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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:
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[ ] 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 sec.240.14a-11(c) or
sec.240.14a-12
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WYNN'S INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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WYNN'S INTERNATIONAL, INC.
500 NORTH STATE COLLEGE BOULEVARD, SUITE 700
ORANGE, CALIFORNIA 92868
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1999
The Annual Meeting of Stockholders of Wynn's International, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, April 28, 1999,
at 9:00 a.m. at 500 North State College Boulevard, Suite 700, Orange,
California, to consider and vote on the following:
1. Re-election of two directors for three-year terms ending in 2002;
2. Approval of Ernst & Young LLP as the Company's independent auditors for
1999;
3. Approval of the Wynn's International, Inc. 1999 Stock Awards Plan; and
4. Transaction of any other business properly arising at the meeting.
The Board of Directors has fixed March 11, 1999 as the record date for the
meeting, and only holders of Common Stock of record at the close of business on
that date are entitled to receive notice of and vote at the meeting. Please sign
and date the enclosed proxy card and return it without delay in the enclosed
postage-paid envelope. If you attend the meeting, you may withdraw your proxy
and vote personally on each matter.
By Order of the Board of Directors
/s/ WENDY K. K. NISHIKAWA
Wendy K. K. Nishikawa
Secretary
Orange, California
March 26, 1999
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TABLE OF CONTENTS
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PAGE
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NOTICE OF ANNUAL MEETING.................................... Cover
PROXY PROCEDURES............................................ 1
Voting by Proxy; Revocability............................. 1
Intended Vote of Proxy Holders............................ 1
Shares Entitled to Vote................................... 1
Voting and Tabulation Procedures.......................... 2
Cost of Solicitation...................................... 2
PROPOSALS TO BE VOTED UPON.................................. 2
Proposal 1 -- Election of Directors....................... 2
Proposal 2 -- Approval of Independent Public
Accountants............................................ 2
Proposal 3 -- Approval of the Wynn's International, Inc.
1999 Stock Awards Plan................................. 3
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD.............. 9
Biographical Information.................................. 9
Committees of the Board................................... 10
Attendance at Board and Committee Meetings................ 11
Compensation of Directors................................. 11
Certain Relationships and Related Transactions............ 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 12
Stock Ownership of Certain Beneficial Owners.............. 12
Stock Ownership of Directors and Executive Officers....... 13
EXECUTIVE COMPENSATION...................................... 14
Summary Compensation Table................................ 14
Option Grants in Last Fiscal Year......................... 15
Aggregated Option Exercises in Last Fiscal Year and FY-End
Option Values.......................................... 15
Performance Share Award Activity.......................... 15
Pension Plan Table........................................ 16
Employment Contracts and Change-in-Control Arrangements... 16
Compensation Committee Interlocks and Insider
Participation.......................................... 17
Section 16(a) Beneficial Ownership Reporting Compliance... 17
REPORT OF THE COMPENSATION COMMITTEE........................ 17
PERFORMANCE GRAPH........................................... 21
GENERAL INFORMATION......................................... 22
Obtaining a Copy of the Company's Annual Report on Form
10-K................................................... 22
Deadline for Stockholder Proposals........................ 22
EXHIBITS
Exhibit A -- Wynn's International, Inc. 1999 Stock Awards
Plan................................................... A-1
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WYNN'S INTERNATIONAL, INC.
------------------------
PROXY STATEMENT
We are sending this Proxy Statement to you, the stockholders of Wynn's
International, Inc. (the "Company"), as part of the Board of Directors'
solicitation of proxies to be voted at the Company's Annual Meeting of
Stockholders to be held on April 28, 1999, at 9:00 A.M. and at any adjournments
of the meeting. The Annual Meeting will be held at the Company's executive
offices at 500 North State College Boulevard, Suite 700, Orange, California
92868. As used in this Proxy Statement, the words "proxy" and "proxy card" refer
to the enclosed proxy card, which, when signed and dated by you and returned to
the Company, gives the named officers of the Company authority to vote your
shares at the April 28, 1999 meeting in the manner that you indicate on the
proxy card. Since many stockholders will be unable to attend the Annual Meeting
in person, the Board of Directors is soliciting your proxy so that you can be
represented and your vote can be counted at the meeting. Even if you are
planning to attend the meeting in person, we encourage you to return your proxy
card so that we will be able to tabulate votes in an efficient manner.
We are mailing this Proxy Statement and proxy card to stockholders on or
about March 26, 1999. We are also enclosing a copy of our 1998 Annual Report to
Stockholders, which includes the Company's 1998 financial statements. The Annual
Report is not, however, part of the proxy materials.
PROXY PROCEDURES
VOTING BY PROXY; REVOCABILITY
You are cordially invited to attend the Annual Meeting. Whether or not you
expect to attend in person, we urge you to sign and date the enclosed proxy card
and return it in the enclosed, postage-paid envelope. You have the right to
revoke your proxy at any time prior to the time your shares are actually voted.
You can revoke your proxy by (i) giving written notice of revocation to the
Corporate Secretary of the Company, (ii) subsequently signing and submitting a
later dated proxy card or (iii) attending the Annual Meeting and voting in
person. Please note that attending the meeting will not by itself revoke your
proxy.
INTENDED VOTE OF PROXY HOLDERS
If you specifically mark and sign your proxy card, your shares will be
voted as you direct.
If we receive a valid proxy card that is not marked for a specific item, we
will vote the shares as follows (unless the proxy card is revoked before voted):
FOR re-election of the two director nominees named below;
FOR approval of Ernst & Young LLP as the Company's independent
auditors for the 1999 fiscal year; and
FOR approval of the Wynn's International, Inc. 1999 Stock Awards Plan.
We do not know of any other matters to be presented at the Annual Meeting.
However, if other matters are properly presented at the meeting, the persons
named in the proxy will vote on them in accordance with their judgment.
SHARES ENTITLED TO VOTE
As of the close of business on March 11, 1999, there were outstanding
18,795,413 shares of Common Stock. Common Stock is the only class of securities
of the Company outstanding. Each share of Common Stock is entitled to one vote.
Only stockholders of record at the close of business on March 11, 1999 are
entitled to vote at the Annual Meeting.
<PAGE> 5
VOTING AND TABULATION PROCEDURES
The Company has appointed an Inspector of Elections who will count all
votes cast by proxy or in person at the Annual Meeting. The Inspector of
Elections will adhere to the following guidelines in tabulating votes:
ABSTENTIONS -- Proxies reflecting abstentions are counted as shares present
and entitled to vote for purposes of determining (i) the presence of a quorum
and (ii) the outcome of any matter submitted to the stockholders for a vote.
Abstentions will be disregarded in the determination of voting results on
matters requiring a plurality of votes (e.g., election of directors). On matters
requiring the affirmative vote of a majority of the shares present and entitled
to vote (e.g., approval of independent auditors) or a majority of the
outstanding shares, abstentions are treated the same as a vote "against" the
matter.
BROKER NON-VOTES -- "Broker non-votes" are shares held by brokers or
nominees for which the broker or nominee (i) lacks discretionary power to vote
and (ii) has not received specific voting instructions from the beneficial
owner. Broker non-votes count as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. However, when a broker or
nominee physically indicates on the proxy that it does not have discretionary
authority to vote some or all of the underlying shares on a particular matter,
those shares will be treated as abstentions with respect to that matter.
UNMARKED PROXIES -- Any unmarked proxies, including those submitted by
brokers or nominees, will be voted FOR the proposals discussed in this Proxy
Statement.
COST OF SOLICITATION
The Company will pay the cost of soliciting proxies. In addition to
solicitations by mail, some of the Company's directors, officers and regular
employees may, without extra compensation, conduct additional solicitation by
telephone and personal interview.
PROPOSALS TO BE VOTED UPON
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, you will be asked to elect two directors for terms
of three years or until their successors are elected and qualified. You are
entitled to one vote per share for each of the two directors to be elected. The
candidates receiving the highest number of votes will be elected.
The nominees for election are Barton Beek and James Carroll. Each nominee
is a member of the Company's Board of Directors elected to his present term of
office at a prior annual meeting. Each has consented to be named as a nominee in
this Proxy Statement and to serve as a director if elected. (See page 9 for
additional information about the nominees).
If any nominee becomes unavailable to stand for re-election, the persons
named in the proxy card will vote for the candidate that the Board selects to
replace the nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE TWO NOMINEES.
------------------------
PROPOSAL 2 -- APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has been our independent auditors since the Company's
incorporation in 1973. Ernst & Young has been the independent auditors of Wynn
Oil Company, a subsidiary of the Company, since 1967. The Board of Directors and
the Audit Committee believe that the knowledge of the Company developed by Ernst
& Young over the course of its long-term relationship with the Company is
invaluable. Consequently, the Board has appointed Ernst & Young as the Company's
independent auditors for the 1999 fiscal year, and seeks your approval of this
decision.
An Ernst & Young representative will attend the Annual Meeting to answer
appropriate questions and make a statement if he so desires.
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Approval of this proposal requires the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by proxy
and entitled to vote at the meeting. If the stockholders do not approve Ernst &
Young as independent auditors, the Board will reconsider its selection of
independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THIS
PROPOSAL.
PROPOSAL 3 -- APPROVAL OF THE WYNN'S INTERNATIONAL, INC. 1999 STOCK AWARDS PLAN
THE PROPOSED APPROVAL
The Board of Directors believes that the various stock incentive plans
adopted by the Company have been valuable in attracting and retaining talented
officers and key employees of the Company and its subsidiaries. The Company
currently maintains the Wynn's International, Inc. Stock-Based Incentive Award
Plan, which was adopted in 1989. The Stock-Based Incentive Award Plan will
expire by its terms on May 3, 1999, and, as of March 11, 1999, only 1,208 shares
of Common Stock of the Company remained available for grant under that plan. In
order to provide the Company with continued flexibility to provide future
stock-based incentives to its key personnel, the Board of Directors has, subject
to stockholder approval, unanimously adopted the Company's 1999 Stock Awards
Plan (the "Plan"). At the 1999 Annual Meeting, management will ask stockholders
to approve the Plan.
The Plan permits the grant of options, stock appreciation rights,
restricted stock awards, performance share awards and other stock-based
incentive awards (referred to below as "Awards") to officers and key employees
of the Company. The Plan covers a maximum of 1,500,000 shares of the Company's
Common Stock, subject to customary adjustments. The Plan contains special
provisions that prohibit the Company from granting Awards if the number of
shares subject to Awards outstanding under the Plan and awards outstanding under
all other stock plans of the Company for key employees, officers and/or
directors would exceed 10% of the number of shares issued and outstanding on the
date of grant. The principal terms of the Plan are summarized below. The
following summary is qualified in its entirety by reference to the full text of
the Plan, which is attached to this Proxy Statement as Exhibit A.
SUMMARY OF THE PLAN
In General
PURPOSE. The purpose of the Plan is to promote the success of the Company
by attracting, motivating, retaining and rewarding officers and key employees of
the Company through the grant of stock options and other stock-based Awards.
ADMINISTRATION. The Plan would be administered by the Stock Awards
Committee of the Board of Directors (the "Committee"). In light of U.S.
securities law and tax law considerations, the Committee must consist of two or
more non-employee directors, each of whom is "disinterested" as such term is
defined for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and "outside" as such term is defined for purposes
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee will have the authority to determine which officers and key
employees will receive Awards under the Plan and to determine the specific terms
and conditions of each Award, including the number of shares of Common Stock
("Shares") subject to each Award, the price to be paid for the Shares and,
subject to the requirements of applicable law, any performance or other vesting
criteria. The Committee will make all other determinations necessary or
advisable for the administration of the Plan.
ELIGIBILITY. Under the Plan, the Committee has discretion to grant an Award
to any officer (whether or not a director) or key employee of the Company or any
of its subsidiaries.
SHARES AVAILABLE FOR AWARDS; SHARE LIMITS. The maximum aggregate number of
Shares that may be issued under the Plan is 1,500,000. The Plan contains a
1,500,000 maximum Share limit on the number of Shares that may be delivered
pursuant to incentive stock options ("Incentive Stock Options") and a 500,000
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maximum Share limit on the number of Shares of restricted stock ("Restricted
Stock") that may be awarded. The Plan contains a 100,000 maximum Share limit on
(i) the number of Shares subject to options ("Options") and stock appreciation
rights ("Stock Appreciation Rights") that may be awarded during any calendar
year to any individual, and (ii) the number of Shares in the aggregate subject
to all Awards that may be awarded during any calendar year to any individual.
Each of the above maximum limits is subject to adjustment as described below.
The Plan also contains a special provision that restricts the Company's
ability to grant additional Awards once the number of Shares covered by Awards
reaches a certain percentage of the outstanding Shares. Specifically, no Award
may be granted under the Plan unless, after giving effect to the Shares covered
by the proposed Award, the total number of Shares covered by (i) outstanding
Awards under the Plan and (ii) outstanding stock options and awards under all
other stock-based plans of the Company (excluding the Company's broad-based
Employee Stock Purchase Plan) is less than or equal to 10% of the total number
of Shares issued and outstanding on the date of grant.
The Plan does not provide the Committee or the Board of Directors with the
authority to amend outstanding Award agreements to reprice previously granted
Options or other Awards under the Plan.
As is customary with plans of this type, the number and kind of Shares
available under the Plan are subject to adjustment in the event of (i) certain
reorganizations, mergers, combinations, recapitalizations, stock splits, stock
dividends, or other similar events that change the number or kind of shares
outstanding, (ii) extraordinary dividends or distributions of property to
stockholders, (iii) an exchange of Common Stock or other securities of the
Company or any similar extraordinary corporate transaction, or (iv) a sale of
all or substantially all of the assets of the Company. Shares relating to
Options or Stock Appreciation Rights that are not exercised, Restricted Stock
Awards that do not vest, Performance Share Awards that are not issued and any
Award that is not exercised or that expires or is cancelled will again become
available for re-grant under the Plan unless prohibited by law.
The Company estimates that all officers of the Company will be among those
eligible to receive Awards, subject to the discretion of the Committee to
determine the particular individuals who, from time to time, will be selected to
receive Awards. The number of key employees of the Company and its subsidiaries
who will be eligible to receive Awards has not been determined at this time.
Neither the specific individuals who are to receive Awards, the number of Awards
that will be granted to any individual or group of individuals, nor the amounts
to be payable with respect to Awards, have been determined at this time. If the
Plan had been in effect in 1998, the Company does not believe that its option
grants to executive officers would have been materially different from those
reflected in the Option Grants in Last Fiscal Year table on page 15.
