SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ADAGE, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
ADAGE, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(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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<PAGE>
ADAGE, INC.
400 WILLOWBROOK LANE
WEST CHESTER, PENNSYLVANIA 19382
---------------------------------------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
---------------------------------------------------------
The Annual Meeting of Shareholders (the 'Meeting') of Adage, Inc., a
Pennsylvania corporation (the 'Company'), will be held on Wednesday, December
11, 1996 at 9:00 a.m., local time, at The Holiday Inn West Chester, Route 202,
West Chester, Pennsylvania, for the following purposes:
1. To elect eight (8) directors to hold office until the Annual
Meeting of Shareholders in 1997 and until their respective successors are
duly elected and qualified;
2. To consider a proposal to approve the Company's 1996 Stock Option
Plan For Non-Employee Directors; and
3. To transact such other business as may properly come before the
Meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on October 31, 1996
as the record date for the Meeting. Only shareholders of record at that time are
entitled to notice of and to vote at the Meeting and any adjournment or
postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Meeting.
The Board of Directors urges you to date, sign and return the enclosed
proxy promptly. The return of the enclosed proxy will not affect your right to
vote in person if you do attend the Meeting.
By Order of the Board of Directors,
Robert T. Holland
Secretary
November 6, 1996
<PAGE>
ADAGE, INC.
400 WILLOWBROOK LANE
WEST CHESTER, PENNSYLVANIA 19382
------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1996
------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Adage, Inc., a Pennsylvania corporation
(the 'Company'), for use at the Company's Annual Meeting of Shareholders (the
'Meeting') which is scheduled to be held at 9:00 a.m., local time, on Wednesday,
December 11, 1996 at The Holiday Inn West Chester, Route 202, West Chester,
Pennsylvania for the purposes set forth in the foregoing notice of the Meeting.
This Proxy Statement, the foregoing notice and the enclosed proxy are being sent
to shareholders on or about November 6, 1996.
The Board of Directors knows of no matter which is likely to be brought
before the Meeting, other than the matters specifically referred to in the
foregoing notice of the Meeting. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If the
enclosed proxy is properly executed and returned prior to voting at the Meeting,
the shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, executed proxies will be voted
'FOR' the eight (8) nominees of the Board of Directors in the election of
directors and 'FOR' approval of the Company's 1996 Stock Option Plan For
Non-Employee Directors.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing and by delivering a duly executed proxy
bearing a later date or by attending the Meeting and voting in person.
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP
VOTING SECURITIES
At the close of business on October 31, 1996, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the Meeting,
there were outstanding 5,129,175 shares of the Company's Common Stock, $.60 par
value per share (the 'Common Stock'). Each shareholder of record at the close of
business on October 31, 1996 is entitled to one vote for each share held. The
presence at the Meeting, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast
will constitute a quorum for the Meeting. In the event that the Meeting is
adjourned for one or more periods aggregating at least 15 days due to the
absence of a quorum, those shareholders entitled to vote who attend the
adjourned Meeting, although less than a quorum as described in the preceding
sentence, shall constitute a quorum for the purpose of acting upon any matter
set forth in the foregoing notice.
In the election of directors, the eight (8) nominees receiving a plurality
of the votes cast at the Meeting shall be elected. Approval of all other matters
to be submitted to the shareholders requires the affirmative vote of a majority
of the votes cast at the Meeting. For purposes of determining the number of
votes cast with respect to any voting matter, only those cast 'FOR' or 'AGAINST'
are included. Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the Meeting.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The table below sets forth certain information as of September 30, 1996
regarding the beneficial ownership, as defined in regulations of the Securities
and Exchange Commission, of Common Stock of (i) each person who is known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
the Company's Common Stock, (ii) each director and nominee for director of the
Company, (iii) the Company's President and the Company's other executive officer
whose salary and bonus compensation exceeded $100,000 during 1995, and (iv) all
directors and executive officers as a group. Unless otherwise specified, the
named beneficial owner has sole voting and investment power. The information in
the table below was furnished by the persons listed.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
------------------------ ----------------- -----------
<S> <C> <C>
Donald F.U. Goebert.................................... 1,605,734(1)(2) 31.8%
400 Willowbrook Lane
West Chester, PA 19382
Robert T. Holland...................................... 114,837(2)(3) 2.6%
Ralph R. Whitney, Jr................................... 46,187(4) *
Buck Scott............................................. 8,000 *
James C. Gale.......................................... 3,124(5) *
Joel A. Schleicher..................................... 2,082(5) *
George N. Benjamin, III................................ 880(6) *
Robert L. MacDonald.................................... 0 *
All executive officers and directors as a group (8
persons)............................................. 1,756,689(1)(2)(3)(4)(5)(6) 35.2%
</TABLE>
- ------------------
* Less than 1%.
