<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant / /
Check the appropriate box:
/x/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LaBarge, Inc.
William J. Maender, Vice President-Finance and Secretary
Payment of filing fee by wire:
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
Preliminary Proxy Statement
(3) Filing party:
LaBarge, Inc.
(4) Date filed:
August 23, 1995
____________________
(1)Set forth the amount on which the filing fee is calculated
and state how it was determined.
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 1995
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of LaBarge, Inc. will be held at
the Adam's Mark Hotel, Fourth and Chestnut Streets, St. Louis, Missouri, on
October 26, 1995, at 11:00 A.M., CDT.
At the Annual Meeting, Common Stockholders will be asked:
1. To elect eight Directors, two for a term ending in 1996, three
for a term ending in 1997 and three for a term ending in 1998,
unless Proposal 2 is not adopted, in which case all for a term
ending in 1996;
2. To consider and act upon a proposal to amend the Company's
By-Laws to divide the Board of Directors into three classes of
as nearly equal size as possible, with Directors in each class
being elected, after an interim period, for terms of three
years;
3. To act upon a proposal to amend the Company's Certificate of
Incorporation to add a new article that requires the
affirmative vote of the holders of at least two-thirds of the
voting power of the outstanding shares to approve certain
fundamental changes such as mergers, sales of substantially
all of the assets and dissolution of the Company and
amendments or repeal of the new article;
4. To consider and act upon ratification of the LaBarge, Inc.
1995 Incentive Stock Option Plan.
5. To consider and act upon the ratification of the selection of
KPMG Peat Marwick LLP as independent accountants for 1996;
6. To transact such other business as may properly come before
the meeting.
Only stockholders whose names appear of record at the Company's close
of business on September 1, 1995 (the "Record Date") are entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof. ALL
CAPITALIZED TERMS NOT OTHERWISE DEFINED IN THIS NOTICE HAVE THE DEFINITIONS
GIVEN TO THEM IN THE ATTACHED PROXY STATEMENT.
If you receive more than one proxy card because you own shares
registered in different names or at different addresses, please complete, sign,
date and return each proxy card as soon as possible in the enclosed envelope,
which needs no postage if mailed in the United States. You must complete and
return a proxy card in order to exercise your proxy voting rights.
By Order of the Board of Directors,
WILLIAM J. MAENDER
Vice President - Finance and Secretary
September 20, 1995
<PAGE> 3
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU
INTEND TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOUR CONVENIENCE.
STOCKHOLDERS CAN HELP THE COMPANY AVOID UNNECESSARY EXPENSE AND DELAY BY
PROMPTLY RETURNING THE ENCLOSED PROXY CARD. THE PRESENCE, IN PERSON OR BY
PROPERLY EXECUTED PROXY, OF A MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE
RECORD DATE IS NECESSARY TO CONSTITUTE A QUORUM AT THE ANNUAL MEETING.
LABARGE, INC.
707 NORTH SECOND STREET
POST OFFICE BOX 14499
ST. LOUIS, MO 63178-4499
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 1995
This Proxy Statement is being furnished to the Common Stockholders of
LaBarge, Inc. (the "Company") on or about September 26, 1995 in connection with
the solicitation of proxies on behalf of the Board of Directors of the Company
for use at the annual meeting of stockholders (the "Annual Meeting") to be held
on October 26, 1995 at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting, and at any adjournment or postponement
of that meeting.
Holders of shares of common stock, par value $.01 per share (the
"Common Stock") of the Company at its close of business on September 1, 1995
(the "Record Date") will be entitled to receive notice of and vote at the
Annual Meeting. On the Record Date 15,232,746 shares of Common Stock were
outstanding. Holders of Common Stock are entitled to one vote per share of
Common Stock they held of record on the Record Date on each matter that may
properly come before the Annual Meeting.
A plurality of votes of Common Stockholders cast at the Annual Meeting
is required for the election of each Director. The proposed amendments to the
Company's Certificate of Incorporation and By-Laws, respectively, require the
affirmative vote of stockholders holding a majority of the shares of Common
Stock entitled to vote at the Meeting. Ratification of the selection of
independent accountants and the LaBarge, Inc. 1995 Incentive Stock Option Plan
requires the affirmative vote of Stockholders holding a majority of the shares
of Common Stock voted at the Annual Meeting.
Management of the Company (the "Management"), together with members of
the Board of Directors of the Company, in the aggregate directly or indirectly
controls approximately 39.5% of the Common Stock outstanding on the Record
Date.
Stockholders of record on the Record Date are entitled to cast their
votes in person or by properly executed proxy at the Annual Meeting. The
presence, in person or by properly executed proxy, of a majority of the Common
Stock outstanding on the Record Date is necessary to constitute a quorum at the
Annual Meeting. If a quorum is not present at the time the Annual Meeting is
convened, the Company may adjourn or postpone the Annual Meeting. Abstentions
and broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Abstentions are counted
in tabulations of the votes cast on proposals presented to stockholders,
whereas broker non-votes are not counted for purposes of determining whether a
2
<PAGE> 4
proposal has been approved. Under applicable Delaware law, an abstention or
broker non-vote will have no effect on the outcome of the election of directors
or on Proposals 4 and 5. Broker non-votes and abstentions will be the
equivalent of negative votes on Proposals 2 and 3.
All Common Stock represented at the Annual Meeting by properly
executed proxies, received prior to or at the Annual Meeting and not properly
revoked, will be voted at the Annual Meeting in accordance with the
instructions indicated in such proxies. If no instructions are indicated, such
proxies will be voted FOR election of the Board's nominees as directors and
FOR Proposals 2 through 5, and at the discretion of the named proxies on any
other matters that may come before the Meeting. The Board of Directors of the
Company does not know of any matters other than the matters described in the
Notice of Annual Meeting attached to this Proxy Statement that will come before
the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a date later than the date of the proxy,
(ii) duly executing a subsequent proxy relating to the Common Stock and
delivering it to the Secretary of the Company at or before the Annual Meeting,
or (iii) attending the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy should be sent to: Corporate
Secretary, LaBarge, Inc., 707 North Second Street, St. Louis, Missouri 63102
[telephone number (314) 231-5960].
The proxies are solicited by the Board of Directors of the Company.
In addition to the use of the mails, proxies may be solicited personally or by
telephone, facsimile transmission or telegraph, by Directors, officers or
regular employees of the Company. The cost of solicitation of proxies will be
borne by the Company.
A copy of the Company's Annual Report for the fiscal year ended July
2, 1995 is being mailed to each stockholder along with this Proxy Statement.
THE DATE OF THIS PROXY STATEMENT IS SEPTEMBER 20, 1995.
PROPOSAL 1: ELECTION OF DIRECTORS
A Board of Directors of eight members is to be elected at the Annual
Meeting. If Proposal 2 is adopted by the stockholders at the Annual Meeting,
the Board of Directors will be divided into three classes, designated as Class
A, Class B and Class C, with terms expiring on the dates of the 1996, 1997 and
1998 Annual Meetings of Stockholders, respectively, and in each case when their
successors have been elected and qualified. The nominees for election as
Directors have been assigned to the following Classes: Class A, Craig E.
LaBarge and James P. Shanahan, Jr.; Class B, R. Hal Dean, J.C. Kuhn, Jr. and
Edward J. Nestor, Jr.; and Class C, Gus G. Casten, Richard P. Conerly and
Pierre L. LaBarge, Jr. The nominees receiving the greatest number of votes at
the Annual Meeting will be elected.
If Proposal 2 is not adopted by the stockholders, all Directors
elected at the Annual Meeting will be elected for a term of one year, to serve
until the Annual Meeting of Stockholders in 1996 and until their successors are
elected and qualified.
3
<PAGE> 5
The nominees for election as Directors at the Annual Meeting set forth
in the table below are all incumbent Directors. Each of the nominees has
consented to serve as a Director if elected. Unless authority to vote for any
of the Directors is withheld in a proxy, it is intended that each proxy will be
voted FOR such nominees. In the event that any of the nominees for Director
should, before the Annual Meeting, become unable to serve if elected, it is
intended that shares represented by proxies which are executed and returned
will be voted for such substitute nominees as may be recommended by the
Company's existing Board of Directors. The accompanying form of Proxy contains
a discretionary grant of authority with respect to this matter. To the best of
the Company's knowledge, all nominees will be available to serve.
The following biographical information is furnished with respect to
each of the eight nominees for election at the Annual Meeting.
