<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Rohn Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[ROHN LOGO]
ROHN INDUSTRIES, INC.
6718 West Plank Road
Peoria, Illinois 61604
----------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS OF
ROHN INDUSTRIES, INC.
----------------
To the Stockholders of ROHN Industries, Inc.:
Notice is hereby given that the 1999 Annual Meeting of Stockholders
("Annual Meeting") of ROHN Industries, Inc., a Delaware corporation, will be
held at The Roosevelt Hotel, 45 East 45th Street, New York City, New York, on
May 18, 1999, at 10:00 a.m., local time, for the following purposes:
(1) To elect five directors to serve until the next annual meeting of
stockholders or until their respective successors are duly elected and
qualified.
(2) To consider and vote upon approval of the ROHN 1999 Stock Option
Plan, a copy of which is attached as Appendix A to the Proxy Statement.
(3) To consider and transact such other business as may properly come
before the annual meeting.
Only stockholders as of the close of business on March 22, 1999 are
entitled to notice of, and to vote at, the annual meeting or any adjournment
or postponement thereof. A list of those stockholders will be available at The
Roosevelt Hotel, 45 East 45th Street, New York City, New York, for examination
by any stockholder for any purpose germane to the annual meeting for ten days
prior to the annual meeting. All stockholders, whether or not they now expect
to be present at the Annual Meeting, are requested to date, sign and return
the enclosed proxy card, which requires no postage if mailed in the United
States, using the envelope provided. Any stockholder present at the meeting
may vote personally on all matters before the meeting, and in that event his
or her proxy will become void. Your attention is directed to the following
pages for further information relating to the Annual Meeting.
By Order of the Board of Directors
Timothy W. Kirk
Secretary
Peoria, Illinois
April 21, 1999
<PAGE>
ROHN INDUSTRIES, INC.
6718 West Plank Road
Peoria, Illinois 61604
April 21, 1999
----------------
PROXY STATEMENT
----------------
General
The enclosed proxy is being solicited on behalf of the Board of Directors
(sometimes referred to as the "Board") of ROHN Industries, Inc. ("ROHN" or
"Company") for use at ROHN's Annual Meeting of Stockholders ("Annual
Meeting"), notice of which accompanies this Proxy Statement, and at all
adjournments and postponements thereof. The Annual Meeting will be held at The
Roosevelt Hotel, 45 East 45th Street, New York City, New York, on May 18,
1999, at 10:00 a.m., local time.
Any stockholder giving a proxy has the power to revoke it at any time prior
to exercise thereof by executing a subsequent proxy, by notifying the
Company's Secretary of such revocation in a written notice received by him at
the above address prior to the Annual Meeting, or by attending the Annual
Meeting and voting in person.
Only stockholders of record at the close of business on March 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting
or any adjournment or postponement thereof. At the close of business on the
Record Date, 52,811,009 shares of common stock of the Company were
outstanding, constituting the only outstanding voting securities of the
Company. Stockholders are entitled to one vote for each share of common stock
held.
A stockholder may, with respect to the election of directors, (i) vote for
the election of all five nominees named herein, (ii) withhold authority to
vote for all such director nominees or (iii) vote for the election of all such
director nominees other than any nominee or nominees with respect to whom the
stockholder withholds authority to vote by so indicating in the appropriate
space on the proxy. A stockholder may, with respect to each other matter
specified in the notice of the meeting, (i) vote "FOR" the matter, (ii) vote
"AGAINST" the matter or (iii) "ABSTAIN" from voting on the matter. Common
stock will be voted as instructed in the accompanying proxy on each matter
submitted to stockholders. If no contrary instructions are indicated in the
proxy, each proxy will be voted FOR the election of the five nominees to the
Board of Directors named below or for a substitute nominee if any of the
nominees listed below becomes unable or unwilling to serve, and FOR approval
of the 1999 Stock Option Plan, and, in the best judgment of the persons named
in the proxy as representatives, upon any other matters which may properly
come before the Annual Meeting.
Election of each director shall be determined by a plurality vote of the
holders of the shares of the Company's common stock present in person or
represented by proxy and entitled to vote at the meeting. Approval of the 1999
Stock Option Plan requires the affirmative vote of the holders of a majority
of the shares of the Company's common stock present in person or by proxy and
entitled to vote at the meeting. A proxy submitted by a stockholder may
indicate that all or a portion of the shares of common stock represented by
such proxy is not being voted by such stockholder with respect to a particular
matter. This could occur, for example, when a broker is not permitted to vote
shares held in street name on certain matters in the absence of instructions
from the beneficial owner. The shares subject to any such proxy which are not
being voted with respect to a particular matter (the "non-voted shares") will
be considered shares not present and not entitled to vote on such matter,
although such shares may be considered present and entitled to vote for other
purposes and will count for purposes of determining the presence of a quorum.
The Company's By-Laws provide that shares voted to abstain will be counted as
present for purposes of determining a quorum but will not be included in
calculating the number of votes on any question. Non-voted and abstaining
shares will have no effect on the election of directors or approval of the
1999 Stock Option Plan.
<PAGE>
The cost of the solicitation of proxies will be borne by the Company. The
Company does not expect to pay any compensation for the solicitation of
proxies but will reimburse brokers and other persons holding common stock in
their names, or in the names of nominees, for their reasonable out-of-pocket
expenses incurred in forwarding proxy materials to principals and obtaining
their proxies.
Stock Ownership
The following table sets forth information as of March 22, 1999 (except as
otherwise indicated) regarding the beneficial ownership of Company common
stock by: (i) each person or group that has reported beneficial ownership of
more than five percent of the Company common stock outstanding, (ii) the
Company's current directors, nominees for director and certain of its current
executive officers, and (iii) all of the Company's current directors and
officers as a group.
<TABLE>
<CAPTION>
Common Stock
--------------------
Amount and
Nature of
Beneficial Percent
Ownership of
Beneficial Owner (1) Class (2)
- ---------------- ---------- ---------
<S> <C> <C>
Principal Stockholders
UNR Asbestos-Disease Claims Trust (3)...................... 29,348,051 55.5%
100 North Lincolnway
North Aurora, IL 60542
Portfolio Q Investors, L.P. (4)............................ 3,189,000 6.0
201 Main Street
Forth Worth, TX 76102
Directors and Executive Officers
Craig Ahlstrom (5)......................................... 46,500 *
Charles M. Brennan, III.................................... 25,690 *
James R. Cote (5).......................................... 70,000 *
Darius W. Gaskins, Jr...................................... 57,190 *
John H. Laeri, Jr. (3)..................................... 29,348,051 55.5
David V. LaRusso (5)....................................... 76,500 *
Michael E. Levine (3)...................................... 29,348,051 55.5
Gene Locks................................................. 28,650 *
Ruth R. McMullin........................................... 46,235 *
Brian B. Pemberton (5)..................................... 455,000 *
Richard L. Rohn (5)........................................ 210,344 *
Alan Schwartz.............................................. 0 *
All directors and officers as a group (10 persons) (5)..... 1,069,409 2.0
</TABLE>
- --------
(1) Unless otherwise noted, the persons listed beneficially own all shares set
forth opposite their respective names with sole power to vote and dispose
of such shares, except Mr. Pemberton (5,000 shares) wherein voting or
investment power is shared with others. Mrs. McMullin's total also
includes 8,700 shares held by her spouse and 3,325 shares held in a trust.
(2) Percentage ownership is not shown for directors or officers owning less
than one percent of the outstanding common stock.
2
<PAGE>
(3) The Trustees of the Trust are Messrs. Laeri and Levine and Mr. David S.
Schrager. The Trustees are deemed to share beneficial ownership of the
29,348,051 Trust shares because they collectively possess the power to
vote and dispose of the Trust shares on behalf of the Trust, except that
the United States Bankruptcy Court for the Northern Division of Illinois
must approve sales of Trust shares.
(4) According to a Schedule 13D filed by Portfolio Q Investors with the SEC on
December 23, 1998, it and its affiliates had sole voting and dispositive
power over such shares.
(5) Includes 16,500, 30,000, 46,500, 250,000 and 34,650 shares subject to
stock options exercisable within 60 days of March 22, 1999 for Messrs.
