<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
THE COAST DISTRIBUTION SYSTEM
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
THE COAST DISTRIBUTION SYSTEM
1982 ZANKER ROAD
SAN JOSE, CALIFORNIA 95112
(408) 436-8611
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 8, 1996
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders of The
Coast Distribution System, a California corporation (the "Company"), will be
held at the Executive Offices of the Company, 1982 Zanker Road, San Jose,
California, on Thursday, August 8, 1996, at 2:00 P.M., Pacific Time, for the
following purposes, as more fully described in the accompanying Proxy Statement:
(1) To elect the following six (6) nominees to serve as directors until the
next annual meeting of shareholders or until their successors are
elected and have qualified:
<TABLE>
<S> <C>
Thomas R. McGuire Brian P. Friedman
Louis B. Sullivan Ben A. Frydman
John E. Turco Robert S. Throop
</TABLE>
(2) To approve and ratify an amendment to the Company's 1993 Stock Option
Plan (the "1993 Plan") to increase the authorized number of shares of
common stock that are issuable thereunder by 250,000 shares, bringing
the total number of shares of common stock that may be issued
thereunder to 500,000 shares; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only shareholders of record at the close of business on June 21, 1996 will
be entitled to vote at the meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
SANDRA A. KNELL
Secretary
July 8, 1996
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any
shareholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting. Shareholders attending the
meeting whose shares are held in the name of a broker or other nominee who
desire to vote their shares at the meeting should bring with them a proxy or
letter from that firm confirming their ownership of shares.
<PAGE> 3
THE COAST DISTRIBUTION SYSTEM
1982 ZANKER ROAD
SAN JOSE, CALIFORNIA, CA 95112
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 8, 1996
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of The Coast Distribution System, a
California corporation (the "Company"), for use at its 1996 Annual Meeting of
Shareholders to be held on Thursday, August 8, 1996, at 2:00 P.M., at the
Executive Offices of the Company, 1982 Zanker Road, San Jose, California. It is
contemplated that this solicitation of proxies will be made exclusively by mail;
however, if it should appear desirable to do so in order to ensure adequate
representation at the meeting, directors, officers and employees of the Company
may communicate with shareholders, brokerage houses and others by telephone,
telegraph or in person to request that proxies be furnished and may reimburse
banks, brokerage houses, custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the shares held by them. All expenses incurred in connection with this
solicitation shall be borne by the Company.
Holders of shares of common stock of the Company ("shareholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a shareholder may be revoked or superseded by
executing a later dated proxy, by giving notice of revocation to the Secretary
of the Company, 1982 Zanker Road, San Jose, California 95112, in writing prior
to or at the meeting or by attending the meeting and voting in person. A proxy,
when executed and not so revoked, will be voted in accordance with the
instructions given in the proxy. If a choice is not specified in the proxy, the
proxy will be voted "FOR" the nominees for election of directors named in this
Proxy Statement and "FOR" approval and ratification of the amendment increasing
the number of shares of common stock issuable under the Company's 1993 Stock
Option Plan. This Proxy Statement is first being mailed to shareholders on or
about July 8, 1996.
VOTING SECURITIES
The shares of common stock constitute the only outstanding class of voting
securities of the Company. Only the shareholders of the Company of record as of
the close of business on June 21, 1996 (the "Record Date"), will be entitled to
vote at the meeting or any adjournment or postponement thereof. As of the Record
Date, there were 5,207,923 shares of common stock outstanding and entitled to
vote. Each shareholder is entitled to one vote for each share of Common Stock
held as of the Record Date. Abstentions and broker non-votes are each included
in the determination of the number of shares present and voting for the purpose
of determining whether a quorum is present. Under the General Corporation Law of
the State of California, for votes cast on matters other than the election of
directors that require the affirmative vote of a majority of the shares present
and voting at the annual meeting, an abstention will have the same effect as a
vote against a proposal and a broker non-vote will have no effect on the outcome
of a proposal. For votes cast on matters that require the affirmative vote of a
majority of the outstanding shares, abstentions and broker non-votes will have
the same effect as votes against a proposal. All shareholders entitled to vote
at the Annual Meeting of Shareholders may cumulate the votes in the election of
directors. With cumulative voting, each shareholder is entitled to a number of
votes equal to the number of directors to be elected multiplied by the number of
shares of common stock held by such shareholder, and those votes may be cast for
a single candidate for director or distributed among as many candidates as such
shareholder desires. In accordance with the General Corporation Law of the State
of California, however, no shareholder may cumulate votes for any candidate for
<PAGE> 4
director unless the name of such candidate is placed in nomination before the
voting and any shareholder before the voting gives notice at the Annual Meeting
of Shareholders of such shareholder's intention to cumulate his or her votes. If
such notice is given by any shareholder entitled to vote at the Annual Meeting
of Shareholders, then every shareholder entitled to vote at the Annual Meeting
will be entitled to cumulate his or her votes in the election of directors. The
proxies solicited by the Board of Directors confer discretionary authority in
the proxy holders to cumulate votes and to allocate such votes among the
nominees of the Board of Directors as such proxy holders deem appropriate so
that, if shares are voted cumulatively in the election of directors, the maximum
number of the nominees of the Board of Directors will be elected. Such proxy
holders do not intend to cumulate votes at the Annual Meeting of Shareholders,
but they reserve the right to do so if any shareholder properly elects to
cumulate votes in the election directors.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of June 21, 1996, information regarding
the ownership of the Company's outstanding Common Stock by each person known to
management to own, beneficially or of record, more than five percent (5%) of the
common stock and by certain executive officers of the Company and all officers
and directors of the Company as a group. Information regarding the beneficial
ownership of the Company's common stock by each of the nominees for election as
directors is set forth below under the caption "Election of Directors."
