SCHEDULE 14A INFORMATION
Proxy Statement to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting material pursuant to ~240.14a-11(c) of ~240.14a-12
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(Name of Registrant as Specified in Its Charter)
OEA, Inc.
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(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:
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2) Aggregate number of securities to which transactions applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identifying the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
OEA, INC.
P.O. BOX 100488
34501 East Quincy Avenue
Denver, Colorado 80250
To the Stockholders of December 8, 1997
OEA, INC.
Notice is hereby given that the annual meeting of stockholders of OEA, INC.
("Company") will be held in the Management Briefing Center of Wells Fargo Bank
of Denver, 17th and California Streets, Denver, Colorado, at 9:00 a.m. on
Thursday the 15th day of January 1998, for the following purposes:
(a) Electing a Board of Directors for the ensuing year; and
(b) Acting on management's proposal for the adoption of the OEA,
Inc. 1997 Employee Stock Purchase Plan; and
(c) Transacting such other business as may properly come before
the meeting or any adjournments thereof.
Only stockholders of record as shown by the transfer books of the Company at the
close of business on November 28, 1997, are entitled to notice of, and to vote
at, such meeting.
Stockholders, whether or not they expect to attend the meeting in person,
are requested to date, sign, and return the enclosed form of proxy in the
enclosed envelope to which no postage need be affixed if mailed in the United
States. The proxy is revocable at any time prior to the exercise thereof.
By Order of the Board of Directors:
J. Thompson McConathy
Secretary
<PAGE>
PROXY STATEMENT
Annual Meeting of Stockholders of
OEA, INC.
to be held on January 15, 1998
GENERAL INFORMATION
The solicitation of the proxy enclosed is made by and on behalf of the
Board of Directors ("Board") of OEA, INC. ("Company"), to be used at the annual
meeting of holders of Common Stock, $0.10 par value, of the Company ("Common
Stock") to be held in the Management Briefing Center of Wells Fargo Bank of
Denver, 17th and California Streets, Denver, Colorado, at the hour of 9:00 a.m.
on Thursday the 15th day of January 1998, and at any adjournments thereof. This
proxy statement and form of proxy are being mailed to stockholders on or about
December 8, 1997.
The purpose of the meeting is (i) to elect nine (9) directors for the
ensuing year, (ii) to act on management's proposal for the adoption of the OEA,
Inc. 1997 Employee Stock Purchase Plan (the "Plan"), and (iii) to act upon such
other matters as may properly come before the meeting.
Management does not know of any matters to be brought before the meeting
other than those stated in the Notice of Meeting. If any other matters should,
however, properly be brought before the meeting, or any adjournments thereof,
the enclosed proxy will be voted in accordance with the judgment of the proxies
therein named.
PROXY SOLICITATION
The cost of the solicitation of proxies will be borne by the Company.
Solicitations will be made only by the use of the mails, except that, if
necessary, officers, directors and regular employees of the Company or its
subsidiaries may make solicitations of proxies by telephone, facsimile or by
personal calls; such persons will receive no special compensation for any
solicitation activities. It is contemplated that brokerage houses and nominees
will be requested to forward the proxy soliciting material to the beneficial
owners of the stock held of record by such persons, and the Company will
reimburse them for their charges and expenses in such cases.
VOTING
The presence, in person or by proxy, of the holders of a majority of the
votes represented by the outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be excluded from the vote and will have no effect. A properly executed proxy
marked "abstain," although counted for purposes of determining the number of
shares represented and entitled to vote at the Annual Meeting, will not be
voted. Shares represented by "broker non-votes" (i.e. shares held by brokers or
nominees that are represented at a meeting but with respect to which the broker
or nominee is not empowered to vote on a particular proposal) will be counted
for purposes of determining whether there is a quorum at the Annual Meeting, but
will have no effect on the outcome of the election of directors and will be
deemed shares not entitled to vote and will not be included for purposes of
determining the number of shares represented and entitled to vote for approval
of the Plan at the Annual Meeting. Directors are elected by plurality vote of
shares present at the meeting. The vote of a majority of the shares represented
and entitled to vote at the Annual Meeting is required to approve the Plan.
All shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. If no such instructions are
indicated, such shares shall be voted FOR the election of the nine nominees for
director. Any holder of Common Stock has the unconditional right to revoke his
or her proxy at any time prior to the voting thereof at the Annual Meeting by
filing with the secretary of the Company written revocation of his or her proxy
prior to the voting thereof, giving a duly executed proxy bearing a later date
or voting in person at the Annual Meeting. Attendance by a shareholder at the
Annual Meeting will not in itself revoke his or her proxy.
<PAGE>
The Board has fixed the close of business on November 28, 1997, as the
record date for determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting. Shares represented by properly executed proxies will be
voted at the meeting and at any adjournments thereof. Each share of stock will
entitle the holder thereof to one vote on each matter presented at the meeting.
The transfer books of the Company will not be closed. The mailing address and
phone number of the Company's principal executive offices are P. O. Box 100488,
Denver, Colorado, 80250, (303) 693-1248.
On the record date there were 20,576,257 shares issued, outstanding, and
eligible to vote.
FINANCIAL STATEMENTS
An annual report to stockholders, including consolidated financial
statements for the fiscal year ended July 31, 1997, is enclosed with this proxy
statement.
ELECTION OF DIRECTORS
At the Annual Meeting nine (9) directors are to be elected, each of
whom shall hold office until the next annual meeting of stockholders or until
his successor is duly elected and qualified. In the event of death or unforeseen
contingencies rendering one or more of said persons unavailable for election,
then such proxies will be voted to fill any vacancies so arising with such
person or persons nominated by the management who has consented to serve if
elected.
Information Concerning Nominees and Executive Officers
Name Position with Company
Ahmed D. Kafadar............. Chairman of the Board and Chief Executive Officer
Charles B. Kafadar........... President, Chief Operating Officer and Director
Ralph A. L. Bogan, Jr........ Director
James R. Burnett............. Director
Lewis W. Watson.............. Director
Philip E. Johnson............ Director
George S. Ansell............. Director
Robert J. Schultz ........... Director
Erwin H. Billig.............. Director
Ahmed D. Kafadar is Chairman of the Board of Directors and Chief
Executive Officer of the Company, and has held such positions since 1957.
Mr. Kafadar, 82, is the founder of the Company.
Charles B. Kafadar has been a Director of the Company since 1977 and
was elected President and Chief Operating Officer of the Company in 1985.
Dr. Kafadar, 52, is the son of Ahmed D. Kafadar.
Ralph A. L. Bogan, Jr. has been a Director of the Company since 1969.
Mr. Bogan, 75, was Chairman and Chief Executive Officer of National Security
Bank, Chicago from 1982 until his retirement in 1991, and is now a financial
consultant.
James R. Burnett has been a Director of the Company since 1977. Dr.
Burnett, 72, was Executive Vice President and Deputy General Manager, Space and
Defense Sector, of TRW, Inc. (manufacturers of military electronics and space
hardware) from 1987 until his retirement in 1991, and is now a consultant.
Lewis W. Watson has been a Director of the Company since 1981. Mr.
