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 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:
____________________________________________________________________
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:
____________________________________________________________________
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>
[NEUTRAL POSTURE ERGONOMICS, INC. LOGO]
NEUTRAL POSTURE ERGONOMICS, INC.
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders of
Neutral Posture Ergonomics, Inc. (the "COMPANY") on Friday, November 10, 2000,
at 9:00 a.m., local time. The meeting will be held at the Brazos Center, 3232
Briarcrest Drive, Bryan, Texas 77802.
At the meeting, you will be asked to consider and elect two directors to serve
until the 2003 Annual Meeting of Shareholders. Your Board of Directors has
unanimously nominated these persons for election as director. You are also being
asked to vote on the following items:
(1) approval of an increase in the number of shares available to be
issued under the Neutral Posture Ergonomics, Inc. 1997 Omnibus
Securities Plan from 200,000 to 500,000; and
(2) ratification of the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for the fiscal year ending
June 30, 2001.
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 over the last year.
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 2000 Annual Report on Form 10-KSB 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 16, 2000
<PAGE>
NEUTRAL POSTURE ERGONOMICS, INC.
3904 N. Texas Avenue
Bryan, Texas 77803
Telephone (979) 778-0502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, NOVEMBER 10, 2000
The Annual Meeting of Shareholders of Neutral Posture Ergonomics, Inc., a Texas
corporation (the "COMPANY"), will be held at the Brazos Center, 3232 Briarcrest
Drive, Bryan, Texas 77802, on Friday, November 10, 2000 at 9:00 a.m., local
time, for the following purposes:
(1) To elect two persons to serve as Class III directors until the 2003
Annual Meeting of Shareholders and until their successors are duly
elected and qualified;
(2) To approve an increase in the number of shares available to be
issued under the Neutral Posture Ergonomics, Inc. 1997 Omnibus
Securities Plan from 200,000 to 500,000;
(3) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the fiscal year ending June 30,
2001; and
(4) 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 10, 2000, 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 10, 2000 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 3904 N.
Texas Avenue, Bryan, Texas 77803, for ten days prior to and during the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE ENCOURAGED TO
FILL OUT, SIGN 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-PRODUCT
DEVELOPMENT AND SECRETARY
Bryan, Texas
October 16, 2000
<PAGE>
NEUTRAL POSTURE ERGONOMICS, INC.
3904 N. Texas Avenue
Bryan, Texas 77803
Telephone (979) 778-0502
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, NOVEMBER 10, 2000
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 at the Brazos Center, 3232 Briarcrest Drive, Bryan, Texas
77802, on Friday, November 10, 2000 (the "ANNUAL MEETING") at 9:00 a.m., local
time, 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 16, 2000.
Shares represented by each proxy, if properly executed and returned to the
Company prior to the Annual Meeting, will be voted in accordance with your
directions. If you do not specify on your proxy card how you want to vote your
shares, they will be voted:
o "FOR" the election of two Class III directors;
o "FOR" the approval of an increase in the number of shares available
to be issued under the Neutral Posture Ergonomics, Inc. 1997 Omnibus
Securities Plan (the "OMNIBUS SECURITIES PLAN") from 200,000 to
500,000; and
o "FOR" the ratification of the appointment of Deloitte & Touche LLP
as independent public accountants for the fiscal year ending June
30, 2001.
A shareholder executing a proxy may revoke it at any time before it is voted
through any of the following actions:
(1) by giving written notice to the Secretary of the Company;
(2) by subsequently executing and delivering a later dated proxy; or
(3) 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 10, 2000, the record date for determining shareholders entitled to
vote at the Annual Meeting, there were outstanding 3,308,800 shares of common
stock, par value $.01 per share. 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 III director and the affirmative vote of
a majority of the shares of common stock present or represented at the Annual
Meeting is required to approve each of the other matters to be voted upon at the
Annual Meeting.
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. Directors are elected by a plurality of the votes of the
shares represented in person or by proxy. With respect to each of the other
matters to be voted upon at the Annual Meeting, shareholders may abstain from
voting. Abstentions will be counted as present for such purposes, but will have
the effect of a negative vote on such proposals because such proposals require
the affirmative vote of a majority of the shares of common stock present or
represented at the Annual Meeting.
<PAGE>
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
other proposals to be voted upon at the Annual Meeting. A broker non-vote will
have no effect on the outcome of the election of directors or the other
proposals to be voted upon at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 2000 certain information with
regard to the beneficial ownership of the common stock by:
(1) each person known by the Company to be the beneficial owner of more
than 5% of the outstanding common stock;
(2) each director of the Company;
(3) each executive officer of the Company; and
(4) 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) 916,510 27.7%
Jaye E. Congleton (1)(3) 814,440 24.6%
Tom Peterson (1) 100,000 3.0%
EXECUTIVE OFFICERS:
David W. Ebner (1) 60,100 1.8%
Gregory A. Katt (1)(4) 17,850 *
Mark E. Benden (1)(5) 11,100 *
DIRECTORS:
Susan P. Bari (6) -- *
Maryla R. Fitch (7) 7,000 *
Dr. Cynthia Pladziewicz (8) 7,500 *
John R. Samuel (9) -- *
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (10 PERSONS) 1,934,500 58.0%
FIVE PERCENT SHAREHOLDERS:
Rebecca E. Boenigk (1)(2) 916,510 27.7%
Jaye E. Congleton (1)(3) 814,440 24.6%
* Less than 1%.
