SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
COMMISSION FILE NO. 0-13826
DISCUS ACQUISITION CORPORATION
(Name of Registrant as Specified In Its Charter)
AVRON L. GORDON, ESQ.
BRIGGS AND MORGAN, P.A.
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8455
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $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:
4) Proposed maximum aggregate value of transaction:
[ ] 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:
DISCUS ACQUISITION CORPORATION
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MN 55402
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NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 1, 1996
------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of shareholders of
Discus Acquisition Corporation (the "Company") will be held at the Minneapolis
Club located at 729 Second Avenue South, Minneapolis, Minnesota 55402, in the
Second Floor Conference Room, on May 1, 1996, at 3:30 p.m. Minneapolis time, for
the following purposes, as more fully described in the accompanying Proxy
Statement:
1. To elect seven directors for the ensuing year, including one
Class B Common Stock director, and until their successors
shall be elected and duly qualified;
2. To approve an amendment to the Articles of Incorporation of
the Company to change its name to Peerless Industrial Group,
Inc.;
3. To approve an amendment to the Articles of Incorporation of
the Company to increase the Company's authorized shares from
10,000,000 to 30,000,000 shares;
4. To approve an amendment to the Company's 1994 Stock Option
Plan which increases the number of shares reserved thereunder
for issuance of stock options from 600,000 shares to 1,000,000
shares and amends the terms and conditions and number of
shares allocated thereunder for the automatic grant of stock
options to outside directors;
5. To ratify and approve the appointment of Coopers and Lybrand,
L.L.P. as independent auditors of the Company for the fiscal
year ending December 31, 1996; and
6. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 19, 1996,
will be entitled to receive notice of and to vote at the meeting.
You are cordially invited to attend the meeting. However, whether or
not you plan to be personally present at the meeting, please complete, date and
sign the enclosed proxy and return it promptly in the enclosed envelope. If you
later desire to revoke your proxy, you may do so at any time before it is
exercised.
By Order of the Board of Directors
Bruce A. Richard
Secretary
Minneapolis, Minnesota
April 1, 1996
DISCUS ACQUISITION CORPORATION
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 1, 1996
------------------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Company for use at the Annual
Meeting of the shareholders to be held at the Minneapolis Club located at 729
Second Avenue South, Minneapolis, Minnesota 55402, in the Second Floor
Conference Room, on May 1, 1996 at 3:30 p.m. Minneapolis time, and at any
adjournment thereof.
Proxies in the accompanying form are solicited on behalf, and at the
direction, of the Board of Directors of the Company (hereinafter sometimes
referred to as the "Board"). All shares of Common Stock represented by properly
executed proxies, unless such proxies have previously been revoked, will be
voted in accordance with the direction on the proxies. If no direction is
indicated, the shares will be voted FOR the election of the nominees for
director named herein, FOR the proposal to approve the amendment to the Articles
of Incorporation and to approve related authorization to the Board of Directors,
FOR the proposal to increase the Company's authorized capital stock, FOR the
proposal to amend the 1994 Stock Option Plan, and FOR approval of the
independent accountants for the fiscal year ending December 31, 1996. If any
other matters are properly presented at the meeting for action, including a
question of adjourning the meeting from time to time, the persons named in the
proxies and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment. If a properly executed proxy is returned
and the shareholder has abstained from voting on any matter, the shares
represented by the proxy will be considered present at the meeting for purposes
of determining a quorum and for purposes of calculating the vote, but will not
be considered to have been voted in favor of such matter.
When stock is held in the name of more than one person, each such
person should sign the proxy. If the shareholder is a corporation, the proxy
should be signed in the name of such corporation by an executive or other
authorized officer. If signed as attorney, executor administrator, trustee,
guardian or in any other representative capacity, the signer's full title should
be given and, if not previously furnished, a certificate or other evidence of
appointment should be furnished. If an executed proxy is returned by a broker
holding shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote with respect to such matter.
A shareholder executing and returning a proxy has the power to revoke
it at any time before it is voted. A shareholder who wishes to revoke a proxy
can do so by executing a later-dated proxy relating to the same shares and
delivering it to William H. Spell, Discus Acquisition Corporation, 2430
Metropolitan Centre, 333 South Seventh Street, Minneapolis, Minnesota 55402,
prior to the vote at the Annual Meeting, by written notice of revocation
received by William H. Spell prior to the vote at the Annual Meeting or by
appearing in person at the Annual Meeting, filing a written notice of revocation
and voting in person the shares to which the proxy relates.
Only shareholders of record at the close of business on March 19, 1996
(the "Record Date") will be entitled to notice of and to vote at the meeting. On
the Record Date there were 5,003,901 shares of Common Stock and 1,227,273 shares
of Class B Common Stock issued, outstanding and entitled to vote. The holders of
the Class B Common Stock, exclusively and voting as a single class, shall be
entitled, by a vote of a majority of the outstanding shares of Class B Common
Stock held by such holders, to elect one director of the corporation, but have
voting rights equal to holders of Common Stock on all other matters. The holders
of Common Stock, exclusively and voting as a single class, shall be entitled, by
a vote of a majority of the outstanding shares of Common Stock held by such
holders, to elect the remainder of the directors of the corporation. Each holder
of Common Stock is entitled to one vote, exercisable in person or by proxy, for
each share of Common Stock held of record on the Record Date. The affirmative
vote of the holders of a majority of the shares of Common Stock present and
entitled to vote at the Annual Meeting and outstanding on the Record Date is
required for approval of all proposals to be voted upon at the Annual Meeting.
The Notice of Annual Meeting, this proxy statement and the form of proxy which
is enclosed are being mailed to the Company's shareholders on or about April 1,
1996.
1. ELECTION OF DIRECTORS
Seven persons have been nominated for election at the Annual Meeting as
directors. The directors will hold office until the next Annual Meeting of
shareholders and will serve until their successors have been duly elected and
qualified.
The Board of Directors unanimously recommends a vote for each of the
nominees. It is intended that votes will be cast pursuant to the enclosed proxy
for the election of the nominees listed in the table below, except for those
proxies which withhold such authority. Shareholders do not have cumulative
voting rights with respect to the election of directors, and proxies cannot be
voted for a greater number of directors than the number of nominees named below.
In the event that any of the nominees shall be unable or unwilling to serve as a
director, it is intended that the proxy will be voted for the election of such
other person or persons as the management may recommend in the place of such
nominee. The management has no reason to believe that any of the nominees will
not be candidates or will be unable to serve.
The following information has been furnished to the Company by the
respective nominees for the Board of Directors.
PRINCIPAL DIRECTOR
NAME AGE OCCUPATION SINCE
COMMON STOCK NOMINEES
Harry W. Spell 72 Chairman of the Board of the Company 1994
and Chairman and Chief Executive Officer
of Eagle Pacific Industries, Inc.
William H. Spell 39 Chief Executive Officer of the 1994
Company and Chief Operating Officer,
President and Director of Eagle Pacific
Industries, Inc.
Bruce A. Richard 66 Secretary of the Company and Vice 1994
Chairman, Secretary, Treasurer
and Director of Eagle Pacific
Industries, Inc.
Reynold M. Anderson 65 General Partner of Zaeco Associates, 1984
Limited Partnership
Michael E. Platt 54 President and Chief Executive Officer 1983
of Fresh Food Ventures, Inc.
Richard W. Perkins 65 President, Chief Executive Officer and 1993
Director of Perkins Capital
Management, Inc.
CLASS B NOMINEE
Brian K. Smith 36 General Partner, Northland Business 1996
Capital, L.L.P.
BUSINESS EXPERIENCE
Harry W. Spell. Harry W. Spell has been a Director of the Company since
1994 and is the father of William H. Spell. He has been Chairman of the Board
and Chief Executive Officer of Eagle Pacific Industries, Inc. ("Eagle Pacific")
since 1992. Eagle Pacific manufactures PVC pipe and polyethylene tubing in
plants in Nebraska, Oregon and Utah. He was employed by Northern States Power
from 1949 until August 1988, when he retired from all positions. Mr. Spell was
Senior Vice President - Finance and Chief Financial Officer of Northern States
Power Company from May 1983 until April 1988. Mr. Spell currently serves as a
Director of Appliance Recycling Centers of America, Inc.
