EDISON CONTROL CORPORATION
140 ETHEL ROAD WEST
PISCATAWAY, NEW JERSEY 08854
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 17, 1995
TO THE SHAREHOLDERS OF EDISON CONTROL CORPORATION:
You are cordially invited to attend the Annual Meeting of Shareholders
of Edison Control Corporation ("the Company") which will be held on
Tuesday, October 17, 1995 at 8:30 A.M. Eastern Time, at World Financial
Center, 200 Liberty Street, 39th Floor, New York, NY 10281.
The meeting and any adjournment thereof will consider and take action
upon the following matters:
(1) To elect directors;
(2) To consider and act upon a proposed amendment to the Company's
1986 Stock Option Plan to increase by 200,000 the number of
shares of Common Stock authorized for issuance thereunder to a
total of 350,000 shares; and
(3) To transact such business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September
11, 1995 as the record date for the determination of shareholders entitled
to notice of and to vote at the meeting. The share transfer books will not
be closed.
YOU ARE EARNESTLY REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT
THE MEETING, TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING
PROXY, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
IF YOU ATTEND THE MEETING IN PERSON, YOU MAY REVOKE THE PROXY AND VOTE YOUR
OWN SHARES.
By order of the Board of Directors.
Jay J. Miller
Secretary
Piscataway, NJ
September 12, 1995
EDISON CONTROL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
October 17, 1995
This Proxy Statement is first being mailed to shareholders on or about
September 12, 1995 in connection with the solicitation of proxies for use
at the Annual Meeting of Shareholders (the "Annual Meeting") of Edison
Control Corporation (the "Company"), to be held on October 17, 1995 at 8:30
A.M., Eastern Time, at World Financial Center, 200 Liberty Street, 39th
Floor, New York, NY 10281, and at any adjournment thereof.
The enclosed proxy is solicited by the Board of Directors of the
Company. Each proxy properly executed and returned by a shareholder and
not revoked will be voted in accordance with the shareholder's instructions
thereon. Any proxy may be revoked at any time before it is voted at the
meeting by filing with the Secretary of the Company notice to such effect
or a duly executed proxy bearing a later date. If no instructions are
indicated, the proxies will be voted for the election of the directors and
in favor of the proposed amendment of the Stock Option Plan. The persons
named as proxies intend to vote in accordance with their discretion on any
other matters which may properly come before the Meeting or any adjournment
thereof. Shareholders who are present at the Meeting may revoke their
proxies and vote in person if they so desire.
Only holders of record of the Company's Common Stock, $.01 par value,
at the close of business September 11, 1995 are entitled to vote at the
Annual Meeting. On that date, there were issued and outstanding 2,136,000
shares of Common Stock of the Company. Each outstanding share is entitled
to one vote at the Annual Meeting.
MATTERS TO BE ACTED UPON
1. Five (5) directors are to be elected to hold
office until the next Annual Meeting of
Shareholders and until their respective successors
are elected and qualified.
2. To consider and act upon a proposal to amend the
Company's 1986 Stock Option Plan to increase the
number of shares of Common Stock reserved for
issuance thereunder from 150,000 to 350,00 shares; and
3. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS
AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Certain Beneficial Owners
Set forth below is certain information concerning each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock on September 1, 1995:
<TABLE>
(S) <C>
<C>
Name and Address of Number of Shares
Percent
Beneficial Owner Owned
of Class <F>
William B. Finneran 733,285 <F1><F2>
33.0%
World Financial Center
34 Floor
New York, NY 10281
Edco Partners 182,053
8.2%
950 17th St.
Suite 1600
Denver CO 80202
John M. Sanzo 167,000
7.5%
P.O. Box 155
Barto, PA 19504
<FN>
<F1>
Includes currently exercisable stock options to purchase 60,000
shares.
<F2>
Does not include 4,740 shares owned by two Uniform Gifts to Minors Act
accounts, each account for the benefit of one of Mr. Finneran's
children: Mr. Finneran disclaims beneficial ownership of these shares
for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended, or otherwise.
