SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
ROCKSHOX, INC.
------------------------------------------------
(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:
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(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):
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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:
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|_| 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:
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(4) Date Filed:
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ROCKSHOX, Inc.
--------------
1610 Garden of the Gods Road
Colorado Springs, Colorado 80907
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 22, 2000
------------------------------
To the Stockholders of ROCKSHOX, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of ROCKSHOX, INC., a Delaware corporation (the
"Company"), will be held on Tuesday, August 22, 2000, at 10:00 a.m. local
time, at the Company's headquarters located at 1610 Garden of the Gods
Road, Colorado Springs, Colorado 80907, for the following purposes:
1. To elect six directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualify.
2. To approve an amendment to the ROCKSHOX, INC. 1998 Stock Option
Plan to increase the number of shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") available for issuance under the
plan from 300,000 shares outstanding at any time to 1,298,000 shares of
Common Stock.
3. To ratify the selection of Ernst & Young L.L.P. as the Company's
independent public accountants for the fiscal year ending March 31, 2001.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors of the Company has fixed the close of business
on June 26, 2000, as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and at any
adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Chris Birkett
Chris Birkett
Vice President, Chief Financial Officer
and Secretary
Colorado Springs, Colorado
July 27, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE
(WHICH IS POSTAGE-PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR
THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN
PERSON IF YOU ATTEND THE ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR
SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH
TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY
ISSUED IN YOUR NAME.
ROCKSHOX, INC.
1610 GARDEN OF THE GODS ROAD
COLORADO SPRINGS, COLORADO 80907
------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
AUGUST 22, 2000
GENERAL
This Proxy Statement is furnished to stockholders of ROCKSHOX, INC.,
a Delaware corporation (the "Company"), in connection with the solicitation
of proxies in the form enclosed herewith for use at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, August 22, 2000, at
10:00 a.m. at the Company's headquarters located at 1610 Garden of the Gods
Road, Colorado Springs, Colorado 80907, and at any and all adjournments or
postponements thereof (the "Annual Meeting"), for the purposes set forth in
the Notice of Annual Meeting. This Proxy Statement and the enclosed form of
proxy are being first mailed to stockholders on or about July 29, 2000.
This solicitation is made by mail on behalf of the Board of Directors
of the Company (the "Board of Directors" or the "Board"). Costs of the
solicitation will be borne by the Company. Further solicitation of proxies
may be made by telephone, telegraph, fax or personal interview by the
directors, officers and employees of the Company and its affiliates, who
will not receive additional compensation for the solicitation. The Company
will reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to stockholders.
Only holders of record of the Common Stock, par value $.01 per share,
of the Company (the "Common Stock") as of the close of business on the
record date, June 26, 2000 (the "Record Date"), are entitled to receive
notice of, and to vote at, the Annual Meeting. Each share of Common Stock
entitles the holder thereof to one vote. Stockholders are not permitted to
cumulate their shares of Common Stock for the purpose of electing directors
or otherwise. At the close of business on the Record Date, there were
approximately 13,761,147 shares of Common Stock issued and outstanding.
Shares represented by proxies in the form enclosed, if the proxies
are properly executed and returned and not revoked, will be voted as
specified. Where no specification is made on a properly executed and
returned proxy, the shares will be voted "FOR" the election of each nominee
for director, "FOR" the amendment to the ROCKSHOX, INC. 1998 Stock Option
Plan (the "1998 Plan") and "FOR" the ratification of the selection of Ernst
& Young L.L.P. to serve as the Company's independent public accountants for
the fiscal year ending March 31, 2001 (the "2001 Fiscal Year"). To be
voted, proxies must be filed with the Secretary of the Company prior to
voting. Proxies may be revoked at any time before voting by filing a notice of
revocation with the Secretary of the Company, by filing a later dated proxy
with the Secretary of the Company or by voting in person at the Annual
Meeting. Shares represented by proxies that reflect abstentions or "broker
non- votes" (i.e., shares held by a broker or nominee that are represented
at the Annual Meeting, but with respect to which such broker or nominee is
not empowered to vote on a particular proposal) will be counted as shares
that are present and entitled to vote for purposes of determining the
presence of a quorum, but not as shares present and voting on such
proposal, thus having no effect on the outcome of such proposal.
The Board of Directors knows of no matters to come before the Annual
Meeting other than the matters referred to in this Proxy Statement. If,
however, any matters properly come before the Annual Meeting, it is the
intention of each of the persons named in the accompanying proxy to vote
such proxies in accordance with such person's discretionary authority to
act in such person's best judgment.
The principal executive offices of the Company are located at 1610
Garden of the Gods Road, Colorado Springs, Colorado 80907.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated Bylaws (the "Bylaws"),
all of the directors are elected at each annual meeting of stockholders.
The Bylaws currently authorize a Board of Directors consisting of not less
than one nor more than fifteen members, the exact number of which shall be
fixed from time to time by the Board of Directors. Currently, the number of
directors has been so fixed at six directors, and there are no vacancies
with respect thereto. Each director will hold office until the next annual
meeting of stockholders and until such director's successor is duly elected
and qualified, or until such director's earlier resignation or removal.
Stockholders may withhold authority from the proxyholders to vote for
the entire slate as nominated or, by writing the name of an individual
nominee in the space provided on the proxy card, withhold the authority to
vote for any individual nominee. Instructions on the accompanying proxy
card to withhold authority to vote for one or more of the nominees will
result in such nominees receiving fewer votes. If any nominee should become
unavailable for election as a result of any unexpected occurrence, such
shares will be voted for the election of such substitute nominee as
management may propose. Each person nominated for election has consented to
being named in this Proxy Statement and has agreed to serve on the Board of
Directors if elected, and management has no reason to believe that any
nominee will be unavailable to serve.
The following six persons have been selected by the Board of Directors
as nominees for election to the Board of Directors: Messrs. Stephen W.
Simons, Bryan L. Kelln, John W. Jordan II, Adam E. Max, Michael R. Gaulke
and Edward T. Post. All of the nominees are incumbent directors. See "Board
of Directors and Executive Officers" for the experience and background of
each of the nominees.
VOTE REQUIRED
The affirmative vote of a plurality of all of the votes cast at the
Annual Meeting is required for the election of a director. Under applicable
Delaware law, in tabulating the vote, broker non- votes and abstentions
will be disregarded and will have no effect on the outcome of the vote.
Unless instructed to the contrary in the proxy, the shares represented by
the proxies will be voted "FOR" the election of the six nominees named
above as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE ABOVE-NAMED NOMINEES.
PROPOSAL NO. 2-- AMENDMENT TO THE ROCKSHOX, INC. 1998 STOCK OPTION PLAN
The Board, subject to stockholder approval, has adopted an amendment
to the 1998 Plan to increase the number of shares of Common Stock available
for issuance under the 1998 Plan from 300,000 shares of Common Stock
outstanding at any time to 1,298,000 shares of Common Stock outstanding at
any time. The purposes of the 1998 Plan are to attract and retain the best
available personnel for positions within the Company, to provide additional
incentives to the Company's employees, directors and consultants who
participate in the 1998 Plan and to promote the success of the Company's
business. The Board of Directors believes that it would be in the best
interest of the Company to increase the number of shares available for
issuance under the 1998 Plan in order to maintain such plan as an incentive
device for attracting and retaining the high caliber officers and employees
necessary for the Company's future growth and success.
The 1998 Plan is designed to permit compliance with the requirements
for "qualified performance based compensation" under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and the conditions
for exemption from the short-swing profit recovery rules under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The summary that follows is subject to the actual terms of the 1998 Plan, a
copy of which is attached as Annex A hereto. Capitalized terms used but not
otherwise defined in the summary that follows shall have the respective
meanings ascribed to them in the 1998 Plan.
SHARES SUBJECT TO THE 1998 PLAN
There are reserved for issuance under the 1998 Plan 300,000
authorized but unissued shares of Common Stock. Up to 100% of such shares
may be subject to Stock Options granted to a single individual in any
calendar year.
The 1998 Plan provides for equitable adjustments with respect to
Stock Options if the outstanding shares are increased, decreased, changed
into or exchanged for a different number or kind of shares or securities of
the Company through reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar
transaction.
ELIGIBILITY
Nonqualified stock options ("NSOs") may be granted to employees,
consultants and directors of the Company. Incentive stock options within
the meaning of Section 422 of the Code ("ISOs") may only be granted to
employees.
ADMINISTRATION
The 1998 Plan is currently administered by the Board of Directors of
the Company, but may subsequently be administered by a committee of the
Board of Directors in accordance with Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code. References herein to the "Administrator" are to
the Board or the Committee, to the extent each may administer the 1998
Plan. Board members do not receive any remuneration in their capacity as
Administrator of the 1998 Plan, which also provides that no Board member
will be liable for any action or determination taken or made in good faith
with respect to the 1998 Plan or any Stock Option granted thereunder.
