<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
805 HANLON DRIVE
BELLE PLAINE, MINNESOTA 56011
(612) 873-7000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the offices of the Company, 805 Hanlon Drive, Belle Plaine, Minnesota,
at 10:00 a.m., Central Time, on Saturday, June 5, 1999.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
about the Company.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. PLEASE VOTE BY PROXY THROUGH THE TELEPHONE OR INTERNET
VOTING PROCEDURES DESCRIBED IN THE ENCLOSED INSTRUCTIONS OR BY SIGNING THE
ENCLOSED PROXY CARD AND PROMPTLY RETURNING IT IN THE ACCOMPANYING ENVELOPE, EVEN
IF YOU PLAN TO ATTEND THE ANNUAL MEETING. You may revoke your proxy and vote in
person at that time if you so desire.
Sincerely,
<TABLE>
<S> <C> <C>
Daniel L. Hanlon David P. Hanlon Jennie L. Hanlon
CO-FOUNDER CO-FOUNDER CO-FOUNDER
</TABLE>
April 28, 1999
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 1999
-----------------------
The Annual Meeting of Shareholders of Excelsior-Henderson Motorcycle
Manufacturing Company will be held at the offices of the Company, 805 Hanlon
Drive, Belle Plaine, Minnesota, at 10:00 a.m., Central Time, on Saturday,
June 5, 1999 for the following purposes:
1. To elect five directors for a one-year term.
2. To approve certain amendments to the Excelsior-Henderson
Motorcycle Manufacturing Company Amended and Restated 1995 Stock
Plan, including an amendment reserving 1,000,000 additional
shares of Common Stock for future awards.
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending January 1,
2000.
4. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed April 7, 1999 as the record date for the
meeting, and only shareholders of record at the close of business on that date
are entitled to receive notice of and vote at the meeting.
YOUR VOTE IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU OWN
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING,
PLEASE MAKE CERTAIN THAT YOU ARE REPRESENTED BY PROXY AT THE MEETING BY VOTING
BY TELEPHONE OR THE INTERNET AS DESCRIBED IN THE ENCLOSED INSTRUCTIONS OR BY
SIGNING THE ENCLOSED PROXY CARD AND PROMPTLY RETURNING IT IN THE ACCOMPANYING
POSTAGE-PAID REPLY ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS
EXERCISE AND GIVING YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING AND REVOKE THE PROXY.
By Order of the Board of Directors,
Gale R. Mellum
SECRETARY
Belle Plaine, Minnesota
April 28, 1999
<PAGE>
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of
Excelsior-Henderson Motorcycle Manufacturing Company, a Minnesota corporation
(the "Company"), for use in connection with the Annual Meeting of Shareholders
to be held on Saturday, June 5, 1999 at the offices of the Company, 805 Hanlon
Drive, Belle Plaine, Minnesota, at 10:00 a.m., Central Time, and at any
adjournments thereof. Only shareholders of record at the close of business on
April 7, 1999 will be entitled to vote at such meeting or adjournment. To
register your vote, you may vote by telephone or the internet as described in
the enclosed instructions or complete, date and sign the enclosed proxy card and
return it in the envelope provided. Proxy cards in the accompanying form which
are properly signed, duly returned to the Company and not revoked will be voted
in the manner specified. Proxies appointed by telephone or the internet that
are not revoked will also be voted in the manner specified. A shareholder
appointing a proxy retains the right to revoke it at any time before it is
exercised by notice in writing to the Secretary of the Company of termination of
the proxy's authority or by subsequently voting by telephone, the internet or a
properly signed and duly returned proxy card bearing a later date.
The address of the principal executive office of the Company is 805
Hanlon Drive, Belle Plaine, Minnesota 56011 and the telephone number is (612)
873-7000. The mailing of this Proxy Statement and the Board of Directors'
form of proxy to shareholders will commence on or about April 28, 1999.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by the use of the mails, certain directors,
officers and employees of the Company may solicit proxies by telephone, telegram
or personal contact, and have requested brokerage firms and custodians, nominees
and other record holders to forward soliciting materials to the beneficial
owners of stock of the Company and will reimburse them for their reasonable
out-of-pocket expenses in so forwarding such materials.
The Common Stock of the Company, par value $.01 per share, is the only
authorized and issued voting security of the Company. At the close of business
on April 7, 1999 there were 13,583,076 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. Holders of Common Stock are
not entitled to cumulate their votes for the election of directors.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock present in person or represented by proxy at the meeting and
entitled to vote is required for approval of each proposal presented in this
Proxy Statement. A shareholder voting through a proxy who abstains with respect
to any matter is considered to be present and entitled to vote on such matter at
the meeting and is in effect a negative vote. However, a shareholder (including
a broker) who does not give authority to vote, or withholds authority to vote,
on any proposal shall not be considered present and entitled to vote on such
proposal.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of March 15, 1999, the number of shares
of Common Stock beneficially owned by each person who is a beneficial owner of
more than 5% of the issued and outstanding Common Stock, by each executive
officer named in the Summary Compensation Table, by each director, and by all
officers and directors as a group. All persons have sole voting and dispositive
power over such shares unless otherwise indicated.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER PERCENTAGE OF
OF BENEFICIAL OWNER: OF SHARES OUTSTANDING SHARES
- ---------------------------------------- -------------- ------------------
<S> <C> <C>
Directors and executive officers
Daniel L. Hanlon(1) 1,791,998(2) 13.2%
David P. Hanlon(1) 1,468,166(3) 10.8
Allan C. Hurd 53,333(4) *
Thomas M. Rootness 74,251(5) *
John B. Donahue 27,801(6) *
Wayne M. Fortun 23,267(6) *
David R. Pomije 83,333(7) *
Directors and Officers, as a group
(8 persons) 3,522,149(8) 25.9
Other beneficial owners
Standish, Ayer & Wood, Inc. 734,500(9) 5.4
</TABLE>
__________________
* Less than one percent.
