<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( X ) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SPI HOLDING, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SPI HOLDING, INC.
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(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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4) Proposed maximum aggregate value of transaction:
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1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
PRELIMINARY COPY
SPI HOLDING, INC.
1501 NORTH PLANO ROAD
RICHARDSON, TEXAS 75081
April 22, 1994
Dear Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of
Stockholders of SPI Holding, Inc. on Wednesday, May 25, 1994, at 10:00 a.m.,
local time. The meeting will be held at the Omni Richardson Hotel, 701 East
Campbell Road at Central Expressway, Richardson, Texas.
Information about the business of the meeting and the nominees
for election as members of the Board of Directors is set forth in the formal
meeting notice and the Proxy Statement on the following pages. During the
meeting, I will report on the operations of the Company and its plans for 1994.
Officers of the Company will be present to respond to questions from
stockholders.
The vote of every stockholder is important. The Board of
Directors appreciates and encourages stockholder participation in the Company's
affairs. There is a space on the enclosed proxy for you to indicate if you
will be able to attend the meeting. Whether or not you plan to attend the
meeting, please sign, date and return the enclosed proxy promptly in the
envelope provided. If you attend the meeting, you may, at your discretion,
withdraw the proxy and vote in person.
Sincerely,
Albert D. Jerome
Chief Executive Officer and President
<PAGE> 3
SPI HOLDING, INC.
1501 NORTH PLANO ROAD
RICHARDSON, TEXAS 75081
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1994
To the Stockholders of SPI Holding, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
SPI Holding, Inc. (the "Company") will be held at the Omni Richardson Hotel,
701 East Campbell Road at Central Expressway, Richardson, Texas, Wednesday, May
25, 1994, at 10:00 a.m., local time, for the following purposes:
1. To elect 14 directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and
qualified;
2. To ratify the appointment of KPMG Peat Marwick as the
Company's independent accountants for the fiscal year ending December
31, 1994;
3. To approve the amendment to the Company's Certificate of
Incorporation changing the name of the Company from SPI Holding, Inc.,
to SpectraVision, Inc.;
4. To adopt the Company's 1994 Management Incentive Equity
Plan; and
5. To transact such other business as may properly come
before the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March
31, 1994 as the record date for determining stockholders entitled to notice of
and to vote at the meeting and any adjournment thereof. Only stockholders of
record at the close of business on such date will be entitled to notice of and
to vote at the meeting and any adjournment thereof.
If you are a stockholder of record and plan to attend the
meeting, please check your proxy card in the space provided for that purpose.
If you are a stockholder whose shares are not registered in your own name and
you plan to attend, please advise the stockholder of record (your bank, broker,
etc.) that you wish to attend. That firm must provide you with evidence of
your ownership, which will enable you to gain admittance to the meeting.
All stockholders are cordially invited to attend the meeting.
Even if you expect to attend the meeting, you are requested to sign, date and
return the accompanying proxy in the enclosed addressed envelope. If you
attend, you may vote in person, if you wish, whether or not you have sent in
your proxy.
By Order of the Board of Directors
Matthew Hutchins
Corporate Secretary
Richardson, Texas
April 22, 1994
<PAGE> 4
PRELIMINARY COPY
SPI HOLDING, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1994
SOLICITATION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the "Board") of
SPI Holding, Inc. (the "Company") for use at the Annual Meeting of Stockholders
of the Company to be held at the Omni Richardson Hotel, 701 East Campbell Road
at Central Expressway, Richardson, Texas on Wednesday, May 25, 1994, 10:00
a.m., local time, and at any adjournment thereof pursuant to and for the
purposes set forth in the accompanying Notice of Meeting. The date of the
first mailing of this Proxy Statement to stockholders was on or about April 22,
1994.
The costs of soliciting proxies will be borne by the Company,
including reasonable costs incurred by custodians, nominees, fiduciaries and
other agents in forwarding the proxy material to their principals. In addition
to such solicitation and the solicitation made hereby, certain directors,
officers and employees of the Company may solicit proxies by fax, telex,
telephone and personal interview.
A proxy will be voted in accordance with the stockholder's
instruction, or if no instruction is indicated, it will be voted in favor of
the proposals set forth in the notice attached hereto. Any stockholder may
revoke his or her proxy at any time prior to its exercise by written notice or
by execution of a subsequent proxy sent to Matthew Hutchins, Corporate
Secretary, SPI Holding, Inc., 1501 North Plano Road, Richardson, Texas 75081.
The proxy also may be revoked if the stockholder is present at the meeting and
elects to vote in person.
RECORD DATE AND VOTING SECURITIES
At the close of business on March 31, 1994, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
there were issued and outstanding 4,593,526 shares of the Company's Class A
common stock ("Class A Common Stock") and 19,390,379 shares of Class B common
stock ("Class B Common Stock") (collectively "Common Stock"), each with a par
value of $0.001. Under Delaware law and under the Company's Restated
Certificate of Incorporation, each share of Class A Common Stock and Class B
Common Stock entitles a stockholder to ten votes and one vote, respectively.
There are no other voting securities outstanding.
The presence in person or by proxy of the holders of a majority
of the issued and outstanding shares of each class of Common Stock is necessary
to constitute a quorum at this meeting. In the absence of a quorum (2,296,764
shares of Class A Common Stock and 9,695,190 shares of Class B Common Stock) at
the meeting, the meeting may be adjourned from time to time without notice
other than announcement at the meeting until a quorum shall be formed.
Pursuant to the Company's Certificate of Incorporation, holders of Class A
Common Stock have the right, voting as a class, to elect nine members of the
Company's Board of Directors ("Class A Directors"), and holders of Class B
Common Stock have the right, voting as a class, to elect five members of the
Company's Board of Directors ("Class B Directors"). The affirmative vote of a
plurality of the shares present in person or
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by proxy at the meeting and entitled to vote is required for the election of
directors, meaning that the nine nominees for Class A Directors and the five
nominees for Class B Directors with the largest number of votes will be elected
as directors. The affirmative vote of a majority of the shares present in
person or by proxy by holders of Class A Common Stock and holders of Class B
Common Stock voting together as a single class at a meeting and entitled to
vote is required for the approval of the appointment of auditors, approval of
the amendment to the Certificate of Incorporation, the adoption of the
Company's proposed 1994 Management Incentive Equity Plan and any other matter
that may come before the meeting. In certain circumstances, a stockholder will
be considered to be present at the meeting for quorum purposes but will not be
deemed to have cast a vote on a matter. Such circumstances exist when a
stockholder is present but specifically abstains from voting on a matter or
when shares are represented at the meeting by a proxy conferring authority to
vote to a person, such as a broker, only on certain matters. Under Delaware
law, abstentions are treated as present and entitled to vote and, including
with respect to the proposed 1994 Management Incentive Equity Plan, have the
effect of a vote against a matter. A broker non-vote on a matter means the
broker is not entitled to vote on that matter, and any such non-vote is not
counted in determining whether any matter requiring approval of a majority of
the shares present and entitled to vote has been approved.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information as of March 31,
1994, regarding the beneficial ownership of the Company's Class A and Class B
Common Stock, excluding Common Stock held by the Company, by (i) each person
known by the Company to own beneficially more than 5% of its outstanding shares
of Common Stock, (ii) each director of the Company, (iii) the five executive
officers of the Company named in the Summary Compensation Table and (iv) all
executive officers and directors of the Company as a group:
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BENEFICIAL OWNERSHIP OF SPI HOLDING, INC.
CLASS A AND CLASS B COMMON STOCK
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
Number of Shares Number of Shares
Beneficially Percentage of Beneficially Percentage of
Beneficial Owner Owned Shares (1) Owned Shares (1)
---------------- ----- ------- ----- -----
<S> <C> <C> <C> <C>
Rainbow Company (2)(3) 4,593,476 99.9% 4,624,986 19.3%
Albert D. Jerome --- --- --- ---
Danny G. Hair --- --- 1,000 *
Matthew Hutchins --- --- --- ---
Jon M. Nottingham --- --- --- ---
Harry S. Budow --- --- --- ---
Seamus McGill (4) --- --- --- ---
John F. Berardi --- --- --- ---
Robert D. Beyer (5) --- --- 1,667 *
Howard T. Buchanan --- --- 520 *
Michael C. Colleran --- --- --- ---
John Davis --- --- --- ---
Marvin Davis (2)(3) 4,593,476 99.9% 4,624,986 19.3%
Leonard Goldberg --- --- --- ---
Gerald S. Gray --- --- --- ---
Sidney Poitier --- --- --- ---
Michael J. Seibert --- --- --- ---
Skip Victor --- --- 1,000 *
Jeffrey I. Werbalowsky --- --- --- ---
Kenneth Ziffren --- --- --- ---
The Equitable Life
Assurance Society of the
United States and Alliance
Capital Management L.P. (6) --- --- 1,551,896 8.0%
Strome, Susskind & Co.,
Mark E. Strome and
Jeffrey E. Susskind (7) --- --- 1,216,000 6.3%
All executive officers and
directors as a group (8) 4,593,476 99.9% 4,629,173 19.3%
- - ---------------
</TABLE>
* Less than 1%.
(1) Based upon 4,593,526 outstanding shares of Class A Common Stock and
19,390,379 outstanding shares of Class B Common Stock.
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(2) Each share of Class A Common Stock is convertible at any time by the
holder thereof into one share of Class B Common Stock. The Class B
Common Stock information included above for Rainbow Company and Marvin
Davis includes 4,593,476 shares of Class B Common Stock issuable upon
conversion of shares of Class A Common Stock, 28,500 shares held by
Davis Oil Company and 3,010 shares of Class B Common Stock issuable
pursuant to presently exercisable stock options held by Rainbow.
(3) Rainbow Company is a general partnership controlled by Mr. Marvin Davis
through its general partners, Davis-Rainbow, Inc., and the Marvin Davis
and Barbara Davis Revocable Trust. Rainbow Company is the record owner
of substantially all of the shares of Class A Common Stock of the
Company. The mailing address of the principal executive office of
Rainbow Company is Suite 2800, 2121 Avenue of the Stars, Los Angeles,
California 90067-5000.
(4) Mr. McGill resigned from the Company March 26, 1993.
(5) Such shares do not include 450,000 shares of Class B Common Stock held
by Guarantee Reassurance Corporation, an investment advisory client of
Crescent Capital Corporation, a registered investment advisor of which
Mr. Beyer, a director of the Company, is a Managing Director and
Principal. Mr. Beyer disclaims beneficial ownership of such 450,000
shares.
(6) In a joint filing on Schedule 13G dated February 9, 1994, AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances
I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, Uni Europe Assurance
Mutuelle, AXA and The Equitable Companies Incorporated and its
subsidiaries reported beneficial ownership with respect to such shares
of the Company's Class B Common Stock. The Equitable Life Assurance
Society of the United States and Alliance Capital Management L.P.,
subsidiaries of The Equitable Companies Incorporated, report ownership
of 553,257 and 962,639 of such shares of Class B Common Stock,
respectively, which were acquired solely for investment purposes and
solely for investment purposes on behalf of client discretionary
investment advisory accounts, respectively. Additionally, Donaldson,
Lufkin & Jenrette Securities Corporation, a subsidiary of The Equitable
Companies Incorporated, reported shared dispositive power with respect
to 36,000 shares held for investment purposes. The mailing address of
the principal business office of The Equitable Companies Incorporated
is 787 Seventh Avenue, New York, New York 10019.
(7) In a joint filing on Schedule 13G dated February 11, 1994, Strome,
Susskind & Co., Mark E. Strome and Jeffrey E. Susskind reported sole
voting and dispositive power with respect to 1,216,000 shares. Messrs.
Strome and Susskind disclaim beneficial ownership as to all shares. The
mailing address of the principal business office of Strome, Susskind &
Co., is 1250 4th Street, Suite 420, Santa Monica, California 90401.
(8) As of March 31, 1994, the executive officers of the Company include the
six executive officers named in the Summary Compensation Table (except
for Mr. McGill) and Howard Gardner. See "Executive Officers."
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors consists of fourteen members of two
classes. Each director holds office until the next annual meeting of
stockholders or until his successor is elected and qualified. The holders of
Class A Common Stock have the right, voting as a class, to elect nine Class A
Directors, and the holders of Class B Common Stock have the right, voting as a
class, to elect five Class B Directors. The Executive Committee of the Board
of Directors has nominated the persons to serve as Class A Directors. The
Class B Nominating Committee, which consists of all of the Class B Directors in
office from time to time, nominates persons to replace, or to continue to serve
as, Class B Directors.
The Board recommends election of the nominees listed below as
directors to hold office until the next annual meeting of stockholders or until
their successors are elected and qualified. Each of such nominees is presently
a member of the Board. If, at the time of the 1994 Annual Meeting of
Stockholders, any of such nominees should be unable to serve or for good cause
will not serve, discretionary authority provided in the proxy will be used to
vote for a substitute or substitutes designated by the Board. The Board has no
reason to believe that any substitute nominees will be required.
Information as to each nominee and as to directors in Class A and
B follows:
CLASS A
Albert D. Jerome - Age 51, Director since November 1991. Mr.
Jerome has also served as Chief Executive Officer, President and a Director of
SPI Holding, Inc. since November 1991. Mr. Jerome was President of NBC
Television Stations from November 1982 to October 1991. Prior to November
1982, Mr. Jerome held various positions with NBC, CBS and ABC. Mr. Jerome was
formerly Chairman of the Board and is presently a director of the Foundation
for Minority Interest in Media, a non-profit organization. Member of the
Executive Committee.