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------- ----------------------- --------
<S> <C> <C>
Thomas R. McGuire............................................ 696,595(2) 13.4%
1982 Zanker Road
San Jose, CA 95112
Furman Selz Incorporated and................................. 558,475(3) 10.8%
Brian P. Friedman
230 Park Avenue
New York, NY 10169
Wellington Management Company................................ 416,000(4) 8.0%
75 State Street
Springfield, MA 01111
Massachusetts Mutual Life.................................... 295,720(5) 5.7%
Insurance Company
1295 State Street
Springfield, MA 01111
Dimensional Fund Advisors Inc................................ 265,500(6) 5.1%
1299 Ocean Avenue
Santa Monica, CA 90401
Sandra A. Knell.............................................. 48,965(7) *
David A. Berger.............................................. 31,744(7) *
Jeffrey R. Wannamaker........................................ 28,240(7) *
All directors and officers as a group (11 persons)........... 1,728,911(8) 32.6%
</TABLE>
- ---------------
* Less than 1%.
(1) Except as otherwise noted below, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them, subject to community property laws where applicable.
(2) Includes an aggregate of 50,016 shares held in trust for the benefit of Mr.
McGuire's children, as to which Mr. McGuire disclaims beneficial ownership,
and 2,500 shares subject to outstanding stock options exercisable during the
60-day period ending August 20, 1996.
(3) Includes 444,200 shares of Common Stock owned by Furman Selz Merchant
Partners LP ("FSMP"), a limited partnership of which a wholly-owned
subsidiary of Furman Selz Incorporated ("Furman Selz") is
2
<PAGE> 5
the general partner; and 11,886 shares owned by the Furman Selz Profit
Sharing Plan. Does not include, and Furman Selz disclaims beneficial
ownership of, shares of Company Common Stock owned by officers and directors
of Furman Selz, including Brian P. Friedman, a director of the Company. Also
includes 65,889 shares held directly by Mr. Friedman; 10,000 shares held by
a family foundation established by Mr. Friedman; 500 shares held by his wife
as custodian for a minor child; and 26,000 shares of Common Stock which he
may purchase during the 60-day period ending August 20, 1996 by exercise of
stock options. Mr. Friedman may be deemed to share beneficial ownership of
the 444,200 shares owned by FSMP as a result of his position as president of
the general partner of FSMP. Mr. Friedman disclaims beneficial ownership of
the shares owned by Furman Selz and the Furman Selz Profit Sharing Plan and
the shares owned by each other officer and director of Furman Selz.
(4) Wellington Management Company ("WMC"), a registered investment advisor, may
be deemed to have beneficial ownership of 416,000 shares of common stock
that are owned by numerous investment advisory clients, none of which is
known to have such interest with respect to more than five percent of the
class. As of December 31, 1995, WMC had shared voting power as to 301,000
shares and shared dispositive power as to 416,000 shares.
(5) Includes 164,967 shares of Common Stock beneficially owned by Massachusetts
Mutual Life Insurance Company ("MassMutual") and 130,752 shares of Common
Stock beneficially owned by MassMutual Corporate Investors. MassMutual is
the investment advisor for MassMutual Corporate Investors and, as such, may
be deemed the beneficial owner of shares owned by MassMutual Corporate
Investors.
(6) In a report filed with the Securities and Exchange Commission, Dimensional
Fund Advisors, Inc., a registered investment advisor ("DFA"), has reported
that all 265,500 shares are owned by advisory clients of DFA and that DFA
holds sole dispositive power with respect to all 265,500 of such shares and
sole voting power with respect to 193,200 of such shares. With respect to
the 72,300 shares as to which DFA disclaims voting power, DFA has reported
that 28,700 and 43,600 shares, respectively, are held in the portfolios of
DFA Investment Dimensions Group Inc. and DFA Investment Trust Company, each
of which is a registered open-end investment company, and the voting power
with respect to such shares is exercised by officers of DFA in their
capacities as officers of those investment companies.
(7) Includes shares subject to outstanding stock options exercisable during the
60-day period ending August 20, 1996, as follows: Ms. Knell -- 11,000
shares; Mr. Berger -- 11,000 shares and Mr. Wannamaker -- 13,800 shares.
(8) Includes 88,100 shares subject to outstanding stock options exercisable
during the 60-day period ending August 20, 1996. Does not include shares as
to which Mr. Friedman, a director of the Company, disclaims a beneficial
ownership. See Note 3 above.
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected at each annual shareholders' meeting to serve until
the next annual meeting or until their successors are elected. The Board of
Directors proposes the election of six (6) directors at the Meeting. Unless
authority to vote for directors has been withheld in the proxy, the persons
named in the enclosed proxy intend to vote at the Meeting for the election of
the nominees presented below. Under California law, the six nominees receiving
the highest number of votes will be elected as directors at the Meeting. As a
result, proxies voted to "Withhold Authority," which will be counted, and broker
non-votes, which will not be counted, will have no practical effect.