(1) The address of Daniel and David Hanlon is 805 Hanlon Drive, Belle Plaine,
MN 56011.
(2) Includes 43,998 shares of Common Stock held in trusts for which
Mr. Hanlon's spouse acts as custodian.
(3) Includes 1,333 shares of Common Stock owned by Mr. Hanlon's son and 166
shares held in a trust for which Mr. Hanlon's spouse acts as custodian.
(4) Includes options to purchase 53,333 shares of Common Stock exercisable
within 60 days of March 15, 1999.
(5) Includes options to purchase 13,333 shares of Common Stock exercisable
within 60 days of March 15, 1999.
(6) Includes options to purchase 16,667 shares of Common Stock exercisable
within 60 days of March 15, 1999.
(7) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days of March 15, 1999.
(8) Includes options to purchase up to 110,000 shares of Common Stock
exercisable within 60 days of March 15, 1999.
(9) Based on information as of February 4, 1999 contained in a Schedule 13G
filed with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The business of the Company is managed under the direction of a Board of
Directors, with the number of directors fixed from time to time by the Board of
Directors. The Board of Directors has fixed at five the number of directors to
be elected to the Board at the 1999 Annual Meeting of Shareholders and has
nominated the five persons named below for election as directors, each to serve
for a one-year term. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the five nominees named below.
Each of the nominees is a current director of the Company and each has
indicated a willingness to serve as a director for the one-year term. In case
any nominee is not a candidate for
2
<PAGE>
any reason, the proxies named in the enclosed form of proxy may vote for a
substitute nominee in their discretion.
Following is certain information regarding the nominees for the office of
director:
DANIEL L. HANLON, AGE 42
Mr. Hanlon, a Co-Founder of the Company, is Co-Chief Executive Officer and
Co-Chairman of the Board of the Company. Immediately prior to founding the
Company in 1993, Mr. Hanlon worked as founder, President and Chief Executive
Officer of EverGreen Solutions Inc., a manufacturer of degradable packaging
materials, from 1990 to December 1993. Prior to 1990, Mr. Hanlon served as
Controller of Midwest Importers, in sales branch management positions with
Knutson Mortgage and Marquette banks, and in various accounting and strategic
planning positions with EcoLab Inc. and Honeywell Inc. Mr. Hanlon received his
B.A. and M.B.A. degrees from the University of St. Thomas, St. Paul, Minnesota.
Mr. Hanlon is a brother of David Hanlon and a brother-in-law of Jennie Hanlon.
Mr. Hanlon has been riding motorcycles for over 29 years.
DAVID P. HANLON, AGE 46
Mr. Hanlon, a Co-Founder of the Company, is Co-Chief Executive Officer and
Co-Chairman of the Board of the Company. From 1984 to November 1993, Mr. Hanlon
was the General Manager of the Michigan District for Rollins Leasing
Corporation, a truck leasing company. Prior to 1984, Mr. Hanlon worked for
three years as the District Manager of Gelco Truck Leasing in the Memphis,
Tennessee district. Mr. Hanlon attended the University of St. Thomas, St. Paul,
Minnesota and studied Business Administration. Mr. Hanlon is a brother of
Daniel Hanlon and the spouse of Jennie Hanlon. Mr. Hanlon has been riding
motorcycles for over 31 years.
JOHN B. DONAHUE, AGE 55
Mr. Donahue was elected as a director of the Company in April 1997. Mr.
Donahue is an owner and President of Donahue Excelsior-Henderson and Delano
Sports Center, a motorcycle and recreational product dealership in suburban
Minneapolis, Minnesota. In 1995, Mr. Donahue was President of the
Harley-Davidson Dealers Council, and has been on the Harley-Davidson Dealer
Advisory Council since 1992. In addition, Mr. Donahue was on the Arctic Cat
Advisory Board from 1984 to 1993 and the Kawasaki National Dealer Advisory Board
from 1975 to 1980. Mr. Donahue has been involved with motorcycles since 1956.
WAYNE M. FORTUN, AGE 50
Mr. Fortun was elected as a director of the Company in April 1997.
Mr. Fortun has been the Chief Executive Officer of Hutchinson Technology
Incorporated since May 1996, President, Chief Operating Officer and a director
since 1983. Hutchinson Technology, a publicly traded company, is the world's
leading supplier of suspension assemblies for rigid magnetic disk drives.
Mr. Fortun is also a director of G&K Services, Inc., a publicly held company,
which provides and maintains commercial, institutional and industrial garments
and other textile products for a variety of businesses and institutions.
Mr. Fortun has been riding motorcycles for over 31 years.
3
<PAGE>
DAVID R. POMIJE, AGE 42
Mr. Pomije was elected as a director of the Company in April 1997. Since
April 1995, Mr. Pomije has been the Chairman of the Board and Chief Executive
Officer of Funco, Inc., which he founded in 1988. From 1988 to April 1995,
Mr. Pomije also served as President, Chief Financial Officer and Secretary.
Funco, a publicly traded company, is a specialty retailer of interactive
entertainment products. Mr. Pomije has been a motorsports enthusiast for over
26 years.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met seven times during fiscal 1998. All incumbent
directors attended at least 75% of the meetings of the Board and of the
committees on which they served held during fiscal 1998, except Mr. Donahue who
was absent from two Board meetings. The Company currently has an Audit
Committee and a Compensation Committee. Following is a description of the
functions performed by each of the Committees:
AUDIT COMMITTEE
The Company's Audit Committee presently consists of Messrs. Fortun
(Chairman), Donahue and Pomije. The Audit Committee makes recommendations
concerning the selection and appointment of independent auditors, reviews the
scope and findings of the completed audit, and reviews the adequacy and
effectiveness of the Company's accounting policies and system of internal
accounting controls. The Audit Committee met twice during fiscal 1998.
