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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MILTOPE GROUP INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MILTOPE GROUP INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To the Stockholders of Miltope Group Inc.:
The Annual Meeting of Stockholders (the "Meeting") of Miltope Group
Inc., a Delaware corporation (the "Company"), will be held at the Company's
corporate headquarters, 500 Richardson Road South, Hope Hull, Alabama,
Monday, June 5, 1995 at 10:00 A.M., Local Time, to consider and act upon
the following:
1. To elect eight directors of the Company to serve as the Board of
Directors until the next annual meeting of stockholders and until
their successors are elected and qualified;
2. To approve the Company's 1995 Stock Option and Performance Award
Plan; and
3. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record of the Common Stock, $.01 par value, of the
Company at the close of business on April 25, 1995 shall be entitled to
receive notice of, and to vote at, the Meeting, and at any adjournment or
adjournments thereof. A Proxy and a Proxy Statement for the Meeting are
enclosed herewith.
All stockholders are cordially invited to attend the Meeting. If you do
not expect to be present, you are requested to fill in, date and sign the
enclosed Proxy, which is solicited by the Board of Directors of the
Company, and to mail it promptly in the enclosed envelope to make sure that
your shares are represented at the Meeting. In the event you decide to
attend the Meeting in person, you may, if you desire, revoke your Proxy and
vote your shares in person.
By Order of the Board of Directors
LEONARD GUBAR
Secretary
Dated: May 5, 1995
IMPORTANT
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THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
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MILTOPE GROUP INC.
500 RICHARDSON ROAD SOUTH
HOPE HULL, ALABAMA 36043
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 5, 1995
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GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Miltope Group Inc., a Delaware
corporation (the "Company"), to be voted at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at the
Company's corporate headquarters, 500 Richardson Road South, Hope Hull,
Alabama 36043, on Monday, June 5, 1995 at 10:00 A.M., Local Time, and any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and in this Proxy
Statement.
The principal executive offices of the Company are located at 500
Richardson Road South, Hope Hull, Alabama 36043. The approximate date on
which this Proxy Statement and the accompanying Proxy will first be sent or
given to stockholders is May 5, 1995.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with
the instructions contained therein and, in the absence of specific
instructions, will be voted (i) for the election as directors of persons
who have been nominated by the Board of Directors, (ii) for the approval of
the Company's 1995 Stock Option and Performance Award Plan (the "1995
Plan"), and (iii) in accordance with the judgment of the person or persons
voting the proxies on any other matter that may be properly brought before
the Meeting. Each such Proxy granted may be revoked at any time thereafter
by writing to the Secretary of the Company prior to the Meeting, or by
execution and delivery of a subsequent Proxy or by attendance and voting in
person at the Meeting, except as to any matter or matters upon which, prior
to such revocation, a vote shall have been cast pursuant to the authority
conferred by such Proxy.
VOTING SECURITIES
Stockholders of record as of the close of business on April 25, 1995
(the "Record Date") will be entitled to notice of, and to vote at, the
Meeting or any adjournments thereof. On the Record Date there were
outstanding 5,845,148 shares of the Common Stock, $.01 par value. There
was no other class of voting securities outstanding at that date. Each
holder of Common Stock is entitled to one vote for each share held by such
holder. The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a
quorum at the Meeting. Under the rules of the Securities and Exchange
Commission, boxes and a designated blank space are provided on the proxy
card for stockholders to mark if they wish to withhold authority to vote
for one or more nominees for director. Votes withheld in connection with
the election of one or more of the nominees for director will be counted as
votes cast against such individuals and will be counted toward the presence
of a quorum for the transaction of business. If no direction is indicated
the proxy will be voted for the election of the nominees for director.
Under the rules of the National Association of Securities Dealers, Inc.
("NASD"), a broker "non-vote" has no effect on the outcome of the election
of directors or the establishment of a quorum for such election. The form
of proxy does not provide for abstentions with respect to the election of
directors; however, a stockholder present at the Meeting may abstain with
respect to such election. The treatment of abstentions and broker "non-
votes" with respect to the election of directors is consistent with
applicable Delaware law and the Company's By-laws.
With respect to the approval of the Company's 1995 Plan, stockholders
may vote in favor of or against the 1995 Plan or they may abstain from
voting. Under the rules of the NASD, an abstention vote has the effect of
a vote against the 1995 Plan and a broker "non-vote" is not counted as a
vote "for" or "against" the 1995 Plan and, accordingly, would have no
effect on the vote regarding the 1995 Plan except that abstentions and
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broker "non-votes" will be counted toward the presence of a quorum for the
transaction of business. The treatment of abstentions and broker "non-
votes" with respect to the approval of the 1995 Plan is consistent with
applicable Delaware law and the Company's By-Laws.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
ownership of voting securities of the Company by each person who is known
to the management of the Company to have been the beneficial owner of more
than 5% of the outstanding shares of the Company's Common Stock as of the
Record Date:
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP* OF CLASS
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Common Stock Innova International 3,664,478 62.7%
($.01 par value) Corporation
Suite 5900
153 East 53rd Street
New York, NY 10022
Common Stock Dimensional Fund 335,300 (1) 5.7%
($.01 par value) Advisors Inc.
Suite 650
1299 Ocean Avenue
Santa Monica, CA 90401
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* Unless otherwise noted, all shares are directly owned.
(1) Dimensional Fund Advisors Inc., a registered investment advisor
("Dimensional"), reported beneficial ownership of 335,300 shares of
the Company's Common Stock as of December 31, 1994. Dimensional
reported that it had sole dispositive power with respect to 335,300
shares, sole voting power with respect to 212,500 shares and no voting
power with respect to 122,800 shares. According to Dimensional, all
of the shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, in series of The
DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and the DFA Participating Group Trust, investment vehicles
for qualified employee benefit plans, for all of which Dimensional
serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.
OWNERSHIP OF COMMON STOCK BY DIRECTORS, NOMINEES AND OFFICERS
The following table sets forth certain information as of the Record
Date, April 25, 1995, regarding the ownership of voting securities of the
Company by (i) each director and nominee of the Board of Directors of the
Company, (ii) each executive officer of the Company named in the Summary
Compensation Table, and (iii) all directors and executive officers of the
Company, and as to the percentage of outstanding shares held by them on
that date:
NAME OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
Common Stock Jan H. Stenbeck 0 *
Common Stock Richard Pandolfi 64,225 1.1%
Common Stock J. Shelby Bryan 83,837 1.4%
Common Stock Alvin E. Nashman 39,665 (2) *
Common Stock Jon L. Boyes 37,328 (3) *
Common Stock David L. Lengel 26,000 (4) *
Common Stock William L. Dickinson 9,671 (5) *
Common Stock Myles L. Tintle 10,250 (6) *
Common Stock Robert G. Kaseta 8,550 (7) *
Common Stock George K. Webster 7,250 (8) *
Common Stock Lawrence W. Swol 2,500 (9) *
Common Stock Franklin Miller 0 *
Common Stock William Mustard 0 *
Common Stock Executive officers and 263,276 (2)(3)(4) 4.5%
directors as a group (5)(6)(7)
(11 persons) (8)(9)(10)
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* Represents less than one percent of the class.
(1) Unless otherwise noted, all shares are directly owned. Includes
shares which may be acquired pursuant to options exercisable on
April 25, 1995 and within sixty days of April 25, 1995, pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
(2) Represents shares of Common Stock which Dr. Nashman may acquire upon
exercise of stock options.
(3) Includes 35,828 shares of Common Stock which Dr. Boyes may acquire
upon exercise of stock options.
(4) Includes 25,000 shares of Common Stock which Mr. Lengel may acquire
upon exercise of stock options. On April 11, 1995, Mr. Lengel
resigned as President and Chief Executive Officer of the
<PAGE>
Notes to Ownership of Common Stock Table continued
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Company. Accordingly, the stock options held by Mr. Lengel and
included in his beneficial ownership will terminate on, and will no
longer be exercisable after, July 11, 1995.
(5) Represents shares of Common Stock which Mr. Dickinson may acquire upon
exercise of stock options.
(6) Represents shares of Common Stock which Mr. Tintle may acquire upon
exercise of stock options.
(7) Includes 4,250 shares of Common Stock which Mr. Kaseta may acquire
upon exercise of stock options and 2,000 shares of Common Stock held
by Mr. Kaseta's wife and children. Mr. Kaseta disclaims beneficial
ownership of the shares owned by his wife and children.
(8) Includes 4,250 shares of Common Stock which Mr. Webster may acquire
upon exercise of stock options.
(9) Represents shares of Common Stock which Mr. Swol may acquire upon
exercise of stock options.
(10) Excludes the shares of Common Stock and stock options held by David L.
Lengel, who served as President and Chief Executive Officer of the
Company until his resignation on April 11, 1995.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
At the Meeting, eight directors are to be elected to serve until the
next annual meeting of stockholders and until their successors shall be
duly elected and shall qualify. As a result of the resignation on April
11, 1995 of David L. Lengel, as President and Chief Executive Officer and a
director of the Company, the Board of Directors of the Company, pursuant to
the By-Laws of the Company, determined to fill the vacancy created by his
resignation at the Annual Meeting. Additionally, the Board of Directors
authorized the increase of the size of the Board of Directors from seven to
eight directors effective as of the election. Unless otherwise specified,
all proxies received will be voted in favor of the election of the eight
nominees of the Board of Directors named below as directors of the Company.
Six of the eight nominees are presently directors of the Company. The term
of the current directors expires at the Meeting. Should any of the nominees
not remain a candidate for election at the date of the Meeting (which
contingency is not now contemplated or foreseen by the Board of Directors),
proxies solicited thereunder will be voted in favor of those nominees who
do remain candidates and may be voted for substitute nominees selected by
the Board of Directors. Assuming a quorum is present, a vote of a majority
of the shares present, in person or by proxy, at the Meeting is required to
elect each of the nominees as a director in accordance with the Company's
By-laws.
The following table sets forth the names of the nominees, their ages,
and their current positions with the Company:
NAME AGE TITLE
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Alvin E. Nashman 68 Chairman of the Board of Directors
Richard Pandolfi 57 Vice Chairman of the Board of Directors
Jan H. Stenbeck 52 Director
Jon L. Boyes 73 Director
J. Shelby Bryan 49 Director
William L. Dickinson 69 Director
William Mustard 42 Nominee
Franklin Miller 59 Nominee
Dr. Nashman has served as Chairman of the Board of Directors of the
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Company since October 1992 and prior to that date as a director of the
Company since September 1984. From 1969 through 1991, he served as
President of Computer Sciences Corporation's System Group and since 1967 he
has been a director of Computer Sciences Corporation, a company which
specializes in software and system integration for communications and
computer systems. In addition, Dr. Nashman is a private consultant and a
director of HALIFAX Corporation.
Mr. Pandolfi has served as Vice Chairman of the Board of Directors of
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the Company since October 1992 and he served as Chairman of the Board of
Directors of the Company from September 1991 to October 1992. Prior to
September 1991, he served as President, Chief Executive Officer and a
director of the Company since its formation in 1984. From 1979 to
September 1991, Mr. Pandolfi served as President and Chief Executive
Officer of Miltope, and from 1984 to September 1991, Mr. Pandolfi served as
a director of Miltope Business Products, Inc., a wholly owned subsidiary of
the Company ("MBP"). He has been a director of Miltope since 1975. In
addition, Mr. Pandolfi has served as President and Chief Executive Officer
and as a director of IV Phoenix Group Inc., a designer and manufacturer of
rugged mobile miniature computers including heads-up displays.
Mr. Pandolfi is also a private consultant and a marketing and sales
representative for Miltope. See "Certain Relationships and Related
Transactions."
Mr. Stenbeck has served as a director of the Company since November
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1987. He has served as director of Millicom International Cellular S.A., an
international cellular telecommunications concern headquartered in
Luxembourg ("MIC"), since December 1990, and as Chairman of the Board of
MIC since May 1991. Mr. Stenbeck is the Chairman of, and the controlling
stockholder in, Industriforvaltnings AB Kinnevik, a holding company which
is the controlling shareholder of several large Swedish and international
enterprises with worldwide operations. Mr. Stenbeck has been active in the
management of Kinnevik for more than 15 years. See "Certain Relationships
and Related Transactions."
