SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
HOWELL INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
HOWELL INDUSTRIES, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(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):
Not Applicable
(4) Proposed maximum aggregate value of transaction: Not Applicable
(5) Total fee paid: Not Applicable
[ ] 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: Not Applicable
2) Form, Schedule or Registration Statement No.: Not Applicable
3) Filing Party: Not Applicable
4) Date Filed: Not Applicable
<PAGE>
HOWELL INDUSTRIES, INC.
Suite 650
17515 West Nine Mile Road
Southfield, Michigan 48075
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held November 22, 1995
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of Howell
Industries, Inc. (the "Company") will be held at Suite 650, 17515 W. 9 Mile
Rd., Southfield, Michigan, on Wednesday, November 22, 1995, at 1:00 o'clock
P.M., Eastern Standard Time, for the following purposes:
1. To elect a Board of three directors to serve until the next Annual
Meeting of Shareholders or until their successors shall have been duly
elected and qualified.
2. To consider a proposal to adopt the Company's 1995 Stock Incentive
Plan for Key Employees.
3. To transact such other business as may properly come before the
meeting.
Only holders of Common Stock of record at the close of business on
October 19, 1995, are entitled to notice of and to vote at the meeting or any
adjournment or adjournments thereof.
Your attention is directed to the attached Proxy Statement and
accompanying proxy. You are requested, whether or not you plan to be present at
the meeting, to sign and return the proxy in the envelope provided, to which no
postage need be affixed if mailed in the United States. If you attend the
meeting you may withdraw your proxy and vote your own shares.
A copy of the Annual Report of the Company for the fiscal year ended July
31, 1995, accompanies this notice.
By Order of the Board of Directors
CYRIL MOSCOW, Secretary
Dated: October 27, 1995
<PAGE>
HOWELL INDUSTRIES, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
To be held November 22, 1995
PROXIES AND SOLICITATION
The accompanying proxy is solicited by the Board of Directors of Howell
Industries, Inc. (the "Company"), to be used at the Annual Meeting of
Shareholders to be held on November 22, 1995, and at any adjournment or
adjournments thereof. The shares represented by valid proxies in the enclosed
form will be voted if received in time for the meeting. The proxy is revocable
at any time prior to being voted.
Proxies are being solicited by mail. The Company will pay all expenses in
connection with the solicitation, including postage, printing and handling and
the expenses incurred by brokerage houses, custodians, nominees and fiduciaries
in forwarding proxy material to beneficial owners.
PLACE OF MEETING
The Annual Meeting will be held at Suite 650, 17515 W. 9 Mile Rd.,
Southfield, Michigan, on Wednesday, November 22, 1995, at 1:00 o'clock P.M.,
Eastern Standard Time.
VOTING RIGHTS AND PRINCIPAL HOLDERS OF SECURITIES
Only holders of record of shares of Common Stock at the close of business
on October 19, 1995, are entitled to notice of and to vote at the meeting or at
any adjournment or adjournments thereof, each share having one vote. On the
record date, the Company had issued and outstanding 622,738 shares of Common
Stock.
Set forth below, to the knowledge of the Company, is (i) the aggregate
beneficial ownership of the outstanding shares of Common Stock as of October
19, 1995, of each person who beneficially owns more than 5% of the outstanding
shares of Common Stock, and (ii) the percentage of the outstanding shares of
Common Stock owned by such persons on October 19, 1995.
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent of Class
of Beneficial Owner on October 19, 1995 on October 19, 1995
<S> <C> <C>
Estate of Herbert Freedland(1)
c/o NBD Bank, N.A.
1116 West Long Lake Road
Bloomfield Hills, Michigan 48302 202,972 33%
Howell Industries, Inc.
Employee Stock Ownership Plan
Suite 650
17515 West Nine Mile Road
Southfield, Michigan 48075 85,933 14%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 72,200 12%
<FN>
- ----------------
(1) NBD Bank, N.A. and Morton Schiff, Chief Executive Officer, President and
Treasurer of the Company, serve as personal co-representatives to the
Estate of Herbert Freedland.
</TABLE>
<PAGE>
I. ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting to serve until
the next annual election and until their successors have been elected and
qualified. It is intended that proxies in the accompanying form will be voted
in favor of the election of the nominees named below. In case any of such
nominees are unable or decline to serve, it is intended that proxies received
in the accompanying form will be voted in accordance with the best judgment of
the proxy holders. The management has no knowledge that any of these nominees
will be unable or will decline to serve.
The following table sets forth the age of each nominee for director of
the Company, his positions with the Company and other principal occupations,
the year in which he commenced to serve as a director of the Company and the
approximate number and percentage of shares of Common Stock of the Company
beneficially owned, directly or indirectly, by each nominee as of the close of
business on October 19, 1995.
<TABLE>
<CAPTION>
Number and Percentage
Positions and Offices With Year First of Shares Beneficially
Company and Other Became a Owned as of
Name Age Principal Occupations (1) Director October 19, 1995
<S> <C> <S> <C> <C>
Morton Schiff 61 Chief Executive Officer,
President and Treasurer of
the Company .............. 1981 213,664 (34%)(2)
Alan E. Schwartz (3) 69 Partner, Honigman Miller
Schwartz and Cohn,
Attorneys ................ 1962 --
Richard H. Cummings (4) 73 Retired Senior Vice
Chairman, NBD Bancorp,
Inc. ..................... 1966 100*
<FN>
- ----------------
*Less than 1.0%
(1) The indicated occupations have been held by each director for the past five
years, except that Mr. Schiff served only in the capacity of Treasurer of
the Company prior to October 8, 1991.
(2) Includes 202,972 shares held by the Estate of Herbert Freedland for which
Mr. Schiff is a personal co-representative along with NBD Bank, N.A. Mr.
Schiff disclaims beneficial ownership of the shares held by the Estate of
Herbert Freedland.
(3) Mr. Schwartz is a director of The Detroit Edison Company, Unisys
Corporation, Core Industries Inc, Handleman Company, Pulte Corporation and
Comerica Incorporated.
(4) Mr. Cummings is a director of Handleman Company.
</TABLE>
All officers and directors as a group beneficially owned 213,764 shares
(34%) of Common Stock as of October 19, 1995. This amount includes the 202,972
shares held by the Estate of Herbert Freedland for which Mr. Schiff is a
personal co-representative and with respect to which he disclaims beneficial
ownership.
The Audit Committee of the Board of Directors, which consists of Alan E.
Schwartz and Richard H. Cummings, met twice during the fiscal year ended July
31, 1995. The functions performed by the Audit Committee are: (1) nominating
the Company's independent auditors for approval by the Board of Directors; (2)
reviewing with the independent auditors the scope, cost and results of the
auditing engagement; (3) reviewing and approving fees for audit and non-audit
professional services provided by the independent auditors and determining
whether such non-audit services affect the independence of the independent
auditors; and (4) reviewing reports submitted by independent auditors regarding
the adequacy of the Company's system of internal accounting controls.
The Board of Directors has no nominating committee, compensation
committee or committees performing similar functions; instead, the Board of
Directors considers such matters at its meetings. The Board of Directors met
seven times during the fiscal year ended July 31, 1995.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
Summary Compensation Table
The following table sets forth information for each of the fiscal years
ended July 31, 1995, 1994 and 1993 concerning the compensation of the Company's
Chief Executive Officer and of each other executive officer of the Company
whose total annual salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and Annual Compensation(1) All Other
Principal Position Year Salary($) Bonus($) Compensation($)(2)
<S> <C> <C> <C> <C>
Morton Schiff, Chief Executive Officer, 1995 150,000 75,000 22,115
President, Treasurer and Director 1994 140,000 90,000 33,637
1993 130,000 60,000 16,604
Ronald Sakuta, Vice President and Chief 1995 130,000 75,000 450
Operating Officer 1994 120,000 90,000 450
1993 110,000 60,000 450
<FN>
- ----------------
(1) Perquisites and other personal benefits do not exceed the lesser of $50,000
or 10% of the total annual salary and bonus for either Mr. Schiff or Mr.