Subject to the terms of the 1998 Plan, the Administrator has the
authority to grant Stock Options to eligible recipients and to determine
the terms and conditions of the award agreements evidencing the grant of
such awards, including the vesting schedule and exercise price of Stock
Options, and the effect, if any, of a change in control of the Company.
AWARDS UNDER THE 1998 PLAN
ISOs and NSOs granted under the 1998 Plan will have a term of no more
than ten years from the date of grant. The purchase price of ISOs will not
be less than 100% of the fair market value of the Common Stock on the date
of grant. The purchase price of NSOs may be less than the fair market value
of the Common Stock on the date of grant.
The aggregate fair market value (determined as of the date of grant)
of the shares subject to ISOs granted to any employee under the l998 Stock
Plan or any other option plan of the Company or its subsidiaries that may
become exercisable for the first time in any calendar year is limited to
$100,000. This restriction does not apply to NSOs.
The exercise price of an option may be paid in cash or, at the
discretion of the Administrator, by the surrender of shares of Common Stock
having a fair market value equal to the purchase price, a combination of
cash and surrender of shares of Common Stock, or such other consideration
and method of payment as is permitted under applicable law.
Termination of Employment -- Death -- Disability. The Administrator
will provide in the award agreements whether and to what extent awards will
be exercisable upon termination of employment or service for any reason,
including upon death, disability or retirement of any participant in the
1998 Plan.
ADDITIONAL PROVISIONS
Payment of Taxes. Participants are required, no later than the date
as of which the value of an award first becomes includible in the gross
income of the participant for Federal income tax purposes to pay to the
Company or make arrangements satisfactory to the Administrator regarding
payment of, any Federal, state, or local taxes of any kind required by law
to be withheld with respect to the award. The obligations of the Company
under the 1998 Plan are conditional on the making of such payments or
arrangements, and the Company has the right, to the extent permitted by
law, to deduct any such taxes from any payment of any kind otherwise due to
the participant.
Amendment and Termination of the 1998 Plan. The Board may at any time
amend, alter, suspend or discontinue the 1998 Plan, except to the extent
that stockholder approval is required by Rule 16b-3 or any other applicable
law or regulation. Amendment or termination of the 1998 Plan may not,
without the consent of any participant, adversely affect Stock Options
previously granted under the 1998 Plan.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion is for general information only and is based
on the Federal income tax law now in effect, which is subject to change,
possibly retroactively. This summary does not discuss all aspects of
Federal income taxation which may be important to particular holders of the
Common Stock in light of their individual investment circumstances or to
certain types of holders subject to special tax rules, nor does it address
specific state, local or foreign tax consequences. This summary assumes
that the Common Stock acquired upon exercise of an option will be held as a
"capital asset" (generally property held for investment) under the Code.
Nonqualified Stock Options. A participant will generally not be
subject to Federal income tax upon the grant of an NSO. Rather, at the time
of exercise of such NSO, the participant will recognize ordinary income for
Federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the exercise price. The Company
will generally be entitled to a tax deduction at such time and in the same
amount as the participant recognizes ordinary income.
A participant will recognize a capital gain or loss upon a sale or
exchange of stock acquired upon exercise of an NSO in an amount equal to
the difference between the fair market value of such stock on the date it
was acquired and the amount realized in the sale or exchange. Such gain or
loss will be long-term if the stock has been held for more than one year.
Incentive Stock Options. A participant will not be subject to tax
upon the grant of an ISO or upon its timely exercise. Exercise of an ISO
will be timely if made during its term and if the participant remains an
employee of the Company or a subsidiary at all times during the period
beginning on the date of grant of the ISO and ending on the date three
months before the date of exercise (or one year before the date of exercise
in the case of a disabled employee). Exercise of an ISO will also be timely
if made by the legal representative of a participant who dies (i) while
in the employ of the Company or a subsidiary or (ii) within three months
after termination of employment (or one year in the case of a disabled
employee). The tax consequences of an untimely exercise of an ISO will be
determined in accordance with the rules applicable to NSOs. (See "Certain
Federal Income Tax Effects--Nonqualified Stock Options.")
If stock acquired pursuant to a timely exercised ISO is later
disposed of, the participant will, except as noted below with respect to a
"disqualifying disposition," recognize long-term capital gain or loss equal
to the difference between the amount realized upon such sale and the option
price. Under these circumstances, the Company will not be entitled to any
deduction for Federal income tax purposes in connection with either the
exercise of the ISO or the sale of such stock by the participant.
If, however, a participant disposes of stock acquired pursuant to the
exercise of an ISO prior to the expiration of two years from the date of
grant of the ISO or within one year from the date such stock is transferred
to him upon exercise (a "disqualifying disposition"), generally (i) the
participant will realize ordinary income at the time of the disposition in
an amount equal to the excess, if any, of the fair market value of the
stock at the time of exercise (or, if less, the amount realized on such
disqualifying disposition) over the option exercise price, and (ii) any
additional gain realized by the participant will be subject to tax as
short-term or long-term capital gain. In such case, the Company may claim a
deduction for Federal income tax purposes at the time of such disqualifying
disposition for the amount taxable to the participant as ordinary income.
The amount by which the fair market value of the stock on the
exercise date of an ISO exceeds the option price will be an item of
adjustment for purposes of the "alternative minimum tax" imposed by Section
55 of the Code.
Exercise with Shares. According to a published ruling of the Internal
Revenue Service, a participant who pays the option price upon exercise of
an NSO, in whole or in part, by delivering shares of stock already owned by
the participant will recognize no gain or loss for Federal income tax
purposes on the shares surrendered, but otherwise will be subject to tax
according to the rules described above for NSOs. (See "Certain Federal
Income Tax Effects--Nonqualified Stock Options.") With respect to shares
acquired upon exercise which are equal in number to the shares surrendered,
(i) such shares will be treated as exchanged for the shares surrendered in
a non-taxable transaction, (ii) the basis of such shares will be equal to
the basis of the shares surrendered, and (iii) the holding period of the
shares acquired will include the holding period of the shares surrendered.
With respect to the additional shares received upon exercise, (a) a
participant will recognize ordinary income in an amount equal to the fair
market value of such shares on the date of receipt, (b) the basis of such
additional shares will be equal to the amount of income recognized, and (c)
the holding period for such additional shares will commence on the date of
receipt.
The Treasury Department has issued proposed regulations that, if
adopted in their current form, would appear to provide for the following
rules with respect to the exercise of an ISO by surrender of previously
owned shares of stock. If the shares surrendered in payment of the
exercise price of an ISO are "statutory option stock" (including stock
acquired pursuant to the exercise of an ISO) and if the surrender
constitutes a "disqualifying disposition" (as would be the case, for
example, if, in satisfaction of the option exercise price, the Company
withholds shares which would otherwise be delivered to the participant),
any gain realized on such transfer will be taxable to the optionee, as
discussed above. Otherwise, when shares of stock are surrendered upon
exercise of an ISO, in general, (i) no gain or loss will be recognized as a
result of the exchange, (ii) the number of shares received that is equal in
number to the shares surrendered will have a basis equal to the basis of
the shares surrendered and (except for purposes of determining whether a
disposition will be a disqualifying disposition) will have a holding period
that includes the holding period of the shares exchanged, and (iii) any
additional shares received will have a zero basis and will have a holding
period that begins on the date of the exchange. If any of the shares
received are disposed of within two years of the date of grant of the ISO
or within one year after exercise, the shares with the lowest basis will be
deemed to be disposed of first, and such disposition will be a
disqualifying disposition giving rise to ordinary income as discussed
above.
REASON FOR AUTHORIZATION
The 1998 Plan is being submitted for stockholder approval pursuant to
Sections 162(m) and 422 of the Code and the rules of the Nasdaq Stock
Market. It is intended that awards granted under the 1998 Plan may
constitute "qualified performance based compensation" for purposes of
Section 162(m) of the Code.
NEW PLAN BENEFITS
If the amendment to the 1998 Plan is approved by the stockholders,
the Company intends to issue to certain of its employees shortly thereafter
options under the 1998 Plan representing up to approximately 600,000 shares
of Common Stock. It is not possible to determine at this time additional
awards that will be granted in connection with the remaining shares of
Common Stock reserved for issuance under the 1998 Plan. During the fiscal
year ended March 31, 2000 (the "2000 Fiscal Year"), the Company did not
grant any options under the 1998 Plan to any of its employees to purchase
shares of Common Stock.
VOTE REQUIRED
The affirmative vote of a majority of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting is required
to approve the amendment to the 1998 Plan. If stockholders do not approve
the amendment to the 1998 Plan, the Board will consider whether to adopt
some alternative incentive compensation arrangement based on its assessment
of the Company's needs.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL NO. 2.
PROPOSAL NO. 3-- RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected, and the Board of Directors has
approved, Ernst & Young L.L.P. as the Company's independent public
accountants for the 2001 Fiscal Year, and the Board of Directors has
further directed that management submit the selection of independent public
accountants for ratification by the stockholders at the Annual Meeting.
