<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Intek Diversified Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction 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:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
INTEK DIVERSIFIED CORPORATION
NOTICE OF
1998 ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
DATE: Wednesday, February 18,
1998
TIME: ____ A.M.
PLACE: The University Club
1 West 54th Street
New York, New York 10019
<PAGE>
[INTEK LETTERHEAD]
January ___, 1998
Dear Stockholder:
It is my pleasure to invite you to Intek Diversified Corporation's 1998
Annual Meeting of Stockholders.
We will hold the meeting on Wednesday, February 18, 1998, at ____ a.m. at The
University Club, 1 West 54th Street in New York City. In addition to the
formal items of business, I will review the major developments of 1997,
answer your questions and discuss the future prospects for Intek.
This booklet includes the Notice of Annual Meeting and the Proxy Statement.
The Proxy Statement describes the business that we will conduct at the
meeting and provides information about Intek.
Your vote is important. Whether you plan to attend the meeting or not,
please complete, date, sign and return the enclosed proxy card promptly. If
you attend the meeting and prefer to vote in person, you may do so.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert J. Shiver
Chairman of the Board
and Chief Executive Officer
<PAGE>
INTEK
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
Date: Wednesday, February 18, 1998
Time: ________ a.m.
Place: The University Club
1 West 54th Street
New York, New York 10019
Dear Stockholders:
At our Annual Meeting, we will ask you to:
- Elect six directors to serve for a term of one year;
- Amend our Certificate of Incorporation as follows:
-- change our name from "INTEK DIVERSIFIED CORPORATION" to
"INTEK GLOBAL CORPORATION";
-- authorize 1,000,000 shares of qpreferred stock to be issued
by the Board of Directors from time to time as and upon such
terms the Board may decide;
-- effect a 1 for 2 reverse stock split;
-- change the voting requirement for stockholders' actions
taken without a meeting.
- Approve our 1997 Performance and Equity Incentive Plan;
- Amend our 1988 Key Employee Incentive Stock Option Plan;
- Ratify the selection of Arthur Andersen LLP, as independent auditors
for 1998; and
- Transact any other business that may properly be presented at the
Annual Meeting.
If you were a stockholder of record at the close of business on January 15,
1998, you may vote at the Annual Meeting.
By order of the Board of Directors,
-----------------------------------
January ___, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Information About The Annual Meeting And Voting. . . . . . . . . . . . . . . 1
Why Did You Send Me this Proxy Statement? . . . . . . . . . . . . . . . 1
How Many Votes Do I Have? . . . . . . . . . . . . . . . . . . . . . . . 1
How Do I Vote by Proxy? . . . . . . . . . . . . . . . . . . . . . . . . 1
May I Revoke My Proxy?. . . . . . . . . . . . . . . . . . . . . . . . . 2
How Do I Vote in Person?. . . . . . . . . . . . . . . . . . . . . . . . 2
What Vote Is Required to Approve Each Proposal? . . . . . . . . . . . . 2
Is Voting Confidential? . . . . . . . . . . . . . . . . . . . . . . . . 3
What Are the Costs of Soliciting these Proxies? . . . . . . . . . . . . 3
How Do I Obtain an Annual Report on Form 10-K?. . . . . . . . . . . . . 4
Information About Intek Common Stock Ownership . . . . . . . . . . . . . . . 5
Which Stockholders Own At Least 5% of Intek?. . . . . . . . . . . . . . 5
How Much Stock is Owned By Directors and Executive Officers?. . . . . . 6
Compensation Committee Interlocks and Insider Participation . . . . . .
Did Directors, Executive Officers and Greater-Than-10% Stockholders
Comply with Section 16(a) Beneficial Ownership Reporting in 1997? . . 7
Information About Directors and Executive Officers . . . . . . . . . . . . . 7
The Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 7
The Committees of the Board . . . . . . . . . . . . . . . . . . . . . . 7
How Do We Compensate Directors? . . . . . . . . . . . . . . . . . . . . 8
Related Party Transactions with Directors . . . . . . . . . . . . . . . 9
The Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . 9
How We Compensate Executive Officers. . . . . . . . . . . . . . . . . .11
Summary Compensation Table . . . . . . . . . . . . . . . . . . . .11
Option Grants During 1997. . . . . . . . . . . . . . . . . . . . .11
Aggregated Option Exercises During 1997
and Year-End Option Values. . . . . . . . . . . . . . . . .12
Employment Agreement with Chief Executive Officer. . . . . . . . . . . . . .12
Employment Agreements with
Certain Executive Officers. . . . . . . . . . . . . . . . . . . . . . .14
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
i
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DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD . . . . . . . . . . . . . .16
Proposal 1: Elect Six Directors. . . . . . . . . . . . . . . . . . . .16
Proposals 2A, 2B, 2C and 2D: Approve Amendments to the Charter . . . .18
Proposal 2A: Approve Amendment to the Charter to Change our Name
to Intek Global Corporation . . . . . . . . . . . . . . . . . .18
Proposal 2B: Approve Amendment to the Charter to Authorize
1,000,000 Shares of "Blank Check" Preferred Stock. . . . . . . .19
Proposal 2C: Approve Amendment to the Charter to Effect a
Reverse Stock Split . . . . . . . . . . . . . . . . . . . . . .21
Proposal 2D: Approve the Amendment to the Charter to Amend the
Voting Requirement for Actions Taken by Stockholders Without a
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Proposal 3: Approve 1997 Performance and Equity Incentive Plan . . . .22
Proposal 4: Approve Amendment to 1988 Key Employee Incentive
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . .28
Proposal 5: Ratify Selection of Independent Auditors for 1998. . . . .29
Information About Stockholder Proposals. . . . . . . . . . . . . . . . . . .30
APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF INTEK DIVERSIFIED
CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B
INTEK 1997 PERFORMANCE AND EQUITY INCENTIVE PLAN. . . . . . . . . . . . B-1
APPENDIX C
AMENDMENT TO INTEK 1988 KEY EMPLOYEE INCENTIVE STOCK PLAN . . . . . . . C-1
APPENDIX D
TERMS OF SERIES A PREFERRED STOCK . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
ii
<PAGE>
PROXY STATEMENT FOR INTEK DIVERSIFIED CORPORATION
1998 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this Proxy Statement and the enclosed proxy card
because Intek's Board of Directors is soliciting your proxy to vote at the
1998 Annual Meeting of Stockholders. This Proxy Statement summarizes the
information you need to know to cast an informed vote at the Annual Meeting.
However, you do not need to attend the Annual Meeting to vote your shares.
Instead, you may simply complete, sign and return the enclosed proxy card.
We will begin sending this Proxy Statement, the attached Notice of
Annual Meeting and the enclosed proxy card on [January 22, 1998] to all
stockholders entitled to vote. Stockholders who owned Intek common stock at
the close of business on January 15, 1998 are entitled to vote. On this
record date, there were ________ shares of Intek common stock outstanding.
Intek common stock is our only class of voting stock. We are also sending
along with this Proxy Statement, the Intek 1997 Annual Report filed on Form
10-K with the Securities and Exchange Commission, which includes our
financial statements.
HOW MANY VOTES DO I HAVE?
Each share of Intek common stock that you own entitles you to one
vote. The proxy card indicates the number of shares of Intek common stock
that you own.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the Annual Meeting or not, we urge you
to complete, sign and date the enclosed proxy card and to return it promptly
in the envelope provided. Returning the proxy card will not affect your
right to attend the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time
to vote your "proxy" (ONE OF THE INDIVIDUALS NAMED ON YOUR PROXY CARD) will
vote your shares as you have directed. If you sign the proxy card but do not
make specific choices, your proxy will vote your shares as recommended by the
Board of Directors as follows:
- "FOR" the election of all six nominees for director,
- "FOR" all amendments to the Certificate of Incorporation,
- "FOR" the 1997 Performance and Equity Incentive Plan,
1
<PAGE>
- "FOR" the amendment to the 1988 Key Employee Incentive Stock Option
Plan, and
- "FOR" ratification of the selection of independent auditors for
1998.
If any other matter is presented, your proxy will vote in
accordance with his best judgment. At the time this Proxy Statement went to
press, we knew of no matters which needed to be acted on at the Annual
Meeting, other than those discussed in this Proxy Statement.
MAY I REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:
- You may send in another proxy with a later date.
- You may notify Intek's Secretary in writing before the Annual
Meeting that you have revoked your proxy.
- You may vote in person at the Annual Meeting.
HOW DO I VOTE IN PERSON?
If you plan to attend the Annual Meeting and vote in person, we
will give you a ballot form when you arrive. However, if your shares are
held in the name of your broker, bank or other nominee, you must bring an
account statement or letter from the nominee indicating that you are the
beneficial owner of the shares on January 15, 1998, the record date for
voting.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1: ELECT SIX DIRECTORS The six nominees for director who receive the
most votes will be elected. So, if you do
not vote for a particular nominee, or you
indicate "withhold authority to vote" for a
particular nominee on your proxy card, your
vote will not count either "for" or
"against" the nominee.
PROPOSALS 2A - 2D: APPROVE The affirmative vote of a majority of
AMENDMENTS TO THE CERTIFICATE OF the outstanding shares of common stock is
INCORPORATION required to approve each of these amendments
to our Certificate of Incorporation. So, if
you do not vote, or "abstain" from voting, it
has the same effect as if you voted
"against" an amendment.
2
<PAGE>
PROPOSAL 3: APPROVE 1997 The affirmative vote of a majority of the
PERFORMANCE AND EQUITY INCENTIVE votes cast at the Annual Meeting is
PLAN required to approve the plan. So, if you
"abstain" from voting, it has the same effect
as if you voted "against" a proposal.
PROPOSAL 4: APPROVE AMENDMENT The affirmative vote of a majority
TO 1988 KEY EMPLOYEE STOCK of the votes cast at the Annual Meeting is
OPTION PLAN required to approve the amendment to the
plan. So, if you "abstain" from voting, it
has the same effect as if you voted
"against" a proposal.
PROPOSAL 5: RATIFY SELECTION OF The affirmative vote of a majority of the
AUDITORS votes cast at the Annual Meeting is required
to ratify the selection of independent
auditors. So, if you "abstain" from voting,
it has the same effect as if you voted
"against" this proposal.
THE EFFECT OF BROKER NON-VOTES If your broker holds your shares in its name,
the broker will be entitled to vote your
shares on Proposals 1, 3, 4 and 5 even if it
does not receive instructions from you. Your
broker is not entitled to vote on Proposals
2A, 2B, 2C or 2D unless it receives
instructions from you.
If your broker does not vote your shares
on Proposal 1, such "broker non-votes"
will have no effect on the outcome since
only a plurality of votes actually cast is
required to elect a director.
If your broker does not vote your shares on
Proposals 3 and 4, such "broker non-votes" do
not count as "shares present." This means
that a broker non-vote would reduce the
number of affirmative votes that are
necessary to approve each of these proposals.
For Proposals 2A, 2B, 2C, 2D and 5, a broker
non-vote has the same effect as a vote
"against" each of these proposals.
IS VOTING CONFIDENTIAL?
We keep all the proxies, ballots and voting tabulations private as
a matter of practice. We only let our Inspectors of Election
(representatives of American Stock Transfer & Trust Company) and certain
employees of our independent tabulating agent (American Stock Transfer &
Trust Company) examine these documents. We will not disclose your vote to
management unless it is necessary to meet legal requirements. We will,
however, forward to management any written comments you make, on the proxy
card or elsewhere.
WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?
Intek will pay all the costs of soliciting these proxies. In
addition to mailing proxy soliciting material, our directors and employees
also may solicit proxies in person, by telephone or by other electronic means
of communications. We will ask banks, brokers and other institutions,
nominees and fiduciaries to forward the proxy material to their principals
and to obtain authority to execute proxies. We will then reimburse them for
their expenses.
3
<PAGE>
HOW DO I OBTAIN AN ANNUAL REPORT ON FORM 10-K?
IF YOU WOULD LIKE A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED SEPTEMBER 30, 1997 THAT WE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WE WILL SEND YOU ONE WITHOUT CHARGE. PLEASE WRITE TO:
INTEK DIVERSIFIED CORPORATION
214 CARNEGIE CENTER
SUITE 304
PRINCETON, NEW JERSEY 08540-6237
ATTENTION: LOUIS J. MONARI, VICE PRESIDENT ADMINISTRATION
4
<PAGE>
INFORMATION ABOUT INTEK COMMON STOCK OWNERSHIP
WHICH STOCKHOLDERS OWN AT LEAST 5% OF INTEK?
The following table shows, as of December 31, 1997, all persons we
know to be "beneficial owners" of more than five percent of Intek common
stock (1). This information is based on Schedules 13D and 13G reports filed
with the Securities and Exchange Commission (SEC) by each of the firms listed
in the table below. If you wish, you may obtain these reports from the SEC.
- -------------------------------------------------------------------------------
NUMBER OF
SHARES OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY(1) PERCENT OF CLASS
- -------------------------------------------------------------------------------
Simmonds Capital Limited 4,295,883 10.2%
5255 Yonge Street, #1050 ------------
Willowdale, Ontario, Canada
Securicor plc 25,937,042(2) 61.8%
Sutton Park House ------------
15 Carshalton Road
Sutton, Surrey, SM 1 4LD
- -------------------------------------------------------------------------------
(1) "Beneficial ownership" is a technical term broadly defined by the SEC to
mean more than ownership in the usual sense. So, for example, you
"beneficially" own Intek common stock not only if you hold it directly, but
also if you indirectly (THROUGH A RELATIONSHIP, A POSITION AS A DIRECTOR OR
TRUSTEE, OR A CONTRACT OR UNDERSTANDING), have (or share) the power to vote
the stock, to sell it or you have the right to acquire it within 60 days.
(2) 25,000,000 shares are owned by Securicor Communications Limited, a
corporation organized under the laws of England and Wales and 937,042
shares are owned by Securicor International Limited, a corporation
organized under the laws of England and Wales. Both Securicor
Communications Limited and Securicor International Limited are wholly
owned direct subsidiaries of Security Services plc which is itself a
wholly owned indirect subsidiary of Securicor plc, a corporation listed
on the London Stock Exchange. On December 3, 1996, Intek acquired all
the issued and outstanding common stock of Securicor Radiocoms Limited,
a wholly-owned subsidiary of Securicor Communications in exchange for
25,000,000 shares of Common Stock. A change in control of Intek occurred
as a result of that transaction.
5
<PAGE>
HOW MUCH STOCK IS OWNED BY DIRECTORS AND EXECUTIVE OFFICERS?
The following table shows, as of December 31, 1997, the Intek
common stock owned beneficially by Intek directors and executive officers.
No director or executive officer owns beneficially 1% or more of the shares
of Intek common stock. All directors and executive officers as a group own
beneficially 2.1% of the shares of Intek common stock.
- -------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER AMOUNT AND NATURE
OF PERCENT
BENEFICIAL OF CLASS
OWNERSHIP
- -------------------------------------------------------------------------------
Robert J. Shiver 324,000(1) *
- -------------------------------------------------------------------------------
Donald Goeltz 0 0%
- -------------------------------------------------------------------------------
Robert Kelly 20,000(2) *
- -------------------------------------------------------------------------------
Louis J. Monari 2,500 *
- -------------------------------------------------------------------------------
Lee R. Montellaro 66,667(3) *
- -------------------------------------------------------------------------------
David Neibert 80,445(4) *
- -------------------------------------------------------------------------------
John G. Simmonds 40,000(5) *
- -------------------------------------------------------------------------------
Steven L. Wasserman 64,000(6) *
- -------------------------------------------------------------------------------
Roger Wiggs 0 0%
- -------------------------------------------------------------------------------
Michael Wilkinson 0 0%
- -------------------------------------------------------------------------------
All directors and executive officers
as a group (10 persons) 597,612 2.1%
- -------------------------------------------------------------------------------
* Less than 1%.
(1) 1,000 shares are held by BDC Holdings, Inc. Mr. Shiver is the sole owner
of BDC Holdings, Inc. Pursuant to the 1994 Directors Stock Option Plan,
Mr. Shiver has an option to acquire 20,000 shares of Intek common stock at
an exercise price of $3.125 per share.
(2) Pursuant to the 1994 Directors Stock Option Plan, Mr. Kelly has an option
to acquire 20,000 shares of Intek common stock at an exercise price of
$6.125 per share.
(3) Pursuant to the 1988 Key Employee Stock Option Plan, Mr. Montellaro has an
option to acquire 66,667 shares of Intek common stock at an exercise price
of $3.00.
(4) Pursuant to the 1994 Stock Option Plan, Mr. Neibert has an option to
acquire 20,000 shares of Intek common stock at an exercise price of
$3.75 per share. Mr. Neibert sold 300,000 shares to Ryan Consulting
Limited pursuant to a Stock Purchase Agreement dated as of December 30,
1997. While all rights related to ownership have been transferred and
conveyed to Ryan Consulting Limited, Mr. Neibert retains a security
interest in such stock until payment for the stock (which payment is due
over a ten-year period commencing July 1, 1998) has been made by Ryan
Consulting Limited. Mr. Neibert disclaims beneficial ownership of such
300,000 shares.
(5) Pursuant to the 1994 Stock Option Plan, Mr. Simmonds has an option to
acquire 40,000 shares of Intek common stock at an exercise price of $3.75
per share.
(6) Pursuant to the 1994 Directors Stock Option Plan, Mr. Wasserman has an
option to acquire 40,000 shares of Intek common stock at an exercise price
of $3.75 per share.
6
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Edmund Hough, the former Chief Executive Officer and a former director of
Intek, served on the Compensation Committee during fiscal 1997 until his
resignation on August 27, 1997. John G. Simmonds, a director of Intek and the
former Chief Executive Officer of Intek from September 23, 1994 until
December 3, 1996, has served on the Compensation Committee since_______, 1997.
DID DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-10% STOCKHOLDERS
COMPLY WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING IN 1997?
