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
PRECISION STANDARD, INC.
(Name of Registrant as Specified in Its Charter)
(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), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by
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PRECISION STANDARD, INC.
1225 17th Street, Suite 1800
Denver, Colorado 80202
(303) 292-6565
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1996
TO THE SHAREHOLDERS OF PRECISION STANDARD, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
Precision Standard, Inc., a Colorado corporation (the "Company"), will be
held at the Westin Hotel Tabor Center, 1672 Lawrence, Denver, Colorado
80202, on Wednesday, May 29, 1996, at 10:00 a.m. Mountain Daylight Time,
and at any and all adjournments thereof, for the purpose of considering
and acting upon the following matters:
1. The election of six (6) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors have
been duly elected and qualified;
2. The ratification of the appointment of Coopers & Lybrand L.L.P.
as the independent public accountants of the Company for the calendar year
ending December 31, 1996;
3. The approval of amendments to the Amended and Restated
Nonqualified Stock Option Plan which, among other matters, increase the
number of shares reserved under the Plan.
4. The approval of an amendment to the Amended and Restated
Incentive Stock Option and Appreciation Rights Plan to increase the number
of shares reserved under the Plan; and
5. The transaction of such other business as properly may come
before the meeting or any adjournment thereof.
A Proxy Statement explaining the matters to be acted upon at the
meeting is enclosed. Please read it carefully.
Only holders of record of the $.0001 par value common stock of the
Company at the close of business on Wednesday, April 17, 1996, will be
entitled to notice of and to vote at the Meeting or at any adjournment or
adjournments thereof. The Proxies are being solicited by the Board of
Directors of the Company.
All Shareholders, whether or not they expect to attend the Annual
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving
of a Proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Denver, Colorado WALTER M. MOEDE
April 29, 1996 SECRETARY
PRECISION STANDARD, INC.
1225 17th Street, Suite 1800
Denver, Colorado 80202
(303) 292-6565
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1996
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Precision Standard, Inc., a Colorado corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders (the
"Meeting") to be held at the Westin Hotel Tabor Center, 1672 Lawrence,
Denver, Colorado 80202, on Wednesday, May 29, 1996, at 10:00 a.m.,
Mountain Daylight Time, and at any adjournment thereof. It is anticipated
that this Proxy Statement and the accompanying Proxy will be mailed to the
Company's Shareholders on or about April 29, 1996.
Any person signing and returning the enclosed Proxy may revoke it at
any time before it is voted by (i) giving a later dated written revocation
of Proxy to the Company, or (ii) providing a later dated amended Proxy to
the Company, or (iii) voting in person at the Meeting. The expense of
soliciting Proxies, including the cost of preparing, assembling and
mailing this Proxy material to Shareholders, will be borne by the Company.
It is anticipated that solicitations of Proxies for the Meeting will be
made only by use of the mails; however, the Company may use the services
of its Directors, Officers and employees to solicit Proxies personally or
by telephone, without additional salary or compensation to them.
Brokerage houses, custodians, nominees and fiduciaries will be requested
to forward the Proxy soliciting materials to the beneficial owners of the
Company's shares held of record by such persons, and the Company will
reimburse such persons for the reasonable out-of-pocket expenses incurred
by them in that connection.
All shares represented by valid Proxies will be voted in accordance
therewith at the Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the
Company's $.0001 par value common stock ("Common Stock"), with each share
entitled to one vote. Only Shareholders of record at the close of
business on Wednesday, April 17, 1996, are entitled to notice of and to
vote at the Meeting or any adjournment thereof. On April 17, 1996, the
Company had 12,471,080 shares of Common Stock outstanding, each share of
which is entitled to one vote on all matters to be voted upon at the
Meeting, including the election of Directors. Cumulative voting in the
election of Directors is not permitted.
A majority of the Company's outstanding Common Stock represented in
person or by Proxy and entitled to vote will constitute a quorum at the
Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
the Company's Common Stock owned beneficially, as of April 17, 1996, by
any person who is known to the Company to be the beneficial owner of 5% or
more of such Common Stock, and, in addition, by each Director and nominee
for Director of the Company, and by all Directors and Executive Officers
of the Company as a group. Information as to beneficial ownership is
based upon statements furnished to the Company by such persons. For
purposes of this disclosure, the amount of the Company's Common Stock
beneficially owned is the aggregate number of shares of the Common Stock
outstanding on such date plus an amount equal to the aggregate amount of
Common Stock which could be issued upon the exercise of stock options or
warrants within 60 days of such date.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Name of Beneficial Owner Ownership Percent of Class
<S> <C> <C>
Matthew L. Gold 8,891,842 shares 68.5%
1225 17th Street, Suite 1800 directly and
Denver, Colorado 80202 indirectly<FN1>
Walter M. Moede 271,205 shares 2.1%
1225 17th Street, Suite 1800 directly<FN2>
Denver, Colorado 80202
Donald C. Hannah 51,125 shares *
6400 East Cactus Wren Road directly<FN3>
Paradise Valley, Arizona 85253
Admiral George E. R. Kinnear II 99,425 shares *
15 Laurel Lane directly<FN4>
Durham, New Hampshire 03824
C. Fredrik Groth 16,972 shares *
Pemco Air Support Services directly<FN5>
Copenhagen Airport South
2791 Dragor, Hangar 253
Copenhagen, Denmark
J. Ben Shapiro, Jr. 12,000 shares *
One Midtown Plaza, #1200 directly<FN6>
1360 Peachtree Street
Atlanta, Georgia 30309
General Thomas C. Richards 4,375 shares *
5903 Mt. Eagle Drive, #708 directly<FN7>
Alexandria, Virginia 22303
Bank of America National 4,215,753 shares 25.3%
Trust and Savings Association directly<FN8>
555 California Street
San Francisco, California 94137
All Directors and 9,346,944 shares 70.0%
Officers as a Group directly and
(7 Persons) indirectly<FN9>
- -------------------
<FN>
<F1> Includes 21,000 shares held by Mr. Gold on behalf of a minor child
and 10,000 shares held by children for which he has voting rights.
Includes 22,643 shares subject to vesting. Also includes options to
purchase 515,278 shares. See "Executive Compensation."
<F2> Includes 3,774 shares subject to vesting. Also includes options to
purchase 246,111 shares. See "Executive Compensation."
<F3> Consists of options to purchase 51,125 shares. See "Compensation of
Directors."
<F4> Includes options to purchase 31,125 shares. See "Compensation of
Directors."
<F5> Includes options to purchase 15,472 shares. Does not include
options to purchase 14,250 shares which are currently unvested.
See "Executive Compensation."
<F6> Includes options to purchase 11,000 shares. See "Compensation of
Directors."
<F7> Consists of options to purchase 4,375 shares. See "Compensation of
Directors."
<F8> In connection with the Senior Subordinated Loan which the Company
obtained from Bank of America in 1988, the Company granted to the
Bank a warrant to purchase 4,215,753 shares of the Company's Common
Stock at an exercise price of approximately $ .24 per share. The
warrant provided for mandatory repurchase periods between June 15 and
December 14 during 1991, 1992 and 1993, at which time the Bank could
have required the Company to repurchase the warrant for the per share
difference between the then current appraised value of the Company's
Common Stock and the exercise price of the warrant. The warrant was
neither put nor exercised by the Bank as of December 31, 1993.
During the periods January 15, 1993 through April 14, 1993 and
January 15, 1994 through September 14, 1994, the Company had the
option to call the warrant for repurchase. The Company exercised
this right to call the warrant on April 1, 1993, but never
consummated the purchase because of ongoing negotiations concerning
the repurchase price. At December 31, 1994, the Company was in
violation of certain restrictive financial terms required by its bank
credit agreements. As one of the conditions to the granting of
waivers and amendments necessary to cure these violations and
preclude their recurrence, in April of 1995, the Bank required
rescission of the Company's call of the warrant. On September 30,
1995, the Company and the Bank agreed to amend the warrant to permit
cashless, or "net issuance," exercises thereof. On April 15, 1996,
in connection with certain waivers and modified financial and
nonfinancial covenants granted by the Bank, the Company agreed to
amend the warrant to extend the expiration date from September 9,
1998 to September 9, 2000.
<F9> Includes options to purchase 874,486 shares.
*Less than one percent.
</FN>
</TABLE>
CHANGE IN CONTROL
As far as is known to the Board of Directors or the management of the
Company, there are no arrangements, including any pledge by any person of
securities of the Company, the operation of which might, at a subsequent
date, result in a change in control of the Company.
ELECTION OF DIRECTORS
The Board of Directors recommends the election as Directors of the
six (6) nominees listed below. The Board's recommendation as nominees
includes all of the Directors elected at the last annual meeting of
Shareholders, except for General Thomas C. Richards who was appointed as a
Director on August 14, 1995. The six nominees, if elected, will hold
office until the next annual meeting of Shareholders and until their
successors are elected and qualified or until their earlier death,
resignation or removal. IT IS INTENDED THAT SHARES REPRESENTED BY PROXIES
IN THE ACCOMPANYING FORM WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
NAMED BELOW UNLESS A CONTRARY DIRECTION IS INDICATED. If at the time of
the Meeting any of the nominees named below should be unable to serve,
which event is not expected to occur, the discretionary authority provided
in the Proxy will be exercised to vote for such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company currently
held by him, and the period during which he has served as a Director:
<TABLE>
<CAPTION>
All Positions and Offices Period Served as
Name Age Held With the Company Director of the Company
<S> <C> <C> <C>
Matthew L. Gold 53 Chairman, President, Since 12/31/86
Chief Executive Officer
and Director
Walter M. Moede 55 Executive Vice President,Since 12/12/89
Chief Financial Officer,
Secretary and Director
Donald C. Hannah 63 Director Since 2/15/91
Admiral George
E. R. Kinnear II 68 Director Since 3/2/93
J. Ben
Shapiro, Jr. 53 Director Since 12/12/94
General Thomas C.
Richards 66 Director Since 8/14/95
</TABLE>
Admiral George E. R. Kinnear II also serves as a Director of Compaq
Computer, a publicly held company engaged in the business of manufacturing
and marketing computers. Donald C. Hannah also serves as a Director of
Franchise Finance Company of America, a real estate investment trust
company, which is a publicly held company, and as a Director of Samoth
Capital, a merchant bank which is also a publicly held company. Except
for the foregoing, none of the nominees hold directorships in any other
company having a class of securities registered under the Securities
Exchange Act of 1934, as amended, or in any company registered as an
investment company under the Investment Company Act of 1940, as amended.
MEETINGS AND COMMITTEES OF THE BOARD
The Company has an Executive Committee. At the beginning of 1995 the
Committee consisted of Matthew L. Gold, Walter M. Moede and Admiral Wesley
L. McDonald. Admiral McDonald retired from the Board of Directors, and
hence the Committee, as of the May 16, 1995 annual meeting of
Shareholders. On May 16, 1995, Admiral George E.R. Kinnear II was
appointed to the Committee. The Committee, which held two meetings during
the last calendar year, has as its primary function director-level review
and approval of non-routine matters of significance during the periods
between scheduled meetings of the Board of Directors.
The Company has an Audit Committee which, at the beginning of 1995,
was comprised of Matthew L. Gold, Admiral Wesley L. McDonald, and Donald
C. Hannah, which oversees the accounting controls for the Company. Upon
Admiral McDonald's retirement on May 16, 1995, J. Ben Shapiro, Jr. was
appointed to the Committee. This Committee held one meeting during the
last calendar year. Pursuant to the requirements of the Company's Nasdaq
National Market agreement, a majority of the Audit Committee consists of
outside Directors.
The Company also has a Compensation Committee, which Committee makes
recommendations on executive compensation and selects those persons
eligible to receive grants of options and appreciation rights under the
Company's Incentive Stock Option and Appreciation Rights Plan and the
Nonqualified Stock Option Plan. In 1995 the Committee was composed of
Donald C. Hannah, Admiral George E. R. Kinnear II and Admiral Wesley L.
McDonald, until Admiral McDonald's May 16, 1995 retirement. General
Thomas C. Richards was appointed to the Committee on September 19, 1995.
This Committee held three meetings during the last calendar year, two of
which were by unanimous written consent.
The Board of Directors met in person nine times during the last
calendar year. Two other meetings were conducted by unanimous written
consent of the Directors. There were no incumbent Directors who during
the last fiscal year attended fewer than 75% of the aggregate of all
meetings of the Board and of all committees of the Board on which he
serves.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names of all Directors and Executive Officers
of the Company, all positions and offices held by each such person, the
period during which he has served as such, and the principal occupations
and employment of such persons during the last five years:
MATTHEW L. GOLD. Mr. Gold has been Chairman, President and Chief
Executive Officer of the Company since January 1987. He has also been
Chairman of Pemco Aeroplex, Inc. and Space Vector Corporation, wholly-
owned subsidiaries of the Company, since September 1988. He has also been
Chairman and President of the Company's subsidiaries, Pemco Air Services
System, Inc., Pemco Nacelle, Inc. and Pemco World Air Services, Inc. since
their inceptions in November 1991, January 1993 and April 1993,
respectively. From 1984 to 1986, he was President of Monarch Aviation,
Inc., a company primarily engaged in the business of modifying and
maintaining large transport aircraft, and later, Pemco Engineers, Inc., a
company primarily engaged in the business of manufacturing aircraft cargo
systems, both of which are predecessors of the Company.