William H. Spell. William H. Spell has been a Director of the Company
since 1994 and is the son of Harry W. Spell, a Director of the Company. He has
been President and Chief Operating Officer of Eagle Pacific and a member of its
Board of Directors since January 1992. From October 1990 through May 1993, Mr.
Spell was a founder, President and Chairman of the Board of National Acquisition
Corp., a public company which merged with Garment Graphics, Inc. a designer,
producer and marketer of silkscreen imprinted, embroidered and decorative
activewear. From 1981 to May of 1988, Mr. Spell was Vice President and Director
of Corporate Finance for John G. Kinnard and Company, Incorporated, a regional
investment banking firm. He also serves on the Board of Directors of Garment
Graphics, Inc. Mr. Spell holds a BS degree and an MBA from the University of
Minnesota.
Bruce A. Richard. Bruce A. Richard has been a Director of the Company
since 1994 and currently serves as the Company's Secretary. He has been a
Director of Eagle Pacific since March 1992, is its Vice Chairman, and has served
as its Vice Chairman, Secretary, Treasurer and a Director since September 1993.
From 1985 through October 1986, he was President and Chief Operating Officer of
Northern States Power Company, from which duties he retired. From July 1954
through 1984, Mr. Richard held various management and other positions with
Northern States Power Company.
Reynold M. Anderson. Reynold M. Anderson is a founder of the Company
and served as Executive Vice President from April 1985 through November 1991. He
also served as the Company's Chief Financial Officer and Secretary between 1983
and April 1985. Since 1985, he has been a General Partner of Zaeco Associates
Limited Partnership, which engages in the ownership and management of real
estate. From 1984 to June 1992, Mr. Anderson served as a Director and executive
officer of Mintesota, Inc., which operated two Perkins Restaurants in Florida.
From 1986 to May 1992, he served as a Director and executive officer of T.H.I.S.
Corporation ("T.H.I.S."), which operated seven Perkins Restaurants in the Palm
Beach County, Florida area. In November 1991, T.H.I.S. filed a Petition for
Reorganization under Chapter 11 of the Bankruptcy Code of 1978 in the United
States Bankruptcy Court for the Southern District of Florida. T.H.I.S. was
subsequently liquidated. Mr. Anderson is a professional civil engineer
registered in the State of Minnesota and received a degree in civil engineering
from the University of Minnesota.
Michael E. Platt. Michael E. Platt is a founder of the Company and was
employed as its Chief Executive Officer from August 1983 through June 1994, and
served as the Company's President from June 1994 through January 1996. He
currently serves as President and Chief Executive Officer of Fresh Food
Ventures, Inc., which operates a Mexican-style restaurant. He is also President
and a Director of Regal One Corporation, which is engaged in the development of
an automatic emission control product. Between 1976 and July 1983, he held
various marketing positions with The Pillsbury Company and was its Director of
Acquisitions between 1980 and 1983. Prior to joining Pillsbury, he was Vice
President of Marketing with Steak & Shake, Inc., from October 1975 to May 1976.
He served as Director of New Products and New Programs with Kentucky Fried
Chicken Corporation, from November 1972 to September 1975. He received a BS
degree from Massachusetts Institute of Technology and an MBA degree from Harvard
University.
Richard W. Perkins. Richard W. Perkins has been President, Chief
Executive Officer and a Director of Perkins Capital Management, Inc. since
December 1985. He has over 30 years experience in the investment business. Prior
to establishing Perkins Capital Management, Inc., Mr. Perkins was a Senior Vice
President at Piper Jaffray Incorporated, where he was involved in corporate
finance and venture capital activities, as well as rendering investment advice
to domestic and international investment managers. He held various positions
with Piper Jaffray from May 1966 through December 1984. Mr. Perkins is also a
Director of the following public companies: Bio-Vascular, Inc., LifeCore
Biomedical, Inc., Children's Broadcasting Corporation, Garment Graphics, Inc.,
CNS, Inc., Eagle Pacific, Nortech Systems, Inc. and Quantech Ltd.
Brian K. Smith. Brian K. Smith was appointed to the Board of Directors
of the Company in January 1996. From 1994 to the present, he has been a General
Partner of Northland Business Capital, L.L.P., a provider of mezzanine and
equity funds. Northland Business Capital, L.L.P. is a subsidiary of the Northern
Company, a $1 billion private financial services company. From 1990 through
1994, Mr. Smith served as Vice President of Norwest Bank Minnesota, N.A.,
working in their Structured Finance Group providing senior and subordinate debt
for leveraged buy-outs. Norwest Bank Minnesota, N.A. is a subsidiary of Norwest
Corp.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held three meetings during the fiscal year ended
December 31, 1995 (fiscal 1995). The Board of Directors has an Audit Committee,
a Compensation Committee, an Executive Committee and a Nomination Committee. No
director attended fewer than 75% of the total number of the meetings of the
Board and of the Committees on which such member served.
The Audit Committee, which met once in fiscal 1995, is composed of
Richard W. Perkins, Michael E. Platt, Brian K. Smith and Bruce A. Richard. The
function of the Audit Committee is to recommend the selection of independent
auditors, review the scope and results of the audit and make inquiries as to the
adequacy of the Company's accounting, financial and operating controls.
The Compensation Committee consists of Bruce A. Richard, Richard W.
Perkins, Brian K. Smith and Reynold M. Anderson. The Compensation Committee,
which considers and makes recommendations concerning executive compensation,
took written actions in 1995, but did not have formal meetings.
The Executive Committee consists of William H. Spell, Bruce A. Richard
and Harry W. Spell. The Executive Committee met informally throughout 1995.
The Nomination Committee consists of Reynold M. Anderson, William H.
Spell and Harry W. Spell. The Nomination Committee held no meetings in fiscal
1995.
DIRECTORS' COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for their services as directors. Outside directors were paid at the
rate of $350 per meeting attended in 1995. In January 1996, the Board of
Directors established fees for non-employee directors at the rate of $6,000 per
year.
Pursuant to the Company's 1994 Stock Option Plan, non-employee
directors will be entitled to options to purchase 18,000 shares of Company
Common Stock at a price equal to fair market value of the Company's Common Stock
on the date of such approval. The options vest up to 6,000 shares on the first,
second and third anniversary dates of the options, if the person is a director
as of such vesting date. Directors will also receive options for 18,000 shares
on the same terms described above upon such director being re-elected for his or
her fourth, seventh, tenth and thirteenth terms. The Board of Directors has
approved, subject to approval by the shareholders, an amendment to the 1994
Stock Option Plan which provides that options to be automatically granted to
outside directors elected after January 1, 1994 and prior to January 1, 1996
shall be increased from 18,000 shares to 62,000 shares, and that options granted
to outside directors first elected after January 1, 1996 will be increased from
18,000 shares to 50,000 shares. See "Proposal to Amend 1994 Stock Option Plan."
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information as of March 19,
1996, with respect to each person known by the Company to be the beneficial
owner of more than 5% of its Common Stock, each director and nominee of the
Company, and all executive officers and directors of the Company as a group.
Beneficial ownership of Common Stock has been determined for purposes of this
table based on Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. Under this rule, a person is, in
general, deemed to be the beneficial owner of a security if the person has or
shares voting power or investment power in respect of such security or has the
right to acquire beneficial ownership of the security within sixty (60) days.
