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, June 8, 1999, 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 approve the
performance-based bonus provision of the Company's
Employment Agreement with Michael Scharf;
3. To ratify and approve the appointment of BDO Seidman LLP as
independent accountants for 1999; and
4. To transact such other business as may properly come before
the Annual Meeting.
The Board of Directors has fixed the close of business on April 16,
1999 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
May 10, 1999
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, June 8, 1999, 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 May 11,
1999.
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 performance-based bonus provision of the
Company's Employment Agreement with Michael Scharf and (iii) "FOR"
ratification and approval of BDO Seidman LLP as independent accountants for
1999. 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 April 16,
1999 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, 9,511,575 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, 56, 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 and Chief Executive Officer 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. Mr. Scharf is also
Chairman of the Board and a director of Niagara LaSalle (UK) Limited, a
subsidiary of Niagara ("Niagara LaSalle UK") formed in March 1999 to
acquire the steel bar division of Glynwed International plc (the "Glynwed
Steel Bar Division"). Since August 1994, Mr. Scharf has been a director of
Maxcor (see below), and until August 1997, was also a Vice President and
the Secretary and Treasurer of Maxcor. Since December 1997, Mr. Scharf has
been a director of Worlds Inc., a development stage company which designs,
develops and markets three-dimensional music-oriented Internet sites on the
worldwide web, and until April 1999, was also its Chairman of the Board.
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, 51, has been the 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, 62, has been a director of the Company since May 1998.
Mr. Archer has been the President and a director of Niagara LaSalle since
its formation in 1986 and the 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, 70, 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, 41, 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 World
Markets Corp. (formerly CIBC Oppenheimer Corp.), an investment banking
firm. He is also the Chairman of Hain Food Group, Inc. and a director of
Hayes Lemmerz International, Inc., Lancer Industries, Inc., Fairfield
Corporation and Spectrasite Holdings, 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, 60, has been a director of the Company since March
1998. From December 1994 through August 1998, Mr. Tansill was a Managing
Director, and since August 1998 he has been an Advisory Director, in the
Investment Banking Division at Paine Webber Incorporated, an independent
national securities firm. Prior to December 1994, Mr. Tansill 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 1998, the Board of Directors met five 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 met once
during 1998.
The Compensation Committee is currently comprised of Messrs. Cohn
(Chairman) and Tansill. Through March 1998, 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 "Option Plan")
and Employee Stock Purchase Plan, which plans were approved by the
Company's stockholders in May 1996 and July 1998, respectively. The
Compensation Committee met four times during 1998.
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. Since 1996, the
Company has granted stock options to its outside directors as compensation
for their service as a director. On May 20, 1998, each member of the Board
of Directors, other than Michael Scharf and Frank Archer, received as
compensation for his service as a director, a stock option (collectively,
the "Director Options") to purchase 10,000 shares of Common Stock
exercisable at $10.9375 per share. On December 15, 1998, each Director
Option was amended to reduce the exercise price thereof to $5.50 per share.
Each Director Option became exercisable as to 2,000 of the underlying
shares on the date of grant and becomes exercisable as to an additional
2,000 of the underlying shares on each of the first through fourth
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 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 and its subsidiaries for certain indemnification
payments made by them to their directors and officers. 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 World Markets Corp.
which has provided investment banking and financial advisory services to
the Company and Niagara LaSalle prior to 1998. CIBC World Markets Corp. is
a subsidiary of CIBC Inc. which is one of five banks who are parties to a
$90 million revolving credit and term loan agreement with Niagara LaSalle
and LaSalle, the obligations of which are guaranteed by the Company. CIBC
Inc.'s commitments under this credit agreement total $20 million.
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, due on December 4, 1998. During December 1998, the
Company extended the maturity date of the Note by one year and Mr. Scharf
paid $100,000 of principal and all accrued interest due under the Note.
