SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
OAK INDUSTRIES INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
1 Set forth the amount on which the filing fees is calculated and state how
it was determined.
[ ] 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:
Oak Industries Inc.
To the Stockholders of Oak Industries Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders
of Oak Industries Inc. to be held at The Westin Hotel, 70 Third Avenue,
Waltham, Massachusetts, on Friday, April 24, 1998 at 9:30 a.m., Eastern
Standard Time. Official notice of the meeting and Oak's proxy statement
are attached. A proxy card is also enclosed.
Whether or not you attend the meeting, please sign and return the
enclosed proxy card promptly; your vote is important.
On behalf of the Board of Directors and the management of your company,
thank you for your cooperation and continued support.
Sincerely,
/S/ Willaim S. Antle III
William S. Antle III
Chairman,
Chief Executive Officer
and President
Waltham, MA
March 16, 1998
Oak Industries Inc.
1000 Winter Street
Waltham, MA 02154
Telephone (781) 890-0400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 24, 1998
TO THE STOCKHOLDERS OF OAK INDUSTRIES INC.:
The Annual Meeting of Stockholders of Oak Industries Inc., a Delaware
corporation (the "Company"), will be held at The Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts, on Friday, April 24, 1998 at 9:30 a.m.,
Eastern Standard Time, for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To consider and act upon a proposal to approve amendments to the
Oak Industries Inc. 1995 Stock Option and Restricted Stock Plan (the "1995
Plan"), including, among other things, an increase in the number of shares
of common stock of the Company available under the 1995 Plan from 2,000,000
to 4,000,000; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Stockholders of record at the close of business on February 23, 1998 will
be entitled to vote at the meeting and at any adjournments thereof.
All stockholders are cordially invited to attend the meeting. However, the
Company urges you to assure your representation at the meeting by signing
and returning the enclosed proxy in the postage prepaid envelope provided
as promptly as possible. The giving of your proxy does not affect your
right to vote in person if you attend the meeting.
By order of the Board of Directors,
/S/ Mela Lew
Mela Lew
Vice President,
General Counsel and Secretary
March 16, 1998
OAK INDUSTRIES INC.
1000 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
PROXY STATEMENT
MARCH 16, 1998
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
THE ENCLOSED PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OAK INDUSTRIES INC. (THE "COMPANY"), FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS (THE "ANNUAL MEETING"), TO BE HELD AT THE WESTIN HOTEL, 70
THIRD AVENUE, WALTHAM, MASSACHUSETTS, ON FRIDAY, APRIL 24, 1998 AT 9:30
A.M., EASTERN STANDARD TIME, OR ANY ADJOURNMENTS THEREOF. A stockholder
giving a proxy has the power to revoke it at any time before it is
exercised by filing with the Secretary of the Company either an instrument
revoking the proxy or a duly executed proxy bearing a later date. A proxy
will be revoked automatically if the stockholder who executed it is present
at the meeting and votes in person. Unless contrary instructions are
indicated on the proxy, all shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will
be voted (i) FOR the election of the nominees for director named herein;
(ii) FOR the approval of the amendments to the Oak Industries Inc. 1995
Stock Option and Restricted Stock Plan described herein; and (iii) in the
discretion of the proxy holders named in the enclosed form of proxy, on any
other business as may properly come before the meeting or any adjournments
thereof. This proxy statement and the accompanying proxy are being mailed
to stockholders on or about March 16, 1998.
Holders of record of the Company's common stock, $0.01 par value per
share (the "Common Stock"), outstanding at the close of business on
February 23, 1998 are entitled to one vote for each share of Common Stock
held. At that time, 17,888,894 shares of Common Stock were outstanding,
each entitling its holder to one non-cumulative vote on each matter
properly brought before the Annual Meeting. Votes cast by proxy or in
person at the Annual Meeting will be tabulated by the election inspector
appointed for the meeting and will determine whether or not a quorum is
present. The election inspector treats abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any
matter submitted to the stockholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, then those shares will not be
considered as present and entitled to vote with respect to that matter.
Where a choice has been specified on the proxy with respect to the matters
set forth above, the shares represented by the proxy will be voted in
accordance with the specification; if no specification is indicated for a
proposal, the shares represented by the proxy will be voted FOR such
proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 23, 1998, the name of
each person who, to the knowledge of the Company, may be deemed to own
beneficially more than 5% of the shares of Common Stock of the Company
outstanding at such date, the number of shares owned by each such person
and the percentage of the outstanding shares of Common Stock represented
thereby.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------------- -------------------- --------
<S> <C> <C>
J. and W. Seligman and Co. Incorporated 3,165,545(1) 17.70%
100 Park Avenue
New York, NY 10017
FMR Corp. 1,749,500(2) 9.78
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, LLP 1,542,500(3) 8.62
75 State Street
Boston, MA 02109
Lazard Freres and Co. LLC 1,299,763(4) 7.27
30 Rockefeller Plaza
New York, NY 10020
Mellon Bank Corporation 1,273,365(5) 7.12
One Mellon Bank Center
Pittsburgh, PA 15258
HL Investment Advisors, Inc. 971,200(6) 5.43
200 Hopmeadow Street
Simsbury, CT 06070
<FN>
(1) Based on Amendment No. 2 to Schedule 13G dated February 13, 1998
indicating (i) shared voting and dispositive power with William C. Morris,
a control person of J. and W. Seligman and Co., Incorporated, of 2,807,080
and 3,165,545 shares, respectively, and (ii) shared voting and dispositive
power of 1,050,000 shares with Seligman Communications and Information
Fund, Inc.
(2) Based on Amendment No. 2 to Schedule 13G dated February 14, 1998
indicating that: (i) Fidelity Management and Research Company ("Fidelity"),
a wholly-owned subsidiary of FMR Corp., is the beneficial owner of
1,429,100 of these shares as a result of Fidelity's acting as investment
advisor to various investment companies (the "Funds"), one of which,
Fidelity Growth and Income Fund, may be deemed to own beneficially
1,426,700 shares of Common Stock, and that Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity, and the Funds each has sole dispositive
power of the 1,429,100 shares; (ii) Fidelity Management Trust Company
("FMTC"), a wholly-owned subsidiary of FMR Corp., is the beneficial owner
of 320,400 shares as a result of FMTC's acting as investment manager of
certain institutional accounts, and Edward C. Johnson 3d and FMR Corp.,
through its control of FMTC, each has sole voting and dispositive power
over such shares; and (iii) members of the Edward C. Johnson 3d family may
be deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR Corp.
(3) Based on Amendment No. 1 to Schedule 13G dated January 14, 1998
indicating that Wellington Management Company, in its capacity as an
investment advisor, has shared voting power with respect to 1,137,200 of
such shares and shared dispositive power with respect to 1,542,500 shares.
(4) Based on Amendment No. 2 to Schedule 13G dated February 13, 1998
indicating sole voting power with respect to 1,219,663 shares and sole
dispositive power with respect to 1,299,763 shares.
(5) Based on Schedule 13G dated January 23, 1998 indicating that Mellon
Bank Corporation, through its control of certain direct or indirect
subsidiaries, including Boston Group Holdings, Inc. and The Boston Company,
Inc., has sole voting power with respect to 1,094,447 shares, sole
dispositive power with respect to 1,181,965 shares, and shared dispositive
power with respect to 91,400 shares.
(6) Based on Amendment No. 1 to Schedule 13G dated February 12, 1998
indicating shared voting and dispositive power of these shares with
Hartford Capital Appreciation Fund, Inc., a registered management
investment company.
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of February 23, 1998, certain
information with respect to the number of shares of Common Stock of the
Company beneficially owned by its directors and executive officers and the
percentage of the outstanding shares of Common Stock represented thereby.
<TABLE>
<CAPTION>
Number of Percent of
Name of Beneficial Owner Shares(1) Class
- ---------------------------- ----------- ----------
<S> <C> <C>
William S. Antle III 597,962(2)(3)(4)(5) 3.27%
Beth L. Bronner 7,750(2)(6) *
Daniel W. Derbes 62,525(2)(6)(7) *
Coleman S. Hicks 121,323(4)(5)(8) *
Roderick M. Hills 118,451(2)(6)(9) *
George W. Leisz 36,245(2)(6) *
Pamela F. Lenehan 152,204(4)(5)(8) *
Gilbert E. Matthews 35,525(2)(6) *
Christopher H. B. Mills 26,525(2)(6) *
Elliot L. Richardson 36,525(2)(6) *
All current executive officers and
directors as a group (10 persons) 1,195,035(10) 6.43%
- ----------------------------
<FN>
* Constitutes less than 1% of the total shares outstanding.
(1) Nature of beneficial ownership is direct and arises from sole
voting and investment power, unless otherwise indicated by footnote.
(2) Includes the following shares subject to stock options becoming
exercisable by the following directors within sixty days of February 23,
1998: Mr. Antle, 401,540 shares; Ms. Bronner, 6,250 shares; Mr. Derbes,
35,025 shares; Mr. Hills, 35,025 shares; Mr. Leisz, 15,025 shares; Mr.