Except as indicated, each of the persons listed in the following table has sole
voting and investment power with respect to the shares set forth opposite his
name.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENTAGE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING STOCK
Northland Business Capital L.L.P. 1,227,273 (1) 19.7%
1285 Northland Lane
St. Paul, Minnesota 55120
Perkins Capital Management, Inc. 782,000 12.5%
730 East Lake Street
Wayzata, MN 55391
Harry W. Spell 200,453 (2) 3.2%
2430 Metropolitan Centre
333 South Seventh Street
Minneapolis, MN 55402
William H. Spell 361,817 (3) 5.6%
2430 Metropolitan Centre
333 South Seventh Street
Minneapolis, MN 55402
Bruce A. Richard 136,181 (4) 2.2%
2458 Farrington Circle
Roseville, MN 55113
Jan C. van Osnabrugge 109,090 (5) 1.8%
1320 West Broadway
Winona, MN 55987
Robert E. Deter 59,090 (6) 0.9%
237 Oak Leaf Drive
Winona, MN 55987
Richard W. Perkins 1,262,000 (7) 20.0%
730 East Lake Street
Wayzata, MN 55391
Reynold M. Anderson 666,771 (8) 10.6%
4130 Burton Lane
Minneapolis, MN 55406
Michael E. Platt 533,450 (9) 8.5%
7173 Oak Pointe Curve
Bloomington, MN 55438
Brian K. Smith 1,227,273 (1) 19.7%
1285 Northland Lane
St. Paul, Minnesota 55120
Z. Albin E. Anderson Irrevocable Trust 370,000 5.9%
c/o Reynold M. Anderson
4130 Burton Lane
Minneapolis, MN 55406
All Directors and Officers as a Group 4,537,944 67.1%
(9 Persons) (1)(2)(3)(4)(5)(6)(7)
- ------------------------
(1) Includes 1,227,273 shares of Class B Common Stock, which is convertible
into Common Stock, owned by Northland Business Capital, L.L.P., of
which Brian K. Smith is a General Partner.
(2) Includes 18,181 shares owned by the Spell Family Foundation of which
Mr. Spell is a director, 73,000 shares purchasable upon the exercise of
vested stock options, and 10,000 shares purchasable pursuant to a
warrant.
(3) Includes 18,181 shares owned by the Spell Family Foundation of which
Mr. Spell is a director, 230,000 shares purchasable upon the exercise
of vested stock options, and 10,000 shares purchasable pursuant to a
warrant.
(4) Includes 42,000 shares purchasable upon the exercise of vested stock
options, and 10,000 shares purchasable pursuant to a warrant.
(5) Includes 109,090 shares owned jointly with Mr. van Osnabrugge's spouse.
(6) Includes 59,090 shares owned jointly with Mr. Deter's spouse.
(7) Includes 782,000 shares owned by Perkins Capital Management, 72,000
shares owned by the Richard W. Perkins Living Trust, 25,000 owned by
the Perkins Capital Management Profit Sharing Trust, 50,000 shares
owned by Quest Venture Partners, 250,000 shares owned by Pyramid
Partners, LP, 73,000 shares purchasable upon the exercise of vested
stock options and a warrant for the purchase of 10,000 shares.
(8) Includes 370,000 shares owned by the Z. Albin E. Anderson Irrevocable
Trust, of which Mr. Anderson is a trustee and beneficiary, 771 shares
owned by Mr. Anderson's spouse, 36,000 shares purchasable upon the
exercise of vested stock options and 10,000 shares purchasable pursuant
to a warrant.
(9) Includes 14,000 shares owned by Mr. Platt's spouse, 16,000 shares owned
jointly with Mr. Platt's spouse and 31,250 shares purchasable upon the
exercise of vested stock options.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation of the Chief
Executive Officer and the Chief Financial Officer of the Company, the only
executive officers of the Company, for the fiscal years ended December 31, 1995,
December 25, 1994, and December 26, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------------- ---------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND OTHER ANNUAL OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY $ BONUS(S) COMPENSATION # OF SHARES ($)
------------------ ---- --------- -------- ------------ ----------- ---
<S> <C> <C> <C> <C> <C> <C>
William H. Spell 1995 60,000 125,000 -- 175,000 --
Chief Executive 1994 35,000 -- -- 230,000 --
Officer 1993 -- -- -- -- --
Michael E. Platt(1) 1995 101,617(2) -- -- -- --
1994 159,500(2) -- -- -- --
1993 140,000 -- -- 31,250 --
</TABLE>
(1) Compensation paid to Mr. Platt through June 1994 was for services as
the Company's Chief Executive Officer and following June 1994 as the
Company's President.
(2) Compensation paid to Mr. Platt in 1994 includes $58,333 paid in
accordance with a severance agreement entered into with the Company in
May 1994, pursuant to which Mr. Platt became entitled to receive a
severance payment equal to his 1993 base salary, payable in monthly
installments through July 1995. In 1994, the Company also paid Mr.
Platt monthly compensation totaling $2,850 for his part-time services
to the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE OR
UNDERLYING OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($ / SHARE) DATE
------ ----------- ---------------- ----------- -----
<S> <C> <C> <C> <C> <C>
William H. Spell 175,000 87.5% $1.10 11/1/02
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE OPTIONS EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE YEAR-END (#) FISCAL YEAR-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------ --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
William H. Spell -- -- 230,000/175,000 287,500/218,750
Michael E. Platt -- -- 31,250/0 39,063/0
</TABLE>
CERTAIN TRANSACTIONS
In connection with the Company's acquisition of the Peerless Chain
Company in December 1995, the Company sold an aggregate of 2,388,874 shares of
Common Stock for a purchase price of $2,627,761, or $1.10 per share, to a group
of investors in a private placement transaction, including five of the Company's
directors or their affiliates. The proceeds from such private placement of
Common Stock were used to partially fund the acquisition of Peerless. The
following officers/directors participated in the private placement, individually
or indirectly through other entities in which they had beneficial interests,
purchasing the number of shares indicated: William H. Spell, Chief Executive
Officer and a Director (81,817 shares); Harry W. Spell, Chairman and a Director
(95,453 shares); Reynold M. Anderson, Director (100,000 shares); Bruce A.
Richard, Director (68,181 shares); and Richard W. Perkins, Director (375,000
shares). Pursuant to negotiations which commenced immediately prior to the
acquisition of Peerless, Northland Business Capital, L.L.P. ("Northland"), of
which Brian K. Smith is a General Partner, acquired 1,227,273 shares of Class B
Common Stock pursuant to the terms of a Stock Purchase Agreement entered into
between the Company and Northland in January 1996. The Common Stock sold to the
foregoing persons was issued directly by the Company to the purchasers in a
private placement transaction without registration of such shares under the
Securities Act of 1933, as amended (the "Act"), pursuant to a claimed exemption
therefrom. The shares constitute "restricted securities" as that term is defined
under Rule 144 of the Act and may not be resold unless registered under the Act
or an exemption from registration becomes available under Rule 144 or another
provision under the Act.
On November 1, 1995 the Board of Directors of the Company authorized
the sale of the shares as a part of the plan to acquire Peerless and finance
that acquisition, subject to receiving a fairness opinion. The Board of
Directors engaged Summit Investment Corporation ("Summit"), an investment
banking firm, to provide an opinion to the Company as to the fairness of the
purchase price for the Common Stock. On November 29, 1995, Summit rendered its
opinion that the financing involving the sale of the Company's equity securities
was fair from a financial point of view to the Company and its shareholders. On
that date the bid and ask prices for the Company, based upon information
available from the NASD Bulletin Board, were $1.375 and $1.75 per share,
respectively. In establishing the price for the Common Stock to be sold, the
Board of Directors also took into account the market price for the Common Stock
of the Company and the fact that the shares to be sold were not registered under
the Act and would be restricted as to sale, transfer and disposition.
In connection with the acquisition of Peerless, the Company determined
that it was desirable to permit certain members of the Peerless management to
participate in the acquisition, by providing them the opportunity to acquire a
proprietary interest in the Company through the purchase of Common Stock. The
Company arranged for loans to nine members of the Peerless management from
American Commercial Bank totalling $468,000. The Company has guarantied the
repayment of such loans. To induce the American Commercial Bank to make such
loan, and as a condition of such financing, the Bank required additional credit
enhancements in the form of personal guaranties from certain directors of the
Company. Accordingly, and in consideration of the issuance of warrants to them,
William H. Spell, Harry W. Spell, Reynold M. Anderson, Richard W. Perkins, and
Bruce A. Richard personally guarantied payment of such obligations, in
consideration for which the Company issued to each of them five-year warrants to
purchase 10,000 shares of the Company's Common Stock at $1.10 per share. As
security for the guaranties by the Company and the directors, the nine members
of the Peerless management (along with their wives if stock was issued to them
jointly) pledged their shares of Common Stock to the Company and the directors
to secure payment of the obligations guarantied.