COMPENSATION COMMITTEE
The Company's Compensation Committee presently consists of Messrs. Pomije
(Chairman), Fortun and Donahue. The Compensation Committee annually reviews and
acts upon the compensation package for the Co-Chief Executive Officers and sets
compensation policy for the other employees of the Company. In addition, the
Compensation Committee acts upon management recommendations concerning employee
stock options, bonuses and other compensation and benefit plans. The
Compensation Committee also administers the Excelsior-Henderson Motorcycle
Manufacturing Company Amended and Restated 1995 Stock Plan and the
Excelsior-Henderson Team Stock Purchase Plan. The Compensation Committee met
four times during fiscal 1998.
DIRECTOR COMPENSATION
The Company's Amended and Restated 1995 Stock Plan provides that a new
outside director of the Company will be issued an option to purchase 10,000
shares of Common Stock upon joining the Board of Directors, with an exercise
price equal to the fair market value of a share on the date of grant. Such
options will vest one year from the date of grant and expire ten years from the
date of grant. In addition, outside directors who have been in office more than
six months receive an option to purchase 6,667 shares of Common Stock at each
annual meeting of the Company's shareholders with an exercise price equal to the
fair market value of a share on the date of grant. Such options vest at the
next annual meeting of shareholders and expire ten years from the date of grant.
4
<PAGE>
EXECUTIVE OFFICERS
Following is certain information regarding the current executive officers
of the Company other than Daniel L. Hanlon and David P. Hanlon:
JENNIE L. HANLON, AGE 44
Ms. Hanlon, a Co-Founder of the Company, has been Spiritual Road Crew
Leader since March 1999. From May 1997 until March 1999 she served the
Company in the capacity of Chief Brand Executive. Ms. Hanlon has been
involved in the capacity of Road Crew leader and in brand management since
the inception of the Company. Ms. Hanlon attended Rasmussen Business College
in St. Paul, Minnesota and John Roberts Powers in Minneapolis, Minnesota,
where she studied modeling and apparel design. Ms. Hanlon is the spouse of
David Hanlon and a sister-in-law of Daniel Hanlon. Ms. Hanlon has been
riding motorcycles for over 26 years.
ALLAN C. HURD, AGE 51
Mr. Hurd has been Senior Vice President of Engineering and Manufacturing
since May 1997 and was Vice President of Manufacturing and Operations from
May 1996 to May 1997. From 1987 through May 1996, Mr. Hurd was employed by
Triumph Motorcycles, LTD, a motorcycle manufacturer located in England. At
Triumph, Mr. Hurd was part of the management team responsible for establishing
and operating all aspects of motorcycle production, including motorcycle design
and development, factory development and layout, manufacturing equipment
specification and acquisition and motorcycle production. From March 1991 to
May 1996, Mr. Hurd was Production Engineering Manager, from July 1989 to
February 1991, he was Design and Production Coordinating Manager and from
May 1987 to July 1989, he was Chief Production Engineer. Mr. Hurd has a degree
in Engineering from Kingston-upon-Hull College of Technology and is a member of
the Institute of Electrical Engineers (Manufacturing Section) and the Institute
of Management. Mr. Hurd has been riding motorcycles for over 36 years.
THOMAS M. ROOTNESS, AGE 51
Mr. Rootness has been Senior Vice President of Finance and Administration
since May 1997, has been Chief Financial Officer since March 1996 and was Vice
President of Finance from March 1996 to May 1997. From September 1993 to
March 1996, Mr. Rootness was Chief Financial Officer, Treasurer and Executive
Vice President of Luigino's Inc., a large, multi-national manufacturer of frozen
food entrees. From January 1992 to August 1993, Mr. Rootness was General/Plant
Manager of the LaBounty Manufacturing division of The Stanley Works after The
Stanley Works purchased LaBounty Manufacturing, Inc., a heavy construction
equipment manufacturer and was the Chief Financial Officer of LaBounty
Manufacturing from August 1990 until such purchase. Prior to 1990, Mr. Rootness
served as President and Chief Financial Officer of National Screenprint, Inc.,
President, Chief Executive Officer and a director of The Barbers Hairstyling for
Men and Women, Inc., a publicly traded company, and as President, Chief
Operating Officer and a director of Dahlberg, Inc., at the time a publicly
traded company. Mr. Rootness is a Certified Public Accountant and received a
Bachelor of Arts in Accounting from the University of Minnesota-Duluth in 1969.
Mr. Rootness has been riding motorcycles for over 26 years.
5
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board is composed entirely of outside
directors. The members of the Compensation Committee are Messrs. Pomije, Fortun
and Donahue. The Compensation Committee annually reviews and acts upon the
compensation package for the Co-Chief Executive Officers and sets compensation
policy for the other employees of the Company. In addition, the Compensation
Committee acts upon management recommendations concerning employee stock
options, bonuses and other compensation and benefit plans. The Compensation
Committee also administers the Excelsior-Henderson Motorcycle Manufacturing
Company Amended and Restated 1995 Stock Plan and the Excelsior-Henderson Team
Stock Purchase Plan. The objectives of the Company's executive compensation
program are:
- to attract, retain, motivate and reward high caliber executives;
- to foster teamwork and support the achievement of the Company's
financial and strategic goals through performance based financial
incentives; and
- to align the executive officers' interests with the success of the
Company and shareholders' interests through stock-based compensation.
The Company's executive compensation program strives to be competitive with
the compensation provided by comparable companies. The Compensation Committee
periodically conducts a review of its executive compensation program. The
purpose of this review is to ensure that the Company's executive compensation
program is meeting the objectives listed above. In its review, the Compensation
Committee considers data submitted by management and data and analysis provided
by an independent consultant engaged by the Company to provide comparative
information regarding the compensation provided by similarly situated companies.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The key components of the Company's executive officer compensation program
are base salary, annual incentive bonus and stock options. These elements are
described below. In determining compensation, the Committee considers all
elements of an executive's compensation package. The Company does not currently
have a policy with respect to the limit under Section 162(m) ("Section 162(m)")
of the Internal Revenue Code of 1986, as amended (the "Code"), on the
deductibility of the qualifying compensation paid to its executives as it is
likely that all such compensation will be deductible by the Company. However,
the Amended and Restated 1995 Stock Plan was previously approved by shareholders
so that grants thereunder will not be subject to the Section 162(m) limitation.
