<PAGE> 1
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
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EVEREST & JENNINGS INTERNATIONAL LTD.
- -------------------------------------------------------------------------------
(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] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
<PAGE> 2
[ ] 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.:
- -------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
EVEREST & JENNINGS INTERNATIONAL LTD.
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
June 6, 1995
Notice is hereby given that the 1995 Annual Meeting of Stockholders (the
"Annual Meeting") of Everest & Jennings International Ltd. (the "Company") will
be held at the offices of the Company, 1100 Corporate Square Drive, St. Louis,
Missouri 63132, on Tuesday, June 6, 1995, commencing at 11:00 a.m. The Annual
Meeting is being held for the following purposes:
(1) To elect five members of the Board of Directors;
(2) To consider and vote upon approval of the adoption of the 1994
Everest & Jennings International Ltd. Stock Option Plan;
(3) To ratify the appointment of Price Waterhouse LLP as the
independent accountants of the Company for fiscal 1995; and
(4) To transact such other business as properly may come before
the meeting and any adjournment thereof.
Only stockholders of record at the close of business on April 28, 1995 are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person. IN
ANY EVENT, PLEASE MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF
PROXY AND RETURN YOUR VOTED PROXY OR PROXIES PROMPTLY IN THE ENCLOSED POSTAGE-
PAID ENVELOPE WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING.
YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH
TO VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
TIMOTHY W. EVANS
Secretary
St. Louis, Missouri
May 5, 1995
<PAGE> 4
EVEREST & JENNINGS INTERNATIONAL LTD.
1100 Corporate Square Drive
St. Louis, Missouri 63132
------------------------------
PROXY STATEMENT
------------------------------
GENERAL
This Proxy Statement (first mailed on or about May 5, 1995 to stockholders
of record on April 28, 1995) is furnished in connection with the solicitation
by the Board of Directors of Everest & Jennings International Ltd. (the
"Company") of Proxies for use at the 1995 Annual Meeting of Stockholders (the
"Annual Meeting"), and at any adjournment thereof. The Annual Meeting will be
held on Tuesday, June 6, 1995, at 11:00 a.m., at the offices of the Company,
1100 Corporate Square Drive, St. Louis, Missouri 63132.
The Annual Meeting is being held: (i) to elect five members of the Board
of Directors of the Company; (ii) to consider and vote upon approval of the
adoption of the 1994 Everest & Jennings International Ltd. Stock Option Plan
(the "1994 Plan"); (iii) to ratify the appointment of Price Waterhouse LLP as
the independent accountants of the Company for fiscal 1995; and (iv) to
transact such other business as properly may come before the meeting and any
adjournment thereof.
A Proxy in the accompanying form which is properly executed and received by
the Company and not revoked prior to the Annual Meeting, will be voted in
accordance with the stockholder's direction and in the absence of direction
will be voted FOR each of the nominees for director shown on the form of Proxy,
FOR approval of the adoption of the 1994 Plan, and FOR ratification of the
appointment of Price Waterhouse LLP as the independent accountants of the
Company for fiscal 1995. Any Proxy executed and returned to the Company may be
revoked by the person giving it by delivering a later signed and dated Proxy or
other written notice of revocation to the Secretary of the Company at any time
prior to the exercise of the Proxy. A Proxy is also subject to revocation if
the person executing the Proxy is present at the Annual Meeting and chooses to
vote in person.
<PAGE> 5
STOCK OWNERSHIP
The stockholder shown in the following table is the only person known to
have owned beneficially, as of March 31, 1995, more than 5% of any class or
series of the Company's voting stock.
<TABLE>
<CAPTION>
Shares of Series A Shares of Series B Shares of Series C
Shares of Common Stock Preferred Stock Preferred Stock Preferred Stock
Beneficially Owned Beneficially Owned Beneficially Owned Beneficially Owned
<F1><F2> <F1><F2> <F1><F2> <F1><F2>
----------------------- ------------------ ------------------ -------------------
Name and Address of Number of Number of Number of Number of
Beneficial Owner Shares Percent Shares Percent Shares Percent Shares Percent
- ----------------------- ----------- ---------- --------- ------- --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIL (Far East Holdings) 57,799,352 80% 7,218,204 100% 786,357 100% 20,000,000 100%
Limited ("BIL")
2801 Three Exchange
Square Central
Hong Kong
- ---------------
<FN>
<F1> For purposes of this chart and the beneficial stock ownership tables on pages 6 and 10, the
percentage of ownership of the Company's Common Stock is based on the 72,257,812 shares of Common
Stock actually outstanding as of March 31, 1995. The following shares are not included: 203,136
shares issuable under currently exercisable options granted under the Company's 1990 Omnibus Stock
Incentive Plan, 400,000 shares issuable under options granted to Bevil J. Hogg and 56,450 shares
issuable on exercise of outstanding options granted under the Company's 1981 Stock Option Plan (all
such options issued under the 1990 Omnibus Stock Incentive Plan, the 1994 Plan and the 1981 Stock
Option Plan all of which are or will become exercisable within 60 days after March 31, 1995 at
exercise prices in excess of the recent closing prices for the Common Stock and which the Company
accordingly believes such options are unlikely to be exercised within 60 days of March 31, 1995);
7,218,204 shares issuable on exercise of the outstanding Series A Preferred Stock; 786,357 shares
issuable on conversion of the outstanding Series B Preferred Stock; and 20,000,000 shares issuable on
conversion of the outstanding Series C Preferred Stock.
<F2> Each outstanding share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Common Stock is entitled to one vote and the holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Common Stock vote together as a single class
on all matters submitted to a stockholder vote (including the election of directors) other than a
matter with respect to which any such class would be entitled under applicable law to vote
separately.
</TABLE>
QUORUM AND VOTING
Only stockholders of record as of the close of business on April 28, 1995
(the "Record Date") will be entitled to vote at the Annual Meeting. As of
March 31, 1995, 72,257,812 shares of Common Stock, $0.01 par value; 7,218,204
shares of Series A Preferred Stock, $0.01 par value; 786,357 shares of Series B
Preferred Stock, $0.01 par value; and 20,000,000 shares of Series C Preferred
Stock, $0.01 par value, were outstanding.
<PAGE> 6
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock, Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock is necessary to
constitute a quorum for transacting business. The holders of Common Stock,
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
are entitled to one vote per share.
Cumulative voting is permitted in the election of directors provided that
at least one stockholder has given notice at the Annual Meeting, before voting
has commenced, of an intention to cumulate votes. If any one stockholder gives
notice of an intention to cumulate votes, all stockholders may cumulate their
votes for the candidates. To cumulate votes, a stockholder may cast as many
votes as there are directors to be elected multiplied by the number of shares
registered in his or her name on the Record Date. These votes may be cast all
for one candidate or may be distributed among the candidates at the discretion
of the stockholder. In any election of directors, the five candidates
receiving the highest number of affirmative votes are elected; votes against a
director and votes withheld have no legal effect. The Company has not been
informed that any stockholder intends to cumulate votes at the Annual Meeting.
Whether or not votes are cumulated for the election of directors at the Annual
Meeting, BIL has the power as of March 31, 1995 to elect all five of the
Directors.
The approval of the adoption of the 1994 Plan and the ratification of the
appointment of Price Waterhouse LLP as independent accountants for the Company
for fiscal 1995 will require the affirmative vote of a majority of the votes of
the shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock, voting together as a single class, present and
voting at the Annual Meeting in person or by Proxy.
Abstentions and broker "non-votes" are not counted in the total number of
votes cast, and thus will have no effect on the outcome of voting on directors.
A broker "non-vote" occurs when a nominee holding shares for a beneficial owner
is present at the meeting but does not vote upon a particular proposal because
the nominee does not have discretionary voting power with respect to that
proposal and has not received instructions from the beneficial owner. Broker
"non-votes" and the shares as to which stockholders abstain are included for
purposes of determining whether a quorum of shares is present at a meeting and,
therefore, as to matters other than the election of directors, have the same
effect as if such shares were voted against such matters.
