SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. ____)
Filed by the Registrant |X|
File 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 ss. 240/14a-11(c) or ss. 240.14a-12
NEUTRAL POSTURE ERGONOMICS, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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:
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ___________________________________________
2) Form Schedule or Registration Statement No.:_______________________
3) Filing Party: _____________________________________________________
4) Date Filed:________________________________________________________
<PAGE>
NEUTRAL POSTURE ERGONOMICS, INC.
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Neutral Posture Ergonomics, Inc. (the "Company") on Tuesday,
November 10, 1998, at 9:00 a.m., local time. The meeting will be held at the
Dallas Marriott Quorum, 14901 Dallas Parkway, Dallas, Texas 75240.
At the meeting, you will be asked to consider and elect three directors to
serve until the 2001 Annual Meeting of Shareholders. Your Board of Directors has
unanimously nominated these persons for election as directors. You are also
being asked to ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the fiscal year ending June 30, 1999.
Information about the business of the meeting is set forth in the accompanying
proxy statement, which you are urged to read carefully. During the meeting, I
will review with you the affairs and progress of the Company since the Company's
initial public offering in October 1997. Officers of the Company will be present
to respond to questions from shareholders.
The Board of Directors appreciates and encourages shareholder
participation in the Company's affairs. Whether or not you plan to attend the
meeting, please fill out, sign, date and return the enclosed proxy promptly in
the envelope provided. Your shares will then be represented at the meeting. If
you attend the meeting, you may, at your discretion, withdraw the proxy and vote
in person.
A copy of the Company's 1998 Annual Report on Form 10-KSB to is also
enclosed. On behalf of the Board of Directors, thank you for your cooperation
and continued support.
Sincerely,
/s/ REBECCA E. BOENIGK
REBECCA E. BOENIGK
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
October 8, 1998
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, NOVEMBER 10, 1998
The Annual Meeting of Shareholders of Neutral Posture Ergonomics, Inc., a
Texas corporation (the "Company"), will be held at the Dallas Marriott Quorum,
14901 Dallas Parkway, Dallas, Texas 75240, on Tuesday, November 10, 1998 at 9:00
a.m., local time, for the following purposes:
(1) To elect three persons to serve as Class I directors until the 2001
Annual Meeting of Shareholders and until their successors are duly
elected and qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as independent
public accountants of the Company for the fiscal year ending June
30, 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on October 7, 1998,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting or any adjournments or postponements thereof. Only
shareholders of record at the close of business on October 7, 1998 are entitled
to notice of, and to vote at, such meeting. A complete list of shareholders
entitled to vote at the meeting will be available for examination at the offices
of the Company, 3904 N. Texas Avenue, Bryan, Texas 77803, for ten days prior to
the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE
ENCOURAGED TO FILL OUT, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXIES FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS
REQUESTED BY THEM.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ JAYE E. CONGLETON
JAYE E. CONGLETON
EXECUTIVE VICE PRESIDENT AND SECRETARY
October 8, 1998
<PAGE>
NEUTRAL POSTURE ERGONOMICS, INC.
3904 N. Texas Avenue
Bryan, Texas 77803
Telephone (409) 778-0502
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, NOVEMBER 10, 1998
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Neutral Posture Ergonomics, Inc., a Texas
corporation (the "Company"), for use at the Annual Meeting of Shareholders of
the Company to be held on Tuesday, November 10, 1998 (the "Annual Meeting") and
at any and all adjournments or postponements thereof. The approximate date on
which this Proxy Statement and accompanying proxy card are first being sent or
given to shareholders is October 13, 1998.
Shares represented by each proxy, if properly executed and returned to the
Company prior to the Annual Meeting, will be voted as directed, but if not
otherwise specified, will be voted for the election of the three Class I
directors and to ratify the appointment of Deloitte & Touche LLP as independent
public accountants, all as recommended by the Board of Directors. A shareholder
executing the proxy may revoke it at any time before it is voted (i) by giving
written notice to the Secretary of the Company, (ii) by subsequently executing
and delivering a later dated proxy or (iii) by voting in person at the Annual
Meeting (although attending the Annual Meeting without executing a ballot or
executing a subsequent proxy will not constitute revocation of a proxy).