BASE SALARY. The Compensation Committee annually reviews the base salary
of the Co-Chief Executive Officers and the other executive officers. In
determining appropriate salary levels, the Compensation Committee considers
individual performance, level of responsibility, scope
6
<PAGE>
and complexity of the position, internal equity and salary levels for
comparable positions at similarly situated companies and the recommendations
of the Co-Chief Executive Officers with respect to the other executives. In
determining base salary, the Compensation Committee also considers strategic
planning, team building and operating results.
ANNUAL INCENTIVE BONUS. The purpose of the Company's annual incentive
bonus is to provide a direct financial incentive in the form of an annual cash
bonus to the executive officers who achieve performance goals established by the
Compensation Committee. The Compensation Committee determines the annual
incentive bonus of the Co-Chief Executive Officers and, in conjunction with the
Co-Chief Executive Officers, the annual incentive bonus of the other executives.
Executives are eligible for target awards under the annual incentive
program with maximum payouts currently ranging from 30% to 60% of base salary.
The size of the maximum award is determined by the executive's position and
competitive data for comparable positions at the similarly situated companies.
The awards paid by the Company decrease or increase based on actual employee
performance in achieving individual and Company goals. For 1998, the
performance of the executives was assessed against target measures set by the
Compensation Committee. The target measures focused on success in maintaining
the Company's development plan, team building and budget management. Incentive
bonus awards to executive officers in fiscal 1998 ranged from 12% to 14% of then
current base salaries. The Co-Chief Executive Officers each received an
incentive bonus award equal to 12% of their respective base salaries in fiscal
1998, which was the maximum amount of their targets. The Compensation Committee
has determined that the Co-Chief Executive Officers will be eligible for
incentive bonuses equal to 40% to 60% of their respective base salaries in
fiscal 1999.
STOCK OPTIONS. Long-term performance incentives are provided to executives
through the Company's Amended and Restated 1995 Stock Plan. The Amended and
Restated 1995 Stock Plan is administered by the Compensation Committee, which is
authorized to award stock options to employees of the Company, non-employee
directors of the Company and certain advisors and consultants to the Company.
At least annually, the Compensation Committee considers whether awards will be
made to executive officers under the Amended and Restated 1995 Stock Plan. Such
awards are based on the scope and complexity of the position and competitive
compensation data. The Compensation Committee has broad discretion to select
the optionees and to establish the terms and conditions for the grant, vesting
and exercise of each option. The executive officers other than the Co-Chief
Executive Officers have all received some options with performance-based vesting
criteria that allow the vesting of such options to be accelerated based on a
determination by the Compensation Committee that the applicable performance
criteria have been met by the executive. The vesting of certain portions of
these options was accelerated in fiscal 1998. In fiscal 1998, the Co-Chief
Executive Officers each received options to purchase 100,000 shares of the
Company's Common Stock. These options were granted at fair market value on the
date of grant and vest in five equal increments on each of the first five
anniversaries of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, comprised entirely of independent, outside
directors, is responsible for establishing and administering the Company's
policies involving the compensation of executive officers. No employee of the
Company serves on the Committee. During fiscal 1998, the
7
<PAGE>
members of the Committee were (and are currently) David R. Pomije, John B.
Donahue and Wayne M. Fortun. The Committee members have no interlocking
relationship as defined by the Securities and Exchange Commission.
COMPENSATION COMMITTEE
David R. Pomije, Chairman
John B. Donahue
Wayne M. Fortun
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
for the fiscal years ended January 2, 1999, January 3, 1998 and December 31,
1996 provided to the Co-Chief Executive Officers of the Company and the other
two individuals who were serving as executive officers at the end of the most
recent fiscal year and who received remuneration exceeding $100,000 for such
fiscal year (the "Named Executive Officers").
<TABLE>
<CAPTION> LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SHARES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS(2) COMPENSATION(3)
- ---------------------------------- ---- --------- ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Daniel L. Hanlon, 1998 $165,000 $20,000 100,000 $ 3,538
Co-Founder, Co-Chairman and 1997 115,000 - - -
Co-Chief Executive Officer 1996 75,865 - - -
David P. Hanlon, 1998 165,000 20,000 100,000 4,097
Co-Founder, Co-Chairman and 1997 115,000 - - -
Co-Chief Executive Officer 1996 75,865 - - -
Allan C. Hurd, 1998 145,000 20,000 75,000 810
Senior Vice President of 1997 110,000 10,000 30,000 152
Engineering and Manufacturing 1996 50,080 - 66,667 10,000
Thomas M. Rootness, 1998 145,000 20,000 75,000 465
Senior Vice President of Finance 1997 110,000 10,000 30,000 460
and Administration and Chief 1996 69,420 - 66,667 24,800
Financial Officer
</TABLE>
_________________
(1) Messrs. Hurd and Rootness were not employed for all of 1996. If they
had been employed for the full year, their respective salaries would
have been $93,000 and $95,000.
(2) Represents options to purchase Common Stock granted under the Company's
Amended and Restated 1995 Stock Plan.
(3) Amounts reported for 1998 represent life insurance premiums paid for Mr.
