<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sections 240.14a-11(c) or Section
240.14a-12
WELLS-GARDNER ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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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.:
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3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[STRIP IN LOGO]
March 24, 1995
To Our Shareholders:
You are cordially invited to attend the 1995 Annual Meeting of
Shareholders of Wells-Gardner Electronics Corporation which will be held at the
General Offices of the company, 2701 North Kildare Avenue, Chicago, Illinois, on
April 25, 1995, at 2:00 P.M. Central Daylight Savings Time. All holders of
shares of the company's common stock as of the close of business on March 17,
1995, are entitled to vote at the Annual Meeting.
Time will be set aside for discussion of each item of business described
in the accompanying Notice of Annual Meeting and Proxy Statement. A current
report on the business operations of the company will be presented at the
meeting and shareholders will have an opportunity to ask questions. We plan to
adjourn the meeting at approximately 3:15 P.M., but members of senior management
will remain to answer any additional questions you may have.
WE HOPE YOU WILL BE ABLE TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU
EXPECT TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY
CARD IN THE ENCLOSED ENVELOPE IN ORDER TO MAKE CERTAIN THAT YOUR SHARES WILL BE
REPRESENTED AT THE ANNUAL MEETING.
Sincerely,
Anthony Spier
Chairman of the Board,
President and Chief
Executive Officer
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - APRIL 25, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Wells-Gardner
Electronics Corporation will be held on Tuesday, April 25, 1995, at 2:00 P.M.,
Central Daylight Savings Time, at the General Offices of the company, 2701 North
Kildare Avenue, Chicago, Illinois, for the following purposes:
1. To elect seven directors;
2. To consider and vote upon a proposal to approve the amendment of the
company's Amended and Restated Incentive Stock Plan; and
3. To act upon any other business which may properly be brought before the
meeting.
The close of business on March 17, 1995, has been fixed as the record date for
determining the shareholders entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors,
RICHARD L. CONQUEST
Secretary
March 24, 1995
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 25, 1995
This Proxy Statement is being sent on or about March 24, 1995, to all
holders of shares of the common stock, $1.00 par value ("Common Stock"), the
only class of stock outstanding, of Wells-Gardner Electronics Corporation, 2701
North Kildare Avenue, Chicago, IL 60639 (the "company"), entitled to vote at the
Annual Meeting of Shareholders on April 25, 1995 (the "Meeting"), in order to
furnish information relating to the business to be transacted.
VOTING PROCEDURES
Shareholders of record at the close of business on March 17, 1995, are
entitled to vote at the Meeting. As of that date, there were 3,957,736 shares of
Common Stock outstanding. Shareholders are entitled to one vote per share owned
on the record date, and with respect to the election of directors, shareholders
have cumulative voting rights. Under cumulative voting, each shareholder is
entitled to the number of votes equal to the number of directors to be elected
multiplied by the number of shares owned by such shareholder, and such
shareholder may cast such votes for one nominee or distribute them in any manner
among any number of nominees.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE, which is postage-paid if mailed in the United States.
You may revoke your proxy at any time before it is actually voted at the
Meeting by delivering written notice of revocation to the Secretary of the
company, by submitting a subsequently dated proxy, or by attending the Meeting
and withdrawing the proxy. You may also be represented by another person present
at the Meeting by executing a proxy designating such person to act on your
behalf. Each unrevoked proxy card properly executed and received prior to the
close of the Meeting will be voted as indicated.
Unless otherwise indicated on the proxy card, votes represented by all
properly executed proxies will be distributed equally among the nominees for
director named herein, except that if additional persons are nominated, the
proxies will have discretionary authority to cumulate votes among the nominees
named herein. The withholding of authority to vote for any individual nominee or
nominees will permit the proxies to distribute the withheld votes in their
discretion among the remaining nominees. In addition, where specific
instructions are not indicated, the proxy will be voted FOR the approval of the
amendment of the company's Amended and Restated Incentive Stock Plan.
Assuming the presence at the Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Common Stock, thereby
constituting a quorum, the affirmative vote of the holders of a plurality of the
shares represented at the Meeting and entitled to vote is required for the
election of directors and the affirmative vote of the holders of a majority of
the shares represented at the Meeting and entitled to vote is required for the
approval of the amendment of the company's Amended and Restated Incentive Stock
Plan. Abstentions are included in the determination of the number of shares
present for purposes of determining if a quorum is present. Neither abstentions
nor broker non-votes are counted in tabulations of the votes cast on proposals
presented to shareholders, and thus have no legal effect on the vote.
The expense of preparing, printing and mailing this Proxy Statement will
be paid by the company. In addition to the use of the mail, proxies may be
solicited personally or by telephone by
<PAGE>
regular employees of the company without additional compensation. The company
will reimburse banks, brokers and other custodians, nominees and fiduciaries for
their costs in sending the proxy materials to the beneficial owners of the
Common Stock.
A copy of the 1994 Annual Report to Shareholders, which includes the
consolidated financial statements of the company for the fiscal year ended
December 31, 1994, was mailed to the shareholders on or about March 24, 1995.
ELECTION OF DIRECTORS
The bylaws of the company provide that the number of directors of the
company shall be from five to nine, as fixed from time to time by the Board of
Directors. The size of the Board is currently set at seven members. Shareholders
are entitled to cumulative voting in the election of directors. See "Voting
Procedures" herein. Directors will hold office until the next Annual Meeting and
until their successors are duly elected and qualified, or until their earlier
death or resignation. The Board of Directors has inquired of each nominee and
has ascertained that each will serve if elected. In the event that any of these
nominees should become unavailable for election, the Board of Directors may
designate substitute nominees, in which event the shares represented by the
proxy cards returned will be voted for such substitute nominees unless an
instruction to the contrary is indicated on the proxy card.
INFORMATION CONCERNING NOMINEES
ANTHONY SPIER Director since April 1990
Anthony Spier, age 51, has been Chairman of the Board, President and Chief
Executive Officer since April 1994. Before joining the company, Mr. Spier was
President of OCE Bruning, a manufacturer of drafting equipment and supplies,
from 1990 to 1994. Prior thereto he was also Vice President of A.M.
International, and President of Bruning Corporation, a division of A.M.
International. He is currently Chairman of the Executive Committee.
ALBERT S. WELLS, JR. Director since April 1948
Albert S. Wells, Jr, age 74, retired from the company in 1990. Before retiring,
Mr. Wells served as Chairman of the Board and Chief Executive Officer. Mr. Wells
had been employed by the company since 1941. He is currently a member of the
Executive and Stock Option Committees. Mr. Wells' son, Randall S. Wells, is
Executive Vice President and General Manager of the company.