(1) Includes 188,971 shares owned by Investors Insurance Group, Inc., a
subsidiary of a company controlled by Mr. Goebert; 85,942 shares owned by
Chester County Fund, Inc., the majority shareholder of which is Mr. Goebert;
and 60,000 shares owned by a partnership controlled by Mr. Goebert. Also
includes 62,500 shares subject to immediately exercisable options or options
exercisable within 60 days and 11,840 shares held in trust for Mr. Goebert's
children.
(2) Includes 23,366 shares held in a custodial account for the Adage, Inc.
Employee Stock Purchase Program, of which Messrs. Goebert and Holland are
Custodians (approximately 3,780 shares held in the custodial account are
owned by Mr. Holland), and 789 shares held in a Trust under the Adage, Inc.
401(k) Retirement-Investment Plan, of which Messrs. Goebert and Holland are
the Trustees.
(3) Includes 56,250 shares subject to immediately exercisable options or options
exercisable within 60 days.
(4) Includes 4,166 shares subject to immediately exercisable options or options
exercisable within 60 days.
(5) Represents shares subject to immediately exercisable options or options
exercisable within 60 days.
(6) Includes 780 shares subject to immediately exercisable options or options
exercisable within 60 days.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three years to the Company's President and to the
Company's other executive officer whose salary and bonus compensation exceeded
$100,000 during 1995.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
AWARDS
ANNUAL COMPENSATION --------------------------
------------------------------------- NUMBER OF
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS(#) ($)
- ------------------------------------- --------- ----------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald F.U. Goebert.................. 1995 $150,000 $ -- $ -- -- $ --
President 1994 150,000 -- -- -- --
1993 150,000 -- -- 100,000 --
Robert T. Holland.................... 1995 $192,600 $5,000 $ -- -- $ --
Chief Financial Officer 1994 192,600 -- -- -- --
1993 192,600 -- -- 50,000 --
</TABLE>
- ------------------
(1) None of the named executive officers received any other annual compensation
not categorized as salary or bonus except for perquisites and other personal
benefits which in the aggregate did not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for such named executive
officer.
STOCK OPTION GRANTS
The Company did not grant any stock options during 1995, pursuant to the
Company's 1988 Stock Plan or otherwise, to the Company's President and the
Company's other executive officer whose salary and bonus compensation exceeded
$100,000 during 1995. The Company does not currently have (and has not
previously had) any plan pursuant to which any stock appreciation rights
('SARs') may be granted.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information relating to options exercised
during 1995 by the Company's President and the Company's other executive officer
whose salary and bonus compensation exceeded $100,000 during 1995, and the
number and value of options held on December 31, 1995 by such individuals. The
Company does not currently have (and has not previously had) any plan pursuant
to which any SARs may be granted.
AGGREGATED OPTION EXERCISES IN 1995 AND OPTION VALUES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT DEC. 31, 1995 IN-THE-MONEY OPTIONS AT
ACQUIRED (#) DEC. 31, 1995 ($)(1)
ON VALUE -------------------------- --------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------------- --------------- ----------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Donald F.U. Goebert............. 0 $ 0 37,500 62,500 $ 0 $ 0
Robert T. Holland............... 0 0 44,350 30,650 0 0
</TABLE>
- ------------------
(1) Total value of unexercised options is based upon the difference between the
last sales price of the Company's Common Stock on the Nasdaq National Market
on December 31, 1995 and the exercise price of the options, multiplied by
the number of option shares. Since the price of the Company's Common Stock
on December 31, 1995 was below the exercise price of such options, the
unexercised options had no value at such date.