</FN>
</TABLE>
Security Ownership of Management and Directors
The following table sets forth as of September 1, 1995, information
concerning the beneficial ownership of Common Stock by each Director of the
Company and all Directors and Officers of the Company as a group:
<TABLE>
<S> <C>
<C>
Name of Number of
Percentage
Beneficial Owner Shares Owned
of Class<F1>F
Gerald B. Cramer 88,000 <F3>
3.9%
John J. Delucca 28,000 <F3>
1.3%
William B. Finneran 733,285 <F1><F2>
33.0%
Jay J. Miller 18,000 <F3>
0.8%
All Directors and
Officers as a group
(6 in number) 867,285 <F4>
40.0%
<FN>
<F1>
Includes currently exercisable stock options to purchase 60,000
shares.
<F2>
Does not include 4,740 shares owned by two Uniform Gifts to Minors Act
accounts, each account for the benefit of one of Mr. Finneran's
children; Mr. Finneran disclaims beneficial ownership of these shares
for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended, or otherwise.
<F3>
Includes currently exercisable stock options to purchase 18,000
shares.
<F4>
Does not include an option to purchase 200,000 shares of Common Stock
granted to an officer, which would be immediately exercisable as to
66,666 shares upon approval of shareholders at this Meeting. See
APPROVAL OF AMENDMENT TO 1986 STOCK OPTION PLAN.
</FN>
</TABLE>
Change in Control
The Company knows of no contractual arrangement which may, at a
subsequent date, result in a change of control of the Company.
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of Directors to be elected
at the Annual Meeting at five. The shares represented by the proxies will
be voted in favor of the election as Directors of the persons named below
unless authority to do so is withheld. The Directors elected will hold
office for a term of one year or until their respective successors are duly
elected and qualify. If any nominee is not a candidate for election at the
Annual Meeting, an event which the Board of Directors does not anticipate,
the proxies will be voted for a substitute nominee and the others named
below.
<TABLE>
<S> <C>
<C> <C>
Director Director
Name Company Office(s)
Since Age
William B Finneran Chairman of the Board
1991 53
and Director
Gerald B. Cramer Director <F1>
1992 64
John J. Delucca Director <F2>
1991 52
Mary E. McCormack President and
- -- 41
Chief Executive Officer
Jay J. Miller Secretary and Director <F1>
1991 62
<FN>
<F1>
Member of the Compensation Committee.
<F2>
Member of the Audit Committee.
</FN>
</TABLE>
William B. Finneran is a Managing Director of Oppenheimer & Co., Inc.,
an investment banking firm, with which he has been associated since 1972.
Mr. Finneran is a Director of Champion Beverage, Inc., a beverage
manufacturer and retailer; Keystone Communications, Inc., a software
development company; National Planning Association, a non-profit advisory
board; and Covenant House, a non-profit charitable institution. Mr.
Finneran was elected Chairman of the Board and Chief Executive Officer of
the Company in November, 1991.
Gerald B. Cramer has been Chairman of Glenayre Technologies, Inc. and
its predecessor since 1986. Mr. Cramer has also been Chairman and Chief
Executive Officer of Cramer Rosenthal McGlynn, Inc., an investment
management firm, since 1973, and also serves as a director of OSHAP
Technologies, Ltd., a computer aided design/manufacturing technology
company, and First Western Corporation, a mortgage banking and servicing
company.
John J. Delucca is Senior Vice President and Treasurer of RJR Nabisco.
Mr. Delucca was Chief Financial Officer of the Hascoe Association, a
private investment company from January, 1991 to September, 1993, President
and Chief Financial Officer for The Lexington Group from October, 1990 to
January, 1991, Senior Vice President of Finance and Managing Director of
the Trump Group from May, 1988 to October, 1990, and Senior Vice President
of Finance for International Controls Corporation from April, 1986 to May,
1988. Mr. Delucca is a Director of Enzo Biochem, Inc., a genetic research
and laboratory company.