Bridge Loans from Directors. In connection with the Peerless
acquisition, Pyramid Partners, L.P., an affiliate of Richard W. Perkins, and
Harry W. Spell loaned the Company $125,000 and $100,000, respectively, in
December 1995, on the basis of short-term unsecured promissory notes bearing
interest at the rate of 20 percent per annum. The notes were repaid in January,
February and March 1996.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE
ARTICLES OF INCORPORATION AS AMENDED AND TO
APPROVE RELATED AUTHORIZATION
TO THE BOARD OF DIRECTORS
By action taken effective March 18, 1996, the Board of Directors
approved the following resolutions, subject in each case to approval by the
shareholders at the 1996 annual meeting:
RESOLVED, that Article I of the Articles of Incorporation of Discus
Acquisition Corporation (the "Company") shall be amended in its
entirety to read as follows:
Article I
The Name of this Corporation is Peerless Industrial Group, Inc.
RESOLVED FURTHER, that at any time prior to filing of the foregoing
amendment to the Company's Articles of Incorporation with the Secretary
of the State of Minnesota, notwithstanding authorization of such
amendment by the shareholders of the Company, the Board of the Company
may abandon such amendment without further action by the shareholders
of the Company.
The Board of Directors believes that the change in corporate name to
Peerless Industrial Group, Inc. will better reflect the principal business
operations of the Company.
THE BOARD RECOMMENDS A VOTE FOR THE ABOVE PROPOSAL TO CHANGE THE NAME
OF THE COMPANY AND TO AUTHORIZE THE BOARD TO ABANDON SUCH NAME AS THE BOARD
MAY DETERMINE WITHOUT FURTHER ACTION BY THE SHAREHOLDERS. The affirmative vote
of the majority of the outstanding shares of Common Stock entitled to vote at
the Annual Meeting of shareholders will be necessary for approval. Unless
otherwise instructed, proxies will be voted FOR approval of the amendment and
the related authorization to the Board of Directors.
3. PROPOSAL TO INCREASE THE COMPANY'S
AUTHORIZED CAPITAL STOCK
The Board of Directors of the Corporation has determined that it is
advisable to increase the Company's authorized capital stock from 10,000,000
shares to 30,000,000 shares and has voted to recommend that the shareholders
adopt an amendment to the Company's Articles of Incorporation effecting the
proposed increase.
As of March 31, 1996, 5,003,901 shares of Common Stock and 1,227,273
shares of Class B Common Stock were issued and outstanding, and 2,368,523 shares
were reserved for issuance upon exercise of stock options, warrants and the
conversion of Class B Common Stock, leaving 1,440,303 shares available for
future issuance. The Board of Directors believes it to be in the best interests
of the Company to authorize additional shares of Common Stock in order to
provide flexibility for corporate action in the future. In addition, management
believes that the availability of additional authorized shares for issuance from
time to time in the Board's discretion in connection with possible future
financings, investment opportunities, acquisitions of other companies, stock
splits, dividends or option grants or for other corporate purposes is desirable
in order to avoid repeated separate amendments to the Company's Articles of
Incorporation and the delay and expenses incurred in holding meetings of
shareholders to approve such amendments. There are at present no specific
understandings, arrangements or agreements with respect to any transactions that
would require the Company to issue any new shares of its Common Stock, other
than proposed stock option grants to employees and directors. See "Proposal to
Amend 1994 Stock Option Plan."
No further authorization by vote of the shareholders will be sought for
the issuance of the additional shares proposed to be authorized, except as might
be required by law or rules of the Nasdaq Stock Market or any stock exchange on
which the Company's shares may then be listed. The shareholders of the Company
do not have any preemptive right to purchase or subscribe for any part of any
new or additional issuance of the Company's securities. Future issuances of
Common Stock by the Company may be dilutive to its shareholders.
The affirmative vote of a majority of the Common Stock outstanding and
entitled to vote as of the record date is required to approve the Amendment to
the Company's Articles of Incorporation. THE BOARD OF DIRECTORS CONSIDERS THIS
AMENDMENT TO BE ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT. If not otherwise specified, proxies will be voted FOR approval of
this Amendment.
4. PROPOSAL TO AMEND 1994
STOCK OPTION PLAN
BACKGROUND AND SUMMARY OF PLAN
In 1994 the Company's Board of Directors and shareholders approved the
Discus Acquisition Corporation 1994 Stock Option Plan (the "Plan"), pursuant to
which 600,000 shares of Common Stock were reserved for grants of options to
members of the Board of Directors who are not employees of the Company and for
incoming members of the Spell Group. The Plan also permits the grant of options
to employees, consultants and advisors to the Company, in the discretion of the
Board. The Plan further provides for the automatic grant to non-employee
directors of five-year options for 18,000 shares of Common Stock when a
non-employee director first becomes an outside director, exercisable as to 6,000
shares on the first, second and third anniversaries of the date of grant to such
director. A copy of the Plan is attached as Appendix 1 to this Proxy Statement,
and incorporated herein.
The Board believes the Plan advances the interests of the Company and
its stockholders by (i) increasing the proprietary interests of employees and
non-employee directors in the Company's long-term success and more closely
aligning the interests of employees and such directors with the Company's
shareholders; and (ii) providing an additional means by which the Company can
attract and retain qualified employees and experienced and knowledgeable people
to serve as directors.
The Plan permits a committee composed of disinterested persons to award
stock options and permits the grant of stock options for up to 600,000 shares of
Common Stock. Options may be granted as incentive or non-incentive stock
options, except that incentive stock options may only be granted to employees of
the Company or a subsidiary. The terms of option grants are approved by the
Company's Compensation Committee, subject to certain conditions. The exercise
price per share may not be less than the fair market value of a share of the
underlying Common Stock on the date the option is granted.
The Plan is administered by the Company's Compensation Committee, which
has the authority (i) to interpret the plan document, (ii) to establish rules
for the plan's administration, (iii) to determine all terms and conditions of
awards (other than automatic non-employee director options) to be made under the
Plan, subject to the limitations expressed therein, and (iv) to amend or modify
the terms of outstanding awards, including accelerating the exercisability or
vesting of an award or extending the term of an award.
The Board of Directors may amend the Plan in such respects as is deemed
advisable. No such amendment will be effective without the approval of the
Company's stockholders if stockholder approval of the amendment is required
pursuant to Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of
the Internal Revenue Code or the rules of NASDAQ, should the Common Stock be
listed on the NASDAQ National Market System.
If there is any material change in the corporate structure or shares of
Common Stock of the Company, such as in connection with a merger,
recapitalization, stock split, stock dividend or other extraordinary dividend
(including a spinoff), the Stock Option Committee (or the board of the surviving
corporation) shall make appropriate adjustments in the aggregate number and kind
of securities to award under the Plan and in the number of shares and purchase
price per share, if any, under any awards outstanding under the Plan. If all or
any portion of an award terminates, expires or is canceled unexercised or
unvested, then the shares subject to such an award will automatically become
available for reissuance under the Plan.
Upon termination of employment, or in the case of a non-employee
director, termination of service as a director, an option terminates (i) three
months after such termination (other than by reason of disability or death) or
(ii) five years after the date of the option grant. In the event such
termination occurs by reason of disability or death, including death within a
period of three months after termination of a directorship or employment, an
option may be exercised until the earlier of (a) twelve months after such death
or disability or (b) the date on which the option expires by its terms. In each
of such cases, an option may be exercisable to the extent it was exercisable on
the date of termination of a directorship or employment, but had not previously
been exercised. No option granted under the Plan may be transferred by a
participant for any reason or by any means, except by will or by the laws of
descent and distribution.
PROPOSED PLAN AMENDMENT
The Board of Directors has approved, subject to shareholder approval,
an amendment to the Plan (the "Amendment") which (i) increases the total number
of shares for which options may be granted from 600,000 shares to 1,000,000
shares, and (ii) increases the number of shares for which options will be
automatically granted to persons who were outside directors in 1995 from 18,000
shares to 62,000 shares; and (iii) increases the number of shares for which
options will be automatically granted to persons who become outside directors
beginning in 1996 from 18,000 shares to 50,000 shares. The Amendment also
changes the name of the plan to the Peerless Industrial Group, Inc. Stock Option
Plan.