Sakuta.
(2) The amounts shown include $450 allocable to each executive officer with
respect to the Company's 401(k) plan contribution for the fiscal years
ended July 31, 1995, July 31, 1994 and July 31, 1993, and the amount
accrued during such fiscal years on Mr. Schiff's behalf pursuant to a
supplemental pension arrangement.
</TABLE>
Defined Benefit or Actuarial Plans
The Company maintains the Howell Industries, Inc. Pension and Retirement
Fund Plan (the "Pension Plan"). The Pension Plan is a qualified,
non-contributory defined benefit plan. It covers all Company personnel (except
union employees whose collective bargaining agreement does not provide for
Pension Plan participation) who have worked at least 1,000 hours in one year.
The normal retirement benefit is computed from the best consecutive five year
anniversary salary rates. It is normally payable for the life of the
participant. The Pension Plan provides a benefit equal to .88% of average
compensation up to a participant's covered compensation (generally, the average
of the taxable wage bases under Social Security in effect during the 35 year
period preceding the employee's Social Security retirement age) plus 1.51% of
the remaining average compensation, all multiplied by the participant's total
years of credited service with the employer (maximum of 25). The accrued
benefit is not vested until completion of five years of service. The
compensation covered by the Pension Plan consists of base pay (exclusive of
bonuses).
The following table illustrates current monthly benefits payable under
the Pension Plan upon retirement at age 65 to persons in certain compensation
and years of service classifications.
<TABLE>
<CAPTION>
Final Average Years of Service
Compensation 10 15 20 25
<S> <C> <C> <C> <C>
$100,000 $1,139 $1,709 $2,278 $2,848
125,000 1,454 2,180 2,907 3,634
150,000 1,768 2,652 3,536 4,421
</TABLE>
Compensation covered by the plan excludes bonuses and is limited to $150,000
for 1995. The current credited years of service for Morton Schiff is 31.42
years and for Ronald Sakuta is 4.25 years. Benefits in this table are stated as
a life annuity with a 10 year payment guarantee. The benefits set forth in the
table have been coordinated with Social Security and there is no further offset
or deduction that applies.
The Company maintains a supplemental pension arrangement with Morton
Schiff (the "Supplemental Plan"). The Supplemental Plan is a nonqualified,
unfunded plan under which amounts are credited to an account until retirement.
The amount to be credited each year is determined under a formula which is
intended to produce an accumulation of funds at age 65 sufficient to purchase
an annuity equal to the difference between the benefit payable under the
Pension Plan and the benefit that would have been received if bonuses formed a
part of the benefit base and if Internal Revenue Service limits on benefits
payable from the Pension Plan did not apply. The Supplemental Plan also
provides for the payment of benefits upon death.
Compensation of Directors
Officers of the Company who are directors do not receive any additional
remuneration for services as a director. During the fiscal year ended July 31,
1995, each director who was not employed by the Company received a director's
fee of $1,000 per month.
In addition, effective December 1, 1994, the Company adopted the Howell
Industries, Inc. Retirement Plan for Non-Employee Directors (the "Retirement
Plan"), which is a non-contributory, non-qualified and unfunded plan. The
Retirement Plan provides for a quarterly retirement allowance to each director
who has never served as an officer of the Company and has served on the Board
of Directors of the Company as a non-employee director for five or more years.
Pursuant to the Retirement Plan, the quarterly retirement allowance is equal to
18.75% (75% annually) of the annual retainer (not including meeting fees) in
effect on the date of the participant's termination of service on the Board of
Directors of the Company. Payments are made quarterly beginning with the month
following termination of service on the Board of Directors of the Company. The
retirement allowance payments continue for a period equal to the number of
calendar quarters served on the Board of Directors of the Company, or until the
participant's death, whichever occurs first. Pursuant to the Retirement Plan,
retired participants must provide limited consulting services to the executive
officers and directors of the Company upon request.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Mr. Schiff has an employment agreement with the Company, which was
amended in August 1994, which provides for a minimum annual salary of $140,000
plus any additional bonus or incentive compensation which the Board of
Directors deems appropriate. The employment agreement, as amended, provides
that prior to a change in control of the Company, the agreement can be
terminated with 30 days' advance written notice. After a change in control, the
term of the agreement becomes three years following the change in control. In
the event of termination of employment for disability or without cause, either
six months prior to or after a change in control and before the expiration of
the three year period following the change in control, Mr. Schiff will be
entitled to the salary that would have otherwise been payable pursuant to the
agreement plus the average annual bonus received by Mr. Schiff for the three
fiscal years prior to the change in control. The employment agreement also
includes provisions entitling Mr. Schiff to employment benefits aggregating not
less than the annual financial value of the benefits available to Mr. Schiff
immediately prior to a change in control. Mr. Sakuta's agreement was also
amended in August 1994 and is substantially similar to Mr. Schiff's agreement,
other than providing for a minimum annual salary of $120,000.
Additional Information With Respect to Compensation Committee Interlocks and
Insider Participation in Compensation Decisions
The Company has no compensation committee. Morton Schiff is an executive
officer of the Company and serves as a director. Mr. Schiff did not participate
in deliberations of the Company's Board of Directors concerning executive
officer compensation. Alan E. Schwartz is a partner in the law firm of Honigman
Miller Schwartz and Cohn, which firm serves as counsel to the Company. It is
expected that such law firm will continue to be retained by the Company in the
current fiscal year.
Board Compensation Committee Report on Executive Compensation
General. The Board of Directors' overall compensation policy applicable
to the Company's executive officers is to provide a compensation package that
is intended to retain qualified executives for the Company and to provide them
with incentives to achieve Company goals and increase shareholder value. The
Board of Directors implements this policy principally through salaries, bonuses
and miscellaneous personal benefits.
Salaries. The Board of Directors' policy is to provide salaries that are
comparable to those of similar executive officers in similar companies in order
to retain qualified executives and that compensate individual employees for
their individual contributions and performance. The Board of Directors
determines comparable salaries paid by other companies similar to the Company
through comparisons of publicly available information and information otherwise
available to the Board of Directors.
Bonuses. The Board of Directors' policy is to pay discretionary bonuses,
determined after the end of the fiscal year, to compensate executive officers
for performance or achievements during the fiscal year with respect to which
such bonus is paid.
Employment Agreements and Miscellaneous Personal Benefits. The Board of
Directors' policy is to have employment agreements with each of its executive
officers to provide them with specified minimum positions, periods of
employment, salaries, fringe benefits and severance benefits. These benefits
are intended to permit the executive officer to focus his attention on
performing his duties to the Company, rather than on the security of his
employment, and to provide the officer with benefits deemed by the Board of
Directors to be suitable for the executive's office.
Fiscal 1995 Compensation Decision Concerning Chief Executive Officer. The
Board of Directors approved an increase in Morton Schiff's annual base
compensation in September 1994 of $10,000, representing a 7% increase, to an
annual base salary of $150,000. In September 1995, the Board of Directors
approved an increase in Mr. Schiff's annual base compensation of $10,000,
representing a 7% increase, to an annual base salary of $160,000. Mr. Schiff
assumed the responsibilities of Chief Executive Officer of the Company in
October 1991, upon the death of the Company's then Chief Executive Officer.
