ASTEC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of
Shareholders (the "Annual Meeting") of Astec
Industries, Inc., a Tennessee corporation (the
"Company"), will be held at the Company's executive
offices, 4101 Jerome Avenue, Chattanooga, Tennessee,
on April 23, 1998, at 10:00 A.M., Chattanooga time,
for the following purposes:
1. To elect four directors in Class III to serve
until the annual meeting of shareholders in
2001, or in the case of each director until
his successor is duly elected and qualified.
2. To consider and vote upon a proposal to
approve and adopt the Astec Industries, Inc.
1998 Long-Term Incentive Plan.
3. To consider and vote upon a proposal to
approve and adopt the Astec Industries, Inc.
Executive Officer Annual Bonus Equity
Election Plan.
4. To transact such other business as may
properly come before the Annual Meeting or
any adjournments thereof.
Only shareholders of record at the close of
business on March 9, 1998 are entitled to notice of,
and to vote at, the Annual Meeting. The transfer
books will not be closed. A complete list of
shareholders entitled to vote at the Annual Meeting
will be available for inspection by shareholders at
the offices of the Company from March 16, 1998 through
the Annual Meeting.
By Order of the
Board of Directors
/s/ Richard W. Bethea, Jr.
RICHARD W. BETHEA, JR.
Secretary
Dated: March 23, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING
IN PERSON, PLEASE VOTE, SIGN, DATE, AND RETURN THE
ENCLOSED PROXY APPOINTMENT CARD PROMPTLY IN THE
ENCLOSED BUSINESS REPLY ENVELOPE. IF YOU DO ATTEND
THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY
APPOINTMENT AND VOTE IN PERSON.
- 2 -
<PAGE>
ASTEC INDUSTRIES, INC.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
(423) 867-4210
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
The enclosed proxy appointment is solicited by and
on behalf of the Board of Directors of Astec
Industries, Inc. (the "Company") for use at its Annual
Meeting of Shareholders (the "Annual Meeting") to be
held on April 23, 1998, and at any adjournments
thereof. The appointment of proxy is revocable at any
time prior to its exercise at the Annual Meeting by
(i) written notice to the Secretary of the Company,
(ii) properly submitting to the Company a duly
executed proxy appointment bearing a later date, or
(iii) attending the Annual Meeting and voting in
person.
This Proxy Statement is being mailed by the
Company to its shareholders on or about March 23,
1998. The Company's Annual Report to Shareholders for
the fiscal year ended December 31, 1997, including
financial statements, is being sent to the
shareholders with this Proxy Statement.
Only holders of record of the Company's Common
Stock as of the close of business on March 9, 1998
(the "Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date
there were 9,360,580 shares of Common Stock
outstanding and entitled to be voted at the Annual
Meeting. A shareholder is entitled to one vote for
each share of Common Stock held.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided
into three classes, with the term of office of each
class ending in successive years. The terms of
directors of Class III expire with this Annual
Meeting. The directors of Class I and Class II will
continue in office until the 1999 and 2000 annual
meetings of shareholders, respectively. At the
present time there are three directors in Class I,
four directors in Class II, and four directors in
Class III. The shareholders are being asked to vote
for the election of the four directors in Class III.
- 3 -
<PAGE>
If the enclosed proxy appointment card is properly
executed and returned, the persons appointed as
proxies will vote the shares represented by the proxy
appointment in favor of the election to the Board of
Directors of each of the four Class III nominees whose
names appear below, unless either authority to vote
for any or all of the nominees is withheld or such
appointment has previously been revoked. It is
anticipated that management shareholders of the
Company will grant authority to vote for the election
of all the nominees. Each Class III director will be
elected to hold office until the 2001 annual meeting
of shareholders and thereafter until his successor has
been elected and qualified. In the event that any
nominee is unable to serve (which is not anticipated),
the persons appointed as proxies will cast votes for
the remaining nominees and for such other persons as
they may select.
The Board of Directors recommends that
shareholders check "Authority Granted" to vote for the
election of all of the nominees. The affirmative vote
of the holders of a majority of the shares of Common
Stock represented and entitled to vote at the Annual
Meeting at which a quorum is present is required for
the election of the nominees. Withholding authority
to vote with respect to any one or more nominees will
constitute a vote against such nominee(s).
-4-
<PAGE>
Certain Information Concerning Nominees and Directors
The following table sets forth the names of the
nominees and of the directors continuing in office,
their ages, the year in which they were first elected
directors, their position(s) with the Company, their
principal occupations and employers for at least the
last five years, any other directorships held by them
in companies that are subject to the reporting
requirements of the Securities Exchange Act of 1934 or
any company registered as an investment company under
the Investment Company Act of 1940, the number of
shares of the Company's Common Stock beneficially
owned by them on March 9, 1998, and the percentage of
the 9,360,580 total shares of Common Stock outstanding
on such date that such beneficial ownership
represents. For information concerning membership on
Committees of the Board of Directors, see "Other
Information About the Board and its Committees" below.
NOMINEES FOR DIRECTOR
Class III
For Three-Year Term Expiring Annual Meeting 2001
<TABLE>
Positions with the Company, Shares of Common Stock
Name, Age, and Principal Occupations During Beneficially Owned and
Year First At Least Past Five Years, Percent of Common
Elected Director and Other Directorships Stock Outstanding1
<CAPTION>
<S> <C> <C>
J. Don Brock Dr. Brock has been President 1,301,4782
(59) of the Company since its
(1972) incorporation in 1972 and
assumed the additional
position of Chairman of the
Board in 1975. He earned
his Ph.D. degree in
mechanical engineering from
the Georgia Institute of
Technology. Dr. Brock also
serves as a director on the
board of The Dixie Group,
Inc., a public company in
the textile manufacturing
business.
Albert E. Guth Mr. Guth has served as the 53,4323
President of Astec Financial
(58) Services, Inc., a subsidiary
(1972) of the Company since June
1996. Previously he served
as Chief Financial Officer
of the Company since 1987,
Senior Vice President of the
Company since 1984 and
Secretary of the Company
since 1972.
W. Norman Smith Mr. Smith has served as the 188,5704
President of Astec, Inc., a 2.00%
(58) subsidiary of the Company,
(1982) since its formation in
January 1995. Previously,
he served as the President
of Heatec, Inc., a
subsidiary of the Company,
since 1977.
- 5 -
<PAGE>
William B. Sansom Mr. Sansom has served as the 1,000
Chairman and Chief Executive
(56) Officer of H.T. Hackney Co.,
(1995) a diversified wholesale
grocery, gas and oil, and
furniture manufacturing
company, since 1983.
Formerly, Mr. Sansom served
as the Tennessee
Commissioner of
Transportation from 1979 to
1981, and as Tennessee
Commissioner of Finance and
Administration from 1981 to
1983. Mr. Sansom also
serves as a director on the
boards of Martin Marietta
Materials and First
Tennessee National
Corporation.
</TABLE>
MEMBERS OF BOARD OF DIRECTORS
CONTINUING IN OFFICE
Class I
Term Expiring Annual Meeting 1999
<TABLE>
Positions with the Company, Shares of Common Stock
Name, Age, and Principal Occupations During Beneficially Owned and
Year First At Least Past Five Years, Percent of Common
Elected Director and Other Directorships Stock Outstanding1
<CAPTION>
<S> <C> <C>
G. W. Jones Mr. Jones has served as a 1,000
(71) director of the Company
(1993) since 1993. While
currently retired, Mr.
Jones served as President
of APAC, Inc., a
subsidiary of Ashland
Oil, Inc., and as Senior
Vice President of Ashland
Oil, Inc., from 1969 to
1992.
- 6 -
<PAGE>
Ronald W.Dunmire Mr. Dunmire served as 1,000
President and Chief
(60) Executive Officer of
(1996) Cedarapids, Inc., a
manufacturer of rock
crushing and road
building equipment and a
subsidiary of Raytheon
Company, from 1983 until
1993. Mr. Dunmire is
currently retired.
Robert Dressler Mr. Dressler has served 1,000
as a Managing Director
(72) since December, 1996 and
(1997) previously served as a
Senior Vice President in
the Corporate Finance
Department of Raymond
James and Associates,
Inc. since 1987. Mr.
Dressler also serves as
director of Crown
Andersen, Inc.
</TABLE>
- 7 -
<PAGE>
Class II
Term Expiring Annual Meeting 2000
<TABLE>
Positions with the Company, Shares of Comm
Name, Age, and Principal Occupations During Beneficially Owned and
Year First At Least Past Five Years, Percent of Com
Elected Director and Other Directorships Stock Outstanding1
<CAPTION>
Daniel K. Frierson Mr. Frierson has been the 1,500
<S> <C> <C>
Chief Executive Officer of
(56) The Dixie Group, Inc., a
(1994) public company in the textile
manufacturing business, since
1979 and has served as
Chairman of the Board of such
company since 1987. Mr.
Frierson also serves as a
director on the boards of
Printpack, Inc. and SunTrust
Bank of Chattanooga, N.A.,
which was formerly American
National Bank.
E. D. Sloan, Jr. Mr. Sloan is Chairman of the 251,0005
Board of Nolas Trading 2.68%
(68) Company, Inc., which until
(1978) 1987 was named Sloan
Construction Co., Inc.
George C. Dillon Mr. Dillon has served as a 3,1006
director of the Company since
(75) 1986. While currently
(1986) retired, Mr. Dillon formerly
served as a director of the
Phelps Dodge Corporation,
Newhall Land & Farming
Company, and Butler
Manufacturing Co.
Robert G. Stafford Mr. Stafford has served as 126,2307
President of Telsmith, Inc., 1.33%
(59) a subsidiary of the Company,
(1988) since April 1991 and as a
director of the Company since
1988.
</TABLE>
1 The amounts of the Company's Common Stock
beneficially owned are reported on the basis of
regulations of the Securities and Exchange Commission
- 8 -
<PAGE>
governing the determination of beneficial ownership of
securities. The beneficial owner has both voting and
dispositive power over the shares of Common Stock,
unless otherwise indicated. As indicated, certain of
the shares included are beneficially owned by the
holders by virtue of their ownership of options to
purchase Common Stock under the 1986 Stock Option Plan
or the 1992 Stock Option Plan and such shares issuable
upon currently exercisable options have been taken
into account in determining the percent of Common
Stock owned. Unless indicated in the table, the
number of shares included in the table as beneficially
owned by a director or nominee does not exceed one
percent of the Common Stock of the Company outstanding
on March 9, 1998.
2 Does not include 148,584 shares held by Edna F.
Brock, Dr. Brock's mother, over which shares he has no
voting or dispositive power. Does include 120,000
shares subject to options under the Company's 1992
Stock Option Plan and 1,478 shares held in the
Company's Supplemental Executive Retirement Plan.
3 Includes 25,000 shares subject to options under the
Company's 1992 Stock Option Plan and 2,652 shares held
in the Company's 401(k) Plan.
4 Includes 10,000 shares subject to options under the
Company's 1986 Stock Option Plan, 56,000 shares
subject to options under the Company's 1992 Stock
Option Plan, 717 shares held in the Company's
Supplemental Executive Retirement Plan.
5 Includes 100,000 shares held of record by Nolas
Trading Company, Inc., a corporation of which Mr.
Sloan owns all of the issued and outstanding shares of
common stock and 150,000 shares held of record by Mr.
Sloan's individual retirement account.
6 Includes 2,000 shares held of record by Mr.
Dillon's individual retirement account.
7 Includes 30,000 shares subject to options under the
Company's 1986 Stock Option Plan, 90,000 shares
subject to options under the Company's 1992 Stock
Option Plan, 1,682 shares held in the Company's 401(k)
Plan, and 1,056 shares held in the Company's
Supplemental Executive Retirement Plan.
Other Information about the Board and its Committees
Meetings. During 1997, the Board of Directors held
six meetings, and the Board's Committees held the
meetings described below. Each incumbent director
attended at least 75% of the aggregate of: (1) the
total number of meetings of the Board of Directors
- 9 -
<PAGE>
held during the period for which he has been a
director; and (2) the total number of meetings held by
all committees of the Board on which he served during
the periods that he served.
Committees. During 1997, the Company's Board of
Directors had an Executive Committee, an Audit
Committee, a Compensation Committee, and a Technical
Committee. The Company did not have a nominating
committee during 1997. The full Board of Directors
performed the function which would be performed by a
nominating committee. In 1998, the Board formed a
Nominating Committee. Certain information regarding
the Board's Committees is set forth below.
Executive Committee. The Executive Committee is
authorized to act on behalf of the Board of Directors
on matters that may arise between regular meetings of
the Board upon which the Board of Directors would be
authorized to act. During 1997, the members of the
Executive Committee were Dr. Brock (Chairman) and
Messrs. Smith and Guth. The Executive Committee met
once during 1997. The current members of the
Executive Committee are Dr. Brock (Chairman) and
Messrs. Smith, Frierson and Guth.
Audit Committee. The Audit Committee annually
reviews and recommends to the Board the firm to be
engaged as independent auditors for the next fiscal
year, reviews with the independent auditors the plan
and results of the auditing engagement, reviews the
scope and results of the Company's procedures for
internal auditing, and inquires as to the adequacy of
the Company's internal accounting controls. In 1997,
the members of the Audit Committee were Messrs. Dillon
(Chairman), Sloan, Jones, Frierson, Sansom, Dunmire
and Dressler. During 1997, the Audit Committee held
four meetings. The current members of the Audit
Committee are Messrs. Dillon (Chairman), Sansom and
Dunmire.