Daniel Hanlon ($3,538) and Mr. David Hanlon ($4,097) and the Company
match on the Company's 401(k) plan in the following amounts: Mr. Hurd,
$810, and Mr. Rootness, $465. Amounts reported for 1997 represent the
Company match on the Company's 401(k) plan in the following amounts:
Mr. Hurd, $152, and Mr. Rootness, $460. Amounts reported for 1996
represent payments made to Messrs. Hurd and Rootness for reimbursement
of moving and temporary living expenses.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes option grants made during fiscal 1998 to the
Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES
SHARES OPTIONS OF STOCK APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
NAME GRANTED(2) FISCAL YEAR SHARE DATE 5% 10%
- ----------------- ---------- ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Daniel L. Hanlon 100,000 13.5% $7.875 12/17/08 $495,255 $1,255,072
David P. Hanlon 100,000 13.5% 7.875 12/17/08 495,255 1,255,072
Allan C. Hurd 75,000 10.1% 7.875 12/17/08 371,441 941,304
Thomas M. Rootness 75,000 10.1% 7.875 12/17/08 371,441 941,304
</TABLE>
___________
(1) The potential realizable value is based on a 10-year term of each option at
the time of grant. Assumed stock price appreciation of 5% and 10% is
mandated by rules of the Securities and Exchange Commission and is not
intended to forecast actual future financial performance or possible future
appreciation. The potential realizable value is calculated by assuming
that the fair market value of the Company's Common Stock on the date of
grant appreciates at the indicated rate for the entire term of the option
and that the option is exercised at the exercise price and sold on the last
day of its term at the appreciated price.
(2) Options granted pursuant to the Company's Amended and Restated 1995 Stock
Plan are exercisable at an exercise price equal to the fair market value on
the date of grant. The options described above vest in five equal
increments on the first five anniversaries of the date of grant. Each
option has a maximum term of 10 years, subject to earlier termination in
the event of the optionee's cessation of service with the Company. In
addition, these options have a reload feature which automatically grants
the option holder a reload option equal to the number of shares delivered
to the Company in payment of the original option's exercise price or any
required withholding tax. The reload option has an exercise price equal to
the fair market value of the Company's Common Stock on the date these
shares are delivered to the Company, which is also the date of grant.
Reload options are fully vested upon issuance and have a maximum term equal
to the remaining term of the original option.
10
<PAGE>
AGGREGATE OPTION
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The purpose of the following table is to report exercise of stock options
by the Named Executive Officers during fiscal 1998 and the value of their
unexercised stock options as of January 2, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
----------------------------- ---------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel L. Hanlon - $ - - 100,000 $ - $137,500
David P. Hanlon - - - 100,000 - 137,500
Allan C. Hurd - - 53,333 118,334 355,831 403,963
Thomas M. Rootness(2) 4,667 35,003 36,667 98,333 232,919 256,456
</TABLE>
___________
(1) Value is based on the per share closing price of the Company's Common Stock
on December 31, 1998, which was $9.25.
(2) The exercise price of Mr. Rootness' option was $1.875 per share, the fair
market value of a share of Common Stock on the date of grant, as determined
by the Board of Directors. Value Realized is based on the per share
closing price of the Company's Common Stock on July 28, 1998, which was
$9.375.
EMPLOYMENT CONTRACTS; TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company does not have any employment or non-competition agreements with
any members of its executive management team but has entered into
confidentiality and non-solicitation agreements with such persons. Such
agreements provide that the executive will not solicit any other employee of the
Company to leave the Company during the executive's employment with the Company
and for one year following such employment, will not compete with the Company
during the executive's employment and will protect the proprietary information
of the Company during and following such executive's employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John B. Donahue, a director of the Company, is the owner of Donahue
Excelsior-Henderson and Delano Sports Center (the "Dealer"), which executed the
Company's standard form Authorized Dealership Agreement (the "Dealership
Agreement") on May 16, 1997. Pursuant to the Dealership Agreement, the Dealer is
an authorized dealer of the Company for the sale and service of the Company's
brand of products.
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors, executive officers and
persons who own more than ten percent of the Company's Common Stock file initial
reports of ownership of the Company's Common Stock and changes in such ownership
with the Securities and Exchange Commission. Other than a Form 4 reporting one
transaction by David P. Hanlon and a Form 4 reporting 15 transactions by
David R. Pomije, to the Company's knowledge based solely on a review of copies
of forms submitted to the Company during and with respect to fiscal 1998 and on
written representations from the Company's directors and executive officers, all
required reports were filed on a timely basis during fiscal 1998.
12
<PAGE>
PERFORMANCE EVALUATION
The graph below compares total cumulative shareholders' return on the
Common Stock for the period from the close of the NASDAQ Stock Market - U.S.
Companies on the date of the Company's initial public offering of Common Stock
(July 24, 1997) to December 31, 1998, with the total cumulative return on the
CRSP Total Return Index for the NASDAQ Stock Market - U.S. Companies and the
Russell 2000 Index over the same period. The Russell 2000 Index measures the
performance of the 2,000 smallest companies in the Russell 3000 Index (comprised
of the 3,000 largest U.S. companies based on total market capitalization). The
Russell 2000 Index was used because the Company believes that no published
industry or line-of-business index is available for comparison purposes and the
Company does not believe that it can reasonably identify an industry peer group
due to its unique characteristics. The index level for the graph and table was
set to 100 on July 24, 1997 for the Common Stock, the Nasdaq Index and the
Russell 2000 Index and assumes the reinvestment of all dividends.
[Performance Graph]
<TABLE>
<CAPTION>
Total Cumulative Return
-----------------------------------------------------------------------------------
7/24/97 9/97 12/97 3/98 6/98 9/98 12/98
------- ---- ------ ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
The Company 100 86 74 103 88 98 123
CRSP Index 100 117 110 128 132 119 154
Russell 2000 Index 100 115 111 122 119 95 110
</TABLE>
13
<PAGE>
PROPOSAL TO APPROVE AMENDMENTS TO THE
AMENDED AND RESTATED 1995 STOCK PLAN
PROPOSED AMENDMENTS REQUIRING SHAREHOLDER APPROVAL
The Board of Directors, subject to shareholder approval, has approved an
amendment to the Excelsior-Henderson Motorcycle Manufacturing Company Amended
and Restated 1995 Stock Plan (the "1995 Stock Plan") to increase by 1,000,000
(from 1,200,000 to 2,200,000) the number of shares of Common Stock available for
issuance under the 1995 Stock Plan. The purpose of this amendment is to ensure
that the Company has flexibility to meet its foreseeable future needs for awards
to be granted under the 1995 Stock Plan. If shareholders approve this
amendment, an aggregate of 919,146 shares of Common Stock would be available for
future awards under the 1995 Stock Plan.