Salary increases approved by the Board of Directors since October 1991 were (i)
based upon the Board of Directors' belief that Mr. Schiff's salary is lower
than salaries of chief executive officers of companies in similar lines of
business as the Company and (ii) to continue to compensate Mr. Schiff for
assuming the additional duties associated with the office of Chief Executive
Officer of the Company. Mr. Schiff also earned a cash bonus of $75,000 for the
fiscal year ended July 31, 1995, which represented 50% of his base salary. The
bonus was based on the Board of Directors' consideration of Mr. Schiff's
personal contribution to the Company's business results.
By the Board of Directors:
Richard H. Cummings
Morton Schiff
Alan E. Schwartz
Performance Graph
The following line graph compares for the past five fiscal years (i) the
yearly cumulative total shareholder return (i.e., the change in share price
plus the cumulative amount of dividends, assuming dividend reinvestment,
divided by the initial share price, expressed as a percentage) on the Company's
Common Stock, with (ii) the cumulative total return of the S&P 500 Index, and
with (iii) the cumulative total return of the American Stock Exchange Capital
Goods Index:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* <F1>
Among Howell Industries, Inc., S&P 500 Index, AMEX Capital Goods Index
Fiscal Year Ended July 31
[EDGAR NOTE: The performance graph required by Item 402(l) of
Regulation S-K appears in this position of the paper document.
A copy of the performance graph on paper is being submitted to
the Branch Chief in the Division of Corporation Finance. A
table containing the data used to create the performance
graph's data points is provided below.]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Howell Industries, Inc. 100 130 169 171 180 175
S&P 500 Index 100 113 127 138 145 183
AMEX Capital Goods Index 100 105 103 113 124 168
</TABLE>
<F1>* Assumes $100 investment on July 31, 1990 in Howell Industries, Inc.
Common Stock, S&P 500 Index companies and AMEX Capital Goods Index
companies. Total return assumes reinvestment of dividends.
<PAGE>
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 officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file initial reports
of ownership and reports of changes in ownership of Common Shares and other
equity securities of the Company with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file. Based solely on review of the copies of such reports
furnished to the Company during fiscal 1995, or written representations that no
Form 5 filings were required, the Company believes that during the fiscal year
ended July 31, 1995 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were
complied with.
OTHER TRANSACTIONS WITH MANAGEMENT AND OTHERS
The general counsel to the Company is Honigman Miller Schwartz and Cohn,
a law firm of which Alan E. Schwartz, a director of the Company, and Cyril
Moscow, Secretary, are partners. The Company has entered into agreements with
Alan E. Schwartz, Richard H. Cummings and Morton Schiff, directors of the
Company, pursuant to which the Company agreed to maintain liability insurance
and to indemnify and advance expenses with respect to claims relating to their
duties as directors.
NBD Bank ("NBD"), along with Morton Schiff, Chief Executive
Officer, President and Treasurer of the Company, are personal
co-representatives of the Estate of Herbert Freedland. During the fiscal year
ended July 31, 1995, the Company paid fees to NBD for services performed by NBD
for the Company during the Company's last fiscal year. The Company expects to
continue to have transactions with NBD in the ordinary course of its business.
In the opinion of management, the Company's commercial dealings with NBD are on
terms as favorable as those available from other third-party banks.
In fiscal 1995, the Company repurchased 242,000 shares of the Company's
Common Stock from the Estate of Herbert Freedland and the children of Mr.
Freedland for an aggregate purchase price of $7,260,000, or $30 per share. The
Company used available cash to fund the purchase.
II. PROPOSAL TO ADOPT THE HOWELL INDUSTRIES, INC. 1995 STOCK
INCENTIVE PLAN FOR KEY EMPLOYEES
The Board of Directors of the Company proposes that the shareholders
approve the Howell Industries, Inc. 1995 Stock Incentive Plan for Key Employees
(the "Plan"). Under the Plan, stock options, stock appreciation rights and
restricted stock relating to shares of Common Stock may be granted to key
employees of the Company or any corporation in which the Company owns, directly
or indirectly, stock possessing more than fifty percent of the combined voting
power of all classes of stock (each, a "Subsidiary"). A maximum of 40,000
shares of Common Stock will be subject to the Plan. The Board of Directors of
the Company adopted the Plan on October 24, 1995, subject to shareholder
approval.
The Board of Directors believes that it is in the best interests of the
Company and its shareholders to approve the Plan to allow the Company to
provide key employees of the Company with an increased incentive to make
significant and extraordinary contributions to the long-term performance and
growth of the Company, to join the interests of key employees with the
interests of the shareholders of the Company and to facilitate attracting and
retaining key employees of exceptional ability. The Plan could, however, have
an "anti-takeover" effect, particularly with regard to the award of restricted
stock which generally will require no payment from the employee.
Persons deemed to be affiliates of the Company, i.e., persons who
directly or indirectly through one or more intermediaries, control, are
controlled by, or are under common control with, the Company, must resell
securities acquired under the Plan pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Rule
144 under the Securities Act or pursuant to an applicable exemption under the
Securities Act.
The Company is the issuer of the securities offered pursuant to the Plan.
As of October 18, 1995, the closing price for the Common Stock on the American
Stock Exchange was $24.50 per share. The Plan is not subject to any provisions
of the Employee Retirement Income Security Act of 1974 and is not qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
The full text of the Plan is set forth as Appendix A to this Proxy
Statement. The major features of the Plan are summarized below, but this is
only a summary and is qualified in its entirety by reference to the actual text
of the Plan. Capitalized terms not otherwise defined herein have the meanings
given them in the Plan.
Administration
The Plan is administered by a committee as may be specified by the Board
of Directors to perform the functions and duties of the Committee under the
Plan (the "Committee"). The Committee is comprised of persons who meet the
standards of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any similar successor rule, and Section 162(m) of the
Code, and the regulations thereunder. Currently, the Committee is composed of
Messrs. Schwartz and Cummings.
Subject to the provisions of the Plan, the Committee will determine, from
those eligible to be participants under the Plan, the persons to be granted
stock options, stock appreciation rights and restricted stock, the amount of
stock or rights to be optioned or granted to each such person and the terms and
conditions of any stock options, stock appreciation rights and restricted
stock. In addition, the Committee is authorized to interpret the Plan and to
make all other determinations necessary for its administration.
Plan Participants
The selection of persons who are eligible to participate in the Plan and
grants and awards to those individuals are determined by the Committee, in its
sole discretion. The only established criterion to determine eligibility under
the Plan is that individuals must be key employees of the Company or any
Subsidiary. No Incentive Option may be granted under the Plan to any one
participant which would result in the aggregate fair market value of underlying
stock with respect to which Incentive Options are exercisable for the first
time by such participant during any calendar year under any plan maintained by
the Company (or any parent or Subsidiary corporation of the Company) exceeding
$100,000. Each grant or award under the Plan is to be evidenced by a written
agreement which will contain such provisions as may be approved by the
Committee.
The Company estimates that currently approximately 10 persons would be
eligible to participate in the Plan. If the Plan is approved by the Company's
shareholders, the Committee intends to grant stock options to purchase 10,000
shares each to Messrs. Schiff and Sakuta.
Shares Subject to Grant or Award
The maximum number of shares of Common Stock with respect to which stock
options or stock appreciation rights may be granted or which may be awarded as
restricted stock under the Plan is 40,000 shares. No employee may receive
options, stock appreciation rights, restricted stock or any combination thereof
for more than 15,000 shares of Common Stock over the term of the Plan. The
number of shares subject to each outstanding stock option or stock appreciation
right or restricted stock award, the option price with respect to outstanding
stock options, the grant value with respect to outstanding stock appreciation
rights, the aggregate number of shares remaining available under the Plan and
the 15,000 share per-employee limitation will be subject to adjustment by the
Committee to reflect events such as stock dividends. If a stock option or stock
appreciation right expires or terminates without having been fully exercised,
or if shares of restricted stock are forfeited, the number of shares with
respect to which the stock option or stock appreciation right was not
exercised and the number of forfeited shares of restricted stock will again
become available for grant or award under the Plan.