(1) The business address for the named person is 3904 N. Texas Avenue, Bryan,
Texas 77803.
(2) Includes an aggregate of 18,900 shares in Mrs. Boenigk's daughter's and
son's UGMA account, of which Mrs. Boenigk's husband is the custodian. Does
not include the shares owned by Mrs. Boenigk's mother, Jaye E. Congleton,
as to which Mrs. Boenigk disclaims beneficial ownership.
-2-
<PAGE>
(3) Includes an aggregate of 4,700 shares in Mrs. Congleton's grandchildren's
UGMA accounts, of which Mrs. Congleton is the custodian. Does not include
the shares owned by Jaye E. Congleton's daughter, Rebecca E. Boenigk, as
to which Mrs. Congleton disclaims beneficial ownership.
(4) Includes 12,500 shares issuable upon exercise of stock options.
(5) Includes 5,000 shares issuable upon exercise of stock options.
(6) The business address for the named person is 1120 Connecticut Avenue NW,
Suite 950, Washington, DC. 20036.
(7) The business address for the named person is 16400 SE CF Way, Vancouver,
Washington 98683. Includes 5,000 shares issuable upon exercise of stock
options.
(8) The business address for the named person is 3707 Gaston Avenue, Suite
418, Dallas, Texas 75246 and includes 5,000 shares issuable upon exercise
of stock options.
(9) The business address for the named person is 4333 Amon Carter Blvd., MD
5283, Fort Worth, Texas 75261.
-3-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors into three
classes. The term of office of the Class III directors expire at the Annual
Meeting. The Class I directors will serve until the 2001 Annual Meeting of
Shareholders, and the Class II directors will serve until the 2002 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.
The nominees have consented to being named in this proxy statement and to serve
if elected. If any of the nominees become 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 the nominees will be unavailable.
NOMINEE
CLASS III -- TERM TO EXPIRE IN 2003
NAME AGE CURRENT POSITION
---- --- ----------------
Rebecca E. Boenigk 36 Chairman of the Board,
Chief Executive Officer and Director
Susan Phillips Bari 55 Director
DIRECTORS CONTINUING IN OFFICE
CLASS I -- TERM TO EXPIRE IN 2001
NAME AGE CURRENT POSITION
---- --- ----------------
Maryla R. Fitch 53 Director
Dr. Cynthia Pladziewicz 43 Director
Thomas G. Peterson 35 President, Chief Operating Officer
and Director
CLASS II - TERM TO EXPIRE IN 2002
NAME AGE CURRENT POSITION
---- --- ----------------
Jaye E. Congleton 56 Executive Vice President - Product
Development, Secretary and Director
John R. Samuel 37 Director
Set forth below is a description of the background of each of the directors
continuing in office and the nominees for director 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 and a member of the Leadership Forum of the Women's
Business Enterprise National Council. In 1997, Mrs. Boenigk was awarded, along
with her mother, Mrs. Congleton, Ernst and Young's Entrepreneur of the Year
award in manufacturing in
-4-
<PAGE>
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.
JAYE E. CONGLETON co-founded the Company in 1990 with Rebecca E. Boenigk and has
served as a director, Executive Vice President - Product Development 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 2002 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.
SUSAN P. BARI has served as a director of the Company since March 2000 and
serves in the class of directors whose terms expire at the 2000 Annual Meeting
of Shareholders. Mrs. Bari has served as President of the Women's Business
Enterprise National Council since 1997. From 1995 to 1997, Mrs. Bari served as
President of the Nonprofit Management Corporation that provided counsel to
nonprofit organizations and small businesses. Mrs. Bari has also spent five
years as Executive Director of the American Women's Economic Development
Corporation and three years as Associate Director, Office of Presidential
Personnel for the White House.
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 2001 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.
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 2001 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.
THOMAS G. PETERSON joined the Company in January 2000 as President and Chief
Operating Officer. In March 2000, he was appointed to serve as a director of the
Company and currently serves in the class of directors whose term expires at the
2001 Annual Meeting of Shareholders. For the five years prior to joining the
Company, Mr. Peterson served as Vice President, Business Development for The
International Source for Ergonomics, Inc. ("ISE, Inc."), a Canadian distributor
of ergonomic accessory line products marketed primarily in the United States and
Canada.
JOHN R. SAMUEL has served as a director of the Company since March 2000 and
serves in the class of directors whose terms expire at the 2002 Annual Meeting
of Shareholders. Mr. Samuel has served as Vice President-Interactive Marketing
for American Airlines since July 1999. From July 1995 to July 1999, Mr. Samuel
served as Managing Director-Interactive Marketing and as Director of Revenue
Management Development from July 1994 to July 1995.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a plurality of the shares represented at the meeting and
entitled to vote 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.
-5-
<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 eight times during fiscal year 2000. During
fiscal year 2000, 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 2000 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 Mrs. Bari. The Audit Committee met
three times during fiscal year 2000.
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, Ms. Fitch, Mrs. Bari and Mr. Samuel. The Compensation Committee
met two times during fiscal year 2000.