Dr. Boyes has served as a director of the Company since March 1986. In
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1977 he retired from the U.S. Navy as a Vice-Admiral. From 1979 to March
1993, Dr. Boyes served as President and Chief Executive Officer of his own
consulting firm, Space and Maritime Applications Corporation. Since April
1993, Dr. Boyes has served as the President and Chief Executive Officer of
Halpenny & Boyes Inc., a health services industry consulting concern. He
is a director of Andrew Corporation, a technology concern.
Mr. Bryan has served as a director of the Company since its formation
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in 1984. He has served as the Vice Chairman and a director of MIC since
October 1, 1994. He served as Chairman of the Board and Chief Executive
Officer of Millicom Incorporated, a cellular telecommunications business
("Millicom"), from February 1985 until such company's merger with and into
a wholly owned subsidiary of MIC, and served as President and Chief
Executive Officer and a director of MIC from December 1991 to October 1994.
Mr. Bryan has been President of Austin Resources Corporation, an oil and
gas exploration company, for a period of more than five years. See
"Certain Relationships and Related Transactions."
Mr. Dickinson has served as a director of the Company since February
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1993. Mr. Dickinson served as United States Representative to Congress
from the 2nd District of Alabama from 1964 to January 1993. Mr. Dickinson
was a ranking Republican for eleven years on the House Armed Services
Committee, and a senior Republican on the House Subcommittee on Procurement
and Military Systems and the House Subcommittee on Military Installations
and Facilities prior to his retirement in 1993.
Mr. Mustard has served as President (Acting) and Chief Financial
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Officer of American Satellite Network, Inc., which provides satellite
television, computer network integration services and related
communications services, since 1993, and as Chief Financial Officer of
Innova International Corporation ("IIC"), which, through its operating
subsidiaries, provides network integration products and services and
telecommunications consulting services, since December 13, 1994. Since
June 1991, Mr. Mustard has held various positions in Millicom and MIC-USA
Inc., the successor by merger to Millicom and a wholly-owned subsidiary of
MIC.
Mr. Miller has served as Chairman and President of IIC since December
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13, 1994. Mr. Miller combines a background in telecommunications with
experience in computerization, software engineering, technology transfer
and industrial management. For more than five years, Mr. Miller has served
as President and Chief Executive Officer of InnovaConsult, Inc., a concern
which provides high level telecommunications consulting services.
In addition to the executive officers who are directors of the Company
listed above, Mr. George K. Webster, is Acting President and Chief
Executive Officer of the Company, Miltope and MBP, Mr. Randolph J. Straka
is Vice President, Finance and Chief Financial Officer of the Company,
Miltope and MBP and Mr. Leonard Gubar is Secretary of the Company and MBP
and Assistant Secretary of Miltope.
Mr. Webster (age 53) has served as Acting President and Chief Executive
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Officer of the Company, Miltope and MBP and as a director of Miltope and
MBP since April 11, 1995. From June 1994 until such date, he served as
Senior Vice President of Miltope. Prior to such date, Mr. Webster served
as Vice President, Programs and Operations of Miltope and later assumed
additional responsibility for business development and marketing. Prior to
joining Miltope in 1992, Mr. Webster served in various executive capacities
for Loral Fairchild Systems, a manufacturer of military sensors, both in
the visible and infrared spectrums, for application on aircraft, combat
vehicles and missiles.
Mr. Straka (age 42) has served as Vice President, Finance and Chief
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Financial Officer of the Company, Miltope and MBP since October 17, 1994.
Prior to joining the Company in October 1994 , Mr. Straka served for a
period of three years as Vice President - International Operations and for
a period of three years as Vice President, Treasurer, and Secretary of
Tokheim Corporation, a manufacturer of service station equipment and
related industrial controls.
Mr. Gubar (age 58) has served as Secretary of the Company since its
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formation in 1984, as Secretary of MBP since June 1987 and as Assistant
Secretary of Miltope since May 1984. Since August 1992, he has been a
member of the law firm of Reid & Priest LLP, which serves as counsel to the
Company and its affiliates. From 1969 to August 1992, he was a member of
the law firm of Spengler Carlson Gubar Brodsky & Frischling. He is a
director of Warner Insurance Services, Inc., a provider of automobile
insurance services to the insurance industry, and Career Horizons, Inc., a
national provider of temporary personnel to businesses and government
agencies.
BOARD OF DIRECTORS AND COMMITTEES
During the 1994 fiscal year, there were six regular and special
meetings of the Board of Directors. Action was taken by the directors by
unanimous consent in lieu of meetings on five occasions in 1994. During
1994, Mr. Bryan attended fewer than 75% of the aggregate number of meetings
of the Board of Directors and committees of the Board on which he serves.
The Board of Directors has designated from among its members an Audit
Committee, which consists of Messrs. Boyes and Nashman. The Audit
Committee, which reviews the Company's financial and accounting practices
and controls, held one meeting during the fiscal year ended December 31,
1994. The Company has a Stock Option Committee of the Board of Directors
for the Company's Incentive Stock Option Plan, Management Stock Option Plan
(which plans expired by their terms in 1994) and 1985 Key Employee Stock
Option Plan which consists of Messrs. Bryan and Boyes. The Stock Option
Committee did not meet during the fiscal year ended December 31, 1994. The
Company has a Stock Option Committee of the Board of Directors for the
Company's 1995 Plan which consists of Messrs. Boyes, Bryan and Stenbeck.
See "Proposal No. 2 -Approval of the 1995 Stock Option and Performance
Award Plan." The Company has a Compensation Committee of the Board of
Directors which reviews the compensation of the Company's employees,
including establishing performance based bonuses for certain executive
officers of the Company and Miltope. The Compensation Committee consists
of Messrs. Bryan, Boyes and Nashman. The Compensation Committee held one
meeting during the fiscal year ended December 31, 1994. The Company does
not have a standing nominating committee.
PROPOSAL NO. 2 - APPROVAL OF THE
1995 STOCK OPTION AND PERFORMANCE AWARD PLAN
GENERAL
The Board of Directors of the Company has approved the adoption of the
Miltope Group Inc. 1995 Stock Option and Performance Award Plan (the "1995
Plan"). As of April 25, 1995, no employees of the Company, Miltope and MBP
have received awards under the 1995 Plan.
The 1995 Plan is briefly described below. Copies of the 1995 Plan may
be obtained from the Company and will also be available for inspection at
the Annual Meeting.
PURPOSE AND EFFECTIVE DATE
The purpose of the 1995 Plan is to provide for the success and enhance
the value of the Company by linking participants' personal interests with
those of the Company's stockholders, customers and employees, by providing
participants with an incentive for outstanding performance, and to
motivate, attract and retain the services of participants upon whom the
success of the Company depends. The 1995 Plan also replaces the Company's
existing stock option plans, one of which terminates with respect to the
grant of new stock options in 1995 and the other two plans terminated with
respect to the grant of new stock options in 1994. The 1995 Plan is
flexible in that it provides for the granting of stock options ("Options"),
stock appreciation rights ("SARs"), restricted stock ("Restricted Stock"),
performance shares and performance units ("Performance Shares and
Performance Units"), singularly or in combination as determined by the
Stock Option Committee of the Board of Directors. The 1995 Plan became
effective, subject to stockholder approval at the Meeting, as of April 11,
1995 (the "Effective Date").
ADMINISTRATION OF THE 1995 PLAN
The 1995 Plan will be administered by the Stock Option Committee of the
Board of Directors of the Company (which will consist exclusively of
outside directors) and currently consists of Jon L. Boyes, J. Shelby Bryan
and Jan H. Stenbeck, or by such other committee consisting of not less than
two non-employee directors appointed by the Board of Directors (the
"Committee"). The Committee will be comprised solely of directors
qualified to administer the 1995 Plan pursuant to Rule 16b-3(c)(2) under
the Securities Exchange Act, as amended (the "Exchange Act").
SHARES SUBJECT TO THE 1995 PLAN
The 1995 Plan authorizes the grant of up to 500,000 shares of the
Company's Common Stock.
If any corporate transaction occurs which causes a change in the
capitalization of the Company, the Committee is authorized to make such
adjustments to the number and class of shares of the Company's Common Stock
delivered, and the number and class and/or price of shares of the Company's
Common Stock subject to outstanding awards granted under the 1995 Plan, as
it deems appropriate and equitable to prevent dilution or enlargement of
participants' rights.
ELIGIBILITY AND PARTICIPATION
Employees eligible to participate in the 1995 Plan include management
and key employees of the Company and its subsidiaries, as determined by the
Committee, including employees who are members of the Board, but excluding
directors who are not employees.
AMENDMENT AND TERMINATION OF THE 1995 PLAN
In no event may any award under the 1995 Plan be granted on or after
the tenth anniversary of the 1995 Plan's Effective Date. The Board may
amend, modify or terminate the 1995 Plan at any time; provided that no
amendment requiring stockholder approval for the 1995 Plan to continue to
comply with Rule 16b-3 under the Exchange Act or Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), shall be effective
unless approved by stockholders, and no amendment, termination or
modification shall materially and adversely affect any outstanding award
without the consent of the participant.
AWARDS UNDER THE 1995 PLAN
Stock Options. The Committee may grant incentive stock options
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("ISOs"), non-qualified stock options ("non-ISOs"), or a combination
thereof under the 1995 Plan. The Option exercise price for each such grant
of Options shall be at least equal to 100% of the fair market value of a
share of the Company's Common Stock on the date the Option is granted.
Options shall expire at such times as the Committee determines at the time
of grant; provided, however, that no Option shall be exercisable later than
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the tenth anniversary of its grant.
Options granted under the 1995 Plan shall be exercisable at such times
and subject to such restrictions and conditions as the Committee shall
approve. The Option exercise price is payable in cash, in shares of the
Company's Common Stock having a fair market value equal to the exercise
price, by share withholding or a combination of the foregoing. The
Committee may allow, along with other means of exercise, cashless exercise
as permitted under the Federal Reserve Board's Regulation T, subject to
applicable securities laws.
Options may be transferred only under the laws of descent and
distribution and, during his or her lifetime, shall be exercisable only by
the participant or his or her legal representative. Each stock option
agreement shall specify the participant's (or his or her beneficiary's)
rights in the event of retirement, death or other termination of
employment.
Stock Appreciation Rights. SARs granted under the 1995 Plan may be in
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the form of freestanding SARs, tandem SARs or a combination thereof. The
base value of a freestanding SAR shall be equal to the fair market value of
a share of the Company's Common Stock on the date of grant. The base value
of a tandem SAR shall be equal to the exercise price of the related Option.
The term of any SAR granted under the 1995 Plan shall be determined by the
Committee, provided that the term of any tandem SAR may not exceed ten (10)
years.
Freestanding SARs may be exercised upon such terms and conditions as
are imposed by the Committee and set forth under the SAR award agreement.
A tandem SAR may be exercised only with respect to the shares of Common
Stock of the Company for which its related Option is exercisable. Tandem
SARs granted in connection with an Option shall expire no later than the
expiration of the Option, and may be exercised only when the fair market
value of the shares subject to the Option exceeds the Option exercise
price. Furthermore, the number of shares of the Company's Common Stock
that may be acquired under the related Option will be reduced, one-for-one,
by the number of shares with respect to which the tandem SAR is exercised.
Upon exercise of an SAR, a participant will receive the difference
between the fair market value of a share of the Company's Common Stock on
the date of exercise and the base value multiplied by the number of shares
with respect to which the SAR is exercised. Payment due upon exercise may
be in cash, in shares of the Company's Common Stock having a fair market
value equal to such cash amount, or in a combination of cash and shares, as
determined by the Committee. The Committee may impose such restrictions on
the exercise of SARs as may be required to satisfy the requirements of
Section 16 of the Exchange Act.
SARs may only be transferred under the laws of descent and distribution
and, during his or her lifetime, shall be exercisable only by the
participant or his or her legal representative. Each SAR award agreement
shall specify the participant's (and his or her beneficiary's) rights in
the event of retirement, death or other termination of employment.