Amendment or Termination of the Plan
The Board of Directors may terminate or amend the Plan at any time,
provided that the Board may not, without shareholder approval, amend the Plan
so as to increase the maximum number of shares in the aggregate which are
subject to the Plan, increase the maximum number of shares for which any
participant may be granted stock options, stock appreciation rights or awarded
restricted stock under the Plan, change the class of persons eligible to be
participants under the Plan or materially increase the benefits accruing to
participants under the Plan, and the Board may not, without the consent of the
holder of a stock option, stock appreciation right or restricted stock award,
change the stock option price or alter or impair any stock option, stock
appreciation right or restricted stock which has been previously granted or
awarded under the Plan.
Unless sooner terminated by the Board of Directors of the Company, the
Plan terminates ten years after its adoption by the Board of Directors.
Termination will not affect the validity or expiration date of any then
outstanding stock option, stock appreciation right or restricted stock award.
Stock Options and Stock Appreciation Rights
Grant and Exercise of Stock Options
Both Incentive Options and Nonqualified Options may be granted under the
Plan. Subject to the following rules, the Committee establishes the price per
share for which shares covered by the option may be purchased. An Incentive
Option is intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code. Any Incentive Option granted under the Plan will
have an exercise price of not less than 100% of the fair market value of the
shares on the date on which such option is granted. With respect to an
Incentive Option granted to a participant who owns more than 10% of the total
combined voting stock of the Company or of any parent or Subsidiary of the
Company, the exercise price for such option must be at least 110% of the fair
market value of the shares subject to the option on the date the option is
granted. A Nonqualified Option granted under the Plan (i.e., an option to
purchase shares of Common Stock that does not meet the Code's requirements for
Incentive Options) must have an exercise price of at least 50% of the fair
market value of the shares subject to the option on the date on which the
option is granted.
The Committee is to specify in its grants of stock options the time or
times at which such options will be exercisable. At the time of exercise of any
option granted pursuant to the Plan, the participant must pay the full option
price of all shares purchased in cash or, with the consent of the Committee,
(i) in Common Stock, (ii) by a promissory note payable to the order of the
Company which is acceptable to the Committee, (iii) by a cash down payment and
delivery of such a promissory note in the amount of the unpaid exercise price
or (iv) in such other manner as the Committee determines is appropriate. The
fair market value of the stock with respect to which Incentive Options are
first exercisable in any one year by a participant cannot exceed $100,000.
Grant and Exercise of Stock Appreciation Rights
Stock appreciation rights may be granted in conjunction with the grant of
an Incentive or Nonqualified Option under the Plan or independently of any such
stock option. A stock appreciation right granted in conjunction with a stock
option may be an alternative right. In such case, the exercise of the stock
option terminates the stock appreciation right to the extent of the number of
shares purchased upon exercise of the stock option and, correspondingly, the
exercise of the stock appreciation right terminates the stock option to the
extent of the number of shares with respect to which such right is exercised.
Alternatively, a stock appreciation right granted in conjunction with a stock
option may be an additional right, in which case both the stock appreciation
right and the stock option may be exercised.
The Committee will specify in its grants the time or times at which stock
appreciation rights or stock options granted in conjunction with such rights
are exercisable. Nevertheless, no stock appreciation right or stock option
granted in conjunction with a stock appreciation right may be exercisable
within six months from the date of grant unless the participant dies or becomes
disabled during such six-month period. In addition, executive officers of the
Company along with others who are regularly required to report their ownership
of capital stock of the Company and changes in such ownership to the Commission
and who are subject to shortswing profit liability under the Exchange Act must
make elections to exercise, and must actually exercise, stock appreciation
rights during certain time periods specified in the Plan and otherwise in
accordance with Rule 16b-3(e), or any replacement rule, under the Exchange Act.
Upon exercise of a stock appreciation right, a participant is not
required to make any payment to the Company (except for applicable withholding
taxes) and is entitled to receive an amount equal to the excess of or, in the
sole discretion of the Committee exercised at the date of grant, a portion of
the excess of the then aggregate fair market value of the number of shares with
respect to which the participant exercises the stock appreciation right over
the aggregate fair market value of such number of shares at the time the stock
appreciation right was granted.
Terms of Stock Options and Stock Appreciation Rights
Generally, no stock option or stock appreciation right granted under the
Plan may remain outstanding for more than ten years from the date of grant.
Continuation of Employment
Unless the Committee determines otherwise, stock options and stock
appreciation rights granted under the Plan may be exercised only while a
participant is an employee of the Company or a Subsidiary.
As a condition to granting a stock option or stock appreciation right
under the Plan, the Committee may require that the prospective participant
agree in writing to remain in the employ of the Company or a Subsidiary for a
designated minimum period from the date of the granting of such stock option or
stock appreciation right.
Sequential Exercise
Successive stock options and stock appreciation rights may be granted to
the same participant, whether or not any stock option or stock appreciation
right previously granted to such participant remains unexercised. A stock
option or a stock appreciation right may be exercised even though stock options
and stock appreciation rights previously granted to such participant remain
unexercised.
Non-Transferability of Stock Options and Stock Appreciation Rights
No stock option or stock appreciation right granted under the Plan is
permitted to be transferred by a participant other than by will or by the laws
of descent and distribution, and such stock option or stock appreciation right
will be exercisable, during the lifetime of the participant, only by the
participant.
Restricted Stock
The Committee may award shares of restricted stock to participants.
Generally, a restricted stock award will not require the payment of any price
by the participant but will call for the transfer of shares to the participant
subject to forfeiture if the participant's employment terminates during a
"restricted" period (which must be at least six months) specified in the award
of the restricted stock. If the participant's employment terminates as a result
of his or her death or permanent disability or if his or her employment is
terminated by action of the Company or a Subsidiary without cause or by mutual
agreement, the Committee may determine that some or all of the shares will not
be forfeited. Although the participant is not permitted to transfer or encumber
shares acquired upon the grant of restricted stock during the restricted
period, the participant has the right to vote, and receive any dividends
payable with respect to, such shares. The Committee may also prescribe other
terms and conditions in connection with the award of restricted stock.
Federal Income Tax Consequences
The rules governing the tax treatment of stock options, stock
appreciation rights, restricted stock and shares acquired upon the exercise of
stock options and stock appreciation rights are quite technical. Therefore, the
description of federal income tax consequences set forth below is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Incentive Options
Incentive Options granted pursuant to the Plan are intended to qualify as
"Incentive Stock Options" within the meaning of Section 422 of the Code. If the
participant makes no disposition of the shares acquired pursuant to exercise of
an Incentive Option within one year after the transfer of shares to such
participant and within two years from grant of the option, such participant
will realize no taxable income as a result of the grant or exercise of such
option, and any gain or loss that is subsequently realized may be treated as
long-term capital gain or loss, as the case may be. Under these circumstances,
the Company will not be entitled to a deduction for federal income tax purposes
with respect to either the issuance of the Incentive Options or the transfer of
shares upon their exercise.
If shares acquired upon exercise of Incentive Options are disposed of
prior to the expiration of the above time periods, the participant will
recognize ordinary income in the year in which the disqualifying disposition
occurs, the amount of which will generally be the lesser of (i) the excess of
the market value of the shares on the date of exercise over the option price,
or (ii) the gain recognized on such disposition. Such amount will ordinarily be
deductible by the Company for federal income tax purposes in the same year,
provided that the amount constitutes reasonable compensation and that the
Company satisfies any applicable federal income tax withholding requirements.