Matthews, 15,025 shares; Mr. Mills, 15,025 shares; and Mr. Richardson,
35,025 shares.
(3) Includes 6,300 shares held by his spouse as to which Mr. Antle
disclaims beneficial ownership and 200 shares held indirectly in trust.
(4) Includes the following shares awarded to the following executive
officers as restricted stock under the Company's 1995 Stock Option and
Restricted Stock Plan that remain subject to restriction on disposition
until January 1, 2000: Mr. Antle, 40,000; and each of Mr. Hicks and Ms.
Lenehan, 25,000 shares.
(5) Includes Common Stock equivalents attributable to the following
executive officers in the Company's Supplemental Retirement Income Plan:
Mr. Antle, 13,335 shares; Mr. Hicks, 2,983 shares; and Ms. Lenehan, 3,454
shares.
(6) Includes 1,500 shares that have been awarded as part of such
Director's annual compensation package; such shares are subject to
restrictions on disposition for a period of five years from their grant
dates.
(7) Includes 26,000 shares held indirectly in trust.
(8) Includes the following shares subject to stock options becoming
exercisable by the following executive officers within sixty days of
February 23, 1998: Mr. Hicks, 68,340; and Ms. Lenehan, 83,750.
(9) Includes (i) 66,149 shares held indirectly by the Hills Family
Limited Partnership, of which Mr. Hills is a general partner; Mr. Hills
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein, and (ii) 8,174 shares held indirectly by his
spouse as trustee as to which he disclaims beneficial ownership.
(10) Includes 710,030 shares subject to stock options becoming
exercisable within sixty days of February 23, 1998 by directors and
executive officers of the Company.
</TABLE>
ELECTION OF DIRECTORS
A board of eight directors is to be elected at the Annual Meeting. The
term of office for each person elected as a director will continue until
the 1999 Annual Meeting of Stockholders or until such person's successor
has been elected and qualified. All nominees have consented to be named
and have indicated their intent to serve if elected. If, for any reason,
any nominee for director shall become unavailable for election, which
management does not anticipate, the proxy holders named in the enclosed
form of proxy may exercise discretionary authority to vote for a substitute
nominee. The nominees who receive the highest number of votes cast at the
Annual Meeting by the holders of shares entitled to vote will be elected as
directors. Accordingly, abstentions and broker non-votes will not affect
the outcome of the election of directors. Unless otherwise instructed,
proxy holders will vote the proxies received by them for the eight nominees
named below. Each of the nominees is currently serving as a director.
Names of the eight nominees and certain information about them are set
forth below:
<TABLE>
<CAPTION>
Director
Name, Principal Occupation and Directorships Age Since
--------------------------------------------- ----- ---------
<S> <C> <C>
William S. Antle III------------------------------------- 53 1990
Chairman of the Board of Directors since May 1996; Chief
Executive Officer and President of the Company since
December 1989; also, Director of ESCO Electronics Corporation,
GenRad, Inc. and New England Investment Companies, Inc.
Beth L. Bronner------------------------------------------ 46 1996
Vice President, Citibank since September 1996; Vice President
for Emerging Markets, ATandT Domestic Services, July 1994
to June 1996; President, Revlon Professional, North America,
August 1992 to June 1994; Executive Vice President, Beauty Care
and Professional Products, Revlon, Inc., January 1992 to August
1992; also, Director of the Hain Food Group and Fortis, Inc.
Daniel W. Derbes----------------------------------------- 67 1989
Chairman of the Compensation Committee of the Board of
Directors since April 1997; President of Signal Ventures
since 1989; also, Non-executive Chairman of the Board of
San Diego Gas and Electric Co., Director of ENOVA Corp.
and WD-40 Company.
Roderick M. Hills---------------------------------------- 66 1985
Vice Chairman of the Company's Board of Directors since
June 1989; Chairman of the Audit Committee of the Board of
Directors since May 1996; President of Hills Enterprises
Ltd. since 1987; from 1989 to 1994, partner of or counsel
to the law firms of Donovan Leisure Rogovin Huge and Schiller,
Shea and Gould, and Mudge Rose Guthrie Alexander and Ferdon;
also, Director of Federal-Mogul Corporation and
Waste Management, Inc.
George W. Leisz------------------------------------------ 74 1989
Managing Director, Carlisle Enterprises, LLC since 1989;
also, Director of Sorvall, L.P. and Centrifugal Corporation.
Gilbert E. Matthews-------------------------------------- 67 1989
Senior Managing Director of Sutter Securities Incorporated
since December 1995 and Chairman of the Board of Sutter
Securities Incorporated since December 1997; Senior Managing
Director of Bear, Stearns and Co. Inc. from 1986 to
December 1995.
Christopher H. B. Mills---------------------------------- 45 1989
Managing Director, North Atlantic Smaller Companies Trust
PLC since 1984; also, Director of PS Group Holdings Inc.,
Midstates PLC, Horace Small Apparel PLC, Denison International
PLC, and Compass Plastics and Technologies Inc.
Elliot L. Richardson------------------------------------- 77 1989
Retired partner of the law firm of Milbank, Tweed, Hadley
and McCloy, partner from 1980 to 1992; also, Member of the
Advisory Board of American Flywheel Systems, Inc.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company (the "Board") has standing Audit,
Compensation and Nominating Committees.
The Audit Committee held four meetings during 1997. The functions
performed by the Audit Committee include recommending independent certified
public accountants to the Board, reviewing quarterly results of the
Company's operations, the plan of audit and the audit results, and
consulting with the Company's accountants on the adequacy of internal
controls. Directors Hills (Chairman), Bronner and Richardson are members
of the Audit Committee.
The Compensation Committee held three meetings during 1997. The
functions performed by the Compensation Committee include reviewing and
recommending to the Board all changes in compensation of officers and key
employees of the Company and its divisions and subsidiaries whose annual
base salary is $150,000 or more, and the administration of grants under the
Company's existing award plans. Directors Derbes (Chairman), Leisz and
Matthews are members of the Compensation Committee.
The Nominating Committee held one meeting during 1997. It is the
function of the Nominating Committee to consider and nominate persons to
serve as directors of the Company. Directors Antle (Chairman), Derbes and
Hills are members of the Nominating Committee. The Nominating Committee
will consider nominees recommended by stockholders pursuant to the
procedures set forth in the Company's By-laws requiring that notice of a
stockholder nomination be given to the Company not less than 90 days before
the Annual Meeting over the signature of at least five stockholders holding
an aggregate of at least 5% of the total number of shares of outstanding
stock of the Company.
The Board held six meetings during 1997. All of the Company's directors
attended 75% or more of the meetings of the Board and of the committees on
which they served.
COMPENSATION OF DIRECTORS
Fees. Each director who is not an employee of the Company or any of its
subsidiaries (an "Outside Director") receives cash compensation of $20,000
annually. The Chairman of the Audit Committee and the Chairman of the
Compensation Committee each receives additional cash compensation of $2,000
annually. A member of the Board who is an employee of the Company or its
subsidiaries is not paid for services as a director. Outside Directors are
eligible to receive grants of restricted stock and to participate in the
Company's stock option and restricted stock plans pursuant to the terms
further described below.
Restricted Stock Grants. Each Outside Director receives an annual grant
of 500 shares of restricted stock (the "Restricted Stock") from the Company
on the first day of each calendar year. In addition to the annual grants,
each new Outside Director also receives an initial grant of 500 shares of
Restricted Stock as of the first business day following such director's
election or appointment. Each grant of Restricted Stock vests upon the
fifth anniversary of the grant date, and is subject to forfeiture in the
event that the Outside Director ceases to be a member of the Board before
such anniversary. The Restricted Stock vests automatically, however, in
the event that the Outside Director resigns from the Board in connection
with his or her retirement from the Board after the age of 59, or in the
event of the Outside Director's death.
Restricted Stock and Stock Option Plans. The purpose of providing
Outside Directors with stock option awards pursuant to the Company's
restricted stock and stock option plans is twofold: first, to provide
Outside Directors with an equity interest in the Company and second, to
secure for the Company and its stockholders the benefits inherent in such
equity ownership by persons whose advice and counsel are important to the
continued growth and success of the Company.
1995 Stock Option and Restricted Stock Plan. In December 1994, the
Board adopted the Oak Industries Inc. 1995 Stock Option and Restricted
Stock Plan (the "1995 Plan"). The 1995 Plan was approved by the
stockholders of the Company in May of 1995, amended by the Board on each of
December 5, 1996 and December 17, 1997, and, subject to stockholder
approval, further amended by the Board on February 5, 1998. See "Proposal
to Approve Amendments to the Oak Industries Inc. 1995 Stock Option and
Restricted Stock Plan." Each Outside Director serving at the time of the
1995 Plan's adoption was granted stock options to purchase 12,500 shares of
Common Stock (the "Initial Grant"). Each Outside Director also received,
on the first and second anniversaries of the Initial Grant, additional
stock options to purchase 2,500 shares. Prior to the February 5, 1998
amendments, new Outside Directors received stock options to purchase 12,500
shares on the first business day following appointment or election.