Watson, 56, has been President and Director of Intermountain Resources,
Inc.(working in mining exploration) since 1981 and formerly was an Audit Partner
with Peat, Marwick, Mitchell & Co., certified public accountants, through 1980.
Philip E. Johnson has been a Director of the Company since 1986. Mr.
Johnson, 50, is a Partner of Bennington, Johnson, & Reeve, P.C., a Denver law
firm.
George S. Ansell has been a Director of the Company since 1993. Dr.
Ansell, 63, has been President of Colorado School of Mines (CSM) since 1984.
He came to CSM after serving as Dean of the School of Engineering at Rensselaer
Polytechnic Institute (RPI) in Troy, New York where he was a 24-year member of
the RPI faculty. Dr. Ansell is also a Director of Cyprus Amax Minerals Company.
<PAGE>
Robert J. Schultz has been a Director of the Company since 1993. Mr.
Schultz, 67, was Vice Chairman of General Motors from August 1990 until his
retirement in January 1993, and was responsible for GM Hughes Electronics
(defense and automotive electronics), Electronic Data Systems Corporation
(information technology), and GM's Corporate Information Activity. Prior to this
position, Mr. Schultz was Group Executive in charge of GM's former
Chevrolet-Pontiac-GM of Canada group from 1984 through 1989. In 1989, he was
elected an Executive Vice President of GM. Mr. Schultz is also a Director of
TexCo Communications and Delco Remey International.
Erwin H. Billig became a Director of the Company in January 1996. Mr.
Billig, 70, has been Vice Chairman of MascoTech, Inc. (major supplier to Ford,
Chrysler, GM and European auto manufacturers) since 1993, Chairman of Titan
Wheel International since 1993, and Vice Chairman of Delco Remy America since
1994. Prior to his current positions, Mr. Billig was Vice President of
International Operations at MascoTech from 1977 to 1984 and President and Chief
Operating Officer from 1984 to 1993.
Additional Executive Officers
J. Thompson McConathy, 50, joined OEA and was elected Vice President of
Finance and CFO in October 1996. Prior to joining OEA, Mr. McConathy held
several senior financial positions with the Black & Decker Corporation over the
past eight years and since 1990 served as the Vice President of Finance for the
Commercial & Industrial Group.
Ben E. Paul, 69, was elected President of OEA Aerospace, Inc. in May
1995. Prior to this election, Mr. Paul was Vice President of OEA Aerospace, Inc.
since June 1994 and Director, Technical Operations since July 1992. Mr. Paul
was one of the original members of OEA. Prior to rejoining OEA, Mr. Paul was
Manager, Advanced Technology at Scot, Inc. (manufacturer of aerospace propellant
devices) from 1978 to 1992.
The Company's executive officers serve at the will of the Board of Directors
(see Employment Agreements under Remuneration of Officers and Directors).
COMMITTEES OF THE BOARD: MEETINGS
The Board has appointed standing Audit, Compensation, Corporate
Responsibility and Board Committees. Members of the Audit Committee are Mr.
Watson, Chairman, Mr. Bogan and Mr. Johnson. The Audit Committee's functions
are to investigate and review accounting and audit procedures of the Company and
to report its findings and recommendations to the Board for action. Dr. Burnett
as Chairman, Mr. Bogan and Mr. Billig comprise the Compensation Committee. Its
functions are to review officers' and certain key employees' compensation and to
make recommendations to the Board of Directors in connection therewith. Members
of the Corporate Responsibility Committee are Dr. Ansell, Chairman, Mr. Johnson
and Mr. Schultz. The Corporate Responsibility Committee's functions are to
promulgate and reaffirm ethical standards for the Company and to ensure that
safety and environmental policies established are in effect. Members of the
Board Committee are Dr. Burnett, Chairman, Dr. Ansell, Dr. Kafadar and
Mr. Schultz. The Board Committee's functions are to advise the Board on various
matters relating to, but not limited to, the search and employment of senior OEA
personnel and directors and term limits for directors. During fiscal year 1997
the Board held four meetings, the Audit Committee held two meetings, the
Compensation Committee held two meetings, the Corporate Responsibility Committee
held three meetings, and the Board Committee held two meetings and all directors
attended at least 75% of the meetings of the Board Committees of which they were
a member.
PROPOSED OEA, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN
The Proposal
The OEA, Inc. 1997 Employee Stock Purchase Plan (the "Plan") was
adopted by the Board of Directors, subject to stockholder approval, on October
30, 1997. The Plan provides for the purchase of up to 100,000 shares of the
Common Stock ("Shares") by employees of the Company at a discount from market
price. The Plan provides for payments for the Shares to be made through direct
payroll deductions. The purpose of the Plan is to provide a method by which
eligible employees of the Company and its U.S. subsidiaries may purchase
shares of Common Stock of the Company by payroll deduction and at favorable
prices. By this means, eligible employees will be given an opportunity to
acquire an additional interest in the prosperity, growth and earnings of the
Company and a further incentive to promote the best interests of the Company. If
the Plan is not approved by stockholders, the Plan will not be implemented.
<PAGE>
Description of the Plan
The following summary of the Plan is qualified in its entirety by the
complete text of the plan, which may be obtained from the Company by any
stockholder.
All regular employees of the Company and its U.S. subsidiaries who
work at least 20 hours per week and who have been employed by the Company for at
least one year are eligible to participate in the Plan. Employees who are
officers of the Company within the meaning of the Securities Exchange Act of
1934, as amended, may not participate in the Plan. The Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Plan is not subject to any of
the provisions of the Employee Retirement Income Security Act of 1974, as
amended, and is not qualified under Section 401(a) of the Code. The Plan will
continue for five years unless earlier terminated by the Board.
The Plan is administered by the Director of Personnel of the Company.
The Plan consists of five consecutive one-year offering periods (each of which
is referred to herein as an "Offering Period"), beginning on the third Friday in
February each year (the "Offering Date") beginning in 1998 and continuing to the
first Friday in April of the following year beginning in 1999 (the "Purchase
Date"). As of each Offering Date, eligible employees will be entitled to
subscribe for a number of Shares equal to the number of whole Shares that may
be purchased for 15% of the eligible employee's annual base salary, not to
exceed 500 shares or the equivalent of $25,000. Subscriptions must be filed
during the six-week subscription period beginning on the Offering Date, and
ending on the first Friday in April of the same calendar year. The purchase
price for Shares purchased under the Plan will be 90% of the closing sale price
on the applicable Offering Date or 90% of the closing sale price on the Purchase
Date, whichever is less. If the price determined as of the Purchase Date is
lower than the price determined as of the Offering Date, the subscriptions will
not be increased; rather, any excess amounts will be refunded.
The maximum number of Shares that may be purchased under the Plan
during the Offering Period ending in April 1999 is 20,000 Shares, and for
subsequent Offering Periods the maximum number of Shares that may be purchased
under the Plan is equal to a proportionate number (based on the number of years
remaining in the Plan) of the Shares remaining after the expiration of the prior
Offering Periods. If subscriptions in any Offering Period exceed the maximum
number of Shares under the Plan, the largest subscriptions will be reduced on a
share-by-share basis until the oversubscription is eliminated. If any change is
made in the Common Stock (through reorganization, recapitalization, stock split,
stock dividend, split-up, combination of Shares, merger, consolidation, share
exchange, or any other change in the capital structure), appropriate adjustments
will be made as to the maximum number, kind and purchase price of Shares
purchased under the Plan.