COMPENSATION OF DIRECTORS
Directors who are not also employees of the Company received options to purchase
5,000 shares of common stock at an exercise price equal to the fair market value
of the common stock upon joining the Board of Directors. Such options vest one
year after the date of grant. 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.
-6-
<PAGE>
PROPOSAL 2
APPROVAL TO INCREASE THE NUMBER OF SHARES AVAILABLE TO BE ISSUED UNDER THE
NEUTRAL POSTURE ERGONOMICS, INC 1997 OMNIBUS SECURITIES PLAN
GENERAL
The Board of Directors adopted and approved the Omnibus Securities Plan
effective as of September 22, 1997. The Company's shareholders at the time also
approved the Omnibus Securities Plan. Under the Omnibus Securities Plan, an
employee (including an employee who is also a director or an officer), director
or consultant of the Company whose judgment, initiative and efforts contributed
or may be expected to contribute to the successful performance of the Company is
eligible to receive awards ("AWARDS") under the Omnibus Securities Plan at the
discretion of the Compensation Committee.
In efforts to provide the Board flexibility in determining compensation and
incentive levels, the Company is seeking the approval of the shareholders to
increase the number of shares available to be issued under the Omnibus
Securities Plan from 200,000 to 500,000. As of June 30, 2000, the Omnibus
Securities Plan had 45,095 available for issuance under the plan. A copy of the
proposed amendment to the Omnibus Securities Plan is attached hereto as APPENDIX
A.
The provisions of the Omnibus Securities Plan are summarized below. All such
statements are qualified in their entirety by reference to the full text of the
Omnibus Securities Plan.
Nothing in the Omnibus Securities Plan or in any Award grant pursuant to it
confers upon any employee any right to continue in the employ of the Company.
The proceeds from the sale of common stock pursuant to the exercise or payment
for Awards under the Omnibus Securities Plan will be added to the general funds
of the Company and used for general corporate purposes. The holder of an award
granted pursuant to the Omnibus Securities Plan does not have any of the rights
or privileges of a shareholder, except with respect to shares that have been
actually issued.
PURPOSE
The purposes of the Omnibus Securities Plan are:
(1) to attract and retain the services of key management employees of
the Company and its subsidiaries;
(2) to provide such employees with a proprietary interest in the
Company;
(3) to increase the interest of such employees in the Company's welfare;
(4) to furnish an incentive to such employees to continue their services
for the Company; and
(5) to provide a means through which the Company may attract able
persons.
ELIGIBILITY
Employees (including employees who are also directors or officers), directors or
consultants of the Company whose judgment, initiative and efforts contributed or
may be expected to contribute to the successful performance of the Company are
eligible to be granted Awards under the Omnibus Securities Plan at the
discretion of the Compensation Committee; provided, that only employees are
eligible to receive incentive stock options. The Company had approximately 91
employees, four outside directors and one consultant, at the date of this proxy
statement, all of whom are eligible to participate in the Omnibus Securities
Plan.
-7-
<PAGE>
SHARES
The aggregate number of shares of common stock that may be issued under the
Omnibus Securities Plan is currently 200,000 shares. The unexercised portion of
any terminated, expired, exchanged, or forfeited Award or an Award settled in
cash in lieu of shares, shall be available for further Awards under the Omnibus
Securities Plan.
If the shareholders approve the proposal, the number of shares available to be
issued under the Omnibus Securities Plan will increase from 200,000 to 500,000.
ADMINISTRATION
The Omnibus Securities Plan is interpreted and administered by the Compensation
Committee of the Board of Directors, which must be comprised solely of at least
two outside directors of the Company. Each member of the Compensation Committee
must also be at the time of his or her appointment and while serving as a member
thereof a "NON-EMPLOYEE DIRECTOR" as such term is defined in Rule 16b-3
promulgated under the Securities and Exchange Act of 1934, as amended ("1934
ACT").
The Compensation Committee has full authority, in its discretion, to:
(1) determine and designate the eligible persons to whom Awards will
be granted;
(2) determine the nature, amount, pricing, timing and other terms of
the Award;
(3) interpret the Omnibus Securities Plan;
(4) prescribe, amend and rescind any rules and regulations necessary
or appropriate for the administration of the Omnibus Securities
Plan; and
(5) make such other determinations and take such other actions as it
deems necessary or advisable in the administration of the Omnibus
Securities Plan.
The types of Awards which the Compensation Committee has authority to grant
consist of:
(1) incentive stock options;
(2) non-qualified stock options;
(3) restricted stock; and
(4) stock appreciation rights.
AWARDS
GENERAL. No participant may receive during any fiscal year Awards covering an
aggregate of more than 100,000 shares of common stock.
No portion of any Award may be exercised after the expiration of ten years from
its date of grant. However, if an employee owns or is deemed to own (by reason
of the attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company (or any parent or
subsidiary) and an incentive stock option is granted to such employee, the term
of such incentive stock option (to the extent required by the Code at the time
of grant) shall be no more than five years from the date of grant.