Additionally, the 1995 Plan previously provided that each new Outside
Director received stock options to purchase 2,500 shares on the first and
second anniversaries of such director's appointment or election. Under the
1995 Plan as proposed to be amended, Outside Directors will be eligible to
receive awards under the 1995 Plan at the discretion of the Board.
As of the date of this proxy statement, each Outside Director (except
for Ms. Bronner, who to date has received stock options to purchase 15,000
shares) has received stock options to purchase an aggregate of 17,500
shares of Common Stock under the 1995 Plan.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer
and the other named executive officers of the Company for the years
indicated.
<TABLE>
<CAPTION>
Long Term
-----------
Annual Compensation Compensation
-------------------- --------------
Name Other Restricted Securities
and Annual Stock Underlying All Other
Principal Salary Bonus(1) Compensation(2) Awards Stock Options Compensation(3)
Positions Year ($) ($) ($) ($) (#) ($)
- -------------------------------------------------------------- -------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William S. Antle III 1997 $525,000 $525,000 _ $ _ 100,000 $88,079(4)
Chairman of the Board, 1996 485,000 475,000 _ 950,000(5) _ 79,974(6)
Chief Executive Officer 1995 450,000 465,000 _ _ 70,000 77,826(7)
and President
Coleman S. Hicks 1997 300,000 200,000 _ _ 75,000 36,641(4)
Senior Vice President 1996 285,000 165,000 _ 593,750(5) _ 35,541(6)(8)
and Chief Financial 1995 91,664 105,000 _ _ 102,000 65,327(9)
Officer
Pamela F. Lenehan 1997 300,000 200,000 _ _ 75,000 39,166(4)
Senior Vice President, 1996 275,000 200,000 _ 593,750(5) _ 32,127(6)
Corporate Development 1995 218,757 200,000 _ _ 102,000 14,688
and Treasurer
Francis J. Lunger(10) 1997 152,500 _ _ _ _ 26,945(4)
Senior Vice President 1996 275,000 200,000 _ 593,750(5) _ 19,342(6)
and Chief Financial 1995 36,489 50,000 _ _ 77,000 _
Officer
- --------------------------------------------------------------------------------------------------------------
<FN>
(1) The bonus amounts are payable as described under the caption
"Compensation Committee Report on Executive Compensation".
(2) Unless otherwise indicated, perquisites for an executive officer do
not exceed the lesser of $50,000 or 10% of such officer's salary and bonus.
(3) The compensation reported includes Company contributions under the
Company's Retirement Savings Plan, which is qualified under Sections 401(a)
and 401(k) of the Internal Revenue Code, and/or the Company's non-qualified
Supplemental Retirement Income Plan as follows: in 1997, the amounts of
$75,000, $35,225, $37,500 and $26,225 for Messrs. Antle and Hicks, Ms.
Lenehan and Mr. Lunger, respectively; in 1996, the amounts of $71,372,
$29,590, $32,025 and $18,046 for Messrs. Antle and Hicks, Ms. Lenehan and
Mr. Lunger, respectively; and in 1995, the amounts of $71,709, $6,434 and
$14,688 for Messrs. Antle and Hicks and Ms. Lenehan, respectively.
(4) Includes $13,079, $1,416, $1,666 and $720 in term life insurance
premiums paid by the Company for the benefit of Messrs. Antle and Hicks,
Ms. Lenehan and Mr. Lunger, respectively.
(5) Represents the dollar value on December 4, 1996, the award date, of
an award to such individual of restricted Common Stock. On such date, the
fair market value of the Common Stock was $23.75. Each of Messrs. Antle,
and Hicks, Ms. Lenehan and Mr. Lunger received 40,000, 25,000,
25,000 and 25,000 shares of restricted Common Stock respectively; the
foregoing amounts represent the total number of shares of restricted stock
awarded to such individuals. Mr. Lunger's shares were forfeited upon his
resignation from the Company. Restrictions with respect to the remaining
shares will lapse on January 1, 2000. Although the Company is presently
prohibited from paying dividends under the terms of its credit facilities,
if the Company were to declare dividends on its Common Stock, the holders
of these shares would be entitled to such dividends. As of December 31,
1997 the value of the shares of restricted stock held by each of Messrs.
Antle and Hicks and Ms. Lenehan was $1,187,500, $742,188 and $742,188,
respectively.
(6) Includes $8,602, $1,413, $102 and $1,296 in term life insurance
premiums paid by the Company for the benefit of Messrs. Antle and Hicks,
Ms. Lenehan, and Mr. Lunger, respectively.
(7) Includes $6,117 in term life insurance premiums paid by the Company
for the benefit of Mr. Antle.
(8) Includes reimbursement of relocation expenses in the amount of $4,538
(9) Includes (a) reimbursement of relocation expenses in the amount of
$37,739 and (b) $21,154 paid to Mr. Hicks for certain consulting services
prior to his employment by the Company.
(10) Mr. Lunger resigned from the Company as of June 23, 1997.
</TABLE>
Stock Option/Stock Appreciation Right Grants. The following table
summarizes stock option grants during fiscal 1997 to the executive officers
named in the preceding Summary Compensation Table and the potential
realizable value of such stock options determined by formulas prescribed by
the Securities and Exchange Commission. The assumed rates of stock price
appreciation are hypothetical; the actual value of the stock options, if
any, will depend on the future performance of the Common Stock. No SARs
were granted or exercised during fiscal 1997.
<TABLE>
<CAPTION>
Stock Option Grants in Fiscal 1997
Individual Grants
----------------- Potential Realizable
Value At Assumed
Number of Securities % of Total Annual Rate of Stock
Underlying Stock Stock Options Price Appreciation
Options Granted Granted to Exercise or For Stock Option
(#) Employees in Base Price Expiration Term
Fiscal Year ($/Sh) Date ---------------------
Name 5% ($) 10% ($)
- ------------------------------------------------------------------------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
William S. Antle III, 7,880(1) .79% $25.375 10/14/2007 $ 125,751 $ 318,677
Chairman, President and 92,120(2) 9.22 25.375 10/15/2007 1,470,069 3,725,445
Chief Executive Officer
Coleman S. Hicks, 7,880(1) .79 25.375 10/14/2007 125,751 318,677
Senior Vice President 67,120(3) 6.72 25.375 10/15/2007 1,071,114 2,714,414
and Chief Financial Officer
Pamela F. Lenehan, 7,880(1) .79 25.375 10/14/2007 125,751 318,677
Senior Vice President, 67,120(3) 6.72 25.375 10/15/2007 1,071,114 2,714,414
Corporate Development
and Treasurer
Francis J. Lunger, N/A N/A N/A N/A N/A N/A
Senior Vice President
and Chief Financial Officer
- ----------------------------------------------------------------------------------- ---------------------
<FN>
*The above stock options become immediately exercisable upon the 45th day
prior to the proposed effective date of a merger, consolidation or
acquisition of the Company under certain circumstances, or upon the
liquidation or dissolution of the Company.
(1) These incentive stock options are exercisable subject to the
following schedule: 3,940 shares on each of October 14, 1999 and 2000.
(2) These non-qualified stock options are exercisable subject to the
following schedule: 34,000 shares on October 14, 1998; and 29,060 shares
on each of October 14, 1999 and 2000.
(3) These non-qualified stock options are exercisable subject to the
following schedule: 25,500 shares on October 14, 1998; and 20,810 shares
on each of October 14, 1999 and 2000.
</TABLE>
The following table summarizes information with respect to stock options
held by each of the named executive officers at the end of 1997 and the
value realized upon the exercise of options by certain of such officers
during 1997. The values shown for unexercised stock options may never be
realized and depend on the future performance of the Common Stock.
<TABLE>
<CAPTION>
Aggregated Stock Option Exercises During Fiscal Year 1997 and Fiscal Year-End Stock Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Stock
Stock Options at FY-End Options at FY-End
Shares Acquired Value (#) $29.6875/share($)(2)
Name on Exercise (#) Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William S. Antle III 56,960 $1,486,970 401,540/123,100 $5,298,822/$571,294
Chairman of the Board,
Chief Executive Officer
and President
Coleman S. Hicks 0 0 68,340/108,660 259,541/451,271
Senior Vice President,
General Counsel
and Secretary
Pamela F. Lenehan 0 0 68,340/108,660 324,029/483,034
Senior Vice President,
Corporate Development
and Treasurer
Francis J. Lunger 26,179 161,433 N/A N/A
Senior Vice President and
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on market value of the Common Stock at exercise minus the
exercise price.
(2) Based on market value of the Common Stock at the end of fiscal 1997
minus the exercise price.
Pension Plans. Although the Company maintains defined benefit pension
plans (the "Pension Plans") for employees of the Company and certain of its
subsidiaries, effective fiscal year 1993, the Pension Plans were amended to
cease all future benefit accruals with respect to executive officers of the
Company. Instead, executive officers of the Company became eligible to
participate in the Company's Supplemental Retirement Income Plan.
Generally, benefits under the Pension Plans are payable to participants
based upon average career salary and years of credited service to the
Company. On the fifth anniversary of his employment, Mr. Antle, the only
named executive who is a beneficiary under the Pension Plans, vested in
accrued benefits equaling $12,881.50 annually beginning at age 65.