Mary E. McCormack was appointed President and Chief Executive Officer
of the Company on February 1, 1995. Prior to joining the Company, Ms.
McCormack was a Managing Director of Beechtree Capital Partners, Inc., a
boutique merchant banking firm which she co-founded in 1989. From 1983 to
1989, she served in a variety of capacities for the investment banking and
brokerage firm of Advest, Inc, most recently as Vice President-Corporate
Finance. Ms. McCormack is a Director of Star International Holdings, Inc.,
a manufacturer of commercial cooking appliances, and the Junior League of
Central Westchester, a non-profit charitable institution.
Jay J. Miller has been a practicing attorney in the State of New York
for more than 30 years. Mr. Miller is a director of Total-Tel USA
Communications, Inc., a provider of long distance telephone service, and
Vestro Natural Foods, Inc., a specialty food manufacturer and distributor,
and is currently serving as Chairman of the Board of Gulf USA Corporation,
a property and natural resources company in reorganization under Chapter 11
and a director of its affiliate, Gulf Resources Pacific Ltd., a New Zealand
property company. Mr. Miller was elected Secretary of the Company in 1991
and served briefly as Chairman of the Board during 1991.
Board of Directors
The Board of Directors held two meetings during the year ended
December 31, 1994. From time to time, the Board conferred informally. All
directors attended all meetings, except John J. Delucca, who did not attend
either meeting.
The Company's Audit and Compensation Committees each held one meeting
during 1994. The Board of Directors does not have a Nominating Committee.
Directors who are not executive officers of the Company each receive an
annual retainer of $5,000. Officers of the Company do not receive
additional compensation for attendance at Board of Director meetings or
committee meetings.
Required Shareholders' Vote
Assuming the presence of a quorum (a majority of the total issued and
outstanding shares of Common Stock of the Company), the favorable vote of
the holders of a plurality of the shares of the Company's stock present and
voting at the Annual Meeting for the election of each nominee is required
for his election.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and other named executives, as
well as the total compensation paid to each named executive for the
Company's two previous fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long-Term Compensation
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
Other
All
Annual
Restricted LTIP Other
Name and Compen- Stock
Optional Pay- Compen-
Principal Position Year Salary($) Bonus($) sation($)
Awards($) SAR's(#) outs($) sation($)
William B. Finneran 1994 50,000 -0- -0- -0-
-0- -0- -0-
Chairman 1993 50,000 -0- -0- -0-
-0- -0- -0-
1992 -0- 50,000 -0- -0-
-0- -0- -0-
John M. Sanzo 1994<F1 28,077 -0- -0- -0-
-0- -0- -0-
President 1993 100,962 -0- -0- -0-
-0- -0- -0-
1992 145,154 -0- -0- -0-
-0- -0- -0-
Jack V. Miller 1994 81,876 -0- -0- -0-
-0- -0- -0-
Chief Financial Officer 1993 -0- -0- -0- -0-
-0- -0- -0-
1992 -0- -0- -0- -0-
-0- -0- -0-
- ---------------
<FN>
<F1>
Resigned as President June 17, 1994.
</FN>
</TABLE>
Option/SAR Grants in Last Fiscal Year
There were no Options/SAR's awarded in the fiscal year ended December 31, 1994.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Options/SAR Values
The following table summarizes options and SAR's exercised during 1994 and
presents the value of unexercised options and SAR'sheld by the named executive
at December 31, 1994:
<TABLE>
<S> <C> <C> <C>
<C>
Number of
Value of
unexercised
unexercised
options/SAR's
options/SAR's
Shares at fiscal year
at fiscal
acquired Value end (#)
year end ($)
on realized exercisable (E)/
exercisable (E)/
Name exercise ($) unexercisable (U)
unexercisable (U)
William B. Finneran -0- -0- 25,000 E
37,500 E <F1>
17,500 E
26,250 E <F1>
17,500 U
26,250 U <F1>
<FN>
<F1>
Value is calculated by subtracting the exercise price from the fair market
value of the Common Stock on December 30, 1994
which was the last trade in 1994 as reported by NASDAQ.