OUTSTANDING VOTING SECURITIES OF THE COMPANY
On October 7, 1998, the record date for determining shareholders entitled
to vote at the Annual Meeting, there were outstanding 3,208,800 shares of Common
Stock, par value $.01 per share ("Common Stock"). Each share of Common Stock is
entitled to one vote for each director to be elected and upon all other matters
to be brought to a vote by the shareholders at the Annual Meeting. The
affirmative vote of a plurality of the shares of Common Stock present or
represented at the Annual Meeting is required to elect the Class I directors,
and the affirmative vote of a majority of the shares of Common Stock present or
represented at the Annual Meeting is required to ratify the appointment of
Deloitte & Touche LLP.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on the proposal to ratify the
appointment of the independent public accountants and will be counted as present
for such purpose, but will have the effect of a negative vote on that proposal
because that proposal requires the affirmative vote of holders of a majority of
shares present in person or by proxy and entitled to vote. Brokers who hold
shares in street name for customers may vote on certain items when they have not
received instructions from beneficial owners. Brokers that do not receive such
instructions may vote on the election of directors and the proposal to ratify
the appointment of the independent public accountants. A broker non-vote will
have no effect on the outcome of the election of directors or the proposal to
ratify the appointment of the independent public accountants.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of October 7, 1998 certain information
with regard to the beneficial ownership of the Common Stock by (i) all persons
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company and (iv) all directors and executive officers
of the Company as a group. Unless otherwise indicated, all shares shown in the
table below are held with sole voting and investment power by the person or
entity indicated.
SHARES OWNED
BENEFICIALLY
-------------------
NAME AND ADDRESS NUMBER PERCENT
---------------- --------- ----
DIRECTORS AND EXECUTIVE OFFICERS:
Rebecca E. Boenigk (1)(2) ............................ 888,410 27.8%
David W. Campbell (1)(3) ............................. 304,000 8.9%
Jaye E. Congleton (1)(4) ............................. 819,190 25.6%
EXECUTIVE OFFICERS:
David W. Ebner (1) ................................... 60,000 1.9%
Gregory A. Katt (1) .................................. 250 *
Mark E. Benden (1) ................................... 1,000 *
Danny D. Skeen (1) ................................... 0 *
DIRECTORS:
Maryla R. Fitch (5) .................................. 2,000 *
Ronald L. Jones (6) .................................. 500 *
Dr. Cynthia Pladziewicz (7) .......................... 2,500 *
James W. Thompson (8) ................................ 1,000 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(11 PERSONS) ......................................... 2,078,850 61.1%
Lord, Abbett & Co. (9)
767 Fifth Avenue
New York, New York 10153 ........................... 313,000 9.8%
* Less than 1%.
(1) The business address for the named person is 3904 N. Texas Avenue, Bryan,
Texas 77803.
(2) Includes 600 shares owned by Rebecca E. Boenigk's children. Does not include
the shares owned by Mrs. Boenigk's mother, Jaye E. Congleton, as to which
Mrs. Boenigk disclaims beneficial ownership.
(3) Includes options to purchase 200,000 shares of Common Stock that became
exercisable upon consummation of the Company's initial public offering
pursuant to the Amended and Restated 1996 Nonqualified Stock Option Plan.
(4) Does not include the shares owned by Jaye E. Congleton's daughter, Rebecca
E. Boenigk, as to which Mrs. Congleton disclaims beneficial ownership.
(5) The business for the named person is 175 Linfield Drive, Menlo Park,
California 94025.
(6) The business address for the named person is One Office Parkway, Trinity,
North Carolina 27370. Includes 250 shares owned by his spouse to which Mr.
Jones disclaims beneficial ownership.
(7) The business address for the named person is 6300 West Parker Road,
Plano, Texas 75093.
(8) The business address for the named person is 13333 Northwest Freeway,
Houston, Texas 77040.
(9) Based upon a Schedule 13G and 13F filed with the Securities and Exchange
Commission by such beneficial owner on February 13, 1998 and August 12,
1998, respectively. According to such Schedule 13G, Lord, Abbett & Co., an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, holds sole dispositive and voting power with respect to all
such shares.
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<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors into
three classes. The term of office of the Class I directors expires at the Annual
Meeting. The Class II directors will serve until the 1999 Annual Meeting of
Shareholders, and the Class III directors will serve until the 2000 Annual
Meeting of Shareholders.