Severance Agreements. Each of Messrs. Antle and Hicks and Ms. Lenehan
is party to a severance agreement (each, an "Agreement"), with the Company.
Each Agreement provides that the executive officer's employment shall be at
will, and is terminable by the Company or the executive officer with or
without cause, or by death or disability. In the event of a termination by
the Company without cause, or by the executive officer with good reason,
the executive officer is entitled to receive benefits as follows: Mr.
Antle, a lump sum cash amount equal to two years' then-current base salary
with continued fringe benefits and perquisites for a period of two years
after the date of termination; and each of Mr. Hicks and Ms. Lenehan, a
lump sum cash amount equal to one year's then-current base salary with
continued fringe benefits and perquisites for period of one year after the
date of termination. In the event that an executive officer's employment
is terminated by the Company without cause or by the executive officer with
good reason within three years after a change of control of the Company,
such executive officer is entitled to severance benefits substantially as
follows: a lump sum cash amount equal to 300% of (a) the executive's then-
current base salary plus (b) the average of the bonuses earned by such
executive for the three years completed immediately prior to the
termination or to the change of control, whichever is higher; a pro-rata
portion of the executive's target bonus for the year of termination; and,
continued fringe benefits and perquisites for a period of three years.
Under the Agreements, a "change of control" occurs upon (i) the acquisition
by a party of more than 20% (which may be increased up to 50% by the Board)
of the Company's outstanding Common Stock, (ii) a change in individuals
constituting the Board as of the date of the Agreements such that such
individuals no longer constitute at least a majority of the Board, (iii)
approval by the stockholders of the Company of a reorganization, merger,
consolidation or other transaction that will result in the transfer of
ownership of more than 50% of the Company's Common Stock, or (iv) the
liquidation or dissolution of the Company or the sale of substantially all
of the Company's assets.
Compensation Committee Report on Executive Compensation. The Board has
designated a Compensation Committee (the "Committee") consisting of Messrs.
Derbes (Chairman), Leisz and Matthews. None of the foregoing Committee
members is a current or former employee of the Company. The Board and the
Committee believe that the Company's compensation system has served and
will continue to serve to attract and retain executives necessary to
increase the Company's value to its stockholders.
The charter of the Committee directs that the Committee review and
recommend to the Board all changes in compensation of employees receiving
an annual base salary of $150,000 or more. Each year, the Committee
submits its recommendations to the Board for consideration and final
approval; the Board did not materially modify or disapprove any of the
Committee's recommendations for the 1998 fiscal year. In his capacities as
Chief Executive Officer ("CEO") and President, Mr. Antle, who is also
Chairman of the Board of Directors, submits salary change recommendations
to the Committee; salary recommendations for Mr. Antle as CEO and
President, however, are made by the Committee to the Board. The Committee
also makes grants of stock options and restricted stock to executive
officers. Additionally, the Committee is responsible for reviewing and
recommending to the Board new benefit plans and perquisite programs, as
well as material changes to any of the Company's compensation plans or
programs.
The Board endeavors to encourage and recognize performance by providing
the Company's executive officers the opportunity to earn total cash
compensation at the top quartile levels for electronics manufacturing
companies. The Committee has selected the independently-prepared Project
777 Annual Survey (the "777 Survey") as the primary basis for establishing
these compensation targets. Many of the companies listed in the 777 Survey
are also included in the Standard and Poor's Industrials Index used in the
Common Stock performance graphs set forth below.
The Board approves net income goals for the Company, which serve in part
as a basis for annual bonus targets for the Company's executive officers.
Aside from the Company's performance against the Board-approved goals,
bonus payments are also based on the overall performance of the individual
as evaluated by the Committee and the Board. Consistent with the
foregoing, in the case of Mr. Antle in his capacities as CEO and President,
each year the Committee recommends to the Board an annual bonus based on
the performance of the Company and of Mr. Antle as CEO and President in the
previous year. Factors influencing the Committee's recommendation of Mr.
Antle's 1997 bonus include the Company's increased and profitable sales in
1997.
The bonuses set forth in the Summary Compensation Table above reflect
the satisfaction of the Committee and the Board with the performance of the
Company and the named executives during 1997. Total compensation to the
named executives approximates top quartile compensation in the 777 Survey.
The Committee plans to continue to emphasize performance bonuses as a
significant portion of executive cash compensation.
The Committee awards stock options and restricted stock pursuant to
plans that have been adopted by the Company. In making such awards, the
Committee considers the individual's potential impact on the growth and
profitability of the Company, the individual's level of responsibility
within the organization, and any prior grants to the individual. The
Committee plans to continue to provide the Company's executive officers
with equity positions roughly competitive to those offered by other
companies. As supported by the graphs below, it is the Committee's view
that the performance of the Company's management has resulted in a
significant increase in stockholder value.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1 million paid to the Company's CEO or any other
executive officer of the Company appearing in the Summary Compensation
Table. Certain performance-based compensation, however, is specifically
exempt from the deduction limit. Although the Company does not have a
policy that requires the Committee to qualify compensation of executive
officers for deductibility under Section 162(m) of the Code, the Company
has taken steps to ensure that stock options awarded to the Company's
executive officers qualify for such deductibility.
Compensation Committee
Daniel W. Derbes (Chairman)
George W. Leisz
Gilbert E. Matthews
Common Stock Performance Graphs. The graphs below compare the
cumulative total stockholder return on the Common Stock of the Company for
each of the Company's last five and last seven fiscal years, respectively,
with the cumulative total return on the Standard and Poor's ("SandP")
Industrials Index and the Dow Jones Equity Market Index over the same
periods. The graphs assume that $100 was invested on each of December 31,
1992 and December 31, 1990 in the Common Stock, the SandP Industrials
Index and the Dow Jones Equity Market Index, and that dividends, if any,
were reinvested. The Company has chosen such indices because the Company's
operating units serve a wide variety of industries and, given the Company's
intention to acquire businesses in a variety of industries, comparison with
a narrow industry sub-group would not be meaningful. The Company has
included the seven-year graph in addition to the required five-year graph
to provide stockholders a better means to assess the performance of the
Company since Mr. Antle's appointment as President and Chief Executive
Officer.
</TABLE>
<TABLE>
OAK INDUSTRIES INC.
Total Cumulative Stockholder Return For
Five-Year Period Ending December 31, 1997
<CAPTION>
Measurement Period
Dow Jones
(Fiscal Year Covered) Oak Industries Inc. SandP Industrial Equity
- -------------------------- ---------------------- ----------------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/92 $100.00 $100.00 $100.00
-12/31/93 140.00 109.04 109.95
-12/31/94 192.63 113.22 110.79
-12/31/95 156.84 152.40 153.13
-12/31/96 193.68 187.46 189.28
-12/31/97 250.00 245.61 253.55
</TABLE>
<TABLE>
OAK INDUSTRIES INC.
Total Cumulative Stockholder Return For
Seven-Year Period Ending December 31, 1997
<CAPTION>
Measurement Period Dow Jones
(Fiscal Year Covered) Oak Industries Inc. S and P Industrial Equity
- ------------------------ ---------------------- ------------------ --------------
<S> <C> <C> <C>
Measurement Pt-12/31/90 $100.00 $100.00 $100.00
-12/31/91 125.07 130.71 132.44
-12/31/92 316.68 138.16 143.84
-12/31/93 443.35 150.65 158.15
-12/31/94 610.02 156.42 159.36
-12/31/95 496.68 210.55 220.26
-12/31/96 613.35 259.00 272.25
-12/31/97 791.70 339.35 364.70
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with a secondary public offering of Common Stock in 1993
(the "Offering"), certain officers of the Company, including Mr. Antle, who
is also a director of the Company, purchased shares with loans from the
Company at a price of $14.50 per share, which was the price at which shares
were sold to the public in the Offering. Mr. Antle's loan is evidenced in
the form of a promissory note (the "Promissory Note"), and is secured by
the Common Stock purchased from the amount advanced. The Promissory Note
is repayable in full on January 1, 2000, and prepayable in certain
circumstances, including the termination of employment. Interest on the
Promissory Note is calculated quarterly, on a retroactive basis, based on
the interest rate applicable to the Company's outstanding debt, and is
payable annually until maturity. During 1997, the largest aggregate amount
of indebtedness outstanding under the Promissory Note was $333,493. As of
February 23, 1998, a principal balance of $280,001 remained outstanding
under the Promissory Note.
PROPOSAL TO APPROVE AMENDMENTS TO THE OAK INDUSTRIES INC.
1995 STOCK OPTION AND RESTRICTED STOCK PLAN
On February 5, 1998 the Board approved several amendments to the 1995
Plan, subject to the approval of the Company's stockholders. The
amendments provide for (i) an increase in the number of shares of Common
Stock authorized for issuance under the 1995 Plan from 2,000,000 to
4,000,000, (ii) increases in both the maximum number of shares for which
stock options may be granted to an individual over the life of the 1995
Plan and the maximum number of shares subject to stock appreciation rights
that may be granted to an individual over the life of the 1995 Plan (the
"Per-individual Limitations"), in each case from 1,000,000 to 2,000,000
shares, and (iii) discretionary grants, by the Board, of stock options to
Outside Directors of the Company. The Board believes it is in the best
interests of the Company to increase the number of shares authorized for
issuance under the 1995 Plan and to increase the Per-individual Limitations
so that the Company can continue to attract and retain the services of
individuals essential to the Company's continued growth and financial
success. Permitting discretionary grants of stock options to Outside
Directors will also provide greater flexibility to the Company to reward
significant contributions of Outside Directors.