WALTER M. MOEDE. Mr. Moede joined the Company as Senior Vice
President and Chief Financial Officer in January 1989. In September of
1989, he was appointed to the additional position of Secretary. In
December of 1989, he was elected to the Board of Directors and named
Executive Vice President of the Company. From November 1986 through
December 1988, Mr. Moede served as Vice President and Treasurer of ICN
Pharmaceuticals, Inc., a company primarily engaged in the manufacturing
and sales of pharmaceutical products. From February 1986 through October
1986, he was Vice President and Treasurer of Castle & Cooke, Inc., a
company primarily engaged in the food, real estate and transportation
businesses. From June 1984 through January 1986, he was Vice President
and Treasurer of Revlon, Inc., a company primarily engaged in the
manufacture and sale of health and personal care products.
DONALD C. HANNAH. Mr. Hannah currently serves as Chairman and Chief
Executive Officer of U.S. Properties, Inc., a real estate acquisition and
marketing company. Mr. Hannah has been Chairman of the Board of Hannah
Marine Corp. of Lemont, Illinois, a marine transport company, since 1956.
He serves on the Board of Managers for American Bureau of Shipping, a
classification society in the marine industry and as a director of the
Marine Resources Foundation. He is also a Director of Franchise Finance
Corporation of America, a real estate investment trust company, and a
Director of Samoth Capital Corporation, a merchant bank.
GEORGE E. R. KINNEAR II. Admiral Kinnear formed his own consulting
company, Kinnear & Associates, in January 1995. He has been a senior
consultant to Enox Corp., a high tech ignition systems company, since
February 1994. He was Chairman of the Board and Chief Executive Officer
of Energy Point, a gasoline servicing company, from July 1992 until
January 1995. He was Chairman of the Board of The Retired Officers
Association, a service company for retired military officers, from October
1992 to October 1994. Prior to that time he served briefly as Vice
Chairman and Chief Executive Officer of New England Digital, a computer
company, from February 1992 to June 1992. Admiral Kinnear was Executive
Vice President and Interim President from November 1988 to January 1992 of
the University of New Hampshire. Before that he was Senior Vice President
and Vice President of Grumman Corp., an aerospace company, from October
1982 to October 1988. He retired as a four star Admiral from the U.S.
Navy in September of 1982 after thirty-seven years of service. Admiral
Kinnear currently serves as a Director of Compaq Computer, a publicly
traded company which manufactures and markets computers. He also serves
as a Director of the Aerospace Corp., the Naval Aviation Museum, and the
U.S. Navy Memorial Foundation.
J. BEN SHAPIRO, JR. Mr. Shapiro has been a partner at the law firm
of Shapiro Fussell Wedge Smotherman & Martin in Atlanta, Georgia since its
formation in October 1970. He currently serves as a Trustee for Emory
University and the American Subcontractors Association Georgia Trust.
THOMAS C. RICHARDS. General Richards has been President of National
Security Industrial Association of Washington, D.C., a nonprofit
corporation, since September 1995. He served as a consultant and as a
member of the Board of Directors for each of First American Bank of Bryan,
Texas, Cubic Defense Systems of San Diego, California and Mantech
International of Fairfax, Virginia, the latter two companies being
involved in the aviation and defense industry, from February 1992 to
September 1995. Prior to that time, he was appointed by the President as
the Administrator of the Federal Aviation Administration from May 1991 to
January 1992, after having served on the Aviation Security and Terrorism
Commission which was formed by the President to review the Pan Am 103
accident. General Richards retired as a four star General from U.S. Air
Force in November 1989 after 33 years of service, the last three of which
were spent commanding the day to day operations of the U.S. European
Command. He currently serves as a Trustee of the U.S. Air Force Academy
Falcon Foundation.
C. FREDRIK GROTH. Mr. Groth has been Vice President-Corporate
Development since May 1993. Mr. Groth joined the Company in July of 1988
as Director of Corporate Development. In 1989, Mr. Groth was named
Managing Director-Marketing and Sales of the Company's Pemco Aeroplex
subsidiary, and in 1990 he was appointed Vice President-Marketing and
Sales of Pemco Aeroplex. Mr. Groth also serves as Vice President of the
Company's Pemco Air Services Systems, Inc. subsidiary, and as the General
Manager of that subsidiary's office in Copenhagen, Denmark.
The Company's Executive Officers are elected by the Board of
Directors at the first meeting after each annual meeting of Shareholders,
and hold office until the next such meeting of Directors or their earlier
resignation or removal.
Other than the executive employment agreements with the Company's
Executive Officers, there is no arrangement or understanding between any
such Director or Executive Officer and any other person or persons
pursuant to which he was or is to be selected as a Director or Executive
Officer nor is there any family relationship between or among any of the
Company's Directors or Executive Officers. See "Executive Compensation -
Agreements with Executive Officers."
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the executive compensation of the
Company's Chief Executive Officer, Executive Vice President, and Vice
President-Corporate Development (the only Executive Officers serving at
the end of the last fiscal year) for each of the Company's last three
fiscal years:
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
Securities
Other Underlying
Annual Restricted Options/
Name and Compensation Stock SARs
Principal Position Year Salary ($)<F1> Bonus ($) ($)<FN2> Award(s)($) (#)<FN3><FN4>
<S> <C> <C> <C> <C> <C> <C>
Matthew L. Gold, CEO 1995 $501,500 $ 0 $44,244<FN5> $ 0 0
1994 493,333 150,000 0 150,000<FN6> 100,000
1993 463,000 200,000<FN7> 0 0 200,000
Walter M. Moede, 1995 $262,500 $ 0 $33,802<FN5> $ 0 0
Executive Vice 1994 261,667 125,000 0 25,000<FN8> 50,000
President 1993 230,500 100,000<FN7> 0 0 100,000
C. Fredrik Groth, 1995 $131,200 $ 20,000 $ 0 $ 0 2,500
Vice President 1994 113,600 0 0 0 10,000
Corporate Development 1993 85,000 22,000 0 0 6,000
<FN>
<FN1> The salaries for Messrs. Gold and Moede include Directors' fees as follows: 1995, $21,500 and
$22,500, 1995, $30,000 and $30,000, and 1993, $23,000 and $23,000, respectively.
<FN2> None of the named Executive Officers received perquisites or other personal benefits the
aggregate annual amount of which was the lesser of either $50,000 or 10% of the total of
annual salary and bonus reported for such Executive Officers.
<FN3> Options granted to Messrs. Gold and Moede for 1994 were nonqualified stock options. Options
shown here as granted to Messrs. Gold and Moede in 1993 were approved by the Compensation
Committee in March of 1994 based on the Company's performance in 1993. Of Mr. Gold's grant
for 1993, options to purchase 64,000 shares were incentive stock options/SARs and options to
purchase 136,000 shares were nonqualified stock options. Of Mr. Moede's grant for 1993,
options to purchase 64,000 shares were incentive stock options/SARs and options to purchase
36,000 shares were nonqualified stock options.
<FN4> All of Mr. Groth's grants were for nonqualified stock options.
<FN5> Messrs. Gold and Moede were reimbursed in the amounts shown for their relocation expenses when
the Company established executive offices in Denver, Colorado in 1995.
<FN6> Mr. Gold's grant of 90,563 shares of restricted stock vests as to one-eighth of the shares
each quarter beginning January 1, 1995. The value of the unvested shares was $45,283 at the
end of the last fiscal year. The Company does not expect to pay any dividends on any shares
in the forthcoming year.
<FN7> The cash bonuses awarded to Messrs. Gold and Moede for 1993 have not been paid. The 1994
bonuses were structured to consist of a combination of restricted stock grants and cash which
have been partially paid.
<FN8> Mr. Moede's grant of 15,094 shares of restricted stock vests as to one-eighth of the shares
each quarter beginning January 1, 1995. The value of the unvested shares was $7,548 at the
end of the last fiscal year. The Company does not expect to pay any dividends on any shares
in the forthcoming year.
</FN>
</TABLE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth the information concerning individual
grants of stock options and appreciation rights during the last fiscal
year to each of the named Executive Officers:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
Number of
Securities Percent of Total
Underlying Options/SARs Exercises
Options/ Granted to Or Base
SARs Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
M. L. Gold 0 0% $0 N/A $0 $0
W. M. Moede 0 0% $0 N/A $0 $0
C. F. Groth 2,500<FN1> 100% $1.1875 12-12-05 $ 1,870 $4,720
<FN>
<FN1> Mr. Groth's options are nonqualified stock options, have a term of ten years and vest as to
one-fourth of the shares on each anniversary of the date of grant.
</FN>
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
The following table sets forth information concerning each exercise
of stock options during the last fiscal year by each of the named
Executive Officers and the fiscal year end value of unexercised options:
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Underexercised
Unexercised In-the-Money
Shares Acquired Value Options/SARs at Options/SARs at Fiscal
Name on Exercise(#) Realized Fiscal Year End(#) Year-End($)
Exercisable/ Exercisable/
unexercisable unexercisablbe
<S> <C> <C> <C> <C>
M. L. Gold 0 $0 515,278/0<FN1> $ 43,950/0
W. M. Moede 0 $0 246,111/0<FN2> $ 20,173/0
C. F. Groth 0 $0 11,222/18,500<FN3> $2,722/0
<FN>
<FN1> Of Mr. Gold's options, exercisable options to purchase 236,000 shares represent nonqualified
stock options, and the remaining options are incentive stock options granted in tandem with
SARs.
<FN2> Of Mr. Moede's options, exercisable options to purchase 86,000 shares represent nonqualified
stock options, and the remaining options are incentive stock options granted in tandem with
SARs.
<FN3> All of Mr. Groth's options represent nonqualified stock options.
</FN>
</TABLE>
Pension Plans
All of the Executive Officers named above are eligible participants
in the Pemco Aeroplex, Inc. Pension Plan (the "Pension Plan"). The
following table sets forth the annual retirement benefits payable under
the Pension Plan upon retirement at age 65 based on an employee's assumed
average annual compensation for the five-year period preceding retirement
and assuming actual retirement on January 1, 1996. The Pension Plan is a
tax qualified defined benefit plan and is subject to certain maximum
benefit provisions. The retirement plan benefit formula is equal to (a)
plus (b):
(a) Earnings portion of formula
- 1% of the employee's final average compensation for the last
five years of benefit service not to exceed $150,000 for 1995,
less $6,600,
TIMES
- the employee's years of credited service (not to exceed 30
years),
PLUS
(b) $144 times the employee's years of credited service (not to exceed 30
years).
The compensation utilized for the Pension Plan formula benefit
includes base pay and does not consider bonuses.
Remuneration Years of Service
15 20 25 30
$125,000 $19,920 $26,560 $33,200 $39,840
150,000 23,670 31,560 39,450 47,340
175,000 23,670 31,560 39,450 47,340
200,000 23,670 31,560 39,450 47,340
225,000 23,670 31,560 39,450 47,340
250,000 23,670 31,560 39,450 47,340
300,000 23,670 31,560 39,450 47,340
400,000 23,670 31,560 39,450 47,340
450,000 23,670 31,560 39,450 47,340
500,000 23,670 31,560 39,450 47,340
Assumes: 1. Remuneration is latest 5-year average annual salary.
2. Retirement is at age 65 or later.
3. No joint and survivor option elected.
To date, none of the Executive Officers have earned a material level
of vested benefits under the Pension Plan.
Certain amendments to the tax laws reduced the amount of benefits
available to some of the Executive Officers under the Pension Plan in plan
years beginning after December 1993. In recognition of these changes, the
Compensation Committee has agreed to adopt a supplemental pension plan for
these Executive Officers to compensate them for the lost benefits under
the Pension Plan. It is expected that such a plan will be adopted in
1996.
401(k) PLAN
On November 2, 1990, the Board of Directors adopted a 401(k) Savings
Plan for employees of the Company and its subsidiaries effective
October 1, 1990 (the "401(k) Plan"), which is qualified under
Subsection 401(k) of the Internal Revenue Code. All employees of the
Company and its subsidiaries who (i) are not covered by any collective
bargaining agreement, (ii) have attained age 21 and (iii) have completed
one year of service, may join the 401(k) Plan. The 401(k) Plan provides a
method for employees to choose between receiving all their compensation
now or deferring some pre-tax income by investing in the 401(k) Plan until
retirement. Deferred amounts representing up to 15% of compensation per
calendar year (not to exceed $9,240 in 1996) are deposited into the Plan
where they may earn income tax-free until distribution. Although the
401(k) Plan allows for matching contributions by the Company, none have
been made as of the date of this Proxy Statement. The 401(k) Plan
currently is administered by an Administrative Committee composed of four
employees of the Company who are not Executive Officers or Directors of
the Company. Directors who are not also employees of the Company are not
eligible to participate. Messrs. Gold and Moede are participants in the
401(k) Plan and their amounts of deferred compensation are included in the
Summary Compensation Table set forth above.
Performance Graph
Set forth below is a line graph and a table comparing the yearly
percentage change in the cumulative total shareholder returns on the
Company's Common Stock with the cumulative total returns of the Standard &
Poor's 500 Stock Index, Standard & Poor's Aerospace/Defense Stock Index
and Standard and Poor's Airline Stock Index as prepared by Standard &
Poor's Compustat - Custom Business Unit. While the Securities and
Exchange Commission's rules only require the Company to provide a
comparison to a broad equity market index (Standard & Poor's 500) and a
published industry line of business index (Standard & Poor's Aerospace),
the Company believes that it is helpful to provide shareholders with a
comparison to an index which reflects the business climate in which many
of the Company's customers operate (Standard & Poor's Airlines). The
Company's performance may be influenced by the airline industry and the
business environment surrounding such industry. The line graph and table
cover the five year period from January 1991 through December 1995 and
represents the total value of a $100 investment in each security/market
index on the last trading day of December, 1990. All dividends are
assumed to be reinvested.