The foregoing are reflected in an Amended and Restated Promissory Note
dated December 15, 1998 (the "Amended Note") executed by Mr. Scharf in
favor of the Company and issued in exchange for the Note. Interest on the
unpaid principal amount ($500,000) of the Amended Note accrues at 5.68% per
annum. Principal and interest on the Amended Note are payable in full on
December 4, 1999, provided that Mr. Scharf may prepay all or part of the
unpaid principal amount of the Amended Note without premium or penalty.
The Amended 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,
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, 1998 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 April 23, 1999 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
NAME(1) NUMBER OF SHARES(2) BENEFICIALLY OWNED(3)
Michael J. Scharf . . . . . . 1,339,200(4) 13.9%
Gilbert D. Scharf . . . . . . 568,700(5) 6.0%
Raymond Rozanski . . . . . . 196,250(6) 2.0%
Frank Archer . . . . . . . . 190,000 2.0%
Andrew R. Heyer . . . . . . . 50,500 *
Gerald L. Cohn . . . . . . . 37,000 *
Marc J. Segalman . . . . . . 20,000 *
Douglas T. Tansill . . . . . 6,000 *
All directors and executive
officers as a group (eight
persons) . . . . . . . . . . 2,407,650 23.8%
- -------------
* 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
120,000; Gilbert D. Scharf - 27,000; Frank Archer - 190,000; Raymond
Rozanski - 190,000; Andrew R. Heyer - 27,000; Gerald L. Cohn -
27,000; Marc J. Segalman - 20,000; Douglas T. Tansill - 6,000 and all
directors and executive officers as a group - 607,000.
(3) Based upon 9,511,575 shares of Common Stock outstanding as of April
23, 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 trustee.
(6) Includes 6,250 shares of Common Stock held by a trust for the benefit
of Mr. Rozanski's children, of which Mr. Rozanski's wife is trustee.
Mr. Rozanski disclaims beneficial ownership of such shares.
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, 53, 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 is also Secretary and a director
of Niagara LaSalle UK. Mr. Rozanski received a B.S. degree in Business
Administration from the State University of New York at Buffalo.
MARC J. SEGALMAN, 40, 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 December 31, 1998
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Executive Officer Year Annual Compensation Securities Underlying All Other
----------------- ---- Base Salary Bonus(1) Options (No. of Shares) Compensation(2)
----------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael J. Scharf 1998 $ 480,000 $ 200,000 -- $ 12,074
Chairman, Chief 1997 $ 400,000(3) $ 200,000 100,000 $ 2,270
Executive Officer 1996 $ 240,000 $ 100,000 200,000 $ 1,634
and President
Frank Archer(4) 1998 $ 250,000 $ 150,000 -- $ 13,940
President of Niagara
LaSalle and LaSalle
Raymond Rozanski(5) 1998 $ 250,000 $ 150,000 -- $ 13,904
Vice President and
Treasurer
Marc J. Segalman (6) 1998 $ 225,000 $ 50,000 25,000(7) $ 6,882
Vice President and 1997 $ 75,000 -- 50,000 $ 406
General Counsel
</TABLE>
----------------------------
(1) Paid in subsequent year.
(2) Amounts for 1998 include the following employer contributions under
the Niagara/LaSalle 401(k) Retirement Savings Plan: Michael J. Scharf
-- $9,600; Frank Archer -- $11,370; Raymond Rozanski -- $11,334; and
Marc J. Segalman -- $4,313. Amounts also include (i) annual premiums
ranging from $406 to $1,624 on life insurance policies providing
coverage for such officers of two times annual salary, up to a maximum
of $250,000 and (ii) annual premiums ranging from $329 to $1,071 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.
(3) Based on an annual salary of $480,000 set by the Compensation
Committee in April 1997, effective May 1, 1997.
(4) Mr. Archer became an executive officer of the Company (for purposes of
the Commissions's applicable rules) in March 1998.
