Section 5. (iii) MAXIMUM TERM. Subject to Section 5(iv), below, the term of each Option shall commence on the date of grant and shall terminate on the fifth anniversary of such date. (iv) TERMINATION OF OPTION. Except as otherwise provided in Section 9, if a Grantee ceases to be an Eligible Director for any reason, then all Options or any unexercised portion of such Options which otherwise are exercisable by such Grantee shall terminate unless such Options are exercised within six months after the date such Grantee ceases to be an Eligible Director (but in no event after expiration of the original term of any such Option); provided, that if such Grantee ceases to be an Eligible Director by reason of such Grantee's death, the six-month period shall instead be a one-year period. (v) TRANSFERABILITY. No Option shall be transferable by a Grantee other than by will or the laws of descent and distribution. During the lifetime of a Grantee, an Option, by its terms, shall be exercisable (subject to any other applicable restrictions on exercise) only by a Grantee for his own account. Upon the A-2 20 death of a Grantee, an Option shall be exercisable (subject to any other applicable restrictions on exercise) only by the executor or administrator of the Grantee's estate. (vi) METHOD OF EXERCISE. To the extent the right to exercise an Option has accrued, such Option may be exercised from time to time by giving written notice to the Secretary of the Company (the date such notice is received by the Company, the "Exercise Date"), stating the number of Shares (which must be a whole number) with respect to which an Option is being exercised and the time during normal business hours for delivery of the Shares with respect to which an Option was exercised, which shall be more than 15 and less than 30 days after the Exercise Date. Subject to compliance with all other terms and conditions of the Plan and the Option Agreement relating to such Option, the Company shall deliver, at the specified time at the principal office of the Company, a certificate for such Shares to the person entitled to receive same upon receipt of payment of the full purchase price for such Shares: (i) by certified or bank cashier's check, or (ii) by delivery of unrestricted Shares with a fair market value equal to the total option price at the time of exercise, or (iii) by a combination of the preceding two methods. (vii) SIX-MONTH HOLDING PERIOD. Shares purchased upon exercise of an Option may not be sold before at least six months have elapsed from the date the Option was granted. Section 6. CHANGES IN CAPITAL STRUCTURE. If the Company (a) pays a dividend or makes a distribution in Shares without receiving consideration in the form of money, services, or property, (b) subdivides or splits its outstanding Shares into a greater number of Shares, or (c) combines its outstanding Shares into a smaller number of Shares, then the aggregate number of Shares reserved for issuance pursuant to the Plan and the number and option price of Shares subject to the unexercised portions of then-outstanding Options shall be adjusted so that, assuming that Options had been previously granted for all of the Shares so reserved, the Grantees would be entitled to receive for the same aggregate price that number of Shares which they would have owned after the happening of any of the events described above had they exercised all of such Options prior to the happening of such event. An adjustment made pursuant to this paragraph shall become effective immediately after the record date in the case of a dividend or the effective date in the case of a subdivision, split, or combination. If the Company reclassifies or changes the Shares (except for splitting or combining, or changing par value, or changing from par value to no par value, or changing from no par value to par value) or participates in a consolidation or merger (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the Shares except as stated above), the aggregate number of Shares reserved for issuance pursuant to the Plan and the number and option price of Shares subject to the unexercised portions of then-outstanding Options shall be adjusted so that, assuming that Options had been previously granted for all the Shares so reserved, the Grantees would be entitled to receive for the same aggregate price that number and type of shares of capital stock which they would have owned after the happening of any of the events described above had they exercised all of such Options prior to the happening of such event. No adjustment pursuant to this section shall be required unless such adjustment would require an increase or decrease of at least 1% in the number or price of Shares; provided that any adjustments which by reason of this paragraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this section shall be made to the nearest cent or to the nearest full share, as the case may be. Anything in this section to the contrary notwithstanding, the Company shall be entitled to make such reductions in the option price, in addition to those required by this section, as it, in its discretion, shall determine to be advisable in order that any stock dividends, subdivisions or splits of shares, A-3 21 distribution of rights to purchase shares or