SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NIAGARA CORPORATION
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
(X) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)::
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NIAGARA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Niagara Corporation, a Delaware corporation (the "Company"), will be held
at the offices of M&T Bank, 350 Park Avenue, 6th Floor, New York, New York
10022, on Tuesday, July 7, 1998, at 10:00 a.m. local time for the following
purposes:
1. To elect a Board of six Directors, each to serve until
the next Annual Meeting or until a successor shall have
been duly elected and qualified;
2. To consider and vote upon a proposal to amend the
Company's 1995 Stock Option Plan to (i) increase the
number of shares of Common Stock reserved for issuance
thereunder by 1,000,000 shares and (ii) increase by
200,000 shares the limit on the number of shares of
Common Stock with respect to which options may be granted
to any individual in any year;
3. To consider and vote upon a proposal to approve the
Company's Employee Stock Purchase Plan;
4. To ratify and approve the appointment of BDO Seidman LLP
as independent accountants for 1998; and
5. To transact such other business as may properly come
before the Annual Meeting.
The Board of Directors has fixed the close of business on June 5,
1998 as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting.
Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you plan to attend, please complete, date and sign the
enclosed proxy and return it promptly in the self-addressed stamped
envelope provided. If you attend the Annual Meeting, you may withdraw your
proxy and vote in person if you so desire.
By Order of the Board of Directors,
GILBERT D. SCHARF
Secretary
New York, New York
June 9, 1998
NIAGARA CORPORATION
667 MADISON AVENUE
11TH FLOOR
NEW YORK, NEW YORK 10021
(212) 317-1000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the stockholders of Niagara
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board of
Directors" or the "Board") for use at the Annual Meeting of Stockholders
scheduled to be held on Tuesday, July 7, 1998, at 10:00 a.m. local time at
the offices of M&T Bank, 350 Park Avenue, 6th Floor, New York, New York
10022 (with any adjournment or postponement thereof, the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting and the accompanying
form of proxy are first being mailed to stockholders on or about June 10,
1998.
All stockholders of the Company are invited to attend the Annual
Meeting. Due to limited seating capacity, persons who are not stockholders
of the Company may attend the Annual Meeting only if invited by the Board.
If you are a stockholder of the Company but not a holder of record, you
must bring proof of beneficial ownership (e.g., a current broker's
statement) in order to be admitted to the Annual Meeting.
Shares of the Company's Common Stock, par value $.001 per share
("Common Stock"), represented by properly executed proxies received prior
to or at the Annual Meeting and not revoked will be voted at the Annual
Meeting in accordance with the instructions indicated on such proxies. If
no instructions are indicated, shares represented by such proxies will be
voted (i) "FOR" the election of the six nominees to the Board of Directors,
(ii) "FOR" approval of the proposed amendment to the Company's 1995 Stock
Option Plan, (iii) "FOR" approval of the proposed Employee Stock Purchase
Plan and (iv) "FOR" ratification and approval of BDO Seidman LLP as
independent accountants for 1998. The Board of Directors is not aware of
any other matter which is to come before the Annual Meeting; if any other
matter is properly presented for consideration, the persons named in the
enclosed proxy will have discretion to vote on such matters in accordance
with their best judgment.
Any proxy given pursuant to this solicitation can be revoked by the
person giving such proxy at any time before it is voted. Proxies can be
revoked by (i) filing with the Secretary of the Company, at or before the
taking of the vote at the Annual Meeting, a written notice of revocation
bearing a later date than the proxy, (ii) duly executing a subsequent proxy
relating to the same shares and delivering it to the Secretary of the
Company before the Annual Meeting or (iii) attending the Annual Meeting and
voting in person (although presence at the Annual Meeting without further
action will not revoke a proxy). Any written notice revoking a proxy should
be sent to: Niagara Corporation, Attention: Gilbert D. Scharf, Secretary,
667 Madison Avenue, New York, New York 10021, or hand delivered to the
Secretary at or prior to the vote at the Annual Meeting.
The Board of Directors has fixed the close of business on June 5,
1998 as the record date for the Annual Meeting. Accordingly, only holders
of record of shares of Common Stock at the close of business on such date
are entitled to notice of and to vote at the Annual Meeting. At the close
of business on the record date, 9,997,455 shares of Common Stock were
issued and outstanding. On all matters voted upon at the Annual Meeting,
holders of shares of Common Stock vote as a single class, with each record
holder entitled to one vote per share.
The presence, in person or by properly executed proxy, of holders of
a majority of outstanding shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum. A stockholder who abstains from a
vote on a particular matter by registering an abstention will be deemed
present at the Annual Meeting for quorum purposes, but will not be deemed
to have voted on such matter. Proxies relating to "street name" shares
voted by brokers on a discretionary basis on certain proposals will be
treated as present for quorum purposes on all proposals, but will not be
entitled to vote on any proposal as to which the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner ("broker non-votes").
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors has nominated six candidates for election at
the Annual Meeting. Each nominee currently serves as a director of the
Company. The directors elected at the Annual Meeting will hold office until
the next annual meeting of stockholders or until their respective
successors have been duly elected and qualified.
If a quorum is present, those nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected as directors. A
"plurality" means that the nominees who receive the greatest number of
votes present or represented by proxy are elected as directors, up to six
directors. Any shares not voted "FOR" a particular director (whether as a
result of a direction to withhold authority or a broker non-vote) will not
be counted to determine a plurality.
Unless otherwise specified, shares represented by properly executed
and returned proxies will be voted "FOR" the nominees listed below. Each
nominee has consented to being named in the proxy statement and to serve if
elected. If, prior to the Annual Meeting, any nominee becomes unavailable
for election, which is not anticipated, the persons named in the enclosed
proxy will have full discretion to vote or refrain from voting for any
other person in accordance with their best judgment.
NOMINEES FOR ELECTION
Certain information with respect to the nominees for election as
directors is set forth below.
MICHAEL J. SCHARF, 55, has been Chairman of the Board, President and
Chief Executive Officer of the Company since its inception in 1993. He has
also served as Chairman of the Board of Niagara LaSalle Corporation,
formerly Niagara Cold Drawn Corp. ("Niagara LaSalle"), and LaSalle Steel
Company ("LaSalle"), since the dates of their acquisition by the Company
and Niagara LaSalle, respectively, and currently holds various other
positions with such subsidiaries. Since December 1997, Mr. Scharf has been
Chairman of the Board of Worlds Inc., a development stage company which
designs, develops, and markets three-dimensional music-oriented Internet
sites on the worldwide web. In addition, since August 1994, Mr. Scharf has
been a director of Maxcor (see below), and until August 1997, was also Vice
President, Secretary and Treasurer of Maxcor. Since August 1989, Mr. Scharf
also has been a private investor. From October 1983 to August 1989, he was
the Chairman and Chief Executive Officer of Edgcomb Steel of New England,
Inc. and its successor corporation, Edgcomb Corporation, one of the largest
independent metals service center and distribution companies in the United
States. Mr. Scharf received an A.B. degree from Princeton University and an
M.B.A. from the Harvard Business School.
GILBERT D. SCHARF, 50, has been Secretary and a director of the
Company since its inception, and until March 1998, was also a Vice
President and the Treasurer of the Company. He has also served as a
director of Niagara LaSalle and LaSalle since the dates of their
acquisition by the Company and Niagara LaSalle, respectively. Since August
1994, Mr. Scharf has been Chairman of the Board, President and Chief
Executive Officer of Maxcor Financial Group Inc., a holding company with
operating subsidiaries in the financial services industry ("Maxcor"), and
currently holds the same positions with Euro Brokers Investment
Corporation, a financial services company and wholly owned subsidiary of
Maxcor, as well as of a number of its subsidiaries. Since 1989, Mr. Scharf
also has been a private investor and Chairman of Scharf Advisors, Inc. Mr.
Scharf received a B.A. degree from Duke University.
FRANK ARCHER, 61, has been a director of the Company since May 1998.
Mr. Archer has been President and a director of Niagara LaSalle since its
formation in 1986 and President and a director of LaSalle since April 1997
when it was acquired by Niagara LaSalle. Mr. Archer received a Certificate
in Tool and Die Design from the Cleveland Engineering Institute and an
Associates degree from John Carroll University. He also attended the
Advanced Management Program at the Harvard Business School.
GERALD L. COHN, 69, has been a director of the Company since its
inception. Mr. Cohn is a private investor who, since 1968, has been
involved in the financing and acquisition of companies, including AgMet,
Inc., a refiner of precious metals and a recycler of ferrous and
non-ferrous metals, Cadillac Cable Corp., a multi-plant manufacturer of
copper and aluminum building wire, Pepco, Inc., a ferrous and non-ferrous
metal recycler and ferrous stevedoring and shipping company, and DVI, Inc.,
a health service finance company for which Mr. Cohn currently serves as a
financial advisory consultant and a director. He is also a director of
Diametrics Medical, Inc. and Frazier Healthcare Investments, L.P. Mr. Cohn
attended Penn State University.
ANDREW R. HEYER, 40, has been a director of the Company since its
inception. Between February 1990 and August 1995, Mr. Heyer was a Managing
Director and co-head of the Argosy Group L.P., a financial advisory firm.
Since August 1995, Mr. Heyer has been a Managing Director of CIBC
Oppenheimer Corp. (formerly CIBC Wood Gundy Securities Corp.) ("CIBC"), an
investment banking firm. He is also the Chairman of Hain Food Group, Inc.
and a director of Hayes Lemmerz International, Inc. Mr. Heyer received a
B.S. degree and an M.B.A. from the Wharton School of the University of
Pennsylvania.
DOUGLAS T. TANSILL, 59, has been a director of the Company since
March 1998. Since December 1994, Mr. Tansill has been a Managing Director
in the Investment Banking Division at Paine Webber Incorporated, an
independent national securities firm. Prior thereto, he was a Managing
Director of Kidder, Peabody and Co. Incorporated and from May 1987 to
December 1994 was a member of the board of directors of such firm. Mr.
Tansill received a B.A. degree from Trinity College and an M.B.A. from the
Harvard Business School.
COMMITTEES, MEETINGS, AND COMPENSATION OF THE BOARD OF DIRECTORS
During 1997, the Board of Directors met four times. All incumbent
directors attended at least 75% of the meetings of the Board and Committees
on which they serve.