In addition, the Board of Directors, subject to shareholder approval, has
approved an amendment to the 1995 Stock Plan which specifies that shares of
Common Stock delivered to the Company in payment of the exercise price of an
option (or in payment of any required withholding tax) shall be available for
future awards under the 1995 Stock Plan. The purpose of this amendment is to
enhance the ability of the Company to meet its future needs for awards to be
granted under the 1995 Stock Plan.
DESCRIPTION OF 1995 STOCK PLAN
GENERAL
In December 1995, the Board of Directors of the Company adopted the
Company's 1995 Stock Plan, which was approved by the Company's shareholders in
March 1996 and approved, as amended and restated, in July 1998.
As of March 15, 1999, an aggregate of 125,133 shares had been issued under
the 1995 Stock Plan and options to purchase 1,154,221 shares were outstanding
and held by employees, executive officers and directors of the Company (of which
79,354 were subject to shareholder approval). Options outstanding at March 15,
1999 have per share exercise prices ranging from $1.875 to $8.5625, or a
weighted average exercise price of $6.26, and expire from four years to ten
years from the date of grant of the option on dates ranging between June 30,
2000 and January 28, 2008, unless exercised prior to that time. Approximately
180 employees are currently eligible to participate in the 1995 Stock Plan.
PURPOSE
The purpose of the 1995 Stock Plan is to attract, motivate and retain key
personnel, including non-employee directors, to produce a superior return to the
shareholders of the Company by offering such personnel an opportunity to realize
stock appreciation, by facilitating stock ownership, and by rewarding them for
achieving a high level of corporate financial performance.
14
<PAGE>
ADMINISTRATION
The 1995 Stock Plan is administered by a committee (the "Committee") of two
or more directors who are "non-employee directors" within the meaning of Rule
16b-3 under the Exchange Act. The Compensation Committee of the Board of
Directors currently serves as the Committee that administers the 1995 Stock
Plan, of which all members are "non-employee directors" for purposes of Exchange
Act Rule 16b-3 and "outside directors" for purposes of Section 162(m) of the
Code. Subject to the provisions of the 1995 Stock Plan, the Committee has the
exclusive power to make awards under the 1995 Stock Plan, to determine when and
to whom awards will be granted, and the form, amount and other terms and
conditions of each award. The Committee has the authority to interpret the 1995
Stock Plan and any award or agreement made under the 1995 Stock Plan, to
establish, amend, waive and rescind any rules and regulations relating to the
administration of the 1995 Stock Plan, to determine the terms and provisions of
any agreements entered into under the 1995 Stock Plan (not inconsistent with the
1995 Stock Plan), and to make all other determinations necessary or advisable
for the administration of the 1995 Stock Plan. The Committee may delegate all
or part of its responsibilities under the 1995 Stock Plan to persons who are not
"non-employee directors" within the meaning of Exchange Act Rule 16b-3 for
purposes of determining and administering awards solely to employees who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.
Notwithstanding the foregoing, the granting, terms, conditions and
eligibility requirements of Director Options (as defined in the 1995 Stock Plan)
are governed solely by the provisions of the 1995 Stock Plan pertaining thereto,
and the Committee has no discretion with respect to the granting of such awards
or to alter or amend any terms, conditions or eligibility requirements of such
awards to outside directors. The provisions for automatic stock option grants to
outside directors are non-exclusive.
NUMBER OF SHARES AND ELIGIBILITY
The total number of shares of Company Common Stock available for
distribution under the 1995 Stock Plan is presently 1,200,000 (2,200,000 as the
1995 Stock Plan is proposed to be amended), subject to adjustment for future
stock splits, stock dividends and similar changes in the capitalization of the
Company. The 1995 Stock Plan provides that no participant may receive, in any
fiscal year, options to purchase more than 300,000 shares of Common Stock under
the 1995 Stock Plan.
All employees of the Company and its affiliates are eligible to receive
awards under the 1995 Stock Plan at the discretion of the Committee. Outside
directors automatically receive grants of non-statutory options as set forth
under "Types of Awards -- Director Options". Awards other than incentive stock
options also may be awarded by the Committee to individuals who are not
employees or outside directors but who provide services to the Company or its
affiliates in the capacity of an independent contractor.
TYPES OF AWARDS
The types of awards that may be granted under the 1995 Stock Plan
include incentive and non-statutory stock options and restricted and
unrestricted stock. Subject to certain restrictions
15
<PAGE>
applicable to outside director options and incentive stock options, awards
will be exercisable by the recipients at such times as are determined by the
Committee.
In addition to the general characteristics of all of the awards described
in this Proxy Statement, the basic characteristics of awards that may be granted
under the 1995 Stock Plan are as follows:
INCENTIVE AND NON-STATUTORY STOCK OPTIONS. Options may be granted to
recipients at such exercise prices as the Committee may determine but not less
than 85% of their fair market value (as defined in the 1995 Stock Plan) as of
the date the option is granted. Stock options may be granted and exercised at
such times as the Committee may determine, except that, unless applicable
federal tax laws are modified, (1) no incentive stock option may be granted at
less than fair market value, (2) no incentive stock options may be granted more
than ten years after the effective date of the 1995 Stock Plan, (3) an incentive
stock option shall not be exercisable more than ten years after the date of
grant, and (4) the aggregate fair market value of the shares of the Company's
Common Stock subject to incentive stock options that may become exercisable in
any calendar year for any employee may not exceed $100,000 under the 1995 Stock
Plan or any other plan of the Company.