<TABLE>
<CAPTION>
TERM
EXPIRATION DIRECTOR POSITIONS WITH THE
DATE AGE SINCE COMPANY
---- --- ----- -------
<S> <C> <C> <C> <C>
NOMINEES FOR ELECTION AS CLASS A
DIRECTORS
Craig E. LaBarge . . . . . . . . . . . 1996 44 1981 Chief Executive Officer,
President and Director
James P. Shanahan, Jr. . . . . . . . . 1996 34 1987 Director
NOMINEES FOR ELECTION AS CLASS B
DIRECTORS
R. Hal Dean . . . . . . . . . . . . . . 1997 78 1981 Director
J.C. Kuhn, Jr. . . . . . . . . . . . . 1997 55 1989 Executive Vice President,
Chief Operating Officer and
Director
Edward J. Nestor, Jr. . . . . . . . . . 1997 70 1972 Director
NOMINEES FOR ELECTION AS CLASS C
DIRECTORS
Gus G. Casten . . . . . . . . . . . . . 1998 70 1971 Director
Richard P. Conerly . . . . . . . . . . 1998 71 1975 Director
Pierre L. LaBarge, Jr. . . . . . . . . 1998 70 1967 Chairman Emeritus and
Director
</TABLE>
EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES FOR DIRECTOR
The following table sets forth certain information, as of September 1,
1995, with respect to the executive officers, directors whose term of office
will continue after the Annual Meeting and nominees for directors of the
Company:
4
<PAGE> 6
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
<S> <C> <C>
Pierre L. LaBarge, Jr. . . . . . . . . 70 Chairman Emeritus and Director
Craig E. LaBarge . . . . . . . . . . . 44 Chief Executive Officer, President and Director
J. C. Kuhn, Jr. . . . . . . . . . . . . 55 Executive Vice President, Chief Operating Officer
and Director
William J. Maender . . . . . . . . . . 49 Vice President - Finance, Treasurer & Secretary
Gus G. Casten . . . . . . . . . . . . . 70 Director
Richard P. Conerly . . . . . . . . . . . 71 Director
R. Hal Dean . . . . . . . . . . . . . . 78 Director
Edward J. Nestor, Jr. . . . . . . . . . 70 Director
James P. Shanahan, Jr. . . . . . . . . 34 Director
</TABLE>
Pierre L. LaBarge, Jr. is the founder of the predecessor of the
Company and Chairman of the Board. On July 1, 1995, Mr. LaBarge retired from
day-to-day business operations. He will remain as Chairman Emeritus. Mr.
LaBarge has been a Director since 1967.
Craig E. LaBarge is the son of Pierre L. LaBarge, Jr. He assumed the
positions of Chief Executive Officer and President in August 1991. Prior to
that time, he was Vice President - Marketing of the Electronics Division of the
Company (October 1975 to September 1979), President of the Electronics Division
of the Company (September 1979 to present), Vice President of the Company
(January 1981 to August 1986) and President and Chief Operating Officer of the
Company (August 1986 to August 1991). He has been a Director since 1981.
Mr. Kuhn assumed his current position with the Company in August 1991.
He has been Executive Vice President - Operations of the Electronics Division
of the Company for more than five years and was Vice President - Operations of
the Company (August 1986 to August 1991). He has been a Director since 1989.
Mr. Maender joined the Company in February 1984. He has been Vice
President - Finance, Treasurer and Secretary for more than five years.
Dr. Casten became a Director in 1971 and serves as a member of the
Human Resources Committee of the Board of Directors. He is retired and was
formerly a physician with Montclair Cardiology Associates, P.A., Birmingham,
Alabama.
Mr. Conerly became a director in 1975 and serves as a member of the
Audit Committee of the Board of Directors. He was formerly Chairman and Chief
Executive Officer of Orion Capital Inc. (a private company) from 1987 to 1994;
President of Pott Industries Inc., St. Louis, Missouri, a marine services
company, from 1969 to 1987; and Vice Chairman of Coal-Marine, Houston Natural
Gas Corporation, parent company of Pott Industries Inc., from 1979 to 1985.
Mr. Conerly is also a director of Mercantile Bancorporation, Inc. and Kellwood
Company, an apparel manufacturer.
5
<PAGE> 7
Mr. Dean became a Director in 1981 and serves as a member of the Audit
and Human Resources Committees of the Board of Directors. He has been retired
for more than the past five years and was formerly Chairman of the Board,
President and Chief Executive Officer of Ralston Purina Company.
Mr. Nestor became a Director in 1972 and serves as a member of the
Audit Committee of the Board of Directors. Mr. Nestor joined the predecessor
of the Company in 1961 and served as Executive Vice President - Finance and
Treasurer from 1975 to June 1987, Secretary from June 1985 to June 1988 and
Senior Vice President - Administration from June 1987 to June 1988. Mr. Nestor
retired as an officer and employee of the Company in June 1988.
Mr. Shanahan became a Director in 1987 and serves as a member of the
Audit and Human Resources Committees of the Board of Directors. He has been
Executive Vice President and General Counsel of Pacholder Associates, Inc., an
investment advisory firm, since April 1986. He was engaged in the private
practice of law from May 1984 to April 1986. Mr. Shanahan is also a director
of USF & G Pacholder Fund, Inc.
The Board of Directors of the Company held six meetings in fiscal
1995. The Company has a standing Audit Committee of its Board of Directors,
which held four meetings in fiscal 1995. This Committee performed the
following principal functions: (i) reviewed financial statements with the
Company's chief financial officer and independent accountants, (ii) reviewed
the independent accountants' "management letters," and (iii) approved the
appointment of the independent accountants for fiscal 1995. The Company also
has a standing Human Resources Committee of its Board of Directors, which held
four meetings in fiscal 1995. This Committee performs the principal function
of acting as a compensation committee. The Company has no standing nominating
committee or any committee which performs similar functions. Each Director
attended at least 75% of the meetings of the Board and its Committees on which
he served in fiscal 1995.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of the Chief Executive Officer and the four other most highly compensated
executives who served in such capacities as of July 2, 1995.
6
<PAGE> 8
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION (1)
AWARDS PAYOUTS
OTHER RESTRICTED ALL
ANNUAL STOCK OPTIONS/ LTIP OTHER
NAME AND SALARY BONUS COMP. AWARDS SARS PAYOUTS COMP.
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) ($)(2) (#)(2) ($) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Craig E. LaBarge 1995 $230,000 $43,000 0 0 40,000 0 $20,003
CEO & President 1994 222,702 0 0 0 65,000 0 21,732
1993 190,581 46,000 0 0 0 0 21,998
Pierre L. LaBarge, Jr. (4) 1995 175,000 0 0 0 0 0 112,310
Chairman Emeritus 1994 178,365 0 0 0 0 0 110,116
1993 177,886 20,000 0 0 0 0 104,726
J. C. Kuhn, Jr. 1995 170,000 23,000 0 0 20,000 0 21,570
Executive Vice 1994 167,154 0 0 0 30,000 0 23,202
President & COO 1993 153,346 30,000 0 0 0 0 23,676
William J. Maender 1995 150,000 19,000 0 0 15,000 0 18,467
Vice President-Finance, 1994 146,769 0 0 0 20,000 0 22,338
Secretary & Treasurer 1993 136,785 22,000 0 0 0 0 19,791
J. Barry Pipkin 1995 129,269 0 0 0 0 0 20,934
Vice President 1994 128,261 0 0 0 10,000 0 34,046
1993 121,715 20,000 0 0 0 0 21,732
</TABLE>
(1) Includes compensation amounts earned during the fiscal years
shown but deferred pursuant to individual deferred
compensation agreements with the Company.
(2) No SARs were granted during the fiscal year.
(3) Includes the following by individual:
<TABLE>
<CAPTION>
SPLIT $ LIFE DEFERRED COMPENSATION COMPANY MATCH ON
NAME PREMIUM (A) EARNINGS 401(K) DEFERRALS
<S> <C> <C> <C>
Craig E. LaBarge $ 20,003 $ 0 $ 0
Pierre L. LaBarge, Jr. 112,310 0 0
J. C. Kuhn, Jr. 21,570 0 0
William J. Maender 16,702 0 1,675
J. Barry Pipkin 19,243 0 1,691
</TABLE>
(a) By agreement, these "split dollar life" premiums will be
substantially recovered upon the surrender of the policy or death
of the executive.
(4) Mr. P. L. LaBarge retired July 1, 1995. For the Company's
benefit, he has signed a long-term consulting agreement with the
Company. In consideration of the agreement, the Company has
loaned to Mr. LaBarge $600,000 which is
7
<PAGE> 9
covered by a 15-year interest-free note. In the event of certain
conditions or upon the death of Mr. LaBarge, the note is due on
demand.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth all stock options granted to the named
executives during the fiscal year ended July 2, 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
% OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(A) FISCAL YEAR ($/SH) DATE (B) 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Craig E. LaBarge 40,000 34.8% $1.4438 8/24/99 $ 9,252 $26,796
Pierre L. LaBarge 0 - - - - -
J. C. Kuhn, Jr. 20,000 17.4% 1.3125 8/24/04 16,508 41,834
William J. Maender 15,000 13.0% 1.3125 8/24/04 12,381 31,375
J. Barry Pipkin 0 - - - - -
</TABLE>
(a) No SARs were granted during the fiscal year.
(b) The date of exercisability of the options granted in fiscal
1995 is August 24, 1996.
AGGREGATE OPTION EXERCISES AND YEAR END OPTION VALUES
The following table sets forth all stock options exercised by the
named executives during the fiscal year ended July 2, 1995 and the number and
value of unexercised options held by such executives at fiscal year end.