</FN>
</TABLE>
Long-Term Incentive Plan-Awards in the Last Fiscal Year
There were no long-term incentive plan-awards made by the Company
during the year ended December 31, 1994.
Pension Plan
The Company has no pension plan for employees or directors.
Compensation Committee Report
The Compensation Committee has submitted the following report for
fiscal year 1994:
1994 continued the progress achieved in 1993. Profit increased
significantly due to the successful management of the Company's investment
portfolio as well as a continued reduction in the loss from the Company's
manufacturing business.
The Chief Executive Officer, William B. Finneran is not a full time
employee of the Company; however, he devotes considerable time to portfolio
management, the search for an acquisition and consideration of the
Company's current business operation. For 1994, Mr. Finneran received
compensation of $50,000, based upon his successful management of the
Company's investment of its excess cash and his other efforts on behalf of
the Company. In addition, he received an option during 1993 to purchase
35,000 shares at a price of $2.50 per share, 50% of which vested in 1994
and the balance in 1995. The Compensation Committee believes Mr.
Finneran's renumeration is low given his experience and the results
achieved.
Mr. John M. Sanzo served as President until his resignation in June,
1994. It is believed that his compensation was commensurate with the
services performed, the results achieved and Mr. Sanzo's background. He
also received an option in 1993 to purchase 18,000 shares at a price of
$4.00 per share, of which 50% vested in 1994 and the balance, which
otherwise would have vested in 1995, was fully vested in 1994 by the Board.
As a result of Mr. Sanzo's resignation, the Company engaged a
management search firm to find an executive skilled in acquisition
evaluation, structure and negotiation which culminated in the hiring in
early 1995 of Ms. Mary McCormack as President and Chief Executive Officer
under a 3 year employment agreement providing for base compensation of
$150,000 per year and the grant to her of an option, subject to
shareholders' approval, to purchase 200,000 shares of Common Stock.
Respectfully submitted,
Gerald B. Cramer
Jay J. Miller
Stock Performance Graph
The following table sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to the Company's shareholders during
the five year period ended December 31, 1994, as well as an overall stock
market index (S&P 500 Index) and the Company's peer group index (S&P
Electrical Equipment Industry Index):
APPROVAL OF AMENDMENT TO 1986 STOCK OPTION PLAN
Shareholders are being asked to approve an amendment to the 1986 Stock
Option Plan of the Company (the "Plan") to increase the aggregate number of
shares available for issuance under the Plan from 150,000 to 350,000
shares. The Company's Board of Directors approved the amendment to the
Plan, subject to shareholders' approval, on February 7, 1995. The purpose
of the amendment is to authorize sufficient shares under the Plan to permit
the grant to Ms. Mary E. McCormack, who was appointed President and Chief
Executive of the Company in February 1995, of a ten year option to purchase
200,000 shares, exercisable at a price of $4.00 per share as provided in
her employment agreement with the Company. The option, if approved by
shareholders, would vest forthwith as to 66,666 shares and as to 66,666 and
66,667 shares on February 1, 1996 and February 1, 1997, respectively. In
the event the amendment to the Plan were not approved, the Company would be
obligated to provide Ms. McCormack with alternate renumeration affording
her economic benefits substantially comparable to those which would have
been provided to her pursuant to the grant of the proposed option. On the
effective date of the grant of the proposed option, to wit, February 1,
1995, Common Stock of the Company was quoted in the over-the-counter market
at $5.00 low bid, $5.00 high asked. However, due to limited trading,
management believes the fair market value of the shares on the date of
grant was $4.00 per share, the exercise price of the proposed option.
As of September 1, 1995, there were no shares available for options
under the Plan, since 36,000 shares were previously issued upon exercise of
options and options to purchase 114,000 shares were currently outstanding.