In addition, the excess, if any, of the amount realized on a disqualifying
disposition over the market value of the shares on the date of exercise will be
treated as capital gain.
Nonqualified Options
A participant who acquires shares by exercise of a Nonqualified Option
generally realizes as taxable ordinary income, at the time of exercise, the
difference between the exercise price and the fair market value of the shares
on the date of exercise. Such amount will ordinarily be deductible by the
Company in the same year, provided that the amount constitutes reasonable
compensation and that the Company satisfies any applicable federal income tax
withholding requirements. Subsequent appreciation or decline in the value of
the shares on the sale or other disposition of the shares will generally be
treated as capital gain or loss.
Stock Appreciation Rights
A participant generally will recognize ordinary income upon the exercise
of a stock appreciation right in an amount equal to the amount of cash received
and the fair market value of any shares received at the time of exercise, plus
the amount of any taxes withheld. Such amount will ordinarily be deductible by
the Company in the same year, provided that the amount constitutes reasonable
compensation and that the Company satisfies any applicable federal income tax
withholding requirements.
Restricted Stock
A participant granted shares of restricted stock under the Plan is not
required to include the value of such shares in ordinary income until the first
time such participant's rights in the shares are transferable or are not
subject to substantial risk of forfeiture, whichever occurs earlier, unless
such participant timely files an election under Section 83(b) of the Code to be
taxed on the receipt of the shares. In either case, the amount of such income
will be equal to the excess of the fair market value of the stock at the time
the income is recognized over the amount (if any) paid for the stock. The
Company will ordinarily be entitled to a deduction, in the amount of the
ordinary income recognized by the participant, for the Company's taxable year
in which the participant recognizes such income, provided that the amount
constitutes reasonable compensation and that the Company satisfies any
applicable federal income tax withholding requirements.
Withholding Payments
If upon the exercise of a Nonqualified Option or stock appreciation
right, or upon the award of restricted stock or the expiration of restrictions
applicable to restricted stock, or upon a disqualifying disposition of shares
acquired upon exercise of an Incentive Option, the Company or any Subsidiary
must pay amounts for income tax withholding, then in the Committee's sole
discretion, either the Company will appropriately reduce the amount of stock or
cash to be delivered or paid to the participant or the participant must pay
such amount to the Company or the Subsidiary to reimburse it for such income
tax withholding. The Committee may, in its sole discretion, permit a
participant to satisfy such withholding obligations by electing to reduce the
number of shares of Common Stock delivered or deliverable to the participant
upon exercise of a stock option or stock appreciation right or award of
restricted stock or by electing to tender an appropriate number of shares of
Common Stock back to the Company subsequent to exercise of a stock option or
stock appreciation right or award of restricted stock (with such restrictions
as the Committee may adopt).
Limitation on Compensation Deduction
Publicly-held corporations are precluded from deducting compensation
paid to certain of their executive officers in excess of $1 million with
specified exceptions. The employees covered by the $1 million limitation on
deductibility of compensation include the chief executive officer and those
employees whose annual compensation is required to be reported to the
Securities and Exchange Commission because the employee is one of the
company's four highest compensated employees for the taxable year whose annual
compensation exceeded $100,000 (other than the chief executive officer). The
exercise of stock options or stock appreciation rights and the release of
restrictions on restricted stock generally cause inclusion in an employee's
compensation for purposes of the $1 million limitation on deductibility of
compensation.
Accounting Treatment
Generally, under current accounting rules neither the grant nor the
exercise of an Incentive Option or a Nonqualified Option under the Plan
requires any charge against earnings, if the exercise price of the option is
equal to or in excess of the fair market value of the shares on the date of
grant. If the exercise price is below the fair market value of the shares on
the date of grant, an earnings charge equal to the difference will be required
either at the date of grant or possibly over the term of the option.
Stock appreciation rights will require a charge against earnings of the
Company each year representing appreciation in the value of such rights during
such year. In the case of stock appreciation rights, such charge is based on
the difference between the market value on the date of grant of Common Stock
with respect to which the stock appreciation right is granted and the current
market price of such Common Stock. In the event of a decline in the market
price of Common Stock subsequent to a charge against earnings related to the
estimated costs of stock appreciation rights, reversal of prior charges is made
in the amount of such decline (but not to exceed aggregate prior increases).
Restricted stock will require a charge against income representing the
value of the benefit conferred, which may be spread over the restricted period.
Such charge is based on the market value at the time the shares are transferred
to the participant.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting will be necessary to
adopt the Plan. Abstentions, withheld votes and broker non-votes will not be
deemed votes cast in determining approval of this proposal, but they will be
counted for purposes of determining whether a quorum is present. The Company
expects that its officers and directors who are also shareholders will vote for
the proposal.
The Board of Directors recommends a vote FOR the proposal to adopt the
Plan. Proxies solicited by management will be so voted unless shareholders
specify in their proxies a contrary choice.
III. OTHER MATTERS
COMPANY ACCOUNTANTS
The Company has selected the accounting firm of Deloitte & Touche LLP as
the Company's independent certified public accountants for the fiscal year
ending July 31, 1996. This accounting firm (and its predecessor) has served as
the Company's independent certified public accountants since 1968. A
representative of Deloitte & Touche LLP is not expected to be present at the
Annual Meeting of Shareholders unless requested in advance by a shareholder of
the Company. If so requested, such a representative will be present to respond
to appropriate questions and will have an opportunity to make a statement if he
desires to do so.
OTHER PROPOSALS
As of the date of this Proxy Statement, the management does not intend to
present, and has not been informed that any other person intends to present,
any matters for action at this meeting other than those specifically referred
to in the Proxy and in this Proxy Statement. If, however, any other matters not
now known or determined shall be presented, it is the intention of the proxy
holders to vote such proxies in accordance with their best judgment.
A shareholder proposal which is intended to be presented at the 1996
Annual Meeting of Shareholders must be received by the Company at its principal
offices, Suite 650, 17515 West Nine Mile Road, Southfield, Michigan 48075, by
June 29, 1996.
By Order of the Board of Directors
CYRIL MOSCOW, Secretary
Dated: October 27, 1995
<PAGE>
APPENDIX A
HOWELL INDUSTRIES, INC.
1995 Stock Incentive Plan
For Key Employees
1. Definitions: As used herein, the following definitions shall apply:
(a) "Board of Directors" means the Board of Directors of the
Corporation.
(b) "Committee" means a committee as shall be specified by the
Board of Directors to perform the functions and duties of the Committee
under the Plan; provided, however, that the Committee shall comply with
the requirements of (i) Rule 16b-3 of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
similar successor rule, and (ii) Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder.
(c) "Corporation" means Howell Industries, Inc., a Michigan
corporation, or any successor thereof.
(d) "Incentive Option" means an option to purchase Common Stock of
the Corporation which meets the requirements set forth in the Plan and
also is intended to be and qualifies as an incentive stock option within
the meaning of Section 422 of the Code.
(e) "Nonqualified Option" means an option to purchase Common Stock
of the Corporation which meets the requirements set forth in the Plan but
is not intended to be or does not qualify as an incentive stock option
within the meaning of Section 422 of the Code.
(f) "Participant" means any individual designated by the Committee
under Paragraph 6 for participation in the Plan.
(g) "Plan" means this Howell Industries, Inc. 1995 Stock Incentive
Plan For Key Employees.
(h) "Restricted stock award" means a grant of Common Stock of the
Corporation which is subject to restrictions against transfer, forfeiture
and such other terms and conditions determined by the Committee, as
provided in Paragraph 18.
(i) "Stock appreciation right" means a right to receive the
appreciation in value, or a portion of the appreciation in value, of a
specified number of shares of the Common Stock of the Corporation, as
provided in Paragraph 12.