ALLAN GARDNER Director since April 1963
Allan Gardner, age 73, retired from the company in 1988. Before retiring, Mr.
Gardner had served the company in various positions, including President and
Chief Operating Officer. Mr. Gardner had been employed by the company since
1948. He is currently Chairman of the Audit Committee.
JAMES J. ROBERTS, JR. Director since April 1982
James J. Roberts, Jr., age 50, has been Chairman of the Board and Chief
Executive Officer of James Industries, Inc. since its incorporation in 1977.
James Industries, a sales representatives' organization serving the electronics
and computer industries, started serving the company as a sales representative
in 1979 and has continued to date. Mr. Roberts is currently Chairman of the
Stock Option Committee and a member of the Executive Committee.
2
<PAGE>
JOHN R. BLOUIN Director since April 1989
John R. Blouin, age 48, has been President of James Industries, Inc. since 1982.
Prior to joining James Industries in 1980, Mr. Blouin served in a variety of
sales management and marketing positions within General Electric Corporation. He
is currently a member of the Audit Committee.
WILLIAM L. DE NICOLO New Director Nominee
William L. De Nicolo, age 48, has been President and Chairman of the Board of
DNIC Brokerage Company, a stock holding company of Telular Canada, since 1986.
Mr. De Nicolo is the founder, and has been, since its formation in 1992,
Chairman of the Board of Directors, of Telular Corporation ("Telular"), a
corporation specializing in the design, development, manufacture and marketing
of cellular telecommunication technology and products. Mr. De Nicolo served as
Chief Executive Officer of Telular from 1992 to 1993.
WAYNE HARRIS New Director Nominee
Wayne Harris, age 60, is the President and owner of Wayne Harris Company, a
Dallas-based appliance wholesaler, of which he has been the sole shareholder
since 1988. Prior thereto, Mr. Harris was Corporate Vice President of Roper
Corporation, a manufacturer of home appliances and outdoor power equipment, from
1981 to 1988.
These seven persons will be placed in nomination for election to the
Board of Directors. The shares represented by the proxy cards returned will be
voted FOR the election of these nominees, as specified under "Voting Procedures"
herein, unless you specify otherwise.
VOTING RIGHTS AGREEMENT
The company, Albert S. Wells, Jr., Anthony Spier, Allan Gardner, James
Industries, Inc. and James J. Roberts, Jr. entered into a voting rights
agreement (the "Voting Rights Agreement") in April 1994, regarding the voting of
the parties' Common Stock for directors of the Company. Pursuant to the Voting
Rights Agreement, Messrs. Wells, Spier, Gardner and Roberts have agreed to vote
their shares of Common Stock at each election of directors for such slate of
nominees as the Executive Committee of the Board shall designate, provided that
such slate shall, during the term of the Voting Rights Agreement, always include
James J. Roberts, Jr., John R. Blouin, Albert S. Wells, Jr., Allan Gardner and
Anthony Spier, as well as one individual designated by Albert S. Wells, Jr. and
approved by James J. Roberts, Jr., and one individual designated by James J.
Roberts, Jr. and approved by Albert S. Wells, Jr. (collectively, the "Designated
Directors"). In any election of directors of the company in which the number of
nominees exceeds the number of directors to be elected, the Voting Rights
Agreement provides that the parties will vote in a manner to assure the election
of the greatest number of Designated Directors. The Voting Rights Agreement
terminates on the earlier of the termination of the Sales Representation
Agreement between the company, James Industries, Inc. and James J. Roberts, Jr.
(see "Compensation Committee Interlocks and Insider Participation" herein) and
December 31, 1997.
BOARD COMPENSATION
Employee directors do not receive additional compensation for serving on
the Board of Directors. Non-employee directors receive $750 for each Board and
Committee meeting attended and a quarterly retainer of $750. The company
reimburses directors for travel expenses incurred. The company also pays the
premiums on directors' and officers' liability insurance policies covering the
3
<PAGE>
directors. During the fiscal year ended December 31, 1994, the Board of
Directors met ten times, seven times in person and three times by telephone
conference, and the non-employee directors were paid for the seven meetings at
which they appeared in person, waiving payment for the telephone conference
meetings.
COMMITTEES OF THE BOARD
The Board of Directors has three standing committees, the Audit
Committee, the Executive Committee and the Stock Option Committee. The Board has
no nominating committee or compensation committee, although the Executive
Committee deals with matters relating to the nominations to the Board and
compensation.
AUDIT COMMITTEE
The Audit Committee consists of two non-employee directors: John Blouin
and Allan Gardner. The Audit Committee met four times during fiscal 1994. It
also meets separately with representatives of the company's independent auditors
and with representatives of senior management. The Audit Committee reviews and
makes recommendations to the Board regarding: (i) the general scope of audit
coverage; (ii) the fees charged by the independent auditors; (iii) matters
relating to the company's internal control systems; (iv) the value of goodwill
and other intangibles; and (v) the expenses of senior executives.
EXECUTIVE COMMITTEE
The Executive Committee consists of three directors: Anthony Spier,
Albert S. Wells, Jr. and James J. Roberts, Jr. The Executive Committee met three
times during fiscal 1994. Pursuant to the company's bylaws, the Executive
Committee has the authority to take all actions that could be taken by the full
Board of Directors, except as provided by statute. It may meet between regularly
scheduled Board meetings to take such action as is necessary for the efficient
operations of the company.
The Executive Committee also deals with matters relating to nominations
to the Board of Directors and compensation. The Executive Committee's duties
relating to nominations to the Board include proposing a slate of directors for
election by the shareholders at each Annual Meeting and proposing candidates to
fill vacancies on the Board. It conducts research to identify suitable
candidates for Board membership, and seeks individuals who will make a
substantial contribution to the company. It will consider candidates proposed by
shareholders. Generally, candidates must be highly qualified and affirmatively
desirous of serving on the Board. They should represent the interests of all
shareholders and not those of a special interest group. Any shareholder wishing
to propose a candidate for consideration should forward the candidate's name and
a detailed background of the candidate's qualifications to the Secretary of the
company.
The Executive Committee makes recommendations to the Board with respect
to the compensation paid to the Chief Executive Officer and other executive
officers. See "Report of the Board of Directors on Compensation" herein.
STOCK OPTION COMMITTEE
The Stock Option Committee consists of two non-employee directors: Albert
S. Wells, Jr. and James J. Roberts, Jr. The Stock Option Committee met twice
during fiscal 1994. The Committee administers the company's Amended and Restated
Incentive Stock Plan. See "Report of the Stock Option Committee on Compensation"
herein.