It is intended that the names of the nominees listed below will be placed
in nomination and that the persons named in the proxy will vote for their
election. Each nominee has consented to being named in this Proxy Statement and
to serve if elected. If any nominee becomes unavailable for any reason, the
shares represented by the proxies will be voted for such person, if any, as may
be designated by the Board of Directors. However, management has no reason to
believe that any nominee will be unavailable.
NOMINEES
CLASS I - TERM TO EXPIRE IN 2001
NAME AGE CURRENT POSITION
---- --- ----------------
David W. Campbell............ 56 President and Director
Maryla R. Fitch.............. 51 Director
Dr. Cynthia Pladziewicz...... 41 Director
DIRECTORS CONTINUING IN OFFICE
CLASS II -- TERM TO EXPIRE IN 1999
NAME AGE CURRENT POSITION
---- --- ----------------
Jaye E. Congleton............ 54 Executive Vice President, Secretary
and Director
Ronald L. Jones.............. 56 Director
CLASS III -- TERM TO EXPIRE IN 2000
NAME AGE CURRENT POSITION
---- --- ----------------
Rebecca E. Boenigk........... 34 Chairman of the Board,
Chief Executive Officer and Director
James W. Thompson............ 47 Director
Set forth below is a description of the background of each of the
directors of the Company.
REBECCA E. BOENIGK co-founded the Company in 1990 with Jaye E. Congleton
and has served as Chairman of the Board since 1990 and Chief Executive Officer
since 1996 and served as President from 1990 to 1996. She currently serves in
the class of directors whose terms expire at the 2000 Annual Meeting of
Shareholders. Mrs. Boenigk also serves on the Industry Advisory Board of the
National Science Foundation Industry/University Cooperative Research Center in
Ergonomics at Texas A&M University. Mrs. Boenigk is a member of the Human Factor
and Ergonomic Society. In 1997, Mrs. Boenigk was awarded, along with her mother,
Mrs. Congleton, Ernst and Young's Entrepreneur of the Year award in
manufacturing in the Houston region. Mrs. Boenigk is the daughter of Mrs.
Congleton, a director and officer of the Company, and Dr. Jerome Congleton, a
consultant to the Company.
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<PAGE>
DAVID W. CAMPBELL has served as President and a director of the Company
since April 1, 1996, and serves in the class of directors whose terms expire at
the 1998 Annual Meeting of Shareholders. Prior to assuming these positions, from
1994 to 1996, Mr. Campbell was a principal with Pate, Winters and Stone,
Management Consultants. From 1989 to 1994, Mr. Campbell served as a Division
President of Scotsman Industries, Inc., a publicly held manufacturer and
marketer of refrigeration products primarily for the food service industry.
JAYE E. CONGLETON co-founded the Company in 1990 with Rebecca E. Boenigk
and has served as a director, Executive Vice President and Secretary of the
Company since April 1998 and also served as a director, Executive Vice President
and Secretary from 1990 to August 1997. Mrs. Congleton currently serves in the
class of directors whose terms expire at the 1999 Annual Meeting of
Shareholders. In 1997, Mrs. Congleton was awarded, along with her daughter, Mrs.
Boenigk, Ernst and Young's Entrepreneur of the Year award in manufacturing in
the Houston region. Mrs. Congleton is the mother of Mrs. Boenigk, the Chairman
of the Board and Chief Executive Officer of the Company, and the spouse of Dr.
Jerome Congleton, a consultant to the Company.
MARYLA R. FITCH has served as a director of the Company since April 1998
and serves in the class of directors whose terms expire at the 1998 Annual
Meeting of Shareholders. Mrs. Fitch has served as Vice President, Corporate
Relations and Secretary of Consolidated Freightways Corporation, a freight
transportation company, since December 1996 when it was spun-off as a
publicly-traded company. From 1991 to 1996, Mrs. Fitch served as Vice President,
Investor Relations and Secretary of CNF Transportation Inc., former parent of
Consolidated Freightways Corporation.
RONALD L. JONES has served as a director of the Company since August 1997
and serves in the class of directors whose terms expire at the 1999 Annual
Meeting of Shareholders. Since March 1996, Mr. Jones has served as President and
Chief Executive Officer of Sealy Corporation, a manufacturer of mattresses and
box springs. From 1988 to 1996, he served as President of Masco Home Furnishings
Inc., a furniture manufacturer. Mr. Jones served as President of HON Industries,
Inc., a publicly traded national manufacturer and marketer of office furniture,
from 1982 to 1988.
