<PAGE>
<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11 or Rule 14a-12
MATTHEWS INTERNATIONAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
1997
NOTICE
OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
<PAGE>
<PAGE> 3
Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, Pennsylvania 15212-5851
412.442.8200 Fax 412.442.8290
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 22, 1997
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 10:30 AM on Saturday, February 22, 1997 at the Health and
Science Theater, Carnegie Science Center, Pittsburgh, Pennsylvania, for the
purpose of considering and acting upon the following:
1. To elect three Directors of the Company for a term of three years.
2. To approve the adoption of amendments to the 1992 Stock Incentive Plan.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
certified public accountants to audit the records of the Company for the
fiscal year ending September 30, 1997.
4. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on December 31, 1996 will be
entitled to vote at the Annual Meeting or any adjournments thereof.
Please indicate on the enclosed proxy card whether you will or will not be able
to attend this meeting. Return the card in the enclosed envelope as soon as
possible. If you receive two proxies because you own both Class A and Class B
Common Stock, please be sure to complete and return them both.
We hope you can be with us for this important occasion.
Sincerely,
Edward J. Boyle
Edward J. Boyle
Corporate Secretary
January 22, 1997
<PAGE>
<PAGE> 4
Matthews International Corporation
Two NorthShore Center
Pittsburgh, PA 15212 - 5851
412 / 442-8200
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of the Company
whose principal executive offices are located at Two NorthShore Center,
Pittsburgh, Pennsylvania 15212. This Proxy Statement and the accompanying proxy
were first released to shareholders on January 22, 1997.
Execution of the proxy will not affect a shareholder's right to attend the
meeting and vote in person. Any shareholder giving a proxy has the right to
revoke it at any time before it is voted by giving notice to the Corporate
Secretary or by attending the meeting and voting in person.
Matters to be considered at the Annual Meeting are those set forth in the
accompanying notice. Shares represented by proxy will be voted in accordance
with instructions. In the absence of instructions to the contrary, the proxy
solicited will be voted for the proposals set forth.
Management does not intend to bring before the meeting any business other than
that set forth in the Notice of Annual Meeting of Shareholders. If any other
business should properly come before the meeting, it is the intention of
Management that the persons named in the proxy will vote in accordance with
their best judgment.
OUTSTANDING STOCK AND VOTING RIGHTS
The Company has two classes of stock outstanding: Class A Common Stock, par
value $1.00 per share, and Class B Common Stock, par value $1.00 per share.
Together, these two classes are referred to as the "Common Stock."
Each outstanding share of Class A Common Stock of the Company entitles the
holder to one vote, and each outstanding share of Class B Common Stock entitles
the holder to ten votes, upon any business properly presented at the
shareholders' meeting. Cumulative voting is not applicable to the election of
directors.
The Board of Directors of the Company has established December 31, 1996 as the
record date for shareholders entitled to vote at the Annual Meeting. The
transfer books of the Company will not be closed. A total of 6,148,784 shares
of Class A Common Stock, and 2,581,977 shares of Class B Common Stock are
outstanding and entitled to vote at the meeting.
Abstentions and broker non-votes have no effect on any proposal to be voted
upon. Broker nonvotes as to any matter are shares held by brokers and other
nominees which are voted at the meeting on matters as to which the nominee has
discretionary authority, but which are not voted on the matter in question
because the nominee does not have discretionary voting authority as to such
matter.
<PAGE>
<PAGE> 5
GENERAL INFORMATION REGARDING CORPORATE GOVERNANCE
Board of Directors
The Board of Directors is the ultimate governing body of the Company. As such,
it functions within a framework of duties and requirements established by
statute, government regulations and court decisions. In carrying out their
responsibilities, directors are expected to perform their duties in good faith
and with the diligence, care and skill which ordinarily prudent people would
exercise under similar circumstances.
Generally, the Board of Directors reviews and confirms the basic objectives and
broad policies of the Company, approves various important transactions,
appoints the officers of the Company and monitors Company performance in key
results areas. Management is accountable to the Board of Directors for the
satisfactory conduct of the day-to-day business of the Company.
Management is responsible for providing the Board of Directors with adequate
support, services and resources, together with thorough information, reports
and analyses concerning the Company's principal activities and plans. In
addition, the Board of Directors has the power, in its discretion, to employ
the services of outside consultants and is free to have discussions and
interviews with personnel of the Company and others as it deems appropriate and
helpful to its work.
Board Composition
The Restated Articles of Incorporation of the Company provide that the Board
of Directors has the power to set the number of Directors constituting the full
Board, provided that such number shall not be less than five nor more than 15.
Until further action, the Board of Directors has fixed the number of directors
constituting the full Board at eight, divided into three classes. The terms
of office of the three classes of Directors end in successive years.
During fiscal year 1996, there were 4 regularly scheduled meetings of the Board
of Directors.
Board Committees
There are three standing committees appointed by the Board of Directors -- the
Executive, Audit and Compensation Committees.
Management has the same responsibility to each committee as it does to the
Board of Directors with respect to providing adequate staff services and
information. Furthermore, each committee has the same power as the Board of
Directors to employ the services of outside consultants and to have discussions
and interviews with personnel of the Company and others.
The principal functions of the three standing committees are summarized as
follows:
Executive Committee
The Executive Committee is appointed by the Board of Directors to have and
exercise during periods between Board meetings all of the powers of the Board
of Directors, except that the Executive Committee may not elect directors,
change the membership of or fill vacancies in the Executive Committee, change
<PAGE> 6
the By-Laws of the Company or exercise any authority specifically reserved by
the Board of Directors. Among the functions customarily performed by the
Executive Committee during periods between Board meetings are the approval,
within limitations previously established by the Board of Directors, of the
principal terms involved in sales of securities of the Company, and such
reviews as may be necessary of significant developments in major events and
litigation involving the Company. In addition, the Executive Committee is
called upon periodically to provide advice and counsel in the formulation of
corporate policy changes and, where it deems advisable, make recommendations
to the Board of Directors.
The Executive Committee holds meetings at such times as are required. During
fiscal year 1996, the Executive Committee met a total of 14 times. The
Chairman of the Executive Committee is David M. Kelly. The other Committee
members are David J. DeCarlo and Geoffrey D. Barefoot.
The membership of the Executive Committee since October 1, 1995 consisted of
the following:
Oct. 1, 1995 to Nov. 30, 1995 Messrs. Kelly, Parker, Kennedy, DeCarlo and
Barefoot
Dec. 1, 1995 to Oct. 31, 1996 Messrs. Kelly, Parker, DeCarlo and Barefoot
Nov. 1, 1996 to the date of
this proxy statement Messrs. Kelly, DeCarlo and Barefoot
Audit Committee
The principal function of the Audit Committee is to endeavor to assure the
integrity and adequacy of financial statements issued by the Company. It is
intended that the Audit Committee will review internal auditing systems and
procedures as well as the activities of the public accounting firm performing
the external audit.
The Committee members are William J. Stallkamp (Chairman), William A. Coates,
and John P. O'Leary, Jr. During fiscal year 1996, the Audit Committee met
twice.
Compensation Committee
The principal function of the Compensation Committee, the members of which are
Messrs. Coates (Chairman), Kennedy and Stallkamp, is to review periodically the
suitability of the remuneration arrangements (including benefits) for the
principal officers of the Company other than stock remuneration. A
subcommittee of the Compensation Committee, the Stock Compensation Committee,
the members of which are Messrs. Coates (Chairman) and Stallkamp, consider and
grant stock remuneration and administer the Company's 1992 Stock Incentive
Plan. The Compensation Committee met four times in fiscal year 1996.
Meeting Attendance
Under the applicable rules of the Securities and Exchange Commission, the
Company's Proxy Statement is required to name those directors who during the
preceding year attended fewer than 75% of the total number of meetings held by
the Board and by the Committees of which they are members. During fiscal year
1996, all directors attended more than 75% of such meetings for which they were
eligible.<PAGE>
<PAGE> 7
Compensation of Directors
Pursuant to the Director Fee Plan, directors who are not also officers of the
Company receive 800 shares of the Company's Class A Common Stock as an annual
retainer fee. Each director may elect to be paid these shares on a current
basis or have such shares credited to a deferred stock account as phantom
stock, with such shares to be paid to the director subsequent to leaving the
Board. In addition, each such director is paid $800 for every meeting of the
Board of Directors attended and (other than a Chairman) $500 for every
committee meeting attended. The Chairman of a committee of the Board of
Directors is paid $700 for every committee meeting attended. No other
remuneration is otherwise paid by the Company to any director for services as
a director.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominations for election to the Board of Directors may be made by the Board of
Directors or by the shareholders. Messrs. Barefoot, Kennedy and Stallkamp,
whose terms of office are expiring, have been nominated by the Board to serve
for three-year terms that will end in 2000. Nominations made by the
shareholders shall be made in writing in accordance with Section 6.1 of the
Articles. No such nominations have been received.
The Board of Directors has no reason to believe that any of the nominees will
become unavailable for election. If a nominee should become unavailable prior
to the meeting, the accompanying proxy will be voted for the election in his
place of such other person as the Board of Directors may recommend.
The Board of Directors recommends that you vote FOR the election of Directors.
The following information is furnished with respect to the three persons
nominated by the Board of Directors for election as a director and with respect
to the continuing directors.
The Nominees
Geoffrey D. Barefoot, age 50, is President, Graphic Systems Division and has
been a Director since 1990. Mr. Barefoot has been employed by the Company since
1975 and has held various management positions, both in Corporate Personnel and
the Graphic Systems Division. He was appointed Pittsburgh Branch Manager in
November 1979, Eastern Regional Manager for the Graphic Systems Division in
July 1984 and Division Manager in March 1986. He was subsequently elected Vice
President in March 1988 and elected President, Graphic Systems Division in
November 1993. Mr. Barefoot received a B.S. Degree in Business Administration
from West Virginia Wesleyan College in 1968 and holds an M.A. Degree in
Industrial Relations from St. Francis College. Prior to joining Matthews, Mr.
Barefoot served as an aviator in the United States Navy from 1968 to 1974.
Thomas N. Kennedy, age 61, was elected a Director in 1987. He was Senior Vice
President, Chief Financial Officer and Treasurer of the Company until his
retirement from Matthews effective December 1, 1995. Mr. Kennedy had been
employed by the Company since 1972. He was elected Treasurer in 1974 and Vice
President--Treasurer in 1986. Mr. Kennedy received a Bachelor of Business
Administration from the University of Pittsburgh in 1958.
<PAGE>
<PAGE> 8
William J. Stallkamp, age 57, has been a Director of the Company since 1981.
Mr. Stallkamp is Chairman and Chief Executive Officer of Mellon PSFS in
Philadelphia, PA. He received a Bachelor of Science Degree in Business
Administration from Miami University of Oxford, Ohio and has performed graduate
work at Carnegie Mellon University and the University of Pittsburgh. He serves
as a Director of Yoder Brothers, Inc., Highmark Blue Cross/Blue Shield, Greater
Philadelphia Chamber of Commerce and Greater Philadelphia First. He also
serves on the Corporate Executive Board of the Philadelphia Museum of Art, and
the Board of Directors for YMCA of Philadelphia and Vicinity, and the
Southeastern Pennsylvania Chapter of the American Red Cross.
Continuing Directors
David M. Kelly, age 54, was elected Chairman of the Board on March 15, 1996.
He joined Matthews on April 3, 1995 as President and Chief Operating Officer
and was appointed Chief Executive Officer October 1, 1995. Prior to his
employment with Matthews, Mr. Kelly was employed by Carrier Corporation for 22
years. During that time his positions included Marketing Vice President for
Asia Pacific; President of Japanese Operations; Vice President, Manufacturing;
President of North American Operations; and Senior Vice President for Carrier's
residential and light commercial businesses. Mr. Kelly received a Bachelor of
Science in Physics from Boston College in 1964, a Master of Science degree in
Molecular Biophysics from Yale University in 1966, and a Master of Business
Administration from Harvard Business School in 1968. He is chairman of the
Executive Committee and the Jas. H. Matthews & Co. Educational and Charitable
Trust, a member of the Pension Board, and serves on the boards of various
subsidiaries of Matthews International Corporation. Mr. Kelly is a member of
the Board of Directors of Mestek, Inc. and United Way of Allegheny County.