Comparative Five Year Total Cumulative Returns
Precision Standard, S&P 500 Index,
S&P Aerospace/Defense Index and S&P Airlines Index
<TABLE>
<CAPTION>
Company/Index Dec90 Dec91 Dec92 Dec93 Dec94 Dec95
<S> <C> <C> <C> <C> <C> <C>
Precision Standard, Inc. 100 47.52 94.96 360.00 160.00 80.00
A&P Aerospace /Defense 100 119.54 125.76 163.58 176.94 292.81
S&P Airlines 100 127.45 113.86 119.56 83.42 121.83
S&P 500 Index 100 130.47 140.41 154.56 156.60 215.45
</TABLE>
Compensation Committee Report
The Compensation Committee (the "Committee") of the Board of
Directors of Precision Standard, Inc. (the "Company") is composed of
outside directors who are not employees of the Company and who qualify as
disinterested persons for purposes of Rule 16b-3 adopted under the
Securities Exchange Act of 1934. At the direction of the Board of
Directors, the Committee prepared the following report on April 17, 1996
for inclusion in this Proxy Statement to comply with the rules of the
Securities and Exchange Commission.
The Company's executive compensation program has been designed to
enable the Company to attract, motivate, and retain key senior management
by providing a fully competitive total compensation package based on
performance. It is intended to reward the key executive for long-term
strategic planning and management, enhancement of shareholder value and
improving Company performance compared to performance levels of comparable
companies in the industry. Of equal importance, it is designed to attract
and retain those key executives who are critical to the long-term success
and competitiveness of the Company.
The key components of the executive compensation program are: (1)
salary, which is based on the individual officer's level of responsibility
and comparisons to the executive positions in the Company, its
subsidiaries and comparable companies in the industry; (2) cash bonus
awards, which are based on individual performance and the performance of
the Company for the year, measured primarily, but not exclusively, in the
profitability of the Company; (3) equity incentive, in the form of stock
options, stock appreciation rights an stock grants, which are intended to
increase the motivation for the Company to improve its financial position
and long-term success as measured by the Company's share price and book
value per share; and (4) employment agreements, which are designed to
provide long-term security to the key executive in exchange for long-term
commitments and agreements not to enter into competition with the Company.
The overall objective of the program is to provide rewards to the key
executives commensurate with the benefits received by the shareholders
from the efforts of those executives.
Under this program, the Company has entered into long-term employment
agreements with each of the Company's three executive officers, Matthew L.
Gold, Walter M. Moede and C. Fredrik Groth, effective June 1, 1993 and
amended March 11, 1994. Pursuant to the employment agreements, Mr. Moede's
base salary was $240,000 and Mr. Gold's annual base salary was $480,000 at
the end of 1994. Because of the severe constraints on the Company's cash
flow in 1995, these officers' salaries were not increased in 1995
notwithstanding the requirement in Mr. Gold's employment agreement for a
minimum increase of 5% each year. The Committee believes that, while
these officers may deserve an increase in their salary based on their
superior performance in 1995, consideration of any such increase must be
deferred to a later date.
The Committee recognizes the extraordinary effort made by these
executive officers in 1995 in the face of a number of critical situations
for the Company, virtually none of which were within those officers'
control. The continued late delivery of Government-Furnished Material
("GFM") and resulting disruption of production lines and scheduled work
flow for the Company's KC-135 contract with the U.S. Government were
exacerbated by an unprecedented number of major structural problems on the
aircraft and periodic failures by the Government to make timely payments
for work performed under that and other contracts. The cash flow
constraints occasioned by these problems further complicated and magnified
the problems these officers faced in 1995.
The Company overcame these difficulties as a result of its
executives' diligent efforts (a) to adjust its production to mitigate the
adverse impacts imposed by these direct and constructive changes to its
primary contract, (b) to develop, defend and negotiate an $8.1 million
settlement of a Request for Equitable Adjustment ("REA") filed in respect
of certain of the costs it incurred and (c) to maintain its cordial and
accommodative relationship with its primary lender despite the payment
defaults and other covenant violations which resulted from the
aforementioned cash flow problems. Accordingly, the Committee believes
that the efforts of Messrs. Gold and Moede in 1995 were extraordinary and
of considerable value to the Company and its shareholders.
The Committee continues to believe that, in light of the Company's
still limited cash flow and the negative financial results reported by the
Company in 1995, it is not in the Company's interests to grant cash
bonuses to Messrs. Gold and Moede at this time. The Committee noted that,
because of the cash flow problems suffered in 1994 and 1995 resulting from
the problems noted above, the cash bonuses awarded to these officers in
1993 have not yet been paid and the 1994 bonuses were structured to
consist of a combination of restricted stock grants and cash which have
been only partially paid. The Committee concluded, however, that there
were adequate resources to pay a cash bonus of $20,000 and to grant
options to purchase 2,500 shares to Mr. Groth in recognition of his
efforts to build the Company's Pemco World Air Services market in Europe,
Africa and the Middle East.
Nevertheless, the Committee does not believe that the efforts of
Mr. Gold and Mr. Moede should remain permanently unrewarded and plans to
reconsider these executive officers' compensation again in 1996 to see if
additional resources are available to compensate them fairly for the
diligence, skills and devotion to the Company's business which they
exhibited in 1995. In this regard, the Committee has proposed, and the
Company's shareholders are being asked to approve, an amendment to the
Company's Nonqualified Stock Option Plan to permit outright stock grants
thereunder. This amendment would facilitate the grant of shares of the
Company's stock in lieu of cash to permit the Company to fairly compensate
its executive officers and other employees for their contributions to the
Company even when cash flow is a problem as it was in 1995.
In 1994, certain changes in the federal tax laws limited the benefits
available to Messrs. Gold and Moede under the Company's defined benefit
pension plan. The Committee affirms its intention to adopt a supplemental
benefit plan to offset the effect of the changes in the law and to provide
benefits to the executive officers that would have been available under
the Company's defined benefit plan but for the changes in the tax laws.
The Committee expects to approve such a plan in the near future and, to
the extent possible, to make the plan retroactive to the date of the
change in the law.
Dated: April 17, 1996 DONALD C. HANNAH
ADMIRAL GEORGE E.R. KINNEAR II
GENERAL THOMAS C. RICHARDS
Compensation of Directors
The Company currently has an arrangement whereby each Director earns
an annual retainer of $18,000, and $1,000 plus expenses for attendance at
each meeting of the Board of Directors and related activities. The
Directors also earn $1,000 plus expenses in connection with attendance at
each meeting of the Audit Committee, the Executive Committee and the
Compensation Committee, excepting when a Committee meets in conjunction
with a full Board meeting. Directors who are employees of the Company are
eligible to receive stock options under either of the Company's stock
option plans. Outside Directors are eligible to receive options under the
Company's Nonqualified Stock Option Plan (the "Nonqualified Plan") only.
Pursuant to the Nonqualified Plan, outside Directors receive fully
vested options on December 10 of each year. The number of shares subject
to options granted in any such year is equal to one share of Common Stock
for each two dollars of Director's base compensation (annual retainer plus
meeting fees for an assumed minimum of four meetings or, currently,
$22,000) paid to the Director during the calendar year in which the option
is granted.
In November 1990, the Board of Directors also adopted a three-year
retirement benefit for the Directors of the Company, payable after they
retire or otherwise terminate their service as a Director of the Company.
In December 1993, The Board of Directors amended the retirement benefit.
Directors retiring from the Company after that date are entitled to
benefits as follows:
Under Five Five or More
Retirement Benefit PayableYears of Service Years of Service
- 1st Year $4,500 $9,000
- 2nd Year $3,000 $6,000
- 3rd Year $1,500 $3,000
All current Directors, as well as one former Director, Admiral Wesley
L. McDonald (who retired as a Director effective May 16, 1995), are
currently entitled to or are eligible for benefits according to the
benefits schedule in effect at the time of such Director's retirement.
For purposes of entitlement to the benefits schedule shown above,
Messrs. Gold, Hannah and Moede have or are deemed to have five years of
service. Upon retirement, this benefit is paid to former Directors on a
quarterly basis for the three-year term of the benefit. The Board of
Directors has determined that Directors are asked to retire from the Board
at age 70-1/2 years.
Agreements with Executive Officers
In 1993, the Company entered into employment agreements with each of
the Executive Officers named in the Summary Compensation Table. Each of
these agreements includes payments to be received upon the voluntary or
involuntary termination of the Executive Officer's employment. The terms
and conditions of each of these agreements is described below.
Pursuant to an agreement effective June 1, 1993 and amended March 11,
1994, Mr. Gold is engaged as President, Chief Executive Officer and
Chairman of the Board for an initial term of five years commencing June 1,
1993. On each June 1 following 1993, the agreement is automatically
extended for an additional year unless the Company or Mr. Gold gives
notice more than ninety days before May 31 of such year. Because no such
notice was given in 1995, the agreement currently expires in 2000.
The agreement provides for an initial annual base salary of $440,000,
with the base salary for subsequent years to be determined by the Board of
Directors on the basis of merit and the Company's financial success and
progress, provided that the annual base salary in each year shall be at
least 5% higher than the previous year's annual base salary. Mr. Gold is
also entitled to bonuses as determined by the Board of Directors in its
sole discretion, and is entitled to vacation and other employee benefits
under the Company's employee benefit plans.
Under the agreement, Mr. Gold is entitled to various amounts on the
termination of his employment depending on the reasons for such
termination. Upon his death or disability Mr. Gold or his designated
beneficiary will be entitled to receive his then annual base salary for
the greater of two years or the remaining term of the agreement together
with any bonuses determined to be due and payable by the Board of
Directors. Upon Mr. Gold's voluntary or involuntary termination, he is
entitled to specified severance amounts. Upon voluntary termination
(i.e., resignation by Mr. Gold other than as a result of a change of
duties, compensation or benefits following a change in control of the
Company), Mr. Gold will be entitled to continue to receive his annual base
salary plus the average annual bonus awarded to him by the Board of
Directors during the three preceding years (the "Average Bonus") for a
period of one year. Upon involuntary termination (i.e. any termination
other than voluntary termination, termination by mutual agreement, or
termination as a result of death, disability or normal retirement), Mr.
Gold will be entitled to 2.99 times the sum of his then annual base salary
and the Average Bonus.
Pursuant to an agreement, effective June 1, 1993 and amended March
11, 1994, Mr. Moede is engaged as Executive Vice President and Chief
Financial Officer of the Company for an initial term of three years
commencing June 1, 1993. On each June 1 following 1993, the agreement is
automatically extended for an additional year unless the Company or Mr.
Moede gives notice more than ninety days before May 31 of such year.
Because no such notice was given in 1995, the agreement currently expires
in 1998.
The agreement provides for an initial annual base salary of $220,000,
with the annual base salary for subsequent years to be determined by the
Board of Directors on the basis of merit and the Company's financial
success and progress, provided that the annual base salary in any
subsequent year shall not be less than the initial base salary. Mr. Moede
is also entitled to bonuses as determined by the Board of Directors in its
sole discretion and is entitled to vacation and other employee benefits
under the Company's employee benefit plans.
Provisions of Mr. Moede's agreement regarding amounts payable upon
his death, disability or other termination of his employment with the
Company parallel those of Mr. Gold's agreement described above.
Pursuant to an agreement effective June 1, 1993, Mr. Groth is engaged
as Vice President-Corporate Development for an initial term of three years
commencing June 1, 1993. The agreement is automatically extended for
additional one-year periods unless the Company or Mr. Groth gives notice
more than ninety days before May 31, 1997 or May 31 of any subsequent year
for which the agreement has previously been extended. Because no such
notice was given in 1995, the agreement currently expires in 1998.
The agreement with Mr. Groth provides for an initial annual base
salary of $100,000, with the annual base salary for subsequent years to be
determined by the Chief Executive Officer of the Company and approved by
the Board of Directors on the basis of merit and the Company's financial
success and progress, provided that the annual base salary in any
subsequent year of the agreement shall not be less than the initial base
salary. Mr. Groth is entitled to bonuses as determined by the Chief
Executive Officer and approved by the Board of Directors on the basis of
merit and the Company's financial success and progress, and is entitled to
vacation and other employee benefits under the Company's employee benefit
plans.
Under the employment agreement, Mr. Groth is entitled to various
amounts on the termination of his employment depending on the reasons for
such termination. Upon termination by reason of his death Mr. Groth's
designated beneficiary or his estate will be entitled to his annual base
salary for the greater of two years or the remaining term of the
agreement, together with any bonuses determined to be due and payable by
the Company's Board of Directors. Upon termination by reason of his
disability Mr. Groth will be entitled to his then annual base salary for
the greater of six months or the remaining term of the agreement together
with any bonuses which the Company's Chief Executive Officer with the
approval of the Board of Directors determines to be due and payable to Mr.
Groth. Upon Mr. Groth's voluntary termination Mr. Groth is entitled to a
lump sum payment of $1,000. In the case of Mr. Groth's involuntary
termination, Mr. Groth will be entitled to one times his annual base
salary.
Other than as described above, the Company has no compensation plan
or arrangement with any individual named in the Summary Compensation Table
above whereby the implementation of such plan or arrangement results or
would result from the resignation, retirement or other termination of that
individual's employment with the Company or from a change in control of
the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company's Consolidated Tire subsidiary previously leased
warehouse and office facilities from Monarch Properties, a sole
proprietorship owned by Matthew L. Gold, the Company's Chairman, President
and Chief Executive Officer. This lease was cancelled in December 1990.