8
<PAGE> 10
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED "IN THE MONEY"
OPTIONS AT YEAR END OPTIONS AT YEAR END (A)
NO. SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISE (B)
<S> <C> <C> <C> <C> <C> <C>
Craig E. LaBarge 35,000 $35,840 0 105,000 $ 0 $98,061
Pierre L. LaBarge, Jr. 0 0 0 0 0 0
J. C. Kuhn, Jr. 23,000 45,195 0 50,000 0 52,500
William J. Maender 0 0 15,000 35,000 23,850 36,563
J. Barry Pipkin 0 0 13,000 10,000 20,670 11,250
</TABLE>
(a) Options are "in the money" if the market value of the shares
covered thereby is greater than the option exercise price.
Market value of a share at July 2, 1995 was $2.25.
(b) Value realized is the difference between market value of a
share on the exercise date and the exercise value per share,
times the number of shares exercised.
EMPLOYEE RETIREMENT BENEFIT PLAN
The Company maintains an Employees Savings Plan (the "Benefit Plan").
The Benefit Plan allows an employee to contribute up to the lesser of 15% of
his or her taxable compensation or an amount equal to $9,240 (which amount is
adjusted each year). The Company matches such contributions at the rate of 50%
of the first $25 contributed per month plus 25% of the excess. Company
matching contributions are not made with respect to employee contributions in
excess of 8% of an employee's taxable compensation. The Benefit Plan covers
all Company employees who meet minimum length of service requirements, are at
least 21 years of age and elect to participate. The Benefit Plan allows
participants to elect that their contributions be invested in Common Stock.
Since July 1, 1990, the Company match is required to be invested in Company
Common Stock. In addition, the Company may contribute a discretionary amount
each year, dependent on profits, which will be allocated to the accounts of
eligible employees in proportion to compensation regardless of whether the
eligible employees elect to participate in and contribute to the Plan. No such
discretionary contributions were made or accrued in fiscal 1994 or 1995.
RETIREMENT SAVINGS PLAN
On August 15, 1991, the Board of Directors approved a Management
Retirement Savings Plan which is an unfunded, non-qualified retirement savings
plan for certain key employees (totaling 15 executives and other employees).
The Management Retirement Savings Plan allows eligible employees to defer
compensation in excess of the limitations under the Internal Revenue Code for
401(k) plans. Such deferrals will earn an annual rate of return of 2% over the
prime interest rate and provide a life annuity with a 15-year term, certain
retirement benefit based on the amount deferred by each individual. The
earnings rates ranged from 9.25% to 11% during fiscal 1995; 8% in fiscal 1994
and 1993; and 11% in fiscal 1992. A lump sum survivor benefit equal to or
greater than the account balance is payable in the event of death prior to
retirement. In conjunction with this Plan, the Company purchases life
insurance policies on those individuals making deferrals, with the Company as
beneficiary. The proceeds of such policies will be used to recover premiums
paid and provide the survivor benefits under the Plan. The Company paid
premiums in fiscal 1995 of $123,620 for such insurance.
9
<PAGE> 11
HUMAN RESOURCE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
LaBarge, Inc. has had an independent Human Resources Committee (the
"Committee") since 1981. The Committee is made up of three outside directors
appointed annually by the Board of Directors (the "Board"). The principal
responsibilities of the Committee include the following:
- review and recommend to the Board the annual salary, incentive
compensation and other benefits of the chief executive officer
and other members of executive management.
The Company's compensation practices are designed to achieve certain
fundamental objectives, including:
- to attract and retain talented key executives;
- to set competitive compensation levels;
- to provide incentives which focus performance on the achievement
of Company objectives; and
- to align executive compensation with the interest of the
stockholders.
To assist the Committee, the Company has, for more than ten years,
contracted with an independent compensation and benefits consulting firm. This
firm periodically evaluates each of the key management positions within the
Company. The evaluation is based upon such criteria as the size and scope of
the job, specific technical and managerial skills required, and the impact of
the specific job on Company results.
Using the evaluations of each job and data on the compensation
practices of over 500 industrial companies in the U.S., the consultants
recommend ranges for both base salary and bonus opportunity. The range for
base salary is wide (plus or minus 20% from a mid-point) to accommodate a
variety of individual criteria, including competitive factors and specific job
performance over time. The recommended range for bonus opportunity is also
wide, plus or minus 50% from a mid-point. The Committee believes that
executives should be paid a base salary that is within the recommended range.
Actual bonus payments may range from zero to the recommended high point or
greater.
Each year the CEO makes recommendations to the Committee regarding
proposed salary changes and bonus payments, if any. The recommendations, and
the Committee's evaluation of them, are based upon a variety of criteria
including profit performance to plan, cash flow, debt reduction, customer
development, the accomplishment of specific important objectives such as the
1992 recapitalization, and many subjective factors. All of these factors were
considered in determining the salary and bonuses for 1995. Since the
management team is small, this approach has worked well and has been adequate
to achieve the stated objectives.
Committee members: R. Hal Dean, Chairman
G. G. Casten
James P. Shanahan, Jr.
VOTING SECURITIES AND OWNERSHIP THEREOF BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of September 1, 1995, there were 15,232,746 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote. Only Common
Stockholders of record at the close of business on September 1, 1995 will be
entitled to vote upon matters to be presented for the vote of Common
Stockholders at the Annual Meeting.
Set forth below is information as of September 1, 1995, concerning all
persons known to the Company to be beneficial owners of more than 5% of the
Common Stock outstanding on the Record Date, and ownership of Common Stock
beneficially owned by each Director and nominee for Director
10
<PAGE> 12
of the Company, and all executive officers and Directors as a group (unless
otherwise indicated, such ownership represents sole voting and sole investment
power):
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES PERCENT
BENEFICIAL OWNERS (1) BENEFICIALLY OWNED OF CLASS
<S> <C> <C>
Gus G. Casten 272,443 1.8%
Richard P. Conerly 51,704 *
R. Hal Dean 108,621 *
John C. Kuhn, Jr. 107,217 (7) *
Pierre L. LaBarge, Jr. 4,102,987 (2) (3) (4) (5) 26.9%
Craig E. LaBarge 2,763,163 (3) (5) (6) (7) (8) 18.1%
(9) (10) (11)
William J. Maender 1,172,678 (5) (7) (12) 7.7%
Edward J. Nestor, Jr. 26,591 (13) *
James P. Shanahan, Jr. 80,000 *
All executive officers and directors 6,073,548 39.5%
as a group (9 persons)
</TABLE>
* Less than 1%.
(1) The address of each executive officer and Director is c/o LaBarge,
Inc., 707 North Second Street, St. Louis, MO 63102.
(2) Includes 1,200,000 shares owned in Pierre L. LaBarge, Jr.'s
individual capacity. The remaining 2,902,987 shares represent
shared voting and shared investment power.
(3) Includes 456,500 shares owned by L B Investment Company, the
directors of which are Pierre L. LaBarge, Jr.; Pierre L. LaBarge,
III; Craig E. LaBarge and Mark J. LaBarge. The three latter-named
LaBarges are sons of Pierre L. LaBarge, Jr.
(4) Includes 1,368,809 shares held by a revocable living trust for
Pierre L. LaBarge, Jr. of which trust Pierre L. LaBarge, Jr. and
Craig E. LaBarge are the co-trustees and in which shares Mr. Craig
E. LaBarge disclaims beneficial ownership.
(5) Includes 1,077,678 shares held in the Benefit Plan as to which the
three members of the Benefit Plan administrative committee have
shared voting power; comprising an aggregate of 313,148 shares
which are held in accounts of executive officers of the Company
and an aggregate of 764,530 shares which are held in accounts of
other employees of the Company.
(6) Includes 400,000 shares held by a trust for the former wife of
Pierre L. LaBarge, Jr., of which trust Craig E. LaBarge, Mark J.
LaBarge, and Pierre L. LaBarge, III are the co-trustees and in
which shares the co-trustees disclaim beneficial ownership.
(7) Includes options for the following number of shares under the 1987
and 1993 Incentive Stock Option Plans: J. C. Kuhn, Jr. - 30,000;
Craig E. LaBarge - 65,000; William J. Maender - 35,000; all
executive officers and directors as a group - 130,000.
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(8) Includes 30,422 shares held by six trusts, one for each of Pierre
L. LaBarge, Jr.'s six grandchildren, of which trusts Craig E.
LaBarge, Mark J. LaBarge and Pierre L. LaBarge, III are the
co-trustees and in which shares the co-trustees disclaim
beneficial ownership.
(9) Includes 70,548 shares held by Craig E. LaBarge's spouse in her
name, 34,000 shares held in her IRA, and 342 shares as custodian
for their two minor children.
(10) Includes 18,172 shares held by a trust for two minor children, of
which trust Craig E. LaBarge and Mark J. LaBarge are co-trustees
and in which shares the co-trustees disclaim beneficial ownership.
(11) Includes 590,501 shares owned in Craig E. LaBarge's individual
capacity.
(12) Includes 60,000 shares owned in William J. Maender's individual
capacity.
(13) Includes 15,816 shares owned in Edward J. Nestor, Jr.'s individual
capacity, 10,263 shares of Common Stock owned by his spouse and
512 shares held as custodian for three minor children.
