<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[x] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Gilbert Associates, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Gilbert Associates, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
GILBERT ASSOCIATES, INC.
P.O. BOX 1498 READING, PA. 19603
NOTICE OF ANNUAL MEETING OF HOLDERS OF CLASS B COMMON STOCK
TO BE HELD JUNE 26, 1996
Notice is hereby given that the Annual Meeting of holders of Class B Common
Stock of GILBERT ASSOCIATES, INC. (the "Company") will be held at The Sheraton
Berkshire Hotel, Woodland & Paper Mill Road, Wyomissing, Pennsylvania, on
Wednesday, June 26, 1996 at 11:00 o'clock in the morning (local time):
For the election of seven (7) directors of the Company;
To consider a proposal to approve the adoption of the 1996 Long Term
Incentive Plan;
To consider a proposal to approve the adoption of the Stock Purchase
Assistance Plan;
To consider a proposal to approve the adoption of the Directors' Stock
Option Plan;
To consider a proposal to amend the Certificate of Incorporation to
authorize the issuance of preferred stock;
To consider a proposal to amend the Certificate of Incorporation to reduce
the number of authorized shares of Gilbert Associates, Inc. stock;
To consider the proposal to ratify the Board of Directors' selection of
Arthur Andersen LLP as independent auditors for the year 1996; and
For the transaction of such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
ONLY HOLDERS OF RECORD OF ISSUED AND OUTSTANDING SHARES OF CLASS B COMMON
STOCK OF THE COMPANY AT THE CLOSE OF BUSINESS ON APRIL 30, 1996 ARE ENTITLED TO
NOTICE OF, AND TO VOTE AT, THE MEETING. Such stockholders may vote in person or
by proxy. The stock transfer books of the Company will not be closed.
By order of the Board of Directors
Thomas F. Hafer
Secretary
Dated: Reading, Pennsylvania
June 4, 1996
STOCKHOLDERS ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY
IN THE ACCOMPANYING ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME BY A WRITTEN
INSTRUMENT SIGNED IN THE SAME MANNER AS THE PROXY AND RECEIVED BY THE SECRETARY
OF THE COMPANY AT OR BEFORE THE ANNUAL MEETING. IF YOU ATTEND THE MEETING, YOU
MAY, IF YOU WISH, REVOKE YOUR PROXY BY VOTING IN PERSON.
<PAGE>
GILBERT ASSOCIATES, INC.
P.O. BOX 1498 READING, PA. 19603
(610) 856-5500
PROXY STATEMENT ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING - JUNE 26, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Gilbert Associates, Inc. (the "Company")
for use at the Annual Meeting of holders of Class B Common Stock of the Company
to be held at The Sheraton Berkshire Hotel, Woodland & Paper Mill Roads,
Wyomissing, Pennsylvania, at 11:00 A.M. on Wednesday, June 26, 1996, and at any
adjournment thereof. The Proxy Statement and form of Proxy are first being sent
or given to stockholders on or about June 4, 1996.
Only holders of record at the close of business on April 30, 1996 of the
outstanding shares of the Company's Class B Common Stock are entitled to vote at
the meeting. The holders of a majority of the stock issued and outstanding and
entitled to vote there at, present in person or represented by proxy, shall be
requisite for and shall constitute a quorum. Only directors of the Company,
"active employees" of the Company and its subsidiaries in which the Company
owns, directly or indirectly, 100% of the voting shares, and certain trusts for
the benefit of such employees, are entitled to hold Class B Common Stock. On
April 30, 1996, there were outstanding of record 392,521 shares of the Company's
Class B Common Stock. Such eligible stockholders are entitled on all matters to
cast one vote for each share held of record. In addition, there were outstanding
of record on such date 5,889,832 shares of the Company's Class A Common Stock,
excluding treasury shares. Holders of Class A Common Stock are not eligible to
vote at the meeting.
If the enclosed Proxy is appropriately marked, signed and returned in time
to be voted at the meeting, the shares represented by the Proxy will be voted in
accordance with the instructions marked thereon. Signed Proxies not marked to
the contrary will be voted (i) for the election of directors, (ii) for the
proposal to approve the adoption of the 1996 Long Term Incentive Plan, (iii) for
the proposal to approve the Stock Purchase Assistance Plan, (iv) for the
proposal to approve the Directors' Stock Option Plan, (v) for the proposal to
amend the Certificate of Incorporation to authorize the issuance of preferred
stock, (vi) for the proposal to amend the Certificate of Incorporation to reduce
the number of authorized shares of Gilbert Associates, Inc. stock, (vii) for the
proposal to ratify the Board of Directors' selection of Arthur Andersen LLP as
independent auditors for the year 1996 and (viii) as the proxy holders may in
their discretion determine, on any other matter which may properly come before
the meeting or any adjournment or adjournments thereof.
Directors are elected by the affirmative vote of a plurality of the votes
of the shares entitled to vote, present in person or represented by proxy. With
respect to the election of directors, votes may be cast in favor of or withheld
from the nominee. Votes that are withheld will be excluded entirely from the
vote and will have no effect thereon. There is no cumulative voting in the
election of directors. Abstentions with respect to any proposal other than the
election of directors will have the same effect as votes against the proposal,
because the approval requires a vote in favor of the proposal by a majority of
the shares entitled to vote, present in person or represented by proxy.
Abstentions and broker non-votes (described below) are counted in determining
the total number of shares entitled to vote and present in person or represented
by proxy. Broker non-votes, which occur when a broker or other nominee holding
shares for a beneficial owner does not vote on a proposal because the beneficial
owner has not checked one of the
1
<PAGE>
boxes on the proxy card, will have no effect on the outcome of any of the
matters to be voted upon at the meeting.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 1995, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FROM THOMAS F. HAFER, SECRETARY OF THE
COMPANY, AT GILBERT ASSOCIATES, INC., P.O. BOX 1498, READING, PA 19603, (610)
856-5500.
1. ELECTION OF DIRECTORS
A. NOMINEES FOR DIRECTOR
At the meeting, seven directors are to be elected to hold office until the
next Annual Meeting of Stockholders and until their successors are elected and
have qualified. It is the intention of the persons in the accompanying Proxy to
vote all shares represented thereby for the election of the seven nominees
listed below. Any stockholder who wishes to withhold from the proxy holder's
authority to vote for the election of one or more directors may do so by marking
his Proxy to that effect. Should any nominee become unable to accept nomination
or election, the proxy holders may exercise their voting power in favor of such
other person or persons as the Board of Directors of the Company may recommend.
The Board of Directors, however, has no reason to believe that any of the
nominees listed below will be unable to serve as a director. Elections of
directors are to be determined by a plurality vote.
Each of the nominees is now a director of the Company. His present position
with the Company as well as certain other information are set forth below:
<TABLE>
<CAPTION>
Year In Which
First Became
Name Age Position With Company Director
---- --- --------------------- --------
<S> <C> <C> <C>
John W. Boyer, Jr.......... 67 ----- 1984
Timothy S. Cobb............ 54 Chairman of the Board, President 1993
and Chief Executive Officer
Donald E. Lyons............ 66 ----- 1989
Alexander F. Smith......... 67 ----- 1970
Paul H. Snyder............. 49 Vice President and Chief 1995
Financial Officer
James A. Sutton............ 61 ----- 1986
Donald K. Wilson, Jr....... 60 ----- 1990
</TABLE>
Mr. Boyer retired in May 1993 as Chairman of Philadelphia Suburban
Corporation whose principal subsidiary, Philadelphia Suburban Water Company, is
a regulated water utility. Mr. Boyer served in various senior executive
positions with that company since 1981. He is a director of Philadelphia
Suburban Corporation, Betz Laboratories, Inc. and Rittenhouse Trust Company.
Since 1993, Mr. Boyer has been Distinguished Visiting Professor of Finance,
Eastern College, St. Davids, Pennsylvania.
Mr. Cobb has been Chairman of the Board since July 1995, Chief Executive
Officer of the Company since March 1994, and President and Chief Operating
Officer of the Company since October 1993. He served as President of
Gilbert/Commonwealth, Inc., then a subsidiary of the
2
<PAGE>
Company, from January 1991 to September 1993 and as President of GAI-Tronics, a
subsidiary of the Company, from June 1988 to December 1991.
For five years prior to his retirement in 1987, Mr. Lyons served as Chief
Executive Officer and President of the Power Systems Group of Combustion
Engineering, Inc., a supplier of technology, equipment and services to the power
and process industries. Mr. Lyons is also a director of Nuclear Support
Services, Inc.
For more than five years prior to his retirement as President in October
1993 and as Chief Executive Officer of the Company in March of 1994, Mr. Smith
served as President and Chief Executive Officer of the Company. Mr. Smith also
serves as a director of Stratton Monthly Dividend Shares, Inc., Stratton Growth
Fund, Inc. and Stratton Small Cap Yield Fund.
Mr. Snyder has been Chief Financial Officer of the Company since August
1995. He served as Vice President and Chief Financial Officer of The Dreyfus
Corporation from August 1994 until joining the Company. For more than five years
prior to joining Dreyfus, Mr. Snyder served as Senior Vice President and Chief
Financial Officer of Mellon PSFS, a division of Mellon Bank Corporation.
Mr. Sutton is Chairman of the Board of Directors of UGI Corporation, a
diversified Pennsylvania-based natural gas and electric utility with non-utility
operations in propane. He has served in various executive positions with UGI
since 1982. Mr. Sutton is also Chairman of the Board of Directors of Amerigas
Propane Inc.
Mr. Wilson retired in 1994 as Executive Vice President of The Hartford
Steam Boiler Inspection and Insurance Company, which is engaged in insurance
underwriting, investments and engineering. Mr. Wilson had served in various
executive positions with that company since 1970. He is also a director of
Mechanics Savings Bank in Hartford, Connecticut, and Spencer Turbine Company in
Windsor, Connecticut. He is presently serving as a consultant with American
Phoenix Corporation of Connecticut.
B. MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors held a total of ten regular and special meetings
during 1995. Each incumbent director attended at least 75% of the total number
of meetings of the Board and committees of the Board held while he was a member
thereof.
The Board of Directors has established the following committees:
An audit committee consisting of J. A. Sutton, Chairman, D. E. Lyons and D.
K. Wilson, Jr., which held two meetings in 1995. This committee is primarily
concerned with the effectiveness of the Company's internal financial control
systems and of the audits of the Company's financial statements by the Company's
independent accountants. Its duties include recommending the selection of
independent accountants; reviewing the scope of audits to be conducted by
independent accountants and internal auditors and the results of such audits;
and appraising the Company's financial reporting activities and accounting
policies.
An executive development committee consisting of J. W. Boyer, Jr.,
Chairman, J. W. Stratton/1/ and J. A. Sutton, which held five meetings in 1995.
The committee assists the Board in structuring compensation and incentive plans
for management, and assists management in the review of candidates, succession
and development of directors, officers and management. Its duties include
________________________
/1/ Mr. Stratton, who has been a Director of the Company since 1984, has
informed the Company of his decision not to stand for reelection to the Board.
3
<PAGE>
reviewing and recommending to the Board compensation and other benefits for
directors, officers and management; serving as any committee required by
incentive compensation plans for such Company personnel; and reviewing with the
Chief Executive Officer the internal organization and key manpower planning and
development of the Company.
A finance committee consisting of J. W. Stratton, Chairman, D. E. Lyons and
D. K. Wilson, Jr., which held one meeting in 1995. The committee assists the
Board in its duties relating to capital structure and expenditures, financial
plans, allocation of assets, cash management and dividend policy. It also
assists the Board and corporate officials in obtaining and maintaining good
working relationships with financial institutions.
The Board of Directors has not formed a separate standing nominating
committee.
C. BENEFICIAL OWNERSHIP OF EQUITY SECURITIES BY CERTAIN PERSONS
As of March 31, 1996, the number and percentage of equity securities of the
Company beneficially owned by (i) each of the current directors and nominees for
director, (ii) each Executive Officer named in the Summary Compensation Table
below, (iii) all Executive Officers and directors of the Company as a group and
(iv) all five percent (5%) stockholders are set forth in the following table:
<TABLE>
<CAPTION>
Class B Percentage Class A Percentage
Individuals Common Stock of Class (1) Common Stock Of Class(1)
----------- ---------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
J. W. Boyer, Jr....................... --- --- 1,500 *
T. S. Cobb............................ 35,669(2)(3) 7.9 --- ---
T. F. Hafer........................... 11,888(2)(3) 2.6 --- ---
D. E. Lyons........................... 2,960 * --- ---
A. F. Smith........................... 70,818 15.7 5,426(4) *
P. H. Snyder.......................... 6,432(3) 1.4 --- ---
J. W. Stratton........................ --- --- 2,500 *
J. A. Sutton.......................... 2,166 * 266 *
D. K. Wilson, Jr...................... 1,895 * --- ---
All Executive Officers and directors
as a group........................... 131,828 29.3 9,692 *
Bankers Trust Company 237,723(5) 52.8 --- ---
R. S. Newlan 47,311(6) 10.5 --- ---
G. E. Troendle 48,328(6) 10.7 --- ---
</TABLE>
________________________
Note: This table does not include shares of restricted Class B stock granted to
Messrs. Cobb, Snyder and Hafer on March 15, 1996. The awards of 18,500, 6,000
and 6,000, respectively, were authorized and approved by the Board of Directors
subject to, and contingent upon, Stockholder approval at the June 26, 1996
Annual Meeting. Also not reflected in this table are approximately 40,000 shares
of the Company's stock, held by former employees of the Company's subsidiary,
United Energy Services Corporation (UESC). Due to the ongoing wind-down of
UESC's operations, the approximately 40,000 shares of Class B Common Stock held
by former UESC employees converted to Class A shares of Common Stock.
(1) Asterisks indicate beneficial ownership of less than 1% of the outstanding
shares of the class.
4
<PAGE>
(2) Includes options held by Mr. Cobb and Mr. Hafer to purchase 22,075 shares
and 6,375 shares, respectively, of Class B Common Stock, either currently
exercisable or exercisable within 60 days of March 31, 1996.
(3) Includes shares purchased on behalf of Mr. Cobb, Mr. Snyder and Mr. Hafer
under the Company's Stock Purchase Program from contributions made through
March 31, 1996 and the Payroll Stock Ownership portion of the Retirement
Savings Plan.