Michael C. Colleran - Age 41, Director since November 1992. Mr.
Colleran has also served as the Executive Vice President of Davis Companies, an
investment company, and the Chief Financial Officer for Miller-Davis Company, a
real estate development general partnership, since May 1988. Member of the
Executive Committee and the Audit Committee.
John Davis - Age 39, Director since November 1992. Mr. Davis has
been President and a Director of Davis Entertainment Company, a motion picture
and television production company, since November 1985; Vice President of Davis
Companies, an investment company, since December 1986 and Director since April
1989; President and a Director of Davis Entertainment Television, a television
production company, since 1988; President and a Director of Davis Films, Inc.,
a motion picture production company, since January 1987; and President and a
Director of both Azur Communications Corporation and Bramble Communications
Corporation, both television broadcast station companies, since December 1988.
Mr. Davis is the son of Mr. Marvin Davis, a director of the Company. Member of
the Executive Committee.
Marvin Davis - Age 68, Chairman of the Board and Director since
April 1989. Mr. Davis is presently the principal partner of Rainbow Company.
Mr. Davis has also served as President and Director of Davis Companies, an
investment company, since October 1986; Chairman of the Board of Davis
Companies and Davis Holding, Inc., each an investment company, since April
1989; Managing General Partner of Davis Oil Company, an independent oil and gas
general partnership, since 1960;
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Managing General Partner of MD Co., an investment company, which is a General
Partner of Miller-Klutznick-Davis-Gray Co. (now known as MKDG Co.), a real
estate development general partnership, since March 1982; and General Partner
of Miller-Davis Company, a real estate development general partnership, since
January 1978. Mr. Davis is the father of John Davis, a director of the
Company. Member of the Executive Committee.
Leonard Goldberg - Age 60, Director since October 1989. Mr.
Goldberg was President and Chief Operating Officer of Twentieth Century Fox
Film Corporation from December 1986 until May 1989. Mr. Goldberg has been
directly involved in the production of many feature films for both the movie
and television industries. Mr. Goldberg is a director of Activision, Inc., a
manufacturer and distributor of entertainment software. Member of the
Compensation Committee.
Gerald S. Gray - Age 64, Director since April 1989. Mr. Gray has
also served as Senior Vice President of Davis Companies, an investment company,
since January 1987; Chief Financial Officer of Davis Oil Company, an
independent oil and gas partnership, since 1977; Managing General Partner of
GSG Company, an investment company, which is a General Partner of
Miller-Klutznick-Davis-Gray Co. (now known as MKDG Co.), a real estate
development general partnership, since March 1982; and General Partner of
Miller-Davis Company, a real estate development general partnership, since
January 1978. Mr. Gray is presently a Director of Children's Diabetes
Foundation at Denver, Colorado. Member of the Executive Committee and the
Audit Committee.
Sidney Poitier - Age 67, Director since October 1992. Mr.
Poitier is an actor, producer and director. He has been President of Verdon
Cedric Productions, a film production company, since 1962. Member of the
Compensation Committee.
Michael J. Seibert - Age 38, Director since November 1993. Mr.
Seibert has been Vice President of Davis Companies, an investment company,
since August 1989. From November 1984 until August 1989, he held various
executive positions at Pacific Enterprises, a public utility holding company.
Kenneth Ziffren - Age 53, Director since May 1989. Mr. Ziffren
is presently Senior Partner of Ziffren, Brittenham & Branca (Attorneys at Law)
and has been with that firm since 1978. Mr. Ziffren is also a director of City
National Corp., a one-bank holding company, and Marvel Entertainment Group,
Inc., a comic book publisher. Member of the Audit Committee and the
Compensation Committee.
CLASS B
John F. Berardi - Age 51, Director since November 1992. Mr.
Berardi has been Executive Vice President and Chief Financial Officer of
Farmland Industries, Inc., a cooperative farm supply, marketing and processing
operation and retail and service operation since March 1992. From July 1990 to
February 1992, Mr. Berardi was a Principal of Berardi and Associates, financial
consultants. From April 1978 to June 1990, Mr. Berardi held various positions
with Harcourt Brace Jovanovich, Inc., a publishing company, and was Executive
Vice President and Chief Financial Officer of Harcourt Brace Jovanovich, Inc.
since September 1986. Member of the Audit Committee.
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Robert D. Beyer - Age 34, Director since November 1992. Mr.
Beyer has also served as Managing Director and Principal of Crescent Capital
Corporation, a registered investment advisor, since April 1991. From 1986 to
March 1991, Mr. Beyer served in various capacities, including as Managing
Director, with Drexel Burnham Lambert, Inc., an investment banking firm.
Member of the Audit Committee.
Howard T. Buchanan - Age 62, Director since November 1992. Mr.
Buchanan also served as the Co-chairman of the Company from January 1988 until
April 1989, when he retired. Prior to January 1988 he was President and Chief
Executive Officer of Spectradyne, Inc. from March 1975 through February 1984,
at which time he also became Chairman of the Board of Spectradyne, Inc.
Skip Victor - Age 38, Director since November 1992. Mr. Victor
has been Executive Vice President and Principal of Chanin and Company, a
financial advisory firm, since 1990. From July 1987 to February 1990, Mr.
Victor was Vice President Corporate Finance at Drexel Burnham Lambert, Inc. He
is a director of BDK Holdings, a holding company with entities that manufacture
and distribute kitchen textiles and other household products.
Jeffrey I. Werbalowsky - Age 37, Director since November 1992.
Mr. Werbalowsky has been Managing Director of Houlihan, Lokey, Howard and
Zukin, a financial advisory firm, since 1988.
Messrs. Beyer and Victor were selected as directors during the
Company's 1992 restructuring pursuant to understandings with the Company's
preferred stockholders, and Messrs. Berardi, Buchanan and Werbalowsky, with the
Company's bondholders.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The Board has standing Executive, Audit and Compensation
Committees that are composed of directors of the Company. The Executive
Committee functions in the place of the Board between regular meetings of the
Board. The functions of the Audit Committee include reviewing external
financial reporting, both annual and quarterly reports, and other financial
portions of external reporting of the Company, recommending engagement of the
Company's independent accountants, reviewing and approving the terms of
engagement of the independent accountants, reviewing the independence of such
accountants, reviewing with the independent accountants the plan, scope and
results of the auditing engagement, and reviewing the scope and results of the
Company's procedures for internal auditing and the adequacy of the Company's
internal accounting controls. The functions of the Compensation Committee
include monitoring compensation for executive officers and monitoring
compensation arrangements of certain management employees for consistency with
corporate objectives and to enhance shareholder value; upon recommendation by
the Chief Executive Officer, approving compensation for senior management; and
approving employee benefit plans.
As described above, pursuant to the Company's Certificate of
Incorporation, the Class B Directors serve as the Class B Nominating Committee,
which nominates persons to serve as Class B Directors at any meeting of
stockholders at which Class B Directors are to be elected. In addition, the
Class B Nominating Committee fills any vacancy occurring among the Class B
Directors whether arising from death, resignation or removal of any Class B
Director.
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During the year ended December 31, 1993, the Board held a total
of eight meetings and the Executive, Audit and Compensation Committees each
held one meeting. Mr. Gregg Davis, son of Mr. Marvin Davis, resigned from the
board effective November 18, 1993. The Board of Directors elected Mr. Seibert
to fill Mr. Gregg Davis' position on the board. The Class B Nominating
Committee held no meetings in 1993.
COMPENSATION OF DIRECTORS
During 1993 the Company paid directors who were not part of
management of the Company and who did not have ownership interest in the
Company $5,000 per board meeting attended. Beginning in 1994, the Company will
compensate all directors $25,000 annually, payable quarterly. This
compensation is paid regardless of the number of meetings held and individual
attendance thereat. Committee member directors receive $1,000 for each
committee meeting that is held on a day when there is no Board meeting.
Additionally, directors' travel expenses to meetings are reimbursed by the
Company. Mr. Beyer has declined to accept any fees from the Company in
connection with his service as director. The Company presently provides
liability insurance for potential losses incurred by its directors and officers
as a result of actions taken by them in their respective capacities on behalf
of the Company. For information regarding certain other compensation paid by
the Company to Mr. Buchanan and to Rainbow Company, a general partnership
controlled by Mr. Marvin Davis, see "Certain Other Transactions" and "Principal
Stockholder Transactions."
PROPOSAL 1. THE BOARD OF DIRECTORS OF THE COMPANY URGES YOU TO
VOTE FOR THE NOMINEES FOR THE BOARD OF DIRECTORS DESCRIBED ABOVE. PROXIES WILL
BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE NINE
CLASS A DIRECTORS NOMINEES AND FIVE CLASS B DIRECTORS NOMINEES WILL BE ELECTED
BY THE HOLDERS OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK RESPECTIVELY,
BY PLURALITY OF THE VOTES CAST SEPARATELY BY THE HOLDERS OF EACH CLASS.
PROPOSAL 2: RATIFICATION OF SELECTION OF ACCOUNTANTS
The Board and the Audit Committee recommend ratification of the
appointment of KPMG Peat Marwick as the Company's independent accountants to
serve until the next Annual Meeting of Stockholders. KPMG Peat Marwick has
audited the financial statements of the Company since 1989. KPMG Peat Marwick
will have a representative at the meeting who will have the opportunity to make
a statement, if the representative desires to do so, and will be available to
respond to appropriate questions.
PROPOSAL 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 2 TO APPROVE THE RATIFICATION OF KPMG PEAT MARWICK AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY. PROXIES WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. PROPOSAL 2 WILL BE ADOPTED IF
APPROVED BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT IN PERSON,
OR BY PROXY, AT THE MEETING AND ENTITLED TO VOTE.
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PROPOSAL 3: NAME CHANGE
The Board of Directors has proposed that the First Article of the
Company's Certificate of Incorporation (the "Certificate of Incorporation")
be amended, subject to approval by the stockholders, to change the name of the
Company from "SPI Holding, Inc." to "SpectraVision, Inc."
The Company has been using "SPI Holding, Inc." as its name since
its inception in 1989 when it acquired the Company's principal operating
subsidiary, Spectradyne, Inc. The proposed amendment would change the legal
name of the Company to reflect the more commonly used principal product name of
"SpectraVision." The Company's stock symbol on the American Stock Exchange
would also be changed from from SPH B to SVN. Under Delaware law, the change
of name requires approval of the stockholders to amend the Certificate of
Incorporation.
If the proposed amendment is adopted, the text of the First
Article will be amended to read as follows:
"FIRST: The name of the Corporation is SpectraVision, Inc."
PROPOSAL 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 3 TO APPROVE THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROXIES WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR
PROXIES. FOR APPROVAL, PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY
OF THE SHARES PRESENT IN PERSON, OR BY PROXY, AT THE MEETING AND ENTITLED TO
VOTE.
PROPOSAL 4: 1994 MANAGEMENT INCENTIVE EQUITY PLAN
On February 2, 1994, the Compensation Committee recommended and
the Board of Directors approved a proposed 1994 Management Incentive Equity
Plan (the "Equity Plan"), subject to approval by stockholders. The terms of
the Equity Plan are described under the caption "Executive Compensation --
Description of the Equity Plan and New Plan Benefits Table" below, and the
Equity Plan is set forth in its entirety as Appendix A hereto. The Board
believes that the Company's long-term success is dependent upon the ability of
the Company to attract and retain outstanding individuals who, by virtue of
their ability and qualifications, make important contributions to the Company.
The Board believes that providing management the opportunity for stock
ownership through the Equity Plan enhances stockholder value because the value
of a grant increases only if the price of the Company's Class B Common Stock
increases.
PROPOSAL 4. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 4 TO APPROVE THE 1994 MANAGEMENT INCENTIVE EQUITY PLAN. PROXIES WILL
BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. FOR
APPROVAL, PROPOSAL 4 REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
PRESENT IN PERSON, OR BY PROXY, AT THE MEETING AND ENTITLED TO VOTE.
OTHER MATTERS
It is not anticipated that there will be presented to the meeting
any business other than election of directors and ratification of the
appointment of independent accountants. If any other matters requiring the
vote of the stockholders arise, including the question of adjourning the
meeting and other matters not known reasonably in advance by the Company, the
persons named in the accompanying proxy will vote on such matters according to
their best judgment.
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<PAGE> 13
Regardless of the number of shares owned by you, it is important
that they be represented at the meeting, and you are respectfully requested to
sign, date and return the accompanying proxy at your earliest convenience.
ADDITIONAL INFORMATION REGARDING 1993 TRANSACTIONS
As discussed in the Company's Annual Report for 1993, the Company
completed three significant transactions in 1993 resulting in the restructuring
of its financial and organizational operations. These transactions, which
represent the consummation of strategic objectives of the Company in 1993 (the
"1993 Transactions"), are described below
(1) On July 28, 1993 the Company, through its wholly owned
subsidiary Spectradyne, Inc. ("Spectradyne") entered into an agreement with
Electronic Data Systems Corporation ("EDS") to install an advanced hotel
pay-per-view system (the "EDS Strategic Alliance"). Under the agreement, EDS
and the Company are installing a Compressed Digital Video ("CDV(TM)") satellite
movie transmission system (the "CDV Satellite Network") throughout most of the
Company's current and future North American hotel sites. The CDV Satellite
Network will substantially replace the Company's existing analog technology,
which relies exclusively on videotape players located at each hotel and which
technology has been used since the Company's inception in 1971.
