SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COMPUTER PRODUCTS, INC.
(Name of Registrant as Specified in Its Charter)
COMPUTER PRODUCTS, INC.
(Name of Persons(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on the 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 transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
COMPUTER PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 8, 1997
To the Stockholders:
The Annual Meeting of the Stockholders of Computer Products, Inc. (the
"Company") will be held on Thursday, May 8, 1997, at 10:00 A.M., local
time, at the Deerfield Beach Hilton, 100 Fairway Drive, Deerfield Beach,
Florida, for the following purposes:
1. To elect six directors to hold office until the Annual Meeting of
Stockholders in 1998 and until their respective successors have been
duly elected and qualified;
2. To approve the Company's 1990 Performance Equity Plan, as amended (the
"Performance Plan"), including an amendment to increase the
number of shares currently available for grant;
3. To approve the Company's Performance Plan including an amendment to
increase the number of shares available for grant in future years; and
4. To transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 11, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting of Stockholders (the "Meeting"). Only
stockholders of record at the close of business on this date will be entitled to
notice of, and to vote at, the Meeting and any adjournment(s) thereof.
By Order of the Board of Directors
RICHARD J. THOMPSON
SECRETARY
March 20, 1997
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE POSTAGE PREPAID ENVELOPE WHICH HAS BEEN PROVIDED, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING IN PERSON. THE PROXY MAY BE REVOKED BY YOU AT ANY
TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE MEETING YOU MAY, IF YOU
WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE YOUR RIGHT TO VOTE YOUR SHARES
IN PERSON.
<PAGE>
PROXY STATEMENT
COMPUTER PRODUCTS, INC.
7900 GLADES ROAD, SUITE 500
BOCA RATON, FLORIDA 33434
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Computer Products, Inc., a Florida
corporation (the "Company"), to be voted at the 1997 Annual Meeting of
Stockholders (the "Meeting") and at any adjournment(s) thereof for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
The Meeting is to be held on Thursday, May 8, 1997, at the Deerfield Beach
Hilton, 100 Fairway Drive, Deerfield Beach, Florida at 10:00 A.M., local time.
The principal executive offices of the Company are located at 7900 Glades
Road, Suite 500, Boca Raton, Florida 33434 (telephone no.: 561-451-1000). The
enclosed proxy and this Proxy Statement are being first sent to stockholders of
the Company on or about March 20, 1997.
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by, or on behalf of, the Board
of Directors. The persons named in the proxy have been designated as proxies by
the Board of Directors. If a quorum, consisting of a majority of the outstanding
shares of common stock, $.01 par value (the "Common Stock"), of the Company is
present at the Meeting, in person or by proxy, (i) the directors shall be
elected by the affirmative vote of a plurality of the shares present at the
Meeting and entitled to vote thereon at such meeting; (ii) approval of the
Company's 1990 Performance Equity Plan, as amended (the "Performance Plan")
including an Amendment ("Amendment No. 1") to increase the number of shares of
Common Stock currently reserved for issuance pursuant to awards which may be
granted thereunder shall require approval by a majority of the shares present at
the Meeting and entitled to vote on such matter; (iii) approval of the
Performance Plan including an Amendment ("Amendment No. 2") to increase in the
future the number of shares of Common Stock reserved for issuance pursuant to
awards which may be granted thereunder shall require approval by a majority of
the shares present at the Meeting and entitled to vote on such matter; and (iv)
the affirmative vote of a plurality of the shares present at the Meeting and
entitled to vote will be required to act on all other matters to come properly
before the Meeting. Abstentions and shares of record held by a broker or nominee
("Broker Shares") that are voted on any matter will be included in determining
the existence of a quorum and will be counted in determining whether a proposal
has been approved. Broker Shares that are not voted on any matter are treated as
shares as to which voting power has been withheld by the beneficial owners of
such shares and, therefore, as shares not entitled to vote on the proposal, and
will not be included in determining the existence of a quorum. Non-voted Broker
Shares will, therefore, not have an effect on any proposal to come before the
Meeting.
Shares represented by properly executed proxies received by the Company
will be voted at the Meeting in the manner specified therein or, if no
specification is made, will be voted (i) "FOR" the election of all the
nominees for directors named herein; (ii) "FOR" the approval of the
Performance Plan as amended by Amendment No. 1 and (iii) "FOR" the
approval of the Performance Plan as amended by Amendment No. 2. In the event
that any other matters are properly presented at the Meeting for action, the
persons named in the proxy will vote the proxies (which confer authority upon
them to vote on any such matters) in accordance with their best judgment. Any
proxy given pursuant to this solicitation may be revoked by the stockholder at
any time before it is exercised by written notification delivered to the
Secretary of the Company, by voting in person at the Meeting or by executing
another proxy bearing a later date. Attendance by a stockholder at the Meeting
does not alone serve to revoke his or her proxy.
<PAGE>
The costs of soliciting proxies will be borne by the Company. The
solicitation of proxies will be made primarily by mail, but, in addition, may be
made by directors, officers and employees of the Company, personally or by
telephone or telegraph. The Company will reimburse brokers, nominees and
fiduciaries for their out-of-pocket and clerical expenses in transmitting
proxies and related materials to beneficial owners. The Company also has
retained D.F. King & Co. to assist in soliciting proxies for a fee of
approximately $5,000 plus reimbursement of out-of-pocket expenses.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
January 3, 1997 ("Fiscal 1996"), which contains audited financial
statements, is being mailed with this Proxy Statement to all persons who were
stockholders of record as of the close of business on March 11, 1997.
RECORD DATE; OUTSTANDING SHARES
The Board of Directors has fixed the close of business on March 11, 1997 as
the record date for the determination of stockholders of the Company who are
entitled to receive notice of, and to vote at, the Meeting. At the close of
business on that date, an aggregate of 23,885,096 shares of Common Stock were
issued and outstanding, each of which is entitled to one vote on each matter to
be voted upon at the Meeting. The Company's stockholders do not have cumulative
voting rights. The Company has no other class of voting securities entitled to
vote at the Meeting.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the close of business on March 11,
1997, information as to those stockholders which are known by the Company to
beneficially own more than 5% of its outstanding Common Stock (based solely upon
filings by each of said holders with the Securities and Exchange Commission on
Schedule 13D or Schedule 13G of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"))
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
- ------------------------------------ --------------------- ------------
Dresdner Bank AG
RCM Capital Management L.L.C.
RCM Limited L.P.(2)
RCM General Corporation(2)
RCM Capital Funds, Inc.(2)
Four Embarcadero Center
Suite 2900
San Francisco, California ......... 3,502,000 14.66%
- ----------------
(1) Beneficial ownership, as reported in the above table, has been determined in
accordance with Rule 13d-3 under the Exchange Act. Unless otherwise
indicated, beneficial ownership includes both sole voting and sole
dispositive power.
(2) Dresdner Bank AG ("Dresdner") is the parent holding company of RCM Capital
Management L.L.C. ("RCM") and may, therefore, be deemed to beneficially own
3,502,000 shares owned by RCM with respect to which Dresdner has neither
dispositive nor voting power. RCM is a registered investment advisor which
directly and beneficially owns 3,502,000 shares of Common Stock, with sole
dispositive power with respect to 3,334,600 of such shares, shared
dispositive power with respect to 167,400 shares and with sole voting power
with respect to 3,076,300 of such shares. In its capacity as investment
adviser, RCM may have discretionary authority to dispose of or to vote
securities that are under its management, and as a result may be deemed to
beneficially own such securities. However, RCM does not have any economic
interest in such securities; clients are the actual owners of the 3,502,000
shares and have the sole right to receive and the power to direct the
receipt of dividends from or proceeds from the sale of such securities. RCM
Limited L.P. ("RCM Limited") is the managing agent of RCM and RCM General
Corporation ("RCM General") is the general partner of RCM Limited. RCM
Limited and RCM General may be deemed to have beneficial ownership of the
securities beneficially owned by RCM.
2
<PAGE>
OWNERSHIP BY MANAGEMENT
The following table sets forth, as of the close of business on March 11,
1997, information concerning beneficial ownership of the Common Stock of the
Company by each director and nominee for election as a director of the Company,
the Named Executives (as defined below) who are currently serving as executive
officers, and all directors and current executive officers as a group (based
upon information furnished by such persons):
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK
- ---- ------------------------ ------------
Joseph M. O'Donnell ............ 606,820 2.49%
Bert Sager ..................... 299,582(3) 1.25%
Richard J. Thompson ............ 231,909 *
Phillip A. O'Reilly ......... 141,721 *
Stephen A. Ollendorff ......... 53,000 *
Edward S. Croft, III ......... 65,302 *
Louis R. DeBartelo ............ 43,451 *
Robert J. Aebli ............... 33,070 *
Salvatore R. Provanzano ......... 39,925 *
Lewis Solomon .................. 25,000 *
Directors and executive officers
as a group (12 persons) ...... 1,633,339 6.51%
- ----------------
* Represents less than 1%.
(1) Beneficial ownership, as reported in the above table, has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Unless
otherwise indicated, beneficial ownership includes both sole voting and sole
dispositive power.
(2) Includes the following shares subject to currently exercisable options
and/or that may be acquired upon the exercise of options within 60 days of
March 11, 1997: Mr. Sager-104,755; Mr. O'Donnell-531,900; Mr.
Ollendorff-49,900; Mr. O'Reilly-91,721; Mr. Croft-59,221; Mr.
Thompson-205,000; Mr. DeBartelo-30,000; Mr. Aebli -20,000; Mr. Provanzano-
39,250; Mr. Solomon-20,000; and all directors and executive officers as a
group (12 persons)-1,202,747.
(3) Includes 53,428 shares which are owned of record by Mr. Sager's wife, with
respect to which Mr. Sager disclaims beneficial ownership.
SECTION 16(A) REPORTING
Pursuant to Section 16(a) of the Exchange Act, directors and/or executive
officers of the Company or beneficial owners of greater than 10% of the
Company's Common Stock are required to file certain reports with the Securities
and Exchange Commission. Mr. O'Donnell inadvertently failed to timely file a
Form 4 disclosing a change in his beneficial ownership of Common Stock following
a purchase of shares in January 1996.
PROPOSAL I: ELECTION OF DIRECTORS
The entire Board of Directors is to be elected at the Meeting. The
Company's By-laws provide that the maximum number of directors is 12. However,
by resolution of the Board of Directors, the number of directors has been set at
six. The six persons listed below, all of whom have consented to being named in
this Proxy Statement and to serving if elected, have been nominated to serve as
directors of the Company until the annual meeting of stockholders to be held in
1998 and until their respective successors have been duly elected and qualified.
All of the nominees are currently directors of the Company and each was elected
by the stockholders at the Company's 1996 Annual Meeting of Stockholders.
Proxies in the accompanying form will be voted at the Meeting in favor of
the election of each of the nominees listed on the accompanying form of proxy,
unless authority to do so is withheld as to an individual nominee or nominees or
all nominees as a group. Proxies cannot be voted for a greater
3
<PAGE>
number of persons than the number of nominees named. In the unexpected event
that any of such nominees should become unable to, or for good cause will not,
serve as a director, proxies may be voted for the election of substitute
nominees. Directors will be elected by a plurality of the votes cast by the
holders of shares entitled to vote thereon who are present at the Meeting in
person or by proxy.
Set forth below is certain information with respect to each nominee for
election as a director of the Company at the Meeting:
<TABLE>
<CAPTION>
YEAR OF
FIRST
AGE ELECTION PRINCIPAL OCCUPATIONS
(AS OF AS A DURING PAST FIVE YEARS;
NAME 3/11/97) DIRECTOR OTHER DIRECTORSHIPS
- ---- -------- -------- -----------------------
<S> <C> <C> <C>
Joseph M. O'Donnell 50 1994 Since February 1997, Chairman and since July 1994,
Chief Executive Officer and President; from
March 1994 to June 1994 and from October 1992
to September 1993, Managing Director of
O'Donnell Associates, a consulting firm; from
October 1993 to February 1994, Chief Executive
Officer of Savin Corporation, an office products
distributor; from June 1990 to September 1992,
President and Chief Executive Officer of Go/Dan
Industries, a manufacturer of automotive parts;
director of Boca Research, Inc., a manufacturer of
data communications, multimedia and networking
products; and director of V-Band Corporation, a
manufacturer of computer systems.