PERFORMANCE GRAPHS
FIVE-YEAR TOTAL RETURN
The following graph compares the cumulative total stockholder return
(stock price appreciation plus dividends) on the Company's Common Stock with
the cumulative total return of the American Stock Exchange Market value and a
peer group.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG LABARGE, INC., THE AMEX MARKET VALUE INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
LB AMEX PEER GROUP
-- ---- ----------
<S> <C> <C> <C>
100 100 100
1991 150 99 114
1992 400 105 113
1993 133 120 133
1994 238 117 144
1995 450 138 208
</TABLE>
* $100 INVESTED ON 06/30/90 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
The peer group consists of the following companies selected on the
basis of their market capitalization and similarity of businesses: AEL
Industries, Inc.; Miltope Group, Inc.; Sparton Corporation; Tech Sym
Corporation; Esterline Technologies Corporation; EDO Corporation; Whittaker
Corporation; Cubic Corporation; GRC International, Inc. and Aydin Corporation.
PROPOSALS NO. 2 AND 3: ANTI-TAKEOVER PROPOSALS
There have been a number of cases in which public companies have been
subjected to hostile takeover attempts - offers not determined to be in the
best interests of a targeted company by its Board of Directors - through
purchases of control by means of tender offers or other purchases of
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<PAGE> 14
outstanding shares. Such purchases which result in the acquisition of less than
all of the targeted company's outstanding shares often have been followed
by a non-negotiated merger or other form of complete unilateral acquisition of
the remaining shares by the company. In some instances, a purchaser has used
its controlling interest either to effect other transactions having an adverse
impact on the company or to direct the company's business without purchasing
the remaining minority interest.
The Board believes that circumstances could exist where a hostile
takeover attempt would be detrimental to the Company's stockholders and that,
to fulfill its fiduciary duty, it needs adequate time to evaluate the matter.
The suddenness and short time period inherent in hostile takeover attempts may
not allow the Board adequate time to: (i) consider fully the proposal; (ii)
identify other viable alternatives; (iii) compare the proposal to the possible
alternatives; and (iv) make a determination recommending acceptance or
rejection of the proposal or expressing no opinion and remaining neutral. An
informed decision with respect to a hostile takeover attempt requires careful
assessment and consideration of often-complex issues regarding the proposal's
"fairness and adequacy," including but not limited to its tax implications for
stockholders, all in comparison with other alternatives which are or may become
available.
The Board also believes that holders of shares not purchased pursuant
to the initial takeover offer may be faced with substantial inequities either
because they did not tender their shares in a timely manner or the offer did
not allow all the Company's shares to be tendered.
While the Board has no knowledge of any specific effort to accumulate
the Company's Common Stock or to obtain control of the Company by other means,
it believes that it is prudent to be prepared in advance and, for that reason,
it has carefully considered what measures might be taken to protect against
takeover attempts which the Board is unable to recommend as being in the best
interests of the Company and its stockholders.
The principal purpose of Proposals 2 and 3 is to attempt to influence
persons who might wish to make a bona fide offer for the Company to negotiate
in good faith with the Board and to ensure that any offer is fair to the
Company and its stockholders, and to emphasize that the Directors have a
significant degree of authority with respect to the protection of the Company.
Proposal 3, which requires the affirmative vote of two-thirds of the
outstanding shares entitled to vote to approve certain business combinations,
is designed to make it more difficult for a person making a hostile takeover
attempt to obtain shareholder approval for a business combination, particularly
in transactions not recommended for stockholder approval by the Board of
Directors as fair to the Company and its stockholders.
The overall effect of the adoption of Proposals 2 and 3 could, under
certain circumstances, be to deter or discourage hostile takeover attempts by
making it more difficult for a person who has gained a substantial equity
interest in the Company effectively to exercise control. Because of this, the
opportunity for stockholders to dispose of their shares at the higher prices
generally available in takeover attempts may be limited. In addition, the
proposed Amendments may result in the then incumbent Directors of the Company
retaining their positions even though a person holding a majority of shares
might desire a change. Such Amendments also may make the accomplishment of
certain corporate transactions more difficult even if they are desired by a
person holding a majority of the shares.
The Board has concluded unanimously that the potential benefits of the
proposed Amendments outweigh the possible disadvantages.
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<PAGE> 15
PROPOSAL 2: AMENDMENT TO BY-LAWS
TO PROVIDE FOR CLASSIFIED BOARD OF DIRECTORS
GENERAL
The Company's Board of Directors has unanimously approved an amendment
to the Company's By-Laws (the "By-Law Amendment") and has voted to recommend
that the stockholders adopt the By-Law Amendment. The proposed By-Law
Amendment would classify the Board of Directors into three classes, as nearly
equal in number as possible, each of which, after an interim arrangement, will
serve for three years, with one class being elected each year. The Board of
Directors believes the proposed By-Law Amendment, taken together with the
proposed amendment to the Company's Certificate of Incorporation (Proposal 3),
would, if adopted, effectively reduce the possibility that a third party could
effect a sudden or surprised change in majority control of the Company's Board
of Directors without the support of the incumbent Board.
Adoption of this By-Law Amendment may have significant effects on the
ability of stockholders of the Company to change the composition of the
incumbent Board of Directors and to benefit from certain transactions which are
opposed by the incumbent Board. Accordingly, stockholders are urged to read
carefully the following sections of this Proxy Statement, which describe this
By-Law Amendment and its purpose and effects, and Exhibit A hereto which sets
forth the full text of the proposed By-Law Amendment, before voting on the
proposed By-Law Amendment to provide for a classified Board of Directors.
PURPOSES AND EFFECTS OF THE PROPOSED BY-LAW AMENDMENT
The Board of Directors of the Company is asking stockholders to
consider and adopt the proposed By-Law Amendment in order to discourage certain
types of transactions described below, which involve an actual or threatened
change of control of the Company. The proposed By-Law Amendment is designed to
make it more difficult and time-consuming to change majority control of the
Board and thus to reduce the vulnerability of the Company to an unsolicited
offer to take over the Company, particularly an offer that does not contemplate
the acquisition of all of the Company's outstanding shares, or for the
restructuring or sale of all or part of the Company. As more fully described
below, the Board believes that, as a general rule, such unsolicited offers are
not in the best interests of the Company and its stockholders.
There have been a number of cases in which the accumulation of
substantial stock positions in public companies by third parties has been a
prelude to proposing a takeover or restructuring or sale of all or part of the
company or other similar extraordinary corporate action. Such actions are
often undertaken by the third party without advance notice to or consultation
with management of the company. In many cases, the purchaser seeks
representation on the company's Board of Directors in order to increase the
likelihood that his proposal will be implemented by the company. If the
company resists the effort of the purchaser to obtain representation on the
company's Board, he may commence a proxy contest to have himself or his
nominees elected to the Board in place of certain Directors, or the entire
Board. In some cases, the purchaser may not truly be interested in taking over
the company, but use the threat of a proxy fight and/or a bid to take over the
company as a means of forcing the company to repurchase his equity position at
a substantial premium over market price.
The Board of Directors of the Company believes that an imminent threat
of removal of the Company's Management severely curtails its ability to
negotiate effectively with such purchasers. Management is deprived of the time
and information necessary to evaluate the takeover proposal, to study
alternative proposals and to help ensure that the best price is obtained in any
transaction
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<PAGE> 16
involving the Company which may ultimately be undertaken. If the real purpose
of a takeover bid is to force the Company to repurchase an accumulated stock
interest at a premium price, Management faces the risk that if it does not
repurchase the purchaser's stock interest, the Company's business and
Management will be disrupted, perhaps irreparably. On the other hand, such a
repurchase diverts valuable corporate resources to the benefit of a single
stockholder.
Takeovers or changes in Management of the Company which are proposed
and effected without prior consultation and negotiation with the Company's
Management are not necessarily detrimental to the Company and its stockholders.
However, the Board feels that the benefits of seeking to protect its ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to take
over or restructure the Company outweigh the disadvantages of discouraging such
proposals.
The adoption of the proposed By-Law Amendment would make more
difficult or discourage a proxy contest or the assumption of control by a
holder of a substantial block of the Company's stock or the removal of the
incumbent Board and could thus have the effect of entrenching incumbent
Management. At the same time, the By-Law Amendment would help ensure that the
Board, if confronted by a surprise proposal from a third party who has recently
acquired a block of the Company's stock, will have sufficient time to review
the proposal and appropriate alternatives to the proposal and to seek a premium
price for the stockholders.
The proposed By-Law Amendment is intended to encourage persons seeking
to acquire control of the Company to initiate such an acquisition through
arms'-length negotiations with the Company's Management and Board of Directors.
The By-Law Amendment, if it is adopted, could also have the effect of
discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company, even though such an attempt might be
beneficial to the Company and its stockholders. In addition, since the By-Law
Amendment is designed to discourage accumulations of large blocks of the
Company's stock by purchasers whose objective is to have such stock repurchased
by the Company at a premium, adoption of the By-Law Amendment could tend to
reduce the temporary fluctuations in the market price of the Company's stock
which are caused by such accumulations. Accordingly, stockholders could be
deprived of certain opportunities to sell their stock at a temporarily higher
market price.