A participant may cancel his or her subscription at any time up to
two weeks before the Purchase Date by giving a two week written notice to the
Company. No participant may purchase Shares under the Plan if, after giving
effect to such purchase, such participant would own 5% or more of the
outstanding Common Stock.
If any right to purchase Shares outstanding under the Plan expires or
is terminated for any reason, such Shares will be available for purchase under
the Plan. Termination of a participant's employment for any reason other than as
a result of a layoff subject to recall within 90 days, retirement or death
terminates the participant's participation in the Plan. If an employee retires
or dies prior to the Purchase Date applicable to an Offering Period in which the
participant is participating, the participant or his or her estate, as the case
may be, may elect within 30 days after the date of retirement or death to (i)
cancel the subscription and receive in cash all funds previously deposited by
the participant or (ii) apply the funds previously deposited to the purchase of
as many whole Shares as such funds will purchase on the next Purchase Date. In
such events, or in the event that a participant or his or her estate withdraws
from the Plan, the payments credited to the participant's account will be
returned to the participant (or the participant's personal representative)
without interest, and the participant's rights under the Plan will terminate.
The Board may modify, amend or terminate the Plan at any time without
notice, except that no amendment may be made that would adversely affect a
participant's rights under the Plan and any amendment which would (a)(i)
decrease the purchase price of the Shares offered under the Plan, (ii) increase
the maximum number of Shares that a participant may purchase, (iii) extend the
duration of the Plan, or (iv) increase the number of Shares issuable under the
Plan, or (b) change the Plan in a way to disqualify it under Section 423(b) of
the Code, must be approved by stockholders.
<PAGE>
Summary of Federal Income Tax Consequences of the Plan
The following summary is for general information only and is limited to
a discussion of federal income tax consequences of participation in the Plan as
described, based upon the Code, regulations thereunder, rulings and decisions
now in effect, all of which are subject to change. The summary does not discuss
all aspects of income taxation that may be relevant to a particular participant
in light of his or her personal circumstances.
The Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code. Under the Code, no taxable income
is recognized by the participant with respect to Shares purchased under the Plan
either at the time of enrollment or at any Purchase Date at the end of an
Offering Period. Taxable income is recognized only when a participant disposes
of the Shares.
If the participant disposes of Shares purchased under the Plan more
than the later of two years from the beginning of the applicable Offering Period
or one year from the Purchase Date, the participant would be deemed to have
received compensation taxable as ordinary income equal to the lesser of (a) the
amount of the discount allowed on the Shares purchased under the Plan; or (b)
the excess of the fair market value of the Shares at the time of disposition
over the purchase price. Any gain on the disposition in excess of the amount
treated as ordinary income would be treated as capital gains. The Company is not
entitled to take a deduction for the amount of the discount in the circumstances
indicated above.
If the participant disposes of Shares purchased pursuant to the Plan
before the expiration of the required holding period described above (the
"disqualifying disposition"),the participant would recognize ordinary income on
the excess of the fair market value of the stock on the Purchase Date over the
purchase price. The Company is entitled to a deduction equal to the amount the
participant is required to report as ordinary compensation income.
Other Information
The Company intends to register the Shares subject to the Plan on Form
S-8 and to deliver prospectuses describing the Plan to participants.
As of November 26, 1997, approximately 1,850 employees would be
eligible to participate in the Plan. Because the price of the Shares to be
purchased will not be established until the end of the first Offering Period,
and because benefits to be received depend upon participants' decisions to
participate throughout the Offering Periods, the benefits to be received under
the Plan by the foregoing persons is not determinable at the date of this proxy
statement. The closing market price of the Common Stock on the New York Stock
Exchange Composite Tape on November 26, 1997 was $30.3125 per Share.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF
THE OEA, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN.
REMUNERATION OF OFFICERS AND DIRECTORS
Executive Compensation
The following Summary Compensation Table sets forth a summary of the
compensation paid by the Company during the last three fiscal years ended July
31, 1997, 1996 and 1995, to its Chief Executive Officer and the four other most
highly compensated executive officers (the "named executive officers") during
the fiscal year ended July 31, 1997.
<PAGE>
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Options Payouts Compensation
Principal Position Year ($)(1) ($)(2) ($)(3) Award(s)($) (#) ($) ($) (4)
- ------------------ ----- ------- -------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ahmed D. Kafadar....... 1997 442,000 52,000 -- -- 2,500 -- 7,918
Chairman of the Board 1996 442,000 53,000 -- -- 3,334 -- 8,413
and Chief Executive 1995 442,000 72,000 -- -- -- -- 9,223
Officer
Charles B. Kafadar..... 1997 350,002 48,000 -- -- 2,500 -- 7,474
President and Chief 1996 350,002 49,000 -- -- 3,000 -- 7,940
Operating Officer 1995 350,002 63,000 -- -- -- -- 8,703
Ben E. Paul............ 1997 200,013 25,000 -- -- 1,000 -- 7,124
President of OEA 1996 190,781 3,000 -- -- 2,000 -- 7,567
Aerospace, Inc. 1995 163,982 30,000 -- -- -- -- 8,293
Paul J. Martin (5)..... 1997 175,011 3,000 -- -- 2,000 -- 7,708
Vice President 1996 175,011 24,000 -- -- 2,000 -- 8,189
Administration 1995 155,779 30,000 -- -- -- -- 8,977
J. Thompson McConathy.. 1997 123,853 30,000 -- -- -- -- 5,783
Vice President 1996 -- -- -- -- -- -- --
Finance 1995 -- -- -- -- -- -- --
</TABLE>
(1)Amounts shown include compensation earned and received by executive officers
as well as amounts earned but deferred at the election of those officers.
(2)Represents amounts accrued for executive officers pursuant to the Company's
Incentive Compensation Plan.
(3)Other annual compensation provided during 1997, 1996, and 1995 did not exceed
disclosure thresholds established by the Securities and Exchange Commission.
(4)Amounts include the Company's contribution to the Company's Profit Sharing
Plan and Pension Plan.
(5)Paul J. Martin retired as Vice President, Administration on September 1,
1997.
Incentive Compensation
The Board has, in each of the past several years, authorized payments of
incentive compensation (bonus) to employees of the Company, in an aggregate
amount to be allocated and distributed at the discretion of the Chairman and
President. Sums shown above under "Bonus" include the incentive compensation
accrued to the named executive officers and expensed for financial reporting
purposes in fiscal years 1997, 1996 and 1995.
Directors' Compensation
The Directors of the Company who are employed by it or its subsidiaries were not
additionally compensated for their services as Directors during fiscal year
1997. Directors not employed by the Company or its subsidiaries received a base
compensation of $9,000 per annum, committee chairmen received an additional base
compensation of $1,000 per annum, additional compensation of $2,900 for each
board meeting attended, $2,500 for each committee meeting attended on days the
Board of Directors did not meet and $2,300 for each committee meeting on days
that the Board of Directors met. Directors utilized for consulting purposes
received $2,500 per day for their services. Mr. Watson was paid $6,250 in
fiscal year 1997 for his consulting services.