Compensation Committee. The Compensation Committee
is authorized to consider and recommend to the full
Board the executive compensation policies of the
Company and to administer the Company's stock option
plans. In 1997, the members of the Compensation
Committee were Messrs. Sloan (Chairman), Dillon,
Dunmire, Dressler, Jones, Frierson and Sansom, and
during 1997, the Compensation Committee held two
meetings. The current members of the Compensation
Committee are Messrs. Frierson (Chairman), Sloan,
Jones and Dunmire.
Technical Committee. The Technical Committee met
once in 1997 to review the Company's product lines and
to consider new areas of technical design. In 1997,
- 10 -
<PAGE>
the members of the Technical Committee were Dr. Brock
(Chairman) and Messrs. Stafford, Smith and Dunmire.
The current members of the Technical Committee are Dr.
Brock (Chairman), and Messrs. Smith, Stafford, Dunmire
and Dressler.
Nominating Committee. In 1998, the Company's Board
of Directors formed the Nominating Committee to
recommend candidates for election. The members of the
Nominating Committee are Messrs. Sansom (Chairman),
Frierson and Dressler.
Common Stock Ownership of Management
Based on available information, the Company
believes that its directors and executive officers as
a group beneficially owned the following number of
shares of Common Stock as of March 9, 1998:
Title of Class Shares Percent of Class
Beneficially
Owned 1
Common Stock, $.20 Par Value 2,056,572 20.95%
1 The foregoing table includes 454,000 shares which
the directors and executive officers have the right to
acquire pursuant to currently exercisable options
under the Company's stock option plans. Such shares
issuable upon exercise of all currently exercisable
options are assumed to be outstanding for purposes of
determining the percent of shares owned by the group.
Common Stock Ownership of Certain Beneficial Owners
The following table sets forth information as of
the dates indicated with respect to the only persons
who are known by the Company to be the beneficial
owners of more than 5% of the outstanding shares of
the Company's Common Stock.
- 11 -
<PAGE>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Date Beneficial Ownership Class 1
J. Don Brock March 9, 1998 1,301,478 2 13.67%
Astec Industries, Inc.
4101 Jerome Avenue
Chattanooga, Tennessee
37407
Heartland Advisors, Inc. March 9, 1998 1,605,900 3 17.16%
790 North Milwaukee Street
Milwaukee,Wisconsin 53202
Dimensional Fund March 9, 1998 811,000 4 8.66%
Advisors, Inc.
1299 Ocean Avenue,
11th Floor
Santa Monica, California 90401
Overseas Lending March 9, 1998 554,000 5.92%
Corporation
c/o Enpro International N.V.
345 Avenue of the Americas
New York, New York 10105
Lynne W. Brock March 9, 1998 990,204 10.58%
6454 Howard Adair Road
Chattanooga, Tennessee 37416
- 12 -
<PAGE>
[FN]
1 The amounts of the Company's Common Stock
beneficially owned are reported on the basis of
regulations of the Securities and Exchange Commission
governing the determination of beneficial ownership of
securities. The beneficial owner has both voting and
dispositive power over the shares of Common Stock,
unless otherwise indicated.
2 Includes 120,000 shares subject to options under
the 1992 Stock Option Plan and 1,478 shares held in
the Company's Supplemental Executive Retirement Plan.
The shares of Common Stock issuable upon exercise of
such options held by Dr. Brock are assumed to be
outstanding for purposes of determining percent of
shares owned by Dr. Brock. Does not include 148,584
shares held beneficially by Edna F. Brock, Dr. Brock's
mother, over which shares he has no voting or
dispositive power.
3 Based on information previously provided by such
investor to the Company, Heartland Advisors, Inc. is
an investment advisor with voting and dispositive
power over 1,530,400 shares and sole dispositive but
no voting power over 75,500 shares.
4 Based on information previously provided by such
investor to the Company, Dimensional Fund Advisors,
Inc. is an investment advisor with voting and
dispositive power over 506,000 shares and sole
dispositive but no voting power over 305,000 shares.
Dimensional Fund Advisors, Inc. disclaims beneficial
ownership of all 811,000 shares.
Executive Compensation
The following table presents certain summary
information concerning compensation paid or accrued by
the Company for services rendered in all capacities
during the fiscal years ended December 31, 1995, 1996
and 1997 for (i) the President of the Company, and
(ii) each of the four other most highly compensated
executive officers of the Company (determined as of
the end of the last fiscal year) whose total annual
salary and bonus exceeded $100,000 (collectively, the
"Named Executive Officers").
- 13 -
<PAGE>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
Securities
Underlying All Other
Name and Salary Bonus Options Compensation
Principal Position Year ($) ($) (# of shares) ($) 1
[CAPTION]
J. Don Brock 1997 $247,000 $125,000 -- $65,466
Chairman of the 1996 240,000 50,000 80,000 75,171
Board and President 1995 232,000 50,000 20,000 78,832
Robert G. Stafford 1997 $159,000 $ 74,250 -- $26,971
President of 1996 154,000 77,000 50,000 23,331
Telsmith, Inc. 1995 147,885 54,760 5,000 21,392
Albert E. Guth 1997 $144,000 $ 30,000 -- $19,927
President of 1996 140,000 20,000 10,000 18,038
Astec Financial
Services, Inc. 1995 135,000 25,000 5,000 21,770
W. Norman Smith 1997 $159,000 $ 79,500 -- $22,022
President of 1996 154,000 30,800 30,000 27,083
Astec, Inc. 1995 140,000 70,000 10,000 22,511
Richard W. Bethea, 1997 $165,000 60,000 10,000 $17,284
Jr.
Vice President 1996 -- -- -- --
and General Counsel 1995 -- -- -- --
- 14 -
<PAGE>
1 The compensation reported under All Other
Compensation represents (a) contributions to the
Company's 401(k) Plan on behalf of the Named Executive
Officers to match 1997 pre-tax elective contributions
(included under salary and bonus) made by each Named
Executive Officer to such plan; (b) contributions to
the Company's Supplemental Executive Retirement Plan
on behalf of the Named Executive Officers; and (c)
insurance premiums on term life insurance policies for
the benefit of each of the Named Executive Officers.
Company contributions under the 401(k) Plan for the
1997 fiscal year were as follows: $3,200 to Dr. Brock;
$3,200 to Mr. Stafford; $3,200 to Mr. Guth; and $3,200
to Mr. Smith. For the 1997 fiscal year, Company
contributions under the Supplemental Executive
Retirement Plan were: $33,374 to Dr. Brock; $23,645
to Mr. Stafford; $15,925 to Mr. Guth; $17,961 to Mr.
Smith; and $16,475 to Mr. Bethea. The amount of
insurance premium paid for the benefit of each of the
Named Executive Officers for the 1997 fiscal year was:
$28,892 for Dr. Brock; $126 for Mr. Stafford; $802 for
Mr. Guth; $861 for Mr. Smith; and $809 for Mr.
Bethea.
Option Grants in Last Fiscal Year
The following table provides details regarding
stock options granted to the Named Executive Officers
in 1997. In addition, the hypothetical gains or
"option spreads" that would exist for the respective
options are reflected. These gains are based on
assumed rates of annual compound price appreciation of
5% and 10% from the date the options were granted over
the full option term.
- 15 -
<PAGE>
Individual Option Grants
<TABLE> Potential Realizable
Securities % of Total Value at Assumed Annual
Underlying Options Granted Exercise Expiration Rates of Stock Price
Name Granted (#) 1 Fiscal Year (%) Price ($/Sh) 2 Date Appreciation for
Option Term ($)
5% 10%
<CAPTION>
Richard W.
<S> <C> <C> <C> <C> <C> <C>
Bethea, Jr. 10,000 100% $9.125 2/2/07 $57,386 $145,428
</TABLE>
[FN]
1 All of the options were granted under the Astec
Industries, Inc. 1992 Stock Option Plan (the "Plan")
and are currently exercisable. If the Company is a
party to any reorganization under which the Company
will not remain in existence or substantially all of
its Common Stock will be purchased by a single
purchaser or group of purchasers acting together, the
Compensation Committee of the Board of Directors may,
in its discretion, (i) declare all options outstanding
under the Plan exercisable immediately and terminate
any options not so exercised within a time period
specified by the Compensation Committee; (ii) adjust
the outstanding options as appropriate so that they
apply to the securities of the corporation resulting
from such reorganization; or (iii) take some
combination of (i) and (ii). If the Compensation
Committee believes an event is likely to lead to a
change in control of stock ownership of the Company,
whether or not any such change in control actually
occurs, the Compensation Committee may declare all
options granted under the Plan immediately
exercisable.
2 The exercise price may be paid by delivery of
already-owned shares and tax withholding obligations
related to exercise may be paid by offset of the
underlying shares, subject to certain conditions.
- 16 -
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table shows stock option exercises
by the Named Executive Officers during 1997, including
the aggregate value of gains on the date of exercise.
In addition, this table includes the number of shares
underlying both exercisable and non-exercisable stock
options as of December 31, 1997. Also reported are
the values for "in-the-money" options which represent
the positive spread between the exercise price of any
such existing stock options and the year-end price of
the Company's Common Stock.
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal at Fiscal Year-End ($)
Shares Year-End (#)
Acquired Value
Name on Exercise Realize($) Exercisable Unexercisable Exercisable Unexercisable
<CAPTION>
J. Don - - 160,000 - $1,150,880 -
<S> <C> <C> <C> <C> <C> <C>
Brock
Robert G. 7,000 $30,275 120,000 - $1,128,750 -
Stafford
Albert E. - - 25,000 - $ 104,375 -
Guth
W. Norman - - 66,000 - $ 520,500 -
Smith
Richard - - 10,000 - $ 76,250 -
W. Bethea
</TABLE>
Pension Plan. The Company formerly operated a
defined benefit plan for the Barber-Greene shop,
Barber-Greene office and Telsmith office employees.
In December 1995, all assets in this plan were finally
distributed to Transamerica, Inc. for the
establishment of annuities for the benefit of its
participants. At the time of this distribution, Mr.
Stafford had nine and one-third years of credit under
- 17 -
<PAGE>
the plan and has an estimated annual benefit payable
upon retirement of $8,385.
Compensation of Directors. During 1997, the
Company's policy regarding the compensation of
directors was to pay directors who were not full-time
employees of the Company a fee of $6,000 per year for
services as a director, plus $1,000 for each Board
meeting attended. During 1998, the Company's policy
regarding the compensation of directors is to pay
directors who are not full-time employees of the
Company a fee of $8,000 per year for services as a
director, plus $1,000 for each Board Meeting attended.
Further, directors are paid $500 per committee meeting
attended or $300 if the committee meeting occurs on
the day of a Board meeting. The Company also
reimburses the directors for travel and other out-of-
pocket expenses incurred in connection with their
duties as directors. Directors who are full-time
employees of the Company receive no additional
compensation for services as directors.
Compensation Committee Interlocks and Insider
Participation. In 1997, the members of the Company's
Compensation Committee were Messrs. Sloan (Chairman),
Dillon, Dunmire, Dressler, Jones, Frierson and Sansom,
none of which served as an officer or employee of the
Company during the 1997 fiscal year. The current
members of the Compensation Committee are Messrs.
Frierson (Chairman), Sloan, Jones and Dunmire. There
are no "interlocks," as defined by the Securities and
Exchange Commission, with respect to any member of the
Compensation Committee.
- 18 -
<PAGE>
Five-Year Shareholder Return Comparison. The
following line-graph presentation compares cumulative,
five-year shareholder returns of the Company with the
Nasdaq Stock Market (US Companies) and an industry
group composed of manufacturers of industrial and
commercial machinery and equipment over the same
period (assuming the investment of $100 in the
Company's Common Stock , the Nasdaq Stock Market (US
Companies) and the industry group on December 31,
1991, and reinvestment of all dividends).
Comparison of Five Year-Cumulative Total Returns
Performance Graph for Astec Industries, Inc.
[GRAPH]
Year-End Cumulative Returns
1992 1993 1994 1995 1996 1997
Astec Industries, Inc. 100.0 151.9 125.9 97.5 93.8 165.4
Nasdaq Stock Market 100.0 114.8 112.2 158.7 195.2 239.5
Peer Index 100.0 85.2 55.2 46.6 54.7 51.2
Legend
Symbol Index Description
___________ Astec Industries, Inc.
__ __ __ __ _ Nasdaq Stock Market (US companies)
- - - - - - - - - - - Peer Index
(Standard Industrial Classification
Code Group 3590-3599)
Total return calculations for the Nasdaq Stock
Market (US Companies) and the Peer Index were prepared
by the Center for Research in Security Prices, The
University of Chicago. The Peer Index is composed of
the approximately 451 companies, including the
Company, in the Standard Industrial Classification
("SIC") Code Group 3590-3599 - manufacturers of
industrial and commercial machinery and equipment.
Information with regard to SIC classifications in
general can be found in the Standard Industrial
Classification Manual published by the Executive
Office of the President, Office of Management and
Budget. Specific information regarding the companies
comprising the Peer Index, SIC Code Group 3590-3599,
will be provided to any shareholder upon request to
the Secretary of the Company.
- 19 -
<PAGE>
Compensation Committee Report on Executive
Compensation.
The Compensation Committee of the Board of
Directors has furnished the following report on
executive compensation:
Overview and Philosophy
The Compensation Committee of the Board of
Directors (the "Compensation Committee") is composed
entirely of outside directors and is responsible for
making recommendations to the Board with respect to
the Company's executive compensation policies. In
addition, the Compensation Committee, pursuant to
authority delegated by the Board, recommends the
compensation to be paid to the Company's executive
officers.