DR. CYNTHIA PLADZIEWICZ has served as a director of the Company since
August 1997 and serves in the class of directors whose terms expire at the 1998
Annual Meeting of Shareholders. Since October 1995, Dr. Pladziewicz has worked
as a psychologist in private practice. She conducts psychological assessments
and pre-surgical psychological screenings, leads psycho-educational and support
groups focused on pain management and consults with physicians and hospitals
regarding patient treatment related to spine surgery and other medical programs.
Dr. Pladziewicz is an attorney who served of counsel to Thompson & Knight, P.C.
from 1991 to June 1997. She is an adjunct professor at Southern Methodist
University where she teaches classes related to law and psychology.
JAMES W. THOMPSON has served as a director of the Company since August
1997 and serves in the class of directors whose terms expire at the 2000 Annual
Meeting of Shareholders. Since December 1994, Mr. Thompson has served as
President, Chief Executive Officer and director of Vallen Corporation, a
publicly held distributor of industrial safety and health products designed for
the protection of the individual worker and the workplace environment. Mr.
Thompson joined Vallen Corporation in June 1994 as President and Chief Executive
Officer of Vallen Safety Supply Company. From 1991 to 1994, Mr. Thompson was the
Senior Group Vice President of Westburne, Inc., a publicly traded distributor of
electrical plumbing, HVAC and telecommunications equipment.
The affirmative vote of a plurality of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting is required to elect the
nominees for director named above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR NAMED ABOVE.
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<PAGE>
MEETINGS OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets to review significant developments affecting the
Company and to act on matters requiring Board approval. It also holds special
meetings when an important matter requires Board action between scheduled
meetings. The Board of Directors met six times during fiscal year 1998. During
fiscal year 1998, each member of the Board participated in at least 75% of all
Board and applicable committee meetings held during the period.
The Board of Directors has established audit and compensation committees
to devote attention to specific subjects and to assist it in the discharge of
its responsibilities. The functions of those committees, their current members
and the number of meetings held during fiscal year 1998 are described below. The
Board of Directors does not have a standing nominating committee.
AUDIT COMMITTEE. The Board of Directors has a standing Audit Committee
(the "Audit Committee") which provides the opportunity for direct communications
between the independent public accountants and the Board of Directors. The Audit
Committee meets with the certified public accountants periodically to review
their effectiveness during the annual audit program and to discuss the Company's
internal control policies and procedures. The members of the Audit Committee are
currently Ms. Fitch, Dr. Pladziewicz and Mr. Jones. The Audit Committee did not
meet during fiscal year 1998.
COMPENSATION COMMITTEE. The Board of Directors also has a standing
Compensation Committee (the "Compensation Committee") that provides
recommendations to the Board of Directors regarding salaries and other
compensation of executive officers of the Company. The members of the
Compensation Committee are currently Dr. Pladziewicz and Messrs. Jones and
Thompson. The Compensation Committee met two times during fiscal year 1998.
COMPENSATION OF DIRECTORS
Directors who are not also employees of the Company receive options to
purchase 5,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock. Such options vest one year after the date of
grant. Such directors are also paid a fee of $1,000 per board meeting attended
and $750 per board committee meeting attended and are reimbursed for
out-of-pocket expenses incurred for attendance at such meetings. Other than with
respect to reimbursement of expenses, directors who are employees of the Company
do not receive additional compensation for their services as a director.
PROPOSAL II
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee,
has appointed Deloitte & Touche LLP as the independent public accountants of the
Company for the fiscal year ending June 30, 1999, subject to shareholder
ratification. Representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting with the opportunity to make a statement if they
so desire and to be available to respond to appropriate questions.
The affirmative vote of a majority of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote is
required to ratify the appointment of Deloitte & Touche LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP.