(2) On October 5, 1993 the Company issued, through a public
offering, 7,650,000 shares of its Class B Common Stock (including 650,000 shares
under an over-allotment option) and $209,500,000 aggregate principal amount of
11.5% senior discount notes due 2001 (the debt and equity offerings referred to
herein as the "Offerings"), resulting in net proceeds to the Company of
approximately $223.8 million. The net proceeds from the Offerings were used to
refinance an aggregate principal amount of $182.6 million of outstanding
obligations under the Company's senior bank loan (the "Old Bank Credit
Facility") and the Company's revolving line of credit (the "Old Supplemental
Credit Facility") and also for general corporate purposes, including to fund
capital expenditures required for the implementation of the EDS Strategic
Alliance and the Company's expansion plans. In connection with the Class B
Common Stock offering, the underwriters exercised an over-allotment option and
purchased 400,000 shares of Class B Common Stock purchased from Rainbow upon
Rainbow's conversion of 400,000 shares of Class A Common Stock. The Company
did not receive any of the proceeds from the shares sold by Rainbow. See
"Principal Stockholder Transactions."
Concurrently with the Offerings the Company obtained a revolving
credit facility with borrowing availability of $20 million from two financial
institutions (the "Revolving Credit Facility"). The Revolving Credit Facility
includes a letter of credit subfacility of up to $10 million including a letter
of credit in the amount of $7.5 million supporting the Company's Canadian bank
credit facility. The Revolving Credit Facility matures October 5, 1997.
(3) Effective December 17, 1993 the Company sold its
manufacturing operations to The Cerplex Group. The sale included all
manufacturing inventory and equipment. Certech Technology, Inc. (a wholly
owned subsidiary of The Cerplex Group) will manufacture and sell to the Company
its hotel entertainment system components. The transaction resulted in cash
proceeds to the Company of approximately $5.2 million.
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<PAGE> 14
EXECUTIVE OFFICERS
Albert D. Jerome -- Age 51, Chief Executive Officer and President
and Director of SPI Holding, Inc. and its subsidiaries, including Spectradyne,
since November 1991. Information about Mr. Jerome is included on page 5 with
the information on nominees for the Board of Directors.
Danny G. Hair -- Age 44, Vice President of Finance and Chief
Financial Officer of SPI Holding, Inc. and its subsidiaries, including
Spectradyne, since November 1991. Mr. Hair was Controller and Chief Accounting
Officer of Lone Star Technologies, a manufacturing and financial services
company, from June 1990 to October 1991. From April 1987 through June 1990,
Mr. Hair was Senior Vice President and Chief Financial Officer of Michigan
General Corporation, a retailing company. From June 1986 through April 1987,
Mr. Hair was Vice President of Audit and Chief Administrative Officer of Club
Corporation of America, a country, athletic and city club operator. Mr. Hair
is a Certified Public Accountant.
Matthew Hutchins -- Age 38, Vice President, Chief Legal Officer
and Corporate Secretary of SPI Holding, Inc. and its subsidiaries, including
Spectradyne., since 1990. Mr. Hutchins is also responsible for the Company's
international operations. Mr. Hutchins was outside counsel for Spectradyne as
a senior associate with the firm of Andrews & Kurth L.L.P. in Dallas for two
years prior to joining the Company. He was with Andrews & Kurth L.L.P. from
1984 to 1990.
Jon M. Nottingham -- Age 51, Senior Vice President of Sales and
Customer Services for Spectradyne. Prior to joining Spectradyne in September
1992, Mr. Nottingham was President of Distribution for LBS Communications, a
television program syndication firm from 1987 until September 1992. Prior to
1987, Mr. Nottingham was Vice President, Television Station Sales for Arbitron,
a television audience ratings firm.
Harry S. Budow -- Age 32, Senior Vice President of Marketing and
Business Development for Spectradyne. Before joining Spectradyne in March
1990, Mr. Budow was Vice President of Marketing and Engineering for Voice
Response, Inc., a provider of interactive voice response systems, from
September 1989 to February 1990 and an executive director of European
operations for VMX Inc., a developer of voice mail systems, from 1986 to 1989.
Howard Gardner -- Age 35, Senior Vice President of Product Design
and Delivery for Spectradyne since November 1993. From 1984 to 1993, Mr.
Gardner served in various capacities, most recently as Divisional General
Manager, with SRX Inc., a developer and manufacturer of digital
telecommunications systems for business and public safety markets.
The Company's Bylaws provide that each officer shall hold office
until the officer's successor is elected or appointed or until the officer's
death, resignation or removal by the Board.
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<PAGE> 15
EXECUTIVE COMPENSATION
The Summary Compensation Table includes individual compensation
information on the Chief Executive Officer, the four other most highly paid
executive officers and Seamus McGill, former Senior Vice President, for
services rendered in all capacities during the years ended December 31, 1993,
1992 and 1991.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Annual All Other
Name and Annual Annual Compen- Compen-
Principal Position Year Salary (1) Bonus sation (3) sation (4)
- - ------------------ ---- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Albert D. Jerome 1991 $ 11,538 $ --- $ --- $ ---
President & Chief 1992 $627,977 150,000(2) $57,857 $78,704
Executive Officer 1993 $622,654 $175,000 $ --- $ 7,870
Danny G. Hair 1991 $ 27,749 $ --- $ --- $ ---
Vice President & 1992 $188,017 $ --- $ --- $ 4,873
Chief Financial Officer 1993 $196,770 $125,000 $ --- $ 5,139
Matthew Hutchins 1991 $137,243 $ 23,438 $ --- $ ---
Vice President, Chief Legal 1992 $170,492 $ --- $ --- $ ---
Officer & Corporate 1993 $176,333 $100,000 $ --- $ 5,996
Secretary
Harry S. Budow 1991 $ 87,602 $ 15,937 $ --- $ 2,877
Senior Vice Bresident, 1992 $147,127 $ --- $ --- $ 5,016
Marketing & Business 1993 $151,117 $150,000 $ --- $ 4,497
Development, Spectradyne, Inc.
Jon M. Nottingham 1991 --- $ --- $ --- $ ---
Senior Vice President, 1992 --- $ --- $ --- $ ---
Sales and Customer 1993 $204,050 $ 75,000 $44,525 $ 7,195
Service, Spectradyne, Inc.
Seamus McGill (5) 1991 $134,737 $ 20,625 $ --- $ 4,495
Senior Vice President 1992 $195,457 $ --- $ --- $ 4,987
Spectradyne Inc. 1993 $ 44,234 $ --- $ --- $257,651
</TABLE>
___________________________
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<PAGE> 16
(1) Annual salaries for 1992 include payment of an additional pay-period due
to a change in payroll practices. Annual salaries for 1993 include
amounts attributable to salary increases that became effective in 1992.
(2) Mr. Jerome's 1992 bonus was paid in consideration of his forfeiture of
his former employer's outstanding unvested stock options, bonus and
other benefits.
(3) In accordance with the transitional provisions of the SEC rules, the
Company has not provided any information in this column for any fiscal
year of the Company that ended prior to 1992. Perquisites for each
individual named in the Summary Compensation Table for 1992 and 1993,
except Mr. Jerome in 1992 and Mr. Nottingham in 1993, are not reflected
because the value aggregated less than the lower of $50,000 or 10% of
the total annual salary and bonus reported for such individual in the
Summary Compensation Table. Other annual compensation for Mr. Jerome in
1992 includes $45,019 for relocation expenses as provided in Mr.
Jerome's employment agreement. Other annual compensation for Mr.
Nottingham in 1993 is for reimbursement of relocation expenses.
(4) All other compensation consists solely of the aggregate value of the
Company contribution under the Savings for Retirement Plan, except that
all other compensation for Mr. Jerome in 1992 consists solely of $7,689
of Company contributions under the Savings for Retirement Plan, a
payment of $39,780 to Mr. Jerome's former employer for the equity in a
life insurance policy and premiums totalling $40,235 for the two-year
period ending December 31, 1993, and all other compensation for Mr.
McGill in 1993 consists solely of $1,954 of Company contributions under
the Savings for Retirement Plan and a severance payment of $255,697.
See footnote 5 following with respect to Mr. McGill's compensation in
1993.
(5) Mr. McGill resigned from the Company effective March 26, 1993. Upon his
resignation, Mr. McGill received a payout of his employment contract
through June 30, 1993 pursuant to a severance payment equal to one
year's salary at his pay rate in effect on March 26, 1993.
EXECUTIVE RETIREMENT PLAN
In 1985 the Board of Directors of the Company adopted the
Executive Retirement Plan to provide retirement and death benefits to its
executive officers, which plan was terminated by the Company in 1987 for new
participants. Mr. Howard T. Buchanan, former Chairman of the Board and Chief
Executive Officer of Spectradyne and currently a director of the Company, is
the only current director or officer of the Company covered by the Executive
Retirement Plan. The plan provided that the Company would pay to each
executive officer who retired after becoming age 60, provided he had worked for
the Company for at least 10 years, the lesser of (i) 60% of the highest base
compensation (including salary but not including any bonuses or contributions
to other plans) of the executive officer or (ii) $150,000 each year after
retirement for 20 years. In the event of the death of an executive officer,
the Company will pay his beneficiaries the remaining benefits. The benefits
under the plan for executive officers are unfunded. The Company, however, has
purchased insurance to cover its costs to pay the death benefits described
above. The Company paid premiums of $26,000 during each of the years 1993,
1992 and 1991 to insure the death benefit under the plan. Mr. Buchanan
received $150,000 under this plan for each of 1993, 1992 and 1991.
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<PAGE> 17
DESCRIPTION OF CERTAIN AGREEMENTS WITH MANAGEMENT
As of January 28, 1992, the Company entered into a five-year
employment agreement with Albert D. Jerome, its President and Chief Executive
Officer, effective December 16, 1991, providing for an annual base salary of
$600,000. Under this agreement the base salary will be adjusted annually to
reflect increases in the Consumer Price Index. Additionally, the agreement
provided for a one-time $150,000 signing bonus paid in January 1992, the
payment of Mr. Jerome's moving expenses and up to $50,000 of the expenses
associated with the sale, purchase, rental or carrying of his personal
residences. In addition to an annual base salary, Mr. Jerome's compensation
pursuant to his employment agreement includes an annual incentive opportunity
with payment based on attainment by the Company of predetermined financial
performance criteria. Such criteria are based on achievement of (i) certain
cash flow targets, which are based on the Company's earnings before interest,
income taxes, depreciation and amortization, and without adjustments for
extraordinary transactions and (ii) projected financial results for the
fiscal year, which are based on the attainment of targets with respect to cash
flow, projected revenue, return on capital and other factors reasonably agreed
to by Mr. Jerome and Messrs. John Davis and Marvin Davis. The cash flow
target for fiscal year 1992 and each year thereafter must represent an
increase from the prior year's cash flow. The amount of the increase as well
as the projected financial results are to be established jointly by Mr. Jerome
and Messrs. John Davis and Marvin Davis at the beginning of each fiscal year.
The agreement provides that annual bonuses are not to exceed $350,000, the
majority of which is based upon the Company's cash flow for the years 1992
through 1996. No bonuses were paid for 1992 or 1993 for cash flow
achievement. Other financial performance criteria and targets have not been
determined. Mr. Jerome did receive a bonus of $175,000 for 1993. The
Compensation Committee approved such bonus based on the Committee's subjective
evaluation of Mr. Jerome's contributions to the 1993 Transactions. Mr.
Jerome's employment agreement also provides for a phantom stock bonus where
Mr. Jerome may earn a cash bonus, vesting through 1996, of up to 7% of the
amount and upon the terms described in the table below. At December 31, 1993,
the Company had no liability under the phantom stock bonus plan.
As of April 5, 1993, the Company's wholly owned subsidiary,
Spectradyne, entered into a personal services agreement with Mr. Harry S.
Budow, Senior Vice President of Marketing and Business Development, which
provided for an annual base salary of $150,000, an annual discretionary
incentive bonus, and participation in benefit plans maintained by the Company.
The agreement was amended as of March 24, 1994 to extend its initial term to
December 31, 1996, to require a five-month notice of termination prior to the
end of the then current term, and to increase Mr. Budow's annual base salary
to $200,000. The agreement is automatically extended for one year unless
either party notifies the other in writing at least five months prior to the
expiration of the current term. The agreement includes a covenant not to
compete during the term of the agreement and in the event of termination of
the agreement for so long as Spectradyne pays Mr. Budow in accordance with the
terms of the agreement, and also includes confidentiality provisions in effect
during the term of the agreement and for two years thereafter.
As of October 16, 1991, the Company's wholly owned subsidiary,
Spectradyne, entered into an employment agreement with Seamus McGill, its
Senior Vice President of Operations. The agreement provided for employment at
an annual base salary of $180,000. The agreement also included an annual
discretionary cash bonus of at least 25% but no greater than 50% of Mr.
McGill's annual base salary. Mr. McGill resigned from the Company effective
March 26, 1993. Upon his resignation, the Company paid Mr. McGill $261,235,
representing salary and benefits through June 1994, in fulfillment of all
Company obligations under the agreement.