4
<PAGE>
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings on March 17,
1995, of each person known by the company to own beneficially more than five
percent of its outstanding Common Stock, directors and nominees, executive
officers named in the Summary Compensation Table and all executive officers and
directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OWNED(A)(B)(C) % OF CLASS
---------------- ----------
<S> <C> <C>
James J. Roberts, Jr........................................... 551,836(d) 13.9%
Individually and as Trustee of
the James J. Roberts Trust
dated December 23, 1991
1619 Colonial Parkway
Inverness, Illinois 60067
Dimensional Fund Advisors, Inc................................. 218,300(e) 5.5%
1299 Ocean Avenue
Suite 650
Santa Monica, California 90401
Albert S. Wells, Jr............................................ 159,998(f) 4.0%
Allan Gardner.................................................. 112,795(g) 2.8%
Anthony Spier.................................................. 99,800 2.5%
Francis J. Myers............................................... 23,000 *
Richard L. Conquest............................................ 36,213 *
John R. Blouin................................................. 11,000 *
William L. De Nicolo........................................... 0 *
Wayne Harris................................................... 0 *
Executive Officers & Directors as a group (12 persons)......... 1,100,842 27.3%
<FN>
- --------------------------
* Represents holdings of less than one percent.
(a) The amounts shown include the following shares that may be acquired within
60 days pursuant to outstanding stock options: Mr. Spier, 10,000 shares;
Mr. Myers, 20,000 shares; Mr. Conquest, 17,004 shares; and all directors
and executive officers as a group, 78,154 shares.
(b) Excludes shares owned by spouses as follows: Mr. Wells, 19,072 shares; Mr.
Gardner, 6,300 shares; and executive officers and directors as a group,
28,217 shares. In each case, beneficial ownership of such shares is
disclaimed.
(c) The amounts shown include performance-based restricted stock awards that
could vest in accordance with their terms as follows: Mr. Spier, 39,000
shares; Mr. Conquest, 9,000 shares; and all executive officers as a group,
102,000 shares.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
(d) According to Schedule 13D filed with the Securities and Exchange Commission
by Mr. Roberts and other information furnished by him, Mr. Roberts has sole
voting power over all shares beneficially owned by him. According to such
information, all of these shares are owned by Mr. Roberts as trustee of a
trust of which he is sole beneficiary.
(e) According to Schedule 13G filed with the Securities and Exchange Commission
by Dimensional Fund Advisors, Inc., it has sole voting power with respect
to 124,200 shares and sole dispositive power with respect to 218,300
shares.
(f) Includes 82,400 shares held by the Lorraine D. Wells Family Trust, of which
Mr. Wells is the trustee.
(g) All of these shares are held by the Allan Gardner Revocable Living Trust
dated 1/9/90, of which Mr. Gardner is the trustee.
</TABLE>
REPORT OF THE BOARD OF DIRECTORS ON COMPENSATION
This report of the Board of Directors shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, and shall not otherwise be deemed filed under
such acts.
OVERVIEW OF EXECUTIVE COMPENSATION POLICIES
The Board of Directors' policy with respect to compensation of the
company's executive officers includes the following objectives:
- Maintain a level of compensation that will attract and retain highly
qualified individuals.
- Match the compensation goals of the executive officers with the
short-term and long-term operational goals of the company.
- Align the interests of the executive officers and shareholders.
- Reward significant performance by individual executive officers, which
performance contributes to the success of the company.
To achieve these objectives, the overall compensation of the company's
executive officers was comprised in 1994 of an annual salary and awards granted
under the company's Amended and Restated Incentive Stock Plan ("ISP"). The
company's Board of Directors determines the annual salary of executive officers,
based upon recommendations of the Executive Committee. The ISP is administered
by the Stock Option Committee. See "Report of the Stock Option Committee on
Compensation" herein.
Due to the difficult year experienced by the company in 1993, the Board
of Directors determined that there would be no increases in the salaries of the
executive officers in 1994. Certain of the company's executive officers have
entered into employment contracts with the company which set forth their minimum
salaries. Any salary amounts exceeding such minimum levels are competitively set
relative to comparable companies in the electronics industry and companies of
comparable size.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Spier is currently employed under a contract entered into in
connection with his election as Chairman of the Board, President and Chief
Executive Officer of the company in April 1994, and which expires December 31,
1997. The contract provides for compensation at an annual rate of not less than
$100,000 until June 30, 1995, and of not less than $200,000 thereafter. Amounts
set by the
6
<PAGE>
contract are minimum amounts and may be supplemented by the Executive Committee.
Mr. Spier's 1994 salary was at the rate specified by his contract. Mr. Spier may
terminate the contract in the event of a "change in control" of the company in
which case he would be entitled to (i) a lump sum payment in an amount equal to
the product of his annual base salary at the time of the change in control
multiplied by the number of years (including partial years) remaining in the
term of employment under the contract, as well as (ii) payment of the value of
any unvested stock options or stock awards. Mr. Spier also received stock
options and restricted stock awards in 1994. See "Report of the Stock Option
Committee on Compensation" and "Summary Compensation Table" herein.
BOARD OF DIRECTORS
Anthony Spier
Albert S. Wells, Jr.
James J. Roberts, Jr.
Allan Gardner
John R. Blouin
Richard L. Conquest
REPORT OF THE STOCK OPTION COMMITTEE ON COMPENSATION
The company believes that significant stock ownership by executive
officers is a major incentive in building shareholder value and aligning the
interests of executives and shareholders. Under the company's ISP, which is
administered by the Stock Option Committee, nonqualified stock options,
incentive stock options, stock appreciation rights and stock awards may be
granted to officers and other key employees of the company. For a description of
the terms and provisions of the ISP, see "Approval of Amendment of Incentive
Stock Plan - Description of the ISP" herein.
In accordance with the company's policy of aligning the interests of its
executive officers with those of its shareholders, grants of performance-based
restricted stock awards were made to all executive officers in 1994. Vesting of
the restricted stock awards is dependent upon the company's achievement of
certain profit goals during the years 1995, 1996 and 1997. Shares will vest in
each of 1995, 1996 and 1997, respectively, if the company's earnings from
continuing operations before interest and tax (EBIT) for that fiscal year equal
or exceed the target amount for that year. Shares for any year which do not vest
because of failure to attain that year's performance goal may vest on the basis
of the attainment of cumulative performance goals during the three year period.
Any awards that have not vested as specified above will be forfeited. In
addition, stock options were granted to two new executive officers (including
Mr. Spier) in connection with their initial elections as such.