General
The Plan provides for the granting of options to officers, directors
and key employees of the Company whose efforts contribute or may be
expected to contribute meaningfully to the Company's growth and success.
The aggregrate number of shares of Common Stock which may be granted
under the Plan is 150,000, subject to adjustment to reflect stock splits,
combinations, sub-divisions, recapitalizations, reorganizations and certian
other similar events. The Plan is not qualified under Section 401 (a) of
the Internal Revenue Code of 1986, as amended (the "Code") and is not
subject to the provisions of the Employment Retirement Income Security Act
of 1974 ("ERISA").
Administration
The Plan is administered by the Board of Directors of the Company (the
"Board"). The Board may select the persons to whom options are to be
granted, determine the number of shares to be covered by an option, the
time at which an option is to be granted, the option period, the
installments in which an option may be exercised and shall establish such
other provisions of the option agreement consistent with the Plan as the
Board of Directors deems necessary or desirable.
Eligibility
Officers, directors and key employees of the Company or any subsidiary
shall be eligible to receive options pursuant to the Plan. No incentive
stock option (ISO) shall be granted under the Plan to an employee who at
the time such option is granted owns, directly or indirectly, Common Stock
of the Company possessing more than 10% of the total combined voting power
of all classes of stock of the Company or its parent or any subsidiary
("10% Stockholders") unless the option price is at least 110% of the fair
market value of such stock on the date of grant and the exercise period of
such option shall not exceed five years from the date of grant.
Maximum Allotment of Options
Under the Plan, there is no stated maximum number of shares which may
be optioned to any eligible person.
Option Price and Period; Exercise Provisions
The purchase price per share of Common Stock issuable upon exercise of
an option shall be determined by the Board of Directors; provided, however,
that (i) in the case of an ISO, the exercise price shall not be less than
100% (or 110% with respect to an ISO granted to a 10% Stockholder) of the
fair market value of such stock on the day the stock is granted and (ii) in
the case of a non-statutory option, the exercise price shall not be less
than 85% of the fair market value of such stock on the day the option is
granted, in each instance as determined by the Board of Directors.
For purposes of the foregoing, the fair market value of the Common
Stock on any date shall be, if such stock is listed on a national
securities exchange, the mean between the highest and lowest reported sale
prices of the stock, on such exchange or, if such stock is quoted in the
National Market System of the National Association of Securities Dealers,
Inc., the mean between the lowest bid and highest asked prices of such
Common Stock reported by the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System, in each case at the close of
business on such date, or if such Common Stock is not quoted on such date,
then on the date on which such Common Stock was quoted most immediately
prior thereto or if such Common Stock is not quoted on the NASDAQ System,
the price determined in good faith by the Board of Directors.
Each option granted under the Plan shall be exercisable at such time
or times and during such period as shall be set forth in the instrument
evidencing such option; provided, however, that no option granted under the
Plan shall have a term in excess of 10 years (5 years in the case of an ISO
granted to a 10% Stockholder) from the date of grant. To the extent that
an option to purchase shares is not exercised by an optionee when it
becomes initially exercisable, it shall not expire but shall be carried
forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period.
Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of such options, (ii)
shares of Common Stock of the Company owned by the optionee having a fair
market value equal in amount to the exercise price of the options being
exercised or (iii) any combination of (i) and (ii). The fair market value
of any shares of the Company's Common Stock which may be delivered upon
exercise of an option shall be determined by the Board of Directors.
The Company's obligation to deliver shares upon the exercise of any
non-statutory option granted under the Plan shall be subject to the
optionee's satisfaction of all applicable Federal, State and local income
and employment tax withholding requirements.
Nontransferability of Options
No option granted under the Plan shall be assignable or transferable
by the option holder, either voluntarily or by operation of law, except by
will or the laws of descent and distribution. During the life of the
recipient, the option shall be exercisable only by the grantee.