Each of the nominees is an incumbent director elected at the last annual
meeting of shareholders. Each of the nominees has consented to serve as a
director for the ensuing year. If any nominee becomes unavailable for any reason
before the election, then the enclosed proxy will be voted for the election of
such substitute nominees, if any, as shall be designated by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees will become unavailable to serve.
3
<PAGE> 6
The names and certain information concerning the persons to be nominated
for election as directors are set forth below. YOUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
NOMINEES
The following table sets forth the names and certain share ownership
information as of June 21, 1996, regarding the persons to be nominated for
election as directors of the Company:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
DIRECTOR BENEFICIAL PERCENT BUSINESS EXPERIENCE
NAME, AGE AND POSITION SINCE OWNERSHIP(1) OF CLASS DURING PAST 5 YEARS
- ------------------------ -------- ------------ -------- ------------------------------------
<S> <C> <C> <C> <C>
Thomas R. McGuire, 52... 1977 696,595(2) 13.4% Mr. McGuire is, and for more than
Chairman of the Board, the past five years has been, the
Chief Executive Chairman of the Board and Chief
Officer Director Executive Officer of the Company.
Louis B. Sullivan, 70... 1977 128,470(3) 2.5% Mr. Sullivan has been a rancher and
Director a private investor since March 1984.
John E. Turco, 65....... 1977 211,492(3) 4.1% Since 1988, Mr. Turco has been
Director private investor primarily in
agricultural businesses.
Brian P. Friedman, 40... 1985 558,475(4) 10.8% Mr. Friedman is an Executive Vice
Director President of Furman Selz
Incorporated ("Furman Selz"), an
investment banking firm at which
he has been employed as an officer
since 1984. Mr. Friedman is also a
director of Transico Industries
Inc., which is engaged in
transportation services.
Ben A. Frydman, 49...... 1988 7,000(3) * Mr. Frydman is and for more than the
Director past five years has been engaged
in the private practice of law, as
a member and shareholder of the
law firm of Stradling, Yocca,
Carlson & Rauth, which provided
legal services to the Company in
1995.
Robert S. Throop, 58.... 1995 9,000(3) * Mr. Throop is, and for more than
Director five years has been, the Chairman
and Chief Executive Officer of
Anthem Electronics, Inc., which is
a national distributor of
semiconductor and computer
products. Mr. Throop also is a
director of Arrow Electronics,
Inc., and the Manitowoc Company,
both of which are public
companies.
</TABLE>
- ---------------
* Less than 1%.
(1) Except as otherwise noted below, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them, subject to community property laws where applicable.
(2) Includes an aggregate of 50,016 shares held in trust for the benefit of Mr.
McGuire's children, as to which he disclaims beneficial ownership, and 2,500
shares subject to outstanding stock options exercisable during the 60-day
period ending August 20, 1996.
4
<PAGE> 7
(3) Includes shares subject to outstanding stock options, as follows: Mr.
Sullivan -- 6,000 shares; Mr. Turco -- 6,000 shares; Mr. Frydman -- 6,000
shares; and Mr. Throop -- 4,000 shares.
(4) Includes 65,889 shares owned directly by Mr. Friedman, 10,000 shares owned
by a family foundation, 500 shares held by his wife as custodian for a minor
child, and 26,000 shares which may be purchased by exercise of stock options
during the 60-day period ending August 20, 1996. Also includes 444,200
shares as to which Mr. Friedman may be deemed to share voting power. Mr.
Friedman disclaims beneficial ownership of shares owned by the Furman Selz
Profit Sharing Plan and shares owned by other officers and directors of
Furman Selz in their individual capacities. See Note 3 to the beneficial
ownership table on Page 2 of this Proxy Statement.
The Board of Directors of the Company held six meetings during the fiscal
year ended December 31, 1995. The Board of Directors has established a standing
Compensation Committee, which held two meetings in 1995, and an Audit Committee,
which held two meeting in 1995. Each director attended at least 75% of the
aggregate number of meetings of the Board and of the Committees of which he was
a member in 1995.
The Compensation Committee reviews programs in the areas of employee and
incentive compensation plans, administers the Company's Stock Purchase Plan, and
reviews and makes recommendations to the Board of Directors with respect to base
salary adjustments and bonuses for all officers and other key personnel of the
Company. Louis B. Sullivan, John E. Turco and Robert S. Throop are currently the
members of the Compensation Committee.
The Audit Committee was established to meet with the independent public
accountants to review planned audit procedures and to review with the
independent public accountants and management the results of audits, including
any recommendations of the independent public accountants for improvements in
accounting procedures and internal controls. Brian P. Friedman, John E. Turco
and Robert S. Throop are currently the members of the Audit Committee.
The Stock Option Committee is responsible for administering the Company's
Stock Option Plans. The Stock Option Committee currently consists of Robert S.
Throop and Louis B. Sullivan.
There are no family relationships among any of the Company's officers or
directors.
DIRECTOR'S COMPENSATION
Directors who also are Company employees receive no compensation for
serving as directors. Non-employee directors are paid a retainer of $6,000 per
year and receive $1,500 for each Board of Directors' meeting attended and are
reimbursed for the out-of-pocket expenses incurred in attending those meetings.