The Board of Directors has Audit and Compensation Committees. The
Audit Committee is comprised of Messrs. Michael Scharf (Chairman), Heyer
and Cohn and recommends to the Board of Directors the accounting firm to be
appointed as independent accountants for the Company; reviews with the
Company's management and independent accountants the Company's annual
operating results; and reviews with the Company's independent accountants
the scope and results of the audit and the adequacy of the Company's
internal accounting procedures and systems. The Audit Committee did not
meet during 1997 because its duties were carried out by the Board of
Directors.
The Compensation Committee is currently comprised of Messrs. Cohn
(Chairman) and Tansill. During 1997, the Compensation Committee was
comprised of Messrs. Cohn (Chairman) and Heyer. The Compensation Committee
considers and makes recommendations to the Board of Directors on matters
relating to the cash compensation of executive officers of the Company and
also administers the Company's 1995 Stock Option Plan. The Compensation
Committee will also administer the proposed Employee Stock Purchase Plan,
which plan is subject to stockholder approval (see Proposal 3). The
Compensation Committee met once during 1997.
The members of the Board of Directors are compensated in a manner and
at a rate determined from time to time by the full Board. On April 27,
1997, each member of the Board of Directors, other than Michael Scharf,
Douglas Tansill (whose service as a director did not commence until March
1998) and Frank Archer (whose service as a director did not commence until
May 1998), received as compensation for his service as a director, a
non-qualified stock option granted pursuant to the Company's 1995 Stock
Option Plan (a "Director Option") to purchase 10,000 shares of Common
Stock, exercisable at $5.50 per share. Each Director Option is currently
exercisable as to 4,000 of the underlying shares and becomes exercisable as
to an additional 2,000 of the underlying shares on each of the next three
anniversaries of the date of grant, provided the holder is then serving as
a director of the Company. Upon a "change in control" of the Company (as
defined in the 1995 Stock Option Plan), each Director Option will become
exercisable in full.
The Company maintains directors and officers liability insurance
which insures directors and officers of the Company and its subsidiaries
against certain liabilities incurred by them while serving in such
capacities, and reimburses the Company for certain indemnification payments
made by the Company to directors and officers of the Company and its
subsidiaries. This policy extends through March 12, 2001 at a total premium
of $215,000. No claims have been made under this policy.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew Heyer, a current director and nominee for election as a
director of the Company, is a Managing Director of CIBC, which rendered
investment banking and financial advisory services to the Company and
Niagara LaSalle in 1997. In April 1997, CIBC served as placement agent in
connection with the issuance of (i) $20 million aggregate principal amount
of 12.5% senior subordinated notes of Niagara LaSalle and (ii) 285,715
shares of Common Stock, the proceeds of which were used to finance Niagara
LaSalle's acquisition of LaSalle. The Company and Niagara LaSalle paid CIBC
$790,081 in fees and reimbursement of expenses as consideration for such
services.
On December 5, 1997, the Company loaned Gilbert D. Scharf $600,000,
the proceeds of which were used by Mr. Scharf to exercise Redeemable Common
Stock Purchase Warrants of the Company, which, having been called for
redemption, were not exercisable after December 11, 1997. The loan was
evidenced by a Promissory Note (the "Note") executed by Mr. Scharf in favor
of the Company. Interest on the unpaid principal amount of the Note accrues
at 5.68% per annum. Principal and interest on the Note are payable in full
on December 4, 1998, provided that Mr. Scharf may prepay all or part of the
unpaid principal amount of the Note without premium or penalty. The Note
requires installment payments of principal following the sale of shares of
Common Stock by Mr. Scharf in amounts equal to the proceeds from such
sales. Mr. Scharf is the Secretary and a director of the Company and, until
March 1998, was a Vice President of the Company and its Treasurer.
Michael J. Scharf and Gilbert D. Scharf are brothers. There are no
other family relationships among the Company's directors, executive
officers or persons nominated or chosen by the Company to become a director
or executive officer.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors, officers and persons who
beneficially own more than 10% of a registered class of the Company's
equity securities ("10% stockholders") to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and
changes in ownership in the Company's equity securities and to furnish the
Company with copies of all such forms. Based solely on its review of copies
of such forms received by it, and written representations that no other
reports were required, the Company believes that all such Section 16(a)
filing requirements applicable to its directors, officers and 10%
stockholders with respect to the Company's fiscal year ended December 31,
1997 and its prior fiscal years were complied with on a timely basis.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE SIX
NOMINEES LISTED ABOVE AS DIRECTORS.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning beneficial
ownership of Common Stock as of June 5, 1998 by (i) persons known by the
Company to be the beneficial owners of 5% or more of the outstanding shares
of Common Stock, (ii) each director of the Company, (iii) each Named
Executive Officer (as defined below) and (iv) all directors and executive
officers of the Company as a group.
PERCENTAGE
NUMBER OF BENEFICIALLY
NAME(1) SHARES (2) OWNED(3)
------- ---------- ------------
Michael J. Scharf........................ 1,274,200(4) 12.7%
Gilbert D. Scharf........................ 560,700(5) 5.6%
Frank Archer............................. 140,000 1.4%
Gerald L. Cohn........................... 29,000 *
Andrew R. Heyer.......................... 29,000 *
Marc J. Segalman ........................ 15,000 *
Douglas T. Tansill....................... 2,000 *
All directors and executive officers as
a group (eight persons)................. 2,189,900 21.0%
- -----------------
* Less than 1%
(1) The address of each stockholder is c/o Niagara Corporation, 667
Madison Avenue, 11th Floor, New York, New York 10021.
(2) Includes shares of Common Stock issuable upon the exercise of stock
options held by the stockholder that are currently exercisable or
exercisable within 60 days ("Exercisable Options"). Beneficial
Ownership of Exercisable Options is as follows: Michael J. Scharf --
60,000; Gilbert D. Scharf -- 19,000; Frank Archer -- 140,000; Gerald
L. Cohn -- 19,000; Andrew R. Heyer -- 19,000; Marc J. Segalman --
15,000; Douglas T. Tansill -- 2,000; and all directors and executive
officers as a group -- 414,000.
(3) Based upon 9,997,455 shares of Common Stock outstanding as of June 5,
1998, plus any shares of Common Stock issuable upon the exercise of
Exercisable Options held by the stockholder (but not by any other
stockholder).
(4) Includes 205,000 shares of Common Stock held by the Michael J. Scharf
1987 Grantor Income Trust and 194,500 shares of Common Stock held by
the Scharf Family 1989 Trust. Michael Scharf is trustee of both of
these trusts.
(5) Includes 238,700 shares of Common Stock held by the Gilbert D. Scharf
Living Trust, of which Gilbert Scharf is the sole trustee.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information with respect to each of the
executive officers of the Company who is not also a director or director
nominee of the Company.
RAYMOND ROZANSKI, 52, has been a Vice President and the Treasurer of
the Company since March 1998, Executive Vice President, Secretary,
Treasurer and a director of Niagara LaSalle since its formation,and
Executive Vice President, Treasurer and a director of LaSalle since it was
acquired by Niagara LaSalle. Mr. Rozanski received a B.S. degree in
Business Administration from the State University of New York at Buffalo.
MARC J. SEGALMAN, 39, has been Vice President and General Counsel of
the Company since September 1997. From October 1987 to August 1997, Mr.
Segalman was an attorney in the mergers and acquisitions group of the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Segalman received an
A.B. degree from Dartmouth College and a J.D. degree from the Boston
University School of Law.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation paid by the Company and
its subsidiaries during each of the last three fiscal years to its Chief
Executive Officer and its other executive officers as of and for the year
ended December 31, 1997 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Securities
Executive Officer Year Annual Compensation (1) Underlying All Other
Base Salary Bonus(2) Options (No. of Shares) Compensation(3)
<S> <C> <C> <C> <C> <C>
Michael J. Scharf 1997 $ 400,000(4) $ 200,000 100,000 $ 2,270
Chairman, Chief 1996 $ 240,000 $ 100,000 200,000 1,634
Executive Officer 1995 $ 90,000(5) -- -- (6)
and President
Marc J. Segalman (7) 1997 $ 75,000 -- 50,000 406
Vice President and
General Counsel
Gilbert D. Scharf (8) 1997 -- -- 10,000 (9) --
Vice President, 1996 -- -- 15,000 (9) --
Secretary and 1995 -- -- -- (10)
Treasurer
</TABLE>
------------
(1) Prior to the Company's acquisition of Niagara LaSalle on August 16,
1995, none of the Company's executive officers received any
compensation for services rendered, but were reimbursed for out-of
pocket expenses incurred in connection with the Company's business.
(2) Awarded in respect of prior calendar year.
(3) Amounts for each of Messrs. Michael Scharf and Segalman include
annual premiums ranging from $406 to $1,624 paid by the Company on
life insurance policies providing coverage for such officers of two
times annual salary, up to a maximum of $250,000. Amounts for Mr.
Scharf also include annual premiums ranging from $329 to $646 on
long-term disability policies providing for, in the event of
disability, two-thirds of monthly earnings, up to a maximum of $4,500
per month. Certain perquisites and other personal benefits that
aggregate in each case less than 10% of the Named Executive Officer's
annual salary and bonus have been omitted pursuant to item
402(b)(2)(iii)(C)(1) of Regulation S-K.
(4) Based on an annual salary of $480,000 set by the Compensation
Committee in April 1997, effective May 1, 1997.
(5) Based on an annual salary of $240,000 set by the Compensation
Committee in January 1996, effective as of August 16, 1995.
(6) Through August 1995, the Company paid $5,000 per month to MGS
Corporation for office space and certain office and secretarial
services. MGS Corporation was wholly owned by Michael Scharf.
(7) Mr. Segalman did not join the Company until September 1997. His
compensation disclosed for 1997 relates only to a partial year
(reflecting an annual base salary of $225,000).
(8) Gilbert Scharf resigned as a Vice President and the Treasurer of the
Company during March 1998. Under the Commission's disclosure
requirements, Mr. Scharf nonetheless is considered an executive
officer of the Company for purposes of this Proxy Statement because
he was serving in such capacity during the Company's last fiscal
year.
(9) Granted as compensation for services as a director.