Although the lease was not due to expire until December 1992, Mr. Gold
agreed to accept $147,000 to cancel the remaining term, which amount
represented 80% of the present value of the remaining rental payments.
The Company paid $26,840 of this obligation in cash and reduced the amount
of indebtedness of Mr. Gold and Monarch Properties to the Company, as
described below. As additional consideration to the Company, Mr. Gold
also waived and released claims that he may have had against the Company
at that time for certain expenses or advances paid by him on behalf of the
Company.
Prior to the surrender and exchange of the Consolidated Tire
warehouse lease discussed above, Mr. Gold and Monarch Properties were
indebted to the Company in the amount of $132,947 and $167,037,
respectively. These debts had been incurred as a result of various
advances made by the Company, and were repayable in equal installments
over five years beginning in 1990. After the application of the remaining
$120,160 reduction attributable to the surrender of the Consolidated Tire
lease, the total debt was reduced to $179,824. In November of 1991, Pemco
Engineers, Inc. completed the 1988 sale of its Stanton, California
facility to Monarch Properties by delivering the September 26, 1988 deed
to Monarch Properties in exchange for a promise to pay $90,000. The
$90,000 sales price was the same as the purchase price paid by Pemco
Engineers in 1988 shortly before the September 26, 1988 deed to Monarch
Properties. As a result of this new obligation, the total indebtedness of
Monarch Properties and Mr. Gold to the Company and its subsidiaries
increased to $269,824 as of December 31, 1991. The obligation remains
outstanding as of the date hereof and the Company has no arrangement or
understanding with Mr. Gold as to the timing of any repayment thereof.
On April 16, 1996, Mr. Gold and the Company entered into a standby
financing commitment which provides for the extension by Mr. Gold of up to
$2.0 million in short-term advances upon demonstration of certain need
factors by the Company. The commitment, which contains cross default
provisions to the Company's principal loan agreements, expires in January
1997 and requires the payment by the Company of a commitment fee of 2%, or
$40,000 to Mr. Gold. Advances under the commitment bear interest at prime
plus three percentage points, have maturities of six months and are
secured by a subordinated security interest in the Company's assets and
the pledge of stock issuance to the extent of ninety percent of the amount
advanced. To date no advances have been made under this commitment. The
Company believes that Mr. Gold's willingness to extend the commitment
under present circumstances was of significant value to the Company and
its business and that the consideration paid to Mr. Gold for the
commitment was no more than would have been paid in an arms length
transaction with an unaffiliated third party (if any such third party
transactions were available, which the Company considers unlikely under
present circumstances).
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * *
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm of Coopers & Lybrand L.L.P.
audited the financial statements of the Company for the period ended
December 31, 1995. At the direction of the Board of Directors, the
ratification of the appointment of Coopers & Lybrand L.L.P. for the
calendar year ending December 31, 1996 is being presented to the
Shareholders for approval at the Meeting. It is expected that a
representative of Coopers & Lybrand L.L.P. will be present at the Meeting
to respond to appropriate questions, and will be given the opportunity to
make a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE CALENDAR YEAR ENDING DECEMBER 31, 1996.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * *
PROPOSAL TO AMEND
THE NONQUALIFIED STOCK OPTION PLAN
The Amended and Restated Nonqualified Stock Option Plan (the "NQSO
Plan") was adopted by the Company in September of 1989 and amended April
17, 1992 and May 17, 1994. It is now proposed to approve amendments to
the NQSO Plan to (i) increase the number of shares of Common Stock
authorized for issuance pursuant to the NQSO Plan from 1,000,000 shares to
1,500,000 shares; (ii) to add a provision for the grant of stock
appreciation rights in tandem with nonqualified stock options; and (iii)
to add a provision for awards of stock grants.
The Company believes that these changes are important to provide
flexibility to the Compensation Committee in its administration of the
NQSO Plan, to encourage stock ownership by employees and management and to
permit the Compensation Committee and the Board of Directors to continue
to provide incentives to promote the financial success and progress of the
Company.
Below is a summary description of the NQSO Plan, as it is proposed to
be amended:
Administration
The Compensation Committee of the Board of Directors of the Company
administers the NQSO Plan. The Compensation Committee currently consists
of Messrs. Hannah, Kinnear and Richards. Subject to the terms of the NQSO
Plan, as amended, the Compensation Committee has the authority to
determine to whom stock options and stock appreciation rights will be
awarded, the number of shares covered by each such award, the exercise or
purchase price per share, the time or times at which stock options and
stock appreciation rights will be awarded, and other terms and provisions
governing the stock options and stock appreciation rights (including
whether stock options will have reload authorization). The Compensation
Committee also has the authority to determine the terms of stock grants,
including the number of shares of stock in each award and may impose
conditions on awards, such as a vesting schedule, which may differ from
one award to another. The interpretation or construction by the
Compensation Committee of the NQSO Plan or any stock options, stock
appreciation rights or stock grants awarded under it will be final.
Underlying Securities
The securities underlying stock options, stock appreciation rights
and stock grants under the NQSO Plan are shares of the Company's Common
Stock. Pursuant to the NQSO Plan, as amended, the maximum number of
shares of Common Stock that may be issued will not exceed 1,500,000
shares, an increase of 500,000 shares. Pursuant to the terms of the NQSO
Plan, shares subject to stock options or stock appreciation rights which
for any reason expire or are terminated unexercised as to such shares may
again be the subject of an award under the NQSO Plan. In addition, for
purposes of calculating the maximum number of shares which may be issued
under the NQSO Plan, only shares issued as a result of an exercise of
stock appreciation rights are counted. Similarly, only the net shares
issued are counted when shares of Common Stock are used as full or partial
payment for shares issued upon exercise of stock options.
The market value of the total shares authorized under the NQSO Plan
as of April 17, 1996 was $1,125,000. The market value as of April 17,
1996 of the 500,000 shares which would be added by this amendment was
$625,000.
Eligible Employees and Others
Stock options, stock appreciation rights and stock grants may be
granted under the NQSO Plan to employees, officers, directors, consultants
and independent contractors of the Company. Stock options granted under
the NQSO Plan are not intended to be incentive stock options (within the
meaning of Section 422 of the Internal Revenue Code [the "Code"]). As of
December 31, 1995, the Company had approximately 104 employees and other
persons eligible to receive stock options, stock appreciation rights and
stock grants. Employees are eligible to receive stock options, stock
appreciation rights or stock grants for no more than an aggregated 750,000
shares each under the NQSO Plan.
The Compensation Committee determines the number of shares of the
Company's Common Stock covered by any award made to Executive Officers or
other employees under the NQSO Plan. Because such number, if any, is
entirely in the discretion of the Compensation Committee, the benefits or
amounts to be received by or allocated to the Executive Officers or any
other group of employees are not determinable. Stock options may be
granted under the NQSO Plan to non-employee Directors of the Company only
pursuant to formula grants described below. Non-employee Directors are
not eligible to receive stock appreciation rights or stock grants.
Stock Option Grants to Outside Directors
The Compensation Committee has no discretion in granting stock
options to Directors who are not employees of the Company. Grants of
stock options are made once each calendar year on December 10 and such
grants are for one option to purchase a share of Common Stock for each two
dollars of Director's compensation paid to the Director during the
calendar year of the grant (annual retainer plus meeting fees for an
assumed minimum of four meetings -- currently $22,000). The exercise
price of such stock options is the market price of Common Stock on the
date of grant and each such stock option granted is a reload authorized
option.
Stock Option Price and Duration
The exercise price per share of stock options granted by the
Compensation Committee under the NQSO Plan cannot be less than fifty
percent of the fair market value of the Common Stock on the date of grant.
The exercise price of stock options granted to officers and Directors may
not be less than one hundred percent of the market price of the Company's
Common Stock on the date of grant.
The NQSO Plan requires that each stock option expire on the date
specified by the Compensation Committee, but not more than 10 years from
its date of grant.
Exercise of Stock Options and Payment for Stock
Exercise of a stock option under the NQSO Plan is effected by a
written notice of exercise delivered to the Company at its principal
office together with payment for the shares in full in cash, or shares of
Common Stock, or a combination thereof. Payment may also be made by
delivery of notice and irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds to pay the
exercise price.
Reload Options
The Compensation Committee may, concurrently with the award of stock
options, authorize "Reload Options". If a stock option is granted with
reload authorization and the stock option is exercised in whole or in part
by the delivery of shares of Common Stock, a Reload Option will
automatically be granted at the time of such exercise for the number of
shares delivered as payment of the exercise price. Any Reload Option
granted pursuant to such authorization will have an exercise price equal
to the fair market value on the date of exercise of the underlying stock
option and will be exercisable from six months after such date through the
remaining term of the underlying stock option. Reload Options are
exercisable in the same manner as the underlying stock option.
Nontransferability of Stock Options
No transfers of stock options are permitted, except that a stock
option may be transferred by will or by the laws of descent and
distribution.
Stock Appreciation Rights
A stock appreciation right entitles its holder to receive from the
Company, at the time of exercise, an amount equal to the excess of the
fair market value (at the date of exercise) of a share of Common Stock
over a specified price fixed by the Compensation Committee not less than
100 percent of the fair market value of a share of Common Stock on the
date of grant, multiplied by the number of shares as to which the holder
is exercising the stock appreciation right. The Compensation Committee
may, in granting stock appreciation rights, provide that such rights are
alternative to a specified stock option.
Exercise of Stock Appreciation Rights
Exercise of a stock appreciation right under the NQSO Plan is
effected by written notice to the Company at any time prior to its stated
expiration, which can be no more than 10 years from the date of grant. If
the stock appreciation right is alternative to a stock option, the stock
option will be deemed cancelled to the extent the stock appreciation right
is exercised.
Stock Grants
A stock grant may be awarded with or without conditions, such as a
vesting schedule. A stock grant which is subject to conditions, such as a
vesting schedule, is not transferable or assignable and may not be
hypothecated. The Company may require employees and other recipients of
stock grants to submit to the Company an amount sufficient to pay
withholding taxes due under any state or federal law prior to delivery of
stock.
Plan Benefits
Set forth below in tabular form are the benefits or amounts to be
received by or allocated to each of the named persons or groups under the
NQSO Plan during 1996. The Compensation Committee determines the number
of stock options, stock appreciation rights and stock grants which may be
awarded to employees, officers, directors, consultants and independent
contractors of the Company under the NQSO Plan. Because such number, if
any, is entirely in the discretion of the Compensation Committee, the
benefits or amounts to be received by or allocated to those persons,
except for the outside Directors, are not determinable. There was only
one grant of stock options under the NQSO Plan by the Compensation
Committee in 1995. There have been no grants of stock appreciation rights
or stock grants made by the Compensation Committee prior to the date of
this Proxy Statement. There are four outside Directors eligible to
receive stock options through the provisions for automatic grants to
outside Directors described above. See "Stock Option Grants to Outside
Directors."
NQSO Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units
<S> <C> <C>
Matthew L. Gold, Chairman
of the Board, Chief
Executive Officer
and President -0- -0-
Walter M. Moede, Executive
Vice President and -0- -0-
Chief Financial Officer
C. Fredrik Groth, Vice
President-Corporate
Development $2,969<FN1> 2,500<FN1>
Executive Officer Group
(3 persons) -0- -0-
Non-Executive Officer
Director Group (4 persons) $49,055<FN2> 37,375<FN2>
Nominee for Director
Group (6 persons) $49,055<FN2> 37,375<FN2>
Associate of Director,
Executive Officer or
Nominee Group (0 persons) -0- -0-
5% or More Recipient
Group (0 persons) -0- -0-
Non-Executive Officer
Employee Group
(101 persons)<FN3>
-0- -0-
- --------------------
<FN>
<FN1> The number of stock options is an estimate based on the number
of stock options actually granted to Mr. Groth in 1995. While
the stock options were granted at the fair market value on
December 12, 1995, the value is shown as an amount equal to the
exercise price times the number of stock options granted. Mr.
Groth's options have a term of ten years and vest as to one-
fourth of the shares on each anniversary of the date of grant.
The estimate does not include prior grants of stock options
which vested in 1995 or which are expected to vest in 1996.
<FN2> The number of stock options is an estimate based on the number
of stock options earned by the outside Directors in 1995. Since
the number of stock options is based on meetings attended, the
total amount of stock options for 1996 is indeterminable at this
time. While the stock options were granted at the fair market
value on December 10, 1995, the value is shown as an amount
equal to the exercise price times the number of stock options
granted.
<FN3> Stock option grants prior to 1995 to employees of the Company
may contain vesting restrictions whereby some options vested in
1995 or will vest in 1996. The vesting of these prior grants is
not included herein.
</FN>
</TABLE>
Amendment, Suspension and Termination
The Compensation Committee may terminate or amend the NQSO Plan in
any respect at any time, except that, without the prior approval of the
shareholders, (a) the total number of shares that may be issued under the
NQSO Plan may not be increased; (b) the minimum exercise price of stock
options, Reload Options and stock appreciation rights may not be modified;
(c) the class of persons to whom stock options, stock appreciation rights
and stock grants may be awarded may not be expanded and; (d) the maximum
number of shares which may be subject to stock options, stock appreciation
rights and stock grants awarded to each employee may not be increased. No
amendment, suspension or termination of the NQSO Plan will, without the
consent of the person who has received a stock option, stock appreciation
right or stock grant subject to conditions, alter or impair any of that
person's stock options, stock appreciation rights or stock grants subject
to conditions or obligations under any stock option, stock appreciation
right or stock grant award prior to that amendment, suspension or
termination.