Restricted Stock. Restricted Stock may be granted in such amounts and
----------------
subject to such terms and conditions as determined by the Committee. The
Committee shall impose such conditions and/or restrictions on any shares of
Restricted Stock as it deems advisable.
Restricted Stock may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated until the end of the applicable
restriction period or upon earlier satisfaction of such other conditions
specified by the Committee.
Participants holding Restricted Stock may exercise full voting rights
with respect to those shares during the restriction period, and shall be
credited with regular cash dividends paid with respect to such shares.
Dividends or distributions credited during the restriction period shall be
subject to the same restrictions on transferability and forfeitability as
the shares of Restricted Stock with respect to which they were paid.
All rights with respect to Restricted Stock shall be available only
during a participant's lifetime, and each Restricted Stock award agreement
shall specify the participant's (and his or her beneficiary's) rights in
the event of retirement, death or other termination of employment.
The shares of Restricted Stock may be subject to vesting requirements,
such as continued employment for specified periods of time.
Performance Shares and Performance Units. Performance Shares and
----------------------------------------
Performance Unit awards may be granted in the amounts and subject to such
terms and conditions as determined by the Committee. The Committee shall
set performance goals which, depending on the extent to which they are met
during the performance periods established by the Committee, will determine
the number and/or value of Performance Shares/Units that will be paid to
participants.
Participants shall receive payment of the value of Performance Shares
or Performance Units earned in cash and/or shares of the Company's Common
Stock which have an aggregate fair market value equal to the value of the
earned Performance Shares/Units after the end of the applicable performance
period, in such combination as the Committee determines. Such shares may
be granted subject to any restrictions deemed appropriate by the Committee.
Prior to the beginning of each performance period, participants may elect
to defer receipt of payout on such terms as the Committee deems
appropriate. Participants shall be entitled to receive dividends declared
with respect to Performance Shares earned in connection with Performance
Share/Unit grants earned but not yet distributed, subject to the same
restrictions as are applicable to dividends earned with respect to
Restricted Stock, described above. At the discretion of the Committee,
participants may be entitled to exercise voting rights with respect to such
shares.
In the event a participant's employment is terminated by reason of
death, disability, voluntary termination with the Company's consent,
involuntary termination for other than Good Cause, as defined under the
1995 Plan, or retirement during a performance period, the participant shall
receive a payout of the Performance Shares and Performance Units as may be
determined under the award grant. In the event employment is terminated
for any other reason, all Performance Shares and Performance Units shall be
forfeited.
Performance Shares and Performance Units may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution.
MERGER OR CONSOLIDATION OF THE COMPANY
As of the effective date of a merger or consolidation of the Company,
and unless the merger or consolidation agreement does not provide for the
continuation of such awards or the substitution of new awards (1) any
Option or SAR outstanding shall become immediately exercisable and (2) any
restriction periods and restrictions imposed on Restricted Stock shall be
deemed to have expired. Performance Shares or Performance Units payable
after the date of such merger or consolidation shall be paid in cash as of
the date they originally were to be paid unless the Company or its
successor determines to pay such amounts as of an earlier date.
Performance Shares and Performance Units shall be canceled if, as a result
of the merger or consolidation, the value of such awards cannot be
determined.
FEDERAL INCOME TAX CONSEQUENCES - OPTIONS
The following is a brief description of the federal income tax
consequences related to Options granted under the 1995 Plan.
Consequences to the Optionholder
Grant. There are no federal income tax consequences to the
-----
optionholder solely by reason of the grant of ISOs and non-ISOs under the
1995 Plan.
Exercise. The exercise of an ISO is not a taxable event for regular
--------
federal income tax purposes if certain requirements are satisfied,
including the restriction providing that the optionholder generally must
exercise the Option no later than three months following the termination of
his employment. However, such exercise may give rise to an alternative
minimum tax liability (see "Alternative Minimum Tax" below).
Upon the exercise of a non-ISO, the optionholder generally will
recognize ordinary income in an amount equal to the excess of the fair
market value of the shares of the Company's Common Stock at the time of
exercise over the amount paid as the exercise price. The ordinary income
recognized in connection with the exercise by an optionholder of a non-ISO
will be subject to both wage and employment tax withholding.
The optionholder's tax basis in the shares acquired pursuant to the
exercise of an Option will be the amount paid upon exercise plus, in the
case of a non-ISO, the amount of ordinary income recognized by the
optionholder upon exercise.
Qualifying Disposition. If an optionholder disposes of shares of the
----------------------
Company's Common Stock acquired upon the exercise of an ISO in a taxable
transaction, and such disposition occurs more than two years from the date
on which the option is granted and more than one more year after the date
on which the shares are transferred to the optionholder pursuant to the
exercise of the ISO, the optionholder will recognize long-term capital gain
or loss equal to the difference between the amount realized upon such
disposition and the optionholder's adjusted basis in such shares (generally
the Option exercise price).
Disqualifying Disposition. If the optionholder disposes of shares of
-------------------------
the Company's Common Stock acquired upon the exercise of an ISO (other than
in certain tax-free transactions) within two years from the date on which
the ISO is granted or within one year after the transfer of the shares to
the optionholder pursuant to the exercise of the ISO, then at the time of
disposition the optionholder generally will recognize ordinary income equal
to the lesser of (i) the excess of such shares' fair market value on the
date of exercise over the exercise price paid by the optionholder or (ii)
the optionholder's actual gain (i.e., the excess, if any, of the amount
----
realized on the disposition over the exercise price paid by the
optionholder). If the total amount realized on a taxable disposition
(including return of capital and capital gain) exceeds the fair market
value on the date of exercise, then the optionholder will recognize a
capital gain in the amount of such excess. If the optionholder incurs a
loss on the disposition (i.e., if the total amount realized is less than
----
the exercise price paid by the optionholder) then the loss will be a
capital loss.
Other Dispositions. If an optionholder disposes of shares of the
------------------
Company's Common Stock acquired upon the exercise of a non-ISO in a taxable
transaction, the optionholder will recognize capital gain or loss in an
amount equal to the difference between his basis (as discussed above) in
the shares sold and the total amount realized upon the disposition. Any
such capital gain or loss (and any capital gain or loss recognized on a
disqualifying disposition of shares of the Company's Common Stock acquired
upon the exercise of ISOs as discussed above) will be long-term depending
on whether the shares of the Company's Common Stock were held for more than
one year from the date such shares were transferred to the optionholder.
Alternative Minimum Tax. Alternative minimum tax ("AMT") is imposed in
-----------------------
addition to, but only to the extent it exceeds, the optionholder's regular
tax for the taxable year. Generally, AMT is computed at the rate of 26% on
the excess of a taxpayer's alternative minimum taxable income ("AMTI") over
the exemption amount, but only if such excess amount does not exceed
$175,000 ($87,500 in the case of married individuals filing separate
returns). The AMT tax rate is 28% of such excess amount over the $175,000
($87,500) amount. For these purposes, the exemption amount is $45,000 for
joint returns or returns of surviving spouses ($33,750 for single taxpayers
and $22,500 for married individuals filing separate returns), reduced by
25% of the excess of AMTI over $150,000 for joint returns or returns of
surviving spouses ($112,500 for single taxpayers and $75,000 for married
individuals filing separate returns). A taxpayer's AMTI is essentially the
taxpayer's taxable income adjusted pursuant to the AMT provisions and
increased by items of tax preference.
The exercise of ISOs (but not non-ISOs) will generally result in an
upward adjustment to the optionholder's AMTI in the year of exercise by an
amount equal to the excess, if any, of the fair market value of the stock
on the date of exercise over the exercise price. The basis of the stock
acquired, for AMT purposes, will equal the exercise price increased by the
prior upward adjustment of the taxpayer's AMTI due to the exercise of the
option. Upon the disposition of the stock, the increased basis will result
in a smaller capital gains for AMTI than for ordinary income tax purposes.
Consequences to the Company
There are no federal income tax consequences to the Company by reason
of the grant of ISOs or non-ISOs or the exercise of ISOs (other than
disqualifying dispositions).
At the time the optionholder recognizes ordinary income from the
exercise of a non-ISO, the Company will be entitled to a federal income tax
deduction in the amount of the ordinary income so recognized (as described
above), provided that the Company timely satisfies its reporting and
disclosure obligations described below. To the extent the optionholder
recognizes ordinary income by reason of a disqualifying disposition of the
stock acquired upon exercise of ISOs, the Company will be entitled to a
corresponding deduction in the year in which the disposition occurs.
The Company will be required to report to the Internal Revenue Service
any ordinary income recognized by an optionholder by reason of the exercise
of a non-ISO or the disqualifying disposition of the Company's Common Stock
acquired pursuant to an ISO.
FEDERAL INCOME TAX CONSEQUENCES - OTHER AWARDS
The following is a brief description of the federal income tax
consequences related to SARs, Restricted Stock, Performance Shares and
Performance Units granted under the 1995 Plan.
Consequences to the Employee
Cash Awards. Generally, an award payable under the 1995 Plan in cash
-----------
is includible in the gross income of the participant as ordinary income at
the time received.
Stock Awards. An award payable in the form of the Company's Common
------------
Stock generally will be includible in the participant's gross income as of
the date the grant is made or, if later, the earlier of the date the Common
Stock awarded to the participant (i) is subsequently transferable by him or
her or (ii) is not subject to a substantial risk of forfeiture; however,
the participant may elect to have the value of the Common Stock includible
in his or her gross income at the time of grant, regardless of any
restrictions on subsequent transferability or substantial risks of
forfeiture. As the value of the Common Stock for federal income tax
purposes is determined as of the date it is included in the participant's
gross income, such an election may be worthwhile if significant
appreciation is expected between the date of grant and the date the
restrictions expire or are eliminated.
Disposition of Common Stock. If a participant disposes of shares of
---------------------------
the Company's Common Stock received under an award in a taxable
transaction, the participant will recognize capital gain or loss in an
amount equal to the difference between his basis (generally, the amount
included as ordinary income pursuant to the award) in the shares sold and
the total amount realized upon the disposition. Any such capital gain or
loss will be long-term so long as the shares of the Company's Common Stock
were held for more than one year from the date such shares were granted to
the participant.
Consequences to the Company
At the time the participant recognizes ordinary income upon the receipt
of an award under the 1995 Plan, the Company generally will be entitled to
a federal income tax deduction in the amount of the ordinary income so
recognized (as described above), provided that the Company timely reports
to the Internal Revenue Service the ordinary income recognized by the
participant pursuant to the award.
OTHER TAX CONSEQUENCES
The foregoing discussion is not a complete description of the federal
income tax aspects of awards made under the 1995 Plan. In addition,
administrative and judicial interpretations of the application of the
federal income tax laws are subject to change. Furthermore, the foregoing
discussion does not address state or local tax consequences.
VOTING REQUIREMENTS
Approval of the 1995 Plan requires the affirmative vote of the holders
of a majority of the shares of Common Stock voting at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE
1995 PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was formed in 1984 as a wholly owned subsidiary of
Stonebrook Group Inc., a Delaware corporation ("Stonebrook") which owned
approximately 55.6% of the outstanding Common Stock of the Company through
December 31, 1994. Miltope was formed in 1975 and was a wholly owned
subsidiary of Stonebrook until it became a wholly owned subsidiary of the
Company in June 1984. As of January 1, 1995, IIC, a Delaware corporation,
acquired 62.8% of the outstanding shares of the Common Stock of the Company
pursuant to certain share exchange transactions with Stonebrook and Stuvik
AB, a Swedish corporation and, at such time, a holder of approximately 7.2%
of the outstanding shares of the Company's Common Stock. IIC is a
subsidiary of American Satellite Network Inc. ("ASN"), a Delaware
corporation and a wholly-owned subsidiary of MIC-USA Inc., a Delaware
corporation and a wholly-owned subsidiary of MIC, a Luxembourg corporation.