Stock options granted under the 1995 Plan may be either stock options
intended to qualify as incentive stock options under Section 422 of the
Code ("ISOs") or non-qualified stock options. ISOs and non-qualified stock
options may be granted under the 1995 Plan to executive officers and other
key employees of the Company and its subsidiaries. In the past, non-
qualified stock options have been issued to Outside Directors of the
Company pursuant to the formulas described under "Compensation of
Directors." Additionally, the Company may make awards of stock
appreciation rights in tandem with stock options, and of restricted stock
(awards of stock appreciation rights, stock options and restricted stock
are referred to collectively herein as "Awards") to executive officers and
other key employees of the Company and its subsidiaries. If the proposed
amendments to the 1995 Plan are approved by the stockholders, stock options
may be granted to Outside Directors on a discretionary basis by the Board.
The complete text of the 1995 Plan as amended to date is attached hereto
as Exhibit A. The principal features of the 1995 Plan as amended are
summarized below; such summary is qualified in its entirety by the full
text of the 1995 Plan.
Description of the 1995 Plan
The 1995 Plan is administered by the Committee. Subject to the terms of
the 1995 Plan, the Committee has the authority to determine the persons to
whom Awards will be granted, the number of shares to be covered by each
Award, whether Awards of stock options are intended to be ISOs, the
duration and, as appropriate, the rate of exercise of each Award, the price
per share (which in the case of stock options may not be less than the fair
market value of the Company's Common Stock on the date of the grant), the
time and manner of exercise and form of payment upon exercise of a stock
option Award, and such other terms and provisions, consistent with the 1995
Plan, as the Committee may approve.
In no event shall more than 200,000 shares of restricted stock in
aggregate be awarded pursuant to the terms of the 1995 Plan. To date,
104,000 shares of restricted stock have been granted and are outstanding.
As amended by the Board on February 5, 1998, no individual may be granted
stock options to purchase more than 2,000,000 shares of Common Stock
pursuant to the 1995 Plan, nor shall any individual be granted shares
subject to stock appreciation rights in excess of 2,000,000 shares pursuant
to the 1995 Plan. The Per-individual Limitations are intended to be
construed and administered in accordance with the requirements of Section
162(m) of the Code. See "Federal Income Tax Consequences" below. Shares
subject to Awards that expire or are forfeited to the Company for any
reason become available once again for award under the 1995 Plan.
Furthermore, shares delivered to the Company in payment of the exercise
price of a stock option or to satisfy the tax withholding consequences of
an Award will be added to the shares available for grant under the 1995
Plan.
Stock options granted to executive officers and other employees pursuant
to the 1995 Plan are intended to be ISOs, except to the extent that any ISO
grant exceeds the limitations applicable to ISOs under the Code, or such
stock option is specifically designated at the time of grant as a non-
qualified stock option. Except as provided for by the Committee, a stock
option granted under the 1995 Plan is exercisable, during the option
holder's lifetime, only by the option holder, and is not transferable
except by will or by the laws of descent and distribution. Giving effect
to the proposed increase from 2,000,000 to 4,000,000 shares, the market
value of the shares of Common Stock reserved for issuance under the 1995
Plan is $117,523,126, based on the closing price on February 23, 1998 as
reported on the New York Stock Exchange; approximately 185 persons are
eligible for Award grants under the 1995 Plan.
In the event of a merger or consolidation of the Company with or into
another corporation as a result of which the Company's stock is no longer
outstanding, or the acquisition by another corporation or person of all or
substantially all of the Company's assets or fifty percent (50%) or more of
the Company's then-outstanding voting stock, or the liquidation or
dissolution of the Company, all stock options outstanding pursuant to the
1995 Plan shall become immediately exercisable on the 45th day prior to the
proposed effective date of such event (as determined by the Committee).
Immediately prior to the consummation of any merger, consolidation, or sale
of assets, all stock options outstanding under the 1995 Plan shall
terminate, unless the Committee shall have arranged that the surviving or
acquiring corporation or an affiliate thereof grant to participants
replacement stock options.
Stock appreciation rights may be granted in tandem with stock options.
The holder of a stock appreciation right, may, in lieu of exercising all or
any part of a stock option, receive from the Company an amount equal to the
lesser of (i) the difference between the fair market value of the
applicable shares and the exercise price of the stock option and (ii) twice
the exercise price of the applicable stock option. Any grant of stock
appreciation rights may specify that the amount payable upon exercise
thereof may be paid by the Company in cash or, in the discretion of the
Committee, shares of Common Stock. A stock appreciation right will not be
exercisable unless the related stock option is also exercisable, and the
then-current value of the optioned shares exceeds the option exercise
price.
Recipients of restricted stock have the right to vote the shares and to
receive all dividends or distributions paid or made with respect thereto;
the Company holds all shares of restricted stock in escrow however, and,
generally, such restricted stock is not subject to sale, transfer or
encumbrance until the restrictions imposed by the Committee expire.
Although the term of any restrictions is fixed by the Committee, all
restrictions expire within ten years of issuance of the stock. Restricted
stock is forfeited to the Company immediately upon a termination of
employment for any reason; however, provision may be made that no
forfeiture will occur in circumstances of normal retirement, death, total
disability or early retirement with the consent of the Committee.
The Committee may at any time, with the consent of the holder, cancel an
existing Award in whole or in part and make another Award for such number
of shares as the Committee may specify. Additionally, the Committee may at
any time or times amend the 1995 Plan or any outstanding Award for the
purpose of satisfying the requirements of Section 422 of the Code, or of
any changes in applicable laws or regulations, or for any other purpose
that may at the time be permitted by law, provided that no such amendment
shall adversely affect the rights of any holder of a previously granted
Award without such individual's consent. The Committee may at any time
terminate the 1995 Plan as to further grants.
Federal Income Tax Consequences
ISOs. The following general rules are applicable for federal income tax
purposes to the Company and to employees who receive and exercise ISOs
granted under the 1995 Plan:
1. Neither the grant nor, in general, the exercise of an ISO results
in ordinary income taxable to the stock option holder (the "Optionee") or
in a deduction to the Company. However, the exercise of an ISO does
increase the Optionee's alternative minimum taxable income ("AMTI") by an
amount equal in general to the excess of the fair market value of the
shares acquired upon exercise over the option price. This increase in AMTI
may result in alternative minimum tax liability.
2. If shares acquired upon exercise of an ISO are not disposed of
prior to the later of (i) two years from the date the ISO was granted or
(ii) one year after exercise, any gain or loss recognized on a subsequent
sale of such shares will be treated as long term capital gain or loss.
3. If shares acquired upon exercise of an ISO are disposed of before
the expiration of one or both of the requisite holding periods (a
"disqualifying disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of
the ISO over the exercise price or (ii) the actual gain on disposition,
will be treated as compensation to the Optionee and will be taxed as
ordinary income in the year of such disposition.
4. In any year that an Optionee recognizes compensation income on a
disqualifying disposition of stock acquired by exercising an ISO, the
Company will generally be entitled to a corresponding deduction for income
tax purposes.
5. Any excess of the amount realized by the Optionee as the result of
a disqualifying sale over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated
as either long-term or short-term capital gain, depending upon the time
elapsed between receipt and disposition of the shares acquired upon
exercise.
6. In general, ISOs awarded to an Optionee will be treated for tax
purposes as non-qualified stock options (see below) to the extent that they
first become exercisable in any calendar year for shares of Common Stock
having a fair market value, determined at time of grant, in excess of
$100,000.
Non-qualified stock options. The following general rules are applicable
to holders of non-qualified stock options granted under the 1995 Plan:
1. The Optionee does not realize any taxable income upon the grant of
a non-qualified stock option, and the Company is not allowed a deduction by
reason of such grant.
2. The Optionee will recognize ordinary income, subject to withholding
if the recipient received the non-qualified stock option as an employee, at
the time of exercise of the stock option in an amount equal to the excess,
if any, of the fair market value of the shares on the date of exercise over
the exercise price.
3. When the Optionee sells the shares acquired upon exercise of the
non-qualified stock option, any gain or loss recognized in the sale (such
gain or loss being equal, in general, to the difference between the amount
realized upon the sale and the Optionee's basis in the shares) will be
treated as a capital gain or loss, long-term or short-term depending on the
holding period. An Optionee's basis in any shares acquired upon exercise
of a non-qualified stock option will include any ordinary income recognized
in connection with the exercise.
4. In general, the Company will be entitled to a tax deduction in the
year in which compensation income is recognized by the Optionee.