(5) Mr. Rozanski became a Vice President of the Company and its Treasurer in
March 1998.
(6) Mr. Segalman became a Vice President of the Company and its General
Counsel in September 1997. His compensation disclosed for 1997
relates only to a partial year (reflecting an annual base salary of
$225,000).
(7) Reflects the repricing on December 15, 1998 of an option granted on
September 8, 1997.
STOCK OPTION GRANT TABLE
The following table sets forth certain information concerning a stock
option granted during 1997 to Marc Segalman which was amended during 1998.
There are no other amendments to options to purchase Common Stock held by
any other Named Executive Officer during 1998 nor were there any other
options to purchase Common Stock granted (or deemed to be granted) to any
Named Executive Officer during 1998.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1998
Potential Realizable Value
Number of % of Total Options Exercise at Assumed Annual Rates of
Executive Shares Underlying Granted to All Price Per Expiration Stock Price Appreciation
Officer Options Granted Employees in 1998 (1) Share Date for Option Term
--------- ----------------- --------------------- --------- ---------- --------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Marc J. Segalman 25,000 (2) 100 5.50(3) 9/08/07(2) $ 73,000 $ 178,750
</TABLE>
--------------------------
(1) Excludes option granted to Gilbert Scharf as compensation for his
service as a director.
(2) The option reported above reflects an amendment to an option granted
under the Option Plan to Mr. Segalman on September 8, 1997 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 an additional 5,000 of the underlying shares on
September 8, 1998, and will become exercisable as to an additional
5,000 of the underlying shares on each of the next three
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 (as defined in
the Option Plan,) 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.
(3) On December 15, 1998, the exercise price per share of Common Stock
was amended from $8.50 to $5.50.
STOCK OPTION EXERCISES AND FISCAL YEAR END VALUES
No options to purchase Common Stock were exercised by any of the Named
Executive Officers during 1998.
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, 1998 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.
<TABLE>
<CAPTION>
EXERCISABLE/UNEXERCISABLE STOCK OPTIONS AT
FISCAL YEAR END AND FISCAL YEAR END VALUES
Number of Shares Underlying Value of Unexercised
Options at 1998 Fiscal Year End In-the-Money Options (1)
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael J. Scharf 100,000 200,000 $ 31,250 $ 62,500
Frank Archer 180,000 70,000 $ 16,250 $ 11,875
Raymond Rozanski 180,000 70,000 $ 16,250 $ 11,875
Marc J. Segalman 20,000 30,000 $ 3,750 $ 5,625
</TABLE>
(1) Based on the December 31, 1998 closing sale price for the Common Stock
of $5 13/16 per share.
EMPLOYMENT CONTRACTS
Michael Scharf
The Company and Niagara LaSalle have entered into an employment
agreement with Michael Scharf dated as of January 1, 1999 (the "Employment
Agreement"), providing, among other things, that he will continue to serve
as Chairman, Chief Executive Officer and President of the Company and
Chairman and Chief Executive Officer of Niagara LaSalle for the term of the
Employment Agreement. Such term will be for five years, subject to annual
one-year extensions commencing on January 1, 2002 unless the Company or Mr.
Scharf provides the other with timely notice not to extend. The Employment
Agreement provides that Mr. Scharf will be entitled to (i) an annual base
salary ("Annual Base Salary") of not less than $480,000; (ii) a
performance-based annual incentive bonus subject to the approval of the
Company's stockholders (see Proposal 2); (iii) a supplemental annual
retirement benefit ("SERP") equal in amount to Mr. Scharf's Final Average
Pay (as defined in the Employment Agreement), multiplied by the product of
Mr. Scharf's years of service with the Company and 2.5%, with 50% of such
annual amount to be paid to Mr. Scharf's surviving spouse during her
lifetime; (iv) annual grants of stock options as determined by the
Compensation Committee of the Board of Directors; and (v) medical coverage
and specified fringe benefits.