securities, or distribution of securities convertible into or exchangeable for shares hereafter made by the Company to its shareholders shall not be taxable. Whenever an adjustment is made pursuant to the preceding provisions of this section, the Company shall promptly prepare a notice of such adjustment setting forth the terms of such adjustment and the date on which such adjustment became effective and shall mail such notice of such adjustment to the Grantees at their respective addresses appearing on the records of the Company or at such other address any Grantees may from time to time designate in writing to the Company. In addition, if any adjustment is made under the preceding provisions of this section with respect to the aggregate number of Shares reserved for issuance pursuant to the Plan, then, with respect to any remaining Options to be granted under the Plan after the date of such adjustment, the number of Shares specified in clause (a) of the first paragraph of Section 5 also shall be proportionately adjusted in a manner consistent with the adjustment in the aggregate number of Shares reserved for issuance pursuant to the Plan. Section 7. COMPLIANCE WITH SECURITIES LAWS; DELIVERY OF SHARES. No Option shall be exercisable and no Shares shall be delivered under the Plan except in compliance with all applicable federal and state securities laws and regulations. The Company's obligation to deliver Shares with respect to the exercise of an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation and warranty as to the investment intention of the Grantee or other person to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933, as amended, or any other applicable federal or state securities laws. Each certificate for Shares issued pursuant to the Plan shall be registered in the name of the Grantee or such other person and shall bear appropriate legend(s) with respect to the restrictions upon transfer of such Shares. All certificates for Shares or other securities delivered under the Plan shall be subject to such stop-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Company may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. In the case of the exercise of an Option by a person or estate acquiring the right to exercise such Option by bequest or inheritance, the Committee may require reasonable evidence as to the ownership of such Option and may require such consents and releases of taxing authorities as the Committee deems advisable. Section 8. WITHHOLDING TAX. The Company, at its option, shall have the right to require any person who is entitled to receive Shares pursuant to the exercise of an Option to pay to the Company an amount equal to all taxes which the Company is required to withhold with respect to such Shares or make arrangements satisfactory to the Company regarding the payment of such taxes, or, in lieu thereof, to retain, or sell without notice, a number of such Shares sufficient to cover the amount required to be withheld. The obligations of the Company under the Plan shall be conditional on such payment or other arrangements. A-4 22 Section 9. TERMINATION FOR CAUSE. Notwithstanding any provision to the contrary in the Plan or in any Option Agreement, upon the discharge of any Grantee as a director of the Company for cause, all unexercised Options granted to such Grantee shall immediately lapse and be of no further force or effect. Section 10. TERMINATION AND AMENDMENT OF PLAN. The Board, without further action on the part of the shareholders of the Company, may from time to time alter, amend or suspend the Plan or may at any time terminate the Plan, provided that: (a) no such action shall materially and adversely affect any outstanding Options without the consent of the respective Grantees of such Options; (b) except for the adjustments provided for in Section 6, no amendment may be made by Board action without shareholder approval if the amendment would (i) materially increase the benefits accruing to participants under the Plan, (ii) materially increase the number of Shares which may be issued under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan; and (c) the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules thereunder. Section 11. NO ENLARGEMENT OF RIGHTS. The award of Options under the Plan to an Eligible Director shall not confer any right to such director to continue as a director of the Company and shall not restrict or interfere in any way with the right of the shareholders of the Company to terminate such directorship, with or without cause, at any time. Section 12. RIGHTS AS SHAREHOLDER. No Grantee or his executor or administrator shall have any rights of a shareholder in the Company with respect to the Shares covered by an Option unless and until a certificate representing such Shares has been duly issued and delivered to him under the Plan. Section 13. DEFINITION OF SUBSIDIARY. The term "subsidiary" when used in the Plan or any Option Agreement means a subsidiary corporation as defined in Section 424 of the Code. Section 14. GOVERNMENT REGULATIONS. Notwithstanding any provisions of the Plan or any Option Agreement, the Company's obligations under the Plan and any such Option Agreement shall be subject to all applicable laws, rules and regulations and to such approvals