Miscellaneous
The Company is not obligated to issue shares with respect to any
stock option, unless the exercise of the stock option and the issuance and
delivery of the shares complies with all relevant provisions of state and
federal law. If the outstanding shares of Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of
shares or securities through merger, consolidation, combination, exchange
of shares, other reorganization, recapitalization, reclassification, stock
divided, stock split or reverse stock split, an appropriate and
proportionate adjustment in the maximum number and kind of shares as to
which stock options, stock appreciation rights or stock grants may be
awarded under the NQSO Plan will be made, together with a corresponding
adjustment to the number and kind of shares allocated to outstanding
unexercised stock options and stock appreciation rights. To the extent
permitted by law, the Compensation Committee may provide for the Company
to make loans to finance the exercise of a stock option. The Company is
entitled, in appropriate circumstance, to withhold the amount of any
withholding or other tax due in connection with the exercise of rights
under the NQSO Plan. No stock options, stock appreciation rights or stock
grants will be awarded under the NQSO Plan after July 10, 1999.
Federal Income Tax Consequences
All stock options granted under the NQSO Plan will be Nonqualified
Stock Options and will be taxed in accordance with Section 83 of the Code
and the Regulations issued thereunder. The following general rules are
applicable to United States holders of such Nonqualified Stock Options and
to the Company for Federal income tax purposes under existing law:
1. The optionee does not realize any taxable income upon the grant
of a Nonqualified Stock Option, and the Company is not allowed a business
expense deduction by reason of such grant.
2. The optionee will recognize ordinary compensation income at the
time of exercise of a Nonqualified Stock Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price. The Company will require employees to
make appropriate arrangements for the withholding of taxes on this amount.
3. When the optionee sells the shares, he or she will recognize a
capital gain or loss in an amount equal to the difference between the
amount realized upon the sale of the shares and his or her basis in the
shares (i.e., the exercise price plus the amount taxed to the optionee as
compensation income). If the optionee holds the shares for longer than
one year, this gain or loss will be a long-term capital gain or loss.
4. In general, the Company will be entitled to a tax deduction in
the year in which compensation income is recognized by the optionee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENTS TO
THE NONQUALIFIED STOCK OPTION PLAN.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * *
PROPOSAL TO AMEND
THE INCENTIVE STOCK OPTION AND APPRECIATION RIGHTS PLAN
The Amended and Restated Incentive Stock Option and Appreciation
Rights Plan (the "Incentive Plan") was adopted by the Company in September
of 1989 and amended April 17, 1992 and May 17, 1994. It is now proposed
to approve an amendment to the Incentive Plan to increase the number of
shares of Common Stock authorized for issuance pursuant to the Incentive
Plan from 1,000,000 shares to 1,500,000 shares.
The Company believes that these changes are important to provide
flexibility to the Compensation Committee in its administration of the
Incentive Plan, to promote stock ownership among key employees and to
permit the Compensation Committee and the Board of Directors to continue
to provide incentives to present and future key employees to advance the
interests of the Company.
Below is a summary description of the Incentive Plan, as proposed to
be amended:
Administration
The Compensation Committee of the Board of Directors of the Company
administers the Incentive Plan. The Compensation Committee currently
consists of Messrs. Hannah, Kinnear and Richards. Subject to the terms of
the Incentive Plan, the Compensation Committee has the authority to
determine to whom stock options and/or stock appreciation rights will be
granted, the number of shares covered by each such grant, the exercise or
purchase price per share, the time or times at which stock options and/or
stock appreciation rights will be granted, and other terms and provisions
governing the stock options (including whether stock options will have
reload authorization). The interpretation or construction by the
Compensation Committee of the Incentive Plan or any stock option or stock
appreciation right granted under it will be final.
Underlying Securities
The securities underlying stock options and stock appreciation rights
under the Incentive Plan are shares of the Company's Common Stock.
Pursuant to the Incentive Plan, as amended, the maximum number of shares
of Common Stock that may be issued upon exercise or payment will not
exceed 1,500,000 shares, an increase of 500,000 shares. Pursuant to the
terms of the Incentive Plan, shares subject to stock options which for any
reason expire or are terminated unexercised as to such shares may again be
the subject of a grant under the Incentive Plan. In addition, for
purposes of calculating the maximum number of shares which may be issued
under the Incentive Plan, only shares issued as a result of an exercise of
stock appreciation rights are counted. Similarly, only the net shares
issued are counted when shares of Common Stock are used as full or partial
payment for shares issued upon exercise of stock options.
The market value of the total shares authorized under the Incentive
Plan as of April 17, 1996 was $1,125,000. The market value as of April
17, 1996 of the 500,000 shares which would be added by this amendment was
$625,000.
Eligible Employees and Others
Stock options and/or stock appreciation rights may be granted under
the Incentive Plan to key employees (within the meaning of Section
416(i)(1)(A) of the Code). Stock options granted under the Incentive
Plan, other than Reload Options (as described below), are incentive stock
options (within the meaning of Section 422 of the Code). As of December
31, 1995, the Company had approximately fifteen (15) key employees. In no
event may the aggregate fair market value (determined on the date of grant
of a stock option) of Common Stock for which incentive stock options
granted to any employee are exercisable for the first time by such
employee during any calendar year (under all qualified stock option plans
of the Company) exceed $100,000. Employees are eligible to receive stock
options for no more than an aggregated 750,000 shares each under the
Incentive Plan.
The Compensation Committee determines the number of shares of the
Company's Common Stock covered by any grant made to an Executive Officer
or other key employee under the Incentive Plan. Because such number, if
any, is entirely in the discretion of the Compensation Committee, the
benefits or amounts to be received by or allocated to the Executive
Officers or any other group of employees are not determinable. Stock
options may not be granted under the Incentive Plan to non-employee
Directors of the Company.
Stock Option Price and Duration
The exercise price per share of stock options granted under the
Incentive Plan cannot be less than the fair market value of the Common
Stock on the date of grant, or, in the case of stock options granted to
employees holding more than 10 percent of the total combined voting power
of all classes of stock of the Company, 110 percent of the fair market
value of the Common Stock on the date of grant.
The Incentive Plan requires that each stock option expire on the date
specified by the Compensation Committee, but not more than 10 years from
its date of grant. However, in the case of any stock option granted to an
employee owning more than 10 percent of the total combined voting power of
all classes of stock of the Company, such stock option will expire on the
date specified by the Compensation Committee, but not more than 5 years
from its date of grant.
Exercise of Stock Options and Payment for Stock
Exercise of a stock option under the Incentive Plan is effected by a
written notice of exercise delivered to the Company at its principal
office together with payment for the shares in full in cash or by check
or, at the discretion of the Compensation Committee, through delivery of
shares of Common Stock having fair market value equal as of the date of
exercise to the cash exercise price of the stock option, or by delivery of
a combination of cash and Common Stock.
Reload Options
The Compensation Committee may, concurrently with the award of stock
options, authorize "Reload Options". If a stock option is granted with
reload authorization and the stock option is exercised in whole or in part
by the delivery of shares of Common Stock, a Reload Option will
automatically be granted at the time of such exercise for the number of
shares delivered as payment of the exercise price. Any Reload Option
granted pursuant to such authorization will have an exercise price equal
to the fair market value on the date of exercise of the underlying stock
option and will be exercisable from such date through the remaining term
of the underlying stock option. Reload Options are exercisable in the
same manner as the underlying option.
Nontransferability of Stock Options
No transfers of stock options are permitted, except that a stock
option may be transferred by will or by the laws of descent and
distribution.
Stock Appreciation Rights
A stock appreciation right entitles its holder to receive from the
Company, at the time of exercise, an amount equal to the excess of the
fair market value (at the date of exercise) of a share of Common Stock
over a specified price fixed by the Compensation Committee not less than
100 percent of the fair market value of a share of Common Stock on the
date of grant, multiplied by the number of shares as to which the holder
is exercising the stock appreciation right. The Compensation Committee
may, in granting stock appreciation rights, provide that such rights are
alternative to a specified stock option.
Exercise of Stock Appreciation Rights
Exercise of a stock appreciation right under the Incentive Plan is
effected by written notice to the Company at any time prior to its stated
expiration, which will be no more than 10 years from the date of grant.
If the stock appreciation right is alternative to a stock option, the
stock option will be deemed cancelled to the extent the stock appreciation
right is exercised.
Plan Benefits
Set forth below in tabular form are the benefits or amounts to be
received by or allocated to each of the named persons or groups under the
Incentive Plan during 1996. The Compensation Committee determines the
number of stock options and stock appreciation rights which may be granted
to key employees under the Incentive Plan. Because such number, if any,
is entirely in the discretion of the Compensation Committee, the benefits
or amounts to be received by or allocated to the key employees in 1996 are
not determinable. There were no grants of stock options or stock
appreciation rights in 1995.
Incentive Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units
<S> <C> <C>
Matthew L. Gold, Chairman
of the Board, Chief
Executive Officer
and President -0- -0-
Walter M. Moede, Executive
Vice President and -0- -0-
Chief Financial Officer
C. Fredrik Groth, Vice
President- Corporate
Development -0- -0-
Executive Officer Group
(3 persons)<FN1> -0- -0-
Non-Executive Officer
Director Group (4 persons) -0- -0-
Nominee for Director
Group (6 persons)<FN1> -0- -0-
Associate of Director,
Executive Officer or
Nominee Group (0 persons) -0- -0-
5% or More Recipient Group
(0 persons) -0- -0-
Non-Executive Officer
Employee Group
(101 persons)<FN1> -0- -0-
- -------------------
<FN>
<FN1> Stock option grants prior to 1995 to employees of the Company may
contain vesting restrictions whereby some options vested in 1995 or
will vest in 1996. The vesting of these prior grants is not
included herein.
</FN>
</TABLE>
Amendment, Suspension and Termination
The Compensation Committee may suspend, terminate or amend the
Incentive Plan in any respect at any time, except that, without the prior
approval of the shareholders, (a) the total number of shares that may be
issued under the Incentive Plan may not be increased; (b) the expiration
date of the Incentive Plan may not be extended; (c) the method of
determining the minimum exercise price of stock options, Reload Options
and stock appreciation rights may not be modified; (d) the class of
employees to whom stock options or stock appreciation rights may be
granted may not be changed; and (e) the maximum number of shares that may
be subject to stock options or stock appreciation rights granted to each
employee under the Incentive Plan may not be increased. No amendment,
suspension or termination of the Incentive Plan will, without the consent
of the person who has received stock options or stock appreciation rights,
alter or impair any of that person's rights or obligations under any stock
option or stock appreciation right granted prior to that amendment,
suspension or termination.
Miscellaneous
The Company's obligation to permit the exercise of any stock option
or stock appreciation right is subject to the approval of any governmental
authority deemed by the Committee to be required in connection with the
sale or issuance of such shares. Adjustments in the number and type of
shares authorized by the Incentive Plan will be made by the Compensation
Committee in the event of a stock dividend, stock split, or combination or
other reduction in the number of issued shares in order to prevent the
dilution or enlargement of rights under stock options or stock
appreciation rights. Adjustments may also be made in the event of a
merger consolidation, reorganization, recapitalization sale or exchange of
substantially all assets or dissolution of the Company. To the extent
permitted by law, the Compensation Committee may provide for the Company
to make loans to finance the exercise of a stock option. The Company is
entitled, in appropriate circumstance, to withhold the amount of any
withholding or other tax due in connection with the exercise of rights
under the Incentive Plan. No stock option or stock appreciation right
will be granted under the Incentive Plan after July 10, 1999.
Federal Income Tax Consequences
A. Incentive Stock Options. The following general rules are
applicable for Federal income tax purposes under existing law to United
States employees of the Company who receive and exercise stock options
granted under the Incentive Plan that are intended to be Incentive Stock
Options ("ISOs"):
1. Generally, no taxable income results to the optionee upon the
grant of an ISO or upon the issuance of shares to him or her upon exercise
of the ISO.
2. No tax deduction is allowed to the Company upon either grant or
exercise of an ISO under the Incentive Plan.
3. If shares acquired upon exercise of an ISO are not disposed of
prior to the later of (i) two years following the date the stock option
was granted or (ii) one year following the date the shares are transferred
to the optionee pursuant to the exercise of the stock option, the
difference between the amount realized on any subsequent disposition of
the shares and the exercise price will generally be treated as long-term
gain or loss to the optionee.
4. If shares acquired upon exercise of an ISO are disposed of
before the expiration of one or both of the requisite holding periods (a
"disqualifying disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of
the stock option over the exercise price or (ii) the actual gain on
disposition, will be treated as compensation to the optionee and will be
taxed as ordinary income in the year of such disposition.
5. In any year that an optionee recognizes compensation income on a
disqualifying disposition of shares acquired by exercising an ISO, the
Company will generally be entitled to a corresponding deduction for income
tax purposes.
6. Any excess of the amount realized by the optionee as the result
of a disqualifying disposition over the sum of (i) the exercise price and
(ii) the amount of ordinary income recognized under the above rules will
be treated as either long-term or short-term capital gain, depending upon
the time elapsed between receipt and disposition of such shares disposed
of.
7. The bargain element at the time of exercise of an ISO, i.e., the
amount by which the fair market value of the Common Stock acquired upon
exercise of the ISO exceeds the exercise price, may be taxable to the
optionee under the "alternative minimum tax" provisions of the Code.