On December 31, 1995, there were outstanding options under the Plan to
purchase 491,000 shares. Additional grants for 426,000 shares were authorized in
1995 to officers and directors subject to shareholder approval of an increase in
the number of shares for which options may be granted under the Plan. The
Company believes that it is prudent and desirable to increase the number of
shares available for grant under the Plan by 400,000 shares to permit current
and future grants and to further the purposes of the Plan. At March 18, 1996,
the market value of the additional shares for which options may be granted
pursuant to the Plan was $692,250.
The purposes of the Amendment are (i) to provide incentive to key
employees of the Company and its subsidiaries by encouraging them to invest in
the Company's stock and thereby increase their proprietary interest in its
business, (ii) to further the personal commitment of key employees to the
Company's success and progress, and (iii) to promote the interests of the
Company and its shareholders. The Company believes that the amendment will
continue to enable the Company to retain and attract key employees.
The Plan currently provides that outside directors are automatically
granted options to purchase 18,000 shares of Common Stock upon initial election
to the Board, and thereafter upon reelection for his or her fourth, seventh,
tenth and thirteenth terms as a director. Such options vest at the rate of 6,000
shares per year of service following the date of grant. Pursuant to the
Amendment, outside directors serving who were elected prior to 1996, consisting
of Harry W. Spell, Reynold M. Anderson, Bruce A. Richard and Richard W. Perkins
would receive an additional option grant of 44,000 shares each which, when added
to their existing automatic option grants of 18,000 shares each, total 62,000
shares for each of these outside directors. Under the revised option vesting
schedule for these directors, 12,000 shares will be deemed vested as of June 7,
1995; 6,000 shares will vest on June 7, 1996; 4,000 shares will vest on January
1, 1996; and 10,000 shares will vest on June 7th in each of the years 1997,
1998, 1999 and 2000.
Outside directors who are first elected as such after 1995, including
nominees Michael E. Platt and Brian K. Smith, will be entitled to receive
options for 50,000 shares each, with options vesting at the rate of 10,000
shares per year on the anniversary dates of their election.
TAX INFORMATION REGARDING STOCK OPTIONS
An optionee will not incur any federal income tax liability as a result
of the grant of an incentive stock option ("ISO") or a nonqualified stock
option. The same is true when any option becomes exercisable. Upon the exercise
of a nonqualified option, the optionee will generally recognize ordinary income
for federal income tax purposes in an amount equal to the difference between the
fair market value of the shares at the time of exercise and the exercise price.
The income recognized by the optionee will be subject to tax withholding by the
Company, and the Company will be entitled to a tax deduction in an amount equal
to the amount of ordinary income recognized by the optionee. Upon resale of such
shares by the optionee, any difference between the sale price and the fair
market value of the shares at the time the option was exercised will be treated
as capital gain or loss.
Generally, an optionee will not incur federal income tax liability as
the result of an exercise of an ISO. However, except in the case of death or
disability, if an ISO is exercised more than three months after an optionee's
termination of employment (a "disqualifying exercise"), the optionee will
recognize ordinary income in an amount equal to the difference between the fair
market value of the shares on the date of exercise and the exercise price. In
addition, for purposes of calculating an optionee's alternative minimum tax, if
any, the difference between the fair market value of the shares at the time the
ISO is exercised and the exercise price becomes an item of adjustment. When the
shares acquired upon exercise of an ISO are sold, the optionee will be taxed on
the difference between the sale price and the exercise price. If such a sale
does not occur within two years of the date the ISO was granted or within one
year of the date it was exercised, then the gain, if any, will be treated as
long-term capital gain. If such a sale occurs within either of the time periods
specified in the preceding sentence ( a "disqualifying disposition"), then the
portion of the optionee's gain equal to the difference between the fair market
value of the stock on the date of exercise (or, if less, the selling price) and
the exercise price will be treated as ordinary compensation income, while the
balance of any gain would be treated as capital gain. The Company is generally
not entitled to a deduction as the result of the grant or exercise of an ISO.
However, if the optionee recognizes ordinary income as the result of a
disqualifying exercise or disposition, the Company is entitled to a deduction in
an equivalent amount in the taxable year of the Company in which the
disqualifying event occurs.
The foregoing is only a summary of the general effect of U.S. federal
income taxation upon the optionee and the Company with respect to the grant and
exercise of options under the 1994 Stock Option Plan and the subsequent sale of
shares. This summary does not discuss the income tax laws of any state or
foreign country in which an optionee may reside.
REQUIRED VOTE
Approval of the amendment to the Plan requires the affirmative vote of
the holders of a majority of the shares of Common Stock represented in person or
by proxy and entitled to vote at the Annual Meeting. THE BOARD OF DIRECTORS OF
THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE PLAN.
NEW PLAN BENEFITS
The following table sets forth the benefits that have been allocated as
of December 31, 1995, under the Plan. The Plan is described above. There are no
other options currently contemplated other than those described below for
director-nominees, although the amount of benefits granted to date is not
necessarily indicative of the amounts that will be granted in the future. The
high bid and low ask prices of a share of Common Stock of the Company on March
18, 1996, were $1.625 and $1.875, respectively.
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF UNITS
- ----------------- ---------------- ---------------
William H. Spell 284,375 175,000
Officer and Director
Harry W. Spell 71,500 44,000
Director
Richard W. Perkins 71,500 44,000
Director
Bruce A. Richard 112,125 69,000
Officer and Director
Michael E. Platt 71,500 44,000
Director
Reynold M. Anderson 81,250 50,000
Director
Executive Group 396,500 244,000
Non-Executive 295,750 182,000
Director Group
Non-Executive Officer -- --
Employee Group
- -----------------------------
(1) Dollar value calculated based on March 18, 1996 closing price of $1.625
per share.
5. APPROVAL OF THE INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers and Lybrand, L.L.P. as
independent auditors for the Company for the fiscal year ending December 31,
1996. Coopers and Lybrand have served as the Company's independent accountants
since 1984. A proposal to ratify the appointment of Coopers and Lybrand, L.L.P.
will be presented at the Annual Meeting. Representatives of Coopers and Lybrand
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they desire to do so and will be available to answer
appropriate questions from shareholders.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF COOPERS AND LYBRAND, L.L.P. AS
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the
"Commission"). Such officers, directors and shareholders are required by the
Commission to furnish the Company with copies of all such reports.
To the Company's knowledge, based solely on a review of copies of
reports filed with the Commission during 1995, all applicable Section 16(a)
filing requirements were complied with, except for the acquisition of options to
purchase 18,000 shares each of Common Stock pursuant to the 1994 Stock Option
Plan by Reynold M. Anderson, Richard W. Perkins, Bruce A. Richard and Harry W.
Spell in June 1994 which was not reported until January 1996.
MANAGEMENT OF THE COMPANY
The following table provides information with respect to the Company's
executive officers. Each executive officer has been appointed to serve until his
successor is duly appointed by the Board of Directors or his earlier removal or
resignation from office.
NAME AGE PRINCIPAL OCCUPATION
William H. Spell 39 Chief Executive Officer and
Director of the Company
Jan C. van Osnabrugge 53 President of the Company
Robert E. Deter 51 Chief Financial Officer of the
Company
William H. Spell. See "Election of Directors."
Jan C. van Osnabrugge. Jan C. van Osnabrugge has been employed by the
Company's subsidiary, Peerless Chain Company, since January 1994 and has served
as the President and Chief Executive Officer of Peerless since January 1994.
Prior to joining Peerless, he served as Chief Executive Officer of Wolfking
Belam BV (NL) from September 1992 through September 1993. Between November 1990
and September 1992 he was employed by Stork RMS BV and Stork NON BV in various
executive capacities, including Chief Executive Officer and Vice President of
Sales and Marketing.
Robert E. Deter. Robert E. Deter has been employed by Peerless since
1979. He has served as the Company's Controller since 1991 and as its Chief
Financial Officer since April 1995.