-8-
<PAGE>
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS. The option price for
each stock option is determined by the Compensation Committee. The option price
for a non-qualified stock option shall be such price as determined by the
Compensation Committee; provided, however, such option price shall not be less
than the par value per share of the common stock. The option price for an
incentive stock option shall be at least 100% of the fair market value of the
share on the date of grant. If an incentive stock option is granted to an
employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent or subsidiary), the option price
shall be at least 110% of the fair market value of the common stock on the date
of grant. Under the Omnibus Securities Plan, fair market value for a particular
date is generally the closing price per share of the common stock on such date.
The Compensation Committee may not grant incentive stock options under the
Omnibus Securities Plan to any employee which would permit the aggregate fair
market value of the common stock with respect to which incentive stock options
(under this and any other plan of the Company and its subsidiaries) are
exercisable for the first time by such employee during any calendar year to
exceed $100,000.
A stock option may be exercised in whole or in part according to the terms of
the stock option agreement by delivery of written notice of exercise to the
Company specifying the number of shares to be purchased and the date of
exercise. The exercise price for each stock option may be paid by the
participant as follows: (a) cash, check, bank draft, or money order payable to
the order of the Company, (b) common stock owned by the participant on the
exercise date, valued at its fair market value on the exercise date, (c) by
delivery to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions from the participant
to a broker or dealer, reasonably acceptable to the Company, to sell certain of
the shares of common stock purchased upon exercise of the stock option or to
pledge such shares as collateral for a loan and promptly deliver to the Company
the amount of sale or loan proceeds necessary to pay such purchase price, and/or
(d) in any other form of valid consideration that is acceptable to the
Compensation Committee in its sole discretion. Fractional shares are not issued
upon exercise of a stock option.
Subject to the foregoing and the other provisions of the Omnibus Securities
Plan, stock options granted under the Omnibus Securities Plan may be exercised
at such times and in such amounts and be subject to such restrictions and other
terms and conditions, if any, as determined by the Compensation Committee. SEE
"AWARD AGREEMENTS" below.
RESTRICTED STOCK. Restricted stock may be awarded by the Compensation Committee
subject to such conditions and restrictions as the Compensation Committee deems
appropriate at the time of grant. Conditions may be based on, among other
things, achievement of pre-established performance goals and objectives.
A participant can exercise an Award of restricted stock by delivering a written
notice to the Compensation Committee setting forth the number of shares of
common stock with respect to which the Award of restricted stock is to be
exercised and the date of exercise thereof which shall be at least three days
after giving such notice unless an earlier time shall have been mutually agreed
upon. On the exercise date, the participant shall deliver to the Company
consideration with a value equal to the total restricted stock price of the
shares to be purchased, payable as follows: (a) cash, check, bank draft, or
money order payable to the order of the Company, (b) by the participant
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the purchase price;
provided that in the event the participant chooses to pay the purchase price as
so provided, the participant and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Compensation Committee shall prescribe as a condition of such payment procedure,
or (c) in any other form of valid consideration that is acceptable to the
Compensation Committee in its sole discretion.
The participant shall pay the Company an amount at least equal to the par value
of the common stock awarded to the participant. From the date a participant
becomes the holder of record of restricted stock, a participant has all the
rights of a shareholder with respect to such shares, including the right to vote
the shares and to receive all dividends and other distributions paid with
respect to the shares.
The terms and conditions of Awards in the form of restricted stock are set forth
in an Award agreement.
-9-
<PAGE>
STOCK APPRECIATION RIGHTS. The Compensation Committee may in its discretion
grant stock appreciation rights to participants in the Omnibus Securities Plan.
Stock appreciation rights entitle the holder, upon exercise of the right, to
receive cash or common stock from the Company equal to the amount by which the
fair market value of a share of common stock on the date of exercise exceeds the
exercise price of the stock appreciation right, multiplied by the number of
shares covered by the stock appreciation right, or portion thereof, which is
exercised. The number of shares of common stock, if any, payable to a
participant upon exercise of a stock appreciation right is determined by
reference to the fair market value of the common stock on the date of exercise.
Stock appreciation rights may be exercised by the delivery of written notice to
the Compensation Committee setting forth the number of shares of common stock
with respect to which the stock appreciation rights are to be exercised and the
date of exercise thereof shall be at least three days after giving such notice
unless an earlier time shall have been mutually agreed upon.
Stock appreciation rights may be granted in tandem with any other Award under
the Omnibus Securities Plan. In the event a stock appreciation right is granted
in tandem with a stock option, the stock appreciation right will be exercisable
only to the extent the related stock option is exercisable. The exercise of the
stock appreciation right will result in the termination, to the extent of such
exercise, of the related stock option and vice versa.
The price for a stock appreciation right for any share of common stock shall be
at least 100% of the fair market value of the share on the date of grant.
All stock appreciation rights granted to participants who are directors,
officers or ten percent or greater shareholders of the Company shall be subject
to the short-swing profit rules promulgated under Section 16 of the 1934 Act.
The terms and conditions of Awards in the form of stock appreciation rights are
set forth in Award agreements.
AWARD AGREEMENTS
Awards under the Omnibus Securities Plan are evidenced by Award agreements that
specify the terms and conditions of the Award. Award agreements contain terms
relating to:
(1) type of Award granted;
(2) date of grant;
(3) total number of shares of common stock subject to the Award;
(4) option price (if applicable);
(5) Award period;
(6) time for exercise; and
(7) other terms, provisions, limitations and performance requirements as
are approved by the Compensation Committee, but not inconsistent
with the Omnibus Securities Plan.