The purchase price payable upon exercise of options may be payable in cash,
or through a reduction of the number of shares of Common Stock delivered to the
participant upon exercise of the option or by delivering stock already owned by
the participant (where the fair market value of the shares of Common Stock
withheld or delivered on the date of exercise is equal to the option price of
the stock being purchased), or in a combination of cash and such stock, unless
otherwise provided in the applicable award agreement. To the extent permitted
by law, the participants may simultaneously exercise options and sell the stock
purchased upon such exercise pursuant to brokerage or similar relationships and
use the sale proceeds to pay the purchase price. The ability of a participant
to pay any portion of the purchase price in shares of Common Stock or through a
reduction in the number of shares received is subject to the discretion of the
Committee to prohibit such method of payment if it could have adverse financial
accounting consequences for the Company. As proposed to be amended, the 1995
Stock Plan would specify that shares of Common Stock delivered to the Company in
payment of the exercise price of an option (or in payment of any required
withholding tax) shall be available for future awards.
DIRECTOR OPTIONS. Each outside director receives, when elected, an option
to purchase 10,000 shares of Common Stock at a price equal to the fair market
value of a share of Common Stock on the date of grant, vesting in one year. In
addition, beginning with the 1998 Annual Meeting of Shareholders, and for each
subsequent Annual Meeting of Shareholders, each outside director is granted an
option to purchase 6,667 shares of Common Stock at the conclusion of each such
Annual Meeting at a price equal to the fair market value of a share of Common
Stock on the date of grant, such options to vest on the date of the next Annual
Meeting of Shareholders subsequent to the grant. Notwithstanding the foregoing,
outside directors are not eligible to receive the 6,667 share annual option
grant prior to completing six months of service as an outside director.
RESTRICTED STOCK AND STOCK AWARDS. The Committee may grant Common Stock to
recipients containing such restrictions as the Committee may determine,
including provisions requiring forfeiture and imposing restrictions upon stock
transfer. A participant with a restricted stock award
16
<PAGE>
shall have all the other rights of a shareholder including the right to
receive dividends and the right to vote. The Committee may also grant awards
of unrestricted stock.
ACCELERATION OF AWARDS, LAPSE OF RESTRICTIONS
The Committee may accelerate vesting requirements and the expiration of the
applicable term or restrictions upon such terms and conditions as are set forth
in the participant's agreement, or otherwise in the Committee's discretion,
including acceleration resulting from a change in control, fundamental change
(as such term is defined in the 1995 Stock Plan), the meeting of performance
objectives set by the Committee, or the participant's death, disability or
retirement.
DURATION, ADJUSTMENTS, MODIFICATIONS, TERMINATION
The 1995 Stock Plan will remain in effect until all Common Stock subject to
it is distributed or all awards have expired or lapsed, whichever occurs later,
or the 1995 Stock Plan is terminated as described below.
In the event of a fundamental change, recapitalization, reclassification,
stock dividend, stock split, stock combination or other relevant change, the
Committee has the discretion to adjust the number and type of shares of Common
Stock available for awards or the number and type of shares of Common Stock
subject to outstanding awards, and the exercise price of outstanding options.
Under the 1995 Stock Plan, the Committee may cancel outstanding options
generally in exchange for cash payments to the recipients upon the occurrence of
a fundamental change.
The 1995 Stock Plan also gives the Board the right to terminate, suspend or
modify the 1995 Stock Plan, except that amendments to the 1995 Stock Plan are
subject to shareholder approval if needed to comply with Exchange Act
Rule 16b-3, the incentive stock option provisions of the Code, their successor
provisions, or any other applicable law or regulation.
SUMMARY OF FEDERAL TAX CONSIDERATIONS
The Company has been advised by its counsel that awards made under the 1995
Stock Plan generally will result in the following tax events for United States
citizens under current United States federal income tax laws.
INCENTIVE STOCK OPTIONS
A recipient will realize no taxable income, and the Company will not be
entitled to any related deduction, at the time an incentive stock option is
granted under the 1995 Stock Plan. If certain statutory employment and holding
period conditions are satisfied before the recipient disposes of shares of
Common Stock acquired pursuant to the exercise of such an option, then no
taxable income will result upon the exercise of such option and the Company will
not be entitled to any deduction in connection with such exercise. Upon
disposition of the shares of Common Stock after expiration of the statutory
holding periods, any gain or loss realized by a recipient will be a capital gain
or loss. The Company will not be entitled to a deduction with respect to a
disposition of the shares of Common Stock by a recipient after the expiration of
the statutory holding periods.
17
<PAGE>
Except in the event of death, if shares of Common Stock acquired by a
recipient upon the exercise of an incentive stock option are disposed of before
the expiration of the statutory holding periods (a "disqualifying disposition"),
the recipient will be considered to have realized as compensation, taxable as
ordinary income in the year of disposition, an amount, not exceeding the gain
realized on such disposition, equal to the difference between the exercise price
and the fair market value of the shares of Common Stock on the date of exercise
of the option. The Company will be entitled to a deduction at the same time and
in the same amount as the recipient is deemed to have realized ordinary income.
Any gain realized on the disposition in excess of the amount treated as
compensation or any loss realized on the disposition will constitute capital
gain or loss, respectively. If the recipient pays the option price with shares
of Common Stock that were originally acquired pursuant to the exercise of an
incentive stock option and the statutory holding periods for such shares of
Common Stock have not been met, the recipient will be treated as having made a
disqualifying disposition of such shares of Common Stock, and the tax
consequences of such disqualifying disposition will be as described above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, an incentive stock option will be treated as
if it were a non-statutory stock option, the tax consequences of which are
discussed below.
NON-STATUTORY STOCK OPTIONS
A recipient will realize no taxable income, and the Company will not be
entitled to any related deduction, at the time a non-statutory stock option is
granted under the 1995 Stock Plan. At the time of exercise of a non-statutory
stock option, the recipient will realize ordinary income, and the Company will
be entitled to a deduction, equal to the excess of the fair market value of the
shares of Common Stock on the date of exercise over the option price. Upon
disposition of the shares of Common Stock, any additional gain or loss realized
by the recipient will be taxed as a capital gain or loss.