If Mr. Scharf's employment is terminated by the Company without Cause
(as defined in the Employment Agreement) or by Mr. Scharf due to a breach
of the Employment Agreement by the Company, the Company will (i) provide
Mr. Scharf with a lump sum amount equal to the product of (A) the greater
of three and the number of years remaining in the term of the Employment
Agreement ("Severance Multiple"), and (B) the sum of Mr. Scharf's then
current Annual Base Salary and the greater of Mr. Scharf's three-year
average annual bonus and the target bonus for the year of termination; (ii)
provide Mr. Scharf with a pro rata bonus for the year of termination; (iii)
for the number of years equal to the Severance Multiple, provide Mr. Scharf
with additional years of service credit under the SERP, continued life
insurance benefits and continued exercisability of stock options; and (iv)
cause all of Mr. Scharf's outstanding equity awards to vest. Mr. Scharf
would also receive a gross-up payment for any excise tax payable under
Section 4999 of the Internal Revenue Code of 1986, as amended.
Frank Archer and Raymond Rozanski
The Company and Niagara LaSalle entered into employment agreements
with each of Frank Archer and Raymond Rozanski (each, an "Executive") dated
August 16, 1995 (the "Archer/Rozanski Agreements"), providing, among other
things, that they will continue to serve as President and Executive Vice
President, respectively, of Niagara LaSalle for a period of five years.
The Archer/Rozanski Agreements provide that each Executive will be entitled
to (i) an annual base salary of not less than $175,000 adjusted for
increases in the consumer price index (which amount has subsequently been
increased to $250,000); (ii) cash bonuses determined by the Compensation
Committee of the Company's Board of Directors; (iii) options to purchase
200,000 shares of Common Stock ("Options"); (iv) medical, dental and life
insurance coverage; and (v) certain specified fringe benefits.
If the Executive's employment is terminated by the Company other than
for incapacity or certain specified acts (i) the Executive would receive
his annual base salary through the end of the five-year term (the
"Employment Period"); (ii) subject to continued compliance with certain
confidentiality and non-competition obligations, the Executive would
receive one-half of his annual base salary (as then in effect) payable over
the one-year period following expiration of the Employment Period; (iii)
the Executive would continue to receive medical, dental and life insurance
coverage, subject to the terms of the applicable plans, through the end of
the Employment Period; and (iv) all Options would immediately vest and
become exercisable for a period of one year.
STOCK OPTION REPRICING TABLE
The following table sets forth certain information concerning a stock
option granted during 1997 to Marc Segalman the exercise price of which was
amended during 1998. There were no other amendments to options to purchase
Common Stock held by any other Named Executive Officer during 1998.
<TABLE>
<CAPTION>
10-YEAR OPTION REPRICINGS
Length of Original
Number of Shares Exercise Price Option Term
Underlying Options Market Price of Stock at Time of New Exercise Remaining at Date
Executive Officer Date Repriced at Time of Repricing Repricing Price of Repricing
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Marc J. Segalman 12/15/98 25,000 $5.25 $8.50 $5.50 8.73 years
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors (the
"Compensation Committee"), formed in August 1995, is currently comprised of
Messrs. Cohn (Chairman) and Tansill. Through March 1998, Andrew Heyer was
a member of the Compensation Committee. Mr. Heyer is a Managing Director
of CIBC World Markets Corp. which has provided investment banking and
financial advisory services to the Company and Niagara LaSalle prior to
1998. CIBC World Markets Corp. is a subsidiary of CIBC Inc. which is one
of five banks who are parties to a $90 million revolving credit and term
loan agreement with Niagara LaSalle and LaSalle, the obligations of which
are guaranteed by the Company. CIBC Inc.'s commitments under this credit
agreement total $20 million.
General
The Compensation Committee is responsible for determining the cash
compensation of the Company's executive officers and for administering the
Option Plan and the Company's Employee Stock Purchase Plan. The
Compensation Committee reviews and develops compensation policies and
programs designed to enhance the Company's long-term profitability by
attracting, motivating and retaining high-quality executives and aligning
their individual interests with the long-term interests of the Company and
its stockholders.