4
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation program for Mr. Donald F.U. Goebert, the
Company's Chairman and President, and Mr. Robert T. Holland, Vice President and
Secretary, as well as for its other executive officers, is administered by the
Compensation Committee of the Board of Directors. The Committee has delegated to
Mr. Goebert responsibility for making recommendations to the Committee with
respect to compensation for the Company's non-executive officers. The
Compensation Committee consists of three outside directors, James C. Gale,
Chairman, Joel A. Schleicher and George N. Benjamin, III, none of whom has ever
been an employee of the Corporation or any of its subsidiaries.
The Company's officer compensation is composed of base salary, incentive
compensation in the form of an annual cash bonus and discretionary long-term
incentive compensation in the form of stock options. Each officer is also a
participant in medical, life insurance, non-contributory 401(k) and other plans
which are generally made available to employees of the Company or of the
business units managed by such officer.
Through the use of data on companies within the industry in which the
Company is engaged and which are comparable in size, location and financial
performance and its evaluation of officer performance, the Compensation
Committee's objective is to recommend to the Board of Directors base salary and
incentive compensation at levels designed to achieve the Company's objective of
attracting, retaining, motivating, and rewarding talented executives. The
Committee believes that a significant portion of the compensation of senior
executives should be based upon the degree of the Company's financial success.
In this fashion, the Company's officers are rewarded on the same basis as the
Company's shareholders. In 1993, for example, the Committee granted options to
Messrs. Goebert and Holland to purchase 100,000 shares and 50,000 shares,
respectively, of the Company's Common Stock. No further grants to Messrs.
Goebert and Holland have been made to date. In light of the foregoing grants,
the Committee determined in 1995 to maintain the 1994 level of base salary
compensation for Messrs. Goebert and Holland and, consistent with its
performance based approach, implemented a bonus plan, effective for fiscal year
1996, pursuant to which Messrs. Goebert and Holland are entitled to a yearly
bonus equal to, in the aggregate, 5% of the Company's annual pre-tax income in
excess of $1.0 million. It is the continuing philosophy of the Compensation
Committee to include corporate goals, stock price, and financial results
measured by return on shareholder equity as determinants of total executive
compensation.
Recent amendments to the Internal Revenue Code provide that publicly-held
corporations may not deduct, for federal income tax purposes, non-performance
based compensation for its chief executive officer and certain other executive
officers to the extent that such compensation exceeds $1,000,000 for the
executive. The Compensation Committee intends to take such actions as are
appropriate to qualify compensation paid to executives for deductibility under
these recent amendments. In this regard, base salary and bonus levels are
expected to remain well below the $1,000,000 limitation in the foreseeable
future. Options granted under the Company's 1988 Stock Plan are designed to
constitute performance-based compensation, which would not be included in
calculating compensation for purposes of the $1,000,000 limitation.
MEMBERS OF THE COMPENSATION COMMITTEE
James C. Gale, Chairman George N. Benjamin, III Joel A. Schleicher
5
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the five-year cumulative total shareholder return
on the Company's Common Stock with the five-year cumulative total return of the
Nasdaq Stock Index, U.S. ('Nasdaq') and the Nasdaq non-financial stocks index
('Composite').
[GRAPHIC]
In the printed document, there is a line chart representing the following:
Annual Returns Endings
December 31,
NASDAQ COMPOSITE ADAGE, INC
1990 100 100 100
1991 160.6 161 127.8
1992 186.9 176.1 113.9
1993 214.5 203.3 127.8
1994 209.7 194.8 108.3
1995 296.3 269.9 94.4
6
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the shareholders will elect eight (8) directors to hold
office until the Annual Meeting of Shareholders in 1997 and until their
respective successors are duly elected and qualified. Unless contrary
instructions are given, the shares represented by a properly executed proxy will
be voted 'FOR' the election of the following nominees: Donald F.U. Goebert; Buck
Scott; Robert L. MacDonald; Ralph R. Whitney, Jr.; Robert T. Holland; James C.