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<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services in all capacities to the Company for fiscal years
1996, 1997 and 1998, with respect to those persons who were during fiscal year
1998 (i) the Chief Executive Officer and (ii) the other executive officer of the
Company that earns over $100,000 per year (collectively, with the Chief
Executive Officer, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- --------------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITIONS YEAR SALARY BONUS OPTIONS COMPENSATION
------ -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Rebecca E. Boenigk 1998 $200,000 $ 0 $ 0 $ 14,960(1)
Chairman of the . 1997 200,000 78,179 0 13,938(2)
Board and Chief 1996 200,000 57,878 0 12,000(3)
Executive Officer
David W. Campbell . 1998 135,000 0 0 11,480(4)
President ....... 1997 120,000 50,406 0 6,100(5)
1996 30,000(6) 0 400,000(7) 0
</TABLE>
(1) Amount consists of (i) the estimated dollar value of the benefit to the
executive officer of Company-paid premiums on split-dollar life insurance
policies on the life of the executive in the amount of $12,000 and (ii) the
estimated dollar value of the benefit to the executive officer of the
personal use of the Company's automobile in the amount of $2,960.
(2) Amount consists of (i) the estimated dollar value of the benefit to the
executive officer of Company-paid premiums on split-dollar life insurance
policies on the life of the executive in the amount of $12,000 and (ii) the
estimated dollar value of the benefit to the executive officer of the
personal use of the Company's automobile in the amount of $1,938.
(3) Amount represents the estimated dollar value of the benefit to the executive
officer of Company-paid premiums on split-dollar life insurance policies on
the life of the executive in the amount of $12,000.
(4) Amount represents (i) the estimated dollar value of the benefit to the
executive officer and his spouse of Company-paid premiums on life insurance
policies on the life of the executive in the amount of $3,080 and (ii) the
auto allowance paid to the executive officer in the amount of $8,400.
(5) Amount represents the estimated dollar value of the benefit to the executive
officer and his spouse of Company-paid premiums on life insurance policies
on the life of the executive.
(6) David Campbell joined the Company in April 1996.
(7) Granted in April 1996 under the Company's Amended and Restated 1996
Nonqualified Stock Option Plan. Upon consummation of the initial public
offering, all options became exercisable.
STOCK OPTIONS. There were no stock options granted or exercised by the
Company's Named Executive Officers during fiscal year 1998.
EMPLOYMENT AND CONSULTING CONTRACTS. The Company has entered into
employment agreements with Rebecca E. Boenigk, the Company's Chairman of the
Board and Chief Executive Officer, David W. Campbell, the Company's President,
David W. Ebner, the Company's Vice President of Operations, and Gregory A. Katt,
the Company's Vice President and Chief Financial Officer, for a term expiring on
July 1, 2000, subject to automatic one-year extensions unless either party gives
90 days written notice of its intention not to renew. The agreement with Mrs.
Boenigk provides for a base salary of $200,000, with an annual bonus based on
the attainment of targets set by the Board of Directors. Mrs. Boenigk's
employment agreement provides that if she is terminated by the Company without
cause or for nonperformance due to disability or if she terminates because of
breach of the agreement by the Company then Mrs. Boenigk will receive (i) all
accrued salary, if applicable; (ii) benefits for 12 months; (iii) an amount
equal to twice her base salary for the preceding year; and (iv) an amount equal
to her bonus for the preceding year. The agreement with Mr. Campbell provides
for a base salary of $135,000 and an annual
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bonus based on the attainment of targets set by the Board of Directors. The
agreement with Mr. Ebner provides for a base salary that is currently $80,450
and an annual bonus based on the attainment of targets set by the Board of
Directors. The agreement with Mr. Katt provides for a base salary that is
currently $84,000 and an annual bonus based on the attainment of targets set by
the Board of Directors. Each of Mr. Campbell's, Mr. Ebner's, and Mr. Katt's
employment agreements provides that if he is terminated by the Company without
cause or for nonperformance due to disability or if he terminates because of
breach of the agreement by the Company then he will receive (i) all accrued
salary, if applicable; (ii) employment benefits for 12 months; (iii) an amount
equal to his base salary for the preceding year; and (iv) an amount equal to 50%
of his bonus for the preceding year. Officers' salaries may be increased at the
discretion of the Board of Directors. All agreements contain non-compete (during
the term of the agreement and for a specified term ranging from 12 to 18 months
thereafter) and confidentiality provisions.