VESTING AND AWARD PERIODS. Except as may be provided in an applicable Award
agreement, no Award made under the Plan may become exercisable or may vest until
at least six months after the initial Award date, and once exercisable an Award
will remain exercisable until it expires or terminates. Each Award will expire
on such date as is determined by the Committee, but in the case of Options, not
later than ten years after the date of grant.
TRANSFERABILITY. The Plan provides, with limited exceptions, that rights or
benefits under any Award are not assignable or transferable except by will or
the laws of descent and distribution, and that only the participant (the
"Participant") may exercise the Award during the Participant's lifetime.
Awards that may be Granted under the Plan.
OPTIONS. An Option is the right to purchase Shares at a future date at a
specified price (the "Option Price"). The Option Price is the closing price for
a Share on the Composite Tape of the New York Stock Exchange on the date of
grant, as reported by The Wall Street Journal ("Fair Market Value") on the date
of grant. On March 11, 1999, the closing price for a Share on the Composite Tape
of the New York Stock Exchange was $16.56.
An Option may either be an Incentive Stock Option under the Code or a
Nonqualified Stock Option. An Incentive Stock Option may not be granted to a
person who owns more than 10% of the total combined voting
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power of all classes of stock of the Company and its subsidiaries unless the
Option Price is at least 110% of the Fair Market Value of the Shares covered by
the Option and the Option by its terms is not exercisable until after expiration
of five years from the grant date. The aggregate Fair Market Value of Shares
(determined at the grant date) for which incentive stock options may be first
exercisable by an option holder during any calendar year under the Plan or any
other plan of the Company or its subsidiaries may not exceed $100,000.
Full payment for Shares purchased upon the exercise of any Option must be
made at the time of exercise in one or a combination of the following methods:
(i) cash, check or electronic funds transfer, (ii) in Shares already owned by
the Participant, provided that if the Shares delivered were initially acquired
upon exercise of a stock option, the Shares had been owned by the Participant at
least six months prior to the date of delivery of the Shares, or (iii) by notice
and third party payment in such manner as may be authorized by the Committee.
STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is the right to
receive payment based on the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the base price of the Stock Appreciation
Right. The Committee determines the base price of each Stock Appreciation Right
and such amount may be paid in cash, in Shares or a combination thereof. In its
discretion the Committee may grant a Stock Appreciation Right either together
with or separate from the grant of another Award. A Stock Appreciation Right
that is granted with another Award is exercisable at such time, and to the
extent, that the related Award is exercisable.
RESTRICTED STOCK AWARDS. A Restricted Stock Award is an Award of a fixed
number of Shares that do not vest unless and until certain restrictions or
criteria are met. The restrictions or criteria may include the passage of time
and/or achieving performance goals. The Committee specifies the price (but not
less than the par value) that the Participant must pay for the Shares and the
restrictions imposed on the Shares. The restrictions may not terminate earlier
than six months after the Award Date, unless the Committee provides otherwise.
Restricted Stock awarded to a Participant may not be voluntarily or
involuntarily sold, assigned, transferred, pledged or encumbered during the
restricted period. Stock certificates evidencing Shares of Restricted Stock
("Restricted Shares") will bear a legend referencing any applicable
restrictions. Unless otherwise provided in the Award agreement, a Participant
receiving a Restricted Stock Award is entitled to receive any dividends and
exercise voting rights for the Shares covered by the Award even though they are
not vested. The Committee will specify in each Award agreement the extent to
which cash paid or received in connection with a Restricted Stock Award must be
returned as to any Restricted Shares that do not vest.
PERFORMANCE SHARE AWARDS AND SPECIAL PERFORMANCE-BASED AWARDS. The
Committee may, in its discretion, grant one or more Performance Share Awards to
any Participant based upon such factors as the Committee deems relevant in light
of the specific type and terms of the Award. The number of Shares that may be
deliverable pursuant to such an Award is based upon the degree of attainment
over a specified period of such measure(s) of performance of the Company (or any
part of the Company) or the Participant as may be established by the Committee,
including continued employment for a period of time. The Award agreement will
specify the maximum number of Shares subject to the Performance Share Award, the
consideration (but not less than the par value) to be paid for any Shares
issued, the duration of the Award and the conditions upon which delivery of any
Shares to the Participant will be based.
In addition to the Performance Share Awards described above, the Plan
permits the Committee to grant certain other types of Awards ("Special
Performance-Based Awards") that are intended to qualify as "performance-based
compensation" under Section 162(m) of the Code. Under Section 162(m), the
Company may not deduct in any year certain compensation in excess of $1,000,000
paid to the Chief Executive Officer or any one of the four other most highly
compensated executive officers of the Company ("Executive Officers") unless,
among other things, this compensation qualifies as performance-based
compensation under Section 162(m) and the material terms of the plan for such
compensation are approved by stockholders. Consistent with the preceding
sentence, if the Plan is not approved by stockholders, the Plan and Awards
issuable under the Plan will not be implemented.
Options and Stock Appreciation Rights granted under the Plan at a Fair
Market Value Option Price are intended to qualify as performance-based
compensation. In addition, other share-based Awards (such as
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Restricted Stock or Performance Share Awards) may be granted under the Plan and
in certain cases are intended to qualify as performance-based compensation under
Section 162(m). With reference to the Special Performance-Based Awards, the
material terms of the Plan include the eligible class of Participants, the
performance goal or goals and the maximum number of Shares deliverable
thereunder to any Participant.
Only Executive Officers are eligible to receive Special Performance-Based
Awards. Special Performance-Based Awards granted to Executive Officers may be
granted under the Plan only in accordance with the requirements of Section
162(m), as generally set forth below.
Vesting of the Special Performance-Based Awards will depend on the
performance of the Company on a consolidated, segment, subsidiary, division or
unit basis with reference to revenues, net earnings, cash flow, return on equity
or on assets or on net investment, cost containment or reduction, or any
combination thereof. The Plan requires that the Committee set the performance
goals with respect to a Special Performance-Based Award in advance of applicable
deadlines under the Code and while the performance relating to such goals
remains substantially uncertain. The applicable performance measurement period
may not be less than one year nor more than ten years. The Committee may make
adjustments to the performance targets in order to mitigate the impact of
material, unusual or nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set.
Before any Special Performance-Based Award is paid, the Committee must
certify that the material terms of the Special Performance-Based Award
(including the performance targets) were satisfied. In lieu of Shares, the
Committee may require or allow a portion of the Award to be paid in the form of
Restricted Stock or an Option.
The maximum number of Shares that are covered by all Special
Performance-Based Awards granted to any Executive Officer during any calendar
year must not exceed 100,000 Shares.
TERMINATION OF EMPLOYMENT. In general, Options, Stock Appreciation Rights,
Restricted Stock and Performance Share Awards terminate upon a Participant's
termination of employment to the extent they have not vested by that date. If a
Participant's employment with the Company terminates due to death or total
disability, the Participant or his or her personal representative or beneficiary
generally will have 12 months after the termination date within which to
exercise any Option or Stock Appreciation Right to the extent it was exercisable
on the termination date. If a Participant's employment with the Company
terminates for any reason other than death or disability, the Participant
generally will have 90 days after the termination date within which to exercise
any Option or Stock Appreciation Right to the extent it was exercisable on the
termination date. Notwithstanding the foregoing, if a Participant's employment
terminates for any reason, the Committee will have discretion to increase the
portion of the Award available to the Participant or to his personal
representative or beneficiary up to the total amount of the Award, or to extend
the exercise period. In no case, however, will the exercise period extend beyond
the original expiration date of the Option or Stock Appreciation Right.
ACCELERATION OF AWARDS. Upon the happening of certain "Change in Control
Events" (as defined in the Plan) with respect to the Company, each Option and
Stock Appreciation Right will become immediately exercisable, each Restricted
Stock Award will immediately vest free of restrictions and each Performance
Share Award or Special Performance-Based Award will immediately become payable,
except that Awards that have been held less than six months prior to the
occurrence of the Change in Control Event will not be accelerated. Such
acceleration will occur automatically unless the Board of Directors determines
otherwise prior to the event. If the Board of Directors of the Company so elects
upon the occurrence of a Change in Control Event, the Company will cancel each
eligible Option and eligible Stock Appreciation Right and pay the holder cash in
an amount per Share equal to the difference between the Option Price or base
price of the Stock Appreciation Right, and the Fair Market Value of a Share on
the date of the Change in Control Event.
TERMINATION OF OR CHANGES TO THE PLAN. No Award may be granted under the
Plan after April 27, 2009. Termination of the Plan generally will not affect the
rights of Participants who hold Awards granted prior to the termination date.
The Committee may, without the consent of the Participant, amend the terms and
conditions of the Awards so long as the amendment does not affect the
Participant in any materially adverse
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manner. The Board may, without stockholder approval, terminate, suspend or amend
the Plan at any time. Amendments made without stockholder approval could
increase the costs to the Company under the Plan, although the amount of the
increased costs cannot be determined at this time. Stockholder approval of an
amendment to the Plan will be necessary to the extent required by law or
applicable regulations.
Federal Income Tax Consequences of Awards under the Plan
The following discussion summarizes the federal income tax consequences of
the Plan under current federal law, which is subject to change. State and local
tax consequences are beyond the scope of this summary.
NONQUALIFIED STOCK OPTIONS. No taxable income will be realized by a
Participant upon the grant of a Nonqualified Stock Option under the Plan at an
Option Price that is equal to the Fair Market Value of the Shares at the time of
grant. When a Participant exercises a Nonqualified Stock Option, however, he or
she will generally recognize ordinary income equal to the difference between the
Option Price and the Fair Market Value of the Shares at the time of exercise.
The Company is generally entitled to a corresponding deduction at the same time
and in the same amounts as the income recognized by the Participant. Upon a
subsequent disposition of the Shares, the Participant will realize short-term or
long-term capital gain or loss, depending on how long the Shares were held. The
Company will not be entitled to any further deduction at that time.
INCENTIVE STOCK OPTIONS. A Participant who receives an Incentive Stock
Option under the Plan does not recognize taxable income either on the date of
its grant or on the date of its exercise, provided that, in general, the
exercise occurs during employment or within three months after termination of
employment. However, any appreciation in value of the Common Stock after the
date of the grant will be includable in the Participant's federal alternative
minimum taxable income at the time of exercise in determining liability for the
alternative minimum tax. If Common Stock acquired pursuant to the exercise of an
Incentive Stock Option is not sold or otherwise disposed of within two years
from the date of grant of the Option nor within one year after the date of
exercise, any gain or loss resulting from disposition of the Common Stock will
be treated as long-term capital gain or loss. If stock acquired upon the
exercise of an Incentive Stock Option is disposed of prior to the expiration of
such holding periods (a "Disqualifying Disposition"), the Participant will
generally recognize ordinary income at the time of such Disqualifying
Disposition equal to the difference between the Option Price and the Fair Market
Value of the Common Stock on the date the Incentive Stock Option is exercised
or, if less, the excess of the amount realized on the Disqualifying Disposition
over the Option Price. Any remaining gain or net loss is treated as a short-term
or long-term capital gain or loss, depending upon how long the Common Stock is
held. Unlike the case in which a Nonqualified Stock Option is exercised, the
Company is not entitled to a tax deduction upon either the grant or exercise of
an Incentive Stock Option or upon disposition of the Common Stock acquired
pursuant to such exercise, except to the extent that the employee recognizes
ordinary income in a Disqualifying Disposition.
STOCK APPRECIATION RIGHTS. A Participant who receives a Stock Appreciation
Right is not taxed upon the grant of the Stock Appreciation Right. Likewise, the
Company will not be entitled to a deduction for the grant of a Stock
Appreciation Right. Upon the exercise of a Stock Appreciation Right, the
Participant generally will be taxed at ordinary income tax rates on the amount
of cash received and the Fair Market Value of any Common Stock received. The
amount of ordinary income recognized by the Participant is deductible by the
Company in the year that the income is recognized.
RESTRICTED STOCK AWARDS. In general, the Participant does not recognize
income upon the grant of a Restricted Stock Award because it is subject to a
substantial risk of forfeiture. Unless the Participant makes an election
described below, the Participant will recognize ordinary income when the
restrictions lapse equal to the difference between the Fair Market Value of the
Restricted Stock at that time and the amount that the Participant paid for the
Restricted Stock. The Company may deduct an amount equal to the income
recognized by the Participant at the time the Participant recognizes the income.
The Participant may elect, within 30 days after the date of receipt of the
Award, to recognize ordinary income arising from the Award as of the Award Date.
If such election is made, the Participant will recognize ordinary income in an
amount equal to the difference between the Fair Market Value of the stock at the
time
7
<PAGE> 11
of grant and the amount paid. The Company may deduct a corresponding amount. No
further income or loss is recognized at the time such stock vests.
The tax treatment upon disposition of Restricted Stock will depend upon
whether the Participant made an election to include the value of the stock in
income when awarded. If the Participant made such an election, any disposition
after the restrictions lapse will result in a long-term or short-term capital
gain or loss depending upon the period the Restricted Stock is held. If,
however, such election is made and for any reason the individual forfeits the
Restricted Stock prior to the lapse of the restrictions, the individual will not
be entitled to a deduction. If an election is not made, disposition after the
lapse of restrictions will result in short-term or long-term capital gain or
loss (depending on the period of time the stock is held after the restrictions
lapse) equal to the difference between the amount received on disposition and
the greater of the amount paid for the stock by the Participant or its Fair
Market Value at the date the restrictions lapsed.
PERFORMANCE SHARE AWARDS. A Participant who receives a Performance Share
Award will generally not realize taxable income at the time of grant, and the
Company will not be entitled to a deduction at that time. When a Performance
Share Award is paid, the Participant will have ordinary income, and the Company
will have a corresponding deduction. The measure of such income and deduction
will be the difference between the Fair Market Value of the Shares at the time
they are issued and the amount paid by the Participant for such Shares.
SPECIAL RULES GOVERNING PERSONS SUBJECT TO SECTION 16(B). Under the federal
tax law, special rules may apply to Participants who are subject to the
restrictions on resale of the Company's Common Stock under Section 16(b) of the
Exchange Act. These rules, which effectively take into account the Section 16(b)
restrictions, apply in limited circumstances and may impact the timing and/or
amount of income recognized by these persons with respect to certain stock-based
Awards under the Plan.