(4) Includes 468 shares owned of record and beneficially by Mr. Smith's wife,
as to which shares he disclaims beneficial ownership.
(5) Bankers Trust Company, 280 Park Avenue, New York, New York 10017 has
advised the Company that at March 31, 1996 it held through controlled
nominees 237,723 shares of the Company's Class B Common Stock, or 52.8% of
the class then outstanding, as trustee on behalf of employees pursuant to
various employee benefit plans of the Company.
(6) The shares owned by R.S. Newlan and G.E. Troendle, respectively, President
and Executive Vice President of Resource Consultants, Inc., 1960 Gallows
Road, Vienna, Virginia 22182, a subsidiary of the Company, include (i)
options held by Messrs. Newlan and Troendle to purchase 13,625 shares and
10,575 shares, respectively, of Class B Common Stock exercisable within 60
days and (ii) shares purchased on each of their behalves under the
Company's Stock Purchase Program and the Company's Retirement Savings Plan
from contributions made through March 31, 1996.
D. EXECUTIVE COMPENSATION AND OTHER INFORMATION
Board Committee Report on Executive Compensation
The Executive Development Committee of the Board assists the Board in
structuring compensation arrangements and incentive plans for the officers and
senior management of the Company. Decisions on compensation and the grant of
incentives are generally made by the three-member Committee, each of whom is a
non-employee director. All decisions by the Committee relating to the
compensation and incentives for the Company's officers are submitted to the full
Board for ratification or revision. Set forth below is the Committee's report on
the 1995 compensation of the Executive Officers of the Company.
Compensation Policies Toward Executive Officers
In December 1989, the Committee undertook an in-depth review and revision
of the Company's compensation policies for the officers and management of the
Company and its subsidiaries. During that year Sibson & Company, Inc.,
compensation consultants, were retained to study and report on the Company's
existing compensation practices.
As a result, the Committee determined that, for 1990 and subsequent years,
the compensation policy of the Company would be as follows:
. Salary will be the basic compensation mechanism.
. The Annual Incentive Bonus Program, discussed below, will be used to
provide specific growth oriented incentives and reward above normal
performance.
. Grants of stock options will be used to align management's interests with
stockholders' interests and encourage long-term investment and interest in
overall Company performance.
5
<PAGE>
. Other programs will be used to encourage ownership and retention of Company
stock by management personnel and employees generally.
The Committee applies these policies directly to the Executive Officers,
presidents of the Company's subsidiaries and certain other management personnel.
The Committee also reviews the compensation policies and practices of the
subsidiaries for general alignment and appropriateness across and between
subsidiary units. The Committee engaged Sibson & Company to upgrade its earlier
study during 1994 and 1995, and the compensation consultants recommended
continuation of the basic program as outlined above through 1995.
Relationship of Performance Under Compensation Plans
Salaries
Each year the Committee examines the salaries of the officers of the
Company. These are compared with information available about salaries in the
Company's industry, inflation and the performance of the individuals. Depending
upon the officer involved, the Committee may utilize salary information relating
to comparable companies or companies in other businesses in which subsidiaries
of the Company are engaged. The companies used for these purposes include some,
but not all, of the companies in the Peer Group shown in the tabular
representation of the performance graph below. As necessary, a number of other
companies not included in such index are also used. The various factors
considered are not formally weighted and the Committee uses subjective judgment
in making its decisions.
If a salary increase is deemed justified, it is recommended to the Board.
Mr. Cobb's percentage increase for 1995 was 7.1%. Mr. Hafer's increase of 13.9%
for 1995 was higher than usual due to the increased salary associated with his
promotion to Vice President in September 1995. Mr. Itin retired from the Company
in April of 1995 and Mr. Snyder joined the Company in August of 1995. The salary
levels for Mr. Cobb and the other Executive Officers were approximately at the
industry median.
Annual Bonus Program
In addition to the Executive Officers, the officers and key management of
the Company and its subsidiaries participate in an annual bonus program. Under
the program, incentive bonus awards are made annually based on performance
measured against predetermined targets. For 1995, the targets for Executive
Officers were based on achieving both current financial performance objectives,
and strategic and operational objectives relating to longer term earnings, with
greater weight being given to the current financial performance objectives. In
1995, the current financial performance objectives were based upon earnings per
share of the Company.
In 1995, Mr. Cobb had a bonus opportunity equal to 100% of his salary. He
was awarded a bonus of 25.5% of his salary. Mr. Hafer had a bonus opportunity
equal to 50% of his salary in 1995. He was awarded a bonus of 27.1% of his
salary. Mr. Snyder's bonus was 31.6% of his annual 1995 salary which was agreed
upon as a condition of joining the Company.
Stock Incentive Plan
In 1995, stock options were granted to 9 employees, managers and officers
of the Company and its subsidiaries. The Executive Officers and others each
received options potentially exercisable for shares of the Company's common
stock. The options granted to Mr. Cobb represented 43.2% of the total options
granted. The grants to Mr. Cobb and the others were based primarily on each
recipient's position and individual performance although factors are not
formally weighted and the Committee uses subjective judgment in making award
grants. Options become exercisable based upon criteria
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<PAGE>
established by the Committee. The options granted in 1995 cannot be exercised
for at least two years following the grant and are exercisable over fixed
periods, none exceeding ten years from the date of grant. The exercise price for
each option was equal to the market price of the stock at the time the option
was granted.
It is the intent of the Company that stock purchased as a result of
exercise of any such options will be held as a long-term personal asset. The
Company believes that this will better align management's interest with
stockholders' interests in the future performance of the Company; however, there
are no contractual or other restrictions limiting the disposition of such stock.
EXECUTIVE DEVELOPMENT COMMITTEE
JOHN W. BOYER, JR., CHAIRMAN JAMES W. STRATTON JAMES A. SUTTON
PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on the
Company's common stock over the last five fiscal years as compared to the
returns of the NASDAQ Market Index and those companies contained within the
Standard Industry Code which must file an Annual Report with the Securities and
Exchange Commission and are publicly traded. The graph assumes $100 was invested
on December 30, 1990 in each company involved and all dividends are reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/90 12/91 12/92 12/93 12/94 12/95
Gilbert Associates, Inc. 100 89 91 73 71 66
PEER GROUP 100 104 89 74 53 74
NASDAQ STOCK MARKET - US 100 161 187 215 210 296
</TABLE>
(PERFORMANCE GRAPH TO BE INSERTED)
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for fiscal 1993, 1994 and 1995, the cash
compensation paid by the Company, as well as other compensation paid or accrued
for those years, to the Executive Officers of the Company in all capacities in
which they served:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Securities
Compensation Underlying All Other
Name and ------------
Principal Position Year ($)Salary ($)Bonus Options/SAR's(1) ($)Compensation
------------------ ---- --------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
T. S. Cobb................ 1995 $374,998 $95,700 60,000 28,904 (2)
President & Chief 1994 358,762 77,000 10,000 13,904
Executive Officer 1993 284,538 30,700 2,500 17,733
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
P. H. Snyder 1995 69,420 60,000 10,000 30,357 (2)
Vice President and 1994 --- --- --- ---
Chief Financial Officer 1993 --- --- --- ---
T. F. Hafer 1995 169,808 50,200 14,000 23,904 (2)
Vice President, General 1994 147,389 27,000 1,500 12,173
Counsel and Secretary 1993 129,166 7,400 750 9,818
J. R. Itin 1995 149,940 --- --- 193,720 (2)(4)
(former Vice President 1994 272,541 49,500 2,500 28,446
and Chief Financial 1993 262,515 44,000 2,500 35,176
Officer) (3)
</TABLE>
____________
(1) See Note 1 to 1994 Stock Option Grants table below.
(2) Includes: (a) for Mr. Cobb, Mr. Snyder, Mr. Hafer, and Mr. Itin Company
contributions of $10,500, $4,421, $10,500 and $6,759, respectively, to
their accounts under the Company's Retirement Savings Plan and $3,404,
$1,736, $3,404 and $2,019, respectively, to their accounts in the Company's
Stock Purchase Program; (b) for Mr. Itin, $8,300, as the above market
portion of interest credits on salary deferred under a deferred
compensation arrangement with the Company; (c) for Mr. Snyder, a one-time
incentive bonus of $20,000 granted as a condition of his employment upon
joining the Company; and (d) for Mr. Cobb, Mr. Snyder and Mr. Hafer,
taxable expense reimbursements of $15,000, $4,200 and $10,000,
respectively.
(3) Mr. Itin retired as Vice President, Chief Financial Officer and a Director
of the Company in April 1995.
(4) Includes $140,000 paid to Mr. Itin in connection with his retirement, and
$36,642 paid by the Company pursuant to the Company's Benefit Equalization
Plan (See "Employment Contracts and Termination of Employment Arrangements"
below).
STOCK OPTIONS
The following table contains information concerning the stock options
granted to Executive Officers during 1995 under the Company's 1989 Stock Option
Plan:
Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------------------------
Percent of Value at Assumed
Number of Total Annual Rates of
Securities Options/SAR's Stock Price
Underlying Granted to Appreciation for
Options/SAR's Employees in Exercise Price Expiration Option Term ($)
-------------------------
Name Granted(1) 1995 Per Share ($) Date 5% 10%
---- ---------- ------------- ------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb 30,000 21.6 13.25 4/28/02 161,783 377,228
30,000 21.6 12.50 7/28/05 235,875 597,750
T. F. Hafer 7,000 5.0 13.25 4/28/02 37,749 88,020
7,000 5.0 12.50 7/28/05 55,038 139,475
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
P. H. Snyder 10,000 7.2 12.00 8/7/05 75,480 191,280
J. R. Itin --- --- --- --- --- ---
</TABLE>
_____________
(1) All options have been granted under the 1989 Gilbert Stock Option Plan and
are exercisable for Class B Common Stock. The exercise price is the fair
market value of the stock on the date of grant.
Aggregate Option Exercises and Year-End Values
The following table shows stock options exercised by Executive Officers
during 1995, including the aggregate value of any gains on the date of exercise.
In addition, this table includes the number of shares covered by both
exercisable and non-exercisable stock options as of December 29, 1995. Also
shown are the values for "in-the-money" options which represent the positive
spread between the exercise price of outstanding stock options and the year-end
price of Company common stock ($12.50).
Aggregated Option/SAR Exercises in Last Fiscal Year,
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money Options/
Options/SARs SARs at
at FY-End (#) FY-End ($)
Shares
Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable(1) Unexercisable(1)
---- ----------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
T. S. Cobb ---- ---- 16,375/ 70,000 ---- / ----
T. F. Hafer ---- ---- 4,875/ 15,500 ---- / ----
P. H. Snyder ---- ---- ---- / 10,000 ---- / 5,000
J. R. Itin 18,750 28,125 ---- / 2,500 ---- / ----
</TABLE>
____________
(1) Future exercise is subject to continued employment by the Company for up to
three years, subject to acceleration for retirement, death or total
disability.
COMPENSATION COMMITTEE INTERLOCKS
There were no Executive Development Committee interlocks during 1995.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has no formal contracts of employment with its Executive
Officers. In 1989, the Board of Directors adopted a Benefit Equalization Plan
which provides Mr. Itin and others with supplemental retirement income. None of
the current Executive Officers are presently entitled to receive benefits under
the Plan. Payments under the Plan are made only to the extent that income from
Social Security, the Company-paid portions of Company retirement plans, and
retirement income plans of other employers do not equal 50% of an individual's
average annual salary for the three highest paid years. Mr. Itin began
receiving annual benefits of $73,284 upon his retirement in
9
<PAGE>
July, 1995. The Plan is unfunded and terminates for an individual upon
termination of employment for any reason other than retirement, death or
disability.
The deferred compensation arrangement and the Benefit Equalization Plan
referenced in the Summary Compensation Table (Notes 2 and 4 respectively)
provide that, in the event of a change of control of the Company, as defined in
such plan, the payments due to Mr. Itin will be accelerated. The accelerated
payments are essentially the present value of the stream of payments which would
have been made had there been no such change of control.
DIRECTOR COMPENSATION
Each Board member, other than officers of the Company or its subsidiaries,
receives an annual retainer of $18,000; committee chairmen receive an additional
$5,000. Each such director also receives $1,000 for each committee or Board
meeting attended. Directors may, at their election, defer receipt of payment of
directors' fees. Deferred directors' fees accrue interest at the prime rate of
interest charged by a major New York money center bank.
2. PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 LONG TERM INCENTIVE PLAN
On February 28, 1996, the Board of Directors of the Company adopted the
Long-Term Incentive Plan as approved and recommended by the Executive
Development Committee of the Board, subject to stockholder approval.
The following general description of certain features of the Plan is
qualified in its entirety by reference to the complete text of the Plan which
appears as Exhibit A to this Proxy Statement.
Summary of the Plan
Purposes
The purposes of the Plan are to provide incentive compensation to officers,
executives and other key employees who contribute to the growth and success of
the Company and its Subsidiaries; to attract and retain individuals of
outstanding ability; and to align the interests of such officers, executives and
other key employees with the interests of the Company's stockholders.
Term
The Plan is effective March 15, 1996, subject to approval by the
stockholders of the Company, and will terminate ten years thereafter. No awards
may be granted after that date; however, Awards outstanding on that date may be
exercised and/or paid in accordance with their terms.
Administration
The Plan is to be administered by a committee of three or more members of
the Board of Directors (the "Committee"). Each member of the committee is
required to be a "disinterested person," within the meaning of Rule 16b-3 under
the Securities and Exchange Act of 1934, as amended, as well as an "outside
director," within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Board's Executive Development Committee will
initially serve as the Plan's committee. Subject to the terms of the Plan, the
Committee will have the exclusive authority to interpret, administer and make
determinations under the Plan, including the exclusive authority to select
Participants and make Awards. The Committee also will have the authority to
establish rules and regulations for purposes of administering the Plan.
10
<PAGE>
Participation and Awards
Participation in the Plan is limited to employees holding positions of
significant responsibility or whose performance or potential will benefit the
future success of the Company and who are selected from time to time by the
Committee. The granting of Awards under the Plan is at the discretion of the
Committee; therefore, it is not possible to indicate which employees may receive
Awards under the Plan in the future or the amount of the Awards. Approximately
40 employees are initially eligible for selection by the Committee to receive
Awards, however, additional participants may be added as is necessary or
appropriate based upon the size and structure of the Company. Stock options,
restricted stock and other Awards were granted under the Plan in early 1996
subject to shareholder approval of the Plan. See "New Plan Benefits," below.