<PAGE>
Profit Sharing Plan
The Company and its wholly owned subsidiary (OEA Aerospace, Inc.) maintain a
profit sharing plan with salary reduction provisions permitted by Section 401(k)
of the Internal Revenue Code of 1986, as amended, covering all of their
employees. Each fiscal year, the Board of Directors of the Company determine the
amount of its contribution to its plan up to 10% of the total compensation of
all participants for such fiscal year. This contribution is allocated to the
accounts of the participants based on a formula which takes into account the
compensation and length of service of each participant. Vesting occurs at the
rate of 20% at the end of two years of service, as defined in the plan, and 20%
for each year of service thereafter, with full vesting at the end of six years
of service. Upon normal retirement, death, disability or termination of
employment, a participant's account balance is payable, at the administrative
committee's option, either in a lump sum or in periodic payments over a period
not to exceed ten years. The compensation column headed "All Other Compensation"
includes the listed officers' benefits under the applicable profit sharing plan
which were accrued during fiscal years 1997, 1996 and 1995.
Pension Plan
The Company and its wholly owned subsidiary (OEA Aerospace, Inc.) maintain a
pension plan covering all of their employees. Each fiscal year the Company and
its subsidiary contribute an amount equal to 5% of the aggregate compensation of
all participants in the plan for such fiscal year. Vesting occurs at the rate of
20% at the end of two years of service, as defined in the plan, and 20% for each
year of service thereafter, with full vesting at the end of six years of
service. Upon normal retirement, death, disability or termination of employment,
a participant's account balance is payable in the form of a joint and survivor
amount if the participant is married, provided, however, if the participant is
not married, or if the participant and his or her spouse so elect, the account
balance may be paid in a lump sum or, with the administrative committee's
permission, in periodic payments over a period not to exceed ten years. The
Compensation column headed "All Other Compensation" includes the listed
officers' benefits under the applicable pension plan which were accrued during
fiscal years 1997, 1996 and 1995.
Employment Agreements
The Company has entered into an employment agreement with Ahmed D. Kafadar dated
May 5, 1989, providing for his full time, active service as Chairman of the
Board of Directors and Chief Executive Officer for an indefinite term. Mr.
Kafadar's employment is terminable at any time at his election, or by the
Company for any reason. The agreement provides for payments upon termination,
pursuant to a formula based on his compensation for the three years prior to his
termination, to Mr. Kafadar during his lifetime and to his surviving spouse for
up to 15 years following his death. If Mr. Kafadar had terminated his employment
as of July 31, 1997, payments calculated in accordance with the agreement would
have approximated $154,600 per year for Mr. Kafadar, or $92,800 per year for his
surviving spouse.
The Company has entered into an employment agreement with Charles B. Kafadar
dated March 15, 1990, providing for his full time, active service as President
and Chief Operating Officer for an indefinite term. Dr. Kafadar's employment is
terminable at his election after age 65 and 33 years of continuous service, or
by the Company at any time for any reason. Upon termination or retirement, the
agreement provides for payments, pursuant to a formula based on his compensation
for the three years prior to his termination, to Dr. Kafadar during his lifetime
and, in the event of his death, his surviving spouse for up to 10 years. Dr.
Kafadar will not be eligible to elect under the agreement to terminate his
employment until 2010. If Dr. Kafadar had terminated his employment as of July
31, 1997, termination payments calculated in accordance with the agreement would
have approximated $212,200 per year for Dr. Kafadar, or $106,100 per year for
his surviving spouse.
Incentive Stock Option Plans
The stockholders approved an Employees' Stock Option Plan (the "Employees'
Plan") on January 13, 1995, and a Nonemployee Directors' Stock Option Plan (the
"Directors' Plan") on January 12, 1996. These plans provide for stock options to
be granted for a maximum of 600,000 shares of Common Stock under the Employees'
Plan and a maximum of 50,000 shares of Common Stock under the Directors' Plan.
Options may be granted to employees and nonemployee directors at prices not less
than fair market value of the Company's Common Stock on the date of grant.
Options granted under the Employees' Plan may be exercised at such times after
the grant date as specified by the Board, except for options granted to
executive officers which may be exercised after six months, and options issued
under the Directors' Plan may be exercised after the first six months following
the grant date. All options must be exercised within 10 years of the grant date,
except for those options granted to recipients who own more than 10% of the
total combined voting power of the stock of the Company which must be exercised
within 5 years of the grant date. Shares may be granted from either authorized
but unissued Common Stock or issued shares reacquired and held as treasury
stock.
The Company maintains an incentive stock option plan, for grants prior to July
28, 1994, which provides for the grant, by the Board of Directors, of options to
purchase shares of the Company's Common Stock to those officers and key
employees of the Company and its subsidiaries who have performed services which,
in the opinion of the Board of Directors, were of special importance in the
management, operation and development of the Company. Options granted are
exercisable during the period commencing one year after the date of grant and
ending ten years after the date of grant, except that any option granted to a
recipient who owns more than 10% of the total combined voting power of the stock
of the Company is exercisable only until five years after the date of grant. The
exercise price of the options granted is to be equal to 100% of the fair market
value of the Company's Common Stock on the date of the grant, except that the
exercise price of any option granted to a recipient who owns more than 10% of
the total voting power of the stock of the Company is to be equal to 110% of the
fair market value of the Company's Common Stock on the date of the grant.
Option Grants in Last Fiscal Year
The following table sets forth information on option grants made during fiscal
year 1997 to the named executive officers. (None of the named executive officers
have ever received stock appreciation rights).
<TABLE>
Individual Grants
Name Number of % of Total Exercise Expiration Potential Realizable
---- Securities Options Price Date Value at Assumed
Underlying Granted to ($/Share)(1) Annual Rates
Options Employees in of Stock Price
Granted Fiscal 1997(3) Appreciation
(#)(1)(4) for Option Term (2)
---------- -------------- ----------- ---------- 5%($) 10%($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Ahmed D. Kafadar 2,500 9.69 41.66 11/01/01 28,775 63,585
Charles B. Kafadar 2,500 9.69 37.88 11/01/06 59,556 150,927
Paul J. Martin 2,000 7.75 37.88 11/01/06 47,645 120,742
Ben E. Paul 1,000 3.88 37.88 11/01/06 23,823 60,371
J. Thompson - - - - - -
McConathy
</TABLE>
(1) On November 1, 1996, the Board of Directors granted options to purchase an
aggregate of 25,800 shares of the Company's Common Stock at an exercise price
equal to $37.88 per share, except that the exercise price of the options granted
to any recipient who owns more than 10% of the total voting power of the Company
was equal to $41.66 per share. The options granted will expire on November 1,
2006, except that the options granted to any recipient who owns more than 10% of
the total voting power of the Company will expire on November 1, 2001. No
consideration was or is to be received by the Company for the granting of any
option.
(2)Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rates shown (5% or
10%), compounded annually, from the date of grant of the option until the end of
the option term. The 5% and 10% assumed rates of appreciation are mandated by
the rules of the Securities and Exchange Commission and do not in any way
represent the Company's estimate or projection of future stock prices. Actual
gains, if any, upon future exercise of any of these options will depend on the
actual performance of the Company's Common Stock and the continued employment of
the executive officer holding the option through its vesting period.