The objectives of the Company's executive
compensation program are to:
- Approve compensation policies and guidelines that
will attract and retain qualified personnel and
reward performance.
- Encourage the achievement of Company performance
by utilizing a performance rated bonus plan.
The executive compensation program provides an
overall level of compensation opportunity that is
competitive within the construction equipment
manufacturing industry, as well as with a broader
group of companies of comparable size and complexity.
Actual compensation levels may be greater or less than
average competitive levels in similar companies based
upon annual and long-term Company performance as well
as individual performance. The Compensation Committee
will use its discretion to recommend executive
compensation where in its judgment external, internal
or an individual's circumstances so warrant.
Executive Officer Compensation Program
The Company's executive officer compensation
program is comprised of base salary, annual cash
performance rating bonus plan compensation, long-term
incentive compensation in the form of stock options
and various benefits, including medical and 401(k)
plans generally available to all employees of the
Company. The Company does not have a policy that
requires or encourages the Board of Directors to limit
executive compensation to that deductible under
Section 162(m) of the Internal Revenue Code. The
Board of Directors will consider various alternatives
for preserving the deductibility of compensation
- 20 -
<PAGE>
payments and benefits to the extent necessary and to
the extent consistent with its other compensation
objectives.
Base Salary
Base salary for the Company's executive officers is
determined by the Compensation Committee based on the
individual's education, experience and performance.
The Compensation Committee periodically reviews each
executive officer's compensation.
Annual Cash Incentive Compensation
The Performance Rating Management Bonus Plan is the
Company's annual incentive program for executive
officers and key managers of the Company's
subsidiaries, and all non-union employees. The
purpose of the plan is to provide direct financial
incentive in the form of an annual cash bonus to those
who achieve their business units' annual goals. In
1998, based on the proposed Executive Officer Annual
Bonus Equity Election Plan, the Company's Executive
Officers will have the option to receive up to 100% of
their bonus in Common Stock or stock options.
Budgeted goals for the Company and each business unit
are set at the beginning of each fiscal year. In
1988, the following measures of Company performance
were selected: return on capital employed, cash flow
on capital employed, growth, and safety. In 1998, the
growth goal is being replaced by an income before
income tax goal. Each year the relative values of
these measures are adjusted based on the circumstances
and goals defined. Individual performance may also be
taken into account in determining bonuses, but no
bonus is paid unless the above criteria have been
achieved. A performance score is applied to ten
percent of earnings by subsidiary after consideration
of income taxes. The performance rating earned may
vary from 5% to 100% of the 10%.
Stock Option
The stock option program is the Company's long-term
incentive plan for executive officers and key
managers. The objectives of the program are to relate
executive and shareholder long-term interests by
creating a strong and direct link between executive
pay and shareholder return, and to enable executives
to develop and maintain a long-term stock position in
the Company's Common Stock. The Company's stock
option plans authorize the Compensation Committee to
award key personnel stock options and stock
appreciation rights. Awards are granted at the
discretion of the Compensation Committee based on
Company performance, individual performance and the
- 21 -
<PAGE>
employee's position with the Company. Because there
are only a limited number of options eligible to be
granted pursuant to the Company's stock option plans,
the Board of Directors has adopted and recommends to
the shareholders the 1998 Long-Term Incentive Plan.
Benefits
The Company provides medical and 401(k) benefits to
the executive officers that are generally available to
Company employees. The amount of prerequisites, as
determined in accordance with the rules of the
Securities and Exchange Commission relating to
executive compensation, did not exceed 10% of salary
for fiscal 1997 and are very minimal.
Chief Executive Officer Compensation
Dr. Brock has served as President of the Company
since he founded it in 1972. His base salary in 1997
was $247,000, a level believed to be competitive with
that of other similarly situated companies in the
construction equipment industry.
Dr. Brock's bonus in fiscal 1997 was $125,000.
This bonus was based on the subjective determination
of the Compensation Committee in recognition of Dr.
Brock's contribution to the Company in 1997. The
Compensation Committee believes Dr. Brock has
continued to manage the Company well in a challenging
business climate.
COMPENSATION COMMITTEE
E. D. Sloan, Jr., Chairman
George C. Dillon
Ronald W. Dunmire
Robert Dressler
Daniel K. Frierson
G. W. Jones
William B. Sansom
Section 16(a) Filing Requirements
Based solely on a review of the copies of the Forms
3, 4 and 5 received by it, the Company believes that
during 1997 all filing requirements applicable to its
officers, directors, and greater than ten-percent
beneficial owners were satisfied, except that Mr. W.
Norman Smith failed to file a Form 4 for a disposition
of shares by his son. This deficiency was corrected
on a Form 4 filed by Mr. Smith on March 12, 1998.
- 22 -
<PAGE>
2. APPROVAL AND ADOPTION OF THE PROPOSED
ASTEC INDUSTRIES, INC. 1998 LONG-TERM INCENTIVE PLAN
On March 12, 1998, the Board of Directors adopted
the Astec Industries, Inc. 1998 Long-Term Incentive
Plan (the "Incentive Plan"), subject to approval
thereof by the shareholders at the Annual Meeting.
The Company has reserved 1,500,000 shares of its
Common Stock for issuance in connection with options
and awards under the Incentive Plan. If approved by
the shareholders at the Annual Meeting, the Incentive
Plan will be effective as of its adoption by the
shareholders.
A summary of the Incentive Plan is set forth
below. The summary is qualified in its entirety by
reference to the full text of the Incentive Plan,
which is attached to this Proxy Statement as Appendix A.
General
The purpose of the Incentive Plan is to promote
the success, and enhance the value, of the Company by
linking the personal interests of employees,
officers, consultants and directors to those of the
shareholders, and by providing such persons with an
incentive for outstanding performance. As of
December 1, 1997, there were approximately 100
persons eligible to participate in the Incentive
Plan.
The Incentive Plan authorizes the granting of
awards ("Awards") to employees, officers, consultants
and directors of the Company or its affiliated
companies in the following forms: (i) options to
purchase shares of Common Stock ("Options"), which
may be incentive stock options or non-qualified, (ii)
stock appreciation rights ("SARs"); (iii) performance
shares ("Performance Shares"); (iv) restricted stock
("Restricted Stock"); (v) dividend equivalents
("Dividend Equivalents"); and (vi) other stock-based
awards.
Pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), the
Company may not deduct compensation in excess of $1
million paid to the Chief Executive Officer and the
four next most highly compensated executive officers
of the Company. The Incentive Plan is designed to
comply with Code Section 162(m) so that the grant of
Options and SARs under the plan, and other Awards,
such as Performance Shares, that are conditioned on
the performance goals described in Section 13.13 of
the plan, will be excluded from the calculation of
- 23 -
<PAGE>
annual compensation for purposes of Code Section
162(m) and will be fully deductible by the Company.
Subject to adjustment as provided in the
Incentive Plan, the aggregate number of shares of
Common Stock reserved and available for Awards or
which may be used to provide a basis of measurement
for or to determine the value of an Award (such as
with a SAR or Performance Share) is 1,500,000, of
which no more than 10% may be granted in the form of
restricted or unrestricted stock awards. The maximum
number of shares of Common Stock with respect to one
or more Options and/or SARs that may be granted during
any one calendar year under the Incentive Plan to any
one participant is 150,000. The maximum fair market
value (measured as of the date of grant) of any Awards
other than Options and SARs that may be received by a
participant (less any consideration paid by the
participant for such Award) during any one calendar
year under the Incentive Plan is $500,000.
Administration
The Incentive Plan will be administered by the
Compensation Committee. The Compensation Committee
has the power, authority and discretion to designate
participants; determine the type or types of Awards to
be granted to each participant and the terms and
conditions thereof; establish, adopt or revise any
rules and regulations as it may deem necessary or
advisable to administer the Incentive Plan; and make
all other decisions and determinations that may be
required under, or as the Compensation Committee deems
necessary or advisable to administer, the Incentive
Plan.
Awards
Stock Options. The Compensation Committee is
authorized to grant Options, which may be incentive
stock options ("ISOs") or non-qualified stock options
("NSOs"), to participants. All Options will be
evidenced by a written Award Agreement between the
Company and the participant, which will include such
provisions as may be specified by the Compensation
Committee. The terms of any ISO must meet the
requirements of Section 422 of the Code.
Stock Appreciation Rights. The Compensation
Committee may grant SARs to participants. Upon the
exercise of a SAR, the participant has the right to
receive the excess, if any, of: the fair market value
of one share of Common Stock on the date of exercise,
- 24 -
<PAGE>
over the grant price of the SAR as determined by the
Compensation Committee, which will not be less than
the fair market value of one share of Common Stock on
the date of grant in the case of any SAR related to an
ISO. All awards of SARs will be evidenced by an Award
Agreement, reflecting the terms, methods of exercise,
methods of settlement, form of consideration payable
in settlement, and any other terms and conditions of
the SAR, as determined by the Compensation Committee
at the time of grant.
Performance Shares. The Compensation Committee
may grant Performance Shares to participants on such
terms and conditions as may be selected by the
Compensation Committee. The Compensation Committee
will have the complete discretion to determine the
number of Performance Shares granted to each
participant and to set performance goals and other
terms or conditions to payment of the Performance
Shares in its discretion which, depending on the
extent to which they are met, will determine the
number and value of Performance Shares that will be
paid to the participant.
Restricted Stock Awards. The Compensation
Committee may make awards of Restricted Stock to
participants, which will be subject to such
restrictions on transferability and other restrictions
as the Compensation Committee may impose (including,
without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends, if
any, on the Restricted Stock).
Dividend Equivalents. The Compensation Committee
is authorized to grant Dividend Equivalents to
participants subject to such terms and conditions as
may be selected by the Compensation Committee.
Dividend Equivalents entitle the participant to
receive payments equal to dividends with respect to
all or a portion of the number of shares of Common
Stock subject to an Award, as determined by the
Compensation Committee. The Compensation Committee
may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been
reinvested in additional shares of Common Stock, or
otherwise reinvested.
Other Stock-Based Awards. The Compensation
Committee may, subject to limitations under applicable
law, grant to participants such other Awards that are
payable in, valued in whole or in part by reference
to, or otherwise based on or related to shares of
Common Stock, as deemed by the Compensation Committee
to be consistent with the purposes of the Incentive
Plan, including without limitation shares of Common
Stock awarded purely as a "bonus" and not subject to
- 25 -
<PAGE>
any restrictions or conditions, convertible or
exchangeable debt securities, other rights convertible
or exchangeable into shares of Common Stock, and
Awards valued by reference to book value of shares of
Common Stock or the value of securities of or the
performance of specified affiliated companies of the
Company. The Compensation Committee will determine
the terms and conditions of any such Awards.
Performance Goals. The Compensation Committee
may determine that any Award will be determined solely
on the basis of (a) the achievement by the Company or
a parent or subsidiary of a specified target return,
or target growth in return, on equity or capital
employed, (b) the achievement by the Company or a
parent or subsidiary of a specified target cash flow,
or target increase in cash flow, from operations, (c)
the Company's, parent's or subsidiary's stock price,
(d) the achievement by a business unit of the Company,
parent or subsidiary of a specified target, or target
growth in, pre-tax or net income or earnings per
share, (e) the achievement by the Company or a parent
or subsidiary, or a business unit thereof, of a
specified target level of or increase in sales, (f)
the achievement by the Company or a parent or
subsidiary, or a business unit thereof, of specified
target safety standards, or (g) any combination of the
goals set forth in (a) through (f) above. If an Award
is made on such basis, the Compensation Committee must
establish goals prior to the beginning of the period
for which such performance goal relates (or such later
date as may be permitted under Code Section 162(m)),
and the Compensation Committee may for any reason
reduce (but not increase) any Award, notwithstanding
the achievement of a specified goal. Any payment of
an Award granted with performance goals will be
conditioned on the written certification of the
Compensation Committee in each case that the
performance goals and any other material conditions
were satisfied.
Limitations on Transfer; Beneficiaries. No
unexercised or restricted Award will be assignable or
transferable by a participant other than by will or
the laws of descent and distribution or, except in the
case of an ISO, pursuant to a qualifying domestic
relations order; provided, however, that the
Compensation Committee may (but need not) permit other
transfers where the Compensation Committee concludes
that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option
intended to be an ISO to fail to be described in Code
Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed
relevant, including without limitation, any state or
federal tax or securities laws or regulations
- 26 -
<PAGE>
applicable to transferable Awards. A participant may,
in the manner determined by the Compensation
Committee, designate a beneficiary to exercise the
rights of the participant and to receive any
distribution with respect to any Award upon the
participant's death.
Acceleration Upon Certain Events. Upon the
participant's death or disability, all outstanding
Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully
exercisable and all restrictions on outstanding Awards
will lapse. Any Options or SARs will thereafter
continue or lapse in accordance with the other
provisions of the Incentive Plan and the Award
Agreement. In the event of a Change in Control of the
Company (as defined in the Incentive Plan), all
outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised will become
fully vested and all restrictions on all outstanding
Awards will lapse. In the event of the occurrence of
any circumstance, transaction or event not
constituting a Change in Control as defined in the
Incentive Plan but which the Board of Directors deems
to be, or to be reasonably likely to lead to, an
effective change in control of the Company, the
Compensation Committee or the Board may in its sole
discretion declare all outstanding Options, SARs, and
other Awards in the nature of rights that may be
exercised to become fully vested, and/or all
restrictions on all outstanding Awards to lapse, in
each case as of such date as the Compensation
Committee or the Board may, in its sole discretion,
declare, which may be on or before the consummation of
such transaction or event.