Types of Awards
Awards under the Plan may be in the form of any of the following: (A) Non-
statutory Stock Options and Incentive Stock Options; (B) Stock Appreciation
Rights; (C) Restricted Stock; (D) Stock Equivalent Units; (E) Dividend
Equivalents; (F) Performance Units; and (G) Other Stock-Based Awards.
Shares Available for Awards and Closing Quotation
The maximum number of shares of stock (Class A or Class B Common Stock, or
both) which may be issued for all purposes under the Plan is 500,000. Of this
total amount, the number of shares available for Awards in the form of
Restricted Stock is 230,000. The maximum number of shares subject to Options
and/or Stock Appreciation Rights under the Plan awarded to any one Participant
may not exceed twenty percent (20%) of the number of shares available under the
Plan, and no more than 40,000 shares of Restricted Stock may be awarded to any
one Participant in any one year. Shares of Common Stock with respect to the
unexercised or undistributed portion of any terminated or forfeited Award, and
shares of Common Stock tendered in payment of the purchase price of Common Stock
subject to option, may be reissued under the Plan.
As of March 15, 1996, the price of the Company's Class A Common Stock as
reported on NASDAQ was $12.50 (based upon the March 15, 1996 Wall Street Journal
reflecting the closing price as of March 14, 1996).
Stock Options
The Plan provides that the Option Price pursuant to which Common Stock may
be purchased will be not less than 100% of the fair market value of the
Company's Class A Common Stock on the date the Stock Option is awarded. The term
of each Option, which may not exceed ten (10) years, will be fixed by the
Committee and evidenced in an Award Agreement. Payment of the Option Price may
be made in cash, check, through the delivery of shares of Common Stock ("Owned
Shares") having fair market value on the exercise date equal to the Option Price
or such other method as may be permitted by the Committee, including but not
limited to a promissory note of the Participant and the simultaneous exercise of
Stock Options and sale of Common Stock acquired upon the exercise of such Stock
Options pursuant to a brokerage arrangement. Awards of certain Stock Options
also may include Reload Options. A Reload Option is a Stock Option to purchase
shares of Common Stock equal to the number of shares of Common Stock delivered
in payment of the exercise price (including, in the discretion of the Committee,
the number of shares tendered to the Company to satisfy any withholding tax
liability arising upon exercise) and is deemed to be granted upon such delivery
without further action by the Committee. A Reload Option is subject to the same
terms of the original Stock Option, including the term thereof; however, the
exercise price of the Reload Option must equal the fair market value of the
Class A Common Stock on the date of grant of the Reload Option.
11
<PAGE>
Stock Appreciation Rights
The Committee may award SARs either free standing as an additional right or
in conjunction with any other Award as an alternative right. The exercise of a
Stock Option granted in conjunction with an SAR terminates the related SAR to
the extent of the shares acquired upon exercise of the Stock Options.
Conversely, the exercise of an SAR granted in conjunction with a Stock Option
terminates the related Stock Option to the extent of the shares with respect to
which such SAR is exercised. The exercise of an additional SAR has no effect on
the exercisability of any other Award, and the exercise of any other Award has
no effect on the exercisability of an additional SAR.
Upon the exercise of an SAR, the Participant will receive the excess of the
Fair Market Value of a share of Common Stock on the exercise date over 100% of
the fair market value of a share of Common Stock on the date the Award was made.
Restricted Stock
The Committee may make Awards of Restricted Stock on such terms, conditions
and restrictions as it determines, which may include, but are not limited to,
continuous service with the Company, achievement of specific business
objectives, and other measurements of individual, business unit, or Company
performance (including earnings per share, net profits, total shareholder
return, cash flow, return on shareholders' equity and cumulative return on net
assets employed). Such terms and conditions may include the manner in which
such Restricted Stock is held, the extent to which the holder of such shares has
rights of a stockholder and the circumstances under which such shares will be
forfeited. None of the shares subject to a Restricted Stock Award may be
assigned, transferred, pledged or sold by the Participant until the termination
of restrictions relating thereto.
Stock Equivalent Units
The Committee may make Awards of Stock Equivalent Units on such terms,
conditions and restriction as it determines, which may include, but are not
limited to, continuous service with the Company, achievement of specific
business objectives, and other measurements of individual, business unit, or
Company performance (including earnings per share, net profits, total
shareholder return, cash flow, return on shareholders' equity and cumulative
return on net assets employed). Such terms and conditions may include the
manner in which such Stock Equivalent units are held and the circumstances under
which such units will be forfeited. A Stock Equivalent Unit is an Award unit
having a value equivalent to the Fair Market Value of one share of Common Stock,
the value of which fluctuates with that of the Common Stock from which such unit
derives its value.
The Committee intends to establish performance criteria associated with
grants of Stock Equivalent Units to Participants who may be "covered employees,"
as such term is defined in Section 162(m) of the Code, which are intended to
qualify under such section with regard to preserving the Company's tax deduction
for certain compensation paid in excess of $1 million, as discussed below under
the heading "Income Tax Aspects of the Plan." No more than 25,000 Stock
Equivalent Units may be granted to any Participant in any one year.
Dividend Equivalents
The Committee may provide in the Award Agreement that Awards accrue
Dividend Equivalents that shall accrue and be payable, subject to any additional
conditions or limitations imposed by the Committee, in the amount of and at such
times as dividends are paid by the Company on shares of Common Stock.
12
<PAGE>
Performance Units
The Committee may make Awards of Performance Units, which are based on the
attainment over a specified period of specific business objectives and other
measures of individual, business unit or Company performance, as it may
determine, including but not limited to, earnings per share, total shareholder
return, cash flow, return on shareholders' equity, and cumulative return on net
assets employed.
The Committee intends to establish performance criteria associated with
grants of Performance Units to Participants who may be "covered employees," as
such term is defined in Section 162 of the Code, which are intended to qualify
under such section with regard to preserving the Company's tax deduction for
certain compensation paid in excess of $1 million, as discussed below under the
heading "Income Tax Aspects of the Plan." The maximum amount that may be paid
to any Participant in any one year with respect to an Award of Performance Units
shall be $500,000.
Other Stock-Based Awards
The Committee may grant other stock-based Awards under the Plan that
provide the Participants with Common Stock or the right to purchase Common
Stock, or provide other incentive Awards that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in or convertible into shares of Common Stock.
Settlement of Awards
At the Committee's discretion, Awards may be settled in cash, shares of
Common Stock, other awards, or in combinations thereof. The Committee may also
require or permit Participants to defer the issuance of shares or the settlement
of Awards in cash under such rules and procedures as it may establish. The
Committee may determine the manner in which Federal, state or local tax
withholding obligations of the Company will be satisfied including, but not
limited to, the reduction in the amount of stock or cash to be delivered or paid
to the Participant or reimbursement by the Participant in cash.
Income Tax Aspects of the Plan
$1 Million Limitation on Deductibility
The performance goals established for awards of Performance Units and Stock
Equivalent Units are intended to qualify such Awards as "performance-based
compensation" as defined in Section 162(m) of the Code in order to preserve tax
deductions by the Company with respect to any such compensation in excess of $1
million paid to "covered employees," i.e., the Company's Chief Executive Officer
and the four highest compensated other executive officers of the Company who are
officers on the last day of the year in question.
To qualify stock options and SARs as "performance-based compensation" for
Federal Income tax purposes, the Plan limits the total number of shares of
Common Stock subject to Stock Options and/or SARs awarded to any one Participant
as set forth above.
Unless made subject to the attainment of performance goals with respect to
one or more of the performance criteria described above, awards of Restricted
Stock to covered employees will not qualify as "performance-based compensation"
and will be subject to the limitation on deductibility under Section 162(m) of
the Code.
13
<PAGE>
Federal Income Tax Consequences
The rules governing the tax treatment of Stock Options, Stock Appreciation
Rights, Restricted Stock, Stock Equivalent Units, Dividend Equivalents and
Performance Units are complex. Therefore, the description of the Federal income
tax consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their applications may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the Federal income tax laws.
Incentive Stock Options. With respect to ISOs, generally, the Participant
will recognize no taxable gain or loss when the ISO is granted or exercised, and
upon exercise, the spread between the fair market value and the exercise price
will be an item of tax preference for purposes of the Participant's alternative
minimum tax.
If the shares acquired upon the exercise of an ISO are held for at least
one year after exercise and two years after grant (the "Holding Periods"), the
Participant will recognize any gain or loss realized upon such sale as long-term
capital gain or loss. The Company will not be entitled to a deduction. If the
shares are not held for the Holding Periods, the Participant will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of Common Stock on the date the option is exercised.
The Company will be entitled to a deduction equal to the amount of any ordinary
income so recognized. If the shares are not held for the Holding Periods and the
amount realized upon sale is less than the grant price, such difference will be
a capital loss to the Participant.
Non-Qualified Stock Options. With respect to Non-Qualified Stock Options,
the Participant will recognize no taxable income at the time of grant. Upon
exercise of a Non-Qualified Stock Option, the Participant will recognize
ordinary income equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise. The Participant will
recognize as a capital gain or loss any profit or loss realized on the sale or
exchange of any share disposed of or sold. The Company will be entitled to
deduct an amount equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise.
Stock Swaps. If previously owned shares are used to exercise Non-Qualified
Stock Options, no additional income results unless other property, including
money, is received by the Participant in the exchange. Assuming no gain or loss
is recognized, the Participant's tax basis and holding period of the previously
owned shares will be carried over to the equivalent number of shares received on
exercise. Any additional shares received upon exercise will result in the
Participant recognizing taxable compensation equal to the fair market value of
the shares on the date of exercise. The tax basis of the additional shares will
be equal, in the aggregate, to the taxable compensation recognized by the
Participant plus any cash paid. The holding period will begin on the day after
the tax basis of the shares is determined. However, if the previously owned
shares had been acquired on the exercise of an Incentive Stock Option and the
holding period requirement for those shares was not satisfied at the time they
were used to exercise this option, such use would constitute a disposition of
such previously owned shares resulting in the recognition of ordinary income as
described above.
Reload Stock Options. The Participant will recognize no income on the grant
of any Reload Stock Option. On exercise of a Reload Option, the tax consequences
to the Participant and the Company are the same as that for a Non-Qualified
Stock Option.
Stock Appreciation Rights. Upon grant of an SAR, the Participant realizes
no taxable income and the Company receives no deduction. The Participant
realizes income at the time of exercise, if the Award becomes vested and is no
longer subject to forfeiture, and the Participant is entitled to
14
<PAGE>
receive the value of the award. The Company receives a deduction of the same
amount in the same year the Participant recognizes income.
Restricted Stock. A Participant granted shares of Restricted Stock is not
required to include the value of such shares in income until the first time such
Participant's rights in the shares are transferable or are not subject to a
substantial risk of forfeiture, whichever occurs earlier, unless such
Participant timely files an election under Code Section 83(b) to be taxed on the
receipt of the shares. In either case, the amount of such income will be equal
to the excess of the fair market value of the stock at the time the income is
recognized over the amount (if any) paid for the stock. Subject to Code Section
162(m), as described above, the Company will generally be entitled to a
deduction, in the amount of the ordinary income recognized by the Participant,
for the Company's taxable year in which the Participant recognizes such income.
Stock Equivalent Units. A Participant granted Stock Equivalent Units
recognizes income in the amount of the award of those units when they vest and
are no longer subject to forfeiture and he is entitled to receive the value of
the award. The Company receives a deduction for the same amount in the year
that income is recognized by the Participant.
Dividend Equivalents. A Participant granted Dividend Equivalents recognizes
income in the amount of the award of those units when they vest and are no
longer subject to forfeiture and he is entitled to receive the value of the
award. The Company receives a deduction for the same amount in the year that
income is recognized by the Participant. However, the deduction with respect to
Awards of Dividend Equivalents to Covered Employees will be subject to the $1
million limitation under Code Section 162(m).
Performance Units. A Participant granted Performance Units recognizes
income in the amount of the award of those units when they vest and are no
longer subject to forfeiture and he is entitled to receive the value of the
award. The Company receives a deduction for the same amount in the year that
income is recognized by the Participant.
Other Provisions
In the event of a Change of Control, as defined in the Plan, in addition to
any action required or authorized by the terms of an Award Agreement, the
Committee may, in its sole discretion, accelerate time periods for purposes of
vesting in, or realizing gain from, any outstanding Award, offer to purchase any
outstanding Award from the holder for its equivalent cash value, or make
adjustments or modification to outstanding Awards as to maintain and protect the
rights and interests of Participants.
No Award or deferred amount under the Plan shall be transferable by a
Participant other than by will or laws of descent and distribution. The Plan
also provides for adjustments upon certain changes in the stock, for tax
withholdings and for non-uniform determination by the Committee.
The Plan became effective on March 15, 1996, subject to approval by the
stockholders of the Company.
The Board of Directors may at any time amend, suspend or terminate the Plan
provided that the Board intends that no amendment shall, without shareholder
approval, effectuate a change for which shareholder approval is required in
order that transactions under the Plan continue to qualify under Rule 16b-3
under the Securities Exchange Act of 1934.
15
<PAGE>
NEW PLAN BENEFITS
On February 28, 1996, the Committee granted Awards as reflected in the
following table, subject to stockholder approval of the Plan at the 1996 Annual
Meeting. If the Plan is not approved by the Company's stockholders, these
Awards will be void and of no effect.
GILBERT ASSOCIATES, INC.
LONG TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
Options(1) Restricted Stock(2) Performance Units(3)
--------------------- ------------------- ------------------------
Value of
Underlying Dollar Dollar Number
Name and Position Securities(4) Number Value(4) Number Value of Units
- -------------------------------- ------------- ------ ----------- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb, President & CEO $462,500 37,000 $231,250 18,500 --- ---
P. H. Snyder, Vice President & 150,000 12,000 75,000 6,000 --- ---
CFO
T. F. Hafer, Vice President, 150,000 12,000 75,000 6,000 --- ---
General Counsel & Secretary
All Executive Officers as a 762,500 61,000 381,250 30,500 --- ---
Group
All Other Employees 202,500 16,200 50,000 4,000 120,000 1,200
as a group
</TABLE>
___________
/1/ All options will become exercisable as follows: 50% on the second
anniversary of the date of grant and 100% on the third anniversary of the
date of grant, unless vesting is accelerated as a result of a change in
control or due to death, disability or, at the discretion of the Committee,
retirement. All options include a "reload" option feature, as described
above. All options were granted at $12.50, which is 100% of the fair market
value of a share of Class A Common Stock on March 15, 1996, (based upon
the March 15, 1996 Wall Street Journal reflecting the closing price as of
March 14, 1996).