William A. Coates, age 67, worked for the Westinghouse Electric Corporation for
37 years where he managed a variety of businesses, both domestic and foreign,
and served in various corporate assignments. At the time of his retirement in
1989, he held the position of Executive Vice President, Technology, Quality and
Operations Services. He received a Bachelor of Science Degree from Westminster
College. Mr. Coates has previously served on the boards of numerous foreign and
domestic Westinghouse subsidiaries and on the boards of Pacific Electronics,
the YMCA of Metropolitan Pittsburgh, and the Pittsburgh Bureau of International
Visitors. He is currently a member of the Boards of Directors of the Pittsburgh
High Technology Council, the Southwestern Pennsylvania Industrial Resource
Center, and the Pittsburgh Biotechnical Corp.
David J. DeCarlo, age 51, is President, Bronze Division and has been a Director
of the Company since 1987. He was hired by the Company in 1985 as Director of
Financial Planning and Analysis. He was named Division Manager of the Bronze
Division and was appointed Vice President in 1986. He was elected President,
Bronze Division in November 1993. Mr. DeCarlo received a Bachelor of Science
Degree in Industrial Management from West Virginia University in 1967, a Master
of Arts Degree in Economics and Statistics from the University of Pennsylvania
in 1970, and an M.B.A. in Finance from the University of Pennsylvania Wharton
School of Finance in 1971 where he also completed all the required courses for
a Ph.D. in Applied Economics and Finance. Prior to joining Matthews, Mr.
DeCarlo held various management positions with Reynolds Aluminum Company,
Westinghouse Electric Corporation, and Joy Manufacturing Company where his last
position was Vice President of Field Operations.<PAGE>
<PAGE> 9
John P. O'Leary, Jr., age 50, is President and Chief Executive Officer of
Tuscarora Incorporated, the nation's largest producer of custom-molded foam
plastic products. He also serves as a member of Tuscarora's Board of
Directors. Immediately prior to taking over as President and Chief Executive
Officer, Mr. O'Leary served as President of Western Division operations and was
responsible for overseeing the operation of 12 profit centers located
throughout the Midwest and South. Mr. O'Leary holds a Masters in Business
Administration from the University of Pennsylvania Wharton School of Business
and received a Bachelor's Degree in Economics from Gettysburg College. He
currently serves on the Board of Directors of the Beaver County Corporation of
Economic Development, First Western Bancorp, Inc., Southwestern Pennsylvania
Industrial Resource Center, McGuire Memorial Home, and Gateway Rehabilitation
Center. Mr. O'Leary is a Trustee of Gettysburg College.
James L. Parker, age 58, retired from the Company November 1, 1996 after nearly
thirty years of service. He was formerly Senior Vice President, General
Counsel and Secretary of the Company. He has been a Director of the Company
since 1981. Mr. Parker received a Bachelor of Business Administration Degree
from the University of Pittsburgh and a Juris Doctor Degree from Case-Western
Reserve University.
The term for each nominee and each Director is listed below:
Term to expire at Annual
Nominees Meeting of Shareholders in:
Geoffrey D. Barefoot 2000
Thomas N. Kennedy 2000
William J. Stallkamp 2000
Continuing Directors
William A. Coates 1998
David J. DeCarlo 1998
John P. O'Leary, Jr. 1998
David M. Kelly 1999
James L. Parker 1999
<PAGE>
<PAGE> 10
PROPOSAL 2
APPROVAL OF ADOPTION OF
AMENDMENTS TO THE 1992 STOCK INCENTIVE PLAN
Introduction
The Corporation's 1992 Stock Incentive Plan (the "Stock Incentive Plan") was
adopted by the Corporation's Board of Directors on May 8, 1992 and approved by
its shareholders on June 6, 1992. Certain amendments (the "Amendments") to the
Stock Incentive Plan were adopted by the Corporation's Board of Directors on
December 13, 1996, as described below. The affirmative vote of a majority of
the votes cast in person or by proxy at a meeting held on or prior to
December 13, 1997 in which the holders of at least a majority of the
outstanding shares of the Corporation's Common Stock are present and voting is
required for approval of adoption of the Amendments to the Stock Incentive Plan
(such plan, including the Amendments, is referred to herein as the "Amended
Plan"). If the shareholders of the Corporation do not approve the Amendments
as proposed in this proxy statement (i) the Stock Incentive Plan shall remain
in effect without including the Amendments, (ii) the conditional grants made
to certain employees by the Stock Compensation Committee on December 13, 1996
essentially will not become effective and (iii) no further grants under the
Stock Incentive Plan would be made to the Chief Executive Officer or any of the
other four highest compensated executive officers of the Corporation.
Description of Amended Plan
The full text of the Amended Plan is set forth as Exhibit A to this Proxy
Statement. The following description of the Amended Plan is qualified in its
entirety by reference to Exhibit A.
Amendments. The description of the Amended Plan provided below includes the
Stock Incentive Plan as amended by the Amendments. In general, the Amendments
were adopted to (i) increase the number of shares available under the Stock
Incentive Plan from 600,000 shares to 1,100,000 shares; (ii) extend the term
of the Stock Incentive Plan from May 7, 2002 to December 12, 2006; (iii) make
certain changes to allow grants of stock options under the Amended Plan to be
eligible for the "performance-based" exception under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and therefore permit
compensation arising upon exercise of the options to be deductible by the
Corporation, as described in the next paragraph; (iv) make certain changes
permitted as a result of the amendments made to Rule 16b-3 under Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"); and
(v) make other minor technical and conforming changes.
Section 162(m) of the Code disallows federal income tax deductions for
compensation paid to the Chief Executive Officer and any of the other four
highest compensated executive officers in excess of $1 million in any taxable
year, subject to certain exceptions. One exception involves compensation paid
pursuant to shareholder-approved compensation plans that are performance-based.
Certain of the Amendments are intended to cause grants of stock options under
the Amended Plan to be eligible for this performance-based exception so that
compensation upon exercise of such options should be deductible under the Code.
General. The purposes of the Amended Plan are to encourage eligible employees
of the Corporation and its subsidiaries to increase their efforts to make the
Corporation and each subsidiary more successful, to provide an additional
<PAGE> 11
inducement for such employees to remain with the Corporation or a subsidiary,
to reward such employees by providing an opportunity to acquire shares of the
Corporation's Class A Common Stock, par value $1.00 per share and Class B
Common Stock, par value $1.00 per share on favorable terms and to provide a
means through which the Corporation may attract able persons to enter the
employ of the Corporation or one of its subsidiaries. The eligible employees
are those employees of the Corporation or any subsidiary who share
responsibility for the management, growth or protection of the business of the
Corporation or any subsidiary.
The Amended Plan provides for (i) the grant of incentive stock options under
Section 422 of the Code, (ii) the grant of nonstatutory stock options and (iii)
restricted share awards. Cash payment rights also may be granted in
conjunction with nonstatutory stock options. The aggregate number of shares
of the Corporation's Common Stock which may be issued upon exercise of the
stock options and pursuant to the restricted share awards under the Amended
Plan is 1,100,000 shares. The maximum number of shares as to which stock
options may be granted and as to which shares may be awarded pursuant to
restricted share awards under the Amended Plan to any one employee in any one
calendar year is 125,000 shares.
As used in this section entitled "Approval of Adoption of Amendments to the
1992 Stock Incentive Plan," except as the context otherwise so requires, the
term "Common Stock" shall mean both the Class A Common Stock and the Class B
Common Stock.
To the extent that the Corporation has such shares available to it and can
issue such shares without violating any law or regulation, including without
limitation the regulations of the NASD concerning disenfranchisement of
shareholders, the Corporation will reserve for issuance upon the grant of any
option and issue once such option is exercised and will issue upon the award
of restricted shares Class B Common Stock of the Corporation. To the extent
Class B Common Stock is not available for reservation at the time of grant or
issuance at the time of award, the Corporation may reserve for issuance and
issue Class A Common Stock and not Class B Common Stock. Authorized but
unissued or re-acquired shares may be issued. No stock options or cash payment
rights may be granted and no restricted shares may be awarded subsequent to
December 12, 2006.
In the event that any outstanding stock option is cancelled by mutual consent
or terminates or expires for any reason without having been exercised in full,
the shares of Common Stock not purchased under the stock option are again
available for purposes of the Amended Plan. If any shares of Common Stock are
forfeited to the Corporation pursuant to the restrictions applicable to
restricted shares awarded under the Amended Plan, the number of shares so
forfeited are again available for purposes of the Amended Plan. The Amended
Plan also contains antidilution provisions which provide in certain events for
proportionate adjustments in the number of shares of Common Stock which may be
offered under the Amended Plan.
Administration. The Amended Plan will be administered by a Committee appointed
by the Board of Directors. None of the members of such Committee are eligible
to participate in the Amended Plan.
Subject to the provisions of the Amended Plan, the Committee has full and final
authority, in its discretion, to grant incentive stock options and nonstatutory
stock options and to make restricted share awards under the Amended Plan, to
determine whether cash payment rights shall be granted in conjunction with
nonstatutory stock options, to determine whether Class A Common Stock or
<PAGE> 12
Class B Common Stock shall be issued and to determine the employees to whom
each grant or award is made and the number of shares covered thereby. In
determining the eligibility of any employee, as well as in determining the
number of shares covered by each grant or award and whether cash payment rights
shall be granted, the Committee considers the position and responsibilities of
the employee being considered, the nature and value to the Corporation or a
subsidiary of his or her services, his or her present and/or potential
contribution to the success of the Corporation or a subsidiary and such other
factors as the Committee may deem relevant.
The Committee also has the power to interpret the Amended Plan and to prescribe
such rules, regulations and procedures in connection with the operations of the
Amended Plan as it deems necessary and advisable in its administration of the
Amended Plan.
Terms of Stock Options. The option price for each stock option may not be less
than 100% of the fair market value of the Corporation's Common Stock on the
date of grant of the stock option except that, in the case of an incentive
stock option granted to an employee who owns actually or constructively
pursuant to the rules contained in Section 424(d) of the Code more than 10%
of the total combined voting power of all classes of stock of the Corporation
or any subsidiary (a "Ten Percent Employee"), the option price may not be less
than 110% of such fair market value. Fair market value of the Common Stock for
all purposes under the Amended Plan is the mean between the publicly reported
highest and lowest sales prices per share of Class A Common Stock of the
Corporation as quoted in the NASDAQ Over-the-Counter Markets listing in The
Wall Street Journal, on the date as of which fair market value is determined.
As of January 9, 1997, the fair market value of the Common Stock of the
Corporation as determined by the above-stated formula was $28.75 per share.
No stock option may be exercised after the expiration of ten years from the
date of grant (five years in the case of an incentive stock option granted to
a Ten Percent Employee). Unless the Committee, in its discretion, otherwise
determines an exercisable stock option may be exercised in whole or in part.
Otherwise stock options may be exercised at such times, in such amounts and
subject to such restrictions as are determined in its discretion by the
Committee.
The option price for each stock option is payable in full in cash at the time
of exercise; however, in lieu of cash the person exercising the stock option
may, if authorized by the Committee at the time of grant in the case of an
incentive stock option or at any time in the case of a nonstatutory stock
option, pay the option price in whole or in part by delivering to the
Corporation shares of Common Stock having a fair market value on the date of
exercise of the stock option equal to the option price for the shares being
purchased, except that any portion of the option price representing a fraction
of a share must be paid in cash and no shares of Common Stock which have been
held less than one year may be delivered in payment of the option price.
If the person exercising a stock option participates in a broker or other
agent-sponsored exercise or financing program, the Corporation will cooperate
with all reasonable procedures of the broker or other agent to permit
participation by the person exercising the stock option in the exercise or
financing program, but the exercise of the stock option shall not be deemed to
occur and no shares of the Common Stock will be issued until the Corporation
has received full payment in cash for the option price from the broker or other
agent.<PAGE>
<PAGE> 13
The aggregate fair market value (determined as of the time the incentive stock
options are granted) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year may not exceed $100,000. If the date on which any
incentive stock options may first be exercised would be accelerated pursuant
to any provision of the Amended Plan or any stock option agreement, or
amendment thereto, and the acceleration of such exercise date would result in
a violation of this $100,000 restriction, then, notwithstanding any such
provision, but subject to the authorization provided for in the following
sentence, the exercise dates of such incentive stock options will be
accelerated only to the date or dates, if any, that do not result in a
violation of the $100,000 restriction, and in such event the exercise dates of
the incentive stock options with the lowest option prices would be accelerated
to the earliest such dates. The Committee may, in its discretion, authorize
the acceleration of the exercise date of one or more incentive stock options
even if such acceleration would violate the $100,000 restriction and one or
more incentive stock options would thereby be converted in whole or in part to
nonstatutory stock options.