Ahlstrom, Cote, LaRusso, Pemberton and Rohn, respectively, and 405,950
shares subject to stock options exercisable within 60 days of March 22,
1999 for all current directors and executive officers as a group.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's common stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. The Company believes that during
1997 and 1998 its executive officers, directors and greater than 10%
stockholders have complied with applicable requirements.
3
<PAGE>
MATTERS TO BE ACTED UPON AT THE ANNUAL MEETING
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors, pursuant to the Company's By-Laws, has determined
that the authorized number of directors shall be five persons. The five
persons listed below have been selected as nominees for election as directors
by the Board of Directors and, if elected, will serve until the next annual
meeting or until their successors are elected and qualify. The Company has
been advised by the UNR Asbestos-Disease Claims Trust that it intends to vote
its shares for election of all the nominees listed below.
Background Information Regarding Nominees
The table below sets forth the names of the nominees for director, their
principal occupations during the last five years and certain other
information.
<TABLE>
<CAPTION>
Principal Occupations for the Last Five
Years,
Director Other Directorships and Committee
Name of Nominee Since Age Assignments
- --------------- -------- --- ---------------------------------------
<S> <C> <C> <C>
John H. Laeri, Jr..... -- 63 Chairman, Meadowcroft Associates Inc., a
private investment banking firm (January
1991 to present); President and Chief
Executive Officer, The GolfCoach Inc., a
golf products marketer (December 1998 to
present); Chairman, UNR Asbestos-Disease
Claims Trust (1990 to present).
Michael E. Levine..... -- 57 Executive Vice President--Marketing &
International (August 1994 to March 1999)
and Executive Vice President--Marketing
(July 1992 to August 1994) of Northwest
Airlines Corporation; Trustee, UNR
Asbestos-Disease Claims Trust (1989 to
present).
Gene Locks............ 1989 60 Chairman of the Board of the Company (May
1991 to present); Founding partner,
Greitzer & Locks, attorneys. Member of
Trustees Advisory Committee to UNR
Asbestos-Disease Claims Trust (June 1989 to
present). Other directorships: Celotex
Corporation. Member of the Company's
Executive, Audit and Compensation
Committees.
Brian B. Pemberton.... 1997 53 President and Chief Executive Officer of
ROHN Industries, Inc. (commencing April 14,
1997); President, Skycell Services, a
division of American Mobile Satellite
Corporation, a common carrier providing
satellite-based mobile voice and data
services to North America ("AMSC") (August
1996 to December 1996); President and Chief
Executive Officer, AMSC (April 1995 to
August 1996); President, AMSC (April 1990
to April 1995). Other directorships: AC
Nielsen Corporation, provider of market
research. Chair of ROHN's Executive
Committee.
Alan Schwartz......... -- 59 Professor of Law at Yale Law School and
Professor at the Yale School of Management
since before 1994. Other directorship:
Cleveland-Cliffs Inc., a provider of iron
products and services.
</TABLE>
4
<PAGE>
Directors' Compensation
The Company employees who serve as directors of the Company receive no
compensation for such services. Non-employee directors of the Company are paid
compensation at an annual rate of $30,000 (the Chairman receives $50,000),
payable in quarterly installments. Non-employee directors have the right to
receive all or part of their annual compensation in shares of restricted
Company common stock. Non-employee directors receive $1,000 for each Board
meeting or meeting of a committee of the Board which they attend in person or
by telephone. Directors are also reimbursed for their out-of-pocket expenses
incurred in connection with such meetings.
Board Meetings; Board Committee Functions and Composition
The Board of Directors met five times in 1997 and ten times during 1998.
The Board has an Audit Committee, a Compensation Committee and certain other
committees. The Board does not have a standing Nominating Committee.
The Audit Committee currently consists of Charles M. Brennan, III (Chair),
Darius W. Gaskins, Jr., Gene Locks and Ruth R. McMullin. The Audit Committee
makes recommendations to the full Board of Directors regarding engagement of
independent public accountants; reviews and approves the scope of independent
audits and the fees and other arrangements regarding such services; reviews
the results of the annual audit with the independent public accountants; and
generally reviews the adequacy of the Company's accounting systems, internal
accounting controls and applications of accounting policies to new or unusual
circumstances. The Audit Committee met twice during 1997 and twice during
1998.
The Compensation Committee currently consists of Darius W. Gaskins, Jr.
(Chair), Charles M. Brennan, III, Gene Locks and Ruth R. McMullin and has the
responsibility for considering and making recommendations to the full Board of
Directors regarding officers' compensation and benefits and the Company's
organizational structure. The Compensation Committee met four times during
1997 and two times during 1998.
During 1997 and 1998, no director, other than William J. Williams, whose
term as a director expired in December 1997, attended less than 75% of the
aggregate of all meetings of the Board and all meetings held by committees of
the Board on which such director served.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total cash and non-cash compensation in
each of 1996, 1997 and 1998 received by the Company's Chief Executive Officers
serving as such in 1998 and the Company's four other most highly compensated
executive officers serving at the end of 1998.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------- ---------------------
Other
Annual Restricted Securities
Compen- Stock Underlying
Name and Principal Salary Bonus sation Awards Options All Other
Position ($) ($) ($) ($)(1) (#)(2) Compensation($)
------------------ Year ------- ------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian B. Pemberton(3)... 1998 331,250 200,000 -- 587,500 450,000 2,500(6)
President and Chief 1997 207,230 200,000 -- 750,000 100,000 56,315(7)
Executive Officer
Richard Rohn............ 1998 183,462 168,000 -- 205,625 105,000 2,500(6)
Vice President--
Shelters 1997 174,785 90,000 -- 187,500 -- 2,375(6)
1996 172,046 172,000 -- 212,500 -- 2,375(6)
James R. Cote........... 1998 142,508 61,000 -- 176,250 90,000 2,500(6)
Vice President--
International 1997 134,200 30,000 -- -- -- 2,500(6)
& Corporate Development 1996 171,625 60,392 -- 61,250 -- 1,989(6)
David V. LaRusso(4)..... 1998 163,077 68,000 -- 176,250 90,000 1,108(6)
Vice President and 1997 49,231 20,000 -- -- 50,000 5,435(7)
Chief Financial Officer
Craig A. Ahlstrom(5).... 1998 103,924 52,000 -- 174,375 50,000 124,975(8)
Vice President--Sales &
Marketing
</TABLE>
- --------
(1) Restricted Stock Awards are made pursuant to the terms of the ROHN 1992
Restricted Stock Plan. The stock is valued at the closing price of the
stock on the NASDAQ Stock Market on the date of the award. On December 31,
1997, Mr. Pemberton held 100,000 shares of restricted stock valued at
$515,600, and on December 31, 1998, he held 175,000 shares of restricted
stock valued at $601,562. On December 31, 1997, Mr. Rohn held 56,024
shares of restricted stock valued at $288,860, and on December 31, 1998,
he held 73,990 shares of restricted stock valued at $254,341. During 1997,
Messrs. Pemberton and Rohn were awarded 100,000 and 25,000 shares of
restricted stock, respectively, and during 1998, they were awarded 100,000
and 35,000 shares, respectively. The shares of restricted stock awarded to
Messrs. Pemberton and Rohn in 1997 and 1998 vest 25% per year over a four-
year period from the date of the grant. On December 31, 1997, Mr. Cote
held 10,000 shares of restricted stock valued at $51,560, and on December
31. 1998, he held 40,000 shares of restricted stock valued at $137,500.
During 1996, Mr. Cote was awarded 10,000 shares of restricted stock that
will vest 100% in five years. During 1998, Mr. Cote was awarded 30,000
shares of restricted stock that will vest 25% per year over a four-year
period from the date of grant. During 1998, Messrs. LaRusso and Ahlstrom
were each awarded 30,000 shares of restricted stock which will vest 25%
per year over a four-year period from the date of the grant. On December
31, 1998, Messrs. LaRusso and Ahlstrom each held 30,000 shares of
restricted stock valued at $103,125. Messrs. Pemberton, Rohn, Cote,
LaRusso and Ahlstrom were entitled to receive all dividends on restricted
stock held by them.
(2) See "Option Grants in 1997 and 1998" below.
(3) Mr. Pemberton's employment with the Company commenced on April 14, 1997.
(4) Mr. LaRusso's employment with the Company commenced on September 2, 1997.
(5) Mr. Ahlstrom's employment with the Company commenced on April 1, 1998.