(j) "Subsidiary" means any corporation in which the Corporation
owns, directly or indirectly, stock possessing more than fifty percent of
the combined voting power of all classes of stock.
2. Purpose of Plan: The purpose of the Plan is to provide key employees
(including officers and directors who are also key employees) of the
Corporation and its Subsidiaries with an increased incentive to make
significant and extraordinary contributions to the long-term performance and
growth of the Corporation and its Subsidiaries, to join the interests of key
employees with the interests of the shareholders of the Corporation and to
facilitate attracting and retaining key employees of exceptional ability.
3. Administration: The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall determine, from
those eligible to be Participants under the Plan, the persons to be granted
stock options, stock appreciation rights and restricted stock, the amount of
stock or rights to be optioned or granted to each such person, and the terms
and conditions of any stock options, stock appreciation rights and restricted
stock. Subject to the provisions of the Plan, the Committee is authorized to
interpret the Plan, to promulgate, amend and rescind rules and regulations
relating to the Plan and to make all other determinations necessary or
advisable for its administration. Interpretation and construction of any
provision of the Plan by the Committee shall, unless otherwise determined by
the Board of Directors of the Corporation, be final and conclusive. A majority
of the Committee shall constitute a quorum, and the acts approved by a majority
of the members present at any meeting at which a quorum is present, or acts
approved by written consent of all of the members of the Committee, shall be
the acts of the Committee.
4. Indemnification of Committee Members: In addition to such other rights
of indemnification as they may have, the members of the Committee shall be
indemnified by the Corporation in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in
connection with the Plan or any stock option, stock appreciation right or
restricted stock granted hereunder to the full extent provided for under the
Michigan Business Corporation Act or the Corporation's Articles of
Incorporation or Bylaws with regard to indemnification of directors of the
Corporation.
5. Maximum Number of Shares Subject to Plan: The maximum number of shares
with respect to which stock options or stock appreciation rights may be granted
or which may be awarded as restricted stock under the Plan shall be 40,000
shares in the aggregate of Common Stock of the Corporation. The number of
shares with respect to which a stock appreciation right is granted, but not the
number of shares which the Corporation delivers or could deliver to a
Participant upon exercise of a stock appreciation right, shall be charged
against the aggregate number of shares remaining available under the Plan;
provided, however, that in the case of a stock appreciation right granted in
conjunction with a stock option under circumstances in which the exercise of
the stock appreciation right results in termination of the stock option and
vice versa, only the number of shares subject to the stock option shall be
charged against the aggregate number of shares remaining available under the
Plan. If a stock option or stock appreciation right expires or terminates for
any reason (other than termination as a result of the exercise of a related
right) without having been fully exercised, or if shares of restricted stock
are forfeited, the number of shares with respect to which the stock option or
stock appreciation right was not exercised at the time of its expiration or
termination, and the number of forfeited shares of restricted stock, shall
again become available for the grant of stock options or stock appreciation
rights or the award of restricted stock under the Plan, unless the Plan shall
have been terminated.
Notwithstanding any other provision in this Plan, no employee of the
Corporation or a Subsidiary may receive options, stock appreciation rights,
restricted stock or any combination thereof for more than 15,000 shares of
Common Stock of the Corporation over the term of the Plan, as provided in
Paragraph 23. For purposes of this 15,000 share per-employee limitation, there
shall be taken into account all shares covered by stock options and stock
appreciation rights granted, and all restricted shares awarded, to an employee
regardless of whether such stock options or stock appreciation rights expire or
terminate without being fully exercised or whether such restricted shares are
forfeited back to the Corporation.
The number of shares subject to each outstanding stock option or stock
appreciation right or restricted stock award, the option price with respect to
outstanding stock options, the grant value with respect to outstanding stock
appreciation rights, the aggregate number of shares remaining available under
the Plan and the 15,000 share per-employee limitation shall be subject to such
adjustment as the Committee, in its discretion, deems appropriate to reflect
such events as stock dividends, stock splits, recapitalizations, mergers,
consolidations or reorganizations of or by the Corporation; provided, however,
that no fractional shares shall be issued pursuant to the Plan, no rights may
be granted under the Plan with respect to fractional shares and any fractional
shares resulting from such adjustments shall be eliminated from any outstanding
stock option, stock appreciation right or restricted stock award.
6. Participants: The Committee shall determine and designate from time to
time, in its sole discretion, those key employees of the Corporation or any
Subsidiary to whom stock options, stock appreciation rights or restricted stock
are to be granted or awarded and who become Participants in the Plan. For the
purposes of the Plan, key employees shall include officers and directors who
are also key employees of the Corporation or any Subsidiary.
7. Written Agreement: Each stock option, stock appreciation right and
restricted stock award shall be evidenced by a written agreement between the
Corporation and the Participant and shall contain such provisions as may be
approved by the Committee. Such agreements shall constitute binding contracts
between the Corporation and the Participant, and every Participant, upon
acceptance of such agreement, shall be bound by the terms and restrictions of
the Plan and of such agreement. The terms of each such agreement shall be in
accordance with the Plan, but the agreements may include such additional
provisions and restrictions determined by the Committee, provided that such
additional provisions and restrictions are not inconsistent with the terms of
the Plan.
8. Allotment of Shares: The Committee shall determine and fix, in its
sole discretion, the number of shares of stock with respect to which each
Participant may be granted stock options and stock appreciation rights and the
number of shares of restricted stock which each Participant may be awarded;
provided, however, that no Incentive Option may be granted under the Plan to
any one Participant which would result in the aggregate fair market value,
determined as of the date the option is granted, of underlying stock with
respect to which Incentive Options are exercisable for the first time by such
Participant during any calendar year under any plan maintained by the
Corporation (or any parent or Subsidiary corporation of the Corporation)
exceeding $100,000.
9. Stock Options: Subject to the terms of the Plan, the Committee, in its
sole discretion, may grant to Participants either Incentive Options,
Nonqualified Options or any combination thereof. Each option granted under the
Plan shall designate the number of shares covered thereby, if any, with respect
to which the option is an Incentive Option, and the number of shares covered
thereby, if any, with respect to which the option is a Nonqualified Option.
10. Stock Option Price: Subject to the rules set forth in this Paragraph
10, at the time any stock option is granted, the Committee, in its sole
discretion, shall establish the price per share for which the shares covered by
the option may be purchased. With respect to an Incentive Option, such option
price shall not be less than 100% of the fair market value of the stock on the
date on which such option is granted; provided, however, that with respect to
an Incentive Option granted to an employee who at the time of the grant owns
(after applying the attribution rules of Section 424(d) of the Code) more than
10% of the total combined voting stock of the Corporation or of any parent or
Subsidiary, the option price shall not be less than 110% of the fair market
value of the stock on the date such option is granted. With respect to a
Nonqualified Option, the option price shall not be less than 50% of the fair
market value of the stock on the date such option is granted. Fair market value
of a share shall be determined by the Committee and may be determined by taking
the mean between the highest and lowest quoted selling prices of the
Corporation's Common Stock on any exchange or other market on which the shares
of Common Stock of the Corporation shall be traded on such date, or if there
are no sales on such date, on the next following day on which there were sales.
The option price shall be subject to adjustment in accordance with the
provisions of Paragraph 5 of the Plan.
11. Payment of Stock Option Price: At the time of the exercise in whole
or in part of any stock option granted hereunder, payment of the option price
in full in cash or, with the consent of the Committee, in Common Stock of the
Corporation or by a promissory note payable to the order of the Corporation
which is acceptable to the Committee, shall be made by the Participant for all
shares so purchased. Such payment may, with the consent of the Committee, also
consist of a cash down payment and delivery of such a promissory note in the
amount of the unpaid exercise price. Such payment may also be made in such
other manner as the Committee determines is appropriate, in its sole
discretion. No Participant shall have any of the rights of a shareholder of the
Corporation under any stock option until the actual issuance of shares to said
Participant, and prior to such issuance no adjustment shall be made for
dividends, distributions or other rights in respect of such shares, except as
provided in Paragraph 5.