ADJUSTMENT
In the case of any stock dividend, stock split, share combination, exchange,
recapitalization or other similar event or occurrence, of or by the Company, the
Compensation Committee shall make appropriate adjustments to the number of
shares subject to purchase or award and the purchase price under outstanding
Awards to prevent the dilution or enlargement of rights. In addition, if such an
event occurs, the number and kind of shares that may be offered under the
Omnibus Securities Plan will be proportionately adjusted by the Compensation
Committee.
-10-
<PAGE>
In the event the Company dissolves, liquidates, winds up its affairs or
transfers a significant portion of its assets to another entity, then under
certain circumstances, a holder of an option will be entitled to receive, in
lieu of each share of common stock of the Company which such participant would
have been entitled to receive under the Award, the same kind and amount of any
securities or assets as may be issuable, distributable, or payable upon any such
sale, dissolution, liquidation, or winding up with respect to each share of
common stock of the Company.
In the event of any merger, consolidation or share exchange pursuant to which
the Company is not the surviving or resulting corporation, there shall be
substituted for each share of common stock subject to the unexercised portions
of such outstanding Awards, that number of shares of each class of stock or
other securities or that amount of cash, property, or assets of the surviving,
resulting or consolidated company which were distributed or distributable to the
shareholders of the Company in respect to each share of common stock held by
them, such outstanding Awards to be thereafter exercisable for such stock,
securities, cash, or property in accordance with their terms. Notwithstanding
the foregoing, however, all such Awards may be canceled by the Company as of the
effective date of any such reorganization, merger, consolidation, share exchange
or any dissolution or liquidation of the Company by giving notice to each holder
thereof or his personal representative of its intention to do so and by
permitting the purchase during the 30 day period next preceding such effective
date of all of the shares of common stock subject to such outstanding Awards.
CHANGE OF CONTROL
In the event of a Change of Control (as defined in the Omnibus Securities Plan),
all unmatured installments of Awards outstanding shall thereupon automatically
be accelerated and exercisable in full. The determination of the Compensation
Committee that any of the foregoing conditions has been met shall be binding and
conclusive on all parties.
AMENDMENT AND TERMINATION OF THE PLAN
The Omnibus Securities Plan terminates on September 22, 2007. The Omnibus
Securities Plan provides that the Company's Board of Directors may, from time to
time, amend, suspend or discontinue the Omnibus Securities Plan without the
consent of the participants; provided that the Board shall seek shareholder
approval to the extent it deems necessary to maintain an exemption under 162(m)
of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The Omnibus Securities Plan is not a "qualified plan" within the meaning of
Section 401 of the Code. Recipients of cash Awards under the Omnibus Securities
Plan will recognize ordinary income equal to the amount of the Award and
recipients of Awards of common stock will recognize ordinary income equal to the
fair market value of the common stock on the date of Award. Employees will also
recognize capital gain or loss upon the subsequent disposition of the shares of
common stock equal to the difference between the sale price of the shares and
the fair market value of the shares on the date of Award. Any such capital gain
or loss generally will be deemed to be a short-term capital gain or loss unless
the shares are held as a capital asset for at least one year prior to their
sale.
Long-term capital gains are currently taxed at a maximum rate of 20% and
short-term capital gains are currently taxed as ordinary income. Ordinary income
is currently taxed at five different marginal rates, ranging from 15% to 39.6%,
depending upon a taxpayer's income level.
In certain cases, the Company will be entitled to report as a compensation
expense an amount equal to the amount awarded in cash or the fair market value
of the shares awarded. The Company is required to withhold federal, state or
local taxes at applicable rates from Awards made, and under certain
circumstances the Company may satisfy its withholding obligations by withholding
appropriate amounts from other compensation payable by the Company to the
recipient of the Award.
The foregoing statements are based upon current federal income tax laws and
regulations and are subject to change if the tax laws and regulations, or
interpretations thereof, change. Each participant is urged to consult his or her
personal tax advisor to determine the specific tax consequences to him or her of
the Omnibus Securities Plan.
-11-
<PAGE>
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of Awards under present law.
INCENTIVE STOCK OPTIONS. An optionee will not recognize any taxable income for
Federal income tax purposes upon receipt of an incentive stock option or at the
time of exercise of an incentive stock option. However, the exercise of an
incentive stock option generally will result in an increase in an optionee's
taxable income for alternative minimum tax purposes.
If an optionee exercises an incentive stock option and does not dispose of the
shares received in a subsequent "disqualifying disposition" (generally, a sale,
gift or other transfer within two years after the date of grant of the incentive
stock option or within one year after the shares are transferred to the
optionee), upon disposition of the shares any amount realized in excess of the
optionee's tax basis in the shares disposed of will be treated as a long-term
capital gain, and any loss will be treated as a long-term capital loss. In the
event of a "disqualifying disposition," the difference between the fair market
value of the shares received on the date of exercise and the option price
(limited, in the case of a taxable sale or exchange, to the excess of the amount
realized upon disposition over the optionee's tax basis in the shares) will be
treated as compensation received by the optionee in the year of disposition. Any
additional gain will be taxable as a capital gain and any loss as a capital
loss, which will be long-term or short-term depending on whether the shares were
held for more than one year.