(3)Based on options to purchase an aggregate of 25,800 shares granted during
fiscal year 1997.
(4)All options vest May 1, 1997.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information on option exercises in fiscal year
1997 by the named executive officers and the value of such officers' unexercised
options at July 31, 1997.
<PAGE>
<TABLE>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Number of Options at Options at Fiscal
Shares Fiscal Year-End Year-End($)(1)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($) Unexercisable Unexercisable
---- ----------- ----------- --------------- --------------------
<S> <C> <C> <C> <C>
Ahmed D. Kafadar....... 6,000 111,600 13,168/ - 74,888/ -
Charles B. Kafadar..... 18,000 658,499 53,500/ - 1,440,968/ -
Paul J. Martin......... 4,250 81,125 2,000/ - 625/ -
Ben E. Paul............ - - 4,000/ - 28,875/ -
J. Thompson McConathy.. - - -/ - -/ -
- -----------------------------------
</TABLE>
(1) Only the value of unexercised, in-the-money options are reported. Value
is calculated by (i) subtracting the total exercise price per share
from the year-end market value of $38.1875 per share and (ii)
multiplying by the number of shares subject to the option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is pleased to present its report
on executive compensation. The Committee consists of three outside members of
the Board of Directors, Dr. Burnett as Chairman, Mr. Billig and Mr. Bogan. This
Committee report documents the components of the Company's executive officer
compensation programs and describes the basis on which fiscal year 1997
compensation determinations were made by the Committee with respect to the Chief
Executive Officer and other executive officers of the Company.
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Company and Committee to ensure that executive
compensation be primarily linked to corporate performance and increases in
shareholder value. The following objectives have been adopted by the Committee
as guidelines for compensation decisions:
o Provide a competitive total compensation package that enables the Company to
attract and retain key executives.
o Integrate all pay programs with the Company's annual and long-term business
objectives and strategy, and focus executive performance on the fulfillment of
those objectives.
o Provide variable compensation opportunities that are directly linked with the
performance of the Company and that align executive remuneration with the
interests of stockholders.
Compensation Program Components
The Committee annually reviews the Company's compensation program to
ensure that pay levels and incentive opportunities are competitive and reflect
the performance of the Company. The particular elements of the compensation
program for executive officers are as follows:
Base Salary - A variety of resources, including published compensation
surveys, are used as general guidance in determining base salary levels.
Although the Committee performs comparisons with companies of similar revenue
size and industry groups, it does not specifically target compensation of the
executive officers to compensation levels at other companies. Base pay levels
for the executive officers are competitive within a range that the Committee
considers reasonable and appropriate. Actual salaries reflect overall Company
performance and contributions of the individual within a competitive salary
range which is established through job evaluations and market comparisons.
Please refer to the Summary Compensation Table for details regarding executive
officer base salaries.
<PAGE>
Annual Incentive Compensation - The Company's officers, senior
management personnel and all other personnel are eligible to participate in an
annual incentive compensation (bonus) plan with awards based primarily on the
achievement of certain corporate net earnings goals and related stock price
appreciation. These goals are normally considerably higher than those being
attained by other companies of similar or larger revenue size within its primary
industry segments. The objective of this plan is to pay competitive levels of
total compensation for the attainment of financial objectives that the Committee
believes are primary determinants of share price over time. Specifically, the
plan intends to focus corporate and individual performance on consistent and
steady earnings growth. Targeted awards and base compensation for executive
officers under this plan are consistent with targeted awards of companies of
similar size and complexity to the Company. Actual awards are subject to
increase or decrease on the basis of the Company's earnings performance and at
the discretion of the Committee. Please refer to the Summary Compensation Table
for details regarding executive officer incentive compensation.
Stock Option Plan - The Committee believes that the best interests of
stockholders will be served by providing executive officers and other key
personnel who have substantial responsibility for the continued success and
profitability of the Company with an opportunity to increase their ownership of
Company Stock. Therefore, from time to time as recommended by the Committee,
executive officers and key personnel are granted stock options in accordance
with the Company's Incentive Stock Option Plan. These personnel have the right
to purchase shares of Common Stock of the Company in the future, at the market
value price of the stock on the date of the grant. The value of the options
granted relates to personal performance and corporate goals achieved. Please
refer to the Summary Compensation Table for details regarding executive officer
stock options.
Chief Executive Officer Compensation - In determining Mr. Ahmed D.
Kafadar's fiscal year 1997 pay and the structure of his total compensation
package, the Committee considered OEA's technical and financial performance
during 1997, the magnitude and effectiveness of the Company's continued
expansion into the automotive products industry, the relationship of Mr.
Kafadar's compensation with the 75th Percentile Market Consensus for Executive
Compensation, comparisons with executives of automotive safety products and
aerospace companies of similar revenue size, and the 1997 Crystal Report on the
total direct compensation of CEO's in 500 middle market-cap firms.
During fiscal year 1997, OEA had another record year and continued its
successful growth in its automotive safety products segment. In 1997, the
Company increased automotive sales by 46% and operating profit by 37% which were
derived from air bag inflators and initiators. Automotive product sales
increased to 80% of total sales compared to 76% in the prior year and 70% in
1995. The Company produced an unprecedented 3 million "smokeless" hybrid
inflators in its first year of production for delivery to air bag module
manufacturers.
The Committee recognizes Mr. Kafadar's significant contribution to the
above; however, his base salary was not increased during 1997.
Internal Revenue Code Section 162(m) Implications for Executive
Compensation - The Committee is responsible for addressing the issues raised by
Internal Revenue Code Section 162(m) ("Section 162(m)"). This Section limits to
$1 million the Company's deduction for compensation paid to certain executive
officers of the Company which does not qualify as "performance-based". To
qualify as performance-based under Section 162(m), compensation payments must be
made pursuant to a plan that is administered by a committee of outside directors
and must be based on achieving objective performance goals. In addition, the
material terms of the plan must be disclosed to and approved by shareholders,
and the Committee must certify that the performance goals were achieved before
payments can be awarded. It is not expected that the compensation to be paid to
the Company's executive officers for fiscal 1998 will exceed the $1 million
limit per officer. Accordingly, the Compensation Committee has not at this time
instituted any changes to its compensation policies to take into account the $1
million limitation.
The Committee continues to carefully consider the impact of this tax code
provision and will monitor the level of compensation paid to the executive
officers in order to take any steps which may be appropriate in response to the
provisions of Section 162(m).
<PAGE>
Summary - Based upon its review of the Company's performance, base
salary and total cash executive compensation comparisons with companies of
similar revenue and industry groups, and the 1997 Crystal Reports, the Committee
believes that the total compensation program for certain executive personnel of
the Company may not be competitive. This matter is being thoroughly reviewed at
this time. The Committee also believes that the stock option program provides
opportunities to participants that are consistent with the returns generated for
the Company's Stockholders.