ACCELERATED PAYMENTS. If, as a result of a Change in Control of the
Company, a Participant's Options or Stock Appreciation Rights become immediately
exercisable, or if restrictions immediately lapse on Restricted Stock, or if
Shares covered by a Performance Share Award are immediately issued, the
additional economic value, if any, attributable to the acceleration may be
deemed a "parachute payment." The additional value will generally be deemed a
parachute payment if such value, when combined with the value of other payments
that are deemed to result from the Change in Control, equals or exceeds a
threshold amount equal to 300% of the Participant's average annual taxable
compensation over the five calendar years preceding the year in which the Change
in Control occurs. In such case, the excess of the total parachute payments over
such Participant's average annual taxable compensation will be subject to a 20%
non-deductible excise tax in addition to any income tax payable. The Company
will not be entitled to a deduction for that portion of any parachute payment
that is subject to the excise tax.
SECTION 162(m) LIMITS. Notwithstanding the foregoing discussion of the
deductibility of compensation under the Plan by the Company, Section 162(m) of
the Code would render non-deductible to the Company certain compensation to
Executive Officers in excess of $1,000,000 in any year unless such excess
compensation is "performance-based" (as defined in the Code) or is otherwise
exempt from these limits on deductibility. The applicable conditions of an
exemption for performance-based compensation plans include, among others, a
requirement that the stockholders approve the material terms of the plans.
Options, Stock Appreciation Rights and certain (but not all) other types of
Awards that may be granted to Executive Officers as contemplated by the Plan are
intended to qualify for the exemption for performance-based compensation under
Section 162(m). No assurances can be given that the compensation paid under the
Plan to any Executive Officer will in fact be deductible.
8
<PAGE> 12
VOTE REQUIRED FOR APPROVAL OF THE PLAN
Approval of the Plan requires the affirmative vote of the holders of a
majority of the Common Stock present, or represented, and entitled to vote at
the Annual Meeting assuming the presence of a quorum. Each share of Common Stock
is entitled to one vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
PLAN.
OTHER MATTERS
We do not know of any other matters to be presented at the Annual Meeting
of Stockholders. If any other matters requiring a stockholder vote properly
arise, including a question of adjourning the meeting, the persons named in the
accompanying proxy will vote on those matters according to their best judgment.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Company's Board of Directors currently consists of seven directors. In
addition, there is one vacancy on the Board resulting from Wesley E. Bellwood's
resignation as a director in January 1999. The Board is divided into three
classes. Two of the classes have three directors and the other class has two
directors. Only one class is elected each year.
The following information about each nominee was furnished by the nominee.
NOMINEES FOR ELECTION AS DIRECTORS TO
SERVE THREE-YEAR TERMS
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DURING PAST DIRECTOR
NAME AGE FIVE YEARS AND CERTAIN OTHER DIRECTORSHIPS SINCE
---- --- ------------------------------------------ --------
<S> <C> <C> <C>
Barton Beek........ 75 Of Counsel, O'Melveny & Myers LLP (February 1994 - 1993
present) (law firm); Partner, O'Melveny & Myers LLP
(1962 - January 1994); a director of JMC Group, Inc.;
a Director and member of the Compensation Committee
and Nominating Committee.
James Carroll...... 69 Chairman and Chief Executive Officer (December 1996 - 1988
present); President and Chief Executive Officer of
the Company (1988 - December 1996); a Director,
Chairman of the Executive Committee and Chairman of
the Nominating Committee.
</TABLE>
9
<PAGE> 13
Set forth below is information concerning each of the other five directors
of the Company whose three-year terms of office will continue after the 1999
Annual Meeting of Stockholders.
DIRECTORS WHOSE TERMS EXPIRE IN MAY 2000
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DURING PAST DIRECTOR
NAME AGE FIVE YEARS AND CERTAIN OTHER DIRECTORSHIPS SINCE
---- --- ------------------------------------------ --------
<S> <C> <C> <C>
Donald C.
Trauscht......... 65 Chairman, BW Capital Corporation (1996-present) 1998
(private investment company); Chairman, Borg Warner
Security Corporation (1995) (physical and electronic
security services); Chairman and Chief Executive
Officer, Borg-Warner Corporation (1991 - 1994)
(diversified manufacturing and service company);
director of Blue Bird Corporation, Borg Warner
Security Corporation, Cordant Technologies Inc. and
Esco Electronics Corporation; a Director and member
of the Audit Committee, Compensation Committee and
Stock Awards Committee.
James D. Woods..... 67 Chairman Emeritus and Consultant for Baker Hughes 1990
Incorporated (1997 - present) (oil field services and
process technologies); Chairman of the Board and
Chief Executive Officer of Baker Hughes Incorporated
(1987 - 1996); director of The Kroger Co., Varco
International, Inc., Howmet International, Inc. and
OMI Corporation; a Director, Chairman of the
Compensation Committee, Chairman of the Stock Awards
Committee and a member of the Nominating Committee.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN MAY 2001
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE DURING PAST DIRECTOR
NAME AGE FIVE YEARS AND CERTAIN OTHER DIRECTORSHIPS SINCE
---- --- ------------------------------------------ --------
<S> <C> <C> <C>
Bryan L.
Herrmann......... 63 Chairman, Base Camp 9 Corp. (1990 - present) 1975
(recreational equipment); General Partner, MOKG 1984
Investment Partners Ltd. (1984 - 1996) (investment
banking); Chairman and Chief Executive Officer,
Spaulding Composites Company (1992 - 1994)
(industrial composite materials); Trustee of Insignia
Properties Trust; a Director and member of the Audit
Committee and Executive Committee.
Robert H. Hood, Jr. 66 President, Douglas Aircraft Company (1989 - 1996) 1993
(aircraft manufacturing); President, McDonnell
Douglas Missile Systems, Inc. (1988 - 1989) (defense
contractor); a Director and member of the
Compensation Committee and Stock Awards Committee.
Richard L.
Nelson.......... 69 Independent business consultant (1983 - present); 1994
Partner, Ernst & Young LLP (1969 - 1983); a Director
and Chairman of the Audit Committee and member of the
Executive Committee.
</TABLE>
COMMITTEES OF THE BOARD
The Board of Directors maintains the five committees listed below. The
Board normally designates committee members at the annual organizational meeting
of the Board following the Annual Meeting of Stockholders. The committees on
which each director currently serves are listed in his biographical information
above.
AUDIT COMMITTEE -- The Audit Committee has responsibility for consulting
with the Company's officers regarding the appointment of independent public
accountants as the Company's auditors, discussing the scope
10
<PAGE> 14
of the auditors' examination and reviewing the Company's annual financial
statements and accounting policies. The Audit Committee met twice during 1998.
COMPENSATION COMMITTEE -- The Compensation Committee is responsible for
recommending the cash compensation of the Company's officers, recommending and
administering the Company's annual Corporate Management Incentive Plan,
recommending retirement compensation for the Company's officers and employees
and considering management succession issues. The Compensation Committee met
three times during 1998.
STOCK AWARDS COMMITTEE -- The Stock Awards Committee is a subcommittee of
the Compensation Committee. The Stock Awards Committee must consist entirely of
directors who are both "non-employee directors" under applicable federal
securities laws and "outside directors" under applicable tax laws. The Stock
Awards Committee is authorized to grant stock options, stock appreciation
rights, restricted stock awards and performance share awards to eligible
employees of the Company. The Stock Awards Committee met twice during 1998.
EXECUTIVE COMMITTEE -- The Executive Committee has all the power and
authority of the Board of Directors, except the power and authority to:
(i) Amend the Company's Certificate of Incorporation or Bylaws;
(ii) Adopt an agreement of merger or consolidation or recommend to
stockholders the sale, lease or exchange of all or substantially all of the
Company's property and assets;
(iii) Recommend to stockholders a dissolution of the Company or a
revocation of the dissolution; and
(iv) Declare a dividend or authorize the issuance of stock of the
Company unless expressly authorized by a resolution of the Board of
Directors.
The Executive Committee did not meet during 1998.
NOMINATING COMMITTEE -- The Nominating Committee is responsible for
developing and submitting to the Board (i) criteria for evaluating director
nominees and existing Board members, (ii) recommendations to fill Board
vacancies, and (iii) recommendations regarding Board composition, size and
director tenure. The Nominating Committee's charter does not include procedures
for stockholders formally to submit the names of potential nominees to the
Board. The Nominating Committee met twice during 1998.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During 1998, the Board of Directors met four times. Each director attended
at least 75% of the 1998 Board meetings, and, except for Mr. Herrmann, each
director attended at least 75% of the aggregate number of 1998 meetings of the
Board Committees on which he served. Mr. Herrmann was appointed to the Audit
Committee in April 1998 and was unable to attend the one meeting of the Audit
Committee held in 1998 after his appointment to that Committee.
COMPENSATION OF DIRECTORS
RETAINER AND MEETING FEES
During 1998, the Company compensated each director, except Mr. Bellwood and
Mr. Carroll, for his services by payment of (i) a quarterly retainer of $4,000,
(ii) $2,000 for each Board meeting attended and (iii) $1,000 for each Audit
Committee and Compensation Committee meeting attended. The Company did not pay a
separate fee to Stock Awards Committee members for attending its 1998 meetings.
In 1998, Mr. Bellwood received a monthly retainer fee of $6,333 for his
continuing services as Chairman Emeritus of the Board, a fee of $2,000 for each
Board meeting attended, and a fee of $1,000 for each Audit Committee meeting
attended. During 1998, Mr. Bellwood was reimbursed for supplemental medical
expenses
11
<PAGE> 15
of $3,827 and tax preparation charges of $2,000, and continued to participate in
the Company's group health plans. Mr. Bellwood resigned as a director of the
Company as of January 1999.
The Company does not pay directors who are Company employees any fees or
additional remuneration for serving as a member of the Board or any of its
Committees. Therefore, Mr. Carroll did not receive any such fees or remuneration
during 1998.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Directors who are not employees of the Company participate in the
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"), which became
effective in 1994. Upon their initial election to the Board, non-employee
directors receive options to purchase 6,750 shares of Common Stock. Upon
reelection to the Board, non-employee directors receive options to purchase
3,375 shares of Common Stock.
All options under the Directors' Plan (i) are nonqualified stock options,
(ii) are granted with an exercise price equal to the closing market price on the
date of grant, (iii) are granted for a period of ten years, and (iv) vest at the
rate of 70% on the first anniversary date of the grant and 10% on each of the
second, third and fourth anniversary dates of grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Director Barton Beek currently is of counsel to O'Melveny & Myers LLP, a
law firm that the Company retained during 1998 and continues to retain in 1999
to handle various legal matters.
SECURITY OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the beneficial ownership of stockholders whom we
know to hold more than 5% of the Company's Common Stock. The table is based on
information we received from those stockholders. Unless otherwise indicated, the
table reflects information as of March 11, 1999.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
NAME AND ADDRESS NUMBER OF SHARES BENEFICIALLY
OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED(1)
------------------- ------------------ ------------------
<S> <C> <C>
Mario J. Gabelli............................ 4,590,869(2) 24.4
One Corporate Center
Rye, New York 10580
FMR Corp.................................... 2,471,225(3) 13.2
82 Devonshire Street
Boston, Massachusetts 02109
James Carroll............................... 1,230,254(4) 6.5
P.O. Box 14143
Orange, California 92863
Carl E. Wynn Foundation..................... 1,092,997 5.8
P.O. Box 14143
Orange, California 92863
</TABLE>
- ---------------
(1) When a stockholder holds options exercisable within 60 days of March 11,
1999, we treat the Common Stock covered by those options as outstanding
shares when we calculate that stockholder's percentage ownership of the
Company's Common Stock. However, we do not consider that Common Stock to be
outstanding when we calculate the percentage ownership of any other
stockholder.
(2) These shares are owned by various entities engaged primarily in providing
investment advisory services for their clients. Mr. Gabelli directly or
indirectly controls and acts as chief investment officer for such
12
<PAGE> 16
entities. He or they have sole voting power with respect to 4,545,339
shares, sole dispositive power with respect to 4,590,869 shares and no
voting power with respect to 45,530 shares. Except for 76,500 shares owned
by Gabelli Performance Partnership, 3,375 shares owned by Gabelli Asset
Management International Advisory Services and 2,025 shares owned by Mr.
Gabelli personally, Mr. Gabelli disclaims any economic interest in the above
reported shares. The share information reflected is based on Mr. Gabelli's
Schedule 13D dated February 5, 1999.
(3) Includes shares beneficially owned by Fidelity Management & Research Company
and Fidelity Management Trust Company, each a wholly-owned subsidiary of FMR
Corp. FMR has sole voting power with respect to 517,075 shares only. It has
sole dispositive power with respect to 2,471,225 shares. The share
information reflected is based on the Schedule 13G filed by FMR Corp. for
the year ended December 31, 1998.
(4) Includes 260,500 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options. Excludes 83,334 shares owned by members of
Mr. Carroll's family, as to which shares Mr. Carroll disclaims beneficial
ownership.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table indicates the number of shares of Common Stock owned by
the Company's directors and executive officers on March 11, 1999.
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
---------------- --------------------- ---------------------
<S> <C> <C>
James Carroll.......................... 1,230,254(3) 6.5
Barton Beek............................ 14,849(4) *
Bryan L. Herrmann...................... 15,858(5) *
Robert H. Hood, Jr. ................... 15,862(6) *
Richard L. Nelson...................... 15,861(7) *
Donald C. Trauscht..................... 5,725(8) *
James D. Woods......................... 14,511(9) *
John W. Huber.......................... 141,878(10) *
Seymour A. Schlosser................... 140,226(11) *
Gregg M. Gibbons....................... 176,097(12) *
All directors and executive officers as
a group (10 persons)................. 1,771,121(13) 9.1
</TABLE>
- ---------------
* Less than one percent.
(1) Subject to applicable community property and similar statutes, the persons
listed as beneficial owners of the shares have sole voting and investment
power with respect to such shares.
(2) When a director or executive officer holds options exercisable within 60
days of March 11, 1999, we treat the Common Stock covered by those options
as outstanding shares when we calculate that director or executive
officer's percentage ownership of the Company's Common Stock. However, we
do not consider that Common Stock to be outstanding when we calculate the
percentage ownership of any other director or executive officer.
(3) Includes 260,500 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options. Excludes 83,334 shares owned by members of
Mr. Carroll's family, as to which shares Mr. Carroll disclaims beneficial
ownership.
(4) Includes 9,787 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
(5) Includes 9,087 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
(6) Includes 7,762 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
(7) Includes 9,111 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
(8) Includes 4,725 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
13
<PAGE> 17
(9) Includes 7,761 shares purchasable within 60 days of March 11, 1999 upon the
exercise of stock options.
(10) Includes 109,499 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options.
(11) Includes 105,718 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options.
(12) Includes 98,677 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options.