<PAGE> 7
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors
In accordance with the Company's Bylaws, the Board of Directors has fixed
the number of directors at five members as of the Annual Meeting.
Each of the persons listed below has been nominated by the Company's
current Board of Directors for election to the Board at the Annual Meeting.
Each director will hold office until the next Annual Meeting and until his or
her successor is elected and qualified. In addition to the nominees listed
below, Dianne J. Jennings, Randall D. Humphreys, B. D. Hunter and C. Richard
Piazza served as directors during all or a portion of 1994. Messrs. Piazza and
Humphreys resigned from the Board on January 21, 1994, Mr. Hunter resigned from
the Board on April 11, 1994 and Ms. Dianne S. Jennings, a current director, has
decided not to stand for re-election.
If the enclosed Proxy is properly executed and returned to the Company
before the Annual Meeting, it will be voted in the manner directed by the
stockholder(s) submitting such proxy. If no such direction is provided, the
proxy will be voted FOR the nominees shown on the Proxy. The persons named in
the Proxy will have the right to vote cumulatively and to distribute votes
among nominees as they consider advisable. If any of the nominees becomes
unavailable for any reason, or if a vacancy should occur before the election,
the shares represented by the Proxy will be voted FOR the person, if any, who
is designated by the Board of Directors to replace the nominee or to fill the
vacancy on the Board. The Board of Directors has no reason to believe that any
of the nominees will be unavailable or that any vacancy on the Board of
Directors will occur. All nominees have consented to be named and have
indicated their intent to serve if elected.
<PAGE> 8
Information Regarding Nominees and Executive Officers
The following table sets forth certain information concerning the business
experience of the nominees for election to the Board of Directors.
<TABLE>
<CAPTION>
Principal Occupations and Affiliations
Over the Last Five Years and Directorships Director
Name Age in Other Publicly Held Companies Since
- ------------------- --- ------------------------------------------------------------------------ --------
<S> <C> <C> <C>
Sandra L. Baylis 47 Executive Assistant, Brierley Investments Ltd., an Australian investment 1994
holding company, since 1993; Executive Assistant, Pioneer International
Ltd., a producer of building construction materials from 1990 to 1993.
Bevil J. Hogg 47 President and Chief Executive Officer of the Company since January 21, 1994
1994; Executive Vice President of the Company from January 14, 1994 to
January 20, 1994; Chief Executive Officer of Medical Composite
Technology, Inc., a wheel chair designer and manufacturer, from
December 16, 1992 to January 13, 1994; Chief Executive Officer of Cycle
Composite, Inc., a bicycle manufacturer, from 1986 to December 1992.
Rodney F. Price 51 Executive Director, Brierley Investments Ltd., an Australian investment 1994
holding company, since 1993; Managing Director and Chief Executive
Officer, Pioneer International Ltd., a producer of building construction
materials, from 1990 to 1993; Managing Director and Chief Executive
Officer, Industrial Equity Limited (IEL) from 1986 to 1989; Chairman,
Australia Media Ltd.; Director, Ilvis.
Robert C. Sherburne 74 Private investor; Chairman of Zac Industries, a manufacturer of computer 1982
peripheral components, from February 1985 to June 1990; Director of Zero
Corporation from 1975 to 1992; Director of Golden Systems Inc.
Charles D. Yie 36 General Partner of Ampersand Specialty Materials Ventures Limited 1994
Partnership ("ASMVLP"), a venture capital investment company, since
1989; Principal from 1987 to 1989. Director of Aseco Corporation.
</TABLE>
<PAGE> 9
The following table sets forth the beneficial stock ownership as of
March 31, 1995 of each of the nominees for election to the Board of Directors,
each of the executive officers named in the Summary Compensation Table on
page 15 (the "named executives officers") and of the Directors and executive
officers as a group. The number of shares shown includes shares, if any, held
beneficially or of record by each person's spouse; voting and investment power
of the shares also may be shared by spouses.
<TABLE>
<CAPTION>
Shares of Series A Shares of Series B Shares of Series C
Shares of Common Stock Preferred Stock Preferred Stock Preferred Stock
Beneficially Owned<F1> Beneficially Owned<F1> Beneficially Owned<F1> Beneficially Owned<F1>
---------------------- ----------------------- ---------------------- ----------------------
Name and Address of Number of Number of Number of Number of
Beneficial Owner Shares Percent Shares Percent Shares Percent Shares Percent
- ------------------- -------------- ------- ------------- ------- ----------- ------- -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sandra L. Baylis 0 <F2> 0 <F2> 0 <F2> 0 <F2>
Bevil J. Hogg 207,650 <F2> 0 <F2> 0 <F2> 0 <F2>
Rodney F. Price 57,799,352<F2> 80% 7,218,204<F3> 100% 786,357<F3> 100% 20,000,000<F3> 100%
Robert C. Sherburne 500 <F2> 0 <F2> 0 <F2> 0 <F2>
Charles D. Yie 2,581,970<F4> 4% 0 <F2> 0 <F2> 0 <F2>
John G. Cowan 650 <F2> 0 <F2> 0 <F2> 0 <F2>
Timothy W. Evans 0 <F2> 0 <F2> 0 <F2> 0 <F2>
Robert A. Swatek 100 <F2> 0 <F2> 0 <F2> 0 <F2>
Directors and
Executive Officers
as a group
(9 persons) 60,590,122 7,218,204<F3> 100% 786,357<F3> 100% 20,000,000<F3> 100%
- ---------------
<FN>
<F1> See Notes (1) and (2) to the Stock Ownership Chart on page 2.
<F2> The percentage of shares beneficially owned does not exceed 1% of the outstanding shares of the applicable
class.
<F3> Consists entirely of shares of stock beneficially owned by BIL and which Mr. Price may be deemed to own
beneficially because he is a director of BIL.
<F4> Consists entirely of shares of stock beneficially owned by ASMVLP and which Mr. Yie may be deemed to own
beneficially because he is a general partner of ASMVLP.
</TABLE>
Agreement Regarding the Election of Directors
The Company has agreed, through July 1995 and pursuant to the terms of the
agreement concerning the acquisition of Medical Composite Technology, Inc., to
nominate two nominees for election to the Board of Directors as designated by
the holders of at least a majority of the Common Stock issued by the Company in
such acquisition. Messrs. Yie and Hogg were nominated as directors in
accordance with this agreement. Additionally, the Company has agreed that the
Board of Directors would not exceed 15 persons during such time period.
<PAGE> 10
PROPOSAL NO. 2
APPROVAL OF ADOPTION OF
1994 EVEREST & JENNINGS INTERNATIONAL LTD. STOCK OPTION PLAN
General
The 1994 Plan was adopted by the Board of Directors of the Company
effective April 25, 1994, subject to approval by the stockholders of the
Company. The purposes of the 1994 Plan are to promote the interests of the
Company and its stockholders by (i) attracting and retaining employees of
outstanding ability; (ii) motivating employees by means of performance-related
incentives to achieve longer range performance goals; (iii) providing incentive
compensation opportunities which are competitive with those of other major
corporations; and (iv) enabling such employees to participate in the long-term
growth and financial success of the Company.
A copy of the 1994 Plan is attached as Annex A to this Proxy Statement. The
following summary of the terms of the 1994 Plan is qualified in its entirety by
reference thereto. Stockholders are urged to refer to the 1994 Plan document
and to read it carefully for a complete statement of provisions summarized
therein.