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, evaluates the executive's contributions and performance for
the relevant compensation period and receives the recommendations of the
Chief Executive Officer. The Compensation Committee also takes into
account the salary and bonus provisions in existing employment agreements
with certain of the Company's executives. In making compensation
decisions, the Compensation Committee exercises its discretion and judgment
based on the foregoing and other criteria, without applying a specific
formula to determine the weight of each factor considered.
Compensation of the Chief Executive Officer
In reviewing and establishing Michael Scharf's cash compensation in
1998, the Compensation Committee determined, reflecting Mr. Scharf's own
recommendation, not to increase his base salary of $480,000. In making
this determination, the Compensation Committee considered (i) the fact that
Mr. Scharf's base salary had been increased from $240,000 to $480,000
effective May 1, 1997 and (ii) the salary levels of Niagara LaSalle's
senior management.
In establishing Michael Scharf's bonus in respect of 1998, the
Compensation Committee considered, among other things, (i) Mr. Scharf's
contributions to the Company and, in particular, Mr. Scharf's efforts and
leadership throughout the strike by the hourly workers at LaSalle's
Hammond, Indiana facility, and the successful resolution of such strike,
(ii) Mr. Scharf's efforts to improve operations and efficiency and reduce
costs at the Company's operating subsidiaries, (iii) the results of
operations for the Company and its subsidiaries for 1998 and, in
particular, the Company's continued profitability despite the strike at the
Hammond facility and (iv) bonuses paid to Niagara LaSalle and LaSalle
senior management in respect of 1998, including two of the other Named
Executive Officers.
The Company and Niagara LaSalle have entered into an Employment
Agreement with Michael Scharf dated as of January 1, 1999, providing, among
other things, that Mr. Scharf will continue to serve as Chairman, Chief
Executive Officer and President of the Company and Chairman and Chief
Executive Officer of Niagara LaSalle for a term of five years, subject to
extension (see "EXECUTIVE COMPENSATION -- Employment Contracts -- Michael
Scharf"). In approving the Employment Agreement, the Board of Directors
(with Michael Scharf abstaining) sought to (i) assure the Company of Mr.
Scharf's continued services for a minimum of five years and (ii) compensate
Mr. Scharf in accordance with the Company's performance through a
performance-based annual incentive bonus (see Proposal 2). The terms of
the Employment Agreement were negotiated between members of the
Compensation Committee and Mr. Scharf. In this regard, the Compensation
Committee was advised by an outside compensation consultant who advised the
Compensation Committee on the terms of employment for chief executive
officers of manufacturing companies similar in size to that of the Company.
In considering the employment terms of such other chief executive officers,
the Compensation Committee recognized that the Company does not compete for
executives merely with those companies comprising the Steel Index on the
performance graph below.
Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") disallows tax deductions by a public 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 things, the compensation is payable only upon
attainment of preestablished, objective performance goals under a plan
approved by the company's stockholders. Compensation attributable to the
Option Plan has been designed to be, and should qualify as, "performance-
based" under Section 162(m) of the Code. In addition, Mr. Scharf's
performance-based bonuses payable in future years under his Employment
Agreement with the Company are intended to so qualify if the provision of
his Employment Agreement providing for such bonuses is approved by the
Company's stockholders (see Proposal 2). 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.
Stock Option Repricings
On December 15, 1998, the Compensation Committee determined that it
was in the best interests of the Company to reset to $5.50 the exercise
price of an option granted to Marc Segalman on September 8, 1997 to
purchase an aggregate of 25,000 shares of Common Stock. Previously, such
exercise price had been $8.50. In making this determination, the
Compensation Committee considered, among other things, (i) Mr. Segalman's
efforts and contributions to the Company, (ii) the significant increase in
the market price of the Common Stock between the date in August 1997 when
Mr. Segalman accepted employment with the Company and the day in September
1997 when he joined the Company, (iii) recent market prices for the Common
Stock and (iv) the accounting implications for the repricing.