In addition, the Company has entered into a Consulting Agreement, dated as
of July 1, 1997, with Dr. Jerome Congleton. Pursuant to this agreement, which
terminates on July 1, 2007, Dr. Congleton receives an annual fee of $35,000;
provided that Dr. Congleton will receive an annual fee of $90,000, prorated for
any partial service, if Jaye E. Congleton is terminated from the Company or if
her compensation is decreased. From July 1, 1997 to April 1998, Dr. Congleton
received an annual fee of $90,000. Dr. Congleton agrees to assign to the Company
all right, title and interest in and to any inventions, designs, improvements or
discoveries during the term of the agreement. The agreement may be terminated at
any time by the written mutual agreement of Dr. Congleton and the Company or by
either party in the event that the other party has committed a material breach
of any of the provisions of the agreement. For the term of the agreement and for
a period of 18 months from the last day of the term of the agreement, Dr.
Congleton agrees not to participate in any manner in any business that is
involved in the design, manufacturing, distribution or sale of ergonomic chairs
and any other office products in any state or country where the Company is
engaged in business or where Dr. Congleton has been involved in strategic
planning on behalf of the Company. The agreement also contains non-solicitation
and confidentiality provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
There were no reportable business relationships between the Company and
the members of the Compensation Committee in fiscal year 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Act requires the Company's directors, executive
officers and beneficial owners of more than 10% of the Common Stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Based solely upon its review of the copies of such forms received by it
and its knowledge that no Form 5s were required from reporting persons, the
Company believes that all such reports were submitted on a timely basis during
fiscal year 1998, except that Danny Skeen and David Ebner, executive officers of
the Company, each filed one late report.
CERTAIN TRANSACTIONS
COMPANY LOANS. In June 1996 and April 1997, the Company made loans
pursuant to notes in the amounts of $32,225 and $106,225, respectively, to Mr.
Campbell, the President and a director of the Company. The Company received the
notes pursuant to the terms of an option agreement with Mr. Campbell to cover a
portion of the exercise price of stock options to purchase 200,000 shares of
Common Stock at an exercise price of $.22 1/2 and to cover the related tax
effects. After such exercise, Mr. Campbell holds options to purchase 200,000
shares of Common Stock at an exercise price of $.22 1/2 per share. These
recourse notes bear interest at a rate of 7.5% per annum and mature on December
31, 2000 and December 31, 2001, respectively.
In June 1996, the Company made a loan pursuant to a note in the amount of
$32,225 to Mr. Ebner, Vice President of Operations of the Company. The Company
received the note pursuant to the terms of an option agreement with Mr. Ebner to
cover a portion of the exercise price of stock options to purchase 100,000
shares of
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Common Stock at an exercise price of $.22 1/2 per share and to cover the related
tax effects. This recourse note bears interest at a rate of 7.5% per annum and
matures on December 31, 2000.
ROYALTIES. In March 1997, Dr. Congleton, a consultant to the Company,
assigned the rights, title and interest in the patent covering most of the chair
models in the Neutral Posture char line (the "Patent") to the Company in
exchange for $30,000 and 25% of net royalties collected by the Company from
third parties for products manufactured, used or sold under license or
sublicense of the Patent. On September 3, 1998, the District Court of Brazos
County rescinded the original assignment of the Patent from Dr. Congleton to the
Company; however, the Court invited Dr. Congleton to re-executed the assignment
of the Patent to the Company subject to any restrictions arising out of an
earlier settlement agreement. The assignment was re-executed on September 3,
1998. Dr. Congleton also has a written agreement with the Company that grants
him a perpetual 3% royalty (exclusive of Texas A&M University's royalty to Dr.
Congleton) on the net sales of every ComputERGO(TM) sold by the Company.
GUARANTEES. The Company's revolving credit facility was guaranteed by Mrs.
Boenigk, Chairman of the Board and Chief Executive Officer, and Mrs. Congleton,
a Vice President, Secretary and a director of the Company. No amounts were
outstanding under such revolving credit facility loan at June 30, 1998. Upon
consummation of the Company's initial public offering, Mrs. Boenigk's and Mrs.
Congleton's personal guarantees were released by the lender. In addition,
certain loan agreements were guaranteed by Mrs. Boenigk, Bobby Boenigk, Mrs.
Boenigk's husband, Mrs. Congleton and Dr. Congleton. The Company owed $138,000
and $463,000 under such loan agreements at June 30, 1998. Upon consummation of
the Company's initial public offering, these personal guarantees were released
by the lender.
