<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LDI CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LDI CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
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<PAGE> 2
[LDI CORPORATION LOGO]
LDI CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 6, 1995
Notice is hereby given that the annual meeting of stockholders of LDI
Corporation (the "Company") will be held at the Hilton Cleveland South, 6200
Quarry Lane (Route I-77 at Rockside Road), Independence, Ohio, on Friday,
October 6, 1995, at 10:00 a.m. Eastern daylight time, for the following
purposes:
1. To elect two directors, each to serve for a term of three years
and until his successor is duly elected and qualified;
2. To approve the Company's stock option plan for non-employee
directors;
3. To approve an amendment to the Company's employee stock option
plan; and
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on August 17,
1995, will be entitled to notice of and to vote at said meeting or any
adjournments thereof.
By Order of the Board of Directors
FRANK G. SKEDEL
Executive Vice President and Secretary
August 29, 1995
- --------------------------------------------------------------------------------
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE> 3
[LDI CORPORATION LOGO]
LDI CORPORATION
4770 Hinckley Industrial Parkway
Cleveland, Ohio 44109
Proxy Statement
_______
This proxy statement is furnished in connection with the solicitation of
proxies for use at the annual meeting of stockholders of LDI Corporation, a
Delaware corporation (the "Company"), to be held on Friday, October 6, 1995, at
10:00 a.m., Eastern daylight time, at the Hilton Cleveland South, 6200 Quarry
Lane (Route I-77 at Rockside Road), Independence, Ohio, and at any adjournments
thereof. This statement and the accompanying notice and proxy, together with
the Company's Annual Report to Stockholders for the year ended January 31,
1995, are first being sent to stockholders on or about August 29, 1995.
The close of business on August 17, 1995, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting. At that date, the Company had outstanding 6,763,957 shares of
common stock, $.01 par value, each of which will be entitled to one vote.
ELECTION OF DIRECTORS
At the meeting, shares of common stock represented by proxies, unless
otherwise specified, will be voted for the election of the two nominees
hereinafter named, each to serve for a term of three years expiring at the
Annual Meeting of Stockholders to be held in 1998 and until his successor is
duly elected and qualified. If, by reason of death or other unexpected
occurrence, either or both of the nominees should not be available for
election, the proxies will be voted for the election of such substitute
nominee(s) as the Board of Directors may propose. In accordance with the
By-Laws of the Company, the Board of Directors has increased the number of
directors from six to eight. One vacancy will remain in the Board, in Class II
(term expiring in 1998).
The reason for fixing the number of directors at a higher number than
those to be elected is that the Company believes it desirable to have the
vacancy available to be filled by the directors should a person who
<PAGE> 4
could make a valuable contribution as a director become available during the
year. The Company intends to add another outside director to the Board of
Directors when a suitable person is identified and has agreed to serve, but no
candidate has been considered and approved by the Board. Although the By-Laws
of the Company give the Board of Directors the right to increase the number of
directors at any time (up to a total Board of 15 members) and to fill the
resulting vacancies, the Board considered it preferable to specifically create
this vacancy prior to the Annual Meeting of Stockholders and to advise the
stockholders that the Board expects to appoint an additional director.
Proxies cannot be voted at the meeting for more than two persons. The
holders of the Company's common stock have no cumulative voting rights in the
election of directors. Broker non-votes and abstaining votes will not be
counted in favor of, or against, the election of any nominee. Directors are
elected by a plurality vote, with the two candidates receiving the highest
number of votes being elected. The following information is set forth with
respect to each person nominated for election as a director, each of whom is
currently a director, and with respect to the directors of the Company whose
terms of office will continue after the meeting.
<TABLE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<CAPTION>
OFFICES HELD AND DIRECTOR TERM
NAME AGE BUSINESS EXPERIENCE SINCE EXPIRES
---- --- ------------------- ----- -------
<S> <C> <C> <C> <C>
Scott S. Cowen (1) 48 Dean of the Weatherhead School of 1989 1998
Management at Case Western Reserve
University since July 1984.
Thomas A. Cutter 53 Member of Capstone Management Ltd., a 1986 1998
privately-owned real estate investment
and management company, since October
1994; Vice Chairman and Senior
Executive Vice President of the Company
from February 1989 through May 1994;
Senior Vice President of Leasing
Dynamics, Inc. from December 1983 to
May 1991.
</TABLE>
- 2 -
<PAGE> 5
<TABLE>
DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
<CAPTION>
OFFICES HELD AND DIRECTOR TERM
NAME AGE BUSINESS EXPERIENCE SINCE EXPIRES
---- --- ------------------- ----- -------
<S> <C> <C> <C> <C>
Floyd S. Robinson (2) 48 President and Chief Executive Officer 1994 1997
of the Company since August 1994;
President-Business Equipment Finan-cing
of USL Capital from January 1992 to
July 1994; President and Chief
Operating Officer of Fleet Credit
Corporation from 1986 to January 1992.
Robert S. Kendall 56 Chairman, President and Director of CPS 1986 1996
Capital, Ltd., a privately-owned
mergers and acquisitions and
institutional investments company,
since September 1994; Chairman of the
Company since February 1989; Chief
Executive Officer of the Company from
February 1989 to July 1994; Chairman
of Leasing Dynamics, Inc. from July
1989 to May 1991.
Michael R. Kennedy 53 Chairman, Chief Executive Officer and 1986 1996
Director of MRK Technologies, Ltd., a
privately-owned computer sales and
service company, since June 1994;
President and Chief Operating Officer
of the Company from February 1989 to
May 1994; Executive Vice President of
Leasing Dynamics, Inc. from February
1972 to May 1991.
Norton W. Rose (3) 66 Vice Chairman and Director of Blue 1994 1997
Coral, Inc., a privately-owned consumer
chemical company, and Chairman and
Director of Premier Travel Partners, a
privately-owned
</TABLE>
- 3 -
<PAGE> 6
<TABLE>
<CAPTION>
OFFICES HELD AND DIRECTOR TERM
NAME AGE BUSINESS EXPERIENCE SINCE EXPIRES
---- --- ------------------- ----- -------
<S> <C> <C> <C> <C>
travel management company, since 1991;
Vice President of Creativity Art
Activities Inc., a privately-owned toy
company, since January 1994; Chairman
of Action Auto Rental, Inc., an
automobile leasing company, from
November 1991 to January 1993; Vice
Chairman of Progressive Corporation, a
liability and casualty insurance
company, from 1985 to August 1990.
William R. Seelbach (4) 47 Chairman and Chief Executive Officer of 1995 1996
Inverness Castings Group, an
independent die casting company, since
1988.
<FN>
- ---------------
(1) Mr. Cowen is also a director of American Greetings Corporation, Cyberex Corporation, FabriCenters of America, Inc.,
Premier Industrial Corporation, Society Corporation, Forest City Enterprises, Inc. and Weatherhead Industries, Inc.
and is on the Board of Advisors of Charles Fradin, Inc./Copley Industries.
(2) Mr. Robinson is also a director of Rockford Industries, Inc.
(3) Mr. Rose is also a director of Telxon Corporation, Cohesant Technologies and Specialty Chemical Resources, Inc. Action
Auto Rental, Inc. filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code on January 28, 1993.
(4) Mr. Seelbach is also a director of Lumitex, Inc. He was elected a director of the Company on August 2, 1995 to fill the
Class III vacancy created by an increase in the number of directors. An involuntary petition under Chapter 11 of the
Bankruptcy Code was filed against Inverness Castings Group on March 23, 1994, which petition was dismissed by the court on
April 14, 1994.
</TABLE>
THE BOARD OF DIRECTORS; COMMITTEES AND ATTENDANCE
The Board of Directors held eight meetings during the year ended
January 31, 1995. The compensation committee, charged with reviewing and
establishing compensation policies for the Company's executive officers,
currently consists of Messrs. Cowen and Rose. Messrs. Cowen and Rose also are
the current members of the Board's audit committee, which is charged with (i)
assuring that appropriate organization, policies, internal controls and systems
are in place with respect to audit, accounting and financial reporting matters;
(ii) providing an independent channel to receive appropriate communication from
employees
- 4 -
<PAGE> 7
and the Company's independent auditors; (iii) reviewing the scope and
performance of the Company's annual financial audit and recommending to the
Board the retention of the Company's independent auditors; and (iv) performing
such other functions as are assigned to it by the Board of Directors from time
to time. The compensation committee does not hold formal meetings, but
frequently met on an informal basis and acted by written consent during the
last fiscal year. The audit committee met three times during the last fiscal
year. During the year, each Director attended at least 75% of the meetings of
the Board and of the committees on which he serves.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 31, 1995, certain
information with regard to the beneficial ownership of the Company's common
stock by each holder of more than five percent of the Company's outstanding
common stock, each director of the Company, each nominee for election as a
director of the Company, each of the current executive officers of the Company
set forth in the Summary Compensation Table and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
---------------- ---------------------- --------
<S> <C> <C>
Floyd S. Robinson 15,000 (2) *
Scott S. Cowen 15,633 (3)(4) *
Thomas A. Cutter 876,900 (5)(6) 12.96%
Robert S. Kendall 1,122,168 (5)(7) 16.59%
Michael R. Kennedy 1,011,262 (5)(8) 14.95%
Norton W. Rose 2,500 (4) *
William R. Seelbach 0 *
Frank G. Skedel 40,848 (9)(10) *
Mont C. Hollingsworth 23,341 (9)(10) *
John S. Rainsberger 9,560 (9) *
Dimensional Fund Advisors Inc. 419,876 (11) 6.21%
Olympus Private Placement Fund, L.P. 1,574,803 (12) 18.89%
The TCW Group, Inc. 579,500 (13) 8.57%
Tweedy, Browne Company L.P. and Related Parties 464,720 (14) 6.87%
All Directors and executive
officers as a group (13 persons) 3,130,457 (15) 45.86%
<FN>
- ------
* Less than 1%
(1) Beneficial ownership includes having or sharing voting power or dispositive power of the securities.