The 1994 Plan makes available up to 4,412,000 shares of Common Stock for
awards to eligible employees of the Company in the form of non-qualified stock
options (the "Awards"). If any option expires or terminates without having been
exercised in full, the unpurchased shares subject to such option will again be
available for the grant of options under the 1994 Plan. Any shares which are
used as full or partial payment by an optionee upon exercise of an option will
also be available for the purposes of the 1994 Plan. Awards under the 1994
Plan may be made to any employee, consultant or member of the Board of
Directors of the Company (collectively, the "Employees"). As of March 31,
1995, approximately 716 Employees were deemed eligible to participate in the
1994 Plan.
The 1994 Plan is administered by a committee appointed by the Board of
Directors to administer the Plan (the "Committee"). The Committee shall at all
times consist of three or more members, a majority of which shall be non-
management members of the Board of Directors. At present, the members of the
Committee are Mr. Price, Mr. Yie and Ms. Jennings. The Committee has the sole
and complete authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the 1994 Plan as it may
from time to time deem advisable, and to interpret the terms and provisions of
the 1994 Plan.
Subject to the provisions of the 1994 Plan, the Committee has the sole and
complete authority to determine the Employees to whom stock options shall be
granted, the number of shares to be covered by each stock option and the
conditions and limitations applicable to the exercise of the stock options, if
any, in addition to those provided for in the 1994 Plan. Awards under the 1994
Plan are confirmed, as appropriate in the discretion of the Committee, by an
Award agreement executed by the Committee and each Employee selected by the
Committee to receive an Award under the 1994 Plan ("Participant"). The
Committee's decisions are final and binding upon all parties.
To the extent determined by the Committee, Awards may provide a
participating Employee (a "Participant") with cash payments in lieu of or in
addition to an Award.
<PAGE> 11
The Committee may determine that any stock option shall become exercisable
in installments and may determine that the right to exercise such stock option
as to such installments shall expire on different dates or on the same date.
The Committee shall establish the option price at the time each stock option is
granted. Such option price is subject to Board approval only if it is less
than the Fair Market Value (as hereinafter defined) of such stock at the time
of the granting of the option. The option price of each share as to which an
option is exercised shall be paid in full at the time of such exercise. Such
payment shall be made (i) in cash, (ii) by tender of shares of Common Stock
owned by the Participant valued at the closing price of the Common Stock on the
American Stock Exchange as of the date of the exercise ("Fair Market Value"),
subject to such limitations on the tender of Common Stock as the Committee may
impose, or (iii) by a combination of cash and shares of Common Stock. In
addition, the Committee may provide the Participant with assistance in
financing the option price and applicable taxes, on such terms and conditions
as it determines appropriate.
No Award is assignable or transferable, and no right or interest of any
Participant is subject to any lien, obligation or liability of the Participant,
except by will or the laws of descent and distribution. Subject to limitations
set out in the next paragraph, options will be exercisable at such time or
times as the Committee in each instance approves, which need not be uniform for
all options.
Except as otherwise provided by the Committee, if a Participant ceases to
be an Employee for any reason other than upon the occurrence of a Participant's
death, a Participant's right to any nonvested Award shall be immediately
forfeited 30 days after the Participant's termination date and if a Participant
ceases to be an Employee by reason of the Participant's death, the
Participant's rights to any nonvested Award shall be forfeited one year after
the Participant's death. The Committee may determine, in its discretion, that
any portion of a Participant's nonvested Award shall become vested upon
termination of employment. The Committee at the time of grant of an Award,
shall specify such terms and conditions as appropriate for the exercise of any
vested Awards following termination of employment.
No Award will be granted more than five years after the effective date of
the 1994 Plan.
Change of Control
Upon the occurrence of a change of control (as defined in the 1994 Plan),
the Committee shall, notwithstanding anything to the contrary contained in the
1994 Plan, either at the time an Award is made or at any time prior to or
simultaneously with a Change of Control (i) provide for the acceleration of any
time periods or waiver of any conditions relating to the exercise or
realization of such Awards so that such Awards may be exercised or realized in
full on or before a date fixed by the Committee; or (ii) provide for purchase
of such Awards, upon the Participant's request, for an amount of cash equal to
the amount which could have been attained upon the exercise or realization or
such rights had such Awards been currently exercisable or payable; or (ii)
cause the Awards then outstanding to be assumed, or new rights substituted
therefor which are equivalent to the Awards, by the surviving corporation in
such Change of Control. The Committee may, in its discretion, include such
further provisions and limitations in any agreement entered into with the
respect to an Award as it may deem equitable and in the best interest of the
Company.
<PAGE> 12
Adjustment Upon Changes in Capitalization
In the event of a stock dividend or split, recapitalization,
reclassification, merger, consolidation, spin-off, combination or exchange of
shares or similar corporate change, or any distributions to common shareholders
other than cash dividends, the Committee may, in its sole discretion, in order
to prevent the dilution or enlargement of the values of the shares of Common
Stock reserved hereunder, make such substitution or adjustment, if any, as it
deems to be appropriate or equitable, as to the number or kind of shares of
Common Stock or other securities issued or reserved for issuance pursuant to
the 1994 Plan, including the number of outstanding stock options and the price
thereof, and the number of outstanding Awards of other types to fairly preserve
the intended benefits of the 1994 Plan to the Participants and the Company.
Amendment of 1994 Plan
Subject to approval by the Board of Directors, the Committee may amend,
suspend or terminate the 1994 Plan or any portion thereof at any time, provided
that no amendment shall be made without stockholder approval which shall
increase the total number of shares of Common Stock reserved for issuance
pursuant to the 1994 Plan or which must otherwise be approved by stockholders
in compliance with applicable federal or state law (including Rule 16b-3 (or
any successor provision) under the Securities Exchange Act of 1934), and the
requirements of any stock exchange or other trading system upon which shares of
Common Stock may then be listed. Notwithstanding anything to the contrary
contained in the 1994 Plan, the Committee may amend the 1994 Plan in such
manner as may be necessary to conform the 1994 Plan with applicable federal and
state rules and regulations.
The Committee may amend, modify or terminate any outstanding Award with the
Participant's written consent at any time prior to payment or exercise in any
manner not inconsistent with the terms of the 1994 Plan, including without
limitation, to change the date or dates as of which a stock option becomes
exercisable.
Federal Income Tax Consequences
The grant of a non-qualified stock option under the 1994 Plan will not
result in taxable income at the time of grant for the optionee or the Company.
Upon exercising a non-qualified stock option, the optionee will recognize
ordinary income in the amount by which the fair market value on the date of
exercise exceeds the option price; the Company will be entitled to a deduction
for the same amount. However, if the sale of the stock by the optionee at a
profit would subject the optionee to suit under Section 16(b) of the Securities
Exchange Act of 1934 (the "Section 16(b) restriction"), the optionee will not
recognize income until the Section 16(b) restriction lapses unless the optionee
elects to recognize income at the time of exercise. In the absence of such
election, upon the lapse of the Section 16(b) restriction, the optionee will
recognize income equal to the excess, if any, of the fair market value of the
stock at the time the Section 16(b) restriction lapses over the option price.
If the optionee is subject to the Section 16(b) restriction, the Company's
deduction will be taken in the taxable year in which the optionee must include
the amount in gross income.
If the optionee exercises an option and surrenders stock already owned
by him or her ("Old Shares"), the optionee will recognize income to the extent
<PAGE> 13
the number of shares acquired ("New Shares") exceeds the number of Old Shares
exchanged, on the receipt of such additional shares in an amount equal to the
fair market value of such additional shares less any cash paid for them and the
Company will be entitled to a deduction in an amount equal to such income. The
basis of such additional shares will be equal to the fair market value of such
shares on the date of exercise (or, if applicable, the date the Section 16(b)
restriction lapses), and the holding period for such additional shares will
commence on the date the option is exercised.
The tax treatment to an optionee of a disposition of shares acquired
through the exercise of an option is dependent upon the length of time the
shares have been held. Generally, there will be no tax consequence to the
Company in connection with the disposition of shares acquired under a non-
qualified option.
The following table contains certain information relating to conditional
grants to Mr. Hogg made on January 21, 1994 and to Mr. Hogg and the other
Participants made on August 1, 1994.