(6) The amounts shown constitute the Company's contributions to the 401(k)
plan for these employees.
6
<PAGE>
(7) The amounts shown are for relocation expenses incurred by Messrs.
Pemberton and LaRusso.
(8) The amount shown is for relocation expenses of $58,271, a relocation bonus
of $41,704 and a signing bonus of $25,000 that were negotiated with Mr.
Ahlstrom.
Option Grants in 1997 and 1998(1)
<TABLE>
<CAPTION>
Potential Realizable
Value
Number of Percent of ($) at Assumed Annual
Securities Total Rates of Stock Price
Underlying Options Exercise Appreciation for
Options Granted or Base Option Terms (2)
Granted in Fiscal Price Expiration ---------------------
Name Year (#) Year ($) Date 5% 10%
- ---- ---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian B. Pemberton...... 1998 450,000 47% $ 5.875 03/11/08 $1,662,628 $4,213,450
1997 100,000 48% $ 7.75 04/14/02 214,118 487,393
Richard Rohn............ 1998 105,000 11% $ 5.875 03/11/08 387,947 983,138
1997 -- -- -- -- -- --
James R. Cote........... 1998 90,000 9% $ 5.875 03/11/08 332,526 842,690
1997 -- -- -- -- -- --
David V. LaRusso........ 1998 90,000 9% $ 5.875 03/11/08 332,526 842,690
1997 50,000 24% $ 4.37 09/02/02 60,368 137,413
Craig A. Ahlstrom....... 1998 50,000 5% $5.8125 4/21/03 80,301 177,445
1997 -- -- -- -- -- --
</TABLE>
- --------
(1) The Company stock option plans are administered by the Compensation
Committee of the Board of Directors, which has authority to determine the
employees to whom, and the terms at which, options will be granted. Under
the terms of the Company's plan, the Compensation Committee retains
discretion, subject to plan limits, to modify the terms of outstanding
options.
The per share option prices are the fair market value of the Company's
common stock on the date of the grant less any extraordinary dividends paid
after the grant date. The options granted to Mr. Pemberton in 1997 became
exercisable twelve months from the date of the grant. All remaining options
granted are exercisable at the rate of one-third per year over a three year
period. The options granted to Messrs. Pemberton and LaRusso in 1997, and
the options granted to Mr. Ahlstrom in 1998, have a term of five years. All
other options were granted for a term of ten years. In addition, all
options granted become exercisable upon a change of control as defined in
the plans.
(2) The amounts shown in these columns are calculated at the 5% and 10% rates
set by the SEC and are not intended to forecast future appreciation of the
Company's stock price.
Aggregate Option Exercises in Last Two Fiscal Years and Fiscal Year-End Option
Values for 1997 and 1998
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Securities the-money Options at
Shares Underlying Options at Fiscal
Acquired Value Fiscal Year-End Year-End (1)
on ($) ------------------------- -------------------------
Name Year Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian B. Pemberton...... 1998 -- -- 100,000 450,000 -- --
1997 -- -- -- 100,000 -- --
Richard Rohn............ 1998 -- -- 105,000 -- --
1997 50,000 $267,500 -- -- -- --
James R. Cote........... 1998 -- -- -- 90,000 -- --
1997 -- -- -- -- -- --
David V. LaRusso........ 1998 -- -- 16,667 123,333 -- --
1997 -- -- -- 50,000 -- $39,300
Craig A. Ahlstrom....... 1998 -- -- -- 50,000 -- --
1997 -- -- -- -- -- --
</TABLE>
- --------
(1) On December 31, 1998 and 1997, the market value of the Company stock was
$3.406 and $5.156, respectively.
7
<PAGE>
Employment Contracts and Other Agreements
Employment Agreement--Brian B. Pemberton
Brian B. Pemberton was elected President and Chief Executive Officer of the
Company on April 14, 1997. The Company has entered into an employment
agreement with Mr. Pemberton which provides for a base salary of $325,000,
subject to annual review and adjustment by the Compensation Committee. Mr.
Pemberton will be eligible for an annual bonus under the Company's Incentive
Bonus Plan which provides a maximum bonus opportunity of 100% of base salary
for senior executive officers. In addition, Mr. Pemberton was awarded 100,000
shares of restricted stock under the Restricted Stock Plan and options to
purchase an additional 100,000 shares under the Company's Stock Option Plan.
Restricted stock will vest at the rate of 25% per year during a four-year
period of continuous employment or in the event of death, disability or a
change of control of the Company, as provided in the Restricted Stock Plan.
Stock options are currently exercisable at the market price of the stock as of
April 1, 1997, and expire in April 2002. Mr. Pemberton is covered by the
Company's health, disability and life insurance program and other benefits
generally provided to the Company executives. Mr. Pemberton's employment may
be terminated by either party at any time for any reason, but in the event his
employment is terminated by the Company without cause, as defined in the
agreement, Mr. Pemberton will be entitled to a severance payment equal to one
year's base salary then in effect plus the amount of the target bonus under
the Incentive Bonus Plan for the year in which termination occurs.
Change of Control Agreements
At various times, the Company has entered into Change of Control Agreements
("Control Agreements") with various executive officers. On November 30, 1996,
the Company entered into a Control Agreement with James Cote. On September 2,
1997, the Company entered into a Control Agreement with David V. LaRusso.
These Control Agreements were for a term of three years, subject to renewal
for additional three year terms. On July 24, 1998, the Control Agreement with
Mr. LaRusso was terminated.
A Change of Control includes (i) the acquisition by any person or group
acting in concert of beneficial ownership of 50% or more of the Company's
outstanding shares, with certain exceptions, (ii) a change in the composition
of the Company's Board of Directors in any 24-month or less period such that a
majority of the directors serving at the end of the period were not serving at
the beginning of the period, unless at the end of the period the majority of
the directors in office were nominated upon the recommendation of a majority
of the Board at the beginning of the period, or (iii) approval by stockholders
of a merger, consolidation or similar transaction (as to which those
stockholders immediately prior to such transaction are not the owners of more
than 75% of the resulting corporation's outstanding voting stock after such
event) or the sale of all or substantially all of the Company's consolidated
assets.
If, during the term of Mr. Cote's Change in Control Agreements, a Change of
Control occurs, and within a two year period from the date of such Change of
Control, either (i) Mr. Cote's employment with the Company is terminated by
the Company other than for cause or on account of his death, permanent
disability or retirement, or (ii) Mr. Cote resigns for good reason, then the
Company is required to pay to Mr. Cote a severance payment. The severance
payment would be equal to one and one-third times base salary for Mr. Cote,
for the year in which termination occurs; provided that in no event may the
total amount of the severance payment exceed 2.99 times the five year average
W-2 income of Mr. Cote. The severance payment is payable in a single lump sum
payable within 30 days of the termination of employment or resignation.
In addition to the severance payment, the Company is required to provide
health, disability and life insurance in accordance with the plans maintained
by the Company for Mr. Cote for a period of one year from the date of
termination of Mr. Cote's employment, provided that health, disability and
life insurance benefits cease if Mr. Cote becomes employed during such period
and receives similar benefits in connection with such employment.
8
<PAGE>
During employment and for a period of one year after the termination of
employment for any reason, Mr. Cote may not enter into, be connected with, or
work for an individual, firm or corporation which is then in substantial
competition with the Company in the United States.
Letter Agreements
On July 24, 1998, the Company entered into letter agreements (the "Letter
Agreements") with the following executive officers of the Company: Messrs.
David V. LaRusso, Richard L. Rohn, Timothy W. Kirk, Craig A. Ahlstrom and Jay
Buehler, former Vice President-Operations of the Company. The Letter
Agreements each provide that if the employment of the covered executive
officer is terminated by the Company without cause, as defined in the Letter
Agreement, prior to July 24, 2001, the terminated executive officer will be
entitled to a severance payment equal to one year's base salary then in effect
plus the amount of the target bonus under the Incentive Bonus Plan for the
year in which termination occurs. Mr. Buehler's employment terminated in
November 1998 and the Company made a severance payment of $232,132 to Mr.
Buehler.
Indemnification Agreements
At various times, the Company has entered into Indemnification Agreements
("Indemnification Agreements") with various executive officers and directors
(each an "Indemnitee"). On June 20, 1990, the Company entered into an
Indemnification Agreement with each of Charles M. Brennan, III, Darius W.