/2/ Shares of restricted stock will vest on the tenth anniversary of the date
of grant unless vesting is accelerated as a result of a change in control
or due to death, disability or, at the discretion of the Committee,
retirement. Vesting will be accelerated with respect to some or all of the
shares to the extent that cumulative earnings per share goals are achieved
for the 1996-1998 performance period. Dividends accrue on shares of
restricted stock and are paid when and to the extent such shares vest.
/3/ Performance units are granted as of the beginning of each fiscal year and
are earned based on performance over a three year period. Each Performance
Unit has a target value of $100 and a maximum value of $200. Performance
measures and goals may vary among business units. The performance measures
for fiscal 1996-1998 are cumulative pre-tax earnings and cumulative return
on assets employed. All performance units lapse upon termination of
employment [for any reason].
/4/ Based on the March 15, 1996 price of the Company's Class A Common Stock of
$12.50 (based upon the March 15, 1996 Wall Street Journal reflecting the
closing price as of March 14, 1996).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996 LONG TERM
INCENTIVE PLAN.
16
<PAGE>
3. PROPOSAL TO APPROVE THE ADOPTION OF THE STOCK PURCHASE ASSISTANCE PLAN
On February 28, 1996, the Board of Directors adopted the Gilbert
Associates, Inc. Stock Purchase Assistance Plan (the "Plan"), subject to
approval by the Company's stockholders. The following summary of the Plan is
qualified in its entirety by reference to the complete text of the Plan set
forth in Exhibit B to this Proxy Statement.
Purpose
The purpose of the Plan is to promote the long-term interests of the
Company and its stockholders by further encouraging and assisting its officers
and key executives to invest in the Company's Stock, with the intention of
further aligning their interests and views as stockholders with other
stockholders of the Company. The Board believes that a meaningful level of stock
ownership will provide these employees with an additional incentive to use their
best efforts to increase the value of the Company. The Board also believes that
the Plan will enhance the Company's ability to recruit and retain persons who
have special competence to contribute to the Company's success.
Administration
The Plan is to be administered by a committee of three or more members of
the Board of Directors (the "Committee"). Each member of the committee is
required to be a "disinterested person," within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, as well as an "outside
director," within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Board's Executive Development Committee will
initially serve as the Plan's committee. Subject to the terms of the Plan, the
committee is authorized to determine eligibility for loans, the amount of each
loan, and the terms and conditions of repayment. The Committee also has the
authority to interpret the Plan and to establish rules and regulations for
purposes of administering the Plan.
Eligibility
Only officers and other key executives of the Company and certain
subsidiaries who, in the judgment of the committee, are or will be in a position
to contribute significantly to the long-term growth and success of the Company,
are eligible to receive loans under the Plan.
General Terms
The Plan authorizes the Committee to extend Company loans to selected key
executives of the Company and certain subsidiaries for the purpose of acquiring
Company stock, including the exercise of employee stock options. The Plan also
authorizes loans to fund the payment of taxes incurred in connection with the
grant of Company stock or the exercise of stock options as well as to refinance
loans incurred to purchase Company stock.
The committee is authorized to establish the terms of each loan offered to
key executives under the Plan, provided that no loan may exceed the fair market
value of the shares of Common Stock purchased with the loan proceeds. All loans
will be full recourse loans. Each loan must be evidenced by a promissory note
from the key executive and must be secured by all or a portion of the shares
purchased with the loan proceeds. The Committee intends that the rate of
interest on each loan approximate the Company's cost of borrowing. In no event,
however, will the rate of interest be less than the lowest prevailing rate of
interest that would avoid imputed interest under Section 7872 of the Code. All
loans must be repaid in full on or before the date established by the Committee
at the time the loan is made, subject to the authority of the committee to
extend the time for repayment. The Plan
17
<PAGE>
requires the immediate payment of a loan upon a key executive's termination of
employment with the Company or his or her default in payment of any loan under
the Plan.
The transfer of shares of Company stock acquired with the proceeds of a
loan under the Plan will be subject to restrictions on transfer and
assignability during the period of the loan. The committee is authorized to
waive these transfer restrictions in situations where the committee determines
that the justification for the waiver is not inconsistent with the purpose of
the Plan.
Loan Limits
The Plan establishes limits on the aggregate amount of loans that may be
made to all participants in the Plan, as well as on the amount of loans that can
be made to any one executive. No loans may be made under the Plan if the
aggregate principal amount of all outstanding loans under the Plan would exceed
1.5% of the Company's consolidated assets, subject to the Board's authority to
increase this amount if the number of key executives eligible to receive loans
under the Plan is increased. Also, unless otherwise determined by the committee,
the aggregate principal amount of all loans to an employee may not exceed 200%
of the average of his or her annual base salary.
Forgiveness of Loans
The Plan authorizes the Board, upon recommendation from the Committee, to
forgive: (1) all the principal and accrued interest on any outstanding loan to
key executives upon a Change in Control of the Company, and (2) up to 50% of the
principal amount of a loan and all accrued interest on the forgiven principal
amount upon the death or disability of a key executive.
Termination of Amendment of the Plan
The Board may amend, discontinue, or terminate the Plan at any time;
however, no amendment, discontinuance or termination may alter or otherwise
affect the terms and conditions of any outstanding loan without the written
consent of the key executive. In addition, without the proper approval of the
stockholders of the Company, no amendment may change the purpose of the Plan or
the purposes for which loans may be extended to key employees, materially
increase the aggregate loan limits, or change the definition of "Key Executives"
for purposes of expanding materially the eligibility of employees to receive
loans under the Plan.
Federal Tax Consequences
The following summarizes the consequences of the extension and repayment of
loans under the Plan for federal income tax purposes, based on management's
understanding of existing federal income tax laws. This summary is necessarily
general in nature and does not purport to be complete. Also, state and local
income tax consequences are not discussed, and may vary from locality to
locality.
Based on the terms and conditions of the loans that may be made under the
Plan, key executives will not recognize any compensation upon the extension of a
loan. If any principal or interest is forgiven, the amount of the forgiveness
will be recognized as ordinary income to the key executive. The Company will be
entitled to a corresponding deduction in the year in which the key executive
recognizes any ordinary income under the Plan.
Plan Loans
At present, no loans have been granted under the Plan. However, upon
stockholder approval of the Plan, the Company intends to offer loans to certain
of its officers and key executives during 1996.
18
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK PURCHASE
ASSISTANCE PLAN.
4. PROPOSAL TO APPROVE THE ADOPTION OF THE THE DIRECTORS' STOCK OPTION PLAN
On February 28, 1996, the Board of Directors of the Corporation adopted the
Directors' Stock Option Plan as approved and recommended by the Executive
Development Committee of the Board, subject to stockholder approval.
The following Summary of the Plan is qualified in its entirety by reference
to the complete text of the Plan, which appears as Exhibit C to this Proxy
Statement.
SUMMARY OF THE PLAN
Purpose
The purpose of the Plan is to permit the granting of stock options to
Directors at an exercise price less than market value at the date of grant as an
alternative to the payment of directors' fees in cash, thereby advancing the
interests of the Company by encouraging and enabling the acquisition of the
Common Stock by Directors, upon whose judgment and ability the Company depends
for its long term growth and development. Accordingly, the Plan is intended to
promote a close identity of interests between the Company, its Directors and its
stockholders, as well as to provide a means to attract and retain outstanding
Directors.
Term
The Plan shall be effective upon approval by the stockholders of the
Company, and will terminate ten years thereafter. No options may be granted
after that date; however, options outstanding on that date may be exercised
and/or paid in accordance with their terms.
Administration
The Plan must be administered by a committee of three or more members of
the Board of Directors (the "Committee"). The Board's Executive Development
Committee will initially serve as the Plan's committee. Subject to the terms of
the Plan, the Committee will have the exclusive authority to interpret,
administer and make determinations under the Plan.
Eligibility of Issuance of Options
All non-employee Directors of the Company are eligible to participate in
the Plan. There are currently five (5) persons so eligible. Options will be
granted automatically at the first meeting of the Board of Directors following
the Company's Annual Meeting of Shareholders. Options will be issued to each
Director who has filed an election to receive stock options in lieu of all or a
specified portion of his Annual Retainer to be earned during each Plan Year.
"Annual Retainer" is the amount of fees which the Director will be entitled to
receive during each Plan Year for serving as director or as a Chairman of one or
more of the committees of the Board. It does not include per meeting attendance
fees or fees for any other services provided to the Company. Options granted
under the Plan will entitle the optionee to purchase shares of Company Class B
Common Stock at a price equal to 75% of the fair market value of the stock on
the date of grant. The number of options for shares of stock each Director will
be entitled to receive is determined by dividing such Director's Annual Retainer
(or the portion thereof which the Director has elected to receive as stock
options) by 25% of the fair market value of a share of Class A Common Stock.
Assuming that each eligible Director elected to receive options in lieu of 100%
his Annual Retainer, and based on the March 15, 1996 price
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<PAGE>
of the Class A Common Stock of $12.50 per share, 28,800 options would be issued
under the Plan during 1996.
Shares Subject to Plan
Fifty thousand (50,000) shares of Class B Common Stock will be available
for use under the Plan. The shares of Common Stock will consist of authorized
and unissued shares, and may include shares reacquired by the Company. The Plan
provides for an equitable adjustment in the number and price of shares of Common
Stock covered by options in the event the outstanding shares of Common Stock are
increased or decreased through stock dividends or similar changes.
Termination or Amendment of the Plan
The Board, at any time, may terminate and in any respect amend or modify
the Plan. However, no such action by the Board may, without approval of the
Company's stockholders (except in the event of certain changes in the Common
Stock and except where the Board has been advised by counsel that such approval
is not required for purposes of Rule 16b-3 under the Exchange Act), (i) increase
the total number of shares of Common Stock available under the Plan, (ii) extend
the period during which any option may be exercised, (iii) extend the term of
the Plan, (iv) change the option price, or (v) alter the class of persons
eligible to receive options. No amendment, modification or termination of the
Plan shall in any manner adversely affect the rights of any person with respect
to any option previously granted.
Federal Income Tax Consequences
The rules governing the tax treatment of stock options are complex.
Therefore, the description of the Federal income tax consequences set forth
below is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their applications may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the Federal income tax laws.
A Director will recognize no taxable income at the time of grant of an
option under the Plan. Upon exercise of an option, the Director will recognize
ordinary income equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise. The Director will recognize
as a capital gain or loss any profit or loss realized on the sale or exchange of
any share disposed of or sold. The Company will be entitled to deduct an amount
equal to the difference between the exercise price and the fair market value of
the shares on the date of exercise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTORS' STOCK
OPTION PLAN.
5. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO AUTHORIZE THE
ISSUANCE OF PREFERRED STOCK
The Company's Certificate of Incorporation currently provides that the
aggregate number of shares which the Company has the authority to issue is
twenty-four million (24,000,000) shares of Common Stock.
The Company's Board of Directors has proposed that the Certificate of
Incorporation be amended and restated to authorize one million (1,000,000)
shares of Preferred Stock. If Proposal 5 is adopted, the Preferred Stock
thereby authorized would be issuable from time to time, without further
stockholder approval, in one or more series in such amounts, at such prices and
with such designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to
20
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dividends and qualifications in terms of conditions of redemption as may be
fixed by the Board. Holders of Common Stock will not have any preemptive right
with respect to the issuance of Preferred Stock.
The Directors believe that their ability to cause the Company to issue one
or more series of Preferred Stock will provide the Company with increased
flexibility in structuring possible future financings and acquisitions, and in
meeting other needs of the Company which might arise. The authorized Preferred
Stock, as well as authorized Common Stock, will be available for issuance
without further action by the stockholders, unless such action is required by
applicable law or the rules of any stock exchange or automated quotation system
on which the Company's securities may be listed or traded. Although the
Directors have no existing arrangement, understanding or agreement to issue
Preferred Stock nor any intention at the present time of doing so, they could
direct the Company to issue a series of Preferred Stock that could, depending on
the terms of such series, impede a merger, tender offer or other transaction
that some, or a majority, of the stockholders might believe to be in their best
interests or in which stockholders might receive a premium for the shares over
the then current market price of such shares.
If Proposal 5 is adopted, Article FOURTH of the Certificate of
Incorporation will be amended and restated as set forth at the end of Proposal 6
(discussed below).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 5.
6. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO REDUCE THE NUMBER OF
AUTHORIZED SHARES OF GILBERT ASSOCIATES, INC. STOCK
The Company's current Certificate of Incorporation authorizes the issuance
of twenty-four million (24,000,000) shares of common stock, of which twelve
million (12,000,000) shares shall be Class A common stock and twelve million
(12,000,000) shares shall be Class B common stock; provided however, that the
total number of shares issued or outstanding at any time shall not exceed twelve
million (12,000,000) shares of common stock.
For purposes of the annual Delaware Franchise Tax, the state of Delaware
has taken the position that although the Company can have no more than twelve
million (12,000,000) shares outstanding or issued at any one time, the tax must
be computed as if the Company had an authorized capitalization of twenty-four
million (24,000,000) shares. The Company's current outstanding capitalization of
both Class A and Class B stock is less than seven million (7,000,000) shares.
The Company believes that it could reduce the overall authorized capital to
eleven million (11,000,000) shares, saving the Company approximately fifty
thousand ($50,000) dollars annually in Delaware Franchise Tax, while still
maintaining enough shares to meet the Company's foreseeable needs. The Board
recommends that the Company's Certificate of Incorporation be amended in order
to realize such annual cost savings.
If Proposal 5 (discussed above) and Proposal 6 are both adopted, the first
and second paragraphs of Article FOURTH of the Company's Restated Certificate of
Incorporation shall be modified to state as follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is eleven million (11,000,000) shares,
of which (i) ten million (10,000,000) shares shall be any combination
of Class A common stock, par value $1.00 per share, and Class B common
stock, par value $1.00 per share, and (ii) one million (1,000,000)
shares shall be Preferred Stock, par value $1.00 per share. The Board
is hereby empowered to cause the Preferred Stock to be issued from
time to time for such consideration as it may from time to time fix,
and to cause such
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Preferred Stock to be issued in series with such voting rights,
designations, preferences, qualifications, limitations, restrictions,
conversion rights and other special or relative rights as designated
by the Board in the resolution providing for the issue of such series.