Neither the Company nor any of its subsidiaries will be entitled to a deduction
with respect to shares received by an optionee upon exercise of an incentive
stock option and not disposed of in a "disqualifying disposition." If an amount
is treated as compensation received by an optionee because of a "disqualifying
disposition," the Company or one of its subsidiaries generally will be entitled
to a corresponding deduction in the same amount for compensation paid.
NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable income
for Federal income tax purposes upon receipt of a non-qualified stock option.
Upon the exercise of a non-qualified stock option the amount by which the fair
market value of the shares received, determined as of the date of exercise,
exceeds the option price will be treated as compensation received by the
optionee in the year of exercise. The Company or one of its subsidiaries
generally will be entitled to a deduction for compensation paid in the same
amount treated as compensation received by the optionee.
RESTRICTED STOCK. A recipient of restricted stock will not recognize any taxable
income for Federal income tax purposes in the year of the Award, provided the
shares are subject to restrictions (that is, they are non-transferable and
subject to a substantial risk of forfeiture). However, the recipient may elect
under Section 83(b) of the Code to recognize compensation income in the year of
the Award in an amount equal to the fair market value of the shares on the date
of the Award, determined without regard to the restrictions. If the recipient
does not make a Section 83(b) election, the fair market value of the shares on
the date the restrictions lapse will be treated as compensation income to the
recipient and will be taxable in the year the restrictions lapse. The Company or
one of its subsidiaries generally will be entitled to a deduction for
compensation paid in the same amount treated as compensation income to the
recipient.
STOCK APPRECIATION RIGHTS. An optionee will not recognize any taxable income for
Federal income tax purposes upon receipt of stock appreciation rights. Any cash
received in payment of stock appreciation rights will be treated as compensation
received by the optionee in the year in which the optionee receives the cash
payment. The Company or one of its subsidiaries generally will be entitled to a
corresponding deduction in the same amount for compensation paid.
OTHER TAX MATTERS. The exercise by a recipient of a stock option or the lapse of
restrictions on restricted stock in certain circumstances, may result in:
(1) a 20% Federal excise tax (in addition to Federal income tax) to the
recipient on certain payments of common stock or cash resulting from
such exercise or deemed earnout of performance units or, in the case
of restricted stock, on all or a portion of the fair market value of
the shares on the date the restrictions lapse; and
-12-
<PAGE>
(2) the loss of a compensation deduction which would otherwise be
allowable to the Company or one of its subsidiaries as explained
above.
NEW PLAN BENEFITS
It is not possible to determine the number of shares that will in the future be
awarded under the Omnibus Securities Plan to any particular individual. However,
set forth below are the number of options that were granted to the persons
listed below during fiscal year 2000 under the terms of the Omnibus Securities
Plan:
NAME AND POSITION DOLLAR VALUE NUMBER OF OPTIONS
----------------- ------------ -----------------
Rebecca E. Boenigk, Chairman - -
of the Board and
Chief Executive Officer
Thomas G. Peterson, President $2.50 80,000
and Chief Operating Officer
David W. Campbell, Former - -
President
All current executive officers
(as a group) $2.50 120,000
All current directors who are - -
not also executive officers
(as a group)
All employees, including - -
non-executive officers (as a
group)
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented at the meeting and
entitled to vote is required to approve the increase in the number of shares
available to be issued under the Omnibus Securities Plan from 200,000 to
500,000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THIS PROPOSAL.
PROPOSAL 3
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, 2001, 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.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented at the 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.
-13-
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company, who are elected by the Board of Directors
of the Company and serve at its discretion, are as follows:
NAME AGE CURRENT POSITION
---- --- ----------------
Rebecca E. Boenigk 36 Chairman of the Board and
Chief Executive Officer
Thomas G. Peterson 35 President and Chief
Operating Officer
Jaye E. Congleton 56 Executive Vice President -
Product Development and
Secretary
Mark E. Benden 33 Vice President -
Engineering
David W. Ebner 39 Vice President -
Operations
Gregory A. Katt 42 Vice President,
Chief Financial
Officer and Treasurer
The business experience of Mrs. Boenigk, Mr. Peterson and Mrs. Congleton
is included under "Proposal 1: Election of Directors."
MARK E. BENDEN served as Director of Engineering from January 1998 to September
1998 and as Vice President -Engineering since September 1998. Prior to these
positions, from 1992 to 1998, he was a regional ergonomic and safety engineer
for Johnson and Johnson, Inc., a publicly traded manufacturer and retailer of a
broad range of products in the health care field.
DAVID W. EBNER has served as Vice President - Operations since 1995. From
1994 to 1995, Mr. Ebner served as the Company's Plant Manager. From 1982 to
1994, Mr. Ebner was the Manager of Facilities and Operations for CompuAdd,
Inc., a computer manufacturer and retailer.
GREGORY A. KATT has served as Vice President and Chief Financial Officer of the
Company since May 1997 and as Treasurer of the Company since August 1997. Mr.
Katt served as Treasurer of American Exploration Company, a publicly traded oil
and gas exploration and production company, from June 1995 to May 1997 and as
its Director of Corporate Reporting, Budgeting and Tax from June 1992 to June
1995.