Gaskins, Jr. and Ruth McMullin. On November 22, 1995, the Company entered into
an Indemnification Agreement with Gene Locks. These Indemnification Agreements
provide that the Company shall indemnify, and advance expenses (as defined
therein) to, each Indemnitee to the fullest extent permitted by law.
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of four independent directors. No
member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries. The Committee formulates the compensation
policy and structure for executive officers, reviews salary and bonus
recommendations for those officers and submits its recommendations to the full
Board of Directors for approval. The Compensation Committee is solely
responsible for determining long-term incentive compensation granted to
executive officers under the stock option, restricted stock and other long-
term incentive plans previously approved by the stockholders.
In formulating and implementing compensation programs, it has been the
philosophy of the Compensation Committee that a substantial portion of
executive compensation should be related to the Company's financial
performance. Accordingly, compensation programs have been structured to
include incentives based on measures of the Company's financial performance.
The compensation programs for executive officers have consisted of base salary
and short-term and long-term incentive compensation plans. The Compensation
Committee determined that the short-term and long-term incentive programs for
1997 and 1998 would be based 50% upon meeting the Company's budget and 50%
upon achieving mutually negotiated personal objectives.
Base Salary
The Committee annually reviews the base salary of each executive officer.
In determining salary adjustments, the Committee considers individual job
performance, length of employment, level of responsibility and information
supplied by an independent compensation consulting firm concerning the average
compensation levels of executive officers in a large group of companies with
average sales of approximately $345 million ("Compensation Peer Group"). The
Committee believes that the Compensation Peer Group has been a more
appropriate comparison for compensation purposes, as adjusted as discussed
below, than the peer group used for computing total shareholder return which
includes firms of substantially larger size. The compensation data used for
comparison from the Compensation Peer Group has been statistically adjusted to
reflect the Company's sales size. The Committee believes that the Compensation
Peer Group, as adjusted, is an appropriate peer group for compensation
purposes. While the salary for the Chief Executive Officer is typically
reviewed annually, the Chief Executive Officer's 1997 base salary was
determined by negotiation when he was hired in April of 1997. The
9
<PAGE>
base salary levels of the other executive officers are also reviewed by the
Committee on a calendar year basis. In 1997, base salaries for executive
officers continuing from 1996 were increased approximately 6% from 1996
levels. Base salaries for executive officers who were hired during 1997 and
1998 were determined by negotiation. Based upon the Compensation Committee's
analysis, and upon the information provided by an independent compensation
consultant, the Committee believed that the 1997 base salary of the Company's
Chief Executive Officer, Mr. Pemberton, was approximately 6% above market, and
the base salaries of the other executive officers were moderately above
market. Accordingly, base salaries for executive officers were not increased
during 1998.
Short-term Incentives
Historically, a significant part of short-term executive compensation is
based on an incentive bonus. Under the 1997 and 1998 Bonus Plan, 50% of an
executive officer's target bonus is tied to meeting the Company's budget and
50% is tied to mutually negotiated personal objectives. For 1997, the Chief
Executive Officer and Richard Rohn, the target bonus was 50% of salary and the
maximum bonus opportunity was 100% of salary. For other executive officers,
the target bonus was 33% of salary and the maximum bonus opportunity was 66%
of salary. For 1998, the target bonus for the Chief Executive Officer, Richard
Rohn and other executive officers was 75%, 67% and 50% of salary,
respectively, with a maximum bonus opportunity of 100% of salary.
Personal goals for the Chief Executive Officer were negotiated between him
and the Compensation Committee as more fully described below. The personal
objectives for other executive officers were negotiated between the Chief
Executive Officer and those executives. Bonuses were awarded to executive
officers, other than the Chief Executive Officer, for 1997 and 1998 based upon
a subjective evaluation by the Compensation Committee of the achievements by
the executive officers.
Long-term Incentives
The Company's long-term incentive plans consist of Stock Option Plans, a
Restricted Stock Plan and a Stock Purchase Plan. The Committee believes that
an appropriate level of ownership by executive management will enhance the
incentive of these executive officers to manage the Company for the benefit of
all stockholders. In 1997, 150,000 options were granted to the named executive
officers under the 1990 Stock Option Plan pursuant to their employment
agreements, 100,000 of which were awarded to the Chief Executive Officer and
50,000 of which were awarded to Mr. LaRusso. In 1997, 125,000 shares of common
stock were awarded to executive officers under the Restricted Stock Plan,
100,000 shares of which were awarded to the Chief Executive Officer pursuant
to his employment agreement and 25,000 shares of which were awarded to Richard
L. Rohn. No stock was sold to executive officers in 1997 under the Stock
Purchase Plan.
In 1998, 785,000 options were granted to the named executive officers as
set forth under "Option Grants in 1997 and 1998" above. In 1998, 225,000
shares of common stock were awarded to the named executive officers under the
Restricted Stock Plan, 100,000 shares of which were awarded to the Chief
Executive Officer, 35,000 shares of which were awarded to Richard Rohn and
30,000 shares of which were awarded to each of Messrs. Cote, LaRusso and
Ahlstrom. No stock was sold to executive officers in 1998 under the Stock
Purchase Plan.
Chief Executive Officer Compensation
Brian B. Pemberton was elected President and Chief Executive Officer of the
Company effective April 14, 1997. The Company entered into an employment
agreement with Mr. Pemberton which provides for a base annual salary of
$325,000, subject to annual review and adjustment by the Compensation
Committee. Mr. Pemberton is eligible for an annual bonus. In addition, Mr.
Pemberton was awarded 100,000 shares of restricted stock under the Restricted
Stock Plan and options to purchase an additional 100,000 shares under the
Company's Key Executives' Stock Option Plan. Those shares of restricted stock
will vest at the rate of 25% per year during a four-year period of continuous
employment or in the event of death, disability or a change of control of the
Company, as provided in the Restricted Stock Plan. Those stock options are
exercisable after one year of employment at the market price of the stock as
of April 1, 1997, and expire in five years. Mr. Pemberton is covered by the
Company's health, disability and life insurance program and other benefits
generally provided to executives of the Company.
10
<PAGE>
For 1997 and 1998, Mr. Pemberton's bonus award was based 50% on the
performance of the Company in relation to the budget and 50% on the personal
goals for Mr. Pemberton established through consultation between Mr. Pemberton
and the Compensation Committee. The 1997 goals for Mr. Pemberton included
implementation of the 1997 budget and business plan, the development of
stockholder relationships, recruitment and development of other executive
officers, and the expansion of international business opportunities for the
Company. These goals were not ranked or weighted. Mr. Pemberton was awarded a
bonus of $200,000 based upon a subjective evaluation of his achievements for
1997 by the Compensation Committee.
The 1998 goals for Mr. Pemberton included assisting the Company's majority
shareholder's efforts to sell all or a part of its shares of Company common
stock, to enhance stockholder value, to develop a long-term strategy for the
Company and to develop additional manufacturing capacity. These goals were not
ranked or weighted. Mr. Pemberton was awarded a bonus of $200,000 based upon a
subjective evaluation of his achievements for 1998 by the Compensation
Committee.
Section 162(m) of the Internal Revenue Code
The Committee has considered the effect of Section 162(m) of the Internal
Revenue Code, which limits the tax deduction to $1 million for compensation
paid to the top five executive officers unless certain requirements are met.
As a general matter, the Committee does not expect that any executive
officer's compensation is likely to exceed $1 million. Accordingly, the
Committee concluded not to make any changes in the Company's existing
compensation programs. The Committee will continue to consider the impact of
Section 162(m) and to assess alternatives to minimize or eliminate any loss of
tax deductions in future years consistent with the objectives of the Company's
executive compensation programs.
Compensation Committee
Darius W. Gaskins, Jr., Chair
Charles M. Brennan, III
Gene Locks
Ruth R. McMullin
11
<PAGE>
Stock Performance Graph
The following performance graph compares the Company's total stockholder
return on its common stock for a six year period (December 31, 1992 to
December 31, 1998) with the cumulative total return of the Standard & Poor's
500 Stock Index and the Standard & Poor's Communications Equipment 500 Index.
This graph assumes an investment of $100 on December 31, 1992 and reinvestment
of dividends.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
S&P Comm.