Jan H. Stenbeck, a director of the Company, is also a director of IIC and
ASN and Chairman and a director of MIC. Mr. Stenbeck is also Chairman of
the Board and, together with family trusts, owner of approximately 99% of
the Common Stock of Stonebrook, which owns approximately 20% of the Common
Stock of IIC. In addition, J. Shelby Bryan, a director of the Company, is
Vice Chairman and a director of MIC.
Richard Pandolfi, who served as President and Chief Executive Officer
of the Company for approximately twelve years, and who currently serves as
Vice Chairman of the Board of the Company and as a private consultant
through a wholly-owned corporation, Pandolfi Group, Inc. ("Pandolfi
Group"), entered into an agreement, dated as of October 1, 1994, with
Miltope pursuant to which Pandolfi Group serves as a marketing and sales
representative with respect to certain products marketed by Miltope in
consideration of certain commissions and a $14,000 advance per month
against commissions earned during the two-year period of the agreement.
Pursuant to the terms of the agreement, commissions may be earned by Mr.
Pandolfi through September 1996. Mr. Pandolfi is the President and Chief
Executive Officer, a director and a minority shareholder of IV Phoenix
Group, Inc., a New York corporation of which IIC owns 42.6%.
Since January 1, 1992, the Company has made certain loans to Stonebrook
which accrue interest at an annual rate equal to the prime lending rate
plus .75% (9.25% at December 31, 1994). The loans to Stonebrook are
payable on demand by the Company and, at April 25, 1995, an aggregate
principal amount of $500,000 in loans to Stonebrook, plus interest thereon
in the amount of approximately $95,000, was outstanding.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
--------------------------
The following table shows all the cash compensation paid or to be paid
by the Company or by Miltope, its wholly-owned subsidiary, as well as
certain other compensation paid or accrued during the fiscal years ended
December 31, 1994, 1993 and 1992 to David L. Lengel, who served as the
Company's President and Chief Executive Officer until April 11, 1995, and
the four executive officers with total compensation in excess of $100,000,
other than the President and Chief Executive Officer, at the end of the
1994 fiscal year. On April 11, 1995, George K. Webster was elected as
Acting President and Chief Executive Officer of the Company. There were no
restricted stock awards or long term incentive plan payouts to any of the
executive officers named in the following table.
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Number
of All
Securities Other
Name and Underlying Compen-
Principal Position Year Salary Bonus Options sation
------------------ ---- ------ ----- ---------- -------
David L. Lengel 1994 $239,861 -- -- $ 22,703(4)
President and Chief 1993 $243,654 $15,000 10,000 --
Executive Officer of 1992 $152,931(2) $53,000(3) 45,000 $ 88,028(5)
the Company (1)
George K. Webster 1994 $132,179 -- -- $102,601(4)
Senior Vice 1993 $122,236 $12,500 17,000 --
President of 1992 $ 44,500(7) $20,832(8) -- --
Miltope (6)
Myles L. Tintle 1994 $128,000 -- -- --
Vice President, 1993 $114,961 $10,000 17,000 --
General Manager of 1992 $110,240 $36,568 -- --
Miltope Business
Products, Inc.
Robert G. Kaseta 1994 $115,492 -- -- $ 18,704(4)
Vice President, 1993 $103,674 $10,000 17,000 --
Engineering of 1992 $ 98,064 $11,708 -- --
Miltope
Lawrence W. Swol 1994 $109,642 -- -- $ 42,310(4)
Vice President, 1993 $101,848 -- 10,000 --
Operations of 1992 $ 40,625(9) $15,000 -- $ 41,057(5)
Miltope
______________________________
(1) Mr. Lengel resigned from the office of President and Chief Executive
Officer on April 11, 1995.
(2) Partial year compensation. Mr. Lengel became President and Chief
Executive Officer of the Company in October 1992. He was Senior Vice
President and Chief Operating Officer of the Company and Miltope from
March 1992 to October 1992.
(3) Represents the amount paid by the Company to Mr. Lengel for the 1992
fiscal year under the Company's Performance Based Bonus Plan (the
"Performance Bonus Plan"). Certain executive officers of the Company
and Miltope were eligible to receive the performance bonus which is
calculated as a percentage of a bonus
<PAGE>
Notes to Summary Compensation Table continued
---------------------------------------------
pool based upon the achievement of certain projected financial targets
approved by the Board of Directors of the Company.
(4) Represents relocation expenses paid by the Company to relocate to
Montgomery, Alabama in 1994.
(5) Represents relocation expenses paid by the Company in 1992.
(6) Mr. Webster was elected to the office of Acting President and Chief
Executive Officer of the Company on April 11, 1995.
(7) Partial year compensation. Mr. Webster was hired in 1992.
(8) Represents a signing bonus.
(9) Partial year compensation. Mr. Swol was hired in 1992.
STOCK OPTIONS AND FISCAL YEAR-END OPTION VALUES
The following table presents the number of outstanding stock options
and the aggregate dollar value of unexercised in-the-money stock options
held by each of the executive officers included in the Summary Compensation
Table at December 31, 1994. No stock options were exercised by such
executive officers during the 1994 fiscal year.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End (1)
-------------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
David L. Lengel 25,000 (2) 30,000 (2) $5,625(2) $5,625(2)
George K. Webster 4,250 12,750 -- --
Myles L. Tintle 10,250 12,750 -- --
Robert G. Kaseta 4,250 12,750 -- --
Lawrence W. Swol 2,500 7,500 -- --
______________________
(1) Value of unexercised in-the-money stock options is calculated by
subtracting the aggregate exercise price of such options from the fair
market value of the total number of shares underlying the in-the-money
stock options on December 30, 1994. The last sale price of the
Company's Common Stock on December 30, 1994 on The Nasdaq Stock Market
was $4.50.
(2) Mr. Lengel's employment with the Company ended on April 11, 1995. As
a result, all stock options held by Mr. Lengel will terminate on, and
will no longer be exercisable after, July 11, 1995.
EMPLOYMENT AGREEMENTS OF EXECUTIVE OFFICERS AND
TERMINATION OF EMPLOYMENT ARRANGEMENTS
David L. Lengel The Company has agreed to pay David L. Lengel, who
---------------
resigned as President and Chief Executive Officer of the Company on April
11, 1995, severance compensation in the amount of six months salary, or
$117,500, payable at normal payroll intervals during such period.
Mr. Lengel's severance compensation will also include (i) continued use of
a Company car and participation in all employee benefit programs to which
he was entitled on April 11, 1995, and (ii) the provision of (A) out-
placement services and (B) office space, office supplies, a telephone and
secretarial assistance solely for the purpose of out-placement activities
for a period of six months.
Randolph J. Straka The Company entered into an employment agreement,
------------------
dated as of October 17, 1994, with Randolph J. Straka, Vice President,
Finance and Chief Financial Officer of the Company. The agreement has a
term of two years ending October 16, 1996 and provides a salary at an
annual rate of $130,000. Mr. Straka is also entitled to (i) participate in
the Company's executive bonus plan, (ii) a one-time sign-on bonus in the
amount of $17,500 and (iii) an option to purchase a total of 25,000 shares
of the Company's Common Stock. The Company also agreed to pay Mr. Straka
certain relocation expenses incurred by him in moving to Montgomery,
Alabama and to reimburse him for certain temporary living expenses.
In the event Mr. Straka's employment is terminated by the Company for
any reason, other than for death or cause, as such term is defined in the
agreement, the Company will pay severance compensation to Mr. Straka in an
amount equal to the greater of one year's salary or the balance of the
salary during the remainder of the employment term. Severance compensation
also includes (i) continued use of a Company car and participation in all
employee benefit programs, and (ii) the provision of (A) out-placement
services and (B) office space, office supplies, a telephone and secretarial
assistance solely for the purpose of out-placement activities for a period
of one year following the date of termination of employment.
COMPENSATION OF DIRECTORS
Directors who are not compensated by the Company, or its subsidiaries,
Stonebrook or affiliates of Stonebrook, presently receive an annual fee of
$8,000 and an additional fee of $1,250 for each meeting of the Board of
Directors attended by such director and $1,250 per meeting of a committee
of the Board which is held on a day other than a day on which a Board
meeting is also held. The Chairman of the Board presently receives an
annual fee of $20,000. All directors are reimbursed for out-of-pocket
expenses in attending such meetings.
Messrs. Boyes, Dickinson and Nashman are each entitled to receive stock
options at the commencement of each year of service as a director entitling
him to purchase up to $15,000 worth of the Company's Common Stock, measured
by the market value of such Common Stock on the date of grant, for an
exercise price equal to not less than 85% of the market value of the Common
Stock covered by the options on the date of grant. On June 3, 1994,
Messrs. Boyes, Dickinson and Nashman were each granted options to purchase
5,639 shares of the Company's Common Stock at a purchase price of $2.66 per
share.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more
than 10% of the Company's Common Stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission. The Company believes that, during the fiscal year ended
December 31, 1994, its executive officers, directors and holders of more
than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements. In making these statements, the Company has relied
upon a review of reports on Forms 3, 4 and 5 furnished to the Company
during, or with respect to, its last fiscal year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The policies of the Compensation Committee regarding executive
compensation are to determine compensation levels based upon a combination
of corporate performance and individual performance measured against pre-
established objectives which are determined each fiscal year by the
Committee and approved by the entire Board of Directors. The goal is to
achieve compensation levels which reflect both individual performance and
incentives based upon common financial targets.
The salary of the President and Chief Executive Officer is reviewed
annually by the Compensation Committee with reference to a review of the
compensation levels of chief executive officers of comparable companies in
the defense electronics industry and of selected public companies in the
geographic region of the Company which the Compensation Committee believes
are competitors of, or similarly situated to, the Company. Based upon this
review, the salary of the President and Chief Executive Officer is
established. Compensation levels for other executive officers of the
Company are similarly established. Salaries of the Company's executive
officers are in the middle of the range of salaries paid by the other
companies surveyed.
Bonuses are separately established at the beginning of each fiscal year
with reference to the Company's performance measured against pre-set
criteria principally relating to corporate income and growth. In 1994, no
bonuses were paid to executive officers.
Grants of stock options, which generally vest over four years, are based
in substantial part on the Committee's judgment as to the long-term
incentive effect that a grant would have on the executive officer's and the
Company's long-term performance.
Payments of base salary for the 1994 fiscal year do not exceed $1
million for any named executive officer included in the Summary
Compensation Table. No stock options were granted to such officers in the
1994 fiscal year. The final regulations implementing Code Section 162(m)
are expected later this year and the Committee intends to review such final
regulations and take further appropriate action at that time.
This report was furnished by Messrs. Nashman, Boyes and Bryan, all of
the members of the Compensation Committee.
COMPARISON OF TOTAL STOCKHOLDER RETURN
The following graph sets forth the Company's total stockholder return
over a five-year period, beginning December 31, 1989, and ending December
31, 1994, as compared to the Nasdaq Stock Market Index and the Nasdaq Non-
Financial Index. The total stockholder return assumes $100 invested at the
beginning of the period in the Company's Common Stock, the Nasdaq Stock
Market Index and the Nasdaq Non-Financial Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
MILTOPE GROUP INC. vs. NASDAQ MARKET INDEXES
Assumes $100 was invested in Miltope Group Inc. and in each index on
December 31, 1989.
================================================================
NASDAQ
The NASDAQ Non-Financial Miltope
Stock Market Stocks Group Inc.
================================================================
1989 100.00 100.00 100.00
----------------------------------------------------------------
1990 84.92 88.03 59.52
----------------------------------------------------------------
1991 136.28 141.73 57.14
----------------------------------------------------------------
1992 158.58 154.92 85.71
----------------------------------------------------------------
1993 180.93 177.61 78.57
----------------------------------------------------------------
1994 176.92 170.30 85.71
----------------------------------------------------------------
AUDITORS
Deloitte & Touche LLP were the Company's independent public auditors for
the fiscal year ended December 31, 1994. The auditors for the current
fiscal year will be appointed by the Board of Directors. It is expected
that Deloitte & Touche LLP will be selected by the Board of Directors to
serve as the Company's auditors for the current fiscal year.
Representatives of Deloitte & Touche LLP intend to be present at the
Meeting and available to respond to appropriate questions and, in addition,
such representatives will be given an opportunity to make a statement at
the Meeting if they so desire. There is a standing audit committee of the
Board of Directors.