Shares of Preferred Stock of any one series shall be identical in all
respects.
The powers, preferences, rights, and the qualifications, limitations
or restrictions with respect to common stock are set forth below."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 6.
7. PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' SELECTION OF ARTHUR ANDERSEN
LLP AS INDEPENDENT AUDITORS FOR THE YEAR 1996
The Board of Directors has selected the firm of Arthur Andersen LLP
independent accountants, to audit the accounts of the Company for the year 1996
and requests that such selection be ratified by majority vote of those Class B
stockholders voting upon ratification. Although submission to stockholders of
the appointment of the independent auditors is not required by law, the Board of
Directors, in accordance with its long-standing policy of seeking annual
stockholder ratification of the selection of auditors, believes it appropriate
that such selection be ratified by the stockholders. The Company has been
advised that neither that firm nor any of its partners has any material direct
or indirect relationship with the Company or its subsidiaries.
On May 1, 1996, the Company notified its prior auditors, Coopers & Lybrand
LLP ("C&L"), of its intention to appoint new independent auditors for 1996. This
action was recommended by the audit committee of the Company and approved by the
Board of Directors.
There have been no disagreements between management and C&L for the last
two fiscal years in connection with the Company's audits and any subsequent
interim period preceding the engagement of Arthur Anderson LLP on any matter of
accounting principles or practices, financial statement disclosures or auditing
scope or procedure of a nature which if not resolved to the satisfaction of C&L
would have caused it to make a reference in connection with its report to the
subject matter of any such disagreements. C&L's reports on the financial
statements of the Company for the last two fiscal years have been unqualified.
A representative from both Arthur Andersen LLP and Coopers & Lybrand LLP
will attend the meeting, will have an opportunity to make a statement if so
desired, and will be available to respond to appropriate questions at the
meeting.
STOCKHOLDER PROPOSALS
If a holder of Class B Common Stock has a proposal which he or she intends
to present at the 1997 Annual Meeting, it must be received by the Company on or
before February 5, 1997 in order to be considered for inclusion in the Company's
Proxy Statement and Proxy for such meeting. Stockholder proposals should be
submitted to Thomas F. Hafer, Secretary of the Company, at the address indicated
on the first page of this Proxy Statement.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before the
meeting and has not been informed of any other business which others may bring
before the meeting. However, if any other matters should properly come before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying Proxy to vote on such matters as they, in their
discretion, may deem advisable.
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The Company will pay all costs of soliciting Proxies in the accompanying
form. Solicitation will be made by mail, and officers and other employees of the
Company may also solicit Proxies by telephone, telecopy or personal interview.
By order of the Board of Directors,
Thomas F. Hafer,
Secretary
June ___, 1996
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EXHIBIT A
LONG-TERM INCENTIVE PLAN
<PAGE>
Gilbert Associates, Inc.
LONG-TERM INCENTIVE PLAN
SECTION 1: PURPOSES
The purposes of the Plan are to provide incentive compensation to officers,
executives and other key employees who contribute to the growth and success of
the Corporation and its Subsidiaries; to attract and retain individuals of
outstanding ability; and to align the interests of such officers, executives and
other key employees with the interests of the Corporation's stockholders.
SECTION 2: DEFINITIONS
The following terms, as used herein, shall have the meaning specified:
1. "AWARD" means an award granted pursuant to Section 4.
2. "AWARD AGREEMENT" means an agreement described in Section 6 entered into
between the Corporation and a Participant, setting forth the terms and
conditions applicable to the Award granted to the Participant.
3. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation as it
may be comprised from time to time.
4. "CAUSE" means (i) felony conviction of a Participant; (ii) the commission
by a Participant of an act of fraud or embezzlement against the Corporation
and/or a Subsidiary; (iii) willful misconduct or gross negligence
materially detrimental to the Corporation and/or a Subsidiary; (iv) the
Participant's continued failure to implement reasonable requests or
directions received in the course of his employment; (v) the Participant's
wrongful dissemination or use of confidential or proprietary information;
or (vi) the intentional and habitual neglect by the Participant of his
duties to the Corporation and/or a Subsidiary.
5. "CHANGE IN CONTROL" means Change in Control as defined in Section 10.
<PAGE>
6. "CODE" means the Internal Revenue Code of 1986, and any successor statute,
as it or they may be amended from time to time.
7. "COMMITTEE" means the Committee as defined in Section 8.
8. "CORPORATION" means Gilbert Associates, Inc., and any successor
corporation.
9. "COVERED EMPLOYEE" means a covered employee within the meaning of Code
Section 162(m)(3).
10. "DISABILITY" means permanent and total disability within the meaning of the
Corporation's long-term disability plan or, as determined by the Committee
in an Award Agreement, Code Section 22(e)(3).
11. "EMPLOYEE" means officers, executives and other key employees of the
Corporation or a Subsidiary, but excludes directors who are not also
officers or employees of the Corporation.
12. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and any successor
statute, as it may be amended from time to time.
13. "FAIR MARKET VALUE" means the closing price of the Class A Common Stock as
reported in The Wall Street Journal on the relevant date, or if no sale of
such Stock is reported for such date, the next preceding day for which
there is a reported sale.
14. "INCENTIVE STOCK OPTION" means an option to purchase Stock that is granted
pursuant to Section 4(2) or pursuant to any other Plan of the Corporation
or its Subsidiaries that complies with Code Section 422.
15. "INSIDER" means any person who is subject to Section 16 of the Exchange
Act, and any successor statutory provision, as it may be amended from time
to time.
16. "PARTICIPANT" means any Employee who has been granted an Award pursuant to
this Plan.
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<PAGE>
17. "RETIREMENT" means retirement at or after age 65 or, with the advance
consent of the Committee, before age 65.
18. "STOCK" means shares of Class A or Class B Common Stock of the Corporation,
or any security of the Corporation issued in substitution, exchange or lieu
thereof.
19. "SUBSIDIARY" means any corporation in which the Corporation, directly or
indirectly, controls fifty percent (50%) or more of the total combined
voting power of all classes of such corporation's stock.
20. "TEN-PERCENT STOCKHOLDER" means any person who owns, directly or
indirectly, on the relevant date securities having ten percent (10%) or
more of the combined voting power of all classes of the Corporation's
securities or of its parent or subsidiaries. For purposes of applying the
foregoing ten percent (10%) limitation, the rules of Code Section 425(d)
shall apply.
SECTION 3: ELIGIBILITY
Persons eligible for Awards shall consist of Employees who hold positions of
significant responsibility with the Corporation and/or a Subsidiary or whose
performance or potential contribution, in the judgment of the Committee, will
benefit the future success of the Corporation and/or a Subsidiary.
SECTION 4: AWARDS
The Committee may grant any of the following types of Awards, either singly, in
tandem or in combination with other types of Awards, as the Committee may in its
sole discretion determine:
1. NON-QUALIFIED STOCK OPTIONS. A Non-qualified Stock Option is an option to
purchase a specific number of shares of Stock exercisable at such time or
times, and during such specified time not to exceed ten (10) years, as the
Committee may determine, at a price not less than 100% of the Fair Market
Value of the Stock on the date the option is granted.
3
<PAGE>
a. The purchase price of the Stock subject to the option may be paid in
cash. At the discretion of the Committee, the purchase price may also
be paid by the tender of Stock (the value of such Stock shall be its
Fair Market Value on the date of exercise), or through a combination
of Stock and cash, or through such other means as the Committee
determines are consistent with the Plan's purpose and applicable law.
No fractional shares of Stock will be issued or accepted.
b. Without limiting the foregoing, to the extent permitted by law
(including relevant state law), (A) the Committee may agree to accept
as full or partial payment of the purchase price of Stock issued upon
exercise of options a promissory note of the Participant evidencing
the Participant's obligation to make future cash payments to the
Corporation, which promissory notes shall be payable as determined by
the Committee, shall be secured by a pledge of the shares of Stock
purchased, and shall bear interest at a rate established by the
Committee and (B) the Committee may also permit Participants, either
on a selective or aggregate basis, to simultaneously exercise options
and sell the shares of Stock thereby acquired, pursuant to a brokerage
or similar arrangement approved in advance by the Committee, and use
the proceeds from such sale as payment of the purchase price of such
Stock.
2. INCENTIVE STOCK OPTIONS. An Incentive Stock Option is an Award in the form
of an option to purchase a specified number of shares of Stock that
complies with the requirements of Code Section 422, which option shall,
subject to the following provisions, be exercisable at such time or times,
and during such specified time, as the Committee may determine.
a. The aggregate Fair Market Value (determined at the time of the grant
of the Award) of the shares of Stock subject to Incentive Stock
Options which are exercisable by one person for the first time during
a particular calendar year shall not exceed $100,000.
b. No Incentive Stock Option may be granted under this Plan on or after
the tenth anniversary of the date this Plan is adopted, or the date
this Plan is approved by stockholders, whichever is earlier.
c. No Incentive Stock Option may be exercisable more than:
4
<PAGE>
1) in the case of an Employee who is not a Ten Percent Stockholder on
the date that the option is granted, ten (10) years after the date
the option is granted, and
2) in the case of an Employee who is a Ten Percent Stockholder on the
date the option is granted, five (5) years after the date the
option is granted.
d. The exercise price of any Incentive Stock Option shall not be less
than:
1) in the case of an Employee who is not a Ten Percent Stockholder on
the date that the option is granted, the Fair Market Value of the
Stock subject to the option on such date; and
2) in the case of an Employee who is a Ten Percent Stockholder on the
date that the option is granted, 110% of the Fair Market Value of
the Stock subject to the option on such date.
e. The Committee may provide that the option price under an Incentive
Stock Option may be paid by one or more of the methods available for
paying the option price of a Non-qualified Stock Option.
3. RELOAD OPTIONS. Without any way limiting the authority of the Committee to
make grants hereunder, the Committee shall have the authority (but not an
obligation) to include within any Award Agreement a provision entitling the
Participant to a further Stock Option (a "Reload Option") in the event the
Participant exercises the Stock Option evidenced by the Award Agreement, in
whole or in part, by surrendering shares of Common Stock previously owned
by the Participant, in accordance with this Plan and the terms and
conditions of the Award Agreement. A Reload Option shall entitle a
Participant to purchase a number of shares of Common Stock equal to the
number of such shares so delivered upon exercise of the original Stock
Option and, in the discretion of the Committee, the number of shares, if
any, tendered to the Company to satisfy any withholding tax liability
arising in connection with the exercise of the original Option. A Reload
Option shall: (a) have an exercise price of not less than one hundred
percent (100%) of the per share Fair Market Value of the Common Stock on
the date of grant of such Reload Option; (b) have a term not longer than
the remaining term of the original Stock Option at the time of exercise
5
<PAGE>
thereof; (c) become exercisable in the event the shares acquired upon
exercise of the original Option are held for a minimum period of time
established by the Committee; and (d) be subject to such other terms and
conditions as the Committee may determine.
4. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right ("SAR") is a right to
receive, upon surrender of the right, an amount payable in cash.
a. The amount payable with respect to each SAR shall be equal in value to
the excess, if any, of the Fair Market Value of a share of Stock on
the exercise date over the Fair Market Value of a share of Stock on
the date the Award is made.
b. In the case of an SAR granted with respect to an Incentive Stock
Option to an Employee who is Ten Percent Shareholder on the date of
such Award, the amount payable with respect to each SAR shall be equal
in value to the Fair Market Value of a share of Stock on the exercise
date over 110% of the Fair Market Value of a share of Stock on the
date the Award is made.
5. RESTRICTED STOCK. Restricted Stock is Stock that is issued to a Participant
subject to restrictions on transfer and such other restrictions on
incidents of ownership as established by the Committee including, but not
limited to, achievement of specific business objectives, and other
measurements of individual, business unit, Corporate or Subsidiary
performance, including, but not limited to, earnings per share, net
profits, total shareholder return, cash flow, return on shareholders'
equity, and cumulative return on net assets employed. Subject to such
restrictions, the Participant as owner of such shares of Restricted Stock
shall have the rights of the holder thereof, except that the Committee may
provide at the time of the Award that any dividends or other distributions
paid on such Stock while subject to such restrictions shall be accumulated
or reinvested in Stock and held subject to the same restrictions as the
Restricted Stock and such other terms and conditions as the Committee shall
determine. A certificate for the shares of Restricted Stock, which
certificate shall be registered in the name of the Participant, shall bear
an appropriate restrictive legend and shall be subject to appropriate stop-
transfer orders; provided, however, that the certificates representing
shares of Restricted Stock shall be held in custody by the Corporation
until the restrictions relating thereto otherwise lapse, and the
Participant shall deliver to the Corporation a stock power endorsed
6
<PAGE>
in blank relating to the Restricted Stock. Restricted Stock may be issued
for no consideration or for such consideration as may be required by
applicable law or by the Committee.
6. STOCK EQUIVALENT UNITS. A Stock Equivalent Unit is an Award based on the
Fair Market Value of one share of Stock. All or part of any Stock
Equivalent Units Award may be subject to conditions and restrictions
established by the Committee, including, but not limited to, achievement of
specific business objectives, and other measurements of individual,
business unit, Corporate or Subsidiary performance, including, but not
limited to, earnings per share, net profits, total shareholder return, cash
flow, return on shareholders' equity, and cumulative return on net assets
employed. Without limiting the generality of the foregoing, it is intended
that the Committee shall establish performance goals applicable to Stock
Equivalent Units granted to Participants who, in the judgment of the
Committee, may be Covered Employees in such manner as shall permit payments
with respect thereto to qualify as "performance-based compensation" as
described in Section 162(m)(4)(C) of the Code and that the maximum number
of Stock Equivalent Units that may be granted to any Participant in any
[one year] shall not exceed 25,000. Stock Equivalent Units may be settled
in Stock or cash or both.
7. DIVIDEND EQUIVALENTS. A Dividend Equivalent is an Award whose value is
equal to the amount of cash dividends payable with respect to a share of
Stock after the date the Award is granted. In lieu of awarding Dividend
Equivalents, the Committee may provide for automatic awards of additional
Stock Equivalent Units on each date that cash dividends are paid on the
Common Stock in an amount equal to (i) the product of the dividend per
share on the Stock times the total number of Stock Equivalent Units then
held by the Participant, divided by (ii) the Fair Market Value of the Stock
on the dividend payment date.