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and greater-than-10% stockholders to file
reports with the SEC and The Nasdaq Stock Market on changes in their
beneficial ownership of Intek common stock and to provide Intek with copies
of the reports. Based on our review of these reports and of certifications
furnished to us, except for Steven L. Wasserman and David Neibert, each of
whom filed one late report involving one transaction, we believe that all of
these reporting persons complied with their filing requirements for 1997.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
The Board of Directors oversees the business and affairs of Intek
and monitors the performance of management. In accordance with corporate
governance principles, the Board does not involve itself in day-to-day
operations. The directors keep themselves informed through, among other
things, discussions with the Chairman, other key executives and our principal
external advisers (LEGAL COUNSEL, OUTSIDE AUDITORS, INVESTMENT BANKERS AND
OTHER CONSULTANTS) by reading reports and other materials that we send them
and by participating in Board and committee meetings.
The Board met 13 times during fiscal 1997. The permanent and
special committees of the Board met 4 times. With the exception of Mr.
Shiver, who missed two out of seven meetings held while he was a director,
each incumbent director attended at least 75% of the total number of Board
meetings held in fiscal 1997.
THE COMMITTEES OF THE BOARD
The Board has two permanent committees: the Audit Committee and
the Compensation Committee. None of the directors who serve as members of
either permanent committee are employees of Intek or our subsidiaries. There
is no nominating committee or any committee that recommends qualified
candidates to the Board for election as directors. For more information, see
below at page ___ under "Information About Stockholder Proposals."
7
<PAGE>
THE AUDIT COMMITTEE The Audit Committee recommends the selection
of the independent auditors to the Board,
approves the scope of the annual audit by the
independent auditors and reviews audit
findings and accounting policies. The
Committee meets with management and also
meets privately, outside the presence of
Intek management, with the independent
auditors.
Messrs. Kelly and Wasserman currently serve
as members of the Committee. The Committee
met 4 times during 1997.
THE COMPENSATION COMMITTEE The Compensation Committee establishes and
approves all elements of compensation for the
executive officers and certain other senior
officers. The Committee's Report on
Executive Compensation for 1997 is printed
below at pages ___ to ___.
The Compensation Committee administers
Intek's stock plans and has sole authority
for awards under the 1988 Stock Incentive
Plan and the 1994 Stock Option Plan
including timing, pricing and amount.
If approved at the Annual Meeting, the
Committee will administer the 1997
Performance and Equity Incentive Plan. For
more information on this proposed 1997
Performance and Equity Incentive Plan, see
Proposal 3 below at pages ___ to ____.
Mr. Simmonds currently serves as the sole
member of the Committee, which originally
consisted of Mr. Simmonds and Mr. Edmund
Hough (the former chief executive officer)
prior to his resignation. The Committee
met one time during 1997.
HOW DO WE COMPENSATE DIRECTORS?
ANNUAL FEE We compensate directors of Intek with a fee
of $4,000 per year plus a one-time grant
of an option to acquire 20,000 shares of
Intek common stock under our 1994 Directors
Stock Option Plan upon election to the Board
of Directors.
MEETING FEES We pay directors a fee of:
- $500 for attendance at each Board
meeting;
- $500 for attendance at each audit
committee meeting held at the same
time as a stockholder or Board
meeting; and
- $500 for attendance at each special
committee meeting.
The annual maximum fee per director is
$10,000.
8
<PAGE>
EXPENSES AND BENEFITS We reimburse all directors for travel and
other related expenses incurred in attending
stockholders, Board and committee meetings.
RELATED PARTY TRANSACTIONS WITH DIRECTORS
Kohrman Jackson & Krantz, P.L.L., a Cleveland, Ohio law firm, of
which Mr. Wasserman is a partner, performs legal services for the Company and
its subsidiaries. Mr. Wasserman is a member of the Company's Board of
Directors and is Secretary of the Company. Mr. Wasserman receives $2,000 per
month as compensation for his services as Secretary of the Company. As of
December 31, 1997, for services rendered in fiscal 1997, the Company had paid
Kohrman Jackson & Krantz, P.L.L. $159,008 in fees.
Intek is currently indebted to Securicor Communications in the amount
of $25.4 million pursuant to a term loan with principal payments due beginning
July 1, 2001. Pursuant to a Support Services Agreement dated December 3, 1996,
the Company obtained from Securicor Communications and its affiliates certain
support and administrative services (including the services of the former chief
executive officer of Intek, Edmund Hough) during fiscal 1997. During fiscal
1997, $666,000 of support and administrative service costs were accrued, but
unpaid. Mr. Wiggs is Chief Executive Officer of Securicor plc. Mr. Wilkinson
is financial director of Securicor Communications. Both Messrs. Wiggs and
Wilkinson are members of Intek's Board of Directors.
Kelly & Povich, P.C., a Washington, D.C. law firm, of which Mr. Kelly
is a 50% shareholder, performs legal services for Intek and its subsidiaries.
Mr. Kelly is a member of Intek's Board of Directors. As of December 31, 1997,
for services rendered in fiscal 1997, the Company had paid Kelly & Povich, P.C.
$87,057 in fees.
THE EXECUTIVE OFFICERS
These are the biographies of Intek's current executive officers,
except for Mr. Shiver, the Chief Executive Officer, whose biography is included
below at page ___ under Proposal 1, "Elect Six Directors."
David Neibert EXECUTIVE VICE PRESIDENT. Mr. Neibert is an
Age 42 Executive Vice President of Intek. Mr. Neibert
is a director (since 1992) and was the
President (from June 1993 until September 1994) of
Roamer One Holdings, Inc., is a director of
Intek since September 1994 and was the President
of Master Marine Incorporated D.B.A. Seamark
Marine Electronics (1987-1992). Mr. Neibert also
was a director of the American Mobile
Telecommunications Association and served as the
Chairman of its 220MHz Council until July 1996.
9
<PAGE>
Lee R. Montellaro CHIEF FINANCIAL OFFICER AND VICE PRESIDENT. Lee
Age 52 R. Montellaro became chief financial officer of
the Company on February 20, 1997. From April
1995 until his employment with Intek, Mr.
Montellaro was an independent corporate
finance consultant. Prior thereto, from November
1993 he was Chief Executive Officer and a Director
of the Luxcel Group, Inc., a Nasdaq listed company
that was a paging carrier, distributor of cellular
products and a cellular agent. Since November
1988, Mr. Montellaro held various other positions
with Luxcel and its predecessor company, including
that of chief financial officer. Mr. Montellaro
is a New York certified public accountant.
Donald Goeltz SENIOR VICE PRESIDENT - CORPORATE DEVELOPMENT.
Age 51 Mr. Goeltz joined Intek in April of 1997. From
1993 until he joined Intek, Mr. Goeltz was the
Senior Vice President of Business Development for
RAM Mobile Data where he directed U.S. strategy.
He also served as RAM's Senior Vice President of
Marketing and Product management. From 1989 to
1993, Mr. Goeltz was a partner in NorthEast
Ventures, a venture development firm focusing on
startup companies. Mr. Goeltz's prior experience
includes executive positions with United
Technologies Corporation and AT&T, and consulting
with Booz, Allen & Hamilton.
Louis J. Monari VICE PRESIDENT - ADMINISTRATION. Louis J. Monari
Age 47 became Vice President Administration on
December 8, 1997. From 1994 until he joined
Intek, Mr. Monari was Vice President and General
Manager of a subsidiary of Digital Solutions,
Inc., a publicly held company providing outsourced
human resource services to companies of all sizes.
From 1988 to 1994, Mr. Monari was co-founder and
President of Holgate Associates, Inc., a
management consulting firm, providing consulting
services in connection with strategic issues,
organizational restructuring, and other related
areas. Prior to 1988, Mr. Monari spent 16 years
in various management positions with Nabisco,
Inc., including 7 years in international
operations.
10
<PAGE>
HOW WE COMPENSATE EXECUTIVE OFFICERS
The tables on pages ___ through ___ show salaries and bonuses paid
during the last three years, options granted in fiscal 1997 and aggregate
options exercised in 1997 for the Chief Executive Officer and our next three
most highly compensated executive officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------------------
SECURITIES
NAME AND PRINCIPAL RESTRICTED UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) STOCK ($) OPTIONS (#) COMPENSATION
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shiver 1997 $25,000(1) $65,000 $1,000,000(2)
Chairman, Chief 1996 -- --
Executive 1995 -- --
Officer
Edmund Hough 1997 -- --
Chief Executive 1996 --
Officer(3) 1995 --
David Neibert 1997 $165,000(4) --
Executive Vice 1996 $116,360
President 1995 $122,500
Lee R. Montellaro 1997 $ 97,500 --
Chief Financial 1996 --
Officer 1995 --
Donald Goeltz 1997 $ 71,111 --
Senior Vice 1996 -- --
President- 1995 -- --
Corporate
Development
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include $4,500 Mr. Shiver received as compensation as a director
of Intek. Mr. Shiver began his employment with Intek on August 27, 1997.
(2) Reflects 300,000 shares of Intek common stock issued to Mr. Shiver
pursuant to his employment agreement. If the fair market value of such stock
is less than $1,000,000 on December 31, 1998, Intek will pay Mr. Shiver the
difference in cash or Intek common stock, at Mr. Shiver's option.
(3) Mr. Hough was Chief Executive Officer of Intek from December 3, 1996 to
August 26, 1997. Although Mr. Hough did not receive a salary from Intek,
Securicor Communications charged Intek, pursuant to a Support Services
Agreement dated December 3, 1996, $666,000 fees out of which a certain
portion was paid for Mr. Hough's services. Does not include $7,500 Mr. Hough
received as compensation as a director of Intek.
(4) Does not include $7,500 Mr. Neibert received as compensation as a director
of Intek.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1997
- ------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) EMPLOYEES ($/SH) DATE ($)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert J. Shiver 20,000 5.3% $3.125 2/20/07 $ 35,400
Lee R. Montellaro 200,000 52.6% $3.00 2/18/07 $338,000
Donald Goeltz 160,000 42.1% $3.00 4/21/07 $272,000
- ------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
WE DID NOT ADJUST THE MODEL FOR NON-TRANSFERABILITY, RISK OF FORFEITURE, OR
VESTING RESTRICTIONS. THE ACTUAL VALUE (IF ANY) AN EXECUTIVE OFFICER RECEIVES
FROM A STOCK OPTION WILL DEPEND UPON THE AMOUNT BY WHICH THE MARKET PRICE OF THE
INTEK COMMON STOCK EXCEEDS THE EXERCISE PRICE OF THE OPTION ON THE DATE OF
EXERCISE. THERE CAN BE NO ASSURANCE THAT THE AMOUNT STATED AS "GRANT DATE
PRESENT VALUE" WILL ACTUALLY BE REALIZED.
1997 FISCAL YEAR-END
OPTION VALUES(1)
- -------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS
HELD AT SEPTEMBER 30, 1997
-----------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------
Robert J. Shiver 20,000(2)
- -------------------------------------------------------------------------------
David Neibert 20,000
- -------------------------------------------------------------------------------
Lee R. Montellaro 66,667(3) 133,333
- -------------------------------------------------------------------------------
(1) No options listed are currently in-the-money.
(2) These options become exercisable on February 18, 1998.
(3) These options become exercisable on February 21, 1998.
EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER
Intek's employment agreement with Mr. Shiver provides that he will
serve as the Chief Executive Officer and Chairman of the Board of Directors.
The agreement has a two-year term unless earlier terminated by Intek or Mr.
Shiver. Such term automatically renews for one year, unless Intek or Mr. Shiver
gives notice of its or his desire not to so renew. Mr. Shiver receives a base
salary of $300,000 per annum and participates in bonus arrangements under which
he is eligible to earn an annual bonus equal to a maximum of 40% of his annual
salary based on Intek's achieving certain performance goals to be established by
the Board of Directors. Mr. Shiver also received a commencement bonus of
$65,000.
Mr. Shiver is entitled to participate in Intek's applicable
long-term incentive compensation plan and was issued 300,000 shares (the
"Restricted Stock") of Intek common stock. In the event that on December 31,
1998, at which time any restrictions will be lifted, the Fair Market Value
(as defined in Mr. Shiver's employment agreement) of the Restricted Stock is
less than $1,000,000, Intek has agreed to pay Mr. Shiver a sum equal to the
difference between $1,000,000 and such Fair Market Value. Such payment is
due on or before February 28, 1999 and is payable at Mr. Shiver's option in
cash or Intek common stock, or a combination of both. Under the terms of Mr.
Shiver's employment agreement, Mr. Shiver also is entitled to an option to
purchase 800,000 shares of Intek common stock, which option will vest over a
five-year period, and which option the Committee plans to grant at an
exercise price of Fair Market Value on the date of grant under the 1997
Performance and Equity Incentive Plan after it is approved by Intek's
stockholders.
If Mr. Shiver's employment is terminated other than for cause, or if
he resigns for good reason, Mr. Shiver will receive:
- his base salary earned but not paid to the date of the
termination of his employment;
12
<PAGE>
- all annual incentive compensation awards with respect to any year
prior to the year of the termination of Mr. Shiver's employment
which have been earned but not paid;
- an amount equal to Mr. Shiver's base salary with respect to a
period equal to 18 months;
- a pro rata annual incentive compensation award for the year in
which Mr. Shiver's employment terminates;
- the restrictions on transferability with respect to all shares of
the Restricted Stock shall be removed immediately;
- the exercisable portion of the options held by Mr. Shiver as of
the date of the termination of his employment shall remain
exercisable until the earlier of (i) the end of the 90-day
period following the date his employment is terminated and
(ii) the date the options would otherwise expire;
- 100% of the unexercisable portion of the options as of the date
his employment is terminated shall become exercisable immediately
until the earlier of (i) the end of the 90-day period following
the date his employment is terminated and (ii) the date the
options would otherwise expire;
- any other amounts earned, accrued or owing to Mr. Shiver as set
forth in his Employment Agreement;
- continued participation, as if he were still an employee, in
Intek's medical, dental, hospitalization and life insurance
plans, programs and/or arrangements and in other employee benefit
plans, programs and/or arrangements in which he was participating
on the date of the termination of his employment until the
earlier of:
-- the end of the 18-month period following the date Mr.
Shiver's employment is terminated; and
-- the date, or dates, Mr. Shiver receives equivalent coverage
and benefits under the plans, programs and/or arrangements
of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage or benefit-by-benefit
basis); and
- such other or additional benefits, if any, as are provided under
applicable plans, programs and/or arrangements of the Company.
Upon a change-in-control, restrictions on transferability on the
Restricted Stock are removed and any unexercisable options granted pursuant
to Mr. Shiver's employment agreement become exercisable. Mr. Shiver also is
subject to restrictions prohibiting him from (i) engaging in competition with
Intek or any of our subsidiaries for a period commencing on August 27, 1997
and ending on the later of August 27, 1999 or one (1) year after the end of
Mr. Shiver's employment with Intek, and (ii) divulging any confidential or
proprietary information he obtained while he was our employee for a period
covering the term of employment and thereafter.
13
<PAGE>
EMPLOYMENT AGREEMENTS WITH
CERTAIN EXECUTIVE OFFICERS
Roamer One, Inc. entered into an employment agreement with David
Neibert, President of Roamer One, Inc. on July 1, 1995. The employment period
is three years commencing on July 1, 1995 and terminating June 30, 1998.
Salary begins at $150,000 and increases by 7% at each anniversary date during
the employment period. Mr. Neibert will receive a one-time bonus in an amount
equal to 10% of gross subscriber billings of the Company in the first month
that gross subscriber billings exceed $250,000.
Intek has entered into an employment agreement with Lee R.
Montellaro dated as of February 18, 1997, pursuant to which Mr. Montellaro
agreed to serve as Chief Financial Officer and Vice President of Intek until
February 18, 1998, with an automatic one-year renewal. Under the terms of
the agreement, Mr. Montellaro is entitled to an annualized base salary of
$160,000, which was increased to $175,000 as of July 1, 1997, and is entitled
to participate in Intek's applicable annual incentive compensation and
long-term incentive compensation plans. Under the terms of Mr. Montellaro's
employment agreement, Mr. Montellaro is entitled to and has been granted an
option to purchase 200,000 shares of Intek common stock, which option will
vest over a three-year period. If Mr. Montellaro's employment is terminated
other than for cause, or if he resigns for good reason, Mr. Montellaro will
receive benefits substantially similar to those of Mr. Shiver under the same
circumstances. Finally, Mr. Montellaro also is subject to restrictions
prohibiting him from (i) engaging in competition with Intek or any of our
subsidiaries for a period commencing on February 18, 1997 and ending one (1)
year after the end of Mr. Montellaro's employment with Intek, and (ii)
divulging any confidential or proprietary information he obtained while he
was our employee for a period covering the term of employment and thereafter.
As of April 21, 1997, Intek entered into an employment agreement
with Donald Goeltz, pursuant to which Mr. Goeltz agreed to serve as Senior
Vice President-Corporate Development of Intek until April 21, 1998, with an
automatic one-year renewal. Under the terms of the agreement, Mr. Goeltz is
entitled to an annualized base salary of $160,000, and is entitled to
participate in Intek's applicable annual incentive compensation and long-term
incentive compensation plans. Mr. Goeltz is entitled to and has been granted
an option to purchase 160,000 shares of Intek common stock, which option will
vest over a three-year period. If Mr. Goeltz's employment is terminated
other than for cause, or if he resigns for good reason, Mr. Goeltz will
receive benefits substantially similar to those of Mr. Shiver under the same
circumstances. Finally, Mr. Goeltz also is subject to restrictions
prohibiting him from (i) engaging in competition with Intek or any of our
subsidiaries for a period commencing on April 21, 1997 and ending one (1)
year after the end of Mr. Goeltz's employment with Intek, and (ii) divulging
any confidential or proprietary information he obtained while he was our
employee for a period covering the term of employment and thereafter.