ANNUAL REPORT
All stockholders of record as of April 25, 1995 are concurrently being
sent a copy of the Company's Annual Report for the fiscal year ended
December 31, 1994 which contains certified financial statements of the
Company for the fiscal years ended December 31, 1993 and 1994.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF ITS
COMMON STOCK ON APRIL 25, 1995, ON THE WRITTEN REQUEST OF ANY SUCH PERSON,
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO THE CHIEF
FINANCIAL OFFICER, MILTOPE GROUP INC., 500 RICHARDSON ROAD SOUTH, HOPE
HULL, ALABAMA 36043.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by January 6, 1996 in order to be
considered for inclusion in proxy materials distributed in connection with
the next annual meeting of stockholders. All such proposals should be in
compliance with applicable Securities and Exchange Commission regulations.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before the Meeting.
However, if any other matters not mentioned in the Proxy Statement are
properly brought before the Meeting or any adjournments thereof, the
persons named in the enclosed Proxy or their substitutes will have
discretionary authority to vote proxies given in said form, or otherwise
act, in respect of such matters in accordance with their best judgment.
All of the costs and expenses in connection with the solicitation of
proxies with respect to the matters described herein will be borne by the
Company. In addition to solicitation of proxies by use of the mails,
directors, officers and employees (who will receive no compensation
therefor in addition to their regular remuneration) of the Company may
solicit the return of proxies by telephone, telegram or personal interview.
The Company will request banks, brokerage houses and other custodians,
nominees and fiduciaries to forward copies of the proxy material to their
principals and to request instructions for voting the proxies. The Company
may reimburse such banks, brokerage houses and other custodians, nominees
and fiduciaries for their expenses in connection therewith.
It is important that proxies be returned promptly. Stockholders are,
therefore, urged to fill in, date, sign and return the Proxy immediately.
No postage need be affixed if mailed in the enclosed envelope in the United
States.
By order of the Board of Directors
LEONARD GUBAR
Secretary
May 5, 1995
<PAGE>
MILTOPE GROUP INC. - 1995 ANNUAL MEETING
JUNE 5, 1995
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of MILTOPE GROUP INC., a Delaware
corporation (the "Company"), acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, dated May 5, 1995, and hereby
constitutes and appoints Alvin E. Nashman and Leonard Gubar, or either of
them acting singly in the absence of the other, with the power of
substitution in either of them, the proxies of the undersigned, to vote
with the same force and effect as the undersigned all shares of Common
Stock of the Company held by the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the Company's corporate
headquarters, 500 Richardson Road South, Hope Hull, Alabama 36043, on
Monday, June 5, 1995 at 10:00 A.M., Local Time, and at any adjournment or
adjournments thereof, hereby revoking any proxy or proxies heretofore given
and ratifying and confirming all that said proxies may do or cause to be
done by virtue thereof with respect to the following matters:
The undersigned hereby instructs said proxies or their substitutes:
1. The election of eight directors nominated by the Board of Directors:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to
listed below (except vote for all nominees
as indicated) listed below
NOMINEES: Richard Pandolfi, Alvin E. Nashman, Jon L. Boyes, William L.
Dickinson, Jan H. Stenbeck, J. Shelby Bryan, Franklin
Miller, William Mustard
(INSTRUCTION: To withhold authority to vote for any individual nominee
or nominees, write such nominee's or nominees' name in the space
provided below.)
-----------------------------------------------------------
2. The approval of the adoption of the Company's 1995 Stock Option and
Performance Award Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Upon such other matters as may properly come before the Meeting or any
adjournment or adjournments thereof.
This proxy when properly executed will be voted as directed. If no
direction is indicated, the proxy will be voted FOR the election of the
eight named individuals as director and the approval of the Company's 1995
Stock Option and Performance Award Plan.
PLEASE SIGN, DATE AND MAIL THIS PROXY
IMMEDIATELY IN THE ENCLOSED ENVELOPE
Dated: , 1995
--------------------------
(L.S.)
--------------------------
(L.S.)
--------------------------
Signature(s)
Please sign your name exactly as it
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title as it appears hereon. When
signing as joint tenants, all parties
in the joint tenancy must sign. When a
proxy is given by a corporation, it
should be signed by an authorized officer
and the corporate seal affixed. No
postage is required if returned in the
enclosed envelope and mailed in the
United States.
<PAGE>
APPENDIX
MILTOPE GROUP INC.
1995 STOCK OPTION AND PERFORMANCE AWARD PLAN
_______________
EFFECTIVE AS OF APRIL 11, 1995
<PAGE>
MILTOPE GROUP INC.
1995 STOCK OPTION AND PERFORMANCE AWARD PLAN
INTRODUCTION
Miltope Group Inc., a Delaware corporation (hereinafter referred to
as the "Corporation"), hereby establishes an incentive compensation plan to
be known as the "Miltope Group Inc. 1995 Stock Option and Performance Award
Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Non-Qualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Units and Performance Shares.
The Plan shall become effective on April 11, 1995. However, it shall
be rendered null and void and have no effect, and all Plan Awards granted
hereunder shall be canceled, if the Plan is not approved by a majority vote
of the Corporation's Stockholders within twelve (12) months of such date.
The purpose of the Plan is to promote the success and enhance the
value of the Corporation by linking the personal interests of Participants
to those of the Corporation's stockholders, customers and employees, by
providing Participants with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Corporation in its
ability to motivate, and retain the services of, participants upon whose
judgment, interest and special effort the successful conduct of its
operations is largely dependent.
The Plan also provides pay systems that support the Corporation's
business strategy and emphasizes pay-for-performance by tying reward
opportunities to carefully determined and articulated performance goals at
corporate, operating unit, business unit and/or individual levels.
DEFINITIONS
For purposes of this Plan, the following terms shall be defined as
follows unless the context clearly indicates otherwise:
(a) "Code" shall mean the Internal Revenue Code of 1986,
----
as amended, and the rules and regulations thereunder.
(b) "Committee" shall mean the Stock Option Committee of the
---------
Board of Directors of the Corporation.
(c) "Common Stock" shall mean the common stock, par value $0.01
------------
per share, of the Corporation.
(d) "Corporation" shall mean Miltope Group Inc., a Delaware
-----------
corporation.
(e) "Disability" shall have the same meaning as the term
----------
"permanent and total disability" under Section 22(e)(3) of the Code.
(f) "Exchange Act" shall mean the Securities Exchange Act of
------------
1934, as amended, and the rules and regulations thereunder.
(g) "Fair Market Value" of the Corporation's Common Stock on a
-----------------
Trading Day shall mean the last reported sale price for Common Stock or, in
case no such reported sale takes place on such Trading Day, the average of
the closing bid and asked prices for the Common Stock for such Trading Day,
in either case on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or if the Common Stock is
not listed or admitted to trading on any national securities exchange, but
is traded in the over-the-counter market, the closing sale price of the
Common Stock or, if no sale is publicly reported, the average of the
closing bid and asked quotations for the Common Stock, as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any comparable system or, if the Common Stock is not listed
on NASDAQ or a comparable system, the closing sale price of the Common
Stock or, if no sale is publicly reported, the average of the closing bid
and asked prices, as furnished by two members of the National Association
of Securities Dealers, Inc. who make a market in the Common Stock selected
from time to time by the Corporation for that purpose. In addition, for
purposes of this definition, a "Trading Day" shall mean, if the Common
Stock is listed on any national securities exchange, a business day during
which such exchange was open for trading and at least one trade of Common
Stock was effected on such exchange on such business day, or, if the Common
Stock is not listed on any national securities exchange but is traded in
the over-the-counter market, a business day during which the
over-the-counter market was open for trading and at least one "eligible
dealer" quoted both a bid and asked price for the Common Stock. An
"eligible dealer" for any day shall include any broker-dealer who quoted
both a bid and asked price for such day, but shall not include any
broker-dealer who quoted only a bid or only an asked price for such day.
In the event the Corporation's Common Stock is not publicly traded, the
Fair Market Value of such Common Stock shall be determined by the Committee
in good faith.
(h) "Good Cause" shall mean (i) a Participant's willful or gross
----------
misconduct or willful or gross negligence in the performance of his duties
for the Corporation or for any Parent or Subsidiary after prior written
notice of such misconduct or negligence and the continuance thereof for a
period of 30 days after receipt by such Participant of such notice, (ii) a
Participant's intentional or habitual neglect of his duties for the
Corporation or for any Parent or Subsidiary after prior written notice of
such neglect, or (iii) a Participant's theft or misappropriation of funds
of the Corporation or of any Parent or Subsidiary or commission of a
felony.
(i) "Incentive Stock Option" shall mean a stock option
----------------------
satisfying the requirements for tax favored treatment under Section 422 of
the Code.
(j) "Non-Qualified Option" shall mean a stock option which does
--------------------
not satisfy the requirements for tax-favored treatment under Section 422 of
the Code.
(k) "Option" shall mean an Incentive Stock Option or a Non-
------
Qualified Stock Option granted pursuant to the provisions of Section V
hereof.
(l) "Optionee" shall mean a Participant who is granted an
--------
Option under the terms of this Plan.
(m) "Parent" shall mean a parent corporation of the Corporation
------
within the meaning of Section 424(e) of the Code.
(n) "Participant" shall mean any employee or other individual
-----------
participating under the Plan.
(o) "Performance Share" shall mean a Plan Award granted pursuant
-----------------
to the provisions of Section VII hereof, with such Award nominally being
based upon the performance of the Corporation's Common Stock.
(p) "Performance Unit" shall mean a Plan Award granted pursuant
----------------
to the provisions of Section VII hereof, which Award may be based upon any
factor set forth under such Section.
(q) "Plan Award" shall mean an Option, Performance Share,
----------
Performance Unit or Restricted Stock granted pursuant to the terms of this
Plan.
(r) "Restricted Stock" shall mean a grant of one or more shares
----------------
of Common Stock subject to certain restrictions as provided under Section
VII hereof.
(s) "Section 16" shall mean Section 16 of the Exchange Act and
----------
the rules and regulations promulgated thereunder.
(t) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the rules and regulations thereunder.
(u) "Subsidiary" shall mean a subsidiary corporation of the
----------
Corporation within the meaning of Section 424(f) of the Code.
SECTION I
ADMINISTRATION
The Plan shall be administered by the Committee, which shall be
composed of at least two directors who meet the requirements of
disinterested administrators under Section 16. Subject to the provisions
of the Plan, the Committee may establish from time to time such
regulations, provisions, proceedings and conditions of awards which, in its
opinion, may be advisable in the administration of the Plan. A majority of
the Committee shall constitute a quorum, and, subject to the provisions of
Section IV of the Plan, the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by a
majority of the Committee, shall be the acts of the Committee. This Plan
is intended to be a bifurcated plan. The references to Section 16
contained herein are intended to apply only to the extent necessary for the
Plan to comply with Rule 16b-3 under Section 16 and only as to those
insiders of the Corporation who are deemed to be Section 16 insiders.
SECTION II
SHARES AVAILABLE
Subject to the adjustments provided in Section IX of the Plan, the
aggregate number of shares of the Common Stock which may be granted for all
purposes under the Plan shall be five hundred thousand (500,000) shares.
Shares of Common Stock underlying awards of securities (derivative or not)
and shares of Common Stock awarded hereunder (whether or not on a
restricted basis) shall be counted against the limitation set forth in the
immediately preceding sentence and may be reused (e.g., in the event that
----
an Option or an award of shares of Common Stock on a restricted basis under
the Plan to any individual expires, is terminated unexercised, or is
forfeited as to any shares covered thereby), however, with respect to Plan
Awards made to Section 16 insiders, shares of Common Stock may be reused
only to the extent permitted under Section 16. To the extent that a Stock
Appreciation Right included in an Option is exercised, such Option shall be
deemed to have been exercised. Incentive and Non-Qualified Stock Options,
Stock Appreciation Rights, Performance Shares, Restricted Stock and
Performance Units awarded under the Plan may be fulfilled in accordance
with the terms of the Plan with either authorized and unissued shares of
the Common Stock, issued shares of such Common Stock held in the
Corporation's treasury or shares of Common Stock acquired on the open
market.