as may be required by any governmental or regulatory agencies. Section 15. GOVERNING LAW. The Plan and all Option Agreements shall be governed by and construed in accordance with the laws of the State of Ohio. Section 16. GENDERS AND NUMBERS. When permitted by the context, each pronoun used in the Plan includes the same pronoun in other genders and numbers, and each noun used in the Plan includes the same noun in other numbers. A-5 23 Section 17. CAPTIONS. The captions of the various sections of the Plan are not part of the context of the Plan, but are only labels to assist in locating those sections, and shall be ignored in construing the Plan. Section 18. EFFECTIVE DATE. The Plan shall be effective May 1, 1992. The Plan shall be submitted to the shareholders of the Company for approval as soon as practicable but in any event not later than 12 months after the effective date of the Plan. Notwithstanding anything to the contrary contained herein, no Options shall be exercisable prior to such approval. If the Plan is not approved by the shareholders of the Company within 12 months after the effective date of the Plan, the Plan and all Options granted under the Plan shall become null and void and have no further force or effect. A-6 24 AMENDMENT NO. 1 TO METATEC CORPORATION 1992 DIRECTORS' STOCK OPTION PLAN The Metatec Corporation 1992 Directors' Stock Option Plan (the "Plan") is hereby amended pursuant to the following provisions: Section 1. DEFINITIONS. As a result of the recapitalization of the Company pursuant to the Company's Amended and Restated Articles of Incorporation approved by the Company's shareholders on May 20, 1993, the term "Shares", as used in the Plan and this amendment, means the Company's common shares, par value $.10 a share. All capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. Section 2. SHARES SUBJECT TO PLAN. The maximum aggregate number of Shares with respect to which options may be granted under the Plan, including the Options (as defined in the Plan) and the One-Time Options (as defined in Section 4, below), is increased by 30,000 Shares to a total of 160,000 Shares. Such aggregate number of Shares shall be subject to adjustment as provided in the Plan. Section 3. ANNUAL GRANTS. The formula contained in the first sentence of Section 5 of the Plan shall not be used for purposes of determining the number of Shares subject to Options granted under that section after the date of this amendment. Instead, the number of Shares subject to each such Option shall be 2,500. Section 4. ADDITIONAL ONE-TIME GRANTS. Each person who is an Eligible Director immediately following the 1994 annual meeting of the shareholders of the Company, and each person who first becomes an Eligible Director at any time during the period beginning on the day after that annual meeting and ending on the day after the 1996 annual meeting of the shareholders of the Company, automatically shall be granted an option (a "One-time Option") to purchase 10,000 Shares. Each One-Time Option, and the Shares subject to that One-Time Option, shall be subject to all terms and conditions applicable to Options under the Plan, except as follows: (a) TERM. Subject to earlier termination as provided below and as provided in the Plan, the term of each OneTime Option shall begin on the date it is granted (the "Grant Date") and shall end on the fifth anniversary of the Grant Date. (b) VESTING. Each One-Time Option shall vest in four equal installments on the first four anniversaries of the Grant Date, so that each One-Time Option may be exercised with respect to the following percentages of the Shares originally subject to that One-Time Option on and after the following anniversaries of the Grant Date, respectively (until termination of that One-Time Option): A-7 25
ANNIVERSARY PERCENTAGE - ------------------------------------- ---------- First................................ 25% Second............................... 50% Third................................ 75% Fourth............................... 100%
If a Grantee of a One-Time Option ceases to be an Eligible Director for any reason, then that One-Time Option shall terminate automatically with respect to that portion of the One-Time Option which has not become exercisable as provided above. (c) EFFECT OF CHANGE IN CONTROL. If a tender offer or exchange offer for Shares (other than such an offer by the Company or approved by the Company's Board of Directors) is commenced, or if the shareholders of the Company shall approve an agreement providing for a transaction in which the Company will cease to be an independent publicly owned entity or for a sale or other disposition of all or substantially all the assets of the Company and such event shall not have been approved by the Company's Board of Directors, then all One-Time Options theretofore granted and not fully exercisable shall thereupon become exercisable in full upon the happening of such event and shall remain so exercisable in accordance with their terms; provided that no One-Time Option which has previously been exercised or otherwise terminated shall become exercisable. The One-Time Options granted to Eligible Directors under this section are in addition to the Options granted to Eligible Directors under Section 5 of the Plan. Section 