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 five other publicly-traded steel companies (the
"Steel Index"). The graph assumes $100 was invested on August 16, 1995 in
shares of Common Stock, 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 and Quanex
Corporation.
COMPARATIVE STOCK PRICE PERFORMANCE(1)
S&P 600
Niagara Smallcap
Date Corporation Index Steel Index
---- ----------- --------- -----------
5/2/94 0.000 0.000 0.000
5/31/94 0.000 (2.756) 6.194
6/30/94 8.108 (6.466) 3.966
7/29/94 9.459 (5.378) 4.961
8/31/94 13.514 0.922 8.625
9/30/94 10.811 0.321 10.545
10/31/94 10.811 (0.767) 1.413
11/30/94 13.514 (4.652) (10.893)
12/30/94 10.811 (2.425) (9.889)
1/31/95 8.108 (3.886) (13.848)
2/28/95 3.378 (0.031) (7.362)
3/31/95 7.432 1.896 (9.650)
4/28/95 8.108 4.093 (14.893)
5/31/95 8.973 5.595 (14.763)
6/30/95 13.514 11.305 (6.884)
7/31/95 13.514 19.739 (5.074)
8/31/95 29.730 22.205 (7.710)
9/29/95 35.135 25.231 (15.151)
10/31/95 13.514 18.972 (14.743)
11/30/95 9.459 23.552 (13.768)
12/29/95 (2.703) 25.479 (6.287)
1/31/96 1.351 25.676 (4.646)
2/29/96 22.973 29.655 (7.551)
3/29/96 2.703 32.318 (1.731)
4/30/96 10.811 39.830 (0.279)
5/31/96 27.027 44.659 0.776
6/28/96 21.622 38.877 (5.889)
7/31/96 21.622 29.230 (17.131)
8/30/96 (5.405) 37.074 (12.505)
9/30/96 10.811 42.970 (6.685)
10/31/96 (2.703) 41.871 (9.769)
11/29/96 (8.108) 49.114 (4.546)
12/31/96 (5.405) 50.741 (5.094)
1/31/97 24.324 53.145 (2.905)
2/28/97 22.973 49.860 (7.033)
3/31/97 13.514 42.047 (13.947)
4/30/97 21.622 43.695 (13.052)
5/30/97 32.432 60.429 1.273
6/30/97 27.027 67.392 2.119
7/31/97 54.054 77.826 9.978
8/29/97 75.676 82.168 13.410
9/30/97 113.514 94.084 8.138
10/31/97 94.595 85.618 (1.363)
11/28/97 100.000 84.136 (2.855)
12/31/97 113.514 87.711 (5.740)
1/30/98 94.595 83.960 (4.198)
2/27/98 106.757 100.580 5.501
3/31/98 90.541 108.103 4.109
4/30/98 114.865 109.232 8.784
5/29/98 109.459 98.021 (0.119)
6/30/98 91.892 98.466 (6.735)
7/31/98 94.595 83.183 (16.136)
8/31/98 29.730 47.746 (31.506)
9/30/98 45.946 56.637 (30.511)
10/30/98 50.676 63.796 (28.770)
11/30/98 47.297 72.873 (29.268)
12/31/98 25.676 83.774 (29.069)
1/29/99 27.027 81.391 (26.880)
2/26/99 62.162 64.895 (33.695)
3/31/99 35.135 66.895 (37.226)
4/30/99 56.757 77.826 (13.152)
(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: APPROVAL OF PERFORMANCE-BASED BONUS PROVISION OF THE COMPANY'S
EMPLOYMENT AGREEMENT WITH MICHAEL SCHARF
Stockholders of the Company are being asked to consider and approve the
portion of the Employment Agreement (see "EXECUTIVE COMPENSATION--
Employment Contracts--Michael Scharf") that provides for Michael Scharf's
performance-based annual incentive bonuses.