12. Stock Appreciation Rights: Subject to the terms of the Plan, the
Committee may grant stock appreciation rights to Participants either in
conjunction with, or independently of, any stock options granted under the
Plan. A stock appreciation right granted in conjunction with a stock option may
be an alternative right wherein the exercise of the stock option terminates the
stock appreciation right to the extent of the number of shares purchased upon
exercise of the stock option and, correspondingly, the exercise of the stock
appreciation right terminates the stock option to the extent of the number of
shares with respect to which the stock appreciation right is exercised.
Alternatively, a stock appreciation right granted in conjunction with a stock
option may be an additional right wherein both the stock appreciation right and
the stock option may be exercised. A stock appreciation right, however, may not
be granted in conjunction with an Incentive Option under circumstances in which
the exercise of the stock appreciation right affects the right to exercise the
Incentive Option or vice versa, unless the stock appreciation right, by its
terms, meets all of the following requirements:
(a) The stock appreciation right will expire no later than the
Incentive Option;
(b) The stock appreciation right may be for no more than the
difference between the option price of the Incentive Option and the fair
market value of the shares subject to the Incentive Option at the time
the stock appreciation right is exercised;
(c) The stock appreciation right is transferable only when the
Incentive Option is transferable, and under the same conditions;
(d) The stock appreciation right may be exercised only when the
Incentive Option is eligible to be exercised; and
(e) The stock appreciation right may be exercised only when the
fair market value of the shares subject to the Incentive Option exceeds
the option price of the Incentive Option.
Upon exercise of a stock appreciation right, a Participant shall be
entitled to receive, without payment to the Corporation (except for applicable
withholding taxes), an amount equal to the excess of or, in the sole discretion
of the Committee exercised at the date of grant, a portion of the excess of (i)
the then aggregate fair market value of the number of shares with respect to
which the Participant exercises the stock appreciation right, over (ii) the
aggregate fair market value of such number of shares at the time the stock
appreciation right was granted. This amount shall be payable by the
Corporation, in the sole discretion of the Committee (which discretion the
Committee may exercise at the date of grant or at the date of exercise, or may
delegate to the Participant), in cash, in shares of Common Stock of the
Corporation or any combination thereof.
13. Granting and Exercising of Stock Options and Stock Appreciation
Rights: Subject to the provisions of this Paragraph 13, each stock option and
stock appreciation right granted hereunder shall be exercisable at any such
time or times or in any such installments as may be determined by the Committee
at the time of the grant. No stock appreciation right or stock option granted
in conjunction therewith may be exercisable prior to the expiration of six
months from the date of grant unless the Participant dies or becomes disabled
prior thereto. Moreover, if a Participant who is granted a stock appreciation
right is a person who is regularly required to report his ownership and changes
in ownership of Common Stock of the Corporation to the Securities and Exchange
Commission and is subject to short-swing profit liability under the provisions
of Section 16(b) of the Exchange Act, then any election to exercise as well as
any actual exercise of such Participant's stock appreciation right shall be
made only during the period beginning on the third business day and ending on
the twelfth business day following the release for publication by the
Corporation of quarterly or annual summary statements of sales and earnings.
Notwithstanding anything contained in the Plan to the contrary, stock
appreciation rights shall always be granted and exercised in such a manner as
to conform to the provisions of Rule 16b-3(e), or any replacement rule, adopted
pursuant to the provisions of the Exchange Act. In addition, the aggregate fair
market value (determined at the time the option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
A Participant may exercise a stock option or stock appreciation right, if
then exercisable, in whole or in part by delivery to the Corporation of written
notice of the exercise, in such form as the Committee may prescribe,
accompanied, in the case of a stock option, by (i) payment for the shares with
respect to which the stock option is exercised in accordance with Paragraph 11,
or (ii) in the sole discretion of the Committee, irrevocable instructions to a
stock broker to promptly deliver to the Corporation full payment for the shares
with respect to which the stock option is exercised from the proceeds of the
stock broker's sale of or loan against the shares. Except as provided in
Paragraph 17, stock options and stock appreciation rights granted to a
Participant may be exercised only while the Participant is an employee of the
Corporation or a Subsidiary.
Successive stock options and stock appreciation rights may be granted to
the same Participant, whether or not the stock option(s) and stock appreciation
right(s) previously granted to such Participant remain unexercised. A
Participant may exercise a stock option or a stock appreciation right, if then
exercisable, notwithstanding that stock options and stock appreciation rights
previously granted to such Participant remain unexercised.
14. Non-Transferability of Stock Options and Stock Appreciation
Rights: No stock option or stock appreciation right granted under the Plan to a
Participant shall be transferable by such Participant otherwise than by will,
or by the laws of descent and distribution, and stock options and stock
appreciation rights shall be exercisable, during the lifetime of the
Participant, only by the Participant.
15. Term of Stock Options and Stock Appreciation Rights: If not sooner
terminated, each stock option and stock appreciation right granted hereunder
shall expire not more than 10 years from the date of the granting thereof;
provided, however, that with respect to an Incentive Option or a related stock
appreciation right granted to a Participant who, at the time of the grant, owns
(after applying the attribution rules of Section 424(d) of the Code) more than
10% of the total combined voting stock of all classes of stock of the
Corporation or of any parent or Subsidiary, such option and stock appreciation
right shall expire not more than five (5) years after the date of granting
thereof.
16. Continuation of Employment: The Committee may require, in its sole
discretion, that any Participant under the Plan to whom a stock option or stock
appreciation right shall be granted shall agree in writing as a condition of
the granting of such stock option or stock appreciation right to remain in the
employ of the Corporation or a Subsidiary for a designated minimum period from
the date of the granting of such stock option or stock appreciation right as
shall be fixed by the Committee.
17. Termination of Employment: If the employment of a Participant by the
Corporation or a Subsidiary shall terminate, the Committee may, in its sole
discretion, permit the exercise of stock options and stock appreciation rights
granted to such Participant (i) for a period not to exceed three months
following termination of employment with respect to Incentive Options or
related stock appreciation rights if termination of employment is not due to
death or permanent disability of the Participant, (ii) for a period not to
exceed one year following termination of employment with respect to Incentive
Options or related stock appreciation rights if termination of employment is
due to the death or permanent disability of the Participant, and (iii) for a
period not to extend beyond the expiration date with respect to Nonqualified
Options or related or independently granted stock appreciation rights. In no
event, however, shall a stock option or stock appreciation right be exercisable
subsequent to its expiration date and, furthermore, unless the Committee, in
its sole discretion, determines otherwise, or an agreement with the Participant
otherwise provides, a stock option or stock appreciation right may only be
exercised after termination of a Participant's employment to the extent
exercisable on the date of termination of employment.
18. Restricted Stock Awards: Subject to the terms of the Plan, the
Committee may award shares of restricted stock to Participants. All shares of
restricted stock granted to Participants under the Plan shall be subject to the
following terms and conditions (and to such other terms and conditions
prescribed by the Committee):
(a) At the time of each award of restricted shares, there shall be
established for the shares a restricted period, which shall be no less
than six months. Such restricted period may differ among Participants and
may have different expiration dates with respect to portions of shares
covered by the same award.
(b) Shares of restricted stock awarded to Participants may not be
sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered during the restricted period applicable to such shares. Except
for such restrictions on transfer, a Participant shall have all of the
rights of a shareholder in respect of restricted shares awarded to him
including, but not limited to, the right to receive any dividends on, and
the right to vote, the shares.