Termination and Amendment
With the approval of the Board, at any time and
from time to time, the Compensation Committee may
terminate, amend or modify the Incentive Plan without
shareholder approval; provided, however, that the
Compensation Committee may condition any amendment on
the approval of shareholders of the Company if such
approval is necessary or deemed advisable with respect
to tax, securities or other applicable laws, policies
or regulations. No termination, amendment, or
modification of the Incentive Plan may adversely
affect any Award previously granted under the
Incentive Plan, without the written consent of the
participant.
Certain Federal Income Tax Effects
Non-qualified Stock Options. Under present
federal income tax regulations, there will be no
- 27 -
<PAGE>
federal income tax consequences to either the Company
or the participant upon the grant of a non-discounted
NSO. However, the participant will realize ordinary
income on the exercise of the NSO in an amount equal
to the excess of the fair market value of the Common
Stock acquired upon the exercise of such option over
the exercise price, and the Company will receive a
corresponding deduction (subject to the provisions of
Section 162(m) of the Code). A subsequent sale or
exchange of such shares will result in gain or loss
measured by the difference between (i) the exercise
price, increased by any compensation reported upon
the participant's exercise of the option, and (ii)
the amount realized on such sale or exchange. Such
gain or loss will be capital in nature if the shares
were held as a capital asset and will be long-term if
such shares were held for the applicable long-term
capital gain holding period.
Incentive Stock Options. Under present federal
income tax regulations, there will be no federal
income tax consequences to either the Company or the
participant upon the grant of an ISO or the exercise
thereof by the participant. If the participant holds
the shares of Common Stock for the greater of two
years after the date the Option was granted or one
year after the acquisition of such shares of Common
Stock (the "required holding period"), the difference
between the aggregate exercise price and the amount
realized upon disposition of the shares of Common
Stock will constitute a capital gain or loss, and the
Company will not be entitled to a federal income tax
deduction. If the shares of Common Stock are disposed
of in a sale, exchange or other "disqualifying
disposition" during the required holding period, the
participant will realize taxable ordinary income in an
amount equal to the excess (if any) of the fair market
value of the Common Stock purchased at the time of
exercise (or, if less, the amount realized on the
disposition of the shares) over the aggregate exercise
price, and the Company will be entitled to a federal
income tax deduction equal to such amount (subject to
the provisions of Section 162(m) of the Code). Upon
exercise of an ISO, the participant may be subject to
alternative minimum tax on certain items of tax
preference. If an ISO is exercised at a time when it
no longer qualifies as an incentive stock option, the
option will be treated as an NSO.
SARs. Under present federal income tax
regulations, a participant receiving a non-discounted
SAR will not recognize income, and the Company will
not be allowed a tax deduction, at the time the Award
is granted. When a participant exercises the SAR, the
amount of cash and the fair market value of any shares
of Common Stock received will be ordinary income to
- 28 -
<PAGE>
the participant and will be allowed as a deduction for
federal income tax purposes to the Company.
Performance Shares. Under present federal income
tax regulations, a participant receiving Performance
Shares will not recognize income and the Company will
not be allowed a tax deduction at the time the Award
is granted. When a participant receives payment of
Performance Shares, the amount of cash and the fair
market value of any shares of Common Stock received
will be ordinary income to the participant and will be
allowed as a deduction for federal income tax purposes
to the Company.
Restricted Stock. Under present federal income
tax regulations, and unless the participant makes an
election to accelerate recognition of the income to
the date of grant, a participant receiving a
Restricted Stock Award will not recognize income, and
the Company will not be allowed a tax deduction, at
the time the Award is granted. When the restrictions
lapse, the participant will recognize ordinary income
equal to the fair market value of the Common Stock,
and the Company will be entitled to a corresponding
tax deduction at that time.
Benefits to Named Executive Officers and Others
As of December 1, 1997, no awards had been
granted or approved for grant under the Incentive
Plan. Any future awards will be made at the
discretion of the Compensation Committee. Therefore,
it is not presently possible to determine with respect
to (i) the executive officers named in the Summary
Compensation Table, (ii) all current executive
officers, as a group, (iii) all current directors who
are not executive officers, as a group, or (iv) all
employees, including all current officers who are not
executive officers, as a group, either the benefits or
amounts that will be received by such persons or
groups pursuant to the Incentive Plan or the benefits
or amounts that would have been received by such
persons or groups under the Incentive Plan if it had
been in effect during the last fiscal year.
Additional Information
The closing price of the Common Stock, as
reported by the Nasdaq National Market on December 1,
1997, was $16.375.
The affirmative vote of the holders of a majority
of the shares present or represented by proxy and
entitled to vote at the meeting on this proposal will
constitute approval of the Incentive Plan.
- 29 -
<PAGE>
The Board of Directors unanimously recommends a
vote "FOR" the proposal to approve the 1998 Long-Term
Incentive Plan.
3. APPROVAL AND ADOPTION OF THE PROPOSED ASTEC
INDUSTRIES, INC.
EXECUTIVE OFFICER ANNUAL BONUS EQUITY ELECTION PLAN
The Board of Directors desires to encourage the
executive officers of the Company to maintain a
significant personal equity interest in the Company,
so as to further align their interests with those of
the Company's shareholders. Consequently, on March
12, 1998, the Board adopted, subject to approval
thereof by the shareholders at the Annual Meeting, the
Astec Industries, Inc. Executive Officer Annual Bonus
Equity Election Plan (the "Bonus Equity Plan"),
pursuant to which executive officers may elect to take
up to 100% of their annual bonus in the form of Common
Stock or stock options, as described below. The
Company has reserved 150,000 shares of its Common
Stock for issuance in connection with the Bonus Equity
Plan, which may be authorized and unissued shares or
treasury shares. If approved by the shareholders at
the Annual Meeting, the Bonus Equity Plan will be
effective as of its adoption by shareholders.
A summary of the Bonus Equity Plan is set forth
below. The summary is qualified in its entirety by
reference to the full text of the plan, which is
attached to this Proxy Statement as Appendix B.
General
The purpose of the Bonus Equity Plan is to
encourage and facilitate Company stock ownership by
executive officers of the Company and its affiliates,
thereby further aligning their interests with those
of the Company's shareholders.
Administration
The Bonus Equity Plan will be administered by the
Compensation Committee, which will be authorized to
select participants, interpret the plan, establish,
amend and rescind any rules and regulations relating
to the Bonus Equity Plan, and make all other
determinations necessary or advisable for the
administration of the Bonus Equity Plan.
Summary of Plan Terms
Pursuant to the Bonus Equity Plan, executive
officers of the Company and its affiliates who are
selected by the Compensation Committee for
- 30 -
<PAGE>
participation in the Bonus Equity Plan may elect to
receive some or all of their annual incentive bonus
in the form of (i) shares of Common Stock, (ii)
deferred rights to receive Common Stock, or (iii)
options to acquire Common Stock. Any amount of the
annual bonus not elected to be taken in such
alternate forms will be paid in cash.
Stock Awards
Election to Receive Shares. The date in each
year on which annual bonuses are payable is referred
to as a "Stock Grant Date") Commencing with the 1999
Stock Grant Date, shares of Common Stock will be
automatically granted on each Stock Grant Date to each
participant who timely elects to receive Common Stock
as payment of some or all of his annual bonus. Such
election must be made in writing on an election form
filed with the plan administrator at least 30 days
before the Stock Grant Date and such election will
remain in effect with respect to all future plan years
until a subsequent election form is filed with the
plan administrator indicating a different election.
The number of shares included in each grant will be
determined by dividing the amount of the participant's
annual bonus to be paid in shares of Common Stock by
the fair market value per share of Common Stock on the
Stock Grant Date. Fractions will be rounded to the
next highest share.
Deferred Stock Awards
Election to Defer. Each participant in the Bonus
Equity Plan will have the right to elect, pursuant to
a written election form delivered to the plan
administrator prior to the commencement of each plan
year, to defer the grant of Common Stock until the
earlier of (i) the participant's termination of
employment or (ii) another designated date at least
three years after the date of such deferral election
(in either case, the "Deferral Termination Date").
The participant will elect whether all of the deferred
grant of shares will be granted in lump sum or in
annual installments over a period of two to ten years
(as the participant may elect) after the Deferral
Termination Date. The deferral election will be
irrevocable except in case of financial hardship, as
described in the Bonus Equity Plan. No shares will be
issued until the grant date(s) so indicated. The
participant will have no rights as a shareholder with
respect to the deferred rights to shares, and the
rights to such shares will be unsecured.
Deferred Dividend Account. If any dividends or
other rights or distributions of any kind are
distributed to holders of Common Stock during the
- 31 -
<PAGE>
deferral period but prior to the participant's
termination of employment, an amount equal to the cash
value of such distributions will be credited to a
deferred dividend account for the participant. The
Company will issue shares of Common Stock equal to the
cumulative total of rights to shares in such account
within 30 days after the participant's Deferral
Termination Date.
Stock Options
Election to Receive Options. A participant may
elect to defer some or all of his or her annual bonus
by conversion to stock options. Any such election to
receive options must be made prior to the beginning of
the plan year. Pursuant to a proper election, options
will be granted on the date the annual bonus for such
plan year is otherwise payable. The number of shares
of Common Stock subject to an option granted under the
Bonus Equity Plan will be the number of whole shares
equal to (A times B) divided by C, where: A is the
dollar amount that the participant elects shall be
payable in options; and B is the quotient of 1 divided
by the Black-Scholes value of an option; and C is the
fair market value of the Common Stock on the date of
grant of the option. Any resulting fraction will be
rounded to the next highest whole number of shares.
Option Terms. The exercise price per share under
each option granted under the Bonus Equity Plan will
be the fair market value of the Common Stock on the
date of grant. Each option will be fully vested upon
grant and will remain exercisable for 10 years.
Options granted under the Bonus Equity Plan will not
be transferable other than by will or the laws of
descent and distribution or, if the Committee so
permits, to family members of the participant, to
trusts established solely for the benefit of such
family members, and to certain entities of which the
only interest holders are such family members (or
trusts for their benefit). Options held by permitted
transferees are not further transferable.
Termination and Amendment
The Bonus Equity Plan will remain in effect for
ten years from its effective date, unless earlier
terminated. The Compensation Committee may terminate
or suspend the Bonus Equity Plan at any time, without
shareholder approval. The Compensation Committee may
amend the Bonus Equity Plan at any time and for any
reason without shareholder approval; provided,
however, that the Compensation Committee may condition
any amendment on the approval of shareholders if such
approval is necessary or deemed advisable with respect
to tax, securities or other applicable laws, policies
- 32 -
<PAGE>
or regulations. No termination, modification or
amendment of the Bonus Equity Plan may, without the
consent of a participant, adversely affect the
participant's rights under a previously-granted award.
Certain Federal Income Tax Effects
Stock Awards. A participant receiving non-
deferred Common Stock in lieu of bonus will recognize
ordinary income equal to the fair market value of the
stock on the date of grant, and the Company will be
entitled to a corresponding tax deduction at that
time.
Deferred Stock. Under present federal income tax
regulations, a participant receiving a right to
receive stock in the future will not recognize income,
and the Company will not be allowed a tax deduction,
at the time such right is granted. When the stock is
actually granted or the participant otherwise has the
right to receive such stock, the participant will
recognize ordinary income equal to the fair market
value of the stock, and the Company will be entitled
to a corresponding tax deduction at that time.
Options. The options that may be granted under
the Bonus Equity Plan will be non-qualified stock
options ("NSOs"). Under present federal income tax
regulations, there will be no federal income tax
consequences to either the Company or the participant
upon the grant of an NSO under the plan. However,
the participant will realize ordinary income on the
exercise of the NSO in an amount equal to the excess
of the fair market value of the Common Stock acquired
upon the exercise of such option over the exercise
price, and the Company will receive a corresponding
deduction. A subsequent sale or exchange of such
shares will result in gain or loss measured by the
difference between (i) the exercise price, increased
by any compensation reported upon the participant's
exercise of the option, and (ii) the amount realized
on such sale or exchange. Such gain or loss will be
capital in nature if the shares were held as a
capital asset and will be long-term if such shares
were held for the applicable long-term capital gain
holding period.
Benefits to Named Executive Officers and Others
Only executive officers of the Company and its
affiliates are entitled to participate in the Bonus
Equity Plan. The following table shows the benefits
that would accrue under the Bonus Equity Plan in 1998
to the executive officers assuming that (i) the Plan
had been in effect throughout fiscal year 1997, and
(ii) each such person elected to receive 100% of his
- 33 -
<PAGE>
annual bonus for 1997 in the form of shares of Common
Stock.
Name and Position Dollar Value($) No. of Shares
J. Don Brock $125,000 7,813 (1)
Chairman of the Board and
President
Robert G. Stafford $ 74,250 4,641 (1)
President of Telsmith, Inc.
Albert E. Guth $ 30,000 1,875 (1)
President of Astec Financial
Services, Inc.
W. Norman Smith $ 79,500 4,969 (1)
President of Astec, Inc.
Richard W. Bethea, Jr. $ 60,000 3,750 (1)
Vice President and General
Counsel
All executive officers, as a $549,481 34,343 (1)
Group (10 persons)
(1) Assumes a fair market value of $16.00 share on the grant date.
Vote Required
The affirmative vote of the holders of a majority
of the shares present or represented by proxy and
entitled to vote at the meeting on this proposal will
constitute approval of the Bonus Equity Plan.