<TABLE>
New Plan Benefits
1994 Plan
-----------------
<CAPTION>
Name and Position Options Grants <F1>
- ---------------------------------------------------------- -------------------
<S> <C>
Bevil J. Hogg
President, Chief Executive Officer and a Director of
the Company 1,000,000
John G. Cowan
Chairman of the Board of Directors, President and
Chief Executive Officer of Everest & Jennings Canadian
Limited 250,000
Timothy W. Evans
Vice President, Chief Financial Officer and Secretary
of the Company 75,000
Robert A. Swatek
Executive Vice President, Operations of the Company 250,000<F2>
All current executive officers as a group (5 persons) 1,650,000<F3>
All current non-executive directors as a group (4 persons) 75,000
All current non-executive employees as a group (478 persons) 2,357,000
- ---------------
<FN>
<F1> Other than 400,000 shares issued to Mr. Hogg (which were exercisable
immediately) these options become exercisable in 50% increments when
the Company achieves certain performance goals and are automatically
exercisable five years from date of grant, assuming continuous
employment with the Company.
<PAGE> 14
<F2> These option grants were cancelled upon the termination of Mr.
Swatek's employment.
<F3> Does not include option grants to Mr. Swatek which were cancelled upon
the termination of his employment.
</TABLE>
Vote Required and Recommendation For Approval
The Board of Directors recommends a vote FOR approval of the adoption of
the 1994 Plan. The affirmative vote of a majority of the shares of Common
Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock present or represented by proxy at the meeting is required for
approval of the adoption of the 1994 Plan.
BIL has indicated that it intends to vote all of its shares of Common
Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock FOR adoption of the 1994 Plan. Such a vote by BIL, standing
alone, would constitute approval of 1994 Plan by the stockholders.
<PAGE> 15
PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors upon the recommendation of its Audit Committee, has
determined to appoint Price Waterhouse LLP as the Company's independent
accountants for the fiscal year ending December 31, 1995.
The Company has employed Price Waterhouse LLP as its independent
accountants since 1990. During fiscal year ended December 31, 1994, the audit
services of Price Waterhouse LLP included the audit of the Company's
consolidated financial statements, services related to filings with the
Securities and Exchange Commission and accounting consultation services.
The rendition of routine audit and non-audit services by Price Waterhouse
LLP was reviewed and approved in advance by the Audit Committee on behalf of
the Board of Directors. As part of the process, the Audit Committee also
considered whether the rendition by that firm of certain non-audit services
affects its independence as the Company's independent accountants and concluded
that it did not.
It is anticipated that representatives of Price Waterhouse LLP will be
present at the Annual Meeting and will have an opportunity to make a statement,
if they wish to do so, and to respond to any appropriate inquiries of the
stockholders or their representatives.
Vote Required and Recommendation for Approval
The Board of Directors and its Audit Committee recommend that the
stockholders vote FOR ratification of the appointment of Price Waterhouse LLP
as independent accountants to perform the audit of the Company's accounts for
the 1995 fiscal year. The affirmative vote of a majority of the shares of
Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock present or represented by proxy at the meeting is required for
ratification of such appointment by the stockholders.
BIL has indicated that it intends to vote all of its shares of Common
Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock FOR ratification of the appointment of Price Waterhouse LLP as
independent accountants for the fiscal year ending December 31, 1995. Such a
vote by BIL, standing alone, would constitute ratification of such appointment
by the stockholders.
<PAGE> 16
IDENTIFICATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning all current
executive officers of the Company. Unless otherwise noted, all positions
listed in the table are with the Company.
<TABLE>
<CAPTION>
Officer Positions with Business Experience
Name Age Since the Company During Past Five Years
- ---------------- --- ------- ------------------------------ --------------------------------------------
<S> <C> <C> <C> <C>
Bevil J. Hogg 47 1994 President, Chief Executive President and Chief Executive Officer since
Officer and a Director of the January 21, 1994; Executive Vice President
Company from January 14, 1995 to January 20, 1994;
CEO of Medical Composite Technology, Inc.
from December 16, 1992 to January 13, 1994;
CEO of Cycle Composite, Inc. from 1986
to December, 1992.
John G. Cowan 56 1974 Chairman of the Board of Chairman of the Board of Directors,
Directors, President and Chief President and Chief Executive Officer of
Executive Officer of Everest & Jennings Canadian Limited,
Everest & Jennings Canadian Ontario, Canada, a wholly owned subsidiary
Limited of the Company, since 1974.
Timothy W. Evans 45 1993 Vice President, Chief Vice President, Chief Financial Officer and
Financial Officer and Secretary since September 20, 1994;
Secretary Controller from June 1, 1993 to
September 19, 1994; prior to joining the
Company and during the past five years,
Mr. Evans was Director, Corporate
Development and Group Controller of
Chromalloy America Corporation, a large
diversified company.
Angelo A. Conti 37 1994 Vice President, Operations Vice President, Operations since June 16,
1994; Director, International Operations of
Herman Miller, Inc., a manufacturer of
office furniture systems, from 1992 to 1994;
Director, Northeast Operations of Herman
Miller from 1988 to 1992.
Robert B. Senn 50 1994 Executive Vice President, Executive Vice President, Sales and
Sales and Marketing Marketing since September 19, 1994;
President/Chief Executive Officer of
Guardian Products, Inc., a manufacturer of
wheel chairs and other durable medical
equipment, from 1990 to 1994.
</TABLE>
<PAGE> 17
INFORMATION CONCERNING MANAGEMENT
Summary of Cash Compensation and Certain Other Compensation
The following Summary Compensation Table shows for the fiscal years ended
December 31, 1992, 1993 and 1994 the cash compensation paid by the Company as
well as certain other compensation paid or accrued for those years, to the
Chief Executive Officer, the other two current executive officers and one
former executive officer whose salary and bonus exceeded $100,000 during the
fiscal year ended December 31, 1994 for services rendered in all capacities.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
----------------------------- ----------------------- -------
Restricted
Other Annual Stock Options/ LTIP All Other
Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------------- ---- -------- ----- ------------ ---------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bevil J. Hogg <F1> 1994 $211,666 0 -- 0 1,000,000 0 $58,679<F2>
President, Chief Executive 1993 -- -- -- -- -- -- --
Officer of the Company 1992 -- -- -- -- -- -- --
John G. Cowan 1994 $118,260 0 -- 0 250,000 0 0
President and Chief 1993 $121,500 0 -- 0 0 0 0
Executive Officer of 1992 $121,500 0 -- 0 0 0 0
Everest & Jennings Canadian
Limited
Timothy W. Evans <F3> 1994 $100,000 0 -- 0 75,000 0 $ 135<F4>
Executive Vice President 1993 -- -- -- 0 -- 0 0
and Chief Financial Officer 1992 -- -- -- -- -- -- --
of the Company
Robert A. Swatek <F5> 1994 $153,111 0 -- 0 250,000<F6> 0 $13,231<F7>
Executive Vice President, 1993 $121,793 0 -- 0 69,000<F6> 0 $ 53<F4>
Operations of the Company 1992 -- -- -- -- -- -- --
- ---------------
<FN>
<F1> Hired on January 21, 1994.
<F2> Represents relocation expense in connection with his hiring including $10,680 tax gross-up on relocation
expenses.
<F3> Promoted to executive officer on September 20, 1994, he was employed by the Company on June 1, 1993.
<F4> Represents the Company's matching contribution under the 401K Plan.
<F5> Hired on March 29, 1993; resigned November 4, 1994.
<F6> Options were cancelled upon termination of employment.
<F7> Represents relocation expense of $13,127 in connection with his hiring and the Company's matching
contribution under the 401K Plan in an amount of $104.
</TABLE>
<PAGE> 18
The Company has not included in the table above the value of incidental
personal perquisites furnished by the Company to its executive officers since
such incidental personal value did not exceed the lesser of $50,000 or 10% of
the total of annual salary and bonus reported for the named executive officers
in the table above.