S&P Equipment
Date ROHN 500 500
---- ---- ---- ---------
<S> <C> <C> <C>
December 1992......................................... $100 $100 $100
December 1993......................................... $130 $110 $ 96
December 1994......................................... $127 $112 $110
December 1995......................................... $248 $153 $164
December 1996......................................... $247 $188 $192
December 1997......................................... $216 $251 $250
December 1998......................................... $144 $322 $441
</TABLE>
PROPOSAL 2--APPROVAL OF THE 1999 STOCK OPTION PLAN
The Board of Directors of the Company on April 9, 1999, adopted the ROHN
Industries, Inc. 1999 Stock Option Plan (the "Option Plan"), subject to
approval by stockholders. A copy of the Option Plan is included as Appendix A
to this Proxy Statement.
The purpose of the Option Plan is to benefit the Company and its
subsidiaries by offering certain present and future employees (including
officers) a favorable opportunity to become holders of stock in the Company
over a period of years, thereby giving them a stake in the growth and
prosperity of the Company and encouraging the continuance of their services
with the Company and its subsidiaries. As of the date of this Proxy Statement,
no options have been granted under the Option Plan.
12
<PAGE>
Summary. Under the Option Plan, the Company may grant options to purchase
up to 2,500,000 shares of common stock of the Company. If any outstanding
option expires or is surrendered, cancelled or terminated for any reason,
shares allocable to such options shall again be available for grant.
The Compensation Committee of the Board of Directors (the "Committee")
administers the Option Plan. Subject to the terms of the Option Plan, the
Committee determines the terms and conditions of options granted under the
Option Plan.
The Option Plan permits the grant of qualified incentive stock options
("ISOs") or nonqualified stock options ("NSOs"). ISOs may be granted to
individuals who, at the time of grant, are employees of the Company or its
affiliates. NSOs may be granted to directors and employees of the Company or
its affiliates. The aggregate number of options which may be granted under the
Option Plan to any individual within any five-year period during the term of
the Option Plan is limited to 1,000,000 shares (subject to proportionate
adjustment for changes in capitalization).
The exercise price of an option granted under the Option Plan is to be
determined by the Committee at the time of grant but may not be, in the case
of ISOs, less than the fair market value per share or, in the case of NSOs,
less than 85% of the fair market value per share, of the Company common stock
at the time of grant. Each option must expire within ten years after the date
of grant. ISOs granted to any person owning more than 10% of the voting stock
of the Company must have an exercise price of at least 110% of the fair market
value per share at the date of grant and may not have terms exceeding five
years. Unless otherwise determined by the Committee, options granted under the
Option Plan vest in three equal annual installments commencing on the first
anniversary of the date of grant.
An optionee may exercise his or her option by giving notice to the Company
specifying the number of shares to be purchased, accompanied by payment of the
exercise price in full in cash or by bank certified, cashier's or personal
check. Options may also be exercised in "cashless exercises" (delivery of
shares or cancellation of options having a fair market value equal to the
exercise price).
An optionee (or his or her estate in case of death) whose employment with
the Company or any subsidiary ceases for any reason (other than for cause) may
exercise options that are exercisable at the time of termination within the
applicable periods following termination specified in the Option Plan. If an
optionee is terminated for "cause," his or her options shall expire as of the
first discovery by the Company of any cause for termination.
Options generally are not transferable except by will or the laws of
descent and distribution or pursuant to a property settlement in a divorce
proceeding.
If the shares of the Company common stock are changed by a split-up or
consolidation of shares or similar capital adjustment, or payment of any stock
dividend, a proportionate adjustment will be made in the number and class of
shares subject to unexercised options or available for options and in the
exercise price for shares.
In the event of a "Change in Control," as defined in the Option Plan, all
options outstanding become immediately exercisable in full without regard to
any vesting schedule. An optionee has the right, within one year after any
"Change in Control," to require the Company (or the surviving entity, if other
than the Company) to purchase from the optionee any or all unexercised options
at a per option price equal to the excess of the fair market value per share
(as defined in the Option Plan) over the exercise price.
The Board of Directors may amend or discontinue the Option Plan, except the
approval of the holders of a majority of the outstanding shares of the Company
common stock present and entitled to vote at any meeting is required for any
amendment which will (i) increase the number of share issuable under the
Option Plan, (ii) permit the grant of options to a class of persons other than
those currently permitted to receive options under the Option Plan, (iii)
reduce the exercise price of outstanding options, or (iv) require stockholder
approval under applicable law.
13
<PAGE>
Federal Income Tax Consequences. The following discussion is a summary of
the material federal income tax consequences to the Company and the optionees,
but does not cover all possible federal, state or local income tax
consequences of participation in the Option Plan.
Under existing law there will be no federal income tax consequences to
either the optionee or the Company upon the grant of an ISO. Except as
described below, the optionee will not have to recognize any income upon the
exercise of an ISO. The tax consequences to an optionee of selling or
disposing of the shares purchased upon exercise of an ISO generally depend on
how long he or she has held the shares. If the optionee sells or disposes of
the shares after the later of (i) two years after the option grant date or
(ii) one year after purchase of shares, the employee will recognize a long-
term capital gain (or loss) measured by the excess (or deficit) of the amount
realized from such sale or disposition over the exercise price, and no
deduction will be allowed to the Company. If the optionee sells or disposes of
the shares (other than by death) before the later of (i) two years after the
option grant date or (ii) one year after purchase of shares, the optionee will
recognize ordinary income in the year of sale or disposition, and the Company
will be entitled to a corresponding deduction, to the extent the fair market
value of the shares at the time they were purchased exceeded the purchase
price. Any additional gain is capital gain to the optionee.
An optionee may under certain circumstances be permitted to pay all or a
portion of the exercise price of an ISO by delivering shares of common stock
of the Company. If the shares delivered were acquired through a previous
exercise of an ISO or an option granted under an employee stock purchase plan,
and if the holding period requirement applicable to such shares has not been
met, the delivery of such shares could be treated as a taxable sale or
disposition of the shares. In general, where an optionee pays the exercise
price of an ISO by delivering shares of common stock, the optionee will have a
zero tax basis in the shares received that are in excess of the number of
shares delivered in payment of the exercise price.
For alternative minimum tax purposes, regardless of whether the optionee
satisfied the holding period requirement, the excess of the fair market value
of the shares on the exercise date over the exercise price will be treated as
a positive adjustment to the optionee's alternative minimum taxable income for
the year the ISO is exercised. If the shares are sold or disposed of in the
year the ISO was exercised, however, the positive adjustment taken into
account for alternative minimum tax purposes will not exceed the gain realized
on such sale or disposition. Exercise of an ISO may thus result in liability
for alternative minimum tax.
An ISO will generally be treated as an NSO for federal income tax purposes
if it is exercised more than three months after the optionee terminates his or
her relationship with the Company, but this three-month limitation will not
apply if the relationship is terminated by the optionee's death.
There will be no federal income tax consequences to either the optionee or
the Company upon the grant of an NSO. Upon the exercise of an NSO, the
optionee will recognize ordinary income in an amount equal to the excess of
the fair market value per share on the date of exercise over the exercise
price, and the Company generally will be entitled to a corresponding federal
income tax deduction.
If an optionee pays the exercise price of an NSO by surrendering shares of
common stock of the Company, then, to the extent the shares received upon
exercise of the option do not exceed the number of shares delivered, the
optionee will be treated as making a tax-free exchange of stock and the new
shares received will have the same tax basis and holding period requirement as
the shares surrendered. The optionee will recognize ordinary income in an
amount equal to the fair market value of the shares in excess of the shares
delivered in payment of the exercise price. The basis of those additional
shares will equal their fair market value on the date the option is exercised.
If an optionee exercises an NSO on a cashless basis as permitted under the
Option Plan, the optionee will recognize ordinary income equal to the fair
market value of the shares received and the optionee's initial tax basis in
such shares will equal their fair market value.
Adoption of The Plan. The affirmative vote of the holders of a majority of
shares of common stock of the Company present in person or by proxy and
entitled to vote at the Annual Meeting is necessary to approve the adoption of
the Plan.
14
<PAGE>
The Board of Directors believes that the Option Plan is in the best
interests of the Company. By offering employees an attractive opportunity to
buy common stock of the Company, the Option Plan provides incentives for
participants to maximize stockholder value. The Option Plan also should help
the Company attract and retain qualified employees. For these reasons, the
Board of Directors recommends a vote FOR approval of the ROHN Industries, Inc.