The Board of Directors unanimously recommends a
vote "FOR" the proposal to approve the 1998 Executive
Officer Annual Bonus Equity Election Plan.
-34-
<PAGE>
AUDITORS
Ernst & Young LLP served as the Company's auditors
for the year ended December 31, 1997, and that firm of
independent accountants is serving as auditors for the
Company for the current calendar year.
Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
The reports of Ernst & Young LLP on the financial
statements of the Company for the three most recent
fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or
modified as to audit scope or accounting principles.
SOLICITATION OF PROXIES
The cost of soliciting proxy appointments will be
borne by the Company. In addition to solicitation by
mail, officers of the Company may solicit proxy
appointments by personal interview, and by telephone
and telegraph, and may request brokers holding stock
in their names, or the names of nominees, to forward
proxy soliciting material to the beneficial owners of
such stock and will reimburse such brokers for their
reasonable expenses.
OTHER MATTERS
Management does not know of any other matters to be
brought before the meeting other than those referred
to above. If any matters which are not specifically
set forth in the form of proxy appointment and this
proxy statement properly come before the meeting, the
persons appointed as proxies will vote thereon in
accordance with their best judgment.
Whether or not you expect to be present at the
meeting in person, please vote, sign, date, and return
promptly the enclosed proxy appointment card in the
enclosed envelope. No postage is necessary if the
proxy appointment card is mailed in the United States.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company intended
to be presented for consideration at the 1999 Annual
Meeting of Shareholders of the Company must be
received by the Company at its principal executive
offices on or before November 23, 1998 in order to be
included in the Company's Proxy Statement and Form of
- 35 -
<PAGE>
Proxy Appointment relating to the 1999 Annual Meeting
of Shareholders.
[FORM OF PROXY APPOINTMENT-FRONT]
ASTEC INDUSTRIES, INC.
PROXY APPOINTMENT SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS
For Annual Meeting of Shareholders to be Held on April 23,
1998
The undersigned hereby appoints J. Don Brock and Richard
W. Bethea, Jr., and each of them, with individual power of
substitution, proxies to vote all shares of the Common Stock
of Astec Industries, Inc. (the "Company") that the
undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held in Chattanooga,
Tennessee on April 23, 1998, and at any adjournment thereof,
as specified on the reverse side:
For participants in the Company's 401(k) Retirement
Plan, as amended and restated on March 1, 1987 ("Plan"),
this card also provides voting instructions to the Trustee
under the Plan for the undersigned's allowable portion, if
any, of the total number of shares of Common Stock of the
Company held by such Plan as indicated on the reverse side
hereof. These voting instructions are solicited and will be
carried out in accordance with the applicable provisions of
the Plan.
1. / / Authority Granted (except as indicated to the
contrary below)
/ / Authority Withheld
to vote for the election as directors
of the Company in Class III of the
four nominees set forth below to serve
until the 2001 Annual Meeting of
Shareholders, or in the case of each
nominee until his successor is duly
elected and qualified, as set forth in
the accompanying Proxy Statement:
J. Don Brock, Albert E. Guth, W. Norman Smith,
William B. Sansom
(INSTRUCTION: To withhold authority to vote
for any individual nominee(s), list name(s)
below.)
2. / / Authority Granted
/ / Authority Withheld
to vote for the approval of the
adoption of the Astec Industries, Inc.
1998 Long-Term Incentive Plan, as set
forth in Appendix A to the Proxy
Statement.
/ / Abstain from Voting
3. / / Authority Granted
/ / Authority Withheld
to vote for the approval of the
adoption of the Astec Industries, Inc.
Executive Officer Annual Bonus Equity
Election Plan, as set forth in
Appendix B to the Proxy Statement.
/ / Abstain from Voting
4. / / Authority Granted
/ / Authority Withheld
to vote in accordance with their best
judgment upon such other matters as
may properly come before the meeting
or any adjournments thereof.
/ / Abstain from Voting
(Continued and to be signed and dated on other
side)
[FORM OF PROXY APPOINTMENT-BACK]
THIS PROXY APPOINTMENT, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
APPOINTMENT WILL BE VOTED AFFIRMATIVELY ON PROPOSALS 1, 2
AND 3.
IMPORTANT: Please date this proxy appointment card and sign
exactly as your name or names appear(s) hereon. If the
stock is held jointly, signatures should include both names.
Executors, administrators, trustees, guardians, and others
signing in a representative capacity should give full title.
In order to ensure that your shares will be represented at
the Annual Meeting of Shareholders, please vote, sign, date,
and return this proxy appointment card promptly in the
enclosed business reply envelope. If you do attend the
meeting, you may, if you wish, withdraw your proxy
appointment and vote in person.
(SEAL)
Signature of Shareholder
DATED: , 1998
(SEAL)
Signature of Shareholder
DATED: , 1998
<PAGE>
APPENDIX A
ASTEC INDUSTRIES, INC.
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the Astec Industries,
Inc. 1998 Long-Term Incentive Plan (the "Plan") is to
promote the success, and enhance the value, of Astec
Industries, Inc. (the "Corporation"), by linking the
personal interests of its employees, officers and directors
to those of Corporation stockholders and by providing its
employees, officers and directors with an incentive for
outstanding performance. The Plan is further intended to
provide flexibility to the Corporation in its ability to
motivate, attract, and retain the services of employees,
officers and directors upon whose judgment, interest, and
special effort the successful conduct of the Corporation's
operation is largely dependent. Accordingly, the Plan
permits the grant of incentive awards from time to time to
selected employees, officers, directors, and consultants.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of
the date upon which it shall be approved by the Board.
However, the Plan shall be submitted to the stockholders of
the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under
the Plan may be exercised prior to approval of the Plan by
the stockholders and if the stockholders fail to approve the
Plan within 12 months of the Board's approval thereof, any
Incentive Stock Options previously granted hereunder shall
be automatically converted to Non-Qualified Stock Options
without any further act. In the discretion of the
Committee, Awards may be made to Covered Employees which are
intended to constitute qualified performance-based
compensation under Code Section 162(m). Any such Awards
shall be contingent upon the stockholders having approved
the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in
this Plan with the initial letter capitalized, and the word
or phrase does not commence a sentence, the word or phrase
shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning
is required by the context. The following words and phrases
shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation
Right, Restricted Stock Award, Performance Share Award,
Dividend Equivalent Award, or Other Stock-Based Award,
or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written
agreement, contract, or other instrument or document
evidencing an Award.
(c) "Board" means the Board of Directors of the
Corporation.
(d) "Change in Control" means and includes each
of the following:
(1) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person")
of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of 25%
or more of the combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes
of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any
acquisition by a Person who is on the Effective
Date the beneficial owner of 25% or more of the
Outstanding Company Voting Securities, (ii) any
acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition
by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any
corporation controlled by the Company, or (v) any
acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii)
and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective
Date, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the
Effective Date whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board
shall be considered as though such individual were
a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose
initial assumption of office occurs as a result of
an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than
the Board; or
(3) Consummation of a reorganization, merger
or consolidation or sale or other disposition of
all or substantially all of the assets of the
Company (a "Business Combination"), in each case,
unless, following such Business Combination, (i)
all or substantially all of the individuals and
entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the
combined voting power of the then outstanding
voting securities entitled to vote generally in
the election of directors of the corporation
resulting from such Business Combination
(including, without limitation, a corporation
which as a result of such transaction owns the
Company or all or substantially all of the
Company's assets either directly or through one or
more subsidiaries) in substantially the same
proportions as their ownership, immediately prior
to such Business Combination of the Outstanding
Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such
Business Combination or any employee benefit plan
(or related trust) of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting
power of the then outstanding voting securities of
such corporation except to the extent that such
ownership existed prior to the Business
Combination, and (iii) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent Board at
the time of the execution of the initial
agreement, or of the action of the Board,
providing for such Business Combination.
(e) "Code" means the Internal Revenue Code of
1986, as amended from time to time.
(f) "Committee" means the committee of the Board
described in Article 4.
(g) "Corporation" means Astec Industries, Inc., a
Tennessee corporation.
(h) "Covered Employee" means a covered employee
as defined in Code Section 162(m)(3).
(i) "Disability" shall mean any illness or other
physical or mental condition of a Participant that
renders the Participant incapable of performing his
customary and usual duties for the Corporation, or any
medically determinable illness or other physical or
mental condition resulting from a bodily injury,
disease or mental disorder which, in the judgment of
the Committee, is permanent and continuous in nature.
The Committee may require such medical or other
evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(j) "Dividend Equivalent" means a right granted
to a Participant under Article 11.
(k) "Effective Date" has the meaning assigned
such term in Section 2.1.
(l) "Fair Market Value", on any date, means (i)
if the Stock is listed on a securities exchange or is
traded over the Nasdaq National Market, the closing
sales price on such exchange or over such system on
such date or, in the absence of reported sales on such
date, the closing sales price on the immediately
preceding date on which sales were reported, or (ii) if
the Stock is not listed on a securities exchange or
traded over the Nasdaq National Market, the mean
between the bid and offered prices as quoted by Nasdaq
for such date, provided that if it is determined that
the fair market value is not properly reflected by such
Nasdaq quotations, Fair Market Value will be determined
by such other method as the Committee determines in
good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that
is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.
(n) "Non-Qualified Stock Option" means an Option
that is not an Incentive Stock Option.
(o) "Option" means a right granted to a
Participant under Article 7 of the Plan to purchase
Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right,
granted to a Participant under Article 12, that relates
to or is valued by reference to Stock or other Awards
relating to Stock.
(r) "Parent" means a corporation which owns or
beneficially owns a majority of the outstanding voting
stock or voting power of the Corporation. For
Incentive Stock Options, the term shall have the same
meaning as set forth in Code Section 424(e).
(q) "Participant" means a person who, as an
employee, officer, consultant or director of the
Corporation or any Parent or Subsidiary, has been
granted an Award under the Plan.
(o) "Performance Share" means a right granted to
a Participant under Article 9, to receive cash, Stock,
or other Awards, the payment of which is contingent
upon achieving certain performance goals established by
the Committee.
(p) "Plan" means the Astec Industries, Inc. 1998
Long-Term Incentive Plan, as amended from time to time.
(q) "Restricted Stock Award" means Stock granted
to a Participant under Article 10 that is subject to
certain restrictions and to risk of forfeiture.
(r) "Retirement" means a Participant's
termination of employment with the Corporation, Parent
or Subsidiary after attaining any normal or early
retirement age specified in any pension, profit sharing
or other retirement program sponsored by the
Corporation, or, in the event of the inapplicability
thereof with respect to the person in question, as
determined by the Committee in its reasonable judgment.
(s) "Stock" means the $0.20 par value common
stock of the Corporation and such other securities of
the Corporation as may be substituted for Stock
pursuant to Article 14.
(t) "Stock Appreciation Right" or "SAR" means a
right granted to a Participant under Article 8 to
receive a payment equal to the difference between the
Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR,
all as determined pursuant to Article 8.
(u) "Subsidiary" means any corporation, limited
liability company, partnership or other entity of which
a majority of the outstanding voting stock or voting
power is beneficially owned directly or indirectly by
the Corporation. For Incentive Stock Options, the term
shall have the meaning set forth in Code Section
424(f).
(v) "1933 Act" means the Securities Act of 1933,
as amended from time to time.
(w) "1934 Act" means the Securities Exchange Act
of 1934, as amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by a
committee (the "Committee") appointed by the Board (which
Committee shall consist of two or more directors) or, at the
discretion of the Board from time to time, the Plan may be
administered by the Board. It is intended that the
directors appointed to serve on the Committee shall be "non-
employee directors" (within the meaning of Rule 16b-3
promulgated under the 1934 Act) and "outside directors"
(within the meaning of Code Section 162(m) and the
regulations thereunder) to the extent that Rule 16b-3 and,
if necessary for relief from the limitation under Code
Section 162(m) and such relief is sought by the Company,
Code Section 162(m), respectively, are applicable. However,
the mere fact that a Committee member shall fail to qualify
under either of the foregoing requirements shall not
invalidate any Award made by the Committee which Award is
otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any
time and from time to time in the discretion of, the Board.
During any time that the Board is acting as administrator of
the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other
than in this Section 4.1) shall include the Board.
4.2 ACTION BY THE COMMITTEE
For purposes of
administering the Plan, the following rules of procedure
shall govern the Committee. A majority of the Committee
shall constitute a quorum. The acts of a majority of the
members present at any meeting at which a quorum is present,
and acts approved unanimously in writing by the members of
the Committee in lieu of a meeting, shall be deemed the acts
of the Committee. Each member of the Committee is entitled
to, in good faith, rely or act upon any report or other
information furnished to that member by any officer or other
employee of the Corporation or any Parent or Subsidiary, the
Corporation's independent certified public accountants, or
any executive compensation consultant or other professional
retained by the Corporation to assist in the administration
of the Plan.
