SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-2
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-7336
ADAGE, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 04-2225121
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Willowbrook Lane
West Chester, Pennsylvania 19382
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 430-3900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.60
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(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock of the Registrant held
by non-affiliates of the Registrant on March 31, 1997, based on the closing
price at which such stock was sold on the Nasdaq National Market on such date,
was $11,623,370.
As of March 31, 1997, 5,129,150 shares of the Registrant's only class
of Common Stock were outstanding.
<PAGE>
Part III of the Annual Report on Form 10-K of Adage, Inc. (the
"Company") for the year ended December 31, 1996, is hereby amended and restated
in its entirety as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information regarding the Company's
directors and executive officers.
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION DURING
NAME AGE PAST FIVE YEARS DIRECTORSHIPS
---- --- ----------------- -------------
<S> <C> <C> <C>
Donald F.U. Goebert 60 Chairman of the Board of Progress Financial
Directors of Company and Corporation; Investors
its predecessor since March Insurance Group, Inc.
1968; President of the
Company's predecessor from
March 1968 to October 1988
and President of Company
since April, 1993.
Robert T. Holland 48 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.
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 69 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.
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<PAGE>
Ralph R. Whitney, Jr. 61 Principal of Hammond IFR Systems, Inc.; Excel
Kennedy Whitney & Co., Industries, Inc.; Baldwin
Inc., a private investment Technology Corporation;
banking firm with offices at and Control Devices, Inc.
230 Park Avenue, New York,
New York. Director of
Company since January 1992.
James C. Gale 47 Managing Director of Latshaw Enterprises, Inc.
Gruntal & Co., Inc. from
1989 to present. Director of
Company since October
1993.
Joel A. Schleicher 45 President and CEO of Pro Novatel, Inc.
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>
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. 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. 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.
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<PAGE>
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 1996, investment banking services to the Company.
Compensation of Directors
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. In addition, in 1996, the Board of Directors of the Company adopted
and the shareholders approved a modification to the compensation policy with
respect to non-employee directors to grant stock options in lieu of the
quarterly fees which were previously paid. Pursuant to the terms of the
Company's 1996 Stock Option Plan For Non-Employee Directors, each non-employee
director will be granted (beginning in 1997) 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 (or on June 30 of such year if earlier), 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.
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<PAGE>
ITEM 11. 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 $100,000 during 1996.
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------
Annual Compensation Awards
---------------------------------------------- ------
Number of
Name and Other Annual Securities All Other
Principal Bonus Compensation Underlying Compensation
Position Year Salary ($) ($) ($)(1) Options(#) ($)
- -------- ---- ---------- ----- ------------ ---------- ---
<S> <C> <C> <C> <C> <C> <C>
Donald F.U. 1996 $150,000 $ - $ - - $ -
Goebert 1995 150,000 - - - -
President 1994 150,000 - - - -
Robert T. 1996 $192,600 $ - $ - - $ -
Holland, Chief 1995 192,600 5,000 - - -
Financial Officer 1994 192,600 - - - -
</TABLE>
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(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 1996, pursuant to
the Company's stock option plan or otherwise, to the Company's President and the
Company's other executive officer whose salary and bonus compensation exceeded
$100,000 during 1996. The Company does not currently have (and has not
previously had) any plan pursuant to which any SARs may be granted.
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<PAGE>
Stock Option Exercises and Holdings
The following table sets forth information relating to options
exercised during 1996 by the Company's President and the Company's other
executive officer whose salary and bonus compensation exceeded $100,000 during
1996, and the number and value of options held on December 31, 1996 by such
individuals. The Company does not currently have (and has not previously had)
any plan pursuant to which any stock appreciation rights ("SARs") may be
granted.
Aggregated Option Exercises in 1996
and Option Values at December 31, 1996
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Dec. 31, 1996 (#) Dec. 31, 1996 ($)(1)
Acquired -------------------------- --------------------
on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald F.U. Goebert 0 $ 0 62,500 37,500 $ 0 $ 0
Robert T. Holland 0 0 56,850 18,150 0 0
</TABLE>
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(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, 1996 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, 1996 was below the exercise price of such
options, the unexercised options had no value at such date.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information as of March 31, 1997
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 1996, 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.
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<PAGE>
<TABLE>
<CAPTION>
Amount Beneficially Percent
Name of Beneficial Owner Owned of Class
- ------------------------ -------------------- --------
<S> <C> <C>
Donald F.U. Goebert................... 1,687,902(1)(2) 31.8%
400 Willowbrook Lane
West Chester, PA 19382
Robert T. Holland..................... 139,932(2)(3) 2.6%
Ralph R. Whitney, Jr.................. 46,187(4) *
Buck Scott............................ 8,000 *
James C. Gale......................... 3,384(5) *
Joel A. Schleicher.................... 2,346(5) *
George N. Benjamin.................... 1,140(6) *
Robert L. McDonald .................. 0 *
All executive officers and directors
as a group (8 persons).............. 1,888,891(1)(2)(3)(4)(5)(6) 35.6%
</TABLE>
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*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 68,750 shares subject to immediately exercisable
options or options exercisable within 60 days, and 28,547 shares held in
custody or 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).
(3) Includes 59,975 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 1,040 shares subject to immediately exercisable options or options
exercisable within 60 days.
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<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leased its headquarters and leases a manufacturing facility
from entities owned principally by Mr. Goebert and also by Messrs. Holland and
Scott. Rentals under these leases were $230,000 for the year ending December 31,
1996. 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 1996 from related parties was $133,000.
In general, the Company believes that the terms of the transactions
described above are at least as favorable as those that might have been obtained
from unaffiliated third parties.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
Date: May 9, 1997 ADAGE, INC.
By: /s/ Donald F.U. Goebert
------------------------
Donald F.U. Goebert,
Chairman and President
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