SECTION III
ELIGIBILITY
Present and future management and key employees (including management
or key employees who are also directors) of the Corporation, or of any
Parent or Subsidiary, who are regularly employed on a salaried basis as
common law employees shall be eligible to participate in the Plan.
SECTION IV
AUTHORITY OF COMMITTEE
The Plan shall be administered by, or under the direction of, the
Committee, which shall administer the Plan so as to comply at all times
with the Exchange Act, to the extent such compliance is required, and,
subject to the Code, shall otherwise have plenary authority to interpret
the Plan and to make all determinations specified in or permitted by the
Plan or deemed necessary or desirable for its administration or for the
conduct of the Committee's business. Subject to the provisions of Section
XIII hereof, all interpretations and determinations of the Committee may be
made on an individual or group basis and shall be final, conclusive, and
binding on all interested parties. Subject to the express provisions of
the Plan, the Committee shall have authority, in its discretion, to
determine the persons to whom Plan Awards shall be granted, the times when
such Plan Awards shall be granted, the number of Plan Awards, the purchase
price or exercise price of each Plan Award, the period(s) during which such
Plan Award shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Plan Awards and the other terms and
provisions thereof (which need not be identical). In addition, the
authority of the Committee shall include without limitation the following:
(a) Financing. The arrangement of temporary financing for an
---------
Optionee by registered broker-dealers, under the rules and regulations of
the Federal Reserve Board, for the purpose of assisting the Optionee in the
exercise of an Option, such authority to include the payment by the
Corporation of the commissions of the broker-dealer;
(b) Procedures for Exercise of Option. The establishment of
---------------------------------
procedures for an Optionee (i) to exercise an Option by payment of cash or
any other property acceptable to the Committee, (ii) to have withheld from
the total number of shares of Common Stock to be acquired upon the exercise
of an Option that number of shares having a Fair Market Value, which,
together with such cash as shall be paid in respect of fractional shares,
shall equal the option exercise price of the total number of shares of
Common Stock to be acquired, (iii) to exercise all or a portion of an
Option by delivering that number of shares of Common Stock already owned by
him having a Fair Market Value which shall equal the Option exercise price
for the portion exercised and, in cases where a Option is not exercised in
its entirety, to permit the Optionee to deliver the shares of Common Stock
thus acquired by him in payment of shares of Common Stock to be received
pursuant to the exercise of additional portions of such Option, the effect
of which shall be that an Optionee can in sequence utilize such newly
acquired shares of Common Stock in payment of the exercise price of the
entire option, together with such cash as shall be paid in respect of
fractional shares and (iv) to engage in any form of "cashless" exercise.
(c) Withholding. The establishment of a procedure whereby a
-----------
number of shares of Common Stock or other securities may be withheld from
the total number of shares of Common Stock or other securities to be issued
upon exercise of an Option, Stock Appreciation Right or other grant or
award, as applicable, or for the tender of shares of Common Stock owned by
the Participant to meet the obligation of withholding for taxes incurred by
the Optionee upon such exercise.
(d) Types of Plan Awards. The Committee may grant awards in the
--------------------
form of one or more of the following: (i) Incentive Stock Options and
Non-Qualified Stock Options (described in Section V), (ii) Stock
Appreciation Rights (described in Section VI), (iii) grants of Restricted
Stock (described in Section VII), (iv) Performance Share Awards (described
in Section VII) and (v) Performance Units (described in Section VII).
SECTION V
STOCK OPTIONS
The Committee shall have the authority, in its discretion, to grant
Incentive Stock Options or to grant Non-Qualified Stock Options or to grant
both types of Options. No Option shall be granted for a term of more than
ten (10) years. Notwithstanding anything contained herein to the contrary,
an Incentive Stock Option may be granted only to common law employees of
the Corporation or of any Parent or Subsidiary now existing or hereafter
formed or acquired, and not to any director or officer who is not also such
a common law employee. The terms and conditions of the Options shall be
determined from time to time by the Committee; provided, however,
-------- -------
that the Options granted under the Plan shall be subject to the following:
(a) Exercise Price. The Committee shall establish the exercise
--------------
price at the time any Option is granted at such amount as the Committee
shall determine; provided, however, that the exercise price for each share
-------- -------
of Common Stock purchasable under any Incentive Stock Option granted
hereunder shall be such amount as the Committee shall, in its best
judgment, determine to be not less than one hundred percent (100%) of the
Fair Market Value per share of Common Stock at the date the Option is
granted; and provided, further, that in the case of an Incentive Stock
Option granted to a person who, at the time such Incentive Stock Option is
granted, owns shares of stock of the Corporation or of any Parent or
Subsidiary which possess more than ten percent (10%) of the total combined
voting power of all classes of shares of stock of the Corporation or of any
Parent or Subsidiary, the exercise price for each share of Common Stock
shall be such amount as the Committee, in its best judgment, shall
determine to be not less than one hundred ten percent (110%) of the Fair
Market Value per share of Common Stock at the date the Option is granted.
The exercise price will be subject to adjustment in accordance with the
provisions of Section IX of the Plan.
(b) Payment of Exercise Price. The price per share of Common
-------------------------
Stock with respect to each Option shall be payable at the time the Option
is exercised. Such price shall be payable in cash or, upon the discretion
of the Committee, pursuant to any of the methods set forth in Sections
IV(a) or (b) hereof. Shares of Common Stock delivered to the Corporation
in payment of the exercise price shall be valued at the Fair Market Value
of the Common Stock on the date preceding the date of the exercise of the
Option.
(c) Exercisability of Options. Each Option shall be exercisable
-------------------------
in whole or in installments, and at such time(s), and subject to the
fulfillment of any conditions on exercisability as may be determined by the
Committee at the time of the grant of such Options. The right to purchase
shares of Common Stock shall be cumulative so that when the right to
purchase any shares of Common Stock has accrued such shares of Common Stock
or any part thereof may be purchased at any time thereafter until the
expiration or termination of the Option.
(d) Expiration of Options. No Option by its terms shall be
---------------------
exercisable after the expiration of ten (10) years from the date of grant
of the Option; provided, however, in the case of an Incentive Stock Option
-------- -------
granted to a person who, at the time such Option is granted, owns shares of
stock of the Corporation or of any Parent or Subsidiary possessing more
than ten percent (10%) of the total combined voting power of all classes of
shares of stock of the Corporation or of any Parent or Subsidiary, such
Option shall not be exercisable after the expiration of five (5) years from
the date such Option is granted.
(e) Exercise Upon Death of Optionee. Subject to the provisions
-------------------------------
of Section V(h) hereof, in the event of the death of the Optionee prior to
his termination of employment (or within three (3) months after his
termination of employment other than for Good Cause) with the Corporation
or with any Parent or Subsidiary, his estate (or other beneficiary, if so
designated in writing by the Participant) shall have the right, within one
(1) year after the date of death (but in no case after the expiration date
of the Option(s)), to exercise his Option(s) with respect to the shares of
Common Stock as to which the deceased Optionee had not exercised his Option
at the time of his death, and only to the extent such Option or Options
were exercisable at such time.
(f) Exercise Upon Disability of Optionee. Subject to the
------------------------------------
provisions of Section V(h) hereof, if the employment by the Corporation or
by any Parent or Subsidiary of an Optionee is terminated because of
Disability, he shall have the right, within one (1) year after the date of
such termination (but in no case after the expiration of the Option(s)), to
exercise his Option(s) with respect to the shares of Common Stock as to
which he had not exercised his Option at the time of such termination, and
only to the extent such Option or Options were exercisable at such time.
(g) Exercise Upon Optionee's Termination of Employment. Except
--------------------------------------------------
as provided in the following sentence, if the employment of an Optionee by
the Corporation or by any Parent or Subsidiary is terminated for any reason
other than those specified in Sections V(e) and (f) above, he shall have
the right, within three (3) months after the date of such termination (but
in no case after the expiration date of the Option(s)), to exercise his
Option(s) only with respect to that number of shares of Common Stock that
he was entitled to purchase pursuant to Options that were exercisable
immediately prior to such termination. Notwithstanding the provisions of
the immediately preceding sentence, if an Optionee's employment is
terminated by the Corporation or by any Parent or Subsidiary for Good Cause
then the Optionee shall, at the time of such termination of employment,
forfeit his rights to exercise all of such Option(s).
(h) Maximum Amount of Incentive Stock Options. Each Plan Award
-----------------------------------------
under which Incentive Stock Options are granted shall provide that to the
extent the aggregate of the (i) Fair Market Value of the shares of Common
Stock (determined as of the time of the grant of the Option) subject to
such Incentive Stock Option and (ii) the fair market values (determined as
of the date(s) of grant of the options) of all other shares of Common Stock
subject to incentive stock options granted to an Optionee by the
Corporation or any Parent or Subsidiary, which are exercisable for the
first time by any person during any calendar year, exceed(s) one hundred
thousand dollars ($100,000), such excess shares of Common Stock shall not
be deemed to be purchased pursuant to Incentive Stock Options. The terms
of the immediately preceding sentence shall be applied by taking options
into account in the order in which they are granted.
SECTION VI
STOCK APPRECIATION RIGHTS
(a) Tandem Stock Appreciation Rights. The Committee shall have
--------------------------------
the authority to grant Stock Appreciation Rights in tandem with an Option,
either at the time of grant of the Option or by amendment. Each such Stock
Appreciation Right shall be subject to the same terms and conditions as the
related Option, if any, and shall be exercisable only at such times and to
such extent as the related Option is exercisable; provided, however, that a
-------- -------
Stock Appreciation Right may be exercised only when the Fair Market Value
of the Common Stock exceeds the exercise price of the related Option. A
Stock Appreciation Right shall entitle the Optionee to surrender to the
Corporation unexercised the related Option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares of
Common Stock (or cash, as provided below) having an aggregate value equal
to the excess of the Fair Market Value of one share of the Common Stock of
the Corporation on the day preceding the surrender of such Option over the
exercise price per share of Common Stock multiplied by the number of shares
of Common Stock provided for under the Option, or portion thereof, which is
surrendered; provided, however, that no fractional shares shall be issued
-------- -------
of Common Stock (cash being delivered to the Participant in lieu of such
fractional shares). The number of shares of Common Stock which may be
received pursuant to the exercise of a Stock Appreciation Right may not
exceed the number of shares of Common Stock provided for under the Option,
or portion thereof, which is surrendered. The Committee shall have the
right, in its sole discretion, to approve an election by a Participant to
receive cash in whole or in part in settlement of the Stock Appreciation
Right. Within thirty (30) days following the receipt by the Committee of a
request to receive cash in whole or in part in settlement of a Stock
Appreciation Right, the Committee shall, in its sole discretion, either
consent to or disapprove, in whole or in part, such a request. A request
to receive cash in whole or in part in settlement of a Stock Appreciation
Right may provide that, in the event the Committee shall disapprove such
request, such request shall be deemed to be an exercise of such Stock
Appreciation Right for shares of Common Stock.
(b) Freestanding Stock Appreciation Rights. The Committee also
--------------------------------------
shall have the authority to grant Stock Appreciation Rights unrelated to
any Option that may be granted hereunder. Each such Stock Appreciation
Right shall be subject to the terms and conditions as determined by the
Committee. A Freestanding Stock Appreciation Right shall entitle the
Optionee to surrender to the Corporation a portion or all of such rights
and to receive from the Corporation in exchange therefor that number of
shares of Common Stock (or cash, as provided below) having an aggregate
value equal to the excess of the Fair Market Value of one share of the
Common Stock of the Corporation on the day preceding the surrender of such
Rights over the Fair Market Value per share of Common Stock (determined as
of the date the Stock Appreciation Right was granted) multiplied by the
number of Stock Appreciation Rights which are surrendered; provided,
--------
however, that no fractional shares of Common Stock shall be issued (cash
-------
being delivered to the Participant in lieu of such fractional shares). The
Committee shall have the right, in its sole discretion, to approve an
election by a Participant to receive cash in whole or in part in settlement
of the Stock Appreciation Right. Within thirty (30) days following the
receipt by the Committee of a request to receive cash in whole or in part
in settlement of a Stock Appreciation Right, the Committee shall, in its
sole discretion, either consent to or disapprove, in whole or in part, such
a request. A request to receive cash in whole or in part in settlement of
a Stock Appreciation Right may provide that, in the event the Committee
shall disapprove such request, such request shall be deemed to be an
exercise of such Stock Appreciation Right for shares of Common Stock.