REPORT ON EXECUTIVE COMPENSATION FOR 1997
BY THE BOARD
The Compensation Committee of the Board administers Intek's executive
compensation program. The Committee has furnished the following report on
executive compensation for 1997:
14
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee has designed Intek's executive compensation program
to support what we believe to be an appropriate relationship between
executive pay and the creation of stockholder value. To emphasize equity
incentives, we link a significant portion of executive compensation to the
market performance of Intek common stock. The objectives of our program are:
- To support a pay-for-performance policy that differentiates
bonus amounts among all executives based on both their individual performance
and the performance of Intek;
- To align the interests of executives with the long-term
interests of stockholders through awards whose value over time depends upon
the market value of Intek's common stock;
- To provide compensation comparable to that offered by other
leading companies in our industry, enabling Intek to compete for and retain
talented executives who are critical to our long-term success; and
- To motivate key executives to achieve strategic business
initiatives and to reward them for their achievement.
We compensate our executives through base salary, bonus paid in
cash, and long-term incentive awards (USUALLY GRANTS OF STOCK OPTIONS).
We also provide our executives with employee benefits, such as
retirement and health benefits, similar to those typically offered to
executives by the corporations with which we compete for talent. (The
employment agreement with Intek's Chief Executive Officer, which includes
comparable change in control provisions, is discussed elsewhere in the Proxy
Statement.)
In 1997, we paid Mr. Shiver in accordance with his employment
agreement, Intek's Chief Executive Officer, $25,000 in salary and $65,000 as
a commencement bonus and we issued 300,000 shares of Intek common stock.
DEDUCTIBILITY OF COMPENSATION
As part of the Omnibus Reconciliation Act of 1993, Section 162(m) was
added to the Internal Revenue Code. Section 162(m) limits the deduction of
compensation paid to the chief executive officer and other named executive
officers to the extent the compensation of a particular executive exceeds $1
million, unless such compensation was based upon predetermined quantifiable
performance goals or paid pursuant to a written contract that was in effect
on February 17, 1993.
The Committee will continue to review and modify Intek's compensation
practices and programs as necessary to ensure Intek's ability to attract and
retain key executives while taking into account the deductibility of
compensation payments. Under the 1988 Stock Incentive Plan, awards of stock
options and performance stock are designed to satisfy the deductibility
requirements of Section 162(m). However, awards under the 1997 Performance and
Equity Incentive Plan may not be fully deductible since, in designing the Plan,
the Committee felt it was important to retain flexibility to reward senior
management for extraordinary contributions that cannot properly be recognized
under a predetermined quantitive plan.
The Compensation Committee
--------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
The graph below compares the five-year total return to stockholders
(STOCK PRICE APPRECIATION PLUS REINVESTED DIVIDENDS) for Intek common stock
with the comparable return of three indexes: the Nasdaq Stock Market, the
Nasdaq Telecommunication Stocks index (which includes wireless
15
<PAGE>
communications companies quoted on The Nasdaq Stock Market) and the Nasdaq
Non-Financial Stocks Index (which includes manufacturing companies that are
quoted on The Nasdaq Stock Market). Points on the graph represent the
performance as of the last business day of each of the years indicated.
COMPARISON OF FIVE-YEAR TOTAL RETURN TO STOCKHOLDER
AMONG INTEK, NASDAQ STOCK MARKET,
NASDAQ TELECOMMUNICATIONS STOCKS AND
NASDAQ NON-FINANCIAL STOCKS
<TABLE>
<CAPTION>
INTEK DIVERSIFIED CORPORATION THE NASDAQ STOCK MARKET (US) NASDAQ TELECOMMUNICATIONS STOCKS NASDAQ NON-FINANCIAL STOCKS
----------------------------- ---------------------------- -------------------------------- ---------------------------
<S> <C> <C> <C> <C>
1992 100.000 100.000 100.000 100.000
1993 58.914 130.981 176.894 130.204
1994 285.714 132.057 163.606 129.475
1995 378.571 182.407 195.227 180.458
1996 271.429 216.450 202.431 210.695
1997 114.286 297.082 273.852 282.914
</TABLE>
[GRAPH]
INTEK, NASDAQ STOCK MARKET, NASDAQ TELECOMMUNICATIONS STOCKS AND NASDAQ
NON-FINANCIAL STOCKS
Since September 23, 1994, Intek redirected its business from
plastics manufacturing to the business of developing and managing 220 Mhz SMR
Systems in the U.S. By May 15, 1995, Intek sold substantially all of its
assets relating to the plastics business. The Nasdaq Non-Financial Stock
Index (which includes manufacturing companies) is used as a meaningful index
against which to measure the Company's performance prior to September 1994
since Intek was a plastics manufacturing company. The Nasdaq
Telecommunication Stocks Index is a meaningful index against which to measure
Intek's performance since September 1994 when it redirected its business into
the communications industry. As of September 30, 1997, a $100 investment made
in September, 1994 would have increased to $273.85 if invested in the Nasdaq
Telecommunications Stock Index, and $114.29 if invested in the Company.
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
PROPOSAL 1: ELECT SIX DIRECTORS
The Board has nominated six directors for election at the Annual
Meeting which will leave two vacancies. The Board is presently seeking
qualified directors with business experience that would prove an asset to the
Board. Intek plans to fill the vacancies as soon as practicable pending the
ongoing search. Each nominee is currently serving as one of our directors.
If you re-elect them, they will hold office until the next annual meeting or
until their successors have been elected.
We know of no reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, your proxy may vote for another
nominee proposed by the Board, or the Board may reduce the number of
directors to be elected. If any director resigns, dies or is otherwise
unable to serve out his term, or the Board increases the number of directors,
the Board may fill the vacancy until the next annual meeting.
16
<PAGE>
NOMINEES
Robert J. Shiver CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF INTEK. Mr.
Age 43 Shiver is the Chairman of the Board and Chief
Director since 1997 Executive Officer of Intek since August, 1997.
From 1994 until August 1997, Mr. Shiver served as
Chief Executive Officer and a director of Centennial
Security Holdings, Inc. and Centennial Security,
Inc., a large provider of security systems and
services in North America. Mr. Shiver, since 1992,
also serves as Chairman and director of BDC
Holdings, Inc.
Michael G. Wilkinson FINANCIAL DIRECTOR OF SECURICOR COMMUNICATIONS LIMITED.
Age 47 Mr. Wilkinson has served as Financial Director of
Director since 1997 Securicor Communications since 1992.
Roger Wiggs CHIEF EXECUTIVE OF SECURICOR PLC. Mr. Wiggs is a
Age 58 solicitor and is the Chief Executive of Securicor
Director since 1997 plc. Mr. Wiggs was appointed Director for Overseas
Operations of Securicor Limited in 1974 and
subsequently Managing Director of Securicor
International Limited. In 1977, Mr. Wiggs was
appointed to the Board of Directors of Securicor
Group plc and Security Services plc and elected
Deputy Group Chief Executive in 1985 and Group Chief
Executive in 1988. Mr. Wiggs is also a director of
Cellnet Group Limited and a non-executive Director
of BSM Group plc and The Crown Agents Foundation.
Steven L. Wasserman PARTNER, KOHRMAN, JACKSON & KRANTZ, P.L.L. Mr.
Age 44 Wasserman is an attorney and a partner of the law
Director since 1994 firm of Kohrman Jackson & Krantz, P.L.L., Cleveland,
Ohio. From 1983 to 1994, Mr. Wasserman was a
shareholder and officer of Honohan, Harwood,
Chernett & Wasserman Co. LPA, Cleveland, Ohio. Mr.
Wasserman also is a director of SecurFone
America, Inc., a prepaid cellular and network service
provider. He is a member of the State bars of Ohio
and Florida. Pursuant to the terms of a voting agreement
entered into by Securicor Communications Limited, Roamer
One Holdings, Inc., Securicor International Limited and
Simmonds Capital Limited, Roamer One Holdings, Inc. is
entitled to designate one member of the Board
of Directors. Mr. Wasserman is the board designee of
Roamer One Holdings, Inc.
Robert Kelly PRINCIPAL, KELLY & POVICH, P.C. Mr. Kelly has been
Age 41 a principal in the Washington, D.C. law firm of
Director since 1996 Kelly & Povich, P.C. since its formation in October
1994 and currently serves as telecommunications
counsel to Intek. Mr. Kelly was a partner in the
Washington, D.C. firm of Piper & Marbury from
January 1989 to March 1992, was a sole practitioner
form March 1992 to February 1993 and was a principal
in the firm of Kelly, Hunter, Mow & Povich, P.C.
from February 1993 to October 1994. Securicor plc has
agreed to indemnify Mr. Kelly for certain
liabilities arising out of his duties as a director
of Intek.
- -------------------------------------------------------------------------------
17
<PAGE>
John G. Simmonds CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF SIMMONDS
Age 47 CAPITAL LIMITED. John G. Simmonds became a director
Director since 1994 of the Company on September 23, 1994. Mr. Simmonds
is a member of the Company's Compensation Committee.
Since 1990, Mr. Simmonds has been the Chairman of
the Board of Directors, President and Chief
Executive Officer of Simmonds Capital Limited, a
diversified electronics company and since 1990, the
Chairman of the Board of Directors and Chief
Executive Officer of Kustom Electronics Inc., a
manufacturer of equipment for wireless data
transmission. Since October, 1995, Mr. Simmonds has
been a director of the Board of Ventel, Inc., a
Canadian corporation listed on the Vancouver Stock
Exchange and Montreal Exchange.
- -------------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF ALL SIX NOMINEES FOR
DIRECTOR.
- -------------------------------------------------------------------------------
PROPOSALS 2A, 2B, 2C AND 2D: APPROVE AMENDMENTS TO THE CHARTER
We are seeking your approval to amend our Amended and Restated
Certificate of Incorporation ("Charter") to:
- change our name (PROPOSAL 2A)
- authorize "blank check" preferred stock (PROPOSAL 2B)
- effect a 1 for 2 reverse stock split (PROPOSAL 2C)
- amend the voting requirement for stockholders' actions taken
without a meeting (PROPOSAL 2D)
The Board adopted certain of these amendments to the Charter
on November 20, 1997 and the others on January 9, 1998, subject to your
approval at the Annual Meeting.
We have summarized below the reasons why you should approve each of
the proposed amendments. Before you decide how to vote, however, you should
read the complete Charter, which we have included as APPENDIX A. We have
marked APPENDIX A to show the proposed additions and deletions.
[For edgar filing purposes, a clean copy of the Charter has been filed.]
PROPOSAL 2A: APPROVE AMENDMENT TO THE CHARTER TO CHANGE OUR NAME TO INTEK
GLOBAL CORPORATION
18
<PAGE>
We propose to amend Article 1 of the Charter to change our name from
"INTEK DIVERSIFIED CORPORATION" to "INTEK GLOBAL CORPORATION." We believe that
a change in the name of the Company is desirable to reflect more accurately the
nature of our business and our plans for the future.
- ----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO THE CHARTER
TO CHANGE OUR NAME TO INTEK GLOBAL CORPORATION.
- ----------------------------------------------------------------------------
PROPOSAL 2B: APPROVE AMENDMENT TO THE CHARTER TO AUTHORIZE 1,000,000 SHARES OF
"BLANK CHECK" PREFERRED STOCK
We propose to amend Article 4 of the Charter to authorize 1,000,000
shares "blank check" preferred stock, $.001 par value.
- Our proposed amendment authorizes 1,000,000 shares of "blank check"
preferred stock. The amendment gives the Board of Directors authority
to designate one or more series of preferred stock. The provisions
are often referred to as "blank check" provisions since the Board of
Directors has the flexibility, at any time and without stockholder
approval, to determine the designations, preferences and limitations
of each such series, including, but not limited to, (i) the number of
shares, (ii) dividend rights, (iii) voting rights, (iv) conversion
privileges, (v) redemption provisions, (vi) sinking fund provisions,
(vii) rights upon liquidation, dissolution or winding up of Intek and
(viii) other rights, preferences and limitations of such series.
- Our proposed amendment provides Intek with the flexibility to address
potential future financing and acquisition needs by creating a series
of preferred stock customized to meet the needs of any particular
transaction. While the proposed amendment is not designed to prevent
a change in control, under certain circumstances, Intek could use the
preferred stock to create voting impediments or to frustrate persons
seeking to effect a takeover or otherwise gain control of Intek and
thereby to protect the continuity of Intek's management. The issuance
of additional preferred stock at below market rates would dilute the
value of the outstanding securities of the Company.
- If any series of preferred stock authorized by the Board of Directors
provides for dividends, the dividends, when legally declared by the
Board of Directors, may be cumulative and may have a preference over
the common stock as to the payment of such dividends. If any series
of preferred stock so provides, in the event of any dissolution,
liquidation or winding up of Intek, whether voluntary or involuntary,
the holders of the series of outstanding preferred stock may be
entitled to receive, prior to the distribution of any assets or funds
to the holders of common stock, a liquidation preference established
by the Board of Directors, together with all accumulated and unpaid
dividends. Depending upon the consideration paid for preferred stock,
the liquidated preference of preferred stock and other matters, the
issuance of preferred stock could therefore result in a reduction in
the assets available for distribution to the holders of common stock
in the event of liquidation of Intek.
19
<PAGE>
- Upon approval by Intek's stockholders of the "blank check" preferred
stock, Intek plans to issue a series of preferred stock ("Series A
Preferred Stock"). On December 29, 1997, Intek entered an
agreement with Securicor Communications Limited, the majority
stockholder of Intek, pursuant to which Intek has agreed to sell
and Securicor Communications Limited has agreed to purchase Series A
Preferred Stock. Intek anticipates issuing 12,408 shares of such
series to Securicor Communications for an aggregate consideration
of $12,408,000. We have summarized below certain key provisions of
the Series A Preferred Stock. Because it is a summary, it may not
contain all the information that is important to you. Accordingly,
we have included the full text of the terms and conditions of the
Series A Preferred Stock as Appendix D.
-- The number of shares of Series A Preferred Stock is 12,408. The
liquidation value is $1,000 per share and par value is $.001 per
share.
-- The holder of the Series A Preferred Stock is entitled to a
cumulative annual dividend (accruing on the first business day of
October of each year) at the rate of 11.5% of the liquidation
value (that is, $115 per share per annum) and is cumulative.
Dividend payments will be due upon the conversion or redemption
of the Series A Preferred Stock or such earlier date as shall be
declared by our Board of Directors.
-- The holder of the Series A Preferred Stock has the right to
convert the Series A Preferred Stock into shares of common stock
if the conversion rate exceeds $6.00 for 20 consecutive trading
days. Each share of Series A Preferred Stock will be converted
into the number of shares of Common Stock derived by dividing
$1,000 by the average market price of a share of Common Stock
for 20 consecutive trading days before the conversion date but
in no case less than $6.
-- Intek may cause the Series A Preferred Stock to be converted if
the conversion rate is or exceeds $9.00 for 20 consecutive
trading days. Each share of Series A Preferred Stock will be
converted into the number of shares of Common Stock derived by
dividing $1,000 by the average market price of a share of Common
Stock for 20 consecutive trading days before the conversion
date but in no case less than $6.
-- Intek may redeem the shares of Series A Preferred Stock at any
time in amounts of not less than 1,000 shares for $1,065 per
share plus accrued and unpaid dividends. Intek must redeem the
Series A Preferred Stock on June 30, 2003, plus accrued and
unpaid dividends.
-- The holder of the Series A Preferred Stock has the right to
convert the Series A Preferred Stock into shares of common stock
if Intek does not redeem the Series A Preferred Stock on June 30,
2003.
-- The Series A Preferred Stock is subject to adjustments for stock
dividends, stock splits or share combinations of the common stock
or any distribution of a material portion of Intek's assets to
the holders of common stock.
-- The Series A Preferred Stock does not have voting power except as
provided by Delaware corporate law.
We believe the issuance to Securicor Communications of 12,408
shares of Series A preferred stock for an aggregate consideration of
$12,408,000 is critical to Intek in implementing its business plan by
providing necessary capital. Pursuant to the agreement, Securicor
Communications has agreed to vote its shares of Intek common stock in favor
of Proposals 2A, 2B, and 2D.
- ----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO THE CHARTER
TO AUTHORIZE 1,000,000 SHARES OF "BLANK CHECK" PREFERRED STOCK.
- ----------------------------------------------------------------------------
20
<PAGE>
PROPOSAL 2C: APPROVE AMENDMENT TO THE CHARTER TO EFFECT A REVERSE STOCK SPLIT
We propose to amend Article 4 of the Charter to permit the exchange
of two shares of the Company's outstanding shares of common stock for one
post-split share of common stock. There are presently 41,973,946 shares of
Intek common stock outstanding. The share consolidation would reduce this
number by a factor of 2. The number of authorized shares of the Company will
not be changed.
- We believe the reverse stock split is desirable because it will assist
the Company in continuing to meet the new requirements (effective
February 23, 1998) for continued listing on the Nasdaq SmallCap Market
by helping to raise the trading price of the Company's common stock.
One of the key requirements for continued listing is that the
Company's common stock must maintain a minimum bid price above
$1.00 per share. WHILE ON DECEMBER 31, 1997, THE CLOSING BID PRICE OF
INTEK'S COMMON STOCK WAS $1.53 PER SHARE AS REPORTED BY THE NASDAQ
STOCK MARKET, THE CLOSING BID PRICE OF INTEK'S COMMON STOCK COULD FALL
BELOW THE NEW REQUIREMENT IN THE FUTURE.
- The effect of the reverse stock split upon the market price for
Intek's common stock cannot be predicted. While the market price of
Intek's common stock immediately prior to the implementation of the
reverse stock split should increase immediately following the reverse
stock split in direct proportion to the exchange ratio of the share
consolidation, the post-split shares may not continue to trade at an
increased price level.
- The reverse stock split affects all stockholders uniformly and will
not cause a dilution of the percentage of aggregate equity ownership,
voting rights, earnings or net book value of stockholders, except for
those stockholders who hold a number of shares of common stock not
divisible by 2, and such stockholders will have their pro-rata
ownership rounded up to the next whole share. The per share earnings
and net book value of Intek's common stock will be increased because
there will be fewer shares of common stock outstanding. Intek
believes that the increase in per share earnings and net book value
should result in a greater market price for the shares of common
stock.