STOCK OPTION GRANT TABLE
The following table sets forth certain information concerning stock
options granted during 1997 to each Named Executive Officer. All such
options were granted under the Company's 1995 Stock Option Plan.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed
Shares Options Annual Rates of
Underlying Granted to All Exercise Stock Price
Executive Options Employees in Price Per Expiration Appreciation
Officer Granted 1997 (1) Share Date for Option Term
- ----------- ---------- -------- --------- ---------- ------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Michael J. Scharf 100,000 (2) 28.2 $5.50 4/27/07 (3) $346,000 $877,000
Marc J. Segalman 25,000 (4) 7.0 5.75 7/29/07 (4) 90,500 229,000
25,000 (5) 7.0 8.50 9/08/07 (5) 133,750 338,750
Gilbert D. Scharf 10,000 (6) 2.8 5.50 4/27/07 (7) 34,600 87,700
</TABLE>
(1) Includes option granted to Gilbert Scharf as compensation for his
service as a director, but excludes options granted to other directors
for such service.
(2) On April 27, 1997, Michael Scharf was granted a non-qualified stock
option to purchase an aggregate of 100,000 shares of Common Stock.
Such option is currently exercisable as to 20% of the underlying
shares and will become exercisable as to an additional 20% of the
underlying shares on each of the next four anniversaries of the date
of grant, provided that Mr. Scharf is then employed by the Company or
one of its subsidiaries. Upon the occurrence of a "change in control"
of the Company (as defined in the 1995 Stock Option Plan), such option
will become exercisable in full.
(3) Expires on the earlier of April 27, 2007 and 90 days after the
termination of Michael Scharf's employment with the Company and its
subsidiaries.
(4) On July 29, 1997, Mr. Segalman was granted a non-qualified stock
option to purchase an aggregate of 25,000 shares of Common Stock. Such
option became exercisable as to 5,000 of the underlying shares on
September 8, 1997 (concurrent with the commencement of his employment
with the Company), and will become exercisable as to an additional
5,000 of the underlying shares on each of the next four anniversaries
of the date of grant, provided that Mr. Segalman is then employed by
the Company or one of its subsidiaries. Upon the occurrence of a
"change in control" of the Company, such option will become
exercisable in full. This option expires on the earlier of July 29,
2007 and 90 days after the termination of Mr. Segalman's employment
with the Company and its subsidiaries.
(5) On September 8, 1997, Mr. Segalman was granted an incentive stock
option to purchase an aggregate of 25,000 shares of Common Stock. Such
option became exercisable as to 5,000 of the underlying shares on the
date of grant and will become exercisable as to an additional 5,000 of
the underlying shares on each of the next four anniversaries of the
date of grant, provided that Mr. Segalman is then employed by the
Company or one of its subsidiaries. Upon the occurrence of a "change
in control" of the Company, such option will become exercisable in
full. This option expires on the earlier of September 8, 2007 and 90
days after the termination of Mr. Segalman's employment with the
Company and its subsidiaries.
(6) Granted as compensation for Gilbert Scharf's service as a director.
Such option is currently exercisable as to 4,000 of the underlying
shares of Common Stock and will become exercisable as to an additional
2,000 of the underlying shares on each of the next three anniversaries
of the date of grant, provided Mr. Scharf is then serving as a
director of the Company. Upon the occurrence of a "change in control"
of the Company, such option will become exercisable in full.
(7) Expires on the earlier of April 27, 2007 and 90 days after the date on
which Gilbert Scharf ceases to serve as a director of the Company.
STOCK OPTION EXERCISES AND FISCAL YEAR END VALUES
No options were exercised by any of the Named Executive Officers
during 1997.
The following table sets forth, for each Named Executive Officer,
the number of shares of Common Stock underlying the total number of stock
options held by him at the Company's December 31, 1997 fiscal year end, and
the aggregate dollar value of the in-the-money unexercised stock options as
of such date, with those options that were then exercisable and those that
were then unexercisable separately identified.
EXERCISABLE/UNEXERCISABLE STOCK OPTIONS AT
FISCAL YEAR END AND FISCAL YEAR END VALUES
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Unexercised In-the-Money
Options at 1997 Fiscal Year End Options (1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael J. Scharf 40,000 260,000 $ 175,000 $ 1,137,500
Marc J. Segalman 10,000 40,000 27,500 110,000
Gilbert D. Scharf 17,000 8,000 74,375 35,000
</TABLE>
(1) Based on the December 31, 1997 closing sale price for the Common
Stock of $97/8 per share.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors, formed in
August 1995, is currently comprised of Messrs. Cohn (Chairman) and Tansill.
During 1997, Andrew Heyer was a member of the Compensation Committee. Mr.
Heyer is a Managing Director of CIBC. As discussed under "Certain
Relationships and Related Transactions," in April 1997, CIBC served as
placement agent in connection with the issuance of certain securities of
the Company and Niagara LaSalle, the proceeds of which were used to finance
Niagara LaSalle's acquisition of LaSalle. The Company and Niagara LaSalle
paid CIBC $790,081 in fees and reimbursement of expenses as consideration
for such services.
General
The Compensation Committee considers and makes recommendations to the
Board on matters relating to cash compensation of the Company's executive
officers and is also responsible for administering the Company's 1995 Stock
Option Plan, which plan was approved by the Company's stockholders in May
1996, and the Company's Employee Stock Purchase Plan, which plan is subject
to stockholder approval (See Proposal 3). The Compensation Committee
reviews and develops compensation policies and programs designed to enhance
the Company's long-term profitability. Currently, the Compensation
Committee's objectives are implemented through three components -- base
salary, annual bonus and stock option awards. In considering and
determining these components, the Compensation Committee, among other
things, reviews the Company's current and historical performance and
evaluates the executive's contributions and performance for the relevant
compensation period.
Compensation of the Chief Executive Officer
In establishing (in May 1997) Michael Scharf's base salary for the
year, the Compensation Committee considered (i) Mr. Scharf's efforts and
contributions to the Company (and in particular, Mr. Scharf's significant
efforts to complete Niagara LaSalle's acquisition of LaSalle in April
1997), (ii) the fact that Mr. Scharf had served as the Company's Chairman,
Chief Executive Officer and President without compensation for over two
years and (iii) the salary levels of Niagara LaSalle's senior management.
In establishing (in March 1998) Michael Scharf's bonus in respect of
1997, the Compensation Committee considered (i) Mr. Scharf's contributions
to the Company and, in particular, Mr. Scharf's significant efforts to
complete Niagara LaSalle's acquisition of LaSalle, (ii) Mr. Scharf's
significant efforts to improve operations and efficiency and reduce costs
at the Company's operating subsidiaries, (iii) the successful restructuring
of the capital structure of the Company and its subsidiaries, (iv) the
results of operations for the Company and its subsidiaries for 1997 and (v)
bonuses paid to Niagara LaSalle and LaSalle senior management in respect of
1997.
On April 27, 1997, the Compensation Committee determined to grant Mr.
Scharf a non-qualified stock option to purchase an aggregate of 100,000
shares of Common Stock at $5.50 per share. On the last trading day before
such option was granted, the closing sales price for the Common Stock was
$5 3/8 per share. Mr. Scharf's option is currently exercisable as to 20% of
the underlying shares, and will become exercisable as to an additional 20%
of the underlying shares on each of the next four anniversaries of the date
of grant, provided that Mr. Scharf is then employed by the Company or one
of its subsidiaries. Upon the occurrence of a "change in control" of the
Company (as defined in the Company's 1995 Stock Option Plan), such option
will become fully exercisable. In making the determination to grant Mr.
Scharf such option, the Compensation Committee considered (i) Mr. Scharf's
long-term contributions to the Company and, in particular, his successful
shepherding of the Company through three acquisitions, (ii) the fact that
Mr. Scharf had served as the Company's Chairman, Chief Executive Officer
and President without compensation for over two years, (iii) the options
granted to other employees of the Company and its subsidiaries and (iv)
that the five-year vesting schedule would serve to further align Mr.
Scharf's interests with the long-term interests of the Company and its
stockholders.
Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the tax deductibility by a company of compensation in excess
of $1 million paid to its chief executive officer and four remaining most
highly compensated executive officers in a taxable year. However,
compensation which qualifies as "performance-based" is excluded from the $1
million limit if, among other requirements, the compensation is payable
only upon attainment of pre-established, objective performance goals under
a plan approved by stockholders. Compensation attributable to the Company's
1995 Stock Option Plan has been designed to be, and should qualify as,
"performance-based" under Section 162(m). The Compensation Committee will
continue to monitor the compensation levels potentially payable under the
Company's compensation programs, but intends to retain the flexibility
necessary to provide total compensation in line with the Company's
compensation philosophy and the Company's strategic goals and best
interests.
COMPENSATION COMMITTEE
Gerald L. Cohn, Chairman
Andrew R. Heyer (member through March 1998)
Douglas T. Tansill (member since March 1998)
STOCK PRICE PERFORMANCE COMPARISON
The following graph compares cumulative total return of shares of
Common Stock with the cumulative total return of (i) the Standard & Poor's
600 Smallcap index (the "S&P 600 Smallcap Index") and (ii) an industry peer
group index comprised of six other publicly-traded steel companies (the
"Steel Index"). The graph assumes $100 was invested on August 16, 1995 in
shares of Common Stock, and stocks comprising the S&P 600 Smallcap Index
and the Steel Index, and the reinvestment of all dividends, and shows the
percentage change from such date.
The companies comprising the Steel Index are publicly-traded steel
companies that produce, process and/or distribute steel bars. The companies
comprising the Steel Index are: A.M. Castle & Co., Bayou Steel Corporation,
Birmingham Steel Corporation, Nucor Corporation, Republic Engineered
Steels, Inc. and Quanex Corporation.
Between August 20, 1993 (the date the Company consummated an initial
public offering) and August 16, 1995, the Company possessed certain unique
business purposes and investor-protection features associated with a
"Specified Purpose Acquisition Company"(R) ("SPAC"). For comparison in
prior years, the Company used a peer group index consisting of
publicly-traded SPACs. Because the Company has not had such purposes and
features since August 16, 1995, it believes the use of the Steel Index is
more appropriate.