No compensation is paid for attending meetings of Committees of the Board of
Directors on which directors serve. Pursuant to the Company's 1993 Employee
Stock Option Plan, each year each non-employee director is automatically granted
an option to purchase 2,000 shares of Company stock at an exercise price that is
equal to the fair market value of the shares on the date of grant. These options
become fully exercisable six months after the date of grant. Upon joining the
Board, each new non-employee director receives an option to purchase 2,000
shares, which becomes exercisable in full one year after the date of grant.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based on its review of copies of reporting forms and certifications of the
Company's directors and executive officers, the Company believes that all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934
applicable to its directors and executive officers in the year ended December
31, 1995 were satisfied.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the fiscal year
ended December 31, 1995, by the Company's Chief Executive Officer, and the other
executive officers whose salary and bonus exceeded $100,000 for fiscal year 1995
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL ------------------------------- OPTIONS
POSITION YEAR SALARY($) BONUS(1) (#)
- --------------------------------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Thomas R. McGuire.................................. 1995 $ 257,765 $ -0- 12,500
Chairman of the Board and 1994 254,175 130,038 50,000
Chief Executive Officer 1993 242,680 121,300 -0-
Sandra A. Knell.................................... 1995 101,442 -0- 5,000
Chief Financial Officer and 1994 90,830 62,000 26,000
Executive Vice President 1993 82,500 57,500 6,000
David A. Berger.................................... 1995 101,442 -0- 5,000
Executive Vice President 1994 90,830 62,000 26,000
1993 82,500 55,500 6,000
Jeffrey R. Wannamaker.............................. 1995 101,442 -0- 5,000
Executive Vice President 1994 89,690 62,000 26,000
1993 77,500 48,000 6,000
</TABLE>
- ---------------
(1) Bonuses paid for 1994 and 1993 were awarded under annual incentive
compensation plans.
OPTION GRANTS
The following table provides information on option grants in fiscal year
1995 to the Named Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF OPTIONS AT
ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS ALL EMPLOYEES PRICE EXPIRATION --------------------
NAME GRANTED(1) IN FISCAL YEAR(2) ($/SHARE)(3) DATE 5% 10%
- --------------------------- --------- ----------------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. McGuire.......... 12,500 19.1% $7.125 2/05/05 $55,938 $141,875
Sandra A. Knell............ 5,000 7.6% 7.125 2/05/05 22,400 56,750
David A. Berger............ 5,000 7.6% 7.125 2/05/05 22,400 56,750
Jeffrey R. Wannamaker...... 5,000 7.6% 7.125 2/05/05 22,400 56,750
</TABLE>
- ---------------
(1) These options vest in ten equal annual installments of 10% of the shares
covered by such options. Each option is subject to termination in the event
of the optionee's cessation of employment with the Company.
(2) Options to purchase an aggregate of 65,500 shares were granted to all
employees in fiscal 1995, including the Named Officers. Each non-employee
director received options to purchase 2,000 shares in 1995.
(3) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the date of exercise, or through a
cashless exercise procedure.
(4) There is no assurance that the values that may be realized on exercise of
such options will be at or near the values estimated in the table, which
utilizes arbitrary compounded rates of growth of the price of the Company's
Common Stock of 5% and 10% per year.
6
<PAGE> 9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information on option exercises in fiscal year
1995 by the Named Officers and the value of unexercised in-the-money options
held by the Named Officers as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1995 AT DECEMBER 31, 1995(1)
SHARES ACQUIRED VALUE -------------------------------- --------------------------------
NAME ON EXERCISE(#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. McGuire...... 50,000 $260,000 1,250 11,250 $ -0- $ -0-
Sandra A. Knell........ 15,000 43,750 12,500 20,500 16,960 -0-
David A. Berger........ 10,000 22,500 12,500 20,500 16,960 -0-
Jeffrey R. Wannamaker.. 4,200 13,446 12,300 20,500 19,286 -0-
</TABLE>
- ---------------
(1) The closing price of the Company's Common Stock on December 31, 1995 on the
American Stock Exchange was $6.00.
COMPENSATION COMMITTEE INTERLOCKS
In fiscal year 1995 the members of the Compensation Committee were Louis B.
Sullivan, John E. Turco and Robert S. Throop, who are non-employee directors of
the Company.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is a standing committee of the Board of
Directors of the Company. The Compensation Committee is responsible for adopting
and evaluating the effectiveness of compensation policies and programs for the
Company and for making determinations regarding the compensation of the
Company's executive officers, subject to review by the full Board of Directors.
The following report is submitted by the members of the Compensation
Committee with respect to the executive compensation policies established by the
Compensation Committee and compensation paid or awarded to executive officers
for fiscal year 1995.
Compensation Policies and Objectives
In adopting compensation programs for executive officers, as well as other
employees of the Company, the Compensation Committee is guided by three basic
principles:
- The Company must offer competitive salaries to be able to attract and
retain highly-qualified and experienced executives and other management
personnel.
- Annual executive compensation in excess of base salaries should be tied
primarily to the Company's performance.
- The financial interests of the Company's senior executives should be
aligned with the financial interests of the shareholders, primarily
through stock option grants and other equity-based compensation programs
which reward executives for improvements in the market performance of the
Company's Common Stock.
Salaries and Employee Benefits Programs. In order to retain executives and
other key employees, and to be able to attract additional well-qualified
executives when the need arises, the Company strives to offer salaries and
health care and other employee benefit programs to its executives and other key
employees which are comparable to those offered by competing businesses.