Dr. J. Robert Burnett, Chairman
Erwin H. Billig
Ralph A. L. Bogan, Jr.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
As of November 28, 1997, the following persons, exclusive of
management, were known to the Company to own beneficially more than 5% of the
Company's Common Stock (the only class of voting securities of the Company):
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class*
T. Rowe Price Associates, Inc.......... 2,087,400 (1) 10.1
100 E. Pratt Street
Baltimore, Maryland 21202
Raymond Shaheen, Esq., Trustee......... 1,376,616 (2) 6.7
20 North Wacker Drive
Chicago, Illinois 60606
Montgomery Asset Management L.P........ 1,235,000 (3) 6.0
600 Montgomery Street, Suite 1700
San Francisco, California
* This information is taken from statements filed by beneficial owners with the
SEC and by reference to the transfer agent's records as of November 28, 1997.
(1) T. Rowe Price Associates, Inc. is a Registered Investment Advisor and the
shares are owned on behalf of their clients. T. Rowe Price has sole
investment authority over all shares and sole voting authority for 328,400
shares and no voting authority over 1,759,000 shares.
(2) Mr. Shaheen holds record title and voting rights to such shares under the
terms of four separate trusts established by Ahmed D. Kafadar in 1960 for
the benefit of his children.
(3) Montgomery Asset Management L.P. is a Registered Investment Advisor and the
shares are owned on behalf of their clients. Montgomery Asset Management has
advised us that they have sole investment authority over 905,000 shares,
sole voting authority for 741,000 shares and no voting authority over
494,000 shares.
MANAGEMENT
As of November 28, 1997, the following Directors and named executive
officers, individually, and all Directors and officers as a group, beneficially
owned shares of the only class of voting securities of the Company (i.e. Common
Stock, $0.10 par value) as follows:
<PAGE>
<TABLE>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership** of Class**
------------------------ ---------------------- ----------
<S> <C> <C>
Ahmed D. Kafadar........................ 2,636,761(1)(4) 12.8
Charles B. Kafadar...................... 124,646(2)(4) -
Ralph A. L. Bogan, Jr................... 119,850(4) -
James R. Burnett........................ 19,250(3)(4) -
Lewis W. Watson......................... 2,750(4) -
Philip E. Johnson....................... 13,250(4) -
George S. Ansell........................ 1,450(4) -
Robert J. Schultz....................... 5,250(4) -
Erwin H. Billig......................... 1,250(4) -
J. Thompson McConathy................... 600 -
Ben E. Paul............................. 47,627(4) -
All Directors and Executive Officers
as a group(the 11 persons named above) 2,972,684 14.4
</TABLE>
**This information is taken from statements filed by beneficial owners with the
SEC and by reference to the transfer agent's records as of November 28, 1997.
A line indicates ownership of less than 1%.
(1)Includes 27,668 shares held by Mr. Kafadar of record, 70,012 shares held in
joint tenancy with his wife, 1,167,597 shares held as trustee of the
Ahmed D. Kafadar Family Trust, 568,838 shares held as trustee of the
Maryanna B. Kafadar Family Trust and 793,478 shares held as trustee of the
Ahmed D. Kafadar Marital Trust. Does not include 43,266 shares held by his
wife in her own name, of which he disclaims beneficial ownership.
(2)Includes 73,445 shares held by Dr. Kafadar of record and 15,701 shares held
in joint tenancy with his wife, in which voting power is shared. Does not
include 10,250 shares held by his wife in her own name or 34,339 shares
held by his wife as custodian for their minor children, of which he
disclaims beneficial ownership.
(3)Dr. Burnett holds these shares in a living trust with his wife, in which
voting power is shared.
(4)Includes unexercised stock options under the Company's stock option plans:
Mr. A. D. Kafadar, 9,168 shares; Dr. C. B. Kafadar, 35,500 shares; Mr. R.
A. L. Bogan, Jr., 1,250 shares; Dr. J. R. Burnett, 1,250 shares; Mr. L. W.
Watson, 1,250 shares; Mr. P. E. Johnson, 1,250 shares; Dr. G. S. Ansell,
1,250 shares; Mr. R. J. Schultz, 1,250 shares; Mr. E. H. Billig, 1,250
shares; and Mr. B. E. Paul, 4,000 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission,
the New York Stock Exchange and the Company.
Based solely on review of the copies of such forms furnished to the Company, or
written representations that no Forms 5 were required, the Company believes that
with respect to transactions required to have been reported in fiscal 1997 or on
a Form 5 for the fiscal year ended July 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors, and greater than ten-percent
beneficial owners were in compliance, except for a Form 3 report and a Form 4
report which were filed late by Mr. McConathy.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative total
stockholder return on the Company's Common Stock during the five years ended
July 31, 1997, with the cumulative total return on the S&P 500 Index and the S&P
Automobiles Index. The comparison assumes $100 was invested on July 31, 1992, in
the Company's Common Stock and in each of such indices and assumes reinvestment
of dividends, if any.
<TABLE>
Data Points
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
|X| OEA, Inc...................... 100 109 130 130 152 168
+ S&P 500....................... 100 109 114 144 168 256
t S&P Automobiles............... 100 129 147 143 161 213
</TABLE>
PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals must be received at the corporate offices of the Company,
34501 East Quincy Avenue (if by mail, addressed to P. O. Box 100488), Denver,
Colorado 80250, no later than August 10, 1998, for inclusion in the proxy
statement for the next annual meeting of stockholders.
AUDITORS
Ernst & Young LLP, who have been auditors for the Company and its subsidiaries
since fiscal year 1991, have been selected by the Board of Directors as auditors
for the Company and its subsidiaries for the fiscal year ending July 31, 1998.
Representatives of Ernst & Young LLP are expected to be present at the annual
meeting of stockholders. They shall be given the opportunity to make a statement
if they desire to do so, and are expected to be available to respond to
appropriate questions.
<PAGE>
OEA, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
THURSDAY, JANUARY 15, 1998 AT 9:00 A.M.
The undersigned hereby constitutes and appoints AHMED D. KAFADAR, CHARLES B.
KAFADAR and J. THOMPSON McCONATHY, and each of them, his true and lawful agents
and proxies with full power of substitutions in each, to vote on behalf of the
undersigned at the Annual Meeting of Stockholders of OEA, INC. to be held in the
Management Briefing Center of Wells Fargo Bank of Denver, 17th & California
Streets, Denver, Colorado, on Thursday, January 15, 1998 at 9:00 a.m., and at
any adjournments thereof, on all matters coming before said meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED, FOR APPROVAL OF THE OEA, INC. 1997 EMPLOYEE STOCK PURCHASE
PLAN, AND IN THE DISCRETION OF THE PERSONS NAMED, UPON OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
(Continued and to be signed on the other side.)
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW
1. To elect directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
FOR all WITHHOLD
nominees listed AUTHORITY
Nominees: Ahmed D. Kafadar, Charles B. Kafadar, Ralph A. L. Bogan, Jr.,
James R. Burnett, Lewis W. Watson, Philip E. Johnson, George S. Ansell,
Robert J. Schultz, and Erwin H. Billig
To withhold authority to vote for any nominee(s), write such nominee(s), name(s)
below.
2. Adoption of the proposed OEA, Inc. 1997
Employee Stock Purchase Plan
FOR AGAINST ABSTAIN
Please sign exactly as your name appears hereon. If the stock is registered in
the name of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
Dated
SIGNATURE(S)
Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.