Bert Sager 71 1968 Since 1949, a practicing attorney; director of Acorn
(1)(2)(3) Venture Capital Corporation, a registered business
development company; and director of Windmere-
Durable Holdings, Inc., a manufacturer of
personal care products.
Edward S. Croft, III 54 1980 Since August 1996, Managing Director of Croft &
(1)(3) Bender LLC, an investment banking and strategic
financial advisory firm; from April 1996 to August
1996, President of Croft & Co., a financial
advisory firm; for more than five years prior to
April 1996, Managing Director of The Robinson-
Humphrey Company, Inc., an investment banking
firm; director of Acorn Venture Capital
Corporation; and director of Just for Feet, Inc., an
athletic footwear retailer.
Stephen A. Ollendorff 58 1984 Practicing attorney for more than the past five years;
(1)(3) since December 1990, Of Counsel to Hertzog,
Calamari & Gleason; from 1983 to present, Vice
President then President then Chairman and Chief
Executive Officer and director of Acorn Venture
Capital Corporation.
Phillip A. O'Reilly 70 1988 Since January 1, 1989, retired executive; from 1979
(1)(2)(3) to December 31, 1988, President (then Chairman)
and Chief Executive Officer of Houdaille
Industries, Inc., a manufacturer of industrial
products.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR OF
FIRST
AGE ELECTION PRINCIPAL OCCUPATIONS
(AS OF AS A DURING PAST FIVE YEARS;
NAME 3/11/97) DIRECTOR OTHER DIRECTORSHIPS
- ---- -------- -------- -----------------------
<S> <C> <C> <C>
Lewis Solomon 63 1995 From April 1986 to February 1997, Chairman of
(1)(2)(3) SilentRadio, a servicer of moving message signs;
since August 1990, Chairman of Liverpool
Industries, a tool and machine parts manufacturer;
director of Anadigics, Inc., a manufacturer of
gallium arsenide semiconductors; director of TSX
Corporation, a cable equipment manufacturer;
director of Microelectronic Packaging, Inc., a
semiconductor packaging company; and director
of Anacomp, Inc., a manufacturer of magnetic
products.
</TABLE>
- ----------------
(1) Member of the Audit Committee.
(2) Member of the Compensation and Stock Option Committee.
(3) Member of the Nominating Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE SIX NOMINEES NAMED ABOVE AS DIRECTORS OF THE COMPANY.
BOARD OF DIRECTORS; COMMITTEES OF THE BOARD
The Board of Directors met five times during Fiscal 1996. During Fiscal
1996, no director attended fewer than 75% of the total number of meetings of the
Board and of the committees of the Board on which he served, with the exception
of Messrs. Sager and Croft, who were absent from one meeting of the Board. In
early 1997, the Board of Directors elected Joseph M. O'Donnell as Chairman of
the Board. The Board of Directors has established three standing committees,
which consist of a Compensation and Stock Option Committee, an Audit Committee
and a Nominating Committee. The following are the current functions of such
committees.
The Compensation and Stock Option Committee, which held four meetings
during Fiscal 1996, sets and approves salary levels of all corporate officers
and has primary responsibility for the administration of the Company's
Performance Plan, including the granting of options thereunder. See
"Compensation and Stock Option Committee Report on Executive Compensation"
below. This committee also administers the Company's 1996 Employee Stock
Purchase Plan. The Chairman of this committee is Phillip A. O'Reilly.
The Audit Committee, which held three meetings during Fiscal 1996, reviews
the internal and external audit functions of the Company and makes
recommendations to the Board of Directors with respect thereto. It also has
primary responsibility for the formulation and development of the auditing
policies and procedures of the Company and for making recommendations to the
Board of Directors with respect to the selection of the Company's independent
auditing firm. The Chairman of this committee is Edward S. Croft, III.
The Nominating Committee, which held no meetings during Fiscal 1996,
recommends nominees to fill vacancies on the Board of Directors and considers
responsible recommendations by the Company's stockholders of candidates to be
nominated as directors of the Company. The Nominating Committee met early in
1997 to discuss and recommend the current nominees to the Board. All
recommendations of candidates by stockholders must be in writing and addressed
to the Secretary of the Company. By accepting a stockholder recommendation for
consideration, the Nominating Committee does not undertake to adopt or take any
other action concerning the recommendation or to give the proponent thereof its
reasons for any action or failure to act. The Chairman of this committee is Bert
Sager.
5
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee consists of Bert Sager, Lewis
Solomon and Phillip A. O'Reilly. None of the committee members are executive
officers or employees of the Company. None of the executive officers of the
Company has served on the board of directors or on the compensation committee of
any other entity, any of whose officers served on the Board of the Company.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company ("Outside Directors")
are compensated for their services by payment of an annual fee of $12,000 plus
$1,000 per day for each Board of Directors meeting attended and $750 per day for
each committee meeting attended (and an additional $250 per day for each
committee meeting at which such person acted as chairman) with a maximum payment
of $2,000 per day for attendance at a meeting of the Board of Directors and
attendance as chairman at a meeting of a committee of the Board of Directors.
During Fiscal 1996, options to purchase 10,000 shares of Common Stock, at
an exercise price of $16.00 per share, were granted by the Company to each of
the Outside Directors pursuant to the Company's Outside Directors' Plan. Under
such plan, each Outside Director is granted an option, exercisable over 10
years, to purchase 10,000 shares of Common Stock each time that such person is
elected or re-elected by the stockholders to serve as a director of the Company
provided that such Outside Director owns certain amounts of Common Stock.
Outside Directors who have served for at least five consecutive years are
entitled to receive certain annual benefits under the Company's Outside
Directors' Retirement Plan, as amended. The annual benefits are based upon the
number of years served and the average annual retainer during the ten years of
service prior to retirement. Such benefits shall only be available to present
and former Outside Directors.
CERTAIN TRANSACTIONS
Mr. Ollendorff is Of Counsel to the law firm of Hertzog, Calamari & Gleason
which acts as counsel for the Company and which received fees and expenses in
Fiscal 1996 for various legal services rendered to the Company. Mr. Croft was
formerly Managing Director of The Robinson-Humphrey Company, Inc. which provided
various investment banking services to the Company in Fiscal 1996. Mr. Croft is
currently Managing Director of Croft & Bender LLC which provided certain
financial advisory services to the Company in Fiscal 1996. In addition, Bert
Sager, a director of the Company, provided limited legal services to the Company
in Fiscal 1996.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended
January 3, 1997, December 29, 1995, and December 30, 1994 , in respect of
compensation earned by the Chief Executive Officer and by the other four most
highly compensated executive officers (whose salary and bonus earned in Fiscal
1996 exceeded $100,000) of the Company serving at the end of Fiscal 1996 (the
"Named Executives").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) COMPENSATION($)(2) OPTIONS(#)(3) COMPENSATION($)
- --------------------------- ---- ---------- ----------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. O'Donnell 1996 344,615 238,427 -0- 154,965 27,751(4)
Chairman, Chief Executive 1995 270,770 231,615 268,375(5) 106,900 28,333(4)
Officer and President 1994 105,770 65,693 14,517(6) 450,000 18,822
Richard J. Thompson 1996 170,449 99,305 -0- 73,312 9,371(7)
Vice President-Finance, 1995 156,966 107,823 -0- 50,000 10,626(7)
Chief Financial Officer, 1994 150,850 76,435 -0- 20,000 6,347
Secretary and Treasurer
Louis R. DeBartelo 1996 194,739 61,736 -0- 51,066 12,619(8)
President, 1995 176,000 73,441 -0- 50,000 11,907(8)
North American Power 1994 157,226 55,090 69,352(9) 15,000 5,353
Conversion Division
Robert J. Aebli 1996 156,073 36,741 -0- 27,500 13,583(10)
President-Heurikon 1995 146,940 36,180 -0- 21,750 12,644(10)
Corporation 1994 140,000 43,701 37,798(11) -0- 7,933
Salvatore R. Provanzano 1996 147,297 -0- -0- 5,880 9,862(12)
President of RTP Corp. 1995 143,604 -0- -0- 16,750 11,352(12)
1994 132,723 70,750 5,129(13) -0- 6,145
</TABLE>
- ----------------
(1) Includes amounts awarded under the Company's annual Executive Incentive
Plan to each of the Named Executives and, for Mr. Provanzano, a starting
bonus of $10,000 for fiscal 1994.
(2) Includes only those perquisites which are, in the aggregate, greater than
or equal to the lesser of $50,000 or 10% of annual salary and bonus.
(3) Represents options awarded under various stock option plans. See "-Stock
Option Grants in Last Fiscal Year."
(4) Includes insurance premiums paid by the Company in the amount of $20,001
and $19,179 with respect to two life insurance policies for the benefit of
Mr. O'Donnell, including a whole-life policy and a hybrid policy in fiscal
years 1996 and 1995, respectively. Also includes $3,000 and $4,534 in
premiums paid by the Company with respect to health insurance for the
benefit of Mr. O'Donnell and a contribution of $4,750 and $4,620 to the
Company's 401(k) plan in fiscal years 1996 and 1995, respectively.
(5) Includes reimbursement for expenses related to Mr. O'Donnell's relocation
in the amount of $149,000, reimbursement for the payment of taxes in the
amount of $115,975 and a car allowance of $3,400.
(6) Represents a payment by the Company to reimburse Mr. O'Donnell for
expenses related to his relocation.
(7) Includes a contribution in the amount of $4,750 and $4,620 by the Company
to the Company's 401(k) plan for the benefit of Mr. Thompson, and also
includes insurance premiums in the amounts of $4,621 and $6,006 paid by the
Company with respect to term life insurance and health insurance for the
benefit of Mr. Thompson in fiscal years 1996 and 1995, respectively.
(8) Includes a contribution in the amount of $4,750 and $4,620 by the Company
to the Company's 401(k) plan for the benefit of Mr. DeBartelo and
insurance premiums in the amounts of $7,869 and $7,287 paid by the Company
with respect to term life insurance and health insurance for the benefit of
Mr. DeBartelo in fiscal years 1996 and 1995, respectively.
(9) Represents a payment by the Company to reimburse Mr. DeBartelo for expenses
related to his relocation.
(10) Includes a contribution in the amount of $4,750 and $4,620 by the Company
to the Company's 401(k) plan for the benefit of Mr. Aebli and insurance
premiums in the amounts of $8,833 and $8,024 paid by the Company with
respect to term life insurance and health insurance for the benefit of Mr.
Aebli in fiscal years 1996 and 1995, respectively.
(11) Represents a payment by the Company to reimburse Mr. Aebli for expenses
related to his relocation.
(12) Includes a contribution in the amount of $4,750 and $4,620 by the Company
to the Company's 401(k) plan for the benefit of Mr. Provanzano and
insurance premiums in the amounts of $5,112 and $6,732 paid by the Company
with respect to term life insurance and health insurance for the benefit of
Mr. Provanzano in fiscal years 1996 and 1995, respectively.
(13) Represents a payment by the Company to reimburse Mr. Provanzano for
expenses related to his relocation.
7
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
to the Named Executives in Fiscal 1996.