COMPARATIVE STOCK PRICE PERFORMANCE(1)
<TABLE>
<CAPTION>
S&P 600
Niagara Corporation Steel Index Small Cap Index
Date Price Divs Ret Price Divs Ret Price Divs Ret
---- ----- ---- --- ----- ---- --- ----- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/98 8.81 -- 67.86 99.28 -- 6.61 200.84 .126 91.68
2/27/98 9.56 -- 82.14 99.59 -- 6.95 193.58 .129 84.63
1/30/98 9.00 -- 71.43 93.06 -- -.07 177.54 .087 69.22
12/31/97 9.88 -- 88.10 91.63 -- -1.61 181.16 .128 72.59
11/28/97 9.25 -- 76.19 92.69 -- -.47 177.71 .127 69.18
10/31/97 9.00 -- 71.43 96.44 -- 3.56 179.14 .090 70.42
9/30/97 9.88 -- 88.10 100.63 -- 8.05 187.31 .125 78.11
8/29/97 8.13 -- 54.76 106.53 -- 14.40 175.81 .131 67.06
7/31/97 7.13 -- 35.71 105.19 -- 12.95 171.62 .085 62.96
6/30/97 5.88 -- 11.90 98.06 -- 5.30 161.55 .121 53.32
5/30/97 6.13 -- 16.67 101.19 -- 8.66 154.83 .138 46.83
4/30/97 5.63 -- 7.14 86.63 -- -6.98 138.68 .086 31.40
3/31/97 5.25 -- .00 85.69 -- -7.99 137.09 .121 29.81
2/28/97 5.69 -- 8.33 94.00 -- .94 144.63 .112 36.83
1/31/97 5.75 -- 9.52 100.00 -- 7.38 147.80 .100 39.72
12/31/96 4.38 -- -16.67 102.38 -- 9.93 145.48 .114 37.43
11/29/96 4.25 -- -19.05 104.00 -- 11.68 143.91 .117 35.84
10/31/96 4.50 -- -14.29 99.00 -- 6.31 136.92 .106 29.14
9/30/96 5.13 -- -2.38 107.75 -- 15.70 137.98 .109 30.04
8/30/96 4.38 -- -16.67 104.38 -- 12.08 132.29 .129 24.58
7/31/96 5.63 -- 7.14 104.38 -- 12.08 124.72 .091 17.34
6/28/96 5.63 -- 7.14 111.00 -- 19.19 134.03 .107 26.00
5/31/96 5.88 -- 11.90 112.00 -- 20.27 139.61 .134 31.14
4/30/96 5.13 -- -2.38 108.05 -- 16.03 134.95 .080 26.64
3/29/96 4.75 -- -9.52 103.97 -- 11.65 127.70 .113 19.77
2/29/96 5.69 -- 8.33 99.47 -- 6.82 125.13 .127 17.26
1/31/96 4.69 -- -10.71 102.13 -- 9.66 121.29 .072 13.54
12/29/95 4.50 -- -14.29 101.13 -- 8.59 121.10 .107 13.30
11/30/95 5.06 -- -3.57 91.97 -- -1.23 119.24 .121 11.46
10/31/95 5.25 -- .00 89.63 -- -3.76 114.82 .075 7.22
9/29/95 6.25 -- 19.05 88.43 -- -5.05 120.86 .090 12.78
8/31/95 6.00 -- 14.29 93.15 -- .03 117.94 .124 9.98
7/31/95 5.25 -- 0.00 96.53 -- 3.65 115.56 .072 7.64
6/30/95 5.25 -- 0.00 93.13 -- .00 107.42 .00
</TABLE>
(1) The comparisons in the performance graph are set forth in response to
disclosure requirements of the Commission and are not intended to
forecast or be indicative of future performance of the shares of the
Common Stock (or of any of the indices or companies comprising them).
The shares of Common Stock are traded on the Nasdaq National Market.
Until October 15, 1995, such stock was quoted on the OTC Bulletin Board, a
National Association of Securities Dealers, Inc. sponsored and operated
inter-dealer automated quotation system for equity securities not included
in the Nasdaq System. Such over-the-counter market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily reflect actual transactions.
PROPOSAL 2: AMENDMENT OF 1995 STOCK OPTION PLAN
On May 16, 1996, the stockholders of the Company approved the
Company's 1995 Stock Option Plan. As originally intended, the purpose of
this plan was to align the interests of officers, key employees and
independent contractors of the Company and its subsidiaries with those of
the Company's stockholders, and to reward the performance of such
individuals. In October 1996, the 1995 Stock Option Plan was amended (as
amended, the "1995 Plan") to provide that directors of the Company and its
subsidiaries may be granted stock options for their service as a director.
The 1995 Plan authorizes the grant of stock options ("Options") that
qualify as incentive stock options ("ISOs") pursuant to Section 422 of the
Code, as well as Options that do not so qualify ("NonQualified Stock
Options" or "NQSOs").
The Board of Directors has unanimously approved an amendment,
attached as Annex A, to the 1995 Plan (the "Amendment") which, if approved
by stockholders, will (i) increase the number of shares of Common Stock
reserved for issuance under the 1995 Plan by 1,000,000 shares and (ii)
increase by 200,000 shares the limit on the number of shares of Common
Stock with respect to which options may be granted to any individual in any
year (the "Annual Limit"), in each case subject to adjustment as described
below and in the 1995 Plan. Of the 1,500,000 shares of Common Stock
currently authorized for issuance under the 1995 Plan, Options to acquire
1,240,000 shares have been granted. Because it believes that the 260,000
shares of Common Stock remaining available for issuance under the 1995 Plan
are not sufficient to attract, retain and reward qualified management, the
Board has determined, subject to stockholder approval, to reserve an
additional 1,000,000 shares of Common Stock for issuance under such plan.
In addition, by increasing the Annual Limit from 400,000 to 600,000 shares
of Common Stock, the Board believes that it will have more flexibility in
structuring compensation packages for senior management, and, subject to
stockhholder approval, has amended the 1995 Plan accordingly.
The following is a description of the material terms of the 1995
Plan, and as such is qualified in its entirety by the actual terms of such
plan, a copy of which is on file with the Commission.
PRINCIPAL FEATURES OF THE 1995 PLAN
Administration
The 1995 Plan is administered by a committee (currently the
Compensation Committee) of the Board (the "Committee") comprised of at
least two directors. Under the 1995 Plan, the Committee determines, among
other things, to whom Options will be granted, the designation (ISO or
NQSO) and number of Options to be granted, and the terms, conditions and
restrictions of such Options. The Committee is also authorized to interpret
the 1995 Plan and any Option, determine the terms and provisions of
agreements evidencing such Options ("Option Agreements"), and prescribe,
amend and rescind rules and regulations relating to the 1995 Plan. All
decisions, determinations and interpretations made by the Committee are
final and binding upon all interested persons. No member of the Committee
will be liable for any action taken or determination made in good faith
with respect to the 1995 Plan or any Option granted thereunder.
Shares Subject to the 1995 Plan
Upon stockholder approval of the Amendment, the number of shares of
Common Stock reserved for issuance under the 1995 Plan will be 2,500,000,
subject to adjustment as described below. Such shares may be authorized but
unissued shares or shares reacquired by the Company. If any shares subject
to an Option are forfeited, cancelled, exchanged or surrendered, or if an
Option otherwise terminates or expires without a distribution of shares,
the shares of Common Stock subject to such Option shall, to the extent of
such forfeiture, cancellation, exchange, surrender, termination or
expiration, become available for future grants under the 1995 Plan.
Upon stockholder approval of the Amendment, the 1995 Plan will
provide that participants in the plan ("Participants") cannot in any one
year be granted Options to purchase more than 600,000 shares of Common
Stock, subject to adjustment as described below.
In certain circumstances (as described in the 1995 Plan) and in order
to prevent dilution or enlargement of Participants' rights, the 1995 Plan
provides that the Committee will make such equitable adjustments as it
deems necessary or appropriate to (i) the number and kind of shares of
Common Stock issued or issuable in respect of Options and (ii) the
exercise, grant, or purchase price relating to an Option, provided that any
such adjustment with respect to an ISO must be made in accordance with
Section 424 of the Code.
On June 5, 1998, the closing price of the Common Stock on the Nasdaq
National Market was $9-3/8 per share.
Terms of Options
Each Option granted under the 1995 Plan is designated by the
Committee as either an ISO or NQSO at the time of grant. As required by the
Code, the aggregate Fair Market Value (as defined in the 1995 Plan and as
determined as of the date of grant) of the shares of Common Stock with
respect to which ISOs are exercisable for the first time by a Participant
during any calendar year cannot exceed $100,000.
Each Option granted under the 1995 Plan is evidenced by an Option
Agreement containing the terms and conditions of the Option, including its
exercise price and the number of shares of Common Stock issuable upon
exercise. The Option exercise price must be paid in full, at the time of
exercise, in cash or shares of Common Stock having a Fair Market Value
equal to such exercise price, in a combination of cash and Common Stock or,
in the sole discretion of the Committee, through a cashless exercise
procedure. Option exercise prices for ISOs cannot be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant (110% if
the Participant owns more than 10% of the outstanding stock of the
Company).
Unless otherwise provided in the Option Agreement, on the date of
grant, each Option is exercisable as to 20% of the Common Stock issuable
upon the exercise thereof, and becomes exercisable as to an additional 20%
on each of the next four anniversaries of such date, provided that the
Committee may accelerate the exercisability of any outstanding Option at
such time and under such circumstances as it, in its sole discretion, deems
appropriate. Unless sooner terminated by the terms of the 1995 Plan or an
Option Agreement, each Option expires not later than ten years from the
date of grant. If a Participant's employment with the Company (or a
subsidiary) terminates, the Committee has the exclusive authority to
determine if, for how long, and under what conditions Options can be
exercised after such termination. In no event will an Option continue to be
exercisable beyond its expiration date.
Upon a Change in Control of the Company, all Options then outstanding
will become immediately exercisable in full. A Change in Control is defined
as (i) the acquisition (other than by an "excluded person," as defined in
the 1995 Plan) of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding voting securities,
(ii) a change in a majority of the Board (subject to certain exceptions for
new directors whose election or nomination was approved by a majority of
directors then in office), (iii) the Company's stockholders approving a
merger or consolidation of the Company other than a transaction which
results in the Company's voting securities continuing to represent 70% or
more of the combined voting power of the Company (or parent or surviving
entity), or a merger or consolidation effected pursuant to a
recapitalization of the Company in which no person other than an "excluded
person" acquires 30% of the voting power of the Company's then outstanding
securities, or (iv) the Company's stockholders approving a plan of complete
liquidation of the Company or an agreement for the sale of all or
substantially all of the Company's assets.