OTHER MATTERS
The management of the Company is unaware of any other matters that are
to be presented for action at the meeting. Should any other matter properly come
before the meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by the directors, officers and
regular employees of the Company. Such persons will receive no additional
compensation for such services. Arrangements will also be made with certain
brokerage firms and certain other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed for their reasonable out-of-pocket expenses
incurred by them in connection therewith. All expenses incurred in connection
with this solicitation will be borne by the Company.
SHAREHOLDER PROPOSALS
Proposals intended to be presented at the 1997 Annual Meeting must be
received by the Company by December 15, 1996 to be considered for inclusion in
the Company's proxy materials relating to that meeting.
By Order of the Board of Directors
DISCUS ACQUISITION CORPORATION
William H. Spell
Chief Executive Officer
- --------------------------------------------------------------------------------
Appendix 1
PEERLESS INDUSTRIAL GROUP, INC. STOCK OPTION PLAN
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) "Acquisition" shall mean: (i) any consolidation or merger to which
the Company is a party; (ii) any sale or conveyance to another corporation of
the property of the Company; (iii) any purchase by, or conveyance to, the
Company of another corporation or such corporation's property as an entirety or
substantially as an entirety; (iv) any statutory exchange of securities with
another corporation (including any exchange effected in connection with a merger
of a third corporation into the Company), or (v) any issuance of Company
securities for securities or substantially all of the assets of another
corporation or the issuance by another corporation of its securities for Company
securities.
(b) The "Company" shall mean Peerless Industrial Group, Inc., a
Minnesota corporation.
(c) "Committee" shall mean a Committee composed of not fewer than the
minimum number of persons required by Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended from time to
time, who may be appointed by, and serve at the pleasure of the Board and shall
have such powers and authority as are granted to it by the Board, including,
without limitation, the authority to grant stock operations hereunder. Each of
the members of the Committee shall be a "disinterested" person within the
meaning of Rule 16b-3, as then in effect. As of the date hereof, a
"disinterested" person under Rule 16b-3 means a person who, among other things,
has not at any time within one year prior to appointment to the Committee been
granted or awarded equity securities pursuant to the Plan or any other plan of
the Company or its affiliates, except to the extent such participation does not
disqualify such director from being a disinterested person under Rule 16b-3.
(d) "Common Stock" shall mean the Common Stock of the Company, subject
to adjustment as described in Section 12.
(e) The "Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended.
(f) The "Internal Revenue Code" is the Internal Revenue Code of 1986,
as amended from time to time.
(g) The "Optionee" for purposes of Section 9 is an employee of the
Company or any Subsidiary to whom an incentive stock option has been granted
under the Plan. For purposes of Section 10, the "Optionee" is the officer,
employee, advisor or consultant of the Company or any Subsidiary to whom a
nonqualified stock option has been granted.
(h) The "Plan" shall mean the Peerless Industrial Group, Inc. Stock
Option Plan, as amended hereafter from time to time including the forms of
Option Agreements as they may be modified by the Board from time to time.
(i) A "Subsidiary" shall mean any corporation of which fifty percent
(50%) or more of the total voting power of outstanding stock is owned, directly
or indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers, directors, employees and
consultants upon whose efforts the success of the Company and its Subsidiaries
will depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of stock options which will qualify as "incentive stock options" under
the provisions of Section 422 of the Internal Revenue Code, and through the
granting of nonqualified stock options pursuant to Section 10 of this Plan.
Adoption of this Plan shall be and is expressly subject to the condition of
approval by the shareholders of the Company within twelve (12) months before or
after the adoption of the Plan by the Board of Directors.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date it is adopted by the Board
of Directors of the Company and approved by the Company's shareholders.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board") or, to the extent empowered by the Board, by a Stock Option
Committee (hereinafter referred to as the "Committee" and as defined in Section
1(f) of this Plan) which may be appointed by the Board from time to time. The
Board shall have all of the powers vested in it under the provisions of the
Plan, including but not limited to exclusive authority (where applicable and
within the limitations described herein) to determine, in its sole discretion,
whether an incentive stock option or nonqualified stock option shall be granted,
the individuals to whom, and the time or times at which, options shall be
granted, the number of shares subject to each option and the option price, terms
and condition of each option. The Committee shall have such powers as are
granted to it by the Board. The Board, or the Committee if so empowered by the
Board, shall have full power and authority to administer and interpret the Plan,
to make and amend rules, regulations and guidelines for administering the Plan,
to prescribe the form and conditions of the respective stock option agreements
(which may vary from Optionee to Optionee) evidencing each option and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's interpretation of the Plan, or the Committee's interpretation
if so empowered by the Board, and all actions taken and determinations made by
the Board pursuant to the power vested in it hereunder, or by the Committee to
the extent empowered by the Board, shall be conclusive and binding on all
parties concerned. No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith in connection with the
administration of the Plan.
In the event the Board appoints a Committee as provided hereunder, any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
The Board, or the Committee if so empowered by the Board, shall from
time to time, at its discretion and without approval of the shareholders,
designate those directors, officers, employees, and consultants or advisors of
the Company or of any Subsidiary to whom nonqualified stock options shall be
granted; provided, however, that nonemployee directors shall only be entitled to
the nonqualified stock options granted under the provisions of Section 11
hereof; and provided further that consultants or advisors shall not be eligible
to receive stock options hereunder unless such consultant or advisor renders
bona fide services to the Company or Subsidiary and such services are not in
connection with the offer or sale of securities in a capital-raising
transaction. The Board, or the Committee if so empowered by the Board, shall
also designate those employees of the Company or of any Subsidiary to whom
incentive stock options shall be granted.
Except with respect to nonemployee directors, the Board, or the
Committee if so empowered by the Board, may grant additional incentive stock
options or nonqualified stock options to some or all participants then holding
options or may grant such options solely or partially to new participants. In
designating participants, the Board, or the Committee if so empowered by the
Board, shall also determine the number of shares to be optioned to each such
participant.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized
but unissued shares of Common Stock. One Million (1,000,000) shares of Common
Stock shall be reserved and available for options under the Plan; provided,
however, the total number of shares of Common Stock reserved for options under
this Plan shall be subject to adjustment as provided in Section 13 of the Plan.
In the event that any outstanding option granted under the Plan for any reason
expires or is terminated prior to the exercise thereof, the shares of Common
Stock allocable to the unexercised portion of such option shall continue to be
reserved for options under the Plan and may be optioned hereunder.
SECTION 7.
DURATION OF PLAN
Incentive stock options may be granted pursuant to this Plan from time
to time during a period of ten (10) years from the earlier of the date the Plan
is approved by the Board of Directors or the date it is approved by the
shareholders of the Company. Nonqualified stock options may be granted pursuant
to the Plan from time to time after the date the Plan is adopted by the Board of
Directors and until the Plan is discontinued or terminated by the Board.
SECTION 8.
PAYMENT
Optionee may pay for shares upon exercise of options granted pursuant
to this Plan with cash, certified check or Common Stock of the Company valued at
such stock's then "fair market value" as defined in Section 9 below.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Each incentive stock option granted pursuant to the Plan shall be
evidenced by a written stock option agreement (the "Option Agreement"). The
Option Agreement shall be in such form as may be approved from time to time by
the Board or the Committee (if so empowered by the Board) and may vary from
Optionee to Optionee; provided, however, that each Optionee and each Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the incentive stock option. The
option price per share shall not be less than one hundred percent
(100%) of the fair market value of the Common Stock per share on the
date the Board, or the Committee if so empowered by the Board, grants
the option; provided, however, that, if an Optionee owns stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its parent or any
Subsidiary, the option price per share of an incentive stock option
granted to such Optionee shall not be less than one hundred ten percent
(110%) of the fair market value of the Common Stock per share on the
date of the grant of the option. The "fair market value" of the Common
Stock of the Company on the date the option is granted shall be
determined by and in the sole discretion of the Board, or the Committee
if so empowered by the Board, with consideration given to the following
factors: (1) if such stock is then reported in the national market
system or is listed upon an established exchange or exchanges, in
determining the "fair market value" of the Common Stock, consideration
shall be given to the last closing price of such stock in such national
market system or on such stock exchange or exchanges on the date the
option is granted or, if no sale of such stock shall have occurred on
that date, on the next preceding day on which there was a sale of
stock; (2) if such stock is not reported in the national market system
or listed upon an exchange, in determining the "fair market value" of
the Common Stock, consideration shall be given to the mean between the
"bid" and "asked" prices quoted in the Common Stock of the Company on
the date the option is granted, or if there are no quoted "bid" and
"asked" prices on such date, on the next preceding date for which there
are such quotes; or (3) in determining the "fair market value" of the
Common Stock, consideration may be given to any facts and circumstances
which may exist at the time the option is granted which, in the sole
discretion of the Board, or the Committee if so empowered by the Board,
bear upon the "fair market value" of the Common Stock of the Company,
including but not limited to, opinions of independent and qualified
valuation experts or investment banking firms. In determining the "fair
market value" of the Common Stock of the Company, the Board, or
Committee if so empowered by the Board, shall act in good faith and
shall be fully protected by doing so.