CHIEF EXECUTIVE OFFICER AWARDS
In connection with Mr. Spier's election as Chairman of the Board,
President and Chief Executive Officer, and as a part of his overall compensation
package, Mr. Spier received a performance-based restricted stock award of 30,000
shares (the terms of which are set forth in footnote (f) to the "Summary
Compensation Table" herein) and was granted an option to purchase 20,000 shares
of Common Stock at an exercise price of $3.75, the fair market value on the date
of the grant. (See "Option Grants in Fiscal 1994" for further information with
respect to the specific terms of such grant.) Mr. Spier also received an
additional restricted stock award of 9,000 shares in connection with the grant
of performance-based stock awards to all executive officers described in the
preceding paragraph. The Stock Option Committee believes the stock awards make a
significant portion of Mr. Spier's overall compensation dependent on company
performance and the option grant helps to
7
<PAGE>
align Mr. Spier's long-term compensation directly with shareholder value since
the potential value of the grant is tied directly to increases in the fair
market value of the company's stock during the term of the option.
STOCK OPTION COMMITTEE
James J. Roberts, Jr.
Albert S. Wells, Jr.
SUMMARY COMPENSATION TABLE
Set forth on the following table are, for the fiscal years indicated,
each component of compensation paid to the Chief Executive Officer and the
former Chief Executive Officer (collectively referred to as the "named executive
officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- -------------------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL SALARY COMPENSATION RESTRICTED OPTIONS COMPENSATION
POSITION FISCAL YEAR (C) BONUS (D) STOCK AWARDS (#) (E)
- -------------------------------- ----------- -------- ------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony Spier (a) 1994 $ 67,375 - $ 11,532 $ 112,500(f) 20,000 $ 1,344
Chairman of the Board, 1993 - - - - - -
President and Chief Executive 1992 - - - - - -
Officer
Francis J. Myers (b) 1994 $174,980 - $ 33,544 - - $ 10,235
Former Chairman of the 1993 $176,897 - $ 30,328 - - $ 6,597
Board, President and Chief 1992 $173,078 $55,668 $ 27,103 $ 116,670(g) 20,000 $ 1,360
Executive Officer
<FN>
- ------------------------
(a) Mr. Spier joined the Company as Chairman of the Board, President and Chief
Executive Officer in April 1994.
(b) Mr. Myers resigned as Chairman of the Board, President and Chief Executive
Officer of the company on April 24, 1994. Mr. Myers is currently employed
by the company as a consultant under an employment agreement entered into
on June 26, 1992 and amended on April 26, 1994 which provides for salary at
an annual rate of $175,000 until June 30, 1995 and a lump sum payment of
$215,000 in January 1995 in satisfaction of certain retirement benefits.
(c) Includes all pre-tax employee contributions to the Employee Retirement
401(k) Plan.
(d) Other annual compensation for Mr. Spier in 1994 includes benefits
associated with the personal use of a company automobile of $3,295 and
company paid taxes of $7,607. Other annual compensation for Mr. Myers
includes benefits associated with the personal use of a company automobile
for years 1994, 1993 and 1992 of $13,520, $13,133 and $13,967, respectively
and company paid taxes for years 1994, 1993 and 1992 of $20,024, $17,195
and $13,136, respectively.
(e) All other compensation in 1994 for Messrs. Spier and Myers includes
premiums paid on life insurance for the benefit of such officers of $1,344
and $5,615, respectively, and, for Mr. Myers, the company's contributions
to the Employee Retirement 401(k) Plan of $4,620.
(f) In 1994, Mr. Spier received performance-based restricted stock awards
aggregating 39,000 shares, which are subject to vesting or forfeiture as
follows: 12,000, 13,000 and 14,000 of Mr. Spier's shares will vest in each
of 1995, 1996 and 1997, respectively, if the company's
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
earnings from continuing operations before interest and tax (EBIT) for that
fiscal year equals or exceeds the target amount for that year. Shares for
any year which do not vest because of failure to attain that year's
performance goal may vest on the basis of the attainment of cumulative
performance goals during the three year period. Any awards that have not
vested as specified above will be forfeited. In addition, these restricted
shares will be forfeited in case of the termination of Mr. Spier's
employment with the company, except if Mr. Spier is terminated by the
company without cause. Any dividends declared on the Common Stock will be
paid on the restricted shares. As of December 31, 1994, Mr. Spier owned a
total of 39,000 shares of restricted stock with a fair market value of
$104,812.
(g) Represents performance-based restricted stock award of 32,559 shares, of
which 10,853 shares vested in 1992 as a result of achievement of
performance goals for that year, and 21,706 shares were forfeited. As of
December 31, 1994, Mr. Myers owned no restricted stock.
</TABLE>
OPTION GRANTS IN FISCAL 1994
Set forth on the following table is certain information concerning the
grants of options to the named executive officers during the fiscal year ended
December 31, 1994:
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPEARANCE FOR
INDIVIDUAL GRANTS OPTION TERM
-------------------------------------------------------- --------------------
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- -------------------------- ----------- ----------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Anthony Spier 20,000(a) 73% $ 3.75 4/26/2004 $ 47,167 $ 119,531
Francis J. Myers - - - - - -
<FN>
- ------------------------
(a) The options become exercisable as follows: 25% in October 1994; 25% in
April 1995; 25% in April 1996; and 25% in April 1997.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST YEAR AND FISCAL
YEAR-END OPTION VALUES
Set forth on the following table is information relating to the number of
shares of Common Stock subject to options held at December 31, 1994 by each of
the named executive officers. None of the unexercised options were in-the-money
at December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL
YEAR-END(#)
SHARES ACQUIRED ON VALUE REALIZED ------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE
- ------------------------------------- --------------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
Anthony Spier - - 5,000 15,000
Francis J. Myers - - 37,900 5,000
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors serve on the Executive Committee,
which deals with certain matters related to compensation of executive officers:
Albert S. Wells, Jr. and James J. Roberts, Jr. Albert S. Wells, Jr. is a former
President and Chief Executive Officer of the company. The third member of the
Executive Committee is Anthony Spier, who is an executive officer of the
company. Mr. Spier disqualifies himself on all decisions relating to his
compensation. The Stock Option Committee, which administers the company's ISP,
consists of two non-employee directors: James J. Roberts, Jr. and Albert S.