Gale; Joel A. Schleicher; and George N. Benjamin, III. All of the nominees are
presently members of the Board of Directors of the Company.
The Board of Directors believes that the nominees will be able to serve as
directors. If any nominee is unable to serve, the person's name in the enclosed
proxy will vote the shares they represent for the election of such other person
as the Board of Directors may recommend, unless the Board of Directors reduces
the number of directors.
Set forth below is certain information concerning the nominees for election
as directors:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE DURING PAST FIVE YEARS DIRECTORSHIPS
- -------------------------------- --- -------------------------------- --------------------------------
<S> <C> <C> <C>
Donald F.U. Goebert 60 Chairman of the Board of Progress Financial Corporation;
Directors of Company and its Investors Insurance Group, Inc.
predecessor since March 1968;
President of the Company's
predecessor from March 1968 to
October 1988 and President of
Company since April, 1993
Buck Scott 67 Private investor since January
1995; President of Electrical
Energy Enterprises, Inc. from
1991 through 1994. Director of
Company since 1980 (including
its predecessor).
Robert L. MacDonald 66 Retired, Director of Financial
Aid Wharton Graduate Division
and Lecturer in Management,
Wharton School, University of
Pennsylvania 1953 to 1993.
Director of Company since
February, 1991.
Ralph R. Whitney, Jr. 61 Principal of Hammond Kennedy IFR Systems, Inc.; Excel
Whitney & Co., Inc., a private Industries, Inc.; Baldwin
investment banking firm with Technology Corporation; and
offices at 230 Park Avenue, New Control Devices, Inc.
York, New York. Director of
Company since January 1992.
7
<PAGE>
PRINCIPAL OCCUPATION
NAME AGE DURING PAST FIVE YEARS DIRECTORSHIPS
- -------------------------------- --- -------------------------------- --------------------------------
Robert T. Holland 47 Vice President, Secretary and
Chief Financial Officer of
Company since July 1989 and
President of a principal
subsidiary of the Company since
March 1993. Director of Company
since January 1992.
James C. Gale 46 Managing Director of Gruntal & Latshaw Enterprises, Inc.
Co., Inc. from 1989 to present.
Director of Company since
October 1993.
Joel A. Schleicher 44 President and CEO of Pro
Communications, Inc. since June
1996; Private investor from
January 1995 through June 1996;
Chief Operating Officer of
Nextel Communications, Inc.
prior to January 1995. Director
of Company since October 1994.
George N. Benjamin, III 59 Partner in Trig Systems, LLC;
President and CEO of
Tie/Communications, Inc. from
April 1992 to November 1995;
Group Vice President of The
Marmon Group, Inc. prior to
April 1992; Director since
March 1996.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee and an Audit Committee.
The Company does not have an Executive Committee or Nominating Committee.
Messrs. Gale, Schleicher and Benjamin serve as members of the Compensation
Committee, which held two meetings during 1995. The Compensation Committee's
functions include primarily compensation review for the principal executive
officers of the Company.
Messrs. Scott, MacDonald, Whitney, Gale and Schleicher serve as members of
the Audit Committee, which held one meeting during 1995. The Audit Committee
meets with the Company's independent public accountants, counsel and management
to discuss the scope and results of the annual audit, internal accounting
procedures and certain other questions of accounting policy.
The Board of Directors held six meetings in 1995. No member of the Board of
Directors attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which such director served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James C. Gale, a director of the Company and member of the Compensation
Committee, is a Managing Director of Gruntal & Co., an investment banking firm
that provided, in 1995, investment banking services to the Company.