Unless the Committee determines otherwise at the time of the grant of a stock
option, the following provisions of this paragraph will apply in the event of
any termination of employment, except that the preceding paragraph will apply
in any event if the exercise date of any incentive stock option is accelerated.
If the employment of an optionee who is not a Disabled Grantee (as defined in
the Amended Plan) is voluntarily terminated with the consent of the Corporation
or a subsidiary or an optionee retires under any retirement plan of the
Corporation or a subsidiary (i) any then outstanding incentive stock option
held by the optionee is exercisable (but only to the extent the stock optionee
was exercisable immediately prior to the termination of employment) at any time
prior to the expiration of the stock option or within three months after the
date of termination of employment, whichever is the shorter period, and (ii)
any nonstatutory stock option held by the optionee is exercisable (but only to
the extent the stock option was exercisable immediately prior to the
termination of employment) at any time prior to the expiration of the stock
option or within one year after the date of termination of employment,
whichever is the shorter period. If the employment of any optionee is
voluntarily terminated with such consent and such termination occurs because
the optionee is a Disabled Grantee, any then outstanding stock option held by
the optionee is exercisable in full (whether or not so exercisable immediately
prior to the termination of employment) at any time prior to the expiration of
the stock option or within one year after the date of termination of
employment, whichever is the shorter period. In the event of the death of an
optionee during employment, any then outstanding stock option is exercisable
in full (whether or not so exercisable immediately prior to the death of the
optionee) by the person or persons entitled to do so under the Will of the
optionee or, if the optionee shall fail to make testamentary disposition of the
stock option or shall die intestate, by the legal representative of the
optionee, in either case at any time prior to the expiration of the stock
option or within one year after the date of death, whichever is the shorter
period. In the event of the death of an optionee after termination of
employment during a period when a stock option is exercisable, any outstanding
stock option held by the optionee at the time of death is exercisable by the
person or persons entitled to do so under the Will of the optionee or by the
legal representative of the optionee (but only to the extent the stock option
was exercisable immediately prior to the death of the optionee) at any time
prior to the expiration of the stock option or within one year after the date
of death, whichever is the shorter period. If the employment of any optionee
terminates for any other reason, unless the exercise period of a stock option
following termination of employment has been extended upon the occurrence of
<PAGE> 14
one or more of the events described under "Additional Rights in Certain Events"
below, the rights of the optionee under any then outstanding stock option
terminate at the time of such termination of employment.
The antidilution provisions contained in the Amended Plan also provide in
certain events for proportionate adjustments in the number of shares covered
by outstanding stock options and in the option price of outstanding stock
options.
Unless the Committee, in its discretion, otherwise determines, no stock option
granted under the Amended Plan is transferable other than by Will or by the
laws of descent and distribution, and a stock option may be exercised during
an optionee's lifetime only by the optionee.
Each grant of a stock option must be confirmed by a stock option agreement
between the Corporation and the optionee which sets forth the terms of the
stock option.
Cash Payment Rights. The Committee may in its discretion grant cash payment
rights in conjunction with a nonstatutory stock option. Cash payment rights
entitle the holder, upon exercise of the stock option, or any portion thereof,
to receive cash from the Corporation (in addition to the shares to be received
upon exercise of the stock option) equal to a percentage (not greater than
100%) set by the Committee of the excess of the fair market value of a share
of Common Stock covered by the stock option on the date of exercise over the
option price per share, multiplied by the number of shares covered by the stock
option, or portion thereof, which is exercised. Cash payment rights may be
used by the Committee to provide funds to the option holder to pay the income
taxes payable upon exercise of a nonstatutory stock option. See "Federal Income
Taxes--Nonstatutory Stock Options" below.
Restricted Shares. Restricted share awards are subject to such restrictions
(including restrictions on the right of the awardee to sell, assign, transfer
or encumber the shares awarded while such shares are subject to restrictions)
as the Committee may impose thereon and are subject to forfeiture to the extent
events (which may, in the discretion of the Committee, include termination of
employment and/or performance-based events) specified by the Committee occur
prior to the time the restrictions lapse.
Each restricted share award must be confirmed by a restricted share agreement
between the Corporation and the awardee, which sets forth the number of
restricted shares awarded, the restrictions imposed thereon, the duration of
such restrictions, the events the occurrence of which would cause a forfeiture
of the restricted shares and such other terms and conditions as the Committee
in its discretion deems appropriate.
Following a restricted share award and prior to the lapse of the applicable
restrictions, share certificates representing the restricted shares are held
by the Corporation in escrow. Except in certain circumstances, the Committee,
in its discretion, may determine that dividends and other distributions on the
shares held in escrow shall not be paid to the awardee until the lapse or
termination of the applicable restrictions. Unless otherwise provided, in its
discretion, by the Committee, any such dividends or other distributions shall
not bear interest. Upon the lapse of the applicable restrictions (and not
before such time), the share certificates representing the restricted shares
and unpaid dividends, if any, are delivered to the awardee. From the date a
restricted share award is effective, however, the awardee is a shareholder with
respect to all the shares represented by the share certificates for the
restricted shares and has all the rights of a shareholder with respect to the
<PAGE> 15
restricted shares, including the right to vote the restricted shares and to
receive all dividends and other distributions paid with respect to the
restricted shares, subject only to the preceding provisions of this paragraph
and the restrictions imposed by the Committee.
Additional Rights in Certain Events. The Amended Plan provides for
acceleration of the exercisability and extension of the expiration date of
stock options, and for lapse of the restrictions on restricted share awards,
upon the occurrence of one or more events described in Section 9 of the Amended
Plan ("Section 9 Events"). Such an event is deemed to have occurred when (i)
the Corporation acquires actual knowledge that any person (other than the
Corporation, a subsidiary or any employee benefit plan sponsored by the
Corporation) has acquired beneficial ownership, directly or indirectly, of
securities representing 15% or more of the voting power of the Corporation,
(ii) a tender offer is made to acquire securities representing 15% or more of
the voting power of the Corporation or voting shares are first purchased
pursuant to any other tender offer, (iii) at any time less than 60% of the
members of the Board of Directors are persons who were either directors on the
effective date of the Amended Plan or individuals whose election or nomination
for election was approved by a vote of at least two-thirds of the directors
then still in office who were directors on the effective date of the Amended
Plan or who were so approved, (iv) the shareholders of the Corporation approve
any agreement or plan providing for the Corporation to be merged, consolidated
or otherwise combined with, or for all or substantially all its assets or stock
to be acquired by, another corporation, as a consequence of which the former
shareholders of the Corporation will thereafter own less than a majority of the
voting power of the surviving or acquiring corporation or the parent thereof
or (v) the shareholders of the Corporation approve any liquidation of all or
substantially all the assets of the Corporation or any distribution to security
holders of assets of the Corporation having a value equal to 15% or more of the
total value of all the assets of the Corporation.
Unless the stock option agreement or an amendment thereto otherwise provides,
but subject to the $100,000 restriction described above for incentive stock
options and exceptions for certain optionees and awardees described in Section
9 of the Amended Plan, notwithstanding any other provision contained in the
Amended Plan, upon the occurrence of any Section 9 Event (i) all outstanding
stock options become immediately and fully exercisable whether or not otherwise
exercisable by their terms and (ii) all stock options held by a grantee whose
employment with the Corporation or a subsidiary terminates within one year of
any Section 9 Event for any reason other than voluntary termination with the
consent of the Corporation or a subsidiary, retirement under any retirement
plan of the Corporation or a subsidiary or death are exercisable for a period
of three months from the date of such termination of employment, but in no
event after the expiration date of the stock option.
Unless the restricted share agreement otherwise provides, notwithstanding any
other provision contained in the Amended Plan, upon the occurrence of any
Section 9 Event prior to the scheduled lapse of all restrictions applicable to
restricted share awards under the Amended Plan, all such restrictions lapse
regardless of the scheduled lapse of such restrictions.
Miscellaneous. The Board of Directors may alter or amend the Amended Plan at
any time except that, without approval of the shareholders of the Corporation,
no alteration or amendment may (i) increase the total number of shares which
may be issued or delivered under the Amended Plan, (ii) make any changes in the
class of employees eligible to be granted stock options or awards under the
Amended Plan, (iii) change the maximum number of shares as to which stock
options may be granted and as to which shares may be awarded to any employee
<PAGE> 16
under the Amended Plan, (iv) change the option price permitted under the
Amended Plan, or (v) be made if shareholder approval of the amendment is at the
time required for stock options or restricted shares under the Amended Plan to
qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule
16b-3 or by the rules of the NASDAQ National Market System or any stock
exchange on which the Common Stock may then be listed. In addition, no
alteration or amendment of the Amended Plan may, without the written consent
of the holder of a stock option or restricted shares theretofore granted or
awarded under the Amended Plan, adversely affect the rights of such holder with
respect thereto.
The Board of Directors may also terminate the Amended Plan at any time, but
termination of the Amended Plan would not terminate any outstanding stock
options granted under the Amended Plan or cause a revocation or forfeiture of
any restricted share award under the Amended Plan.
If an employee who has been granted stock options or awarded restricted shares
under the Amended Plan engages in the operation or management of a business,
whether as owner (except as owner of less than ten percent of the publicly-
traded equity securities of an entity), partner, officer, director, employee
or otherwise and whether during or after termination of employment, which is
in competition with the Corporation or any of its subsidiaries, the Committee
may in its discretion immediately terminate all stock options held by such
person (except when the exercise period of a stock option has been extended
because one or more of the events described under "Additional Rights in Certain
Events" above has occurred) and declare forfeited all restricted shares held
by such person as to which the restrictions have not yet lapsed.
The Amended Plan contains no provision prohibiting the grant of stock options
by the Committee upon the condition that outstanding stock options granted at
a higher option price be surrendered for cancellation. Certain outstanding
stock options granted under the Amended Plan may from time to time have option
prices in excess of the market price per share of the Corporation's Common
Stock. It is possible, therefore, that the Committee may grant stock options
under the Amended Plan exercisable at the fair market value of shares of Common
Stock on the date of grant upon the condition that outstanding stock option
price granted under the Amended Plan be surrendered for cancellation.
<PAGE>
<PAGE> 17
Amended Plan Benefits
Upon amendment of the Stock Incentive Plan by the Board of Directors to
increase the number of shares available under the Stock Incentive Plan, certain
conditional option grants were made as set forth below (in each case subject
to certain vesting provisions with respect to such option grants):
Amended Plan Benefits
1992 Stock Incentive Plan
Name and Position Number of Shares*
----------------- ----------------
David M. Kelly, Chairman of the
Board and Chief Executive Officer 95,000
David J. DeCarlo, Director and
President, Bronze Division 125,000
James L. Parker, Director, Senior
Vice President, General Counsel and
Secretary None
Geoffrey D. Barefoot, Director and
President, Graphic Systems Division None
Edward J. Boyle, Vice President -
Accounting and Finance 20,500
Executive Officers as a group 258,000
All employees as a group, excluding
executive officers 67,000
* Table reflects options granted on December 13, 1996 by the Stock
Compensation Committee of the Board of Directors pursuant to the amendments
to the 1992 Stock Incentive Plan as proposed in this proxy statement subject
to shareholder approval.
Possible Anti-takeover Effect
The provisions of the Amended Plan providing for the acceleration of the
exercise date of outstanding stock options upon the occurrence of a Section 9
Event, the extension of the period during which outstanding stock options may
be exercised upon termination of employment following a Section 9 Event and the
lapse of restrictions applicable to restricted stock awards upon the occurrence
of a Section 9 Event may be considered as having an anti-takeover effect.
Federal Income Tax Consequences
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of incentive stock options and
nonstatutory stock options and the making of restricted share awards under
present law.