(13) Includes 622,627 shares purchasable within 60 days of March 11, 1999 upon
the exercise of stock options.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table describes the amounts and forms of compensation the
Company's four executive officers received over the preceding three fiscal
years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------------
AWARDS
-----------------------
RESTRICTED SECURITIES
ANNUAL COMPENSATION STOCK UNDERLYING ALL OTHER
--------------------------- AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(A) BONUS($)(A) ($) (#) ($)(B)
--------------------------- ---- ------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
James Carroll........................ 1998 $566,500 $303,630 -0- 25,000 $ 4,000
Chairman and 1997 $515,000 $515,000 -0- -0- $ 4,000
Chief Executive Officer (C) 1996 $515,000 $515,000 $151,825(D) -0- $ 3,750
John W. Huber........................ 1998 $365,000 $195,630 -0- 15,000 $ 4,000
President and Chief 1997 $326,000 $326,000 -0- -0- $148,377(F)
Operating Officer (E) 1996 $226,000 $226,000 -0- 22,500 $ 3,750
Seymour A. Schlosser................. 1998 $259,600 $139,139 -0- 10,000 $ 4,000
Vice President-Finance 1997 $236,000 $236,000 -0- -0- $ 4,000
and Chief Financial Officer 1996 $216,500 $216,500 -0- -0- $ 3,750
Gregg M. Gibbons..................... 1998 $253,000 $135,601 -0- 10,000 $ 4,000
Vice President-Corporate Affairs 1997 $230,000 $230,000 -0- -0- $ 4,000
and General Counsel (G) 1996 $211,000 $211,000 -0- -0- $ 3,750
</TABLE>
- ---------------
(A) Amounts shown include cash compensation earned and received or deferred by
executive officers. All other annual compensation did not exceed the lesser
of $50,000 or 10% of the total salary and bonus reported for the named
executive officer.
(B) Unless otherwise noted, this column reflects only amounts contributed to
the Company's 401(k) Plan, a qualified defined contribution plan, for the
accounts of the named executive officers.
(C) Prior to December 11, 1996, Mr. Carroll served as President and Chief
Executive Officer of the Company.
(D) On December 11, 1996, Mr. Carroll was granted a restricted stock award of
11,250 shares at a cost to Mr. Carroll of approximately $0.01 per share.
The shares vested on December 11, 1997. Regular dividends were paid on the
restricted stock.
(E) Mr. Huber became President and Chief Operating Officer of the Company in
December 1996. Compensation paid to Mr. Huber in 1996 in his prior capacity
as President and Chief Executive Officer of the Company's subsidiary,
Wynn's-Precision, Inc., is included on the table for informational
purposes.
(F) The Company reimbursed Mr. Huber for moving expenses in the amount of
$144,377 to relocate to Southern California.
(G) Prior to December 31, 1997, Mr. Gibbons also served as the Company's
Secretary.
14
<PAGE> 18
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT VALUE AT ASSUMED
SECURITIES OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#)(A, B, C) FISCAL YEAR ($/SH)(D) DATE 5% ($) 10% ($)
---- ------------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James Carroll................. 25,000 16.0% $22.31 2/10/08 $350,766 $888,910
John W. Huber................. 15,000 9.6% $22.31 2/10/08 $210,460 $533,346
Seymour A. Schlosser.......... 10,000 6.4% $22.31 2/10/08 $140,306 $355,564
Gregg M. Gibbons.............. 10,000 6.4% $22.31 2/10/08 $140,306 $355,564
</TABLE>
- ---------------
(A) No stock appreciation rights have been granted or are presently
outstanding. Options granted in 1998 are exercisable starting 12 months
after the grant date, with 70% of the shares covered thereby becoming
exercisable at that time and with an additional 10% of the option shares
becoming exercisable on each successive anniversary date, with full vesting
occurring on the fourth anniversary date. Acceleration of the
exercisability of the options may occur under certain circumstances,
including a change in control of the Company. The options were granted with
an exercise price of 100% of the fair market value of the Company's Common
Stock on the date of grant. The options were granted for a term of 10
years, subject to earlier termination in case of certain events related to
termination of employment.
(B) Under the terms of the Company's Stock-Based Incentive Award Plan, the
Stock Awards Committee retains discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options.
(C) With the exception of the options granted to Mr. Carroll, the options were
accompanied by performance share award grants. See "1998 Performance Share
Activity of Executive Officers" below.
(D) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END
(#) ($)(A)
SHARES VALUE ---------------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
James Carroll.......... -0- -0- 243,000/25,000 $4,417,335/$0
John W. Huber.......... -0- -0- 97,987/20,514 $1,500,544/$54,892
Seymour A. Schlosser... -0- -0- 125,831/11,013 $2,139,167/$16,071
Gregg M. Gibbons....... -0- -0- 90,665/11,013 $1,572,822/$16,071
</TABLE>
- ---------------
(A) Market value of the underlying securities at year end minus the exercise
price of "in-the-money" options.
PERFORMANCE SHARE AWARD ACTIVITY
SUMMARY OF EMPLOYEE STOCK BONUS POLICY
Since February 1994, the Company has maintained an Employee Stock Bonus
Policy (the "Stock Policy") as part of the Company's existing Stock-Based
Incentive Award Plan (the "Stock Plan"). Under the Stock Policy, all stock
option awards granted after January 1, 1994 are accompanied by a performance
share award contingent upon exercise of the associated options.
The performance share award entitles the recipient to receive one share of
Common Stock for every five shares purchased upon the exercise of the stock
option if the recipient satisfies two conditions. The recipient must (i)
maintain continuous record ownership of the option shares for three years after
exercise and
15
<PAGE> 19
(ii) remain continuously employed by the Company during the three-year period.
During this period, the recipient does not enjoy any rights of a stockholder
with respect to the performance shares.
Upon completion of the three-year holding period and satisfaction of the
continuous employment requirement, the recipient will receive the shares of
Common Stock covered by the performance share award. The recipient will also
receive an amount equal to the amount of dividends, without interest, that would
have been paid on the Common Stock if the recipient had received the shares at
the time the associated stock options were exercised.
PRIOR PERFORMANCE SHARE AWARDS TO EXECUTIVE OFFICERS
Messrs. Huber, Schlosser and Gibbons have received performance share awards
for a total of 14,588, 9,088, and 9,088 contingent performance shares,
respectively, since January 1, 1994 pursuant to the Stock Policy. Neither Mr.
Huber nor Mr. Schlosser has exercised any options associated with performance
share awards. In 1996, Mr. Gibbons exercised options associated with 2,306
performance shares and in 1997, Mr. Gibbons exercised options associated with
621 performance shares.
1998 PERFORMANCE SHARE ACTIVITY OF EXECUTIVE OFFICERS
In 1998, performance share awards were made to Messrs. Huber, Schlosser and
Gibbons in the amount of 3,000, 2,000 and 2,000 contingent performance shares,
respectively.
PENSION PLAN TABLE
The following table shows estimated annual benefits payable upon retirement
in specified compensation and years of service classifications to the executive
officers listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
YEARS OF SERVICE
BASE ------------------------------
REMUNERATION 10 20 30
- ------------ -------- -------- --------
<S> <C> <C> <C>
$250,000 $ 45,000 $ 90,000 $125,000
$350,000 $ 63,000 $126,000 $175,000
$450,000 $ 81,000 $162,000 $225,000
$550,000 $ 99,000 $198,000 $275,000
$650,000 $117,000 $234,000 $325,000
</TABLE>
The Company's retirement benefits are based on the participant's highest
base salary in his final three years of employment. Messrs. Carroll, Huber,
Schlosser and Gibbons have completed 19, 13, 10 and 21 years of service,
respectively, under the Company's retirement plans. The benefits shown above are
the aggregate amounts provided under the Company's qualified retirement plan,
the employer-provided portion of the Company's 401(k) plan and the Company's
non-qualified and unfunded supplemental retirement income plan. The annual
benefits shown above represent a single life annuity commencing at age 65. These
amounts would be actuarially reduced if an alternate form of pension benefit
were elected or for the commencement of benefits prior to age 65. The above
benefits are reduced dollar-for-dollar by the officers' primary Social Security
benefits.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into employment contracts with Messrs. Carroll,
Huber, Schlosser and Gibbons, which expire December 31, 2001. These contracts
provide for an annual salary to be fixed by the Board of Directors for 1999 and
thereafter at not less than $600,000 for Mr. Carroll, $386,900 for Mr. Huber,
$275,176 for Mr. Schlosser and $268,180 for Mr. Gibbons. Increases above these
minimums are entirely within the Board's discretion.
The employment contracts contain provisions designed to alleviate the
executive officers' potential concerns over a possible "change in control" of
the Company. For purposes of the contracts, a "change in control" will be deemed
to take place if (a) any change occurs that is required to be reported under
federal
16
<PAGE> 20
securities regulations; (b) any person becomes the beneficial owner of 40% or
more of the Company's outstanding voting securities; or (c) at the end of any
two-year period, the directors, who at the beginning of the period constituted
the Board, no longer constitute a majority of the Board, unless the election of
the new directors was approved by a two-thirds vote of the then directors who
were in office at the beginning of the period.
If, within the two-year period immediately following any change in control,
the employment of Mr. Carroll, Mr. Huber, Mr. Schlosser or Mr. Gibbons
terminates, either voluntarily or involuntarily, for any reason other than
death, permanent disability or retirement at or after his normal retirement
date, the Company will pay termination compensation to him equal to 2.99 times
the average annual compensation, including salary and bonuses, paid to him
during the five most recent calendar years, except that in the event of
voluntary termination in certain cases the lump sum compensation will be equal
to his highest annual compensation, including salary and bonus, for services
rendered in any of the three most recent calendar years.
The Company's Stock-Based Incentive Award Plan provides for the
acceleration of the vesting of awards granted thereunder, including restricted
stock awards, upon the occurrence of a "change in control" of the Company. The
definition of "change in control" in the Stock-Based Incentive Award Plan is
substantially the same as the definition in the employment contracts. Such
acceleration will occur automatically unless the Board of Directors, prior to
the occurrence of the change in control, determines otherwise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Beek is of counsel to O'Melveny & Myers LLP, a law firm that the
Company retains regularly to handle a variety of legal matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that its executive officers and directors complied with all
applicable Section 16(a) filing requirements in 1998.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER IT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
REPORT OF THE COMPENSATION COMMITTEE
TO: THE BOARD OF DIRECTORS
The Compensation Committee is responsible for evaluating the performance
and determining the compensation levels of the Company's Chief Executive Officer
and other executive officers. In connection therewith, the Committee recommends
and administers the Company's annual Corporate Management Incentive Plan. The
Committee is also responsible for recommending retirement compensation for the
Company's officers and employees, and considering management succession issues.
The Committee reviews with the Board in detail all aspects of compensation for
the Company's executive officers.
OVERALL COMPENSATION POLICIES
The Company believes that its financial success directly correlates with
the skills and talents of its executive management. In order to recruit, retain
and motivate top-performing managers, the Company must provide an outstanding
executive compensation package. In structuring executive compensation, the
Committee adheres to the following policies:
- A substantial portion of each executive officer's annual compensation
should be tied to the Company's overall financial performance.
17
<PAGE> 21
- The Committee should evaluate each officer's individual performance and
the extent to which that individual performance contributed to the
Company's overall performance.
- Compensation levels should be appropriate and commensurate with
compensation paid to executives in the same industry.
- Executive officers and key employees should have a strong incentive to
advance the Company's long-term strategic and financial goals, and not
merely be concerned with its shorter-term financial performance.
- Retirement benefits should provide a meaningful source of income to
retired executives in order to give current executives greater incentive
to provide long-term service to the Company.
- The tax implications to the Company and its executive officers of various
payments and benefits should be considered in structuring total executive
compensation.
The Committee relies principally on four forms of compensation to pursue
these policies: (i) base salary, (ii) performance-based bonuses, (iii) stock
options and other stock-based awards, and (iv) retirement benefits pursuant to
the Company's retirement and 401(k) plans.
ANNUAL COMPENSATION
Annual compensation for each executive officer consists mainly of base
salary and a contingent bonus based upon Company and individual performance.
Each year the Committee reviews the base salaries of its executive officers. In
setting the base salary for an executive officer, the Committee reviews the
officer's current salary and salary history, and evaluates the officer's
individual performance during the year. The Committee also considers the
prevailing salary rates of comparable executive officers of other companies in
the same industry and the relative financial performance of the Company.
An executive officer will receive a bonus for a given year if (i) the
Company has achieved certain financial objectives for the year, and (ii) the
Committee determines that the officer's individual performance contributed to
the achievement of those objectives. Each year the Company establishes a
Corporate Management Incentive Plan (the "Management Incentive Plan"). The
Management Incentive Plan sets forth the Company's financial objectives for the
coming year and establishes a formula for determining a corporate bonus pool if
the Company achieves its financial objectives.
Under the 1998 Management Incentive Plan, the bonus pool's size is based on
the Company's pretax return on beginning stockholders' equity. Specifically, the
pool equals 10% of the amount by which consolidated pretax earnings exceed a 23%
return on beginning stockholders' equity, subject to a maximum bonus pool of
$1,850,000. The 1998 performance threshold represents a significant increase
over the 1997 Management Incentive Plan, which set the threshold at an 18%
return on beginning stockholders' equity.
After the total Management Incentive Plan bonus pool is calculated, the
executive officers determine the amount of bonuses to be paid to the Company's
other corporate management employees, based on their evaluation of each
employee's individual performance. The Compensation Committee then decides how
to allocate the remainder of the bonus pool to the executive officers, subject
to a maximum payment of 100% of the executive officer's base salary.
In evaluating each executive officer's performance and contribution to the
Company's financial results, the Committee considers not only measurable
accomplishments, but also achievements that are more difficult to quantify, such
as the development and execution of key corporate strategies, the containment of
costs and minimization of liabilities, and the ability to lead and motivate
others. Based on these factors, the Committee arrives at an incentive
compensation figure for each of the executive officers.
Under the 1998 Management Incentive Plan, the Committee may recommend to
the Board, and the Board may grant, an additional bonus for outstanding
performance, even if the payment of such additional bonus award would cause the
maximum bonus pool to be exceeded. However, an executive officer's total bonus
may not exceed 100% of his base salary in that year.
18
<PAGE> 22
LONG-TERM INCENTIVES
In addition to the base salary and bonus elements of executive
compensation, the Company provides long-term incentives to the executive
officers of the Company. The Stock Awards Committee, which is a sub-committee of
the Compensation Committee, from time to time provides long-term incentives to
the executive officers and other key employees through the grant of stock
options, restricted stock, performance share awards and other awards under the
Company's Stock-Based Incentive Award Plan. If the stockholders approve the
Company's proposed 1999 Stock Awards Plan, the Stock Awards Committee will
continue to provide long-term incentives to executive officers and other key
employees through the grant of stock options and other awards under that plan.