<PAGE>
APPENDIX A
FORM OF THE OEA, INC. 1997 EMPLOYEE
STOCK PURCHASE PLAN
ESTABLISHMENT AND PURPOSE
The OEA, Inc. 1997 Stock Purchase Plan (the "Plan") was adopted by the
Board of Directors of OEA, Inc. (the "Corporation") on October 30, 1997, [and
was approved by the stockholders at the Annual Stockholders Meeting on January
15, 1998.]
The purpose of The OEA, Inc. 1997 Employee Stock Purchase Plan is to
provide a method by which eligible employees of OEA, Inc. and its Subsidiaries
may purchase shares of Common Stock of the Corporation by payroll deduction and
at favorable prices. By this means, eligible employees will be given an
opportunity to acquire an additional interest in the prosperity, growth and
earnings of the Corporation and a further incentive to promote the best
interests of the Corporation. The Corporation intends this plan to qualify as an
"employee stock purchase plan" under Section 423 of the Code and this Plan shall
be so construed. Any term not expressly defined in this Plan, but defined for
purposes of Section 423 of the Code shall have the same definition herein.
1. Definition
The following terms shall have the meanings set forth below:
(a) "Base Salary" shall mean an Eligible Employee's annual basic
or regular compensation from the Corporation and its
Subsidiaries, based on his or her compensation rate in effect
at the applicable Offering Date, excluding overtime,
commissions, bonuses and other non-basic
compensation items. In the case of an Eligible Employee who
has no basic or regular rate of compensation, his or her "Base
Salary" shall be an amount determined by the Corporation in
its discretion to reflect the basic salary rate that would
apply to that Eligible Employee if he or she was paid a
regular salary for comparable services.
(b) "Code" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, and any regulations promulgated
thereunder.
(c) "Common Stock" shall mean the shares of common stock, par
value $.10 per share, of the Corporation.
(d) "Corporation" shall mean OEA, Inc.
<PAGE>
(e) "Eligible Employees," as of any applicable Offering Date,
shall mean all Employees who have been in the employ of the
Corporation or any of its Subsidiaries continuously for at
least one year, other than (i) persons who are officers of the
Corporation within the meaning of the Exchange Act on the
applicable Offering Date, unless they are not "highly
compensated employees," as defined in Section 414(q) of the
Code; (ii) persons who are paid through a non-U.S. payroll;
and (iii) persons who, after purchasing shares of Common
Stock under the Plan, would own shares of capital stock
possessing five percent or more of the total combined voting
power or value of all classes of outstanding capital stock of
the Corporation or any of its Subsidiaries. For purposes of
the preceding sentence, capital stock that any person may
purchase under outstanding stock options shall be treated as
owned by the person and the provisions of Section 424(d) of
the Code shall apply. An Eligible Employee who terminates
employment with the Corporation and all of its Subsidiaries
shall become eligible to participate in the Plan as of the
Offering Date immediately following his or her reemployment
with the Corporation or any of its Subsidiaries regardless of
his or her period of employment following reemployment,
provided such person otherwise then qualifies as an Eligible
Employee.
(f) "Employee" shall mean each active, regular full-time or
active, regular part-time employee of the Corporation or any
of its Subsidiaries, including but not limited to officers of
the Corporation and its Subsidiaries, provided that such
employee's normal work week is at least 20 hours per week and
provided further that "Employee" shall not include any
employee who is on leave or layoff status or is otherwise
inactive.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(h) "Offering Date" shall mean the third Friday in February in
each of the years 1998 through 2002.
(i) "Offering Period" shall mean each of the periods commencing on
an Offering Date and ending on the Purchase Date in the year
immediately following such Offering Date.
(j) "Option" shall mean a right granted pursuant to the Plan to
purchase shares of Common Stock in each of the respective
Offering Periods in an amount determined in accordance with
the terms of the Plan.
(k) "Participant," as it relates to an Offering Period, shall mean
each Eligible Employee who has executed a subscription
agreement in accordance with Section 4 of the Plan and whose
subscription and related Option have not been canceled.
(l) "Plan" shall mean The OEA, Inc. 1997 Employee Stock Purchase
Plan.
(m) "Purchase Date" shall mean the first Friday in April in each
of the years 1999 through 2003.
(n) "Stock Price" shall mean the closing price per share of Common
Stock as reported in the New York Stock Exchange Composite
Transactions for the New York Stock Exchange, or if such
shares of Common Stock are not sold on such date, the closing
price per share of Common Stock as reported in the New York
Stock Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of
Common Stock were sold.
(o) "Subsidiaries" shall mean a corporation of which capital stock
possessing more than 50% of the total combined voting power of
all classes of its capital stock entitled to vote generally in
the election of directors is owned in the aggregate by the
Corporation, directly or indirectly, through one or more
Subsidiaries.
<PAGE>
2. Eligibility to Participate; Grant of Option
(a) As of any Offering Date, each Eligible Employee shall be
granted an Option, which shall entitle the Eligible Employee
to purchase shares of Common Stock in accordance with the
terms and conditions of the Plan. Subject to the further
limitations set forth in Section 2(b) of the Plan, the maximum
number of shares of Common Stock that an Eligible Employee
shall be entitled to purchase pursuant to such Option will
equal the lesser of (i) for each calendar year, the number of
whole shares of Common Stock purchasable for $25,000 based on
the Stock Price on the applicable Offering Date and aggregated
with the eligible employee's rights to purchase stock under
all other plans maintained by the Corporation; (ii) the number
of whole shares of Common Stock purchasable for 15% of the
Eligible Employee's Base Salary based on the Stock Price on
the applicable Offering Date, or (iii) 500 shares of Common
Stock.
(b) Notwithstanding the provisions of Section 2(a) of the Plan,
the maximum number of shares of Common Stock purchasable by
all Eligible Employees during an Offering Period shall be as
follows: during the Offering Period ending in April, 1999,
20,000 shares; during the Offering Period ending in April,
2000, one-fourth of the shares of Common Stock remaining under
Section 3 after the first Offering Period; during the Offering
Period ending in April, 2001, one-third of the shares of
Common Stock remaining after the first two Offering Periods;
during the Offering Period ending in April, 2002, one-half of
the shares of Common Stock remaining after the first three
Offering Periods; and during the Offering Period ending in
April, 2003, all of the shares of Common Stock remaining under
the Plan. In the event of an oversubscription for shares
of Common Stock during any Offering Period, the largest
subscriptions shall be reduced until the oversubscription is
eliminated. For example, if there was an oversubscription
of 150 shares and there were three subscriptions for 100
shares each with the next largest subscription being for 50
shares, each of the 100 share subscriptions would be reduced
to 50 shares.
3. Stock Subject to the Plan
(a) There shall be reserved for the granting of Options under the
Plan and for issuance and sale pursuant to such Options
100,000 shares of Common Stock. The shares of Common Stock to
be issued upon the exercise of Options under the Plan shall be
made available from the authorized and unissued shares of
Common Stock or may be Treasury shares. If for any reason
shares of Common Stock as to which an Option has been granted
cease to be subject to purchase thereunder, then such shares
of Common Stock again shall be available for Issuance pursuant
to Options under the Plan.