1998 Stock Option Plan.
STOCKHOLDER PROPOSALS; OTHER MATTERS
Stockholder proposals for inclusion in proxy materials for the 2000 Annual
Meeting of Stockholders should be addressed to the Company's Secretary, 6718
West Plank Road, Peoria, Illinois 61604, and must be received on or before
December 21, 1999.
The Company's By-Laws specify procedures for notifying the Secretary of
business (including nominations of directors) to be properly brought before
any meeting of Stockholders. A copy of the By-Laws may be obtained from the
Company's Secretary.
At this time, the Board of Directors is not aware of any other matters to
be presented for action at the Annual Meeting other than those presented above
in this Proxy Statement. If any other business should properly come before the
Annual Meeting, votes may be cast with respect to such matters in accordance
with the best judgment of the person or persons acting under the proxy.
By Order of the Board of Directors
Timothy W. Kirk
Secretary
Peoria, Illinois
April 21, 1999
Any stockholder may obtain a copy of the Company's 1998 Annual Report on Form
10-K to the Securities and Exchange Commission without charge by writing to
ROHN Industries, Inc. at 6718 West Plank Road, Peoria, Illinois 61604.
15
<PAGE>
Exhibit A
ROHN INDUSTRIES, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Rohn Industries, Inc. 1999 Stock
Option Plan (this "Plan") is to benefit Rohn Industries, Inc. (the "Company")
and its subsidiaries by offering certain present and future employees,
including officers, a favorable opportunity to become holders of stock in the
Company over a period of years, thereby giving them a stake in the growth and
prosperity of the Company and encouraging the continuance of their services
with the Company or its subsidiaries.
Section 2. Administration.
2.1 Committee. This Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"). The Committee's interpretation and construction of any terms or
provisions of this Plan or any option issued hereunder, or of any rule or
regulation adopted in connection therewith, shall be conclusive and binding on
all interested parties, so long as such interpretation and construction with
respect to incentive stock options corresponds to the requirements of Section
422 of the Internal Revenue Code, as amended (the "Code") and the regulations
thereunder.
2.2 Grants to Section 16 Persons. For so long as the Company's Common Stock
is registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Committee may not grant options to an
officer of the Company subject to Section 16 of the Exchange Act unless the
grant is (i) approved in advance by the Committee in accordance with the
provisions of Rule 16b-3(d)(1) under the Exchange Act (where the Committee is
composed solely of two or more non-employee directors who satisfy the
requirements of Rule 16b-3(b)(3) under the Exchange Act), (ii) approved in
advance, or subsequently ratified by the stockholders in accordance with the
provisions of Rule 16b-3(d)(2) under the Exchange Act or (iii) absent approval
pursuant to clauses (i) or (ii), no officer of the Company may sell shares
received upon the exercise of an option during the six-month period
immediately following the grant of such option.
2.3 Grants to Section 162(m) Officers. The Board may not grant options to
an officer subject to Section 162(m) of the Code unless the grant is approved
by the Committee where the Committee is composed of at least two "outside
directors" (as defined in the regulations promulgated under Section 162(m) of
the Code).
2.4 Section 16(b) Compliance and Bifurcation of Plan. It is the intention
of the Company that this Plan comply in all respects with Section 16(b) and
Rule 16b-3 under the Exchange Act, to the extent applicable, and, if any Plan
provision is later found not to be in compliance with such Section or Rule,
the provision shall be deemed null and void, and the Plan shall be construed
in favor of its meeting the requirements of Section 16(b) and Rule 16b-3 under
the Exchange Act. Notwithstanding anything in the Plan to the contrary, the
Committee, in its absolute discretion, may bifurcate the Plan so as to limit
the use of any provision of the Plan to participants who are executive
officers or other persons subject to Section 16(b) of the Exchange Act without
so restricting, limiting or conditioning the Plan with respect to other
participants.
Section 3. Stock Subject to This Plan. The stock subject to this Plan shall
be the Company's common stock, par value $.01 per share (the "Common Stock"),
authorized but unissued or held in the Company's treasury or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7
hereof, the aggregate amount of Common Stock to be delivered upon the exercise
of all options granted under this Plan shall not exceed 2,500,000 shares as
such Common Stock was constituted on the effective date of this Plan. If any
option granted under this Plan shall expire, or be surrendered, exchanged for
another option, canceled or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon
again be available for purposes of this Plan, including for replacement
options which may be granted in exchange for such surrendered, canceled or
terminated options.
A-1
<PAGE>
Section 4. Eligibility. An incentive stock option may be granted only to an
individual who, at the time the option is granted, is an employee of the
Company or any subsidiary. A nonqualified stock option may be granted to any
employee of the Company or any subsidiary, whether an individual or an entity.
Any party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
Section 5. Terms and Conditions of Options. Options granted under this Plan
shall contain such terms, conditions, limitations and restrictions as the
Committee shall deem advisable and which are not inconsistent with this Plan.
Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 Number of Shares and Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as
established by the Committee, provided that the Committee shall act in good
faith to establish an exercise price which shall be not less than the fair
market value per share of the Common Stock at the time the option is granted
with respect to incentive stock options and not less than 85% of the fair
market value per share of the Common Stock at the time the option is granted
with respect to nonqualified stock options and also provided that, with
respect to incentive stock options granted to greater than 10% stockholders,
the exercise price shall be as required by Section 6. In addition, in any
five-year period, no individual may be granted options under the Plan to
purchase more than 1,000,000 shares of Common Stock, subject to adjustment as
set forth in Section 7.
5.2 Term and Maturity. Subject to the restrictions contained in Section 6
with respect to granting incentive stock options to greater than 10%
stockholders, the term of each incentive stock option shall be as established
by the Committee and, if not so established, shall be 10 years from the date
it is granted but in no event shall the term of any incentive stock option
exceed 10 years. The term of each nonqualified stock option shall be as
established by the Committee and, if not so established, shall be 10 years
from the date it is granted. To ensure that the Company or its subsidiaries
will achieve the purpose and receive the benefits contemplated in this Plan,
any option granted to any Optionee hereunder shall, unless the condition of
this sentence is waived by resolution adopted by the Committee, be exercisable
according to the following schedule:
<TABLE>
<CAPTION>
Period of Optionee's
Continuous
Employment
With the Company or Related
Corporation From the
Date
the Option is Portion of Total Option
Granted Which is Exercisable
--------------------------- -----------------------
<S> <C>
after 1 year.................................. 33 1/3%
after 2 years................................. 66 2/3%
after 3 years................................. 100%
</TABLE>
5.3 Exercise. Subject to the vesting schedule described in Section 5.2
above, each option may be exercised in whole or in part; provided, however,
that no fewer than 100 shares (or the remaining shares then purchasable under
the option, if less than 100 shares) may be purchased upon any exercise of
option rights hereunder and that only whole shares will be issued pursuant to
the exercise of any option. Options shall be exercised by delivery to the
Company of notice of the number of shares with respect to which the option is
exercised, together with payment of the exercise price.
5.4 Payment of Exercise Price. Payment of the option exercise price shall
be made in full at the time the notice of exercise of the option is delivered
to the Company and shall be in cash, bank certified or cashier's check or
personal check (unless at the time of exercise the Committee in a particular
case determines not to accept a personal check) for the Common Stock being
purchased.
The Committee can determine at the time the option is granted for incentive
stock options, or at any time before exercise for nonqualified stock options,
that additional forms of payment will be permitted. To the extent
A-2
<PAGE>
permitted by the Committee and applicable laws and regulations (including, but
not limited to, federal tax and securities laws and regulations and state
corporate law), an option may be exercised by:
(a) delivery of shares of Common Stock held by an Optionee having a fair
market value equal to the exercise price, such fair market value to be
determined in good faith by the Committee;
(b) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price and
any federal, state or local withholding tax obligations that may arise in
connection with the exercise; provided, that the Committee, in its sole
discretion, may at any time determine that this subparagraph (b), to the
extent the instructions to the broker call for an immediate sale of the
shares, shall not be applicable to any Optionee whose employment with the
Company has terminated prior to the time of exercise; or
(c) delivery of a properly executed exercise notice together with
instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair
market value equal to the option exercise price.