Amendment and Termination of the 1995 Plan
The Board or the Committee may from time to time amend or terminate
the 1995 Plan, but cannot, without approval of the Company's stockholders,
adopt an amendment to the 1995 Plan for which stockholder approval is
required under applicable Delaware law or in order for the 1995 Plan to
continue to comply with Rule 16b-3 under the Exchange Act. In addition, no
such amendment can be adopted which adversely affects any of the rights of
any Participant under any previously granted Option, without such
Participant's consent. If the 1995 Plan is terminated, unexercised Options
will continue to be exercisable in accordance with their terms and the
terms of the 1995 Plan in effect immediately prior to such termination.
Eligibility
Any officer, key employee, independent contractor or director of the
Company or any of its subsidiaries is eligible to participate in the 1995
Plan. Under the Code, however, only employees of the Company and its
subsidiaries may be granted ISOs. No Options may be granted under the 1995
Plan on or after August 15, 2005.
Since Options granted under the 1995 Plan are subject to the
discretion of the Committee, benefits under the 1995 Plan are not
determinable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a brief summary of the principal United
States federal income tax consequences under current federal income tax
laws, is not intended to be exhaustive, and, among other things, does not
describe state, local or foreign income and other tax consequences.
Incentive Stock Options
A Participant will not recognize taxable income upon the grant or
timely exercise of an ISO, and the Company will not be entitled to a tax
deduction with respect to such grant or exercise. The exercise of an ISO
may, however, give rise to taxable compensation income (and be subject to
applicable withholding taxes) and a corresponding tax deduction to the
Company if the ISO is not exercised on a timely basis (generally, while the
Participant is employed by the Company or within 90 days after termination
of employment) or if the Participant subsequently engages in a
"disqualifying disposition," as described below.
A sale or exchange by a Participant of shares acquired upon the
exercise of an ISO more than one year after the transfer of shares to such
Participant or more than two years after the date of grant of the ISO,
whichever is later, will result in any difference between the net sale
proceeds and the exercise price being treated as long-term capital gain (or
loss) to the Participant. If such sale or exchange takes place within two
years after the date of grant or within one year from the date of transfer
of the underlying shares to the Participant, such sale or exchange will
generally constitute a "disqualifying disposition" and have the following
results: any excess of (i) the lesser of (a) the fair market value of the
shares at the time of exercise of the ISO and (b) the amount realized on
such disqualifying disposition of the shares over (ii) the option exercise
price of such shares will be taxable as ordinary income to the Participant
and subject to applicable withholding taxes, and the Company will be
entitled to a tax deduction in the amount of such income. Any further gain
or loss after the date of exercise generally will qualify as capital gain
or loss and not result in any deduction by the Company.
Generally, when shares of previously acquired Common Stock are
surrendered as payment for the exercise price of an ISO, no gain or loss
will be recognized as a result of the exchange. However, if the shares
surrendered were acquired pursuant to the exercise of an ISO and at the
date of surrender the applicable ISO holding period for such shares has not
been met, then such surrender will constitute a disqualifying disposition
giving rise to ordinary income tax treatment (as discussed above).
Non-Qualified Stock Options
Generally, a Participant will not recognize taxable income upon the
grant of an NQSO, and the Company will not be entitled to a tax deduction
with respect to such grant.
Upon the exercise of an NQSO, the amount by which the fair market
value of the shares of Common Stock received upon exercise exceeds the
exercise price will be taxable as compensation income to the Participant
and be subject to applicable withholding taxes. The Company generally will
be entitled to a tax deduction at such time and in the amount of such
compensation income. The Participant's tax basis for the shares of Common
Stock received upon exercise of an NQSO will be the sum of the compensation
income recognized and the exercise price.
Upon the sale of shares of Common Stock received upon the exercise of
an NQSO, any appreciation or depreciation after the exercise date generally
will be taxed as capital gain or loss and be long-term capital gain or loss
if such shares were held for more than one year.
If the exercise price of an NQSO is paid, in whole or in part, with a
Participant's previously acquired shares of Common Stock, then such
Participant will recognize no gain or loss for federal income tax purposes
on the shares surrendered (except in certain cases in which such shares
were acquired upon the exercise of an ISO), but otherwise will be taxed in
accordance with the discussion above.
APPROVAL REQUIRED
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to approve the Amendment. An abstention will
have the same effect as a vote against the Amendment; broker non-votes will
be disregarded and will have no effect on the outcome of the vote. Unless a
contrary instruction is indicated, a properly executed and returned proxy
will be voted "FOR" approval of the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT.
PROPOSAL 3: PROPOSED EMPLOYEE STOCK PURCHASE PLAN
Stockholders of the Company are being asked to consider and approve
the Niagara Corporation Employee Stock Purchase Plan (the "Purchase Plan").
The purpose of the Purchase Plan is to provide employees of the Company and
its subsidiaries with an opportunity to purchase, on favorable terms,
shares of Common Stock through accumulated payroll deductions and thereby
provide such employees with an added incentive to contribute to the
prosperity of the Company. The Purchase Plan was approved by the Board of
Directors on March 12, 1998 and is designed to encourage the purchase of
shares of Common Stock by a broad base of employees. The Purchase Plan is
intended to comply with the requirements of Section 423 of the Code and to
obtain for the participating employees the tax advantages provided thereby
(as described under "Certain Federal Income Tax Consequences" below). In
order for the purchase of Common Stock under the Purchase Plan to qualify
for such tax treatment, the plan must be approved by the Company's
stockholders within 12 months of its adoption.
The following description of the Purchase Plan does not purport to be
complete and is qualified in its entirety by reference to the full text
thereof attached as Annex B. Capitalized terms used and not defined herein
have the meanings defined in the Purchase Plan.
PRINCIPAL FEATURES OF THE PURCHASE PLAN
Administration
The Purchase Plan would be administered by the Compensation Committee
or any other committee of the Board (the "Committee") appointed to
administer such plan. Subject to the terms of the Purchase Plan, the
Committee could make such rules and regulations and establish such
procedures for the administration of the Purchase Plan as it deems
appropriate. All decisions, determinations and interpretations made by the
Committee would be final and binding upon all interested persons. No member
of the Committee would be liable for any action taken or any determination
or interpretation made in good faith with respect to the Purchase Plan.
Eligibility
Any employee regularly employed by the Company, Niagara LaSalle or
LaSalle on a full-time basis would be eligible to participate in the
Purchase Plan, provided such employee has worked at least 1,000 hours
during a period of 12 consecutive months from the most recent date of
employment. Employees who are five percent or more stockholders of the
Company or any subsidiary of the Company, however, would not be eligible to
participate. Employees of any corporation acquired by the Company after
approval of the Purchase Plan could participate if such corporation was so
designated by the Committee.
As described below, the amount of benefits to be received by each
participating employee would be determined by such employee's purchase
election. Accordingly, benefits under the Purchase Plan are not
determinable.
Participation
An eligible employee may participate in the Purchase Plan by filing
before an applicable Offering Date an enrollment agreement authorizing
payroll deductions of up to 10% of such employee's Compensation. A
participating employee may elect to discontinue participation in the
Purchase Plan at any time (or participation will automatically terminate
upon interruption or termination of an employee's Continuous Status as an
Employee) and the amount credited to such employee's account that has not
been used to purchase shares of Common Stock will be returned without
interest.
Purchase of Common Stock
The purchase price of shares of Common Stock subject to options
granted under the Purchase Plan is the lower of (i) 85% of the closing
price of the Common Stock on the Nasdaq National Market at the beginning of
the Offering Period (the date of grant) or (ii) 85% of such closing price
at the end of the Offering Period (the date of exercise). No option would
be granted under the Purchase Plan which would permit a Participant's right
to purchase shares of Common Stock to accrue at a rate which exceeds
$25,000 in Fair Market Value (determined on the date of grant) for each
calendar year in which such option is outstanding at any time.
Upon the expiration of each Offering Period, a Participant's option
is exercised automatically for the purchase of that number of full shares
of Common Stock which the accumulated payroll deductions credited to such
Participant's account, and not previously withdrawn, would purchase at the
applicable purchase price.
On June 5, 1998, the closing price of the Common Stock on the Nasdaq
National Market was $9-3/8 per share.
Offering Periods are based on calendar quarters (the first of which
would begin on October 1, 1998) although the Committee, in the exercise of
its sole discretion, may change the commencement dates and length of such
periods. Upon a proposed Change in Control of the Company, the Committee
would shorten the Offering Period then in progress, although, in such
event, the Committee, in the exercise of its sole discretion, may take such
other action as it deems appropriate. A Change in Control of the Company is
defined as (i) a merger or consolidation of the Company, other than a
transaction which results in the Company's voting securities continuing to
represent 70% or more of the combined voting power of the Company (or
parent or surviving entity), or a merger or consolidation effected pursuant
to a recapitalization of the Company in which no person other than an
Excluded Person acquires 30% of the voting power of the Company's then
outstanding securities, (ii) the Company's stockholders approving a plan of
complete liquidation of the Company or (iii) the sale of all or
substantially all of the Company's assets.
Shares Subject to the Purchase Plan
The number of shares of Common Stock reserved for issuance under the
Purchase Plan is 1,000,000, subject to adjustment as described below. Such
shares may be authorized but unissued shares or shares reacquired by the
Company. If any option granted under the Purchase Plan expires or
terminates without a distribution of shares, the shares of Common Stock
subject to such option shall, to the extent of such expiration or
termination, become available for future grants under the Purchase Plan.
In the event of a Change in Capitalization of the Company, the
Purchase Plan provides that the Committee will make such equitable
adjustments as it deems appropriate to, among other things, (i) the number
of shares of Common Stock reserved for issuance under the Purchase Plan and
(ii) the purchase price for options granted under the Purchase Plan but not
yet exercised.
Transferability
The right to purchase shares of Common Stock which is granted to a
participating employee under the Purchase Plan would not be transferable
and would be exercisable only by such employee.