Other Rules. The Company's ability to claim deductions for amounts
received by certain participants under the 1995 Plan is subject to Section
162(m) of the Code, which in general limits to $1,000,000 the deduction a
public corporation may claim for annual remuneration paid to any of the
officers named in the summary compensation table. It is intended that
stock options granted under the 1995 Plan qualify for a statutory
"performance-based compensation" exception to the $1,000,000 limit. The
Company's ability to deduct the ordinary income amount associated with the
exercise of a non-qualified stock option or with the disqualifying
disposition of an ISO may also be limited in the event of a change in
control of the Company.
Board Recommendation and Vote Required
The Board has approved the amendments to the 1995 Plan. The affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to approve the amendments to the 1995 Plan. Therefore, broker non-
votes will have no effect on the vote, and abstentions will have the effect
of a vote against the approval of the amendments to the 1995 Plan.
The Board of Directors recommends a vote FOR this proposal.
INDEPENDENT PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, the Board has
selected Price Waterhouse LLP to serve as the Company's independent
accountants for the year ending December 31, 1998. Price Waterhouse LLP
has served as the Company's accountants since the fiscal year ended
December 31, 1990. A representative of Price Waterhouse LLP will be
present and have the opportunity to make a statement at the Annual Meeting,
and be available to respond to questions.
OTHER MATTERS
The Board does not intend to bring any other matters before the Annual
Meeting, nor is it aware of any other matters to be brought before the
Annual Meeting by others. However, if other matters should come before the
Annual Meeting, it is the intention of the proxy holders named in the
enclosed form of proxy to vote in accordance with their discretion on such
matters.
STOCKHOLDER PROPOSAL DEADLINE
A stockholder proposal intended to be presented at the Company's 1999
Annual Meeting of Stockholders must be received by the Secretary of Oak
Industries Inc. at 1000 Winter Street, Waltham, Massachusetts 02154 no
later than November 11, 1998.
EXPENSES OF SOLICITATION
The cost of preparing, assembling and mailing this proxy statement and
form of proxy and the cost of soliciting proxies for the Annual Meeting
will be borne by the Company. The Company will solicit proxies by use of
the mails; in addition, officers, directors and regular employees of the
Company may solicit proxies in person or by telephone or telegraph. The
Company has also retained Morrow and Co. to aid in the solicitation of
proxies. The Company estimates that it will pay Morrow and Co. fees of
$10,000 for these services, plus related expenses. The Company will
reimburse brokers and other persons holding stock in their names or in the
names of nominees for expenses incurred sending proxy material to and
obtaining the proxies from their principals.
Mela Lew
Vice President,
General Counsel and Secretary
Waltham, Massachusetts
March 16, 1998
EXHIBIT A
OAK INDUSTRIES INC.
1995 STOCK OPTION AND RESTRICTED STOCK PLAN
As amended through February 5, 1998
OAK INDUSTRIES INC., a corporation organized under the laws of the State
of Delaware, hereby adopts this 1995 Stock Option and Restricted Stock
Plan. The purposes of this Plan are as follows:
1. To further the growth, development and financial success of the
Company by providing additional incentives to certain of its executive and
other key Employees who have been or will be given responsibility for the
management or administration of the Company's business affairs, and to its
non-Employee Directors by assisting them to become owners of capital stock
of the Company and thus to benefit directly from its growth, development
and financial success; and
2. To enable the Company to obtain and retain the services of the type
of individuals considered essential to the long-range success of the
Company by providing and offering them an opportunity to become owners of
capital stock of the Company.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and
the singular shall include the plural, where the context so indicates.
Section 1.1 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Compensation Committee of the Board, which
shall consist of at least two Directors; provided, however that the Chief
Executive Officer of the Company, so long as such individual is also a
Director, shall have the authority to make awards under this Plan for not
more than 10,000 shares each of the Company's Stock to Employees who are
not executive officers for the purpose of Section 16 of the Securities
Exchange Act of 1934, as amended.
Section 1.4 - Company
"Company" shall mean Oak Industries Inc. In addition, "Company" shall
mean any corporation assuming, or issuing new employee stock options in
substitution for, Options outstanding under the Plan, in a transaction to
which Section 424(a) of the Code applies.
Section 1.5 - Director
"Director" shall mean a member of the Board.
Section 1.6 - Employee
"Employee" shall mean any employee (as defined in accordance with the
Regulations and Revenue Rulings then applicable under Section 3401(c) of
the Code) of the Company, or of any corporation which is then a Parent
Corporation or a Subsidiary, whether such employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to the adoption
of this Plan.
Section 1.7 - Fair Market Value
"Fair Market Value" of a share of the Stock for purposes of the Plan, of
a given date, shall be: (i) the closing price of a share of the Stock on
the principal exchange on which shares of the Stock are then trading, if
any, on such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; (ii) if such Stock
is not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, (1) the last sales price (if the Stock is then listed as
a National Market Issue under the NASD National Market System), or (2) the
mean between the closing representative bid and asked prices (in all other
cases) for the Stock on such date as reported by NASDAQ or such successor
quotation system; or (iii) if such Stock is not publicly traded on an
exchange and not quoted on NASDAQ or a successor quotation system, the mean
between the closing bid and asked prices for the Stock on such date as
determined in good faith by the Committee; or (iv) if the Stock is not
publicly traded, the fair market value established by the Committee acting
in good faith.
Section 1.8 - Incentive Stock Option
"Incentive Stock Option" shall mean an Option that qualifies under
Section 422 of the Code and that is designated as an Incentive Stock Option
by the Committee. In the event that an Option is not designated as either
an Incentive Stock Option or a Non-Qualified Stock Option by the Committee,
it shall be an Incentive Stock Option.
Section 1.9 - Non-Qualified Option
"Non-Qualified Option" shall mean an Option that is not an Incentive
Stock Option and that is designated as a Non-Qualified Option by the
Committee.
Section 1.10 - Officer
"Officer" shall mean an officer of the Company, any Parent Corporation
or any Subsidiary.
Section 1.11 - Option
"Option" shall mean an option to purchase Stock of the Company, granted
under the Plan. "Option" includes both Incentive Stock Options and Non-
Qualified Options.
Section 1.12 - Optionee
"Optionee" shall mean an Employee or a Director to whom an Option is
granted under the Plan.
Section 1.13 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
Section 1.14 - Plan
"Plan" shall mean this 1995 Stock Option and Restricted Stock Plan of
Oak Industries Inc.
Section 1.15 - Restricted Stock
"Restricted Stock" shall mean Stock of the Company issued pursuant to
Article VII of the Plan.
Section 1.16 - Restricted Stockholder
"Restricted Stockholder" shall mean an Employee or a Director to whom
Restricted Stock has been issued under the Plan.
Section 1.17 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.18 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.19 - Stock
"Stock" shall mean shares of the Company's common stock, $.01 par value
per share.
Section 1.20 - Stock Appreciation Right
"Stock Appreciation Right" shall mean a stock appreciation right granted
under the Plan.
Section 1.21 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
Section 1.22 - Termination of Employment
"Termination of Employment" shall mean the termination of the employee-
employer relationship between the Employee and the Company, a Parent
Corporation or a Subsidiary for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death or retirement,
but excluding terminations where there is a simultaneous reemployment by
the Company, a Parent Corporation or a Subsidiary. Without limiting its
discretion under Section 9.1, the Committee shall determine the effect of
all other matters and questions relating to Termination of Employment, and
all questions of whether particular leaves of absence constitute
Terminations of Employment.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
Shares delivered under the Plan shall be authorized but unissued Stock
or, if the Committee so decides in its sole discretion, previously issued
Stock acquired by the Company and held in its treasury. The aggregate
number of such shares which may be delivered pursuant to the Plan shall not
exceed 4,000,000. The aggregate number of shares which may be awarded as
Restricted Stock under the Plan shall not exceed 200,000.
The maximum number of shares for which Options may be granted to any
individual over the life of the Plan shall be 2,000,000. The maximum
number of shares subject to Stock Appreciation Rights granted to any
individual over the life of the Plan shall likewise be 2,000,000. The per-
individual limitations described in this paragraph shall be construed and
applied consistent with the rules and regulations under Section 162(m) of
the Code.
Section 2.2 - Unexercised Options
If any Option expires or is canceled without having been fully
exercised, the number of shares of Stock subject to such Option but as to
which such Option was not exercised prior to its expiration or cancellation
may again be awarded hereunder, subject to the limitations of Section 2.1.
Section 2.3 - Exercised Stock Appreciation Rights
To the extent that a Stock Appreciation Right shall have been exercised
for cash, the number of shares of Stock subject to the related Option, or
portion thereof, may again be awarded hereunder, subject to the limitations
of Section 2.1. To the extent that a Stock Appreciation Right shall have
been exercised for Stock, the number of shares of Stock actually issued
shall be counted against the maximum number of shares of Stock which may be
delivered pursuant to the Plan and the balance of the shares of Stock
subject to the related Option, or portion thereof, may again be awarded
hereunder, subject to the limitations of Section 2.1. An Option that is
exercised using shares of Stock to pay the Option price shall be treated,
for purposes of this Section 2.3 only, as the exercise of a Stock
Appreciation Right for Stock.