8
<PAGE>
COMPENSATION OF DIRECTORS
The Company currently pays to each of its non-employee directors, on a
quarterly basis, $1,500 per quarter for serving on the Board of Directors (the
'Director Quarterly Fee'). In addition, each non-employee director receives
$1,000 for attendance at each board meeting and $500 for attendance at each
meeting of any committee of the Board of Directors which is not held in
conjunction with a meeting of the Board of Directors. The Board of Directors of
the Company, subject to approval of the shareholders at this Meeting, has
approved a modification to the compensation policy with respect to non-employee
directors to grant stock options in lieu of the Director Quarterly Fee. Pursuant
to the terms of the Company's 1996 Stock Option Plan For Non-Employee Directors
(the '1996 Director Plan'), if approved by shareholders at this Meeting, each
non-employee director will be granted on the date of each annual meeting of
shareholders at which such person is elected or reelected, as the case may be,
to the Board of Directors (beginning in 1997), an option to purchase 5,000
shares of Common Stock. Such options become exercisable eleven months from the
date of grant at an exercise price equal to the fair market value of the Common
Stock on the date of grant. See 'Proposal to Approve the Company's 1996 Stock
Option Plan For Non-Employee Directors.'
CERTAIN TRANSACTIONS
The Company leases its headquarters and a manufacturing facility from
entities owned principally by Mr. Goebert and also by Messrs. Holland and Scott.
Rentals under these leases were $187,000 for the year ending December 31, 1995.
In addition, a subsidiary of the Company manages rental properties owned by the
aforementioned entities for fees related to a percentage of gross rents plus a
percentage of new leases signed. Property management fees received by the
Company during 1995 from related parties was $124,000.
In general, the Company believes that the terms of the transactions
described in this section are at least as favorable as those that might have
been obtained from unaffiliated third parties.
PROPOSAL TO APPROVE THE COMPANY'S
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Company's Board of Directors has adopted, subject to the approval of
the Company's shareholders, the Adage, Inc. 1996 Stock Option Plan For
Non-Employee Directors (the '1996 Director Plan'). The 1996 Director Plan is
designed to assist the Company in attracting, retaining and compensating highly
qualified individuals who are not employees of the Company for service as
members of the Board and to provide them with a proprietary interest in the
Company's Common Stock. The Board believes the 1996 Director Plan will be
beneficial to the Company and its shareholders by allowing non-employee
directors to have a personal financial stake in the Company, in addition to
underscoring their common interest with shareholders in increasing the value of
the Common Stock over the long term. If the 1996 Director Plan is approved, the
Adage, Inc. 1988 Non-Employee Director Stock Option Plan (the '1988 Director
Plan'), pursuant to which non-employee directors are granted, only upon election
to the board, an option to purchase 4,166 shares of Common Stock, will be
terminated and no further grants will be made thereunder. As of October 31,
1996, options to purchase 16,664 shares of Common Stock were granted under the
1988 Director Plan and remain outstanding.
9
<PAGE>
The material features of the 1996 Director Plan are as follows:
OPTION GRANTS. The 1996 Director Plan provides for annual grants of a
stock option to purchase 5,000 shares of Common Stock beginning with the
Company's 1997 Annual Shareholders' Meeting, to each person who is a
Non-Employee Director (as defined below) on the day following the Company's
annual meeting of shareholders, and who has been a Non-Employee Director
for at least three months prior to such grant date. In the event the
Company does not hold its annual meeting of shareholders by June 30 in any
year, the grant for such year shall be made on June 30 of such year.
NUMBER OF SHARES. The aggregate maximum number of shares that may be
issued under the 1996 Director Plan is 200,000, subject to adjustment upon
the occurrence of a stock dividend, stock split, recapitalization or
certain other capital adjustments. Shares subject to options that terminate
unexercised will be available for future option grants under the 1996
Director Plan. The closing price for a share of Common Stock on October 31,
1996 was $3.75 as reported by the Nasdaq National Market.
EXERCISE PRICE. The exercise price for options granted under the 1996
Director Plan will be the fair market value of a share of Common Stock on
the date of grant, which generally will be the last reported sale price
thereof on such date.