_
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<PAGE> 18
LONG-TERM INCENTIVE PLAN -- AWARD IN 1993(1)
<TABLE>
<CAPTION>
Number of Performance or
Shares, Units or Other Period
Name Other Rights (#) Until Payout
---- ---------------- -------------
<S> <C> <C>
Albert D. Jerome 5%-7%(2) 01/01/99(1)
-----------------------------
</TABLE>
(1) The phantom stock bonus will be payable pursuant to the Company's
employment agreement with Mr. Jerome on the earlier of the sale of the
Company (as defined in the agreement) or January 1, 1999, and no
amounts were awarded in 1992 or 1993 pursuant to the agreement.
(2) Cash bonus of 5% of the amount by which the fair market value of the
equity interests in the Company owned by entities controlled by Mr.
Marvin Davis (the "Davis Affiliates") exceeds the total value of the
investments by the Davis Affiliates in the Company (plus interest
accrued at the prime rate from the date of such investments), with
such value not to exceed $100 million, subject to vesting upon the
sale of the Company (as defined in the agreement) or in installments
based on continued employment from December 31, 1992 through January
1, 1997. If the fair market value of the equity interests owned by
the Davis Affiliates exceeds the total investments by greater than
$200 million, the cash bonus is 7% of such excess amount. In the
event the Davis Affiliates sell less than all of their equity interest
in the Company, Mr. Jerome shall be entitled to a pro rata share of
the phantom stock bonus.
INCENTIVE BONUS PLAN
In 1994, the Compensation Committee has recommended and the Board
of Directors has approved the 1994 Management Incentive Bonus Plan of SPI
Holding, Inc. (the "Bonus Plan"). The Bonus Plan is intended to further the
attainment of the Company's profit and growth objectives by providing
incentives to key executives whose management and individual performances have
a direct impact on achieving those objectives. The Bonus Plan is also expected
to encourage the continued employment of the Company's key executives and to
facilitate the recruiting of executive personnel in the future. Pursuant to
the Bonus Plan, upon the recommendation of the Chief Executive Officer, the
Compensation Committee will award cash bonus awards to eligible employees. The
bonuses, which may be made on an annual basis, will be contingent on the
Company's achievement of targeted levels of pre-tax net operating cash flow
("cash flow") for the year, and will be paid out of a pool consisting of an
amount equal to up to 10% of the cash flow, if any, in excess of the target.
In addition, the Compensation Committee, upon the recommendation of the Chief
Executive Officer, may award a special bonus (under special circumstances) of
up to one-half of one percent of cash flow for the year. The target will be
established by the Compensation Committee, in consultation with the Chief
Executive Officer. Eligible employees will be those who are determined by the
Compensation Committee to be in a position to have a direct impact on the
Company's profitability, but the Chief Executive Officer will not be eligible.
The maximum bonus that will be payable to any employee is 100% of his base
salary. The Bonus Plan became effective as of January 1, 1994, for years
beginning on and after that date.
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<PAGE> 19
DESCRIPTION OF EQUITY PLAN AND NEW PLAN BENEFITS TABLE
The Equity Plan, which is subject to approval by the Company's
stockholders, is a stock plan providing for the grant of (i) incentive stock
options and nonqualified stock options ("Options"), (ii) stock appreciation
rights ("Rights") and restricted stock awards ("RSAs"). The Equity Plan
provides that the total number of shares of Class B Common Stock that may be
subject to Options, Rights and RSAs is 1,800,000 shares and that the maximum
number of shares that may be subject to Options or Rights granted to any
eligible individual employee in any calendar year is 180,000. Options, Rights
and RSAs are collectively referred to as "Incentive Awards."
The Equity Plan is administered by a committee selected by the
Company's Board of Directors (the "Plan Committee"), consisting of two or more
directors who are not also employees of the Company, each of whom is
disinterested within the meaning of Rule 16b-3(c)(2) of the Exchange Act.
Eligible employees are those senior management or other key employees of the
Company and its subsidiaries (including key employees who are also directors)
as may be selected by the Plan Committee from time to time, upon recommendation
of the Compensation Committee. On February 2, 1994, the Compensation
Committee, serving as the Plan Committee, approved, subject to stockholder
approval of the Equity Plan, the incentive stock option grants shown in the New
Plan Benefits Table.
At the time an Option is granted, the Plan Committee may, in its
sole discretion, designate whether an Option is to be considered an incentive
stock option or nonqualified stock option. Unless otherwise expressly provided
at the time of grant, Options under the Equity Plan will be incentive stock
options. To the extent that the aggregate fair market value of incentive stock
options granted to an employee which become exercisable in any calendar year
exceeds $100,000, such Options will be designated as nonqualified options.
The price per share to be purchased pursuant to the exercise of
an Option shall be determined by the Plan Committee at the time of grant;
provided, however, that the purchase price per share for the exercise of an
incentive stock option shall not in any event be less than 100% of the fair
market value of such shares on the date of the grant. Payment of the purchase
price under Options can be made in cash, previously owned shares of Class B
Common Stock having a value equal to the exercise price, or by such other
method as the Plan Committee may permit from time to time. However, a holder
may not use previously owned shares that were acquired pursuant to the Equity
Plan, or any other stock plan that may be maintained by the Company or its
subsidiaries, to pay the purchase price under an Option unless the holder has
beneficially owned such shares for at least six months.
The Plan Committee can grant Rights either (i) independently of
Options, (ii) in connection with Options whereby the exercise of the Option
cancels the corresponding number of Rights or the exercise of the Rights
cancels the Option ("Alternative Rights") or (iii) in connection with Options
whereby the exercise of an Option is deemed to be a simultaneous exercise of
the corresponding number of Rights ("Conjunctive Rights"). The number of
shares with respect to which Alternative Rights are surrendered shall not be
available for future grants of Incentive Awards.
A Right with respect to a share of Class B Common Stock entitles
the holder to receive an amount equal to the excess (or a portion of the
excess, as determined by the Plan Committee at the time of grant), of the fair
market value of a share on the date of exercise over (i) the fair market value
of a share on the date of grant, in the case of a Right granted independently
of any Option, or (ii) the exercise price of the related Option, in the case of
a Right granted in connection with an Option.
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<PAGE> 20
However, with respect to Rights exercised by officers and directors who are
subject to Section 16(b) of the Exchange Act, during quarterly ten-day periods
beginning on the third day after the Company's quarterly statements of sales
and earnings, the amount payable to all such holders who exercise their Rights
during any such period may be uniformly determined by reference to a single
fair market value of a share of Class B Common Stock on any day during such
relevant quarterly period, as may be designated by the Plan Committee, rather
than the fair market value of such Class B Common Stock on the actual date of
exercise by each respective holder. The Plan Committee may limit the amount
payable upon the exercise of any Rights.
At the election of the holder, but subject to disapproval of such
election by the Plan Committee, distribution of the amount payable upon the
exercise of Rights granted independently of any Option may be made in shares of
Class B Common Stock, valued at their fair market value on the date of exercise
of the Rights, or in cash, or in a combination of cash and shares. Payment
pursuant to the exercise of Conjunctive Rights or Alternative Rights shall be
made solely in cash.
Unless otherwise specified by the Plan Committee, Options and
Rights shall be exercisable cumulatively at the rate of 25% per year commencing
on the first anniversary of the date of grant; however Options or Rights
granted prior to stockholder approval of the Equity Plan will become
exercisable cumulatively at the rate of 25% on the date of stockholder approval
and 25% per year on each of the first, second and third anniversaries of the
date of grant. All Options and Rights become immediately exercisable in the
event of death, disability, a Change in Control of the Company (as defined in
the Equity Plan) or upon the occurrence of such special circumstance or event
as the Plan Committee determines. However, no Options or Rights may be
exercised earlier than six months following the later of the date of grant or
stockholder approval of the Equity Plan. Options and Rights related thereto
generally will be exercisable for ten years after the date of grant. Rights
granted independently of Options generally will be exercisable for a period
determined by the Plan Committee, but in no event after ten years from the date
of grant. Unexercised Options or Rights held by terminated employees will
expire on the earlier of sixty days after the date of termination of employment
or the stated expiration date; however, in the case of a termination due to
disability or death, the sixty-day period is extended to one year after such
termination.
The recipient of an RSA is granted shares (or a right to purchase
shares) of Class B Common Stock. Such shares are subject to transfer
restrictions determined by the Plan Committee, and subject to a substantial
risk of forfeiture unless and until specific conditions established by the Plan
Committee are met. Unless otherwise specified by the Plan Committee,
restrictions imposed by the Plan Committee shall lapse at a rate of 25% per
year beginning on the first anniversary date of grant. The recipient forfeits
the restricted shares upon voluntary resignation or discharge for cause prior
to the end of the restriction period.
Payment of the purchase price for restricted shares shall be made
in cash, by check, or by such other method as the Plan Committee may permit.
Certificates for the shares of Class B Common Stock granted or
purchased pursuant to an RSA shall be issued in the name of the holder thereof,
but the certificates shall be retained by the Company for the holder's account
and shall not be delivered to the holder until the end of the restriction
period. The holder of an RSA has the right to vote the shares of Class B
Common Stock registered in his or her name. Dividends and distributions
(including stock dividends and distributions in the event of a split-up,
conversion, exchange, reclassification or substitution) with
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<PAGE> 21
respect to such shares may be retained by the Company for the holder's account,
to be distributed to the holder at the time the restriction period ends.
Each Incentive Award shall contain usual anti-dilution provisions
which will be applicable in the event of a stock dividend, split-up,
conversion, exchange, reclassification or substitution. In the event of a
recapitalization, merger, consolidation, rights offering, reorganization,
liquidation, or other change in the Company's corporate structure or
outstanding shares, the Plan Committee may make such equitable adjustments to
the number of shares and the class of shares available under the Equity Plan or
to any outstanding Incentive Award as it shall deem appropriate to prevent
dilution or enlargement of rights.
The Company shall obtain such consideration for granting
Incentive Awards under the Equity Plan as the Plan Committee in its discretion
may request.
Each Incentive Award may be subject to provisions to assure that
any exercise or disposition of Class B Common Stock will not violate the
securities laws.
The Board of Directors or the Plan Committee may at any time
withdraw or amend the Equity Plan and may, with the consent of the affected
holder of an outstanding Incentive Award, at any time withdraw or amend the
terms and conditions of such Incentive Awards. Any amendment which would
increase the number of shares issuable pursuant to Incentive Awards or change
the class of employees to whom Incentive Awards may be granted shall be subject
to the approval of the stockholders of the Company within one year of such
amendment.
No Incentive Award may be granted under the Equity Plan after February 1, 2004.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Federal income tax consequences to an employee who receives
incentive stock options generally will, under current law, be as follows:
An employee will not realize any income upon the grant or
exercise of an incentive stock option. If the employee disposes of the shares
of Class B Common Stock acquired upon the exercise of an incentive stock option
at least two years after the date the Option is granted and at least one year
after the Class B Common Stock is transferred to him or her, the employee will
realize long-term capital gain in an amount equal to the excess, if any, of his
or her selling price for the shares over the Option exercise price. In such
case, the Company will not be entitled to any tax deduction resulting from the
issuance or sale of the shares. If the employee disposes of the shares of
Class B Common Stock acquired upon the exercise of an incentive stock option
prior to the expiration of two years from the date the Option is granted, or
one year from the date the Class B Common Stock is transferred to him or her,
any gain realize will be taxable at such time as follows: (a) as ordinary
income to the extent of the difference between the option exercise price and
the lesser of the fair market value of the shares on the date the option was
exercised or the amount realized from such disposition, and (b) as capital gain
to the extent of any excess, which gain shall be treated as short-term or
long-term capital gain depending upon the holding period of the Class B Common
Stock. In such case, the Company may claim an income tax deduction (as
compensation) for the amount taxable to the employee as ordinary income.
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<PAGE> 22
In general, the difference between the fair market value of the
Class B Common Stock at the time the incentive stock option is exercised and
the Option exercise price will constitute an item of adjustment, for purposes
of determining alternative minimum taxable income, and under certain
circumstances may be subject, in the year in which the Option is exercised, to
the alternative minimum tax.
If an employee uses shares of Class B Common Stock which he or
she owns to pay, in whole or in part, the exercise price for shares acquired
pursuant to an incentive stock option, (a) the holding period for the newly
issued shares of Class B Common Stock equal in value to the old shares which
were surrendered upon the exercise shall include the period during which the
old shares were held, (b) the employee's basis in such newly issued shares will
be the same as his or her basis in the old shares surrendered and (c) no gain
or loss will be recognized by the employee on the old shares surrendered.
However, if any employee uses shares previously acquired pursuant to the
exercise of an incentive stock option to pay all or part of the exercise price
under an incentive stock option, such tender will constitute a disposition of
such previously acquired shares for purposes of the one-year (or two-year)
holding period requirement applicable to such incentive stock option and such
tender may be treated as a taxable exchange.
The Federal income tax consequences to an employee who receives
nonqualified stock options generally will, under current law, be as follows:
An employee will not realize any income at the time the Option is
granted. Generally, an employee will realize ordinary income, at the time the
Option is exercised in a total amount equal to the excess of the then fair
market value of the Class B Common Stock acquired over the exercise price.
However, Section 83 of the Internal Revenue Code of 1986, as amended (the
"Code") provides that, if a director, officer or principal stockholder (i.e.,
an owner of more than 10 percent of the outstanding shares of Class B Common
Stock) receives shares pursuant to the exercise of an Option, he or she is not
required to recognize any income until the date on which such shares can be
sold at a profit without liability under Section 16(b) of the Exchange Act. At
such time, the director, officer or principal stockholder will realize income
equal to the amount by which the then fair market value of the shares acquired
pursuant to the exercise of such Option exceeds the price paid for such shares.