<PAGE>
<PAGE> 18
Incentive Stock Options. An optionee does not recognize any taxable income for
Federal income tax purposes upon receipt of an incentive stock option or
generally, at the time of exercise of an incentive stock option. The exercise
of an incentive stock option, however, generally does result in an increase in
an optionee's taxable income for alternative minimum tax purposes.
If an optionee exercises an incentive stock option and does not dispose of the
shares received in a subsequent "disqualifying disposition" (generally, a sale,
gift or other transfer within two years after the date of grant of the
incentive stock option or within one year after the shares are transferred to
the optionee), upon disposition of the shares any amount realized in excess of
the optionee's tax basis in the shares disposed of is treated as a long-term
capital gain, and any loss is treated as a long-term capital loss. In the
event of a "disqualifying disposition", the difference between the fair market
value of the shares received on the date of exercise and the option price
(limited, in the case of a taxable sale or exchange, to the excess of the
amount realized upon disposition over the optionee's tax basis in the shares)
is treated as compensation received by the optionee in the year of disposition.
Any additional gain is taxable as a capital gain and any loss as a capital
loss, which is long-term or short-term depending on whether the shares were
held for more than one year. Under proposed regulations, special rules apply
in determining the compensation income recognized upon a disqualifying
disposition if the option price of the incentive stock option is paid with
shares of Common Stock. If shares of Common Stock received upon the prior
exercise of an incentive stock option are transferred to the Corporation in
payment of the option price of an incentive stock option within either of the
periods referred to above, the transfer is considered a "disqualifying
disposition" of the shares transferred, but under proposed regulations, only
compensation income determined as stated above, and no capital gain or loss,
is recognized.
Neither the Corporation nor any of its subsidiaries is entitled to a deduction
with respect to shares received by an optionee upon exercise of an incentive
stock option and not disposed of in a "disqualifying disposition." If an
amount is treated as compensation received by an optionee because of a
"disqualifying disposition," the Corporation or one of its subsidiaries
generally is entitled to a deduction is the same amount for compensation paid,
subject to the "Limits on Deductions/Other Tax Matters" below.
Nonstatutory Stock Options. An optionee generally does not recognize any
taxable income for Federal income tax purposes upon receipt of a nonstatutory
stock option. Upon the exercise of a nonstatutory stock option the amount by
which the fair market value of the shares received, determined as of the date
of exercise, exceeds the option price is treated as compensation received by
the optionee in the years of exercise. If the option price of a nonstatutory
stock option is paid in whole or in part in shares, no income, gain or loss is
recognized by the optionee on the receipt of share equal in value on the date
of exercise to the shares delivered in payment of the option price. The fair
market value of the remainder of the shares received upon exercise of the
nonstatutory stock option, determined as of the date of exercise, less the
amount of cash, if any, paid upon exercise is treated as compensation income
received by the optionee on the date of exercise of the stock option.
The Corporation or one of its subsidiaries generally is entitled to a deduction
for compensation paid in the same amount that is treated as compensation
received by the optionee upon exercise of a nonstatutory stock option, subject
to the "Limits on Deductions/Other Tax Matters" below.
<PAGE>
<PAGE> 19
Cash Payment Rights. An optionee will not recognize any taxable income for
Federal income tax purposes upon receipt of cash payment rights. Any cash
received in payment of cash payment rights will be treated as compensation
received by the optionee in the year in which the optionee receives the cash
payment. The Corporation or one of its subsidiaries generally will be entitled
to a corresponding deduction in the same amount for compensation paid, subject
to the "Limits on Deductions/Other Tax Matters" below.
Restricted Shares. An awardee does not recognize any taxable income for
Federal income tax purposes in the year of the award, provided the shares are
subject to restrictions (that is, they are nontransferable and subject to a
substantial risk of forfeiture). However, the awardee may elect under Section
83(b) of the Code to recognize compensation income in the year of the award in
an amount equal to the fair market value of the shares on the date of the
award, determined without regard to the restrictions. If the awardee does not
make a Section 83(b) election, the fair market value of the shares on the date
the restrictions lapse is treated as compensation income to be awardee and is
taxable in the year the restrictions lapse. The Corporation or one of its
subsidiaries generally is entitled to a deduction for compensation paid in the
same amount that is treated as compensation income to the awardee.
Limits on Deductions/Other Tax Matters. The exercise by an optionee of a stock
option or the lapse of restrictions on restricted stock following the
occurrence of a Section 9 Event, in certain circumstances, may result in (i)
a 20% Federal excise tax (in addition to Federal income tax) to the optionee
or the awardee on all or a portion of the Common Stock or cash resulting from
the exercise or the restricted stock on which the restrictions lapse and (ii)
the loss of a compensation deduction which would otherwise be allowable to the
Corporation or one of its subsidiaries as explained above.
Section 162(m) of the Code disallows a compensation deduction for compensation
paid to the Chief Executive Officer and any of the other four highest
compensated officers in excess of $1 million each in any taxable year, except
that compensation that is performance-based may be excluded from this deduction
limitation. (The $1 million deduction limit is reduced by the amount of any
compensation deduction disallowed under the immediately preceding paragraph.)
The Amended Plan has been structured so that compensation arising from the
exercise of nonstatutory stock options (with or without cash payment rights)
or the disqualifying disposition of shares acquired upon exercise of incentive
stock options should be performance-based within the meaning of Section 162(m)
of the Code. Restricted share awards are not at present eligible for this
performance-based exception and, if granted to any of such five officers, may
be subject to the limits of Section 162(m) of the Code.
Vote Required for Approval of Proposal 2
The vote required for approval of Proposal 2 is the affirmative vote of a
majority of the votes cast by all the shareholders entitled to vote thereon.
The Board of Directors recommends that you vote FOR approval of Proposal 2.
<PAGE>
<PAGE> 20
PROPOSAL 3
SELECTION OF AUDITORS
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has appointed Coopers & Lybrand L.L.P. as independent certified
public accountants to audit the records of the Company for the year ending
September 30, 1997.
The Board of Directors has determined that it would be desirable to request an
expression of opinion from the shareholders on the appointment. Ratification
of the appointment of Coopers & Lybrand L.L.P. requires the affirmative vote
of a majority of all the votes cast by shareholders of Common Stock entitled
to vote at the meeting. If the shareholders do not ratify the selection of
Coopers & Lybrand L.L.P., the selection of alternative independent certified
public accountants will be considered by the Board of Directors.
It is not expected that any representative of Coopers & Lybrand L.L.P. will be
present at the Annual Meeting of Shareholders.
The Board of Directors recommends that you vote FOR Proposal 3.
OTHER INFORMATION
Certain Reportable Transactions
The Securities and Exchange Commission requires disclosure of certain business
transactions or relationships between the Company, or its subsidiaries, and
other organizations with which any of the Company's directors are affiliated
as an owner, partner, director, officer or employee. Briefly, disclosure is
required where such a business transaction or relationship meets the standards
of significance established by the Securities and Exchange Commission with
respect to the types and amounts of business transacted. The Company is aware
of no transaction requiring disclosure pursuant to this item during the past
fiscal year.
Stock Ownership
The Company's Articles of Incorporation divide its voting stock into three
classes: Preferred Stock and Class A and Class B Common Stock. At the present
time, none of the Preferred Stock is issued or outstanding. The following
information is furnished with respect to persons who the Company believes,
based on its records, beneficially own more than five percent of the
outstanding shares of Class A and Class B Common Stock of the Company, and with
respect to nominees for election to and continuing members of the Board of
Directors. Those individuals with more than five percent of such shares could
be deemed to be "control persons" of the Company.
<PAGE>
<PAGE> 21
This information is as of November 30, 1996.
Number of Number of
Class A Shares Class B Shares
Name of Beneficially Percent Beneficially Percent
Beneficial Owner (1) Owned (2) of Class Owned (2) of Class
- ---------------- -------------- -------- -------------- --------
Directors and Officers:
- ----------------------
D.M. Kelly 17,000 0.3% 28,000 1.1%
G.D. Barefoot None - 104,500 4.0
W.A. Coates 14,200 0.2 None -
D.J. DeCarlo None - 144,995 5.6
T.N. Kennedy 53,050 0.9 None -
J.P. O'Leary, Jr. 5,000 0.1 None -
J.L. Parker 317,760 5.2 None -
W.J. Stallkamp 2,000 * None -
All directors and
executive officers as
a group (11 persons) 409,010 6.7 404,845 15.5
Others:
- ------
W. Hauber 472,930 7.7 None -
W. Witte None - 215,840 8.4
E. Szaronos None - 180,000 6.9
D. Majestic None - 156,000 6.0
* Less than 0.1%
(1) The mailing address of each beneficial owner is the same as that of the
Registrant.
(2) The nature of the beneficial ownership for all shares is sole voting and
investment power.
Changes in Control
The Company knows of no arrangement which may, at a subsequent date, result in
a change in control of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
On February 2, 1996, Steven F. Nicola filed an amended Form 3 with the
Securities and Exchange Commission reporting ownership of the Company's stock
as of his election as an officer, December 1, 1995. Pursuant to the Director
Fee Plan, directors electing to have shares credited to a deferred stock
account as phantom stock are also credited the share equivalent of dividends
declared and paid. Such dividends were the only transactions reported on Form
5 for fiscal 1996 for all directors who are not officers of the Company, which
forms were filed on December 13, 1996. Apart from such filings, the Company
is aware of no delinquent filings of Securities and Exchange Commission Forms
3, 4 or 5 for the period October 1, 1995 through September 30, 1996 by any
holder of the registrant's equity securities.<PAGE>
<PAGE> 22
Executive Officers
The Executive Officers of the Company as of December 31, 1996 are the
following:
Year First
Elected as
Name Age An Officer Positions with Registrant
- ---- --- ---------- -------------------------
David M. Kelly 54 1995 President and Chief Executive
Officer
Geoffrey D. Barefoot 50 1988 President, Graphic Systems
Division
Edward J. Boyle 50 1991 Vice President, Accounting &
Finance - Secretary and Treasurer
David J. DeCarlo 51 1986 President, Bronze Division
Richard C. Johnson 50 1991 Vice President, Corporate
Development and Human Resources
Steven F. Nicola 36 1995 Controller
During the past five years, the business experience of each executive officer
named has been as reflected above or in a management capacity with the Company,
except for Mr. Kelly, who was an officer of Carrier Corporation prior to April
1995, and Mr. Nicola, who was a manager with Coopers & Lybrand, L.L.P. prior
to November 1992.