Section 2.4 - Forfeited Restricted Stock
Any shares of Restricted Stock forfeited to the Company pursuant to the
restrictions thereon may again be awarded hereunder, subject to the
limitations of Section 2.1.
Section 2.5 - Shares used to Satisfy Tax Withholding
Any shares of Stock that are used to satisfy tax withholding
consequences of an Option exercise or the grant or vesting of an Award
shall become available for award under the Plan.
Section 2.6 - Changes in Company's Shares
In the event that the outstanding shares of Stock are hereafter changed
into or exchanged for a different number or kind of shares or other
securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend or combination of shares, appropriate
adjustments shall be made by the Committee in the number and kind of shares
subject to Options, Stock Appreciation Rights and Restricted Stock then
outstanding or subsequently granted under the Plan, including but not
limited to adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued under the Plan.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 - Eligibility
Any Director of the Company or any executive or other key Employee of
the Company or of any corporation which is then a Parent Corporation or a
Subsidiary shall be eligible to be granted Options, subject to Section 3.2.
Section 3.2 - Qualification of Incentive Stock Option
Incentive Stock Options shall be granted only to Employees.
Section 3.3 - Granting of Options
The Committee shall from time to time, in its absolute discretion:
(a) Determine which non-Employee Directors and executive and key
Employees should be granted Options; and
(b) Determine the number of shares of Stock to be subject to
such Options and determine whether such Options are to be Incentive Stock
Options or Non-Qualified Options; and
(c) Determine the terms and conditions of such Options,
consistent with the Plan.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Agreement
Each Option shall be evidenced by a written stock option agreement,
which shall be executed by the Optionee and an authorized Officer of the
Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with the Plan. Stock option agreements
evidencing Incentive Stock Options shall contain such terms and conditions
as may be necessary to qualify such Options as "incentive stock options"
under Section 422 of the Code.
Section 4.2 - Option Price
The price of the shares subject to each Option shall be set by the
Committee; provided, however, that the price per share shall not be less
than 100% of the Fair Market Value of such shares on the date such Option
is granted; provided, further, that, in the case of an Incentive Stock
Option, the price per share shall not be less than 110% of the Fair Market
Value of such shares on the date such Option is granted in the case of an
individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of
the Company, any Subsidiary or any Parent Corporation.
Section 4.3 - Commencement of Exercisability
Options shall become exercisable at such times and in such installments
(which may be cumulative) as the Committee shall provide in the terms of
each individual Option; provided, however, that by a resolution adopted
after an Option is granted the Committee may, on such terms and conditions
as it may determine to be appropriate, accelerate the time at which such
Option or any portion thereof may be exercised.
Section 4.4 - Expiration of Options
The Committee shall provide, either at the time of the grant or any time
thereafter, in the terms of each individual Option, when such Option
expires and becomes unexercisable; and (without limiting the generality of
the foregoing) the Committee may provide in the terms of individual Options
that said Options expire immediately upon a Termination of Employment for
any reason.
Section 4.5 - Employment
Nothing in this Plan or in any stock option agreement hereunder shall
confer upon any Optionee any right to continue in the employ of the
Company, any Parent Corporation or any Subsidiary or shall interfere with
or restrict in any way the rights of the Company, its Parent Corporations
and its Subsidiaries, which are hereby expressly reserved, to discharge any
Optionee at any time for any reason whatsoever, with or without cause.
Section 4.6 - Merger, Consolidation, Acquisition, Liquidation or
Dissolution
In the event of the merger or consolidation of the Company with or into
another corporation as a result of which the Stock is no longer
outstanding, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 50% or more of the Company's
then outstanding voting stock, or the liquidation or dissolution of the
Company, all outstanding Options shall become immediately exercisable on
the 45th day prior to the proposed effective date of any such merger,
consolidation, acquisition, liquidation or dissolution. Immediately prior
to the consummation of such merger, consolidation or sale of assets all
outstanding Options shall terminate unless the Committee shall have
arranged that the surviving or acquiring corporation or an affiliate of
that corporation assume the Options or grant to participants replacement
Options.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise Options
During the lifetime of the Optionee, only the Optionee or the Optionee's
permitted transferees may exercise an Option granted to such Optionee, or
any portion thereof. After the death of the Optionee, any exercisable
portion of any Option may, prior to the time when such portion becomes
unexercisable, be exercised by the Optionee's personal representative or by
any person empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof becomes unexercisable, such Option or
portion thereof may be exercised in whole or in part; provided, however,
that the Company shall not be required to issue fractional shares and the
Committee may, by the terms of the Option, require any partial exercise to
be with respect to a specified minimum number of shares.
Section 5.3 - Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the Secretary's office of
all of the following prior to the time when such Option or such portion
becomes unexercisable:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that such Option
or portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) Full payment for the shares of Stock with respect to which
such Option or portion is thereby exercised by:
(i) cash or check; or
(ii) shares of Stock owned by the Optionee (which in the case
of Stock acquired from the Company, shall have been held for at least six
months) duly endorsed for transfer to the Company with a Fair Market Value
on the day immediately prior to the date of delivery equal to the aggregate
Option price; or
(iii) with the consent of the Committee, a full recourse
promissory note bearing interest (at a rate at least sufficient to preclude
the imputation of interest under the Code or any successor provision) and
payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to be
given for such note. No Option may, however, be exercised by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law; or
(iv) delivery of an unconditional and irrevocable undertaking
by a broker to deliver promptly to the Company sufficient funds to pay the
exercise price; or
(v) any combination of the consideration provided in the
foregoing subsections (i), (ii), (iii), and (iv); and
(c) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or
state securities laws or regulations. The Committee may, in its absolute
discretion, also take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(d) In the event that the Option or portion thereof shall be
exercised by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option or
portion thereof.
Section 5.4 - Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate
or certificates for shares of Stock purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it, any
Parent Corporation or any Subsidiary is required to withhold under federal,
state or local law in connection with the exercise of the Option. If
permitted by the Committee, either at the time of the grant of the Option
or at the time of exercise, the Optionee may elect at such time and in such
manner as the Committee may prescribe, to satisfy such withholding
obligation by (i) delivering to the Company Stock owned by such individual
having a Fair Market Value on the date immediately prior to the date of
delivery equal to such withholding obligation, or (ii) requesting that the
Company withhold from the shares of Stock to be delivered upon exercise of
such Option a number of shares of Stock having a Fair Market Value on the
date immediately prior to the date of delivery equal to such withholding
obligation; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
Section 5.5 - Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to
such holders.
Section 5.6 - Transfer Restrictions
Except as the Committee may otherwise provide, an Option granted under
the Plan is personal to the Optionee and is not transferable by the
Optionee in any manner other than by will or the laws of descent and
distribution. The Committee, in its absolute discretion, may impose such
other restrictions on the transferability of the shares purchasable upon
the exercise of an Option as it deems appropriate. Any such restriction
shall be set forth in the respective stock option agreement and may be
referred to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any disposition
of shares of Stock, acquired by exercise of an Incentive Stock Option,
within two years from the date of granting such Option or one year after
the transfer of such shares to such Employee. The Committee may direct
that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1 - Grant of Stock Appreciation Rights
A Stock Appreciation Right may be granted to any Employee who receives a
grant of an Option under the Plan. A Stock Appreciation Right may be
granted in connection and simultaneously with the grant of an Option or
with respect to a previously granted Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with the
Plan as the Committee shall impose, including the following:
(a) A Stock Appreciation Right shall be related to a particular
Option and shall be exercisable only to the extent the related Option is
exercisable.
(b) A Stock Appreciation Right shall be granted to the Optionee
to the maximum extent of 100% of the number of shares subject to the
simultaneously or previously granted Option.
(c) A Stock Appreciation Right shall entitle the Optionee (or
other person entitled to exercise the Option pursuant to the terms thereof)
to surrender unexercised a portion of the Option to which the Stock
Appreciation Right relates to the Company and to receive from the Company
in exchange therefor an amount payable in cash or, in the discretion of the
Committee, shares of the Stock, determined by multiplying the lesser of (i)
the difference obtained by subtracting the Option exercise price per share
of Stock subject to the related Option from the Fair Market Value of a
share of Stock on the date of exercise of the Stock Appreciation Right, or
(ii) twice the Option exercise price per share of the Stock subject to the
related Option, by the number of shares of Stock subject to the related
Option with respect to which the Stock Appreciation Right shall have been
exercised.
ARTICLE VII
ISSUANCE OF RESTRICTED STOCK
Section 7.1 - Eligibility
Any executive or other key Employee of the Company or of any corporation
which is then a Parent Corporation or a Subsidiary shall be eligible to be
issued Restricted Stock.
Section 7.2 - Issuance of Restricted Stock
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which executive or key Employees should be
issued Restricted Stock; and
(ii) Determine the number of shares of Restricted Stock to be
issued to such selected executive or key Employees; and
(iii) Determine the terms and conditions applicable to such
Restricted Stock, consistent with the Plan.
(b) Shares issued as Restricted Stock may be either previously
authorized but unissued shares or issued shares which have been reacquired
by the Company. Legal consideration, but no cash payment, will be required
for each issuance of Restricted Stock.