Wells, Jr. Messrs. Roberts and Blouin, who are both directors of the company,
are the sole shareholders of James Industries, Inc., and Mr. Roberts is the
Chairman of the Board and Chief Executive Officer, and Mr. Blouin is President,
of James Industries, Inc. James Industries, Inc., a sales representatives'
organization, acts as a sales representative for, and as a distributor of, the
company's products. James Industries, Inc. has been an independent sales
representative for the company since 1979 and is compensated therefor on a
commission basis pursuant to a Sales Representation Agreement dated January 1,
1991, which expires December 31, 1996. Commissions paid pursuant to this
agreement to James Industries, Inc. in the year ended December 31, 1994,
totalled $1,047,000. James Industries, Inc. also acts as a distributor,
purchasing the company's products for sale to third parties. For the year ended
December 31, 1994, the company's sales to James Industries, Inc. totalled
$2,216,000. In addition, James Industries, Inc. is also an independent sales
representative for certain of the company's suppliers. In 1994, the company
purchased $1,072,000 of products from third party vendors represented by James
Industries, Inc. on a commission basis.
APPROVAL OF AMENDMENT OF INCENTIVE STOCK PLAN
The company's Amended and Restated Incentive Stock Plan (the "ISP") as
currently in effect was adopted by the Board of Directors on March 4, 1992, and
was approved by the company's shareholders on April 28, 1992. The Board of
Directors has adopted amendments (the "Amendments") to the ISP, subject to
shareholder approval, which amend the ISP by (i) increasing the number of shares
of Common Stock available for benefits thereunder by 600,000 shares and (ii)
extending the term during which benefits may be granted thereunder to December
31, 2004.
The Amendments will be approved only upon the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENT
OF THE ISP.
DESCRIPTION OF THE ISP
The purpose of the ISP is to attract, motivate and retain outstanding
management personnel and other key employees by providing such individuals with
long-term financial incentives. Under the ISP, non-qualified stock options,
incentive stock options, stock appreciation rights and stock awards may be
granted to officers and other key employees of the company. On March 17, 1995,
506 shares were available for benefits under the ISP, excluding the 600,000
additional shares reserved pursuant to the Amendments. Approximately 41
employees are eligible to participate in the ISP. The ISP is administered by a
committee of two or more non-employee directors (currently, the Stock Option
Committee of the Board of Directors), appointed by the Board of Directors, which
determines the key employees of the company who are eligible to participate,
based upon their contributions and value to the company, the number and types of
benefits to be granted, and the terms and conditions of such benefits. Option
prices and the periods during which options may be exercised are fixed by the
committee, but in no case can the price be less than 100% of the fair market
value of the shares at the date of grant. The option exercise price may be paid
in cash or by tendering shares of Common Stock of the company. Stock
appreciation rights may be granted with respect to options or independently.
10
<PAGE>
Under the stock awards provision of the ISP, shares may be sold at prices less
than fair market value, or issued without other payment, as a bonus or as
additional compensation for services to the company.
TAX CONSEQUENCES
Counsel for the company has advised that under existing federal income
tax laws and regulations, the grant of stock options (including incentive stock
options) or stock appreciation rights under the ISP, or the award of stock
subject to restrictions and a risk of forfeiture under the ISP, does not result
in income taxable to the employee or provide a deduction for the company. In
general, the exercise of a non-qualified stock option or a stock appreciation
right, or the lapse of restrictions on transferability or termination of risks
of forfeiture of a stock award, results in ordinary income taxable to the
employee, and the company is entitled to a corresponding deduction. The amount
so taxable and so deductible will be the excess of fair market value on the date
of exercise over the option price in the case of a non-qualified stock option,
the amount of cash and the fair market value of the Common Stock received by the
employee in the case of a stock appreciation right and the excess of the fair
market value at the date of lapse of the restrictions or risk of forfeiture over
the payments, if any, made by the employee in the case of a stock award. In the
case of a stock award, the employee may elect to be taxed upon receipt of the
restricted award shares rather than upon lapse of the restrictions.
Under Section 422 of the Internal Revenue Code of 1986, as amended, there
are no tax consequences to the employee or the company when an incentive stock
option is granted or exercised. (The exercise of an incentive stock option may,
however, result in alternative minimum tax consequences to the employee.) If the
employee holds the stock received on exercise for at least two years from date
of grant and one year from date of transfer of the shares into the employee's
name, any gain realized on the disposition of the stock will be accorded
long-term capital gains treatment and no deduction is allowed to the company. If
the holding-period requirements are not satisfied, the employee will recognize
ordinary income at the time of sale equal to the lesser of (i) the gain realized
on the sale, or (ii) the difference between the option price and the fair market
value of the stock on the date of exercise. Any additional gain on the sale not
reflected above will be long-term capital gain, depending on whether the stock
is held for more than twelve months. The company is entitled to a deduction
equal to the amount of ordinary income recognized by the employee.
11
<PAGE>
NEW PLAN BENEFITS
The benefits and awards to be granted under the ISP, as amended, are not
determinable. Set forth on the following table are the benefits granted in the
year ended December 31, 1994, and from January 1, 1995 to March 17, 1995, to the
named executive officers, to the company's executive officers as a group, to the
company's directors who are not executive officers and to all employees,
including all current officers who are not executive officers, as a group. On
March 18, 1995, the price of the Common Stock was $3.875 per share as reported
on the American Stock Exchange.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS AND STOCK AWARDS GRANTED
--------------------------------------------------
IN 1994 IN 1995 TO DATE
-------------------------- ----------------------
STOCK STOCK
NAME AND POSITION OPTIONS(A) AWARDS(B) OPTIONS(C) AWARDS
- --------------------------------------------------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Anthony Spier 20,000 39,000 26,700 0
Chairman of the Board, President and Chief
Executive Officer
Francis J. Myers 0 0 0 0
Former Chairman of the Board, President and Chief
Executive Officer
Executive Group 27,500 102,000 128,800 0
Non-Executive Director Group 0 0 0 0
Non-Executive Officer Employee Group 0 0 92,500 0
<FN>
- --------------------------
(a) In 1994, the company granted 27,500 stock options to two new executive
officers, including 20,000 stock options granted to Mr. Spier, at an
exercise price of $3.75, the fair market value of the Common Stock on the
date of the grant. The options become exercisable as follows: 25% in
October 1994, 25% in April 1995, 25% in April 1996, and 25% in April 1997.
The options will expire on April 26, 2004.
(b) In 1994, the company granted performance-based restricted stock awards to
all executive officers. Each executive officer received an award of 9,000
restricted shares. (Mr. Spier received an additional award of 30,000
restricted shares in connection with his election as Chairman of the Board,
President and Chief Executive Officer of the company, and as a part of his
overall compensation package, the terms of which are set forth in footnote
(f) to the "Summary Compensation Table" herein.) The restricted stock
awards are subject to vesting as follows: 2,000, 3,000 and 4,000 shares
will vest in each of 1995, 1996 and 1997, respectively, if the company's
earnings from continuing operations before interest and tax (EBIT) for that
fiscal year equal or exceed the target amount for that year. Shares for any
year which do not vest because of failure to attain that year's performance
goal may vest on the basis of the attainment of cumulative performance
goals during the three year period. Any awards that have not vested as
specified above will be forfeited. Any dividends declared on the Common
Stock will be paid on the restricted shares.