B. Nonqualified Options. A Reload Option granted under the
Incentive Plan will be a Nonqualified Option and will be taxed in
accordance with Section 83 of the Code and the Regulations issued
thereunder. The following general rules are applicable to United States
holders of such stock options and to the Company for Federal income tax
purposes under existing law:
1. The optionee does not realize any taxable income upon the grant
of a Nonqualified Option, and the Company is not allowed a business
expense deduction by reason of such grant.
2. The optionee will recognize ordinary compensation income at the
time of exercise of a Nonqualified Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price. The Company will require employees to
make appropriate arrangements for the withholding of taxes on this amount.
3. When the optionee sells the shares, he or she will recognize a
capital gain or loss in an amount equal to the difference between the
amount realized upon the sale of the shares and his or her basis in the
shares (i.e., the exercise price plus the amount taxed to the optionee as
compensation income). If the optionee holds the shares for longer than
one year, this gain or loss will be a long-term capital gain or loss.
4. In general, the Company will be entitled to a tax deduction in
the year in which compensation income is recognized by the optionee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE INCENTIVE STOCK OPTION AND APPRECIATION RIGHTS PLAN.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * *
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any other matter to be presented at the meeting other than as
set forth herein. However, if any other matters are properly brought
before the Meeting, the shares represented by valid Proxies will be voted
with respect to such matters in accordance with the judgment of the
persons voting them.
Under Colorado law, unless otherwise provided in the Company's
Articles of Incorporation, for the election of directors, of the shares
represented in person or by proxy at the meeting and entitled to vote,
that number of candidates equalling the number of directors to be elected
having the highest number of votes cast in favor of their election, are
elected to the board of directors. For the ratification of the
independent public accountants and the amendments to the NQSO Plan and the
Incentive Plan, of the shares represented in person or by proxy at the
meeting and entitled to vote, the votes cast favoring the ratification and
approving the amendments to the NQSO Plan and the Incentive Plan must
exceed the votes opposing it. Abstentions and broker non-votes will be
counted for purposes of establishing a quorum only. On those votes cast
for the election of directors and the proposals will be counted as votes
in favor or affirmative votes.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 accompanies this Proxy Statement. The audited financial
statements of the Company are included in such Form 10-K. Copies of the
exhibits to that Form 10-K are available from the Company upon written
request of a Shareholder and payment of the Company's out-of-pocket
expenses.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN MAY 1997
Any proposal from a Shareholder intended to be presented at the
Company's Annual Meeting of Shareholders to be held in May 1997, must be
received at the offices of the Company, 1225 17th Street, Suite 1800,
Denver, Colorado 80202 no later than December 30, 1996, in order to be
included in the Company's proxy statement and proxy relating to that
meeting.
WALTER M. MOEDE
SECRETARY
Denver, Colorado
April 29, 1996
APPENDIX
PROXY CARD
PRECISION STANDARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Matthew L. Gold and Walter M. Moede,
each with the power to appoint his substitute, and hereby authorizes them
to represent and to vote as designated below, all the shares of common
stock of Precision Standard, Inc. held of record by the undersigned on
April 17, 1996, at the Annual Meeting of Shareholders to be held on May
29, 1996 or any adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below (except as marked to the
contrary)
[ ] WITHHOLD AUTHORITY to vote for all the nominees listed below
Matthew L. Gold Walter M. Moede
Donald C. Hannah General Thomas C. Richards
Admiral George E.R. Kinnear II J. Ben Shapiro, Jr.
(INSTRUCTION: To withhold authority to vote for an individual
nominee, cross out that nominee's name above.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P.
AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3 PROPOSAL TO APPROVE AMENDMENTS TO THE AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION PLAN, WHICH AMONG OTHER MATTERS, INCREASE THE
NUMBER OF SHARES RESERVED UNDER THE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
INCENTIVE STOCK OPTION AND APPRECIATION RIGHTS PLAN TO INCREASE THE NUMBER
OF SHARES RESERVED UNDER THE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may properly come before the
Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT
THE TIME OF THE MAILING OF THE NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO
THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement furnished herewith.
Dated: , 1996
-----------------------------------
-----------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s)
stenciled hereon. Executors, administrators,
trustees, guardians and attorneys should
indicate when signing. Attorneys should submit
powers of attorney.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED
ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING OR TO SUBMIT A LATER DATED REVOCATION OR
AMENDMENT TO THIS PROXY ON ANY OF THE ISSUES SET FORTH ABOVE.
APPENDIX
PRECISION STANDARD, INC.
AMENDED AND RESTATED NONQUALIFIED STOCK OPTION PLAN
March 29, 1996
Section 1. Purpose. The purpose of the PRECISION STANDARD,
INC. (the "Company") Amended and Restated Nonqualified Stock Option Plan
(the "Plan") is to provide incentives for selected persons to promote the
financial success and progress of the Company by granting such persons
awards ("Awards") of incentives in the form of options to purchase shares
of the Company's Common Stock ("Options"), stock appreciation rights
("SARs"), and Common Stock of the Company ("Stock Grants"). An Award may
consist of one or a combination of such incentives and may be made at any
time or from time to time.
Section 2. General Provisions.
A. Administration. The Plan shall be adminis-
tered by the Compensation Committee, which shall be comprised of two or
more independent outside directors appointed by the Board of Directors
(the "Committee"). No member of the Committee shall receive a grant under
the Plan if such grant would cause such member to cease to be a
"disinterested person" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 ("Exchange Act"); provided, however, that
if at any time Rule 16b-3 so permits without adversely affecting the
ability of the Plan to comply with the conditions for exemption from
Section 16 of the Exchange Act (or any successor provisions) provided by
Rule 16b-3, one or more members of the Committee may cease to be
"disinterested persons." Any action of the Committee shall be taken by
majority vote or the unanimous written consent of the Committee members.
B. Authority of the Committee. Subject to other
provisions of the Plan, and with a view towards furtherance of its
purpose, the Committee shall have sole authority and absolute discretion:
1. to construe and interpret the Plan;
2. to define the terms used herein;
3. to prescribe, amend and rescind rules and
regulations relating to the Plan;
4. to determine the persons to whom Awards are
granted;
5. to determine the time or times at which
Awards shall be granted;
6. to determine the number of shares subject to
each Award;
7. to determine all of the other terms and
conditions of the Options, SARs, and Stock Grants awarded hereunder; and
8. to make all other determinations necessary
or advisable for the administration of the Plan and to do everything
necessary or appropriate to administer the Plan.
All decisions, determinations and interpretations made by the Committee
shall be binding and conclusive on all participants in the Plan and on
their legal representatives, heirs and beneficiaries.
C. Maximum Number of Shares Subject to the Plan.
The maximum aggregate number of shares of Common Stock subject to the Plan
shall be 1,500,000, subject to adjustment as provided in Section 2.G of
the Plan. The Common Stock subject to the Plan may be divided among the
various types of Awards as the Committee determines in its sole discretion
from time to time. For purposes of calculating the maximum number of
shares of Common Stock which may be issued under the Plan, (a) all shares
underlying an Option (including the shares, if any, withheld for tax
withholding requirements) shall be counted when cash is used as full
payment for shares issued upon exercise of the Option; (b) in the case of
net exercise of an Option, only the net shares issued (including the
shares, if any, withheld for tax withholding requirements) shall be
counted when shares of Common Stock are used as full or partial payment
for shares issued upon exercise of an Option; (c) all shares underlying an
SAR (including the shares, if any, withheld for tax withholding
requirements) shall be counted upon exercise of an SAR; and (d) all shares
issued pursuant to a Stock Grant (including the shares, if any, withheld
for tax withholding requirements) shall be counted when the shares are no
longer subject to any conditions, such as a vesting schedule, and
certificates representing such shares have been issued and delivered. If
any Options or SARs granted under the Plan expire or terminate for any
reason before they have been exercised, the shares subject to such Options
or SARs shall again be available under the Plan.
D. Eligibility and Participation. Subject to the
terms of the Plan, Awards may be granted to such employees, officers,
directors, consultants and independent contractors of the Company or any
Parent, Subsidiary or Affiliate of the Company, as defined below, as the
Committee may select from time to time in its sole discretion. Employees
of the Company are eligible to receive Awards for no more than an
aggregate of 750,000 shares of the Company's Common Stock per employee
under the Plan. The Committee, in its sole discretion, shall determine
the number of shares of the Company's Common Stock covered by any Award
made to executive officers or other employees under the Plan. Grants to
non-employee directors of the Company may only be made pursuant to formula
grants in the manner and amounts set forth in Section 7 hereof. A person
may be granted more than one Award under the Plan. As used in the Plan,
the following terms shall have the following meanings:
1. "Parent" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company
if, at the time of the granting of an Award, each of such corporations
other than the Company owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
2. "Subsidiary" means any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of granting of an Award, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
3. "Affiliate" means any corporation that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, another corporation, where
"control" (including the terms "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to cause the
direction of the management and policies of the corporation, whether
through the ownership of voting securities, by contract or otherwise.
4. "Common Stock" means shares of the Company's
$.0001 par value common stock, or such other shares as are substituted
pursuant to Section 2.G hereof.
E. Effective Date of Plan. The Plan was adopted by
the Company in September 1989 and was amended April 17, 1992 and May 17,
1994. On March 18, 1996, the Committee adopted the most recent amendments
to the Plan, which shall be submitted to the shareholders of the Company
for their approval and adoption at a meeting to be held on May 29, 1996,
or at any adjournment thereof. The shareholders shall be deemed to have
approved and adopted these most recent amendments to the Plan only if they
are approved and adopted at a meeting of the shareholders duly held by
vote taken in the manner required by the laws of the State of Colorado.
F. Termination and Amendment of Plan. The Plan
shall terminate on July 10, 1999. No Options, SARs, or Stock Grants shall
be granted under the Plan after that date. Subject to the limitation
contained in Section 2.H of the Plan, the Committee may at any time amend
or revise the terms of the Plan, including the form and substance of the
Options, SARs, and Stock Grants granted hereunder, provided that no such
amendment or revision shall (i) increase the maximum aggregate number of
shares that may be issued pursuant to Awards granted under the Plan,
except as permitted under Section 2.G of the Plan; (ii) change the minimum
exercise price for Options and SARs granted under the Plan; (iii) permit
the granting of an Award to any person other than as provided in Section
2.D of the Plan; or (iv) increase the maximum number of shares that may be
subject to Awards granted to employees under the Plan without the approval
of the Company's shareholders in the manner required by the laws of the
State of Colorado. In addition, the provisions of Section 7 hereof
relating to the amount, price, and timing of grants to directors who are
not employees of the Company shall not be amended more than once every six
months, other than to comport with changes, if applicable, in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
G. Adjustments. If the outstanding shares of Common
Stock are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made in the maximum
number and kind of shares as to which Options, SARs, and Stock Grants may
be granted under the Plan. A corresponding adjustment shall be made to
the number or kind of shares allocated to unexercised Options and SARs, or
portions thereof, and to unvested Options, SARs, and Stock Grants granted
prior to any such change. Any such adjustment in outstanding Options or
SARs shall be made without change in the aggregate purchase price
applicable to the unexercised portion of such Options or SARs, but with a
corresponding adjustment in the price for each share covered by the
Options or SARs.
H. Prior Options and Obligations. No amendment,
suspension or termination of the Plan shall, without the consent of the
person who has received an Award, alter or impair any of that person's
options or obligations under any Award granted under the Plan prior to
that amendment, suspension or termination.
I. Privileges of Stock Ownership. Notwithstanding
the exercise of any Option or SAR, or the receipt of any Stock Grant,
granted pursuant to the terms of the Plan, no person shall have any of the
rights or privileges of a shareholder of the Company with respect to any
shares of stock until certificates representing such shares have been
issued and delivered. No shares shall be required to be issued and deliv-
ered upon exercise of any Option or SAR, or pursuant to a Stock Grant,
until there has been compliance with all of the requirements of law and of
all regulatory agencies having jurisdiction over the issuance and delivery
of the securities.
J. Reservation of Shares of Common Stock. During
the term of the Plan, the Company will at all times reserve and keep
available such number of shares of its Common Stock as shall be sufficient
to satisfy the requirements of the Plan. In addition, the Company will
from time to time, as is necessary to accomplish the purposes of the Plan,
seek or obtain from any regulatory agency having jurisdiction any
requisite authority in order to issue shares of common stock hereunder.
The inability of the Company to obtain from any regulatory agency having
jurisdiction the authority deemed by the Company's counsel to be necessary
to the lawful issuance of any Award or shares of its stock hereunder shall
relieve the Company of any and all liability with respect to the
nonissuance of the Award or the shares of Common Stock as to which the
requisite authority shall not have been obtained.
H. Tax Withholding. The exercise of any Option or
SAR, and the receipt of any Stock Grant, is subject to the condition that
if at any time the Company shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding obligations under any
state or federal law is necessary or desirable as a condition of, or in
connection with, such exercise or delivery or purchase of shares pursuant
thereto, then in such event, the exercise of an Option or SAR, or the
receipt of a Stock Grant, shall not be effective unless such withholding
shall have been effected or obtained in a manner acceptable to the
Company.
I. Fair Market Value. The "fair market value" of
the Common Stock on any given date means (a) the mean between the highest
and lowest reported sale prices on the Nasdaq National Market (or, if not
so reported, on any domestic stock exchange on which the Common Stock is
then listed); or (b) if the Common Stock is not reported on the Nasdaq
National Market or listed on any domestic stock exchange, the mean between
the closing high bid and low asked prices as reported by the Nasdaq Small
Cap Market (or, if not so reported, by the system then regarded as the
most reliable source of such quotations); or (c) if the Common Stock is
reported on the Nasdaq National Market, listed on a domestic exchange,
reported on the Nasdaq Small Cap Market, or quoted in a domestic over-the-
counter market, but there are no reported sales or quotations, as the case
may be, on the given date, the value determined pursuant to (a) or (b)
above using the reported sale prices or quotations on the last previous
date on which such a reported sale or quotation took place; or (d) if none
of the foregoing clauses apply, the fair market value as determined in
good faith by the Committee.