In establishing salaries for executive officers, the Compensation Committee
reviews (i) the historical performance of the executives; and (ii) available
information regarding prevailing salaries and compensation programs offered by
competing businesses. Another factor which is considered in establishing
salaries of
7
<PAGE> 10
executive officers is the cost of living in Northern California where the
Company is headquartered, as such cost generally is higher than in other parts
of the country.
In 1990 and 1991, the Company's executive officers agreed to accept salary
reductions as part of cost-cutting programs implemented by the Company in
response to a decline in sales that resulted from the combined effects of the
economic recession and the Persian Gulf War, both of which severely impacted the
travel and recreation industries. In 1993, with a return to profitability,
salaries were increased to levels approximately comparable to those in effect
prior to 1990.
In 1995 the Named Officers received cost-of-living increases in their
salaries averaging 3% and, in addition, the Compensation Committee approved 12%
increases in the salaries of Ms. Knell and Messrs. Berger and Wannamaker to
bring their salaries in line with prevailing executive salaries at comparable
companies. Salary increases in future years are expected to be limited for the
most part to cost-of-living increases.
In order to retain qualified management personnel, the Company has followed
the practice of seeking to promote executives from within the Company whenever
that is practicable. The Board of Directors believes that this policy enhances
employee morale and provides continuity of management. Typically, modest salary
increases are made in conjunction with such promotions.
Performance-Based Compensation. The Compensation Committee believes that,
as a general rule, annual compensation in excess of base salaries should be made
dependent primarily on the Company's performance. Accordingly, at the beginning
of each fiscal year, the Compensation Committee establishes an incentive
compensation program for executive officers and other key management personnel
under which executive officers and other key management personnel may earn
bonuses, in amounts ranging from 5% to 100% of their annual salaries, provided
the Company achieves or exceeds the earnings goal established for the year.
The earnings goal is established on the basis of the annual operating plan
which is developed by management and which requires approval of the Board of
Directors. The annual operating plan, which is designed to maximize
profitability, within the constraints of prevailing economic and competitive
conditions, some of which are outside the control of the Company, is developed
on the basis of (i) the Company's performance in the prior year; (ii) estimates
of sales revenue for the plan year based upon recent market conditions and
trends and other factors which, based on historical experience, are expected to
affect the level of sales that can be achieved; (iii) historical operating costs
and cost savings that management believes can be realized; and (iv) competitive
conditions faced by the Company. By taking all of these factors into account,
including market conditions, the earnings goal in the annual operating plan,
which is also the basis on which bonus awards are determined under the incentive
plan, is fixed at what is believed to be a realistic level so as to make the
incentives meaningful to executives and to avoid penalizing executives and other
key management personnel for conditions outside of their control.
In certain instances, bonuses under the incentive plan are awarded not only
on the basis of the Company's overall profitability, but also on the achievement
by an executive of specific objectives within his or her area of responsibility.
For example, a bonus may be awarded for an executive's efforts in achieving
greater than anticipated cost savings, or establishing new or expanding existing
markets for the Company's products. Typically, the maximum bonus that may be
awarded for achievement of specific objectives is determined at the beginning of
the year to provide the requisite incentive for such performance.
As a result of this performance-based bonus program, executive compensation
generally increases in those years in which the Company's profitability
increases. On the other hand, in years in which the Company experiences less
than anticipated profit growth, bonuses, and therefore also total executive
compensation, tend to be lower. For example, in each of 1994 and 1993, the
Company's net income increased as compared to the prior year and, as a result,
bonuses awarded to the Company's Chief Executive Officer and the other Named
Officers for 1994 and 1993 were greater than the bonuses awarded to them in each
of the respective preceding years. On the other hand, in 1995, the Company's net
income declined as compared to 1994 and, as a
8
<PAGE> 11
consequence, no bonuses were awarded for 1995 to the Company's Chief Executive
Officer or the other Named Officers.
Stock Options and Equity-Based Programs. In order to align the financial
interests of senior executives and other key employees with those of the
shareholders, the Company grants stock options to its senior executives and
other key employees on a periodic basis and makes contributions to an employee
stock purchase plan under which officers and employees may elect to have a
portion of their salaries withheld and used, together with the Company's
contributions, to purchase Common Stock of the Company. Stock option grants, in
particular, reward senior executives and other key employees for performance
that results in increases in the market price of the Company's Common Stock,
which directly benefits all shareholders. Moreover, the Compensation Committee
generally has followed the practice of granting options on terms which provide
that the options become exercisable in cumulative annual installments, generally
over a three-to-five-year period. The Compensation Committee believes that these
features of the option grants not only provides an incentive for senior
executives to remain in the employ of the Company, but also makes the Company's
earnings performance and longer term growth in share prices important for the
executives who receive stock options.
During fiscal year 1995, options to purchase common stock of the Company
were granted to the Chief Executive Officer, certain senior executives and other
key employees of the Company, and the Company made contributions to the
Company's Employee Stock Purchase Plan, that were designed to increase
management ownership of the Company's Common Stock and provide them with a
continuing interest in the Company's share performance.
Louis B. Sullivan
John E. Turco
Robert S. Throop
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Report, and
the performance graph on page 10, shall not be incorporated by reference into
any such filings.