Ernst & Young L.L.P. has audited the Company's consolidated financial
statements since 2000. Representatives of Ernst & Young L.L.P. are expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire, and will be available to respond to
appropriate questions.
VOTE REQUIRED
Stockholder ratification of the selection of Ernst & Young L.L.P. as
the Company's independent public accountants is not required by the Bylaws
or otherwise. However, the Board of Directors is submitting the selection
of Ernst & Young L.L.P. to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection,
the Board of Directors will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Board, in its discretion, may direct
the appointment of a different auditing firm at any time during the 2001
Fiscal Year if the Board of Directors determines that such a change would
be in the best interests of the Company and its stockholders. Unless
instructed to the contrary in the proxy, the shares represented by the
proxies will be voted "FOR" the proposal to ratify the selection of Ernst &
Young L.L.P. to serve as independent public accountants for the Company for
the 2001 Fiscal Year.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL NO. 3.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
directors and executive officers of the Company as of June 26, 2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Stephen W. Simons 45 Chairman of the Board, Chief Technical Officer and Director
Bryan L. Kelln 34 Chief Executive Officer, President and Director
Chris Birkett 32 Vice President, Chief Financial Officer and Secretary
Gwynne Williams 53 Vice President, Operations
Michael R. Gaulke 54 Director
John W. Jordan II 51 Director
Adam E. Max 41 Director
Edward T. Post 53 Director
</TABLE>
Stephen W. Simons, age 45, is a co-founder of the Company and has
served as a director of the Company since its inception in 1989. Mr. Simons
also served as Interim Chief Executive Officer of the Company from July
1999 until January 2000, as President from 1992 until November 1997, and
has been Chairman of the Board of Directors since l996 and Chief Technical
Officer since November 1997. Prior to founding the Company, Mr. Simons
founded SIMONS, which developed suspension modifications and complete
motorcycle front forks.
Bryan L. Kelln, age 34, has served as Chief Executive Officer and
President of the Company since January 2000 and as a director of the
Company since March 2000. Prior to joining the Company, Mr. Kelln served as
Senior Vice President and General Manager of BICCGeneral, a global
manufacturing entity, from May 1999 until January 2000. From December 1997
until May 1999, Mr. Kelln served as Senior Vice President and General
Manager of General Cable Corporation, a North American industrial
manufacturing firm, and from December 1995 until December 1997 as Vice
President-Supply Chain Management of General Cable Corporation. Mr. Kelln
served in various positions, most recently as a Principal, at Mercer
Managing Consulting, a global strategic consulting firm, from 1989 until
December 1995.
Chris Birkett, age 32, has served as Vice President, Chief Financial
Officer and Secretary of the Company since November 1999. Mr. Birkett also
served as Director of Finance of the Company from June 1999 until November
1999; as Director, Corporate Financial Planning & Analysis of the Company
from August 1998 until June 1999; and as Manager of Treasury & Financial
Analysis from December 1996 until August 1998. Prior to joining the
Company, Mr. Birkett served as Manager of Treasury & International Finance
of Continuum Electro Optics, a laser manufacturing company, from April 1995
until December 1996.
Gwynne Williams, age 53, has served as Vice President, Operations of
the Company since April 2000. Mr. Williams also served as Vice President,
Manufacturing of the Company from January 1999 until April 2000. Between
July 1991 and January 1999, Mr. Williams was employed at Arvin Ride Control
Products, and served as its Vice President, Engineering & Sales between
August 1994 to January 1999.
Michael R. Gaulke, age 54, has served as a director of the Company since
January 1997. Mr. Gaulke joined Exponent, Inc. in September 1992, as
Executive Vice President and Chief Financial Officer, and became its
President in March l993. In June 1996, Mr. Gaulke was named Chief Executive
Officer of Exponent, Inc., and has been a member of the Board of Directors
of Exponent, Inc. since January 1994. From November l988 to September 1992,
Mr. Gaulke served as Executive Vice President and Chief Financial Officer
of Raynet Corporation, a subsidiary of Raychem Corporation.
John W. Jordan II, age 51, has served as a director of the Company since
March l995, and served as Chairman of the Board of Directors of the Company
until October l996. Mr. Jordan has served as a managing director of The
Jordan Company LLC, a private merchant banking firm that he founded, since
February 1982; as a partner of Jordan Zalaznick Capital Company since May
1985; as Chairman of Jordan/Zalaznick Advisors, Inc. since December 1986;
as Chairman and Chief Executive Officer of Jordan Industries, Inc. since
June 1988; as Chairman of TJC Management Corp. since February 1989; and as
proprietor of Jordan Investment Company of Illinois since January 1993. Mr.
Jordan also serves as a director of AmeriKing Corporation, Apparel
Ventures, Inc., Archibald Candy Corporation, Carmike Cinemas, Inc., Gear
for Sports, Inc., GFSI Holdings, Inc., Jackson Products, Inc., Motors &
Gears, Inc. and Welcome Home, Inc.
Adam E. Max, age 41, has served as a director of the Company since March
1995, and served as a Vice President from that time until October 1996. Mr.
Max is a managing director of The Jordan Company LLC, which he joined in
April 1986. Mr. Max also serves as a director of Archibald Candy
Corporation and other private companies.
Edward T. Post, age 53, has served as a director of the Company since
January 1998. Mr. Post has served as President and Chief Operating Officer
of Smith Sports Optics since January 1994. Prior to such time, Mr. Post
served as President of Scott USA beginning in 1989.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and acted four times by
unanimous written consent during the 2000 Fiscal Year. During the 2000
Fiscal Year, each member of the Board of Directors, except for John W.
Jordan II, George Napier and Paul H. Turner, attended at least 75% of the
aggregate number of meetings of the Board of Directors and the committees
of which he was a member. The Company has standing Audit and Compensation
Committees. The Company does not have a standing Nominating Committee.
Effective March 28, 2000, George Napier and Paul H. Turner resigned from
the Board of Directors and Bryan L. Kelln was appointed to the Board of
Directors.
Audit Committee. The Audit Committee, which was established in
January 1997 and consists of Michael R. Gaulke, Adam E. Max and Edward T.
Post (each of whom is a non-employee director), held three meetings during
the 2000 Fiscal Year. The Audit Committee has the power and authority to
(i) select the firm of independent accountants to audit the financial
statements of the Company and its consolidated subsidiaries, subject to
approval by the Board of Directors, (ii) discuss with such independent
public accountants and with the management of the Company, the Company's
financial accounting and reporting principles, policies and practices,
(iii) discuss with such independent accountants, and with management of the
Company and such management's staff, the adequacy of the Company's
accounting, financial and operating controls, and (iv) report to the Board
of Directors with respect to any and all of the foregoing, at such times
and in such manner as the Board of Directors shall determine.
Compensation Committee. The Compensation Committee, which was established
in January l997 and which consists of Stephen W. Simons, Adam E. Max,
Michael R. Gaulke and Edward T. Post (three of whom are non-employee
directors), held no meetings during the 2000 Fiscal Year. The Compensation
Committee has the power and authority to review and approve salary and
other compensation arrangements, including annual incentive awards (but
excluding the granting of stock options pursuant to the ROCKSHOX, INC. l996
Stock Plan (the "1996 Plan"), the 1998 Plan and any future plans), for
officers and employees of the Company.
COMPENSATION OF THE BOARD OF DIRECTORS
The Company currently pays each of its non-employee directors a
quarterly fee of $5,000. Non-employee directors also are eligible to
receive options to purchase Common Stock under the 1996 Plan and the 1998
Plan as compensation for their services as directors. Each non-employee
director is reimbursed for reasonable expenses incurred to attend director
and committee meetings. Adam E. Max and John W. Jordan II, both
non-employee directors, are affiliated with a company that was a party to a
consulting arrangement with the Company. See "Certain Relationships and
Related Transactions--Consulting Agreement."
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of June 26, 2000 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock (the "Principal Stockholders"), (ii)
each of the Company's directors, (iii) each of the Named Executive Officers
(as such term is defined in the Summary Compensation Table under "Executive
Compensation") and (iv) all directors and executive officers as a group.
This table is based on information provided to the Company or filed with
the Securities and Exchange Commission by the Company's directors,
executive officers and Principal Stockholders. Except as otherwise
indicated, the Company believes that the beneficial owners of the Common
Stock listed below, based on information furnished by such owners, have
sole voting and dispositive power with respect of such shares, subject to
community property laws where applicable. Unless otherwise indicated in the
footnotes to the table, the business address of each beneficial owner is
c/o ROCKSHOX, INC.,1610 Garden of the Gods Road, Colorado Springs, Colorado
80907.