Term
The Purchase Plan will terminate on March 31, 2008 unless terminated
earlier in the sole discretion of the Board.
Amendments to or Discontinuance of the Purchase Plan
The Board could from time to time amend, suspend or discontinue the
Purchase Plan; provided, however, that to the extent required by Rule 16b-3
under the Exchange Act, Section 423 of the Code or any other law,
regulation, stock exchange or other applicable securities market rule, no
such amendment could be effected without the approval of stockholders of
the Company entitled to vote thereon. In addition, the Committee could make
such amendments as it deems necessary to comply with applicable laws, rules
and regulations.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a brief summary of the principal United
States federal income tax consequences under current federal income tax
laws, is not intended to be exhaustive, and, among other things, does not
describe state, local or foreign income and other tax consequences.
The Purchase Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Code. Certain federal income tax
consequences to Participants from such status under present law are
described below.
Neither the grant of an option under the Purchase Plan nor the
purchase of shares of Common Stock upon exercise of such option will result
in an employee's realization of taxable income, thus permitting employees
to acquire Common Stock under the Purchase Plan without immediate tax
consequences. An employee who does not dispose of shares of Common Stock so
purchased until at least 2 years after the date of grant of such employee's
option with respect thereto and 12 months after the date of exercise will
also receive long-term capital gain treatment for any appreciation in the
value of such shares of Common Stock over the lower of (i) the fair market
value of such shares at the time the option is granted or (ii) the fair
market value of such shares at the time the option is exercised. Such
capital gain treatment is not, however, available for the discount at which
the shares of Common Stock are initially purchased under the Purchase Plan,
and an employee who meets such holding requirements is required to include
as ordinary income at the time of such employee's death or disposition of
such shares the lesser of (i) the excess of the fair market value of such
shares over the option price at the time of grant or (ii) the excess of the
fair market value of such shares at the time of disposition of such shares
or death, over the amount such employee paid for such shares. If an
employee sells shares of Common Stock under such circumstances for less
than such employee paid for such shares, there is no ordinary income and
such employee will realize a long-term capital loss of the difference. Any
ordinary income realized by an employee will increase the basis of such
employee's shares of Common Stock for purposes of determining the amount of
any gain or loss realized upon the disposition thereof.
With limited exceptions, an employee who fails to retain shares of
Common Stock purchased under the Purchase Plan until at least 2 years
after the date the option with respect thereto is granted and 12 months
after the date such option is exercised is considered to have made a
"disqualifying disposition" and forfeits the special tax treatment extended
under Section 423 of the Code. In general, such employee realizes ordinary
income at the time of such disposition equal to the excess of the fair
market value of the shares of Common Stock at the time of purchase over the
price paid for such shares. Such fair market value becomes the basis for
determining any further gain or loss at the time of disposition of the
shares of Common Stock. In determining whether that gain or loss is
long-term or short-term, the holding period is calculated from the date of
purchase. A capital gain or loss is long-term if the shares have been held
for more than 12 months.
The Company is entitled to a deduction equal to the amount of
ordinary income realized by an employee who makes a disqualifying
disposition. Otherwise, the Company is not entitled to any deduction on
account of the grant or exercise of options granted under the Purchase Plan
or the subsequent sale by employees of shares of Common Stock purchased
pursuant to the Purchase Plan.
APPROVAL REQUIRED
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to approve the Purchase Plan. An abstention
will have the same effect as a vote against the Purchase Plan; broker non
- -votes will be disregarded and will have no effect on the outcome of the
vote.. Unless a contrary instruction is indicated, a properly executed and
returned proxy will be voted "FOR" approval of the Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PURCHASE PLAN.
PROPOSAL 4: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of members of the Audit
Committee, has appointed BDO Seidman LLP ("BDO Seidman") as independent
accountants for 1998, subject to ratification and approval by the Company's
stockholders. BDO Seidman has served as the Company's independent
accountants since the Company's inception. The Board recommends that
stockholders ratify and approve their appointment. A representative of BDO
Seidman is expected to attend the Annual Meeting and will have an
opportunity to make a statement, if he desires to do so, and to respond to
questions from the Company's stockholders.
The affirmative vote of the holders of a majority of shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to ratify and approve the appointment of BDO
Seidman as independent accountants for 1998. Unless a contrary instruction
is indicated, a properly executed and returned proxy will be voted "FOR"
appointment of BDO Seidman as independent accountants for 1998. A failure
to vote shares, either by abstention or broker non-vote, will have the same
effect as a vote against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPOINTMENT OF BDO SEIDMAN AS INDEPENDENT ACCOUNTANTS FOR 1998.
SOLICITATION OF PROXIES
The costs of soliciting proxies for the Annual Meeting will be paid
by the Company. In addition to the mailing of proxy materials, such
solicitation may be made in person or by telephone, facsimile or telegram
by directors and executive officers of the Company, who will receive no
additional compensation. Kissel-Blake Inc. will assist in the solicitation
of proxies by the Company for a fee of $4,000, plus reasonable
out-of-pocket expenses. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries for forwarding solicitation
materials to beneficial owners of Common Stock held of record by such
persons, and the Company will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Proposals which stockholders of the Company intend to present at next
year's annual meeting of stockholders must be received, in order to be
considered at such meeting, by the Secretary of the Company, at the
Company's executive offices located at 667 Madison Avenue, New York, New
York 10021, not later than the close of business on February 10, 1999.
Stockholder proposals received after that date will not be included in the
Company's proxy statement or form of proxy prepared in connection with such
meeting.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K for the year ended December
31, 1997, as filed with the Commission, is enclosed with this proxy
statement (without exhibits or schedules), but is not to be regarded as
proxy soliciting materials. The Company will provide without charge to each
stockholder, upon written request, copies of the exhibits and schedules to
such Form 10-K. Stockholders should address such written requests to:
Niagara Corporation, Attention: Gilbert D. Scharf, Secretary, 667 Madison
Avenue, New York, New York 10021.
By Order of the Board of Directors,
GILBERT D. SCHARF
Secretary
New York, New York
June 9, 1998
ANNEX A
SECOND AMENDMENT
TO THE
NIAGARA CORPORATION
1995 STOCK OPTION PLAN
Pursuant to resolutions of the Board of Directors ("Board") of
Niagara Corporation ("Niagara") adopted on May 20, 1998, the Niagara
Corporation 1995 Stock Option Plan, as amended (the "Plan") is hereby
amended as follows:
FIRST
Section 5 of the Plan is hereby amended by deleting the first
sentence thereof and replacing it with the following:
The maximum number of shares of Stock reserved for issuance
pursuant to the Plan shall be 2,500,000 shares, subject to
adjustment as provided herein.
SECOND
Section 5 of the Plan is hereby amended by deleting the second
paragraph thereof and replacing it with the following:
No Participant may be granted Options, in any one year, to
purchase more than 600,000 shares of Stock, subject to adjustment
as provided herein.
This Second Amendment shall take effect upon its adoption by the
Board, subject to the approval of the stockholders of Niagara within
twelve (12) months thereof.
IN WITNESS WHEREOF, the undersigned has executed this Second
Amendment on behalf of Niagara Corporation this 8th day of June, 1998.
NIAGARA CORPORATION
/s/ Michael J. Scharf
__________________________
Michael J. Scharf
President
ATTEST:
/s/ Marc J. Segalman
__________________________
Marc J. Segalman
Vice President
ANNEX B
NIAGARA CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The purpose of the Niagara Corporation Employee Stock Purchase
Plan (the "Plan") is to provide employees of Niagara Corporation,
a Delaware corporation (the "Company"), and its Designated
Subsidiaries (as defined below), with an opportunity to purchase,
on favorable terms, shares of Common Stock (as defined below),
through accumulated payroll deductions, and thereby have an
additional incentive to contribute to the prosperity of the
Company. It is the intention of the Company that the Plan
qualify as an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the provisions of the Plan shall be construed
in a manner consistent with the requirements of such Section of
the Code.
2. DEFINITIONS
The following terms, as used herein, shall have the following
meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change in Capitalization" shall mean any increase, reduction, or
change or exchange of shares of Stock for a different number or
kind of shares or other securities of the Company, by reason of a
reclassification, recapitalization, merger, consolidation,
reorganization, stock dividend or distribution, stock split,
spin-off, or reverse stock split, combination or exchange of
stock, change in corporate structure or otherwise.
(c) "Change in Control" of the Company shall be deemed to occur upon
the first to occur of the following:
(i) there is consummated a merger or consolidation of the
Company or any Subsidiary with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent
entity) 70% or more of the combined voting power of the voting
securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation or (B)
a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) other than (A) the Company, (B) any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any Subsidiary, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities or
(D) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of Stock, acquired 30% or more of the combined
voting power of the Company's then outstanding securities;
(ii) the stockholders of the Company approve a plan of
complete liquidation of the Company (or any transaction having a
similar effect); or
(iii) the consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets (or
any transaction having a similar effect).
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" shall mean the Compensation Committee of the Board or
such other committee of members of the Board appointed by the
Board, in its sole discretion, to administer the Plan and to
perform the functions set forth herein.
(f) "Company" shall mean Niagara Corporation, a Delaware corporation.
(g) "Compensation" shall mean the salary, wages, commissions,
overtime pay and bonuses paid by an Employer to an Employee as
reported by the Employer to the United States government for
Federal income tax purposes, including an Employee's portion of
compensation deferral contributions pursuant to Section 401(k) of
the Code, any amount excludable pursuant to Section 125 of the
Code and/or any non-qualified compensation deferral, but
excluding all non-cash items, moving or relocation allowances,
car allowances, imputed income attributable to car or life
insurance, severance pay, fringe benefits, any credit or benefit
under any employee benefit plan maintained by the Employer, and
income attributable to the exercise of Company stock options.
The Committee shall determine whether a particular item is
included in Compensation.
(h) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of a person's employment with the
Company or a Designated Subsidiary. Continuous Status as an
Employee shall not be considered interrupted in the case of a
leave of absence agreed to in writing by the Employee's Employer.
(i) "Designated Subsidiaries" shall mean Subsidiaries which have been
designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan, which may include
corporations which become Subsidiaries after the approval of the
Plan.
(j) "Employee" shall mean any person, including an officer, (i) who
is regularly employed by the Company or a Designated Subsidiary
as a full-time employee and (ii) who has completed a Year of
Service.