5. EFFECTIVE DATE; CONSTRUCTION. The effective date of this amendment is March 21, 1994, and this amendment shall be deemed to be a part of the Plan as of such date. In the event of any inconsistencies between the provisions of the Plan and this amendment, the provisions of this amendment shall control. Except as modified by this amendment, the Plan shall continue in full force and effect without change. This amendment shall be submitted to the shareholders of the Company for their approval as soon as practicable but in any event not later than 12 months after this amendment has been adopted by the board of directors of the Company. Notwithstanding the preceding paragraph or any other provisions of this amendment to the contrary, if this amendment is not approved by the shareholders of the Company within such 12-month period, this amendment shall automatically become null and void and have no further force or effect, and the Plan shall continue in effect without this amendment. A-8 26 AMENDMENT NO. 2 TO METATEC CORPORATION 1992 DIRECTORS' STOCK OPTION PLAN The Metatec Corporation 1992 Directors' Stock Option Plan (the "Original Plan"), as previously amended by Amendment No. 1 to the Original Plan (collectively, the "Plan"), is hereby amended pursuant to the following provisions: Section 1. DEFINITIONS. All capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. Section 2. TERM OF OPTIONS. If, after a Grantee reaches the age of 70, that Grantee ceases to be an Eligible Director for any reason other than his death or discharge for cause, then: (a) any unvested portion of any One-Time Option granted to that Grantee automatically shall vest and become exercisable at that time; and (b) any Option or portion of an Option (hereinafter, simply an "Option") which is otherwise then exercisable by that Grantee (including without limitation any unexercised portion of a One-Time Option) shall not terminate as provided in Section 5(iv) of the Original Plan and shall continue to be exercisable during the remainder of the original term of that Option; provided that if such Grantee thereafter dies, then each such Option shall terminate unless exercised within one year after the date of that Grantee's death (but in no event after expiration of the original term of that Option). The preceding provisions shall not be construed to modify the provisions of the Plan relating to termination of any unexercised Options held by any Grantee who ceases to be an Eligible Director as the result of that Grantee's death or discharge for cause. Section 3. EFFECTIVE DATE; CONSTRUCTION. The effective date of this amendment is January 25, 1995, and this amendment shall be deemed to be a part of the Plan as of such date. In the event of any inconsistencies between the provisions of the Plan and this amendment, the provisions of this amendment shall control. Except as modified by this amendment, the Plan shall continue in full force and effect without change. This amendment shall be submitted to the shareholders of the Company for their approval as soon as practicable, but in any event not later than 12 months after this amendment has been adopted by the board of directors of the Company. Notwithstanding the preceding paragraph or any other provisions of this amendment to the contrary, if this amendment is not approved by the shareholders of the Company within such 12-month period, this amendment shall automatically become null and void and have no further force or effect, and the Plan shall continue in effect without this amendment. A-9 27 AMENDMENT NO. 3 TO METATEC CORPORATION 1992 DIRECTORS' STOCK OPTION PLAN The Metatec Corporation 1992 Directors' Stock Option Plan (the "Original Plan"), as previously amended by Amendment No. 1 dated March 21, 1994 ("Amendment No. 1"), and Amendment No. 2 dated January 25, 1995 (together with the Original Plan, collectively, the "Plan"), is hereby amended pursuant to the following provisions: Section 1. DEFINITIONS. All capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. Section 2. ANNUAL GRANTS. The annual Option grants provided for in Section 5 of the Original Plan, as amended by Section 3 of Amendment No. 1, shall continue through the first seven annual meetings of the shareholders of the Company following the effective date of the Original Plan. Section 3. EFFECTIVE DATE; CONSTRUCTION. The effective date of this amendment is January 24, 1996, and this amendment shall be deemed to be a part of the Plan as of such date. In the event of any inconsistencies between the provisions of the Plan and this amendment, the provisions of this amendment shall control. Except as modified by this amendment, the Plan shall continue in full force and effect without change. This amendment shall be submitted to the shareholders of the Company for their approval as soon as practicable, but in any event not later than 12 months after this amendment has been approved by the board of directors of the Company. Notwithstanding the preceding paragraph or any other provisions of this amendment to the contrary, if this amendment is not approved by the shareholders of the Company within such 12-month period, this amendment shall automatically become null and void and have no further force or effect, and the Plan shall continue in