Stock Options
The following table contains information concerning grants of stock options
to the named executive officers for 1994. The exercise price for all of the
grants of stock options was the fair market value on the date of the grant.
<TABLE>
OPTION GRANTS DURING THE
FISCAL YEAR ENDED DECEMBER 31, 1994
<CAPTION>
Potential Realizable
Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term <F1>
- -------------------------------------------------------------------- --------------------
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name # Fiscal 1994 ($/Sh) Date 5% ($) 10% ($)
- ---------------- ----------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bevil J. Hogg 400,000 10% $1.00 1/24/99 $110,513 $244,204
600,000 15% $0.85 11/1/99 $140,904 $311,360
Timothy W. Evans 75,000 2% $0.85 11/1/99 $ 17,613 $ 38,920
John G. Cowan 250,000 6% $0.85 11/1/99 $ 58,710 $129,733
Robert A. Swatek 250,000<F2> 6% $0.85 11/1/99 -- --
- ---------------
<FN>
<F1> The dollar amounts under the 5% and 10% columns in the Option Grants table are the
result of calculations required by rules of the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation of the stock price
of the Common Stock of the Company. Although permitted by SEC rules, the Company did
not use an alternative formula or model to compute a grant date valuation because,
given the Company's recent financial performance, the Company is not aware of any
formula which will determine with any reasonable degree of accuracy a present value
based on future unknown or volatile factors. Amounts shown reflect the difference
between the appreciation and the exercise price.
<F2> Cancelled upon termination of his employment.
</TABLE>
<PAGE> 19
The following table sets forth information with respect to the named
executive officers regarding the value of their unexercised options held as of
December 31, 1994. No options were exercised during 1994.
<TABLE>
AGGREGATED OPTION VALUES AT DECEMBER 31, 1994
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-Money Options
at December 31, 1994 at December 31, 1994
------------------------------------------ -----------------------------------------
(#) ($)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------- --------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Bevil J. Hogg 400,000 600,000 0 0
Timothy W. Evans 7,000 89,000 0 0
John G. Cowan 62,500 250,000 0 0
Robert A. Swatek 35,016 24,964 0 0
</TABLE>
COMPARATIVE STOCK PERFORMANCE
Set forth below are line graphs which illustrate for the purpose of
comparison the cumulative total returns (assuming reinvestment of dividends) of
the Company's Class A Common Stock and Class B Common Stock (single class after
November 18, 1993), the Standard & Poors 500 Composite Stock index ("S&P 500"),
and the Standard & Poors Health Care Composite Index ("Health Care Composite").
In each case, this presentation assumes an initial investment of $100 on
December 31, 1989 and illustrates the return history for each hypothetical
investment through December 31, 1994.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
E&J COMMON STOCK, S&P 500, AND HEALTH CARE COMPOSITE INDEX
(12/31/89 -- 12/31/94)
[PERFORMANCE GRAPH]
<CAPTION>
Dec. 1989 Dec. 1990 Dec. 1991 Dec. 1992 Dec. 1993 Dec. 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 97 126 136 150 152
Health Care Composite 100 117 181 151 140 157
E & J - Class A Common 100 13 25 17 14 6
E & J - Class B Common 100 16 29 15 13 5
</TABLE>
<PAGE> 20
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1994, no officers or employees of
the Company or any of its subsidiaries, other than Bevil J. Hogg, President and
Chief Executive Officer of the Company, participated in deliberations of the
Company's Board concerning executive officer compensation and there were no
interlocking relationships between any executive officer of the Company and any
other entity.
Report of the Board of Directors on Executive Compensation
The Board is responsible for developing and implementing the Company's
executive compensation program and determines on an annual basis the nature and
amount of compensation to be paid to the President and Chief Executive Officer
and to the other executive officers of the Company.
The compensation program for executive officers, including the President
and Chief Executive Officer, currently consists of annual base compensation and
participation in the Company's 1994 Plan and other employee benefit programs.
As the Company has restructured and replaced members of its management
team, it has attempted to lower the compensation levels paid to senior officers
(including the Chief Executive Officer) while at the same time removing
reporting layers, thus flattening the organization structure. When the Company
returns to profitable operations, some compensation levels may be reviewed and
bonus plans may be implemented to raise the compensation levels of those senior
officers who were instrumental in this recovery.
Options were granted under the 1994 Plan to all domestic associates and
certain key executives of the Company's Canadian and Mexican operations as of
September 1, 1994. It is anticipated that options will be granted at a later
date to all remaining Canadian and Mexican associates who have joined the
Company since September 1, 1994. The quantity of options granted an individual
associate was and will be based on the level of their position within the
organization and was generally established at a level intended to incent
associates to perform in a manner that promotes the overall performance of the
Company.
The Revenue Reconciliation Act of 1993 (the "Act") precludes the Company
from taking a deduction for certain compensation in excess of $1 million per
year paid or accrued with respect to the Chief Executive Officer and the four
other highest paid Executive Officers on and after January 1, 1994. As of the
Record Date, neither the Board nor the Company has taken any action to qualify
compensation (not otherwise qualified under the Act) for deduction by the
Company. Based on present levels of compensation, it does not appear that any
of the named executive officers' non-deductible compensation will exceed $1
million in 1995.
1994 Board of Directors
Sandra L. Baylis
Bevil J. Hogg
Dianne J. Jennings
Rodney F. Price
Robert C. Sherburne
Charles D. Yie
<PAGE> 21
CORPORATE GOVERNANCE
Meetings of the Board
Regular meetings of the Board generally are held on a monthly basis.
Special meetings are called when necessary. During the Company's fiscal year
ended December 31, 1994, there were ten Board meetings. All current directors
attended more than 75% of the meetings of the Board and of Board committees on
which they served.
Committees of the Board
The standing committees of the Board are the Audit Committee and the
Compensation Committee. Membership for the Audit Committee from January 21,
1994 to the Record Date was as follows: Charles D. Yie (Chair), Robert C.
Sherburne and Dianne J. Jennings. Membership for the Compensation Committee
from May 23, 1994 to the Record Date was as follows: Rodney F. Price (Chair),
Dianne J. Jennings and Charles D. Yie. The Board of Directors also functions
as an ad-hoc Nominating Committee.
Audit Committee
The Audit Committee has responsibility for recommending to the Board of
Directors a firm of independent accountants to audit the Company's accounts,
for reviewing the scope and results of audits, for reviewing both the auditors'
recommendations to management and the response of management to such
recommendations, and for reviewing the adequacy of internal financial and
accounting controls. During fiscal 1994, this committee met three times.
Compensation Committee
During fiscal 1994, the Compensation Committee did not meet separately, and
the topic of employee compensation was discussed at meetings of the full Board
of Directors.
Nominating Committee
The ad hoc Nominating Committee, which consists of the full Board,
considers as potential director nominees persons recommended by stockholders.
Stockholder recommendations should, where possible, include a brief description
of the potential nominee's business background for the last five years and a
list of other publicly held companies of which the potential nominee is a
director. Recommendations should be submitted to the ad hoc Nominating
Committee in care of the Secretary of the Company by December 17, 1995.
Compensation of Directors
No non-management Directors received compensation for attendance at either
Board or Committee meetings during 1994, other than reimbursement for expenses
in connection with attending such meetings.