(c) Exercise of Stock Appreciation Rights. If the Participant
-------------------------------------
(1) voluntarily ceases to be an employee of the Corporation, or of any
Parent or Subsidiary, with the written consent of the Committee, (i) dies
or becomes Disabled, (ii) terminates his employment with the Corporation
or with any Parent or Subsidiary due to Retirement, or (iii) suffers an
involuntary termination of his employment with the Corporation or with any
Parent or Subsidiary for reasons other than Good Cause, the Plan Award
earned under Section VI(b) with respect to any outstanding Freestanding
Stock Appreciation Rights shall be determined as otherwise provided herein
or in any agreement executed by the Corporation and such Participant
hereunder. If the Participant ceases to be an employee of the Corporation
or of any Parent or Subsidiary for any other reason, all Plan Awards
granted hereunder and subject to restrictions shall be forfeited.
SECTION VII
PERFORMANCE SHARES, RESTRICTED STOCK AND PERFORMANCE UNITS
The Committee shall have the authority to grant Performance Shares,
Restricted Stock or Performance Units either separately or in combination
with other Plan Awards. The terms and conditions of Performance Shares,
Restricted Stock or Performance Units shall be determined from time to time
by the Committee, without limitation, except as otherwise provided in the
Plan. Furthermore:
(a) Services Rendered. Each such Plan Award shall be granted
-----------------
for services rendered (or to be rendered) and at no additional cost to the
Participant, provided, however, that the value of the services performed
must, in the opinion of counsel to the Corporation, equal or exceed the par
value of such shares of Common Stock to be granted to the Participant.
(b) Performance Account. The Corporation shall establish a
-------------------
performance account for each Participant to whom Performance Shares or
Performance Units are granted, and the Performance Shares or Performance
Units granted shall be credited to such account. Shares of Common Stock
granted in the form of Restricted Stock, shall be registered in the name of
the Participant and together with a stock power endorsed in blank,
deposited with the Corporation at the time the account is credited.
(c) Duration of Performance or Restriction Period. The duration
---------------------------------------------
of the performance or restriction period shall be determined by the
Committee at the time each such grant is made. More than one grant may be
outstanding at any one time, and performance or restriction periods may be
of different lengths. With respect to Restricted Stock, the Participant
shall generally have the rights and privileges of a stockholder of the
Corporation as to such shares, including the right to vote such Restricted
Stock, except that the following restrictions shall apply: (i) the
Participant shall not be entitled to delivery of a certificate until the
expiration or termination of the restriction period, (ii) none of the
shares of Restricted Stock may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the restriction period and (iii)
all of the shares of Restricted Stock shall be forfeited by the Participant
without further obligation on the part of the Corporation as set forth in
Section VII(g) hereof. Cash and stock dividends with respect to the
Restricted Stock will be withheld by the Corporation for the Participant's
account, and interest may be paid on the amount of cash dividends withheld
at a rate and subject to such terms as may be determined by the
Corporation. All cash or stock dividends so withheld by the Corporation
shall initially be subject to forfeiture, but shall become non-forfeitable
and payable at the same times, and at the same rate, as determined with
respect to the lapse of restrictions on Restricted Stock. Upon the
forfeiture of any Restricted Stock, such forfeited shares of Common Stock
shall be transferred to the Corporation without further action by the
Participant. Upon the expiration or termination of the restriction period,
the restrictions imposed on the appropriate Restricted Stock shall lapse
and a stock certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be delivered, free of
all such restrictions, except any that may be imposed by law or by any
applicable stockholders' agreement, to the Participant. A Participant who
files an election with the Internal Revenue Service to include the fair
market value of any Restricted Stock in gross income while they are still
subject to restrictions shall promptly furnish the Corporation with a copy
of such election together with the amount of any federal, state, local or
other taxes that may be required to be withheld to enable the Corporation
to claim an income tax deduction with respect to such election.
(d) Performance Targets. At the time of each grant, the
-------------------
Committee shall establish (subject to the provisions of Section VII(e)
hereof) performance targets and/or periods of service to which the vesting
of Performance Shares, Performance Units and/or Restricted Stock shall be
constituted as appropriate. The Committee may also establish a
relationship between performance targets and the number of Performance
Shares or the number or value of Performance Units which shall be earned.
The Committee also shall establish a relationship between performance
results other than the targets and the number of Performance Shares or
Restricted Stock and the number or value of Performance Units, if any,
which shall be earned. The Committee shall determine the measures of
performance to be used in determining the extent to which Performance
Shares or Performance Units are earned or to which restrictions on
Restricted Stock or units shall lapse. Performance measures and targets
may vary among grants, but once established for a grant may not be modified
with respect to that grant except as provided in Section X and provided
that, with respect to Performance Shares and Performance Units, the
Committee may, in its sole discretion, make such adjustments to performance
targets, the number of Performance Shares or the number or value of
Performance Units which shall be earned, or such other changes as it may
deem necessary or advisable in the event of material changes in the
criteria used for establishing performance targets which would result in
the dilution or enlargement of a Participant's award outside the goals
intended by the Committee at the time of the grant of the Plan Award.
(e) Performance Measures. The performance measures utilized to
--------------------
determine the number of Performance Shares, Performance Units or shares of
Restricted Stock that become vested under the Plan shall be as determined
by the Committee in its sole discretion and may include, but shall not be
limited to:
(i) Total stockholder return (measured as the sum of Common
Stock appreciation and dividends declared) in relation to any
nationally recognized stock index.
(ii) Return on invested capital in relation to target
objectives.
(iii) Share earnings/earnings growth in relation to target
objectives.
(iv) Cash flow/cash flow growth in relation to target
objectives.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining stockholder
approval.
(f) Dividend or Interest Equivalents. The Committee may provide
--------------------------------
that amounts equivalent to dividends or interest shall be payable with
respect to Performance Shares, Restricted Stock or Performance Units held
in the Participant's performance account. Such amounts shall be credited
to the performance account, and shall be payable to the Participant in cash
or in Common Stock, as set forth under the terms of the Plan Award, at such
time as the restrictions on the Restricted Stock are removed or the
Performance Shares or Performance Units are earned. The Committee further
may provide that amounts equivalent to interest or dividends held in the
performance accounts shall be credited to such accounts on a periodic or
other basis.
(g) Termination of Employment. If the Participant (i)
-------------------------
voluntarily ceases to be an employee of the Corporation, or of any Parent
or Subsidiary, with the written consent of the Committee, (ii) dies or
becomes Disabled, (iii) terminates his employment with the Corporation or
with any Parent or Subsidiary due to Retirement or (iv) suffers an
involuntary termination of his employment with the Corporation or with any
Parent or Subsidiary for reasons other than Good Cause, the Plan Award
earned under this Section with respect to any outstanding Performance
Shares, Restricted Stock, Performance Units or interest on dividend
equivalents shall be determined as otherwise provided herein or in any
agreement executed by such Participant hereunder. If the Participant
ceases to be an employee of the Corporation or of any Parent or Subsidiary
for any other reason, all Plan Awards granted hereunder and subject to
restrictions shall be forfeited. In such case, the Corporation shall have
the right to complete the blank stock power with respect to Restricted
Stock and transfer the same to its treasury.
SECTION VIII
DEFERRAL OF PAYMENTS
The Committee may, in its sole discretion, establish procedures by
which a Participant may elect to defer payment of a Plan Award. The
Committee shall determine the terms and conditions of such deferral. Any
such deferral shall be subject to the following:
(a) Contingent Nature of Allocation. Every allocation under the
-------------------------------
Plan to a performance account shall be considered "contingent" and unfunded
until any forfeiture restrictions under the terms of the Plan Award expire
or lapse, until all conditions contained in the Plan Award are satisfied,
and until any elective deferral period expires. Such contingent
allocations shall be considered bookkeeping entries only, notwithstanding
the crediting of deemed "dividends" or "interest." Nothing contained
herein shall be construed as creating a trust or fiduciary relationship
between the Participant and the Corporation or the Committee.
(b) Participant's Rights to Awards. Until the Plan Award vests,
------------------------------
the elective deferral period expires, and any restrictions are lifted, the
related amounts held in the Participant's performance account cannot be
sold, conveyed, transferred, pledged, hypothecated, or assigned and any
attempt to do so by the Participant shall result in the immediate
forfeiture of such Plan Award. Until the Plan Award vests and becomes
payable, such account balances shall be the property of the Corporation.
The Participant's right to such account balances shall be subject to the
claims of the general creditors of the Corporation. Receipt of the Plan
Award is conditioned upon satisfactory compliance with the terms and
conditions of the such Award and other requirements of the Plan.
(c) Election to Defer Payment. If a Participant desires to
-------------------------
defer the normal receipt of Common Stock or cash due him under a Plan
Award, he must make an irrevocable election in a calendar year prior to the
calendar year or years in which he is to perform services that will entitle
him to the Plan Award. Such election shall be made in accordance with Rule
16b-3 to the extent required and shall provide a fixed date for the
termination of the deferral period. The Participant shall not be permitted
to receive his Plan Award prior to the end of the elected deferral period,
except in the event of: his death, Retirement, Disability or termination
of employment with the Corporation or any Parent or Subsidiary.
SECTION IX
ADJUSTMENT OF SHARES; MERGER
OR CONSOLIDATION OF THE CORPORATION
(a) Recapitalization, Etc. In the event there is any change in
----------------------
the Common Stock of the Corporation by reason of any reorganization,
recapitalization, stock split, stock dividend or otherwise, there shall be
substituted for or added to each share of Common Stock theretofore
appropriated or thereafter subject, or which may become subject, to any
Option, grant of Restricted Stock, Performance Share or Performance Unit
award, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or for
which each such share shall be exchanged, or to which each such share be
entitled, as the case may be, and the per share price thereof also shall be
appropriately adjusted. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Stock Option shall comply with the
rules of Section 424(a) of the Code and (ii) in no event shall any
adjustment be made which would render any Incentive Stock Option granted
hereunder to be other than an incentive stock option for purposes of
Section 422 of the Code.
(b) Merger or Consolidation of Corporation. Upon (i) the merger
--------------------------------------
or consolidation of the Corporation with or into another corporation, if
the agreement of merger or consolidation does not provide for (1) the
continuance of the Options, Stock Appreciation Rights and shares of
Restricted Stock granted hereunder or (2) the substitution of new Options,
Stock Appreciation Rights or shares of Restricted Stock for Options, Stock
Appreciation Rights and shares of Restricted Stock granted hereunder, or
for the assumption of such Options, Stock Appreciation Rights and shares of
Restricted Stock by the surviving corporation or (ii) the dissolution,
liquidation, or sale of substantially all the assets, of the Corporation,
(1) the holder of any such Option or Stock Appreciation Right theretofore
granted and still outstanding (and not otherwise expired) shall have the
right immediately prior to the effective date of such merger,
consolidation, dissolution, liquidation or sale of assets to exercise such
Option(s) or Stock Appreciation Right(s) in whole or in part without regard
to any installment provision that may have been made part of the terms and
conditions of such Option(s) or Stock Appreciation Right(s) and (2) all
restrictions regarding transferability and forfeiture on shares of
Restricted Stock shall be removed as of the effective date of such merger,
consolidation, dissolution, liquidation or sale of assets; provided that
any conditions precedent to the exercise of such Options or Stock
Appreciation Rights and the transfer of such shares of Restricted Stock,
other than the passage of time, have occurred. The Corporation, to the
extent practicable, shall give advance notice to affected Optionees and
holders of Stock Appreciation Rights or shares of Restricted Stock of such
merger, consolidation, dissolution, liquidation or sale of assets. All
such Options and Stock Appreciation Rights which are not so exercised shall
be forfeited as of the effective time of such merger, consolidation,
dissolution, liquidation or sale of assets.