(c) Between January 1, 1995 and March 15, 1995, the company granted a total of
221,300 stock options to certain of its executive officers and key
employees. The stock options are exercisable at a price equal to the fair
market value of the Common Stock on the date of the grant, expire ten years
after they are granted, and their vesting schedule varies depending on
their date of grant.
</TABLE>
12
<PAGE>
COMMON STOCK PRICE PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative
total shareholder return of the company's Common Stock with the cumulative total
return of the S&P Midcap 400 Index and the S&P Electronics-Instrumentation Index
during the years 1990 through 1994, assuming the investment of $100 on December
31, 1989, and the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS-GARDNER ELECTRONIC S&P MIDCAP 400 INDEX ELECTRONICS-INSTRUMENTATION
<S> <C> <C> <C>
1989 100 100 100
1990 70 94.88 71.65
1991 53.33 142.42 124.17
1992 176.67 159.38 152.52
1993 106.67 181.62 174.74
1994 71.65 175.11 217.17
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the company has appointed the firm of KPMG Peat
Marwick to serve as independent public accountants of the company for the fiscal
year ending December 31, 1995. A representative of KPMG Peat Marwick will be
present at the Meeting and will have the opportunity to make a statement. The
representative will also be available to respond to appropriate questions from
the shareholders.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented at the 1996 Annual
Meeting of Shareholders must be received at the company's executive offices,
2701 North Kildare Avenue, Chicago, Illinois 60639, by no later than 120 days
prior to March 22, 1996, in order to be considered for inclusion in the
company's proxy statement materials relating to such meeting.
OTHER BUSINESS
The company is not aware of any business to be acted upon at the Meeting
other than that which is described in this Proxy Statement. In the event that
other business calling for a vote of the shareholders is properly presented at
the Meeting, the holders of the proxies will vote your shares in accordance with
their best judgment.
Chicago, Illinois
March 24, 1995
13
<PAGE>
APPENDIX A
PROXY WELLS-GARDNER ELECTRONICS CORPORATION
2701 NORTH KILDARE AVENUE
CHICAGO, ILLINOIS 60639
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony Spier and James J. Roberts, Jr.,
and each of them, as Proxies, each with power of substitution, and hereby
authorizes them to vote, as designated below, all Common Shares of Wells-Gardner
Electronics Corporation held of record by the undersigned on March 17, 1995, at
the annual meeting of shareholders to be held on April 25, 1995, and any
adjournment thereof. A majority of the Proxies present at the meeting, and if
only one is present, then that one, may exercise the power of all the Proxies
hereunder.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
1. ELECTION OF DIRECTORS
(EXCEPT AS MARKED TO THE CONTRARY BELOW)
Anthony Spier, Albert S. Wells, Jr., Allan Gardner, James J. Roberts, Jr.,
John R. Blouin, William L. De Nicolo, Wayne Harris
If additional persons are nominated, the named Proxies may cumulate the votes
represented by this proxy in their discretion among the above-named nominees.
The withholding of authority to vote for any individual nominee or nominees will
permit the Proxies to distribute the withheld votes among the remaining
nominees.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW).
FOR all nominees listed below / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
For / / Against / /
2. APPROVAL OF AMENDMENTS TO INCENTIVE STOCK PLAN. To consider and vote upon a
proposal to approve the amendment of the Amended and Restated Incentive
Stock Plan.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Dated ____________________________, 1995
________________________________________
Signature
________________________________________
Signature if held jointly
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
APPENDIX B
AMENDMENT NO. 1
TO
WELLS-GARDNER ELECTRONICS CORPORATION
AMENDED AND RESTATED INCENTIVE STOCK PLAN
1. AMENDMENTS. The Wells-Gardner Electronics Corporation Amended
and Restated Incentive Stock Plan (the "Plan") is hereby amended as follows:
(a) Section 4 of the Plan is deleted in its entirety and
replaced with the following:
4. SHARES RESERVED. 600,000 Common Shares, par value $1.00 of the
Company plus any Common Shares which as of the effective date of Amendment
No. 1 to the Plan are authorized for award under this Plan and which have
not been awarded (subject to adjustments in accordance with Section 9
below), are reserved for issuance upon the exercise or issuance of Benefits
granted under this Plan. In addition, any shares subject to Benefits
granted from time to time under this Plan including any of the shares
subject to Benefits outstanding on the effective date of Amendment No. 1 to
the Plan, may be made subject to new Benefits under this Plan in the event
of a lapse, expiration or cancellation of such Benefits. All options
granted under the Plan may, but need not, be "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended.
(b) Section 16 of the Plan is deleted in its entirety and
replaced with the following:
16. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted
after December 31, 2004, provided, however, that the terms and conditions
applicable to any Benefit granted hereunder may thereafter be amended or
modified by mutual agreement between the Company and the participant or
such other persons as may then have an interest therein. Also, by mutual
agreement between the company and a participant hereunder, Benefits may be
granted to such participant in substitution and exchange for, and in
cancellation of, any Benefits previously granted such participant under
this Plan. The Board of Directors may amend this Plan from time to time or
terminate this Plan at any time. However, no action authorized by this
paragraph shall reduce the amount of any existing Benefits or change the
terms and conditions thereof without the participant's consent. No
amendment of this Plan shall, without approval of the shareholders of the
Company, (i) materially increase the total number of shares which may be
issued under this Plan, (ii) materially change the minimum purchase price
of
<PAGE>
Common Shares which may be made subject to options under this Plan, (iii)
materially modify the requirements as to eligibility for Benefits under
this Plan; (iv) result in any member of the Committee losing his or her
status as a disinterested person under Securities and Exchange Commission
Regulation [SECTION]240.16b-3; (v) result in the Plan losing its status as
a protected plan under Securities and Exchange Commission Rule 16b-3; or
(vi) extend the term of this Plan.