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL OPTIONS
NUMBER OF GRANTED TO EXERCISE
SECURITIES UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION GRANT DATE
NAME OPTIONS GRANTED(#) FISCAL YEAR(%) SHARE($) DATE PRESENT VALUE($)(1)
- ---- --------------------- -------------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Joseph M. O'Donnell ......... 75,000 9.7 16.00 5/02/06 433,035
75,000 9.7 11.25 2/15/06 286,503
4,965 0.6 11.625 1/25/06 22,195
Richard J. Thompson ......... 45,000 5.8 16.00 5/02/06 259,821
25,000 3.2 11.625 1/25/06 100,350
2,312 0.3 11.625 1/25/06 10,335
Louis R. DeBartelo ............ 37,500 4.9 16.00 5/02/06 216,517
12,500 1.6 12.75 3/15/06 56,118
1,066 0.1 11.625 1/25/06 4,765
Robert J. Aebli ............... 15,000 1.9 16.00 5/02/06 86,607
12,500 1.6 12.81 7/15/06 46,931
Salvatore R. Provanzano ...... 8,550 1.1 16.00 5/02/06 49,365
</TABLE>
- ----------------
(1) Based upon the Black-Scholes option pricing model adopted for use in valuing
executive stock options. The actual value, if any, a Named Executive may
realize will depend upon the excess of the market price of the Common Stock
over the exercise price on the date the option is exercised. There is,
therefore, no assurance that the value realized by a Named Executive will be
at or near the value estimated by the Black-Scholes model. The estimated
values under the model are based upon certain assumptions which the Company
believes are reasonable, such as a risk-free rate of return of 5.95%, stock
price volatility of .52, future dividend yield of 0% and time to exercise of
2.5 years. The values do not take into account certain features of the stock
plans which may affect such values, such as conditions to exercisability and
nontransferability.
OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES TABLE
The following table sets forth information with respect to stock options
exercised by the Named Executives in Fiscal 1996 and information with respect to
exercisable and non-exercisable stock options held on January 3, 1997 by the
Named Executives. The table also includes the value of "in-the-money"
stock options which represents the spread between the exercise price of the
existing stock options and the year-end price of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS HELD AT
JANUARY 3, 1997(#) JANUARY 3, 1997(1)($)
SHARES ------------------------------ -----------------------------
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE NOT EXERCISABLE EXERCISABLE NOT EXERCISABLE
- ---- ----------- ----------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. O'Donnell ... 100,000 1,636,250 531,900 79,965 7,566,418 231,630
Richard J. Thompson ...... 50,000 878,750 198,334 53,978 2,819,177 242,631
Louis R. DeBartelo ...... 70,000 854,678 32,500 43,566 348,437 187,149
Robert J. Aebli ......... 36,750 499,175 20,000 22,500 194,493 161,212
Salvatore R. Provanzano -0- -0- 39,250 16,050 595,825 144,281
</TABLE>
- ----------------
(1) Based upon the closing price of the Common Stock on January 3, 1997
($18.625).
EMPLOYMENT AND TERMINATION ARRANGEMENTS
On June 29, 1994, the Company and Joseph M. O'Donnell, Chairman, Chief
Executive Officer and President of the Company, entered into an employment
agreement which provides that Mr. O'Donnell was to receive a base salary at the
rate of $250,000 per year for the first year of his employment and $300,000 per
year thereafter. The base salary is to be reviewed by the Board of Directors
periodically. In
8
<PAGE>
addition, the agreement provided that Mr. O'Donnell is eligible to receive an
incentive payment each year in an amount equal to up to 50% of his base salary
for such year, payable 50% in cash and 50% in stock. Such incentive payment was
subsequently increased to up to 60% of base salary by the Compensation and Stock
Option Committee. Mr. O'Donnell is also eligible for additional payments in the
discretion of the Compensation and Stock Option Committee, awarded in accordance
with the terms of the Company's annual Executive Incentive Plan. The agreement
also provided for the grant to Mr. O'Donnell of stock options to purchase
400,000 shares of Common Stock as well as additional options, the grant and
terms of which are contingent upon Mr. O'Donnell's purchase of certain amounts
of Common Stock in the open market. Under the terms of the agreement, Mr.
O'Donnell was also entitled to reimbursement of expenses, including
reimbursement of relocation expenses, reimbursement for the payment of certain
taxes and a bridge loan for the purchase of a new home pending the sale of his
prior home, of up to $250,000 which has been repaid, and health, disability and
life insurance benefits. The Company also has agreed to cause Mr. O'Donnell to
be nominated as a director throughout the term of his employment. The employment
agreement expires on July 26, 1997, but is renewable each year for a one-year
term unless either party provides notice of termination.
Upon any event of earlier termination of the agreement, Mr. O'Donnell is
entitled to receive his base salary through the date of termination. In the
event of Mr. O'Donnell's death or "disability" (as defined in the agreement), he
is entitled to receive his base salary for an additional year from the date of
termination, except that payments for the additional year will be offset by
certain Company- sponsored insurance benefits payable during such period, plus
any pro rated incentive payment under the Company's annual Executive Incentive
Plan to which he may be entitled. In the event that Mr. O'Donnell's employment
is terminated by the Company without "cause" (as defined in the agreement) or by
Mr. O'Donnell due to the Company's "substantial breach" (as defined in the
agreement), Mr. O'Donnell is entitled to receive his base salary for the number
of months he was employed by the Company plus six months, but for no more than
18 months total, except that if the Company terminates the agreement for "cause"
in writing on or after July 26, 1995, and makes a lump sum payment of $50,000 to
Mr. O'Donnell, then the total number of months is 12 unless the termination
occurs prior to the date six months from the date of written notice and payment,
in which event the number of months is set at 18. Mr. O'Donnell is also entitled
to receive any pro rated incentive payment to which he may be entitled and
reimbursement of expenses of outplacement-related services up to $45,000. In the
event of the Company's termination of the agreement without "cause", or
termination of the agreement by Mr. O'Donnell due to the Company's "substantial
breach", following a "change of control" (as defined in the agreement), Mr.
O'Donnell is entitled to receive a lump sum payment equal to the lesser of (a)
the product of the sum of his base salary and the amount of his last incentive
payment multiplied by two and (b) the maximum amount that would be permitted
without the imposition of certain taxes, or the loss of certain tax deductions,
under the Internal Revenue Code of 1986, as amended, within 10 days from the
date of termination.
Richard J. Thompson, Vice President of Finance, Secretary, Treasurer and
Chief Financial Officer of the Company, entered into a letter agreement with the
Company on April 28, 1994, which provides that if Mr. Thompson's employment is
terminated without "cause" (as defined in the agreement), or if he resigns
within 30 days after a substantial reduction in his responsibilities, duties or
compensation, Mr. Thompson shall be entitled to receive an amount equal to his
annual base salary plus any incentive payment he may have earned, as well as
insurance and other employee benefits, for a period of 12 months from
termination. Such payments are payable to Mr. Thompson as they would have been
paid if his employment had continued without termination. The agreement further
provides that upon such termination all stock options previously granted to Mr.
Thompson shall remain outstanding until the 90th day following the 12-month
period during which he is entitled to receive post-termination compensation,
except that options granted under the 1981 Stock Option Plan shall be reissued
under the Performance Plan at an exercise price equal to the closing price of
the Common Stock as of the date of the agreement, and the Company will
compensate Mr. Thompson for any loss caused by such repricing. The agreement
further provides that Mr. Thompson is eligible for the compensation described
therein following his execution of a release of the Company from all claims he
may have against the Company, its officers and directors.
9
<PAGE>
Salvatore R. Provanzano, President of RTP Corp., a subsidiary of the
Company ("RTP"), entered into a letter agreement with the Company on
January 13, 1997, which provides that if Mr. Provanzano's employment is
terminated without "cause" (as defined in the agreement) within 12 months
of such agreement in conjunction with or subsequent to a future sale of RTP to
an unrelated third party (a "Sale"), or if he resigns within such 12-month
period because of a substantial reduction in compensation as a result of a Sale,
Mr. Provanzano shall be entitled to continue to receive his base salary and
insurance benefits for a period of 12 months from the date of termination of
employment, base salary to be payable in accordance with the Company's normal
payroll practices. In addition, Mr. Provanzano would be entitled to any
incentive compensation he may have earned in respect of the prior fiscal year.
The agreement further provides that in order to be eligible for the foregoing
benefits, Mr. Provanzano must execute a release of the Company and RTP or any
successor of RTP from all claims he may have against the Company, RTP or such
successor. Pursuant to a separate letter agreement between the Company and Mr.
Provanzano, dated January 8, 1997, the Company has agreed to pay Mr. Provanzano
a one-time bonus in the event of a Sale of RTP, in consideration of Mr.
Provanzano's cooperation and assistance in facilitating such Sale, equal to 1%
of the lesser of (i) the purchase price paid in such Sale or (ii) the book value
of RTP at the time of such Sale, plus 3% of the excess of the purchase price
paid in the Sale over the book value of RTP at the time of such Sale.
Certain options granted to the Named Executives become immediately
exercisable in the event of a "change of control" or if a Named
Executive's employment is terminated within six months after a "change of
control" of the Company pursuant to the terms of the option plan under which
the options were granted.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") of the
Company's Board of Directors is comprised of three individuals, each of whom is
a non-employee director. The Committee is responsible for establishing the
overall philosophy of the Company's executive compensation program and
overseeing the executive compensation plans developed to execute the Company's
compensation strategy.
THE COMPANY'S EXECUTIVE COMPENSATION STRATEGY
The Company's executive compensation program has been designed to promote
stockholder interests and to:
- Link key executives' compensation to Company business objectives;
- Reward teamwork and individual performance for achieving annual business
results;
- Provide motivation to key executives to excel by offering competitive
incentive and total compensation;
- Promote human resources goals to attract, hire and retain quality talent;
and
- Balance short and long-term considerations through compensation for
achievement of annual goals that are consistent with long-term objectives.
It is the Company's intention to ensure that all compensation paid to its
executives is tax deductible under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). Although Section 162(m) of the Internal
Revenue Code imposes limits on deductibility for compensation to certain
executives exceeding $1 million per year, the Company does not currently
anticipate any limitations of this deduction.
10
<PAGE>
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Company's executive compensation program includes two principal
elements: annual cash compensation and long-term awards. The Company uses
competitive survey data of companies in the high-technology industry with
comparable revenue levels in assessing cash compensation and long-term awards.
Annual cash compensation includes both base salaries and annual incentive
awards pursuant to the Company's Executive Incentive Plan ("EIP").
Executives' base salaries are evaluated each year based upon an assessment of
competitive market data of comparable companies, as discussed above. Executives
are eligible for adjustments in base salary based upon an assessment of
individual performance and changes in principal job duties and responsibilities.
Executives are eligible to receive annual incentive awards under the EIP.
Each executive participating in the plan has a targeted annual incentive award,
based upon competitive practice which represents a stated percentage of the
executive's base salary. The performance of executives with corporate-wide
responsibilities is evaluated based upon the achievement of corporate financial
targets measured by the Company's net income and revenue growth. The performance
of executives with divisional and/or subsidiary responsibility is evaluated
based upon the achievement of divisional or subsidiary financial targets
measured by management net income, revenue growth and cash flow. The financial
targets for 1996 were developed from the Company's annual planning process. The
Committee reviews and approves the targets each year based upon fairness, degree
of difficulty and reasonableness. Further, the Company had to achieve a minimum
net income performance threshold before corporate executives could receive a
financial target payout under the EIP. For division/subsidiary participants, the
division had to achieve a minimum management net income performance threshold
before division/ subsidiary executives could receive a financial target payout
under the EIP. There may be no incentive payout if the Company is not
profitable.
The maximum individual annual incentive award is two (2) times the targeted
annual incentive award. In addition, annual incentive awards are limited to no
more than 10% of the Company's net income, excluding extraordinary items,
before total after-tax cost of the executive annual incentive payout, unless
otherwise approved by the Committee and Board of Directors.
Long-term incentive compensation included the 1990 Performance Equity Plan.
The Performance Plan permits the Company to grant stock options to selected
executives at a price no less than the fair market value of the Common Stock on
the date of grant.