(c) Effect of Merger or Consolidation. As of the effective date
---------------------------------
of the merger, consolidation, dissolution, liquidation or sale of
substantially all of the assets of the Corporation, no Participant shall
earn any additional Performance Share or Performance Unit or dividend or
interest equivalent under this Plan. Furthermore, if the value of any
Performance Share or Performance Unit cannot be determined as of such date
because such Plan Award is conditioned upon the future financial
performance of the Corporation, such Performance Share or Performance Unit
(including any applicable dividend or interest equivalents) shall be
canceled. Any Performance Share or Performance Unit payable after the date
of the merger, consolidation, dissolution, liquidation or sale of
substantially all of the assets of the Corporation shall be paid in cash
(unless the appropriate merger or consolidation agreement provides
otherwise) as of the date such Performance Share or Performance Unit
originally was to have been paid, or as of such earlier date as may be
determined by the Corporation or its successor.
SECTION X
MISCELLANEOUS PROVISIONS
(a) Administrative Procedures. The Committee may establish any
-------------------------
procedures determined by it to be appropriate in discharging its
responsibilities under the Plan. Subject to the provisions of Section XIII
hereof, all actions and decisions of the Committee shall be final.
(b) Assignment or Transfer. No grant or award of any Incentive
----------------------
Stock Option or any other "derivative security" (as defined by Rule
16a-l(c) promulgated under the Exchange Act) made under the Plan or any
rights or interests therein shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order. During the lifetime of a
Participant Options and other Plan Awards granted hereunder shall be
exercisable only by the Participant, and Plan Awards earned hereunder shall
be payable only to the Participant. Performance Shares or Restricted Stock
or Performance Units may not be sold, assigned, transferred, redeemed,
pledged or otherwise encumbered during the restriction period, except as
provided in Section VIII(b) hereof.
(c) Investment Representation. In the case of Plan Awards paid
-------------------------
in shares of Common Stock or other securities, the Committee may require,
as a condition of receiving such securities, that the Participant furnish
to the Corporation such written representations and information as the
Committee deems appropriate to permit the Corporation, in light of the
existence or nonexistence of an effective registration statement under the
Securities Act to deliver such securities in compliance with the provisions
of the Securities Act.
(d) Withholding Taxes. The Corporation shall have the right to
-----------------
deduct from all cash payments hereunder any federal, state, local or
foreign taxes required by law to be withheld with respect to such payments.
In the case of the issuance or distribution of Common Stock or other
securities hereunder, the Corporation, as a condition of such issuance or
distribution, may require the payment (through withholding from the
Participant's salary, reduction of the number of shares of Common Stock or
other securities to be issued, or otherwise) of any such taxes. Subject to
the Rules promulgated under Section 16 of the Exchange Act (to the extent
applicable), and to the consent of the Committee, the Participant, may
satisfy the withholding obligations by paying to the Corporation a cash
amount equal to the amount required to be withheld or by tendering to the
Corporation a number of shares of Common Stock having a value equivalent to
such cash amount, or by use of any available procedure as described under
Section IV(c) hereof.
(e) Forfeiture. In order for a Participant or his legal
----------
representative to receive payments or benefits under the Plan, a
Participant must (i) be an active employee of the Corporation or of any
Parent or Subsidiary, (ii) have become Disabled or have terminated his
employment with the Corporation or with any Parent or Subsidiary due to
Retirement, (iii) have died while in the active employment of the
Corporation or of any Parent or Subsidiary, (iv) have voluntarily ceased to
be an employee of the Corporation or of any Parent or Subsidiary with the
written consent of the Committee or (v) suffered an involuntary termination
of employment by the Corporation or any Parent or Subsidiary for other than
Good Cause.
(f) Costs and Expenses. The costs and expenses of administering
------------------
the Plan shall be borne by the Corporation and shall not be charged against
any award nor to any employee receiving a Plan Award.
(g) Funding of Plan. Except in the case of awards of Restricted
---------------
Stock, the Plan shall be unfunded. The Corporation shall not be required
to segregate any of its assets to assure the payment of any Plan Award
under the Plan. Neither the Participants nor any other persons shall have
any interest in any fund or in any specific asset or assets of the
Corporation or any other entity by reason of any Plan Award, except to the
extent expressly provided hereunder. The interests of each Participant and
former Participant hereunder are unsecured and shall be subject to the
general creditors of the Corporation.
(h) Other Incentive Plans. The adoption of the Plan does not
---------------------
preclude the adoption by appropriate means of any other incentive plan for
employees.
(i) Plurals and Gender. Where appearing in the Plan, masculine
------------------
gender shall include the feminine and neuter genders, and the singular
shall include the plural, and vice versa, unless the context clearly
indicates a different meaning.
(j) Headings. The headings and sub-headings in this Plan are
--------
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
(k) Severability. In case any provision of this Plan shall be
------------
held illegal or void, such illegality or invalidity shall not affect the
remaining provisions of this Plan, but shall be fully severable, and the
Plan shall be construed and enforced as if said illegal or invalid
provisions had never been inserted herein.
(l) Payments Due Missing Persons. The Corporation shall make a
----------------------------
reasonable effort to locate all persons entitled to benefits under the
Plan; however, notwithstanding any provisions of this Plan to the contrary,
if, after a period of one (1) year from the date such benefits shall be
due, any such persons entitled to benefits have not been located, their
rights under the Plan shall stand suspended. Before this provision becomes
operative, the Corporation shall send a certified letter to all such
persons at their last known addresses advising them that their rights under
the Plan shall be suspended. Subject to all applicable state laws, any
such suspended amounts shall be held by the Corporation for a period of one
(1) additional year and thereafter such amounts shall be forfeited and
thereafter remain the property of the Corporation.
(m) Liability and Indemnification. (i) Neither the Corporation
-----------------------------
nor any Parent or Subsidiary shall be responsible in any way for any action
or omission of the Committee, or any other fiduciaries in the performance
of their duties and obligations as set forth in this Plan. Furthermore,
neither the Corporation nor any Parent or Subsidiary shall be responsible
for any act or omission of any of their agents, or with respect to reliance
upon advice of their counsel provided that the Corporation and/or the
appropriate Parent or Subsidiary relied in good faith upon the action of
such agent or the advice of such counsel.
(ii) Except for their own gross negligence or willful
misconduct regarding the performance of the duties specifically
assigned to them under or their willful breach of the terms of, this
Plan, the Corporation, each Parent and Subsidiary and the Committee
shall be held harmless by the Participants, former Participants,
beneficiaries and their representatives against liability or losses
occurring by reason of any act or omission. Neither the Corporation,
any Parent or Subsidiary, the Committee, nor any agents, employees,
officers, directors or shareholders of any of them, nor any other
person shall have any liability or responsibility with respect to this
Plan, except as expressly provided herein.
(n) Incapacity. If the Committee shall receive evidence
----------
satisfactory to it that a person entitled to receive payment of any Plan
Award is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such Plan Award and to give a
valid release thereof, and that another person or an institution is then
maintaining or has custody of such person and that no guardian, committee
or other representative of the estate of such person shall have been duly
appointed, the Committee may make payment of such Plan Award otherwise
payable to such person to such other person or institution, including a
custodian under a Uniform Gifts to Minors Act, or corresponding legislation
(who shall be an adult, a guardian of the minor or a trust company), and
the release by such other person or institution shall be a valid and
complete discharge for the payment of such Plan Award.
(o) Cooperation of Parties. All parties to this Plan and any
----------------------
person claiming any interest hereunder agree to perform any and all acts
and execute any and all documents and papers which are necessary or
desirable for carrying out this Plan or any of its provisions.
(p) Governing Law. All questions pertaining to the validity,
-------------
construction and administration of the Plan shall be determined in
accordance with the laws of the State of New York.
(q) Nonguarantee of Employment. Nothing contained in this Plan
--------------------------
shall be construed as a contract of employment between the Corporation (or
any Parent or Subsidiary), and any employee or Participant, as a right of
any employee or Participant to be continued in the employment of the
Corporation (or any Parent or Subsidiary), or as a limitation on the right
of the Corporation or any Parent or Subsidiary to discharge any of its
employees, with or without cause.
(r) Notices. Each notice relating to this Plan shall be in
-------
writing and delivered in person or by certified mail to the proper address.
All notices to the Corporation or the Committee shall be addressed to it at
500 Richardson Road South, Hope Hull, Alabama 36043, Attn: Vice President,
Finance and Chief Financial Officer. All notices to Participants, former
Participants, beneficiaries or other persons acting for or on behalf of
such persons shall be addressed to such person at the last address for such
person maintained in the Committee's records.
(s) Written Agreements. Each Plan Award shall be evidenced by a
------------------
signed written agreement between the Corporation and the Participant
containing the terms and conditions of the award.
SECTION XI
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Corporation shall have the right to
amend, suspend or terminate the Plan at any time, provided that no
amendment shall be made which shall increase the total number of shares of
the Common Stock of the Corporation which may be issued and sold pursuant
to Options or other Plan Awards, reduce the minimum exercise price in the
case of an Incentive Stock Option, or modify the provisions of the Plan
relating to eligibility with respect to Incentive Stock Options unless such
amendment is made by or with the approval of the stockholders (such
approval being granted within 12 months of the effective date of such
amendment). The Board of Directors of the Corporation shall be authorized
to amend the Plan and the Options granted thereunder (i) to maintain
qualification as "incentive stock options" within the meaning of Section
422 of the Code, if applicable or (ii) to comply with Rule 16b-3 (or any
successor rule) promulgated under the Exchange Act. Except as otherwise
provided herein, no amendment, suspension or termination of the Plan shall
alter or impair any Plan Awards previously granted under the Plan, without
the consent of the holder thereof.
SECTION XII
TERM OF PLAN
The Plan shall remain in effect until the earlier of April 11, 2005,
or the tenth anniversary of the date the Plan was adopted by the Board of
Directors of the Corporation, unless sooner terminated by such Board of
Directors. No Plan Awards may be granted under the Plan subsequent to the
termination of the Plan.
SECTION XIII
CLAIMS PROCEDURES
(a) Denial. If any Participant, former Participant or
------
beneficiary is denied any vested benefit to which he is, or reasonably
believes he is, entitled under this Plan, either in total or in an amount
less than the full vested benefit to which he would normally be entitled,
the Committee shall advise such person in writing the specific reasons for
the denial. The Committee shall also furnish such person at the time with
a written notice containing (i) a specific reference to pertinent Plan
provisions, (ii) a description of any additional material or information
necessary for such person to perfect his claim, if possible, and an
explanation of why such material or information is needed and (iii) an
explanation of the Plan's claim review procedure.
(b) Written Request for Review. Within 60 days of receipt of
--------------------------
the information stated in subsection (a) above, such person shall, if he
desires further review, file a written request for reconsideration with the
Committee.
(c) Review of Document. So long as such person's request for
------------------
review is pending (including the 60 day period in subsection (b) above),
such person or his duly authorized representative may review pertinent Plan
documents and may submit issues and comments in writing to the Committee.
(d) Committee's Final and Binding Decision. A final and binding
--------------------------------------
decision shall be made by the Committee within 60 days of the filing by
such person of this request for reconsideration; provided, however, that if
-------- -------
the Committee, in its discretion, feels that a hearing with such person or
his representative is necessary or desirable, this period shall be extended
for an additional 60 days.
(e) Transmittal of Decision. The Committee's decision shall be
-----------------------
conveyed to such person in writing and shall include specific reasons for
the decision, be written in a manner calculated to be understood by such
person, and set forth the specific references to the pertinent Plan
provisions on which the decision is based.
(f) Limitation on Claims. Notwithstanding any provisions of
--------------------
this Plan to the contrary, no Participant (nor the estate or other
beneficiary of a Participant) shall be entitled to assert a claim against
the Corporation (or against any Parent or Subsidiary) more than three years
after the date the Participant (or his estate or other beneficiary)
initially is entitled to receive benefits hereunder.