The Company's Certificate of Incorporation does not permit cumulative
voting in the election of Directors. Accordingly, the holders of a majority of
the outstanding shares entitled to vote for the election of Directors can elect
all of the Directors then being elected in any annual or special meeting of the
Company's stockholders.
The proposed By-Law Amendment is permitted under Delaware law and is
consistent with the rules of the American Stock Exchange, upon which the
Company's Common Stock is listed and traded. The By-Law Amendment is not the
result of any specific efforts of which the Company is aware to accumulate the
Company's securities or to obtain control of the Company. The Board, which
unanimously approved the By-Law Amendment and recommended that it be submitted
to the Company's stockholders for adoption, does not presently contemplate
recommending the adoption of any further amendments to the Certificate of
Incorporation or the By-Laws which would affect the ability of third parties to
take over or change control of the Company, except for the next-described
proposal in this Proxy Statement to amend the Certificate of Incorporation to
provide for higher voting requirements with respect to certain business
combinations.
DESCRIPTION OF THE PROPOSED BY-LAW AMENDMENT
The full text of the proposed By-Law Amendment to provide for a
classified Board of Directors is contained in Exhibit A attached to this Proxy
Statement. The following description of the By-Law Amendment is qualified in
its entirety by reference to Exhibit A.
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<PAGE> 17
CLASSIFICATION OF THE BOARD OF DIRECTORS. The Company's By-Laws now
provide that all Directors are to be elected to the Company's Board of
Directors annually for a term of one year. The Board has set the number of
Directors at eight. The proposed By-Law Amendment provides that the Board
shall be divided into three classes of Directors, each class to be as nearly
equal in number of Directors as possible. If the proposed By-Law Amendment is
adopted, the Company's Directors will be divided into three classes and two
Directors will be elected for a term expiring at the 1996 Annual Meeting, three
Directors will be elected for a term expiring at the 1997 Annual Meeting and
the remaining three Directors will be elected for a term expiring at the 1998
Annual Meeting (and, in each case, until their respective successors are duly
elected and qualified). Starting with the 1996 Annual Meeting, one class of
Directors will be elected each year for a three-year term.
The classification of Directors will have the effect of making it more
difficult to change the composition of the Board of Directors. At least two
stockholder meetings, instead of one, will be required to effect a change in
the majority control of the Board, except in the event of vacancies resulting
from removal for cause or other reason (in which case the remaining Directors
will fill the vacancies so created - see "Removal of Directors; Filling
Vacancies on the Board of Directors" below). The longer time required to elect
a majority of a classified Board will also help to assure continuity and
stability of the Company's management and policies, since a majority of the
Directors at any given time will have prior experience as Directors of the
Company. It should also be noted that the classification provision will apply
to every election of Directors, whether or not a change in the Board would be
beneficial to the Company and its stockholders and whether or not a majority of
the Company's stockholders believes that such a change would be desirable.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS.
The Board of Directors, at the meeting at which it proposed the By-Law
Amendment to provide for a classified Board of Directors, also amended the
By-Laws to provide that a Director, or the entire Board of Directors, may be
removed by the stockholders only for cause, whereas prior to such amendment, a
Director, or the entire Board of Directors, could be removed by the
stockholders with or without cause.
The By-Laws provide that a vacancy on the Board, including a vacancy
created by an increase in the number of Directors, may be filled by the
remaining Directors, though less than a quorum and that the newly-elected
Directors shall serve for the remainder of the full term of the class in which
the vacancy occurred.
The provisions of the By-Law relating to the removal of Directors and
the filling of vacancies on the Board will preclude a third party from removing
incumbent Directors without cause and simultaneously gaining control of the
Board by filling the vacancies created by removal with his own nominees.
INCREASED STOCKHOLDER VOTE FOR AMENDMENT, REPEAL, ETC. OF BY-LAW
PROVISION. The Board of Directors has also amended the By-Laws to provide that
amendment or repeal of the By-Law providing for a classified Board of Directors
may only be accomplished by vote of the holders of two-thirds of the shares
outstanding and entitled to vote, such amendment to take effect only if and
after the proposal to establish a classified Board of Directors is adopted by
the stockholders. If this amendment had not been adopted by the Directors, the
provision for a classified Board could have been amended or repealed by vote of
the holders of a majority of the outstanding shares entitled to vote. The
requirement for an increased stockholder vote is designed to prevent a
stockholder with a majority of the voting power of the Company from avoiding
the requirements of the proposed By-Law Amendment by simply amending or
deleting the provision for a classified Board.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSED AMENDMENT TO THE BY-LAWS FOR A CLASSIFIED
BOARD OF DIRECTORS.
PROPOSAL 3: AMENDMENT TO CERTIFICATE OF INCORPORATION
PROVIDING FOR HIGHER VOTING REQUIREMENTS
WITH RESPECT TO CERTAIN BUSINESS COMBINATIONS
The Company's Board of Directors has unanimously approved an amendment
to the Company's Certificate of Incorporation (the "Certificate Amendment") and
has voted to recommend that the stockholders approve the Certificate Amendment.
The proposed Certificate Amendment would require the affirmative vote of
holders of two-thirds of the outstanding shares of the Company entitled to vote
for the approval of certain Fundamental Changes (defined below) in the Company.
Adoption of this Certificate Amendment may have significant effects on
the ability of stockholders of the Company to benefit from certain
transactions. Accordingly, stockholders are urged to read carefully the
following sections of this Proxy Statement, which describe this Certificate
Amendment and its purpose and effects, and Exhibit A hereto which sets forth
the full text of the proposed Certificate Amendment, before voting on the
proposed Certificate Amendment to provide for a super-majority voting
requirement for certain Fundamental Changes.
PURPOSES AND EFFECTS OF THE PROPOSED CERTIFICATE AMENDMENT
The Board of Directors of the Company is asking stockholders to
consider and adopt the proposed Certificate Amendment in order to discourage
certain types of transactions described below, which involve an actual or
threatened change of control of the Company. The proposed Certificate
Amendment is designed to make it more difficult for a person who acquires a
substantial portion of the Company's outstanding shares to effect a merger,
sale of asset or similar transaction with the Company on terms not approved by
the Board of Directors. While the Certificate Amendment will also make it more
difficult for the Company to engage in such a transaction even if approved and
recommended to stockholders by the Board of Directors, the Company believes
such transactions are generally approved by substantial majorities of
stockholders when they are approved and recommended by such companies' Boards
of Directors.
As is the case with the By-Law Amendment, the proposed Certificate
Amendment is intended to encourage persons seeking to acquire control of the
Company to initiate such an acquisition through arms'-length negotiations with
the Company's Management and Board of Directors. The Certificate Amendment, if
it is adopted, could also have the effect of discouraging a third party from
making a tender offer or otherwise attempting to obtain control of the Company,
even though such an attempt might be beneficial to the Company and its
stockholders. In addition, since the Certificate Amendment is designed to
discourage accumulations of large blocks of the Company's stock by purchasers
whose objective is to have such stock repurchased by the Company at a premium,
adoption of the Certificate Amendment could tend to reduce the temporary
fluctuations in the market price of the Company's stock which are caused by
such accumulations. Accordingly, stockholders could be deprived of certain
opportunities to sell their stock at a temporarily higher market price.
The proposed Certificate Amendment is permitted under Delaware law and
is consistent with the rules of the American Stock Exchange. As is the case
with the By-Law Amendment, the Certificate Amendment is not the result of any
specific efforts to which the Company is aware to accumulate the Company's
securities or to obtain control of the Company.
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<PAGE> 19
DESCRIPTION OF THE PROPOSED CERTIFICATE AMENDMENT
The full text of the proposed Certificate Amendment to provide for a
classified Board of Directors is contained in Exhibit A attached to this Proxy
Statement. The following description of the Certificate Amendment is qualified
in its entirety by reference to Exhibit A.
Delaware law currently requires the affirmative vote of a majority of
the shares of the Company entitled to vote to approve certain transactions
involving fundamental changes of the Company, including mergers,
consolidations, sale by the Company of all or substantially all of its assets
or dissolution of the Company (each, a "Fundamental Change Transaction"). The
proposed Certificate Amendment provides that such transactions must be approved
by the holders of two-thirds of the shares of the Company entitled to vote.
The super-majority vote requirement will have the effect of making it more
difficult for the Company to engage in a Fundamental Change Transaction. It
should be noted that the Certificate Amendment will apply to every Fundamental
Change Transaction, whether or not approved and recommended to stockholders by
the Company's Board of Directors. However, the Board of Directors believes
that corporations generally are able to obtain the affirmative vote by holders
of at least two-thirds of shares of companies entitled to vote in situations in
which such transactions are approved and recommended by the Board of Directors.
The proposed Certificate Amendment also provides that amendment or
repeal of the requirement for two-thirds affirmative vote, or repeal of the
provision in the Certificate of Incorporation providing that only the Company's
Board of Directors may adopt and amend the Company's By-Laws (except the
provision in the By-Laws relating to a classified Board of Directors) may only
be amended or repealed by the affirmative vote of holders of two-thirds of the
Company's outstanding shares entitled to vote. Without this provision, such an
amendment or repeal would require the affirmative vote of holders of a majority
of the shares of the Company entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION REQUIRING A TWO-
THIRDS AFFIRMATIVE VOTE BY SHAREHOLDERS TO APPROVE CERTAIN FUNDAMENTAL
CHANGES IN THE COMPANY.