- The reverse stock split will be implemented after stockholder
approval, at which time 2 shares of pre-split common stock will be
given a value equivalent to 1 share of post-split common stock. The
number of shares of post-split shares held by any record holder will
be determined from the total number of shares represented by all of
the certificates issued in the name of that record holder as are held
in each account set forth on the records of Intek's transfer agent,
American Stock Transfer & Trust Company on the record date. If the
calculation results in a quotient containing a fraction, Intek will
round up to the nearest whole share instead of issuing a fractional
share.
- Approval of the reverse stock split will require a change in the
"CUSIP" number assigned to Intek's common stock (used to identify,
transfer and trade publicly registered securities). Stockholders may
not be required to exchange their pre-split certificates for
post-split share certificates. Stockholders who desire to do so may
request that new certificate(s) be issued to them in the amount(s)
that represent their post-split shareholdings, by surrendering their
certificates to the Transfer Agent at 40 Wall Street, New York, NY,
10005 (212-936-5100), and paying any applicable transfer fee.
21
<PAGE>
-- Stockholders will not be required to recognize any gain or loss if the
reverse stock split is effected. The tax basis of the aggregate
shares of post-split common stock received by present stockholders
will be equal to the basis of the aggregate shares of the exchanged
pre-split common stock.
-- Our proposed amendment increases the number of authorized (but
unissued) shares of Common Stock since the number of outstanding shares
of Common Stock is reduced by a factor of 2. The additional shares, if
issued, would have the same rights as the shares of Common Stock now
outstanding. THE BOARD HAS NO PRESENT PLANS, AGREEMENTS, COMMITMENTS
OR UNDERSTANDINGS FOR THE ISSUANCE OR USE OF THESE ADDITIONAL SHARES.
-- We believe it is important for the Board of Directors to have the
flexibility to act promptly to meet future business needs as they
arise. Sufficient shares should be readily available to maintain our
financing and capital raising flexibility, for stock splits and stock
dividends, acquisitions and mergers, employee benefit plans and other
proper business purposes.
-- By having additional shares readily available for issuance, the
Board will be able to act expeditiously without spending the time
and incurring the expense of soliciting proxies and holding
special meetings of stockholders.
-- The Board, however, may issue additional shares of Common Stock
without action on your part only if the action is permissible
under Delaware law and the rules of The Nasdaq Stock Market on
which the Intek Common Stock is quoted. FOR EXAMPLE, IF THE
BOARD WERE TO MAKE A STOCK ACQUISITION WHICH RESULTED IN AN
INCREASE OF 20% OR MORE IN THE NUMBER OF SHARES OF QUOTED COMMON
STOCK OUTSTANDING, NASDAQ STOCK MARKET RULES WOULD REQUIRE (AFTER
FEBRUARY 23, 1997) THAT WE OBTAIN YOUR APPROVAL.
-- If the Board were to issue additional shares, it could have a
dilutive effect on Intek's per share earnings and on your voting
power in Intek (UNLESS YOU WERE TO PURCHASE ADDITIONAL SHARES TO
KEEP YOUR SAME LEVEL OF OWNERSHIP).
-- Because such an effective increase could be viewed as having an
anti-takeover effect, SEC rules require us to disclose all Charter,
By-law and other provisions that could be viewed as having an
anti-takeover effect. These include:
-- under Proposal 2B, if approved by the stockholders, the Board
would have the authority to issue one or more series of preferred
stock up to a maximum of approximately 1 million shares; and
-- under our By-Laws, only the President, a majority of the
Board and stockholders owning a majority of the issued and
outstanding common stock may call a special meeting of
stockholders.
- ----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO THE CHARTER
TO EFFECT A 1 FOR 2 REVERSE STOCK SPLIT.
- ----------------------------------------------------------------------------
PROPOSAL 2D: APPROVE THE AMENDMENT TO THE CHARTER TO AMEND THE VOTING
REQUIREMENT FOR ACTIONS TAKEN BY STOCKHOLDERS WITHOUT A MEETING
We propose to amend Article 11 of the Charter so as to provide that
any action taken by the stockholders without a meeting requires only a majority
of the outstanding shares rather than all stockholders.
- The Charter provides that any action taken by stockholders without a
meeting may be taken only if all stockholders of Intek entitled to
vote on the matter consent to the action, in writing. This provision
requires actions needing the vote of Intek's stockholders to be voted
on at a meeting because as a public company the Company cannot, on a
timely basis, if at all, contact all stockholders.
-- By amending the Charter, the stockholders will be able to act
expeditiously without Intek spending the time and incurring the
expense of soliciting proxies and holding special meetings of
stockholders. FOR EXAMPLE, AT PRESENT, IF THE BOARD OF DIRECTORS
DETERMINES TO AMEND THE CHARTER TO AUTHORIZE ADDITIONAL SHARES OF
COMMON STOCK OR PREFERRED STOCK, SUCH ACTION WOULD HAVE TO WAIT
UNTIL THE NEXT ANNUAL OR SPECIAL MEETING OF STOCKHOLDERS OF
INTEK.
-- If this provision is approved, Securicor plc, which as of the
record date beneficially owned 61.8% of the outstanding shares of
Intek's common stock, could approve any stockholder action
without the benefit of a stockholders' meeting. Delaware law
requires that such actions are not effective until notice is sent
to all stockholders.
- ----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENTS TO THE CHARTER TO AMEND
THE VOTING REQUIREMENT FOR ACTIONS TAKEN BY STOCKHOLDERS WITHOUT A MEETING.
- ----------------------------------------------------------------------------
PROPOSAL 3: APPROVE 1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
We are asking for your approval of the 1997 Performance and Equity
Incentive Plan. The Committee adopted (and the Board Ratified) the 1997
Performance and Equity Incentive Plan on November 20, 1997, subject to your
approval at the Annual Meeting.
22
<PAGE>
We have summarized below certain key provisions of the 1997
Performance and Equity Plan. Because it is a summary, it may not contain all
the information that is important to you. Before you decide how to vote, you
should review the full text of the 1997 Performance and Equity Incentive Plan,
which we have included as Appendix B.
DESCRIPTION OF 1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
PURPOSES AND ELIGIBILITY The purposes of the 1997 Performance and
Equity Incentive Plan are to attract, retain
and motivate key employees, nonemployee
directors and independent contractors, to
compensate them for their contributions to
our growth and profits and to encourage them
to own Intek common stock. The 1997
Performance and Equity Incentive Plan
authorizes the issuance of awards to certain
employees, nonemployee directors and
independent contractors selected by the
compensation committee to receive such
awards.
SHARES AVAILABLE A total of 4,000,000 million shares of common
-- OVERALL LIMIT stock (PLUS THE NUMBER OF SHARES REMAINING
UNDER THE 1988 STOCK INCENTIVE PLAN, THE
1994 STOCK OPTION PLAN AND THE 1994
DIRECTORS' STOCK OPTION PLAN) are authorized
for issuance under the 1997 Performance and
Equity Incentive Plan. As of December 31,
1997, a total of 310,500 shares remains
available for future awards under the 1988
Stock Incentive Plan, the 1994 Stock Option
Plan and the 1994 Directors' Stock Option
Plan. We will adjust the number of shares
available for issuance under the 1997
Performance and Equity Incentive Plan if
there are changes in our capitalization
(such as if the reverse stock split is
effected), a merger, or a similar transaction
is effected. We may issue new shares or
treasury shares or both. Treasury shares are
shares that we previously issued and
subsequently repurchased and are holding in
our treasury.
SPECIAL LIMITS In addition to the overall share limit, two
special limits apply:
-- INDIVIDUAL EMPLOYEE The maximum number of shares underlying an
LIMIT ON SHARES award that is measured in stock that can
be granted to any single participant over
the life of the 1997 Performance and Equity
Incentive Plan is 3,000,000.
-- INDIVIDUAL EMPLOYEE The maximum dollar amount that may be paid
LIMIT OF CASH COMPENSATION to any single participant with respect to an
award measured in cash over the life of
the 1997 Performance Equity Incentive Plan
is $3,000,000.
23
<PAGE>
ADMINISTRATION The Compensation Committee of the Board will
administer the 1997 Performance and Equity
Incentive Plan, select participants from
among eligible employees, and determine the
form, terms and conditions of awards.
Subject to certain limitations, the Committee
may from time to time delegate some or all
of its authority to other persons.
AWARDS The 1997 Performance and Equity Incentive
-- GENERALLY Plan authorizes the following awards based
upon Intek common stock: stock options,
stock appreciation rights, stock awards,
stock units, performance shares,
performance units and cash awards.
The Committee will determine vesting,
exercisability, payment and other
restrictions that apply to an award. Vesting
generally means the individual has the right
to the award or can exercise the stock
option or stock appreciation right. However,
under the 1997 Performance and Equity
Incentive Plan, certain awards (vested or
unvested) will be forfeited by the
participant in the event of death, disability
or certain terminations of employment. The
Committee does have authority to determine
the effect, if any, that an employee's
termination or a change in control of Intek
will have on an award.
The Plan terminates in 10 years. This means
that if you approve the 1997 Performance and
Equity Incentive Plan at the Annual Meeting,
no awards will be permitted to be made under
the Plan after November 20, 2007.
-- STOCK OPTIONS Stock options may be either nonqualified or
incentive stock options (WITHIN THE MEANING
OF SECTION 422 OF THE INTERNAL REVENUE CODE).
Generally, the Committee will issue stock
options at an exercise price no less than
the fair market value of Intek common stock
on the date of grant. However, in special
situations, the Committee may grant a
nonqualified stock option at less than the
fair market value of Intek common stock on
the date of grant.
The exercise price of a stock option may be
paid in cash or previously owned stock or
both. Stock options may also be exercised
through a "cashless exercise" procedure. This
allows employees to sell immediately some or
all of the shares to generate sufficient cash
to pay the exercise price of the stock option
and to satisfy withholding tax obligations.
The Committee will fix the term of a stock
option upon grant. However, under the 1997
Performance and Equity Incentive Plan, the
term may be no longer than ten years for
incentive stock options, and twenty years
for nonqualified stock options.
-- STOCK APPRECIATION Stock appreciation rights entitle an employee
RIGHTS to receive the excess, if any, of the fair
market value on the date of exercise over the
exercise price. Generally, the Committee
will issue stock appreciation rights at no
less than at the fair market value of Intek
common stock on the date of grant. At the
discretion of the Committee, the Committee
may make payments to an employee upon
exercise of a stock appreciation right in
cash, shares of common stock or both.
24
<PAGE>
The Committee may grant stock appreciation
rights alone or together with stock options.
-- STOCK AWARDS Stock awards consist of one or more shares of
Intek common stock granted to a participant.
Stock awards may be subject to restrictions
on transfer and to vesting conditions, as
the Committee may determine.
-- STOCK UNITS Stock units are hypothetical shares of
Intek common stock which are similar to
shares of Intek common stock except Intek
will keep track of stock units under a
bookkeeping account set up for each
participant who receives stock units.
Shares of Intek common stock are not
allocated or set aside prior to the date
the stock units are paid. Stock units
may be subject to restrictions and other
terms and conditions as the Committee may
determine. Stock units usually will be
paid in shares of Intek common stock but
may be paid wholly or partially in cash.
-- PERFORMANCE SHARES Performance shares are stock awards which
the participant earns upon the satisfaction
of certain performance goals established by
the Committee. The number of performance
shares that the participant receives may
vary, such as if several performance goals
are used. Performance shares usually will
be paid in shares of Intek common stock but
may be paid wholly or partially in cash.
-- PERFORMANCE UNITS Performance Units are similar to stock
units but which the participant earns
upon the satisfaction of certain
performance goals established by the
Committee. The number of units that the
participant receives may vary if several
performance goals are used. Performance
units usually will be paid in shares of
Intek common stock but may be paid wholly
or partially in cash.
-- CASH AWARDS Cash awards are awards of cash
compensation which may be subject to
terms and conditions determined by the
Committee.
-- PERFORMANCE- BASED AWARDS Performance-based awards are awards
granted under the 1997 Performance and
Equity Incentive Plan (i.e., stock
options, stock appreciation rights, stock
awards, stock units, performance shares,
performance units and cash awards) that
the Committee intends to qualify as
25
<PAGE>
"performance-based compensation" under
Section 162(m) of the Internal Revenue
Code of 1986. The purpose is to preserve
Intek's right to take a tax deduction for
the compensation attributable to such
awards. For an award to be a
performance-based award under the 1997
Performance and Equity Incentive Plan:
- at the time of grant the Committee must
be comprised solely of two or more
"outside directors" (as such term is used
in Section 162(m) of the Internal Revenue
Code of 1986 and the regulations
thereunder)
- with respect to either the granting or
vesting of an award (other than a
nonqualified stock option or a stock
appreciation right which are granted with
an exercise price at or above the fair
market value of Intek common stock on
the date of grant), such award must be
subject to the achievement of a
performance goal or goals based on one
or more of the performance measures
listed below:
-- net sales
-- pretax income before allocation of
corporate overhead and bonus
-- budget
-- cash flow
-- earnings per share
-- net income
-- division, group or corporate financial
goals
-- return on stockholders' equity
-- return on assets
-- attainment of strategic and
operational initiatives
-- appreciation in and/or maintenance of
the price of Intek common stock or any
other publicly traded securities of
Intek
-- market share
-- gross profits
-- earnings before interest and taxes
-- earnings before interest, taxes,
depreciation and amortization
-- economic value-added models
-- comparisons with various stock market
indices
-- increase in number of customers
-- reductions in costs.
- the Committee must establish in writing
objective performance goals applicable to
a given performance period and the
individual employees or class of employees
to which such performance goals apply no
later than 90 days after the commencement
of such performance period (but in no
event after 25 percent of such performance
period has elapsed)
- no compensation attributable to a
performance-based award can be paid to or
otherwise received by a participant until
the Committee certifies in writing that
the performance goals (and any other
material terms) applicable to such
period have been satisfied
- after the establishment of a performance
goal, the Committee cannot revise such
performance goal or increase the amount
of compensation payable under the award
upon the attainment of such performance
goal
-- TRANSFERABILITY OF AWARDS Generally, awards under the 1997
Performance and Equity Incentive Plan are
not transferable except in the case of
the participant's death. However, the
Committee may allow participants to
transfer nonqualified stock options to
certain family members for estate
planning purposes.
-- DEFERRAL OF AWARDS The Committee may (but need not) allow a
participant to elect to defer
compensation attributable to awards, but
subject to certain guidelines and
procedures that are to be established by
the Committee.
-- TERMINATION OF EMPLOYMENT If the participant's employment is
terminated due to death or disability,
all portions of awards that have not
vested are forfeited and all vested stock
options and stock appreciation rights
remain exercisable for a one-year period
following termination. If the
participant's employment is terminated
for cause, all awards are forfeited. If
the participant's employment is
terminated for any other reason, awards
that have not vested are forfeited and
all vested stock options and stock
appreciation rights remain exercisable
for a 90-day period following
termination. However, the Committee may
change the above terms subject to certain
limitations.
-- TERMINATION OF PLAN The Board may suspend or terminate the
1997 Performance and Equity Incentive
Plan at any time with or without prior
notice, but such termination cannot
reduce the amount of any outstanding
award or change the terms and conditions
of such award without the participant's
consent.
-- AMENDMENT OF PLAN The Board may amend the 1997 Performance
and Equity Incentive Plan at any time
with or without prior notice, but such
amendment cannot reduce the amount of any
outstanding award or change the terms and
conditions of such award without the
Participant's consent. The approval of
the Company's stockholders is required if
the amendment would:
- increase the total number of shares
which may be issued under the 1997
Performance and Equity Incentive Plan
- increase the maximum number of shares
with respect to all awards that may be
granted to any individual under the 1997
Performance and Equity Incentive Plan
- increase the maximum dollar amount that
may be paid with respect to any single
award measured in cash, or
- modify the requirements as to eligibility
for awards under the 1997 Performance and
Equity Incentive Plan.
It is not possible to determine the benefits or amounts that will be
received by any participant for the current year or any year in the future
because (a) the performance goals will be determined by the Committee at the
beginning of the performance period, and (b) the amount, if any, payable will
depend upon the extent to which the executive satisfies such performance
goals.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, we have made no awards
under the 1997 Performance and Equity Incentive Plan. Intek anticipates
granting an option to Mr. Shiver for 800,000 shares of Intek common stock at
fair market value on the date of grant under the 1997 Performance and Equity
Incentive Plan pursuant to the terms of Mr. Shiver's Employment Agreement.
Since Incentve awards will be authorized by the Committee in its sole
discretion, it is not possible to determine the benefits or amounts that will
be received by anyone else in the future. Stock options have been awarded in
1997 under the 1988 Stock Incentive Plan. Information about these stock
options awarded to the executive officers named in the Summary Compensation
Table appears at page __ above under "Option Grants During 1997."
The following table provides additional information about stock
options awarded in 1997 under the 1988 Stock Incentive Plan and anticipated
awards under the 1997 Performance and Equity Incentive Plan:
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
COVERED BY STOCK
NAME AND POSITION DOLLAR VALUE (1) OPTIONS
- -----------------------------------------------------------------------------------------------------
Robert Shiver.............................................. $710,400(2) 800,000(3)
- -----------------------------------------------------------------------------------------------------
Donald Goeltz.............................................. $272,000 160,000(4)
- -----------------------------------------------------------------------------------------------------
Lee Montellaro............................................. $338,000 200,000(4)
- -----------------------------------------------------------------------------------------------------
All executive officers as a group (3 persons).............. $1,320,400 1,160,000
- -----------------------------------------------------------------------------------------------------
All employees, including all current officers who are
not executive officers, as a group......................... $1,320,400 1,160,000
</TABLE>
(1) We calculated the values using the Black-Scholes stock option pricing model
that we modified to take dividends into account and which assumes an
expected life of the option of three years after vesting. We used the
same assumptions in the calculation as those set forth under
"Option Grants During 1997" above at page __.