</TABLE>
- 5 -
<PAGE> 8
(2) Consists of shares originally issued as restricted stock, all of which
vested on July 19, 1995.
(3) Includes 10,500 shares issuable upon the exercise of options to
purchase common stock. Also includes 1,050 shares held by Marjorie
Cowen, his spouse, as to which shares Mr. Cowen disclaims any
beneficial ownership.
(4) Does not include shares issuable upon the exercise of options to
purchase common stock granted pursuant to the Stock Option Plan for
Non-Employee Directors being submitted to the stockholders for
approval.
(5) Messrs. Kendall, Kennedy and Cutter and certain other stockholders of
the Company are parties to a Stockholders Agreement (the "Stockholders
Agreement") pursuant to which the parties thereto have agreed to vote
all of the shares held by them in the same manner as a majority of the
shares held by Messrs. Kendall, Kennedy and Cutter. An aggregate of
3,351,520 shares of common stock, or approximately 49.82% of the shares
outstanding, are subject to the Stockholders Agreement.
(6) Includes 766,964 shares held by Margaret Cutter, his spouse, and 49,215
shares held by a foundation of which Mr. Cutter is trustee, as to all
of which shares he disclaims any beneficial ownership.
(7) Includes 1,050,000 shares held by CPS Capital, Ltd., of which Mr.
Kendall is the principal member. Also includes 56,471 shares held by a
foundation of which Mr. Kendall is trustee, as to which shares he
disclaims beneficial ownership.
(8) Includes 8,000 shares held by a foundation of which Mr. Kennedy is
trustee. Does not include 96,906 shares held of record by National
City Bank as trustee of an irrevocable trust established by Mr. Kennedy
for the benefit of his children. Mr. Kennedy disclaims beneficial
ownership of all of such shares.
(9) Includes shares held under the LDI Corporation Retirement Savings Plan.
Also includes 27,410 shares of common stock issuable to Mr. Skedel,
13,592 shares issuable to Mr. Hollingsworth and 9,560 shares issuable
to Mr. Rainsberger upon the exercise of options to purchase common
stock granted pursuant to the LDI Corporation Employee Stock Option
Plan, which options are exercisable within 60 days of July 31, 1995.
(10) Includes 7,500 shares of restricted stock issued to Mr. Skedel and
4,000 shares of restricted stock issued to Mr. Hollingsworth. Such
shares will vest in equal installments in June 1996 and June 1997.
(11) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 419,876 shares, all
of which shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of
the DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares. This information is as of December 31, 1994 and was
obtained from a Schedule 13G field by Dimensional with the Securities
and Exchange Commission on or about February 9, 1995.
(12) Consists of shares issuable upon the exercise of outstanding warrants
to purchase common stock.
- 6 -
<PAGE> 9
(13) This information was obtained from a Schedule 13G filed by The TCW
Group, Inc. with the Securities and Exchange Commission on or about
February 10, 1995.
(14) This information was obtained from a Schedule 13G filed by Tweedy,
Browne Company L.P. ("TBC"), TBK Partners, L.P. and Vanderbilt
Partners, L.P. with the Securities and Exchange Commission on or about
July 13, 1995. Includes shares held by TBC in customer accounts, as to
which shares all three parties disclaim beneficial ownership.
(15) Includes shares held under the LDI Corporation Retirement Savings Plan.
Includes 52,402 shares of common stock issuable to all executive
officers as a group upon the exercise of options to purchase common
stock granted pursuant to the LDI Corporation Employee Stock Option
Plan, which options are exercisable within 60 days of July 31, 1995.
Includes 21,500 shares of restricted stock issued to all executive
officers as a group, which shares will vest in equal installments in
June 1996 and June 1997.
The address of each of the persons shown in the preceding table who are
the beneficial owners of more than five percent of the outstanding shares of
the Company's outstanding common stock, as of July 31, 1995, is as follows:
Mr. Kendall and CPS Capital, Ltd., Suite 1510, 1801 East Ninth Street,
Cleveland, Ohio 44114; Mr. Kennedy, 30700 Carter Street, Solon, Ohio 44139; Mr.
Cutter, 29299 Clemens Road, Suite 1K, Westlake, Ohio 44145; Olympus Private
Placement Fund, L.P., Metro Center, One Station Place, Stamford, Connecticut
06902; Dimensional Fund Advisors Inc., 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401; The TCW Group, Inc., 865 South Figueroa Street, Los
Angeles, California 90017; and Tweedy, Browne Company L.P., 52 Vanderbilt
Avenue, New York, New York 10017.
The Company is required to identify any officer or director who failed
to timely file with the Securities and Exchange Commission a required report
relating to ownership and changes in ownership of the Company's equity
securities. Based on material provided to the Company, it believes that during
the year ended January 31, 1995, all such filing requirements were complied
with by its officers and directors, except that the Form 3 filed for Mr.
Robinson upon his joining the Company reported only his initial stock options
and failed to include shares of restricted stock awarded to him. This omission
was discovered in the preparation of his annual Form 5, and the restricted
stock was included on that Form. In addition, annual Form 5 reports were filed
late for four executive officers to reflect shares allocated to them in the LDI
Stock Fund of the LDI Corporation Retirement Savings Plan.
- 7 -
<PAGE> 10
<TABLE>
EXECUTIVE COMPENSATION
The following information is set forth with respect to the Company's Chief Executive Officer and certain other persons who served
as executive officers of the Company during the year ended January 31, 1995.
I. SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
------
OTHER RESTRICTED
YEAR ANNUAL STOCK OPTIONS/ ALL OTHER
ENDED SALARY BONUS COMPENSATION AWARDS SARS COMPENSATION
NAME AND PRINCIPAL POSITION(1) JAN. 31 ($) ($) ($)(2) ($) (#) ($)(5)
------------------------------ ----- -------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C>
Floyd S. Robinson 1995 188,970 50,000 53,172 54,375 (3) 250,000(4) - 0 -
President and Chief
Executive Officer
Robert S. Kendall 1995 173,131 - 0- N/A - 0 - - 0 - 53,318
Chairman of the Board and 1994 371,153 65,025 N/A - 0 - 10,000 6,189
former 1993 275,000 337,450 N/A - 0 - - 0 - 17,470
Chief Executive Officer
Frank G. Skedel 1995 160,000 50,000 27,322 - 0 - - 0 - 5,098
Executive Vice President 1994 160,000 46,000 N/A - 0 - 10,000 4,701
and 1993 160,000 49,500 N/A - 0 - - 0 - 15,059
Chief Financial Officer
John S. Rainsberger 1995 172,352 16,817 N/A - 0 - - 0 - 2,565
Vice President--Sales
Mont C. Hollingsworth 1995 100,275 37,500 N/A - 0 - - 0 - 2,578
Senior Vice President and 1994 93,934 21,000 N/A - 0 - 10,000 2,506
Controller 1993 98,798 19,000 N/A - 0 - - 0 - 8,325
Benjamin W. Cannon 1995 122,195 129,000 N/A - 0 - - 0 - 6,025
Former Vice President and 1994 199,236 31,000 N/A - 0 - 10,000 5,115
General Counsel 1993 168,152 23,250 N/A - 0 - - 0 - 10,876
William G. Zenallis 1995 160,000 30,986 N/A - 0 - - 0 - 5,083
Vice President--National 1994 168,101 36,074 N/A - 0 - 10,000 5,022
Sales 1993 159,660 - 0 - N/A - 0 - - 0 - 12,374
<FN>
- ----------
(1) Because of executive changes during the year ended January 31, 1995, more than five officers are included in this table.
Messrs. Robinson and Kendall both served as Chief Executive Officer during the year. Messrs. Skedel, Rainsberger and
Hollingsworth are the next three highest paid persons who were executive officers at the end of the fiscal year. Messrs.
Cannon and Zenallis were executive officers during the year and would have been among the five highest paid executive
officers if they had remained as executive officers at the end of the year. Because Messrs. Robinson and Rainsberger were
not executive officers of the Company during the fiscal years ended January 31, 1994 or 1993, no information is provided
for them as to those years.
(2) The amount set forth in this column for Mr. Robinson consists almost entirely of relocation expenses of Mr. Robinson and
his family paid or reimbursed by the Company. The amount for Mr. Skedel
</TABLE>
- 8 -
<PAGE> 11
represents club membership expenses paid or reimbursed by the Company.
Certain other executive officers were reimbursed for club membership
expenses and other business perquisites in amounts that are less than
the reporting thresholds established by the Securities and Exchange
Commission.
(3) Consists of 15,000 shares originally issued as restricted stock, all of
which vested on July 19, 1995. The value of the shares is calculated
at the value on January 31, 1995.
(4) The options were granted to Mr. Robinson on July 19, 1994 and have an
exercise price of $3.75 per share. They will vest in 20% installments
on July 19 in each of the years 1995 through 1999, except that they
will vest 100% upon any change in control (as defined) of the Company.
(5) Consists of amounts contributed by the Company under the LDI
Corporation Retirement Savings Plan and the LDI Corporation Pension
Plan and Trust, except that the amount for Mr. Kendall includes
severance payments to Mr. Kendall of $52,877 during the year ended
January 31, 1995 (see "Employment Agreements and Arrangements with
Respect to Severance Compensation").
<TABLE>
<CAPTION>
II. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- -------------------------------------------------------------------------------------- ---------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME (1) GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------------- --------------- --------------- ------------ ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Floyd S. Robinson 250,000 100% $3.75 7/20/2003 $447,625 $1,072,125
<FN>
(1) No options were granted during the year ended January 31, 1995 to any of the other persons named in the
Summary Compensation Table.