Each year the Committee reviews and approves annual salaries, annual
incentive awards, grants of long-term incentives and the performance targets and
criteria established for both the annual and long-term incentive plans. In
addition, the Committee reviews the performance of the Company and its divisions
and subsidiaries and exercises the final authority in approving the payout of
executive incentive awards. The Committee has engaged executive compensation
consultants and used competitive compensation data.
In the beginning of 1996, the Committee reviewed and approved the financial
targets to be included in the 1996 EIP for the Chief Executive Officer and the
Named Executives. Based upon the Committee's review of the Company's
performance by the Chief Executive Officer and the Named Executives following
conclusion of the 1996 fiscal year, the Company granted awards to the Chief
Executive Officer and the Named Executives under the 1996 EIP based on the
attainment of Company and divisional objectives.
Based upon assessments of individual performance, the Company awarded an
increase in base salary in 1996 to Messrs. Thompson, DeBartelo and Aebli.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. O'Donnell's base salary during Fiscal 1996 was increased to $350,000.
The base salary of Mr. O'Donnell was based upon an assessment of competitive
market data of comparable companies, as
11
<PAGE>
described above. Mr. O'Donnell received an annual incentive award of $238,427
under the 1996 Executive Incentive Plan based on attainment of Company's
financial results during Fiscal 1996. On January 25, 1996, the Company, pursuant
to the EIP, granted Mr. O'Donnell a non-qualified stock option to purchase
4,965 shares of Common Stock at an exercise price of $11.625 per share,
exercisable after January 25, 1998, provided that Mr. O'Donnell (i) is still
employed by the Company on such date and (ii) owns a number of shares equal to
the number of shares granted to him pursuant to the 1995 Executive Incentive
Plan. On February 15, 1996, the Company, pursuant to the Company's 1996
Executive Stock Ownership Program, granted Mr. O'Donnell an incentive stock
option to purchase 75,000 shares of Common Stock, at an exercise price of $11.25
per share, exercisable as follows: (i) 50% vesting upon the closing price of a
share of Common Stock being equal to $14.0125 for 20 of 30 consecutive trading
days, (ii) 50% vesting upon the closing price of a share of Common Stock being
equal to $16.875 per share for 20 of 30 consecutive trading days, and (iii) to
the extent not previously exercisable, 100% on February 15, 2003. All of such
options are currently exercisable. On May 2, 1996, the Company, pursuant to the
Performance Plan, granted Mr. O'Donnell an incentive stock option to purchase
75,000 shares of Common Stock, at an exercise price of $16.00 per share,
exercisable as follows: (i) 50% vesting upon the closing price of a share of
Common Stock being equal to $20.00 for 20 of 30 consecutive trading days, (ii)
50% vesting upon the closing price of a share of Common Stock being equal to
$24.00 per share for 20 of 30 consecutive trading days, and (iii) to the extent
not previously exercisable, 100% on May 2, 2003. None of such options is
currently exercisable.
MEMBERS OF THE COMPENSATION AND STOCK OPTION COMMITTEE:
Phillip A. O'Reilly, Chairman
Bert Sager
Lewis Solomon
STOCK PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder return
(assuming reinvestment of dividends) on the Company's Common Stock, over the
most recent five-year period up to and including January 3, 1997, with the
cumulative total return of companies on the Russell 2000- Index and the S&P-
SmallCap Electrical Equipment Index (the "Electrical Equipment Index"), a
published line-of- business index. In light of the Company's continued focus on
its power conversion business, the Electrical Equipment Index was selected by
the Company in lieu of the customized selected peer group utilized in the
preceding year (the "Selected Peer Group") because the Company believes the
Electrical Equipment Index provides a more meaningful comparison to the
Company's performance. The Selected Peer Group is also provided for purposes of
comparison.
The Selected Peer Group consists of the following companies corresponding
to the Company's three lines of business: power conversion-ASTEC (BSR) Plc,
Vicor Corporation and Unitech Plc; industrial automation-Data Translation, Inc.,
Fischer & Porter Company and Keithley Instruments, Inc.; and computer
systems-Concurrent Computer Corp., SBE Inc. and Ciprico Inc. Within each
business line sub-group, each component company was weighted according to its
relative market capitalization as of the beginning of each period. Additionally,
each line of business sub-group was weighted based upon the Company's quarterly
revenues in each line of business. If the number of outstanding shares was not
available for each quarter, the number of shares outstanding as of the most
recent date available was used to compute market capitalization for companies in
the Selected Peer Group. Adjustments were made each quarter to the market
capitalization of companies in the power conversion sub-group based on
exchange-rate fluctuations as required.
12
<PAGE>
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
------ ------ ------ ------ ------ ------
Computer Products Inc. $100 $107 $86 $126 $428 $725
Russell 2000 $100 $118 $141 $138 $178 $207
Selected Peer Group $100 $83 $116 $140 $214 $251
S&P/registered trademark/
SmallCap Electrical
Equipment Index $100 $112 $143 $166 $209 $237
THE SELECTED PEER GROUP IS A CUSTOMIZED INDEX CONSISTING OF THE FOLLOWING
SUB-GROUPS:
<TABLE>
<S> <C> <C>
POWER CONVERSION INDUSTRIAL AUTOMATION COMPUTER SYSTEMS
- ASTEC (BSR) plc - DATA TRANSLATION - CONCURRENT COMPUTER CORP
- VICOR - FISCHER & PORTER CO.* - SBE INC.
- UNITECH plc** - KEITHLEY INSTRUMENTS - CIPRICO INC.
</TABLE>
EACH SUB-GROUP IS WEIGHTED QUARTERLY WITH RESPECT TO CPRD'S REVENUES IN EACH
LINE OF BUSINESS.
* NOTE: FISCHER & PORTER CO. WAS ACQUIRED 8/5/94 AND IS INCLUDED IN THE RETURN
THROUGH 6/30/94
** NOTE: UNITECH Plc WAS DELISTED ON 6/30/96 AND IS INCLUDED IN THE RETURN
THROUGH SUCH DATE.
13
<PAGE>
PROPOSAL II: APPROVAL OF THE 1990 PERFORMANCE EQUITY PLAN
INCLUDING AN AMENDMENT TO INCREASE THE NUMBER OF SHARES
CURRENTLY AVAILABLE FOR GRANT
In September 1996 and March 1997, the Board approved amendments to the
Performance Plan to make certain changes occasioned by the recent amendment of
Rule 16b-3 of the Securities Act of 1933, as amended and certain amendments to
the Code. In February 1997, the Board adopted, subject to stockholder approval
at the Meeting, an amendment ("Amendment No. 1") to the Performance Plan
providing for an increase in the number of shares of Common Stock reserved for
issuance pursuant to awards granted under the Performance Plan from 4,450,000 to
5,950,000 shares. As of March 11, 1997, 966,049 shares remained available for
future grants under the Performance Plan. Such amendments are described in the
summary of the Performance Plan set forth in Proposal III, below, and in the
Performance Plan, a copy of which, as amended, is annexed hereto as Exhibit A.
In order to ensure that all compensation paid to its executives is tax
deductible under Section 162(m) of the Code, stockholder approval is being
sought for the entire Performance Plan as amended by Amendment No. 1.
The Board of Directors believes that the Company would be at a disadvantage
in attracting and retaining the most qualified and experienced persons to serve
as officers and key employees were it limited in its ability to grant stock or
stock related incentive awards. Based on research and consultation with
independent consultants, the Company believes that the level and amount of
awards it has granted in the past are consistent with or below those of other
companies of the Company's size and standing in its industry. The independent
committee which administers the Performance Plan has adopted a policy of
requiring a minimum level of stock ownership for senior executives in the
Company to be eligible for future incentive awards, as well as conditioning
vesting of certain awards upon significant increases in the price per share of
the Common Stock as a means to create even greater incentive to such persons to
remain with the Company and to meet and exceed performance targets. Therefore,
the Board believes that this proposal is in the best interests of the Company
and its stockholders.
The affirmative vote of a majority of the votes cast by the holders of
shares entitled to vote thereon who are present at the Meeting, in person or by
proxy, is required for approval of the Performance Plan as amended by Amendment
No. 1.
The Board of Directors unanimously recommends a vote "FOR" the adoption
of Proposal II.
PROPOSAL III: APPROVAL OF THE 1990 PERFORMANCE EQUITY PLAN
INCLUDING AN AMENDMENT TO INCREASE THE NUMBER OF SHARES
AVAILABLE FOR GRANT IN FUTURE YEARS
In February 1997, the Board adopted, subject to stockholder approval at the
Meeting, an amendment ("Amendment No. 2") to the Performance Plan providing that
the number of shares reserved for issuance pursuant to awards granted under the
Performance Plan shall be increased each year, commencing on the date that the
number of shares currently available for grant (as such number may be increased
by Amendment No. 1) shall have been fully granted and be no longer available
(the "Reset Date"). On the Reset Date, the number of shares reserved for
issuance under the Performance Plan shall be increased to an amount equal to
14.9% of the total number of shares of Common Stock outstanding on such date
minus the number of shares subject to outstanding awards on such date. On each
anniversary of the Reset Date during the term of the Performance Plan, the
number of shares reserved for issuance under the Performance Plan shall be
increased so that the number of shares available for grant thereunder plus the
number of shares subject to outstanding awards shall be equal to 14.9% of the
total number of shares of Common Stock outstanding on such date.
Although the Committee anticipates granting awards under the Performance
Plan on an annual basis in amounts consistent with prior practice (approximately
770,000 shares of stock or stock related
14
<PAGE>
awards were granted to employees in fiscal 1996), the Company also needs the
flexibility of having additional shares reserved under the Performance Plan
primarily to be used in connection with the negotiation by the Company of future
acquisitions. Such additional shares are expected to be granted to key and other
employees of companies which the Company may acquire as the Company continues
its current expansion strategy. Therefore, the Board believes that this proposal
is in the best interests of the Company and its stockholders.
In order to ensure that all compensation paid to its executives is tax
deductible under Section 162(m) of the Code, stockholder approval is being
sought for the entire Performance Plan as amended by Amendment No. 2. The
following summary of the Performance Plan, as amended by proposed Amendment No.
1 and proposed Amendment No. 2, does not purport to be complete and is subject
to and qualified in its entirety by reference to the text of the Performance
Plan annexed hereto as Exhibit A.
SUMMARY OF THE PLAN
The Performance Plan authorizes the granting of incentive awards for up to
5,950,000 shares of Common Stock, subject to adjustment as described below.
Commencing on the date (the "Reset Date") that the number of shares
available for grant shall equal zero, the number of shares of Common Stock
reserved for issuance shall be increased to an amount equal to 14.9% of the
total number of shares of Common Stock outstanding on the Reset Date minus the
number of shares subject to outstanding awards on such date. On each anniversary
of the Reset Date during the term of the Performance Plan, the number of shares
reserved for issuance shall be increased so that the number of shares available
for grant thereunder plus the number of shares subject to outstanding awards
shall be equal to 14.9% of the total number of shares of Common Stock
outstanding on such date. Incentive awards consist of stock options, restricted
stock awards, deferred stock awards, stock appreciation rights and other stock
based awards as described below. In order to ensure that all compensation paid
to its executives is tax deductible under Section 162(m) of the Code, the
maximum number of shares of common stock with respect to which awards may be
granted during any calendar year to any employee shall be 250,000.
Notwithstanding such permitted amount, the Committee does not anticipate
granting to any individual in any year awards in amounts significantly higher
than prior practice. The shares available for incentive awards will be made
available from either authorized and unissued shares or shares to be purchased
or acquired by the Company. Unless sooner terminated, the Performance Plan will
expire at the close of business on August 28, 2000. Officers, key employees and
prospective employees of the Company and its subsidiaries will be eligible to
receive incentive awards ("Eligible Persons").