(2) Assumes a grant date of December 31, 1997 for the purpose of calculating
a dollar value.
(3) Intek anticipates granting these shares under the 1997 Performance and
Equity Incentive Plan.
(4) Options covering these shares have been granted under the 1988 Incentive
Stock Plan.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of issuing and exercising stock
options under the 1997 Performance and Equity Incentive Plan may be summarized
as follows:
NONQUALIFIED STOCK OPTIONS The grant of a nonqualified stock option has
no immediate federal income tax effect: the
employee will not recognize taxable income
and Intek will not receive a tax deduction.
When the employee exercises the option, the
employee will recognize ordinary income in an
amount equal to the excess of the fair market
value of the common stock on the date of
exercise over the exercise price. Intek is
required to withhold tax on the amount of
income recognized. Intek will receive a tax
deduction equal to the amount of income
recognized.
When the employee sells common stock obtained
from exercising a nonqualified stock option,
any gain or loss will be taxed as a capital
gain or loss (LONG-TERM OR SHORT-TERM,
DEPENDING ON HOW LONG THE SHARES HAVE BEEN
HELD). Certain additional rules apply if the
exercise price for an option is paid in
shares previously owned by the employee.
INCENTIVE STOCK OPTIONS When an employee is granted an incentive
stock option, or when the employee exercises
the option, the employee will generally not
recognize taxable income (EXCEPT FOR PURPOSES
OF THE ALTERNATIVE MINIMUM TAX) and Intek
will not receive a tax deduction.
27
<PAGE>
If the employee holds the shares of common
stock for at least two years from the date of
grant, and one year from the date of
exercise, then any gain or loss will be
treated as mid-term or long-term capital
gain or loss. If, however, the shares are
disposed of during this period, the option
will be treated as a nonqualified stock
option. Intek will only receive a tax
deduction if the shares are disposed of
during this period. The deduction will be
equal to the amount of taxable income the
employee recognizes.
-----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE 1997 PERFORMANCE AND EQUITY
INCENTIVE PLAN.
-----------------------------------------------------------------------------
PROPOSAL 4: APPROVE AMENDMENT TO 1988 KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
We are seeking your approval of an Amendment to Intek's 1988 Incentive
Stock Plan. The Board adopted the Amendment on April 21, 1997, subject to your
approval at the Annual Meeting.
We have summarized below certain key provisions of the Amendment to
the 1988 Incentive Stock Plan. Because it is a summary, it may not contain all
the information that is important to you. Before you decide how to vote, you
should review the full text of the Amendment to the 1988 Incentive Stock Plan,
which we have included as Appendix C.
- Under the Plan, the Board of Directors may grant incentive stock
options only to eligible directors, officers, employees, or other
persons who make significant contributions to the continued well-being
and successful operation of the Company. To date, the stockholders
have approved 500,000 shares of stock to be issued and administered
under the Plan and the Company has filed a Form S-8 777registration
statement and amendments for the purpose of registering shares to be
administered under the Plan. As of September 30, 1997, 417,500 shares
of common stock have been awarded, and no unexercised options to
acquire shares of stock were vested and outstanding under the terms of
the 1988 Incentive Stock Plan.
- The purpose of this proposal is to obtain stockholder approval to
(i) change the name of the 1988 Incentive Stock Plan to "1988 INTEK
DIVERSIFIED CORPORATION KEY EMPLOYEE STOCK PLAN"; (ii) amend the
definitions of "Code" and "Committee"; (iii) amend the definition of
"Option" to include nonqualified options; (iv) amend the 1988
Incentive Stock Plan by providing that the option price may not be
determined by the Committee but rather that for an incentive stock
option it shall be at least fair market value of Intek's common stock
on the date of grant except with respect to 10% shareholders, the
option price shall not be less than 110% of fair market value of
Intek's common stock on the date of grant; (v) provide that
subsequently granted options cannot be exercised by an optionee if he
or she holds earlier granted options; and (vi) provide that no
optionee can be granted options to purchase more than 400,000 shares
of Intek common stock.
- The Board of Directors believes these changes are necessary to bring
the 1988 Incentive Stock Plan into compliance with the IRS'
regulations in this area to provide Intek flexibility to grant options
to deserving individuals.
28
<PAGE>
-----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO 1988 KEY EMPLOYEE
INCENTIVE STOCK OPTION PLAN.
-----------------------------------------------------------------------------
PROPOSAL 5: RATIFY SELECTION OF INDEPENDENT AUDITORS FOR 1998
We are asking you to ratify the Board's selection of Arthur Andersen
LLP, certified public accountants, as independent auditors for 1998. The Audit
Committee recommended the selection of Arthur Andersen to the Board. Arthur
Andersen has served as the independent auditors of Intek since 1993.
A representative of Arthur Andersen will attend the Annual Meeting to
answer your questions.
We are submitting this proposal to you because the Board believes that
such action follows sound corporate practice. If you do not ratify the
selection of independent auditors, the Board will consider it a direction to
consider selecting other public accountants. However, even if you ratify
the selection, the Board may still appoint new independent auditors at any time
during the year if it believes that such a change would be in the best interests
of Intek and our stockholders.
-----------------------------------------------------------------------------
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE SELECTION OF
ARTHUR ANDERSEN AS INDEPENDENT AUDITORS FOR 1998.
-----------------------------------------------------------------------------
29
<PAGE>
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in our 1999 proxy
statement, we must receive them on or before October 22, 1998. Please address
your proposals to: Intek Diversified Corporation, 214 Carnegie Center, Suite
304, Princeton, New Jersey 08540-6237.
By order of the Board of Directors,
Steven L. Wasserman, Secretary
January __, 1998
30
<PAGE>
APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
INTEK DIVERSIFIED CORPORATION
A-1
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
INTEK GLOBAL CORPORATION
A DELAWARE CORPORATION
1. NAME. The name of the Corporation is INTEK Global Corporation.
2. REGISTERED OFFICE AND AGENT. The registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
3. PURPOSES. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
4. CAPITAL STOCK. The Corporation is authorized to issue two (2)
classes of shares to be designated respectively common stock, $.01 par value
per share, and preferred stock, $.001 par value per share. The number of
shares of common stock authorized is Sixty Million (60,000,000). The number
of shares of preferred stock authorized is One Million (1,000,000). The
preferred shares may be issued in one or more series. The Board of Directors
is authorized to fix the number of any such series of preferred shares and to
determine the designation of any such series. The Board of Directors is
further authorized to determine or alter the rights, preferences, privileges,
and restrictions granted to or imposed upon any wholly unissued series of
preferred shares and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, to increase or decrease (but not
below the number of shares of such series then outstanding) the number of
shares of any such series subsequent to the issuance of shares of that series.
Upon filing with the Secretary of State of the State of Delaware of these
Amended and Restated Articles of Incorporation, every two outstanding shares of
common shares prior to the filing of these Articles shall be combined and
converted into one (1) share of newly issued common shares. The number of
authorized shares of common stock shall remain as 60,000,000.
5. EXISTENCE. The Corporation is to have perpetual existence.
6. COMPROMISE OR AGREEMENT. Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any class of them and/or
between this Corporation and its shareholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or shareholder thereof or on
the application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the shareholders or class of shareholders of this corporation, as the case may
be, to be SUMMONED in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the shareholders or class of shareholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all creditors or class of creditors, and/or shareholders or class
of shareholders of this Corporation, as the case may be, and also on this
Corporation.
7. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action that may be
taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, by written
consent of holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
8. POWERS OF BOARD OF DIRECTORS. In furtherance and not in limitation of
the powers conferred by statute, the Board of Directors is expressly authorized
to make, alter or repeal the By-Laws of the Corporation.
9. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot unless the By-Laws of the Corporation shall so provide.
10. LIABILITY OF DIRECTORS. The personal liability of the directors of
the corporation is hereby eliminated to the fullest extent permitted by
paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended and
Supplemented.
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APPENDIX B
INTEK 1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
B-1
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INTEK DIVERSIFIED CORPORATION
1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
1.0 DEFINITIONS
The following terms shall have the following meanings unless the context
indicates otherwise:
1.1 "AWARD" shall mean either a Stock Option, an SAR, a Stock Award, a Stock
Unit, a Performance Share, a Performance Unit, or a Cash Award.
1.2 "AWARD AGREEMENT" shall mean a written agreement between the Company and
the Participant that establishes the terms, conditions, restrictions
and/or limitations applicable to an Award in addition to those established
by the Plan and by the Committee's exercise of its administrative powers.
1.3 "BOARD" shall mean the Board of Directors of the Company.
1.4 "CASH AWARD" shall mean the grant by the Committee to a Participant of an
award of cash under Section 11 below.
1.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.6 "COMMITTEE" shall mean (i) the Board or (ii) a committee or subcommittee
of the Board appointed by the Board from among its members. The Committee
may be the Board's Compensation Committee. Unless the Board determines
otherwise, the Committee shall be comprised solely of not less than two
members who each shall qualify as (x) a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) (or any successor rule) under the Exchange Act
and (y) an "outside director" within the meaning of Section 162(m) of the
Code and the Treasury Regulations thereunder.
1.7 "COMMON STOCK" shall mean the common stock, $____ par value per share, of
the Company.
1.8 "COMPANY" shall mean Intek Diversified Corporation, a Delaware
corporation.
1.9 "DIVIDEND EQUIVALENT RIGHT" shall mean the right to receive the amount of
any dividend paid on the share of Common Stock underlying a Stock Unit or
a Performance Unit, which shall be payable in cash, in Common Stock, in
the form of additional Stock Units or Performance Units (as the case may
be), or a combination of all of the foregoing.
1.10 "EFFECTIVE DATE" shall mean the date on which the Plan is adopted by the
Board.
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1.11 "EMPLOYEE" shall mean an employee of the Company or any Subsidiary as
described in Treasury Regulation Section 1.421-7(h).
1.12 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time, including applicable regulations thereunder.
1.13 "FAIR MARKET VALUE OF THE COMMON STOCK" shall mean:
(a) if the Common Stock is readily tradeable on a national securities
exchange or other market system, the closing price of the Common
Stock on the date of calculation (or on the last preceding trading
date if Common Stock was not traded on such date), or
(b) if the Common Stock is not readily tradeable on a national securities
exchange or other market system:
(i) the book value of a share of Common Stock as of the last day
of the last completed fiscal quarter preceding the date of
calculation; or
(ii) any other value as otherwise determined in good faith by the
Board.
1.14 "INDEPENDENT CONTRACTOR" shall mean a person (who is not an Employee
or a Nonemployee Director) or an entity that renders services to the
Company.
1.15 "ISO" shall mean an "incentive stock option" as such term is used in
Code Section 422.
1.16 "NONEMPLOYEE DIRECTOR" shall mean a member of the Board who is not
an Employee.
1.17 "NONQUALIFIED STOCK OPTION" shall mean a Stock Option that does not
qualify as an ISO.
1.18 "PARTICIPANT" shall mean any Employee, Nonemployee Director or Independent
Contractor to whom an Award has been granted by the Committee under the
Plan.
1.19 "PERFORMANCE-BASED AWARD" shall mean an Award subject to the achievement
of certain performance goal or goals as described in Section 12 below.
1.20 "PERFORMANCE SHARE" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.1 below.
1.21 "PERFORMANCE UNIT" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.2 below.
1.22 "PLAN" shall mean the Intek Diversified Corporation 1997 Performance and
Equity Incentive Plan.
1.23 "SAR" shall mean the grant by the Committee to a Participant of a stock
appreciation right as described in Section 8 below.
1.24 "STOCK AWARD" shall mean the grant by the Committee to a Participant of an
Award of Common Stock under Section 9.1 below.
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1.25 "STOCK OPTION" shall mean the grant by the Committee to a Participant of
an option to purchase Common Stock under Section 7 below.
1.26 "STOCK UNIT" shall mean the grant by the Committee to a Participant of an
Award as described in Section 9.2 below.
1.27 "SUBSIDIARY" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the Voting Stock or any other
business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
1.28 "TREASURY REGULATIONS" shall mean the regulations promulgated under the
Code by the United States Department of the Treasury, as amended from time
to time.
1.29 "VEST" shall mean:
(a) with respect to Stock Options and SARs, when the Stock Option or SAR
(or a portion of such Stock Option or SAR) first becomes exercisable
and remains exercisable subject to the terms and conditions of such
Stock Option or SAR; or
(b) with respect to all Awards, when the Participant has:
(i) an unrestricted right, title and interest to receive the
compensation (whether payable in Common Stock, cash or a
combination of both) attributable to an Award (or a portion
of such Award) or to otherwise enjoy the benefits underlying
such Award; and
(ii) a right to transfer an Award subject to no Company-imposed
restrictions or limitations other than restrictions and/or
limitations imposed by Section 14 below.
1.30 "VESTING DATE" shall mean the date or dates on which an Award Vests.
1.31 "VOTING STOCK" shall mean the capital stock of any class or classes having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.
2.0 PURPOSE AND TERM OF PLAN
2.1 PURPOSE. The purpose of the Plan is to provide motivation to certain
Employees, Nonemployee Directors and Independent Contractors to put forth
maximum efforts toward the growth, profitability, and success of the
Company and Subsidiaries by providing incentives to such Employees,
Nonemployee Directors and Independent Contractors either though cash
payments and/or through the ownership and performance of the Common Stock.
In addition, the Plan is intended to provide incentives which will attract
and retain highly qualified individuals as Employees and Nonemployee
Directors and to assist in aligning the interests of such Employees and
Nonemployee Directors with those of its stockholders.
2.2 TERM. The Plan shall be effective as of the Effective Date; PROVIDED,
HOWEVER, that the Plan shall be approved by the stockholders of the
Company at an annual meeting or any special meeting of
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stockholders of the Company within 12 months before or after the
Effective Date, and such approval by the stockholders of the Company
shall be a condition to the right of each Participant to receive Awards
hereunder. Any Award granted under the Plan prior to the approval by the
stockholders of the Company shall be effective as of the date of grant
(unless the Committee specifies otherwise at the time of grant), but no
such Award may Vest, be paid out, or otherwise disposed of prior to such
stockholder approval. If the stockholders of the Company fail to approve
the Plan in accordance with this Section 2.2, any Award granted under the
Plan shall be cancelled. The Plan shall terminate on the 10th
anniversary of the Effective Date (unless sooner terminated by the Board).
3.0 ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION. All Employees of the Company, all
Nonemployee Directors and Independent Contractors shall be eligible to
participate in the Plan and to receive Awards. Participants shall consist
of such Employees, Nonemployee Directors and Independent Contractors as
the Committee in its sole discretion designates to receive Awards under
the Plan. Designation of a Participant in any year shall not require the
Committee to designate such person or entity to receive an Award in any
other year or, once designated, to receive the same type or amount of
Award as granted to the Participant in any other year. The Committee
shall consider such factors as it deems pertinent in selecting
Participants and in determining the type and amount of their respective
Awards.
4.0 ADMINISTRATION
4.1 RESPONSIBILITY. The Committee shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in
accordance with its terms.
4.2 AWARD AGREEMENT. Each Award granted under the Plan shall be evidenced by
an Award Agreement which shall be signed by the Committee and the
Participant; PROVIDED, HOWEVER, that in the event of any conflict between
the provision of the Plan and any provision of an Award Agreement, the
provision of the Plan shall prevail.
4.3 AUTHORITY OF THE COMMITTEE. The Committee shall have all the
discretionary authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan, including but not
limited to the following:
(a) to determine eligibility for participation in the Plan;
(b) to determine eligibility for and the type and size of an Award
granted under the Plan;
(c) to supply any omission, correct any defect, or reconcile any
inconsistency in the Plan in such manner and to such extent as it
shall deem appropriate in its sole discretion to carry the same into
effect;
(d) to issue administrative guidelines as an aid to administer the Plan
and make changes in such guidelines as it from time to time deems
proper;
(e) to make rules for carrying out and administering the Plan and make
changes in such rules as it from time to time deems proper;
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(f) to the extent permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions, and limitations;
(g) to accelerate the Vesting of any Award when such action or actions
would be in the best interest of the Company;
(h) to grant Award in replacement of Awards previously granted under this
Plan or any other executive compensation plan of the Company; and
(i) to take any and all other actions it deems necessary or advisable for
the proper operation or administration of the Plan.
4.4 ACTION BY THE COMMITTEE. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a
meeting, by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or more of
its members to execute and deliver documents on behalf of the Committee.
4.5 DELEGATION OF AUTHORITY. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may
deem advisable; PROVIDED, HOWEVER, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has
delegated duties as aforesaid, may employ one or more persons to render
advice with respect to any responsibility the Committee or such person may
have under the Plan. The Committee may employ such legal or other
counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by
the Committee in the engagement of such counsel, consultant or agent shall
be paid by the Company, or the Subsidiary whose employees have benefitted
from the Plan, as determined by the Committee.
4.6 DETERMINATIONS AND INTERPRETATIONS BY THE COMMITTEE. All determinations
and interpretations made by the Committee shall be binding and conclusive
on all Participants and their heirs, successors, and legal
representatives.
4.7 LIABILITY. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act
hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties
in connection with the administration of the Plan have been delegated.
4.8 INDEMNIFICATION. The Company shall indemnify members of the Committee and
any agent of the Committee who is an employee of the Company, against any
and all liabilities or expenses to which they may be subjected by reason
of any act or failure to act with respect to their duties on behalf of the
Plan, except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
5.0 SHARES SUBJECT TO PLAN
5.1 AVAILABLE SHARES. The aggregate number of shares of Common Stock which
shall be available for grants of Awards under the Plan during its term
shall be the sum of (i) 4,000,000 shares (which shall be subject to the
approval by the Company's stockholders in accordance with Section 2.2
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above) and (ii) the number of shares of Common Stock available for grants
as of the Effective Date under the Company's (x) 1988 Key Employee Stock
Plan, as amended, (y) the 1994 Non-Employee Directors Stock Option Plan,
and (z) the 1994 Stock Option Plan. Such shares of Common Stock available
for issuance under the Plan may be either authorized but unissued shares,
shares of issued stock held in the Company's treasury, or both, at the
discretion of the Company, and subject to any adjustments made in
accordance with Section 5.2 below. Any shares of Common Stock underlying
Awards which terminate by expiration, forfeiture, cancellation or
otherwise without the issuance of such shares shall again be available for
grants of Awards under the Plan.