<PAGE>
<PAGE> 23
Compensation of Executive Officers and Retirement Benefits
The following table sets forth the individual compensation information for the
fiscal years ended September 30, 1996, 1995, and 1994 for the Company's Chief
Executive Officer and the four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------- -----------------------
Awards Payouts
------ ------- All
Securities Other
Name of Individual Underlying LTIP Compen-
and Principal Position Year Salary Bonus Options Payouts sation
- ---------------------- ---- ------- ------- ---------- --------- -------
(1) (Shares) (2)
<S> <C> <C> <C> <C> <C> <C>
David M. Kelly (3) 1996 $268,764 $261,193 35,000 None None
Chairman of the Board and 1995 125,004 94,233 100,000 None None
Chief Executive Officer
David J. DeCarlo 1996 188,100 159,409 20,000 None 4,904
Director and President, 1995 177,636 162,132 43,000 None 3,851
Bronze Division 1994 169,224 161,168 None None 3,408
James L. Parker (4) 1996 148,806 101,069 None None 463,518
Director, Senior Vice 1995 143,580 111,633 33,000 None 424,311
President, General 1994 139,296 121,430 None None 375,478
Counsel and Secretary
Geoffrey D. Barefoot 1996 142,497 59,827 15,000 None 2,028
Director and President, 1995 135,696 68,213 32,000 None 1,391
Graphic Systems Division 1994 126,228 98,202 None None 1,325
Edward J. Boyle 1996 104,709 68,308 14,000 None 2,205
Vice President, 1995 92,745 47,484 17,500 None 1,092
Accounting & Finance 1994 88,632 46,933 None None 2,063
<FN>
(1) Includes management incentive plan and supplemental management incentive payments and,
for Mr. Kelly, an amount equal to his life insurance premium cost. At his request, the
Company does not provide life insurance for Mr. Kelly, but in lieu thereof pays to him
annually the amount which the Company would have paid in premiums to provide coverage,
considering his position and age. Such amounts are not included in calculating other
Company benefits for Mr. Kelly. The amount paid to Mr. Kelly in lieu of life insurance
for 1996 and 1995 was $4,100 each year. The Company has adopted a management incentive
plan for officers and key management personnel. Participants in such plan are not
eligible for the Company's profit distribution plan. The incentive plan is based on
attainment of established personal goals and on divisional and Company performance for
the fiscal year. In addition, payments include a supplement in amounts which are
sufficient to pay annual interest expense on the outstanding notes of management under
the Company's Designated Employee Stock Purchase Plan and to pay medical costs which are
not otherwise covered by a Company plan. As of the date of the Company's Initial Public
Offering (July 20, 1994), no further notes have been issued under the Designated
Employee Stock Purchase Plan.<PAGE>
<PAGE> 24
(2) Includes stock appreciation right benefits, educational assistance for dependent
children and premiums for term life insurance. Mr. Parker previously had exchanged
a portion of his common stock shareholdings for an equivalent number of stock
appreciation rights, pursuant to which the Company credited and paid annually an amount
equal to the participation value of all units so acquired. Participation value of each
unit was the amount of earnings per share of common stock adjusted to account for
retiree benefits on a cash basis, calculated on the basis of the weighted average number
of unrestricted shares outstanding during the fiscal year. Stock appreciation right
benefits expire upon retirement or death. Each officer of the Company is provided term
life insurance coverage in an amount approximately equivalent to three times his
respective salary. Amounts reported in this column for the named officers in fiscal
1996, 1995 and 1994 include the following respective life insurance benefit costs:
Mr. DeCarlo, $2,904, $1,851 and $2,408; Mr. Parker, $3,429, $3,135 and $2,371;
Mr. Barefoot, $2,028, $1,391 and $1,325; and Mr. Boyle, $1,205, $1,092 and $1,063.
Educational assistance for dependent children is provided to any officer or employee of
the Company whose child meets the scholastic eligibility criteria and is attending an
eligible college or university. Educational assistance amounts reported in this column
for the named officers in fiscal 1996, 1995 and 1994, respectively, were: Mr. DeCarlo,
$2,000, $2,000 and $1,000; and Mr. Boyle, $1,000, none and $1,000. See also note (1).
(3) Mr. Kelly joined the Company on April 3, 1995 and was elected Chief Executive Officer
effective October 1, 1995. Mr. Kelly has an employment arrangement with the Company
which provides that, in the event of his discharge without cause prior to April 3, 1998,
he will receive additional compensation of double his annual base salary rate as of the
discharge date. Such arrangement further provides for the life insurance payments
described in note (1) above and the waiver of minimum service for vesting purposes
described below under "Retirement Plan."
(4) Mr. Parker retired as an officer November 1, 1996, but is expected to continue as a
director.
</TABLE>
The Summary Compensation Table does not include expenses to the Company of
incidental benefits of a limited nature to executive officers including use of
Company vehicles, club memberships, dues, or tax planning services. The
Company believes such incidental benefits are in the conduct of the Company's
business, but, to the extent such benefits and use would be considered personal
benefits, the value thereof is not reasonably ascertainable and does not
exceed, with respect to any individual named in the compensation table, the
lesser of $50,000 or 10% of the annual compensation reported in such table.
<PAGE>
<PAGE> 25
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants (1) Option Term
- ----------------------------------------------------------------- ----------------------
Percent
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted Year per Share Date 5% 10%
- -------------- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
D.M. Kelly 35,000 18.3% $26.00 4/8/06 $572,285 $1,450,295
D.J. DeCarlo 20,000 10.4% $26.00 4/8/06 327,020 828,740
J.L. Parker None - - - - -
G.D. Barefoot 15,000 7.8% $26.00 4/8/06 245,265 621,555
E.J. Boyle 14,000 7.3% $26.00 4/8/06 228,914 580,118
<FN>
(1) All options were granted at market value as of the date of grant. Options are
exercisable in various share amounts based on the attainment of certain market value
levels of Class A Common Stock, but, in the absence of such events, are exercisable in
full for a one-week period beginning five years from the date of grant. The options are
not exercisable within six months from the date of grant and expire on the earlier of
ten years from the date of grant, upon employment termination, or within specified time
limits following voluntary employment termination (with consent of the Company),
retirement or death.
</TABLE>
Report of the Compensation Committee
The Company's officer compensation policies are administered by the
Compensation Committee of the Board of Directors. The Committee consists of
three independent, non-employee directors: Messrs. Coates, Stallkamp and
Kennedy (a former officer). Executive compensation for the Company's chief
executive officer and the four other most highly compensated executive officers
is presented in the Summary Compensation Table.
<PAGE>
<PAGE> 26
Objectives and Policies
The Compensation Committee seeks to:
. Ensure that there is a strong linkage between officer compensation and the
creation of shareowner value;
. Align the interests of the Company's officers with those of its stockholders
through potential stock ownership;
. Ensure that compensation and incentives are at levels which enable the
Company to attract and retain high-quality officers.
Components of Compensation
The Company's officer compensation program presently is comprised of three
elements: base salary, annual incentives (bonuses) and stock options. An
executive compensation consulting firm is periodically engaged to provide
comparative market compensation data.
Base Salary
The objective of the base salary policy is to provide income reflecting
individual performance and a median level in comparison to a peer group. An
outside consulting firm specializing in such services is retained to compare
each officer's responsibilities with a peer group of other corporations whose
annual revenues range between $100 and $250 million. Accordingly, base
salaries of executive officers for calendar 1996 were increased over calendar
1995 to reflect competitive market pay practices. The Company endeavors via
annual base salary adjustments to determine that officers' base salary levels
and opportunities for incentive compensation are competitive in the
marketplace.
Annual Incentive Compensation (Bonuses)
Annual incentive payments paid to officers in 1996 were based upon four
parameters:
. Achievement of economic value added (EVA) objectives;
. Operating profit performance to budget;
. Operating profit performance to two year average;
. Achievement of personal goals.
The target awards, which are percentages of base salary, vary with position.
A 70% performance threshold must be reached for any payout for the first three
of the above items. Based on these performance criteria, officers again
received incentive payments under this program.
The 1996 Incentive Compensation Plan comprised of four factors described above
was revised and the Board of Directors approved a new incentive compensation
program for 1997 that is based primarily upon EVA (Economic Value Added)
improvement and individual performance goals. EVA is a measure of economic
return in excess of the cost of operating capital employed to generate the
return.
<PAGE>
<PAGE> 27
Stock Options
Stock options, which are an integral part of incentive compensation for the
officers of the Company, serve to encourage share ownership by Company
executives and thus align the interests of officers and shareholders. The
aggregate number of shares of the Company's common stock which may be issued
for stock options or restricted stock is 600,000 under the 1992 Stock Incentive
Plan. The Board of Directors has authorized, subject to shareholder approval,
an additional 500,000 shares of the Company's common stock for the future grant
of options or restricted stock under the 1992 Stock Incentive Plan. The Stock
Compensation Committee (Messrs. Stallkamp and Coates) plans to make periodic
grants of stock options to executive officers and other key employees of the
Company to foster a commitment to increasing long-term shareholder value.
During fiscal 1996 certain officers and other management personnel were granted
nonstatutory stock options to purchase a combined total of 191,500 shares of
the Company's stock at fair market value at the time of the grants.
Report on 1996 CEO Compensation
The chief executive officer's compensation is established based on the
philosophy and policies enunciated above for all executive officers. This
includes cash compensation (base salary and annual cash incentive payouts) and
long-term incentives (stock option awards). In calendar 1996, Mr. Kelly's base
salary was increased 10 percent, recognizing that he is currently well below
the median for his comparison group. Mr. Kelly's annual incentive paid in 1996
was based upon the achievement of the four parameters listed under Annual
Incentive Compensation discussed above. In 1996, Mr. Kelly was granted 35,000
non-statutory stock options under the 1992 Stock Incentive Plan to further
align his long-term interests with those of our shareowners.
Tax Policy
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
disallows the Company's federal income tax deductions for compensation paid to
the Chief Executive Officer and any of the other four highest compensated
executive officers in excess of $1 million each in any taxable year, subject
to certain exceptions. One exception involves compensation paid pursuant to
shareholder-approved compensation plans that are performance-based. Certain
of the amendments to the Company's 1992 Stock Incentive Plan which are proposed
in this proxy statement are intended to cause grants of stock options under
such plan to be eligible for this performance-based exception (so that
compensation upon exercise of such options should be deductible under the
Code). Payments of cash compensation to executives (and certain other benefits
which could be awarded under the plan, such as restricted stock) are not at
present eligible for this performance-based exception, although such payments
are currently not close to the $1 million limit. The Committee has taken and
intends to continue to take whatever actions are necessary to minimize, if not
eliminate, the Company's non-deductible compensation expense, while
maintaining, to the extent possible, the flexibility which the Committee
believes to be an important element of the Company's executive compensation
program.
Compensation Committee:
W. A. Coates, Chairman
W. J. Stallkamp
T. N. Kennedy
December 13, 1996<PAGE>
<PAGE> 28
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE RETURN *
AMONG MATTHEWS INTERNATIONAL CORPORATION,
S&P 500 INDEX AND S&P MANUFACTURING INDEX **
S&P
S&P 500 Manufacturing
Year Matthews Index Index
- ---- -------- ------- -------------
1991 $100 $100 $100
1992 117 111 106
1993 126 125 127
1994 241 130 142
1995 325 168 190
1996 460 201 246
* Total return assumes reinvestment of dividends
** Fiscal year ended September 30
Note:
Performance graph assumes $100 invested on October 1, 1991 in Matthews
International Corporation common stock, Standard & Poor's (S&P) 500 Index and
S&P Manufacturing (Diversified) Index. Prior to the Company's initial public
offering (July 20, 1994), the performance of Matthews International Corporation
common stock was based on Consolidated Adjusted Book Value per share as defined
under the Employees' Stock Purchase Plan (assuming dividend reinvestment). The
results are not necessarily indicative of future performance.
Compensation Committee Interlocks and Insider Participation
Thomas N. Kennedy, a former officer of the Company, is a member of the
Company's Compensation Committee.<PAGE>
<PAGE> 29
Retirement Plan
The Company's domestic retirement plan is noncontributory and provides benefits
based upon length of service and final average earnings. Generally, employees
age 21 with one year of continuous service are eligible to participate in the
retirement plan. The benefit formula is 3/4 of 1% of the first $550 of final
average monthly earnings plus 1-1/4% of the excess times years of credited
service (maximum 35). The plan is an insured, defined benefit plan and covered
compensation is limited generally to base salary or wages. Benefits are not
subject to any deduction or offset for Social Security.
In addition to benefits provided by the Company's retirement plan, the Company
has a Supplemental Retirement Plan, which provides for supplemental pension
benefits to executive officers of the Company designated by the Board of
Directors, including those named in the Summary Compensation Table. Upon normal
retirement under this plan, such individuals who meet stipulated age and
service requirements are entitled to receive monthly supplemental retirement
payments which, when added to their pension under the Company's retirement plan
and their maximum anticipated Social Security primary insurance amount, equal,
in total, 1.85% of final average monthly earnings (including incentive
compensation) times the individual's years of continuous service (subject to
a maximum of 35 years). Upon early retirement under this plan, reduced
benefits will be provided, depending upon age and years of service. Benefits
under this plan do not vest until age 55 and the attainment of 15 years of
continuous service. However, in order to recruit Mr. Kelly, the Company waived
such minimum service requirement with respect to Mr. Kelly. No benefits will
be payable under such supplemental plan following the voluntary employment
termination or death of any such individual. The Supplemental Retirement Plan
is unfunded; however, a provision has been made on the Company's books for the
actuarially computed obligation.