effect without this amendment. A-10 28 AMENDMENT NO. 4 TO METATEC CORPORATION 1992 DIRECTORS' STOCK OPTION PLAN The Metatec Corporation 1992 Directors' Stock Option Plan (the "Original Plan"), as previously amended by Amendment No. 1 dated March 21, 1994 ("Amendment No. 1"), and Amendment No. 2 dated January 25, 1995, and Amendment No. 3 dated January 24, 1996 ("Amendment No. 3") (together with the Original Plan, collectively, the "Plan"), is hereby amended pursuant to the following provisions: Section 1. DEFINITIONS. All capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. Section 2. ANNUAL GRANTS. The annual Option grants provided for in Section 5 of the Original Plan, as amended by Section 3 of Amendment No. 1, as further amended by Section 2 of Amendment No. 3, shall continue through the first nine annual meetings of the shareholders of the Company following the effective date of the Original Plan. Section 3. ADDITIONAL ONE-TIME GRANTS. The One-Time Option grants provided for in Section 4 of Amendment No. 1 shall continue for each person who first becomes an Eligible Director at any time during the period beginning on the day of the 1997 annual meeting of the shareholders of the Company and ending on the day after the 2000 annual meeting of the shareholders of the Company. Section 4. SHARES SUBJECT TO PLAN. The maximum aggregate number of Shares with respect to which options (including the Options and the One-Time Options) may be granted under the Plan, as set forth in Section 3 of the Plan, as amended by Section 2 of Amendment No. 1, is increased by 50,000 Shares to a total of 210,000 Shares. Such aggregate number of Shares shall be subject to adjustment as provided in the Plan. Section 5. TERMINATION AND AMENDMENT OF PLAN. Section 10 of the Original Plan is hereby amended in its entirety to read as follows: The Board may from time to time alter, amend, or suspend the Plan or may at any time terminate the Plan, provided that no such action shall materially and adversely affect any outstanding options without the consent of the respective Grantees of such options. Section 6. EFFECTIVE DATE; CONSTRUCTION. The effective date of this amendment is January 29, 1997, and this amendment shall be deemed to be a part of the Plan as of such date. In the event of any inconsistencies between the provisions of the Plan and this amendment, the provisions of this amendment shall control. Except as modified by this amendment, the Plan shall continue in full force and effective without change. A-11 29 This amendment shall be submitted to the shareholders of the Company for approval as soon as practicable, but in any event not later than 12 months after this amendment has been approved by the board of directors of the Company. Notwithstanding the preceding paragraph or any other provisions of this amendment to the contrary, if this amendment is not approved by the shareholders of the Company within such 12-month period, this amendment and all Options granted with respect to the additional Shares subject to the Plan as a result of this amendment shall automatically become null and void and have no further force or effect, and the Plan shall continue in effect without this amendment. A-12 30 PROXY - ----- METATEC CORPORATION ------------- THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Jeffrey M. Wilkins and William H. Largent, and each of them, with full power of substitution, proxies to vote and act with respect to all Common Shares, $0.10 par value (the "Shares"), of Metatec Corporation, a Florida corporation (the "Company"), which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on Thursday, April 24, 1997, at the Company's principal executive offices located at 7001 Metatec Boulevard, Dublin, Ohio 43017, at 1:00 p.m., local time, and at any and all adjournments thereof, with all the powers the undersigned would possess if present in person, on the following proposals and any other matters that my properly come before the Annual Meeting. 1. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1992 DIRECTORS'S STOCK OPTION PLAN FOR [ ] AGAINST [ ] ABSTAIN [ ] 2. WITH [ ] OR WITHOUT [ ] AUTHORITY TO ELECT ALL NOMINEES LISTED BELOW AS CLASS I DIRECTORS (EXCEPT AS MARKED TO THE CONTRARY BELOW): E. David Crockett Peter J. Kight William H. Largent Instruction: To withhold authority to vote for any individual nominee, strike a line through his name. 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. The Shares represented by this Proxy will be voted upon the proposals listed above in accordance with the instructions given by the undersigned, but if no instructions are given, this Proxy will be voted FOR the proposal listed in Item 1, and to elect all directors as set forth in Item 2 above, and in the discretion of the proxies, on any other matters which properly comes before the Annual Meeting. Dated _______________________, 1997 ___________________________________________ (Signature of Shareholder) ___________________________________________ (Signature of Shareholder) (Please sign legibly exactly as the name is printed on the left.) If the registration is as attorney, executor, administrator, trustee or guardian, please sign full title as such. PLEASE DATE, SIGN AND MAIL PROXY PROMPTLY -----END PRIVACY-ENHANCED MESSAGE-----