PROPOSAL 4: APPROVAL OF THE LABARGE, INC.
1995 INCENTIVE STOCK OPTION PLAN
PURPOSE
The LaBarge, Inc. 1995 Incentive Stock Option Plan (the "Plan") was
adopted to promote the interests of the Company and its stockholders by
providing a method whereby employees of the Company may purchase Common Stock
in the Company and thereby provide additional incentive for them to remain in
the Company's employ and increase their personal interest in the Company's
continued success. The options issued under the Plan are intended to be
incentive stock options within the meaning of Section 422A of the Internal
Revenue Code of 1986 (the "Code"). A copy of the Plan is attached hereto as
Exhibit B.
ADMINISTRATION
The Plan is administered by The Company's Human Resources Committee
(the "Committee") which consists of three outside members of the Company's
Board of Directors.
The Committee has the final power to construe and interpret the Plan
and options granted thereunder, and to determine all questions that may arise
in the administration of the Plan. The
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<PAGE> 20
Committee has the power, subject to the provisions of the Plan, to determine
the persons to whom and the dates on which options will be granted, the number
of shares to be subject to each option, the time or times during the term of
each option within which all or a portion of such option may be exercised, and
the other terms of the options. The Board has the right to adopt, amend, and
repeal rules and regulations governing the administration of the Plan.
SHARES SUBJECT TO THE PLAN
An aggregate of 400,000 shares of the Company's Common Stock is
subject to the Plan. Such shares may be either authorized but unissued shares
or treasury shares. In the event that any option under the Plan expires
unexercised or is terminated, surrendered or canceled, the shares previously
subject to such option shall again become available for the issuance of options
under the Plan.
ELIGIBILITY
Options may be granted under the Plan to those employees deemed
appropriate by the Committee. In making such determination, the Committee may
take into account the nature of the services rendered or expected to be
rendered by an employee, present and potential contributions to the Company's
success, the anticipated number of years of service remaining, and such other
factors as the Committee deems relevant.
Under the Plan, no option may be granted to a person who, at the time
of the grant, owns, directly or indirectly, stock constituting more than 10% of
the total combined voting power of all classes of stock entitled to vote of the
Company or of any parent or subsidiary unless the price of the stock subject to
the option is at least 110% of the fair market value of such stock at the date
the option is granted and the term of the option does not exceed five years from
the date such option is granted.
The aggregate fair market value (determined at the time the option is
granted) of stock subject to option which any employee may be granted in any
calendar year under the Plan cannot exceed $100,000 plus any carryover amount.
DURATION, AMENDMENT AND TERMINATION
The Plan was adopted by the Company's Board of Directors on August 15,
1995, subject to approval within twelve months by the holders of a majority of
the Company's outstanding Common Stock. If such approval is not obtained
within such time, the Plan shall become null and void and all options granted
shall be automatically cancelled. The Board of Directors may terminate the
Plan at any time. Unless terminated earlier, the Plan will terminate on August
15, 2005.
The Board of Directors may amend the Plan from time to time, except
that without shareholder approval there shall be no amendment which would: (a)
abolish the Committee without designating another such committee, change the
qualifications of its members, or withdraw the administration of the Plan from
its supervision; (b) increase the maximum number of shares for which options
may be granted under the Plan; (c) amend the formula for determination of the
purchase price of shares on which options may be granted; (d) extend the term
of the Plan or change the minimum option price; or (e) amend the requirements
as to the employees eligible to receive options.
TERMS OF THE OPTIONS
The following is a description of the terms of options permitted by
the Plan. Individual option grants in any given case may be more restrictive
as to any or all of the terms of options permitted by the Plan as described
below:
Option Term. Options granted under the Plan may have a maximum term
of ten years, except that options granted to persons owning more than 10% of
the total combined voting power of all classes
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of stock of the Company may have a maximum term of five years. An option
may not by exercised before two years of continued employment with the Company
or a subsidiary immediately following grant of the option.
Under the Plan, in the event of (1) a dissolution of the Company, or
(2) a merger or consolidation in which the Company is not the surviving
corporation, options outstanding under the Plan shall terminate; provided,
however, that in the case of dissolution, merger or consolidation, then during
the thirty-day period prior to the effective date of such event, each holder of
an option shall have the right to exercise the option in whole or in part.
Option Exercise Price and Payment Terms. The exercise price for any
option granted under the Plan may not be less than the fair market value of the
stock subject to the option on the date of grant, and in some cases (see
"Eligibility," above), may not be less than 110% of fair market value on the
date of grant.
The exercise price of options granted under the Plan must be tendered
by cashier's or certified check or LaBarge, Inc. Common Stock already owned by
the employee having a fair market value equal to the option price, or a
combination thereof, at the time notice of exercise is given.
Nonassignability. Under the Plan, an option may not be transferred by
the optionee other than by will or by the laws of descent and distribution.
During the lifetime of an optionee, an option may be exercised only by the
optionee.
Expiration Following Termination of Employment. Under the Plan, an
option will generally terminate three months after the optionee ceases to be
employed by the Company or in accordance with its terms if earlier. In the
event of termination for cause, an option may be terminated immediately. In
the event of death or disability, an option terminates one year after such
event or in accordance with its terms if earlier.
Adjustment Provisions. If there is any change in the Common Stock
subject to the Plan (through reorganization, recapitalization, stock dividend,
stock split, combination or other increase or decrease in such shares effected
without receipt of consideration by the Company), the Board of Directors may
make appropriate adjustments to the maximum number of shares subject to the
Plan and shall make appropriate adjustments to the price per share of stock
subject to the Plan and to outstanding options.
FEDERAL INCOME TAX CONSEQUENCES
Favorable income tax treatment is currently provided for stock
options that qualify as "incentive stock options" under Section 422A of the
Code. Options granted under the Plan are intended to be eligible for the
federal income tax treatment accorded incentive stock options under the Code.
The discussion in this proxy statement of the federal income tax
consequences associated with incentive stock options is based on the Code, as
it is currently enacted, and temporary and proposed regulations published by
the Treasury Department.
Grant. There are no federal income tax consequences to the optionee
by reason of the grant of an incentive stock option.
Exercise. Upon exercise of an incentive stock option, the optionee
does not recognize taxable income. The amount by which the fair market value
of the stock acquired at the time of exercise exceeds the option exercise price
is an item of tax preference, subject to the alternative minimum tax
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(see "Alternative Minimum Tax," below).
Disposition. Under current law, the federal income tax consequences
of disposing of stock acquired through the exercise of an incentive stock
option depend on the timing of the disposition in relation to the date on which
the option was granted and the date on which the shares were transferred to the
employee on exercise of the option.
Qualifying Disposition. Under the current law, if the optionee holds
stock acquired through exercise of an incentive stock option for more than two
years from the date on which the option was granted and more than one year from
the date on which the shares were transferred to the optionee upon exercise of
the option, any gain or loss on a subsequent disposition of such stock would be
taxed to the optionee as a long-term capital gain or loss equal to the
difference between the amount received upon such disposition and the optionee's
basis in such stock. For tax years beginning after December 31, 1987, capital
gains income will be taxed at a maximum rate of 28%.
Disqualifying Disposition. Generally, if the optionee disposes of the
stock before the expiration of either of the holding periods described above,
at the time of disposition the optionee would realize taxable ordinary income
equal to the lesser of the excess, if any, of the stock's fair market value on
the date of exercise over the optionee's basis in the stock, or the optionee's
actual gain, if any, on the purchase and sale (i.e., the excess, if any, of the
amount received upon disposition over the optionee's basis in the stock).
The optionee's additional gain, if any, will be a capital gain under
current law. If the optionee has incurred a loss on the purchase and sale,
then the optionee will realize no ordinary income and the loss will be a
capital loss. Such capital gain or loss will be long-term or short-term
depending on whether the stock was held for more than the applicable long-term
capital gain holding period (which is currently six months) from the date
exercise.
The Company will be required to report to the Internal Revenue Service
any ordinary income realized by the optionee by reason of a disqualifying
disposition of stock acquired through exercise of an incentive stock option if
such information is available to the Company and, under the proposed
regulations, may be required to withhold income taxes from the optionee's
compensation with respect to such income.
Consequences to the Company. There are no federal income tax
consequences to the Company by reason of the grant or exercise of an incentive
stock option. To the extent an optionee recognized ordinary income by reason
of a disqualifying disposition, the Company is entitled (subject to the
requirement of reasonableness and the satisfaction of the withholding
obligation) to a corresponding business expense deduction in the tax year in
which the disposition occurs. Otherwise, there are no federal income tax
consequences to the Company by reason of the disposition of stock acquired
through exercise of an incentive stock option.
Alternative Minimum Tax. The exercise of an option or disposition of
stock acquired on such exercise may give rise to a tax preference item that
could potentially subject the optionee to the alternative minimum tax (or
additional minimum tax if the optionee is already subject to such tax). The
tax preference item is the difference between the exercise price of an
incentive stock option and the fair market value of the stock on the date of
exercise. This difference is added to the basis of the stock for determining
gain or loss for alternative minimum tax purposes upon disposition of the
stock.