</TABLE>
- 9 -
<PAGE> 12
<TABLE>
<CAPTION>
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS
AT JANUARY 31, 1995 (#) AT JANUARY 31, 1995 ($)
-------------------------------------- -----------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Floyd S. Robinson - 0 - 250,000 - 0 - - 0 -
Robert S. Kendall - 0 - - 0 - - 0 - - 0 -
Frank G. Skedel 27,410 13,250 - 0 - - 0 -
John S. Rainsberger 9,560 9,890 - 0 - - 0 -
Mont C. Hollingsworth 13,592 9,575 - 0 - - 0 -
Benjamin W. Cannon - 0 - - 0 - - 0 - - 0 -
William G. Zenallis 7,880 9,470 - 0 - - 0 -
</TABLE>
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an employee of the
Company receives an annual director's fee of $16,000 ($32,000 for the
Chairman). In addition, each such director receives $1,000 ($2,000 for the
Chairman) for attendance at each meeting of the Board and each meeting of a
committee thereof not held in conjunction with a Board meeting, plus
reimbursement of expenses incurred in attending any such meeting.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Company's objective in developing its compensation plans for its
executive officers is to reflect, to the extent most equitable, the best
interests of both the Company's stockholders and the Company's executive
officers, and to align their financial interests in the success of the Company.
During the fiscal year ended January 31, 1995, cash bonuses (but not
stock options or restricted stock) were awarded to certain senior managers and
executives in accordance with the incentive plans described below. Additional
cash bonuses were awarded to certain executives and other employees of the
Company based initially upon the recommendations of their supervisors and, in
many cases, upon the extraordinary time and efforts such individuals had
expended in connection with the Company's Strategic Business Plan and related
matters over the course of the year. Certain employees were also recognized
for significant achievements throughout the year unrelated to the Strategic
Business Plan. No compensation was paid during the fiscal year ended January
31, 1995 under the incentive component of the plan in effect for Messrs.
Kendall, Kennedy and Cutter prior to the entering into of the severance
agreements with them described below under "Employment Agreements and
Arrangements with Respect to Severance Compensation."
The compensation of Mr. Robinson, the President and Chief Executive
Officer, is determined in accordance with his employment agreement with the
Company (see "Employment Agreements and
- 10 -
<PAGE> 13
Arrangements with Respect to Severance Compensation"). The salary and benefits
provided for in that agreement were structured to permit the Company to attract
a highly qualified individual with extensive experience in the equipment
leasing industry. As with other executives of the Company, the Compensation
Committee of the Board of Directors recommended that a substantial portion of
Mr. Robinson's compensation be in the form of stock options, restricted stock
and bonuses, thus tying his total compensation to his performance and the
resulting success of the Company.
The Company currently has incentive programs under which stock can be
awarded to executive officers as well as to other employees. These programs
are the LDI Corporation Employee Stock Option Plan and the LDI Corporation
Restricted Stock Plan. The Stock Option Plan is described elsewhere in this
proxy statement (see "Proposal to Approve the Amendment of the Employee Stock
Option Plan").
Effective May 1, 1994, the Compensation Committee adopted two incentive
compensation plans setting forth parameters for the granting of cash bonuses,
stock options and restricted stock to certain senior executives. The
Performance and Long-Term Incentive Plan applies to from ten to twenty key
senior managers of the Company, and at July 31, 1995, twelve managers were
covered. Under this plan, each covered employee is eligible for an annual cash
bonus, payable quarterly, of 5% to 20% of the employee's base annual salary,
depending upon the achievement of certain quarterly objectives as approved by
the President and Chief Executive Officer. Each covered employee will also be
granted, during the current fiscal year, options to purchase up to 6,000 shares
of Common Stock of the Company, with the options vesting over a three-year
period. The Compensation Committee will reevaluate the granting of further
options annually.
The second plan, the Senior Executive Incentive Program, applies to up
to ten key senior executives. At July 31, 1995, four executive officers were
covered. Under this plan, each covered executive is eligible to receive an
annual cash bonus of up to 35% of base annual compensation, annual grants of
restricted stock of up to 10,000 shares, vesting over a two-year period, and
annual grants of options to purchase between 10,000 and 20,000 shares of Common
Stock, vesting over a three-year period. The amounts awarded are based upon
the Company's achievement of performance goals (such as return on equity,
return on assets, cash flow and profit) as recommended by the President and
Chief Executive Officer (who is not covered by the Senior Executive Incentive
Program) and approved by the Compensation Committee.
The Compensation Committee believes that these two incentive
compensation plans, as well as the other incentive and bonus arrangements
available to employees of the Company, satisfy the goal of providing the
Company's key employees with clear incentives to perform their individual jobs
to the best of their abilities and, in the case of the executives under the
Senior Executive Incentive Program, to aggressively and responsibly play a key
role in the success of the Company.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Scott S. Cowen
Norton W. Rose
- 11 -
<PAGE> 14
<TABLE>
PERFORMANCE GRAPH
The following graph compares the performance of the Company's common
stock with that of the NASDAQ composite stock index, a line-of-business peer
group and the line-of-business peer group formerly used by the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG LDI CORPORATION, THE NASDAQ STOCK MARKET INDEX AND PEER GROUPS
<CAPTION>
1/90 1/91 1/92 1/93 1/94 1/95
<S> <C> <C> <C> <C> <C> <C>
LDI CORPORATION 100 75 109 51 54 27
OLD PEER GROUP 100 103 158 179 204 195
NEW PEER GROUP 100 103 93 76 117 117
NASDAQ STOCK MRKT - US 100 102 89 80 122 128
<FN>
(1) The comparison of total return on investment (change in year-end stock price plus reinvested
dividends) for each of the periods assumes that $100 was invested on January 31, 1990 in each
of LDI Corporation, the NASDAQ Composite Index and the two peer groups, with the investment
weighted on the basis of market capitalization. The total cumulative dollar returns shown on
the graph represent the value that such investments would have had on January 31, 1995.
(2) The line-of-business peer group (the "new peer group") consists of Comdisco, Inc., Amplicon, Inc.,
Capital Associates, Inc., Leasing Solutions and Sunrise Leasing, each of which is engaged in the
equipment leasing industry as a substantial part of its business. The line-of-business peer group
used by the Company in previous years (the "old peer group") consisted of Comdisco, Amplicon,
Capital Associates, Electro Rent Corp. and HPSC, Inc.
</TABLE>
- 12 -
<PAGE> 15
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS WITH
RESPECT TO SEVERANCE COMPENSATION
The Company has entered into an employment agreement with Mr. Robinson
providing for an annual base salary of $350,000, a bonus of $50,000 payable
upon commencement of his employment and a guaranteed bonus of $100,000 in
respect of the fiscal year ended January 31, 1995. For subsequent fiscal
years, Mr. Robinson will be entitled to participate in a bonus plan providing
for an annual bonus based upon performance goals to be determined by the Board
of Directors, such bonus not to exceed the amount of the base salary. The
agreement also provides for Mr. Robinson to be granted options to purchase a
total of 750,000 shares of common stock. One third of the options were granted
on July 19, 1994, one third of the options were granted on July 19, 1995, and
the remaining options will be granted on July 19, 1996, in each case at the
market value of the common stock on those dates. If Mr. Robinson's employment
is terminated other than for cause (as defined), he will be entitled to
payments equal to the sum of (i) his base salary for the remaining term of the
agreement, but not less than twelve months, plus (ii) an amount equal to the
average of the annual bonuses paid to him prior to termination of his
employment. In addition, he will be entitled to continuation of medical
benefits.
The Company has entered into an employment agreement with another
officer under which he is entitled to similar payments upon such termination of
employment, and has entered into an employment agreement with a third officer
under which he is entitled to payments similarly calculated, but based upon a
six-month period rather than a twelve-month period. The Company has entered
into employment agreements with each of Messrs. Skedel and Hollingsworth which
provide for severance compensation aggregating between $100,000 and $300,000
depending on the circumstances under which the individual terminates his
employment with the Company. The individual will also receive medical and
dental benefits so long as payments of severance compensation continue or until
the individual receives similar benefits from a new employer. The Company had
a similar employment agreement with Jerry E. Kish, former Executive Vice
President and Chief Financial Officer, under which the Company is paying Mr.
Kish severance compensation in the aggregate amount of $300,000 and is
maintaining medical and dental benefits.
The Company has entered into severance agreements with each of Messrs.
Kendall, Kennedy and Cutter. These agreements provide for monthly payments of
severance compensation to continue through November 1996 for each of Messrs.
Kennedy and Cutter and through January 1997 for Mr. Kendall. Payments of
severance compensation are contingent upon the former officer fulfilling certain
obligations and upon the Company not being in violation of any covenants,
representations or warranties under any of its loan agreements. The aggregate
amount of severance paid and payable to each of them under these agreements is
$450,000. In connection with the refinancing of the Company's senior debt
agreements in July, 1995, Messrs. Kendall, Kennedy and Cutter agreed to
subordinate their severance payments to the senior debt and to defer the
receipt of such payments, beginning July 1995, until the senior debt is repaid
in full. When the senior debt is repaid in full, each of them will receive his
accrued but deferred payments in a lump sum, together with interest on the
deferred amounts, and will receive an accelerated lump sum payment equal to the
then present value of the remaining severance payments.
- 13 -
<PAGE> 16
The Board of Directors approved a severance plan in connection with the
Company's reduction in work force announced and implemented during the year
ended January 31, 1995. Employees who were designated between March 1 and June
30, 1994 to be part of the reduction received severance payments based on their
tenure with the Company and level of responsibility. The amounts of such
severance payments were equal to four weeks' pay for each year of service with
respect to senior managers and senior directors; two weeks' pay for each year
of service with respect to supervisors and managers; and one week's pay for
each year of service with respect to non-executives and non-exempt personnel.
The amounts of severance payments to executive officers were considered on a
case-by-case basis. Affected employees were also entitled to continued medical
and dental benefits. Payments of severance were made in lump sums, except for
the senior managers, who received their severance amounts in bi- weekly
payments, and executives, who received their amounts as determined on a
case-by-case basis.
CERTAIN TRANSACTIONS
During the year ended January 31, 1995, the Company leased office,
warehouse and operations space from NCP Ltd. ("NCP"), an Ohio limited
partnership, the general partners of which are Messrs. Kendall, Kennedy and
Cutter and Jay J. Ross, a former officer of the Company. Jerry E. Kish, a
former officer and director of the Company, was a partner of NCP until January
1, 1995, at which date he surrendered his partnership interest back to NCP.