The following table shows the total estimated annual retirement benefits
payable at normal retirement under the above plans for the individuals named
in the Summary Compensation Table at the specified executive remuneration and
years of continuous service:
Years of Continuous Service
Covered ----------------------------------------------------
Remuneration 15 20 25 30 35
- ------------------ -------- -------- -------- -------- --------
$125,000 $ 34,688 $ 46,250 $ 57,813 $ 69,375 $ 80,938
150,000 41,625 55,500 69,375 83,250 97,125
175,000 48,563 64,750 80,938 97,125 113,313
200,000 55,500 74,000 92,500 111,000 129,500
225,000 62,438 83,250 104,063 124,875 145,688
250,000 69,375 92,500 115,625 138,750 161,875
300,000 83,250 111,000 138,750 166,500 194,250
400,000 111,000 148,000 185,000 222,000 259,000
450,000 124,875 166,500 208,125 249,750 291,375
500,000 138,750 185,000 231,250 277,500 323,750
600,000 166,500 222,000 277,500 333,000 388,500
700,000 194,250 259,000 323,750 388,500 453,250
<PAGE>
<PAGE> 30
The table shows benefits at the normal retirement age of 65, before applicable
reductions for social security benefits. The Employee Retirement Income
Security Act of 1974 places limitations, which may vary from time to time, on
pensions which may be paid under federal income tax qualified plans, and some
of the amounts shown on the foregoing table may exceed the applicable
limitation. Such limitations are not currently applicable to the Company's
Supplemental Retirement Plan.
Estimated years of continuous service for each of the individuals named in the
Summary Compensation Table, as of October 1, 1996 and rounded to the next
higher year, are: Mr. Kelly, 2 years; Mr. DeCarlo, 12 years; Mr. Parker,
30 years, Mr. Barefoot, 21 years; and Mr. Boyle, 10 years.
Indebtedness of Management
The following officers and directors were indebted to the Company on notes
carrying annual interest rates of not less than 6.5% or more than 8% (depending
on the date of inception or renewal) which were issued under the Company's
Designated Employee Stock Purchase Plan, as referred to in Note 7 of the Notes
to Consolidated Financial Statements:
Highest Amount
Outstanding During Amount
the Year Ended Outstanding at
September 30, 1996 November 30, 1996
------------------ -----------------
Geoffrey D. Barefoot $ 199,086 $ 131,126
Edward J. Boyle 112,678 82,840
David J. DeCarlo 552,831 424,685
Richard C. Johnson 147,466 85,463
Thomas N. Kennedy 222,231 None
Steven F. Nicola 46,734 36,241
James L. Parker 340,977 None
The Company has annually made supplemental management incentive payments to
officers and other employees indebted on such notes in amounts equal to the
interest paid by such persons on their respective notes. As of the date of the
Company's Initial Public Offering (July 20, 1994), no further notes have been
issued under the Designated Employee Stock Purchase Plan.
OTHER MATTERS
Shareholders may make proposals for inclusion in the proxy statement and proxy
form for the 1998 Annual Meeting of Shareholders. Any such proposal should be
written and mailed to the Secretary of the Company at the corporate office for
receipt by October 31, 1997.
<PAGE>
<PAGE> 31
The cost of soliciting proxies in the accompanying form will be paid by the
Company. Shareholder votes at the Annual Meeting will be tabulated by the
Company's transfer agent, First Chicago Trust Company of New York.
A copy of the Company's Annual Report for 1996 has previously been mailed to
each shareholder of record, or will be mailed with this Proxy Statement.
By Order of The Board of Directors
Edward J. Boyle
Edward J. Boyle
Corporate Secretary
<PAGE>
<PAGE> 32
Exhibit A
MATTHEWS INTERNATIONAL CORPORATION
1992 STOCK INCENTIVE PLAN
(as amended through December 13, 1996)
The purposes of the 1992 Stock Incentive Plan (as amended, the "Plan") are to
encourage eligible employees of Matthews International Corporation (the
"Corporation") and its Subsidiaries to increase their efforts to make the
Corporation and each Subsidiary more successful, to provide an additional
inducement for such employees to remain with the Corporation or a Subsidiary,
to reward such employees by providing an opportunity to acquire shares of the
Class A Common Stock, par value $1.00 per share, of the Corporation (the "Class
A Common Stock") and the Class B Common Stock, par value $1.00 per share, of
the Corporation (the "Class B Common Stock") on favorable terms and to provide
a means through which the Corporation may attract able persons to enter the
employ of the Corporation or one of its Subsidiaries. As used herein, except
where the context otherwise so requires, the term "Common Stock" shall mean
both the Class A Common Stock and the Class B Common Stock. For the purposes
of the Plan, the term "Subsidiary" means any corporation in an unbroken chain
of corporations beginning with the Corporation if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing at
least fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
SECTION 1
Administration
The Plan shall be administered by a Committee (the "Committee") appointed by
the Board of Directors of the Corporation (the "Board") and consisting of not
less than two members of the Board, who, at the time of their appointment to
the Committee and at all times during their service as members of the
Committee, are (i)"Non-Employee Directors" as then defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
successor rule, and (ii)"outside directors" under Section 162(m)(4)(C) of the
Internal Revenue Code of 1986 (the "Code"), or any successor provision.
The Committee shall interpret the Plan and prescribe such rules, regulations
and procedures in connection with the operations of the Plan as it shall deem
to be necessary and advisable for the administration of the Plan consistent
with the purposes of the Plan.
The Committee shall keep records of action taken at its meetings. A majority
of the Committee shall constitute a quorum at any meeting and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by all members of the Committee, shall be the acts
of the Committee.
<PAGE>
<PAGE> 33
SECTION 2
Eligibility
Those employees of the Corporation or any Subsidiary (including, but not
limited to, covered employees as defined in Section 162(m)(3) of the Code, or
any successor provision) who share responsibility for the management, growth
or protection of the business of the Corporation or any Subsidiary shall be
eligible to be granted stock options (with or without cash payment rights) and
to receive restricted share awards as described herein.
Subject to the provisions of the Plan, the Committee shall have full and final
authority, in its discretion, to grant stock options (with or without cash
payment rights) and to award restricted shares as described herein, to
determine whether Class A Common Stock or Class B Common Stock shall be issued,
and to determine the employees to whom any such grant or award shall be made
and the number of shares to be covered thereby. In determining the eligibility
of any employee, as well as in determining the number of shares covered by each
grant of a stock option or award of restricted shares and whether cash payment
rights shall be granted in conjunction with a stock option, the Committee shall
consider the position and the responsibilities of the employee being
considered, the nature and value to the Corporation or a Subsidiary of his or
her services, his or her present and/or potential contribution to the success
of the Corporation or a Subsidiary and such other factors as the Committee may
deem relevant.
SECTION 3
Shares Available under the Plan
The aggregate number of shares of the Common Stock which may be issued and as
to which grants of stock options or awards of restricted shares may be made
under the Plan is 1,100,000 shares, subject to adjustment and substitution as
set forth in Section 8. If any stock option granted under the Plan is
cancelled by mutual consent or terminates or expires for any reason without
having been exercised, the number of shares subject thereto shall again be
available for purposes of the Plan. If any shares of the Common Stock are
forfeited to the Corporation pursuant to the restrictions applicable to
restricted shares awarded under the Plan, the number of shares so forfeited
shall again be available for purposes of the Plan.
To the extent that the Corporation has such shares available to it and can
issue such shares without violating any law or regulation, including without
limitation the By-laws of the National Association of Securities Dealers, Inc.
concerning disenfranchisement of shareholders, the Corporation will reserve for
issuance upon the grant of any option and issue when such option is exercised
and will issue upon the award of restricted shares Class B Common Stock of the
Corporation. To the extent Class B Common Stock is not available for
reservation at the time of grant or issuance at the time of award, the
Corporation retains the right to reserve for issuance and to issue Class A
Common Stock and not Class B Common Stock. The shares which may be issued
under the Plan may be either authorized but unissued shares or shares
previously issued and thereafter acquired by the Corporation or partly each,
as shall be determined from time to time by the Board.
<PAGE>
<PAGE> 34
SECTION 4
Grant of Stock Options and Cash Payment Rights
and Awards of Restricted Shares
The Committee shall have authority, in its discretion, (a) to grant "incentive
stock options" pursuant to Section 422 of the Code, to grant "nonstatutory
stock options" (i.e., stock options which do not qualify under Sections 422 or
423 of the Code) or to grant both types of stock options (but not in tandem)
and (b) to award restricted shares. The Committee also shall have the
authority, in its discretion, to grant cash payment rights in conjunction with
nonstatutory stock options with the effect provided in Section 5(D). Cash
payment rights may not be granted in conjunction with incentive stock options.
Cash payment rights granted in conjunction with a nonstatutory stock option may
be granted either at the time the stock option is granted or at any time
thereafter during the term of the stock option.
The maximum number of shares as to which stock options may be granted and as
to which shares may be awarded under the Plan to any one employee in any one
calendar year is 125,000 shares, subject to adjustment and substitution as set
forth in Section 8. For the purposes of this limitation, any adjustment or
substitution made pursuant to Section 8 in a calendar year with respect to the
maximum number of shares set forth in the preceding sentence shall also be made
with respect to any shares subject to stock options or share awards previously
granted under the Plan to such employee in the same calendar year.
Notwithstanding any other provision contained in the Plan or in any stock
option agreement or an amendment thereto, but subject to the possible exercise
of the Committee's discretion contemplated in the last sentence of this Section
4, the aggregate fair market value, determined as provided in Section 5(H) on
the date of grant of incentive stock options, of the shares with respect to
which such incentive stock options are exercisable for the first time by an
employee during any calendar year under all plans of the corporation employing
such employee, any parent or subsidiary corporation of such corporation and any
predecessor corporation of any such corporation shall not exceed $100,000. If
the date on which one or more incentive stock options could first be exercised
would be accelerated pursuant to any provision of the Plan or any stock option
agreement or an amendment thereto, and the acceleration of such exercise date
would result in a violation of the $100,000 restriction set forth in the
preceding sentence, then, notwithstanding any such provision, but subject to
the provisions of the next succeeding sentence, the exercise dates of such
incentive stock options shall be accelerated only to the extent, if any, that
does not result in a violation of such restriction and, in such event, the
exercise dates of the incentive stock options with the lowest option prices
shall be accelerated to the earliest such dates. The Committee may, in its
discretion, authorize the acceleration of the exercise date of one or more
incentive stock options even if such acceleration would violate the $100,000
restriction set forth in the first sentence of this paragraph and even if one
or more such incentive stock options are thereby converted in whole or in part
to nonstatutory stock options.
<PAGE>
<PAGE> 35
SECTION 5
Terms and Conditions of Stock Options
and Cash Payment Rights
Stock options and cash payment rights granted under the Plan shall be subject
to the following terms and conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be such price as the Committee, in its discretion, shall
determine but shall not be less than one hundred percent (100%) of the fair
market value per share of the Common Stock covered by the stock option on the
date of grant, except that in the case of an incentive stock option granted to
an employee who, immediately prior to such grant, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation or any Subsidiary (a "Ten Percent Employee"), the
option price shall not be less than one hundred ten percent (110%) of such fair
market value on the date of grant. For purposes of this Section 5(A), the fair
market value of the Common Stock shall be determined as provided in Section
5(H). For purposes of this Section 5(A), an individual (i) shall be considered
as owning not only shares of stock owned individually but also all shares of
stock that are at the time owned, directly or indirectly, by or for the spouse,
ancestors, lineal descendants and brothers and sisters (whether by the whole
or half blood) of such individual and (ii) shall be considered as owning
proportionately any shares owned, directly or indirectly, by or for any
corporation, partnership, estate or trust in which such individual is a
stockholder, partner or beneficiary.
(B) The option price for each stock option shall be paid in full upon exercise
and shall be payable in cash in United States dollars (including check, bank
draft or money order), which may include cash forwarded through a broker or
other agent-sponsored exercise or financing program; provided, however, that
in lieu of such cash the person exercising the stock option may (if authorized
by the Committee at the time of grant in the case of an incentive stock option,
or at any time in the case of a nonstatutory stock option) pay the option price
in whole or in part by delivering to the Corporation shares of the Common Stock
having a fair market value on the date of exercise of the stock option,
determined as provided in Section 5(H), equal to the option price for the
shares being purchased; except that (i) any portion of the option price
representing a fraction of a share shall in any event be paid in cash and (ii)
no shares of the Common Stock which have been held for less than one year may
be delivered in payment of the option price of a stock option. If the person
exercising a stock option participates in a broker or other agent-sponsored
exercise or financing program, the Corporation will cooperate with all
reasonable procedures of the broker or other agent to permit participation by
the person exercising the stock option in the exercise or financing program.