<PAGE> 22
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
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission and the American Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
ten-percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1994 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
CERTAIN TRANSACTIONS
Debt Conversion Transaction
As of September 30, 1993, the Company, E&J Inc., Jennings Investment Co.
and BIL entered into a Debt Conversion Agreement to provide for the conversion
(the "Debt Conversion Transaction") of approximately $75 million in principal
and accrued, unpaid interest (the "Converted BIL Debt"), owed by the Company
and E&J Inc. to BIL pursuant to an amended and restated credit agreement, an
amended promissory note, and certain interim loans. Pursuant to the Debt
Conversion Agreement, (a) the Company and E&J Inc. issued to BIL a Convertible
Promissory Note -- Common Stock (the "Common Stock Note") in the initial
principal amount of $45 million and a Convertible Promissory Note -- Preferred
Stock (the "Preferred Stock Note") in the original principal amount of $20
million; (b) BIL agreed to lend to E&J Inc. $5.7 million to allow E&J Inc. to
repay the outstanding balance of cash advances owed by E&J Inc. to the Hong
Kong and Shanghai Banking Corporation ("HSBC") under a $20,000,000 revolving
credit facility ("Revolving Credit Facility"); (c) Brierley Investments
Limited, an affiliate of BIL, agreed to guarantee a letter of credit facility
("Letter of Credit Facility") between E&J Inc. and HSBC (or an alternative
commercial lending institution) in an amount not exceeding $6 million through
and including June 30, 1995; (d) BIL, as guarantor of the obligations of E&J
Inc. under the Revolving Credit Facility, agreed to an amendment thereof
whereby cash advances of up to $10 million were made available for E&J Inc.'s
working capital needs; (e) the Company and E&J Inc. agreed to indemnify (the
"Indemnification Obligation") BIL from and against any and all losses arising
out of BIL's guarantee of the Letter of Credit Facility and the Revolving
Credit Facility; (f) BIL agreed to lend to the Company and E&J Inc. up to $12.5
million pursuant to revolving promissory note ("Revolving Promissory Note");
(g) BIL and the Company and E&J Inc. entered into a Security Agreement (the
"Security Agreement") pursuant to which the Company and E&J Inc. granted a
security interest in all of their assets to BIL to secure on a pari passu basis
the obligations of the Company and E&J Inc. to BIL under the Common Stock Note,
the Preferred Stock Note, the Revolving Promissory Note and the Indemnification
Obligation; and (h) the Company and BIL entered into a Registration Rights
Agreement pursuant to which the Company granted to BIL registration rights with
respect to shares of Common Stock held as of the date of the Registration
Rights Agreement and shares of Common Stock obtained by BIL as a result of the
conversion of the Common Stock Note and Series C Preferred Stock issuable upon
conversion of the Preferred Stock Note.
<PAGE> 23
The Company held a Special Meeting of Stockholders on December 31, 1993, to
ratify and approve the Debt Conversion Transaction. Concurrent with
ratification and approval of the Debt Conversion Transaction, the Company's
stockholders approved and adopted amendments to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
25,000,000 to 120,000,000 and to increase the number of authorized shares of
Preferred Stock from 11,000,000 to 31,000,000 (the "Recapitalization
Proposals").
BIL had agreed, upon stockholder approval of the Debt Conversion
Transaction and the Recapitalization Proposals, to advance E&J Inc. $10 million
to pay HSBC the cash advance it made to E&J Inc. under the Revolving Credit
Facility. Subsequent to the Special Meeting of Stockholders, BIL and E&J Inc.
agreed to transfer $10 million from the Revolving Promissory Note to the Common
Stock Note, thus increasing the balance of the Common Stock Note to $55
million.
The Common Stock Note was scheduled to mature on March 31, 1994, bear
interest at the rate of 8% per annum from and after March 31, 1994, and was
secured by a lien on and security interest in all assets of the Company and E&J
Inc. on a pari passu basis with the repayment and other obligations of the
Company and E&J Inc. under the Preferred Stock Note, the Revolving Promissory
Note and the Indemnification Obligation. The Common Stock Note was
subordinated to all debt borrowed by the Company or E&J Inc. from, or the
payment of which had been guaranteed by the Company or E&J Inc. to, HSBC, the
Pension Benefit Guaranty Corporation, Congress Financial Corporation and any
other financial institution constituting a principal lender to the Company
and/or E&J Inc.
The Common Stock Note was convertible into that number of shares of Common
Stock equal to the outstanding principal balance of that Note at conversion
divided by a stated conversion price ($1.00 per share, subject to antidilution
adjustment). The Common Stock Note automatically converted in full upon
satisfaction of all of the following conditions: (a) ratification of the Debt
Conversion Transaction by the stockholders of the Company; (b) approval and
adoption of the Recapitalization Proposals by the stockholders of the Company;
(c) the filing and effectiveness of an amendment to the Company's Certificate
of Incorporation to effect the Recapitalization Proposals; (d) adoption by the
Board of Directors of resolutions to designate the Series C Preferred Stock and
the filing and effectiveness of a Certificate of Designations of the Series C
Preferred Stock (the "Series C Certificate of Designations"); (e) reservation
of a sufficient number of shares of Series C Preferred Stock for issuance on
conversion of the Preferred Stock Note; (f) reservation of a sufficient number
of Common Stock for issuance on conversion of the Common Stock Note and the
Series C Preferred Stock issuable on conversion of the Preferred Stock Note;
and (g) approval for listing on the American Stock Exchange of the Common Stock
issuable on conversion of the Common Stock Note and the Series C Preferred
Stock issuable on conversion of the Preferred Stock Note. BIL waived condition
(g), and the Common Stock Note converted into 55 million shares of Common Stock
on January 12, 1994.
The Preferred Stock Note was scheduled to mature on March 31, 1994, bear
interest at the rate of 8% per annum from and after March 31, 1994, and was
secured by a lien on and security interest in all assets of the Company and E&J
Inc. on a pari passu basis with the repayment and other obligations of the
Company and E&J Inc. under the Common Stock Note, the Revolving Promissory Note
and the Indemnification Obligation. The Preferred Stock Note was subordinated
to all debt borrowed by the Company or E&J Inc. from, or the payment of which
<PAGE> 24
had been guaranteed by the Company or E&J Inc. to, HSBC, the Pension Benefit
Guaranty Corporation, Congress Financial Corporation and any other financial
institution constituting a principal lender to the Company and/or E&J Inc.
The Preferred Stock Note was convertible into a number of shares of
Series C Preferred Stock equal to the outstanding principal balance of that
Note at conversion divided by a stated conversion price ($1.00 per share,
subject to antidilution adjustment). The Series C Preferred Stock is
convertible into shares of Common Stock on a one-for-one basis. The Preferred
Stock Note automatically converted in full upon satisfaction of all of the
following conditions: (a) ratification of the Debt Conversion Transaction by
the stockholders of the Company; (b) approval and adoption of the
Recapitalization Proposal by the stockholders of the Company; (c) the filing
and effectiveness of an amendment to the Company's Certificate of Incorporation
to effect the Recapitalization Proposal; (d) adoption by the Board of Directors
of the Series C Certificate of Designations; (e) reservation of a sufficient
number of shares of Series C Preferred Stock for issuance on conversion of the
Preferred Stock Note; (f) reservation of a sufficient number of Common Stock
for issuance on conversion of the Common Stock Note and the Series C Preferred
Stock issuable on conversion of the Preferred Stock Note; and (g) approval for
listing on the American Stock Exchange of the Common Stock issuable on
conversion of the Common Stock Note and the Series C Preferred Stock issuable
on conversion of the Preferred Stock Note. BIL waived condition (g), and the
Preferred Stock Note converted into 20 million shares of Series C Convertible
Preferred Stock on January 12, 1994.
Principal Terms of Series C Preferred Stock
The principal terms of the Series C Preferred Stock are as follows:
Dividends -- 7% cumulative dividends mandatorily payable (subject to applicable
law), commencing after the Company achieves two consecutive fiscal quarters of
operating profit, accruing as of the first day of such quarters, and payable on
the first business day of each April, commencing with the first April following
the end of the fiscal year in which the second of the consecutive fiscal
quarters occurs and payable in kind, in shares of Common Stock ("In-Kind
Dividend Stock"), at the option of the Company; Conversion -- convertible into
Common Stock on a share-for-share basis, subject to anti-dilution provisions;
Registration Rights -- as contained in the Registration Rights Agreement, and
as follows with respect to shares of Common Stock issuable upon conversion of
Series C Preferred Stock: (a) the holder may make a one-time demand that the
Company register distribution of shares of Common Stock for not less than
500,000 shares; and (b) the holder has the right to request that the
distribution of its shares of Common Stock be included in any registration
statement under the Securities Act of 1933 filed by the Company; Sinking Fund
- -- none; Redemption -- none; Preemptive Rights -- none; Voting Rights -- one
vote per share and (except as otherwise required by applicable law) votes
together with, the Common Stock; and Liquidation Preference -- a liquidation
preference per share equal to $1.00.