RESTRICTED AND UNRESTRICTED STOCK
Unless the recipient files an election to be taxed under Section 83(b) of
the Code, (1) the recipient will not realize income upon the grant of restricted
stock, (2) the recipient will realize ordinary income, and the Company will be
entitled to a corresponding deduction, when the restrictions have been removed
or expire, and (3) the amount of such ordinary income and deduction will be the
fair market value of the restricted stock on the date the restrictions are
removed or expire. If the recipient files an election to be taxed under Section
83(b) of the Code, the tax consequences to the recipient and the Company will be
determined as of the date of the grant of the restricted stock rather than as of
the date of the removal or expiration of the restrictions.
With respect to awards of unrestricted stock, (1) the recipient will
realize ordinary income and the Company will be entitled to a corresponding
deduction upon the grant of the unrestricted stock, and (2) the amount of such
ordinary income and deduction will be the fair market value of such unrestricted
stock on the date of grant.
18
<PAGE>
When the recipient disposes of restricted or unrestricted stock, the
difference between the amount received upon such disposition and the fair market
value of such shares of Common Stock on the date the recipient realizes ordinary
income will be treated as a capital gain or loss.
WITHHOLDING
The 1995 Stock Plan permits the Company to withhold from awards an amount
sufficient to cover any required withholding taxes. If permitted by the
Committee, in lieu of cash, a participant may elect to cover withholding
obligations through a reduction in the number of shares of Common Stock to be
delivered to the participant or by delivery of shares of Common Stock already
owned by the participant.
BOARD OF DIRECTORS' RECOMMENDATION
On January 28, 1999, the Board of Directors, subject to obtaining
shareholder approval, approved amendments to the 1995 Stock Plan to increase the
total number of shares of Common Stock available for issuance under the 1995
Stock Plan from 1,200,000 to 2,200,000, and to specify that shares of Common
Stock delivered to the Company in payment of the exercise price of an option (or
in payment of any required withholding tax) shall be available for future awards
under the 1995 Stock Plan.
A vote for Proposal Three is a vote to approve the amendments to the
Excelsior-Henderson Motorcycle Manufacturing Company Amended and Restated 1995
Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENTS
TO THE EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY AMENDED AND RESTATED
1995 STOCK PLAN DISCUSSED IN THIS PROXY STATEMENT.
RELATIONSHIP WITH AND APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP has been the auditors for the Company
since the Company's inception in December 1993. The Board of Directors has
selected Arthur Andersen LLP to serve as the Company's independent auditors
for the fiscal year ending January 1, 2000, subject to ratification by the
shareholders. While it is not required to do so, the Board of Directors is
submitting the selection of that firm for ratification to ascertain the view
of the shareholders. If the selection is not ratified, the Board of
Directors will reconsider its selection. Proxies solicited by the Board of
Directors will, unless otherwise directed, be voted to ratify the appointment
of Arthur Andersen LLP as independent auditors for the Company for the fiscal
year ending January 1, 2000.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting of Shareholders and will be afforded an opportunity to make a statement
if such representative so desires and will be available to respond to
appropriate questions during the meeting.
19
<PAGE>
ADDITIONAL MATTERS
The Annual Report of the Company for the year ended January 2, 1999,
including financial statements, is being mailed with this Proxy Statement.
Shareholder proposals intended to be presented at the 2000 Annual Meeting
of Shareholders must be received by the Company at its principal executive
office no later than December 31, 1999 for inclusion in the Proxy Statement for
that meeting. Any other shareholder proposal must be received by the Company at
its principal executive office no later than March 14, 2000 in order to be
presented at the 2000 Annual Meeting of Shareholders.
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the meeting other than those referred to
herein. If any other matters properly come before the Annual Meeting calling
for a vote of shareholders, it is intended that the shares of Common Stock
represented by the proxies solicited by the Board of Directors will be voted by
the persons named therein in accordance with their best judgment.
By Order of the Board of Directors,
Gale R. Mellum
SECRETARY
Dated: April 28, 1999
20
<PAGE>
EXCELSIOR HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
805 HANLON DRIVE
BELLE PLAINE, MINNESOTA 56011
[LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
By signing this card you appoint Daniel L. Hanlon and David P. Hanlon, and
each of them, as Proxies, each with the power to appoint his substitute, and
authorize such Proxies to represent and to vote, as designated below, all the
shares of Common Stock of Excelsior-Henderson Motorcycle Manufacturing
Company held of record by you on April 7, 1999, at Annual Meeting of
Shareholders to be held on June 5, 1999, or any adjournments thereof.
SEE REVERSE FOR VOTING INSTRUCTIONS
<PAGE>
-------------------
COMPANY #
CONTROL #
-------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/bigx -- QUICK *** EASY *** IMMEDIATE
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Excelsior-Henderson, c/o Shareowner
Services-SM-, P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
-- PLEASE DETACH HERE --
1. ELECTION OF DIRECTORS (all for a one-year term):
01 Daniel L. Hanlon 02 David P. Hanlon 03 John B. Donahue
04 Wayne M. Fortun 05 David R. Pomije
(Instruction: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.)
/ / FOR ALL NOMINEES LISTED ABOVE
(except as marked to the contrary below)
------------------------------------------------
/ / WITHHOLD AUTHORITY
to vote for all nominees listed above
2. APPROVAL OF CERTAIN AMENDMENTS TO THE EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY AMENDED AND RESTATED 1995 STOCK PLAN, including
an amendment reserving 1,000,000 additional shares of Common Stock
for future awards.
/ / For / / Against / / Abstain
3. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP as independent
public accountants of the Company for the 1999 fiscal year.
/ / For / / Against / / Abstain
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS VOTED IN THE MANNER
DIRECTED BY THE SHAREHOLDER NAMED BELOW. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. THE PROXIES ARE AUTHORIZED
TO VOTE IN THEIR DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Address Change? Mark Box / /
Indicate changes below.
Dated: , 1999
--------------------------------
----------------------------------------------
/ /
----------------------------------------------
Signature(s) in Box
(If there are co-owners both must sign)
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