(k) "Employer" shall mean, as to any particular Employee, the
corporation which employs such Employee, whether it is the
Company or a Designated Subsidiary.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(m) "Exercise Date" shall mean the last Trading Day of each Offering
Period, except as the Committee may otherwise provide.
(n) "Fair Market Value" per share of Stock as of a particular date
shall mean (i) if the shares of Stock are then listed or admitted
to trading on a national securities exchange or a national market
system, including, without limitation, the NASDAQ National Market
or the Nasdaq Stock Market, the last reported sales price on such
date of a share of Stock sold in the regular way on the principal
exchange or system on which such Stock is listed or admitted to
trade (or the mean of the closing bid and asked prices if no
sales were reported on such date), (ii) if the shares of Stock
are not then listed or admitted to trade on such exchange or
system, the average of the closing bid and asked prices of a
share of Stock on the over-the-counter market on such date or
(iii) in the absence of an established market for the Stock, such
value as the Committee, acting in good faith and in its sole
discretion, shall determine.
(o) "Offering Date" shall mean the first Trading Day on or after any
of the following: January 1, April 1, July 1 or October 1 of each
Plan Year, commencing October 1, 1998; except that the Committee
shall have the power to change such Offering Dates. The Offering
Date of an Offering Period is the grant date for the options
offered in such Offering Period.
(p) "Offering Period" shall mean a period of approximately three (3)
months, beginning with an Offering Date and ending on the last
Trading Day of the calendar quarter following such Offering Date,
except that the Committee shall have the power to change the
duration of Offering Periods; however, no option granted under
the Plan shall be exercisable more than 27 months from its date
of grant.
(q) "Option Price" shall mean the price at which Participants may
purchase Stock under the Plan, as determined pursuant to Section
4(c) hereof.
(r) "Participant" shall mean an Employee who participates in the
Plan.
(s) "Plan" shall mean the Niagara Corporation Employee Stock Purchase
Plan, as amended from time to time.
(t) "Plan Year" shall mean the calendar year, except that the first
Plan Year shall begin on October 1, 1998 and shall end on
December 31, 1998.
(u) "Stock" shall mean shares of Common Stock, par value $.001 per
share, of the Company.
(v) "Subsidiary" shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company
if, at the time of granting an option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
(w) "Trading Day" shall mean a day on which national stock exchanges
and the NASDAQ System are open for trading.
(x) "Year of Service" shall mean a successive period of twelve
consecutive months ((A) from a person's original employment
date with the Company or a Designated Subsidiary if there has
been (i) no interruption or termination of employment with the
Company or a Designated Subsidiary or (ii) a leave of absence
agreed to in writing by such person's Employer or (B) from the
date such person has resumed employment with the Company or a
Designated Subsidiary if there has been such interruption or
termination of employment or a leave of absence not agreed to in
writing by such person's Employer) during which a person's hours
of employment with the Company or a Designated Subsidiary are
1,000 hours or more.
3. ELIGIBILITY
(a) Subject to the provisions of Sections 4(b) and 8(b) hereof, any
person who is an Employee as of an Offering Date shall be
eligible to participate in the Plan.
(b) Notwithstanding any provisions of the Plan to the contrary, no
Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person
whose shares would be attributed to such Employee pursuant to
Section 424(d) of the Code) would own capital stock of the
Company and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting
power or value of all classes of capital stock of the Company or
of any Subsidiary or (ii) which permits such Employee's right to
purchase stock under all employee stock purchase plans (as
described in Section 423 of the Code) of the Company and any
Subsidiary to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of Fair Market Value of such stock (determined
at the time such option is granted) for any calendar year in
which such option would be outstanding at any time.
4. GRANT OF OPTION; PARTICIPATION; OPTION PRICE
(a) Subject to the provisions of Section 17 hereof, the Plan shall be
implemented by consecutive Offering Periods until the expiration
of the term of the Plan. Subject to the limitations set forth in
Sections 3(b) and 9 hereof, on each Offering Date, each Employee
participating in such Offering Period shall be granted an option
to purchase, on the Exercise Date of such Offering Period (at the
applicable Option Price), up to a number of full shares of Stock
determined by dividing (i) such Participant's payroll deductions
accumulated prior to such Exercise Date and retained in such
Participant's account as of such date by (ii) the applicable
Option Price. Exercise of the option shall occur as provided in
Section 6 hereof, unless the Participant has withdrawn or upon
interruption or termination of such Participant's Continuous
Status as an Employee pursuant to Section 8 hereof, and shall
expire on the last Trading Day of the Offering Period.
(b) Each Employee may elect to become a Participant in the Plan with
respect to an Offering Period by completing and filing an
enrollment agreement with such Employee's Employer (in accordance
with the rules and procedures adopted by the Committee from time
to time) authorizing payroll deductions in accordance with
Section 5 hereof. Once enrolled in the Plan, a Participant shall
continue to participate in successive offerings in accordance
with such enrollment agreement unless such Participant withdraws
or upon interruption or termination of such Participant's
Continuous Status as an Employee pursuant to Section 8 hereof,
or at the end of the Offering Period in which such Employee's
payroll deductions were discontinued pursuant to Section 5(a)
hereof.
(c) The Option Price per share of Stock for a particular Offering
Period shall be equal to 85% of the Fair Market Value of a share
of Stock on the Offering Date or on the Exercise Date, whichever
is lower.
5. PAYROLL DEDUCTIONS
(a) Subject to Section 4(b) hereof, a Participant may, in accordance
with the rules and procedures adopted by the Committee from time
to time, authorize a payroll deduction of any whole percentage
from 1 percent to 10 percent of such Participant's Compensation
each pay period (the permissible range within such percentages to
be determined by the Committee from time to time). A Participant
may increase or decrease such payroll deduction (or discontinue
payroll deductions) at any time but, subject to the provisions of
Section 8 hereof, not more frequently than once each Offering
Period, by filing a new enrollment agreement with such
Participant's Employer. All payroll deductions made by a
Participant shall be credited to such Participant's account under
the Plan. A Participant may not make any additional payments
into such account.
(b) Notwithstanding any provisions of the Plan to the contrary, to
the extent necessary to comply with Section 423(b)(8) of the Code
and Section 3(b) hereof, a Participant's payroll deductions may
be discontinued at such time during any Offering Period scheduled
to end during a Plan Year (the "Current Offering Period") in
which the aggregate of all payroll deductions which were
previously used to purchase Stock under the Plan in a prior
Offering Period which ended during such year plus all payroll
deductions accumulated with respect to the Current Offering
Period equals or exceeds $25,000. Payroll deductions shall
recommence at the rate provided in such Participant's enrollment
agreement at the beginning of the first Offering Period which is
scheduled to end in the following Plan Year, unless terminated as
provided in Section 8 hereof.
6. EXERCISE OF OPTION
Subject to Sections 9 (a) and 19 (b) hereof, unless a Participant
withdraws from the Plan or upon interruption or termination of
such Participant's Continuous Status as an Employee as provided
in Section 8 hereof, or unless the Committee otherwise provides,
such Participant's option to purchase shares of Stock shall be
exercised automatically on the Exercise Date, and the maximum
number of full shares of Stock subject to such option will be
purchased for such Participant at the applicable Option Price
with the accumulated payroll deductions in such Participant's
account. No fractional shares of Stock will be purchased; any
payroll deductions accumulated in a Participant's account which
are not sufficient to purchase a full share of Stock shall be
retained in such Participant's account for the purchase of shares
of Stock during the next Offering Period, subject to earlier
withdrawal by the Participant as provided in Section 8 hereof.
7. DELIVERY OF SHARES
(a) Unless the Participant has elected pursuant to Section 7 (b)
hereof to have certificates representing the shares of Stock
purchased under the Plan issued to such Participant, such shares
shall be held for such Participant's benefit by a broker
designated by the Committee. Such shares may be registered in
the name of the Participant or, at the election of the
Participant, in the name of the Participant and such
Participant's spouse as joint tenants or in the name of a trust
for the benefit of such Participant or such Participant and such
Participant's spouse.
(b) As promptly as practicable after receipt of a request from any
Participant for withdrawal of shares of Stock in such
Participant's account, the Company shall arrange for the delivery
to such Participant of a certificate representing such shares
which the Participant requests to withdraw. Notwithstanding the
foregoing, except (i) within sixty (60) days following a Change
in Control of the Company or (ii) upon the approval of the
Committee, in its sole discretion, withdrawals may be made no
more frequently than once each Offering Period.
8. WITHDRAWAL; INTERRUPTION OR TERMINATION OF EMPLOYMENT
(a) A Participant may withdraw at any time all, but not less than
all, payroll deductions credited to such Participant's account
under the Plan that have not been used to purchase shares of
Stock by giving written notice to the Company prior to the next
occurring Exercise Date. All such payroll deductions credited to
such Participant's account shall be paid to such Participant
promptly after receipt of such Participant's notice of withdrawal
and such Participant's option for the Offering Period in which
the withdrawal occurs shall be automatically terminated. No
further payroll deductions for the purchase of shares of Stock
will be made for such Participant during such Offering Period.
If a Participant withdraws from an offering, payroll deductions
will not resume at the beginning of the next Offering Period
unless the Participant delivers a new enrollment agreement to the
Company in accordance with Section 4 (b) hereof. A Participant's
withdrawal from an offering will not have any effect upon such
Participant's eligibility to participate in a succeeding offering
or in any other plan which may be adopted by the Company.
(b) Upon interruption or termination of a person's Continuous Status
as an Employee during an Offering Period for any reason,
including voluntary termination, retirement or death, (i) the
payroll deductions credited to such person's account that have
not been used to purchases shares of Stock shall be returned to
such person (or, in the case of such person's death, to the
person or persons entitled thereto under Section 11 hereof), and
such person's option shall be automatically terminated and (ii)
to be eligible to participate in a succeeding offering, such
person must again qualify as an Employee as of the Offering Date
for such offering.
9. STOCK
(a) The maximum number of shares of Stock which shall be reserved
for sale under the Plan shall be 1,000,000 shares, which number
shall be subject to adjustment upon Changes in Capitalization as
provided in Section 15 hereof. Such shares shall be either
authorized and unissued shares or shares which have been
reacquired by the Company. If any option granted hereunder
expires or terminates without a distribution of shares of Stock,
the shares of Stock with respect to such option shall, to the
extent of such expiration or termination, again be available for
grants of options under the Plan.