5.2 ADJUSTMENT TO SHARES. If there is any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares, dividend in kind or
other like change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Company, an adjustment shall be
made to each outstanding Award so that each such Award shall thereafter be
with respect to or exercisable for such securities, cash and/or other
property as would have been received in respect of the Common Stock
subject to such Award had such Award been paid, distributed or exercised
in full immediately prior to such change or distribution. Such adjustment
shall be made successively each time any such change shall occur. In
addition, in the event of any such change or distribution, in order to
prevent dilution or enlargement of Participants' rights under the Plan,
the Committee shall have the authority to adjust, in an equitable manner,
the number and kind of shares that may be issued under the Plan, the
number and kind of shares subject to outstanding Awards, the exercise
price applicable to outstanding Stock Options, and the Fair Market Value
of the Common Stock and other value determinations applicable to
outstanding Awards. Appropriate adjustments may also be made by the
Committee in the terms of any Awards granted under the Plan to reflect
such changes or distributions and to modify any other terms of outstanding
Awards on an equitable basis, including modifications of performance goals
and changes in the length of performance periods. In addition, the
Committee is authorized to make adjustments to the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Company or the financial statements of
the Company, or in response to changes in applicable laws, regulations, or
accounting principles. Notwithstanding anything contained in the Plan,
any adjustment with respect to an ISO due to a change or distribution
described in this Section 5.2 shall comply with the rules of Code Section
424(a), and in no event shall any adjustment be made which would render
any ISO granted hereunder other than an incentive stock option for
purposes of Code Section 422.
6.0 MAXIMUM INDIVIDUAL AWARDS
6.1 MAXIMUM AGGREGATE NUMBER OF SHARES UNDERLYING STOCK-BASED AWARDS GRANTED
UNDER THE PLAN TO ANY SINGLE PARTICIPANT. The maximum aggregate number of
shares of Common Stock underlying all Awards measured in shares of Common
Stock (whether payable in Common Stock, cash or a combination of both)
that may be granted to any single Participant during the life of the Plan
shall be [3,000,000] shares, subject to adjustment as provided in Section
5.2 above. For purposes of the preceding sentence, such Awards that are
cancelled or repriced shall continue to be counted in determining such
maximum aggregate number of shares of Common Stock that may be granted to
any single Participant during the life of the Plan.
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6.2 MAXIMUM DOLLAR AMOUNT UNDERLYING CASH-BASED AWARDS GRANTED UNDER THE PLAN
TO ANY SINGLE PARTICIPANT. The maximum dollar amount that may be paid to
any single Participant with respect to any single Award measured in cash
(whether payable in Common Stock, cash or a combination of both) during
the life of the Plan shall be $3,000,000, irrespective of the length of
the performance period with respect to such Award.
7.0 STOCK OPTIONS
7.1 IN GENERAL. The Committee is authorized to grant Stock Options to
Employees, Nonemployee Directors and Independent Contractors on or after
the Effective Date. The Committee shall, in its sole discretion,
determine the Employees, the Nonemployee Directors and Independent
Contractor who will receive Stock Options and the number of shares of
Common Stock underlying each Stock Option. With respect to Employees who
become Participants, the Committee may grant such Participants ISOs or
Nonqualified Stock Options or a combination of both. With respect to
Nonemployee Directors and Independent Contractors who become Participants,
the Committee may grant such Participants only Nonqualified Stock Options.
Each Stock Option shall be subject to such terms and conditions consistent
with the Plan as the Committee may impose from time to time. In addition,
each Stock Option shall be subject to the following terms and conditions
set forth in Sections 7.2 through 7.8 below.
7.2 EXERCISE PRICE. The Committee shall specify the exercise price of each
Stock Option in the Award Agreement; PROVIDED, HOWEVER, that (i) the
exercise price of any ISO shall not be less than 100 percent of the Fair
Market Value of the Common Stock on the date of grant, and (ii) the
exercise price of any Nonqualified Stock Option shall not be less than 100
percent of the Fair Market Value of the Common Stock on the date of grant
unless the Committee -- in its sole discretion and due to special
circumstances -- determines otherwise on the date of grant.
7.3 TERM OF STOCK OPTION. The Committee shall specify the term of each Stock
Option in the Award Agreement; PROVIDED, HOWEVER, that (i) no ISO shall be
exercised after the 10th anniversary of the date of grant of such ISO and
(ii) no Nonqualified Stock Option shall be exercised after the 20th
anniversary of the date of grant of such Nonqualified Stock Option. Each
Stock Option shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall, in its sole
discretion, set forth in the Award Agreement on the date of grant.
7.4 VESTING DATE. The Committee shall specify the Vesting Date with respect
to each Stock Option in the Award Agreement. The Committee may grant
Stock Options that are Vested, either in whole or in part, on the date of
grant. If the Committee fails to specify a Vesting Date in the Award
Agreement, 20 percent of such Stock Option shall become exercisable on
each of the first 5 anniversaries of the date of grant and shall remain
exercisable following such anniversary date until the Stock Option expires
in accordance with its terms under the Award Agreement or under the terms
of the Plan. The Vesting of a Stock Option may be subject to such other
terms and conditions as shall be determined by the Committee, including,
without limitation, accelerating the Vesting if certain performance goals
are achieved.
7.5 EXERCISE OF STOCK OPTIONS. The Stock Option exercise price may be paid in
cash or, in the sole discretion of the Committee, by the delivery of
shares of Common Stock then owned by the Participant, by the withholding
of shares of Common Stock for which a Stock Option is exercisable, or by a
combination of these methods. In the sole discretion of the Committee,
payment may also be made by delivering a properly executed exercise notice
to the Company
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together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the
exercise price. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage
firms. The Committee may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law
and the purpose of the Plan, including, without limitation, in lieu of
the exercise of a Stock Option by delivery of shares of Common Stock
then owned by a Participant, providing the Company with a notarized
statement attesting to the number of shares owned by the Participant,
where upon verification by the Company, the Company would issue to the
Participant only the number of incremental shares to which the
Participant is entitled upon exercise of the Stock Option. In
determining which methods a Participant may utilize to pay the exercise
price, the Committee may consider such factors as it determines are
appropriate; PROVIDED, HOWEVER, that with respect to qISOs, all such
discretionary determinations by the Committee shall be made at the time
of grant and specified in the Award Agreement.
7.6 RESTRICTIONS RELATING TO ISOs. In addition to being subject to the terms
and conditions of this Section 7, ISOs shall comply with all other
requirements under Code Section 422. Accordingly, ISOs may be granted
only to Participants who are employees (as described in Treasury
Regulation Section 1.421-7(h)) of the Company or of any "Parent
Corporation" (as defined in Code Section 424(e)) or of any "Subsidiary
Corporation" (as defined in Code Section 424(f)) on the date of grant.
The aggregate market value (determined as of the time the ISO is granted)
of the Common Stock with respect to which ISOs (under all option plans of
the Company and of any Parent Corporation and of any Subsidiary
Corporation) are exercisable for the first time by a Participant during
any calendar year shall not exceed $100,000. For purposes of the
preceding sentence, (i) ISOs shall be taken into account in the order in
which they are granted and (ii) ISOs granted before 1987 shall not be
taken into account. ISOs shall not be transferable by the Participant
otherwise than by will or the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by such
Participant. The Committee shall not grant ISOs to any Employee who, at
the time the ISO is granted, owns stock possessing (after the application
of the attribution rules of Code Section 424(d)) more than 10 percent of
the total combined voting power of all classes of stock of the Company or
of any Parent Corporation or of any Subsidiary Corporation unless the
exercise price of the ISO is fixed at not less than 110 percent of the
Fair Market Value of the Common Stock on the date of grant and the
exercise of such ISO is prohibited by its terms after the 5th anniversary
of the ISO's date of grant. In addition, no ISO shall be issued to a
Participant in tandem with a Nonqualified Stock Option issued to such
Participant in accordance with Treasury Regulation Section 14a.422A-1,
Q/A-39.
7.7 ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of the Award
Agreements or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option, provided
they are not inconsistent with the Plan, including, without limitation,
the requirement that the Participant not engage in competition with the
Company.
7.8 CONVERSION STOCK OPTIONS. The Committee may, in its sole discretion,
grant a Stock Option to any holder of an option (an "Original Option") to
purchase shares of the stock of any corporation (i) whose stock or assets
were acquired, directly or indirectly, by the Company or any Subsidiary,
or (ii) which was merged with and into the Company or a Subsidiary, so
that the Original Option is converted into a Stock Option (a "Conversion
Stock Option"); PROVIDED, HOWEVER, that such Conversion Stock Option as of
the date of grant of such Conversion Stock Option (the "Conversion Stock
Option Grant Date") shall have the same economic value as the Original
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Option as of the Conversion Stock Option Grant Date. In addition, unless
the Committee, in its sole discretion determines otherwise, a Conversion
Stock Option which is converting an Original Option intended to qualify as
an ISO shall have the same terms and conditions as applicable to the
Original Option in accordance with Code Section 424 and the regulations
thereunder so that the conversion (i) is treated as the issuance or
assumption of a stock option under Code Section 424(a) and (ii) is not
treated as a modification, extension or renewal of a stock option under
Code Section 424(h).
8.0 SARS
8.1 IN GENERAL. The Committee may, in its sole discretion, grant SARs to
Employees, Nonemployee Directors, and/or Independent Contractors. An SAR
is a right to receive a payment in cash, Common Stock or a combination of
both, in an amount equal to the excess of (x) the Fair Market Value of the
Common Stock, or other specified valuation, of a specified number of
shares of Common Stock on the date the SAR is exercised over (y) the Fair
Market Value of the Common Stock, or other specified valuation (which
shall be no less than the Fair Market Value of the Common Stock), of such
shares of Common Stock on the date the SAR is granted, all as determined
by the Committee; PROVIDED, HOWEVER, that if a SAR is granted
retroactively in tandem with or in substitution for a Stock Option, the
designated Fair Market Value of the Common Stock in the Award Agreement
may be the Fair Market Value of the Common Stock on the date such Stock
Option was granted. Each SAR shall be subject to such terms and
conditions, including, but not limited to, a provision that automatically
converts a SAR into a Stock Option on a conversion date specified at the
time of grant, as the Committee shall impose from time to time in its sole
discretion and subject to the terms of the Plan.
9.0 STOCK AWARDS AND STOCK UNITS
9.1 STOCK AWARDS. The Committee may, in its sole discretion, grant Stock
Awards to Employees, Nonemployee Directors, and/or Independent Contractors
as additional compensation or in lieu of other compensation for services
to the Company. A Stock Award shall consist of shares of Common Stock
which shall be subject to such terms and conditions as the Committee in
its sole discretion determines appropriate -- including, without
limitation, restrictions on the sale or other disposition of such shares,
the Vesting Date with respect to such shares, and the right of the Company
to reacquire such shares for no consideration upon termination of the
Participant's employment within specified periods. The Committee may
require the Participant to deliver a duly signed stock power, endorsed in
blank, relating to the Common Stock covered by such Stock Award and/or
that the stock certificates evidencing such shares be held in custody or
bear restrictive legends until the restrictions thereon shall have lapsed.
With respect to the shares of Common Stock subject to a Stock Award, the
Participant shall have all of the rights of a holder of shares of Common
Stock, including the right to receive dividends and to vote the shares,
unless the Committee determines otherwise on the date of grant.
9.2 STOCK UNITS. The Committee may, in its sole discretion, grant to
Employees, Nonemployee Directors, and/or Independent Contractor Stock
Units as additional compensation or in lieu of other compensation for
services to the Company. A Stock Unit is a hypothetical share of Common
Stock represented by a notional account established and maintained (or
caused to be established or maintained) by the Company for such
Participant who receives a grant of Stock Units. Stock Units shall be
subject to such terms and conditions as the Committee, in its sole
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discretion, determines appropriate -- including, without limitation,
determinations of the Vesting Date with respect to such Stock Units and
the criteria for the Vesting of such Stock Units. A Stock Unit granted by
the Committee shall provide for payment in shares of Common Stock at such
time or times as the Award Agreement shall specify. The Committee shall
determine whether a Participant who has been granted a Stock Unit shall
also be entitled to a Dividend Equivalent Right.
9.3 PAYOUT OF STOCK UNITS. Subject to a Participant's election to defer in
accordance with Section 17.3 below, upon the Vesting of a Stock Unit, the
shares of Common Stock representing the Stock Unit shall be distributed to
the Participant, unless the Committee, in its sole discretion, provides
for the payment of the Stock Unit in cash (or partly in cash and partly in
shares of Common Stock) equal to the value of the shares of Common Stock
which would otherwise be distributed to the Participant.
10.0 PERFORMANCE SHARES AND PERFORMANCE UNITS
10.1 PERFORMANCE SHARES. The Committee may, in its sole discretion, grant
Performance Shares to Employees, Nonemployee Directors, and/or Independent
Contractors as additional compensation or in lieu of other compensation
for services to the Company. A Performance Share shall consist of a share
or shares of Common Stock which shall be subject to such terms and
conditions as the Committee, in its sole discretion, determines
appropriate -- including, without limitation, determining the performance
goal or goals which, depending on the extent to which such goals are met,
will determine the number and/or value of the Performance Shares that will
be paid out or distributed to the Participant who has been granted
Performance Shares. Performance goals may be based on, without
limitation, Company-wide, divisional and/or individual performance, as the
Committee, in its sole discretion, may determine, and may be based on the
performance measures listed in Section 12.3 below.
10.2 PERFORMANCE UNITS. The Committee may, in its sole discretion, grant to
Employees, Nonemployee Directors, and/or Independent Contractors
Performance Units as additional compensation or in lieu of other
compensation for services to the Company. A Performance Unit is a
hypothetical share or shares of Common Stock represented by a notional
account which shall be established and maintained (or caused to be
established or maintained) by the Company for such Participant who
receives a grant of Performance Units. Performance Units shall be subject
to such terms and conditions as the Committee, in its sole discretion,
determines appropriate -- including, without limitation, determining the
performance goal or goals which, depending on the extent to which such
goals are met, will determine the number and/or value of the Performance
Units that will be accrued with respect to the Participant who has been
granted Performance Units. Performance goals may be based on, without
limitation, Company-wide, divisional and/or individual performance, as the
Committee, in its sole discretion, may determine, and may be based on the
performance measures listed in Section 12.3 below.
10.3 ADJUSTMENT OF PERFORMANCE GOALS. With respect to those Performance Shares
or Performance Units that are not intended to qualify as Performance-Based
Awards (as described in Section 12 below), the Committee shall have the
authority at any time to make adjustments to performance goals for any
outstanding Performance Shares or Performance Units which the Committee
deems necessary or desirable unless at the time of establishment of the
performance goals the Committee shall have precluded its authority to make
such adjustments.
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10.4 PAYOUT OF PERFORMANCE SHARES OR PERFORMANCE UNITS. Subject to a
Participant's election to defer in accordance with Section 17.3 below,
upon the Vesting of a Performance Share or a Performance Unit, the shares
of Common Stock representing the Performance Share or the Performance Unit
shall be distributed to the Participant, unless the Committee, in its sole
discretion, provides for the payment of the Performance Share or a
Performance Unit in cash (or partly in cash and partly in shares of Common
Stock) equal to the value of the shares of Common Stock which would
otherwise be distributed to the Participant.
11.0 CASH AWARDS
11.1 IN GENERAL. The Committee may, in its sole discretion, grant Cash Awards
to Employees, Nonemployee Directors, and/or Independent Contractors as
additional compensation or in lieu of other compensation for services to
the Company. A Cash Award shall be subject to such terms and conditions
as the Committee, in its sole discretion, determines appropriate --
including, without limitation, determining the Vesting Date with respect
to such Cash Award, the criteria for the Vesting of such Cash Award, and
the right of the Company to require the Participant to repay the Cash
Award (with or without interest) upon termination of the Participant's
employment within specified periods.
12.0 PERFORMANCE-BASED AWARDS
12.1 IN GENERAL. The Committee, in its sole discretion, may designate Awards
granted under the Plan as Performance-Based Awards (as defined below) if
it determines that such compensation might not be tax deductible by the
Company due to the deduction limitation imposed by Code Section 162(m).
Accordingly, an Award granted under the Plan may be granted in such a
manner that the compensation attributable to such Award is intended by the
Committee to qualify as "performance-based compensation" (as such term is
used in Code Section 162(m) and the regulations thereunder) and thus be
exempt from the deduction limitation imposed by Code Section 162(m)
("Performance-Based Awards").
12.2 QUALIFICATION OF PERFORMANCE-BASED AWARDS. Awards shall only qualify as
Performance-Based Awards under the Plan if:
(a) at the time of grant the Committee is comprised solely of two or more
"outside directors" (as such term is used in Code Section 162(m) and
the regulations thereunder);
(b) with respect to either the granting or Vesting of an Award (other
than (i) a Nonqualified Stock Option or (ii) an SAR, which are
granted with an exercise price at or above the Fair Market Value of
the Common Stock on the date of grant), such Award is subject to the
achievement of a performance goal or goals based on one or more of
the performance measures specified in Section 12.3 below;
(c) the Committee establishes in writing (x) the objective performance-
based goals applicable to a given performance period and (y) the
individual employees or class of employees to which such performance-
based goals apply no later than 90 days after the commencement of
such performance period (but in no event after 25 percent of such
performance period has elapsed);
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<PAGE>
(d) no compensation attributable to a Performance-Based Award will be
paid to or otherwise received by a Participant until the Committee
certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been satisfied;
and
(e) after the establishment of a performance goal, the Committee shall
not revise such performance goal or increase the amount of
compensation payable thereunder (as determined in accordance with
Code Section 162(m)) upon the attainment of such performance goal.