Notwithstanding any procedure of the broker or other agent-sponsored exercise
or financing program, if the option price is paid in cash, the exercise of the
stock option shall not be deemed to occur and no shares of the Common Stock
will be issued until the Corporation has received full payment in cash
(including check, bank draft or money order) for the option price from the
broker or other agent. The date of exercise of a stock option shall be
determined under procedures established by the Committee, and as of the date
of exercise the person exercising the stock option shall be considered for all
purposes to be the owner of the shares with respect to which the stock option
has been exercised. Payment of the option price with shares shall not increase
the number of shares of the Common Stock which may be issued under the Plan as
provided in Section 3.<PAGE>
<PAGE> 36
(C) Unless the Committee, in its discretion, shall otherwise determine, stock
options shall be exercisable by a grantee during employment commencing on the
date of grant. Subject to the terms of Section 5(F) providing for earlier
termination of a stock option, no stock option shall be exercisable after the
expiration of ten years (five years in the case of an incentive stock option
granted to a Ten Percent Employee) from the date of grant. Unless the
Committee, in its discretion, shall otherwise determine, a stock option to the
extent exercisable at any time may be exercised in whole or in part.
(D) Cash payment rights granted in conjunction with a nonstatutory stock
option shall entitle the person who is entitled to exercise the stock option,
upon exercise of the stock option or any portion thereof, to receive cash from
the Corporation (in addition to the shares to be received upon exercise of the
stock option) equal to such percentage as the Committee, in its discretion,
shall determine not greater than one hundred percent (100%) of the excess of
the fair market value of a share of the Common Stock covered by the stock
option on the date of exercise of the stock option over the option price per
share of the stock option times the number of shares covered by the stock
option, or portion thereof, which is exercised. Payment of the cash provided
for in this Section 5(D) shall be made by the Corporation as soon as
practicable after the time the amount payable is determined. For purposes of
this Section 5(D), the fair market value of the Common Stock shall be
determined as provided in Section 5(H).
(E) Unless the Committee, in its discretion, shall otherwise determine in the
case of nonstatutory stock options, (i) no stock option shall be transferable
by the grantee otherwise than by Will, or if the grantee dies intestate, by the
laws of descent and distribution of the state of domicile of the grantee at the
time of death, and (ii) all stock options shall be exercisable during the
lifetime of the grantee only by the grantee.
(F) Unless the Committee, in its discretion, shall otherwise determine but
subject to the provisions of Section 4 in the case of incentive stock options:
(i) If the employment of a grantee who is not disabled within the meaning of
Section 422(c)(6) of the Code (a "Disabled Grantee") is voluntarily terminated
with the consent of the Corporation or a Subsidiary or a grantee retires under
any retirement plan of the Corporation or a Subsidiary, any then outstanding
incentive stock option held by such grantee shall be exercisable by the grantee
(but only to the extent exercisable by the grantee immediately prior to the
termination of employment) at any time prior to the expiration date of such
incentive stock option or within three months after the date of termination of
employment, whichever is the shorter period;
(ii) If the employment of a grantee who is not a Disabled Grantee is
voluntarily terminated with the consent of the Corporation or a Subsidiary or
a grantee retires under any retirement plan of the Corporation or a Subsidiary,
any then outstanding nonstatutory stock option held by such grantee shall be
exercisable by the grantee (but only to the extent exercisable by the grantee
immediately prior to the termination of employment) at any time prior to the
expiration date of such nonstatutory stock option or within one year after the
date of termination of employment, whichever is the shorter period;
<PAGE>
<PAGE> 37
(iii) If the employment of a grantee who is a Disabled Grantee is voluntarily
terminated with the consent of the Corporation or a Subsidiary, any then
outstanding stock option held by such grantee shall be exercisable in full
(whether or not so exercisable by the grantee immediately prior to the
termination of employment) by the grantee at any time prior to the expiration
date of such stock option or within one year after the date of termination of
employment, whichever is the shorter period;
(iv) Following the death of a grantee during employment, any outstanding stock
option held by the grantee at the time of death shall be exercisable in full
(whether or not so exercisable by the grantee immediately prior to the death
of the grantee) by the person entitled to do so under the Will of the grantee,
or, if the grantee shall fail to make testamentary disposition of the stock
option or shall die intestate, by the legal representative of the grantee at
any time prior to the expiration date of such stock option or within one year
after the date of death, whichever is the shorter period;
(v) Following the death of a grantee after termination of employment during
a period when a stock option is exercisable, any outstanding stock option held
by the grantee at the time of death shall be exercisable by such person
entitled to do so under the Will of the grantee or by such legal representative
(but only to the extent the stock option was exercisable by the grantee
immediately prior to the death of the grantee) at any time prior to the
expiration date of such stock option or within one year after the date of
death, whichever is the shorter period; and
(vi) Unless the exercise period of a stock option following termination of
employment has been extended as provided in Section 9(C), if the employment of
a grantee terminates for any reason other than voluntary termination with the
consent of the Corporation or a Subsidiary, retirement under any retirement
plan of the Corporation or a Subsidiary or death, all outstanding stock options
held by the grantee at the time of such termination of employment shall
automatically terminate.
Whether termination of employment is a voluntary termination with the consent
of the Corporation or a Subsidiary and whether a grantee is a Disabled Grantee
shall be determined in each case, in its discretion, by the Committee and any
such determination by the Committee shall be final and binding.
If a grantee of a stock option engages in the operation or management of a
business (whether as owner, partner, officer, director, employee or otherwise
and whether during or after termination of employment) which is in competition
with the Corporation or any of its Subsidiaries, the Committee may immediately
terminate all outstanding stock options held by the grantee; provided, however,
that this sentence shall not apply if the exercise period of a stock option
following termination of employment has been extended as provided in Section
9(C). Whether a grantee has engaged in the operation or management of a
business which is in competition with the Corporation or any of its
Subsidiaries shall also be determined, in its discretion, by the Committee, and
any such determination by the Committee shall be final and binding.<PAGE>
<PAGE> 38
(G) All stock options shall be confirmed by a written agreement or an
amendment thereto in a form prescribed by the Committee, in its discretion.
Each agreement or amendment thereto shall be executed on behalf of the
Corporation by the Chief Executive Officer (if other than the President), the
President or any Vice President and by the grantee. The agreement confirming
a stock option shall specify whether the stock option is an incentive stock
option or a nonstatutory stock option. The provisions of such agreements need
not be identical.
(H) Fair market value of the Common Stock shall be the mean between the
following prices, as applicable, for the date as of which fair market value is
to be determined as quoted in The Wall Street Journal (or in such other
reliable publication as the Committee, in its discretion, may determine to rely
upon): (a) if the Common Stock is listed on the New York Stock Exchange, the
highest and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common Stock is
not listed on such exchange, the highest and lowest sales prices per share of
Common Stock for such date on (or on any composite index including) the
principal United States securities exchange registered under the 1934 Act on
which the Common Stock is listed or (c) if the Common Stock is not listed on
any such exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the National Association of Securities Dealers Automated
Quotations System or any successor system then in use ("NASDAQ"). If there are
no such sale price quotations for the date as of which fair market value is to
be determined but there are such sale price quotations within a reasonable
period both before and after such date, then fair market value shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices per share of the Common Stock as so quoted on the nearest
date before and the nearest date after the date as of which fair market value
is to be determined. The average should be weighted inversely by the
respective numbers of trading days between the selling dates and the date as
of which fair market value is to be determined. If there are no such sale
price quotations on or within a reasonable period both before and after the
date as of which fair market value is to be determined, then fair market value
of the Common Stock shall be the mean between the bona fide bid and asked
prices per share of Common Stock as so quoted for such date on NASDAQ, or if
none, the weighted average of the means between such bona fide bid and asked
prices on the nearest trading date before and the nearest trading date after
the date as of which fair market value is to be determined, if both such dates
are within a reasonable period. The average is to be determined in the manner
described above in this Section 5(H). If the fair market value of the Common
Stock cannot be determined on the basis previously set forth in this Section
5(H) on the date as of which fair market value is to be determined, the
Committee shall in good faith determine the fair market value of the Common
Stock on such date. Fair market value shall be determined without regard to
any restriction other than a restriction which, by its terms, will never lapse.
Subject to the foregoing provisions of this Section and the other provisions
of the Plan, any stock option granted under the Plan may be exercised at such
times and in such amounts and be subject to such restrictions and other terms
and conditions, if any, as shall be determined, in its discretion, by the
Committee and set forth in the agreement referred to in Section 5(G) or an
amendment thereto.
<PAGE>
<PAGE> 39
SECTION 6
Terms and Conditions of
Restricted Share Awards
Restricted share awards shall be evidenced by a written agreement in a form
prescribed by the Committee, in its discretion, which shall set forth the
number of shares of the Common Stock awarded, the restrictions imposed thereon
(including, without limitation, restrictions on the right of the grantee to
sell, assign, transfer or encumber such shares while such shares are subject
to other restrictions imposed under this Section 6), the duration of such
restrictions, events (which may, in the discretion of the Committee, include
performance-based events) the occurrence of which would cause a forfeiture of
the restricted shares and such other terms and conditions as the Committee in
its discretion deems appropriate. Restricted share awards shall be effective
only upon execution of the applicable restricted share agreement on behalf of
the Corporation by the Chief Executive Officer (if other than the President),
the President or any Vice President, and by the awardee. The provisions of
such agreements need not be identical. Awards of restricted shares shall be
effective on the date determined, in its discretion, by the Committee.
Following a restricted share award and prior to the lapse or termination of the
applicable restrictions, the share certificates representing the restricted
shares shall be held by the Corporation in escrow together with related stock
powers in blank signed by the grantee. Except as provided in Section 8, the
Committee, in its discretion, may determine that dividends and other
distributions on the shares held in escrow shall not be paid to the awardee
until the lapse or termination of the applicable restrictions. Unless
otherwise provided, in its discretion, by the Committee, any such dividends or
other distributions shall not bear interest. Upon the lapse or termination of
the applicable restrictions (and not before such time), the share certificates
representing the restricted shares and unpaid dividends, if any, shall be
delivered to the awardee. From the date a restricted share award is effective,
the grantee shall be a shareholder with respect to all the shares represented
by the share certificates for the restricted shares and shall have all the
rights of a shareholder with respect to the restricted shares, including the
right to vote the restricted shares and to receive all dividends and other
distributions paid with respect to the restricted shares, subject only to the
preceding provisions of this paragraph and the other restrictions imposed by
the Committee.
If an awardee of restricted shares engages in the operation or management of
a business (whether as owner, partner, officer, director, employee or otherwise
and whether during or after termination of employment) which is in competition
with the Corporation or any of its Subsidiaries, the Committee may immediately
declare forfeited all restricted shares held by the awardee as to which the
restrictions have not yet lapsed. Whether an awardee has engaged in the
operation or management of a business which is in competition with the
Corporation or any of its Subsidiaries shall also be determined, in its
discretion, by the Committee, and any such determination by the Committee shall
be final and binding.
Neither this Section 6 nor any other provision of the Plan shall preclude an
awardee from transferring or assigning restricted shares to (i) the trustee of
a trust that is revocable by such awardee alone, both at the time of the
transfer or assignment and at all times thereafter prior to such awardee's
death or (ii) the trustee of any other trust to the extent approved in advance
by the Committee in writing. A transfer or assignment of restricted shares
from such trustee to any person other than such awardee shall be permitted only
<PAGE> 40
to the extent approved in advance by the Committee in writing, and restricted
shares held by such trustee shall be subject to all of the conditions and
restrictions set forth in the Plan and in the applicable agreement as if such
trustee were a party to such agreement.
SECTION 7
Issuance of Shares
The obligation of the Corporation to issue shares of the Common Stock under the
Plan shall be subject to (i) the effectiveness of a registration statement
under the Securities Act of 1933, as amended, with respect to such shares, if
deemed necessary or appropriate by counsel for the Corporation, (ii) the
condition that the shares shall have been listed (or authorized for listing
upon official notice of issuance) upon each stock exchange, if any, on which
the shares of Common Stock may then be listed and (iii) all other applicable
laws, regulations, rules and orders which may then be in effect.