(b) If, on a given Exercise Date, the total number of shares which
would otherwise be subject to options which are to be exercised
exceeds the number of shares then available under the Plan, the
Committee shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall
be practicable and as it shall determine to be equitable. In
such event, the Committee shall give written notice to each
Participant of such reduction of the number of shares affected
thereby.
10. ADMINISTRATION
The Plan shall be administered by the Committee, and the
Committee may select administrator(s) to whom its duties and
responsibilities hereunder may be delegated. The Committee shall
have full power and authority, subject to the provisions of the
Plan, to promulgate such rules and regulations as it deems
necessary for the proper administration of the Plan, to interpret
the provisions and supervise the administration of the Plan, and
to take all action in connection therewith or in relation thereto
as it deems necessary or advisable, including, without
limitation, the power to change the Offering Dates and/or
duration of Offering Periods, determine the permissible range of
payroll deductions, limit the frequency and/or number of changes
in the amount of payroll deductions during an Offering Period,
establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts
applied toward the purchase of Stock for each Participant
properly correspond with amounts withheld from such Participant's
Compensation, determine the appropriate adjustments or actions,
if any, to be taken in the event of a Change in Capitalization or
proposed Change in Control of the Company, and establish such
other rules and procedures, consistent with the terms of the
Plan, which the Committee determines to be necessary or advisable
for the administration of the Plan. No member of the Committee
shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and
all members of the Committee shall be fully indemnified by the
Company with respect to any such action, determination or
interpretation. All decisions, determinations and
interpretations of the Committee shall be final and binding on
all persons, including the Company, the Participant (or any
person claiming any rights under the Plan from or through any
Participant) and any stockholder.
11. DESIGNATION OF BENEFICIARY
(a) A Participant may file with the Company, on forms supplied by the
Company, a written designation of a beneficiary who is to receive
cash remaining in such Participant's account under the Plan in
the event of the Participant's death. If a Participant is
married and the designated beneficiary is not such Participant's
spouse, spousal consent shall be required for such designation to
be effective.
(b) Such designation of beneficiary may be changed by the Participant
at any time by written notice to the Company, on forms supplied
by the Company. In the event of the death of a Participant and
in the absence of a beneficiary validly designated under the Plan
who is living at the time of such Participant's death, the
Company shall deliver such shares of Stock and/or cash to the
executor or administrator of the estate of the Participant or, if
no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant in accordance
with the applicable laws of descent and distribution, or if no
spouse, dependent or relative is known to the Company, then to
such other person as the Company may designate.
12. TRANSFERABILITY
Rights with regard to the exercise of an option or to receive
shares of Stock under the Plan may not be assigned, transferred,
pledged or otherwise disposed of in any way by the Participant.
Payroll deductions credited to a Participant's account may not be
assigned, transferred, pledged or otherwise disposed of in any
way by the Participant other than by will, the laws of descent
and distribution or as provided in Section 11 hereof. Any such
attempt at assignment, transfer, pledge or other disposition
shall be without effect, except that the Company may treat such
act as an election to withdraw funds in accordance with Section 8
hereof.
13. INTEREST; USE OF FUNDS
In accordance with the provisions of the Code (i) no interest
shall accrue on or be payable with respect to the payroll
deductions of a Participant and (ii) all payroll deductions
received or held by the Company under the Plan may be used by the
Company for any corporate purpose and the Company shall not be
obligated to segregate such funds.
14. REPORTS
Individual accounts shall be maintained for each Participant in
the Plan. Statements of account shall be given to Participants at
least annually, which statements shall set forth the amounts of
payroll deductions, the Option Price, the number of shares of
Stock purchased, the aggregate number of shares of Stock in the
Participant's account and the remaining cash balance, if any.
15. EFFECT OF CERTAIN CHANGES
(a) In the event of a Change in Capitalization, the Committee shall
determine, in its sole discretion, the appropriate equitable
adjustments, if any, to be made under the Plan, including,
without limitation, adjustments to the number of shares of Stock
which have been reserved for issuance under the Plan, as well as
the Option Price covered by each option under the Plan which has
not yet been exercised.
(b) In the event of a proposed Change in Control of the Company (as
determined by the Committee), the Committee shall shorten the
Offering Period then in progress by setting a new Exercise Date
and shall, in advance of such date, notify each Partici-pant that
the Exercise Date for the Offering Period then in progress has
been changed to the new Exercise Date and that such Participant's
option shall be exercised automatically on such new Exercise
Date, unless prior to such date such Participant has withdrawn or
there has been an interruption or termination of such person's
Continuous Status as an Employee pursuant to Section 8 hereof;
provided, however, that the Committee, in the exercise of its
sole discretion, may take such other action as it deems
appropriate.
16. TERM OF PLAN
Subject to the Board's right to discontinue the Plan (and thereby
end its term) pursuant to Section 17 hereof, the term of the Plan
(and its last Offering Period) shall end on March 31, 2008. Upon
any discontinuance of the Plan, unless the Committee shall
determine otherwise, any assets remaining in the Participants'
accounts under the Plan shall be delivered to the respective
Participant (or such Participant's legal representative) as soon
as practicable.
17. AMENDMENT TO AND DISCONTINUANCE OF PLAN
The Board may at any time and for any reason amend, suspend or
discontinue the Plan. No amendment shall be effective unless it
receives the requisite approval of the stockholders of the
Company if such stockholder approval of such amendment is
required to comply with Rule 16b-3 under the Exchange Act,
Section 423 of the Code or to comply with any other applicable
law, regulation, stock exchange or other applicable securities
market system rule.
18. NOTICES
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the
Company for the receipt thereof.
19. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW
(a) This Plan and the rights of all persons claiming hereunder shall
be construed and determined in accordance with the laws of the
State of Delaware without giving effect to the choice of law
principles thereof, except to the extent that such law is
preempted by federal law.
(b) The obligation of the Company to sell or deliver shares of Stock
with respect to options granted under the Plan shall be subject
to all applicable laws, rules, and regulations, including all
applicable federal and state securities laws and the rules of any
stock exchange or other securities market on which the shares of
Stock are then listed or admitted to trade, and the obtaining of
all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee. The Company, in its
discretion, may postpone the issuance or delivery of Stock under
any option granted hereunder and may require any Participant to
make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery
of Stock in compliance with applicable laws, rules and
regulations.
(c) To the extent applicable hereto, the Plan is intended to comply
with Rule 16b-3 under the Exchange Act, and the Committee shall
interpret and administer the provisions of the Plan in a manner
consistent therewith. Any provisions inconsistent with such Rule
shall be inoperative and shall not affect the validity of the
Plan.
20. WITHHOLDING OF TAXES
(a) If the Participant makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated
thereunder, of any shares of Stock issued to such Participant
pursuant to such Participant's exercise of an option granted
hereunder, and such disposition occurs within the two-year period
commencing on the day after the Offering Date or within the one-
year period commencing on the day after the Exercise Date, such
Participant shall, within ten (10) days of such disposition,
notify the Company thereof and thereafter immediately deliver to
the Company any amount of Federal, state or local income taxes
and other amounts which the Company informs the Participant the
Company is required to withhold.
(b) At the time an option granted hereunder is exercised, in whole
or in part, such Participant must make adequate provisions for
the Company's federal, state or other tax withholding
obligations, if any, which arise upon the exercise of the option
or the disposition of the Stock. At any time, the Company may,
but will not be obligated to, withhold from the Participant's
Compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding
required to make available to the Company any tax deductions or
benefits attributable to the sale or disposition, at any time,
of Stock by the Participant.
21. NO RIGHT TO CONTINUED EMPLOYMENT OR BENEFITS
Nothing in the Plan or in any option granted hereunder or
agreement entered into pursuant hereto shall confer upon any
Participant the right to continue in the employ of the Company or
any Designated Subsidiary or to be entitled to any remuneration
or benefits not set forth in the Plan or such agreement or to
interfere with or limit in any way the right of the Company or
any Designated Subsidiary to terminate such Participant's
employment.
22. EFFECTIVE DATE
The Plan shall take effect upon its adoption by the Board,
subject to the approval of the Plan by the stockholders of the
Company within twelve (12) months thereof.
NIAGARA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 7, 1998
The undersigned hereby appoints Michael J. Scharf and Gilbert D.
Scharf as Proxies, each with the power to appoint such stockholder's
substitute, and hereby authorizes them, or either one of them, to represent
and to vote, as designated below, all of the shares of Common Stock of
Niagara Corporation (the "Company"), held of record by the undersigned on
June 5, 1998, at the Annual Meeting of Stockholders to be held on Tuesday,
July 7, 1998 at 10:00 a.m. local time and any and all adjournments or
postponements thereof.
1. Proposal 1 - Election of Directors-Nominees are: Michael J.
Scharf, Gilbert D. Scharf, Frank Archer, Gerald L. Cohn, Andrew
R. Heyer and Douglas T. Tansill.
FOR ALL NOMINEES |_| WITHHOLD AUTHORITY to vote for all Nominees |_|
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
below.
2. Proposal 2 - Amendment of the Company's 1995 Stock Option Plan
to (i) increase the number of shares of Common Stock reserved
for issuance thereunder by 1,000,000 shares and (ii) increase
by 200,000 shares the limit on the number of shares of Common
Stock with respect to which options may be granted to any
individual in any year.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal 3 - Approval of the Company's Employee Stock Purchase
Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Proposal 4 - Appointment of BDO Seidman LLP as independent
accounts for 1998.
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the Annual
Meeting and any adjournment or
postponement thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 and 4.
Dated: ___________________, 1998
---------------------------------
Signature
---------------------------------
Signature if held jointly
Please sign exactly as your name
appears herein. If shares are
held by joint tenants, both must
sign. When signing as an
attorney, executor,
administrator, trustee, or
guardian, give your full title as
such. If shares are held by a
corporation, the corporation's
president or other authorized
officer must sign using the
corporation's full name. If
shares are held by a partnership,
an authorized person must sign
using the partnership's full
name.
PLEASE MARK, DATE, SIGN, AND
RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED SELF-ADDRESSED
STAMPED ENVELOPE.