12.3 PERFORMANCE MEASURES. The Committee may use the following performance
measures (either individually or in any combination) to set performance
goals with respect to Awards intended to qualify as Performance-Based
Awards: net sales; pretax income before allocation of corporate overhead
and bonus; budget; cash flow; earnings per share; net income; division,
group or corporate financial goals; return on stockholders' equity; return
on assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Common Stock or any
other publicly-traded securities of the Company; market share; gross
profits; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; economic value-added models;
comparisons with various stock market indices; increase in number of
customers; and/or reductions in costs.
13.0 CHANGE IN CONTROL
13.1 ACCELERATED VESTING. Notwithstanding any other provision of this Plan to
the contrary, if there is a change in control of the Company, the
Committee, in its sole discretion, may take such actions as it deems
appropriate with respect to outstanding Awards, including, without
limitation, accelerating the Vesting Date and/or payout of such Awards.
13.2 CASHOUT. The Committee, in its sole discretion, may determine that, upon
the occurrence of a change in control of the Company, all or a portion of
certain outstanding Awards shall terminate within a specified number of
days after notice to the holders, and each such holder shall receive an
amount equal to the value of such Award on the date of the change in
control, and with respect to each share of Common Stock subject to a Stock
Option or SAR, an amount equal to the excess of the Fair Market Value of
such shares of Common Stock immediately prior to the occurrence of such
change in control over the exercise price per share of such Stock Option
or SAR. Such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or
in a combination thereof, as the Committee, in its sole discretion, shall
determine.
13.3 ASSUMPTION OR SUBSTITUTION OF AWARDS. Notwithstanding anything contained
in the Plan to the contrary, the Committee may, in its sole discretion,
provide that an Award may be assumed by any entity which acquires control
of the Company or may be substituted by a similar award under such
entity's compensation plans.
14.0 TERMINATION OF EMPLOYMENT IF PARTICIPANT IS AN EMPLOYEE
14.1 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. Subject to any
written agreement between the Company and a Participant, if a
Participant's employment is terminated due to death or disability:
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(a) all non-Vested portions of Awards held by the Participant on the date
of the Participant's death or the date of the termination of his or
her employment, as the case may be, shall immediately be forfeited by
such Participant as of such date; and
(b) all Vested portions of Stock Options and SARs held by the Participant
on the date of the Participant's death or the date of the termination
of his or her employment, as the case may be, shall remain
exercisable until the earlier of (i) the end of the 12-month period
following the date of the Participant's death or the date of the
termination of his or her employment, as the case may be, or (ii) the
date the Stock Option or SAR would otherwise expire.
14.2 TERMINATION OF EMPLOYMENT FOR CAUSE. Subject to any written agreement
between the Company and a Participant, if a Participant's employment is
terminated by the Company for cause, all Awards held by a Participant on
the date of the termination of his or her employment for cause, whether
Vested or non-Vested, shall immediately be forfeited by such Participant
as of such date.
14.3 OTHER TERMINATIONS OF EMPLOYMENT. Subject to any written agreement
between the Company and a Participant, if a Participant's employment is
terminated for any reason other than for cause or other than due to death
or disability:
(a) all non-Vested portions of Awards held by the Participant on the date
of the termination of his or her employment shall immediately be
forfeited by such Participant as of such date; and
(b) all Vested portions of Stock Options and/or SARs held by the
Participant on the date of the termination of his or her employment
shall remain exercisable until the earlier of (i) the end of the
90-day period following the date of the termination of the
Participant's employment or (ii) the date the Stock Option or SAR
would otherwise expire.
14.4 COMMITTEE DISCRETION. Notwithstanding anything contained in the Plan to
the contrary, the Committee may, in its sole discretion, provide that:
(a) any or all non-Vested portions of Stock Options and/or SARs held by
the Participant on the date of the Participant's death and/or the
date of the termination of his or her employment shall immediately
become exercisable as of such date and, except with respect to ISOs,
shall remain exercisable until a date that occurs on or prior to the
date the Stock Option or SAR is scheduled to expire;
(b) any or all Vested portions of Nonqualified Stock Options and/or SARs
held by the Participant on the date of the Participant's death and/or
the date of the termination of his or her employment shall remain
exercisable until a date that occurs on or prior to the date the
Stock Option or SAR is scheduled to expire; and/or
(c) any or all non-Vested portions of Stock Awards, Stock Units,
Performance Shares, Performance Units, and/or Cash Awards held by the
Participant on the date of the Participant's death and/or the date of
the termination of his or her employment shall immediately Vest or
shall become Vested on a date that occurs on or prior to the date the
Award is scheduled to vest.
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14.5 ISOS. Notwithstanding anything contained in the Plan to the contrary, (i)
the provisions contained in this Section 14 shall be applied to an ISO
only if the application of such provision maintains the treatment of such
ISO as an ISO and (ii) the exercise period of an ISO in the event of a
termination of the Participant's employment due to disability provided in
Section 14.1 above shall be applied only if the Participant is
"permanently and totally disabled" (as such term is defined in Code
Section 22(e)(3)).
15.0 TAXES
15.1 WITHHOLDING TAXES. With respect to Employees, the Company, or the
applicable Subsidiary, may require a Participant who has become vested in
his or her Stock Award, Stock Unit, Performance Share or Performance Unit
granted hereunder, or who exercises a Stock Option or SAR granted
hereunder to reimburse the corporation which employs such Participant for
any taxes required by any governmental regulatory authority to be withheld
or otherwise deducted and paid by such corporation or entity in respect of
the issuance or disposition of such shares or the payment of any amounts.
In lieu thereof, the corporation or entity which employs such Participant
shall have the right to withhold the amount of such taxes from any other
sums due or to become due from such corporation or entity to the
Participant upon such terms and conditions as the Committee shall
prescribe. The corporation or entity that employs such Participant may,
in its discretion, hold the stock certificate to which such Participant is
entitled upon the vesting of a Stock Award, Stock Unit, Performance Share
or Performance Unit or the exercise of a Stock Option or SAR as security
for the payment of such withholding tax liability, until cash sufficient
to pay that liability has been accumulated.
15.2 USE OF COMMON STOCK TO SATISFY WITHHOLDING OBLIGATION. With respect to
Employees, at any time that the Company, Subsidiary or other entity that
employs such Participant becomes subject to a withholding obligation under
applicable law with respect to the vesting of a Stock Award, Stock Unit,
Performance Share or Performance Unit or the exercise of a Nonqualified
Stock Option (the "Tax Date"), except as set forth below, a holder of such
Award may elect to satisfy, in whole or in part, the holder's related
personal tax liabilities (an "Election") by (i) directing the Company,
Subsidiary or other entity that employs such Participant to withhold from
shares issuable in the related vesting or exercise either a specified
number of shares or shares of Common Stock having a specified value (in
each case not in excess of the related personal tax liabilities), (ii)
tendering shares of Common Stock previously issued pursuant to the
exercise of a Stock Option or other shares of the Common Stock owned by
the holder, or (iii) combining any or all of the foregoing Elections in
any fashion. An Election shall be irrevocable. The withheld shares and
other shares of Common Stock tendered in payment shall be valued at their
Fair Market Value of the Common Stock on the Tax Date. The Committee may
disapprove of any Election, suspend or terminate the right to make
Elections or provide that the right to make Elections shall not apply to
particular shares or exercises. The Committee may impose any additional
conditions or restrictions on the right to make an Election as it shall
deem appropriate, including conditions or restrictions with respect to
Section 16 of the Exchange Act.
15.3 NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the Plan in
any capacity, including, but not limited to, the Company and any
Subsidiary and their directors, officers, agents and employees makes any
representation, commitment, or guarantee that any tax treatment,
including, but not limited to, federal, state and local income, estate and
gift tax treatment, will be applicable with respect to amounts deferred
under the Plan, or paid to or for the benefit of a
14
<PAGE>
Participant under the Plan, or that such tax treatment will apply to or
be available to a Participant on account of participation in the Plan.
16.0 AMENDMENT AND TERMINATION
16.1 TERMINATION OF PLAN. The Board may suspend or terminate the Plan at any
time with or without prior notice; PROVIDED, HOWEVER, that no action
authorized by this Section 16.1 shall reduce the amount of any outstanding
Award or change the terms and conditions thereof without the Participant's
consent.
16.2 AMENDMENT OF PLAN. The Board may amend the Plan at any time with or
without prior notice; PROVIDED, HOWEVER, that no action authorized by this
Section 16.2 shall reduce the amount of any outstanding Award or change
the terms and conditions thereof without the Participant's consent. No
amendment of the Plan shall, without approval of the stockholders of the
Company:
(a) increase the total number of shares which may be issued under the
Plan;
(b) increase the maximum number of shares with respect to all Awards that
may be granted to any individual under the Plan;
(c) increase the maximum dollar amount that may be paid with respect to
any single Award measured in cash; or
(d) modify the requirements as to eligibility for Awards under the Plan.
In addition, the Plan shall not be amended without the approval of such
amendment by the Company's stockholders if such amendment will disqualify
any ISO granted hereunder.
16.3 AMENDMENT OR CANCELLATION OF AWARD AGREEMENTS. The Committee may amend or
modify any Award Agreement at any time by mutual agreement between the
Committee and the Participant or such other persons as may then have an
interest therein. In addition, by mutual agreement between the Committee
and a Participant or such other persons as may then have an interest
therein, Awards may be granted to an Employee, Nonemployee Director or
Independent Contractor in substitution and exchange for, and in
cancellation of, any Awards previously granted to such Employee,
Nonemployee Director or Independent Contractor under the Plan, or any
award previously granted to such Employee, Nonemployee Director or
Independent Contractor under any other present or future plan of the
Company or any present or future plan of an entity which (i) is purchased
by the Company, (ii) purchases the Company, or (iii) merges into or with
the Company.
17.0 MISCELLANEOUS
17.1 OTHER PROVISIONS. Awards granted under the Plan may also be subject to
such other provisions (whether or not applicable to the Award granted to
any other Participant) as the Committee determines on the date of grant to
be appropriate, including, without limitation, for the installment
purchase of Common Stock under Stock Options, to assist the Participant in
financing the acquisition of Common Stock, for the forfeiture of, or
restrictions on resale or other disposition of, Common Stock acquired
under any Stock Option, for the acceleration of Vesting of Awards in the
event of a change in control of the Company, for the payment of the value
15
<PAGE>
of Awards to Participants in the event of a change in control of the
Company, or to comply with federal and state securities laws, or
understandings or conditions as to the Participant's employment in
addition to those specifically provided for under the Plan.
17.2 TRANSFERABILITY. Each Award granted under the Plan to a Participant shall
not be transferable otherwise than by will or the laws of descent and
distribution, and Stock Options and SARs shall be exercisable, during the
Participant's lifetime, only by the Participant. In the event of the
death of a Participant, each Stock Option or SAR theretofore granted to
him or her shall be exercisable during such period after his or her death
as the Committee shall, in its sole discretion, set forth in the Award
Agreement on the date of grant and then only by the executor or
administrator of the estate of the deceased Participant or the person or
persons to whom the deceased Participant's rights under the Stock Option
or SAR shall pass by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
permit the transferability of a Stock Option (other than an ISO) by a
Participant solely to members of the Participant's immediate family or
trusts or family partnerships or other similar entities for the benefit of
such persons, and subject to such terms, conditions, restrictions and/or
limitations, if any, as the Committee may establish and include in the
Award Agreement.
17.3 ELECTION TO DEFER COMPENSATION ATTRIBUTABLE TO AWARD. The Committee may,
in its sole discretion, allow a Participant to elect to defer the receipt
of any compensation attributable to an Award under guidelines and
procedures to be established by the Committee after taking into account
the advice of the Company's tax counsel.
17.4 LISTING OF SHARES AND RELATED MATTERS. If at any time the Committee shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to any Award on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of, or in connection
with, the granting of an Award or the issuance of shares of Common Stock
thereunder, such Award may not be exercised, distributed or paid out, as
the case may be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
17.5 NO RIGHT, TITLE, OR INTEREST IN COMPANY ASSETS. Participants shall have
no right, title, or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or any other person. To the extent that
any person acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall
be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
17.6 NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE OR TO GRANTS. The
Participant's rights, if any, to continue to serve the Company as a
director, officer, employee, independent contractor or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a
Participant under the Plan, and the Company or the applicable Subsidiary
reserves the right to terminate the
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employment of any Employee or the services of any Independent Contractor
or director at any time. The adoption of the Plan shall not be deemed
to give any Employee, Nonemployee Director, Independent Contractor or any
other individual any right to be selected as a Participant or to be
granted an Award.
17.7 AWARDS SUBJECT TO FOREIGN LAWS. The Committee may grant Awards to
individual Participants who are subject to the tax laws of nations other
than the United States, and such Awards may have terms and conditions as
determined by the Committee as necessary to comply with applicable foreign
laws. The Committee may take any action which it deems advisable to
obtain approval of such Awards by the appropriate foreign governmental
entity; PROVIDED, HOWEVER, that no such Awards may be granted pursuant to
this Section 16.6 and no action may be taken which would result in a
violation of the Exchange Act or any other applicable law.
17.8 GOVERNING LAW. The Plan, all Awards granted hereunder, and all actions
taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws, except as superseded by applicable federal
law.
17.9 OTHER BENEFITS. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary nor affect any benefits or compensation
under any other benefit or compensation plan of the Company or any
Subsidiary now or subsequently in effect.
17.10 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, Common Stock, Stock Options, or other
property shall be issued or paid in lieu of fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
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APPENDIX C
AMENDMENT TO
INTEK 1988 KEY EMPLOYEE INCENTIVE STOCK PLAN
<PAGE>
AMENDMENT NO. 1
TO THE 1988 INTEK DIVERSIFIED CORPORATION
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
This Amendment No. 1 (this "Amendment") to the 1988 INTEK Diversified
Corporation Key Employee Incentive Stock Plan (the "Plan") is adopted by INTEK
Diversified Corporation (the "Company") as of the 21st day of April, 1997,
pursuant to the terms of Section 8.1 of the Plan.
W I T N E S S E T H:
WHEREAS, the Plan was adopted by the Company, effective August 15, 1988;
WHEREAS, pursuant to the Plan, the Board of Directors of the Company has
the right to amend the Plan;
WHEREAS, the Company desires to amend the Plan to revise certain provisions
thereof;
NOW, THEREFORE, the Company hereby amends the Plan, effective April 21,
1997, but subject to approval by the stockholders, as follows:
1. Section 1.1 shall be amended to delete the word "Incentive" from the
name of the Plan, so that the Plan shall be hereafter known as the "1988 INTEK
Diversified Corporation Key Employee Stock Plan."
2. Section 2.1(b) shall be deleted in its entirety and replaced with the
following:
"(b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
from time to time."
3. Section 2.1(c) shall be deleted in its entirety and replaced with the
following:
"(c) "Committee" shall mean the Stock Option Committee of the Board."
4. Section 2.1(h) shall be deleted in its entirety and replaced with the
following:
"(h) "Option" shall mean an option to purchase Common Stock granted
pursuant to the Plan, which may be either an option that is intended to
qualify as an "incentive stock option" under Section 422 of the Code (an
"Incentive Stock Option") or an option that is not intended to so qualify
(a "Nonqualified Option")."
5. Section 6.2(a) shall be deleted in its entirety and replaced with the
following:
"(a) The Option Price of the Common Stock subject to the Option shall
be determined by the Committee, but the Option price for an Incentive Stock
Option shall not be less than the Fair Market Value of the Common Stock on
the Date of Grant for all persons
<PAGE>
eligible to participate in the Plan, except persons described in
Section 6.3; in the case of persons described in Section 6.3, the Option
Price shall be not less than 110% of the Fair Market Value of the Common
Stock on the Date of Grant."
6. Section 6.10 shall be deleted in its entirety and replaced with the
following:
"6.10 RESTRICTIONS ON EXERCISE OF OPTIONS. An Incentive Stock
Option granted under the Plan may not be exercised while there is
outstanding any Incentive Stock Option which was granted, before the Date
of Grant of such Incentive Stock Option, to such Optionee to purchase stock
in the Company or in a corporation which, on the Date of Grant of the
Option, is a parent or subsidiary corporation of the Company."
7. Section 6.11 shall be deleted in its entirety and replaced with the
following:
"6.11 LIMIT ON OPTIONS TO ONE OPTIONEE. No Optionee shall be
granted Options to purchase more than 400,000 shares of Common Stock during
the term of the Plan, subject to adjustment as provided in Section 5.3."
IN WITNESS WHEREOF, the Company, has caused this instrument to be executed
by its duly authorized officer on the date first written above.
INTEK DIVERSIFIED CORPORATION
By:_________________________________
Steven L. Wasserman, Secretary
2
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APPENDIX D
TERMS OF SERIES A PREFERRED STOCK
D-1
<PAGE>
INTEK DIVERSIFIED CORPORATION
Certificate of Designations, Powers,
Preferences and Rights of the
Series A Convertible
Preferred Stock, $.001 par value
--------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------
INTEK DIVERSIFIED CORPORATION, a Delaware corporation (the "Corporation"),
by its President, the undersigned, does hereby certify that the following
resolution has been duly adopted by the Board of Directors of the Corporation:
"Resolved, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation (the "Board of Directors") by the
provisions of the Certificate of Incorporation (the "Certificate of
Incorporation") of the Corporation, there hereby is created, out of the 12,408
shares of Preferred Stock of the Corporation authorized in Article Fourth of its
Certificate of Incorporation (the "Preferred Stock"), a series of 12,408 shares,
which series shall have the following designations, powers, preferences, rights,
qualifications, limitations and restrictions (in addition to the designations,
powers, preferences, rights, qualifications, limitations and restrictions set
forth in the Certificate of Incorporation which are applicable to the Preferred
Stock).