The Company does not, however, offer a long-term incentive plan within the
meaning of Item 402(a)(7)(iii) of Regulation S-K.
In determining whether it should grant stock-based awards to a particular
executive officer, the Stock Awards Committee considers both the Company's
overall performance and the executive's contribution to that performance. The
Stock Awards Committee also considers what challenges and strategic goals each
officer will face in the coming years, and whether a stock-based award would
provide the executive with an effective additional incentive to achieve the
goals set.
CONSIDERATION OF TAX IMPLICATIONS
As one of many factors in its consideration of compensation matters, the
Compensation Committee considers the anticipated tax treatment to the Company
and to its executive officers of various payments of compensation and benefits.
For example, some types of compensation payments and their deductibility (e.g.,
the spread on exercise of nonqualified stock options) depend upon the timing of
an executive's vesting or exercise of previously granted rights.
In addition, Section 162(m) of the Internal Revenue Code affects the
deductibility of executive compensation for federal income tax purposes. Section
162(m) essentially limits the Company's deduction to $1,000,000 per year for
compensation (other than certain qualified performance-based compensation) paid
to each of the Company's four executive officers.
The Committee does not necessarily expect to limit executive compensation
to the maximum deductible amount under Section 162(m). However, the Committee
will consider various alternatives designed to preserve the deductibility of
compensation payments and benefits to the extent they are consistent with its
other compensation objectives. These alternatives include offering stock-based
awards that are designed to meet the deductibility criteria established in the
regulations under Section 162(m). In addition, the Committee may consider
offering executive officers the option of deferring some of their compensation
until another year.
1998 EXECUTIVE COMPENSATION
The formula bonus pool under the 1998 Management Incentive Plan was
$1,331,000. Based on the recommendation of management and the concurrence of the
Committee members, the Committee recommended that only $1,000,000 be paid to all
corporate personnel, including the executive officers, for services rendered in
1998. Of this amount, the executive officers decided to pay a total of $226,000
to the other corporate personnel. The remaining balance of $774,000 was then
available for the Committee to pay bonuses to the executive officers.
Based on the Company's performance in 1998, and the Committee's assessment
of the contribution of each of the executive officers to this performance, the
Committee awarded bonuses to each of the four executive officers equal to
approximately 53.6% of his base salary.
In 1998, each executive officer also received perquisites and other
benefits incidental to his employment that, in the aggregate for each executive
officer, were well below the threshold reporting requirements.
19
<PAGE> 23
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In 1998, Mr. Carroll received a base salary of $566,500 pursuant to an
employment agreement with the Company that was set to expire on December 31,
1999. Based on the strong performance of the Company under Mr. Carroll's
leadership, the Committee recommended to the Board, and the Board of Directors
authorized, that the Company continue to employ Mr. Carroll beyond 1999.
Accordingly, in January 1999, the Company entered into a new employment
agreement with Mr. Carroll that expires on December 31, 2001. The new employment
agreement establishes Mr. Carroll's minimum annual base salary for 1999 at
$600,000.
In addition to his base salary for 1998, the Committee also awarded Mr.
Carroll a bonus of $303,630 under the 1998 Management Incentive Plan. In
determining the size of Mr. Carroll's bonus, the Committee reviewed Mr.
Carroll's role in achieving the Company's 1998 financial results, which included
record revenues, pretax income and income after taxes, and substantial cash
generated from operations. The Committee also considered Mr. Carroll's
leadership in non-financial matters, such as the development and implementation
of corporate strategies, the continued refinement of an orderly succession plan
and the motivation of the Company's key executives. Based on all of these
factors, the Committee concluded that a bonus award equal to 53.6% of Mr.
Carroll's base salary was appropriate.
Mr. Carroll's total compensation in 1998 did not exceed the Section 162(m)
$1,000,000 deductibility limit.
CONCLUSION
The Committee has reviewed each element of compensation for each of the
executive officers for 1998. In the Committee's opinion, the compensation of
each executive officer is reasonable and appropriate in view of the Company's
consolidated performance and the Committee's evaluation of each executive
officer's contribution to that performance.
COMPENSATION COMMITTEE
James D. Woods
Barton Beek
Robert H. Hood, Jr.
Donald C. Trauscht
February 10, 1999
20
<PAGE> 24
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN* AMONG WYNN'S INTERNATIONAL,
INC., NEW YORK STOCK EXCHANGE MARKET INDEX AND AUTOMOTIVE PARTS AND ACCESSORIES
PEER GROUP**
LOGO
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Wynn's International, Inc................ 100 123.03 169.24 274.90 420.37 442.53
Peer Group Index......................... 100 86.30 92.14 116.12 148.25 151.27
NYSE Market Index........................ 100 98.06 127.15 153.16 201.50 239.77
</TABLE>
- ---------------
* $100 invested on December 31, 1993 in the Company's Common Stock and in the
New York Stock Exchange Market Index and the Automotive Parts and Accessories
Peer Group Index. Total return includes reinvestment of dividends, if
applicable. Returns for the Company for the above period are not necessarily
indicative of future performance. Dates are for the calendar years ending on
December 31 of each year.
** Automotive Parts and Accessories Peer Group is comprised of 73 public
companies. The Peer Group and New York Stock Exchange Market Index
information was furnished by Media General Financial Services.
21
<PAGE> 25
GENERAL INFORMATION
OBTAINING A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
Upon request, we will send you a free copy of the Company's Annual Report
on Form 10-K for the year ended December 31, 1998, which we filed with the
Securities and Exchange Commission. If you would like a copy, please write to
the Company's Secretary, Wendy K. K. Nishikawa, at Wynn's International, Inc.,
500 North State College Boulevard, Suite 700, Orange, California 92868.
DEADLINE FOR STOCKHOLDER PROPOSALS
If you wish to present a proposal at the Company's 2000 Annual Meeting, we
must receive it by November 27, 1999 in order to consider it for inclusion in
the 2000 Proxy Statement.
22
<PAGE> 26
EXHIBIT A
WYNN'S INTERNATIONAL, INC.
1999 STOCK AWARDS PLAN
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
1. THE PLAN........................................................... A-1
1.1 Purpose..................................................... A-1
1.2 Administration and Authorization; Power and Procedure....... A-1
1.3 Participation............................................... A-2
1.4 Shares Available for Awards; Share Limits................... A-2
1.5 Grant of Awards............................................. A-2
1.6 Award Period................................................ A-3
1.7 Limitations on Exercise and Vesting of Awards............... A-3
1.8 No Transferability; Limited Exceptions to Transfer
Restrictions................................................ A-3
2. OPTIONS............................................................ A-3
2.1 Grants...................................................... A-3
2.2 Option Price................................................ A-4
2.3 Limitations on Grant and Terms of Incentive Stock Options... A-4
2.4 Limits on 10% Holders....................................... A-4
3. STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK
APPRECIATION RIGHTS)............................................... A-4
3.1 Grants...................................................... A-4
3.2 Exercise of Stock Appreciation Rights....................... A-5
3.3 Payment..................................................... A-5
3.4 Limited Stock Appreciation Rights........................... A-5
4. RESTRICTED STOCK AWARDS............................................ A-5
4.1 Grants...................................................... A-5
4.2 Restrictions................................................ A-6
4.3 Return to the Corporation................................... A-6
5. PERFORMANCE SHARE AWARDS AND SPECIAL PERFORMANCE-BASED AWARDS...... A-6
5.1 Grants of Performance Share Awards.......................... A-6
5.2 Special Performance-Based Awards............................ A-6
6. OTHER PROVISIONS................................................... A-7
6.1 Termination of Employment; Rights of Eligible Employees,
Participants and Beneficiaries.............................. A-7
6.2 Adjustments; Acceleration................................... A-8
6.3 Compliance with Laws........................................ A-10
6.4 Tax Matters................................................. A-10
6.5 Plan Amendment, Termination and Suspension.................. A-11
6.6 Privileges of Stock Ownership............................... A-11
6.7 Effective Date of the Plan.................................. A-11
6.8 Term of the Plan............................................ A-11
6.9 Governing Law/Construction/Severability..................... A-11
</TABLE>
i
<PAGE> 28
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
6.10 Captions.................................................... A-12
6.11 Effect of Change of Subsidiary Status....................... A-12
6.12 Stock-Based Awards in Substitution for Stock Options or
Awards Granted by Another Corporation....................... A-12
6.13 Non-Exclusivity of Plan..................................... A-12
6.14 No Corporate Action Restriction............................. A-12
6.15 Other Company Benefit and Compensation Programs............. A-13
6.16 Deferred Payments........................................... A-13
7. DEFINITIONS........................................................ A-13
7.1 Definitions................................................. A-13
</TABLE>
ii
<PAGE> 29
WYNN'S INTERNATIONAL, INC.
1. THE PLAN
1.1 PURPOSE
The purpose of this Plan is to promote the success of the Company by
providing an additional means through the grant of Awards to attract, motivate,
retain and reward key employees, including officers, whether or not directors,
of the Company with awards and incentives for high levels of individual
performance and improved financial performance of the Company. "Corporation"
means Wynn's International, Inc. and "Company" means the Corporation and its
Subsidiaries, collectively. These terms and other capitalized terms are defined
in Article 7.
1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
(a) COMMITTEE. The Committee shall administer this Plan and shall
authorize all Awards to Eligible Employees. Action of the Committee with
respect to the administration of this Plan shall be taken pursuant to a
majority vote or by written consent of its members.
(b) PLAN AWARDS; INTERPRETATION; POWERS OF COMMITTEE. Subject to the
express provisions of this Plan, the Committee shall have the authority to:
(i) Determine eligibility and, from among those persons determined
to be eligible, the particular Eligible Employees who will receive an
Award;
(ii) Grant Awards to Eligible Employees, determine the price at
which securities will be offered or awarded and the amount of securities
to be offered or awarded to any of such persons, and determine the other
specific terms and conditions of such Awards consistent with the express
limits of this Plan, and establish the installments (if any) in which
such Awards shall become exercisable or shall vest, or determine that no
delayed exercisability or vesting is required, and establish the events
of termination or reversion of such Awards;
(iii) Approve the forms of Award Agreements (which need not be
identical either as to type of award or among Participants);
(iv) Construe and interpret this Plan and any agreements defining
the rights and obligations of the Company and Participants under this
Plan, further define the terms used in this Plan, and prescribe, amend
and rescind rules and regulations relating to the administration of this
Plan;
(v) Cancel, modify or waive the Corporation's rights with respect
to, or modify, discontinue, suspend or terminate, any or all outstanding
Awards held by Eligible Employees, subject to any required approval
under Section 6.5;
(vi) Accelerate, or extend the exercisability or term of, any or
all outstanding Awards within the maximum ten (10) year term of Awards
under Section 1.6; and
(vii) Make all other determinations and take such other action as
contemplated by this Plan or as may be necessary or advisable for the
administration of this Plan and the effectuation of its purposes.
(c) BINDING DETERMINATIONS/LIABILITY LIMITATION. Any action taken by,
or inaction of, the Corporation, any Subsidiary, the Board or the Committee
relating or pursuant to this Plan and within its authority hereunder or
under applicable law shall be within the absolute discretion of that entity
or body and shall be conclusive and binding upon all persons. Neither the
Board nor any Committee, nor any member thereof or person acting at the
direction thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with this
Plan (or any Award made under this Plan), and all such persons shall be
entitled to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without limitation,
A-1
<PAGE> 30
attorneys' fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under any directors and officers liability
insurance coverage that may be in effect from time to time.
(d) RELIANCE ON EXPERTS. In making any determination or in taking or
not taking any action under this Plan, the Committee or the Board, as the
case may be, may obtain and may rely upon the advice of experts, including
professional advisors to the Corporation. No director, officer or agent of
the Company shall be liable for any such action or determination taken or
made or omitted in good faith.
(e) DELEGATION. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of
the Company.
1.3 PARTICIPATION.
Awards may be granted by the Committee only to those persons whom the
Committee determines to be Eligible Employees. An Eligible Employee who
previously has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee shall so determine.
1.4 SHARES AVAILABLE FOR AWARDS; SHARE LIMITS.
(a) SHARES AVAILABLE. Subject to the provisions of Section 6.2, the
capital stock that may be delivered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock and any shares of its
Common Stock held as treasury shares (collectively, "Shares"). Shares may
be delivered for any lawful consideration.
(b) SHARE LIMITS. The maximum number of Shares that may be delivered
pursuant to Awards granted to Eligible Employees under this Plan shall not
exceed 1,500,000 Shares (the "Share Limit"). The maximum number of Shares
that may be delivered pursuant to Options qualified as Incentive Stock
Options granted under this Plan is 1,500,000 Shares. The maximum number of
Shares that may be delivered as Restricted Stock (other than Restricted
Stock granted as a Special Performance-Based Award pursuant to Section 5.2)
granted under this Plan is 500,000 Shares. The maximum number of Shares
subject to those Options and Stock Appreciation Rights that may be granted
during any calendar year to any individual shall be limited to 100,000 and
the maximum individual limit on the number of Shares in the aggregate
subject to all Awards that during any calendar year are granted under this
Plan shall be 100,000. Each of the five foregoing numerical limits shall be
subject to adjustment as contemplated by this Section 1.4 and Section 6.2.
(c) LIMITATIONS ON GRANTS; REISSUE OF UNVESTED AWARDS. No Award may be
granted under this Plan unless, on the date of grant, the sum of (i) the
maximum number of Shares issuable at any time pursuant to such Award, plus
(ii) the number of Shares that have previously been issued pursuant to
Awards granted under this Plan, other than reacquired Shares available for
reissue consistent with any applicable legal limitations, plus (iii) the
maximum number of Shares that may be issued at any time after such date of
grant pursuant to Awards that are outstanding on such date, does not exceed
the Share Limit. In addition, no Award may be granted under this Plan
unless, after giving effect to such Award, the total number of Shares
subject to outstanding Awards under this Plan and subject to outstanding
stock options or other awards under all other stock-based plans of the
Corporation (other than the Corporation's Employee Stock Purchase Plan)
constitutes 10% or less of the total number of Shares issued and
outstanding as of the date of grant. Shares that are subject to or underlie
Awards that expire or for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason are not paid or delivered
under this Plan, as well as reacquired Shares, shall again, except to the
extent prohibited by law, be available for subsequent Awards under this
Plan. Except as limited by law, if an Award is or may be settled only in
cash, such Award need not be counted against any of the limits under this
Section 1.4.