Alternatively, a director, officer or principal stockholder who would not
otherwise be taxed at the time the shares are transferred may file a written
election within 30 days with the Internal Revenue Service, to be taxed as of
the date of transfer, on the difference between the then fair market value of
the shares and the price paid for such shares.
All income realized upon the exercise of a nonqualified stock
option will be taxed as ordinary income. The Company will be entitled to a tax
deduction (as compensation) for the amount taxable to an employee (including a
director, officer and principal stockholder) upon the exercise of a
nonqualified stock option, as described above, in the same year as those
amounts are taxable to the employee.
Shares of Class B Common Stock issued pursuant to the exercise of
a nonqualified stock option generally will constitute a capital asset in the
hands of an employee (including a director, officer or principal stockholder)
and will be eligible for capital gain or loss treatment upon any subsequent
disposition. The holding period of an employee (including a director, officer
or principal stockholder) will commence upon the date he or she recognizes
income with respect to the issuance of such shares, as described above. The
employee's basis in the shares will be equal to the greater of their fair
market value as of that date or the amount paid for such shares. If, however,
an employee uses shares of Class B Common Stock which he or she owns to pay, in
whole or in part, the exercise price for
-19-
<PAGE> 23
shares acquired pursuant to the exercise of a nonqualified stock option, (a)
the holding period for the newly issued shares of Class B Common Stock equal in
value to the old shares which were surrendered upon the exercise shall include
the period during which the old shares were held, (b) the employee's basis in
such newly issued shares will be the same as his or her basis in the
surrendered shares, (c) no gain or loss will be realized by the employee on the
old shares surrendered, and (d) the employee will realize ordinary income in an
amount equal to the fair market value of the additional number of shares
received over and above the number of old shares surrendered.
The Federal income tax consequences to an employee who receives
an RSA generally will, under current law, be as follows:
An employee will not realize any income when the right to acquire
shares subject to the RSA is granted, or when the certificates for the shares
themselves are registered in the employee's name. The employee will realize
ordinary income as and when the shares are no longer subject to a substantial
risk of forfeiture (which risk of forfeiture includes the restrictions imposed
by Section 16(b) of the Exchange Act), in an amount equal to the difference
between the fair market value of the shares as of such date and the price he or
she paid for such shares. Alternatively, the employee can file a written
election with the Internal Revenue Service, no more than 30 days after the
certificates for the shares are issued, to be taxed as of the date of issuance
on the difference between the then fair market value of the shares and the
price he or she paid for such shares. Once the employee has realized ordinary
income with respect to the RSA, any subsequent increase in the value of the
shares subject to the RSA generally will be taxed when the shares are sold, as
long-term or short-term capital gain, depending on how long the shares are
held. The employee's holding period with respect to the shares will begin on
the date he or she realizes ordinary income with respect to the shares and the
basis in the shares will be equal to their then fair market value. The Company
will be entitled to a tax deduction when, and to the extent, ordinary income is
realized by the employee with respect to such shares. Any dividends or other
distributions paid on the shares generally will be taxable when distributed to
the employee.
An employee will be subject to tax, at ordinary income tax rates,
on the amount of cash and the fair market value of any property received upon
the exercise of any Rights. The Company will be entitled to a tax deduction
equal to the amount includable in the employee's income.
In addition to the Federal income tax consequences discussed
above, Section 280G of the Code provides that if an officer, stockholder or
highly compensated individual receives a payment which is in the nature of
compensation and which is contingent upon a change in control of the employer,
and such payment equals or exceeds three times his or her "base salary" (as
hereinafter defined), then any amount received in excess of base salary shall
be considered an "excess parachute payment." An individual's "base salary" is
equal to his or her average annual compensation over the five-year period (or
period of employment, if shorter) ending with the close of the individual's
taxable year immediately preceding the taxable year in which the change in
control occurs. If the taxpayer establishes, by clear and convincing evidence,
that an amount received is reasonable compensation for past or future services,
all or a portion of such amount may be deemed not to be an excess parachute
payment. If any payments made under the Equity Plan in connection with a
change in control of the Company constitute excess parachute payments with
respect to any employee, then in addition to any income tax which would
otherwise be owed on such payment, the individual will be subject to an excise
tax equal to 20% of such excess parachute payment and the Company will not be
entitled to any tax deduction to which it otherwise would have been entitled
with respect to such excess parachute payment.
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<PAGE> 24
Section 280G provides that payments made pursuant to a contract
entered into within one year of the change in control are presumed to be
parachute payments unless the individual establishes, by clear and convincing
evidence, that such contract was not entered into in contemplation of a change
in control. In addition, the General Explanation of the Tax Reform Act of 1984
prepared by the Staff of the Joint Committee on Taxation indicates that the
grant of an Incentive Award within one year of the change in control or the
acceleration of an Incentive Award because of a change in control may be
considered a parachute payment, in an amount equal to the value of the
Incentive Award or the value of the accelerated portion of the Incentive Award,
as the case may be. Pursuant to proposed regulations issued by the Treasury
Department under Section 280G, the acceleration of a nonqualified stock option
because of a change in control is considered a parachute payment in an amount
equal to the value of the accelerated portion of the option. Even if the grant
of an Incentive Award within one year of the change in control or the
acceleration of an Incentive Award is not a parachute payment for purposes of
Section 280G, the exercise of an Option or Right granted within one year of the
change in control or the exercise of the accelerated portion of an Option or
Right may result in a parachute payment, in an amount equal to the excess of
the fair market value of the shares received upon exercise of the Option over
the exercise price (or the cash or fair market value of shares received upon
the exercise of Rights). Payments received for the cancellation of an
Incentive Award because of a change in control may also result in parachute
payments.
Under Section 162(m) of the Code, publicly held companies
generally may not deduct compensation for certain employees to the extent such
compensation exceeds $1 million for the taxable year. The $1 million
limitation would apply to the Company's Chief Executive Officer and the four
most highly compensated officers other than the Chief Executive Officer.
Compensation which is performance-based (as defined in the Code and rules and
regulations thereunder) however, is not counted as subject to the deductibility
limitations of Section 162(m). Income pursuant to Options and Rights under the
Equity Plan are intended to permit the full deduction by the Company, by
qualifying such amounts as performance-based compensation and, therefore,
exempt from the limitations of Section 162(m). Income pursuant to RSAs would
be subject to the deductibility limitations of Section 162(m).
The foregoing summary with respect to Federal income taxation
does not purport to be complete and reference is made to the applicable
provisions of the Code.
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<PAGE> 25
The following table shows the number of Options awarded on
February 2, 1994, subject to approval of the Equity Plan by the stockholders,
to the following persons: (i) each of the Chief Executive Officer and the four
most highly compensated executive officers of the Company; (ii) the executive
officers as a group; and (iii) all other non-executive officers and employees
as a group:
NEW PLAN BENEFITS
1994 Management Incentive Equity Plan of SPI Holding, Inc.
<TABLE>
<CAPTION>
Name and Position Number of Options(1)
- - ----------------- -----------------
<S> <C>
Albert D. Jerome, President ---
& Chief Executive Officer
Danny G. Hair, Vice President 44,970
& Chief Financial Officer
Matthew Hutchins, Vice President, 44,970
Chief Legal Officer & Corporate Secretary
Harry S. Budow, Senior Vice President, 50,366
Marketing & Business Development,
Spectradyne, Inc.
Jon M. Nottingham, Senior Vice President, 44,970
Sales and Customer Services, Spectradyne, Inc.
Executive Group 203,264
Non-Executive Officer Employee Group 156,492
- - --------------------
</TABLE>
(1) The exercise price under all Options granted was $7.875 per share, which
amount was equal to the fair market value of the Class B Common Stock on
the date of grant. Options vest 25% on the date of stockholder approval
of the Equity Plan and 25% per year on each subsequent anniversary of
the date of grant. Vesting is accelerated in the event of the holder's
death or disability or a Change in Control of the Company (as defined in
the Equity Plan). In the event the Equity Plan is not approved by the
stockholders, all options granted shall be void and of no force and
effect. On April __, 1994, the closing price per share of the Class B
Common Stock as reported on the American Stock Exchange was $__.
-22-
<PAGE> 26
STOCK PRICE PERFORMANCE GRAPH
Prior to November 1992, the Company's Common Stock was privately
held. In connection with the Company's financial restructuring completed in
November 1992, the Company registered its Common Stock under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Common Stock commenced trading on the American Stock Exchange on November 23,
1992.
(STOCK PRICE PERFORMANCE GRAPH)
<TABLE>
<CAPTION>
November 23, 1992 December 31, 1992 December 31, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
SPI Holding, Inc. 100.00 84.75 122.03
S&P 500 100.00 103.20 113.61
Peer Group 100.00 106.92 162.94
</TABLE>
Source: S&P Compustat Services
-23-
<PAGE> 27
Set forth above is a line graph comparing the cumulative total
stockholder return (change in year-end stock price plus reinvested dividends)
on the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index and a peer group selected by the Company for
the period commencing November 23, 1992 through December 31, 1993. The
Company's selected peer group consists of the following cable television
businesses: Adelphia Communications Corporation, Cablevision Systems
Corporation, Century Communications Corp., Falcon Cable Systems Company, Galaxy
Cablevision, L.P., Jones Intercable Investors, L.P. and TCA Cable TV, Inc.
There can be no assurance that the Company's stock performance
will continue into the future with the same or similar trends depicted in the
graph above. The Company will not make or endorse any predictions as to future
stock performance.
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PROGRAM
The Company's compensation program for executives is currently
administered by the Compensation Committee of the Company's Board of Directors.
The Compensation Committee is composed of Messrs. Goldberg, Poitier and
Ziffren, all of whom are nonemployee directors. The Compensation Committee has
the responsibility for ensuring that the Company's executive compensation
program continues to be in the best interest of the stockholders. Set forth
below is a report submitted by the Compensation Committee addressing the
Company's executive compensation programs for 1993.
The Company's financial results are highly dependent on its
ability to attract and retain qualified executives. The general objectives of
the executive officer compensation program are to provide a level of
compensation that will allow the Company to attract and retain talented
executive officers, particularly officers who are capable of identifying,
structuring, financing and implementing the technological innovations and
growth plans required in the Company's business.
EXECUTIVE OFFICER COMPENSATION
The executive officers, including the named executive officers
other than Mr. Jerome and Mr. Budow, received base salaries in 1993 at the rate
determined in 1992. With respect to Mr. Jerome and Mr. Budow, base
compensation for 1993 was determined in accordance with agreements with the
Company. See "Description of Certain Agreements with Management."
The bonuses paid for 1993 to executive officers, including the
named executive officers and the Chief Executive Officer, were recommended to
the Compensation Committee by the Chief Executive Officer and were approved by
the Compensation Committee. The amount of the bonus awarded to executive
officers in 1993, including the named executive officers and the Chief
Executive Officer as described under "Chief Executive Officer Compensation,"
reflected the extent and nature of such executive officer's involvement with
and contribution to the realization of the 1993 Transactions. The measures
used to determine bonus amounts for executive officers in 1993 related to each
officer's managerial responsibilities in connection with the 1993 Transactions
as well as in connection with the conduct of the Company's business. The
factors considered by the Compensation Committee were tied to the officer's
area of responsibility, were generally qualitative rather than quantitative in
nature and were not weighted according to any formula in determining bonus
compensation.
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<PAGE> 28
The Compensation Committee's specific objective in approving
bonus compensation in 1993 was to ensure that senior management would remain
with the Company after the financial restructuring in 1992 and would be
adequately compensated for the additional demands placed upon senior management
by the implementation of the Company's strategic objectives, including the 1992
financial restructuring, the EDS Strategic Alliance, the Offerings and the sale
of the Company's manufacturing operations. The agreement for the EDS Strategic
Alliance was executed in July 1993, the Offerings were successfully closed in
October 1993, and the sale of the manufacturing operations was consummated in
December 1993. In recognition of the extra demands placed upon senior
management and the need for continuity of management during and after the 1992
restructuring and the 1993 Transactions, the Compensation Committee determined
to provide a bonus in 1993 to certain of the executive officers. At the time
of approving the 1993 bonus amounts, the Compensation Committee was aware of
the increase in the price of the Company's Class B Common Stock, as shown in
the Stock Price Performance Graph for 1993.
CHIEF EXECUTIVE OFFICER COMPENSATION
The 1993 base salary of Mr. Jerome, who assumed the offices of
President and Chief Executive Officer in November 1991, was determined solely
in accordance with the terms of a five-year employment agreement with the
Company, which provides for annual increases based upon the Consumer Price
Index. The employment agreement reflects Mr. Jerome's previous total
compensation history and his previous experience as President of NBC Television
Stations, a position that provided Mr. Jerome with relevant experience in the
television entertainment industry that is valuable in conducting the Company's
particular business and in building useful business relationships for the
Company. Mr. Jerome's compensation package pursuant to his employment
agreement, which includes base salary, bonus, and long-term incentive awards,
was approved by Mr. Marvin Davis and Mr. Gray as members of the 1991 Executive
Committee and represents a premium required to attract a qualified chief
executive officer to the Company during its 1992 restructuring process. The
terms of the five-year employment agreement with Mr. Jerome are described above
in "Description of Certain Agreements with Management."