The Performance Plan is administered by the Compensation and Stock Option
Committee (the "Committee"), which determines the persons to whom awards will be
granted, the number of awards to be granted and the specific terms of each
grant, subject to the provisions of the Performance Plan.
TYPES OF INCENTIVE AWARDS
INCENTIVE AND NONQUALIFIED OPTIONS. The Performance Plan provides both for
"incentive stock options" as defined in Section 422 of the Code ("Incentive
Options") and for options not qualifying as Incentive Options ("Nonqualified
Options"), both of which may be granted with other stock-based awards available
under the Performance Plan. The Committee shall determine the Eligible Persons
to whom such Options may be granted.
Pursuant to the Performance Plan, the Committee shall determine the
exercise price for each share issued in connection with an Incentive Option or a
Nonqualified Option (collectively referred to as "Options"), but the exercise
price of an Incentive Option shall in all cases not be less than 100% of the
fair market value of Common Stock on the date the Option is granted (or in the
case of an Incentive Option granted to an Eligible Person owning more than 10%
of the outstanding Common Stock, not less than 110% of such fair market value).
The exercise price must be paid in full at the time of exercise, either in cash,
or subject to any limitations as the Committee may impose, in securities of the
Company.
15
<PAGE>
The Committee shall determine when Options may be exercised, which in no
event shall be more than ten years from the date of grant (or in the case of an
Incentive Option granted to an Eligible Person owning more than 10% of the
outstanding Common Stock, not more than five years), and the manner in which
each Option will become exercisable. Other than as set forth herein, the rules
relating to the terms of Options apply to both Incentive Options and
Nonqualified Options. Options may not be transferred by the grantee other than
by will, the laws of descent and distribution or pursuant to the express terms
of the applicable agreement governing such Options.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights ("SARs") in conjunction with all or part of Options granted under
the Performance Plan. A SAR entitles the holder to surrender to the Company all
or a portion of an Option in exchange for an amount (payable in cash and/or
Common Stock as determined by the Committee) equal to the excess of the Fair
Market Value (as defined in the Performance Plan) of one share of Common Stock
over the exercise price per share specified in a related Option granted to the
holder multiplied by the number of shares subject to the SAR.
RESTRICTED STOCK AWARDS. The Committee may award shares of restricted stock
("Restricted Stock"). Shares of Restricted Stock may be issued either alone or
in addition to other awards granted under the Performance Plan. The Committee
shall determine the Eligible Persons to whom and the time or times at which,
grants of Restricted Stock will be made, the number of shares to be awarded, the
price (if any) to be paid by the recipient, the time or times within which such
awards may be subject to forfeiture (the "Restriction Period"), the vesting
schedule and rights to acceleration thereof, and all other terms and conditions
of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors or criteria as
the Committee may determine.
Restricted Stock awarded under the Performance Plan may not be sold,
exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
other than to the Company during the applicable Restriction Period. Except for
the foregoing restrictions, the grantee shall, even during the Restriction
Period, have all of the rights of a stockholder, including the right to receive
all dividends declared on, and the right to vote, such shares.
In order to enforce the foregoing restrictions, the Performance Plan
requires that all shares of Restricted Stock awarded to the grantee remain in
the physical custody of the Company until the restrictions on such shares have
terminated.
DEFERRED STOCK AWARDS. The Committee may award shares of deferred stock
("Deferred Stock"). Shares of Deferred Stock may be awarded either alone
or in addition to other awards granted under the Performance Plan. The Committee
shall determine the Eligible Persons to whom and the time or times at which
Deferred Stock shall be awarded, the number of shares of Deferred Stock to be
awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the stock will be
deferred, and all the other terms and conditions of the awards.
The Committee may condition the grant of Deferred Stock upon the attainment
of specified performance goals or such other facts or criteria as the Committee
may determine.
Deferred Stock awards granted under the Performance Plan may not be sold,
exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
other than to the Company during the applicable Deferral Period. The grantee, as
determined by the Committee, may be paid dividends declared currently or
deferred and deemed to be reinvested in additional Deferred Stock. The grantee
may request to defer the receipt of an award for an additional specified period.
The Committee may accelerate vesting of all or any part of the Deferred Stock
award and/or may waive the deferral limitations for all or any part of a
Deferred Stock award.
If a grantee of an award ceases to be an employee of the Company prior to
the expiration of the Deferral Period applicable to all or any part of the
shares awarded to such grantee, then, all shares of
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stock theretofore awarded to the grantee which are still subject to such
Deferral Period shall, upon such termination of employment, vest or be forfeited
in accordance with the terms and conditions established by the Committee at the
time of grant.
OTHER STOCK-BASED AWARDS. The Committee may grant performance shares and
shares of stock valued with reference to the performance of the Company or any
subsidiary, either alone or in addition to or in tandem with Stock Options,
Restricted Stock or Deferred Stock (collectively "Stock-Based Awards").
Subject to the terms of the Performance Plan, the Committee has complete
discretion to determine the terms and conditions applicable to Stock-Based
Awards. Such terms and conditions may require, among other things, continued
employment and/or the attainment of specified performance objectives.
OTHER TERMS AND CONDITIONS
AGREEMENTS; TRANSFERABILITY. Options, Restricted Stock, Deferred Stock,
Stock-Based Awards and SARs granted under the Performance Plan will be evidenced
by agreements consistent with the Performance Plan in such form as the Committee
may prescribe. Neither the Performance Plan nor agreements thereunder confer any
right to continued employment upon any holder of an Option, Restricted Stock,
Deferred Stock, Stock-Based Award or SAR. Further, all agreements will provide
that the right to exercise Options or receive Restricted Stock after the
expiration of the "Restriction Period" or Deferred Stock after the expiration of
the Deferral Period or to receive payment under Stock-Based Awards or right to
exercise an SAR, cannot be transferred except by will, the laws of descent and
distribution or pursuant to the express provisions of the applicable agreement.
CHANGE OF CONTROL PROVISIONS. In the event of a "Change of Control" (as
described in the Performance Plan) of the Company, the Committee may at its
discretion do any or all of the following, either at the time an award is made,
or at any time prior to or concurrently with such Change of Control: (i) allow
the exercise in full of all outstanding Options and allow such Options to remain
exercisable in full until their expiration date, and (ii) allow for the lapse of
all restrictions and deferral limitations on Restricted Stock awards, Deferred
Stock awards, Stock-Based awards and SARs. The Committee may further change or
limit such awards in any way it deems appropriate and in the Company's best
interest.
AMENDMENTS AND TERMINATION. The Board may at any time, and from time to
time, amend any of the provisions of the Performance Plan, and may at any time
suspend or terminate the Performance Plan. However, no amendment shall be
effective unless and until it has been duly approved by a majority of the
holders of the outstanding shares of Common Stock if (i) it increases the
aggregate number of shares of Common Stock which may be issued pursuant to the
Performance Plan (except as described under the caption "Adjustment" below), or
(ii) the failure to obtain such approval would adversely affect the compliance
of the Performance Plan with the requirements of any other applicable law, rule
or regulation. The Committee may amend the terms of any Option or other award
theretofore granted under the Performance Plan. However, subject to the
adjustments described below, no such amendment may be made by the Committee
which in any material respect impairs the rights of the participant without the
participant's consent.
1997 EXECUTIVE INCENTIVE PLAN. Pursuant to the terms of the Performance
Plan, the Committee may award Options, Stock and/or Deferred Stock to
participants in the 1997 Executive Incentive Plan, adopted by the Company's
Board of Directors, effective January 24, 1997. (See "Executive
Compensation-Elements of the Executive Compensation Plan"). Any Options,
Stock or Deferred Stock awarded to participants in the Incentive Plan or
Executive Stock Ownership Plan shall be in conformity, and subject to, the
provisions of the Performance Plan.
ADJUSTMENT. In the event of any merger, reorganization, consolidation,
recapitalization, dividend (other than a dividend or its equivalent which is
credited to a Performance Plan participant or a regular cash dividend), Common
Stock split, or other change in corporate structure affecting the Common
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Stock, such substitution or adjustment shall be made in the aggregate number of
shares reserved for issuance under the Performance Plan, in the maximum number
of shares with respect to which awards may be granted to any employee in any
year, in the number and option price of shares subject to outstanding Options
granted under the Performance Plan, and in the number of shares subject to other
outstanding awards (including but not limited to awards of Restricted Stock and
Deferred Stock and Stock-Based Awards) granted under the Performance Plan as may
be determined to be appropriate by the Committee in order to prevent dilution or
enlargement of rights.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PERFORMANCE PLAN
The following is a brief summary of the Federal income tax aspects of
awards to be made under the Performance Plan based upon the Code and other
statutes, regulations and interpretations in effect on the date hereof. This
summary is not intended to be exhaustive, and does not describe state or local
tax consequences.
1. INCENTIVE OPTIONS. The participant will recognize no taxable income upon
the grant or exercise of an Incentive Option. Upon a disposition of the shares
after the later of two years from the date of grant and one year after the
transfer of the shares to the participant, (i) the participant will recognize
the difference, if any, between the amount realized and the exercise price as
long-term capital gain or long-term capital loss (as the case may be) if the
shares are capital assets; and (ii) the Company will not qualify for any
deduction in connection with the grant or exercise of the options. The excess,
if any, of the fair market value of the shares on the date of exercise of an
Incentive Option over the exercise price will be treated as an item of
adjustment for a participant's taxable year in which the exercise occurs and
may result in an alternative minimum tax liability for the participant. In the
case of a disposition of shares in the same taxable year as the exercise, where
the amount realized on the disposition is less than the fair market value of the
shares on the date of exercise, there will be no adjustment since the amount
treated as an item of adjustment, for alternative minimum tax purposes, is
limited to the excess of the amount realized on such disposition over the
exercise price which is the same amount included in regular taxable income.
If Common Stock acquired upon the exercise of an Incentive Option is
disposed of prior to the expiration of the holding periods described above, (i)
the participant will recognize ordinary compensation income in the taxable year
of disposition in an amount equal to the excess, if any, of the lesser of the
fair market value of the shares on the date of exercise or the amount realized
on the disposition of the shares, over the exercise price paid for such shares;
and (ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the limitation that the compensation be reasonable and
other applicable limitations under the Code. The participant will recognize the
excess, if any, of the amount realized over the fair market value of the shares
on the date of exercise, if the shares are capital assets, as short-term or
long-term capital gain, depending on the length of time that the participant
held the shares, and the Company will not qualify for a deduction with respect
to such excess.
Subject to certain exceptions for death, if an Incentive Option is
exercised more than three months following the termination of the participant's
employment, the option will generally be taxed as a nonqualified stock option.
See "Nonqualified Options."
2. NONQUALIFIED OPTIONS. Except as noted below, with respect to
Nonqualified Options (i) upon grant of the option, the participant will
recognize no income; (ii) upon exercise of the option (if the shares of Common
Stock are not subject to a substantial risk of forfeiture), the participant will
recognize ordinary compensation income in an amount equal to the excess, if any,
of the fair market value of the shares on the date of exercise over the exercise
price, and the Company will qualify for a deduction in the same amount, subject
to the requirement that the compensation be reasonable and other applicable
limitations under the Code; (iii) the Company will be required to comply with
applicable Federal income tax withholding requirements with respect to the
amount of ordinary compensation income recognized by the participant; and (iv)
on a sale of the shares, the participant will
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recognize gain or loss equal to the difference, if any, between the amount
realized and the sum of the exercise price and the ordinary compensation income
recognized. Such gain or loss will be treated as capital gain or loss if the
shares are capital assets and as short-term or long-term capital gain or loss,
depending upon the length of time that the participant held the shares.
If the shares acquired upon exercise of a Nonqualified Option are subject
to a substantial risk of forfeiture, the participant's and the Company's
Federal income tax consequences of the exercise and disposition of the shares
will be determined under rules similar to those set forth below under the
caption "Restricted Stock."