Lease Transaction. An affiliate of BIL, Steego Corporation ("Steego"), is
leasing to the Company the computer system and the telephone system which are
located at the Company's facilities in St. Louis. Steego has entered into a
back-to-back lease arrangement for such systems with Sentry Financial
Corporation, which is not affiliated with either BIL or Steego.
<PAGE> 25
Other. During the fiscal year ended December 31, 1994, BIL received
595,998 shares of in kind Series A Convertible Preferred Stock dividends and
interest on debt securities totaling $998,050.
Indirect Interests. Rodney F. Price, a director of the Company, is also a
director of BIL. As a result, Mr. Price may be deemed to have an indirect
interest in the foregoing transactions with BIL.
EXPENSES OF PROXY SOLICITATIONS
The principal solicitation of Proxies is being made by mail. However,
certain officers, directors and employees of the Company, none of whom will
receive additional compensation therefor, may solicit Proxies by telegram,
telephone or other personal contact. The Company will bear the cost of the
solicitation of the Proxies, including postage, printing and handling, and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners of shares.
ANNUAL REPORT
Included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 are, among other things, a description of the business
of the Company and its subsidiaries, consolidated balance sheets of the Company
and its subsidiaries for the fiscal years ended December 31, 1993 and December
31, 1994, the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three fiscal years in the period ended
December 31, 1994, and a financial summary for the five fiscal years ended
December 31, 1994. A copy of the Company's Annual Report on Form 10-K is being
mailed to stockholders together with this Proxy Statement. Stockholders are
urged to read the Company's Annual Report carefully.
Upon written request and payment of a copying charge of $.20 per page, the
Company will furnish to any such stockholder a copy of the exhibits to the
Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
Requests should be addressed to Timothy W. Evans, Secretary, Everest & Jennings
International Ltd., 1100 Corporate Square Drive, St. Louis, Missouri 63132.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR PRESENTATION AT 1996 ANNUAL MEETING
Any proposal that a stockholder wishes to present for consideration at the
1996 Annual Meeting and which such stockholder wishes included in the Company's
1996 proxy materials must be received by the Company no later than January 5,
1996.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the Annual Meeting. As for any
business that may properly come before the Annual Meeting, the Proxies confer
discretionary authority in the persons named therein. Those persons will vote
or act in accordance with their best judgment with respect thereto.
<PAGE> 26
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
TIMOTHY W. EVANS
Secretary
St. Louis, Missouri
May 5, 1995
<PAGE> 27
ANNEX A
EVEREST & JENNINGS INTERNATIONAL LTD.
STOCK OPTION PLAN
SECTION 1
GENERAL PROVISIONS
1.1 PURPOSE
The purposes of the 1994 Stock Option Plan dated April 25, 1994 (the
"Plan") of Everest & Jennings International Ltd. (the "Company") are to promote
the interests of the Company and its stockholders by (i) attracting and
retaining employees of outstanding ability; (ii) motivating employees by means
of performance-related incentives to achieve longer-range performance goals;
(iii) providing incentive compensation opportunities which are competitive with
those of other major corporations; and (iv) enabling such employees to
participate in the long-term growth and financial success of the Company. It
is intended that options granted hereunder will not qualify as incentive stock
options within the meaning of Code Section 422.
1.2 DEFINITIONS
"Award" -- means a grant or award under the Plan.
"Board of Directors" -- means the Board of Directors of the Company.
"Code" -- means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" -- means the Committee appointed by the Board of Directors to
administer the Plan.
"Common Stock" -- means common stock of the Company, or any stock
substituted for such common stock through a recapitalization.
"Company" -- means Everest & Jennings International Ltd. and its
Subsidiaries.
"Employee" -- means an employee, consultant or a member of the Board of
Directors of the Company.
"Fair Market Value" -- means the closing price of the Common Stock on the
American Stock Exchange on the date on which it is to be valued hereunder.
"Participant" -- means an Employee who is selected by the Committee to
receive an Award under the Plan.
1.3 ADMINISTRATION
The Plan shall be administered by the Committee, which shall at all times
consist of [three] or more members, and a majority of which shall be non-
management members of the Board of Directors. The Committee may select one of
<PAGE> 28
its members as its Chairman, and shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable. The
Committee shall have sole and complete authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the operation of
the Plan as it shall from time to time deem advisable, and to interpret the
terms and provisions of the Plan. Awards under the Plan shall be confirmed, as
appropriate in the discretion of the Committee, by an Award agreement executed
by the Committee and the Participant. The Committee's decisions are final and
binding upon all parties. By accepting any benefits under the Plan, each
Participant, and each person claiming under or through him, shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, all provisions of the Plan and any action or decision under the
Plan by the Company, the Board of Directors or the Committee.
1.4 ELIGIBILITY
The Committee shall select the Employees eligible to be Participants in
the Plan.
1.5 SHARES RESERVED
(a) There shall be reserved for issuance pursuant to the Plan from
authorized and unissued shares or treasury shares or a combination of both a
total of four million four hundred twelve thousand (4,412,000) shares of Common
Stock of the Company. If any option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan. Any shares of Common
Stock which are used as full or partial payment to the Company by an optionee
of the purchase price upon exercise of an option shall again be available for
the purposes of the Plan.
(b) In the event of a stock dividend or split, recapitalization,
reclassification, merger, consolidation, spin-off, combination or exchange of
shares or similar corporate change, or any distributions to common shareholders
other than cash dividends, the Committee may, at its sole discretion, in order
to prevent the dilution or enlargement of the values of the shares of Common
Stock reserved hereunder, make such substitution or adjustment, if any, as it
deems to be appropriate and equitable, as to the number or in kind of shares of
Common Stock or other securities issued or reserved for issuance pursuant to
the Plan, including the number of outstanding stock options and the exercise
price thereof, and the number of outstanding Awards of other types to fairly
preserve the intended benefits of the Plan to the Participants and the Company.
1.6 CHANGE OF CONTROL
In order to maintain the Participants' rights in the event of Change of
Control of the Company, as hereinafter defined, the Committee shall,
notwithstanding anything to the contrary contained in the Plan, either at the
time an Award is made hereunder or at any time prior to or simultaneously with
<PAGE> 29
a Change of Control (i) provide for the acceleration of any time periods or
waiver of any conditions relating to the exercise or realization of such Awards
so that such Awards may be exercised or realized in full on or before a date
fixed by the Committee; or (ii) provide for purchase of such Awards, upon the
Participant's request, for an amount of cash equal to the amount which could
have been attained upon the exercise or realization of such rights had such
Awards been currently exercisable or payable; or (iii) cause the Awards then
outstanding to be assumed, or new rights substituted therefor which are
equivalent to the Awards, by the surviving corporation in such change. The
Committee may, in its discretion, include such further provisions and
limitations in any agreement entered into with respect to an Award as it may
deem equitable and in the best interests of the Company.
A "Change of Control" shall be deemed to have occurred if:
(i) Brierley Investments Limited and its affiliates ("BIL") own less
than a majority of the Company's voting stock and there has been a change in
the composition of the Board of Directors so that a majority of the Board of
Directors have been members of the Board of Directors for less than twenty-four
months, unless the election of each new director who was not a director at the
beginning of the period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period;
(ii) any person (including a group as defined in Section 13(d) (3)
of the Securities Exchange Act of 1934) becomes, directly or indirectly, the
beneficial owner of 20% or more of the shares of the Company entitled to vote
for the election of directors and BIL owns less than a majority of the
Company's voting stock;
(iii) as a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination, sales of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Company just prior to such event cease to constitute a
majority of the Company's Board of Directors; or
(iv) the Company ceases to be a publicly-owned Company or a sale or
other disposition of all or substantially all of the assets and/or common stock
and/or preferred stock of the Company occurs.