(b) Term and Exercisability of Incentive Stock Option. The term during
which any incentive stock option granted under the Plan may be
exercised shall be established in each case by the Board, or the
Committee if so empowered by the Board, but in no event shall any
incentive stock option be exercisable during a term of more than ten
(10) years after the date on which it is granted. The Option Agreement
shall state when the incentive stock option becomes exercisable and
shall also state the maximum term during which the option may be
exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the option in the event it is
not exercised in full immediately shall be specified in the Option
Agreement. The Board, or the Committee if so empowered by the Board,
may accelerate the exercise date of any incentive stock option granted
hereunder which is not immediately exercisable as of the date of grant.
(c) Other Provisions. The Option Agreement authorized under this
Section 9 shall contain such other provisions as the Board, or the
Committee if so empowered by the Board, shall deem advisable. Any such
Option Agreement shall contain such limitations and restrictions upon
the exercise of the option as shall be necessary to ensure that such
option will be considered an "Incentive Stock Option" as defined in
Section 422 of the Internal Revenue Code or to conform to any change
therein.
(d) Holding Period. The sale or other disposition of any shares of
Common Stock acquired by an Optionee pursuant to the exercise of an
option describe above shall be eligible for the favorable taxation
treatment of Section 42(a) of the Internal Revenue Code if no
disposition of such shares is made by the Optionee within two (2) years
from the date of the granting of the option under which the shares were
acquired nor within one year after the acquisition of such shares
pursuant to the exercise of such option, or such other periods as may
be prescribed by the Internal Revenue Code. In the event of an
Optionee's death, such holding period shall not be applicable pursuant
to Section 421(c)(1) of the Internal Revenue Code.
SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to the Plan shall be
evidenced by a written Option Agreement. The Option Agreement shall be in such
form as may be approved from time to time by the Board or the Committee (if so
empowered by the Board), and may vary from Optionee to Optionee; provided,
however, that each Optionee and each Option Agreement shall comply with and be
subject to the following terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the nonqualified stock option.
Unless otherwise determined by the Board of Directors, or the Committee
if so empowered by the Board, the option price per share shall be equal
to one hundred percent (100%) of the fair market value of the Common
Stock per share on the date the Board or the Committee grants the
option. For the purposes hereof, the "fair market value" of a share of
Common Stock shall have the same meaning as set forth under Section
9(a) herein.
(b) Term and Exercisability of Nonqualified Stock Option. The term
during which any nonqualified stock option granted under the Plan may
be exercised shall be established in each case by the Board, or the
Committee if so empowered by the Board. The Option Agreement shall
state when the nonqualified stock option becomes exercisable and shall
also state the maximum term during which the option may be exercised.
In the event a nonqualified stock option is exercisable immediately,
the manner of exercise of the option in the event it is not exercised
in full immediately shall be specified in the stock option agreement.
The Board, or the Committee if so empowered by the Board, may
accelerate the exercise date of any nonqualified stock option granted
hereunder which is not immediately exercisable as of the date of grant.
(c) Withholding. In the event the Optionee is required under the Option
Agreement to pay to the Company, or make arrangements satisfactory to
the Company respecting payment of, any federal, state, local or other
taxes required by law to be withheld with respect to the option's
exercise, the Board of the Committee may, in its discretion and
pursuant to such rules as it may adopt, permit the Optionee to satisfy
such obligation, in whole or in part, by electing to have the Company
withhold shares of Common Stock otherwise issuable to the Optionee as a
result of the option's exercise equal to the amount required to be
withheld for tax purposes. Any stock elected to be withheld shall be
valued at its "fair market value," as provided under Section 9(a)
hereof, as of the date the amount of tax to be withheld is determined
under applicable tax law. The Optionee's election to have shares
withheld for this purpose shall be made on or before the date the
option is exercised or, if later, the date that the amount of tax to be
withheld is determined under applicable tax law. Such election shall
also comply with such rules as may be adopted by the Board or the
Committee to assure compliance with Rule 16b-3, as then in effect, of
the General Rules and Regulations under the Securities Exchange Act of
1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this
Section 10 shall contain such other provisions as the Board, or the
Committee, as the case may be, shall deem advisable.
SECTION 11.
GRANTING OF OPTIONS TO NONEMPLOYEE DIRECTORS
Each nonemployee director of the Company who is elected to the Board
after December 31, 1995 shall automatically be granted a nonqualified option (a
"Director Option"), as of the date of his or her election to the Board, to
purchase fifty thousand (50,000) shares of the Company's Common Stock. The terms
and conditions of Director Options granted pursuant to this Section 11 shall be
as follows: (a) Options shall expire on the earlier of (i) twelve (12) months
after the Optionee ceases to be a director or (ii) five (5) years after the date
of grant; provided, however, that in the event the nonemployee director ceases
to be a director as a result of death or disability of such director, any option
granted to such nonemployee director hereunder may be exercised until (i) twelve
(12) months after such death or disability or (ii) the date on which the option,
by its terms, expires, whichever is earlier; (b) The option shall become
exercisable as to 10,000 shares beginning on the later of (i) the first
anniversary of the grant of the option or (ii) six (6) months after the date on
which the plan is first approved by the shareholders of the Company in
accordance with Rule 16b-3 under the Securities Exchange Act (such date
hereinafter referred to as the "Exercise Date") each such option shall be
exercisable with respect to an additional 10,000 on the second, third, fourth
and fifth anniversary of the Exercise Date; and it shall be a condition to the
exercise that in each case, the director shall have maintained continuous
service as a director throughout such twelve (12) month period; and (c) the
exercise price per share shall be one hundred percent (100%) of the fair market
value per share on the date of grant of such option, as determined in accordance
with Section 9 hereof. If any amendment to the Plan requires approval by the
shareholders of the Company for continued applicability of Rule 16b-3 under the
Exchange Act, or for initial or continued listing of the Common Stock or other
securities of the Company upon any stock exchange, then such amendment shall be
approved by the holders of a majority of the Company's outstanding capital stock
entitled to vote.
Director Options granted to persons who were nonemployee directors
elected after January 1, 1994 and prior to January 1, 1996, shall be increased
by 44,000 shares, to an aggregate of 62,000 shares which shall be exercisable in
accordance with the following schedule:
Number of Shares Date Exercisable
---------------- ----------------
12,000 June 7, 1995
4,000 January 1, 1996
6,000 June 7, 1996
10,000 June 7, 1997
10,000 June 7, 1998
10,000 June 7, 1999
10,000 June 7, 2000
The terms of the foregoing options shall be as follows: (a) Options
shall expire on the earlier of (i) twelve (12) months after the Optionee ceases
to be a director or (ii) five (5) years after the date of grant; provided,
however, that in the event the nonemployee director ceases to be a director as a
result of death or disability of such director, any option granted to such
nonemployee director hereunder may be exercised until (i) twelve (12) months
after such death or disability or (ii) the date on which the option, by its
terms, expires, whichever is earlier; (b) it shall be a condition to the
exercise that in each case, the director shall have maintained continuous
service as a director throughout such twelve (12) month period; and (c) the
exercise price per share shall be one hundred percent (100%) of the fair market
value per share on the date of grant of such option, as determined in accordance
with Section 9 hereof.
SECTION 12.