A. DESIGNATION; NUMBER OF SHARES; STATED VALUE.
The designation of said series of the Preferred Stock shall be Series A
Convertible Preferred Stock (the "Series A Preferred Stock"). The number of
shares of Series A Preferred Stock shall be 12,408. The liquidation value of
the Series A Preferred Stock shall be $1,000.00 per share (the "Original Issue
Price"). The shares of Series A Preferred Stock shall be issued as full shares
and shall have a par value of $.001 per share.
B. SENIOR RIGHT TO DIVIDENDS. The holders of Series A Preferred Stock
shall be entitled to a cumulative annual dividend. Dividends shall accrue
annually on the first business day of October of each year. Dividends shall
accrue at the rate of eleven and one half (11 1/2%) percent of the Original
Issue Price of $1,000.00 per share (that is, $115.00 per share per annum) and
shall be cumulative. Subject to any limitations under the General Corporation
Law of the State of Delaware ("GCL") and except as otherwise provided in
Sections C and D below, dividend payments will be due upon the conversion or
redemption of the Series A Preferred Stock or such earlier date as shall be
declared by the Corporations Board of Directors. As used herein, the first
"Dividend Year" shall be the period beginning on the date of original
issuance of
<PAGE>
the particular shares of Series A Preferred Stock and ending on September 30,
1998, and the successive Dividend Years shall be the successive periods
beginning October 1 and ending on September 30 of the next calendar year.
Dividends may be paid in any year to holders of any "Junior Stock," subject to
all of the preferential rights of the holders of any other Preferred Stock then
outstanding, and only after the Corporation shall have paid or provided for the
payment of dividends on all Series A Preferred Stock, including any amounts that
may have been accumulated but not declared or not paid for each Dividend Year
from the date of issuance to and including the Dividend Year in question. The
term "Junior Stock" shall mean shares of the Corporation's Common Stock and each
series of Preferred Stock of the Corporation ranking junior to the Series A
Preferred Stock as to dividends or distribution of assets on liquidation,
dissolution or winding up. Holders of Series A Preferred Stock shall not be
entitled to any cash or other dividend other than as provided in this Section B.
C. SENIOR RIGHTS IN DISSOLUTION AND DISTRIBUTION OF ASSETS. Upon
liquidation, dissolution, or winding up of the Corporation, holders of Series A
Preferred Stock shall be entitled to receive, on a pro rata basis, prior to any
distribution to holders of any Junior Stock, a liquidation preference of
$1,000.00 per share plus all dividends accumulated but unpaid to the date such
payment is made available to such holders of Series A Preferred Stock. Holders
of Series A Preferred Stock shall not be entitled to any further payment as
dividends in liquidation or otherwise. After payment to the holders of the
Series A Preferred Stock, the holders of shares of Common Stock, subject to all
of the preferential rights of the holders of the Preferred Stock, shall be
entitled to receive, ratably, all remaining assets of the Corporation. A
consolidation or merger of the Corporation with or into any other corporation or
corporations shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section C.
D. CONVERSION. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
1. RIGHT TO CONVERT.
(a) Each record holder of Series A Preferred Stock of the
Corporation shall be entitled to convert the shares of Series A Preferred Stock
held by such holder, at such holder's option, at any time the Conversion Rate
(defined below) equals or exceeds $6.00 for 20 consecutive trading days and in
the manner specified in Section D (2) below, into that number of fully-paid and
non-assessable shares of the Corporation's Common Stock determined as follows:
Each share of Series A Preferred Stock so surrendered for conversion shall be
converted into that number of shares of Common Stock derived by dividing (a) the
Original Issue Price by (b) the "Conversion Rate". As used herein, the
"Conversion Rate" shall be the average "Market Price" (defined below) of the
Corporation's Common Stock for the twenty (20) consecutive trading days ending
the day before the "Conversion Date" (as defined below); provided, however, that
the minimum Conversion Rate shall be $6.00. Following any such conversion, the
Corporation shall, as soon as reasonably practicable thereafter, make provisions
for payment of any dividends accumulated but unpaid, through the Conversion
Date, on any shares of Series A Preferred Stock so surrendered, provided that
such payment may be made, at the Corporation's sole election, in a number of
shares of the Corporation's Common Stock determined in accordance with the
provisions of this Section D(1).
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(b) "Market Price", when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price per share of
Common Stock or such other securities on such date and, when used with reference
to shares of Common Stock or other securities for any period shall mean the
average of the daily closing prices per share of Common Stock or such other
securities for such period. If the Common Stock or such other securities are
listed or admitted to trading on a national securities exchange, the closing
price shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Stock or such other securities are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Stock
or such other securities are listed or admitted to trading or, if the Common
Stock or such other securities are not so listed on any national securities
exchange, as reported in the transaction reporting system applicable to
securities designated as a "national market system security" or "small cap
market security" on NASDAQ. If the Common Stock or such other securities are
not publicly held or so listed or designated, "Current Market Price" shall mean
the Fair Market Value per share of Common Stock or of such other securities as
determined in good faith by the Board of Directors of the Corporation based on
an opinion of an independent investment banking firm with an established
national reputation with respect to the valuation of securities.
2. MECHANICS OF CONVERSION.
(a) In order to convert Preferred Stock into full shares of
Common Stock, the holder shall (i) fax or otherwise deliver a copy of the fully
executed notice of conversion in the form attached to the Preferred Stock
Purchase Agreement between the Corporation and the initial registered holder of
the Series A Preferred Stock ("Notice of Conversion") to the Corporation at the
office of the Corporation and of its designated Transfer Agent for the Common
Stock that the holder elects to convert the same, which notice shall specify the
number of Preferred Shares to be converted, the applicable conversion price and
a calculation of the number of shares of Common Stock issuable upon such
conversion (together with a copy of the first page of each certificate to be
converted) prior to Midnight, New York City time (the "Conversion Notice
Deadline") on the date of conversion specified on the Notice of Conversion and
(ii) surrender the original certificates representing the Preferred Shares being
converted (the "Preferred Stock Certificates"), duly endorsed, along with a copy
of the Notice of Conversion (together with the Preferred Stock Certificates, the
"Conversion Documents") no later than Midnight, New York city time the next
business day, to a common courier for either overnight or 2-day delivery to the
office of the Corporation or the Transfer Agent for the Common Stock. The
Corporation shall issue and deliver within three (3) business days after
delivery to the Corporation of the facsimile copies of such Notice of Conversion
and such Preferred Stock Certificates to such holder at the address of the
holder on the books of the Corporation (or such other address as may be
specified by such holder), a certificate or certificates for the number of
shares of Common Stock issuable upon such conversion; provided, however, that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock
3
<PAGE>
unless either the original Preferred Stock Certificates have been received by
the Corporation or its Transfer Agent, or the holder notifies the Corporation
or its Transfer Agent, or the holder delivers to the Corporation an affidavit
and indemnification to the effect that such certificates have been lost,
stolen or destroyed.
(b) The registered holder of Series A Preferred Stock may convert
a portion of such shares. In the event of a partial conversion, the Corporation
shall issue to the registered holder a new certificate representing the shares
of Series A Preferred Stock which were not converted.
3. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, the Corporation shall take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
4. MANDATORY CONVERSION. At the Corporation's sole option, if the
Conversion Rate equals or exceeds $9.00 for 20 consecutive trading days, the
Corporation may call each share of Series A Preferred Stock outstanding for
conversion into Common Stock on such date at the Conversion Rate then in effect
as provided in Section D(1) above.
5. CORPORATE CHANGE. The Conversion Rate shall be appropriately
adjusted to reflect, as deemed equitable and appropriate by the Board of
Directors of the Corporation, any stock dividend, stock split or share
combination of the Common Stock or any distribution of a material portion of the
Corporation's assets to the holders of Common Stock. In the event of a merger,
reorganization, recapitalization or similar event of or with respect to the
Corporation (a "Corporate Change") (other than a Corporate Change in which the
Corporation is the surviving entity or in which all or substantially all of the
consideration received by the holders of the Corporation's capital stock upon
such Corporate Change consists of cash or assets other than securities issued by
the acquiring entity or any affiliate thereof), this Series A Preferred Stock
shall be assumed by the acquiring entity and thereafter this Series A Preferred
Stock shall be convertible into such class and type of securities as the holder
would have received had the holder converted this Series A Preferred Stock
immediately prior to such Corporate Change.
E. REDEMPTION.
1. REDEMPTION.
(a) The Corporation may at any time or from time to time
redeem Series A Preferred Stock in amounts of not less than 1,000 shares for
$1,065 per share, plus accrued and unpaid dividends.
(b) Subject to the GCL, the Corporation shall be bound to redeem
all the
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<PAGE>
Series A Preferred Stock in issue on June 30, 2003, plus accrued and unpaid
dividends.
2. MECHANICS OF REDEMPTION. The following procedures shall apply to
all redemptions of Series A Preferred Stock under Section E(1):
(a) The Corporation shall send a notice of redemption (the
"Redemption Notice") to each holder of record of shares to be redeemed by
facsimile, with the original to follow by 2-day courier addressed to the holder
at such holder's address appearing on the books of the Corporation or given by
the holder to the Corporation for the purpose of notice, or if there is no such
address, at the principal executive offices of the Corporation. The Redemption
Notice shall include the date of redemption, the Redemption Price to be paid,
the number of shares of Series A Preferred Stock to be redeemed, and the place
at which the shareholders may obtain payment of the Redemption Price upon
surrender of their share certificates.
(b) If funds are legally available for such redemption on the
date fixed in the Redemption Notice, then, whether or not the share certificates
are surrendered for payment of the Redemption Price, the shares redeemed shall
no longer be outstanding and the holders thereof shall cease to be shareholders
of the Corporation with respect to the shares redeemed on and after the date
fixed for redemption and shall be entitled only to receive the Redemption Price
without interest upon surrender of the share certificate. If less than all of
the shares represented by one certificate are to be redeemed, the Corporation
shall issue a new share certificate for the shares not redeemed.
(c) On the Redemption Date the Corporation shall be entitled and
(upon delivery to the Corporation of the relevant share certificate) bound to
redeem the shares of Series A Preferred Stock the subject of the notice, and
shall on the Redemption Date pay to the holder thereof the amounts paid up or
credited as paid up on such shares together with a sum equal to all arrears and
accruals (if any) of the preferential dividend thereon irrespective of whether
or not such dividend has been declared or earned or become due and payable, to
be calculated down to and including the Redemption Date. Following such
Redemption Date, the preferential dividend on any Series A Preferred Stock to be
redeemed shall cease to accrue, except in relation to any such shares in respect
of which payment of the redemption monies is not made (for whatever reason) on
the Redemption Date, in which case the preferential dividend shall continue to
accrue down to and including the actual date of payment in full of such
redemption monies.
(d) Certificates for shares of Series A Preferred Stock shall be
deemed to have been canceled to the extent appropriate on the date on which
payment is full is made of the redemption monies in respect of the shares to
which the certificate relates. Following any redemption of part only of the
shares of Series A Preferred Stock in issue, certificates (if any) which then
relate to Series A Preferred Stock which have not been redeemed shall be
delivered up to the Corporation and, subject only to such delivery up, the
Corporation shall issue without payment new definitive certificates in respect
of these Series A Preferred Shares which have not been redeemed.
(e) If on the Redemption Date the Corporation is prohibited by
law from redeeming all of the Series A Preferred Stock then required to be
redeemed, it shall on such date
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<PAGE>
redeem such number of the same as it may then lawfully redeem and shall
redeem the balance as soon thereafter as it is not so prohibited. If the
Corporation fails to make any partial redemption of the Series A Preferred
Stock on any Redemption Date, then any subsequent redemptions of Series A
Preferred Stock shall be deemed to be of those Series A Preferred Stock
which first became due for redemption. In addition, in the event the
Corporation is prohibited by law from redeeming, or otherwise unable to
redeem, any of the Series A Preferred Stock then required to be redeemed the
holder shall, in addition to the rights set forth in Section D above, have
the option of converting the shares of Series A Preferred Stock not redeemed
into shares of the Corporation's Common Stock. Each share of Series A
Preferred Stock so surrendered for conversion shall be converted into that
number of shares of Common Stock determined by dividing the original Issue
Price by the average market price of the Corporation's Common Stock for the
20 consecutive trading days beginning on the Redemption Date.
(f) All references to payment in this Article E.2. are exclusive
of any associated tax credit.
F. VOTING RIGHTS. Except as otherwise provided by the GCL, the holders
of the Series A Preferred Stock shall have no voting power whatsoever, and no
holder of Series A Preferred Stock shall vote or otherwise participate in any
proceeding in which actions shall be taken by the Corporation or the
shareholders thereof or be entitled to notification as to any meeting of the
Board of Directors or the shareholders.
To the extent that under the GCL the vote of the holders of the Series
A Preferred Stock, voting separately as a class, is required to authorize a
given action of the Corporation, the affirmative vote or consent of the holders
of at least a majority of the outstanding shares of the Series A Preferred Stock
shall constitute the approval of such action by the class. To the extent that
under the GCL the holders of the Series A Preferred Stock are entitled to vote
on a matter with holders of Common Stock, voting together as one class, each
share of Series A Preferred Stock shall be entitled to a number of votes equal
to the number of shares of Common Stock into which it is then convertible using
the record date for the taking of such vote of stockholders as the date as of
which the Conversion Rate is calculated. Holders of the Series A Preferred
Stock shall be entitled to notice of all shareholder meetings or written
consents with respect to which they would be entitled to vote, which notice
would be provided pursuant to the Corporation's Bylaws and applicable statutes.
G. PROTECTIVE PROVISIONS. So long as shares of Series A Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by voting or written consent, as provided by Delaware law) of the holders of at
least 90% of the then outstanding shares of Series A Preferred Stock:
1. alter or change the rights, preferences or privileges of the
shares of Series A Preferred Stock;
2. create any new class or series of stock having a preference over
the Series A Preferred Stock with respect to any dividends or distributions
under any circumstances;
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<PAGE>
3. do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series A Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
H. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of
Series A Preferred Stock shall be converted pursuant to Section D hereof, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class or series, and shall not be
issuable by the Corporation as Series A Preferred Stock.
I. PREFERENCE RIGHTS. Subject to Section G above, the Board of Directors
of the Corporation shall not otherwise be prevented from issuing one or more
series of preferred stock with such preferences as may be determined by the
Board of Directors, in its discretion.
DATED this _____ day of ____________, 1998.
-----------------------------------
, Chairman and CEO
-----------------------------------
, Secretary
STATE OF )
------------
) SS:
COUNTY OF )
------------
I, ______________________, a notary public, do hereby certify that on this
_____ day of ___________________, 19 ___, personally appeared before me
_________________________, who being by me first duly sworn, declared that he is
the ________________________ of ______________________________________________,
that he signed the foregoing document as ______________________ of the
corporation, and that the statements therein contained are true.
----------------------------------
Notary Public
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[INTEK LOGO]
INTEK DIVERSIFIED CORPORATION
---------------------------
---------------------------
(LOGO)
1998
INTEK DIVERSIFIED CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
FEBRUARY 18, 1998
The undersigned hereby appoints ___________ and ___________,
and each of them, proxies, with power of substitution, to
vote all shares of Common Stock of Intek Diversified
Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on Wednesday,
February 18, 1998, at ______ a.m., local time, at The
University Club, New York, New York, and at any adjournments
of the Annual Meeting. The proxies have the authority to
vote as directed on the reverse side of this card with the
same effect as though the undersigned were present in person
and voting. The proxies are further authorized in their
discretion to vote upon such other business as may properly
come before the Annual Meeting and any adjournments of the
Annual Meeting. The undersigned revokes all proxies
previously given to vote at the Annual Meeting.
PLEASE INDICATE ON THE REVERSE SIDE OF THIS PROXY CARD HOW YOU WISH
YOUR SHARES TO BE VOTED. UNLESS YOU INDICATE OTHERWISE, YOUR PROXY
WILL VOTE "FOR" ALL OF THE PROPOSALS ON THE REVERSE SIDE OF THIS CARD.
WE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD.
(IMPORTANT -- PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE OF THIS CARD)
<PAGE>
1998 PROXY
- --------
X
- --------
PLEASE MARK YOUR
VOTE AS IN
THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS YOU DIRECT. IF YOU GIVE
NO DIRECTION, WE WILL VOTE YOUR SHARES OF COMMON STOCK "FOR" ALL PROPOSALS.
------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" ALL PROPOSALS.
------------------------------------
1. Elect Six Directors.
THE NOMINEES ARE: Robert Kelly, Robert J. Shiver, John G. Simmonds,
Steven L. Wasserman, Roger Wiggs and Michael Wilkinson.
FOR all nominees WITHHOLD AUTHORITY
(except as indicated to vote for all
below) nominees
(To withhold authority to vote for any individual nominee, write that
nominee's name below)
__________________________________
<PAGE>
2A Approve Amendment to Charter to Change FOR AGAINST ABSTAIN
Name to Intek Global Corporation
2B Approve Amendment to Charter to FOR AGAINST ABSTAIN
Authorize Shares of Preferred Stock
and Authority of Board of Directors to
Issue the Preferred Stock
2C Approve an Amendment to Charter to FOR AGAINST ABSTAIN
Effect a 1 for 2 Reverse Stock Split
2E Approve an Amendment to Charter to FOR AGAINST ABSTAIN
Change the Voting Requirement for
Stockholders' Action Taken Without a
Meeting
3 Approve 1997 Performance and Equity FOR AGAINST ABSTAIN
Incentive Plan
4 Approve Amendment of 1988 Key Employee FOR AGAINST ABSTAIN
Incentive Stock Plan
5 Ratify Selection of Arthur Andersen FOR AGAINST ABSTAIN
LLP as independent auditors for 1998
Signature___________________________ Date______________________
Signature___________________________ Date______________________
IMPORTANT: Please sign EXACTLY as your name(s) appears on this proxy
card. Joint owners should each sign. If you are signing as
an executor, administrator, trustee, guardian, attorney or
corporate officer, please give your full title.