AMOUNT AND NATURE OF PERCENTAGE OF
SHARES OF COMMON OUTSTANDING COMMON
NAME AND ADDRESS OF STOCK BENEFICIALLY STOCK BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED
Stephen W. Simons (1)................ 2,205,000 16.0%
Bryan L. Kelln....................... 63,000 *
Chris Birkett (2).................... 6,000 *
Gwynne Williams (2).................. 10,000 *
John W. Jordan II (3)................ 327,308 2.4%
Adam E. Max (4)...................... 210,004 1.5%
Michael R. Gaulke (2)................ 5,000 *
Stephen W. Simons (1)................ 2,205,000 16.0%
Edward T. Post (2)................... 5,000 *
JZ Equity Partners, PLC (5).......... 2,100,042 15.3%
Royce & Associates, Inc.(6).......... 1,087,500 7.9%
Charles M. Royce(6).................. 1,087,500 7.9%
Paul H. Turner (7)................... 2,202,500 16.0%
All directors and executive officers
as a group (8 persons) (8)........... 2,831,312 20.5%
-------------------
* Less than 1%
(1) Includes (i) 2,053,312 shares held by The Simons Revocable Trust, of
which Mr. Simons and Debra W. Simons are trustees, (ii) 21,688 shares
held by The Simons Children Irrevocable Trust, over which Mr. Simons
has no voting or dispositive power and (iii) 130,000 shares held by
the Wanda Bobowski Fund, the voting or dispositive power of which is
shared with Debra W. Simons. Mr. Simons disclaims beneficial
ownership with respect to all shares held by The Simons Children
Irrevocable Trust and by the Wanda Bobowski Fund.
(2) Represents shares with respect to which such person has the right to
acquire beneficial ownership by virtue of currently exercisable stock
options and options that become exercisable within 60 days of June
26, 2000.
(3) Includes 327,308 shares held by the John W. Jordan Il Revocable Trust,
of which Mr. Jordan is the grantor, trustee and sole beneficiary.
Excludes 2,100,042 shares held by JZ Equity Partners, PLC, which
is advised by Jordan/Zalaznick Advisers, Inc., an entity
controlled by Mr. Jordan and certain other persons (see footnote
5 below). Mr. Jordan is a managing director of The Jordan Company
LLC, an entity with which Mr. Max is affiliated (see footnote 4
below). The business address for Mr. Jordan is c/o Jordan
Industries, Inc., 875 N. Michigan Avenue, Suite 4020, Chicago,
Illinois 60611.
(4) Mr. Max is a managing director of The Jordan Company LLC, an entity
with which Mr. Jordan is also affiliated. Excludes 2,100,042 shares
held by JZ Equity Partners, PLC. The business address for Mr. Max is
c/o The Jordan Company, 767 Fifth Avenue, 48th Floor, New York, New
York 10153.
(5) JZ Equity Partners, PLC is advised by Jordan/Zalaznick Advisers, Inc.,
an entity controlled by Mr. Jordan and certain other persons. See
"Certain Relationships and Related Transactions." The business
address for JZ Equity Partners, PLC is c/o Jordan/Zalaznick
Advisors, Inc., 767 Fifth Avenue, 48th Floor, New York, New York
10153.
(6) Pursuant to the Schedule 13G (Amendment No. 1) filed as of February
2, 2000 with the Securities and Exchange Commission, Royce &
Associates, Inc., a New York corporation ("Royce"), has sole voting
and dispositive power with respect to 1,087,500 shares, and Charles
M. Royce, who may be deemed to be a controlling person of Royce, may
be deemed to beneficially own the 1,087,500 shares beneficially owned
by Royce. Charles M. Royce does not own any shares outside of Royce,
and disclaims beneficial ownership of shares held by Royce. The
business address for each of them is 1414 Avenue of the Americas, New
York, New York 10019.
(7) Includes 549,250 shares held by Turner Family LP, a Colorado limited
partnership (the "Turner Partnership"). Mr. Turner is the sole
general partner of the Turner Partnership, and a trust, the trustees
of which are persons other than Mr. Turner and the beneficiaries of
which are certain family members of Mr. Turner, is the sole limited
partner of the Turner Partnership holding a 40% interest in the
Turner Partnership. Mr. Turner disclaims beneficial ownership of the
219,700 shares representing the trust's interest in the Turner
Partnership. Also includes 134,500 shares held by Bikes Aren't Bad
Foundation, of which Mr. Turner is the sole director. Mr. Turner
disclaims beneficial ownership of all of such shares held by Bikes
Aren't Bad Foundation.
(8) Includes 26,000 shares with respect to which all directors and
executive officers have the right to acquire beneficial ownership by
virtue of currently exercisable stock options and options that become
exercisable within 60 days of June 26, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following summarizes various transactions between the Company and
certain of its directors or executive officers or entities associated with
such persons. The Company believes that each such transaction was, and that
any future transaction will be, approved in accordance with the Delaware
General Corporation Law.
Registration Rights Agreement. Effective as of the closing of the
initial public offering of the Common Stock, which occurred on October 2,
l996, the Company entered into a registration rights agreement (the
"'Registration Rights Agreement") with, among others, certain trusts the
beneficiaries and/or trustees of which include Stephen W. Simons, Paul H.
Turner and John W. Jordan II, as well as Adam E. Max (collectively, the
"Insider Holders"). Pursuant to the Registration Rights Agreement and
subject to certain conditions, the Insider Holders have demand registration
rights to require the Company to register the number of shares requested to
be so registered until such time as such shares of Common Stock (i) are
effectively registered under the Securities Act of 1933, as amended (the
"Securities Act"), and disposed of in accordance with a registration
statement covering such shares, (ii) are saleable by the holders thereof
pursuant to Rule 144(k) under the Securities Act or (iii) are distributed
for resale pursuant to Rule 144 under the Securities Act ("Registrable
Securities"). The Registration Rights Agreement provides that, subject to
certain conditions, the Insider Holders have incidental registration rights
if the Company proposes to file a registration statement under the
Securities Act with respect to an offering of Common Stock (other than a
registration statement or Form S-4 or Form S-8 or any successor form
thereto or filed solely in connection with an exchange offer or an offering
made solely to employees of the Company) to require the Company to include
in each such registration all Registrable Securities as each Insider Holder
may request in accordance with the terms of the Registration Rights
Agreement. In the event of any registration thereunder, the Registration
Rights Agreement contains certain customary provisions relating to holdback
and indemnification arrangements. The Registration Rights Agreement also
provides that all reasonable fees and expenses incident to the performance
thereof or compliance therewith by the Company will be borne by the
Company.
Supplier Consulting Agreement. Stephen W. Simons provides consulting
services to a supplier to the Company (the "Supplier") pursuant to a
consulting agreement (the "Supplier Consulting Agreement") in consideration
of which the Supplier pays Mr. Simons a fee equal to 3% of the Supplier's
net sales (as defined therein). The Supplier Consulting Agreement
terminates on December 31, 2002; provided, that the Supplier Consulting
Agreement (i) will be automatically renewed for two years, if the total of
all consulting fees paid to Mr. Simons pursuant to the Supplier Consulting
Agreement is less than $1,000,000 on December 31, 2002, (ii) will
automatically terminate when the total of all consulting fees paid to Mr.
Simons pursuant to the Supplier Consulting Agreement equals $1,700,000 and
(iii) may be terminated by Mr. Simons at any time upon 30 days' written
notice. During the 2000 Fiscal Year, Mr. Simons received $200,000 in
payments from the Supplier. The Company purchased approximately $1,622,000
of components from the Supplier in the 2000 Fiscal Year.
Consulting Agreement. On March 24, 1995, the Company entered into a
management consulting agreement (the "Consulting Agreement") with TJC
Management Corporation ("TJCMC"), an affiliate of The Jordan Company (John
W. Jordan II is a 50% stockholder of TJCMC and Mr. Max is an affiliate),
pursuant to which TJCMC was retained to render consulting services
to the Company. Pursuant to the Consulting Agreement, TJCMC is entitled to
(i) a quarterly fee of $62,500, (ii) an investment banking and sponsorship
fee of 2% of the aggregate consideration paid (including non-competition
and similar payments, but net of transaction expenses) in connection with
an initial public offering of Common Stock, the sale of all or
substantially all of the Common Stock or substantially all of the assets of
the Company to a company other than an affiliate, or the purchase by the
Company of all the equity or substantially all of the assets of a company
(other than an affiliate), and (iii) a financial consulting fee of l% of
the amount obtained or made available pursuant to any financing. The fees
payable under clauses (ii) and (iii) of the preceding sentence are payable
with respect to a transaction only if TJCMC is retained to render services
in connection therewith. The Consulting Agreement also provides that if
TJCMC renders services outside the ordinary course of business, TJCMC is
entitled to an additional amount equal to the value of such services. Also
pursuant to the Consulting Agreement, TJCMC and certain of its affiliates
are indemnified from certain liabilities related to services performed
pursuant to the Consulting Agreement and TJCMC is entitled to reimbursement
of reasonable out-of-pocket expenses. The term of the Consulting Agreement
continued until April l, 2000. During the 2000 Fiscal Year, the total
amount paid pursuant to the Consulting Agreement was $201,875 plus
approximately $23,684 for reimbursement of out-of-pocket expenses.
Noncompetition Agreements. Each of Stephen W. Simons and Paul H.