(c) Upon the selection of an executive or key Employee to be
issued Restricted Stock, the Committee shall instruct the Secretary to
issue such Restricted Stock and may impose such conditions on the issue of
such Restricted Stock as it deems appropriate. Restricted Stock may not be
issued by the Committee to executive or key Employees who are then
Directors or Officers of the Company unless such issuance has been
recommended by the Committee. Such recommendation shall be in writing and
shall specify the Directors or Officers to whom such issuance is
recommended and the recommended number of shares of Restricted Stock to be
issued.
ARTICLE VIII
TERMS OF RESTRICTED STOCK
Section 8.1 - Restricted Stock Agreement
Restricted Stock shall be issued only pursuant to a written restricted
stock agreement, which shall be executed by the Restricted Stockholder and
an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan.
Section 8.2 - Employment
Nothing in this Plan or in any restricted stock agreement hereunder
shall confer upon any Restricted Stockholder any right to continue in the
employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without cause.
Section 8.3 - Rights as Shareholders
Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 8.7, the Restricted Stockholder shall have all the
rights of a stockholder with respect to said shares, subject to the
restrictions in such Restricted Shareholder's restricted stock agreement,
including the right to vote the shares and to receive all dividends or
other distributions paid or made with respect to the shares.
Section 8.4 - Restrictions
All shares of Restricted Stock issued under this Plan (including any
shares received by holders thereof as a result of stock dividends, stock
splits or any other forms of recapitalization) shall be subject to such
restrictions as the Committee shall provide in the terms of each individual
restricted stock agreement; provided, however, that by a resolution adopted
after the Restricted Stock is issued, the Committee may, on such terms and
conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the restricted stock agreement. All
restrictions imposed pursuant to this Section 8.4 shall expire within ten
years of the date of issuance. Restricted Stock may not be sold or
encumbered until all restrictions are terminated or expire.
Section 8.5 - Forfeiture of Restricted Stock
The Committee shall provide in the terms of each individual restricted
stock agreement that the Restricted Stock then subject to restrictions
under the restricted stock agreement be forfeited by the Restricted
Stockholder back to the Company immediately upon a Termination of
Employment for any reason; provided, however, that provision may be made
that no such forfeiture shall occur in the event of a Termination of
Employment because of the Employee's normal retirement, death, total
disability or early retirement with the consent of the Committee.
Section 8.6 - Merger, Consolidation, Acquisition, Liquidation or
Dissolution
Upon the merger or consolidation of the Company with or into another
corporation, as a result of which the Company's stock is no longer
outstanding, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 50% or more of the Company's
then outstanding voting stock, or the liquidation or dissolution of the
Company, the Committee may determine, at its sole discretion, that the
restrictions imposed under the restricted stock agreement on some or all
shares of Restricted Stock shall immediately expire and/or that some or all
of such shares shall cease to be subject to forfeiture under Section 8.5.
Section 8.7 - Escrow
The Secretary or such other escrow holder as the Committee may appoint
shall retain physical custody of the certificates representing Restricted
Stock until all of the restrictions imposed under the restricted stock
agreement expire or shall have been removed; provided, however, that in no
event shall any Restricted Stockholder retain physical custody of any
certificates representing Restricted Stock issued to such Restricted
Shareholder.
Section 8.8 - Legend
In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee shall cause a legend or legends to be placed
on certificates representing all shares of Restricted Stock that are still
subject to restrictions under restricted stock agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
ARTICLE IX
ADMINISTRATION
Section 9.1 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The
Committee shall have the power to interpret the Plan, the Options, the
Stock Appreciation Rights and the Restricted Stock and to adopt such rules
for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any
such interpretations and rules in regard to Incentive Stock Options shall
be consistent with the basic purpose of the Plan to grant "incentive stock
options" within the meaning of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any
and all rights and duties of the Committee under the Plan.
Section 9.2 - Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 9.3 - Good Faith Actions
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees,
holders of Stock Appreciation Rights and Restricted Stockholders, the
Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan, the Options, the Stock Appreciation
Rights or the Restricted Stock and all members of the Committee shall be
fully protected by the Company in respect to any such action, determination
or interpretation.
ARTICLE X
OTHER PROVISIONS
Section 10.1 - Amendment, Suspension or Termination of the Plan
The Committee may at any time discontinue making grants under the Plan.
With the consent of the holder, the Committee may at any time cancel an
existing grant in whole or in part and grant another award for such number
of shares as the Committee specifies. The Committee may at any time or
times amend the Plan or any outstanding grant for the purpose of satisfying
the requirements of Section 422 of the Code or of any changes in applicable
laws or regulations or for any other purpose that may at the time be
permitted by law, or may at any time terminate the Plan as to further
grants, but no such amendment shall adversely affect the rights of any
holder (without such person's consent) of any Option, Stock Appreciation
Right or Restricted Stock previously granted. No Option or Stock
Appreciation Right may be granted and no Restricted Stock may be issued
during any period of suspension nor after termination of the Plan, and in
no event may any Option or Stock Appreciation Right be granted or any
Restricted Stock issued under this Plan after December 7, 2004.
Section 10.2 - Approval of Plan by Shareholders
This Plan was initially approved by the shareholders on May 3, 1995. On
February 5, 1998, the Board approved amendments to (a) Section 2.1 of the
Plan increasing (i) the aggregate number of shares of Stock which may be
delivered pursuant to the Plan from 2,000,000 to 4,000,000 shares and (ii)
the per-individual limitations on the number of shares of Stock for which
Options and Stock Appreciation Rights may be granted, and (b) Section 3.3
of the Plan to permit discretionary grants of Options to non-Employee
Directors of the Company. Such amendments shall be submitted for approval
of the Company's shareholders within 12 months after February 5, 1998.
Options and Stock Appreciation Rights may be granted and Restricted Stock
may be issued consistent with such amendments prior to such shareholder
approval; provided, however, that Options and Stock Appreciation Rights
granted in excess of the prior limitations set forth in Section 2.1 or
Options granted to non-Employee Directors on a discretionary basis by the
Board pursuant to Section 3.3 shall not be exercisable, and the
restrictions regarding Restricted Stock issued in excess of such prior
limitations shall not lapse, prior to the time when such amendments are
approved by the shareholders; and provided, further, that if such approval
has not been obtained at the end of said 12-month period, (a) all Options
and Stock Appreciation Rights previously granted and all Restricted Stock
previously issued under the Plan in excess of the prior limitations set
forth in Section 2.1 and (b) all Options granted to non-Employee Directors
on a discretionary basis by the Board under Section 3.3, shall thereupon be
canceled and become null and void.
Section 10.3 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of
the Company, any Parent Corporation or any Subsidiary (a) to establish any
other forms of incentives or compensation for employees of the Company, any
Parent Corporation or any Subsidiary, or (b) to grant or assume options or
to issue Restricted Stock otherwise than under this Plan in connection with
any proper corporate purpose, including, but not by way of limitation, the
grant or assumption of Options or the issuance of Restricted Stock in
connection with the acquisition, by purchase, lease, merger, consolidation
or otherwise, of the business, stock or assets of any corporation, firm or
association.
Section 10.4 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
Appendix A
PROXY
OAK INDUSTRIES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
April 24, 1998
The undersigned hereby appoints Coleman S. Hicks and Pamela F. Lenehan,
or either of them, proxies, with full power of substitution, to vote all
shares of the Common Stock of Oak Industries Inc. (the "Company") held of
record by the undersigned as of February 23, 1998, at the Annual Meeting of
Stockholders to be held on Friday, April 24, 1998, at 9:30 a.m., Eastern
Standard Time, at The Westin Hotel, 70 Third Avenue, Waltham, Massachusetts,
or any adjournments thereof.
IMPORTANT: To secure a quorum and to avoid the expense and delay of
sending follow-up letters, please mail this proxy promptly in the envelope
provided. Your vote is important whether your holdings are large or small.
Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any stockholder giving a
proxy has the right to revoke it by written notice to the Secretary of the
Company at any time before it is exercised or by delivering a later
exercised proxy to the Secretary of the Company at any time before the
original proxy is exercised.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE]
/X/ Please mark
votes as in this
example
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF EACH NOMINEE AND FOR PROPOSAL 2.
1. Election of Directors:
Election of eight directors for terms of one year:
NOMINEES: William S. Antle III, Beth L. Bronner, Daniel W. Derbes,
Roderick M. Hills, George W. Leisz, Gilbert E. Matthews,
Christopher H.B. Mills, Elliot L. Richardson
/ / FOR / / WITHHELD
- -----------------------------------------
/ /For all nominees except as noted above
2. Approval of amendments to the Oak Industries Inc. 1995 Stock Option and
Restricted Stock Plan (the "1995 Plan"), including, among other things, an
increase in the number of shares of common stock of the Company available
under the 1995 Plan from 2,000,000 to 4,000,000.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Signatures should agree with the name or names on the stock certificate as
they appear hereon. Executors, administrators, trustees, attorneys or
guardians should give full title.
Signature:-------------------------------------------Date:--------------
Signature:-------------------------------------------Date:--------------