Section 3. Options.
A. Option Price. The option price for shares
acquired pursuant to the exercise of any Option, in whole or in part,
shall be determined by the Committee at the time of the grant of the
Option. Such option price may be less than the market price of the
Company's Common Stock on the date of grant, but in no event shall the
option price be less than fifty percent (50%) of the fair market value of
the Common Stock on the date of grant. The foregoing notwithstanding, the
option price of Options granted to officers or directors shall be 100% of
the market price of the Company's Common Stock on the date of grant.
B. Exercise of Options. Each Option shall be
exercisable in one or more installments during its term, and the right to
exercise may be cumulative, as determined by the Committee. No Option may
be exercised for a fraction of a share of Common Stock. The option price
shall be paid at the time of exercise of the Option in cash or shares of
the Company's Common Stock, or in a combination thereof. If permitted by
the Committee, payment may also be made by delivering a properly executed
notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds attributable to
the purchased shares needed to pay the exercise price. If any portion of
the purchase price at the time of exercise is paid in shares of Common
Stock, those shares shall be tendered at their fair market value on the
date of exercise.
C. Acceleration of Options. Notwithstanding
the first sentence of Section 3.B of the Plan, if the Company or its
shareholders enter into an agreement to dispose of all or substantially
all of the assets or stock of the Company by means of a sale, merger or
other reorganization, liquidation, or otherwise, any Option granted
pursuant to the Plan shall become immediately exercisable with respect to
the full number of shares subject to that Option during the period
commencing as of the date of the agreement to dispose of all or
substantially all of the assets or stock of the Company and ending when
the disposition of assets or stock contemplated by that agreement is
consummated or the Option is otherwise terminated in accordance with its
provisions or the provisions of the Plan, whichever occurs first; provided
that no Option shall be immediately exercisable under this Section on
account of any agreement of merger or other reorganization where the
shareholders of the Company immediately before the consummation of the
transaction will own at least 50% of the total combined voting power of
all classes of stock entitled to vote of the surviving entity (whether the
Company or some other entity) immediately after the consummation of the
transaction. In the event the transaction contemplated by the agreement
referred to in this Section is not consummated, but rather is terminated,
cancelled or expires, the Options granted pursuant to the Plan shall
thereafter be treated as if that agreement had never been entered into.
D. Written Notice Required. Any Option granted
pursuant to the Plan shall be exercised when written notice of that
exercise has been given to the Company at its principal office by the
person entitled to exercise the Option and full payment for the shares
with respect to which the Option is exercised has been received by the
Company.
Section 4. Reload Options. Concurrently with the award
of Options under the Plan, the Committee may authorize reload options
("Reload Options") to purchase, for cash or shares, the number of shares
of Common Stock used to exercise the underlying Option.
A. Reload Option Amendment. Each notice
evidencing the grant of an Option shall state whether the Committee has
authorized Reload Options with respect to the underlying Option. Upon the
exercise of an underlying Option, the Reload Option will be evidenced by
an amendment to the notice of grant of the underlying Option. Reload
Options shall be subject to the terms and conditions in the underlying
option agreement and shall be subject to the terms and conditions set
forth in the Plan.
B. Reload Option Price. The option price per
share of Common Stock deliverable upon exercise of a Reload Option shall
be the fair market value of a share of Common Stock on the date of
exercise of the underlying Option.
C. Term and Exercise. Each Reload Option is
fully exercisable from the date of exercise of the underlying Option and
shall remain exercisable for the remaining term of the underlying Option.
Reload Options may be exercised in the same manner as the underlying
Options in accordance with the Plan.
D. Termination of Employment. No additional
Reload Options shall be granted to participants in the Plan when an Option
or Reload Option is exercised pursuant to the terms of the Plan following
termination of the participant's employment or the cessation of the
participant's service to the Company as a director, consultant or
independent contractor.
Section 5. Stock Appreciation Rights. The Committee
may, from time to time in its sole discretion, grant SARs in addition to
or in conjunction with Options granted hereunder, either at the time of
the grant of the Options or at any subsequent time during the term of the
Options. Subject to the terms of the Plan, the Committee shall determine
and designate the recipients of SARs, the dates SARs are granted, the
number of shares subject to SARs, the duration of each SAR, and whether
SARs are alternative to any previously or contemporaneously granted Option
or Reload Option ("Related Options"). SARs shall be subject to the terms
and conditions and evidenced by agreements in the form determined from
time to time by the Committee.
A. Value of SARs. SARs shall entitle
their holders to receive a number of shares of the Company's Common Stock
equal to (i) the excess of the fair market value of a share of the
Company's Common Stock on the date of exercise over a specified price
fixed by the Committee, which price may not be less than 100% of the fair
market value of a share of Common Stock on the date of the grant,
multiplied by (ii) the number of shares as to which the holder is
exercising the SAR.
B. Duration. The term of an SAR granted
as an alternative to an Option will be the same as the term of its Related
Option; upon exercise of the SAR, the Related Option will terminate, and
upon exercise of the Related Option, the SAR will terminate. The term of
an SAR granted in addition to and separately from any Option shall be
specified by the Committee at the time such SAR is granted.
C. Exercise of SARs. SARs may be
exercised according to their terms by providing written notice to the
Company at any time prior to the expiration of the SAR. No SAR may be
exercised for a fraction of a share of Common Stock. If the SAR is
alternative to an Option, the Related Option shall be deemed terminated to
the extent the SAR is exercised.
Section 6. Stock Grants. The Committee may, from time to
time in its sole discretion, grant shares of the Company's Common Stock
under the Plan. Such Stock Grants may be awarded with or without
conditions, such as vesting schedules or performance requirements.
Recipients of Stock Grants will not be required to pay for the acquisition
of the Company's Common Stock but will be subject to tax consequences and
resale restrictions.
Section 7. Grants to Outside Directors. Notwithstanding any
contrary provision of the Plan, the Committee shall have no discretion to
determine the amount, price or timing of grants of Awards to directors who
are not employees of the Company. Grants of Awards hereunder to directors
who are not employees of the Company shall be made not more than once in
each calendar year and shall be granted on December 10 of each year. Each
such grant shall be for one share of Common Stock for each two dollars of
director's compensation to include retainer plus four Board meetings paid
to the director during the calendar year, but not to include any
additional compensation for committee meetings attended not held in
conjunction with Board meetings or for additional Board meetings attended
beyond four; such amount to be reduced accordingly if less than four Board
meetings attended. The exercise price for Options granted to outside
directors shall be 100% of the market price of the Common Stock on the
date of grant. Each Option granted in accordance with this Section shall
include authorization for a Reload Option in accordance with Section 4 of
the Plan.
Section 8. Terms and Conditions May Differ. The terms and
conditions of Awards granted under the Plan may differ as the Committee
shall in its discretion determine so long as all Awards satisfy the
requirements of the Plan.
Section 9. Duration of Options and SARs. Each Option and
each SAR granted pursuant to the Plan shall expire on the date determined
by the Committee which shall be not later than ten years after the date of
grant and shall be subject to early termination as provided in the Plan.
Subject to the foregoing, Options granted to outside directors pursuant to
Section 7 hereof shall be fully vested on the date of grant and shall be
exercisable for a period of ten years.
Section 10. Limitations on Acquiring Voting Stock. No Award
may be granted to persons who are not officers or directors of the Company
if such Award would cause that person to hold, beneficially or of record,
in excess of 5% of the outstanding voting stock of the Company.
Section 11. Compliance with Securities Laws. Shares of
Common Stock shall not be issued with respect to any Award granted under
the Plan unless the issuance and delivery of the shares pursuant thereto
shall comply with all relevant provisions of state and federal law,
including without limitation the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder and the requirements of any
stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to
such compliance. Further, each recipient of an Award hereunder shall
consent to the imposition of a legend on the certificate representing the
shares of Common Stock issued hereunder restricting the transferability of
such shares as required by law, the Award, or by the Plan.
Section 12. Employment. Each recipient of an Award, if
requested by the Committee, must agree in writing as a condition of the
granting of his or her Award, to remain in the employ of the Company or to
remain as a consultant to the Company, or any of its Subsidiaries,
following the date of the granting of that Award for a period or periods
specified by the Committee, which period(s) shall in no event exceed an
aggregate of four years. Nothing in the Plan or in any Award granted
hereunder shall confer upon any Award recipient any right to continued
employment or retainer by the Company or any of its Subsidiaries, or limit
in any way the right of the Company or any Subsidiary at any time to
terminate or alter the terms of that employment or consulting arrangement.
Section 13. Rights Upon Termination of Employment, Director,
Consultant or Independent Contractor Status. If an Award recipient ceases
to be employed by the Company or ceases to serve as a director, consultant
or independent contractor of the Company, or any Subsidiary, for any
reason other than death or retirement, his or her Award shall immediately
terminate; provided that the Committee may, in its discretion, allow
Options and SARs to remain exercisable (to the extent exercisable on the
date of termination of employment or retainer) for up to one additional
year for each year of service to the Company by the Award recipient (up to
a maximum of five years after the date of termination), unless the Option,
SAR, or the Plan otherwise provides for earlier termination; and provided
further that, for purposes of determining when a director no longer serves
the Company, the period during which post-retirement or similar benefits
are paid to the director by the Company shall be deemed to be continued
service.
Section 14. Rights Upon Death. Except as otherwise limited
by the Committee at the time of the grant of an Option or SAR, if the
recipient dies while he or she is an employee, director or consultant of
the Company or any Subsidiary, his or her Options and SARs shall remain
exercisable for one year after the date of death, unless the Options,
SARs, or the Plan otherwise provide for earlier termination. During such
exercise period after death, Options and SARs may be fully exercised, to
the extent that they remain unexercised on the date of the recipient's
death, by the person or persons to whom the recipient's rights to the
Options or SARs shall pass by will or by laws of descent and distribution.
Section 15. Waiver of Vesting Restrictions in the Event of
Retirement. Notwithstanding any provision of the Plan, in the event an
Award recipient retires as an employee or director of the Company, or any
Subsidiary, the Committee shall have the discretion to waive any vesting
restrictions on the retiree's Options, SARs, or Stock Grants.
Section 16. Awards Not Transferable. Awards granted pursuant
to the Plan may not be sold, pledged, assigned or transferred in any
manner otherwise than by will or the laws of descent and distribution.
During the lifetime of the Award recipient, Options and SARs may only be
exercised by that recipient or by his or her guardian or legal
representative.
Section 17. Reports to Shareholders. Upon written request,
the Company shall furnish to each Award recipient a copy of its most
recent Form 10-K Annual Report and each quarterly report to shareholders
issued since the end of the Company's most recent fiscal year.
Adopted by the Board of Directors and approved by the shareholders of the
Company on September 8, 1989. Amended and restated on June 1, 1992 and
March 11, 1994. Further amended and restated on March 29, 1996, subject
to approval of the Company's shareholders at the annual meeting of the
shareholders to be held on May 29, 1996.
PRECISION STANDARD, INC.
MATTHEW L. GOLD, WALTER M. MOEDE,
PRESIDENT SECRETARY
APPENDIX
PRECISION STANDARD, INC.
AMENDED AND RESTATED
INCENTIVE STOCK OPTION AND APPRECIATION RIGHTS PLAN
March 11, 1994
1. Plan. Options to purchase and appreciation rights for
shares of the Corporation's common stock may be granted in accordance with
this Plan to key employees (within the meaning of Section 416(i)(1)(A) of
the Code) of the Corporation and its Subsidiaries selected by the
Committee.
2. Definitions. The "Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.
The "Committee" means a committee which shall be comprised
of two or more independent outside directors designated by the Board of
Directors of the Corporation, each of whom shall be a disinterested person
(within the meaning of the regulations promulgated under Section 16(b) of
the Securities Exchange Act of 1934).
"Common Stock" means shares of the common stock, $.0001 par
value per share of the Corporation, or such other shares as are
substituted pursuant to paragraph 7(f).
The "Corporation" means Precision Standard, Inc.
The "fair market value" of the Common Stock on any given
date means (a) the mean between the highest and lowest reported sale
prices on the NASDAQ National Market System (or, if not so reported, on
any domestic stock exchange on which the Common Stock is then listed); or
(b) if the Common Stock is not listed on the NASDAQ National Market System
or on any domestic stock exchange, the mean between the high bid and low
asked prices as reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so reported, by the system then
regarded as the most reliable source of such quotations); or (c) if the
Common Stock is listed on a domestic exchange or quoted in the domestic
over-the-counter market, but there are not reported sales or quotations,
as the case may be, on the given date, the value determined pursuant to
(a) or (b) above using the reported sale prices or quotations on the last
previous date on which so reported; or (d) if none of the foregoing
clauses apply, the fair market value as determined in good faith by the
Committee.
"Subsidiary" means any corporation in which the Corporation
owns, directly or indirectly, stock possessing 50% or more of the total
combined voting power.