LIMITATION ON ISSUANCE OF STOCK
The Company is not obligated to issue any stock upon exercise of an
option under the Plan if such issuance would violate any loan agreement or
other contract to which the Company is subject.
21
<PAGE> 23
There are no such restrictions at this time. The issuance of stock upon
exercise of any option under the Plan is also subject to compliance with any
applicable stock exchange listing requirement and applicable state and federal
securities laws.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE LABARGE, INC. 1995 INCENTIVE STOCK
OPTION PLAN.
PROPOSAL 5: SELECTION OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP ("Peat Marwick") has been appointed as
independent accountants for the Company for the fiscal year ending June 30,
1996 by the Board of Directors with the approval of the Audit Committee. Peat
Marwick was the Company's independent accountants for fiscal 1994 and 1995.
Although the appointment of independent accountants is not required to be
approved by Common Stockholders, the Board of Directors believes Common
Stockholders should participate in the appointment through ratification. A
representative of Peat Marwick is expected to be present at the Annual Meeting
of Stockholders with the opportunity to make a statement, if he so desires, and
he is expected to be available to respond to appropriate questions raised
orally at the meeting.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock casting a vote at the Annual Meeting is necessary for
the ratification of the selection of the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP
AS INDEPENDENT ACCOUNTANTS FOR FISCAL 1996.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be presented at the next Annual Meeting,
which is expected to be held in October 1996, must be received by the Company
at its principal office at the address listed on page 2 hereof no later than
May 23, 1996.
By Order of the Board of Directors,
WILLIAM J. MAENDER
Vice President - Finance and Secretary
St. Louis, Missouri
September 20, 1995
22
<PAGE> 24
EXHIBIT A
1. PROPOSAL 2 - Amendment to Section 3 of ARTICLE II of the By-Laws to
provide for a classified Board:
"3. ELECTION AND TERM. The directors shall be
divided into three classes: Class A, Class B and Class C. Such
classes shall be as nearly equal in number as possible. The term
of office of the initial Class A directors shall expire at the
Annual Meeting of Stockholders in 1996; the term of office of the
initial Class B directors shall expire at the Annual Meeting of
Stockholders in 1997; and the term of office of the initial Class
C directors shall expire at the Annual Meeting of Stockholders in
1998, or thereafter in each case when their respective successors
are elected and have qualified. At each annual election held
after classification and the initial election of directors
according to classes, the directors chosen to succeed those whose
terms then expire shall be identified as being of the same class
as the directors they succeed and shall be elected for a term
expiring at the third succeeding annual meeting or thereafter when
their respective successors in each case are elected and have
qualified. If the number of directors is changed, any increase or
decrease in directors shall be apportioned among the classes so as
to maintain all classes as nearly equal in number as possible and
any individual director elected to any class shall hold office for
a term which shall coincide with the term of such class. If the
office of any director becomes vacant at any time by reason of
death, resignation, retirement, disqualification, removal from
office or otherwise, or if any new directorship is created by any
increase in the authorized number of directors, a majority of the
directors then in office, although less than a quorum, or the sole
remaining director, may choose a successor of fill the newly
created directorship, and the director so chosen shall hold
office, subject the provisions of these By-Laws, until the
expiration of the term of the class to which he has been chosen
and until his successor shall be duly elected and qualified."
2. PROPOSAL 3 - Proposed addition of a new Article TENTH to the Company's
Certificate of Incorporation to require affirmative vote of two-
thirds of the shares entitled to vote to approve certain fundamental
changes of the Company, to read as follows:
"TENTH: As to the following matters, the affirmative vote of
two-thirds (2/3's) of the shares entitled to vote shall be
required to approve any proposed stockholder action which
otherwise requires stockholder approval under the Delaware General
Corporation Law: (a) to sell, exchange, transfer or otherwise
dispose of all or substantially all of the corporation's property
and assets; (b) to dissolve or liquidate the corporation; (c) to
merge or consolidate the corporation with or into another
corporation; or (d) to amend, alter or delete from the Certificate
of Incorporation this Article TENTH or the paragraph numbered "2"
of Article EIGHTH hereof."
<PAGE> 25
EXHIBIT B
LaBarge, Inc.
1995 Incentive Stock Option Plan
I.
Purpose of the 1995 Incentive Stock Option Plan
The purpose of the 1995 Incentive Stock Option Plan (the "Plan") is to
promote the interests of LaBarge, Inc. ("Company") and its stockholders by
providing a method whereby Company employees may be encouraged to invest in the
Company's Common Stock, thereby increasing their proprietary interest in its
business, providing them with additional incentive to remain in the employ of
the Company and increasing their personal interest in its continued success and
progress. These employees will be granted options ("Options") to purchase
shares of the Common Stock, $.01 par value, of the Company ("Common Stock").
It is intended that Options issued hereunder will constitute Incentive Stock
Options within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended from time to time (the "Code").
II.
Administration of the 1995 Plan
A. The Committee. The Plan shall be administered by the Human
Resources Committee of the Board of Directors of the Company or such other
committee as shall be designated by the Board of Directors (the "Committee").
The Committee shall consist of not less than four Directors of the Company, and
shall be appointed by the Board of Directors. A majority of the members of the
Committee shall constitute a quorum. Any decision or determination reduced to
writing and signed by all the members of the Committee shall be fully as
effective as if it had been made by a majority vote at a meeting duly called
and held. The Committee may appoint a chairman from among the members and a
secretary (who need not be a member) and make such rules and regulations for
the conduct of its business as it shall be deemed advisable. No member of the
Committee shall be liable in the absence of bad faith, for any act or omission
with respect to his or her service on the Committee. Service on the Committee
shall constitute service as a Director of the Company so that members of the
Committee shall be entitled to identification and reimbursement as Directors
of the Company.
B. Authority of the Committee. Subject to the expressed provisions
of the Plan, the Committee shall have plenary authority to determine, in its
discretion, the employees to whom options are granted, and the time or times
within which (during the term of the Option) all or a portion of such Options
may
<PAGE> 26
be exercised. In making such determination, the Committee may take into
account the nature of the services rendered or expected to be rendered by the
respective employees, their present and potential contributions to the
Company's success, the anticipated number of years of effective service
remaining and such other factors as the Committee in its discretion shall deem
relevant. Subject to the express provisions of the Plan, Section 422A of the
Code and any regulations or rulings thereunder, the Committee shall also have
plenary authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, to determine the terms and conditions of the
respective Options (which terms and conditions need not be the same in each
case), to impose restrictions on any shares issued upon the exercise of any
Option and to determine the manner in which such restrictions may be removed,
and to make all other determinations deemed necessary or advisable in
administering the Plan. The Committee may specify in the original terms of any
option or, if not so specified, shall determine whether any authorized leave of
absence or absence of military or governmental service or for any other reason
shall constitute a termination of employment for purposes of the Plan. Subject
to the provisions of Article X, the determination of the Committee on the
matters referred to in the Plan shall be conclusive; provided that it shall be
the Board of Directors of the Company which shall determine whether unissued or
treasury shares shall be issued upon the exercise of any Option.
C. Each option shall be evidenced by an option agreement which shall
contain such terms and conditions as may be approved by the Committee, and the
said agreement shall be signed by an officer of the Company and the employee.
III.
Shares Subject to the 1995 Plan
An aggregate of 400,000 shares of Common Stock shall be subject to the
Plan, subject to adjustment in accordance with Section VIII hereof. Such
shares may be either authorized but unissued shares or shares now or hereafter
held in the treasury of the Company.
In the event that any Option under the Plan expires unexercised or is
terminated, surrendered or canceled, the shares theretofore subject to such
Option, or the unexercised portion thereof, shall again become available for
Option under the Plan, including to the former holder of such Option, upon such
terms as the Committee shall determine in accordance with the Plan and which
terms may be more or less favorable than those applicable to such former
Option.
IV.
Granting Date
The action of the Committee with respect to the granting of an Option
shall take place on such date as a majority of the members of the Committee at
a meeting shall make a determination with respect
<PAGE> 27
to the granting of an Option or, in the absence of a meeting, on such date as
of which written designation covering such Option shall have been executed by
all members of the Committee. The effective date of the grant of an Option
(the "Granting Date") shall be the date specified by the Committee in its
determination or designation relating to the award of such Option or, in the
absence of such a Specification, the date on which the action of the Committee
relating to the award of such Option took place.
V.
Eligibility
Options may be granted only to those employees who are deemed appropriate by
the Committee.
VI.
Terms and Conditions of Options
A. Option Price. Subject to the provision of subparagraph VI.F.
below, the purchase price of the stock under each Option shall be determined by
the Committee, but shall not be less than 100% of the fair market value of the
stock on the Granting Date for such option; provided, however, that the option
price shall not be less than the par value of the stock subject to the Option.
The fair market value of the stock shall be, for purposes of the Plan,
determined under the regulations or rulings under Section 422A of the Code.
B. Term of Option. Subject to the provisions of subparagraph VI.F
below, the term of each Option granted under the Plan shall be for a period not
exceeding ten years from the Granting Date. Each Option granted under the Plan
may be exercised by the employee as stated in his individual Option, but in no
event may any Option be exercised before two years of continued employment with
the Company, or a subsidiary, immediately following the Granting Date.