ELIGIBILITY. The 1996 Director Plan is available to 'Non-Employee
Directors,' who are defined as members of the Board of Directors who are
not, and have not been for a period of three months prior to the date of
grant thereunder, employees of the Company or any of its subsidiaries.
VESTING. Except as described below, each option granted under the
1996 Director Plan shall vest and become exercisable eleven months after
the date of grant. Upon termination of service of a Non-Employee Director
as a member of the Board by reason of death, disability, resignation after
reaching age 65 or removal from the Board without cause, all outstanding
options under the 1996 Director Plan granted to such Non-Employee Director
as of the termination of service shall vest and become exercisable. In the
event of a Change of Control, all options then outstanding under the 1996
Director Plan shall vest and become exercisable.
A 'Change of Control' shall be deemed to have occurred upon the
earliest to occur of the following events: (a) the date the shareholders of
the Company (or the Board of Directors, if shareholder action is not
required) approve a plan or other arrangement pursuant to which the Company
will be dissolved or liquidated; (b) the date the shareholders of the
Company (or the Board of Directors, if shareholder action is not required)
approve a definitive agreement to sell or otherwise dispose of
substantially all of the assets of the Company; (c) the date the
shareholders of the Company (or the Board of Directors, if shareholder
action is not required) and the shareholders of the other constituent
corporation (or its board of directors if stockholder action is not
required) have approved a definitive agreement to merge or consolidate the
Company with or into such other corporation other than, in either case, a
merger or consolidation of the Company in which holders of shares of Common
Stock immediately prior to the merger or consolidation will have at least a
majority of the voting power of the surviving corporation's voting
securities immediately after the merger or consolidation, which voting
securities are to be held in the same proportion as such holders' ownership
of Common Stock immediately before the merger or consolidation; (d) the
date any entity, person or group, within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act (other than (i) the Company or any of
its subsidiaries or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its subsidiaries, or (ii) any other
person who, as of January 1, 1996, shall have been the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 25% of outstanding shares of Common Stock), shall have become the
beneficial owner of, or shall have obtained voting control over, more than
25% of the outstanding shares of Common Stock; or (e) the first day after
the date the 1996 Director Plan is effective when directors are elected
such that a majority of the Board of Directors shall have been members of
the Board of Directors for less than two years, unless the nomination for
election of each new director who was not a
10
<PAGE>
director at the beginning of such two year period, was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
ADMINISTRATION. The 1996 Director Plan will be administered by either
the Board of Directors or a committee (in either case, the 'Committee')
appointed by the Board and consisting of at least two or more Non-Employee
Directors (as such term is defined under Rule 16b-3 promulgated under the
Exchange Act). The Committee will be authorized to interpret the 1996
Director Plan, establish and amend rules relating to the 1996 Director Plan
and make other determinations necessary or advisable for the administration
of the 1996 Director Plan. Except as otherwise required by applicable law,
Rule 16b-3 or Nasdaq or the national securities exchange on which the
Common Stock is then included or listed, as the case may be, the Board of
Directors of the Company may amend the Plan from time to time in such
manner as it may deem advisable. No amendment to the Plan shall adversely
affect any outstanding Option, however, without the consent of the
Optionee.
TERMINATION OF OPTIONS. Options shall terminate on the earliest of
(a) the expiration of five years from the date of grant, (b) three months
from the date the optionee's service as a member of the Board of Directors
ceases for any reason other than death, disability, voluntary resignation
after age 65 or removal from the Board without cause, (c) expiration of one
year from the date of termination of service on the Board by reason of
death, disability, voluntary resignation after reaching age 65 or removal
from the Board without cause, and (d) the date of removal from the Board
with cause.
TERM OF THE 1996 DIRECTOR PLAN. No options may be granted under the
1996 Director Plan after October 27, 2006.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. The options granted under
the 1996 Director Plan will be non-statutory options not intended to
qualify under Section 422 of the Internal Revenue code. The grant of
options will not result in taxable income to the director or a tax
deduction for the Company. A director will recognize ordinary income in the
year in which the option is exercised, in an amount equal to the excess of
the fair market value of the shares over the exercise price of the option,
and the Company will be allowed a deduction in that amount. Upon
disposition of the shares, a director will recognize long-term or
short-term capital gain or loss, depending upon the length of time the
shares were held prior to disposition, equal to the difference between the
amount realized on disposition and the basis in the shares (which basis
ordinarily is the fair market value of the shares on the date the option
was exercised).