8. PERFORMANCE UNITS. A Performance Unit is an Award denominated in cash, the
amount of which may be based on the achievement of specific business
objectives, and other measures of individual, business unit, Corporate or
Subsidiary performance over a specified period of time including, but not
limited to, earnings per share, total shareholder return, cash flow, return
on shareholders' equity, and cumulative return on net assets employed.
Without limiting the generality of the foregoing, it is intended that the
Committee shall establish performance goals applicable to Performance Units
granted to Participants who, in the judgment of the Committee, may be
Covered
7
<PAGE>
Employees in such a manner as shall permit payments with respect thereto to
qualify as "performance-based compensation" as described in Section
162(m)(4)(C) of the Code and that the maximum amount of such compensation
that may be paid to any one Participant with respect to any one year shall
be $500,000. Performance Units may be settled in Stock or cash or both.
9. OTHER AWARDS. The Committee may from time to time grant other Awards under
this Plan that provide the Participants with Stock or the right to purchase
Stock, or provide other incentive Awards that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or
that are otherwise payable in or convertible into shares of, Stock. The
Awards shall be in a form determined by the Committee, provided that the
Awards shall not be inconsistent with the other express terms of this Plan.
SECTION 5: SHARES OF STOCK AVAILABLE UNDER PLAN
1. Subject to the adjustment provisions of Section 9, the number of shares of
Stock with respect to which Awards may be granted under the Plan shall not
exceed 500,000 shares of Stock; provided that no more than 230,000 of the
shares of Stock available for Awards shall be available for Awards in the
form of Restricted Stock. No single Participant shall receive Awards (i) in
the form of options, whether Non-qualified Stock Options or Incentive Stock
Options, and/or SARs with respect to more than twenty percent (20%) of the
shares of Stock available under the Plan and (ii) for more than 40,000
shares of Restricted Stock in any one year.
2. Shares of Stock with respect to the unexercised or undistributed portion of
any terminated or forfeited Award and shares of Stock tendered in payment
of the purchase price of the Stock subject to option shall be available for
further Awards in addition to those shares of Stock available under Section
5(1). Additional rules for determining the number of shares of Stock
granted under the Plan may be adopted by the Committee, as it deems
necessary and appropriate.
3. The Stock that may be issued pursuant to an Award under the Plan may be
treasury or authorized but unissued Stock, or Stock may be acquired,
subsequently or in anticipation of the transaction, in the open market to
satisfy the requirements of the Plan.
8
<PAGE>
SECTION 6: AWARD AGREEMENTS
Each Award under the Plan shall be evidenced by an Award Agreement. Each Award
Agreement shall set forth the number of shares of Stock, SARs, Stock Equivalent
Units, Dividend Equivalents and/or Performance Units subject to the Award and
shall include the terms set forth below and such other terms and conditions
applicable to the Award, as determined by the Committee, not inconsistent with
the terms of the Plan, including, but not limited to, the term of the Award,
vesting provisions, any other restrictions or conditions (including performance
requirements) on the Award and the method by which restrictions or conditions
lapse, provisions permitting the surrender of outstanding Awards or securities
held by the Participant in order to exercise or realize rights under other
Awards, or in exchange for the grant of new Awards under similar or different
terms, the effect on the Award of a Change in Control of the Corporation, the
price, amount or value of Awards, and the terms, if any, pursuant to which a
Participant may elect to defer the receipt of cash or Stock under an Award. In
the event of any conflict between an Award Agreement and this Plan, the terms of
the Plan shall govern.
1. NON-ASSIGNABILITY. A provision that no Award shall be assignable or
transferable except by will or by the laws of descent and distribution and
that, during the lifetime of a Participant, the Award shall be exercised
only by such Participant or by his or her guardian or legal representative.
2. Termination of Employment.
a. A provision describing the treatment of an Award in the event of the
Retirement, Disability, death or other termination of a Participant's
employment with the Corporation or a Subsidiary, including but not
limited to terms relating to the vesting, time for exercise,
forfeiture or cancellation of an Award in such circumstances.
Participants who terminate employment due to Retirement, Disability,
or death prior to the satisfaction of applicable conditions and
restrictions associated with their Award(s) may be entitled to a
prorated Award(s) as and to the extent determined by the Committee.
b. A provision that for purposes of the Plan, (i) a transfer of an
Employee from the Corporation to a Subsidiary or affiliate of the
Corporation, whether or not incorporated, or visa versa, or from
9
<PAGE>
one Subsidiary or affiliate of the Corporation to another, and (ii) a
leave of absence, duly authorized in writing by the Corporation, shall
not be deemed a termination of employment.
c. A provision stating that in the event the Participant's employment is
terminated for Cause, anything else in the Plan or the Award Agreement
to the contrary notwithstanding, all Awards granted to such
Participant shall immediately terminate and be forfeited.
3. RIGHTS AS A STOCKHOLDER. A provision stating that a Participant shall have
no rights as a stockholder with respect to any Stock covered by an Award
until the date the Participant becomes the holder of record thereof. Except
as provided in Section 9, no adjustment shall be made for dividends or
other rights, unless the Award Agreement specifically requires such
adjustment.
4. WITHHOLDING. A provision requiring the withholding of applicable taxes
required by law from all amounts paid in satisfaction of an Award. A
Participant may satisfy the withholding obligation by paying the amount of
any taxes in cash or, with the approval of the Committee, shares of Stock
may be deducted from the payment to satisfy the obligation in full or in
part. The amount of the withholding and the number of shares of Stock to be
deducted shall be determined by the Committee with reference to the Fair
Market Value of the Stock when the withholding is required to be made.
5. EXECUTION. A provision stating that no Award is enforceable until the Award
Agreement has been signed by the Participant and the Corporation. By
executing the Award Agreement, a Participant shall be deemed to have
accepted and consented to any action taken under the Plan by the Committee,
the Board of Directors or their delegates.
6. HOLDING PERIOD. To the extent necessary to satisfy the applicable
requirements of Rule 16b-3 under the Exchange Act, in the case of an Award
to an Insider of: (1) an equity security, a provision stating (or the
effect of which is to require) that such security must be held for at least
six (6) months (or such longer period as the Committee in its discretion
specifies) from the date of acquisition; or (2) a derivative security with
a fixed exercise price within the meaning of Section 16 of the Exchange
Act, a provision stating (or the effect of which is to require) that at
least six (6) months (or such longer period as the Committee in its
discretion specifies) must elapse from the
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date of acquisition of such derivative security to the date of disposition
of the derivative security (other than upon exercise or conversion) or its
underlying equity security.
7. TREATMENT OF OPTIONS. Each Award of an option shall state whether it will
or will not be treated as an Incentive Stock Option.
SECTION 7: AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, suspend or discontinue the Plan,
in whole or in part. The Committee may at any time alter or amend any or all
Award Agreements under the Plan to the extent permitted by law, but no such
alteration or amendment shall impair the rights of any holder of an Award
without the holder's consent, except to preserve the Plan's qualification as a
safe harbor plan under Section 16 of the Exchange Act.
SECTION 8: ADMINISTRATION
1. The Plan and all Awards shall be administered by a Committee of the Board
of Directors, which Committee shall consist of not less than three (3)
members of such Board of Directors and shall be constituted so as to permit
the Plan to comply with the administration requirement of Rule 16b-
3(c)(2)(i) of the Exchange Act and Code Section 162(m)(4)(C). The members
of the Committee shall be designated by the Board of Directors. A majority
of the members of the Committee shall constitute a quorum. The vote of a
majority of a quorum shall constitute action by the Committee.
2. The Committee shall have full and complete authority, in its sole and
absolute discretion, (i) to exercise all of the powers granted to it under
the Plan, (ii) to construe, interpret and implement the Plan and any
related document, (iii) to prescribe, amend and rescind rules relating to
the Plan, (iv) to make all determinations necessary or advisable in
administering the Plan, and (v) to correct any defect, supply any omission
and reconcile any inconsistency in the Plan. The actions and determinations
of the Committee on all matters relating to the Plan and any Awards will be
final and conclusive. The Committee's determinations under the Plan need
not be uniform and may be made by it selectively among Employees who
receive, or who are eligible to receive, Awards under the Plan, whether or
not such persons are similarly situated.
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3. The Committee may appoint such accountants, counsel, and other experts as
it deems necessary or desirable in connection with the administration of
the Plan. The Committee may delegate to the officers or employees of the
Corporation and its Subsidiaries the authority to execute and deliver such
instruments and documents, to do all such acts and things, and to take all
such other steps deemed necessary, advisable or convenient for the
effective administration of the Plan in accordance with its terms and
purpose, except that the Committee may not delegate any discretionary
authority with respect to substantive decisions or functions regarding the
Plan or Awards thereunder as these relate to Insiders or Covered Employees
including, but not limited to, decisions regarding the timing, eligibility,
pricing, amount or other material terms of such Awards.
4. The Committee and others to whom the Committee has delegated such duties
shall keep a record of all their proceedings and actions and shall maintain
all such books of account, records and other data as shall be necessary for
the proper administration of the Plan.
5. The Corporation shall pay all reasonable expenses of administering the
Plan, including, but not limited to, the payment of professional fees.
6. It is the intent of the Corporation that this Plan and Awards hereunder
satisfy, and be interpreted in a manner that satisfy, in the case of
Participants who are or may be Insiders, the applicable requirements of
Rule 16b-3 of the Exchange Act, so that such persons will be entitled to
the benefits of Rule 16b-3, or other exemptive rules under Section 16, and
will not be subjected to avoidable liability thereunder. If any provision
of this Plan or of any Award would otherwise frustrate or conflict with the
intent expressed in this Section, that provision to the extent possible
shall be interpreted and deemed amended so as to avoid such conflict. To
the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to Insiders.
SECTION 9: ADJUSTMENT PROVISIONS
1. In the event of any change in the outstanding shares of Stock by reason of
a stock dividend or split, recapitalization, merger or consolidation
(whether or not the Corporation is a surviving
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corporation), reorganization, combination or exchange of shares or other
similar corporate changes or an extraordinary dividend payback in cash or
property, the number of shares of Stock (or other securities) then
remaining subject to this Plan, and the maximum number of shares that may
be issued to any single Participant pursuant to this Plan, including those
that are then covered by outstanding Awards, shall (i) in the event of an
increase in the number of outstanding shares, be proportionately increased
and the price for each share then covered by an outstanding Award shall be
proportionately reduced, and (ii) in the event of a reduction in the number
of outstanding shares, be proportionately reduced and the price for each
share then covered by an outstanding Award shall be proportionately
increased.
2. The Committee shall make any further adjustments as it deems necessary to
ensure equitable treatment of any holder of an Award as the result of any
transaction affecting the securities subject to the Plan not described in
(1), or as is required or authorized under the terms of any applicable
Award Agreement.
3. The existence of the Plan and the Awards granted hereunder shall not affect
or restrict in any way the right or power of the Board of Directors or the
shareholders of the Corporation to make or authorize any adjustment,
recapitalization, reorganization or other capital structure of its
business, any merger or consolidation of the Corporation, any issue of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, the dissolution or liquidation
of the Corporation or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding.
SECTION 10: CHANGE IN CONTROL
1. In the event of a Change in Control, in addition to any action required or
authorized by the terms of an Award Agreement, the Committee may, in its
sole discretion take any of the following actions as a result, or in
anticipation, of any such event to assure fair and equitable treatment of
Participants:
a. Accelerate time periods for purposes of vesting in, or realizing gain
from, any outstanding Award made pursuant to this Plan;
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<PAGE>
b. Offer to purchase any outstanding Award made pursuant to this Plan
from the holder for its equivalent cash value, as determined by the
Committee, as of the date of the Change in Control; or
c. Make adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights and
interests of Participants following such Change in Control.
Any such action approved by the Committee shall be conclusive and binding
on the Corporation and all Participants.
2. Change in Control shall occur in the event of any of the following:
a. A tender offer or exchange offer is made whereby the effect of such
offer is to take over and control the affairs of the Corporation and
such offer is consummated for the ownership of securities of the
Corporation representing twenty percent (20%) or more of the
combined voting power of the Corporation's then outstanding voting
securities.
b. The Corporation is merged or consolidated with another corporation
and, as a result of such merger or consolidation, less than fifty
percent (50%) of the outstanding voting securities of the surviving or
resulting corporation shall then be owned in the aggregate by the
former stockholders of the Corporation other than affiliates within
the meaning of the Exchange Act or any party to such merger or
consolidation.
c. The Corporation transfers substantially all of its assets to another
corporation or entity that is not a wholly-owned subsidiary of the
Corporation.
d. Any person or group (as such terms are used in Sections 13(d)(3) and
14(d)(3) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting
14
<PAGE>
power of the Corporation's then outstanding securities, and the effect
of such ownership is to take over and control the affairs of the
Corporation.
e. The first day after the date this Plan is effective when directors are
elected such that either a majority of the Board of Directors shall
have been members thereof, respectively, for less than one (1) year,
unless the nomination for election of each new director who was not a
director of the Corporation at the beginning of such one (1) year
period was approved by a vote of at least fifty percent (50%) of the
directors of the Corporation then still in office who were directors
at the beginning of such period.
SECTION 11: MISCELLANEOUS
1. NONASSIGNABILITY. No Award or shall be assignable or transferable except by
will or by the laws of descent and distribution and except as otherwise
determined by the Committee.
2. WITHHOLDING TAXES. Whenever payments under the Plan are to be made, the
Corporation or a Subsidiary shall withhold therefrom an amount sufficient
to satisfy any applicable governmental withholding tax requirements related
thereto.
3. OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be deemed in
any way to limit or restrict the Corporation or a Subsidiary from making
any award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.
4. PAYMENTS TO OTHER PERSONS. If payments are legally required to be made to
any person other than the person to whom any amount is made available under
the Plan, payments shall be made accordingly. Any such payment shall be a
complete discharge of the liability hereunder.
5. UNFUNDED PLAN. The Plan shall be unfunded. No provision of the Plan or any
Award Agreement shall require the Corporation or a Subsidiary, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Corporation or a
Subsidiary maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or
15
<PAGE>
separately maintained or administered fund for such purposes. Participants
shall have no rights under the Plan other than as unsecured general
creditors of the Corporation or a Subsidiary.