9
<PAGE> 12
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for the Company, the American Stock Exchange composite index (the "AMEX
Composite"), and an index of peer group companies (the "Peer Group") selected by
the Company as described below.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD COAST AMEX MARKET
(FISCAL YEAR COVERED) DISTRIBUTION PEER GROUP INDEX
--------------------- ------------ ---------- -----------
<S> <C> <C> <C>
1990 100 100 100
1991 118 159 123
1992 247 217 125
1993 288 233 148
1994 359 221 131
1995 282 279 169
</TABLE>
The total cumulative return on investment (change in the period-end stock
price plus reinvested dividends) for each of the periods for the Company, the
AMEX Composite and the Peer Group is based on the stock price or index at the
end of fiscal 1990.
The graph above compares the performance of the Company with that of (i)
the AMEX Composite index and (ii) a Peer Group consisting of six original
equipment manufacturers that compete in the same markets as the Company. The
Company is the only publicly-traded company whose primary activity is the
wholesale distribution of recreational vehicle and boating parts and
accessories. The Peer Group consists of Brunswick Corporation, Coachmen
Industries Inc., Fleetwood Enterprises, Inc., Outboard Marine Corporation, Thor
Industries, Inc. and Winnebago Industries, Inc.
10
<PAGE> 13
PROPOSAL TWO
AMENDMENT TO THE 1993 STOCK OPTION PLAN TO INCREASE THE TOTAL
NUMBER OF SHARES ISSUABLE UNDER THAT PLAN
FROM 250,000 TO 500,000 SHARES
INTRODUCTION
Subject to approval by the Company's shareholders, the Board of Directors
amended the 1993 Plan on July 3, 1996 to increase the authorized number of
shares of Common Stock issuable thereunder by 250,000 shares and to reserve the
additional shares for issuance under the 1993 Plan, bringing the total number of
shares of Common Stock subject to the 1993 Plan to 500,000.
Approval of the addition of 250,000 shares of Common Stock to the number of
shares reserved for issuance thereunder will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present or
represented, and entitled to vote, at the Annual Meeting. Proxies solicited by
management for which no specific direction is included will be voted FOR the
amendment to the 1993 Plan to add 250,000 shares of Common Stock to the number
of shares reserved for issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE 1993
PLAN TO ADD 250,000 SHARES OF COMMON STOCK TO THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE 1993 PLAN.
The essential features of 1993 Plan are summarized below. The summary does
not purport to be a complete description of the 1993 Plan. Copies of the 1993
Plan can be obtained by writing the Secretary, The Coast Distribution System,
1982 Zanker Road, San Jose, California 95112.
DESCRIPTION OF THE 1993 PLAN
The 1993 Plan provides for the grant by the Company of options to purchase
Common Stock, and also provides for sales of restricted Common Stock, to
officers and other key employees and to directors of the Company and its
subsidiaries. The number of shares available for issuance under the 1993 Plan is
currently 250,000 and, if the amendment is approved, that number will be
increased to 500,000 shares. The aggregate number and kind of shares covered by
the 1993 Plan, and the number and kind of shares and the exercise price per
share covered by outstanding stock options, are subject to adjustment in the
event of any changes in the character or number of outstanding shares of Common
Stock by reason of stock splits, reverse stock splits, stock dividends,
reclassification or similar changes in the capital structure of the Company. At
June 21, 1996, options for the purchase of an aggregate of 234,000 shares had
been issued and were outstanding under, and 6 executive officers, 5 non-employee
directors and approximately 30 employees of the Company and its subsidiaries
were eligible to participate in, the 1993 Plan.
The 1993 Plan provides that it is to be administered by the Board of
Directors or a committee of at least two directors appointed by the Board (the
"Committee"). The 1993 Plan is administered by the Company's Stock Option
Committee, the members of which are Louis B. Sullivan and Robert S. Throop, both
of whom are non-employee directors of the Company. The Committee has broad
discretion, subject to the terms of the 1993 Plan, to determine the persons
entitled to receive options and/or restricted stock, and the terms and
conditions on which options and/or restricted stock are granted and to interpret
and prescribe rules and regulations relating to the 1993 Plan.
STOCK OPTIONS
Options granted under the 1993 Plan may be either "incentive stock
options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or "nonqualified stock options," as determined by
the Board of Directors or the Committee at the time of grant. The exercise price
of options must be at least equal to the fair market value of the Common Stock
as of the date of grant; provided, however, that in the case of an incentive
stock option granted to any person who owns, at the time of the grant, stock
possessing more than 10% of the combined voting power of all classes of the
Company's stock or of any
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<PAGE> 14
parent or subsidiary corporation (a "10% shareholder"), the exercise price must
be at least 110% of the fair market value as of the date of grant. In addition,
nonqualified options may be granted on terms which will permit the optionee to
forego other compensation that would be payable to him or her by the Company, or
any parent or subsidiary, in exchange for a reduction in the aggregate exercise
price of such options equal to the amount of other compensation which such
optionee agrees to forego.
Incentive stock options may be granted under the 1993 Plan to officers and
other key employees of the Company or of any parent or subsidiary corporation of
the Company, including directors if they are also employees. Nonqualified stock
options may be granted to officers, key employees and directors (whether or not
employed by the Company). Options may be exercised at such times and be subject
to such restrictions and conditions as the Board or Committee approves, which
need not be the same for all optionees. The Board or Committee has full
discretion to determine the terms of vesting of options, whether by the tenure
of employment or affiliation with the Company, by performance goals or by other
events, which may include a change of control of the Company (provided that the
aggregate fair market value of shares subject to incentive stock options that
become exercisable for the first time in any calendar year cannot exceed
$100,000).