Turner has entered into a noncompetition agreement, dated March 24, 1995,
pursuant to which each such person agreed, among other things, that until
three years from and after the date such person ceases to be employed by
the Company, he will not directly or indirectly (i) divert or attempt to
divert from the Company any business with any customer or account with
which he had any contact or association, which was under his supervision,
or the identity of which was learned by him as a result of his employment
with the Company, (ii) solicit any person transacting business with the
Company to terminate its relationship or association with the Company, or
to represent, distribute or sell services or products in competition with
the services or products of the Company, or (iii) solicit any employee of
the Company to leave its employ. Mr. Turner resigned as an officer of the
Company effective July 31, 1998, and, therefore, the provisions of the
preceding sentence will terminate on July 31, 2001 with respect to Mr.
Turner.
Technical Consulting Arrangement. During the 2000 Fiscal Year,
the Company retained Exponent, Inc. to provide technical consulting
services to the Company and the Company's legal counsel with respect to
three projects. Michael R. Gaulke, a director of the Company, is Executive
Vice President, Chief Financial Officer and a member of the board of
directors of Exponent, Inc. Exponent, Inc. received an aggregate of
approximately $105,911 as payment for its consulting services in connection
with the three projects. All of such fees were paid for by the Company's
insurance company.
Indebtedness of Management. Pursuant to Bryan L. Kelln's employment
agreement, on January 24, 2000, the Company granted Mr. Kelln a $200,000
interest-free loan for a three-year period. Forgiveness of the loan from
fiscal year to fiscal year will be based on performance goals to be
determined by the Company. As of June 26, 2000, there was a balance of
$200,000 outstanding under the loan.
EXECUTIVE COMPENSATION
The following table sets forth, in summary form, the compensation
paid by the Company during the last three completed fiscal years to its
chief executive officer and the three other most highly compensated
executive officers for services rendered to the Company (the "Named
Executive Officers"). The information below pertains to the Company's
fiscal years ended March 31.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES ALL
UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) COMPENSATION($)
--------------------------- ---- --------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen W. Simons (1) 2000 $250,000 $ 0 0 $ 0
Chairman of the Board of 1999 250,000 0 0 0
Directors, Chief Technical Officer 1998 250,000 0 0 52
and Former Interim Chief
Executive Officer
Bryan L. Kelln(1) 2000 $52,885 $ 0 500,000 $239,020(2)
Chief Executive Officer and 1999 0 0 0 0
President 1998 0 0 0 0
George Napier(3) 2000 $320,503 $ 0 0 $ 261,700(2)
Former Chief Executive Officer 1999 310,000 50,000 0 145,106
Former President and Former 1998 123,846 0 410,000 4,400
Vice Chairman
Chris Birkett 2000 $124,423 $ 75,000 0 $ 910(2)
Vice President, 1999 95,969 10,000 12,000 988
Chief Financial Officer and 1998 71,822 5,000 0 768
Secretary
Robert Bonacorsi(4) 2000 $165,577 $ 0 0 $ 1,656(2)
Vice President, Quality & 1999 136,346 0 30,000 12,509
Engineering 1998 27,692 0 20,000 65,000
Gwynne Williams(5) 2000 $175,000 $ 0 0 $ 51,048(2)
Vice President, Operations 1999 33,654 51,629 40,000 0
1998 0 0 0 0
</TABLE>
(l) Effective January 18, 2000, Mr. Simons resigned as Interim Chief
Executive Officer of the Company, and Mr. Kelln was appointed Chief
Executive Officer and President of the Company.
(2) All Other Compensation includes the following relocation expenses paid
during the 2000 Fiscal Year: Mr. Kelln, $239,020; Mr. Napier,
$261,700; and Mr. Williams, $51,048. In addition, All Other
Compensation includes the following contributions made by the Company
during the 2000 Fiscal Year to employee accounts under the Company's
401(k) plan: Mr. Birkett, $910; and Mr. Bonacorsi, $1,656.
(3) Effective July 15, 1999, Mr. Napier resigned as Chief Executive
Officer and President of the Company and served as Vice Chairman of
the Board between July 15, 1999 and March 28, 2000. Mr. Simons was
elected Interim Chief Executive Officer effective upon Mr. Napier's
resignation as Chief Executive Officer and President.
(4) Effective May 12, 2000, Mr. Bonacorsi resigned as Vice President,
Quality & Engineering of the Company.
(5) Mr. Williams' employment with the Company commenced on January 18,
1999.
OPTIONS GRANTS AND EXERCISES
The following table sets forth certain information regarding stock
options granted to and exercised by the Named Executive Officers during the
2000 Fiscal Year and the stock options held by them as of March 31, 2000.
<TABLE>
<CAPTION>
OPTION GRANTS IN THE 2000 FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTION PRICE APPRECIATION FOR OPTION TERM (1)
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR(%) ($/SH) (2) DATE 5%($) 10%($)
---- ----------- -------------- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Stephen W. _ _ _ _ _ _
Simons
Bryan L. Kelln(3) 500,000 80% $1.780 1/18/10 $245,891 $543,354
George Napier - - - - - -
Chris Birkett - - - - - -
Robert Bonacorsi - - - - - -
Gwynne Williams - - - - - -
---------------------
</TABLE>
(1) The potential gains shown are net of the option exercise price and do
not include the effect of any taxes associated with exercise. The
amounts shown are for the assumed rates of appreciation only as
required by the Securities and Exchange Commission, do not constitute
projections of future stock price performance, and may not necessarily
be realized. Actual gains, if any, on stock option exercises depend on
the future performance of the Common Stock, continued employment of
the optionee through the term of the options, and other factors.
(2) The exercise price is equal to the fair market value of the Common
Stock on the date of grant.
(3) Mr. Kelln's stock option was granted on January 18, 2000. Such option
was granted under the 1996 Plan. The option vests and becomes
exercisable in equal 25% installments on each of the first four
anniversaries of the date of grant. To the extent permitted under
applicable law, the option granted is an "incentive stock option" for
purposes of Section 422 of the Code.
The following table sets forth certain information regarding the value of
unexercised options to acquire Common Stock held by the Named Executive
Officers as of the end of the 2000 Fiscal Year. None of the Named Executive
Officers exercised any options to acquire Common Stock in the 2000 Fiscal
Year.
AGGREGATED OPTION EXERCISES IN THE 2000 FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
MARCH 31, 2000(#) MARCH 31, 2000(1)($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Stephen W. Simons 0 0 $0 $0
Bryan L. Kelln 0 500,000 0 0
George Napier (2) 6,000 4,000 0 0
Chris Birkett 3,000 9,000 0 0
Robert Bonacorsi (3) 15,500 34,500 0 0
Gwynne Williams 10,000 30,000 0 0
(1) The value of unexercised in-the-money options is calculated by
multiplying (A) the number of securities underlying such options by
(B) the difference between (i) the closing price of the Common Stock
on the Nasdaq at March 31, 2000 and (ii) the option exercise price.
(2) Effective July 15, 1999, Mr. Napier resigned as Chief Executive
Officer and President of the Company. Effective March 28, 2000, Mr.
Napier resigned as Vice Chairman of the Board. Pursuant to his stock
option agreement and as a result of his resignation, all of Mr.
Napier's stock options were cancelled effective July 15, 2000.
(3) Effective May 12, 2000, Mr. Bonacorsi resigned as Vice President,
Operations of the Company. Pursuant to his stock option agreement and
as a result of his resignation, all of Mr. Bonacorsi's stock options
were cancelled effective June 11, 2000.
EMPLOYMENT AGREEMENTS
In October 1996, Stephen W. Simons entered into an amended and restated
employment agreement with the Company, with an initial one-year term and
automatic renewal for additional one-year terms, not to exceed four
one-year renewal terms in total, at the election of Mr. Simons. Pursuant to
the agreements, Mr. Simons receives an annual salary of $250,000 and
certain perquisites. In addition, the agreement provides that for each
fiscal year during the term of the agreement in which Mr. Simons has been
an employee of the Company for the entire fiscal year, the Company will pay
to Mr. Simons a cash bonus in an amount not to exceed 100% of his annual
salary based upon the Board of Directors' evaluation of the performance of
his individual duties and upon the performance of the Company during such
fiscal year.
In January 2000, Bryan L. Kelln entered into an employment agreement
with the Company terminable at-will by either Mr. Kelln or by the Company
at any time with or without cause and with or without notice. Pursuant to
the agreement, Mr. Kelln serves as President and Chief Executive Officer of
the Company and receives an initial annual base salary of $275,000, subject
to review and adjustment from time to time. Mr. Kelln is eligible for a
bonus for the 2001 Fiscal Year of 50% of his base salary, based on
achievement of performance goals to be determined by the Company. Mr. Kelln
was also reimbursed for expenses incurred by Mr. Kelln in connection with
his relocation. In addition, during the 2000 Fiscal Year, the Board of
Directors granted Mr. Kelln an option to purchase 500,000 shares of Common
Stock. In the event Mr. Kelln's employment is terminated by the Board of
Directors for any reason, other than cause, within his first year of
employment, Mr. Kelln will be paid an amount equal to six months of his
base salary. Further, the Company will pay Mr. Kelln an amount equal to six
months of his base salary in the event he becomes so disabled that he
cannot fulfill his position responsibilities, and if he becomes deceased
during his employment with the Company, his estate or beneficiary will
receive an amount equal to six months of his salary. In addition, the
Company granted Mr. Kelln a $200,000 interest-free loan for a three-year
period. Forgiveness of the loan from fiscal year to fiscal year will be
based on performance goals to be determined by the Company. See "Certain
Relationships and Related Transactions" above.