C. Restrictions on Transfer and Exercise.
(1) Except as hereinafter provided, no Option granted pursuant to
the Plan may be exercised at any time unless the holder thereof is then an
employee of the Company. Options granted under the Plan shall not be affected
by any change of employment so long as the grantee continues to be an employee
of the Company.
(2) The Option of any optionee whose employment is terminated for
any reason, other than for death, disability (as defined in Section 105(d) (4)
of the Code) or discharged for cause, shall terminate on the earlier of three
months after termination of employment or the date that such Option expires in
accordance with its term.
(3) In the event of the death of an optionee (a) while an
employee of the Company or a subsidiary or (b) within three months after the
termination of the employment of the optionee, or in the event of the
termination of employment by an optionee for permanent disability, the Option
may be
<PAGE> 28
exercised as follows:
(a) In the event of the death of an optionee during employment or
within three months after the termination of employment, each
Option granted to such optionee shall be exercisable or
payable (at the option of the Company and, if paid, at a price
equal to the excess of the fair market value over the option
price) to the extent provided therein but not later than one
year after his or her death (but not beyond the stated
duration of the Option). Any such exercise or payment shall
be made only: (1) by or to the executor or administrator of
the estate of the deceased optionee or person or persons to
whom the deceased optionee's rights under the Option shall
pass by will or the laws of descent and distribution; and (2)
to the extent, if any, that the deceased optionee was entitled
at the date of his or her death.
(b) In the case of an optionee who becomes disable, the Option
shall terminate on the earlier of one year after termination
or employment or the date that such Option expires in
accordance with its terms. During such period, the Option may
be exercised by an optionee who becomes disabled with respect
to the same number of shares, in the same manner and to the
same extent as if the optionee had continued employment during
such period.
(4) The Option shall lapse immediately upon termination of
employment of the optionee through discharge for cause as determined by the
Committee in its sole discretion.
(5) Each Option granted under the Plan shall, by its terms, not be
transferable otherwise than by will or the laws of descent and distribution.
During the optionee's lifetime, an Option granted under the Plan can be
exercised only by him or her.
D. Manner of Exercise. An Option shall be exercised by giving a
written notice to the President of the Company stating the number of shares of
Common Stock with respect to which the Option is being exercised and containing
such other information as may be requested and by tendering payment in full
therefore with a cashier's or certified check; Common Stock already owned by
the Employee having a fair market value equal to the option price; or a
combination of a cashier's or certified check and Common Stock already owned by
the Employee having an aggregate fair market value equal to the option price.
For purposes of this Subsection 4 (d), "fair market value" is the closing price
per share of Common Stock on the American Stock Exchange on the day immediately
preceding the day on which an Option is exercised, or if there is no sale on
such day, the closing price per share on the last previous day which a sale is
reported. If Common Stock is not listed on the American Stock Exchange on the
day immediately preceding the day an Option is exercised, the closing price of
a share of Common Stock as reported by the exchange upon which it is then
listed, or if it is not then listed on any exchange, the closing price per
share of Common Stock as reported by an automated quotation system shall be
used to determine fair market value. If Common Stock is not listed on any
exchange or its price reported by an automated quotation system on the day
immediately preceding the day an Option is exercised, the Committee shall
determine the fair market value of Common Stock for purposes of this Subsection
4 (d) on the date of exercise of the Option.
<PAGE> 29
E. Limitations on Issuance of Stock Option Shares. The Company shall
not be required, upon the exercise of any Option, to issue or deliver any
shares of stock prior to (a) the authorization of such shares for listing on
any stock exchange on which the Company's stock may then be listed, and (b)
such registration or other qualification of such shares under applicable
securities laws as the Company shall determine to be necessary or advisable.
If shares issuable on the exercise of Options have not been registered under
the Securities Act of 1933 ("the Act") or there is not available a current
Prospectus meeting the requirements of the Act with respect thereto, optionees
may be required to represent at the time of each exercise of Options that the
shares purchased are being acquired for investment and not with a view to
distribution; and the Company may place a legend on the stock certificate to
indicate that the stock may not be sold or otherwise disposed of except in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
F. Limitation on Options.
(1) Notwithstanding the provision of paragraph VI.A and B above,
if any optionee, at the time an Option is granted, owns (as defined in Section
425(d) or the Code) Common Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, any subsidiary thereof or
of the Company's parent (if any), the option price for such Option shall be at
least 110% of the fair market value of the stock subject to such Option, and
such Option by its terms shall not be exercisable after the expiration of 5
years from the date such Option is granted.
(2) The aggregate fair market value (determined as of the time the
Option is granted) of the stock with respect to which Incentive Stock Options
(as defined in Section 422A of the Code) are exercisable for the first time by
an employee during any calendar year (under this Plan or any other plan of the
Company) shall not exceed $100,000.
VII.
Stockholder and Employment Rights
A holder of an Option shall have none of the rights of a stockholder
with respect to any of the shares subject to Option until such shares shall be
issued upon the exercise of the Option.
Nothing in the Plan or in any Option granted pursuant to the Plan
shall, in the absence of an express provision to the contrary, confer on any
individual any right to be or to continue in the employ of the Company or its
subsidiaries or shall interfere in any way with the right of the Company or any
of its subsidiaries to terminate the employment of any individual at any time.
VIII.
Adjustments to Common Stock
The aggregate number of shares of Common Stock of the Company on which Options
may be
<PAGE> 30
granted hereunder, the number of shares thereof covered by each outstanding
Option and the price per share thereof in each such Option may all be
appropriately adjusted, as the Board of Directors may determine, for any
increase or decrease in the number of shares of stock of the Company resulting
from a subdivision or consolidation of shares whether through reorganization,
recapitalization, stock split or combination of shares, or the payment of a
stock dividend or the increase or decreasing such shares effected without
receipt of consideration by the Company. No fractional shares of stock shall
be issued upon exercise of any Option, and in case fractional share shall
become subject to an Option by reason of a stock dividend or otherwise, the
optionee holding such Option shall not be entitled to exercise it with respect
to such fractional share.
Subject to any required action by the stockholders, if the Company
shall be the surviving corporation in any merger or consolidation, any Option
granted hereunder shall pertain to and apply to the securities to which a
holder of the number of shares of stock subject to the Option would have been
entitled. Upon a dissolution of the Company, or a merger or consolidation in
which the Company is not the surviving corporation, every Option outstanding
hereunder shall terminate, provided, however, that the case of such
dissolution, merger or consolidation, then during the period thirty days prior
to the effective date of such event, each holder of an Option granted pursuant
to the Plan shall have a right to exercise the Option, in whole or in part.
IX.
Effective Date and Termination Effective Date
A. Effective Date. The Plan shall become operative and in effect on
the date the Plan is approved by a vote of majority of all members of the Board
of Directors, provided, however that the Plan shall be submitted to the
Stockholder of the Company for approval within twelve months of the date of
adoption of the Plan, and if such approval shall not be obtained by a vote of
the holders of a majority of the total outstanding capital stock of the Company
entitled to vote, voting as a single class, the Plan shall be null and void and
all Options, if any, granted thereunder shall automatically be canceled.
B. Termination. The Plan shall remain in effect until and shall
terminate within 10 years from the date the Plan is adopted or the Plan was
approved by the shareholders, whichever is earlier, but it may be terminated at
an earlier date by action of the Board of Directors. Except as provided in
subparagraph A above, termination of this Plan shall not affect the rights of
grantees under Options theretofore granted to purchase stock under the Plan,
and, all such Options shall continue in force and in operation after
termination of the Plan, except as provided in subparagraph A above and except
as may be terminated through death or other termination of employment in
accordance with the terms of the Plan.
<PAGE> 31
X.
Amendments
The Board of Directors shall have complete power and authority to
amend the Plan, provided, however, that except as expressly permitted in the
Plan, the Board of Directors shall not, without the affirmative vote of the
holders of a majority of the voting stock of the Company, make any amendment
which would (a) abolish the Committee without designating such other committee,
change the qualifications of its members, or withdraw the administration of the
1995 Plan from its supervision, (b) increase the maximum number of shares for
which options may be granted under the Plan, (c) amend the formula for
determination of the purchase price of shares on which options may be granted,
(d) extend the term of the Plan or change the minimum option price, or (e)
amend the requirements as to the employees eligible to receive Options.
XI.
Government and Other Regulations
The obligation of the Company to sell or deliver shares under Options
granted pursuant to the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by the registrations with any governmental
agencies as may be required.
XII.
Loan Agreements
Each Option shall be subject to the condition that the Company shall
not be obliged to issue or transfer any of its stock to a holder of an Option,
in the exercise thereof, if at any time the Committee or the Board of Directors
shall determine that the issuance or transfer of such stock would be in
violation of any covenant in any of the Company's loan agreements or other
contracts.
The Company hereby agrees to the provisions of this Plan, and in
witness thereof, has cause this Agreement to be executed on this 15th day of
August, 1995.
ATTEST: LABARGE, INC.
______________________________ By______________________________
Secretary President