-14-
<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
1998, 1999 and 2000, with respect to those persons who were during fiscal year
2000 (1) the Chief Executive Officer and (2) the other executive officers of the
Company that earn over $100,000 per year and (3) other individuals for whom
disclosure would have been provided but for the fact that the individual was not
serving as an executive officer at the end of the fiscal year (collectively,
with the Chief Executive Officer, the "NAMED EXECUTIVE OFFICERS").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)
---------------------- ---- ---------- ------------ ----------------
<S> <C> <C> <C> <C>
Rebecca E. Boenigk 2000 $ 204,000 $ 0 $ 0
Chairman of the 1999 $ 200,000 $ 20,614 $ 0
Board and Chief 1998 $ 200,000 $ 0 $ 0
Executive Officer
Thomas G. Peterson (5) 2000 $ 75,000 $ 0 $ 0
President and Chief
Operating Officer
David W. Campbell (8) 2000 $ 0 $ 0 $ 0
Former President 1999 $ 105,000 $ 0 $ 0
1998 $ 135,000 $ 0 $ 0
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------
AWARDS PAYOUTS
------------------------------------ -----------
SECURITIES
NAME AND RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION STOCK AWARD(S)($) OPTIONS/SARS (#) PAYOUTS ($) COMPENSATION ($)
---------------------- ----------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Rebecca E. Boenigk $ 0 0 $ 0 $ 14,960 (2)
Chairman of the $ 0 0 $ 0 $ 14,960 (3)
Board and Chief $ 0 0 $ 0 $ 14,960 (4)
Executive Officer
Thomas G. Peterson (5) $ 0 80,000 (6) $ 0 $ 3,900 (7)
President and Chief
Operating Officer
David W. Campbell (8) $ 0 0 $ 0 $ 0
Former President $ 0 0 $ 0 $ 272,486 (9)
$ 0 0 $ 0 $ 11,480 (10)
</TABLE>
----------------
(1) Represents performance bonuses actually received for the fiscal year
indicated. Such bonuses are typically received in September for the prior
fiscal year.
(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 $2,960.
(3) 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.
(4) 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.
(5) Thomas G. Peterson joined the Company in January 2000
(6) On February 23, 2000, Mr. Peterson was granted an option to purchase
80,000 shares of common stock at an exercise price of $2.50 per share. One
fourth of the optioned shares become exercisable commencing on February
23, 2001 and one fourth of the optioned shares become exercisable on each
anniversary thereafter, until February 23, 2004. Such shares cannot be
exercised after February 23, 2010.
(7) Amount represents the auto allowance paid to the executive officer in the
amount of $3,900.
(8) David Campbell resigned from the Company in May 1999.
(9) Amount consists of (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 and (iii) severance payments paid by the Company.
(10) Amount consists of (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.
-15-
<PAGE>
STOCK OPTIONS. The following table provides information on grants of stock
options during the fiscal year ended June 30, 2000 for each of the Named
Executive Officers of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES UNDERLYING OPTIONS GRANTED TO
NAME OPTIONS GRANTED EMPLOYEES IN FISCAL YEAR EXERCISE PRICE EXPIRATION DATE
------------------ --------------------- ------------------------ -------------- -----------------
<S> <C> <C> <C> <C>
Rebecca E. Boenigk 0 0% -- --
Thomas G. Peterson 80,000 (1) 40% $ 2.50 February 23, 2010
David W. Campbell 0 0% -- --
</TABLE>
----------
(1) One fourth of the optioned shares become exercisable commencing on February
23, 2001, and one fourth of the optioned shares become exercisable on each
anniversary thereafter, until February 23, 2004. Such stock options cannot
be exercised after February 23, 2010.
The following table shows for each of the Named Executive Officers the number of
shares covered by both exercisable and non-exercisable stock options as of June
30, 2000, and the values for "in-the-money" options, based on the positive
spread between the exercise price of any such existing stock options and the
Year-end value of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED AT JUNE 30, 2000 AT JUNE 30, 2000 (1)
ON VALUE REALIZED ----------------------------- -----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rebecca E. Boenigk 0 0 $ 0 0 $ 0 $ 0
Thomas G. Peterson 0 0 $ 0 80,000 $ 0 $ 0
David W. Campbell 0 0 $ 0 0 $ 0 $ 0
</TABLE>
(1) The closing price per share of the Company's Common Stock on June 30, 2000
was $1.3125 as reported by the Nasdaq Small Cap Market.
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. Ebner, the Company's Vice President of
Operations, and Gregory A. Katt, the Company's Vice President and Chief
Financial Officer. The initial terms of each of these agreements expired on July
1, 2000, but have been automatically renewed through July 1, 2001, and will
continue to be subject to automatic one-year extensions thereafter 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 $204,000, 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:
(1) all accrued salary, if applicable;
(2) employment benefits for 12 months;
(3) an amount equal to twice her base salary for the preceding year; and
(4) an amount equal to her bonus for the preceding year.
-16-
<PAGE>
The agreement with Mr. Ebner provides for a base salary that is $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. 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:
(1) all accrued salary, if applicable;
(2) employment benefits for 12 months;
(3) an amount equal to his base salary for the preceding year; and
(4) an amount equal to 50% of his bonus for the preceding year.