DISTRIBUTIONS. For the period between April 1, 1996 through October 20,
1997, consummation of the initial public offering, the Company paid
distributions of $458,000 to its shareholders in connection with their estimated
federal income tax obligations attributable to the Company's S Corporation
earnings, of which Mrs. Boenigk, Mrs. Congleton, and Messrs. Campbell and Ebner
received $197,293, $182,036, $26,421 and $20,551, respectively. The Company has
no intention of declaring or paying any other dividend or making any other
distribution to its shareholders in the near future.
OTHER RELATIONSHIPS. Dr. Cynthia Pladziewicz, a director of the Company,
served of counsel to Thompson & Knight, P.C. during fiscal year 1997. The
Company retained Thompson & Knight, P.C. to perform certain blue sky research
and filings in connection with the Company's initial public offering during
fiscal year 1998. Dr. Congleton's, a consultant to the Company, fee is subject
to adjustment upon the occurrence of certain events. See "Executive Compensation
- - Employment and Consulting Agreements."
FUTURE TRANSACTIONS. Although the Company has no present intention to do
so, it may in the future enter into other transactions incident to its business
with its directors, officers, shareholders and other affiliates. The Company's
policy is that any transaction in the future with an affiliated entity,
executive officer, shareholder or director will be subject to review and
approval by a majority of the Company's directors who have no interest in the
transaction and such transaction will be on no less favorable terms than the
Company could obtain from unaffiliated parties.
SHAREHOLDER PROPOSALS
Pursuant to the rules of the Securities and Exchange Commission, in order
for shareholder proposals to receive consideration for inclusion in the
Company's Proxy Statement for the 1999 Annual Meeting of Shareholders, such
proposals must be received by the Company at its principal executive offices no
later than June 10, 1999. Such proposals should be directed to Neutral Posture
Ergonomics, Inc., 3904 N. Texas Avenue, Bryan, Texas 77803, Attention: Chief
Executive Officer.
8
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GENERAL
The 1998 Annual Report to Shareholders, which includes the Company's
Annual Report on Form 10-KSB, has been mailed to the Company's shareholders with
this mailing. The Annual Report does not form any part of the material for the
solicitation of proxies.
The expense of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone or telegram. The Company
may request brokers, dealers or other nominees to send proxy materials to and
obtain proxies from their principals and the Company may reimburse such persons
for their reasonable expenses.
OTHER BUSINESS
Management knows of no other matter that will come before the Annual
Meeting. However, if other matters do come before the Annual Meeting, the proxy
holders will vote in accordance with their best judgment.
9
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FRONT SIDE OF PROXY
REVOCABLE PROXY
NEUTRAL POSTURE ERGONOMICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Rebecca E. Boenigk and Gregory A. Katt,
or either of them, with full power of substitution and resubstitution, as
proxies of the undersigned, with all the powers that the undersigned would
possess if personally present to cast all votes that the undersigned would be
entitled to vote at the Annual Meeting of Shareholders of Neutral Posture
Ergonomics, Inc. (the "Company") to be held on November 10, 1998, at the
Dallas Marriott Quorum at 14901 Dallas Parkway, Dallas, Texas 75240 at 9:00
a.m., local time, and any and all adjournments, continuations and
postponements thereof (the "Annual Meeting"), including (without limiting
the generality of the foregoing) to vote and act as follows:
1. ELECTION OF THREE CLASS I DIRECTORS.
Nominees: David W. Campbell, Maryla R. Fitch and Cynthia Pladziewicz.
[ ] FOR all nominees (except as set [ ] WITHHOLD AUTHORITY to vote for
forth to the contrary below) all nominees
----------------------------------
In the event the undersigned wishes to withhold authority to vote for
any particular nominee listed above, please so indicate by clearly
writing the name of any such nominee on the line above.
2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
BACK SIDE OF PROXY
(CONTINUED FROM OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES
FOR DIRECTOR AND FOR THE RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 1999. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS PRESENTED.
_________________________________
Signature
_________________________________
Signature if held jointly
Date: ___________________ , 1998
Please sign exactly as your name
appears on your stock certificate.
If 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 shares are held of
record by a corporation, please
sign in full corporate name by
president or other authorized
officer. If shares are held of
record by a partnership, please
sign in full partnership name by
an authorized signatory.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