In addition to an annual base salary, Mr. Jerome's compensation
pursuant to his employment agreement includes an annual incentive opportunity
with payment based on attainment by the Company of predetermined financial
performance criteria. See "Description of Certain Agreements with Management."
The agreement provides that annual bonuses are not to exceed $350,000, the
majority of which is based upon the Company's cash flow for the years 1992
through 1996. No bonuses were paid for 1992 or 1993 for cash flow achievement.
Other financial performance criteria and targets have not been determined.
Mr. Jerome did receive a bonus of $175,000 for 1993. The Compensation
Committee approved such bonus based on the Committee's subjective evaluation
of Mr. Jerome's contributions to the 1993 Transactions. See "Executive
Officer Compensation."
-25-
<PAGE> 29
As set forth in his employment agreement, Mr. Jerome is also
eligible for long-term incentive compensation, the principal purpose of which
is to encourage Mr. Jerome to enhance the value of the Company and, hence, the
price of the Common Stock and the stockholders' return. No long-term incentive
compensation amounts are currently payable under the terms of the employment
agreement. See "Long-Term Incentive Plan -- Award in 1993."
POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code, which was enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to the corporation's Chief Executive Officer and four other most
highly compensated executive officers. Qualifying performance-based
compensation will not be subject to the deduction limits if certain
requirements are met. Section 162(m) of the Code and proposed regulations
thereunder do not affect the Company's compensation payments for fiscal 1993 or
compensation expected to be paid in 1994. In addition, stock options and stock
appreciation rights which may be granted to executive officers under the Equity
Plan have been structured in a manner that complies with Section 162(m) of the
Code. See "Description of Equity Plan and New Plan Benefits Table -- Certain
Federal Income Tax Considerations."
GENERAL
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and such report shall not otherwise be deemed
filed under such acts.
Compensation Committee: Leonard Goldberg
Sidney Poitier
Kenneth Ziffren
-26-
<PAGE> 30
PRINCIPAL STOCKHOLDER TRANSACTIONS
Pursuant to a management services agreement executed in
connection with the 1992 restructuring, effective as of November 23, 1992,
Rainbow, a general partnership controlled by Mr. Marvin Davis, a director of
the Company, provided to the Company and its subsidiaries technical and
financial advice, information and assistance, at the request of the Company, in
connection with the management and conduct of the business and affairs of the
Company and in connection with the guarantee of the Old Supplemental Credit
Facility provided by Mr. Marvin Davis. Fees paid under this management
services agreement were $182,189, plus out-of-pocket expenses of $56,000, in
1993. Upon the closing of the Offerings and the Revolving Credit Facility in
October 1993, the management services agreement was terminated. See
"Additional Information Regarding 1993 Transactions."
In addition, on September 15, 1993, a majority of the Company's
disinterested directors authorized the payment of a $1,000,000 transaction fee
(the "Davis Capital Fee") to Davis Capital Advisors (an affiliate of Mr. Marvin
Davis) as compensation for Davis Capital Advisors' assistance with the
structuring, negotiation and execution of the agreement with EDS, the terms of
the Offerings and the terms of the Revolving Credit Facility. In so
authorizing, the Board of Directors found that the terms of the Davis Capital
Fee were no less favorable than those that could have been obtained in a
comparable transaction by the Company from an unrelated third party.
In connection with the Company's Offering of 7,650,000 shares of
Class B Comon Stock (including over-allotment option) in October 1993, the
underwriters exercised an over-allotment option and purchased 400,000 shares of
Class B Common Stock purchased from Rainbow upon Rainbow's conversion of
400,000 shares of Class A Common Stock. Rainbow paid underwriting discounts
and commissions with respect to such 400,000 shares, and the Company paid all
fees and expenses of the 1993 Offerings. The Company did not receive any of
the proceeds from the 400,000 shares sold by Rainbow pursuant to the
underwriters' over-allotment option.
The Company believes that the management services agreement and
the Davis Capital Fee between the Company and the affiliates of Mr. Marvin
Davis were on terms at least as favorable as could be obtained from an
unrelated third party.
CERTAIN OTHER TRANSACTIONS
In connection with the termination of employment with certain of
the Company's former executive officers, since December 1992, the Company has
provided certain salary and other employment termination benefits or consulting
payments to the following individuals in the aggregate amounts: Mr. Freddy
Kalles, former Vice President of New Business Development, $118,856; and Mr.
Seamus McGill, former Senior Vice President of Operations, $257,651.
Pursuant to an employment agreement dated May 25, 1987, Mr.
Howard T. Buchanan, former Chairman of the Board and Chief Executive Officer of
Spectradyne, Inc. and a current director of the Company, receives $12,500 per
month and customary employee benefits not to exceed $30,000 in any 12-month
period in satisfaction of a change-of-control clause, which was triggered by
the acquisition in 1987 of all of the outstanding stock of Spectradyne by the
Company. This agreement expires in April 1995. Payments under this agreement
were $167,250 for the year ended December 31, 1993. Mr. Buchanan also receives
annual payments pursuant to a retirement plan. See "Executive Retirement
Plan."
-27-
<PAGE> 31
As reported on Schedule 13G, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") is an affiliate of The Equitable Life Assurance
Society of the United States and Equitable Capital Management Corporation,
which entities together, own 8.0% of the Company's Class B Common Stock. DLJ
was one of the underwriters of the Company's Offerings in 1993 and received a
customary underwriting discount in connection with its services. See
"Additional Information Regarding 1993 Transactions."
During a period following August 16, 1993, a secondary offering
of $6,933,000 principal amount of the Company's 11-1/2% Senior Subordinated
Reset Notes due 2002 was consummated by Crescent Shared Opportunity Fund, L.P.,
Philadelphia life Insurance Company and DLJ as selling noteholders. The
Company did not receive any of the proceeds from the offering of these notes
but pursuant to certain registration rights agreements with the selling
noteholders paid costs and expenses attributable to such offering (not
including any brokers' discounts or commissions, which were paid by the selling
noteholders). Mr. Robert D. Beyer, a director of the Company, is a Managing
Director and Principal of Crescent Capital Corporation, an affiliate of a
selling noteholder, Crescent Shared Opportunity Fund, L.P. In addition,
Crescent Capital Corporation manages the investment account of Philadelphia
Life Insurance Company, which was a selling noteholder, and of Guaranty
Reassurance Corporation, which entity owned 5.4% of the Company's Class B
Common Stock at the time of such offering. Mr. Beyer disclaims beneficial
ownership of shares held by Guaranty Reassurance Corporation.
For information regarding transactions with Rainbow Company, a
general partnership controlled by Mr. Marvin Davis, see "Principal Stockholder
Transactions."
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") and the American Stock Exchange,
initial statements of beneficial ownership (Form 3) and statements of changes
in ownership (Forms 4 or 5) of Common Stock and other equity securities of the
Company. Officers, directors and greater-than-ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge based solely on review of the copies
of such reports furnished to the Company or written representations that no
other reports were required, the Company believes that during 1993 all filing
requirements applicable to its officers, directors and greater-than-ten-percent
beneficial owners were complied with, except as follows. Following the
appointment of Michael J. Seibert as a Class A Director effective November 18,
1993, the Form 3 required to be filed on behalf of Mr. Seibert was
inadvertently not filed on a timely basis until February 3, 1994.
-28-
<PAGE> 32
DEADLINE FOR STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's Proxy Statement
relating to the 1995 Annual Meeting of Stockholders, a stockholder proposal
must be received in proper form at the Company's principal executive office no
later than January 25, 1995, and must otherwise comply with the requirements of
Rule 14a-8 under the Exchange Act.
ANNUAL REPORT AND INFORMATION FOR STOCKHOLDERS
The annual report to stockholders, including consolidated
financial statements, accompanies this Proxy Statement but does not constitute
a part of the proxy soliciting materials. THE COMPANY WILL FURNISH A COPY
WITHOUT CHARGE OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1993, INCLUDING FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES
BUT WITHOUT EXHIBITS, TO EACH PERSON WHOSE VOTE IS SOLICITED BY THIS PROXY
STATEMENT, UPON WRITTEN REQUEST TO JANICE SCHROER, INVESTOR RELATIONS, SPI
HOLDING, INC., 1501 NORTH PLANO ROAD, RICHARDSON, TEXAS 75081. Upon the
payment of the Company's reasonable expense of furnishing the exhibit
requested, the Company upon request will furnish any exhibit to the Form 10-K
to any person whose vote is solicited by this Proxy Statement.
MISCELLANEOUS
Please date, sign and return the proxy at your earliest
convenience in the enclosed envelope. No postage is required for mailing in
the United States. A prompt return of your proxy will be appreciated.
By Order of the Board of Directors
Matthew Hutchins
Corporate Secretary
Richardson, Texas
April 22,1994
-29-
<PAGE> 33
PRELIMINARY COPY
PRELIMINARY COPY
SPI HOLDING, INC. ANNUAL MEETING MAY 25, 1994.
Proxy No. _____________. Shares In Your Name.
The undersigned having received the notice and accompanying Proxy Statement for
said meeting hereby constitutes and appoints ALBERT D. JEROME, DANNY G. HAIR
AND MATTHEW HUTCHINS (the "Proxy Committee"), and each of them, his true and
lawful agents and proxies with power of substitution in each, to represent and
vote at the Annual Meeting May 25, 1994 or at any adjournment thereof on all
matters coming before said meeting, all shares of SPI HOLDING, INC. which the
undersigned may be entitled to vote. The above proxies are hereby instructed
to vote as shown on the reverse side of this card.
P This proxy must be dated and signed exactly as shown hereon.
R Dated: ____________, 1994
O ___________________ Signature(s)
X
Executors, administrators, trustees, etc. should
Y give full title as such. If the signer is a
corporation, please sign full corporate name by duly
REGISTRATION, authorized officer. Joint owners should each sign
ADDRESS, personally.
CITY, STATE
CONTINUED FROM OTHER SIDE
SPI HOLDING, INC. ANNUAL MEETING MAY 25, 1994
This proxy when properly executed will be voted in the manner directed herein
by the above signed stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS (2), (3), (4) AND (5) AND FOR THE ELECTION OF CLASS B
DIRECTORS.
(1) ELECTION OF CLASS B DIRECTORS.
Nominees: John F. Berardi, Robert D. Beyer, Howard T. Buchanan, Skip
Victor and Jeffrey I. Werbalowsky
(Mark only one)
( ) VOTE FOR all nominees listed; except as marked to the contrary above
(if any) (to withhold your vote for any individual nominee strike a
line through the nominee's name in the list above).
( ) VOTE WITHHELD from all nominees.
(2) APPROVAL OF INDEPENDENT ACCOUNTANTS
FOR ( ) AGAINST ( ) ABSTAIN ( )
(3) APPROVAL OF CHANGE OF NAME TO SPECTRAVISION, INC.
FOR ( ) AGAINST ( ) ABSTAIN ( )
(4) APPROVAL OF 1994 MANAGEMENT INCENTIVE EQUITY PLAN
FOR ( ) AGAINST ( ) ABSTAIN ( )
(5) In the discretion of the Proxy Committee, upon other matters as may
properly come before the meeting.
P PLEASE MARK THIS BOX IF YOU WILL PERSONALLY BE ATTENDING THE MEETING. ( )
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
R BOXES ABOVE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY
O COMMITTEE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
X THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
Y
<PAGE> 34
1994 MANAGEMENT INCENTIVE EQUITY PLAN
OF
SPI HOLDING, INC.
1. Purpose. The purpose of this 1994 Management Incentive Equity
Plan is to advance the interests of SPI Holding, Inc. (the "Company") by
encouraging and enabling the acquisition of a larger personal proprietary
interest in the Company by officers, management and key employees of the
Company and its Subsidiaries upon whose judgment and keen interest the Company
is largely dependent for the successful conduct of its operations and by
providing such officers, management and key employees with incentives to put
forth maximum efforts for the success of the Company's business. It is
anticipated that the acquisition of such proprietary interest in the Company
and such incentives will stimulate the efforts of such officers, management and
key employees on behalf of the Company and its Subsidiaries and strengthen
their desire to remain with the Company and its Subsidiaries. It is also
expected that such incentives and the opportunity to acquire such a proprietary
interest will enable the Company and its Subsidiaries to attract desirable
personnel.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "Alternative Rights" shall have the meaning set forth in
Section 7.
(b) "Board of Directors" shall mean the Board of Directors of
the Company, as constituted at any time.
(c) "CEO" shall mean the person who at the time shall be the
Chief Executive Officer of the Company.
(d) "Chairman of the Board" shall mean the person who at the
time shall be Chairman of the Board of Directors.
(e) "Committee" shall mean the Management Incentive Equity
Plan Committee hereinafter described in Section 3.
(f) "Common Stock" shall mean the Company's Class B Common
Stock.
(g) "Company" shall mean SPI Holding, Inc.
(h) "Conjunctive Rights" shall have the meaning set forth in
Section 7.
<PAGE> 35
(i) "Eligible Persons" shall mean those persons described in
Section 4 who are potential recipients of Incentive Awards.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) "Fair Market Value" on a specified date shall mean the
closing price at which a Share is traded on the stock exchange, if
any, on which Shares are primarily traded or, if the Shares are not
then traded on a stock exchange, the closing price of a Share as
reported on the NASDAQ National Market System or, if the Shares are
not then traded on the NASDAQ National Market System, the average of
the closing bid and asked prices at which a Share is traded on the
over-the-counter market, but if no Shares were traded on such date,
then on the last previous date on which a Share was so traded, or, if
none of the above are applicable, the value of a Share as established
by the Committee for such date using any reasonable method of
valuation.