4.3 AUTHORITY OF COMMITTEE
The Committee has the
exclusive power, authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be
granted to each Participant;
(c) Determine the number of Awards to be granted
and the number of shares of Stock to which an Award
will relate;
(d) Determine the terms and conditions of any
Award granted under the Plan, including but not limited
to, the exercise price, grant price, or purchase price,
any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and
accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole
discretion determines;
(e) Accelerate the vesting or lapse of
restrictions of any outstanding Award, based in each
case on such considerations as the Committee in its
sole discretion determines;
(f) Determine whether, to what extent, and under
what circumstances an Award may be settled in, or the
exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement,
which need not be identical for each Participant;
(h) Decide all other matters that must be
determined in connection with an Award;
(i) Establish, adopt or revise any rules and
regulations as it may deem necessary or advisable to
administer the Plan;
(j) Make all other decisions and determinations
that may be required under the Plan or as the Committee
deems necessary or advisable to administer the Plan;
and
(k) Amend the Plan or any Award Agreement as
provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation
of the Plan, any Awards granted under the Plan, any Award
Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES
Subject to adjustment as
provided in Section 14.1, the aggregate number of shares of
Stock reserved and available for Awards or which may be used
to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right
or Performance Share Award) shall be 1,500,000, of which not
more than 10% may be granted as Awards of Restricted Stock
or unrestricted Stock Awards.
5.2. LAPSED AWARDS
To the extent that an Award is
canceled, terminates, expires or lapses for any reason, any
shares of Stock subject to the Award will again be available
for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available
for the grant of an Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant
to an Award may consist, in whole or in part, of authorized
and unissued Stock, treasury Stock or Stock purchased on the
open market.
5.4. LIMITATION ON AWARDS
Notwithstanding any
provision in the Plan to the contrary, the maximum number of
shares of Stock with respect to one or more Options and/or
SARs that may be granted during any one calendar year under
the Plan to any one Covered Employee shall be 150,000. The
maximum fair market value (measured as of the date of grant)
of any Awards other than Options and SARs that may be
received by a Covered Employee (less any consideration paid
by the Participant for such Award) during any one calendar
year under the Plan shall be $500,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to
individuals who are employees, officers, directors or
consultants of the Corporation or a Parent or Subsidiary.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant
Options to Participants on the following terms and
conditions:
(a) EXERCISE PRICE. The exercise price per share
of Stock under an Option shall be determined by the
Committee, provided that the exercise price for any
Option shall not be less than the Fair Market Value as
of the date of the grant.
(b) TIME AND CONDITIONS OF EXERCISE
The Committee shall determine the time or times at which an
Option may be exercised in whole or in part. The
Committee also shall determine the performance or other
conditions, if any, that must be satisfied before all
or part of an Option may be exercised. The Committee
may waive any exercise provisions at any time in whole
or in part based upon factors as the Committee may
determine in its sole discretion so that the Option
becomes exerciseable at an earlier date.
(c) PAYMENT. The Committee shall determine the
methods by which the exercise price of an Option may be
paid, the form of payment, including, without
limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the
methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants; provided,
however, that if shares of Stock are used to pay the
exercise price of an Option, such shares must have been
held by the Participant for at least six months.
(d) EVIDENCE OF GRANT
All Options shall be
evidenced by a written Award Agreement between the
Corporation and the Participant. The Award Agreement
shall include such provisions, not inconsistent with
the Plan, as may be specified by the Committee.
7.2. INCENTIVE STOCK OPTIONS
The terms of any
Incentive Stock Options granted under the Plan must comply
with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share
of Stock shall be set by the Committee, provided that
the exercise price for any Incentive Stock Option shall
not be less than the Fair Market Value as of the date
of the grant.
(b) EXERCISE. In no event may any Incentive
Stock Option be exercisable for more than ten years
from the date of its grant.
(c) LAPSE OF OPTION
An Incentive Stock Option
shall lapse under the earliest of the following
circumstances; provided, however, that the Committee
may, prior to the lapse of the Incentive Stock Option
under the circumstances described in paragraphs (3),
(4) and (5) below, provide in writing that the Option
will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3),
(4) and (5) below, it will automatically become a Non-
Qualified Stock Option:
(1) The Incentive Stock Option shall lapse
as of the option expiration date set forth in the
Award Agreement.
(2) The Incentive Stock Option shall lapse
ten years after it is granted, unless an earlier
time is set in the Award Agreement.
(3) If the Participant terminates employment
for any reason other than as provided in paragraph
(4) or (5) below, the Incentive Stock Option shall
lapse, unless it is previously exercised, three
months after the Participant's termination of
employment; provided, however, that if the
Participant's employment is terminated by the
Company for cause or by the Participant without
the consent of the Company, the Incentive Stock
Option shall (to the extent not previously
exercised) lapse immediately.
(4) If the Participant terminates employment
by reason of his Disability, the Incentive Stock
Option shall lapse, unless it is previously
exercised, one year after the Participant's
termination of employment.
(5) If the Participant dies while employed,
or during the three-month period described in
paragraph (3) or during the one-year period
described in paragraph (4) and before the Option
otherwise lapses, the Option shall lapse one year
after the Participant's death. Upon the
Participant's death, any exercisable Incentive
Stock Options may be exercised by the
Participant's beneficiary, determined in
accordance with Section 13.6.
Unless the exercisability of the Incentive Stock
Option is accelerated as provided in Article 13, if a
Participant exercises an Option after termination of
employment, the Option may be exercised only with
respect to the shares that were otherwise vested on the
Participant's termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION
The aggregate
Fair Market Value (determined as of the time an Award
is made) of all shares of Stock with respect to which
Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed
$100,000.
(e) TEN PERCENT OWNERS
No Incentive Stock
Option shall be granted to any individual who, at the
date of grant, owns stock possessing more than ten
percent of the total combined voting power of all
classes of stock of the Corporation or any Parent or
Subsidiary unless the exercise price per share of such
Option is at least 110% of the Fair Market Value per
share of Stock at the date of grant and the Option
expires no later than five years after the date of
grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS
No Award of an Incentive Stock Option may be made pursuant
to the Plan after the day immediately prior to the
tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE
During a Participant's
lifetime, an Incentive Stock Option may be exercised
only by the Participant or, in the case of the
Participant's Disability, by the Participant's guardian
or legal representative.
(h) DIRECTORS. The Committee may not grant an
Incentive Stock Option to a non-employee director. The
Committee may grant an Incentive Stock Option to a
director who is also an employee of the Corporation or
Parent or Subsidiary but only in that individual's
position as an employee and not as a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Committee is authorized to
grant SARs to Participants on the following terms and
conditions:
(a) RIGHT TO PAYMENT
Upon the exercise of a
Stock Appreciation Right, the Participant to whom it is
granted has the right to receive the excess, if any,
of:
(1) The Fair Market Value of one share of
Stock on the date of exercise; over
(2) The grant price of the Stock
Appreciation Right as determined by the Committee,
which shall not be less than the Fair Market Value
of one share of Stock on the date of grant in the
case of any SAR related to an Incentive Stock
Option.
(b) OTHER TERMS
All awards of Stock
Appreciation Rights shall be evidenced by an Award
Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in
settlement, and any other terms and conditions of any
Stock Appreciation Right shall be determined by the
Committee at the time of the grant of the Award and
shall be reflected in the Award Agreement.
ARTICLE 9
PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE SHARES
The Committee is
authorized to grant Performance Shares to Participants on
such terms and conditions as may be selected by the
Committee. The Committee shall have the complete discretion
to determine the number of Performance Shares granted to
each Participant. All Awards of Performance Shares shall be
evidenced by an Award Agreement.
9.2. RIGHT TO PAYMENT
A grant of Performance Shares
gives the Participant rights, valued as determined by the
Committee, and payable to, or exercisable by, the
Participant to whom the Performance Shares are granted, in
whole or in part, as the Committee shall establish at grant
or thereafter. The Committee shall set performance goals
and other terms or conditions to payment of the Performance
Shares in its discretion which, depending on the extent to
which they are met, will determine the number and value of
Performance Shares that will be paid to the Participant.
9.3. OTHER TERMS. Performance Shares may be payable in
cash, Stock, or other property, and have such other terms
and conditions as determined by the Committee and reflected
in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK
The Committee is
authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and
conditions as may be selected by the Committee. All Awards
of Restricted Stock shall be evidenced by a Restricted Stock
Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS
Restricted Stock
shall be subject to such restrictions on transferability and
other restrictions as the Committee may impose (including,
without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately
or in combination at such times, under such circumstances,
in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time
of the grant of the Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined
by the Committee at the time of the grant of the Award or
thereafter, upon termination of employment during the
applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period,
Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may
provide in any Award Agreement that restrictions or
forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in
other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK
Restricted Stock granted under the Plan may be evidenced in
such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must
bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted
Stock.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS
The Committee is
authorized to grant Dividend Equivalents to Participants
subject to such terms and conditions as may be selected by
the Committee. Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with
respect to all or a portion of the number of shares of Stock
subject to an Award, as determined by the Committee. The
Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been
reinvested in additional shares of Stock, or otherwise
reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS
The
Committee is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards
that are payable in, valued in whole or in part by reference
to, or otherwise based on or related to shares of Stock, as
deemed by the Committee to be consistent with the purposes
of the Plan, including without limitation shares of Stock
awarded purely as a "bonus" and not subject to any
restrictions or conditions, convertible or exchangeable debt
securities, other rights convertible or exchangeable into
shares of Stock, and Awards valued by reference to book
value of shares of Stock or the value of securities of or
the performance of specified Parents or Subsidiaries. The
Committee shall determine the terms and conditions of such
Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS
Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in
tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for
another Award, the Committee may require the surrender of
such other Award in consideration of the grant of the new
Award. Awards granted in addition to or in tandem with
other Awards may be granted either at the same time as or at
a different time from the grant of such other Awards.
13.2. EXCHANGE PROVISIONS
The Committee may at
any time offer to exchange or buy out any previously granted
Award for a payment in cash, Stock, or another Award
(subject to Section 14.1), based on the terms and conditions
the Committee determines and communicates to the Participant
at the time the offer is made.
13.3. TERM OF AWARD
The term of each Award shall
be for the period as determined by the Committee, provided
that in no event shall the term of any Incentive Stock
Option or a Stock Appreciation Right granted in tandem with
the Incentive Stock Option exceed a period of ten years from
the date of its grant (or, if Section 7.2(e) applies, five
years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS
Subject to the
terms of the Plan and any applicable law or Award Agreement,
payments or transfers to be made by the Corporation or a
Parent or Subsidiary on the grant or exercise of an Award
may be made in such form as the Committee determines at or
after the time of grant, including without limitation, cash,
Stock, other Awards, or other property, or any combination,
and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case
determined in accordance with rules adopted by, and at the
discretion of, the Committee.
13.5. LIMITS ON TRANSFER
No right or interest of
a Participant in any unexercised or restricted Award may be
pledged, encumbered, or hypothecated to or in favor of any
party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of
such Participant to any other party other than the
Corporation or a Parent or Subsidiary. No unexercised or
restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and
distribution or, except in the case of an Incentive Stock
Option, pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code if such Section
applied to an Award under the Plan; provided, however, that
the Committee may (but need not) permit other transfers
where the Committee concludes that such transferability (i)
does not result in accelerated taxation, (ii) does not cause
any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is
otherwise appropriate and desirable, taking into account any
factors deemed relevant, including without limitation, state
or federal tax or securities laws applicable to transferable
Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a
Participant may, in the manner determined by the Committee,
designate a beneficiary to exercise the rights of the
Participant and to receive any distribution with respect to
any Award upon the Participant's death. A beneficiary,
legal guardian, legal representative, or other person
claiming any rights under the Plan is subject to all terms
and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan
and Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the
Committee. If no beneficiary has been designated or
survives the Participant, payment shall be made to the
Participant's estate. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is
filed with the Committee.
13.7. STOCK CERTIFICATES
All Stock certificates
delivered under the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any
national securities exchange or automated quotation system
on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to
reference restrictions applicable to the Stock.
13.8 ACCELERATION UPON DEATH OR DISABILITY
Notwithstanding any other provision in the Plan or any
Participant's Award Agreement to the contrary, upon the
Participant's death or Disability during his employment or
service as a director, all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of
rights that may be exercised shall become fully exercisable
and all restrictions on outstanding Awards shall lapse. Any
Option or Stock Appreciation Rights Awards shall thereafter
continue or lapse in accordance with the other provisions of
the Plan and the Award Agreement. To the extent that this
provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.9. ACCELERATION UPON A CHANGE IN CONTROL
Except as otherwise provided in the Award Agreement, upon
the occurrence of a Change in Control, all outstanding
Options, Stock Appreciation Rights, and other Awards in the
nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall
lapse; provided, however that such acceleration will not
occur if, in the opinion of the Company's accountants, such
acceleration would preclude the use of "pooling of interest"
accounting treatment for a Change in Control transaction
that (a) would otherwise qualify for such accounting
treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision
causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION UPON CERTAIN EVENTS NOT
CONSTITUTING A CHANGE IN CONTROL
In the event of the
occurrence of any circumstance, transaction or event not
constituting a Change in Control (as defined in Section 3.1)
but which the Board of Directors deems to be, or to be
reasonably likely to lead to, an effective change in control
of the Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of the
1934 Act, the Committee may in its sole discretion declare
all outstanding Options, Stock Appreciation Rights, and
other Awards in the nature of rights that may be exercised
to be fully exercisable, and/or all restrictions on all
outstanding Awards to have lapsed, in each case, as of such
date as the Committee may, in its sole discretion, declare,
which may be on or before the consummation of such
transaction or event. To the extent that this provision
causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options.
13.11. ACCELERATION FOR ANY OTHER REASON
Regardless of whether an event has occurred as described in
Section 13.9 or 13.10 above, the Committee may in its sole
discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other
Awards in the nature of rights that may be exercised shall
become fully or partially exercisable, and/or that all or a
part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such
date as the Committee may, in its sole discretion, declare.
The Committee may discriminate among Participants and among
Awards granted to a Participant in exercising its discretion
pursuant to this Section 13.11.