5.5 Withholding Tax Requirement. The Company or any subsidiary shall have
the right to retain and withhold from any payment of cash or Common Stock
under the Plan the amount of taxes required by any government to be withheld
or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require an Optionee receiving shares of Common
Stock to reimburse the Company for any such taxes required to be withheld by
the Company and withhold such shares in whole or in part until the Company is
so reimbursed. In lieu thereof, the Company shall have the right to withhold
from any other cash amounts due or to become due from the Company to the
Optionee an amount equal to such taxes or retain and withhold a number of
shares having a market value not less than the amount of such taxes required
to be withheld by the Company to reimburse the Company for any such taxes and
cancel (in whole or in part) any such shares so withheld. If required by
Section 16(b) of the Exchange Act, the election to pay withholding taxes by
delivery of shares held by any person who at the time of exercise is subject
to Section 16(b) of the Exchange Act, shall be made either six months prior to
the date the option exercise becomes taxable or at such other times as the
Company may determine as necessary to comply with Section 16(b) of the
Exchange Act.
5.6 Assignability and Transferability of Option. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law
or otherwise) other than (i) by will or by the applicable laws of descent and
distribution, (ii) pursuant to a property settlement in connection with a
divorce proceeding, or (iii) as otherwise determined by the Committee by
resolution. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of this Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. The designation by an Optionee of a
beneficiary does not, in and of itself, constitute an impermissible transfer
under this Section.
5.7 Termination of Employment. If the Optionee's employment with the
Company or any subsidiary ceases for any reason other than termination for
cause, death or total disability, and unless by its terms the option sooner
terminates or expires, then the Optionee may exercise, for an 18-month period
(and in the case of incentive stock options, for a three-month period) that
portion of the Optionee's option which is exercisable at the time of such
cessation, but the Optionee's option shall terminate at the end of the 18-
month period (three-month period for incentive stock options) following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived by resolution adopted by the Committee within
90 days of such cessation.
If an Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall
mean dismissal for
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dishonesty, conviction or confession of a crime punishable by law (except
minor violations), fraud, misconduct or unauthorized disclosure of
confidential information. If an Optionee's employment with the Company or any
subsidiary is suspended pending an investigation of whether or not the
Optionee shall be terminated for cause, all Optionee's rights under any option
granted hereunder likewise shall be suspended during the period of
investigation.
If an Optionee's employment with the Company or any subsidiary ceases
because of a total disability, the Optionee's option shall not terminate until
the end of the 18-month period and, in the case of an incentive stock option,
shall not cease to be treated as an incentive stock option until the end of
the 12-month period, following such cessation (unless by its terms it sooner
terminates and expires). As used in this Plan, the term "total disability"
refers to a mental or physical impairment of the Optionee which is expected to
result in death or which has lasted or is expected to last for a continuous
period of 12 months or more and which causes the Optionee to be unable, in the
opinion of the Company and two independent physicians, to perform his or her
duties for the Company and to be engaged in any substantial gainful activity.
Total disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of
total disability to the Committee.
For purposes of this Section 5.7, a transfer of employment between or among
the Company and/or any subsidiary shall not be deemed to constitute a
cessation of employment with the Company or any subsidiary. For purposes of
this Section 5.7, with respect to incentive stock options, employment shall be
deemed to continue while the Optionee is on military leave, sick leave or
other bona fide leave of absence (as determined by the Committee). The
foregoing notwithstanding, employment shall not be deemed to continue beyond
the first 90 days of such leave, unless the Optionee's reemployment rights are
guaranteed by statute or by contract.
5.8 Death of Optionee. If an Optionee dies while he or she is employed by
the Company or any subsidiary or within the 12-month period following
cessation of such employment, any option held by such Optionee to the extent
that the Optionee would have been entitled to exercise such option, may be
exercised within 12 months after his or her death by the personal
representative of his or her estate or by the person or persons to whom the
Optionee's rights under the option shall pass by will or by the applicable
laws of descent and distribution.
5.9 Status of Shareholder. Neither the Optionee nor any party to which the
Optionee's rights and privileges under the option may pass shall be, or have
any of the rights or privileges of, a shareholder of the Company with respect
to any of the shares issuable upon the exercise of any option granted under
this Plan unless and until such option has been exercised.
5.10 Continuation of Employment. Nothing in this Plan or in any option
granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a subsidiary, or to interfere in
any way with the right of the Company or of any such subsidiary to terminate
his or her employment with the Company at any time.
5.11 Modification and Amendment of Option. Subject to the requirements of
Code Section 422 with respect to incentive stock options and to the terms and
conditions and within the limitations of this Plan, the Committee may modify
or amend outstanding options granted under this Plan. The modification or
amendment of an outstanding option shall not, without the consent of the
Optionee, impair or diminish any of his or her rights or any of the
obligations of the Company under such option. Except as otherwise provided in
this Plan, no outstanding option shall be terminated without the consent of
the Optionee. Unless the Optionee agrees otherwise, any changes or adjustments
made to outstanding incentive stock options granted under this Plan shall be
made in such a manner so as not to constitute a "modification" as defined in
Code Section 424(h) and so as not to cause any incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as
defined in Code Section 422(b).
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5.12 Limitation on Value for Incentive Stock Options. As to all incentive
stock options granted under the terms of this Plan, to the extent that the
aggregate fair market value (determined at the time the incentive stock option
is granted) of the stock with respect to which incentive stock options are
exercisable for the first time by the Optionee during any calendar year (under
this Plan and all other incentive stock option plans of the Company, a
subsidiary or a predecessor corporation) exceeds $100,000, such options shall
be treated as nonqualified stock options. The previous sentence shall not
apply if the Code is amended or if the Internal Revenue Service publicly
rules, issues a private ruling to the Company, any Optionee, or any legatee,
personal representative or distributee of an Optionee or issues regulations,
changing or eliminating such annual limit, in which case the limitation shall
be that provided by the Code or the Internal Revenue Service, as the case may
be.
5.13 Valuation of Common Stock Received Upon Exercise
5.13.1 Exercise of Options Under Sections 5.4(a) and (c). The value of
Common Stock received by the Optionee from an exercise under Sections
5.4(a) and 5.4(c) hereof shall be the fair market value as determined by
the Committee, provided that, if the Common Stock is traded in a public
market, such valuation shall be the average of the high and low trading
prices or bid and asked prices, as applicable, of the Common Stock for the
date of receipt by the Company of the Optionee's delivery of shares under
Section 5.4(a) hereof or delivery of the exercise notice under Section
5.4(c) hereof.
5.13.2 Exercise of Option Under Section 5.4(b). The value of Common
Stock received by the Optionee from an exercise under Section 5.4(b) hereof
shall equal (a) in the case of the sale of the Common Stock received as a
result of the exercise by a broker on the date of receipt by the Company of
the Optionee's exercise notice, the sales price received for such shares;
and (b) in all other cases, the average of the high and low trading prices
or bid and asked prices, as applicable, of the Common Stock for the date of
receipt by the Company of the Optionee's exercise notice.
Section 6. Greater Than 10% Stockholders.
6.1 Exercise Price and Term of Incentive Stock Options. If incentive stock
options are granted under this Plan to employees who own more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted.
This provision shall control notwithstanding any contrary terms contained in
any other document. The term and exercise price limitations of this provision
shall be amended to conform to any change required by a change in the Code or
by a ruling or pronouncement of the Internal Revenue Service.
6.2 Attribution Rule. For purposes of Section 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him which is actually issued and outstanding
immediately before the grant of the incentive stock option to the employee.
Section 7. Adjustment.
7.1 Upon Changes in Capitalization. The aggregate number and class of
shares for which options may be granted under this Plan, the number and class
of shares covered by each outstanding option, and the exercise price per share
thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment, or the payment of any stock dividend.
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<PAGE>
7.2 Effect of Change in Control.
7.2.1 Any option previously granted to any Optionee who is an employee
of the Company or any subsidiary on the date of a "Change in Control" shall
be immediately exercisable in full on or after such date during its term,
without regard to any time of exercise established under Section 5 hereof.