Options granted under the 1993 Plan are not transferable except by will or
the laws of descent and distribution, provided that nonqualified stock options
may be transferred pursuant to a qualified domestic relations order, as defined
in the Code. Options may have a term not exceeding ten years from the date of
grant, and not more than five years from the date of grant in the case of an
incentive stock option granted to a 10% shareholder.
The exercise price of stock options may be paid in cash; by delivery of
other shares of Common Stock owned by the optionee or by cancellation of
indebtedness of the Company to the optionee (in either case with the consent of
the Board of Directors); provided that a public market for the Common Stock
exists, by a "same day sale" commitment from the optionee and a broker to
deliver proceeds of the sale of Common Stock acquired on exercise or through a
"margin" commitment from the optionee and a broker to use the stock acquired on
exercise as security for a loan from the broker to pay the exercise price; or
such other form of consideration as the Board or Committee in its discretion may
determine.
AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS
Under the 1993 Plan, each director of the Company who is not an employee of
the Company, and was not previously an officer or employee of the Company or
subsidiary that was eligible to receive options under any employee stock option
plan of the Company, will automatically be granted nonqualified options to
purchase 2,000 shares of Common Stock upon commencement of service as a
director; and incumbent directors who are not employees of the Company or any
subsidiary will automatically be granted options to purchase 2,000 shares of
Common Stock each year upon their re-election by the shareholders to the Board
of Directors. The options granted on commencement of service will vest on the
first anniversary of the date of grant. The options granted to incumbent
directors on their re-election to the Board will vest in full six months after
grant. In each case, the options will have an exercise price equal to the fair
market value on the date of grant and will have a ten-year term. The amount,
price and timing of grants and the vesting of options to be granted to non-
employee directors pursuant to the automatic grant provisions of the 1993 Plan
may be modified by action of the Board of Directors, but not more often than
once every six months.
RESTRICTED STOCK
The Committee may grant rights to purchase Common Stock on restricted terms
to officers, key employees and directors (whether or not employed by the
Company). Such rights would entitle the recipient to purchase a specified number
of shares of Common Stock from the Company under the 1993 Plan on terms which
would, for a specified period of time, restrict the transferability of the
shares or require the recipient to resell the shares to the Company, at cost, on
the occurrence of such conditions or events as the Committee may determine. The
restrictions on transfer and any resale obligation would lapse on such schedule
or on other
12
<PAGE> 15
conditions as the Committee may determine, which may include continued
employment, achievement of financial goals, or upon the death, disability or
retirement of the participant.
AMENDMENT AND TERMINATION OF THE 1993 PLAN
The Board of Directors may amend or terminate the 1993 Plan at any time
without shareholder approval; provided, however, that shareholder approval will
be obtained for any amendment to the 1993 Plan to the extent that shareholder
approval is necessary and desirable to comply with either Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or with Section 422 of the Code (or
any other applicable law or regulation), and provided further, that the amount,
price or timing of automatic option grants to non-employee directors may not be
amended more often than once every six months except to comport with changes in
Rule 16b-3 or the Code. Unless it is terminated sooner by the Board of
Directors, the 1993 Plan will terminate on January 31, 2003.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
of the 1993 Plan. State and local income taxes, which may vary from locality to
locality, are not discussed.
Incentive Stock Options. No taxable income is recognized by an optionee
upon either the grant or exercise of an incentive stock option. When the
optionee sells or otherwise disposes of the shares acquired upon the exercise of
an incentive stock option, the entire gain or loss realized will be treated as
long-term capital gain if the disposition occurs more than one year after the
option was exercised and more than two years after the date of grant of the
option. However, if the disposition occurs before the one-year or two-year
periods have elapsed (a "disqualifying disposition"), any gain realized will be
taxed as ordinary income in an amount equal to the difference between the option
price and either the fair market value of the shares at the time of exercise or
the sale price, whichever is less, and the balance, if any, will be treated as
capital gain. Any loss realized upon a disqualifying disposition will be treated
as a capital loss. Special rules may apply in specific circumstances, such as
the use of already-owned stock to exercise an incentive stock option. The
Company will be entitled to a deduction for federal income tax purposes only to
the extent the optionee recognizes ordinary income upon the disposition of the
shares. The differences between the option price and the fair market value of
the shares acquired at the time of exercise of an incentive stock option will be
an item of tax preference for purposes of computing the alternative minimum tax
under Section 55 of the Code.
Nonqualified Stock Options. No taxable income is recognized by an optionee
upon the grant of a nonqualified stock option. Upon exercise, however, the
optionee will recognize ordinary income in the amount by which the fair market
value of the shares purchased exceeds, on the date of exercise, the purchase
price paid for such shares. The income recognized by the optionee will be
subject to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company is entitled to a tax
deduction in an amount equal to the ordinary income recognized by the optionee.
The optionee's basis in the shares acquired will be increased by the amount of
ordinary income recognized. Any subsequent gain or loss recognized upon the sale
of the shares will be treated as long-term capital gain or loss if the shares
have been held for more than the applicable statutory holding period.