(c) Section 17 of the Plan is deleted in its entirety and
replaced with the following:
17. FAIR MARKET VALUE. "Fair Market Value" of any security of the
Company or any other issuer means, as of any applicable date:
(i) if the security is listed on a national securities exchange
or authorized for quotation on the National Association of Securities
Dealers Inc.'s Nasdaq National Market ("NASDAQ/NM"), the closing
price, regular way, of the security on such exchange or NASDAQ/NM, as
the case may be, or if no such reported sale of the security shall
have occurred on such date, on the next preceding date on which there
was such a reported sale, or
(ii) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NM, the
average of the closing bid and asked prices as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or, if no such prices shall have been so reported for such
date, on the next preceding date for which such prices were so
reported, or
(iii) if the security is not listed for trading on a national
securities exchange and is not authorized for quotation on NASDAQ/NM
or NASDAQ, the fair market value of the security as determined in good
faith by a qualified, independent appraiser selected by the Board.
(d) A new Section 18 is added to the Plan and shall read as
follows:
18. STOCKHOLDER APPROVAL. This Plan was amended by the Board of
Directors of the Company on March 7, 1995. Sections 1(a) and 1(b) of
Amendment No. 1 to the Plan and any Benefits granted thereunder shall be
null and void if stockholder approval of Sections 1(a) and 1(b) of
Amendment No. 1 to the Plan is not obtained within twelve (12) months
<PAGE>
of adoption of Amendment No. 1 to the Plan by the Board of Directors.
2. PLAN REMAINS IN EFFECT. Except as amended and modified by this
Amendment No. 1, the Plan remains in full force and effect.
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
AMENDED AND RESTATED INCENTIVE STOCK PLAN
1. PURPOSE. The Wells-Gardner Electronics Corporation Amended and
Restated Incentive Stock Plan (the "Plan" is intended to provide incentives
which will attract and retain highly competent persons as officers and key
employees of Wells-Gardner Electronics Corporation (the "Company") and its
subsidiaries, by providing them opportunities to acquire Common Shares of the
Company ("Common Shares") on the terms described herein.
2. ADMINISTRATION. The Plan will be administered by the Incentive Stock
Option Committee (the "Committee"), to furnish help or be of service, and will
be appointed by and report to the Board of Directors of the Company from among
its members and which shall be comprised of two or more non-employee members of
the Board, provided, however, that as long as the Common Shares of the Company
are registered under the Securities Exchange Act of 1934, members of the
Committee must qualify as disinterested persons within the meaning of Securities
and Exchange Commission Regulation [SECTION]240.16b-3.
3. PARTICIPANTS. Participants will consist of such key employees
(including officers) of the Company or its subsidiaries as the Committee
determines to be mainly responsible for the success and future growth and
profitability of the Company and whom the Committee may, from time to time,
recommend to the Board of Directors for approval to receive Benefits under the
Plan. Designation of a participant in any year shall not require the Committee
to designate such person to receive a Benefit in any other year or, once
designated, to receive the same number or type of Benefits as granted to the
participant in any other year, or as granted to any other participant in any
year. The Committee shall consider such factors as it deems pertinent in
management 's recommendations for selecting participants and in determining the
number and type of their respective benefits. The aggregate fair market value
(determined as of the time the option is granted) of the Common Shares with
respect to which incentive stock options are exercisable for the first time by a
participant during any calendar year (under all option plans of the Company)
shall not exceed $100,000.
4. SHARES RESERVED. 595,367 Common Shares, par value $1.00 of the
Company (subject to adjustments in accordance with Section 9 below) are reserved
for issuance upon the exercise or issuance of Benefits granted under this Plan.
In addition, any shares subject to Benefits granted from time to time under this
Plan including any of the 211,442 shares subject to Benefits outstanding on the
date of adoption of this Amended and Restated Plan, by the Board of Directors,
may be made subject to new Benefits under this Plan in the event of a lapse,
expiration or cancellation of such Benefits. All options granted under the Plan
may, but need not, be "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended.
5. STOCK OPTIONS. Stock Options will consist of non-qualified stock
options or incentive stock options (as defined in Section 422 of the Internal
Revenue Code of 1986) to purchase Common Shares at purchase prices not less than
100% of the fair market value of the Common Shares on the date the option is
granted. Such options will be exercisable not earlier than six months and not
later than ten years after the date they are granted and will terminate not
later than three months after termination of employment for any reason other
than death.
<PAGE>
Leaves of absence for military service, illness, and transfer of employment
between the Company and any subsidiary thereof shall not constitute termination
of employment. Options may be exercised by payment of the purchase price in
cash and/or by surrendering or delivering to the Company Common Shares equal in
value (based upon its fair market value on the date of surrender or delivery) to
such purchase price, or the portion thereof so paid. In the discretion of the
Committee, payment may also be made by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds to
pay the exercise price. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
6. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
Stock Appreciation Rights to the holders of any Stock Option granted hereunder.
In addition, Stock Appreciation Rights may be granted independently of and
without relation to Stock Options. Each Stock Appreciation Right shall be
subject to such terms and conditions consistent with this Plan as the Committee
shall impose from time to time, including the following:
(a) A Stock Appreciation Right relating to a Stock Option may be made
part of such option at the time of its grant or any time thereafter up
to six months prior to its expiration.
(b) Each Stock Appreciation Right will entitle the holder to elect to
receive up to 100% (or such lesser amount as determined by the
Committee) of the appreciation in the fair value of the shares subject
thereto up to the date right is exercised. In the case of a right
issued in relation to, and exercisable in lieu of, a Stock Option,
such appreciation shall be measured from not less than the option
price. In the case of all other rights issued hereunder, such
appreciation shall be measured from not less than the fair market
value of the Common Shares on the date the right is granted. Payment
of such appreciation shall be made in cash or in Common Shares, or a
combination thereof, as set forth in the Stock Appreciation Right, but
no Stock Appreciation Right shall entitle the holder to receive, upon
exercise thereof, more than the number of Common Shares (or cash of
equal value) with respect to which the right is granted.
(c) Each Stock Appreciation Right will be exercisable at the times, on the
conditions, and to the extent set forth therein, but no Stock
Appreciation Right may be exercisable earlier than six months nor
later than ten years after it is granted. Exercise of a Stock
Appreciation Right shall reduce the number of shares issuable under
this Plan by the number of shares with respect to which the right is
exercised.
7. STOCK AWARDS. Stock Awards will consist of Common Shares transferred
to participants at such prices less than fair market value (or without other
payment therefor) as additional compensation for services to the Company. Stock
Awards shall be subject to such terms and conditions as the Committee determines
appropriate, including, without limitation, restrictions on the sale or other
disposition of such shares and rights of the Company to reacquire such shares
upon termination of the participant's employment within specified periods.
8. BENEFITS. All references in the Plan to "Benefits" shall be deemed to
include Stock Options, Stock Appreciation Rights and Stock Awards.