1.5 GRANT OF AWARDS.
Subject to the express provisions of this Plan, the Committee shall
determine the number of Shares subject to each Award, the price (if any) to be
paid for the Shares or the Award and, in the case of Performance Share Awards,
in addition to matters addressed in Section 1.2(b), the specific objectives,
goals or performance criteria (such as an increase in sales, market value,
earnings or book value over a base period,
A-2
<PAGE> 31
the years of service before vesting, the relevant job classification or level of
responsibility, continued employment for a specified period or other factors)
that further define the terms of the Performance Share Award. Each Award shall
be evidenced by an Award Agreement signed by the Corporation and the
Participant. Neither the Committee nor the Board shall amend any outstanding
Award Agreement to reprice a previously granted Option or other Award.
1.6 AWARD PERIOD.
Each Award and all executory rights or obligations under the related Award
Agreement shall expire on such date (if any) as shall be determined by the
Committee, but in the case of Options or other rights to acquire Common Stock
not later than ten (10) years after the Award Date.
1.7 LIMITATIONS ON EXERCISE AND VESTING OF AWARDS.
(a) PROVISIONS FOR EXERCISE. Unless the Committee otherwise expressly
provides, no Award shall be exercisable or shall vest until at least six
(6) months after the initial Award Date, and once exercisable an Award
shall remain exercisable until the expiration or earlier termination of the
Award.
(b) PROCEDURE. Any exercisable Award shall be deemed to be exercised
when the Secretary or other designated officer of the Corporation receives
written notice of such exercise from the Participant, together with any
required payment made in accordance with Section 2.2 and satisfaction of
the tax withholding requirements of Section 6.4.
(c) FRACTIONAL SHARES/MINIMUM ISSUE. Fractional share interests shall
be disregarded. No fewer than ten (10) shares may be purchased on exercise
of any Award at one time unless the number purchased is the total number at
the time available for purchase under the Award.
1.8 NO TRANSFERABILITY; LIMITED EXCEPTIONS TO TRANSFER RESTRICTIONS.
(a) LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 1.8, by applicable law and by the
Award Agreement, as the same may be amended, (i) all Awards are
non-transferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge; (ii)
Awards shall be exercised only by the Participant; and (iii) amounts
payable or Shares issuable pursuant to an Award shall be delivered only to
(or for the account of) the Participant.
(b) EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and transfer
restrictions in Section 1.8(a) shall not apply to:
(i) Transfers to the Corporation;
(ii) The designation of a beneficiary to receive benefits in the
event of the Participant's death or, if the Participant has died,
transfers to or exercise by the Participant's Beneficiary, or, in the
absence of a validly designated Beneficiary, transfers by will or the
laws of descent and distribution;
(iii) If the Participant has suffered a Total Disability, permitted
transfers or exercises on behalf of the Participant by his or her
Personal Representative; or
(iv) The authorization by the Committee of "cashless exercise"
procedures with third parties who provide financing for the purpose of
(or who otherwise facilitate) the exercise of Awards consistent with
applicable laws and the express authorization of the Committee.
2. OPTIONS.
2.1 GRANTS.
One or more Options may be granted under this Article 2 to any Eligible
Employee. Each Option granted shall be designated in the applicable Award
Agreement by the Committee as either an Incentive Stock Option, subject to
Sections 2.3 and 2.4, or a Nonqualified Stock Option.
A-3
<PAGE> 32
2.2 OPTION PRICE.
(a) PRICING LIMITS. The purchase price per Share of Common Stock
covered by each Option shall be determined by the Committee at the time of
the Award, but shall not be less than 100% (110% in the case of a
Participant described in Section 2.4) of the Fair Market Value of the
Common Stock on the date of grant and in addition shall not be less than
the par value thereof.
(b) PAYMENT PROVISIONS. The purchase price of any Shares purchased on
exercise of an Option granted under this Article 2 shall be paid in full at
the time of each purchase in one or a combination of the following methods:
(i) in cash or by electronic funds transfer; (ii) by check payable to the
order of the Corporation; (iii) by notice and third party payment in such
manner as may be authorized by the Committee; or (iv) by the delivery of
Shares already owned by the Participant, provided, however, that the
Committee may in its absolute discretion limit the Participant's ability to
exercise an Award by delivering such Shares, and provided, further, that
any Shares delivered that were initially acquired upon exercise of a stock
option must have been owned by the Participant at least six (6) months as
of the date of delivery. Shares used to satisfy the exercise price of an
Option shall be valued at their Fair Market Value on the trading day
immediately preceding the date of exercise.
2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.
(a) $100,000 LIMIT. To the extent that the aggregate "Fair Market
Value" of stock with respect to which incentive stock options first become
exercisable by a Participant in any calendar year exceeds $100,000, taking
into account both Common Stock subject to Incentive Stock Options under
this Plan and stock subject to incentive stock options under all other
plans of the Company, such options shall be treated as Nonqualified Stock
Options. For this purpose, the "Fair Market Value" of the stock subject to
options shall be determined as of the date the options were awarded. In
reducing the number of options treated as incentive stock options to meet
the $100,000 limit, the most recently granted options shall be reduced
first. To the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Committee may, in the manner and
to the extent permitted by law, designate which Shares are to be treated as
Shares acquired pursuant to the exercise of an Incentive Stock Option.
(b) OPTION PERIOD. Each Option and all rights thereunder shall expire
no later than ten (10) years after the Award Date.
(c) OTHER CODE LIMITS. Incentive Stock Options may only be granted to
Eligible Employees who satisfy the other eligibility requirements of the
Code. There shall be imposed in any Award Agreement relating to Incentive
Stock Options such other terms and conditions as from time to time are
required in order that the Option be an "incentive stock option" as that
term is defined in Section 422 of the Code.
2.4 LIMITS ON 10% HOLDERS.
No Incentive Stock Option may be granted to any person who, at the time the
Option is granted, owns (or is deemed to own under Section 424(d) of the Code)
shares of outstanding Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation, unless the
exercise price of such Option is at least 110% of the Fair Market Value of the
stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five (5) years from the date such Option is granted.
3. STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK APPRECIATION RIGHTS).
3.1 GRANTS.
In its discretion, the Committee may grant to any Eligible Employee Stock
Appreciation Rights either concurrently with the grant of another Award or in
respect of an outstanding Award, in whole or in part, or independently of any
other Award. Any Stock Appreciation Right granted in connection with an
Incentive Stock Option shall contain such terms as may be required to comply
with the provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
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3.2 EXERCISE OF STOCK APPRECIATION RIGHTS.
(A) EXERCISABILITY. Unless the Award Agreement or the Committee
otherwise provides, a Stock Appreciation Right related to another Award
shall be exercisable at such time or times, and to the extent, that the
related Award shall be exercisable.
(B) EFFECT ON AVAILABLE SHARES. To the extent that a Stock
Appreciation Right is exercised, the number of underlying Shares
theretofore subject to a related Award shall be charged against the maximum
number of Shares that may be delivered pursuant to Awards under this Plan.
The number of Shares subject to the Stock Appreciation Right and the
related Award of the Participant shall be reduced by the number of
underlying Shares as to which the exercise related, unless the Award
Agreement otherwise provides.
(C) STAND-ALONE STOCK APPRECIATION RIGHTS. A Stock Appreciation Right
granted independently of any other Award shall be exercisable pursuant to
the terms of the Award Agreement, but in no event earlier than six (6)
months after the Award Date, except in the case of death or Total
Disability.
3.3 PAYMENT.
(A) AMOUNT. Unless the Committee otherwise provides, upon exercise of
a Stock Appreciation Right and the attendant surrender of an exercisable
portion of any related Award, the Participant shall be entitled to receive
payment of an amount determined by multiplying:
(i) The difference obtained by subtracting the exercise price per
Share under the related Award (if applicable) or the initial Share value
specified in the Award from the Fair Market Value of a Share on the date
of exercise of the Stock Appreciation Right, by
(ii) The number of Shares with respect to which the Stock
Appreciation Right shall have been exercised.
(B) FORM OF PAYMENT. The Committee, in its sole discretion, shall
determine the form in which payment shall be made of the amount determined
under paragraph (a) above, either solely in cash, solely in Shares (valued
at Fair Market Value on the date of exercise of the Stock Appreciation
Right), or partly in such Shares and partly in cash, provided that the
Committee shall have determined that such exercise and payment are
consistent with applicable law. If the Committee permits the Participant to
elect to receive cash or Shares (or a combination thereof) on such
exercise, any such election shall be subject to such conditions as the
Committee may impose.
3.4 LIMITED STOCK APPRECIATION RIGHTS.
The Committee may grant to any Eligible Employee Stock Appreciation Rights
exercisable only upon or in respect of a Change in Control Event or any other
specified event ("Limited SARs"), and such Limited SARs may relate to or operate
in tandem or combination with or substitution for Options, other Stock
Appreciation Rights or other Awards (or any combination thereof), and may be
payable in cash or Shares based on the spread between the exercise price per
Share under the related Award (if applicable) or the initial Share value
specified in the Limited SAR and a price based upon the Fair Market Value of the
Common Stock during a specified period or at a specified time within a specified
period before, after or including the date of such event.
4. RESTRICTED STOCK AWARDS.
4.1 GRANTS.
The Committee may, in its discretion, grant one or more Restricted Stock
Awards to any Eligible Employee. Each Restricted Stock Award Agreement shall
specify the number of Shares to be issued to the Participant, the date of such
issuance, the consideration for such Shares to be paid by the Participant (which
consideration shall be an amount that is not less than the par value of the
Shares), the extent (if any) to which and the time (if ever) at which the
Participant shall be entitled to dividends, voting and other rights in respect
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of the Shares prior to vesting, and the restrictions (which may be based on
performance criteria, passage of time or other factors or any combination
thereof) imposed on such Shares and the conditions of release or lapse of such
restrictions. Such restrictions shall not lapse earlier than six (6) months
after the Award Date, except to the extent the Committee may otherwise provide.
Stock certificates evidencing Restricted Shares shall bear a legend making
appropriate reference to the restrictions imposed hereunder and shall be held by
the Corporation or by a third party designated by the Committee until the
restrictions on such Shares shall have lapsed and the Shares shall have vested
in accordance with the provisions of the Award and Section 1.7. Upon issuance of
the Restricted Stock Award, the Participant may be required to provide such
further assurance and documents as the Committee may require to enforce the
restrictions.
4.2 RESTRICTIONS.
(a) PRE-VESTING RESTRAINTS. Except as provided in Sections 4.1 and
1.8, Restricted Shares may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered, either voluntarily or involuntarily,
until the restrictions on such Shares have lapsed and the Shares have
become vested.
(b) DIVIDEND AND VOTING RIGHTS. Unless otherwise provided in the
applicable Award Agreement, a Participant receiving a Restricted Stock
Award shall be entitled to dividend and voting rights for all Shares issued
even though they are not vested, provided that such rights shall terminate
immediately as to any Restricted Shares that cease to be eligible for
vesting.
(c) CASH PAYMENTS. If the Participant shall have paid or received cash
(including any dividends) in connection with the Restricted Stock Award,
the Award Agreement shall specify whether and to what extent such cash
shall be returned (with or without interest) as to any Restricted Shares
that cease to be eligible for vesting.
4.3 RETURN TO THE CORPORATION.
Unless the Committee otherwise expressly provides, Restricted Shares that
remain subject to restrictions at the time of termination of employment or are
subject to other conditions to vesting that have not been satisfied by the time
specified in the applicable Award Agreement shall not vest and shall be returned
to the Corporation in such manner and on such terms as the Committee shall
therein provide.
5. PERFORMANCE SHARE AWARDS AND SPECIAL PERFORMANCE-BASED AWARDS.
5.1 GRANTS OF PERFORMANCE SHARE AWARDS.
The Committee may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon such factors as the Committee shall deem relevant
in light of the specific type and terms of the Award. The Award Agreement shall
specify the maximum number of Shares subject to the Performance Share Award, the
consideration to be paid for any such Shares as may be issuable to the
Participant (which consideration shall be an amount that is not less than the
par value of the Shares), the duration of the Award and the conditions upon
which delivery of any Shares to the Participant shall be based, which delivery
shall not be earlier than six (6) months after the Award Date. The number of
Shares that may be deliverable pursuant to such Award shall be based upon the
degree of attainment over a specified period of not more than ten (10) years (a
"performance cycle") as may be established by the Committee of such measure(s)
of the performance of the Company (or any part thereof) or the Participant or
such other criteria (including continued employment or the passage of time) as
may be established by the Committee. The Committee may provide for full or
partial credit, prior to completion of such performance cycle or the attainment
of the performance achievement specified in the Award, in the event of the
Participant's death, retirement or Total Disability, a Change in Control Event
or in such other circumstances as the Committee (consistent with Section
6.9(c)(ii), if applicable) may determine.
5.2 SPECIAL PERFORMANCE-BASED SHARE AWARDS.
Without limiting the generality of the foregoing, and in addition to other
Awards granted under other provisions of this Article 5, other performance-based
awards within the meaning of Section 162(m) of the
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Code ("Special Performance-Based Awards"), may be granted under this Plan,
whether in the form of restricted stock, performance stock, phantom stock or
other rights, the vesting of which depends on the performance of the Company on
a consolidated, segment, subsidiary, division or unit basis with reference to
revenues, net earnings (before or after taxes or before or after taxes,
interest, depreciation and/or amortization), cash flow, return on equity or on
assets or on net investment, or cost containment or reduction, or any
combination thereof (the business criteria) relative to pre-established
performance goals. The applicable business criteria and the specific performance
goals must be approved by the Committee in advance of applicable deadlines under
the Code and while the performance relating to such goals remains substantially
uncertain. The applicable performance measurement period may be neither less
than one (1) nor more than ten (10) years. Performance targets may be adjusted
to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not foreseen at the
time the targets were set. Other types of performance and non-performance awards
may also be granted under the other provisions of this Plan.
(a) ELIGIBLE CLASS. The eligible class of persons for Awards under
this Section 5.2 shall be executive officers of the Corporation.
(b) MAXIMUM AWARD. In no event shall grants in any calendar year to a
Participant under this Section 5.2 relate to more than 100,000 shares.
(c) COMMITTEE CERTIFICATION. Before any Special Performance-Based
Award is paid, the Committee shall certify that the material terms of the
Special Performance-Based Award were satisfied.