Restricted Stock. The receipt of restricted stock will not result in a
taxable event until the applicable restrictions and risk of forfeiture lapse,
unless the participant makes an election under Section 83(b) of the Code to be
taxed as of the date of purchase. If a Section 83(b) election is made, the
participant will recognize ordinary income in an amount equal to the excess of
the fair market value of such shares on the date of purchase over the amount
paid for such shares. If no amount is paid for such shares, the participant will
recognize ordinary income in an amount equal to the fair market value of such
shares on the date of grant. Even if the amount paid and the fair market value
of the shares are the same (in which case there would be no ordinary income), a
Section 83(b) election must be made to avoid deferral of the date ordinary
income is recognized. The election must be filed with the Internal Revenue
Service not later than thirty (30) days after
13
<PAGE> 16
the date of purchase. If no Section 83(b) election is made, a taxable event will
occur on each date the participant's ownership rights vest (i.e., when the
restrictions and risk of forfeiture lapse) as to the number of shares that vest
on that date, and the holding period for long-term capital gain purposes will
not commence until the date the shares vest. The participant will recognize
ordinary income on each date shares vest in an amount equal to the excess of the
fair market value of such shares on that date over the amount paid for such
shares. The Company is entitled to a tax deduction in an amount equal to the
ordinary income recognized by the participant.
TAX WITHHOLDING
Under the 1993 Plan, the Company has the power to withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local withholding tax requirements with respect to any options
exercised or restricted stock granted under the 1993 Plan. To the extent
permissible under applicable tax, securities, and other laws, the Committee may,
in its sole discretion, permit a participant to satisfy an obligation to pay any
tax to any governmental entity in respect of any option or restricted stock up
to an amount determined on the basis of the highest marginal tax rate applicable
to such participant, in whole or in part, by (i) directing the Company to apply
shares of Common Stock to which the participant is entitled as a result of the
exercise of an option or as a result of the lapse of restrictions on restricted
stock, or (ii) delivering to the Company shares of Common Stock owned by the
participant.
INDEPENDENT ACCOUNTANTS
During 1995, Grant Thornton provided audit services to the Company which
included the examination of the Company's financial statements for the year
ended December 31, 1995. The Company has not yet selected auditors for 1996. A
representative of Grant Thornton is expected to be present at the Meeting to
respond to appropriate questions from shareholders, and will have an opportunity
to make a statement if he so desires.
ANNUAL REPORT
The 1995 Annual Report to Shareholders of the Company is being sent with
this Proxy Statement to each shareholder of record as of June 21, 1996 with this
Proxy Statement. The Annual Report is not to be regarded as proxy solicitation
material.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 1997 Annual
Meeting of Shareholders and presentation in the Company's Proxy Statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company at its principal place of business no later than February 28, 1997 in
order to be considered for inclusion in the Company's proxy statement relating
to that meeting. Matters pertaining to such proposals, including the number and
length thereof, eligibility of persons entitled to have such proposals included
and other aspects are regulated by the Securities Exchange Act of 1934, Rules
and Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
14
<PAGE> 17
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
SANDRA A. KNELL
Secretary
July 8, 1996
COPIES OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K, AS AMENDED, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
WILL BE PROVIDED TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
SECRETARY, THE COAST DISTRIBUTION SYSTEM, 1982 ZANKER ROAD, SAN JOSE, CALIFORNIA
95112.
15
<PAGE> 18
PROXY THE COAST DISTRIBUTION SYSTEM
1996 ANNUAL MEETING OF SHAREHOLDERS -- AUGUST 8, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. McGuire, Louis B. Sullivan and
John E. Turco, and each of them, individually, as attorneys and Proxies, with
full power of substitution, to represent the undersigned and to vote, as
designated below, all the shares of Common Stock of The Coast Distribution
System (the "Company") which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of The Coast Distribution System to be held at the
Executive Offices of the Company, 1982 Zanker Road, San Jose, California, on
Thursday, August 8, 1996, at 2:00 P.M. Pacific Time, or at any postponement or
adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: / / FOR ALL NOMINEES LISTED / / WITHHOLD AUTHORITY
BELOW (except as marked to the (to vote for the nominees
contrary below) listed below)
</TABLE>
Nominees: Thomas R. McGuire, Louis B. Sullivan, John E. Turco, Brian P.
Friedman, Ben A. Frydman and Robert S. Throop
(INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. INCREASE IN THE NUMBER OF SHARES ISSUABLE UNDER 1993 OPTION PLAN TO 500,000
SHARES.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, UPON OTHER BUSINESS WHICH PROPERLY COMES BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
IMPORTANT -- PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY.
<PAGE> 19
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER ON THE REVERSE SIDE OF THIS PROXY. WHERE NO DIRECTION IS GIVEN, SUCH
SHARES WILL BE VOTED "FOR" THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON
THE REVERSE SIDE OF THIS PROXY AND "FOR" THE INCREASE IN THE NUMBER OF SHARES
ISSUABLE UNDER THE 1993 STOCK OPTION PLAN. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY TO CUMULATE VOTES FOR ANY OR ALL OF THE NOMINEES FOR ELECTION OF
DIRECTORS FOR WHICH AUTHORITY TO VOTE HAS NOT BEEN WITHHELD.
Date , 1996
-------------
(Signature of
shareholder)
------------------------
------------------------
Please sign your name
exactly as it appears
hereon. Executors,
administrators,
guardians, officers of
corporations, and others
signing in a fiduciary
capacity should state
their full titles as
such.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND
RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