The Company made rental payments to NCP of $355,000 for the year ended January
31, 1995. The Company paid $40,000 to NCP for the year ended January 31, 1995,
for building maintenance, consulting services and building management fees.
In connection with the consolidation of the Company's facilities and the sale
of certain of its noncore businesses, all of the leases from NCP have been
terminated, and the Company has no remaining commitments to NCP for rentals
with respect to facilities.
On May 31, 1994, the Company sold to the predecessor of MRK
Technologies, Ltd. ("MRK") substantially all of the assets of a subsidiary and
a division of the Company engaged in the businesses of selling computer systems
and software and related equipment, network connectivity products and related
services. Mr. Kennedy is the Chairman and Chief Executive Officer and one of
the principal members of MRK. The purchase price paid by MRK for the assets
consisted of cash and short-term notes in the aggregate amount of approximately
$8.5 million and a subordinated note in the original principal amount of $2
million payable in installments through 1999. The note is subordinated to
certain commercial financing arrangements of MRK, is guaranteed by Mr. Kennedy
and is secured by Mr. Kennedy's pledge to the Company of shares of the Company
held by him. The unpaid principal amount of the note at July 31, 1995 was $1.5
million. In connection with the sale, the Company leased to MRK certain
furniture, fixtures and equipment used in the business. The lease provides for
aggregate rentals of approximately $796,000 over a term of thirty-six months
and gives MRK the option to purchase the leased equipment at the end of the
lease term for a nominal amount.
On March 31, 1994, the Company sold to Open Software, Inc.
substantially all of the assets of the Company's open systems software
distribution business. The purchase price consisted of $100,000 in cash and
certain percentage amounts based on software revenues during the three months
following the closing. Mr. Kennedy was the Chairman and Chief Executive
Officer and one of the principal stockholders of Open
- 14 -
<PAGE> 17
Software, Inc., which is now a part of MRK. Michael T. Joseph, who was Senior
Vice President of the Company immediately prior to the sale, was the President
and Chief Operating Officer of Open Software, Inc.
During the year ended January 31, 1995, the Company purchased computer
equipment for lease to its customers and acquired other products and services
from MRK. The aggregate amount of these purchases was $5.3 million, for which
the Company owed MRK $145,000 at January 31, 1995. In addition, the Company
sold $180,000 of goods and services to MRK during the year. At January 31,
1995, the Company was owed approximately $375,000 from MRK for goods and
services and custodial funds held by MRK.
PROPOSAL TO APPROVE THE OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On March 27, 1995, the Board of Directors of the Company adopted the
1995 Non-Employee Directors' Stock Option Plan (the "Directors' Plan"), subject
to approval by the stockholders of the Company.
The Directors' Plan is intended to encourage non-employee directors of
the Company to acquire or increase their ownership of Common Stock of the
Company on reasonable terms, and to foster a strong incentive to put forth
maximum effort for the continued success and growth of the Company and its
subsidiaries. The Directors' Plan provides for the granting of non-qualified
stock options to purchase an aggregate of 150,000 shares of the Common Stock to
current and future non-employee directors of the Company. As of March 27,
1995, the non-employee directors eligible to receive stock options under the
Directors' Plan were Scott S. Cowen and Norton W. Rose. Upon his election to
the Board of Directors on August 2, 1995, William R. Seelbach became eligible
to receive stock options under the Directors' Plan.
The complete text of the Directors' Plan is attached as Exhibit A to
this Proxy Statement. The following summary is qualified in its entirety by
reference to Exhibit A.
Each of the Directors on March 27, 1995 identified above as being
eligible to receive stock options under the Directors' Plan was granted an
option, subject to stockholder approval of the Directors' Plan, to purchase
10,000 shares of Common Stock. On each third anniversary of such date, each
such Director who is still a Director on such date will be granted an option to
purchase an additional 10,000 shares of Common Stock. Each Director who joins
the Board of Directors after the Directors' Plan was originally adopted will be
granted an option, on the first day of his term, to purchase 10,000 shares of
Common Stock. On each third anniversary of such date, such Director, if he is
still a Director on such date, will be granted an Option to purchase an
additional 10,000 shares of Common Stock. If the number of shares available
to grant under the Directors' Plan on a scheduled date of grant is
insufficient to make all the grants, then each eligible Director will receive
an option to purchase a pro rata number of the available shares.
The option price per share for the options granted on March 27, 1995
was $3.75, and the option price per share for the options granted on August 2,
1995 was $2.375 (in each case, the fair market value of the Common Stock on
such date). The option price per share for later grants will be the fair
market value of the shares of Common Stock on the date of grant. Under the
Directors' Plan, fair market value is generally the closing price of the Common
Stock on NASDAQ on the last business day prior to the date on which the value
is to be determined.
- 15 -
<PAGE> 18
The options granted under the Directors' Plan will be exercisable for a
term of ten years from the date of grant, subject to earlier termination, and
may be exercised 100% after six months from the date of grant.
In the event that a director ceases to be a member of the Board of
Directors (other than by reason of death or disability), an option may be
exercised by the director (to the extent the director was entitled to do so at
the time he ceased to be a member of the Board of Directors) at any time within
three months after he ceases to be a member of the Board of Directors, but not
beyond the term of the option. If the director dies or becomes disabled while
he is a member of the Board of Directors, an option may be exercised in full by
a legatee of the director under his will, or by him or his personal
representative or distributees, as the case may be, at any time within twelve
months after his death or disability, but not beyond the term of the option;
provided, that in the event of a disability, an option may not be exercised
prior to the six month anniversary of the date the option was granted. If the
director dies within three months after he ceases to be a member of the Board of
Directors, an option may be exercised (to the extent the director was entitled
to do so at the time he ceased to be a member of the Board of Directors) by a
legatee of the director under his will, or by his personal representative or
distributees, as the case may be, at any time within twelve months after his
death, but not beyond the term of the option.
Options granted under the Directors' Plan will be subject to adjustment
upon a recapitalization, stock split, stock dividend, merger, reorganization,
liquidation, extraordinary dividend, or other similar event affecting the
Common Stock. Options will not be transferable other than by will or pursuant
to the laws of descent and distribution or pursuant to a qualified domestic
relations order, and will be exercisable during the lifetime of an option
holder only by such holder or his personal representative in the event of
disability.
The Directors' Plan will terminate on March 27, 2005 and options may
not be granted under the Directors' Plan after that date although the terms of
any option may be amended in accordance with the Directors' Plan at any date
prior to the end of the term of such option. Any options outstanding at the
time of termination of the Directors' Plan will continue in full force and
effect according to the terms and conditions of the option and the Directors'
Plan.
The Directors' Plan may be amended by the Board of Directors, provided
that stockholder approval will be necessary if required pursuant to Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
no amendment may impair any of the rights of any holder of an option previously
granted under the Directors' Plan without the holder's consent, and provided
that certain provisions of the Directors' Plan may not be amended more than once
every six months.
The Directors' Plan will be administered by the Board of Directors. The
principal terms of the option grants are fixed in the Directors' Plan.
Therefore, the Board of Directors will have no discretion to select which
directors receive options, the number of shares of Common Stock subject to such
grants, or the exercise price of options.
The federal income tax consequences to the Company and eligible
directors in the Directors' Plan of the grant and exercise of options under
currently applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code") are as described below.
- 16 -
<PAGE> 19
FEDERAL INCOME TAX CONSEQUENCES
The issuance of a non-qualified stock option under the Directors' Plan
will not result in any taxable income to the recipient director or a tax
deduction to the Company at the time it is granted. Generally, a director to
whom a non-qualified stock option has been granted will recognize ordinary
income on the first date following the date the director exercises the option
on which the shares of Common Stock first become transferable and are no longer
subject to a substantial risk of forfeiture. On that date, the director will
recognize income in an amount equal to the excess of the fair market value of
the shares of Common Stock on the date the shares of Common Stock first become
transferable or are no longer subject to forfeiture over the option price. For
tax purposes, the Common Stock is considered to be non-transferable and subject
to a substantial risk of forfeiture as long as the sale of the shares could
subject the director to suit under the "short swing profit" rules pursuant to
Section 16(b) of the Exchange Act ("Section 16(b)").
Alternatively, if the director so elects, he will recognize ordinary
income on the date of exercise in an amount equal to the excess of the fair
market value of the shares of Common Stock (without taking into account any
lapse restrictions) on the date of exercise over the option price.
The Company is entitled to a tax deduction corresponding to the amount
of income recognized by the director as a result of the exercise of an option
for the year in which the director recognizes such income for federal income tax
purposes.
Under the Section 16(b) regulations, a director may exercise an option
and sell the underlying stock immediately without subjecting himself to suit
under the "short swing profit" provisions as long as the director has held the
option and/or the underlying Common Stock for an aggregate of six months. If
the director exercises a stock option within the first six months following the
date of grant (for example, following a change in control that results in the
option becoming exercisable during that period), then (except in certain cases
involving death or incompetence), taxation will be deferred and the amount of
income will be measured six months after the date of grant (unless the
director elects to be taxed on the date of exercise) because the sale of the
underlying Common Stock before this date could subject the director to suit
under the "short swing profit" provisions.
NEW PLAN BENEFITS
The table below sets forth the benefits that will be received by the
non-employee directors if the Directors' Plan is approved by the stockholders.
Only non-employee directors will receive stock options under the Directors'
Plan.
<TABLE>
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ----------------------- ---------------------- --------------------
<S> <C> <C>
Non-employee directors as a group (3 persons) (a) 30,000
<FN>
- -----------------
(a) The options granted to Messrs. Cowen and Rose under the Directors' Plan were granted at the exercise price of $3.75 per
share, and the options granted to Mr. Seelbach under the Directors' Plan
</TABLE>
- 17 -
<PAGE> 20
were granted at the exercise price of $2.375 per share (in each case,
the fair market value of a share of Common Stock on the date of grant).
The actual value, if any, that a non-employee director may realize will
depend on the excess of the stock price over the exercise price on the
date of exercise. As of July 31, 1995, the closing price of a share of
Common Stock on NASDAQ was $2.50.