(d) TERMS AND CONDITIONS OF AWARDS. The Committee shall have
discretion to determine the restrictions or other limitations of the
individual Awards under this Section 5.2 (including the authority to reduce
Awards, payouts or vesting or to pay no Awards, in its sole discretion, if
the Committee preserves such authority at the time of grant by language to
this effect in its authorizing resolutions or otherwise).
(e) STOCK PAY-OUT FEATURES. Special Performance-Based Share Awards
shall be paid in Shares, provided that the Committee may require or allow a
portion of the Award to be paid in the form of Restricted Shares or an
Option.
6. OTHER PROVISIONS.
6.1 TERMINATION OF EMPLOYMENT; RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS
AND BENEFICIARIES.
(a) EFFECTS OF TERMINATION OF EMPLOYMENT.
(i) OPTIONS -- TERMINATION FOR OTHER THAN DEATH OR TOTAL
DISABILITY. If a Participant's employment by the Company terminates for
any reason other than death or Total Disability, the Participant shall
have, unless otherwise provided in the Award Agreement and subject to
earlier termination pursuant to or as contemplated by Section 1.6 or
6.2, ninety (90) days from and after the Severance Date within which to
exercise any Option to the extent it shall have become exercisable as of
the Severance Date. To the extent an Option was not exercisable as of
the Severance Date, it shall terminate.
(ii) OPTIONS -- DEATH OR TOTAL DISABILITY. If a Participant's
employment by the Company terminates as a result of death or Total
Disability, the Participant, Participant's Personal Representative or
his or her Beneficiary, as the case may be, shall have, unless otherwise
provided in the Award Agreement and subject to earlier termination
pursuant to or as contemplated by Section 1.6 or 6.2, twelve (12) months
from and after the Severance Date within which to exercise any Option to
the extent it shall have become exercisable as of the Severance Date. To
the extent an Option was not exercisable as of the Severance Date, it
shall terminate.
(iii) CERTAIN STOCK APPRECIATION RIGHTS. A Stock Appreciation Right
granted concurrently or in tandem with an Option shall have the same
post-termination provisions and exercisability periods as the Option to
which it relates, unless the Committee otherwise provides.
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(iv) OTHER AWARDS. Unless otherwise provided in the applicable
Award Agreement and subject to the other provisions of this Plan,
Restricted Stock Awards, Stock Appreciation Rights, Performance Share
Awards and Special Performance-Based Awards, to the extent such Awards
have not become vested as of the Severance Date, shall be forfeited as
of the Severance Date.
(v) COMMITTEE DISCRETION. Notwithstanding the foregoing provisions
of this Section 6.1, in the event of, or in anticipation of, a
termination of employment with the Company for any reason, the Committee
may, in its discretion, increase the portion of the Participant's Award
available to the Participant, or Participant's Beneficiary or Personal
Representative, as the case may be, or, subject to the provisions of
Section 1.6, extend the exercisability period upon such terms as the
Committee shall determine and expressly set forth in or by amendment to
the Award Agreement.
(b) EMPLOYMENT STATUS. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under this Plan to an
Eligible Employee or to Eligible Employees generally.
(c) NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or in any
other documents under this Plan or in any Award) shall confer upon any
Eligible Employee or Participant any right to continue in the employ or
other service of the Company, constitute any contract or agreement of
employment or other service or affect an employee's status as an employee
at will, nor shall interfere in any way with the right of the Company to
change a person's compensation or other benefits, or to terminate his or
her employment or other service, with or without cause and with or without
notice. Nothing in this Section 6.1(c), however, is intended to adversely
affect any express independent right of such person under a separate
employment contract other than an Award Agreement.
(d) PLAN NOT FUNDED. Awards payable under this Plan shall be payable
in Shares or from the general assets of the Corporation, and (except as
provided in Section 1.4(c)) no special or separate reserve, fund or deposit
shall be made to assure payment of such Awards. No Participant, Beneficiary
or other person shall have any right, title or interest in any fund or in
any specific asset (including Shares, except as expressly otherwise
provided) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant, Beneficiary
or other person. To the extent that a Participant, Beneficiary or other
person acquires a right to receive payment pursuant to any Award hereunder,
such right shall be no greater than the right of any unsecured general
creditor of the Company.
6.2 ADJUSTMENTS; ACCELERATION.
(a) ADJUSTMENTS. Upon or in contemplation of any reclassification,
recapitalization, stock split (including a stock split in the form of a
stock dividend) or reverse stock split; any merger, combination,
consolidation or other reorganization; any spin-off, split-up or similar
extraordinary dividend distribution ("Spin-off") in respect of the Common
Stock (whether in the form of securities or property); any exchange of
Common Stock or other securities of the Corporation, or any similar,
unusual or extraordinary corporate transaction in respect of the Common
Stock; or a sale of all or substantially all the assets of the Corporation
as an entirety (an "Asset Sale"); then the Committee shall, in such manner,
to such extent (if any) and at such time as it deems appropriate and
equitable in the circumstances:
(i) In any of such events, proportionately adjust any or all of (a)
the number and type of Shares (or other securities) that thereafter may
be made the subject of Awards (including the specific maximums and
numbers of Shares set forth elsewhere in this Plan), (b) the number,
amount and type of Shares (or other securities or property) subject to
any or all outstanding Awards, (c) the grant, purchase or exercise price
of any or all outstanding Awards, (d) the securities, cash or other
property deliverable upon exercise of any outstanding Awards, or (e)
subject to limitations under Section 6.9(c), the performance standards
appropriate to any outstanding Awards, or
(ii) In the case of a reclassification, recapitalization, merger,
consolidation, combination or other reorganization, Spin-off or Asset
Sale, make provision for a cash payment or for the
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substitution or exchange of any or all outstanding Share-based Awards or
the cash, securities or property deliverable to the holder of any or all
outstanding Share-based Awards, based upon the distribution or
consideration payable to holders of Common Stock upon or in respect of
such event.
In each case, with respect to Awards of Incentive Stock Options, no
adjustment shall be made that would cause the Plan to violate Section 422
or 424(a) of the Code or any successor provisions without the written
consent of holders materially and adversely affected thereby.
In any of such events, the Committee may take such action prior to such
event to the extent that the Committee deems the action necessary to permit
the Participant to realize the benefits intended to be conveyed with
respect to the underlying Shares in the same manner as is or will be
available to stockholders generally.
(b) ACCELERATION OF AWARDS UPON CHANGE IN CONTROL. Unless prior to a
Change in Control Event the Board determines that, upon its occurrence,
benefits under any or all Awards shall not be accelerated or determines
that only certain or limited benefits under any or all Awards shall be
accelerated and the extent to which they shall be accelerated, and/or
establishes a different time in respect of such Event for such
acceleration, then upon the occurrence of a Change in Control Event:
(i) each Option and Stock Appreciation Right shall become
immediately exercisable,
(ii) Restricted Stock shall immediately vest free of restrictions,
and
(iii) each Performance Share Award shall become payable to the
Participant;
provided, however, that Awards granted hereunder that have not been held
for six (6) months or more prior to the occurrence of the Change in Control
Event shall not, in any event, be so accelerated. Any discretion with
respect to these events shall be limited to the extent required by
applicable accounting requirements in the case of a transaction intended to
be accounted for as a pooling of interests transaction.
The Committee may override the limitations on acceleration in this Section
6.2(b) by express provision in the Award Agreement and may accord any
Eligible Employee a right to refuse any acceleration, whether pursuant to
the Award Agreement or otherwise, in such circumstances as the Committee
may approve. Any acceleration of Awards shall comply with applicable legal
requirements and, if necessary to accomplish the purposes of the
acceleration or if the circumstances require, may be deemed by the
Committee to occur (subject to Section 6.2(d)) a limited period of time not
greater than 30 days before the event. Without limiting the generality of
the foregoing, the Committee may deem an acceleration to occur immediately
prior to the applicable event and/or reinstate the original terms of an
Award if an event giving rise to an acceleration does not occur.
(c) CASH PAYMENT FOR ELIGIBLE OPTIONS AND ELIGIBLE SARS. The Committee
shall provide written notice of the occurrence of a Change in Control Event
to each holder of an Option or Stock Appreciation Right that has been held
for at least six (6) months as of the date of the Change in Control Event
(an "Eligible Option" and "Eligible SAR", respectively). Upon the
occurrence of the Change in Control Event, if so elected by the Board, the
Company shall cancel each Eligible Option and each Eligible SAR and shall
pay the holder thereof an amount in cash determined by multiplying (i) the
difference between the exercise price per Share of the Eligible Option or,
in the case of an Eligible SAR, the exercise price per Share of the related
Option or the initial Share value of the Award, and the Fair Market Value
per Share on the date of the Change in Control Event, by (ii) the number of
Shares subject to the Eligible Option or Eligible SAR.
(d) POSSIBLE RECISSION OF ACCELERATION. If the vesting of an Award has
been accelerated expressly in anticipation of an event or subject to
stockholder approval of an event and the Board later determines that the
event will not occur, the Committee may rescind the effect of the
acceleration as to any then outstanding and unexercised or otherwise
unvested Awards.
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(e) ACCELERATION UPON TERMINATION OF SERVICE IN ANTICIPATION OF, OR
FOLLOWING A CHANGE IN CONTROL EVENT. Unless the Committee otherwise
provides prior to a Change in Control Event, if any Participant's
employment is terminated by the Company for any reason other than for cause
after the announcement of but before consummation of a Change in Control
Event, then, upon or immediately prior to the consummation of the event and
subject to its consummation, Awards held by the Participant prior to the
Change in Control Event shall be deemed reinstated to the extent previously
vested and terminated prior to expiration and, to the extent unvested,
shall be deemed vested to the extent that other Awards of the same type
were accelerated in connection with the event, irrespective of the vesting
and early termination provisions of the Participant's Award Agreement.
Notwithstanding the foregoing, in no event shall an Award be extended
beyond its final expiration date.
(f) GOLDEN PARACHUTE LIMITATION. In no event shall an Award be
accelerated under this Plan to an extent or in a manner that would not be
fully deductible by the Company for federal income tax purposes because of
Section 280G of the Code, nor shall any payment hereunder be accelerated if
any portion of such accelerated payment would not be deductible by the
Company because of Section 280G of the Code. If a holder would be entitled
to benefits or payments hereunder and under any other plan or program,
which benefits or payments would constitute "parachute payments" as defined
in Section 280G of the Code, then the holder may, by written notice to the
Company, designate the order in which such parachute payments shall be
reduced or modified so that the Company is not denied federal income tax
deductions for any "parachute payments" because of Section 280G of the
Code. Notwithstanding the foregoing, an employment or other agreement with
the Participant may expressly provide for benefits in excess of amounts
determined by applying the foregoing Section 280G limitations.
(g) POSSIBLE EARLY TERMINATION OF AWARDS. If any Award or other right
to acquire Common Stock has not been exercised or has not become vested or
exercisable prior to (i) a dissolution of the Corporation or (ii) a
reorganization event described in Section 6.2(a), and no provision has been
made for the substitution, exchange or other settlement of such Award, such
Award shall thereupon terminate.
6.3 COMPLIANCE WITH LAWS.
This Plan, the granting and vesting of Awards under this Plan, the offer,
issuance and delivery of Shares and/or the payment of money under this Plan or
under Awards are subject to compliance with all applicable federal and state
laws, rules and regulations (including, but not limited to, state and federal
securities law requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. In addition, any securities
delivered under this Plan may be subject to any special restrictions that the
Committee may require to preserve a pooling of interests under generally
accepted accounting principles. The person acquiring any securities under this
Plan will, if requested by the Company, provide such assurances and
representations to the Company as the Committee may deem necessary or desirable
to assure compliance with all applicable legal and accounting requirements.
6.4 TAX MATTERS.
Upon any exercise, vesting, or payment of any Award or upon the disposition
of Shares acquired pursuant to the exercise of an Incentive Stock Option prior
to satisfaction of the holding period requirements of Section 422 of the Code,
the Company shall have the right at its option to (i) require the Participant
(or Personal Representative or Beneficiary, as the case may be) to pay or
provide for payment of the amount of any taxes that the Company may be required
to withhold with respect to such Award event or payment or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash payment. In any case where a tax is
required to be withheld in connection with the delivery of Shares under this
Plan, the Participant may elect, in his or her sole discretion (subject to
Section 6.3), pursuant to such rules and subject to such conditions as the
Committee may establish, to have the Corporation reduce the number of Shares to
be delivered by (or otherwise reacquire) the appropriate number of Shares valued
at their Fair Market Value, to satisfy such withholding obligation, determined
in each case as of the trading day next preceding the applicable date of
exercise, vesting or payment.
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6.5 PLAN AMENDMENT, TERMINATION AND SUSPENSION.
(a) BOARD AUTHORIZATION. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or in part.
No Awards may be granted during any suspension of this Plan or after
termination of this Plan, but the Committee shall retain jurisdiction as to
Awards then outstanding in accordance with the terms of this Plan.
(b) STOCKHOLDER APPROVAL. To the extent then required under Sections
162, 422 or 424 of the Code or any other applicable law, or deemed
necessary or advisable by the Board, any amendment to this Plan shall be
subject to stockholder approval.
(c) AMENDMENTS TO AWARDS. Without limiting any other express authority
of the Committee under (but subject to) the express limits of this Plan,
the Committee by agreement or resolution may waive conditions of or
limitations on Awards to Participants that the Committee in the prior
exercise of its discretion has imposed, without the consent of a
Participant, and may make other changes to the terms and conditions of
Awards that do not affect in any manner materially adverse to the
Participant, the Participant's rights and benefits under an Award.
(d) LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment,
suspension or termination of this Plan or change in or affecting any
outstanding Award shall, without written consent of the Participant, affect
in any manner materially adverse to the Participant any rights or benefits
of the Participant or obligations of the Company under any Award granted
under this Plan prior to the effective date of such change. Changes
contemplated by Section 6.2 shall not be deemed to constitute changes or
amendments for purposes of this Section 6.5.
6.6 PRIVILEGES OF STOCK OWNERSHIP.
Except as otherwise expressly authorized by the Committee or this Plan, a
Participant shall not be entitled to any privilege of stock ownership as to any
Shares not actually delivered to and held of record by the Participant. No
adjustment will be made for dividends or other rights as a stockholder for which
a record date is prior to such date of delivery.
6.7 EFFECTIVE DATE OF THE PLAN.
This Plan is effective as of the date this Plan is approved by the
stockholders of the Corporation.
6.8 TERM OF THE PLAN.
No Award will be granted under this Plan after April 27, 2009 (the
"Termination Date"). Unless otherwise expressly provided in this Plan or in an
applicable Award Agreement, any Award granted prior to the Termination Date may
extend beyond such date, and all authority of the Committee with respect to
Awards hereunder, including the authority to amend an Award, shall continue
during any suspension of this Plan and in respect of Awards outstanding on the
Termination Date.