13.12 EFFECT OF ACCELERATION
If an Award is
accelerated under Section 13.9 or 13.10, the Committee may,
in its sole discretion, provide (i) that the Award will
expire after a designated period of time after such
acceleration to the extent not then exercised, (ii) that the
Award will be settled in cash rather than Stock, (iii) that
the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be
equitably converted in connection with such transaction, or
(iv) any combination of the foregoing. The Committee's
determination need not be uniform and may be different for
different Participants whether or not such Participants are
similarly situated.
13.13. PERFORMANCE GOALS. The Committee may determine
that any Award granted pursuant to this Plan to a
Participant (including, but not limited to, Participants who
are Covered Employees) shall be determined solely on the
basis of (a) the achievement by the Corporation or a Parent
or Subsidiary of a specified target return, or target growth
in return, on equity or capital employed, (b) the
achievement by the Corporation or a Parent or Subsidiary of
a specified target cash flow, or target increase in cash
flow, from operations, (c) the Corporation's, Parent's or
Subsidiary's stock price, (d) the achievement by a business
unit of the Corporation, Parent or Subsidiary of a specified
target, or target growth in, pre-tax or net income or
earnings per share, (e) the achievement by the Corporation
or a Parent or Subsidiary, or a business unit thereof, of a
specified target level of or increase in sales, (f) the
achievement by the Corporation or a Parent or Subsidiary, or
a business unit thereof, of specified target safety
standards, or (g) any combination of the goals set forth in
(a) through (f) above. If an Award is made on such basis,
the Committee has the right for any reason to reduce (but
not increase) the Award, notwithstanding the achievement of
a specified goal. If an Award is made on such basis, the
Committee shall establish goals prior to the beginning of
the period for which such performance goal relates (or such
later date as may be permitted under Code Section 162(m) or
the regulations thereunder). Any payment of an Award
granted with performance goals shall be conditioned on the
written certification of the Committee in each case that the
performance goals and any other material conditions were
satisfied.
13.14. TERMINATION OF EMPLOYMENT
Whether military,
government or other service or other leave of absence shall
constitute a termination of employment shall be determined
in each case by the Committee at its discretion, and any
determination by the Committee shall be final and
conclusive. A termination of employment shall not occur in
a circumstance in which a Participant transfers from the
Corporation to one of its Parents or Subsidiaries, transfers
from a Parent or Subsidiary to the Corporation, or transfers
from one Parent or Subsidiary to another Parent or
Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is
declared upon the Stock, the shares of Stock then subject to
each Award shall be increased proportionately without any
change in the aggregate purchase price therefor. In the
event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities
of the Corporation or of another corporation, whether
through reorganization, recapitalization, reclassification,
stock split-up, combination of shares, merger or
consolidation, there shall be substituted for each such
share of Stock then subject to each Award the number and
class of shares into which each outstanding share of Stock
shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each
Award.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The
Board or the Committee may, at any time and from time to
time, amend, modify or terminate the Plan without
stockholder approval; provided, however, that the Board or
Proxy 97 w app a b<PAGE>
Committee may condition any amendment or modification on the
approval of stockholders of the Company if such approval is
necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or
regulations.
15.2 AWARDS PREVIOUSLY GRANTED
At any time and from
time to time, the Committee may amend, modify or terminate
any outstanding Award without approval of the Participant;
provided, however, that, subject to the terms of the
applicable award agreement, such amendment, modification or
termination shall not, without the Participant's consent,
reduce or diminish the value of such Award determined as if
the Award had been exercised, vested, cashed in or otherwise
settled on the date of such amendment or termination; and
provided further that, except as otherwise permitted in the
Plan, the exercise price of any Option may not be reduced
and the original term of any Option may not be extended. No
termination, amendment, or modification of the Plan shall
adversely affect any Award previously granted under the
Plan, without the written consent of the Participant.
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS
No Participant or any
eligible participant shall have any claim to be granted any
Award under the Plan, and neither the Corporation nor the
Committee is obligated to treat Participants or eligible
participants uniformly.
16.2. NO STOCKHOLDER RIGHTS
No Award gives the
Participant any of the rights of a stockholder of the
Corporation unless and until shares of Stock are in fact
issued to such person in connection with such Award.
16.3. WITHHOLDING. The Corporation or any Parent
or Subsidiary shall have the authority and the right to
deduct or withhold, or require a Participant to remit to the
Corporation, an amount sufficient to satisfy federal, state,
and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to
any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under
the Plan, the Committee may, at the time the Award is
granted or thereafter, require that any such withholding
requirement be satisfied, in whole or in part, by
withholding shares of Stock having a Fair Market Value on
the date of withholding equal to the amount to be withheld
for tax purposes, all in accordance with such procedures as
the Committee establishes.
16.4. NO RIGHT TO CONTINUED SERVICE
Nothing in
the Plan or any Award Agreement shall interfere with or
limit in any way the right of the Corporation or any Parent
or Subsidiary to terminate any Participant's employment or
status as an officer, director or consultant at any time,
nor confer upon any Participant any right to continue as an
employee, officer, director or consultant of the Corporation
or any Parent or Subsidiary.
l6.5. UNFUNDED STATUS OF AWARDS
The Plan is
intended to be an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to
a Participant pursuant to an Award, nothing contained in the
Plan or any Award Agreement shall give the Participant any
rights that are greater than those of a general creditor of
the Corporation or any Parent or Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable
under applicable law, each member of the Committee shall be
indemnified and held harmless by the Corporation from any
loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to
which such member may be a party or in which he may be
involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such
member in satisfaction of judgment in such action, suit, or
proceeding against him provided he gives the Corporation an
opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which
such persons may be entitled under the Corporation's
Certificate of Incorporation or Bylaws, as a matter of law,
or otherwise, or any power that the Corporation may have to
indemnify them or hold them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS
No payment
under the Plan shall be taken into account in determining
any benefits under any pension, retirement, savings, profit
sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided
otherwise in such other plan.
16.8. EXPENSES. The expenses of administering the
Plan shall be borne by the Corporation and its Parents or
Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings
of the Sections in the Plan are for convenience of reference
only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
16.10. GENDER AND NUMBER
Except where otherwise
indicated by the context, any masculine term used herein
also shall include the feminine; the plural shall include
the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES
No fractional shares of
Stock shall be issued and the Committee shall determine, in
its discretion, whether cash shall be given in lieu of
fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS
The
obligation of the Corporation to make payment of awards in
Stock or otherwise shall be subject to all applicable laws,
rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under
no obligation to register under the 1933 Act, or any state
securities act, any of the shares of Stock paid under the
Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933
Act, and the Corporation may restrict the transfer of such
shares in such manner as it deems advisable to ensure the
availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by
federal law, the Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the
State of Tennessee.
16.14 ADDITIONAL PROVISIONS
Each Award Agreement
may contain such other terms and conditions as the Committee
may determine; provided that such other terms and conditions
are not inconsistent with the provisions of this Plan.
The foregoing is hereby acknowledged as being the
Astec Industries, Inc. 1998 Long-Term Incentive Plan as
adopted by the Board of Directors of the Company on March
12, 1998 and approved by the Company's shareholders on April
23, 1998.
ASTEC INDUSTRIES, INC.
By: /s/ Richard W. Bethea, Jr.
Its: Secretary
APPENDIX B
ASTEC INDUSTRIES, INC.
EXECUTIVE OFFICER ANNUAL BONUS EQUITY ELECTION PLAN
1. Purpose. The purpose of the Astec Industries,
Inc. 1998 Executive Officer Annual Bonus Equity Election
Plan is to encourage and facilitate Company stock ownership
by executive officers of the Company and its affiliates,
thereby further aligning their interests with those of the
Company's stockholders.
2. Defined Terms. Unless the context clearly
indicates otherwise, the following terms shall have the
following meanings:
"Annual Bonus" means the annual incentive bonus
received by a Participant from the Company or its affiliates
in any Plan Year.
"Board" means the Board of Directors of the Company.
"Company" means Astec Industries, Inc., a Tennessee
corporation.
"Committee" has the meaning assigned such term in
Section 3.
"Common Stock" means the common stock, par value $0.20
per share, of the Company.
"Deferral Period" has the meaning set forth in Section
6(b) of the Plan.
"Deferral Termination Date" has the meaning set forth
in Section 6(b) of the Plan.
"Deferred Grant Date" has the meaning set forth in
Section 6(b) of the Plan.
"Distributions" has the meaning set forth in Section
6(b) of the Plan.
"Election Form" means a form approved by the Committee
pursuant to which a Participant elects a method of payment
of his or her Annual Bonus and whether payment will be
deferred, as provided herein.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value", on any date, means (i) if the
Common Stock is listed on a securities exchange or is traded
over the Nasdaq National Market, the closing sales price on
such exchange or over such system on such date or, in the
absence of reported sales on such date, the closing sales
Proxy 97 w app a b<PAGE>
price on the immediately preceding date on which sales were
reported, or (ii) if the Common Stock is not listed on a
securities exchange or traded over the Nasdaq National
Market, the mean between the bid and offered prices as
quoted by Nasdaq for such date, provided that if it is
determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will
be determined by such other method as the Committee
determines in good faith to be reasonable.
"Hardship" has the meaning set forth in Section 6(c) of
the Plan.
"Option" means an option to purchase Shares granted
under Section 7. Options granted under the Plan are not
incentive stock options within the meaning of Section 422 of
the Internal Revenue Code.
"Option Grant Date" means the date upon which an Option
is granted to a Participant pursuant to Section 7.
"Option Notice" means a written notice, agreement or
certificate with a Participant from the Company evidencing
an Option.
"Optionee" means a Participant to whom an Option has
been granted or, in the event of such Participant's death
prior to the expiration of an Option, such Participant's
estate or other designated beneficiary.
"Options Election Period" means the period designated
by the Committee each year during which Participants may
elect to receive Options as payment of some or all of their
Annual Bonus. The Options Election Period shall end on or
before December 31 of each year for the following Plan Year.
"Participant" means any employee of the Company or any
of its affiliates who is selected by the Committee for
participation in the Plan.
"Permitted Transferee" of an Optionee means (i) one or
more of the following family members of the Optionee:
spouse, former spouse, child (whether natural or adopted),
stepchild, any other lineal descendent of the Optionee; (ii)
a trust, partnership or other entity established and
existing for the sole benefit of, or under the sole control
of, one or more of the above family members of the Optionee,
or (iii) any other transferee specifically approved by the
Committee after taking into account any state or federal
tax, securities or other laws applicable to transferable
options.
"Plan" means the Astec Industries, Inc. Executive
Officer Annual Bonus Equity Election Plan, as amended from
time to time.
"Plan Year" means the twelve-month period ending on
December 31 of each year which, for purposes of the Plan, is
the period for which Annual Bonuses are earned.
"Stock Grant Date" means the date on which Shares are
issued under the Plan in any Plan Year, which shall be the
date on which Annual Bonus is otherwise payable in such Plan
Year.
"Rule 16b-3" means Rule 16b-3, as amended from time to
time, of the Securities and Exchange Commission as
promulgated under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of Common Stock.
3. Administration. The Plan shall be administered by
the Compensation Committee of the Board of Directors (the
"Committee"). Subject to the provisions of the Plan, the
Committee shall be authorized to select Participants, to
interpret the Plan, to establish, amend and rescind any
rules and regulations relating the Plan, and to make all
other determinations necessary or advisable for the
administration of the Plan; provided, however, that the
Committee shall have no discretion with respect to the
number of Shares subject to any awards under the Plan or the
time at which any such awards are to be granted. The
Committee's interpretation of the Plan, and all actions
taken and determinations made by the Committee pursuant to
the powers vested in it hereunder, shall be conclusive and
binding upon all parties concerned including the Company,
its stockholders and persons granted awards under the Plan.
The Committee may appoint a plan administrator to carry out
the ministerial functions of the Plan, but the administrator
shall have no other authority or powers of the Committee.
Notwithstanding the foregoing, the Board shall exercise any
and all rights, duties and powers of the Committee under the
Plan to the extent required by the applicable exemptive
conditions of Rule 16b-3, as determined by the Board its
sole discretion.
4. Shares Subject to Plan. The Shares issued under
the Plan shall not exceed in the aggregate 150,000 Shares of
Common Stock. Such Shares may be authorized and unissued
Shares or treasury Shares.
5. Participants. All active employees of the Company
or any of its affiliates shall be eligible to participate in
the Plan, as selected by the Committee from time to time.
6. Stock Awards.
(a) Grant Dates and Requirements for Grants.
Unless a Participant has elected pursuant to Section
6(b) to defer receipt of Shares, then, commencing with
the 1999 Stock Grant Date, Shares of Common Stock shall
be automatically granted on each Stock Grant Date to
each Participant who elects to receive Shares under
this Plan as payment of some or all of his or her
Annual Bonus. Such election must be made on an
Election Form filed with the Committee or the plan
administrator at least 30 days before the Stock Grant
Date and such election shall remain in effect with
respect to all future Plan Years until a subsequent
Election Form shall have been received by the Committee
or the plan administrator indicating a different
election. The total number of Shares included in each
grant under this Section 6(a) shall be determined by
dividing the amount of the Participant's Annual Bonus
which the Participant has elected to receive in the
form of shares by the Fair Market Value per Share on
the Stock Grant Date. Fractions will be rounded to the
next highest Share. The Shares or rights to which a
Participant is entitled under this Section 6(a) shall
be in lieu of the payment of his or her Annual Bonus in
cash or Options.