(b) In the event of any reorganization, recapitalization, stock
split, stock dividend, combination of shares of Common Stock,
merger, consolidation, share exchange or any other change in
the capital structure of the Corporation, the Board of
Directors of the Corporation may make such adjustments which
it deems appropriate in the number, kind and purchase price of
the shares of Common Stock subject to Options under the Plan.
4. Subscription Agreements
On or about each Offering Date the Corporation shall make subscription
agreements available to all Eligible Employees. To subscribe for shares
of Common Stock in connection with an Offering Period, an Eligible
Employee must complete, execute and deliver a subscription agreement to
the Corporation between the Offering Date and the close of business on
the first Friday in April in the same calendar year. A separate
subscription agreement must be executed for each Offering Period under
the Plan.
<PAGE>
5. Purchase Price
The purchase price per share of Common Stock purchasable under Options
granted in respect of each Offering Period under the Plan shall be
equal to the lesser of 90% of (i) the Stock Price on the Offering Date
or (ii) the Stock Price on the applicable Purchase Date in each case
adjusted down to the nearest one-sixteenth point (.0625).
6. Payment; Currency
(a) Payment for shares of Common Stock shall be made through
payroll deductions in equal installments over a period of 50
weeks, with no right of prepayment. Payment for shares of
Common Stock subscribed for under the Plan shall be made in
United States dollars.
(b) Notwithstanding the provisions of Section 6(a) of the Plan,
Eligible Employees who have subscribed for shares of Common
Stock under the Plan who, subsequent to the applicable
Offering Date, are on leave or layoff status and who are
eligible to continue participation in the Plan shall be
entitled to make installment payments by personal check or
through any other arrangement acceptable to the Corporation.
(c) If, as of the Purchase Date, a Participant has made an
overpayment for the number of shares of Common Stock
subscribed for in respect of the applicable Offering Period,
either as a result of the application of Section 5 of the Plan
or otherwise, such overpayment shall be refunded as soon as
practicable.
7. Cancellation of Participation
(a) A Participant may cancel his or her subscription in respect of
any Offering Period at any time prior to the applicable
Purchase Date by giving written notice of cancellation of the
subscription to the Corporation at least two weeks before the
Purchase Date. As soon as practicable after receipt of any
such written notice the Corporation will return the funds
previously deposited by the Participant, without interest
thereon.
(b) In the event that any installment payment due under the Plan
remains unpaid for a period of 30 days without arrangements
being made for the payment of such installment, which
arrangements are acceptable to the Corporation in its sole
discretion, the subscription and Option relating to the unpaid
installment shall be canceled automatically without further
action by the Participant or the Corporation. As soon as
practicable after any such cancellation, the Corporation will
return the funds previously deposited by the Participant,
without interest thereon.
(c) In the event that a Participant's employment with the
Corporation and its Subsidiaries is terminated (other than as
a result of layoff subject to recall within 90 days but
including, without limitation, as a result of the sale by the
Corporation or any of its Subsidiaries of a Subsidiary,
business, or product line) prior to the Purchase Date
applicable to an Offering Period in which the Participant is
participating, his or her subscription and the Option relating
thereto shall be deemed canceled automatically without further
action by the Participant or the Corporation. In the event
that a Participant is laid off or is on a leave of absence
prior to the Purchase Date applicable to an Offering Period in
which such Participant is participating, the Participant shall
continue to participate in the Plan, unless he or she does not
resume employment within 90 days beginning on the date such
layoff or leave commenced, in which case his or her
subscription and the Option relating thereto shall be deemed
automatically canceled at the close of business on the 90th
day after the date such layoff or leave commenced. As soon as
practicable after any such cancellation, the Corporation will
return the funds previously deposited by such Participant,
without interest thereon.
<PAGE>
(d) In the event that a Participant retires with a right to
receive an immediate retirement benefit or dies prior to the
Purchase Date applicable to an Offering Period in which the
Participant is participating, the Participant or his or her
estate, may elect within 30 days after the date of retirement
or death to (i) cancel the subscription and Option relating
thereto and receive in cash the funds previously deposited
without interest thereon, or (ii) apply the funds previously
deposited to the purchase of as many whole shares of Common
Stock as the funds will purchase at a price equal to the
purchase price calculated in accordance with Section 5 of the
Plan, with the balance being refunded to the Participant or
his or her estate. A failure by the Participant or his or her
estate to make such an election shall be treated as a notice
of cancellation under Section 7(a) of the Plan.
8. Exercise of Option; Certificates
(a) Options granted to Eligible Employees whose subscription has
not been canceled in accordance with the terms of the Plan
shall be deemed to have been exercised, in respect of each
Offering Period, on the applicable Purchase Date without
further action by the Eligible Employee or the Corporation.
(b) Upon the exercise of any Options under the terms of the Plan,
the funds relating to each Option exercised shall be paid over
to the Corporation. As soon as practicable thereafter,
certificates for the whole shares of Common Stock purchased
shall be issued to Participants whose Options have been so
exercised.
(c) No fractional shares of Common Stock shall be issued under any
circumstances. In lieu of any such fractional shares,
Participants shall receive a cash payment based on the Stock
Price on the applicable Purchase Date or, in the case of a
purchase in accordance with Section 7 (d) of the Plan, the
date on which the Corporation receives written notice of the
Participant's or his or her estate's election to purchase
shares of Common Stock thereunder.
(d) Shares of Common Stock issued under the Plan shall be issued
in the name of the Participant, unless such Participant has
given written notice to the Corporation directing that the
shares of Common Stock be issued in the name of the
Participant and his or her spouse as tenants by the entireties
or joint tenants with right of survivorship. Shares of Common
Stock will not be issued in any other name or names under the
Plan.
9. Rights not Transferable
Except as contemplated by Section 8(d) of the Plan, an Eligible
Employee's rights to subscribe for shares of Common Stock under the
Plan and rights in respect of any Option granted under the Plan belong
to the Eligible Employee alone and may not be transferred, assigned to,
or availed of for any purpose by any other person.
10. Administration
The Plan shall be administered by the Director of Personnel of the
Corporation, who shall have full authority, consistent with the Plan,
to interpret the Plan, to promulgate such rules and regulations with
respect to the Plan as he or she deems desirable, to delegate his or
her responsibilities hereunder to appropriate persons and to make all
other determinations necessary or desirable for the administration of
the Plan. All decisions, determinations and interpretations of the
Director of Personnel or his or her designee shall be binding upon all
persons.
<PAGE>
11. Amendment or Termination of the Plan
The Board of Directors of the Corporation shall have the right to
amend, modify or terminate the Plan at any time without notice:
provided, however, that no Participant's then existing rights may be
adversely affected and, provided further, that no such amendment or
modification of the Plan may decrease the purchase price for the shares
of Common Stock offered under the Plan, and no amendment may be made
without approval of the stockholders of the Corporation if approval is
required under Code Section 423 and if the amendment would (i) increase
the maximum number of shares of Common Stock that a Participant may
purchase, (ii) extend the duration of the Plan, or (iii) increase the
number of shares of Common Stock offered under the Plan (other then as
a result of the provisions of Section 3 (b) of the Plan).
Notwithstanding the above, the Plan will terminate effective at
midnight on the first Friday in April, 2003.