SECTION 8
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
then subject to any outstanding stock options, the number of shares of the
Common Stock which may be issued under the Plan but are not then subject to
outstanding stock options, and the maximum number of shares as to which stock
options may be granted and as to which shares may be awarded to any employee
under Section 4 of the Plan on the date fixed for determining the stockholders
entitled to receive such stock dividend or distribution shall be adjusted by
adding thereto the number of shares of the Common Stock which would have been
distributable thereon if such shares had been outstanding on such date. Shares
of Common Stock so distributed with respect to any restricted shares held in
escrow, shall also be held by the Corporation in escrow and shall be subject
to the same restrictions as are applicable to the restricted shares on which
they were distributed.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation or otherwise, then there shall be
substituted for each share of the Common Stock subject to any then outstanding
stock option, for each share of the Common Stock which may be issued under the
Plan but which is not then subject to any outstanding stock option, and for the
maximum number of shares as to which stock options may be granted and as to
which shares may be awarded to any employee under Section 4 of the Plan the
number and kind of shares of stock or other securities into which each
outstanding share of the Common Stock shall be so changed or for which each
such share shall be exchangeable. Unless otherwise determined by the
Committee, in its discretion, any such stock or securities, as well as any cash
or other property, into or for which any restricted shares held in escrow shall
be changed or exchangeable in any such transaction, shall also be held by the
Corporation in escrow and shall be subject to the same restrictions as are
applicable to the restricted shares in respect of which such stock, securities,
cash or other property was issued or distributed.
<PAGE> 41
In case of any adjustment or substitution as provided for in this Section 8,
the aggregate option price for all shares subject to each then outstanding
stock option prior to such adjustment or substitution shall be the aggregate
option price for all shares of stock or other securities (including any
fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash or extraordinary distribution
to holders of the Common Stock, (i) the Committee shall make any adjustments
to any then outstanding stock option which it determines are equitably required
to prevent dilution or enlargement of the rights of grantees which would
otherwise result from any such transaction, and (ii) unless otherwise
determined by the Committee, in its discretion, any stock, securities, cash or
other property distributed with respect to any restricted shares held in escrow
or for which any restricted shares held in escrow shall be exchanged in any
such transaction shall also be held by the Corporation in escrow and shall be
subject to the same restrictions as are applicable to the restricted shares in
respect of which such stock, securities, cash or other property was distributed
or exchanged.
No adjustment or substitution provided for in this Section 8 shall require the
Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution. Owners of restricted shares held
in escrow shall be treated in the same manner as owners of Common Stock not
held in escrow with respect to fractional shares created by an adjustment or
substitution of shares, except that, unless otherwise determined by the
Committee, in its discretion, any cash or other property paid in lieu of a
fractional share shall be subject to restrictions similar to those applicable
to the restricted shares exchanged therefor.
If any such adjustment or substitution provided for in this Section 8 requires
the approval of shareholders in order to enable the Corporation to grant
incentive stock options or to comply with Section 162(m) of the Code, then no
such adjustment or substitution shall be made without the required shareholder
approval. Notwithstanding the foregoing, in the case of incentive stock
options, if the effect of any such adjustment or substitution would be to cause
the stock option to fail to continue to qualify as an incentive stock option
or to cause a modification, extension or renewal of such stock option within
the meaning of Section 424 of the Code, the Committee may determine that such
adjustment or substitution not be made but rather shall use reasonable efforts
to effect such other adjustment of each then outstanding stock option as the
Committee, in its discretion, shall deem equitable and which will not result
in any disqualification, modification, extension or renewal (within the meaning
of Section 424 of the Code) of such incentive stock option.
Except as provided in this Section 8, a grantee shall have no rights by reason
of any issue by the Corporation of stock of any class or securities convertible
into stock of any class, any subdivision or consolidation of shares of stock
of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class.
<PAGE> 42
SECTION 9
Additional Rights in Certain Events
(A) Definitions.
For purposes of this Section 9, the following terms shall have the following
meaning:
(1) The term "Person" shall be used as that term is used in Section 13(d) and
14(d) of the 1934 Act.
(2) "Beneficial Ownership" shall be determined as provided in Rule 13d-3 under
the 1934 Act as in effect on the effective date of the Plan.
(3) "Voting Shares" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of Directors (without
consideration of the rights of any class of stock other than the Common Stock
to elect Directors by a separate class vote); and a specified percentage of
"Voting Power" of a company shall mean such number of the Voting Shares as
shall enable the holders thereof to cast such percentage of all the votes which
could be cast in an annual election of directors (without consideration of the
rights of any class of stock other than the Common Stock to elect Directors by
a separate class vote).
(4) "Tender Offer" shall mean a tender offer or exchange offer to acquire
securities of the Corporation (other than such an offer made by the Corporation
or any Subsidiary), whether or not such offer is approved or opposed by the
Board.
(5) "Section 9 Event" shall mean the date upon which any of the following
events occurs:
(a) The Corporation acquires actual knowledge that any Person other than the
Corporation, a Subsidiary or any employee benefit plan(s) sponsored by the
Corporation has acquired the Beneficial Ownership, directly or indirectly, of
securities of the Corporation entitling such Person to 10% or more of the
Voting Power of the Corporation;
(b) (i) A Tender Offer is made to acquire securities of the Corporation
entitling the holders thereof to 20% or more of the Voting Power of the
Corporation; or (ii) Voting Shares are first purchased pursuant to any other
Tender Offer;
(c) At any time less than 60% of the members of the Board of Directors shall
be individuals who were either (i) Directors on the effective date of the Plan
or (ii) individuals whose election, or nomination for election, was approved
by a vote (including a vote approving a merger or other agreement providing the
membership of such individuals on the Board of Directors) of at least two-
thirds of the Directors then still in office who were Directors on the
effective date of the Plan or who were so approved;
(d) The shareholders of the Corporation shall approve an agreement or plan
providing for the Corporation to be merged, consolidated or otherwise combined
with, or for all or substantially all its assets or stock to be acquired by,
another corporation, as a consequence of which the former shareholders of the
Corporation will own, immediately after such merger, consolidation, combination
or acquisition, less than a majority of the Voting Power of such surviving or
acquiring corporation or the parent thereof; or
<PAGE> 43
(e) The shareholders of the Corporation shall approve any liquidation of all
or substantially all of the assets of the Corporation or any distribution to
security holders of assets of the Corporation having a value equal to 10% or
more of the total value of all the assets of the Corporation; provided,
however, that (i) if securities beneficially owned by a grantee are included
in determining the Beneficial Ownership of a Person referred to in paragraph
5(a) or (ii) a grantee is required to be named pursuant Item 2 of the Schedule
14D-1 (or any similar successor filing requirement) required to be filed by the
bidder making a Tender Offer referred to in paragraph 5(b), then no Section 9
Event with respect to such grantee shall be deemed to have occurred by reason
of such event.
(B) Acceleration of the Exercise Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock options,
unless the agreement referred to in Section 5(G), or an amendment thereto,
shall otherwise provide, notwithstanding any other provision contained in the
Plan, in case any Section 9 Event occurs all outstanding stock options shall
become immediately and fully exercisable whether or not otherwise exercisable
by their terms.
(C) Extension of the Expiration Date of Stock Options.
Subject to the provisions of Section 4 in the case of incentive stock options,
unless the agreement referred to in Section 5(G), or an amendment thereto,
shall otherwise provide, notwithstanding any other provision contained in the
Plan, all stock options held by a grantee whose employment with the Corporation
or a Subsidiary terminates within one year of any Section 9 Event for any
reason other than voluntary termination with the consent of the Corporation or
a Subsidiary, retirement under any retirement plan of the Corporation or a
Subsidiary or death shall be exercisable for a period of three months from the
date of such termination of employment, but in no event after the expiration
date of the stock option.
(D) Lapse of Restrictions on Restricted Share Awards.
Unless the agreement referred to in Section 6, or an amendment thereto, shall
otherwise provide, notwithstanding any other provision contained in the Plan,
if any Section 9 Event occurs prior to the scheduled lapse of all restrictions
applicable to restricted share awards under the Plan, all such restrictions
shall lapse upon the occurrence of any such Section 9 Event regardless of the
scheduled lapse of such restrictions.
<PAGE>
<PAGE> 44
SECTION 10
Effect of the Plan on the Rights of Employees and Employer
Neither the adoption of the Plan nor any action of the Board or the Committee
pursuant to the Plan shall be deemed to give any employee any right to be
granted a stock option (with or without cash payment rights) or to be awarded
restricted shares under the Plan. Nothing in the Plan, in any stock option or
cash payment rights granted under the Plan, in any restricted share award under
the Plan or in any agreement providing for any of the foregoing or amendment
thereto shall confer any right to any employee to continue in the employ of the
Corporation or any Subsidiary or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the employment of any employee at
any time or adjust the compensation of any employee at any time.
SECTION 11
Amendment or Termination
The right to amend the Plan at any time and from time to time and the right to
terminate the Plan are hereby specifically reserved to the Board; provided that
no such amendment of the Plan shall, without shareholder approval (a) increase
the total number of shares which may be issued under the Plan, (b) make any
changes in the class of employees eligible to receive options or awards under
the Plan, (c) change the maximum number of shares as to which stock options may
be granted and as to which shares may be awarded to any employee under Section
4 of the Plan, (d) change the option price permitted under Section 5(A) of the
Plan, or (e) be made if shareholder approval of the amendment is at the time
required for stock options or restricted shares under the Plan to qualify for
the exemption from Section 16(b) of the 1934 Act provided by Rule 16b-3 or by
the rules of the NASDAQ National Market System or any stock exchange on which
the Common Stock may then be listed. No amendment or termination of the Plan
shall, without the written consent of the holder of a stock option, cash
payment rights or restricted shares theretofore granted or awarded under the
Plan, adversely affect the rights of such holder with respect thereto.
SECTION 12
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be May 8, 1992, the
date of adoption of the Plan by the Board, and the effective date of the
amendments to the Plan adopted by the Board on December 13, 1996 shall be
December 13, 1996, provided that such amendments are approved by a majority of
the votes cast at a meeting of shareholders duly called, convened and held on
or prior to December 13, 1997, at which a quorum representing a majority of the
outstanding voting stock of the Corporation is, either in person or by proxy,
present and voting on the Plan. No stock option granted under the Plan on or
after December 13, 1996 may be exercised until after such approval and any
restricted shares awarded under the Plan shall be forfeited to the Corporation
on December 13, 1997 if such approval has not been obtained on or prior to that
date. No stock option or cash payment rights may be granted and no restricted
shares may be awarded under the Plan subsequent to December 12, 2006.
<PAGE>
<PAGE> 45
APPENDIX
PROXY
MATTHEWS INTERNATIONAL CORPORATION
I hereby appoint David M. Kelly and Edward J. Boyle and each of them, with full
power of substitution and revocation, proxies to vote all shares of Common
Stock of Matthews International Corporation which I am entitled to vote at the
Annual Meeting of Shareholders or any adjournment thereof, with the authority
to vote as designated on the reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE
<PAGE>
<PAGE> 46
[ X ] Please mark your vote as in this example.
- -----------------------------------------------------------------------------
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE LISTED PROPOSALS.
- -----------------------------------------------------------------------------
FOR WITHHELD NOMINEES:
1. Election of Thomas N. Kennedy,
Directors [ ] [ ] William J. Stallkamp and
Geoffrey D. Barefoot.
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the adoption of amendments to
the 1992 Stock Incentive Plan. [ ] [ ] [ ]
3. To ratify the appointment of Coopers &
Lybrand LLP, as independent certified
public accountants to audit the records
of the Company for the fiscal year ending
September 30, 1997. [ ] [ ] [ ]
4. To transact such other business as may properly come before the meeting.
I plan to attend
the meeting. [ ]
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
----------------------------------------------------
----------------------------------------------------
SIGNATURE(S) DATE
- -------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL CORPORATION
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 22, 1997
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 10:30 AM, Saturday, February 22, 1997 at Carnegie Science
Center, Pittsburgh, Pennsylvania, for the purpose of considering and acting
upon the proposals set forth above.
Shareholders of record at the close of business on December 31, 1996, will be
entitled to vote at the Annual Meeting or any adjournments thereof.