In January 1999, Gwynne Williams entered into an employment agreement
with the Company. Pursuant to the agreement, Mr. Williams would serve as
Vice President, Manufacturing and would receive an initial annual base
salary of $175,000, subject to review and adjustment from time to time, and
would be eligible for the Company's annual management bonus plan with a 30%
of salary payout at target and a range of 0% to 45% based upon the
Company's performance. The agreement further provides that Mr. Williams is
entitled to participate in all benefits programs available from time to
time. In the event Mr. Williams' employment is terminated by the Company,
for any reason other than death, disability, resignation or for cause, Mr.
Williams will be entitled to a severance payment equal to one year of
salary and continuation of benefits, of which six months of salary will be
guaranteed and six months will be mitigated. In April 2000, Mr. Williams
was promoted to the position of Vice President, Operations of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 2000 Fiscal Year, the Compensation Committee of the Board of
Directors consisted of Michael R. Gaulke, Stephen W. Simons, Adam E. Max
and Edwin T. Post. However, pursuant to certain requirements of Rule 16b-3
under the Exchange Act, grants of stock options made to the Named Executive
Officers in the 2000 Fiscal Year were made by all of the members of the
Board of Directors. During the 2000 Fiscal Year, Mr. Simons was an officer
of the Company. In addition, during the 2000 Fiscal Year, the Company
engaged in certain transactions with certain of its directors and certain
entities affiliated with certain of such directors. See "Certain
Relationships and Related Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to executive officers. However, George Napier, the former
Chief Executive Officer and former President of the Company, did not
participate in discussions regarding his own compensation. The following is
the report of the Compensation Committee to the Board of Directors
describing compensation policies and rationales applicable to the Company's
executive officers with respect to compensation paid to such executive
officers for the 2000 Fiscal Year.
Compensation Philosophy:
The general philosophy of the Company's compensation program is to offer
executive officers competitive compensation based both on the Company's
performance and on the individual's contribution and performance. The
Company's compensation policies are intended to motivate, reward and retain
highly qualified executives for long-term strategic management and the
enhancement of stockholder value, to support a performance-oriented
environment that rewards achievement of specific internal Company goals and
to attract and retain executives whose abilities are critical to the
long-term success and competitiveness of the Company.
There are three main components in the Company's executive compensation
program:
o Base Salary
o Incentive Bonus
o Stock Incentives
Base Salary:
The salaries of Messrs. Bonacorsi, Kelln, Napier, Simons and Williams
were fixed pursuant to the terms of their employment agreements with the
Company. The salaries of the other executive officers are determined
annually by the Compensation Committee with reference to surveys of
salaries paid to executives with similar responsibilities at comparable
companies, generally in both the bicycle and manufacturing industries. The
peer group for each executive officer is composed of executives whose
responsibilities are similar in scope and content. The Company seeks to set
executive compensation levels that are competitive with the average levels
of peer group compensation.
Incentive Bonus:
Annual incentive bonuses for executive officers are intended to reflect
the Compensation Committee's belief that a significant portion of the
annual compensation of each executive officer should be contingent upon the
performance of the Company, as well as the individual contribution of each
officer.
Stock Incentives:
The Company utilizes stock options as long-term incentives to reward and
retain executive officers. The Board of Directors, which in the 2000 Fiscal
Year had responsibility for making option grants under the 1996 Plan and
the 1998 Plan, believes that stock option grants provide an incentive which
focuses the executives' attention on the Company from the perspective of an
owner with an equity stake in the business. Because options are typically
granted with an exercise price equal to the fair market value of the Common
Stock on the date of grant, the Company's stock will provide value to the
recipient only when the price of the Company's stock increases above the
exercise price, that is, only to the extent that stockholders as a whole
have benefitted. Generally, stock options vest over a three to five year
period and optionees must be employed by the Company at the time of vesting
in order to exercise the options.
Compensation of the Chief Executive Officer and Other Executives:
Mr. Napier's base salary was set at $300,000 per year pursuant to his
employment agreement. Mr. Napier resigned as Chief Executive Officer and
President of the Company on July 15, 1999. Mr. Kelln's base salary has been
set at $275,000 per year pursuant to his employment agreement. Salary
increases for senior executives effected during the 2000 Fiscal Year were
based on individual performance, position, tenure, leadership and
competitive data in compensation surveys of comparable companies.
Senior executives in the Company also participate in the 1996 Plan and
1998 Plan, and the Board granted such executives options to purchase shares
of Common Stock during the 2000 Fiscal Year. In determining the number of
shares to award to the executive officers noted above and the other
executives, the Board considered several factors, including primarily the
above-mentioned executive officers' and such other executives' actual and
potential contributions to the Company's long-term success, and the size of
awards provided to other executives holding similar position in comparable
companies.
Pursuant to their employment agreements with the Company, senior
executives may receive an annual bonus as determined by the Board. In
determining the amounts of such bonuses, the Board considers certain
criteria, including the individual performance of each executive and the
performance of the Company. The Board has determined that no bonus amounts
would be paid for the 2000 Fiscal Year based upon the Company's
performance.
Section 162(m) Policy:
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally provides that publicly held companies may not deduct compensation
paid to certain of its top executive officers to the extent such
compensation exceeds $1 million per officer in any year. However, pursuant
to regulations issued by the Treasury Department, certain limited
exemptions to Section l62(m) apply with respect to "qualified
performance-based compensation" and to compensation paid in certain
circumstances by companies in the first few years following their initial
public offering of stock. The Company granted non-qualified stock options
under the 1996 Plan to Mr. Patten. Because stockholders had approved the
1996 Plan, the grant qualifies as "performance-based compensation" under
Section 162(m). The Company will continue to monitor the applicability of
Section 162(m) to its ongoing compensation arrangements. Accordingly, the
Company does not expect that amounts of compensation paid to its executive
officers will fail to be deductible on account of Section 162(m).
Respectfully submitted,
STEPHEN W. SIMONS*
BRYAN L. KELLN*
JOHN W. JORDAN II*
ADAM E. MAX
MICHAEL R. GAULKE
EDWARD T. POST
* With respect to that portion of the report entitled "Stock Incentives"
only.
The Compensation Committee Report will not be deemed to be incorporated
by reference into any filing by the Company under the Securities Act or the
Exchange Act, except to the extent that the Company specifically
incorporates the same by reference.
-----------------------
PERFORMANCE GRAPH:
The following line graph compares the cumulative total stockholder return
for the Common Stock with the NASDAQ U.S. Index and a Peer Group (as
defined below) for the period commencing September 27, 1996 and ending
March 31, 2000. The peer group (the "Peer Group") is composed of the
following companies: K2 Inc., Huffy Corp., Cannondale Corp., Aldila Inc.
and Ride Inc.
The graph assumes that $100 was invested on September 27, 1996, the date
of the commencement of public trading of the Common Stock, and that all
dividends are reinvested. Historical stock price performance should not be
considered indicative of future stock price performance.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG ROCKSHOX, INC.,
NASDAQ STOCK MARKET-US, NASDAQ NON-FINANCIAL INDEX AND SELECTED PEER GROUPS
9/27/96 3/31/97 3/31/98 3/31/99 3/31/00
------- ------- ------- ------- -------
NASDAQ U.S. 100 99 150 202 377
Peer Group 100 86 85 41 34
ROCKSHOX, INC. 100 100 51 8 7
The Stock Price Performance Graph will not be deemed to be incorporated
by reference into any filing by the Company under the Securities Act or the
Exchange Act, except to the extent that the Company specifically
incorporates the same by reference.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Common Stock,
to file reports of beneficial ownership of the Common Stock and changes in
such ownership with the Securities and Exchange Commission, The Nasdaq
Stock Market and the Company. Specific due dates for these reports have
been established, and the Company is required to disclose in this Proxy
Statement any failure to file these reports on a timely basis. Based solely
on its review of the copies of these reports received or written
representations from these reporting persons that no Forms 5 were required
for such persons, the Company believes that, during the 2000 Fiscal Year,
all of such filing requirements under Section 16(a) were timely met,
subject to the following exception: A Form 3 was not timely filed on behalf
of Mr. Birkett.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
2001 annual meeting of stockholders must be received by the Secretary of
the Company by March 29, 2001 for inclusion in the notice of meeting and
proxy statement relating to the Company's 2001 annual meeting of
stockholders. The proposal must comply in all respects with the rules and
regulations of the Securities and Exchange Commission and the Bylaws of the
Company.