(b) Deferral of Receipt of Shares.
(i) Election to Defer. Each Participant
will have the right to elect, pursuant to a written
Election Form delivered to the Committee or the plan
administrator prior to the commencement of each Plan
Year, to defer the grant of the Shares that would
otherwise be granted to the Participant in lieu of his
or her Annual Bonus to be earned in such ensuing Plan
Year until the earlier of (i) the Participant's
termination of employment or (ii) another designated
date at least three years after the date of such
deferral election (in either case, the "Deferral
Termination Date"). Pursuant to this Election Form,
the Participant will elect whether all of the deferred
grant will be (a) granted within 30 days after the
Deferral Termination Date or (b) granted in
approximately equal annual installments of Shares over
a period of two to ten years (as the Participant may
elect) after the Deferral Termination Date, each such
annual grant to be made within 30 days after the
anniversary of the Deferral Termination Date. The
deferral Election Form signed by the Participant prior
to the Plan Year will be irrevocable except in case of
Hardship (as defined in Section 6(c)) as determined in
good faith by the Board pursuant to Section 6(c). No
Shares will be issued until the grant date(s) so
deferred (the "Deferred Grant Date") at which time the
Company agrees to issue the Shares to the Participant.
The Participant will have no rights as a stockholder
with respect to the deferred rights to Shares, and the
rights to such Shares will be unsecured.
(ii) Deferred Dividend Account. If any
dividends or other rights or distributions of any kind
("Distributions") are distributed to holders of Common
Stock during the period from the applicable Stock Grant
Date until the Deferral Termination Date (the "Deferral
Period") but prior to the Participant's termination of
employment, an amount equal to the cash value of such
Distributions on their distribution date, as such value
is determined by the Committee, will be credited to a
deferred dividend account for the Participant as
follows: the account will be credited with the right
to receive Shares having a Fair Market Value as of the
date of the Distribution equal to the cash value of the
Distribution. The Company will issue Shares equal to
the cumulative total of rights to Shares in such
account within 30 days after the Participant's Deferral
Termination Date.
If a Distribution is distributed to holders of
Common Stock after the Participant's Deferral
Termination Date but prior to the issuance in full of
the deferred Shares, an amount equal to the cash value
of such Distributions pertaining to any Shares still
deferred shall be converted into Shares equivalent in
value to the Distribution (based on the Fair Market
Value as of the date of Distribution) and such Shares
will be issued to the Participant as soon as practical
after the date of the Distribution.
No right or interest in the deferred dividend
account shall be subject to liability for the debts,
contracts or engagements of the Participant or shall be
subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no
effect; provided, however, that nothing in this Section
6(b) shall prevent transfers by will or by the
applicable laws of descent and distribution. The
Committee will have the right to adopt other
regulations and procedures to govern deferral of grants
of Shares.
(c) Hardship. The Board may accelerate the
distribution of all or a portion of a Participant's
deferred grants of Shares on account of his or her
Hardship, subject to the following requirements: (i)
the value of such accelerated distribution shall not
exceed the amount necessary to satisfy the Hardship,
less the amount which can be satisfied from other
resources which are reasonably available to the
Participant, (ii) the denial of the Participant's
request for a Hardship acceleration would result in
severe financial hardship to the Participant, and (iii)
the Participant has not received an accelerated
distribution on account of Hardship within the 12-month
period preceding the acceleration.
For purposes of this Plan, "Hardship" of a
Participant, as determined by the Board in its
discretion on the basis of all relevant facts and
circumstances and in accordance with the following
nondiscriminatory and objective standards uniformly
interpreted and consistently applied, shall mean a
severe financial hardship to the Participant resulting
from a sudden and unexpected illness or accident of the
Participant or of his or her dependent, loss of the
Participant's property due to casualty, or other
extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the
Participant. A financial need shall not constitute a
Hardship unless it is for at least $1,000,000 or the
entire value of the principal amount of the
Participant's deferred grants.
7. Stock Option Awards.
(a) Election to Receive Options. A Participant
may elect to defer some or all of his or her Annual
Bonus by conversion to Options in accordance with this
Section 7. A Participant who wishes to receive some or
all of his or her Annual Bonus for a Plan Year in the
form of Options must irrevocably elect to do so during
the Options Election Period for such Plan Year, by
delivering a valid Election Form to the Committee or
the plan administrator. A Participant's participation
in Section 7 of the Plan will be effective with respect
to the Annual Bonus to be earned in the first Plan Year
beginning after the Committee or the plan administrator
receives the Participant's Election Form.
(b) Irrevocable, Annual Election. Elections to
receive Options as payment of Annual Bonus are
irrevocable and shall be valid only for one Plan Year.
New elections must be made for participation in Section
7 of the Plan for subsequent Plan Years.
(c) Time of Grant. Options shall be granted to
each Participant who, during the applicable Options
Election Period, filed with the Committee or the plan
administrator a written irrevocable election to receive
Options as payment of some or all of such Participant's
Annual Bonus to be earned in the following Plan Year.
Such Options will be granted on the date the Annual
Bonus for such Plan Year is otherwise payable.
(d) Number of Options. The Committee or the plan
administrator shall cause to be calculated in the month
of November of each year the Black-Scholes value of an
Option under the Plan to purchase one Share of Common
Stock. Such Black-Scholes value shall apply for
purposes of this Section 7(d) for Options to be granted
under the Plan in the following Plan Year. The number
of Shares subject to an Option granted pursuant to this
Section 7 shall be the number of whole Shares equal to:
(A times B) divided by C, where:
A = the dollar amount of the Annual Bonus that the
Participant elects shall be payable in Options; and
B = the quotient of 1 divided by the Black-Scholes
value of an Option for one Share (expressed as a
percentage of the Fair Market Value of one Share of
Common Stock); and
C = the Fair Market Value per Share on the Option
Grant Date.
In determining the number of Shares subject to an
Option, any fraction of a Share will be rounded to the
next highest whole number of Shares.
For example:
Assume that a Participant has elected to defer
$5,000 of his or her Annual Bonus, that the Fair Market
Value per Share on the Option Grant Date was $16, and
that the most recently determined Black-Scholes value
of an Option was 50% of the Fair Market Value. The
Participant would be granted 625 Options as payment of
the $5,000 compensation. ($5,000 times 1/50%) divided
by $16 FMV = 625 Options granted.
(e) Exercise Price. The total price paid per
Share under each Option granted under this Section 7
shall be the Fair Market Value per Share on the Option
Grant Date.
(f) Exercise of Options. Each Option shall be
fully exercisable upon grant and will remain
exercisable for 10 years from the Option Grant Date
regardless of whether the Optionee remains an employee
of the Company or its affiliates throughout such term.
An Option, or portion thereof, may be exercised in
whole or in part only with respect to whole Shares.
(g) Payment of Exercise Price. Shares shall be
issued to the Optionee (or his Permitted Transferee)
pursuant to the exercise of an Option only upon receipt
by the Company from the Optionee (or his Permitted
Transferee) of payment in full of the exercise price.
The exercise price shall be payable in United States
dollars upon the exercise of the Option and may be paid
in cash, by check, or in Shares having a total Fair
Market Value on the date of exercise equal to the
exercise price; provided that if the Shares surrendered
in payment of the exercise price were themselves
acquired otherwise than on the open market, such Shares
shall have been held for at least six months. The
Committee may permit the use of any cashless exercise
methods that are permitted by law.
(h) Option Notice. Each Option granted under the
Plan shall be evidenced by an Option Notice which shall
be executed by an authorized officer of the Company.
Such Option Notice shall contain provisions regarding
(a) the number of Shares that may be issued upon
exercise of the Option, (b) the exercise price per
Share of the Option and the means of payment therefor,
(c) the term of the Option, and (d) such other terms
and conditions not inconsistent with the Plan as may be
determined from time to time by the Committee.
(i) Transferability of Options. No Option shall
be assignable or transferable by the Optionee other
than by will or the laws of descent and distribution
or, with the express prior written consent of the
Committee, to a Permitted Transferee. The Committee
shall be under no obligations to permit the transfer of
Options to Permitted Transferees, or to treat Options
or Participants similarly in this regard. Any transfer
to a Permitted Transferee shall be subject to the
following terms and conditions:
(i) An Option transferred to a Permitted
Transferee shall not be assignable or transferable by
the Permitted Transferee other than by will or the laws
of descent and distribution.
(ii) Transferred Options shall continue to
be subject to all the terms and conditions of the
Option as applicable to the original Optionee (other
than the withholding requirements and the ability to
further transfer the Option).
(iii) The Optionee and the Permitted
Transferee shall execute any and all documents
reasonably requested by the Committee or the plan
administrator, including without limitation documents
(A) to confirm the status of the transferee as a
Permitted Transferee, (B) to satisfy any requirements
for an exemption for the transfer under applicable
federal and state securities laws, and (C) to evidence
the transfer.
(iv) Shares acquired by a Permitted
Transferee through exercise of an Option may not be
transferred, nor will any assignee or transferee
thereof be recognized as an owner of such Shares by the
Company for any purpose, unless a registration
statement under the Securities Act and any applicable
state securities act with respect to such Shares shall
then be in effect or unless the availability of an
exemption from registration with respect to any
proposed transfer or disposition of such Shares shall
be established to the satisfaction of counsel for the
Company.
8. Prorated Grants. If on any date, Shares of Common
Stock are not available under the Plan to grant to
Participants the full amount of a grant contemplated by the
Plan, then each such Participant shall receive an award
equal to the number of Shares of Common Stock then available
under the Plan divided by the number of Participants
entitled to a grant of Shares or Options on such date.
Fractional Shares shall be ignored and not granted. Any
shortfall resulting from such proration shall be paid in the
form of cash.
9. Withholding. Except with respect to the exercise
of Options transferred to Permitted Transferees, whenever
the Company issues Shares under the Plan, the Company shall
have the right to withhold from sums due the recipient, or
to require the recipient to remit to the Company, any amount
sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery of any
certificate for such Shares.
10. Adjustments.
(a) Subject to Section 10(c) but notwithstanding
any other term of this Plan, in the event that the
Committee determines that any Distribution (whether in
the form of cash, Common Stock, other securities, or
other property), recapitalization, reclassification,
stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or
other rights to purchase Common Stock or other
securities of the Company, or other similar corporate
transaction or event, in the Committee's sole
discretion, affects the Common Stock such that an
adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be
made available under the Plan or with respect to an
award or awards hereunder, then the Committee shall, in
such manner as it may deem equitable, adjust the number
and type of shares (or other securities or property)
which may be granted under the Plan (including, but not
limited to, adjustments of the maximum number and kind
of securities which may be issued); provided, however,
that to the extent required by the applicable exemptive
conditions of Rule 16b-3, any such adjustment shall be
subject to approval by the Board.
(b) Subject to Section 10(c) but notwithstanding
any other term of this Plan, in the event of any
corporate transaction or event described in paragraph
(a) which results in Shares being exchanged for or
converted into cash, securities or other property
(including securities of another corporation), all
stock grants deferred under Section 6 shall become the
right to receive such cash, securities or other
property, and there shall be substituted on an
equitable basis for each Share of Common Stock then
subject to an Option granted pursuant to Section 7 the
consideration payable with respect to the outstanding
Shares of Common Stock in connection with such
corporate transaction or event, all without any change
in the aggregate purchase price for the Shares then
subject to the Option.
(c) The number of Shares finally granted under
this Plan shall always be rounded to the next highest
whole Share.
Proxy 97 w app a b<PAGE>
(d) Any decision of the Committee pursuant to the
terms of this Section 10 shall be final, binding and
conclusive upon the Participants, the Company and all
other interested parties; provided, however, that to
the extent required by the applicable exemptive
conditions of Rule 16b-3, any such decision shall be
subject to approval by the Board.
11. Amendment. The Committee may terminate or suspend
the Plan at any time, without stockholder approval. The
Committee may amend the Plan at any time and for any reason
without stockholder approval; provided, however, that the
Committee may condition any amendment on the approval of
stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other
applicable laws, policies or regulations. No termination,
modification or amendment of the Plan may, without the
consent of a Participant, adversely affect a Participant's
rights under an award granted prior thereto.
12. Indemnification. Each person who is or has been a
member of the Committee or who otherwise participates in the
administration or operation of this Plan shall be
indemnified by the Company against, and held harmless from,
any loss, cost, liability or expense that may be imposed
upon or incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding in
which such person may be involved by reason of any action
taken or failure to act under the Plan and shall be fully
reimbursed by the Company for any and all amounts paid by
such person in satisfaction of judgment against him or her
in any such action, suit or proceeding, provided he or she
will give the Company an opportunity, by written notice to
the Committee, to defend the same at the Company's own
expense before he or she undertakes to defend it on his or
her own behalf. This right of indemnification shall not be
exclusive of any other rights of indemnification.
The Committee and the Board may rely upon any
information furnished by the Company, its public accountants
and other experts. No individual will have personal
liability by reason of anything done or omitted to be done
by the Company, the Committee or the Board in connection
with the Plan.
13. Duration of the Plan. The Plan shall remain in
effect until the tenth anniversary of the Effective Date,
unless terminated earlier by the Committee.
14. Expenses of the Plan. The expenses of
administering the Plan shall be borne by the Company.
15. Effective Date. The Plan was originally adopted
by the Board on March 12, 1998, and became effective upon
the approval thereof by the stockholders of the Company on
April 23, 1998 (the "Effective Date").
ASTEC INDUSTRIES, INC.
By: /s/ Richard W. Bethea, Jr.
Its: Secretary