TRANSFER OF OPTION
No option shall be transferable, in whole or in part, by the Optionee
other than by will or by the laws of descent and distribution and, during the
Optionee's lifetime, the option may be exercised only by the Optionee. If the
Optionee shall attempt any transfer of any option granted under the Plan during
the Optionee's lifetime, such transfer shall be void and the option, to the
extent not fully exercised, shall terminate.
SECTION 13.
RECAPITALIZATION, SALE, MERGER, EXCHANGE,
CONSOLIDATION OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company,
the number of shares of Common Stock effected without receipt of consideration
by the Company, the number of shares of Common Stock reserved under Section 6
hereof and the number of shares of Option Stock covered by each outstanding
option and the price per share thereof shall be equitably adjusted by the Board
of Directors to reflect such change. Additional shares which may be credited
pursuant to such adjustment shall be subject to the same restrictions as are
applicable to the shares with respect to which the adjustment relates.
In the event of the sale by the Company of substantially all of its
assets and the consequent discontinuance of its business, or in the event of a
merger, exchange, consolidation or liquidation of the Company, the Board of
Directors shall, in its sole discretion, in connection with the Board's adoption
of the plan for sale, merger, exchange, consolidation or liquidation, provide
for one or more of the following: (i) the acceleration of the exercisability of
any or all outstanding options; (ii) the complete termination of this Plan and
cancellation of outstanding options not exercised prior to a date specified by
the Board (which date shall give Optionees a reasonably period of time in which
to exercise the options prior to, or simultaneously with, the effectiveness of
such sale, merger, exchange, consolidation or liquidation); and (iii) the
continuance of the Plan with respect to the exercise of options which were
outstanding as of the date of adoption by the Board of such plan for sale,
merger, exchange, consolidation or liquidation and provide to Optionees holding
such options the right to exercise their respective options as to an equivalent
number of shares of stock of the corporation succeeding the Company by reason of
such sale, merger, exchange, consolidation or liquidation. The grant of an
option pursuant to the Plan shall not limit in any way the right or power of the
Company to make adjustments, reclassification, reorganizations or changes of its
capital or business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.
SECTION 14.
INVESTMENT PURPOSE
No shares of Common Stock shall be issued pursuant to the Plan unless
and until there has been compliance, in the opinion of Company's counsel, with
all applicable legal requirements, including without limitation, those relating
to securities laws and stock exchange listing requirements. As a condition to
the issuance of Common Stock to an Optionee, the Board, or the Committee if so
empowered by the Board, may require the Optionee to (a) represent that the
shares of Common Stock are being acquired for investment and not resale and to
make such other representations as the Board, or the Committee if so empowered
by the Board, shall deem necessary or appropriate to qualify the issuance of the
shares as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (b) represent that the Optionee shall not dispose of the
shares of Common Stock in violation of the Securities Act of 1933 or any other
applicable securities laws. The Company reserves the right to place a legend on
any stock certificate issued upon exercise of an option granted pursuant to the
Plan to assure compliance with this Section 14.
SECTION 15.
RIGHTS AS A SHAREHOLDER
An Optionee (or the Optionee's successor or successors) shall have no
rights as a shareholder with respect to any shares covered by an option until
the date of the issuance of a stock certificate evidencing such shares (except
as otherwise provided in Section 13 above). No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 13).
SECTION 16.
AMENDMENT OF PLAN
The Board of Directors of the Company may from time to time, insofar as
permitted by law, suspend or discontinue the Plan or revise or amend it in any
respect; provided, however, that no such revision or amendment, except as is
authorized in Section 13, shall impair the terms and conditions of any option
which is outstanding on the date of such revision or amendment to the material
detriment of the Optionee without the consent of the Optionee. Notwithstanding
the foregoing, no such revision or amendment shall, (i) materially increase the
number of shares subject to the Plan except as provided in Section 13 hereof,
(ii) change the designation of the class of employees eligible to receive
options, (iii) decrease the price at which options may be granted, or (iv)
materially increase the benefits accruing to Optionees under the Plan, unless
such revision or amendment is approved by the shareholders of the Company.
Additionally, the provisions of Section 11 shall not be amended more than once
every six (6) months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder.
Furthermore, the Plan may not, without the approval of the shareholders, be
amended in any manner that will cause incentive stock options to fail to meet
the requirements of "Incentive Stock Options" as defined in Section 422 of the
Internal Revenue Code.
SECTION 17.
NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the Optionee
to exercise such option. Further, the granting of an option hereunder shall not
impose upon the Company or any Subsidiary any obligation to retain the Optionee
in its employ or as a director for any period.
- --------------------------------------------------------------------------------
DISCUS ACQUISITION CORPORATION
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of 1996 Annual Meeting
and the Proxy Statement, dated April 1, 1996, hereby appoints William H. Spell
and Reynold M. Anderson as proxies (each with the power to act alone and with
the power of substitution and revocation), to represent the undersigned and to
vote, as designated below, all common shares of Discus Acquisition Corporation
held of record by the undersigned on March 19, 1996, at the 1996 Annual Meeting
of shareholders to be held on May 1, 1996 at 3:30 p.m. at the Minneapolis Club
located at 729 Second Avenue South, Minneapolis, Minnesota 55402, in the Second
Floor Conference Room, and at any adjournments thereof.
1. To elect directors for the ensuing year and until their successors
shall be elected and duly qualified.
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
REYNOLD M. ANDERSON, WILLIAM H. SPELL, HARRY W. SPELL,
MICHAEL E. PLATT, RICHARD W. PERKINS, BRUCE A. RICHARD
INSTRUCTION: To withhold authority to vote for any individual, write
that nominee's name in the space provided below.
---------------------------------------------------------------------
2. To approve an amendment to the Articles of Incorporation of the Company
to change its name to Peerless Industrial Group, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Articles of Incorporation of the Company
to increase the Company's authorized shares from 10,000,000 to
30,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve an amendment to the Company's 1994 Stock Option Plan which
increases the number of shares reserved thereunder for issuance of
stock options from 600,000 to 1,000,000 shares and amends the terms and
conditions and number of shares allocated thereunder for the automatic
grant of stock options to outside directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To ratify and approve the appointment of Coopers and Lybrand, L.L.P. as
independent auditors of the Company for the fiscal year ending December
31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
PROXY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 THROUGH 6. ABSTENTIONS WILL BE COUNTED TOWARDS THE
EXISTENCE OF A QUORUM.
Please sign exactly as name appears on this proxy. When shares are held
by joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
Dated: ________________________________ _____________________________________
_____________________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
DISCUS ACQUISITION CORPORATION
2430 METROPOLITAN CENTRE
333 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of 1996 Annual Meeting
and the Proxy Statement, dated April 1, 1996, hereby appoints William H. Spell
and Reynold M. Anderson as proxies (each with the power to act alone and with
the power of substitution and revocation), to represent the undersigned and to
vote, as designated below, all common shares of Discus Acquisition Corporation
held of record by the undersigned on March 19, 1996, at the 1996 Annual Meeting
of shareholders to be held on May 1, 1996 at 3:30 p.m. at the Minneapolis Club
located at 729 Second Avenue South, Minneapolis, Minnesota 55402, in the Second
Floor Conference Room, and at any adjournments thereof.
1. To elect a director for the ensuing year and until his or her successor
shall be elected and duly qualified.
[ ] FOR the nominee listed below
[ ] WITHHOLD AUTHORITY
to vote for the nominee listed below
BRIAN K. SMITH
2. To approve an amendment to the Articles of Incorporation of the Company
to change its name to Peerless Industrial Group, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Articles of Incorporation of the Company
to increase the Company's authorized shares from 10,000,000 to
30,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve an amendment to the Company's 1994 Stock Option Plan which
increases the number of shares reserved thereunder for issuance of
stock options from 600,000 to 1,000,000 shares and amends the terms and
conditions and number of shares allocated thereunder for the automatic
grant of stock options to outside directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To ratify and approve the appointment of Coopers and Lybrand, L.L.P. as
independent auditors of the Company for the fiscal year ending December
31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
PROXY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 THROUGH 6. ABSTENTIONS WILL BE COUNTED TOWARDS THE
EXISTENCE OF A QUORUM.
Please sign exactly as name appears on this proxy. When shares are held
by joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
Dated: ________________________________ _____________________________________
_____________________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