6.9 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
(a) CHOICE OF LAW. This Plan, the Awards, all documents evidencing
Awards and all other related documents shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
(b) SEVERABILITY. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of this Plan
shall continue in effect.
(c) PLAN CONSTRUCTION.
(i) RULE 16B-3. It is the intent of the Corporation that the
Awards and transactions permitted by Awards generally satisfy and be
interpreted in a manner that, in the case of Participants who are or may
be subject to Section 16 of the Exchange Act, satisfies the applicable
requirements of Rule 16b-3 so that such persons (unless they otherwise
agree) will be entitled to the benefits of
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Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act
in respect of those transactions and will not be subjected to avoidable
liability.
(ii) SECTION 162(M). It is the further intent of the Company that
(to the extent the Company or Awards under this Plan may be or become
subject to limitations on deductibility under Section 162(m) of the
Code), Options or Stock Appreciation Rights granted with an exercise or
base price not less than Fair Market Value on the date of grant and
Special Performance-Based Awards under Section 5.2 of this Plan that are
granted to or held by a person subject to Section 162(m) of the Code
will qualify as performance-based compensation or otherwise be exempt
from deductibility limitations under Section 162(m) of the Code, to the
extent that the Committee authorizing the Award (or the payment thereof,
as the case may be) satisfies any applicable administrative requirements
thereof.
6.10 CAPTIONS.
Captions and headings are given to the sections and subsections of this
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
this Plan or any provision thereof.
6.11 EFFECT OF CHANGE OF SUBSIDIARY STATUS.
For purposes of this Plan and any Award hereunder, if a Participant is
employed by an entity that ceases to be a Subsidiary, a termination of the
Participant's employment shall be deemed to have occurred as of the date the
entity ceased to be a Subsidiary unless the Participant continues as an Eligible
Employee in respect of another entity within the Company.
6.12 STOCK-BASED AWARDS IN SUBSTITUTION FOR STOCK OPTIONS OR AWARDS GRANTED
BY ANOTHER CORPORATION.
Awards may be granted to Eligible Employees under this Plan in substitution
for employee stock options, stock appreciation rights, restricted stock or other
stock-based awards granted by other entities to persons who are or who will
become Eligible Employees in respect of the Company, in connection with a
distribution, merger or other reorganization by or with the granting entity or
an affiliated entity, or the acquisition by the Company, directly or indirectly,
or all or a substantial part of the stock or assets of the employing entity.
6.13 NON-EXCLUSIVITY OF PLAN.
Nothing in this Plan shall limit or be deemed to limit the authority of the
Board or the Committee to grant awards or authorize any other compensation, with
or without reference to the Common Stock, under any other plan or authority.
6.14 NO CORPORATE ACTION RESTRICTION.
The existence of the Plan, the Award Agreements and the Awards granted
hereunder shall not limit, affect or restrict in any way the right or power of
the Board or the stockholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in the
Corporation's or any Subsidiary's capital structure or its business, (b) any
merger, amalgamation, consolidation or change in the ownership of the
Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital,
preferred or prior preference stock ahead of or affecting the Corporation's or
any Subsidiary's capital stock or the rights thereof, (d) any dissolution or
liquidation of the Corporation or any Subsidiary, (e) any sale or transfer of
all or any part of the Corporation or any Subsidiary's assets or business, or
(f) any other corporate act or proceeding by the Corporation or any Subsidiary.
No Participant, Beneficiary or any other person shall have any claim under any
Award or Award Agreement against any member of the Board or the Committee, or
the Corporation or any employees, officers or agents of the Corporation or any
Subsidiary, as a result of any such action.
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6.15 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS.
Payments and other benefits received by a Participant under an Award made
pursuant to this Plan shall not be deemed a part of a Participant's compensation
for purposes of the determination of benefits under any other employee welfare
or benefit plans or arrangements, if any, provided by the Corporation or any
Subsidiary, except where the Committee or the Board expressly otherwise provides
or authorizes in writing. Awards under this Plan may be made in addition to, in
combination with, as alternatives to or in payment of grants, awards or
commitments under any other plans or arrangements of the Company or the
Subsidiaries.
6.16 DEFERRED PAYMENTS.
The Committee may authorize for the benefit of any Eligible Employee the
deferral of any payment of cash or Shares that may become due or of cash
otherwise payable under this Plan, and provide for accrued benefits thereon
based upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.
7. DEFINITIONS.
7.1 DEFINITIONS.
(a) "AWARD" means an award of any Option, Stock Appreciation Right,
Restricted Stock, Stock Bonus, Performance Share Award, Special
Performance-Based Award, dividend equivalent or deferred payment right or
other right or security that would constitute a "derivative security" under
Rule 16a-1(c) of the Exchange Act, or any combination thereof, whether
alternative or cumulative, authorized by and granted under this Plan.
(b) "AWARD AGREEMENT" means any writing setting forth the terms of an
Award that has been authorized by the Committee.
(c) "AWARD DATE" means the date upon which the Committee took the
action granting an Award or such later date as the Committee designates as
the Award Date at the time of the Award.
(d) "BENEFICIARY" means the person, persons, trust or trusts
designated by a Participant or, in the absence of a designation, entitled
by will or the laws of descent and distribution, to receive the benefits
specified in the Award Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is designated and able to act under
the circumstances.
(e) "BOARD" means the Board of Directors of the Corporation.
(f) "CHANGE IN CONTROL EVENT" means any of the following:
(i) The occurrence of any change in control that is required to be
reported in response to the proxy regulations of the Commission;
(ii) Any "person" (as such term is used in Section 3(a)(9) and
Sections 13(d) and 14(d)(2) of the Exchange Act, other than the
Corporation, is or becomes the beneficial owner, directly or indirectly,
of securities of the Corporation representing 40% or more of the
combined voting power of the Corporation's then outstanding securities.
(iii) During any period of two consecutive years, individuals who,
at the beginning of such period constitute the Board, cease for any
reason to constitute at least a majority thereof, unless the election of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
the period.
(iv) Shares are first purchased pursuant to an exchange or tender
offer other than an offer by the Corporation or a Subsidiary.
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<PAGE> 42
Notwithstanding the foregoing, prior to the occurrence of any of the events
described in clause (f)(i) through (iv) above, the Board may determine that
such an event shall not constitute a Change in Control Event for purposes
of the Plan and Awards granted under it.
(g) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(h) "COMMISSION" means the Securities and Exchange Commission.
(i) "COMMITTEE" means the Board or a committee appointed by the Board
to administer this Plan, which committee shall be comprised solely of two
or more directors or such greater number of directors as may be required
under applicable law, and each of whom is an "outside director" under
Section 162(m) of the Code and a "non-employee director" within the meaning
of Rule 16b-3.
(j) "COMMON STOCK" means the Common Stock, $0.01 par value per share,
of the Corporation and such other securities or property as may become the
subject of Awards, or become subject to Awards, pursuant to an adjustment
made under Section 6.2 of this Plan.
(k) "COMPANY" means, collectively, the Corporation and its
Subsidiaries.
(l) "CORPORATION" means Wynn's International, Inc., a Delaware
corporation, and its successors.
(m) "ELIGIBLE EMPLOYEE" means an officer (whether or not a director)
or key employee of the Company.
(n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
(o) "FAIR MARKET VALUE" on any date means (1) if the stock is listed
or admitted to trade on a national securities exchange, the closing price
of the stock on the Composite Tape, as published in the Western Edition of
The Wall Street Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such date, or, if
there is no trading of the stock on such date, then the closing price of
the stock as quoted on such Composite Tape on the next preceding date on
which there was trading in such shares; (2) if the stock is not listed or
admitted to trade on a national securities exchange, the last price for the
stock on such date, as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting System
or a similar organization if the NASD is no longer reporting such
information; (3) if the stock is not listed or admitted to trade on a
national securities exchange and is not reported on the National Market
Reporting System, the mean between the bid and asked price for the stock on
such date, as furnished by the NASD or a similar organization; or (4) if
the stock is not listed or admitted to trade on a national securities
exchange, is not reported on the National Market Reporting System and if
bid and asked prices for the stock are not furnished by the NASD or a
similar organization, the value as established by the Committee at such
time for purposes of this Plan.
(p) "INCENTIVE STOCK OPTION" means an Option which is intended, as
evidenced by its designation, as an incentive stock option within the
meaning of Section 422 of the Code, the award of which contains such
provisions and is made under such circumstances and to such persons as may
be necessary to comply with that section.
(q) "LIMITED SAR" has the meaning given to such term in Section 3.4.
(r) "NONQUALIFIED STOCK OPTION" means an Option that is designated as
a Nonqualified Stock Option and shall include any Option intended as an
Incentive Stock Option that fails to meet the applicable legal requirements
thereof. Any Option granted hereunder that is not designated as an
Incentive Stock Option shall be deemed to be designated a Nonqualified
Stock Option under this Plan and not an incentive stock option under the
Code.
(s) "OPTION" means an option to purchase Common Stock granted under
this Plan.
(t) "PARTICIPANT" means an Eligible Employee who has been granted an
Award under this Plan.
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<PAGE> 43
(u) "PERFORMANCE SHARE AWARD" means an Award of a right to receive
Shares under Section 5.1 or 5.2, the issuance or payment of which is
contingent upon, among other conditions, the attainment of performance
objectives specified by the Committee.
(v) "PERSONAL REPRESENTATIVE" means the person or persons who, upon
the disability or incompetence of a Participant, shall have acquired on
behalf of the Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Plan and who shall have
become the legal representative of the Participant.
(w) "PLAN" means this 1999 Stock Awards Plan, as it may be amended
from time to time.
(x) "RESTRICTED SHARES" or "RESTRICTED STOCK" means Shares awarded to
a Participant under this Plan, subject to payment of such consideration, if
any, and such conditions on vesting (which may include, among others, the
passage of time, specified performance objectives or other factors) and
such transfer and other restrictions as are established in or pursuant to
this Plan and the related Award Agreement, for so long as such shares
remain unvested under the terms of the applicable Award Agreement.
(y) "RETIREMENT" means retirement (including early retirement) at any
time of a Participant as an employee of the Company, as such term or
concept is used in the Wynn's International, Inc. Retirement Plan or the
Wynn's-Precision, Inc. Salaried Employees Pension Plan, or in any successor
plan, in each case, as from time to time in effect.
(z) "RULE 16B-3" means Rule 16b-3 as promulgated by the Commission
pursuant to the Exchange Act, as amended from time to time.
(aa) "SECTION 16 PERSON" means a person subject to Section 16(a) of
the Exchange Act.
(bb) "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
(cc) "SEVERANCE DATE" means the date of termination of a Participant's
employment with the Company.
(dd) "SHARES" has the meaning given to such term in Section 1.4(a).
(ee) "STOCK APPRECIATION RIGHT" means a right authorized under this
Plan to receive a certain number of Shares or an amount of cash, or a
combination of Shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common
Stock.
(ff) "SUBSIDIARY" means any corporation or other entity a majority of
whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
(gg) "TOTAL DISABILITY" means a "permanent and total disability"
within the meaning of Section 22(e)(3) of the Code and such other
disabilities, infirmities, afflictions or conditions as the Committee by
rule may include.
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<TABLE>
<S> <C>
Please mark your ------
votes as X
indicated in this ------
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3, WHICH ARE MATTERS PROPOSED BY THE BOARD OF
DIRECTORS.
WITHHELD
FOR FOR ALL
---------- ---------
Proposal 1. ELECTION OF DIRECTORS Other In their discretion, upon any
other matters as may properly
NOMINEES: come before the meeting.
Barton Beek
James Carroll
---------- ---------
If you want to vote against any nominee, draw a line
through the nominee's name.
FOR AGAINST ABSTAIN YOU MUST SIGN AND DATE THIS PROXY FOR IT TO BE VOTED
Proposal 2. Approval of Ernst & AT THE ANNUAL MEETING. IF PROPERLY EXECUTED, THIS
Young, LLP as independent -------- ---------- ---------- PROXY WILL BE VOTED AS YOU DIRECT. IF YOU DO NOT
auditors for the fiscal VOTE ON A PROPOSAL, THIS PROXY WILL BE VOTED FOR THE
year ending December 31, -------- ---------- ---------- PROPOSAL.
1999.
ON ANY OTHER MATTERS PROPERLY ARISING AT THE
MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE DISCRETION OF THE PERSONS NAMED AS PROXIES. IF
FOR ANY REASON, ANY NOMINEE BECOMES UNAVAILABLE
Proposal 3. Approval of the Wynn's -------- ---------- ---------- PRIOR TO THE ANNUAL MEETING, THE BOARD OF DIRECTORS
International, Inc. 1999 WILL SELECT ANOTHER NOMINEE. THIS PROXY WILL BE
Stock Awards Plan. -------- ---------- ---------- VOTED FOR THE REPLACEMENT NOMINEE UNLESS YOU
WITHHELD YOUR VOTE FROM THE LISTED BUT UNAVAILABLE
NOMINEE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)____________________________________________________________________ Date _______________________, 1999
NOTE: This Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give
their full title, as such. If the stockholder is a corporation, a duly authorized officer should sign on behalf of the
corporation and should indicate his or her title.
- ----------------------------------------------------------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
</TABLE>
<PAGE> 45
PROXY
WYNN'S INTERNATIONAL, INC.
THE BOARD OF DIRECTORS OF THE COMPANY IS ASKING YOU
FOR YOUR PROXY FOR THE APRIL 28, 1999 ANNUAL MEETING
You, as a stockholder of WYNN'S INTERNATIONAL, INC., a Delaware
corporation (the "Company"), acknowledge that you have received a copy of the
Notice of Annual Meeting of Stockholders, the accompanying Proxy Statement and
the Annual Report to Stockholders for the year ended December 31, 1998. You
revoke any prior proxy and appoint each of James Carroll, John W. Huber, Seymour
A. Schlosser and Gregg M. Gibbons, your true and lawful agents and proxies with
full power of substitution in each, to vote your shares of Common Stock of the
Company at the Annual Meeting of Stockholders of the Company to be held on
Wednesday, April 28, 1999, at 9:00 A.M, at 500 North State College Boulevard,
Suite 700, Orange, California 92868. Your proxy applies to any and all matters
coming before the April 28, 1999 Annual Meeting of Stockholders, and at any
adjournment thereof.
PLEASE VOTE ON THE PROPOSALS AND THEN SIGN, DATE AND PROMPTLY RETURN THIS PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