Stockholder proposals submitted to the Company for consideration at the
Company's 2001 annual meeting of stockholders outside the processes of Rule
14a-8 (i.e., the procedures for placing a stockholder's proposal in the
Company's proxy materials) will be considered untimely if received by the
Company after June 12, 2000. Accordingly, the proxy with respect to the
Company's 2001 annual meeting of stockholders will confer discretionary
authority to vote on any stockholder proposals received by the Company
after June 12, 2001.
By Order of the Board of Directors
/s/ Chris Birkett
Chris Birkett
Vice President, Chief Financial Officer and Secretary
Colorado Springs, Colorado
July 27, 2000
ANNEX A
ROCKSHOX, INC.
1998 STOCK OPTION PLAN
AS AMENDED AND RESTATED ON MAY 8, 2000
ROCKSHOX, INC.
1998 STOCK OPTION PLAN
AS AMENDED AND RESTATED ON MAY 8, 2000
ROCKSHOX, INC.
1998 STOCK OPTION PLAN
AS AMENDED AND RESTATED THROUGH MAY 8, 2000
SECTION 1
PURPOSE OF PLAN; DEFINITIONS
1.1 Purpose. The purpose of the Plan is to reinforce the long-term
commitment to the Company's success of those officers (including officers
who are directors of the Company), other employees, independent directors,
consultants and advisors of the Company who are or will be responsible for
such success; to facilitate the ownership of the Company's stock by such
individuals, thereby reinforcing the identity of their interests with those
of the Company's stockholders; and to assist the Company in attracting and
retaining officers and other employees, directors, consultants and advisors
with experience and ability. The Plan was originally approved by the Board
in February 1998, and certain grants of Stock Options were made at such
time. However, the Company subsequently determined that it was in the best
interests of the Company, its employees, non-employee directors and
consultants to attain shareholder approval of the Plan so that (i) the Plan
would meet the requirements under Section 162(m) of the Code and (ii)
Incentive Stock Options may be granted under the Plan, which such
shareholder approval was attained on August 20, 1998. The Plan was
subsequently amended by the Board in May 2000 to increase the number of
shares of the Company's stock available for issuance under the Plan from
300,000 shares to 1,298,000 shares.
1.2 Definitions. Wherever the masculine gender is used it shall include
the feminine, and where a singular pronoun is used, it shall include the
plural, unless the context clearly indicates otherwise. For purposes of the
Plan, the following terms shall be defined as set forth below:
(a) "Administrator" means the Board, or if the Board does not
administer the Plan, the Committee in accordance with
Section 2.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
(d) "Committee" means the Compensation Committee of the Board
other than directors who are not Non-Employee Directors,
including such additional individuals as the Board shall
designate in order to fulfill the Non-Employee Director
requirement of Section 162(m) of the Code and Rule 16b-3 as
promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934 (the
"Act"), and as such Section and Rule may be amended from
time to time, or any successor definition adopted by the
Commission, or any other Committee the Board may
subsequently appoint to administer the Plan. The Committee
shall be composed entirely of individuals who are
Non-Employee Directors. If at any time the Board shall not
administer the Plan, then the functions of the Board
specified in the Plan shall be exercised by the Committee.
(e) "Company" means ROCKSHOX, Inc., a Delaware corporation (or any
successor corporation).
(f) "Effective Date" shall mean the date provided pursuant to
Section 12.
(g) "Eligible Person" means any person eligible to participate
in the Plan pursuant to Section 4.
(h) "Fair Market Value" means, as of any given date, with respect
to any awards granted hereunder (A) the closing price of a
share of the Company's Stock on the principal exchange on
which shares of the Company's Stock are then trading, if
any, on the trading day previous to such date, or, if shares
were not traded on the trading day previous to such date,
then on the next preceding trading day during which a sale
occurred; or (B) if such Stock is not traded on an exchange
but is quoted on Nasdaq or a successor quotation system, (1)
the last sales price (if the Company's Stock is then listed
as a National Market Issue under the Nasdaq National Market
System) or (2) the mean between the closing representative
bid and asked prices (in all other cases) for the Company's
Stock on the trading day previous to such date as reported
by Nasdaq or such successor quotation system; or (C) if such
Stock is not publicly traded on an exchange and not quoted
on Nasdaq or a successor quotation system, the mean between
the closing bid and asked prices for the Company's Stock, on
the day previous to such date, as determined in good faith
by the Committee; or (D) if the Company's Stock is not
publicly traded, the fair market value established by the
Committee acting in good faith.
(i) "Incentive Stock Option" means any Stock Option intended to
be designated as an "incentive stock option" within the
meaning of Section 422 of the Code.
(j) "Non-Employee Director" shall have the meaning set forth in
Section 162(m) of the Code and Rule 16b-3 of the Act, and as
such Section and Rule may be amended from time to time, or
any successor definition adopted by the Commission.
(k) "Non-Qualified Stock Option" means any Stock Option that is
not an incentive stock option within the meaning of Section
422 of the Code.
(l) "Participant" means any Eligible Person selected by the
Administrator, pursuant to the Administrator's authority in
Section 2 below, to receive grants of Stock Options.
(m) "Plan" means the ROCKSHOX, INC. 1998 Stock Option Plan.
(n) "Stock" means the Common Stock of the Company, par value $.01
per share.
(o) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
SECTION 2
ADMINISTRATION
2.1 Administrator. The Plan shall be administered by the Board or by the
Committee, which shall be appointed by the Board and which shall serve at
the pleasure of the Board, in accordance with the requirements of Section
162(m) of the Code (but only to the extent necessary to maintain
qualification of the Plan under Section 162(m) of the Code) and, to the
extent applicable, Rule 16b-3 of the Act.
2.2 Duties and Powers of Administrator. The Administrator shall have the
power and authority to grant Stock Options to Eligible Persons, consultants
and advisors to the Company, pursuant to the terms of the Plan.
In particular, the Administrator shall have the authority:
(a) to select those employees, advisors, consultants, officers
and directors of the Company who shall be Eligible Persons;
(b) to determine whether and to what extent Stock Options are to
be granted hereunder to Eligible Persons;
(c) to determine the number of shares to be covered by each such
award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder;
(e) to determine the terms and conditions, not inconsistent with
the terms of the Plan, which shall govern all written
instruments evidencing the Stock Options;
(f) to accelerate the date or dates of exercise of any award
granted hereunder;
(g) to reduce the exercise price of any Stock Option to the then
Fair Market Value, if the Fair Market Value of the Stock
covered by such Stock Option has declined since the date the
Stock Option was granted; and
(h) in its discretion, to adopt, alter and repeal such
administrative rules, guidelines and practices governing the
Plan as it shall from time to time deem advisable; to
interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.
2.3 Majority Rule. The Committee shall act by a majority of its members
in attendance at a meeting at which a quorum is present or by a memorandum
or other written instrument signed by all members of the Committee.
2.4 Indemnification. To the fullest extent permitted by law, each of the
members of the Board and the Committee and each of the directors, officers
and employees of the Company, shall be held harmless and be indemnified by
the Company for any liability, loss (including amounts paid in settlement),
damages or expenses (including reasonable attorneys' fees) suffered by
virtue of any determinations, acts or failures to act, or alleged acts or
failures to act, in connection with the administration of this Plan so long
as such person is not determined by a final adjudication to be guilty of
willful misconduct with respect to such determination, action or failure to
act.
SECTION 3
STOCK SUBJECT TO PLAN
3.1 Number of and Source of Shares. The total number of shares of Stock
reserved and available for issuance under the Plan shall be 1,298,000. Such
shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares. The aggregate number of shares of Stock as to which
Stock Options may be granted to any individual during any calendar year may
not, subject to adjustment as provided in this Section 3, exceed 100% of
the shares of Stock reserved for the purposes of the Plan in accordance
with the provisions of this Section 3.
3.2 Unrealized Awards. To the extent that a Stock Option expires or is
otherwise terminated without being exercised such shares shall again be
available for issuance in connection with future awards under the Plan. If
any shares of Stock otherwise issuable under the Plan have been pledged as
collateral for indebtedness incurred by a Participant in connection with
the realization of any award hereunder, and such shares are returned to the
Company in satisfaction of such indebtedness, such shares shall again be
available for issuance in connection with future awards under the Plan.
3.3 Adjustment of Awards. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend or other change in
corporate structure affecting the Stock, a substitution or adjustment shall
be made in (i) the kind and aggregate number of shares reserved for
issuance under the Plan and (ii) the kind, number and option price of
shares subject to outstanding Stock Options granted under the Plan, as may
be determined by the Administrator, in its sole discretion. Such other
substitutions or adjustments shall be made respecting awards hereunder as
may be determined by the Administrator, in its sole discretion. In
connection with any event described in this paragraph, the Administrator
may provide, in its discretion, for the cancellation of any outstanding
awards and payment in cash or other property in exchange therefor.