VOTE REQUIRED FOR APPROVAL
The proposal to approve the Directors' Plan requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE DIRECTORS' STOCK OPTION PLAN.
PROPOSAL TO APPROVE THE AMENDMENT OF THE EMPLOYEE STOCK OPTION PLAN
The aggregate number of shares with which awards may be made under the
LDI Corporation Employee Stock Option Plan (the "Employee Stock Option Plan")
currently stands at 1,000,000. The Board of Directors has adopted an amendment
to the Employee Stock Option Plan to increase to 1,500,000 the aggregate number
of shares of Common Stock with respect to which awards may be made.
The complete text of the Employee Stock Option Plan, reflecting the
amendment described herein, is attached as Exhibit B to this Proxy Statement.
The following summary is qualified in its entirety by reference to Exhibit B.
EMPLOYEE STOCK OPTION PLAN
The Company has adopted the Employee Stock Option Plan, pursuant to
which options to purchase up to 1,000,000 shares of Common Stock (which amount
will be increased to 1,500,000 shares of Common Stock if the proposal to amend
the Plan is approved by the Company's stockholders at the meeting) may be
granted. Options will be granted to certain officers and other key management
employees of the Company or its subsidiaries who are in a position to
contribute substantially to the growth and success of the Company and its
subsidiaries. No director who is not an employee of the Company or one of its
subsidiaries will be eligible to receive options. Options granted under the
Stock Option Plan may be nonqualified or incentive stock options. The exercise
prices of options granted under the Stock Option Plan must be at least equal to
100% of the fair market value of the Common Stock at the time the option is
granted or 110% of such fair market value at the case of an option granted to
an individual who at the time of the grant owns more than 10% of the total
combined voting power of all classes of stock of the Company. Except as the
Compensation Committee of the Board of Directors may determine in connection
with a specific grant, the options are exercisable in 20% increments each year
beginning one year after the date of grant. On July 20, 1994, 250,000 options
to purchase Common Stock were granted to Floyd S. Robinson, President and Chief
Executive Officer of the Company. Such options will become exercisable in
annual 20% increments beginning July 20, 1995. No other options were granted
under the Employee Stock Option Plan during the fiscal year ended January 31,
1995.
- 18 -
<PAGE> 21
The Employee Stock Option Plan was approved by the Company's Board of
Directors at a special meeting of the Board of Directors held on May 20, 1987,
and by its stockholders by unanimous written consent dated May 20, 1987, prior
to the registration of the Company's Common Stock under Section 12 of the
Exchange Act. On April 27, 1995, the Board of Directors adopted an amendment
to the Employee Stock Option Plan to increase to 1,500,000 the aggregate number
of shares of Common Stock with respect to which awards may be made, subject to
further adjustment for stock dividends, stock splits and other changes in the
Company's capital structure. Common Stock that is not purchased under an
option which has terminated or lapsed may be used for the further grant of
options under the Employee Stock Option Plan.
Stockholder approval of the amendment to the Employee Stock Option Plan
is being sought to continue the qualification of the Employee Stock Option Plan
as an incentive stock option plan under Section 422 of the Code and in order
that the awards of options to certain executive officers pursuant to the
Employee Stock Option Plan will continue to be exempt from the operation of
Section 16(b). Generally, Section 16(b) provides for forfeiture of any profit
realized by certain executive officers from any combination of purchase and
sale of Common Stock within a six-month period. Continued exemption from the
application of Section 16(b) is currently conditioned upon obtaining the
approval of the amendments to the Employee Stock Option Plan by the
stockholders of the Company, in addition to certain other conditions which the
Company intends to continue to satisfy.
Under the Employee Stock Option Plan, awards of options to purchase
shares of Common Stock may be made to certain officers and other key employees
of the Company or its subsidiaries. The options provided for under the Employee
Stock Option Plan may be either incentive options ("Incentive Stock Options")
intended to qualify for favorable tax treatment under Section 422 of the Code or
nonqualified options ("Nonqualified Stock Options"), which do not qualify for
such treatment.
The Employee Stock Option Plan is administered by the Compensation
Committee of the Board of Directors. Subject to the terms of the Company's
incentive plans, the Compensation Committee has sole authority to determine and
designate persons to whom awards are to be made under the Employee Stock Option
Plan and the nature and terms of such awards.
Incentive Stock Options granted under the Employee Stock Option Plan
may not be exercised more than nine years after the date of grant (or five
years in the case of an option granted to an individual who at the time of the
grant owns more than 10% of the total combined voting power of all classes of
stock of the optionee's employer corporation and its parent or subsidiary
corporation (a "10% Owner")). Nonqualified Stock Options granted under the
Employee Stock Option Plan may not be exercised more than eleven years after
the date of grant. The aggregate fair market value (determined on the date of
grant) of the Common Stock subject to Incentive Stock Options which are
exercisable for the first time by an optionee in any calendar year may not
exceed $100,000. Options (whether Nonqualified or Incentive Stock Options) may
not be exercised during the first year after they are granted. Thereafter,
options shall be exercisable for 20% of the number of shares of Common Stock
subject thereto each succeeding one-year period, except that any option not so
exercised may be exercised during any succeeding year of the option term. The
Employee Stock Option Plan provides that the option price shall not be less
than 100% of the fair market value of the Common Stock on the date such option
is granted or 110% of such fair market value in the case of an Incentive Stock
Option granted to a 10% Owner. The purchase price must be paid in full by the
optionee at the time of exercise in either cash or Common Stock.
- 19 -
<PAGE> 22
No cash consideration will be received by the Company for granting
options under the Employee Stock Option Plan. Options will be granted in
consideration of the services rendered or to be rendered to the Company by the
employees receiving the options.
FEDERAL INCOME TAX CONSEQUENCES
With respect to Nonqualified Stock Options, in general, for federal
income tax purposes under present law:
(i) The grant of a Nonqualified Stock Option, by itself, will not
result in income to the optionee.
(ii) Except as provided in (v) below, the exercise of a Nonqualified
Stock Option (in whole or in part, according to its terms) will
result in ordinary income to the optionee at that time in an
amount equal to the excess (if any) of the fair market value of
the stock on the date of exercise over the option price.
(iii) The tax basis of the Common Stock acquired upon exercise of a
Nonqualified Stock Option, which will be used to determine the
amount of any capital gain or loss on a future taxable
disposition of such stock, will be the fair market value of the
shares on the date of exercise (but not less than the option
price) and the holding period will begin on the date of
exercise.
(iv) No deduction will be allowable to the Company upon the grant of
a Nonqualified Stock Option, but upon the exercise of a
Nonqualified Stock Option a deduction will be allowable to the
Company at that time in an amount equal to the amount of
ordinary income realized by the optionee exercising such
option if the Company deducts and withholds appropriate federal
withholding tax.
(v) With respect to the exercise of a Nonqualified Stock Option and
the payment of the option price by the delivery of Common
Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income
will be realized by the optionee at that time, the tax basis of
the shares received will be the same as the tax basis of the
shares surrendered, and the holding period of the optionee in
the shares received will include the optionee's holding period
in the shares surrendered. To the extent that the number of
shares received exceeds the number of shares surrendered,
ordinary income will be realized by the optionee at that time
in the amount of the fair market value of such excess shares,
the tax basis of such excess shares will be equal to the fair
market value of such shares at the time of exercise and the
holding period of the optionee in such shares will begin on the
date such shares are transferred to the optionee.
With respect to Incentive Stock Options, in general, for federal income
tax purposes under present law:
(i) Neither the grant nor the exercise of an Incentive Stock
Option, by itself, will result in income to the optionee;
however, the excess of the fair market value of the stock at
the time of exercise over the option price is (unless there is
a disposition of the shares acquired upon exercise of an
Incentive Stock Option in the taxable year of exercise)
includable in
- 20 -
<PAGE> 23
alternative minimum taxable income which may, under certain
circumstances, result in an alternative minimum tax liability
to the optionee under Section 55 of the Code.
(ii) If the shares acquired upon exercise of an Incentive Stock
Option are disposed of in a taxable transaction after the later
of two years from the date on which the option is granted or
one year after the date on which such shares are transferred to
the optionee, long-term capital gain or loss will be realized
by the optionee in an amount equal to the difference between
the option price and the amount realized by the optionee.
(iii) If the shares acquired upon the exercise of an Incentive Stock
Option are disposed of within the two-year period after the
date of grant or the one-year period after the transfer of the
shares to the optionee:
(a) Ordinary income will be realized by the optionee at the
time of such disposition in an amount equal to the
excess, if any, of the fair market value of the shares
at the time of such exercise over the option price, but
generally not in an amount exceeding the excess, if
any, of the amount realized by the optionee over the
option price.
(b) Short-term or long-term capital gain will be realized
by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any,
of the amount realized over the greater of (1) the fair
market value of the shares at the time of such exercise
or (2) the option price.
(c) Short-term or long-term capital loss will be realized
by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any,
of the option price over the amount realized.
(iv) No deduction will be allowed to the Company with respect to
Incentive Stock Options granted or shares transferred upon
exercise thereof, except that if a disposition is made by the
optionee within the two-year period or the one-year period
referred to above, the Company will be entitled to a deduction
in the taxable year in which the disposition occurred in an
amount equal to the amount of ordinary income realized by the
optionee on such disposition.
(v) With respect to the exercise of an Incentive Stock Option and
the payment of the option price by the delivery of Common
Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income
will be realized by the optionee at that time, the tax basis of
the shares received will be the same as the tax basis of the
shares surrendered and the holding period (except for purposes
of the one-year period referred to above) of the optionee in
shares received will include the optionee's holding period in
the shares surrendered. To the extent that the number of
shares received exceeds the number of shares surrendered, no
taxable income will be realized by the optionee at that time,
such excess shares will be considered incentive stock option
stock with a zero basis and the holding period of the optionee
in such shares will begin on the date such shares are
transferred to the optionee. If the shares surrendered were
acquired as
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<PAGE> 24
the result of the exercise of an Incentive Stock Option and
the surrender takes place within two years from the date the
option relating to the surrendered shares was granted or within
one year from the date of such exercise, the surrender will
result in the realization of ordinary income by the optionee at
that time in an amount equal to the excess, if any, of the fair
market value of the shares surrendered over the option price of
such shares. If any of the shares received are disposed of
within one year after the shares are transferred to the
optionee, the optionee will be treated as first disposing of
the shares with a zero basis.