3. STOCK APPRECIATION RIGHTS. A participant who receives a SAR will
recognize no income on the grant of such SAR but he or she will recognize
ordinary compensation income equal to the cash received and/or the fair market
value on the date of transfer of the Common Stock, and the Company will qualify
for a deduction of equal amount subject to the reasonableness of compensation
limitation and other applicable limitations under the Code.
4. RESTRICTED STOCK. A participant who receives Restricted Stock will
recognize ordinary compensation income in an amount equal to the excess, if any,
of the fair market value of the Restricted Stock at the time the Restricted
Stock is no longer subject to a substantial risk of forfeiture, over the
consideration paid for the Restricted Stock. However, a participant may elect,
under Section 83(b) of the Code, within 30 days of the transfer of the
Restricted Stock, to recognize ordinary compensation income on the date of
transfer in an amount equal to the excess, if any, of the fair market value on
the date of such transfer of the shares of Restricted Stock (determined without
regard to the restrictions) over the consideration paid for the Restricted
Stock. If the participant makes such election and thereafter forfeits the
shares, he or she will qualify for a deduction only in an amount equal to the
excess, if any, of the consideration paid for the shares over the amount
realized on such forfeiture. With respect to a sale of shares after the
forfeiture period has expired where the participant has not made an election
under Section 83(b), the holding period to determine whether the participant has
long-term or short-term capital gain or loss begins when the Restriction Period
expires, and the tax basis for such shares will generally be the fair market
value of such shares on such date. If the participant makes an election under
Section 83(b), the holding period will commence on the day after the date of
transfer and the tax basis will equal the fair market value of shares
(determined without regard to the restrictions) on the date of transfer. A
participant's shares are treated as being subject to a substantial risk of
forfeiture so long as his or her sale of the shares at a profit could subject
him or her to a suit under Section 16(b) of the Exchange Act.
Whether or not the participant makes an election under Section 83(b), the
Company generally will qualify for a deduction (subject to the reasonableness of
compensation limitation and other applicable limitations under the Code) equal
to the amount that is taxable as ordinary income to the participant, in its
taxable year in which or with which ends the taxable year of the participant in
which such income is included in the participant's gross income. The income
recognized by the participant will be subject to applicable withholding tax
requirements.
Dividends paid on Restricted Stock which is subject to a substantial risk
of forfeiture generally will be treated as compensation that is taxable as
ordinary compensation income to the participant and will be deductible by the
Company subject to the reasonableness limitation and other applicable
limitations under the Code. If, however, the participant makes a Section 83(b)
election, the dividends will be treated as dividends and taxable as ordinary
income to the participant, but will not be deductible by the Company.
5. DEFERRED STOCK. A participant who receives an award of Deferred Stock
will recognize no income on the grant of such award. However, he or she will
recognize ordinary compensation income on the transfer of the Deferred Stock (or
the later lapse of a substantial risk of forfeiture to which the Deferred Stock
is subject, if the participant does not make a Section 83(b) election), in
accordance with the same rules as discussed above under the caption
"Restricted Stock."
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6. OTHER STOCK-BASED AWARDS. The Federal income tax treatment of other
Stock-Based Awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award may, depending on the
nature of and conditions applicable to the award, be taxable as an Option or an
award of Restricted Stock.
Employees who will participate in the Performance Plan in the future and
the amounts and terms of their awards are determined by the Committee as
summarized above. Since no such determinations have yet been made, it is not
possible to state the terms of any awards which may be granted under the
Performance Plan or the names or positions of or respective amounts of awards to
any individuals who may participate.
The affirmative vote of a majority of the votes cast by the holders of
shares entitled to vote thereon who are present at the Meeting, in person or by
proxy, is required for approval of Amendment No. 2 to the Performance Plan.
The Board of Directors unanimously recommends a vote "FOR" the adoption of
Proposal III.
INDEPENDENT AUDITORS
Pursuant to a recommendation of the Audit Committee, the Board of Directors
has selected and retained the firm of Arthur Andersen LLP to act as independent
certified public accountants for the Company for the 1997 fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting, to have the opportunity to make a statement (if they so desire) and to
be available to respond to appropriate questions. Arthur Andersen LLP was
retained as the Company's independent certified public accountants beginning in
March 1991.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors has no
knowledge of any business which will be presented for consideration at the
Meeting, other than as described above. If any other matter or matters are
properly brought before the Meeting or any adjournment(s) thereof, it is the
intention of the persons named in the accompanying form of proxy to vote proxies
on such matters in accordance with their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal which is intended to be presented by any stockholder for
action at the 1998 Annual Meeting of Stockholders must be received in writing by
the Secretary of the Company at 7900 Glades Road, Boca Raton, Florida 33434, not
later than November 20, 1997 in order for such proposal to be considered for
inclusion in the Proxy Statement and form of Proxy relating to the 1998 Annual
Meeting of Stockholders.
By Order of the Board of Directors
RICHARD J. THOMPSON
SECRETARY
Dated: March 20, 1997
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EXHIBIT A
COMPUTER PRODUCTS, INC.
1990 PERFORMANCE EQUITY PLAN
(RESTATED AS OF MARCH 11, 1997)
SECTION 1. PURPOSE; DEFINITIONS.
1.1. PURPOSE. The purpose of the Computer Products, Inc. (the
"Company") 1990 Performance Equity Plan (the "Plan") is to enable
the Company to offer to its key employees and to key employees of its
subsidiaries, long term performance-based stock and/or other equity interests in
the Company, thereby enhancing its ability to attract, retain and reward such
key employees, and to increase the mutuality of interests between those
employees and the stockholders of the Company. The various types of long-term
incentive awards which may be provided under the Plan will enable the Company to
respond to changes in compensation practices, tax laws, accounting regulations
and the size and diversity of its businesses.
1.2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth herein:
(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means a change of control of the Company
pursuant to Section 10 hereof.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute or statutes thereto.
(e) "Committee" means the Stock Option Committee of the Board or
any other committee of the Board which the Board may designate.
(f) "Common Stock" means the Common Stock of the Company, par
value $.01 per share.
(g) "Company" means Computer Products, Inc., a corporation
organized under the laws of the State of Florida, and any successor thereto.
(h) "Deferred Stock" means Stock to be received, under an award
made pursuant to Section 8 hereof, at the end of a specified deferral period.
(i) "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto.
(k) "Exchange Act Holder" means such officer or director or 10%
beneficial owner of Common Stock subject to Section 16(b) of the Exchange Act.
(l) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock (as hereinafter
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defined) is listed on a national securities exchange or quoted on the NASDAQ
National Market System, the closing price of the Common Stock on the last
preceding day on which the Common Stock was traded, as reported on the composite
tape or by NASDAQ/NMS System Statistics, as the case may be; (ii) if the Common
Stock is not listed on a national securities exchange or quoted on the NASDAQ
National Market System, but is traded in the over-the-counter market, the
average of the bid and asked prices for the Common Stock on the last preceding
day for which such quotations are reported by NASDAQ; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) hereof, such price as the Committee shall determine.
(m) "Formula Price Per Share" means the highest gross price
(before brokerage commissions, soliciting dealers' fees and similar charges)
paid for any share of Common Stock at any time during the ninety-day period
immediately prior to the Change of Control (whether by way of exchange,
conversion, distribution, liquidation or otherwise) paid or to be paid for any
share of Common Stock in connection with a Change of Control. If the
consideration paid or to be paid in any transaction that results in a Change of
Control consists, in whole or in part, of consideration other than cash, the
Board shall take such action, as in its judgment it deems appropriate, to
establish the cash value of such consideration, but such valuation shall not be
less than the value, if any, attributed to such consideration by any other party
to such transaction that results in a Change of Control.
(n) "Holder" means an eligible employee or prospective employee of
the Company or a Subsidiary who has received an award under the Plan.
(o) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(p) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(q) "Other Stock-Based Award" means an award under Section 9
hereof that is valued in whole or in part by reference to, or is otherwise based
upon, Common Stock.
(r) "Plan" means this Computer Products, Inc. 1990 Performance
Equity Plan, as hereinafter amended from time to time.
(s) "Restricted Stock" means Common Stock, received under an award
made pursuant to Section 7 hereof, that is subject to restrictions under said
Section 7.
(t) "SAR Value" means the excess of the Fair Market Value of one
share of Common Stock over the exercise price per share specified in a related
Stock Option in the case of a Stock Appreciation Right granted in tandem with a
Stock Option and the Stock Appreciation Right price per share in the case of a
Stock Appreciation Right awarded on a free standing basis multiplied by the
number of shares in respect of which the Stock Appreciation Right shall be
exercised, on the date of exercise.
(u) "Stock Appreciation Right" means the right, pursuant to an
award granted under Section 6 hereof, to recover an amount equal to the SAR
Value.
(v) "Stock Option" or "Option" means any Non-Qualified Stock
Option or Incentive Stock Option to purchase shares of Stock which is awarded
pursuant to the Plan.
(w) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.
SECTION 2. ADMINISTRATION.
2.1. COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Committee, the membership of which shall be at all times constituted so as to
not adversely affect the compliance of awards under
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the Plan with the requirements of Rule 16b-3 under the Exchange Act or with the
requirements of any other applicable law, rule or regulation.
2.2. POWERS OF COMMITTEE. The Committee shall have full authority to
award, pursuant to the terms of the Plan, to eligible employees and prospective
employees described under Section 4 hereof: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock, and/or (v)
Other Stock-Based Awards. For purposes of illustration and not of limitation,
the Committee shall have the authority (subject to the express provisions of
this Plan):
(a) to select the eligible employees and prospective employees to whom
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock
and/or Other Stock-Based Awards may from time to time be awarded hereunder;
(b) to determine the Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock and/or
Other Stock-Based Awards, or any combination thereof, if any, to be awarded
hereunder to one or more eligible employees;
(c) to determine the number of shares to be covered by each award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award hereunder (including, but not limited to, share
price, any restrictions or limitations, and any vesting, exchange, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine);
(e) to determine any specified performance goals or such other factors
or criteria which need to be attained for the vesting of an award granted
hereunder;
(f) to determine the terms and conditions under which awards hereunder
are to operate on a tandem basis and/or in conjunction with or apart from other
equity awarded under this Plan and cash awards made by the Company or any
Subsidiary outside of this Plan;
(g) to determine the extent and circumstances under which Common Stock
and other amounts payable with respect to an award hereunder shall be deferred,
which may be either automatic or at the election of the Holder; and
(h) to substitute (A) new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms, and (B) new awards of any
other type for previously granted awards of the same or other type, which
previously granted awards are upon less favorable terms.
2.3. INTERPRETATION OF PLAN. Subject to Section 11 hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable, to interpret the terms and provisions of the Plan and any award
issued under the Plan (and to determine the form and substance of all Agreements
relating thereto), and to otherwise supervise the administration of the Plan.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options or any Agreement providing for Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the Holder(s)
affected, to disqualify any Incentive Stock Option under such Section 422.
Subject to Section 11 hereof, all decisions made by the Committee pursuant
to the provisions of the Plan shall be made in the Committee's sole discretion
and shall be final and binding upon all persons, including the Company, its
Subsidiaries and the Holders.
SECTION 3. COMMON STOCK SUBJECT TO PLAN.