FORMULA PLAN BENEFITS. The following table summarizes the options to
be granted under the 1996 Director Plan on an annual basis to the
Non-Employee Directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION SUBJECT TO OPTION
- ----------------------------------------------------------- --------------------
<S> <C>
Nonemployee Director Group
(6 persons) 30,000
</TABLE>
The affirmative vote of the holders of a majority of the Common Stock
voting at the meeting in person or by proxy is required to approve the 1996
Director Plan. THE BOARD OF DIRECTORS RECOMMENDS VOTING 'FOR' APPROVAL OF THE
1996 DIRECTOR PLAN.
11
<PAGE>
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Board of Directors has selected the firm of MacDade, Abbott & Co. to
serve as independent auditors for the Company for the current fiscal year.
Representatives of MacDade, Abbott & Co. are expected to be present at the
Meeting and will have the opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of the Company's Common
Stock (collectively, the 'Reporting Persons') to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
the Company with copies of these reports. Based on the Company's review of the
copies of these reports received by it, and from written representations
received from the Reporting Persons, the Company believes that all filings
required to be made by the Reporting Persons for the period January 1, 1995
through December 31, 1995 were made on a timely basis.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual meeting of
shareholders in 1997 must be received by the Company at its principal office in
West Chester, PA, no later than January 18, 1997 in order to be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of solicitation of proxies for the
Meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers or regular employees of the Company or its subsidiaries.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO, AS FILED WITH THE SEC FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO DONALD F.U. GOEBERT, PRESIDENT OF THE COMPANY, AT
THE ADDRESS OF THE COMPANY APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
12
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF ADAGE, INC.
The undersigned, a holder of Common Stock of ADAGE, INC., hereby
constitutes and appoints DONALD F. U. GOEBERT and ROBERT T. HOLLAND, and each of
them acting individually, as the attorney and proxy of the undersigned, with
full power of substitution, for and in the name and stead of the undersigned, to
attend the Annual Meeting of Shareholders of the Company to be held on
Wednesday, December 11, 1996 at 9:00 a.m., at The Holiday Inn West Chester,
Route 202, 400 Willowbrook Lane, West Chester, Pennsylvania, and any adjournment
or postponement thereof, and thereat to vote all shares of Common Stock which
the undersigned would be entitled to vote if personally present, as follows:
1. [ ] FOR all eight (8) nominees for director listed below.
[ ] WITHHOLD AUTHORITY to vote for all eight (8) nominees for director
listed below.
[ ] FOR all eight (8) nominees for director listed below, EXCEPT
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S) WHOSE NAME(S) IS (ARE)
LINED THROUGH. Nominees: Donald F.U. Goebert; Buck Scott; Robert L. MacDonald;
Ralph R. Whitney, Jr.; Robert T. Holland; James C. Gale; Joel A. Schleicher;
George N. Benjamin, III.
2. To approve the Company's 1996 Stock Option Plan For Non-Employee
Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To vote on such other business which may properly come before the
meeting.
Unless otherwise specified, the shares will be voted 'FOR' the election of
all eight (8) nominees for director and 'FOR' the other proposals set forth
above. This Proxy also delegates discretionary authority to vote with respect to
any other business which may properly come before the meeting and any
adjournment or postponement thereof.
(Please sign and date on reverse side)
<PAGE>
(Continued from other side)
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT OF ADAGE, INC.
Date: _______________, 1996
___________________________
Signature of Shareholder
___________________________
Signature of Shareholder
NOTE: Please sign this Proxy exactly as name(s) appear(s) in address. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such, and if signer is a corporation, please sign with
full corporate name by duly authorized officer or officers and affix the
corporate seal. When stock is issued in the name of two or more persons, all
such persons should sign.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