VOTE REQUIRED FOR APPROVAL
The proposal to approve the amendment to the Employee Stock Option Plan
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN.
SELECTION OF INDEPENDENT AUDITORS OF THE COMPANY
The Board of Directors of the Company has not selected the independent
auditors of the Company and its subsidiaries for the year ending January 31,
1996. The Audit Committee of the Board of Directors of the Company has
determined that the Company will seek bids from various accounting firms for
such purpose not less often than every five years. Each time such bids are
sought, the Board of Directors will select the auditors after all bids have
been received and the firms have been evaluated. The Company has not yet
determined whether it will be practicable, in view of the time remaining before
the end of the current fiscal year, to institute this bidding process for the
year ending January 31, 1996.
Representatives of Deloitte & Touche, the Company's independent
auditors for the year ended January 31, 1995, are expected to be present at the
meeting and will have the opportunity to make a statement about the Company's
financial condition, if they desire to do so, and to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the 1996 annual
meeting of stockholders for inclusion in the Proxy Statement and form of proxy
relating to that meeting is advised that the proposal must be received by the
Company at its principal executive offices no later than February 15, 1996.
The Company will not be required to include in its proxy statement or form of
proxy a stockholder's proposal which is received after that date or which
otherwise fails to meet requirements for stockholder proposals established by
regulations of the Securities and Exchange Commission.
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OTHER MATTERS
The solicitation of proxies is being made by and on behalf of the Board
of Directors. The cost of the solicitation will be borne by the Company,
including the reasonable expenses of brokerage firms or other nominees for
forwarding proxy materials to beneficial owners. In addition to solicitation
by mail, proxies may be solicited by telephone, telegraph or personally.
Proxies may be solicited by directors, officers and employees of the Company
without additional compensation.
The persons named in the enclosed proxy, or their substitutes, will
vote the shares represented by such proxy at the meeting. The form of proxy
permits specification of a vote for persons nominated for election as
directors and the withholding of authority to vote for one or more specified
nominees. The form of proxy also permits specification of a vote for or
against, or abstention with respect to, the proposal to approve the option plan
for non-employee directors and the proposal to approve the amendment to the
employee stock option plan. If the enclosed proxy is executed and returned,
the shares represented thereby will be voted in accordance with any
specifications made by the stockholder. In the absence of any such
specification, they will be voted to elect the two nominees for election as
directors as set forth under "Election of Directors" above, FOR the proposal to
approve the option plan for non-employee directors and FOR the proposal to
approve the amendment to the employee stock option plan.
A stockholder may revoke his proxy at any time before it is voted at the
meeting by giving written notice of revocation to the Secretary, by executing
and returning a later dated proxy or by attending the meeting and voting in
person. The mere presence of a stockholder at the meeting will not operate to
revoke his proxy.
If any other matters shall come before the meeting, the persons named
in the proxy, or their substitutes, will vote thereon in accordance with their
judgment. The Board of Directors does not know of any other matters which will
be presented for action at the meeting.
By Order of the Board of Directors.
FRANK G. SKEDEL
Executive Vice President and Secretary
August 29, 1995
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR-ENDED JANUARY 31, 1995, AND THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE BY SENDING A REQUEST TO: CORPORATE SECRETARY, LDI
CORPORATION, 4770 HINCKLEY INDUSTRIAL PARKWAY, CLEVELAND, OHIO 44109.
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<PAGE> 26
EXHIBIT A
LDI CORPORATION
1995 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. This 1995 Non-Employee Directors' Stock
Option Plan of LDI Corporation adopted on this 27th day of March, 1995, is
intended to encourage directors of the Company who are not officers or key
employees of the Company or any of its Subsidiaries to acquire or increase
their ownership of common stock of the Company. The opportunity so provided
is intended to foster in participants an incentive to put forth maximum effort
for the continued success and growth of the Company and its Subsidiaries, to
aid in retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals to the Company in the future.
2. DEFINITIONS. When used herein, the following terms shall have the
meaning set forth below:
2.1 "Board" means the Board of Directors of LDI Corporation.
2.2 "Code" means the Internal Revenue Code of 1986, as in
effect at the time of reference, or any successor revenue code which
may hereafter be adopted in lieu thereof.
2.3 "Company" means LDI Corporation.
2.4 "Directors" means directors who serve on the Board and who
are not officers or key employees of the Company or any of its
Subsidiaries.
2.5 "ERISA" means the Employee Retirement Income Security Act
of 1974, as in effect at the time of reference, or any successor law
which may hereafter be adopted in lieu thereof, and any reference to
any specific provisions of ERISA shall refer to the corresponding
provisions of ERISA as it may hereafter be amended or replaced.
2.6 "Exchange Act" means the Securities Exchange Act of 1934,
as in effect at the time of reference, or any successor law which may
hereafter be adopted in lieu thereof, and any reference to any specific
provisions of the Exchange Act shall refer to the corresponding
provisions of the Exchange Act as it may be amended or replaced.
2.7 "Fair Market Value" means with respect to the Shares, (i)
the closing price of the Shares on the principal stock exchange on
which Shares are then traded or admitted to trading, on the last
business day prior to the date on which the value is to be determined,
(ii) if no sales take place on such day on any such exchange, the
average of the last reported closing bid and asked prices on such day
as officially quoted on any such exchange, or (iii) if the Shares are
not then listed or admitted to trading on any such exchange, the
average of the last reported closing bid and asked prices on such day
on the over-the-counter market. For purposes of this Section 2.7. the
National Association of Securities Dealers National Market System shall
be deemed a principal stock exchange.
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2.8 "Option" means the right to purchase the number of
Shares specified by the Plan at a price and for a term fixed by the
Plan, and subject to such other limitations and restrictions as the
Plan and the Board impose.
2.9 "Option Agreement" means a written agreement in such
form as may be, from time to time, hereafter approved by the Board,
which shall be duly executed by the Company and the Director and which
shall set forth the terms and conditions of an Option under the Plan.
2.10 "Plan" means the 1995 Non-Employee Directors' Stock
Option Plan of LDI Corporation.
2.11 "Regulation T" means Part 220, chapter II, title 12 of
the Code of Federal Regulations, issued by the Board of Governors of
the Federal Reserve System pursuant to the Exchange Act, as amended
from time to time.
2.12 "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations of the Securities and Exchange Commission as in effect at
the time of reference, or any successor rules or regulations which may
hereafter be adopted in lieu thereof, and any reference to any specific
provisions of Rule 16b-3 shall refer to the corresponding provisions of
Rule 16b-3 as it may hereafter be amended or replaced.
2.13 "Shares" means shares of the Company's $.01 par value
common stock or, if by reason of the adjustment provisions contained
herein any rights under an Option under the Plan pertain to any other
security, such other security.
2.14 "Subsidiary" or "Subsidiaries" means any corporation or
corporations other than the Company in an unbroken chain of
corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
2.15 "Successor" means the legal representative of the
estate of a deceased Director or the person or persons who shall
acquire the right to exercise or receive an Option by bequest or
inheritance or by reason of the death of the Director.
2.16 "Term" means the period during which a particular
Option may be exercised.
3. STOCK SUBJECT TO THE PLAN. There will be reserved for use, upon the
exercise of Options to be granted from time to time under the Plan, an
aggregate of 150,000 Shares, which Shares may be, in whole or in part, as the
Board shall from time to time determine, authorized but unissued Shares, or
issued Shares which shall have been reacquired by the Company. Any Shares
subject to issuance upon exercise of Options but which are not issued because
of a surrender, lapse, expiration or termination of any such Option prior to
issuance of the Shares shall once again be available for issuance in
satisfaction of Options.
4. ADMINISTRATION OF THE PLAN. Subject to the provisions of the Plan,
the Board shall have full authority, in its discretion, to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan, and
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generally to interpret and determine any and all matters whatsoever relating to
the administration of the Plan and the granting of Options hereunder.
5. GRANT OF OPTIONS.
5.1 EXISTING DIRECTORS. Each Director who is a Director
on the date the Plan becomes effective (other than Robert S. Kendall,
Michael R. Kennedy and Thomas A. Cutter) shall be granted an Option on
such date to purchase 10,000 Shares without further action by the
Board. On each third anniversary of the date the Plan becomes
effective, each such Director who is still a Director on such
anniversary date shall be granted an additional Option to purchase
10,000 Shares without further action by the Board.
5.2 FUTURE DIRECTORS. Each Director who joins the Board
after the date the Plan becomes effective shall be granted an Option on
the first day of his initial term on the Board (the "Initial Grant
Date") to purchase 10,000 Shares without further action by the Board.
On each third anniversary of the Initial Grant Date, if the Director is
still a Director on such anniversary date, such Director shall be
granted an additional Option to acquire 10,000 Shares without further
action by the Board.
5.3 LIMITATIONS. If the number of Shares available to
grant under the Plan on a scheduled date of grant is insufficient to
make all automatic grants required to be made pursuant to the Plan on
such date, then each eligible Director shall receive an Option to
purchase a pro rata number of the remaining Shares available under the
Plan; provided further, however, that if such proration results in
fractional Shares, then such Option shall be rounded down to the
nearest number of whole Shares.
6. BASIC STOCK OPTION PROVISIONS.
6.1 OPTION PRICE. The option price per Share of any Option
granted under the Plan shall be the Fair Market Value of a Share on the
date the Option is granted.
6.2 TERMS OF OPTIONS. Options granted hereunder shall be
exercisable for a Term beginning six (6) months from the date of grant
and ending ten (10) years from the date of grant, but shall be subject
to earlier termination as hereinafter provided. Except as otherwise
provided in the Plan, prior to its expiration or termination, an Option
granted hereunder may be exercised as to any part or all of the Shares
subject to the Option at any time during the Term.