"Change in Control" shall mean the occurrence, at any time during the
specified term of an option granted under the Plan, of any of the following
events:
(i) The acquisition, by a person or group of persons acting in
concert, of a beneficial ownership interest in the Company, resulting
in the total beneficial ownership of such persons or group of persons
equaling or exceeding 50% of the outstanding Common Stock; provided,
however, that no such person or group of persons shall be deemed to
beneficially own (i) any Common Stock acquired directly from the
Company or (ii) any Common Stock held by the Company or any subsidiary
or any employee benefit plan (or any related trust) of the Company or
its subsidiaries. The Change in Control shall be deemed to occur on the
date the beneficial ownership of the acquiring person or group of
persons first equals or exceeds 50% of the outstanding Common Stock.
(ii) A change, within any period of 24 months or less, in the
composition of the Board such that at the end of such period a majority
of the directors who are then serving were not serving at the beginning
of such period, unless at the end of such period the majority of the
directors in office were nominated upon the recommendation of a
majority of the Board at the beginning of such period. The Change in
Control shall be deemed to occur on the date the last director
necessary to result in a Change in Control takes office or resigns from
office, as applicable.
(iii) Approval by shareholders of the Company of a merger,
consolidation or other reorganization having substantially the same
effect, or the sale of all or substantially all the consolidated assets
of the Company in each case, with respect to which the persons or group
of persons who were the respective beneficial owners of the Common
Stock immediately prior to such event do not, following such event,
beneficially own, directly or indirectly, more than 50% of the then
outstanding voting securities of the Company resulting from such event
or the Company purchasing or receiving assets pursuant to such event.
If more than one of the foregoing events shall occur, each such event shall
constitute a separate Change in Control.
7.2.2 Notwithstanding any other provisions in the Plan, prior to the
passage of one year from and after any Change in Control, each Optionee shall
have the right to require the Company (or, if the Company is not the survivor
of a merger, consolidation or reorganization with an acquiror, the acquiror)
to purchase from him or her any or all unexercised options granted under this
Plan at a purchase price equal to (i) the excess of the fair market value per
share over the exercise price multiplied by (ii) the number of option shares
specified by the Optionee for purchase in a written notice to the Company (or,
if the Company is not the survivor of a merger, consolidation or
reorganization with an acquiror, the acquiror), attention of the Secretary.
7.2.3 For purposes of Section 7.2.2 above, "fair market value per share"
shall mean, (i) except in the case of a merger, consolidation or
reorganization with an acquiror in which the Company is not the survivor (a
"Termination Merger"), the higher of (A) the average of the highest sales
price per share of the Company's Common Stock on the NASDAQ Stock Market (as
reported in The Wall Street Journal, Midwest Edition) (or, if the Company's
Common Stock is not then traded on the NASDAQ Stock market, on the principal
market where such Common Stock is actively traded) on each of the five trading
days immediately preceding the date the Optionee so notifies the Company or
(B) the average of the highest sales price per share of the Company's Common
Stock on the NASDAQ Stock Market (as reported in The Wall Street Journal,
Midwest Edition) (or, if the Company's Common Stock is not then traded on the
NASDAQ Stock Market, reported on the principal market where such Common Stock
is actively traded) on each of the five trading days immediately preceding the
date of the Change in Control, and (ii) in the case of a Termination Merger,
the higher of (C) the fair market
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<PAGE>
value of the consideration receivable per share by holders of Common Stock in
such Termination Merger, which fair market value as to any securities included
in such consideration shall be the average of the highest sales price per unit
of such security on the NASDAQ Stock Market (as reported in The Wall Street
Journal, Midwest Edition) (or, if such security is not then traded on the
NASDAQ Stock Market, reported on the principal market where such security is
actively traded) on each of the five trading days immediately preceding the
date of the Termination Merger and as to any such security not actively traded
in any market and as to all other property included in such consideration,
shall be the amount determined by the Committee in its discretion or (D) the
amount determined pursuant to Clause (i)(B) of this Section 7.2.3. The amount
payable to each Optionee by the Company or acquiror, as the case may be, shall
be in cash or by certified check and shall be reduced by any taxes required to
be withheld.
7.3 Fractional Shares. In the event of any adjustment in the number of
shares covered by an option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
7.4 Determination of Committee to Be Final. All Section 7 adjustments shall
be made by the Committee, and its determination as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive.
Unless an Optionee agrees otherwise, any change or adjustment to an incentive
stock option shall be made in such a manner so as not to constitute a
"modification" as defined in Code Section 424(h) and so as not to cause his or
her incentive stock option issued hereunder to fail to continue to qualify as
an incentive stock option as defined in Code Section 422(b).
Section 8. Securities Regulation. Shares shall not be issued with respect
to an option granted under this Plan unless the exercise of such option and
the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Exchange
Act, the rules and regulations promulgated thereunder, and the requirements of
any stock exchange or inter-dealer quotation system upon which the shares may
then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance, including the availability of an
exemption from registration for the issuance and sale of any shares hereunder.
Inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of
an exemption from registration for the issuance and sale of any shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such shares as to which such requisite authority shall
not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is
provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation, may be stamped on
stock certificates in order to assure exemption from registration. The Company
may also require such other action or agreement by the Optionees as it may
from time to time deem to be necessary or advisable. THE COMPANY SHALL NOT BE
OBLIGATED, BY REASON OF THIS PROVISION OR OTHERWISE, TO UNDERTAKE REGISTRATION
OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange or inter-dealer quotation system, shares shall not be issued with
respect to an option granted this Plan unless, prior to issuance, such
exchange or inter-dealer quotation system shall have authorized the listing of
the shares thereon.
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Section 9. Amendment and Termination.
9.1 Board Action. The Board may at any time suspend, amend or terminate
this Plan, provided that except as set forth in Section 7, the approval of the
holders of a majority of the Company's outstanding shares of voting capital
stock present and entitled to vote at any meeting is necessary for the
adoption by the Board of any amendment which will:
(a) increase the number of shares which are to be reserved for the
issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons other
than those currently permitted to receive stock options under this Plan; or
(c) require shareholder approval under applicable law, including Section
16(b) of the Exchange Act.
9.2 Automatic Termination. Unless sooner terminated by the Board, this Plan
shall terminate ten years from the earlier of (a) the date on which this Plan
is adopted by the Board or (b) the date on which this Plan is approved by the
stockholders of the Company. No option may be granted after such termination
or during any suspension of this Plan. The amendment or termination of this
Plan shall not, without the consent of the option holder, alter or impair any
rights or obligations under any option theretofore granted under this Plan.
Section 10. Effectiveness Of This Plan. This Plan shall become effective
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock present
and entitled to vote at any meeting at any time within 12 months before or
after the adoption of this Plan. Options may be granted hereunder prior to
such stockholder approval, but subject thereto.
Adopted by the Board of Directors on April 9, 1999 and approved by the
stockholders on , 1999.
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PROXY
ROHN Industries, Inc. PROXY/VOTING INSTRUCTION CARD
6718 West Plank Road
Peoria, Illinois 61604
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Gene Locks and Brian B. Pemberton and each of
them, as the proxies and representatives of the undersigned, with full power of
substitution, to vote all of the shares of common stock of ROHN Industries, Inc.
which the undersigned would be entitled to vote, with all powers which the
undersigned would have if personally present, at the Annual Meeting of
Stockholders to be held on May 18, 1999 and at any adjournment or postponement
thereof, as designated on the reverse side.
Election of Directors:
Nominees: J. Laeri, M. Levine, G. Locks, B. Pemberton, A. Schwartz
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder(s). If no direction is made, this proxy will be
voted FOR proposals 1 and 2.
Please sign and date on the reverse side
and mail this proxy in the enclosed return envelope as promptly as possible.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
[X] Please mark your
vote as in this
example.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- ----------------------------------------------------------------------------------------------------------
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] 2. Proposal to approve the ROHN [_] [_] [_]
Directors 1999 Stock Option Plan.
(see reverse)
To withhold authority to vote for In their discretion the proxies and representatives are
any individual or nominee(s) authorized to vote upon such other business as may properly
write the name(s) of the nominee(s) come before the meeting.
on the line below.
- ----------------------------------- NOTE: Please sign exactly as name(s) appear(s) below.
If shares of common stock are held in the name of more
than one person, all 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.
-----------------------------------------------------------
Signature Date(s)
-----------------------------------------------------------
Signature (if held jointly) Date(s)
- ----------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