1.7 WITHHOLDING
The Company shall have the right to deduct from all amounts paid in cash
(whether under this Plan or otherwise), or to require a cash payment of, any
taxes required by law to be withheld therefrom. In the case of payments of
Awards in the form of Common Stock, at the Committee's discretion the
participant may be required to pay to the Company the amount of any taxes
required to be withheld with respect to such Common Stock or, in lieu, thereof,
the Company shall have the right to retain (or the Participant may be offered
the opportunity to elect to tender) the number of shares of Common Stock whose
Fair Market Value equals the amount required to be withheld.
<PAGE> 30
1.8 NONTRANSFERABILITY
No Award shall be assignable or transferable, and no right or interest of
any Participant shall be subject to any lien, obligation or liability of the
Participant, except by will or the laws of descent and distribution.
1.9 NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the
grant of any Award shall not be construed as giving a Participant the right to
be retained in the employ of the Company. Further, the Company expressly
reserves the right at any time to dismiss a Participant free from any
liability, or any claim under the Plan, except as provided herein or in any
agreement entered into with respect to an Award.
1.10 MISSOURI LAW CONTROLS
The validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of Missouri.
1.11 AMENDMENT
(a) Subject to approval by the Board of Directors, the Committee may
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that any such amendment must be approved by the holders of
outstanding shares of Common Stock by such vote (if any) as may be required by,
and otherwise in compliance with, applicable federal or state law (including
Rule 16b-3 (or any successor provision) under the Securities Exchange Act of
1934), and the requirements of any stock exchange or other trading system upon
which the shares of Common Stock may then be listed. Notwithstanding anything
to the contrary contained herein the Committee may amend the Plan in such
manner as may be necessary to conform the Plan with applicable federal and
state rules and regulations. Except as provided in Section 1.11(b) hereof, no
termination or amendment of the Plan may adversely affect the rights of any
Participant with respect to any outstanding Award.
(b) The Committee may amend, modify or terminate any outstanding Award
with the Participant's written consent at any time prior to payment or exercise
in any manner not inconsistent with the terms of the Plan, including without
limitation, to change the date or dates as of which a stock option becomes
exercisable.
1.12 DIVIDENDS, EQUIVALENTS AND VOTING RIGHTS; CASH PAYMENTS
To the extent determined by the Committee, Awards may provide the
Participant with cash payments in lieu of or in addition to an Award. The
holder of an option shall have none of the rights of a stockholder with respect
to the shares subject to option until such shares shall be issued to such
holder upon the exercise of the option.
1.13 SECURITIES LAWS
The Company shall not be obligated to issue Common Stock pursuant to any
Award under the Plan if such issuance would violate any applicable federal or
state securities law, or any rule or regulation of any regulatory agency or any
<PAGE> 31
certified exchange on which the Common Stock is then listed. Unless rendered
unnecessary by reason of registration of the Common Stock under the Securities
Act of 1933, any Participant may be required by the Committee to furnish the
company with a certificate, satisfactory to counsel for the Company, stating in
substance that the Participant is acquiring the Common Stock for investment
purposes only and not with a view to, or for sale in connection with, any
distribution of the Common Stock. If the Committee determines that the
listing, registration or qualification of the Common Stock upon any securities
exchange or under any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issue or purchase of Common Stock under the Plan, such
registration, qualification, consent or approval shall be effected or obtained
prior to such issuance or purchase.
1.14 EFFECT ON OTHER BENEFITS
The value of an Award is not includable for determining compensation or
benefits under any other compensation or benefit plan of the Company.
1.15 EFFECT OF TERMINATION OF EMPLOYMENT ON VESTING
Except as otherwise provided by the Committee, if a Participant ceases to
be an Employee for any reason other than upon the occurrence of a Participant's
death (in which case a non-vested Award shall be forfeited one (1) year after
the Participant's death), a Participant's rights to any nonvested Award shall
be immediately forfeited thirty (30) days after the Participant's termination
date; provided, however, the Committee may determine, in its discretion, that
any portion of a Participant's nonvested Award shall become vested upon
termination of employment. The Committee, at the time of grant of an Award,
shall specify such terms and conditions as appropriate for the exercise of any
vested Awards following termination of employment.
1.16 EFFECTIVE DATE
The Plan shall be effective as of April 25, 1994, subject to the approval
of the stockholders of the Company. No stock option may be granted more than
five years after the effective date of the Plan.
<PAGE> 32
SECTION 2
STOCK OPTIONS
2.1 AUTHORITY OF COMMITTEE
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees to whom stock options shall be
granted, the number of shares to be covered by each stock options and the
conditions and limitations, if any, in addition to those set forth in Section
2.3 hereof, applicable to the exercise of the stock options.
2.2 OPTION PRICE
The Committee shall establish the option price at the time each stock
option is granted, subject to Board approval only if the option price is less
than the Fair Market Value of such stock at the time of the granting of the
option. The option price shall be subject to adjustment in accordance with the
provisions of Section 1.5(b) hereof.
2.3 EXERCISE OF OPTIONS
(a) The Committee may determine that any stock option shall become
exercisable in installments and may determine that the right to exercise such
stock option as to such installments shall expire on different dates or on the
same date.
(b) The option price of each share as to which an option is exercised
shall be paid in full at the time of such exercise. Such payment shall be made
in cash, by tender of shares of Common Stock owned by the Participant valued at
Fair Market Value as of the date of exercise, subject to such limitations on
the tender of Common Stock as the Committee may impose, or by a combination of
cash and shares of Common Stock. In addition, the Committee may provide the
Participant with assistance in financing the option price and applicable taxes,
on such terms and conditions as it determines appropriate. The cash proceeds
of sale of stock subject to option are to be added to the general funds of the
Company and used for its general corporate purposes. The shares of Common
Stock of the Company received by the Company as payment of the option price are
to be added to the shares of the Common Stock of the Company held in its
Treasury and used for the purposes of granting options under the Plan.
<PAGE> 33
APPENDIX
FORM OF PROXY
[FRONT]
PROXY
COMMON SHARES
EVEREST & JENNINGS INTERNATIONAL LTD.
1100 Corporate Square Drive
St. Louis, Missouri 63132
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bevil J. Hogg and Timothy W. Evans, or either
of them, with power of substitution, as proxies, to appear and vote, as
designated on the reverse side, all the shares of Common Stock of Everest &
Jennings International Ltd. held of record by the undersigned on April 28,
1995, at the Annual Meeting of Shareholders to be held on Tuesday, June 6,
1995, at 11:00 a.m., and at any adjournment thereof.
(Continued on reverse side)
[BACK]
[ X ] Please mark your votes as in this example.
1. Election of Directors [ ] For [ ] Withheld
Nominees: Sandra L. Baylis, Bevil J. Hogg, Rodney F. Price, Robert C.
Sherburne, Charles D. Yie
For, except vote withheld from the following nominee(s):
----------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE ADOPTION OF THE 1994 EVEREST & JENNINGS
INTERNATIONAL LTD. STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. OTHER BUSINESS: In their discretion, the proxies are authorized to vote
upon such other business as properly may come before the meeting or any
adjournment thereof.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR the election of the nominees listed at proposal 1 above, FOR
proposal 2 and FOR proposal 3.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated May 5, 1995 and a copy of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994.
<PAGE> 34
PLEASE MARK ABOVE, THEN DATE AND SIGN BELOW AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
SIGNATURE(S) _________________________________________ DATE __________________
Please sign exactly as name appears on the stock certificate, joint owners
should each sign. Trustee and other acting in a representative capacity should
indicate the capacity in which they sign.