2
<PAGE>
9. ADJUSTMENT PROVISIONS.
(a) If the company shall at any time change the number of issued Common
Shares without new consideration to the Company (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of
shares, liquidation, combination or other change in corporate structure
affecting the Common Shares) or make a distribution of cash or property
which has a substantial impact on the value of issued Common Shares, the
total number of shares reserved for issuance under this Plan and the
number of shares covered by each outstanding Benefit and the reference
price or fair market value for each outstanding Benefit shall be
adjusted so that the net value of each such Benefit shall not be
changed.
(b) In the case of any sale of assets, merger, consolidation,
combination or other corporate reorganization or restructuring of the
Company with or into another corporation which results in the
outstanding Common Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof
(an "Acquisition"), subject to the provisions of this Plan and any
limitation applicable to the Benefit:
(i) any Participant to whom a Stock Option has been granted
shall have the right thereafter and during the term of the Stock
Option, to receive upon exercise thereof the Acquisition
Consideration (as defined below) receivable upon the Acquisition
by a holder of the number of Common Shares which might have been
obtained upon exercise of the Stock Option or portion thereof, as
the case may be, immediately prior to the Acquisition; or
(ii) any Participant to whom a Stock Appreciation Right has been
granted shall have the right thereafter and during the term of
such right to receive upon exercise thereof the difference on the
exercise date between the aggregate fair market value of the
Acquisition receivable upon such acquisition by a holder of the
number of Common Shares which are covered by such right and the
aggregate reference price of such right.
The term "Acquisition Consideration" shall mean the kind and amount of
securities, cash or other property or any combination thereof receivable in
respect of one Common Share upon consummation of an Acquisition.
(c) Notwithstanding any other provisions of this Plan, and without
affecting the number of shares reserved or available hereunder, the
Committee may authorize the issuance, continuation, or assumption of
Benefits or provide for other equitable adjustments after changes in the
Common Shares resulting from any merger, consolidation, acquisition of
property or stock or reorganization upon such terms and conditions as it
may deem appropriate.
10. NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS. Each
Stock Option and Stock Appreciation Right granted under this Plan to any
employee shall not be transferable by him otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during his lifetime, only by
him. In the event of the death of a participant during employment or within
three months thereafter, each Stock Option and Stock Appreciation Right
theretofore granted to him shall be exercisable only within one year after his
death (but not beyond the stated duration of the Stock Option and Stock
Appreciation Right) and then only:
3
<PAGE>
(a) By the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's
rights under the Benefit shall pass by will or the laws of descent and
distribution; and
(b) To the extent that the deceased participant was entitled to do so
as of the date of his death.
11. OTHER PROVISIONS. The award of any Benefit under this Plan may also
be subject to such other provisions (whether or not applicable to the Benefits
awarded to any other participant) as the Committee determines appropriate,
including without limitation, provisions for the installment purchase of Common
Shares under Stock Options provisions for the installment exercise of Stock
Appreciation Rights, provisions to assist the participant in financing the
acquisition of Common Shares, provisions for the forfeiture of, or restrictions
on resale or other disposition of Common Shares acquired under any form of
Benefit, provisions for the acceleration of exercisability or vesting of
Benefits in the event of a change of control of the Company, provisions for the
payment of the value of Benefits to participants in the event of a change of
control of the Company, provisions to comply with Federal and state securities
laws, or understandings or conditions as to the participant's employment in
addition to those specifically provided for under this Plan.
12. RULES. The Committee may establish such rules and regulations as it
considers desirable for the administration of this Plan. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants and their legal representatives. The committee authorizes the CEO
and/or the President to grant stock options to an employee who changes jobs or
to a new employee to fill a management void. No member of the Board, no member
of the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, by any other member or employee or by any agent to
whom duties in connection with the administration of this Plan have been
delegated or, except in circumstances involving his bad faith, gross negligence
or fraud, for any act or failure to act by the member or employee.
13. MANNER OF ACTION BY COMMITTEE. A majority of the members of the
Committee qualified to act on a question may act by meeting or by writing signed
without meeting and may execute, or delegate to one of its members authority to
execute any instrument or document required. The Committee may delegate the
performance of ministerial functions in connection with this Plan to such person
or persons as the Committee may select. The costs of administration of this
Plan will be paid by the Company.
14. TENURE. A participant's right, if any, to continue to serve the
Company and its subsidiaries as an officer, employee, or otherwise, shall not be
enlarged or otherwise affected by his designation as a participant under this
Plan.
15. WITHHOLDING. All payments or distributions made pursuant to the Plan
shall be net of any amounts required to be withheld pursuant to applicable
federal, state and local tax withholding requirements. If the Company proposes
or is required to distribute Common Shares pursuant to the Plan, it may require
the recipient to remit to it an amount sufficient to satisfy such tax
withholding requirements prior to the delivery of any certificates for such
Common Shares. The Committee may, in its discretion and subject to such rules
as it may adopt, permit an optionee or award or right holder to pay all or a
portion of the federal, state and local withholding taxes arising in connection
with (a) the exercise of a non-qualified stock
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option or a Stock Appreciation Right or (b) the receipt or vesting of Stock
Awards, by electing to have the Company withhold Common Shares having a fair
market value equal to the amount to be withheld.
16. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted
after December 31, 2001, provided, however, that the terms and conditions
applicable to any Benefit granted hereunder may thereafter be amended or
modified by mutual agreement between the Company and the participant or such
other persons as may then have an interest therein. Also, by mutual agreement
between the company and a participant hereunder, Benefits may be granted to such
participant in substitution and exchange for, and in cancellation of, any
Benefits previously granted such participant under this Plan. The Board of
Directors may amend this Plan from time to time or terminate this Plan at any
time. However, no action authorized by this paragraph shall reduce the amount
of any existing Benefits or change the terms and conditions thereof without the
participant's consent. No amendment of this Plan shall, without approval of the
shareholders of the Company, (i) materially increase the total number of shares
which may be issued under this Plan, (ii) materially change the minimum purchase
price of Common Shares which may be made subject to options under this Plan,
(iii) materially modify the requirements as to eligibility for Benefits under
this Plan; (iv) result in any member of the Committee losing his or her status
as a disinterested person under Securities and Exchange Commission Regulation
[SECTION]240.16b-3; (v) result in the Plan losing its status as a protected plan
under Securities and Exchange Commission Rule 16b-3; or (vi) extend the term of
this Plan.
17. STOCKHOLDER APPROVAL. This Plan was restated and adopted by the Board
of Directors of the Company on March 4, 1992. The Plan and any Benefits granted
thereunder shall be null and void if stockholder approval of the Plan is not
obtained within twelve (12) months of such adoption of the Plan by the Board of
Directors.
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