3. Limitation on Aggregate Shares. The number of shares of
Common Stock for which options and appreciation rights may be granted
under this Plan and which may be issued upon exercise or payment shall not
exceed, in the aggregate, 1,500,000 shares. For purposes of calculating
the maximum number of shares of Common Stock which may be issued under the
plan, (a) all shares issued (including the shares, if any, withheld for
tax withholding requirements) shall be counted when cash is used as full
payment for shares issued upon exercise of an option; (b) only the shares
issued (including the shares, if any, withheld for tax withholding
requirements) as a result of an exercise of appreciation rights shall be
counted; and (c) only the net shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be counted when shares of
Common Stock are used as full or partial payment for shares issued upon
exercise of an option. If any options or appreciation rights expire
unexercised or are cancelled, terminated or forfeited in any manner
without the issuance of Common Stock or payment, the shares for which the
options and appreciation rights were granted shall again be available
under this Plan. The 1,500,000 shares of Common Stock may be either
authorized and unissued shares, treasury shares, or a combination thereof.
4. Options. Options to be granted under this Plan shall be
incentive stock options (within the meaning of Section 422 of the Code).
Subject to the terms of this Plan, the Committee shall determine and
designate the recipients of options, the dates options are granted, the
number of shares of Common Stock subject to option, the options prices,
and the duration of options. The option price per share of Common Stock
shall be fixed by the Committee at not less than 100% of the fair market
value per share of Common Stock on the date of grant. Options may not be
granted to any employee who at the time the option is granted owns more
than 10% of the total combined voting power of all classes of stock of the
Corporation or of its parent or subsidiary except that options may be
granted to such persons if the option price is at least 110% of the fair
market value and the option by its terms is not exercisable more than five
years from the date it is granted. Employees of the Corporation will be
eligible to receive options for no more than an aggregate of 750,000
shares per employee under this Plan. To the extent required by the Code,
the aggregate fair market value (determined at the time the option is
granted) of the Common Stock for which incentive stock options are
exercisable for the first time by an option holder during any calendar
year (under all plans of the Corporation and its subsidiaries) shall not
exceed $100,000. Options granted under this Plan shall be subject to
terms and conditions and evidenced by agreements in the form determined
from time to time by the Committee and shall be subject to the terms and
conditions in paragraph 7.
a. Term of Options. No incentive stock option shall be
exercisable more than ten years after the date of grant. Subject to the
five-year limitation for 10% shareholders provided in paragraph 4, options
granted to employees who are directors of the Corporation shall be fully
vested on the date of grant and shall be exercisable for a period of ten
years.
b. Exercise of Options. Options shall be exercised by
written notice to the Corporation (to the attention of the Corporate
Secretary) accompanied by payment in full of the option price. Payment of
the option price may be made, at the discretion of the optionee (i) in
cash (including check, bank draft, or money order), (ii) by delivery of
Common Stock (valued at the fair market value thereof on the date of
exercise) or (iii) by delivery of a combination of cash and Common Stock.
The Committee may, in order to prevent any possible violation of law,
require the option price to be paid in cash. The right to deliver Common
Stock in payment of the option price may be limited or denied in any
option agreement.
An option shall not be exercisable (i) after the
expiration of ten years from the date it is granted; (ii) unless the
person exercising the option has been, at all times, during the period
beginning with the date of grant of the option and ending on a date three
months prior to the date of exercise employed by the Corporation except
that, in the case of a disabled recipient the period is extended to twelve
months prior to the date of exercise and in the case of the death of a
recipient, within one year after the date of death (but in no event after
the option has expired).
5. Reload Options. Concurrently with the award of options to
any participant under this Plan, the Committee may authorize reload
options to purchase for cash or shares a number of shares of Common Stock.
The number of reload options shall equal the number of shares of Common
Stock used to exercise the underlying option. The grant of a reload
option shall be effective upon the exercise of the underlying option,
through the use of shares of Common Stock held by the optionee for at
least 12 months. Notwithstanding the fact that the underlying option is
an incentive stock option (within the meaning of Section 422 of the Code),
a reload option is not intended to qualify as an incentive stock option
(within the meaning of Section 422 of the Code).
a. Reload Option Amendment. Each notice evidencing the
grant of an option shall state whether the Committee has authorized reload
options with respect to the underlying option. Upon the exercise of an
underlying option, the reload option will be evidenced by an amendment to
the notice of grant of the underlying option. Reload options shall be
subject to the terms and conditions in the underlying option agreement and
shall be subject to the terms and conditions in paragraph 7.
b. Reload Option Price. The option price per share of
Common Stock deliverable upon exercise of a reload option shall be the
fair market value of a share of Common Stock on the date of exercise of
the underlying option.
c. Term and Exercise. Each reload option is fully
exercisable from the date of exercise of the underlying option and shall
remain exercisable for the remaining option term of the underlying option.
Reload options may be exercised in the same manner as the underlying
options in accordance with paragraph 4(b).
d. Termination of Employment. No additional reload
options shall be granted to any participant under this Plan when an option
or reload option is exercised pursuant to the terms of this Plan following
termination of the participant's employment with the Corporation.
6. Appreciation Rights. Subject to the terms of this Plan,
the Committee shall determine and designate the recipients of appreciation
rights, the dates appreciation rights are granted, the number of shares
subject to appreciation rights, the duration of appreciation rights, and
whether appreciation rights are alternative to any previously or
contemporaneously granted option or reload option (a "Related Option").
Employees of the Corporation will be eligible to receive appreciation
rights for no more than an aggregate of 750,000 shares per employee under
this Plan. Appreciation rights granted to employees who are directors
shall be fully vested on the date of grant and shall be exercisable for a
period of ten years. Appreciation rights shall be subject to the terms
and conditions and evidenced by agreements in the form determined from
time to time by the Committee and shall be subject to the terms and
conditions in paragraph 7.
a. Nature of Appreciation Right. An appreciation right
shall entitle its holder to receive from the Corporation, at the time of
its exercise, an amount equal to the excess of the fair market value (at
the date of exercise) of a share of Common Stock over a specified price
fixed by the Committee which shall not be less than 100% of the fair
market value of a share of Common Stock on the date of grant) multiplied
by the number of shares as to which the holder is exercising the
appreciation right. For an appreciation right that is alternative to a
Related Option, the specified price shall be the option price. The amount
payable to the holder may be paid by the Corporation in Common Stock
(valued at its fair market value on the date of exercise), cash or a
combination of both, subject, in the case of cash or a combination of
Common Stock and cash, to the consent of the Committee.
b. Exercise. An appreciation right shall be exercised by
written notice to the Corporation (to the attention of the Corporate
Secretary) at any time prior to its stated expiration (which shall not be
more than ten years after the date of grant). If the appreciation right
is alternative to a Related Option, the Related Option shall be deemed
cancelled to the extent the appreciation right is exercised.
7. Additional Provisions.
a. Additional Conditions. The Committee may at the time
of granting any option or appreciation right and at any time thereafter
impose additional conditions, provisions and limitations to the options or
appreciation rights which the Committee deems advisable, including, but
not limited to, limitations on the period within which the option or
appreciation right shall be exercisable and the maximum amount of
appreciation to be recognized with regard to any appreciation right.
b. Listing, Registration, and Compliance With Laws and
Regulations. If the Committee determines, in its discretion, that the
listing, registration, or qualification of the shares subject to the
option or appreciation right upon any securities exchange or automated
quotation service or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition to or in connection with
the granting of an option or appreciation right or the issue or purchase
of shares thereunder, no option or appreciation right may be exercised or
paid in Common Stock in whole or in part unless the listing, registration,
qualification, consent or approval has been effected or obtained free of
any conditions not acceptable to the Committee. The holder of the option
or appreciation right will supply the Corporation with certificates,
representations, and information that the Corporation requests and shall
otherwise cooperate with the Corporation in obtaining the listing,
registration, qualification, consent or approval. In the case of officers
and other persons subject to Section 16(b) of the Securities Exchange Act
of 1934, the Committee may at any time impose any limitations upon the
exercise of an option or appreciation right which, in the Committee's
discretion, are necessary or desirable in order to comply with Section
16(b) and the rules and regulations thereunder. If the Corporation, as
part of an offering of securities or otherwise, finds it desirable,
because of federal or state regulatory requirements, to reduce the period
during which any options or appreciation rights may be exercised, the
Committee may, in its discretion and without the holders' consent, reduce
the holders' exercise period on not less than 15 days written notice to
the holders.
c. Cash Payments. Options and appreciation rights may,
in the Committee's discretion, provide that the holder, as soon as
practicable after the holder exercises the option or appreciation right in
whole or in part, will receive a cash payment in an amount that the
Committee may determine, but not more than: (i) in the case of an option
exercise, the excess of the fair market value of a share of Common Stock
(on the date the holder recognizes taxable income) over the option price
multiplied by the number of shares as to which the option is exercised,
and (ii) in the case of an appreciation rights exercise, the fair market
value (on the date or dates the holder recognizes taxable income) of the
Common Stock and other consideration issued to the holder.
d. Loans for Exercise or Taxes. Subject to limitations
imposed by law, the Committee may provide for the Corporation or any
subsidiary of the Corporation to make loans to finance the exercise of any
option as well as the estimated or actual amount of taxes payable by the
holder as a result of the exercise or payment of any option and may
prescribe, or may empower the Corporation or the subsidiary to prescribe,
the other terms and conditions (including but not limited to the interest
rate, maturity date and whether the loan will be secured or unsecured) of
any such loan.
e. Nontransferability. Options and appreciation rights
may not be transferred other than by will or the laws of descent and
distribution and, during the lifetime of the person to whom they are
granted, may be exercised only by such person, or such person's guardian
or legal representative.
f. Adjustment for Change in Common Stock. In the event
of a stock dividend or stock split, or combination or other reduction in
the number of issued shares, the Committee shall, in order to prevent the
dilution or enlargement of rights under options or appreciation rights,
make adjustments in the number and type of shares authorized by this Plan,
the number and type of shares covered by, or for which payments are
measured, outstanding options and appreciation rights and the prices
specified therein that it determines to be appropriate and equitable. In
the event of a merger, consolidation, reorganization, recapitalization,
sale or exchange of substantially all assets or dissolution of the
Corporation, the rights under options and appreciation rights outstanding
under this Plan will terminate, except to the extent and subject to such
adjustments as may be provided, in order to prevent the dilution or
enlargement of rights under options or appreciation rights, (i) by the
Committee, (ii) in the terms of the merger, consolidation, reorganization,
recapitalization, or plan for dissolution or sale or exchange of the
assets, or (iii) in the form of agreement covering any option or
appreciation right.
8. Administration. This Plan shall be administered by the
Committee. The Committee shall have full power to construe and interpret
this Plan and options and appreciation rights granted under this Plan, to
establish and amend rules for its administration, to grant options and
appreciation rights under this Plan, and to correct any defect or omission
or reconcile any inconsistency in this Plan or in any option or
appreciation right to the extent the Committee deems desirable to carry
this Plan or any option or appreciation right into effect. The Committee
may, with the consent of the person entitled to exercise any outstanding
option or appreciation right, amend an option or appreciation right,
including reducing the exercise price of any option or appreciation right
to not less than the fair market value of the Common Stock at the time of
the amendment and extending the term thereof.
All actions taken and decisions made by the Committee
pursuant to this Plan shall be binding and conclusive on all persons
interested in this Plan. The Committee may from time to time authorize
the Chairman of the Board or the President of the Corporation to determine
the dates on which options or appreciation rights shall be granted to
persons designated by the Committee (other than officers or directors of
the Corporation or any subsidiary) for the number of shares as the
Committee shall have designated, at prices determined by or in a manner
specified by the Committee.
9. Termination and Amendment. The Committee at any time may
suspend or terminate this Plan and make additions or amendments that it
deems advisable under this Plan, except that they may not, without further
approval by the Corporation's stockholders, (a) increase the maximum
number of shares for which options or appreciation rights may be granted
under this Plan, except pursuant to paragraph 7(f) above, (b) extend the
term of this Plan, (c) change the method of determining the minimum price
specified in an option, a reload option or appreciation right pursuant to
paragraphs 4, 5(b) and 6(a), except pursuant to paragraphs 7(f) and 8, (d)
change the class of employees to whom options and appreciation rights
shall be granted under this Plan, or (e) increase the maximum number of
shares that may be subject to options or SARs granted to each employee
under this Plan. No option or appreciation rights shall be granted
hereunder after July 10, 1999. No amendment, suspension or termination of
this Plan shall, without the consent of the person who has received an
option or appreciation right, alter or impair any of that person's rights
or obligations under any option or appreciation right granted under this
Plan prior to such amendment, suspension or termination.
10. Taxes. The Corporation shall be entitled, if necessary or
desirable, to withhold (or secure payment from the Plan participant in
lieu of withholding) the amount of any withholding or other tax due from
the Corporation for any amount payable and/or shares issuable under this
Plan, and the Corporation may defer payment or issuance unless indemnified
to its satisfaction.
11. Shareholder Adoption. This Amended and Restated Incentive
Stock Option and Appreciation Rights Plan (the "Amended and Restated
Plan") shall be submitted to the shareholders of the Corporation for their
approval and adoption at a meeting to be held on May 17, 1994, or at any
adjournment thereof. The shareholders shall be deemed to have approved
and adopted this Amended and Restated Plan only if it is approved and
adopted at a meeting of the shareholders duly held by vote taken in the
manner required by the laws of the State of Colorado.
Adopted by the Board of Directors and approved by the
shareholders of the Corporation on September 8, 1989. Amended and
restated on June 1, 1992. Further amended and restated on March 11, 1994.
PRECISION STANDARD, INC.
Matthew L. Gold, President
Section 3 was amended by the Compensation Committee on March 18, 1996 to
increase the number of shares authorized under the Plan from 1,000,000 to
1,500,000 shares and proposed for approval by the Company's shareholders
on May 29, 1996.