PERFORMANCE-BASED ANNUAL INCENTIVE BONUSES
Subject to approval by the Company's stockholders at the Annual Meeting,
the Employment Agreement provides that Mr. Scharf will be entitled to
receive, with respect to each of the Company's fiscal years occurring
during the term of the Employment Agreement, an annual incentive bonus, in
cash (the "Annual Bonus" and, as applied to all annual bonuses during the
term of the Employment Agreement, the "Annual Bonuses"), based upon the
achievement of preestablished performance goals. If the target performance
goal is met, the Annual Bonus will be equal in amount to 50% of Mr.
Scharf's Annual Base Salary (as defined in the Employment Agreement), as in
effect on the first day of the Company's fiscal year with respect to which
the Annual Bonus is paid.
The target performance goal will be the achievement by the Company of an
EBITDA (as defined below) target approved by the Compensation Committee for
such year. The Annual Bonus will increase by 1% of Annual Base Salary for
each 1% increment in EBITDA in excess of such target. The EBITDA target
will be based on operations existing at the time the target is approved,
but the target may be amended by the Compensation Committee based upon
corporate acquisitions or dispositions, or other relevant factors. For
purposes of the Employment Agreement, EBITDA will mean the Company's
earnings before interest, taxes, depreciation and amortization, as
determined in accordance with the Company's audited financial statements.
The Employment Agreement provides that the Company must seek the approval
of its stockholders for the Annual Bonuses at its annual stockholders'
meeting following the execution of the Employment Agreement, and the Annual
Bonuses will be paid only if such approval is obtained. If such approval
is not obtained, the Company and Mr. Scharf will negotiate in good faith to
structure an alternative incentive compensation arrangement to fairly
compensate Mr. Scharf.
Assuming the achievement of the target performance goal for 1999 and
based upon Mr. Scharf's current Annual Base Salary, his Annual Bonus for
1999 would be $240,000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
As discussed in the "Report of the Compensation Committee on Executive
Compensation," Section 162(m) of the Code disallows a publicly held
company's deductions for employee remuneration exceeding $1,000,000 per
year for certain executives, but contains an exception for qualified
"performance-based compensation." The Employment Agreement has been
designed to permit the Annual Bonuses to qualify as "performance-based
compensation" if they are approved by the Company's stockholders.
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 performance-based bonus
provision of the Employment Agreement. An abstention will have the same
effect as a vote against this proposal. To the extent there are any broker
non-votes, they 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
performance-based bonus provision of the Employment Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PERFORMANCE-BASED BONUS PROVISION OF THE COMPANY'S
EMPLOYMENT AGREEMENT WITH MICHAEL SCHARF.
PROPOSAL 3: 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 1999, 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 1999. Unless a contrary instruction
is indicated, a properly executed and returned proxy will be voted "FOR"
appointment of BDO Seidman as independent accountants for 1999. 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 1999.
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. Innisfree M&A Incorporated will assist in the
solicitation of proxies by the Company for a fee of $5,500, 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 January 11, 2000.
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, 1998, 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
May 10, 1999
NIAGARA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 8, 1999
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
April 16, 1999, at the Annual Meeting of Stockholders to be held on
Tuesday, June 8, 1999 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 - Approval of the performance-based bonus provision
of the Company's Employment Agreement with Michael
Scharf.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal 3 - Appointment of BDO Seidman LLP as independent
accountants for 1999.
|_| FOR |_| AGAINST |_| ABSTAIN
4. 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 and 3.
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.
Dated: ___________________, 1999
_________________________________
Signature
_________________________________
Signature if held jointly
PLEASE MARK, DATE, SIGN, AND
RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED SELF-ADDRESSED
STAMPED ENVELOPE.