6.3 TERMINATION OF DIRECTORSHIP. In the event a Director
ceases to be a member of the Board (other than by reason of death or
disability), then an Option may be exercised by the Director (to the
extent that the Director was entitled to do so at the termination of
his or her directorship) at any time within three (3) months after he
or she ceases to be a member of the Board, but not beyond the Term of
the Option, or prior to the approval of the Plan by the Company's
stockholders.
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<PAGE> 29
6.4 DEATH OR DISABILITY OF DIRECTOR. If a Director dies or
becomes disabled while he or she is a member of the Board, or within
three (3) months after he or she ceases to be a member of the Board,
an Option may be exercised (to the extent the Director shall have been
entitled to do so at the time of his or her death or disability) by the
Director's Successor in the event of death, or by the Director or his
or her personal representative, as the case may be, in the event of
disability, at any time within one (1) year after he or she ceases to
be a member of the Board on account of such death or disability, but
not beyond the Term of the Option or prior to the approval of the Plan
by the Company's stockholders.
7. EXERCISE OF RIGHTS UNDER OPTIONS.
7.1 NOTICE OF EXERCISE. A Director entitled to exercise
an Option may do so by delivery of a written notice to that effect
specifying the number of Shares with respect to which the Option is
being exercised and any other information the Board may require. The
notice shall be accompanied by payment in full of the purchase price of
any Shares to be purchased, which payment shall be made (i) in cash,
(ii) by delivery of certificates of Shares held for more than six (6)
months, duly endorsed in blank, equal in value to the purchase price of
the Shares to be purchased based on their Fair Market Value at the time
of exercise or (iii) a combination thereof. No Shares shall be issued
upon exercise of an Option until full payment has been made therefor.
All notices or requests provided for herein shall be delivered to the
Company's Secretary, or such other person as the Board may designate.
No fractional Shares shall be issued.
7.2 CASHLESS EXERCISE PROCEDURES. The Company, in its
sole discretion, may establish procedures whereby a Director, subject
to the requirements of Rule 16b-3, Regulation T, federal income tax
laws, and other federal, state and local tax and securities laws, can
exercise an Option or a portion thereof without making a direct payment
of the option price to the Company. If the Company so elects to
establish a cashless exercise program, the Company shall determine, in
its sole discretion, and from time to time, such administrative
procedures and policies as it deems appropriate and such procedures and
policies shall be binding on any Director wishing to utilize the
cashless exercise program.
8. OTHER OPTION TERMS AND CONDITIONS. Each Option or each Option
Agreement evidencing the grant of an Option shall contain such other terms and
conditions not inconsistent herewith as shall be approved by the Board.
9. RIGHTS OF OPTION HOLDER. The holder of an Option shall not have
any of the rights of a stockholder with respect to the Shares subject to
purchase or receipt under his or her Option, except to the extent that one or
more certificates for such Shares shall be issuable to the holder upon the due
exercise of the Option and the payment in full of the purchase price therefor.
10. NONTRANSFERABILITY OF OPTIONS. An Option shall not be
transferable, other than: (a) by will or the laws of descent and distribution,
and an Option may be exercised, during the lifetime of the holder of the
Option, only by the holder, or in the event of death, the holder's Successor,
or in the event of disability, the holder's personal
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<PAGE> 30
representative, or (b) pursuant to a qualified domestic relation order, as
defined in the Code or ERISA or the rules thereunder, in which case the Option
shall be exercisable in accordance with such order.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of
changes in all of the outstanding Shares by reason of stock dividends, stock
splits, reclassifications, recapitalizations, mergers, consolidations,
combinations, or exchanges of shares, separations, reorganizations or
liquidations, or similar events, or in the event of extraordinary cash or
non-cash dividends being declared with respect to the Shares, or similar
transactions or events, the number and class of Shares available under the
Plan in the aggregate, the number and class of Shares subject to Options
theretofore granted, applicable purchase prices and all other applicable
provisions, shall, subject to the provisions of the Plan, be equitably
adjusted by the Board (which adjustment may, but need not, include payment to
the holder of an Option, in cash or in shares, in an amount equal to the
difference between the price at which such Option may be exercised and the then
current Fair Market Value of the Shares subject to such Option as equitably
determined by the Board). The foregoing adjustment and the manner of
application of the foregoing provisions shall be determined by the Board, in
its sole discretion. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an Option.
12. FORMS OF OPTIONS. An Option shall be granted hereunder on the
date or dates specified in the Plan. Whenever the Plan provides for the
receipt of an Option by a Director, the Company's Secretary or such other
person as the Board shall appoint, shall forthwith send notice thereof to the
Director, in such form as the Board shall approve, stating the number of
Shares subject to the Option, its Term, and the other terms and conditions
thereof. The notice shall be accompanied by a written Option Agreement, in
such form as may from time to time hereafter be approved by the Board, which
shall have been duly executed by or on behalf of the Company. Execution by the
Director to whom such Option is granted of said Option Agreement in accordance
with the provisions set forth in this Plan shall be a condition precedent to
the exercise of any Option.
13. TAXES.
13.1 RIGHT TO WITHHOLD REQUIRED TAXES. The Company shall
have the right to require a person entitled to receive Shares pursuant
to the exercise of an Option under the Plan to pay the Company the
amount of any taxes which the Company is or will be required to
withhold, if any, with respect to such Shares before the certificate
for such Shares is delivered pursuant to the Option. Furthermore, the
Company may elect to deduct such taxes from any other amounts then
payable in cash or in shares or from any other amounts payable any
time thereafter to the Director.
13.2 DIRECTOR ELECTION TO WITHHOLD SHARES. A Director may
satisfy the withholding tax liability, if any, with respect to the
exercise of an Option, by having the Company withhold Shares otherwise
issuable upon exercise of the Option if such Director makes an election
to do so which satisfies the requirements of Rule 16b-3.
14. TERMINATION OF THE PLAN. The Plan shall terminate ten (10) years
from the date the Plan becomes effective, and an Option shall not be granted
under the Plan after that date although the terms of any Option may be amended
at any date prior to the end of its Term in accordance with the Plan. Any
Option outstanding at the time of
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<PAGE> 31
termination of the Plan shall continue in full force and effect according to
the terms and conditions of the Option and the Plan.
15. AMENDMENT OF THE PLAN. The Plan may be amended at any time and
from time to time by the Board, but no amendment without the approval of the
stockholders of the Company shall be made if stockholder approval under Rule
16b-3 would be required. Notwithstanding the foregoing, the Plan may not be
amended more than once every six (6) months to change the Plan provisions
listed in section (c)(2)(ii)(A) of Rule 16b-3, other than to comport with
changes in the Code, ERISA or Rule 16b-3. Notwithstanding the discretionary
authority granted to the Board in Section 4 of the Plan, no amendment of the
Plan or any Option granted under the Plan shall impair any of the rights of any
holder, without the holder's consent, under any then outstanding Option
theretofore granted under the Plan.
16. DELIVERY OF SHARES ON EXERCISE. Delivery of certificates for
Shares pursuant to an Option exercise may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with any
applicable requirements of any federal, state or local law or regulation or any
administrative or quasi-administrative requirement applicable to the sale,
issuance, distribution or delivery of such Shares. The Board may, in its sole
discretion, require a Director to furnish the Company with appropriate
representations and a written investment letter prior to the exercise of an
Option or the delivery of any Shares pursuant thereto.
17. FEES AND COSTS. The Company shall pay all original issue taxes
on the exercise of any Option granted under the Plan and all other fees and
expenses necessarily incurred by the Company in connection therewith.
18. EFFECTIVENESS OF THE PLAN. The Plan shall be approved by the
Board. The Plan shall thereafter be submitted to the Company's stockholders
for approval and unless the Plan is approved by the affirmative votes of the
holders of shares having a majority of the voting power of all shares
represented at a meeting duly held in accordance with Delaware law within
twelve (12) months after being approved by the Board, the Plan and all Options
made under it shall be void and of no force and effect. The Plan shall become
effective on the date specified by the Board.
19. OTHER PROVISIONS. As used in the Plan, and in Option Agreements
and other documents prepared in implementation of the Plan, references to the
masculine pronoun shall be deemed to refer to the feminine or neuter, and
references in the singular or the plural shall refer to the plural or the
singular, as the identity of the person or persons or entity or entities being
referred to may require. The captions used in the Plan and in such Option
Agreements and other documents prepared in implementation of the Plan are for
convenience only and shall not affect the meaning of any provision hereof or
thereof.
20. DELAWARE LAW TO GOVERN. This Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
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EXHIBIT B
LDI CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK OPTION PLAN
1. INCENTIVE PURPOSE. The purpose of the LDI Corporation Employee Stock
Option Plan (the "Plan") is to encourage and enable certain officers
and other key management employees of LDI Corporation, a Delaware
Corporation (the "Company"), and its subsidiaries to acquire a larger
stock ownership and personal financial interest in the Company and
thereby provide additional incentive for the promotion of the welfare
of the Company and for the continued service of the participants with
the Company.
2. AMOUNT OF STOCK. Upon the approval of the Plan by the shareholders,
there shall be reserved, allotted and set aside for issuance under the
Plan 1,500,000 of the presently authorized but unissued Common Shares,
$.01 par value, of the Company (the "Common Shares"), subject to
Paragraph 13.
3. ADMINISTRATION. The Board of Directors or a duly appointed committee
thereof (the "Board") will designate employees to whom incentive or
nonqualified stock options are to be granted and will specify the
number of shares subject to each such option. The Board shall be
authorized to administer the Plan in accordance with its terms and may
adopt and amend such rules and regulations as the Board may desire
concerning the conduct of its affairs. The interpretation and
construction by the Board of any provision of the Plan or of any stock
option granted under it shall be final. No member of the Board shall
be liable for any action or determination made in good faith.