3.1. NUMBER OF SHARES. The total number of shares of Common Stock reserved
and available for distribution under the Plan shall be 5,950,000 shares. The
number of shares reserved for issuance
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pursuant to awards granted under the Plan shall be increased each year,
commencing on the date after March 11, 1997, that the number of shares available
for grant under the Plan shall have been fully granted and be no longer
available (the "Reset Date"). On the Reset Date, the number of shares
reserved for issuance under the Plan shall be increased to an amount equal to
14.9% of the total number of shares of Common Stock outstanding on such date
minus the number of shares subject to outstanding awards on such date. On each
anniversary of the Reset Date during the term of the Plan, the number of shares
reserved for issuance under the Performance Plan shall be increased so that the
number of shares available for grant thereunder plus the number of shares
subject to outstanding awards shall be equal to 14.9% of the total number of
shares of Common Stock outstanding on such date. If any shares of Common Stock
that are subject to a Stock Option or Stock Appreciation Right cease to be
subject to such Option or Stock Appreciation Right, or if any shares that are
subject to a Restricted Stock or Deferred Stock award or Other Stock-Based Award
granted hereunder are forfeited or any such award otherwise terminates without a
payment being made to the Holder in the form of Common Stock, such shares shall
again be available for distribution in connection with future grants and awards
under the Plan. The number of shares of Common Stock deemed to be issued under
the Plan upon the exercise of an Option or Other Stock-Based Award in the nature
of a stock purchase right shall be reduced by the number of shares of Common
Stock surrendered by the Holder in payment of the exercise or purchase price of
the award and withholding taxes thereon. The maximum number of shares of common
stock with respect to which awards may be granted during any calendar year to
any employee shall be 250,000 shares.
3.2. CHARACTER OF SHARES. Shares of Common Stock under the Plan may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
3.3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of any
merger, reorganization, consolidation, recapitalization, dividend (other than a
dividend or its equivalent which is credited to a Holder or a regular cash
dividend), stock split, reverse stock split, or other change in corporate
structure affecting the Common Stock, such substitution or adjustment shall be
made in the aggregate number of shares reserved for issuance under the Plan, in
the maximum number of shares with respect to which awards may be granted to any
employee in any year, in the number and exercise price of shares subject to
outstanding Options, in the number of shares and Stock Appreciation Right price
relating to Stock Appreciation Rights, and in the number of shares subject to,
and related terms of, other outstanding awards (including but not limited to
awards of Restricted Stock, Deferred Stock and Other Stock-Based Awards) as may
be determined to be appropriate by the Committee in order to prevent dilution or
enlargement of each Holder's rights, provided that the number of shares subject
to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
4.1. GENERAL. Awards under the Plan may be made to (i) officers and other
key employees of the Company or any Subsidiary (including officers and key
employees serving as directors of the Company) who are at the time of the grant
of an award under this Plan regularly employed by the Company or any Subsidiary;
and (ii) prospective employees of the Company or its Subsidiaries. The exercise
of any Stock Option and the vesting of any award hereunder granted to a
prospective employee shall be conditioned upon such person becoming an employee
of the Company or a Subsidiary. The term "prospective employee" shall mean
any person who holds an outstanding offer of regular employment on specific
terms from the Company or a Subsidiary.
4.2. Intentionally Omitted.
SECTION 5. STOCK OPTIONS.
5.1. GRANT AND EXERCISE. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, as the Committee may from time to time approve.
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The Committee shall have the authority to grant to any Holder hereof Incentive
Stock Options, Non- Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights) which options may be
granted alone, in tandem with or in addition to other awards under the Plan. To
the extent that any Stock Option (or portion thereof) does not qualify as an
Incentive Stock Option, it shall constitute a separate Non-Qualified Stock
Option. Unless granted in substitution for another outstanding award, Options
shall be granted for no consideration other than services.
5.2. TERMS AND CONDITIONS. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant but shall be not less than 100% of the Fair Market Value of the
Common Stock at the time of grant (110%, in the case of an Incentive Stock
Option granted to a Holder ("10% Stockholder") who, at the time of grant,
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its parent (if any) or subsidiary
corporations, as those terms are defined in Sections 424(e) and (f) of the
Code).
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years (five
years, in the case of an Incentive Stock Option granted to a 10% Stockholder)
after the date on which the Option is granted.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee. If the Committee provides, in its discretion, that any Stock Option
is exercisable only in installments, the Committee may waive such installment
exercise provisions at any time at or after the time of grant in whole or in
part, based upon such factors as the Committee shall determine.
(d) METHOD OF EXERCISE. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock Options may
be exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, which shall be in cash or, unless otherwise provided
in the Agreement, in whole shares of Common Stock which are already owned by the
Holder of the Stock Option or, unless otherwise provided in the Stock Option
Agreement, partly in cash and partly in such Common Stock. Cash payments shall
be made by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; provided, however, that the Company
shall not be required to deliver certificates for shares of Common Stock with
respect to which a Stock Option is exercised until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
Payments in the form of Common Stock (which shall be valued at the Fair Market
Value of a share of Common Stock on the date of exercise) shall be made by
delivery of stock certificates in negotiable form which are effective to
transfer good and valid title thereto to the Company, free of any liens or
encumbrances. Subject to the terms of the Agreement, the Committee may, in its
sole discretion, at the request of the Holder, deliver upon the exercise of a
Non-Qualified Stock Option a combination of shares of Deferred Stock and Common
Stock; provided that, notwithstanding the provisions of Section 8 of the Plan,
such Deferred Stock shall be fully vested and not subject to forfeiture. Except
as otherwise expressly provided in this Plan or in the Agreement, no Stock
Option may be exercised at any time unless the Holder thereof is then an
employee of the Company or of a Subsidiary. The Holder of a Stock Option shall
have none of the rights of a stockholder with respect to the shares subject to
the Stock Option until such shares shall be transferred to the Holder upon the
exercise of the Stock Option.
(e) BUYOUT AND SETTLEMENT PROVISIONS. The Committee may at any time
offer to buy out for cash or otherwise settle a Stock Option previously granted,
based upon such terms and conditions as the Committee shall establish and
communicate to the Holder at the time that such offer is made, including a
settlement by exchange of a different award under the Plan for the surrender of
the Option.
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SECTION 6. STOCK APPRECIATION RIGHTS.
6.1. GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
tandem with ("Tandem Stock Appreciation Right") or in conjunction with all
or part of any Stock Option granted under the Plan or may be granted on a
free-standing basis. In the case of a Non-Qualified Stock Option, a Tandem Stock
Appreciation Right may be granted either at or after the time of the grant of
such Non-Qualified Stock Option. In the case of an Incentive Stock Option, a
Tandem Stock Appreciation Right may be granted only at the time of the grant of
such Incentive Stock Option. Unless granted in substitution for another
outstanding award, Stock Appreciation Rights shall be granted for no
consideration other than services.
A Tandem Stock Appreciation Right shall terminate and shall no longer be
exercisable upon the termination or exercise of the related Stock Option, except
that, unless otherwise determined by the Committee, a Tandem Stock Appreciation
Right granted with respect to less than the full number of shares covered by a
related Stock Option shall not be reduced until after the number of shares
remaining under the related Stock Option equals the number of shares covered by
the Tandem Stock Appreciation Right.
A Tandem Stock Appreciation Right may be exercised by a Holder, in
accordance with Section 6.2 hereof, by surrendering the applicable portion of
the related Stock Option. Upon such exercise and surrender, the Holder shall be
entitled to receive such amount in the form of payment determined in the manner
prescribed in Section 6.2 hereof. Stock Options which have been so surrendered,
in whole or in part, shall no longer be exercisable to the extent Tandem Stock
Appreciation Rights have been exercised.
6.2. TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
the following terms and conditions:
(a) EXERCISABILITY. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock Options
to which they relate shall be exercisable in accordance with the provisions of
Section 5 hereof and this Section 6, and may be subject to such additional
limitations on exercisability as shall be determined by the Committee and set
forth in the Agreement. Other Stock Appreciation Rights shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee and set forth in the Agreement.
(b) RECEIPT OF SAR VALUE. Upon the exercise of a Stock Appreciation
Right, a Holder shall be entitled to receive up to, but not more than, an amount
in cash and/or shares of Common Stock equal to the SAR Value with the Committee
having the right to determine the form of payment.
(c) SHARES AFFECTED UNDER PLAN. Upon the exercise of a Tandem Stock
Appreciation Right, the Stock Option or part thereof to which such Tandem Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitations set forth in Section 3 hereof on the number of shares
of Common Stock to be issued under the Plan, but only to the extent of the
number of shares, if any, issued under the Tandem Stock Appreciation Right at
the time of exercise based upon the SAR Value.
(d) LIMITED STOCK APPRECIATION RIGHTS. The Committee may grant
"Limited Stock Appreciation Rights" i.e., Stock Appreciation Rights that
become exercisable upon the occurrence of one or more of the events which
trigger a Change of Control as defined in Section 10 hereof, and shall be
settled in an amount equal to the Formula Price Per Share, subject to such other
terms and conditions as the Committee may specify.
SECTION 7. RESTRICTED STOCK.
7.1. GRANT. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the
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time or times at which, grants of Restricted Stock will be awarded, the number
of shares to be awarded, the time or times within which such awards may be
subject to forfeiture (the "Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
awards. Unless granted in substitution for another outstanding award, Restricted
Stock shall be granted for no consideration other than services.
7.2. TERMS AND CONDITIONS. Each Restricted Stock award shall be subject to
the following terms and conditions:
(a) CERTIFICATES. Restricted Stock, when issued, will be represented by
a stock certificate or certificates registered in the name of the Holder to whom
such Restricted Stock shall have been awarded. During the Restriction Period,
certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as hereinafter defined) shall bear a restrictive legend
to the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.
(b) RIGHTS OF HOLDER. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Holder will
have the right to vote such Restricted Stock, to receive and retain all regular
cash dividends and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a Holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (A) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (B) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (C) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions
("Retained Distributions") made or declared with respect to the Restricted
Stock (and such Retained Distributions will be subject to the same restrictions,
terms and conditions as are applicable to the Restricted Stock) until such time,
if ever, as the Restricted Stock with respect to which such Retained
Distributions shall have been made, paid or declared shall have become vested
and with respect to which the Restriction Period shall have expired; and (D) a
breach by the Holder of any of the restrictions, terms or conditions contained
in this Plan or the Agreement or otherwise established by the Committee with
respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with respect
thereto.
(c) VESTING; FORFEITURE. Upon the expiration of the Restriction Period
with respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (A) such Restricted Stock shall
become vested in accordance with the terms of the Agreement, and (B) any
Retained Distributions with respect to such Restricted Stock shall become vested
to the extent that the Restricted Stock related thereto shall have become
vested. Any such Restricted Stock and Retained Distributions that do not vest
shall be forfeited to the Company and the Holder shall not thereafter have any
rights with respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.
SECTION 8. DEFERRED STOCK.
8.1. GRANT. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of Deferred
Stock shall be awarded, the number of shares of Deferred Stock to
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be awarded, the duration of the period (the "Deferral Period") during
which, and the conditions under which, receipt of the shares will be deferred,
and all the other terms and conditions of the awards. Unless granted in
substitution for an outstanding award or upon exercise of an Option, Deferred
Stock shall be issued for no consideration other than services.
8.2. TERMS AND CONDITIONS. Each Deferred Stock award shall be subject to
the following terms and conditions:
(a) CERTIFICATES. At the expiration of the Deferral Period (or the
additional Deferral Period referred to in Section 8.2(d) hereof ("Additional
Deferral Period", where applicable), share certificates shall be delivered to
the Holder, or his legal representative, representing the number of the shares
equal to the number covered by the Deferred Stock award.
(b) DIVIDENDS. As determined by the Committee, amounts equal to any
dividends declared during the Deferral Period (or the Additional Deferral
Period, where applicable) with respect to the number of shares covered by a
Deferred Stock award may be paid to the Holder currently or deferred and deemed
to be reinvested in additional Deferred Stock.
(c) VESTING; FORFEITURE. Upon the expiration of the Deferral Period (or
the Additional Deferral Period, where applicable) with respect to each award of
Deferred Stock and the satisfaction of any other applicable limitations, terms
or conditions, such Deferred Stock shall become vested in accordance with the
terms of the Agreement. Any Deferred Stock that does not vest shall be forfeited
to the Company and the Holder shall not thereafter have any rights with respect
to such Deferred Stock that has been so forfeited.