(l) "Incentive Award" shall mean an Option, Restricted Stock
Award or Rights granted pursuant to this Plan.
(m) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended.
(n) "Options" shall mean any stock options granted pursuant
to this Plan.
(o) "Plan" shall mean this 1994 Management Incentive Equity
Plan of SPI Holding, Inc., as adopted by the Board of Directors on
February 2, 1994, as such Plan from time to time may be amended.
(p) "Restricted Shares" shall mean the Shares issued as a
result of a Restricted Stock Award.
(q) "Restricted Stock Award" shall mean a grant of Shares or
of the right to purchase Shares pursuant to Section 12 hereof. Such
Shares, when and if issued, shall be subject to such transfer
restrictions and risk of forfeiture as the Committee shall determine
at the time the Award is granted, until such specific conditions are
met. Such conditions may be based on continuing employment or
achievement of pre-established performance objectives, or both.
(r) "Rights" shall mean stock appreciation rights granted
pursuant to the Plan, which shall entitle the holder thereof to
receive from the Company cash or Shares or a combination of cash and
Shares based upon the excess
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<PAGE> 36
of the Fair Market Value of Shares at the time of exercise over the
purchase price of the Shares subject to the related Option, or the
Fair Market Value of Shares on the date the Rights were granted, as
the case may be, subject to the terms and conditions of the Plan.
(s) "Share" shall mean a share of Common Stock.
(t) "Spread" shall mean (i) with respect to Conjunctive
Rights and Alternative Rights, the excess of the Fair Market Value of
one Share on the date of exercise of such Rights over the purchase
price per Share payable under the related Option and (ii) with respect
to Rights not granted in connection with an Option, the excess of the
Fair Market Value of one Share on the date of exercise of such Rights
over the Fair Market Value of one Share on the date such Rights were
granted.
(u) "Subsidiary" shall mean any corporation 50% or more of
whose stock having general voting power is owned by the Company, or by
another Subsidiary as herein defined, of the Company.
3. Committee. This Plan shall be administered by a Committee which
shall consist of two or more directors of the Company who are not also
employees of the Company, each of whom shall be a "disinterested person" within
the meaning of Rule 16b-3(c)(2) under the Exchange Act. The members of the
Committee shall be selected by the Board of Directors. Each member of the
Committee shall serve as such until such time as his successor is duly
appointed by the Board of Directors. At all meetings of the Committee, a
majority of its members shall be required to constitute a quorum for the
transaction of business and all actions taken by the Committee shall require
the affirmative vote of a majority of a quorum of its members. Alternatively,
the Committee may take action by a written consent signed by a majority of its
members. The Committee shall have all powers and authority in the
administration of the Plan, including, without limitation, the authority to
establish such rules and regulations, not inconsistent with the provisions of
this Plan, which it may deem necessary or advisable to administer this Plan,
the authority to interpret this Plan, and the authority to prescribe, amend and
rescind the rules and regulations established by it, and to take such other
action with regard to this Plan as it shall deem desirable to effectuate the
purpose of this Plan. Determinations of the Committee as to any questions
which may arise with respect to the interpretation of the provisions of this
Plan shall be final.
The Compensation Committee of the Board of Directors, acting by
unanimous vote or written consent, shall from time to time make recommendations
to the Committee with respect to
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<PAGE> 37
Incentive Awards to be granted under the Plan. The Committee, after taking
such recommendations into consideration, shall, in its sole discretion, make
all final determinations concerning grants of Incentive Awards hereunder.
4. Participants. The class of persons who are potential recipients of
Incentive Awards granted under this Plan shall consist of such senior
management employees or other key employees of the Company or a Subsidiary as
shall be chosen by the Committee. The parties to whom Incentive Awards are
granted under this Plan, and the number of Shares subject to each such
Incentive Award, shall be determined by the Committee in its sole discretion,
subject, however, to the terms and conditions of this Plan. Persons to whom
Incentive Awards may be granted include key employees who are also directors of
the Company or a Subsidiary.
5. Shares. Subject to the provisions of Section 16 hereof, 1,800,000
Shares in the aggregate may be subject to Options, Restricted Stock Awards and
Rights granted independently of any Option, as determined by the Committee, all
of which Shares may be either Shares held in treasury or authorized but
unissued Shares. If the Shares that would be issued or transferred pursuant to
any such Incentive Awards are not issued or transferred and cease to be
issuable or transferable for any reason, the number of Shares subject to such
Incentive Award will no longer be charged against the limitation provided for
herein and may again be made subject to Incentive Awards; provided, however,
that Shares as to which an Option has been surrendered in connection with the
exercise of a related Right shall not again be available for the grant of any
further Incentive Awards; and, provided further, that the counting of Shares
subject to Incentive Awards granted under the Plan against the number of Shares
available for further Incentive Awards shall in all cases conform to the
requirements of Rule 16b-3 under the Exchange Act. The maximum number of
Shares which may be the subject of Options and Rights granted to any Eligible
Person in any calendar year shall not exceed 180,000 Shares.
6. Grant of Options. The number of Options to be granted to any
Eligible Person shall be determined by the Committee in its sole discretion.
At the time an Option is granted, the Committee may, in its sole discretion,
designate whether such Option (a) is to be considered as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code or (b) is
not to be treated as an incentive stock option for purposes of this Plan and
the Internal Revenue Code. Options with respect to which no designation is
made by the Committee shall be deemed to be incentive stock options to the
extent that the $100,000 limitation described in the following paragraph is
met.
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Notwithstanding any other provision of this Plan to the contrary, to
the extent that the aggregate Fair Market Value of the Shares with respect to
which Options which are designated as (or deemed to be) incentive stock options
granted to an employee first become exercisable in any calendar year exceeds
$100,000, such Options shall be treated as Options which are not incentive
stock options. For the purposes of the foregoing sentence, the Fair Market
Value of the Shares shall be determined as of the date upon which the Options
are granted, and all options which are incentive stock options shall be counted
towards the $100,000 limitation, whether such options are granted under this
plan or any other incentive stock option plan maintained by the Company or any
Subsidiary. This paragraph shall be applied by taking options into account in
the order in which they are granted.
Nothing herein contained shall be construed to prohibit the issuance
of Options at different times to the same person.
The form of Option shall be determined from time to time by the
Committee. A certificate of Option signed by the Chairman of the Board or the
CEO or a Vice President of the Company, attested by the Treasurer or an
Assistant Treasurer, or Secretary or an Assistant Secretary of the Company and
bearing the seal of the Company affixed thereto, shall be issued to each person
to whom an Option is granted. The certificate of Option for an Option shall be
legended to indicate whether or not the Option is an incentive stock option.
7. Grant of Rights. The Committee shall have the authority in its
discretion to grant to any Eligible Person Rights which may be granted
separately or in connection with an Option (either at the time of grant or at
any time during the term of the Option). Rights granted in connection with an
Option shall be granted with respect to the same number of Shares then covered
by the Option, subject to adjustment pursuant to the provisions of Section 16
hereof, and may be exercised, as determined by the Committee in its discretion
at the time of the grant of the Rights, either in conjunction with, or as an
alternative to, the exercise of the related Option.
Conjunctive Rights ("Conjunctive Rights") granted in connection with
an Option shall entitle the holder thereof to receive payment from the Company
only if and to the extent that the related Option is exercisable and is
exercised. Upon any exercise of an Option in respect of which Conjunctive
Rights shall have been granted, the holder of the Rights shall be entitled to
receive payment of an amount equal to the product obtained by multiplying (i)
the Spread, or such percentage or portion of the Spread as shall be determined
by the Committee at the time of grant, by (ii) the number of Shares in respect
of which the related Option shall have then been so exercised.
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<PAGE> 39
Alternative Rights ("Alternative Rights") granted in connection with
an Option shall entitle the holder thereof to receive payment from the Company
only if and to the extent that the related Option is exercisable, by
surrendering the Option with respect to the number of Shares as to which such
Rights are then exercised. Upon any exercise of Alternative Rights, the holder
thereof shall be entitled to receive payment of an amount equal to the product
obtained by multiplying (i) the Spread, or such percentage or portion of the
Spread as shall be determined by the Committee at the time of grant, by (ii)
the number of Shares in respect of which the Rights shall have then been so
exercised.
Rights granted without relationship to an Option shall be exercisable
as determined by the Committee, but in no event more than ten years from the
date of grant. Such Rights shall entitle the holder, upon the exercise
thereof, to receive payment from the Corporation of an amount equal to the
product obtained by multiplying (i) the Spread, or such percentage or portion
of the Spread as shall be determined by the Committee at the time of grant, by
(ii) the number of Shares in respect of which the Rights shall have then been
so exercised.
Notwithstanding anything contained herein, the Committee may, in its
sole discretion, limit the amount payable upon the exercise of Rights. Any
such limitation shall be determined as of the date of grant and noted on the
certificate evidencing the grant of the Rights.
Payment of the amount determined hereunder upon the exercise of
Conjunctive Rights or Alternative Rights shall be made solely in cash.
Payment of the amount determined hereunder upon the exercise of Rights
not granted in connection with an Option shall be made solely in cash, or
solely in Shares valued at their Fair Market Value on the date of exercise of
Rights, or in a combination of cash and Shares pursuant to the terms of such
Rights, which terms shall provide that payment shall be made either (i) in the
form set forth in the Rights certificate, or (ii) in such form as the holder
may elect, provided that any election by the holder shall be subject to
approval by the Committee. No fractional Shares shall be issued by the
Company, and settlement therefor shall be made in cash.
Notwithstanding any other provision of the Plan or of the Rights, for
purposes of determining the amount of the Spread in the case of a holder of
Rights who is a Director or officer subject to Section 16(b) of the Exchange
Act, the Committee, in its sole discretion, may designate a single Fair Market
Value per Share with respect to all such holders who exercise Rights during any
single ten-day period specified in Rule 16b-3(e)(3) under the Exchange Act;
provided, however, that the Fair Market
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<PAGE> 40
Value per Share designated by the Committee during any such period shall in no
event be greater than the highest Fair Market Value per Share on any day during
such period or less than the lowest Fair Market Value per Share on any day
during such period.
The form of Rights shall be as determined from time to time by the
Committee. A certificate of Rights signed by the Chairman of the Board or the
President or a Vice President, attested by the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, of the Company and having
the seal of the Company affixed thereto, shall be delivered to each person to
whom Rights are granted.
8. Purchase Price. The price per Share of the Shares to be purchased
pursuant to the exercise of an Option shall be fixed by the Committee at the
time of grant; provided, however, that the purchase price per Share for the
Shares to be purchased pursuant to the exercise of an incentive stock option
shall not in any event be less than 100% of the Fair Market Value of such
Shares on the date of grant of the Option.
The purchase price per share, if any, for Restricted Shares to be
purchased pursuant to Restricted Stock Awards shall be fixed by the Committee
at the time of the grant of the Restricted Stock Award. Payment of such
purchase price shall be made in cash or by check payable to the order of the
Company, or by such other method as the Committee may permit.
9. Duration of Options and Related Rights. The duration of any Option
granted under this Plan shall be for a period of ten years from the date upon
which the Option is granted. The duration of any Rights granted in connection
with any Option shall be coterminous with the duration of the related Option.
10. Ten Percent Stockholders. Notwithstanding any other provision of
this Plan to the contrary, no Option which is intended to qualify as an
incentive stock option may be granted under this Plan to any employee who, at
the time the Option is granted, owns shares possessing more than 10 percent of
the total combined voting power or value of all classes of stock of the
Company, unless the exercise price under such Option is at least 110% of the
Fair Market Value of a Share on the date such Option is granted and the
duration of such Option is no more than five years.
11. Exercise of Options and Rights. Except as otherwise provided
herein, an Option and Rights, after the grant thereof, shall be exercisable by
the holder at such rate and times as may be fixed by the Committee, provided,
however, that no Option or Rights may be exercised in part or in full prior to
the approval of the Plan by a majority vote of the stockholders of the Company
as provided in Section 20. Unless otherwise specified by
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<PAGE> 41
the Committee, all Options and Rights shall become exercisable cumulatively at
the rate of 25% per year, commencing on the first anniversary of the date of
grant. Notwithstanding the preceding, Options and Rights granted on or after
the date of adoption of this Plan but before its approval by the stockholders
as provided in Section 21 hereof shall be exercisable with respect to 25% of
the Shares subject thereto on and after the date of such stockholder approval
and shall become exercisable cumulatively with respect to an additional 25% of
the Shares subject thereto on each of the first, second and third anniversaries
of the date of grant.