4. PARTICIPATION. Subject to the limitations herein set forth, the Board
may grant incentive or nonqualified stock options from time to time
during the period ending April 30, 1997 to such officers or other key
management employees of the Company or any subsidiary thereof as in the
opinion of the Board will best further the interests of the Company and
achieve the purposes of the Plan. No option shall be granted to any
individual who, at the time the option is granted, shall not be an
employee of the Company or subsidiary thereof.
5. THE OPTION PRICE. Except as provided in Paragraph 7, the option price
per Share of Common Stock to be paid upon the exercise of any stock
option shall be not less than the fair market value per share at the
time the option is granted, as determined by the Board. Such fair
market value shall be the closing sale price per share (or in the event
there are no sales, then the average of the closing bid and asked
prices per share), on NASDAQ on the last trading day preceding the date
on which the option is granted.
6. LENGTH OF OPTION. Each incentive stock option shall by its terms
provide that it is not exercisable after nine (9) years from the date
it is granted; provided, however, if an employee, at the time an
incentive stock option is granted to him owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the
employer corporation and its parent or subsidiary corporation (taking
into account the attribution of stock ownership rules set forth in
Section 425 (d) of
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the Internal Revenue Code) such option shall be its terms provide that
it is not exercisable after five (5) years from the date it is granted.
Each nonqualified stock option shall by its terms provide that it is
not exercisable after eleven (11) years from the date it is granted.
Each option shall also provide that it may not be exercised prior to
one year from the date it is granted. Thereafter, not more than twenty
percent (20%) of the number of Share of Common Stock subject thereto
may be purchased during any succeeding one-year period; provided,
however, that any unexercised option may be exercised any succeeding
year of the term of the option. The Board may, on a case-by-case
basis, at any time on or after the date of the grant of any option and
during the term thereof, accelerate the schedule of the time or times
when an option granted under this Plan may be exercised. Except as
provided in Paragraphs 8, 9 and 10 hereof, no option may be exercised
unless the optionee is, at the time of such exercise, in the employ of
the Company or of a subsidiary thereof and shall have been continuously
so employed since the granting of his option. Absence or leave approved
by the Board in accordance with applicable provisions of the Internal
Revenue Code and Regulations shall not be considered an interruption of
employment for any purpose of the Plan.
7. LIMITATION ON GRANTING OF OPTIONS. The aggregate fair market value
(determined at the time the option is granted) of the stock, with
respect to which incentive stock options are exercisable for the first
time by any employee during any calendar year (under all option plans
of his employer corporation and its parent and subsidiary
corporations), shall not exceed $100,000. If an employee, at the time
an incentive stock option is granted to him, owns stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the employer corporation or its parent or
subsidiary corporations (taking into account the attribution of stock
ownership rules set forth in Section 425(d) of the Internal Revenue
Code), the option price per Common Share to be paid upon the exercise
of such option shall not be less than one hundred and ten percent
(110%) of the fair market value per Common Share at the time the
option is granted, as determined in accordance with Paragraph 5.
8. TERMINATION OF EMPLOYMENT. If an optionee shall cease to be employed
by the Company or a subsidiary thereof on account of normal retirement,
early retirement, or disability retirement, either physical or mental,
or on account of physical or mental disability, he may exercise his
option to the extent that he was entitled to exercise it at the date of
such cessation or for such greater number of shares subject to the
option as to which the Board may authorize an acceleration of time of
exercise under the option. If such cessation of employment is for any
reason other than death or permanent and total disability (within the
meaning of Section 105(d) (4) of the Internal Revenue Code), said
optionee may exercise his option to the same extent, but only within
the three months next succeeding such cessation of employment;
provided, however, that in the event of an uninterrupted transfer of
employment to or between the Company and/or any parent or subsidiary
corporation of the Company, such option shall continue in effect until
the employee ceases to be employed by all such affiliated corporations.
Neither the Plan, nor the granting of any option thereunder, will
confer upon any optionee any right with respect to continuance of
employment by the Company, or any subsidiary thereof, nor will it
interfere in any way with his right, or the employer's right, to
terminate his employment at any time.
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9. DEATH OF OPTIONEE. In the event of the death of an optionee while in
the employ of the Company or a subsidiary thereof, the options
theretofore granted to him shall be exercisable only within one year
next succeeding such death, or within the balance of the period of the
option if less than one year, and then only by the administrator or
executor of his estate and to the extent that the deceased optionee was
entitled to exercise it at the date of his death.
10. DISABILITY OF OPTIONEE. In the event of the permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code) of the optionee while in the employ of the Company or a
subsidiary thereof, the options theretofore granted to him shall be
exercisable only within one year next succeeding his cessation of
employment.
11. NONASSIGNABILITY. Each option shall by its terms provide that it is not
transferable by the optionee otherwise than by will or the laws of
descent and distribution and that it is exercisable during his
lifetime, only by the optionee, and after his death, only by his
administrator or executor, as above provided.
12. METHOD OF EXERCISE. Exercise of options shall be by the execution by
the person entitled at the time to exercise the options of a written
notice of such exercise and delivery thereof to the Company at its
principal office in Cleveland, Ohio, which notice shall specify the
number of shares being purchased. In the case of shares of Common
Stock purchased under options (unless such shares of Common Stock have
in either case been registered under the Securities Act of 1933 (the
"1933 Act")), the written notice shall contain a representation in form
approved by the Company that such shares are being acquired not with a
view to resale or distribution and will not be sold or otherwise
transferred except upon compliance with the 1933 Act and the Rules and
Regulations issued thereunder. In the case of the exercise of an
option, such notice shall be accompanied by payment in full of the
purchase price of such shares. The payment may be made in cash or in
shares of Common Stock valued at the closing sales price per share (or
in the event there are no sales, then the average of the closing bid
and asked prices per share), on the NASDAQ on the last trading day
preceding the date on which the option is exercised. Upon receipt of
such notice and payment, the Company will promptly issue and deliver
its certificate for the number of shares of Common Stock being
purchased under options. No person, estate or other entity shall have
any of the rights of a shareholder with reference to shares of Common
Stock subject to an option until a certificate or certificates for the
shares have been delivered. An option granted under this Plan may be
exercised for any lesser number of shares than the full amount for
which it could be exercised. Such a partial exercise of an option shall
not affect the right to exercise the option from time to time in
accordance with this Plan for the remaining shares subject to the
option.
13. ADJUSTMENTS. In the event of any change in the number or kind of
outstanding shares of the Company by reason of
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or any
other change in the corporate structure or shares of stock of the
Company, the Board in its discretion shall make an appropriate
adjustment in the number and kind of shares for which options may
thereafter be granted both in the aggregate and as to each
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<PAGE> 35
optionee, as well as in the number and kind of shares subject to options
theretofore granted and the option price payable upon exercise of such
options.
14. REALLOCATION OF UNUSED SHARES. Shares which are not purchased under
options which terminate or lapse may be used for the further grant of
options under the Plan.
15. EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under
the Plan at any time up to and including April 30, 1997, on
which date the Plan will expire, except as to options then outstanding
under the Plan, which options shall remain in effect until they have
been exercised or have expired.
16. AMENDMENT AND REVOCATION. The Board shall have the right to alter,
amend or revoke the Plan or any part thereof at any time and from time
to time; provided, however, that without approval of the shareholders,
the Board may not make any alteration or amendment to the Plan which
would change the maximum number of shares which may be issued under the
Plan, change the description or designation of the class of employees
eligible to receive options under the Plan, extend the term of the Plan
or of options granted thereunder, or make any alteration or amendment
to the Plan as to which approval by shareholders is necessary for Rule
16b-3 of the Securities and Exchange Commission; and provided, further,
that, without the consent of the optionees, no change may be made in
any option theretofore granted which will impair the rights of such
optionees.
17. COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES.
a. No option shall be exercisable and no shares of Common Stock
will be delivered under this Plan except in compliance with
all applicable federal and state laws and regulations
including, without limitation, compliance with the rules of
all stock exchanges on which the Company's Common Stock may be
listed. Any share certificate issued to evidence shares of
Common Stock may bear legends and statements the Board shall
deem advisable to assure compliance with federal and state
laws and regulations. No option shall be exercisable, and no
shares will be delivered under this Plan, until the Company
has obtained consent or approval from regulatory bodies,
federal or state, having jurisdiction over such matters as the
Board may deem advisable.
b. In the case of the exercise of an option by a person or
estate acquiring the right to exercise the option by
bequest or inheritance, the Board may require reasonable
evidence as to the ownership of the option and may require
such consents and releases of taxing authorities that it may
deem advisable.
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<PAGE> 36
LDI CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Floyd S. Robinson and Frank G.
Skedel, and each of them, with full power of substitution, as proxies
for the undersigned to attend the Annual Meeting of Stockholders of
LDI Corporation, to be held at the Hilton Cleveland South, 6200 Quarry
Lane, Independence, Ohio at 10:00 a.m., Eastern daylight time, on
October 6, 1995, and thereat, and at any adjournments thereof, to vote
and act with respect to all common stock of the Company which the
undersigned would be entitled to vote, with all the power the
undersigned would possess if present in person, as follows:
1. / / WITH or / / WITHOUT authority to vote for the election of the
nominees listed below.
Scott S. Cowen Thomas A. Cutter
(INSTRUCTION: To withhold authority to vote for an individual
nominee write the nominee's name on the line provided
below.)
----------------------------------------------------------------------
2. Proposal to approve the Company's stock option plan for
non-employee directors.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the amendment to the Company's employee stock
option plan.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, to vote upon such other business as may
properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY
THE STOCKHOLDER. IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE
VOTED TO ELECT THE NOMINEES NAMED IN ITEM 1 ABOVE AND FOR THE
APPROVALS DESCRIBED IN ITEMS 2 AND 3 ABOVE.
Receipt of Notice of Annual Meeting of Stockholders and the
related Proxy Statement dated August 29, 1995, is hereby acknowledged.
Date: , 1995
----------------------------
----------------------------
----------------------------
Signature of Stockholder
Please sign as your name or
names appear hereon. If
shares are held jointly, all
holders must sign. When
signing as attorney,
executor, administrator,
trustee or guardian please
give your full title. If a
corporation, please sign in
full corporate name by
president or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