6. LIMITS OF LIABILITY. Any liability of the Corporation or a Subsidiary to
any Participant with respect to an Award shall be based solely upon
contractual obligations created by the Plan and the Award Agreement.
Neither the Corporation or its Subsidiaries, nor any member of the Board of
Directors or of the Committee, nor any other person participating in any
determination of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability to any
party for any action taken, or not taken, in good faith under the Plan.
7. RIGHTS OF EMPLOYEES. Status as an eligible Employee shall not be construed
as a commitment that any Award shall be made under this Plan to such
eligible Employee or to eligible Employees generally. Nothing contained in
this Plan or in any Award Agreement shall confer upon any Employee or
Participant any right to continue in the employ or other service of the
Corporation or a Subsidiary or constitute any contract or limit in any way
the right of the Corporation or a Subsidiary to change such person's
compensation or other benefits or to terminate the employment or other
service of such person with or without Cause.
8. SECTION HEADINGS. The section headings contained herein are for the purpose
of convenience only, and in the event of any conflict, the text of the
Plan, rather than the section headings, shall control.
9. GENDER, ETC. In interpreting the Plan, the masculine gender shall include
the feminine, the neuter gender shall include the masculine or feminine,
and the singular shall include the plural unless the context clearly
indicates otherwise.
10. INVALIDITY. If any term or provision contained herein or in any Award
Agreement shall to any extent be invalid or unenforceable, such term or
provision will be reformed so that it is valid, and such invalidity or
unenforceability shall not affect any other provision or part thereof.
11. APPLICABLE LAW. The Plan, the Award Agreements and all actions taken
hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware without regard to the conflict of
law principles thereof.
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12. COMPLIANCE WITH LAWS. Notwithstanding anything contained herein or in any
Award Agreement to the contrary, the Corporation shall not be required to
sell or issue shares of Stock hereunder or thereunder if the issuance
thereof would constitute a violation by the Participant or the Corporation
of any provisions of any law or regulation of any governmental authority or
any national securities exchange; and as a condition of any sale or
issuance the Corporation may require such agreements or undertakings, if
any, as the Corporation may deem necessary or advisable to assure
compliance with any such law or regulation.
13. EFFECTIVE DATE AND TERM. The Plan was adopted by the Board of Directors
effective as of March 15, 1996, subject to approval by the Corporation's
stockholders. The Committee may grant Awards prior to stockholder approval,
provided, however, that Awards granted prior to such stockholder approval
are automatically cancelled if stockholder approval is not obtained at or
prior to the period ending twelve months after the date the Plan is
effective and provided further that no Award may be exercisable prior to
the date stockholder approval is obtained. The Plan shall remain in effect
until all Awards under the Plan have been exercised or terminated under the
terms of the Plan and applicable Award Agreements, provided that Awards
under the Plan may only be granted within ten (10) years from the effective
date of the Plan.
<PAGE>
EXHIBIT B
STOCK PURCHASE ASSISTANCE PLAN
<PAGE>
Gilbert Associates, Inc.
STOCK PURCHASE ASSISTANCE PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to promote the long-term interests of Gilbert
Associates, Inc. and its shareholders by encouraging and assisting its officers
and key executives to make meaningful investments in the Common Stock of the
Company so that, as shareholders, their views and interests will be identified
with the views and interests of the other shareholders. Meaningful stock
ownership will provide officers and key executives with an additional incentive
to exert their best efforts to increase the value of the Company for the benefit
of all shareholders. The Plan will also strengthen the Company's ability to
recruit and retain persons who have special competence to contribute to the
Company's success.
SECTION 2. DEFINITIONS
1. "APPLICABLE RATE" means, with respect to a Loan, the lowest rate or rates
of interest which would avoid the imputation of interest under Section 7872
of the Code.
2. "ANNUAL SALARY" means, with respect to a Key Executive, his or her annual
base salary in a particular fiscal year of the Company.
3. "BOARD" means the Board of Directors of the Company.
4. "CHANGE IN CONTROL" means the first to occur of any one of the events
described below:
a. A tender offer or exchange offer is made whereby the effect of such
offer is to take over and control the affairs of the Corporation and
such offer is consummated for the ownership of securities of the
Corporation representing twenty percent (20%) or more of the
combined voting power of the Corporation's then outstanding voting
securities.
b. The Corporation is merged or consolidated with another corporation
and, as a result of such merger or consolidation, less than fifty
percent (50%) of the outstanding voting
<PAGE>
securities of the surviving or resulting corporation shall then be
owned in the aggregate by the former stockholders of the Corporation
other than affiliates within the meaning of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or any party to such
merger or consolidation.
c. The Corporation transfers substantially all of its assets to another
corporation or entity that is not a wholly-owned subsidiary of the
Corporation.
d. Any person or group (as such terms are used in Sections 139(d)(3) and
14(d)(3) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the
Corporation's then outstanding securities, and the effect of such
ownership is to take over and control the affairs of the Corporation.
e. The first day after the date this Plan is effective when directors are
elected such that either a majority of the Board of Directors shall
have been members thereof, respectively, for less than one (1) year,
unless the nomination for election of each new director who was not a
director of the Corporation at the beginning of such one (1) year
period was approved by a vote of at least fifty percent (50%) of the
directors of the Corporation then still in office who were directors
at the beginning of such period.
f. Any other event or series of events which, notwithstanding any other
provisions of this definition, is determined by the Board to
constitute a change in control of the Company for purposes of this
Plan.
5. "CODE" means the Internal Revenue Code, as amended.
6. "COMMITTEE" means the Executive Development Committee of the Board, or any
successor committee thereto.
7. "COMMON STOCK" means the shares of Class A or Class B common stock of the
Company.
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8. "COMPANY" means Gilbert Associates, Inc., a Delaware corporation.
9. "INSTALLMENT PAYMENT" means the amount of the annual loan repayment, which
will repay the loan including principle and interest in the time period
specified in the Loan Offer and which will be specified in the Loan Offer.
10. "KEY EXECUTIVE" means any officer or other key executive of the Company or
a Subsidiary who, in the judgment of the Committee, is or will be in
position to contribute significantly to the longer-term growth and success
of the Company.
11. "LOAN" means the loan made by the Company to a Key Executive pursuant to
the Plan.
12. "LOAN OFFER" means an offer by the Committee in behalf of the Company to
extend a Loan to a Key Executive.
13. "PLAN" means the Gilbert Associates, Inc. Stock Purchase Assistance Plan.
14. "RESTRICTION PERIOD" means the period defined in Section 6(a).
15. "SUBSIDIARY" means any corporation at least 80 percent of the outstanding
voting stock of which is owned by the Company.
SECTION 3. ADMINISTRATION
1. THE COMMITTEE. The Committee shall be responsible for administering the
Plan. The Committee shall be comprised of three or more members of the
Board, all of whom shall be "disinterested persons" as defined in Rule
16(b)-3 under the Exchange Act and "outside directors" as that term is used
in Section 162 of the Code and the regulations promulgated thereunder.
2. POWERS. The Committee shall have full and exclusive discretionary power to
interpret the Plan, to determine eligibility for Loans, and to adopt such
rules, regulations, and guidelines for
3
<PAGE>
administering the Plan as the Committee may deem necessary or proper. The
Committee may employ attorneys, consultants, accountants, and other
persons. The Board, Committee, the Company, and its officers shall be
entitled to rely upon the advice or opinion of such persons.
3. BINDING EFFECT OF COMMITTEE ACTIONS. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon the Key Executives, 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 or Loans. All members of the Committee shall be
fully protected and indemnified by the Company, to the fullest extent
permitted by applicable law, in respect of any such action, determination,
or interpretation.
SECTION 4. LOANS
1. BENEFIT TO COMPANY. The Board has reasonably determined that the Plan will
benefit the Company.
2. PURPOSE OF LOAN. The Company may extend Loans from time to time to Key
Executives to be used solely for the purpose of:
a. Acquiring Common Stock at fair market value in open market
transactions or from the Company;
b. Acquiring Common Stock upon the exercise of stock options granted
under a stock option plan of the Company;
c. Paying taxes incurred in connection with the exercise of such a stock
option;
d. Paying taxes incurred in connection with the grant of Common Stock;
e. Refinancing loans incurred to purchase Common Stock; or
4
<PAGE>
f. Any combination of the above.
3. AMOUNT; GENERAL TERMS. Each Loan shall be made pursuant to a Loan Offer by
the Committee to a Key Executive. The amount of Loan offered shall be
determined by the Committee, but shall not exceed the fair market value of
the shares of Common Stock to be purchased with the proceeds of the Loan.
Each Loan shall be full recourse, evidenced by a promissory note and a loan
agreement which together shall contain the relevant terms and conditions of
the Plan and such other terms and conditions not inconsistent with the Plan
as the Committee shall determine.
4. INTEREST RATE AND MATURITY. Each Loan shall bear interest at a rate not
less than the Applicable Rate. The first Installment Payment date shall be
one year following the date of the Loan, and thereafter Installment
Payments shall be due annually, each year, until the maturity of the Loan.
Each Loan shall mature and the unpaid principal and interest shall become
immediately due and payable in full upon the earlier of:
a. The default by the Key Executive on any Loan made to him or her under
the Plan;
b. The termination of employment (whether voluntary or involuntary) or
death of the Key Executive; or
c. Such other date as is determined by the Committee at the time the Loan
is made.
The Committee may, in its discretion, authorize the extension of the time
for repayment of a Loan upon such terms and conditions as the Committee may
determine.
5. SECURITY. Each Loan shall be secured by the pledge of all or a portion (as
determined by the Committee) of the shares of Common Stock acquired with
the proceeds of the Loan, provided that, at the time of making the Loan,
the principal amount thereof shall not exceed the fair market value of the
shares of Common Stock pledged as security therefor. Shares of Common
Stock pledged to secure repayment of a Loan shall be delivered to the
Company, endorsed in blank by the Key Executive to whom the Loan is made or
accompanied by a separate stock
5
<PAGE>
power so endorsed, with signature guaranteed. The fluctuation in the market
value of the shares pledged as security for a Loan shall not affect any of
the terms or conditions of the Loan, or of the note, loan agreement, or
pledge related thereto.
6. RESTRICTED SHARES; LEGEND.
a. The transfer of shares of Common Stock purchased with the proceeds of
a Loan shall be restricted during the period that all or any part of
the Loan remains unpaid (the "Restriction Period"). During the
Restriction Period, a Key Executive shall not be permitted to sell,
give, pledge (except to the Company), assign or otherwise transfer any
shares purchased with the proceeds of the Loan.
b. The Committee shall have authority to waive such restrictions if the
Committee determines, in its discretion, that a waiver in the
particular situation is not inconsistent with the purpose of the Plan.
c. Stock certificates representing the shares of Common Stock purchased
with the proceeds of a Loan shall bear a legend in substantially the
following form:
The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions of the Gilbert Associates,
Inc. Stock Purchase Assistance Plan and related Loan Agreement entered into
between the registered owner and the Company dated. Copies of the Plan and
Loan Agreement are on file in the offices of Gilbert Associates, Inc.,
Reading, PA, 19603.
7. ACCEPTANCE OF LOAN OFFER. The Committee shall establish a reasonable time
period during which each Loan Offer may be accepted by a Key Executive.
During such time period, the Key Executive may accept the whole or less
than the whole amount of the Loan offered. The manner of acceptance shall
be prescribed by the Committee. If a Key Executive does not accept a Loan
Offer during such time period, in whole or in part, the Loan Offer, or the
amount not accepted, shall lapse.
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<PAGE>
8. FORGIVENESS - CHANGE IN CONTROL. In connection with a Change in Control,
the Board in its discretion, upon the recommendation of the Committee,
shall have the authority to forgive all principal and interest on all
outstanding Loans to Key Executives under the Plan.
9. FORGIVENESS - DEATH OR DISABILITY. Upon the death of a Key Executive, or
if the Key Executive's employment is terminated by reason of his or her
total disability, the Board, upon the recommendation of the Committee,
shall have the authority in its discretion to reduce, by forgiveness, the
principal amount of all Loans to that Key Executive by an amount equal to
not more than 50 percent of the original principal amount of such Loans and
to forgive all accrued interest on the principal amount so forgiven.
10. TAX WITHHOLDING. The Company may take such action as may be necessary or
appropriate to satisfy tax withholding requirements for any federal, state
or local laws or regulations in connection with Loan forgiveness.
SECTION 5. LOAN LIMITS
1. KEY EXECUTIVE. No Loan shall be made to a Key Executive which will cause
the aggregate principal amount of all Loans outstanding to such Key
Executive to exceed 200 percent of his or her Annual Salary, provided that
the Committee is authorized to approve Loans exceeding such limit if the
Committee determines in its discretion that a larger Loan to a particular
Key Executive is prudent and consistent with the Purpose of the Plan.
2. COMPANY AGGREGATE. No Loans shall be made under the Plan which will cause
the aggregate principal amount of all outstanding Loans made under the Plan
to exceed 1.5 percent of the consolidated assets of the Company and its
Subsidiaries. The Board may from time to time adjust the limit on the
aggregate principal amount of Loans which may be outstanding under the Plan
based upon changes in the number of Key Executives who are eligible to
receive Loans.
7
<PAGE>
SECTION 6. GENERAL PROVISIONS
1. NO RIGHT TO LOAN OR EMPLOYMENT. No Key Executive or other person shall
have any claim or right to receive a Loan under the Plan or to be retained
in the employment of the Company or a Subsidiary by reason of the Plan or
any Loan to him or her.
2. COMPLIANCE WITH LAWS. No Loan shall be made hereunder unless counsel for
the Company shall be satisfied that such Loan will be in compliance with
all applicable federal, state, and local laws.
3. PLAN EXPENSES. The expenses of the Plan and its administration shall be
borne by the Company.
4. PLAN NOT FUNDED. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the making of any Loan under the Plan.
The Plan shall not establish a fiduciary relationship between the Company
and any Key Executive or other person.
5. ACCEPTANCE OF ACTIONS TAKEN UNDER PLAN. By accepting a Loan under the
Plan, a Key Executive shall be deemed conclusively to have indicated his or
her acceptance and consent to any action taken under the Plan by the
Company, the Board, or the Committee.
6. REPORTS. The appropriate officers of the Company shall cause to be filed
any reports, returns, or other information regarding Loans hereunder, as
may be required by any applicable statute, rule, or regulation.