Effect of Termination of Employment or Death
If an optionee ceases to be employed by the Company or one of its
subsidiaries for any reason, including retirement but other than death, any
option granted to such optionee under the Plan shall immediately terminate;
provided, however, that any portion of such option which was otherwise
exercisable on the date of termination of the optionee's employment may be
exercised within the three-month period following the date on which the
optionee ceased to be so employed, but in no event after the expiration of
the exercise period. Any such exercise may be made only to the extent of
the number of shares subject to the option which were purchasable on the
date of such termination of employment. If the optionee dies during such
three-month period, the option shall be exercisable by the optionee's
personal representatives, heirs or legatees to the same extent and during
the same period that the optionee could have exercised the option on the
date of death. If any optionee dies while an employee of the Company or
any subsidiary of the Company, any option granted to such optionee under
the Plan shall be exercisable by the optionee's personal representatives,
heirs or legatees for the purchase of that number of shares and to the same
extent that the optionee could have exercised the option on the date of
death. The option or any unexercised portion thereof shall terminate
unless so exercised prior to the earlier of the expiration of six months
from the date of such death or the expiration of the exercise period.
Amendment of the Plan
The Board of Directors may at any time and from time to time modify or
amend the Plan in any respect, except that without the approval of the
shareholders of the Company, the Board of Directors may not (a) materially
increase the benefits accruing to individuals who participate in the Plan,
(b) increase the maximum number of shares which may be issued under the
Plan (except for permissible adjustments provided in the Plan) or (c)
materially modify the requirements as to eligibility for participation in
the Plan. The termination or any modification or amendment of the Plan
shall not, without the consent of an optionee, affect rights under an
option previously granted. With the consent of the optionee affected, the
Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors reserves the right to
amend or modify the terms and provisions of the Plan and any outstanding
options under the Plan to the extent necessary to qualify any or all
options under the Plan for such favorable Federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded ISO's
under Section 422 of the Internal Revenue Code.
Rights as a Shareholder
The holder of an option shall have no rights as a shareholder with
respect to any shares covered by an option until the issuance to said
person of a certificate for such stock. Except for the adjustments
provided in the Plan for stock dividends, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
Federal Income Tax Consequences
Non-Statutory Stock Options
The granting of a non-statutory stock option does not produce taxable
income to the recipient or a tax deduction to the Company. Taxable
ordinary income will be recognized by the holder at the time of exercise in
an amount equal to the excess of the fair market value of the shares
purchased at the time of such exercise over the aggregate option price.
The Company will be entitled to a corresponding Federal income tax
deduction. Upon a subsequent taxable disposition of the shares, the
optionee will generally recognize a taxable capital gain or loss based upon
the difference between the per share fair market value at the time of
exercise and the per share selling price. The taxable income resulting
from the exercise of an option will constitute wages subject to the
withholding of income tax and the Company will be required to make whatever
arrangements are necessary to insure that funds equalling the amount of tax
required to be withheld are available for payment. The tax basis for the
stock acquired is the option price plus the taxable income recognized.
Incentive Stock Options
An optionee will not recognize any taxable income at the time an ISO
is granted or exercised and the Company will not be entitled to a Federal
income tax deduction at that time. The excess of the fair market value of
the shares at the time of exercise over the aggregate option price will be
an adjustment to alternative minimum taxable income for purposes of the
Federal "alternative minimum tax" at the date of exercise. If the optionee
holds the shares acquired upon exercise of the ISO for two years after the
date the option as granted and one year after the acquisition of such
shares, the difference between the aggregate option price and the amount
realized upon disposition of the shares will constitute a long-term capital
gain or loss, as the case may be, and the Company will not be entitled to a
Federal income tax deduction. If the shares are disposed of in a sale,
exchange or other "disqualifying disposition" within two years after the
date of grant or within one year after date of exercise, the optionee will
realize taxable ordinary income in an amount equal to the excess of the
fair market value of the shares at the time of exercise over the aggregate
option price. Under proposed tax regulations, however, it would appear
that where stock is subject to a substantial risk of forfeiture (which
would occur if the employee is subject to Section 16(b) of the Exchange
Act), the relevant date for determining the amount of ordinary income would
be the date six months thereafter (but in no event may such amount be
greater than the sales price). The Company will be entitled to a Federal
income tax deduction equal to such amount.