SECTION 4
ELIGIBILITY
Officers (including officers who are directors of the Company),
other key employees of, independent directors, consultants and advisors to
the Company, who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company, shall be
eligible to be granted Stock Options. The Participants under the Plan shall
be selected from time to time by the Administrator, in its sole discretion,
from among the Eligible Persons recommended by the senior management of the
Company, and the Administrator shall determine, in its sole discretion, the
number of shares covered by each award.
SECTION 5
STOCK OPTIONS
5.1 Option Awards. Any Stock Option granted under the Plan shall be in
such form as the Administrator may from time to time approve, and the
provisions of Stock Option awards need not be the same with respect to each
optionee. Recipients of Stock Options shall enter into a subscription
and/or award agreement with the Company, in such form as the Administrator
shall determine, which agreement shall set forth, among other things, the
exercise price of the option, the term of award agreement and provisions
regarding exercisability of the option granted thereunder.
The Stock Options granted under the Plan may be of two types: (i)
Non-Qualified Stock Options and (ii) Incentive Stock Options. More than one
option may be granted to the same optionee and be outstanding concurrently
hereunder.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions as the Administrator shall deem desirable:
5.2 The Administrator shall have the authority to grant any officer or
employee of the Company (including directors who are also officers of the
Company) Incentive Stock Options, or both types of Stock Options. Directors
who are not officers of the Company, consultants and advisors may only be
granted Non-Qualified Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option. More than one option may be granted to
the same optionee and be outstanding concurrently hereunder.
5.3 Price. The option price per share of Stock purchasable under a Stock
Option shall be determined by the Administrator in its sole discretion at
the time of grant but shall not, in the case of Incentive Stock Options, be
less than 100% of the Fair Market Value of the Stock on such date and shall
not, in any event, be less than the par value (if any) of the Stock. If an
employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option (to the extent required by the Code at the time of grant)
shall be no less than 110% of the Fair Market Value of the Stock on the
date such Incentive Stock Option is granted.
5.4 Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, that if an
employee owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company and an Incentive Stock Option is
granted to such employee, the term of such Incentive Stock Option (to the
extent required by the Code at the time of grant) shall be no more than
five years from the date of grant.
5.5 Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Administrator at or after grant. The Administrator may provide, in its
discretion, that any Stock Option shall be exercisable only in
installments, and the Administrator may waive such installment exercise
provisions at any time in whole or in part based on such factors as the
Administrator may determine, in its sole discretion, including but not
limited to in connection with any "change in control" of the Company, as
defined in any stock option agreement.
5.6 Method of Exercise. Subject to Section 5.4 above, Stock Options may
be exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased, accompanied by payment in full of the purchase
price in cash or its equivalent as determined by the Administrator. As
determined by the Administrator, in its sole discretion, payment in whole
or in part may also be made in the form of unrestricted Stock already owned
by the optionee having a Fair Market Value with an aggregate value on the
date of surrender equal to the purchase price of the shares as to which the
Stock Option shall be exercised. An optionee shall generally have the
rights to dividends and any other rights of a stockholder with respect to
the Stock subject to the option only after the optionee has given written
notice of exercise and has paid in full for such shares.
5.7 The Administrator may require the voluntary surrender of all or a
portion of any Stock Option granted under the Plan as a condition precedent
to the grant of a new Stock Option. Subject to the provisions of the Plan,
such new Stock Option shall be exercisable at the price, during such period
and on such other terms and conditions as are specified by the
Administrator at the time the new Stock Option is granted. Consistent with
the provisions of Section 162(m), to the extent applicable, upon their
surrender, Stock Options shall be canceled and the shares previously
subject to such canceled Stock Options shall again be available for grants
of Stock Options and other awards hereunder.
5.8 Non-Transferability of Options. Unless otherwise determined by the
Administrator, no Stock Option shall be transferable by the optionee, and
all Stock Options shall be exercisable, during the optionee's lifetime,
only by the optionee.
5.9 Termination of Employment or Service. If an optionee's employment
with or service as a director, consultant or advisor to the Company
terminates by reason of death, Disability or for any other reason, the
Stock Option may thereafter be exercised to the extent provided in the
applicable subscription or award agreement, or as otherwise determined by
the Administrator.
5.10 Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an Optionee under this Plan and all other option plans
of the Company become exercisable for the first time by the Optionee during
any calendar year exceeds $100,000, such Stock Options shall be treated as
Non-Qualified Stock Options. The option price per share of Stock
purchasable under a Stock Option shall be determined by the Administrator
in its sole discretion at the time of grant.
SECTION 6
AMENDMENT AND TERMINATION
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair
the rights of a Participant under any award theretofore granted without
such Participant's consent, or that without the approval of the
stockholders (as described below) would:
(i) except as provided in Section 3, increase the total number
of shares of Stock reserved for the purpose of the Plan;
(ii) change the class of directors, officers, employees,
consultants and advisors eligible to participate in the
Plan; or
(iii) extend the maximum option period under paragraph (2) of
Section 5 of the Plan.
Notwithstanding the foregoing, stockholder approval under this
Section 8 shall only be required at such time and under such circumstances
as stockholder approval would be required under Section 162(m) of the Code
or other applicable law, rule or regulation with respect to any material
amendment to any employee benefit plan of the Company.
The Administrator may amend the terms of any award theretofore
granted, prospectively or retroactively, but, subject to Section 3 above,
no such amendment shall impair the rights of any holder without his or her
consent.
SECTION 7
UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of
the Company.
SECTION 8
GENERAL PROVISIONS
8.1 The Administrator may require each person purchasing shares pursuant
to a Stock Option to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Administrator deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as
the Administrator may deem advisable under the rules, regulations, and
other requirements of the Commission, any stock exchange upon which the
Stock is then listed, and any applicable federal or state securities law,
and the Administrator may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.
8.2 Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of
the Plan shall not confer upon any employee, consultant or advisor of the
Company any right to continued employment with the Company, as the case may
be, nor shall it interfere in any way with the right of the Company to
terminate the employment or service of any of its employees, consultants or
advisors at any time.
8.3 Each Participant shall, no later than the date as of which the value
of an award first becomes includible in the gross income of the Participant
for federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state,
or local taxes of any kind required by law to be withheld with respect to
the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to the Participant.
8.4 No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of
the Board or the Administrator and each and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
SECTION 9
EFFECTIVE DATE OF PLAN
The Plan will become effective (the "Effective Date") on August
20, 1998, the date the Company's stockholders formally approve the Plan.
SECTION 10
TERM OF PLAN
No Stock Option shall be granted pursuant to the Plan on or after
the tenth anniversary of the Effective Date, but awards theretofore granted
may extend beyond that date.
ROCKSHOX, INC.
Proxy For Annual Meeting Of Stockholders
To Be Held On August 22, 2000
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of ROCKSHOX, INC., a Delaware corporation
(the "Company"), hereby appoints Bryan L. Kelln and Chris Birkett or either
of them, as proxies for the undersigned, each with full power of
substitution to attend the Annual Meeting of Stockholders of the Company to
be held on Tuesday, August 22, 2000 at 10:00 a.m., local time, at the
Company's headquarters located at 1610 Garden of the Gods Road, Colorado
Springs, Colorado 80907, and at any adjournment(s) or postponement(s)
thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at such Annual Meeting and otherwise to
represent the undersigned at the Annual Meeting, with the same effect as if
the undersigned were present. The undersigned hereby acknowledges receipt
of the Notice of Annual Meeting of Stockholders and the accompanying Proxy
Statement and revokes any proxy previously given with respect to such
shares.
(Continued and to be signed on reverse side)
FOLD AND DETACH HERE
1. To elect the following six directors to serve until the next annual
meeting of stockholders and until their successors are duly elected and
qualify.
Nominees: Stephen W. Simons, Bryan L. Kelln, John W. Jordan II, Adam E.
Max, Michael R. Gaulke and Edward Post
[ ] FOR ALL NOMINEES [ ] WITHHOLD AS TO ALL NOMINEES
FOR ALL NOMINEES(S) (Except as written below)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2. To approve an amendment to the ROCKSHOX, INC. 1998 Stock Option Plan to
increase the number of shares of common stock, par value $.01 per share,
of the Company (the "Common Stock") available for issuance under the
plan from 300,000 shares outstanding at any time to 1,298,000 shares of
Common Stock
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection of Ernst & Young L.L.P. as the Company's
independent public accountants for the fiscal year ending March 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
[ ] CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE
WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO
SPECIFICATION IS MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED
WILL BE CAST "FOR" THE FOREGOING PROPOSALS AND OTHERWISE IN THE DISCRETION
OF THE PROXIES AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
Signature Signature if held jointly Dated , 2000.
---------- ------------ ----
Please sign exactly as your name appears hereon and date. If the shares are
held jointly, each holder should sign. When signing as an attorney,
executor, administrator, trustee, guardian or as an officer, signing for a
corporation or other entity, please give full title under signature.
Fold and Detach Here