(c) If a Participant ceases to be an employee of the Corporation or
a Subsidiary for any reason (voluntarily or involuntarily and with or
without cause) other than death or permanent disability, all shares
theretofore awarded to the Participant which are still subject to the
restrictions imposed by Paragraph 18(b) shall upon such termination of
employment be forfeited and transferred back to the Corporation, without
payment of any consideration by the Corporation. In the event such
employment is terminated by action of the Corporation or a Subsidiary
without cause or by agreement between the Corporation or a Subsidiary and
the Participant, the Committee may, in its sole discretion, release some
or all of the shares from the restrictions.
(d) If a Participant ceases to be an employee of the Corporation or
a Subsidiary by reason of death or permanent disability, the restrictions
imposed by Paragraph 18(b) shall lapse with respect to shares then
subject to such restrictions, unless otherwise determined by the
Committee.
(e) Stock certificates shall be issued in respect of shares of
restricted stock awarded hereunder and shall be registered in the name of
the Participant. Such certificates shall be deposited with the
Corporation or its designee, together with a stock power endorsed in
blank, and, in the sole discretion of the Committee, a legend shall be
placed upon such certificates reflecting that the shares represented
thereby are subject to restrictions against transfer and forfeiture.
(f) At the expiration of the restricted period applicable to the
shares, the Corporation shall deliver to the Participant or the legal
representative of the Participant's estate the stock certificates
deposited with it or its designee and as to which the restricted period
has expired. If a legend has been placed on such certificates, the
Corporation shall cause such certificates to be reissued without the
legend.
In the case of events such as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Corporation, any stock, securities or other property which a Participant
receives or is entitled to receive by reason of his ownership of restricted
shares shall, unless otherwise determined by the Committee, be subject to the
same restrictions applicable to the restricted shares and shall be deposited
with the Corporation or its designee.
19. Investment Purpose: If the Committee in its sole discretion
determines that as a matter of law such procedure is or may be desirable, it
may require a Participant, upon any acquisition of stock hereunder (whether by
reason of the exercise of stock options or stock appreciation rights or the
award of restricted shares) and as a condition to the Corporation's obligation
to issue or deliver certificates representing such shares, to execute and
deliver to the Corporation a written statement, in form satisfactory to the
Committee, representing and warranting that the Participant's acquisition of
shares of stock shall be for such person's own account, for investment and not
with a view to the resale or distribution thereof and that any subsequent offer
for sale or sale of any such shares shall be made either pursuant to (a) a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), which registration statement has become
effective and is current with respect to the shares being offered and sold, or
(b) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the Participant shall, prior to any offer
for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Corporation as to the availability of such
exemption. The Corporation may endorse an appropriate legend referring to the
foregoing restriction upon the certificate or certificates representing any
shares issued or transferred to a Participant under the Plan.
20. Rights to Continued Employment: Nothing contained in the Plan or in
any stock option, stock appreciation right or restricted stock granted or
awarded pursuant to the Plan, nor any action taken by the Committee hereunder,
shall confer upon any Participant any right with respect to continuation of
employment by the Corporation or a Subsidiary nor interfere in any way with the
right of the Corporation or a Subsidiary to terminate such person's employment
as an employee at any time, with or without cause.
21. Withholding Payments: If upon the exercise of a Nonqualified Option
or stock appreciation right, or upon the award of restricted stock or the
expiration of restrictions applicable to restricted stock, or upon a
disqualifying disposition (within the meaning of Section 422 of the Code) of
shares acquired upon exercise of an Incentive Option, there shall be payable by
the Corporation or a Subsidiary any amount for income tax withholding, in the
Committee's sole discretion, either the Corporation shall appropriately reduce
the amount of stock or cash to be delivered or paid to the Participant or the
Participant shall pay such amount to the Corporation or Subsidiary to reimburse
it for such income tax withholding. The Committee may, in its sole discretion,
permit Participants to satisfy such withholding obligations, in whole or in
part, by electing to have the amount of Common Stock delivered or deliverable
by the Corporation upon exercise of a stock option or stock appreciation right
or upon award of restricted stock appropriately reduced, or by electing to
tender Common Stock back to the Corporation subsequent to exercise of a stock
option or stock appreciation right or award of restricted stock, to reimburse
the Corporation or a Subsidiary for such income tax withholding, subject to
such rules and regulations as the Committee may adopt. The Committee may make
such other arrangements with respect to income tax withholding as it shall
determine.
22. Effectiveness of Plan: The Plan shall be effective on the date the
Board of Directors adopts the Plan, provided that the shareholders of the
Corporation approve the Plan within 12 months of its adoption by the Board of
Directors. Stock options, stock appreciation rights and restricted stock may be
granted or awarded prior to shareholder approval of the Plan, but each such
stock option, stock appreciation right or restricted stock grant or award shall
be subject to shareholder approval of the Plan. No stock option or stock
appreciation right may be exercised prior to shareholder approval, and any
restricted stock awarded is subject to forfeiture if such shareholder approval
is not obtained.
23. Termination, Duration and Amendments of Plan: The Plan may be
abandoned or terminated at any time by the Board of Directors. Unless sooner
terminated, the Plan shall terminate on the date ten years after its adoption
by the Board of Directors, and no stock options, stock appreciation rights or
restricted stock may be granted or awarded thereafter. The termination of the
Plan shall not affect the validity of any stock option, stock appreciation
right or restricted stock outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders of
the Corporation, to amend or revise the terms of the Plan at any time;
provided, however, that no such amendment or revision shall (i) increase the
maximum number of shares in the aggregate which are subject to the Plan
(subject, however, to the provisions of Paragraph 5), increase the maximum
number of shares for which any Participant may be granted stock options, stock
appreciation rights or awarded restricted stock under the Plan (except as
contemplated by Paragraph 5), change the class of persons eligible to be
Participants under the Plan or materially increase the benefits accruing to
Participants under the Plan, without approval or ratification of the
shareholders of the Corporation; or (ii) change the stock option price (except
as contemplated by Paragraph 5) or alter or impair any stock option, stock
appreciation right, or restricted stock which shall have been previously
granted or awarded under the Plan, without the consent of the holder thereof.
As adopted by the Board of Directors on October 24, 1995.
<PAGE>
[ Form of Proxy -- Front ]
P R O X Y HOWELL INDUSTRIES, INC. P R O X Y
Annual Meeting of Shareholders, November 22, 1995
The undersigned hereby appoints Morton Schiff and Cyril Moscow, and each of
them, with power of substitution, the proxies of the undersigned to vote the
stock of the undersigned at the Annual Meeting of Shareholders of Howell
Industries, Inc. (the "Company") to be held November 22, 1995, and at any
adjournment thereof:
1. ELECTION OF [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
DIRECTORS below (except as marked to vote for all nominees
to the contrary below) listed below.
Morton Schiff, Alan E. Schwartz and Richard H. Cummings
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
_______________________________________________________________________________
2. Proposal to adopt the Company's 1995 Stock Incentive Plan for Key Employees:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion with respect to any other matters that may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
If no choice is specified, the shares will be voted FOR the nominees
listed and FOR the proposal to adopt the Company's 1995 Stock
Incentive Plan for Key Employees.
(Continued, and to be signed, on reverse side)
[ Form of Proxy -- Back ]
Account Number Number of Shares Proxy Number
Dated: __________________________, 1995
_______________________________________
_______________________________________
Shareholder Should Sign Here
NOTE: Please date this proxy and sign
exactly as your name appears hereon. If
the shares are registered in more than
one name, each joint owner should sign.
When signing as attorney, administrator,
personal representative, executor,
guardian or trustee, add your title to
the signature.
PLEASE PROMPTLY DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