Special Rules
To the extent an optionee pays all or part of the option price of a
non-statutory Stock Option by tendering shares of Common Stock owned by the
optionee, the tax consequences described above apply except that the number
of shares received upon such exercise which is equal to the number of
shares surrendered in payment of the option price shall have the same tax
basis and holding period as the shares surrendered. The additional shares
received upon such exercise have a tax basis equal to the amount of
ordinary income recognized on such exercise and a hold period which
commences on the date of recognition of such income. Under proposed
Treasury regulations, if an optionee exercises an ISO by tendering shares
previously acquired on the exercise of an ISO, a disqualifying disposition
may occur and the optionee may recognize income and be subject to other
basis allocation and holding period requirements.
Accounting Treatment
Option grants with exercise price less than fair market value of the
option shares on the date of grant will give rise to compensation expense
equal to the amount of the discount. Such expense will be accrued as the
shares purchasable under the option vest in the optionee. Option grants at
fair market value on the grant date will not result in any change to the
Company's earnings. The number of outstanding options may, however, be a
factor in determining earnings per share.
Should a FASB exposure draft on the compensatory treatment of stock
option grants become effective, then all options granted after such
effective date (currently retroactive to January 1, 1994) with an exercise
price equal to the fair market value of the option shares on the grant date
will be subject to footnote disclosure in the Company's financial
statements. Such footnote would reflect a reduction in the Company's
reported earnings which would have arisen had the value of the option been
recorded as a compensation expense. Commencing in 1997, all such option
grants would result ina a direct charge to the Company's reported earnings.
Required Shareholders
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock is required for approval
of the proposed Amendment to the Plan. The Board of Directors unanimously
recommend a vote FOR the adoption of the proposed Amendment.
PROPOSALS OF SHAREHOLDERS FOR 1996 ANNUAL MEETING
Proposals of shareholders intended to be presented for action at the
1996 Annual Meeting of Shareholders must be received at the Company's
offices no later than May 15, 1996 to be considered for inclusion in the
Company's Proxy Statement and form of proxy relating to the meeting. The
terms and conditions of Rule 14a-8 under the Securities Exchange Act of
1934 will apply to any such submission.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December
31, 1994, including financial statements (the "Annual Report"), was mailed
to shareholders on or about September 12, 1995. No part of such Annual
Report shall be regarded as proxy soliciting material or a communication by
means of which any solicitation was being or is to be made.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young, which firm has served as auditor for the Company's
fiscal year ended December 31, 1994, has indicated that it expects to have
a representative present at the Annual Meeting. The representative will be
afforded the opportunity to make a statement, if he desires, and will be
available to appropriate shareholder questions.
VOTING AND SOLICITATION
The solicitation of proxies in the accompanying form is made by the
Board of Directors, and the cost thereof will be borne by the Company. The
Company may solicit proxies by mail, telephone, or telegraph. Brokerage
firms, custodians, banks, trustees, nominees, or other persons holding
shares in their names, will be reimbursed for their reasonable expenses in
forwarding proxy material to their principals.
As the date of this Proxy Statement, the Board of Directors is not
aware of any other matters to be presented at the meeting, but if any other
matters properly come before the meeting, it is intended that the persons
voting the accompany proxy will vote the shares represented thereby in
accordance with their best judgment.
It is important that proxies be returned promptly. Therefore, whether
or not you plan to attend in person, you are urged to execute and return
your proxy, to which no postage need be affixed if mailed in the United
States.
By Order of the Board of Directors.
Jay J. Miller,
Secretary
September 12, 1995