The Company recently entered into employment agreements with Thomas G Peterson,
the Company's President and Chief Operating Officer, Jaye E. Congleton, the
Company's Executive Vice President and Secretary, and Mark E. Benden, the
Company's Vice President of Engineering, for a term expiring on March 1, 2003,
subject to automatic one-year extensions unless either party gives 90 days
written notice of its intention not to renew. The agreement with Mr. Peterson
provides for a base salary of $165,000, with an annual bonus based on the
attainment of targets set by the Board of Directors. The agreement with Mrs.
Congleton provides for a base salary that is $75,000 and an annual bonus based
on the attainment of targets set by the Board of Directors. The agreement with
Mr. Benden 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. Peterson's, Mrs. Congleton's and Mr. Benden's employment agreements provides
that if he or she 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 or she will receive:
(1) all accrued salary, if applicable;
(2) employment benefits for 12 months;
(3) an amount equal to his or her base salary for the preceding year; and
(4) an amount equal to 50% of his or her 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. Dr. Congleton has agreed 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 has agreed 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 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
-17-
<PAGE>
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 2000.
CERTAIN TRANSACTIONS
COMPANY LOANS. 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 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(R) chair 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. This product has been
discontinued. Dr. Congleton is the spouse of Mrs. Congleton, a director and
officer of the Company, and the father of Mrs. Boenigk, a director and officer
of the Company.
CONSULTING AGREEMENT. Dr. Congleton has entered into a consulting agreement with
the Company. Dr. Congleton's 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
Proposals of shareholders intended to be presented at the 2001 Annual Meeting of
Shareholders and desired to be included in the Company's proxy statement for
that meeting must be received by the Chief Executive Officer, Neutral Posture
Ergonomics, Inc., 3904 N. Texas Avenue, Bryan, Texas 77803, no later than June
18, 2001, in order to be included in such proxy statement. If notice of any
other shareholder proposal intended to be presented at the 2001 Annual Meeting
of Shareholders is not received by the Company on or before August 31, 2001, the
proxy solicited by the Board of Directors of the Company for use in connection
with that meeting may confer authority on the proxies to vote in their
discretion on such proposal, without any discussion in the Company's proxy
statement for that meeting of either the proposal or how such proxies intend to
exercise their voting discretion.
GENERAL
The 2000 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
-18-
<PAGE>
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.
****************************************
APPENDIX A
Amendment No. 1 to the
Neutral Posture Ergonomics, Inc.
1997 Omnibus Securities Plan
The name of the plan is the Neutral Posture Ergonomics, Inc. 1997
Omnibus Securities Plan (the "1997 Plan"). The 1997 Plan was adopted by the
Board of Directors of Neutral Posture Ergonomics, Inc., a Texas corporation
(the "Company"), effective as of September 22, 1997. This Amendment No. 1 to
the 1997 Plan (the "Amendment") was adopted by the Board of Directors of the
Company on August 17, 2000.
Section 1. The Amendment amends and restates the first paragraph of
Article 5 of the Omnibus Plan in its entirety as follows:
"Subject to adjustment as provided in ARTICLES 13 and 14, the
maximum number of shares of Common Stock that may be delivered pursuant to
Awards granted under the Plan is (a) five hundred thousand (500,000)
shares; plus (b) shares of Common Stock previously subject to Awards which
are forfeited, terminated, settled in cash in lieu of Common Stock, or
exchanged for Awards that do not involve Common Stock, or expired
unexercised."
Section 2. The remaining provisions of the Omnibus Plan are not modified or
changed by this Amendment.
-19-
<PAGE>
REVOCABLE REVOCABLE
PROXY 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, 2000, at the Brazos Center, 3232
Briarcrest Drive, Bryan, Texas 77802 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 on the reverse side.
The Board of Directors recommends a vote FOR the election of the nominees
for director and FOR each of the other proposals. 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.
SEE REVERSE
SIDE
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY
USING THE ENCLOSED SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
(Continued and to be signed on the reverse side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
BACK SIDE OF PROXY
NEUTRAL POSTURE ERGONOMICS, INC.
PLEASE MARK VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
For Withhold For All
All All Except
1. ELECTION OF TWO CLASS III DIRECTORS- [ ] [ ] [ ]
Nominees:
01 Rebecca E. Boenigk 02 Susan Phillips Bari
______________________________________
Write exception(s) above
For Against Abstain
2. Approval of an increase in the number [ ] [ ] [ ]
of shares available to be issued under
the 1997 Omnibus Securities Plan from
200,000 to 500,000.
For Against Abstain
3. Ratification of appointment of Deloitte & [ ] [ ] [ ]
Touche LLP as independent public
accountants for the fiscal year ending
June 30, 2001.
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Mark here for address change. [ ]
New Address: ______________________________________________
___________________________________________________________
___________________________________________________________
Dated: ___________________________, 2000
Signature(s)_________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
Dear Shareholder(s):
Enclosed you will find material relative to the Company's 2000 Annual
Meeting of Shareholders. The Notice of Annual Meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized on
the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete
and return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a shareholder, please
remember that your vote is important to us. We look forward to hearing from you.
NEUTRAL POSTURE ERGONOMICS, INC.