(d) ADDITIONAL DEFERRAL PERIOD. A Holder may request to, and the
Committee may in its sole discretion at any time, defer the receipt of an award
(or an installment of an award) for an additional specified period or until a
specified event (the "Additional Deferral Period"). Subject to any
exceptions adopted by the Committee, such request must generally be made at
least one year prior to expiration of the Deferral Period for such Deferred
Stock award (or such installment).
SECTION 9. OTHER STOCK-BASED AWARDS.
9.1. GRANT AND EXERCISE. Other Stock-Based Awards may be awarded, subject
to limitations under applicable law, that are denominated or payable in, valued
in whole or in part by reference to, or otherwise based on, or related to,
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, purchase rights, shares of
Common Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or
the performance of specified Subsidiaries. Other Stock- Based Awards may be
awarded either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company.
The Committee shall determine the eligible persons to whom and the time or
times at which grants of such awards shall be made, the number of shares of
Common Stock to be awarded pursuant to such awards, and all other terms and
conditions of the awards. Notwithstanding the foregoing, except to the extent
that an Other Stock-Based Award is granted in substitution for another
outstanding award or is delivered upon exercise of an Option, the amount of
consideration to be required to be received by the Company shall be either no
consideration (other than services) or, in the case of an Other Stock-Based
Award in the nature of a purchase right, an amount equal to or greater than 50%
of the Fair Market Value of the shares to which the award relates on the date of
grant of such award.
9.2. TERMS AND CONDITIONS. Each Other Stock-Based Award shall be subject
to the following terms and conditions:
(a) DIVIDENDS. The Holder of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of shares
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covered by the award, as determined by the Committee. The Committee may provide
that such amounts (if any) shall be deemed to have been reinvested in additional
Common Stock.
(b) VESTING; FORFEITURE. Any Other Stock-Based Award and any Common
Stock covered by an Other Stock-Based Award shall vest or be forfeited to the
extent so provided in the Agreement.
SECTION 10. ACCELERATION.
10.1. ACCELERATION UPON CHANGE OF CONTROL. Unless the award Agreement
provides otherwise or unless the Holder waives the application of this Section
10.1 prior to a Change of Control (as hereinafter defined), in the event of a
Change of Control:
(a) Each outstanding Stock Option, Stock Appreciation Right and Limited
Stock Appreciation Right granted under the Plan shall immediately become
exercisable in full notwithstanding the vesting or exercise provisions contained
in the Agreement; and
(b) All restrictions and deferral limitations related to awards of
Restricted Stock, Deferred Stock and Other Stock-Based Awards, shall be deemed
to have expired and all such awards and any related Retained Distributions shall
become vested.
10.2. CHANGE OF CONTROL DEFINED. A "Change of Control" shall be
deemed to have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) any
merger, reverse stock split, recapitalization or other business combination of
the Company, with or into another corporation, or an acquisition of securities
or assets by the Company, pursuant to which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property, other than a transaction in
which the majority of the holders of Common Stock immediately prior to such
transaction will own at least 50% of the total voting power of the
then-outstanding securities of the surviving corporation immediately after such
transaction, or (ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (iii) the liquidation or dissolution of the
Company; or
(b) A transaction in which any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other
than the Company, or any profit- sharing, employee ownership or other employee
benefit plan sponsored by the Company or any Subsidiary, or any trustee of or
fiduciary with respect to any such plan when acting in such capacity, or any
group comprised solely of such entities): (i) shall purchase any Common Stock
(or securities convertible into Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior
consent of the Board, or (ii) shall become the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly (in one
transaction or a series of transactions), of securities of the Company
representing 50% or more of the total voting power of the then-outstanding
securities of the Company ordinarily (and apart from the rights accruing under
special circumstances) having the right to vote in the election of directors
(calculated as provided in Rule 13d-3(d) in the case of rights to acquire the
Company's securities); or
(c) If, during any period of two consecutive years, individuals who at
the beginning of such period constituted the entire Board and any new director
whose election by the Board, or nomination for election by the Company's
stockholders was approved by a vote of at least two thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election by the stockholders was previously so
approved, cease for any reason to constitute a majority thereof.
10.3. GENERAL WAIVER BY COMMITTEE. The Committee may, after grant of an
award, accelerate the vesting of all or any part of any Stock Option, Deferred
Stock, Restricted Stock or any Other Stock- Based Award and/or waive any
limitations or restrictions, if any, for all or any part of an award.
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10.4. ACCELERATION UPON TERMINATION OF EMPLOYMENT. In the case of a Holder
whose employment with the Company or a Subsidiary is involuntarily terminated
for any reason (other than for cause), the Committee may accelerate the vesting
of all or any part of any award and/or waive in whole or in part any or all of
the remaining deferral limitations or restrictions imposed hereunder or pursuant
to the Agreement.
SECTION 11. AMENDMENTS AND TERMINATION.
11.1. AMENDMENTS TO PLAN. The Board may at any time, and from time to
time, amend any of the provisions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such amendment shall be effective
unless and until it has been duly approved by the stockholders of the
outstanding shares of Common Stock if (a) it increases the aggregate number of
shares of Common Stock which are available pursuant to the Plan, (except as
provided in Section 3 hereof) or (b) the failure to obtain such approval would
adversely affect the compliance of the Plan with the requirements of any
applicable law, rule or regulation.
11.2. AMENDMENTS TO INDIVIDUAL AWARDS. The Committee may amend the terms
of any award granted under the Plan; provided, however, that subject to Section
3 hereof, no such amendment may be made by the Committee which in any material
respect impairs the rights of the Holder without the Holder's consent.
SECTION 12. TERM OF PLAN.
12.1. EFFECTIVE DATE. The Plan shall be effective as of August 29, 1990
("Effective Date").
12.2. TERMINATION DATE. No award shall be granted pursuant to the Plan on
or after the tenth anniversary of the Effective Date, but awards granted prior
to such tenth anniversary may extend beyond that date. The Plan shall terminate
at such time as no further awards may be granted and all awards granted under
the Plan are no longer outstanding.
SECTION 13. GENERAL PROVISIONS.
13.1. INVESTMENT REPRESENTATIONS. The Committee may require each person
acquiring shares of Common Stock pursuant to an award under the Plan to
represent to and agree with the Company in writing that the Holder is acquiring
the shares for investment without a view to distribution thereof.
13.2. ADDITIONAL INCENTIVE ARRANGEMENTS. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
13.3. NO RIGHT OF EMPLOYMENT. Nothing contained in the Plan or in any
award hereunder shall be deemed to confer upon any employee of the Company or
any Subsidiary any right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of any of its employees at any time.
13.4. WITHHOLDING TAXES. Not later than the date as of which an amount
first becomes includible in the gross income of the Holder for Federal income
tax purposes with respect to any award under the Plan, the Holder shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. If permitted by the Committee, tax
withholding or payment obligations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
upon such payment or arrangements and the Company or the Holder's employer (if
not the Company) shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Holder from the
Company or any Subsidiary.
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13.5. GOVERNING LAW. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Florida (without regard to choice of law provisions).
13.6. OTHER BENEFIT PLANS. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
13.7. EMPLOYEE STATUS. A leave of absence, unless otherwise determined by
the Committee prior to the commencement thereof, shall not be considered a
termination of employment. Any awards granted under the Plan shall not be
affected by any change of employment, so long as the Holder continues to be an
employee of the Company or any Subsidiary.
13.8. NON-TRANSFERABILITY. Other than the transfer of a Stock Option,
Stock Appreciation Right or other award by will, by the laws of descent and
distribution, or pursuant to the express provisions of the applicable Agreement,
no award under the Plan may be alienated, sold, assigned, hypothecated, pledged,
exchanged, transferred, encumbered or charged, and any attempt to alienate,
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person
entitled to such benefit. Except as expressly provided in any applicable
Agreement, any Stock Option, Stock Appreciation Right or other award granted
under this Plan shall be only exercisable during the lifetime of the Holder by
the Holder or by his guardian or legal representative.
13.9. APPLICABLE LAWS. The obligations of the Company with respect to all
awards under the Plan shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration statement
under the Securities Act of 1933, as amended, and (ii) the rules and regulations
of any securities exchange on which the Common Stock may be listed or the NASDAQ
National Market System if the Common Stock is designated for quotation thereon.
13.10. CONFLICTS. If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3 under the Exchange Act, or with the
requirements of any other applicable law, rule or regulation, and/or with
respect to Incentive Stock Options, Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of said Rule 16b-3, and/or with respect to Incentive Stock Options,
Section 422 of the Code. With respect to Incentive Stock Options, if this Plan
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the
same force and effect as if such provision had been set out at length herein.
13.11. WRITTEN AGREEMENTS. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 60 days after the Agreement has been delivered to the Holder for
his or her execution.
13.12. CONSIDERATION FOR COMMON STOCK. The Committee may not grant any
awards under the Plan pursuant to which the Company will be required to issue
any shares of Common Stock unless the Company will receive consideration for the
shares of Common Stock sufficient under the laws of the State of Florida so that
such shares of Common Stock will be fully paid and non-assessable when issued.
13.13. COMMON STOCK CERTIFICATES. Notwithstanding anything to the contrary
contained herein, whenever certificates representing shares of Common Stock
subject to an award are required to be delivered pursuant to the terms of the
Plan, the Company may in lieu of such delivery requirement
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comply with the provisions of Section 607.0626 of the Florida Business
Corporation Act. All certificates for shares of Common Stock delivered under the
Plan shall be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
13.14. UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to
any payments not yet made to a Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a general
creditor of the Company.
13.15 COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT. As of September 24,
1996, the Plan is intended to be governed by the provisions of Rule 16b-3 under
Section 16 of the Exchange Act, as amended by Release Number 34-37260, and shall
not be subject to the phase-in period for such amendment after such date.
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COMPUTER PRODUCTS, INC.
PROXY FOR ANNUAL MEETING TO BE HELD ON MAY 8, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned stockholder(s) of COMPUTER PRODUCTS, INC., a Florida
corporation (the "Company"), hereby constitute(s) and appoint(s) PHILLIP A.
O'REILLY and BERT SAGER, and each of them, with full power of substitution in
each, as the agent, attorneys and proxies of the undersigned, for and in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of the Company to be held at the Deerfield Beach Hilton, 100
Fairway Drive, Deerfield Beach, Florida, on May 8, 1997 at 10:00 A.M. (local
time), and any adjournments thereof, all of the shares of stock which the
undersigned would be entitled to vote if then personally present in the manner
specified and on any other business as may properly come before the Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON THE
REVERSE SIDE. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS
1, 2, AND 3, AND AT THE PROXIES' DISCRETION, UPON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT(S) THEREOF.
(Continued and to be signed and dated on the reverse side.)
<PAGE>
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS
listed below to vote for all
nominees listed
below
/___/ /___/ /___/
Nominees: Edward S. Croft, III, Joseph M. O'Donnell, Stephen A. Ollendorff,
Phillip A. O'Reilly, Bert Sager, Lewis Solomon
(INSTRUCTION: To withhold authority to vote for any individual nominee mark the
"EXCEPTIONS" box and write the nominee's name in the space below.)
*EXCEPTIONS ___________________________________________________________________
2. To approve the Company's 1990 Performance Equity Plan, as amended (the
"Performance Plan"), including Amendment No. 1 to increase the number of
shares currently available for grant.
FOR /___/ AGAINST /___/ ABSTAIN /___/
3. To approve the Performance Plan, including Amendment No. 2 to increase the
number of shares available for grant in future years.
FOR /___/ AGAINST /___/ ABSTAIN /___/
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s)
thereof and as set forth in Rule 14a-4(c) of the Securities Exchange Act of
1934, as amended.
Please sign exactly as name appears
above. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated ___________________________, 1997
_______________________________________
Signature
_______________________________________
Signature if held jointly
Please Mark, Sign, Date and Votes must be indicated
Return the Proxy Card Promptly (x) in Black or Blue ink /___/
Using the Enclosed Envelope.