7. GOVERNING LAW. The validity, construction, and effect of the Plan, and any
actions relating to the Plan, shall be determined in accordance with the
laws of the State of Delaware and applicable federal law.
8. SUCCESSORS AND ASSIGNS OF KEY EXECUTIVE. The Plan shall be binding upon
all successors and assigns of each Key Executive, including, without
limitation, his or her estate, the personal representative, executor,
administrator, or trustee of such estate, or any trustee in bankruptcy or
representative of his or her creditors.
8
<PAGE>
SECTION 7. AMENDMENT AND TERMINATION OF THE PLAN
The Board may from time to time amend the Plan in any respect, or may
discontinue or terminate the Plan at any time, provided, however, that:
1. No such amendment, discontinuance, or termination shall alter or otherwise
affect the terms and conditions of any Loan then outstanding to a Key
Executive without such Key Executive's written consent, except as otherwise
provided herein or in the promissory note or loan agreement evidencing such
Loan; and
2. Without the approval of the shareholders of the Company, no amendment shall
(i) change the purpose of the Plan or the purposes for which Loans may be
extended to Key Employees, (ii) increase materially the aggregate Loan
limits established by Section 5 except as permitted therein, or (iii)
change the definition of Key Executive for the purpose of expanding
materially the eligibility of employees to receive Loans.
SECTION 8. EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board, subject to approval of the shareholders
of the Company. The Plan shall become effective when approved by the
shareholders. It is the intention of the Board to submit the Plan for
shareholder approval at the 1996 annual meeting of shareholders.
9
<PAGE>
EXHIBIT C
DIRECTORS' STOCK OPTION PLAN
<PAGE>
Gilbert Associates, Inc.
DIRECTORS' STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to permit the granting of stock options to Directors
at an exercise price less than market value at the date of grant as an
alternative to the payment of directors' fees in cash, thereby advancing the
interests of the Company by encouraging and enabling the acquisition of Common
Stock by Directors, upon whose judgment and ability the Company depends for its
long-term growth and development. Accordingly, the Plan is intended to promote
a close identity of interests between the Company, its Directors and its
shareholders, as well as to provide a means to attract and retain outstanding
Directors.
SECTION 2. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon such date as it may be approved by the
shareholders of the Company and shall remain in effect for ten years from the
date on which it is so approved or until termination by the Board whichever
occurs first.
SECTION 3. STOCK SUBJECT TO THE PLAN
There are authorized for issuance or delivery upon the exercise of options to be
granted from time to time under the Plan an aggregate 50,000 shares of Common
Stock, subject to adjustment as provided hereinafter in Section 6. Such shares
may be, as a whole or in part, authorized but unissued shares, whether now or
hereinafter authorized, or issued shares which have been reacquired by the
Company. If any option issued under this Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full, the shares which
have not been purchased thereunder shall again become available for the purposes
of this Plan.
<PAGE>
SECTION 4. PLAN ADMINISTRATION
4.1 The Plan shall be administered by the Committee. The Committee shall be
comprised of three or more members of the Board, all of whom shall be
"disinterested persons" as defined in Rule 16(b)-3 under the Exchange Act.
4.2 Grants of stock options under the Plan and the amount and nature of the
awards shall be automatic in accordance with Section 5. However, the
Committee shall have full and final authority to interpret the Plan, adopt,
amend and rescind rules and regulations relating to the Plan, and make all
other determinations and take all other actions necessary and advisable for
the administration of the Plan. The Committee may employ attorneys,
consultants, accountants, and other persons. The Board, Committee, the
Company, and its officers shall be entitled to rely upon the advice or
opinion of such persons.
4.3 Decisions and determinations of the Committee on all matters relating to
the Plan shall be in its sole discretion and shall be conclusive. No
member of the Committee shall be liable for any action taken or decision
made in good faith relating to this Plan or any grant hereunder.
SECTION 5. TERMS AND CONDITIONS OF STOCK OPTION AWARDS
Each option granted under the Plan shall be evidenced by a written award
document, which document shall comply with and be subject to the following terms
and conditions.
5.1 DIRECTORS' ELECTIONS AND OPTION GRANT DATES. Except as hereinafter
provided, options shall be granted automatically on the date of the first
meeting of the Board held following the Company's annual meeting of
shareholders to any Director who has timely filed with the Company an
election to receive a stock option in lieu of the Annual Retainer, or some
portion thereof, to be earned by such Director in each Plan Year during
which he or she shall serve as a Director.
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5.2 OPTION FORMULA. The number of shares of Common stock subject to each
option granted to any Director for a Plan Year shall be equal to the
nearest number of whole shares determined in accordance with the following
formula.
Annual Retainer = Number of Shares
-----------------------
Fair Market Value minus
Option Exercise Price
No fractional shares shall be issued, nor shall cash payments be made in
lieu of fractional shares.
5.3 OPTION EXERCISE PRICE. The Option Exercise Price for each option granted
under the Plan shall be seventy-five percent (75%) of the Fair Market Value
of shares of such Common Stock on the date the option is granted. "Fair
Market Value" shall be the closing price of Common Stock as reported in The
Wall Street Journal on the date of reference or, if no sale of such Common
Stock is reported for such date, the next preceding day for which there is
a reported sale.
5.4 TERM AND EXERCISE OF OPTION. Options may be exercised only by written
notice to the Company. The Director shall arrange for payment, in cash or
check payable to the Company, of the full exercise price for the shares as
to which they are exercised. No option granted under the Plan may be
exercised before the twelve-month anniversary of the date upon which it was
granted; provided, however, that any option granted under the Plan shall
become immediately exercisable upon the Director's death or Disability or
upon a Change in Control of the Company. No option granted under the Plan
shall be exercisable after the expiration of twenty years from the date
upon which it is granted. Each option shall be subject to termination
before its date of expiration as hereinafter provided in Sections 5.5 and
5.6.
5.5 TERMINATION OF DIRECTORSHIP. The rights of a Director in an option granted
under the Plan shall not terminate upon such Director's termination as a
Director for any reason (including retirement, death or Disability);
provided, however, that if such termination occurs prior to a Change in
Control of the Company, that portion of an option granted under the Plan
which is
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attributable to any portion of an Annual Retainer which is not earned due
to termination as a Director (for any reason) shall automatically abate and
be cancelled.
5.6 DEATH OF A DIRECTOR. Any option granted to a Director and outstanding on
the date of his or her death may be exercised by the administrator of such
Director's estate, the executor under his or her will, or the person or
persons to whom the option shall have been validly transferred by such
executor or administrator pursuant to the will or laws of intestate
succession, but not beyond the first to occur of (i) the expiration of
twelve months from the date of the Director's death, or (ii) the specified
expiration date of the option. Upon the first to occur of said two events,
the option shall terminate.
SECTION 6. CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common Stock by reason
of a stock dividend or split, recapitalization, merger or consolidation (whether
or not the Company is a surviving corporation), reorganization, combination or
exchange of shares or other similar Company changes or an extraordinary dividend
pay back in cash or property, the number of shares of Common Stock (or other
securities) then remaining subject to this Plan, and the maximum number of
shares that may be issued, including those that are then covered by outstanding
options, shall (i) in the event of an increase in the number of outstanding
shares, be proportionately increased and the Option Exercise Price for each
share then covered by an outstanding options shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced and the Option Exercise Price for each share then
covered by an outstanding option shall be proportionately increased.
SECTION 7. WITHHOLDING TAXES
Whenever shares of Common Stock are to be issued or delivered, the Committee
shall have the right, at or prior to the delivery of any certificate or
certificate for shares, to require the recipient to remit to the Company, in the
form of cash or check payable to the order of the Company, an amount sufficient
to satisfy any withholding requirements with respect to federal, state and local
income and employment taxes.
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SECTION 8. LIMITATION OF RIGHTS
8.1 NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting of
an option, nor any other action taken pursuant to the Plan, shall
constitute evidence of any agreement or understanding, expressed or
implied, that the Company will retain any person as a Director for any
period of time, or at any particular rate of compensation.
8.2 NO STOCKHOLDERS' RIGHTS FOR OPTIONS. The holder of an option granted under
the Plan shall have no rights as a stockholder with respect to the shares
covered by his or her options until the date of the issuance to such holder
of a stock certificate therefor, and no adjustments will be made for
dividends or other rights for which the record date is prior to the date
such certificate is issued.
SECTION 9. TRANSFERABILITY
9.1 Options are not transferable other than by will or the laws of intestate
succession. No transfer by will or by the laws of intestate succession
shall be effective to bind the Company unless the Committee shall have been
furnished with a copy of the deceased Director's will or such other
evidence as the Committee may deem necessary to establish the validity of
the transfer.
9.2 Only the Director or his or her guardian, or in the event of death, his or
her legal representative or beneficiary, may exercise options and receive
deliveries of shares.
SECTION 10. AMENDMENT, MODIFICATION AND TERMINATION
The Board, at any time, may terminate and in any respect amend or modify the
Plan; provided, however, that no such action by the Board may, without approval
of the Company's shareholders (except as otherwise provided in Section 6 and
except where the Board has been advised by counsel that such approval is not
required for purposes of Rule 16b-3 under the Exchange Act), (i) increase the
total number of shares of common stock available under the Plan in the
aggregate, (ii) extend the period during which any option may be exercised,
(iii) extend the term of the Plan, (iv) change the option price, or (v) alter
the class of persons eligible to receive options. No amendment, modification
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or termination of the Plan shall in any manner adversely affect the rights of
any person with respect to any option previously granted.
SECTION 11. DEFINITIONS
11.1 "ANNUAL RETAINER" means the amount of fees which the Director will be
entitled to receive during a Plan Year for serving as a Director or a
member of one or more committees of the Board; provided, however, that if a
Director elects to receive a stock option in lieu of only a portion of the
Annual Retainer, the Annual Retainer for purposes of the foregoing formula
shall equal the portion of the Annual Retainer so elected. For purposes of
this Plan, "Annual Retainer" shall not include fees or expenses for
attendance at meetings of the Board or any committee of the Board or for
any other services to be provided to the Company.
11.2 "BOARD" means the Board of Directors of the Company.
11.3 "CHANGE IN CONTROL" means the first to occur of any one of the events
described below:
a. A tender offer or exchange offer is made whereby the effect of such
offer is to take over and control the affairs of the Company and such
offer is consummated for the ownership of securities of the Company
representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding voting securities.
b. The Company is merged or consolidated with another corporation and, as
a result of such merger or consolidation, less than fifty percent
(50%) of the outstanding voting securities of the surviving or
resulting corporation shall then be owned in the aggregate by the
former stockholders of the Company other than affiliates within the
meaning of the Exchange Act or any party to such merger or
consolidation.
c. The Company transfer substantially all of its assets to another
corporation or entity that is not a wholly-owned subsidiary of the
Company.
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d. Any person or group (as such terms are used in Sections 13(d)(3) and
14(d)(3) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, and the effect of such
ownership is to take over and control the affairs of the Company.
e. The first day after the date this Plan is effective when directors are
elected such that either a majority of the Board of Directors shall
have been members thereof, respectively, for less than one (1) year,
unless the nomination for election of each new director who was not a
director of the Company at the beginning of such one (1) year period
was approved by a vote of at least fifty percent (50%) of the
directors of the Company then still in office who were directors at
the beginning of such period.
f. Any other event or series of events which, notwithstanding any other
provisions of this definition, is determined by the Board to
constitute a change in control of the Company for purposes of this
Plan.
11.4 "COMMITTEE" means the Executive Development Committee of the Board, or any
successor committee thereto.
11.5 "COMMON STOCK" means the shares of Class B common stock of the Company.
11.6 "COMPANY" means Gilbert Associates, Inc., a Delaware corporation.
11.7 "DIRECTOR" means a member of the Board who is not an employee of the
Company.
11.8 "DISABILITY" means total and permanent disability.
11.9 "EXCHANGE ACT" means Exchange Act as defined in Section 11.3.
11.10 "FAIR MARKET VALUE" means Fair Market Value as defined in Section 5.3.
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11.11 "OPTION EXERCISE PRICE" means the Option Exercise Price as defined in
Section 5.3.
11.12 "PLAN" means the Gilbert Associates, Inc. Directors' Stock Option Plan.
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CONFIDENTIAL VOTING INSTRUCTIONS
GILBERT ASSOCIATES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING June 26, 1996.
The undersigned hereby appoints TIMOTHY S. COBB and PAUL H. SNYDER, and
each of them, with full power of substitution, attorneys and proxies to
represent the undersigned at the annual meeting of stockholders of Gilbert
Associates, Inc. to be held on Wednesday, June 26, 1996, and at any adjournment
thereof, and thereat to vote all shares of Class B Common Stock that the
undersigned would possess if personally present.
Please complete this form on the reverse side, sign your name exactly as it
appears above, and return it in the enclosed envelope to Bankers Trust Company.
(Continued and to be signed on the reverse side)
<PAGE>
a. Election of Directors PLEASE MARK YOUR CHOICE LIKE THIS [X] IN
DARK INK AND SIGN AND DATE BELOW
[_] VOTE FOR ALL [_] WITHHOLD FROM
Except as marked [X] to VOTING FOR ALL
the contrary below
[_] J.W. Boyer, Jr. [_] P.H. Snyder
[_] T.S. Cobb [_] J.A. Sutton
[_] D.E. Lyons [_] D.K. Wilson, Jr.
[_] A.F. Smith
b. Proposal to Approve the Adoption For Against Abstain
of the 1996 Long Term Incentive [_] [_] [_]
Plan
c. Proposal to Approve the Adoption For Against Abstain
of the Stock Purchase Assistance [_] [_] [_]
Plan
d. Proposal to Approve the Adoption For Against Abstain
of the Directors' Stock Option [_] [_] [_]
Plan
e. Proposal to Amend the Certificate For Against Abstain
of Incorporation to Authorize the [_] [_] [_]
Issuance of Preferred Stock
f. Proposal to Amend the Certificate For Against Abstain
of Incorporation to reduce the [_] [_] [_]
Number of Authorized Shares of
Gilbert Associates, Inc. Stock
g. Proposal to Ratify the Board of For Against Abstain
Directors' Selection of Arthur [_] [_] [_]
Anderson LLP as Independent
Auditors for the Year 1996
- ----------------------------------- ----------------
SIGNATURE OF STOCKHOLDER DATE