Notwithstanding the foregoing, all or any part of any remaining
unexercised Options or Rights granted to any person may, after approval of the
Plan by the stockholders of the Company as provided in Section 21, be exercised
in the following circumstances: (a) subject to the provisions of Section 15
hereof, upon the total and permanent disability (as shall be determined by the
Committee in its sole discretion) or death of the holder, (b) upon a "Change in
Control" as hereinafter defined or (c) upon the occurrence of such special
circumstance or event as in the opinion of the Committee merits special
consideration. For purposes of this Plan, a Change in Control shall be deemed
to have occurred at such time as both of the following shall have occurred:
(i) any Person or group of Persons (defined as the term "person" is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Davis Group (as
hereinafter defined), is or becomes the beneficial owner, directly or
indirectly, through any purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company (or, if the
Company is not the survivor, its successor), other than from the Davis Group,
entitling such Person or group of Persons to exercise more than 30% of the
total voting power of all shares of capital stock of the Company (or, if the
Company is not the survivor, its successor) entitled to vote generally in the
election of directors (any shares of voting stock of which such Person or group
of Persons is the beneficial owner that are not then outstanding being deemed
outstanding for purposes of calculating such percentage) and (ii) the
individuals who constitute the Board of Directors on the effective date of this
Plan, together with any directors whose election or nomination for election by
the stockholders of the Company was approved by a majority of the directors
then in office who were either directors on such effective date or whose
election or nomination for election was previously so approved, cease to
constitute a majority of the Board of Directors (or, if the Company is not the
survivor, the board of directors of its successor); for purposes hereof, the
"Davis Group" shall mean the group consisting of Marvin Davis, members of his
family, his family trusts and any companies controlled directly or indirectly
by Marvin Davis.
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<PAGE> 42
An Option shall be exercised by the delivery of a written notice duly
signed by the holder thereof to such effect ("Exercise Notice"), together with
the Option certificate and the full purchase price of the Shares purchased
pursuant to the exercise of the Option, to the Chairman of the Board or an
officer of the Company appointed by the Chairman of the Board for the purpose
of receiving the same. Payment of the full purchase price shall be made as
follows: in cash or by check payable to the order of the Company; by delivery
to the Company of Shares which shall be valued at their Fair Market Value on
the date of exercise of the Option; or by such other methods as the Committee
may permit from time to time; provided, however, that a holder may not use any
Shares acquired pursuant to the exercise of an Option granted under this Plan
or any other stock option plan maintained by the Company or any Subsidiary
unless the holder has beneficially owned such Shares for at least six months.
Any Conjunctive Rights granted in connection with an Option shall be exercised
by the inclusion in the Exercise Notice of a notice of exercise of Rights,
together with the Rights certificate.
Within a reasonable time after the exercise of an Option, the Company
shall cause to be delivered to the person entitled thereto, a certificate for
the Shares purchased pursuant to the exercise of the Option and, if Conjunctive
Rights have been exercised in connection therewith, the amount of cash
determined in accordance with Section 7 hereof. If the Option and any
Conjunctive Rights shall have been exercised with respect to less than all of
the Shares subject to the Option and Rights, the Company shall also cause to be
delivered to the person entitled thereto a new Option certificate and a new
Rights certificate in replacement of the certificates surrendered at the time
of the exercise of the Option and Rights, indicating the number of Shares with
respect to which the Option and Rights remain available for exercise, or the
original Option certificate and Rights certificate shall be endorsed to give
effect to the partial exercise thereof.
Alternative Rights or Rights not granted in connection with an Option
shall be exercised by the delivery of a duly signed notice in writing to such
effect, together with the Rights certificate. Holders of Alternative Rights
shall also surrender the related Option certificate. Within a reasonable time
thereafter, the Company shall cause to be delivered to the person entitled
thereto, the amount of cash and/or a certificate for the number of Shares
determined in accordance with Section 7 hereof. Upon the exercise of
Alternative Rights, the number of Shares subject to exercise under the related
Option or portion thereof shall be reduced by the number of Shares represented
by the Option or portion thereof surrendered. Shares subject to Options or
portions thereof surrendered upon the exercise of Alternative Rights shall not
be available for subsequent Incentive Awards under the Plan. If the Rights
shall have been
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<PAGE> 43
exercised with respect to less than all of the Shares subject thereto (or to
the related Option, if any), the Company shall also cause to be delivered to
the person entitled thereto a Rights certificate (and an Option certificate, in
the case of Alternative Rights) with respect to the difference between the
number of Shares of the Rights certificate (and related Option certificate, if
any) surrendered at the time of the exercise of the Rights and the number of
Shares with respect to which the Rights were so exercised (and the related
Option, if any, was so surrendered), or the original Rights certificate (and
related Option certificate, if any) shall be endorsed to give effect to the
partial exercise (and surrender) thereof.
Notwithstanding any other provision of the Plan or of any Option or
Rights, no Option or Rights granted pursuant to the Plan may be exercised at
any time when the Option or Rights or the granting or exercise thereof violates
any law or governmental order or regulation.
12. Terms and Conditions of Restricted Stock Awards.
(a) All Restricted Shares granted to or purchased by an
Eligible Person pursuant to the Plan shall be subject to the following
conditions:
(i) the Restricted Shares may not be sold, transferred,
or otherwise alienated or hypothecated until the restrictions
are satisfied, removed or expire;
(ii) each certificate representing Restricted Shares
issued pursuant to a Restricted Stock Award under this Plan
shall bear a legend making appropriate reference to the
restrictions imposed; and
(iii) the Committee may impose such other conditions as it
may deem advisable on any Restricted Shares granted to or
purchased by an Eligible Person pursuant to a Restricted Stock
Award under this Plan, including, without limitation,
restrictions under the requirements of any stock exchange upon
which such Shares or shares of the same class are then listed,
and under any securities law applicable to such Shares.
(b) Unless otherwise specified by the Committee, the
restrictions imposed under subsection (a) hereof upon any Restricted
Stock Award shall lapse with respect to the Shares subject thereto (i)
at the rate of 25% per year, commencing on the first anniversary of
the date of grant of the Restricted Stock Award, subject to the
provisions of Section 15 hereof, or (ii) in their entirety in the
event the holder's employment by the Company or any Subsidiary is
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<PAGE> 44
involuntarily terminated other than for Cause (as defined in Section
15 hereof) as determined by the Board of Directors.
(c) Prior to the satisfaction, expiration or lapse of all
of the restrictions and conditions imposed upon Restricted Shares, a
stock certificate or certificates representing such Restricted Shares
shall be registered in the holder's name but shall be retained by the
Company for the holder's account. The holder shall have the right to
vote such Restricted Shares and shall have all other rights and
privileges of a beneficial and record owner with respect thereto,
including, without limitation, the right to receive dividends,
distributions and adjustments with respect thereto; provided, however,
that such dividends, distributions and adjustments may be retained by
the Company for the holder's account and for delivery to the holder,
together with the stock certificate or certificates representing such
Restricted Shares, as and when said restrictions and conditions shall
have been satisfied, expired or lapsed.
13. Consideration for Incentive Awards. The Company shall obtain
such consideration for the grant of an Incentive Award as the Committee in its
discretion may determine.
14. Non-transferability of Incentive Awards. Options and Rights
shall not be transferable or assignable by the holder thereof except to the
extent that the Estate or heirs of a deceased holder of Options or Rights may
be permitted to exercise them. Restricted Stock Awards shall not be
transferable or assignable by the holder thereof, except that any Restricted
Shares subject to restrictions at the time of the holder's death (and any
dividends, distributions and adjustments with respect thereto) shall be
transferred to the holder's Estate or heirs. Incentive Awards may be exercised
or surrendered during the holder's lifetime only by the holder thereof.
15. Termination of Employment. All or any part of any Option and/or
Rights, to the extent unexercised, shall terminate immediately, upon the
cessation or termination for any reason of the holder's employment by the
Company and all Subsidiaries, except that the holder shall have until the end
of the sixty (60) day period following the cessation of his employment with the
Company or its Subsidiaries, and no longer, to exercise any unexercised Option
and/or Rights that he could have exercised on the day on which such employment
terminated; provided that such exercise must be accomplished prior to the
expiration of the term of such Option and Rights. Notwithstanding the
foregoing, if the cessation of employment is due to total and permanent
disability (as shall be determined by the Committee in its sole discretion) or
to death, the holder or the representative of the
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<PAGE> 45
Estate or the heirs of a deceased holder shall have the privilege of exercising
the Options and Rights which are unexercised at the time of such disability or
death; provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option and Rights and within one year of the
holder's disability or death, as the case may be.
Notwithstanding the preceding, if the Board of Directors shall
determine that a holder's employment by the Company or any subsidiary has been
terminated for "Cause" (as hereinafter defined) then all such unexercised
Options and Rights of the holder shall terminate immediately upon such
termination of the holder's employment. For purposes of this Section 15,
"Cause" shall mean the holder's (a) fraud or intentional misrepresentation in
the course of his employment, (b) embezzlement, misappropriation or conversion
of assets or opportunities of the Company or any Subsidiary, (c) willful damage
to, or willful disclosure of any material confidential information of, the
Company or any Subsidiary, (d) willful or grossly negligent engagement in any
activity competitive with the business of the Company or a Subsidiary as to
which the Company has notified the holder in writing and the holder has not
ceased (other than for reasons beyond the control of the holder) within 3
business days following such notice of his or her participation in such
activity, (e) a failure to follow reasonable directions or instructions of a
more senior officer which are consistent with the holder's position and
responsibilities as of the date of his or her initial participation in the Plan
(as such position and responsibilities may be changed from time to time with
the prior consent of the holder), and such failure shall have continued (other
than for reasons beyond the control of the holder) for a period of 3 business
days after receipt of written notice thereof from the Company; or (f) willful
or grossly negligent breach of any stated material employment policy of the
Company or any subsidiary; provided that no act or failure to act on the part
of a holder shall be deemed to be "willful" if it was due primarily to an error
in judgment or negligence.
Except as hereinafter provided, if a holder of a Restricted Stock
Award shall voluntarily or involuntarily leave the employ of the Company and
its Subsidiaries, all such Restricted Shares subject to restrictions at the
time his employment terminates (and any dividends, distributions and
adjustments retained by the Company with respect thereto) shall be forfeited
and any consideration received therefor from the holder shall be returned to
the holder. Notwithstanding the foregoing, all restrictions to which
Restricted Stock Awards are subject shall lapse (a) upon the holder's total and
permanent disability (as shall be determined by the Committee in its sole
discretion) or death, (b) upon a Change in Control or (c) upon the occurrence
of such special circumstance or event as in the opinion of the Committee merits
special consideration.
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<PAGE> 46
16. Adjustment Provision. If prior to the complete exercise of any
Option, or prior to the satisfaction, expiration or lapse of all of the
restrictions and conditions imposed pursuant to a Restricted Stock Award, there
shall be declared and paid a stock dividend upon the Shares or if the Shares
shall be split up, converted, exchanged, reclassified, or in any way
substituted for,
(a) in the case of an Option, then the Option, to the extent that
it has not been exercised, shall entitle the holder thereof upon the future
exercise of the Option to such number and kind of securities or cash or other
property subject to the terms of the Option to which he would have been
entitled had he actually owned the Shares subject to the unexercised portion of
the Option at the time of the occurrence of such stock dividend, split-up,
conversion, exchange, reclassification or substitution, and the aggregate
purchase price upon the future exercise of the Option shall be the same as if
the originally optioned Shares were being purchased thereunder; and
(b) in the case of a Restricted Share issued pursuant to a
Restricted Stock Award, the holder of such Award shall receive, subject to the
same restrictions and other conditions of such Award as determined pursuant to
the provisions of Section 12, the same securities or other property as are
received by the holders of the Company's Shares pursuant to such stock
dividend, split-up, conversion, exchange, reclassification or substitution.
Any fractional shares or securities issuable upon the exercise of the Option as
a result of such adjustment shall be payable in cash based upon the Fair Market
Value of such shares or securities at the time of such exercise. If any such
event should occur, the number of Shares with respect to which Incentive Awards
remain to be issued, or with respect to which Incentive Awards may be reissued,
shall be adjusted in a similar manner.
In addition to the adjustments provided for in the preceding
paragraph, upon the occurrence of any of the events referred to in said
paragraph prior to the complete exercise of any Rights, the Committee, in its
sole discretion, shall determine the amount of cash and/or number of Shares or
other property to which the holder of the Rights shall be entitled upon their
exercise, so that there shall be no increase or dilution in the cash and/or
value of the Shares or other property to which the holder of Rights shall be
entitled by reason of such events.
Notwithstanding any other provision of this Plan, in the event of a
recapitalization, merger, consolidation, rights offering, reorganization,
liquidation, or other change in the Company's corporate structure or
outstanding Shares, the
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<PAGE> 47
Committee may make such equitable adjustments to the number of Shares and class
of shares available hereunder or to any outstanding Incentive Awards as it
shall deem appropriate to prevent dilution or enlargement of rights.
17. Issuance of Shares and Compliance with Securities Act. The
Company may postpone the issuance and delivery of Shares pursuant to the grant
or exercise of any Incentive Award until (a) the admission of such Shares to
listing on any stock exchange on which Shares of the Company of the same class
are then listed, and (b) the completion of such registration or other
qualification of such Shares under any State or Federal law, rule or regulation
as the Company shall determine to be necessary or advisable. Any holder of an
Incentive Award shall make such representations and furnish such information as
may, in the opinion of counsel for the Company, be appropriate to permit the
Company, in the light of the then existence or non-existence with respect to
such Shares of an effective Registration Statement under the Securities Act, to
issue the Shares in compliance with the provisions of the Securities Act or any
comparable act. The Company shall have the right, in its sole discretion, to
legend any Shares which may be issued pursuant to the grant or exercise of any
Incentive Award, or may issue stop transfer orders in respect thereof.
18. Income Tax Withholding. If the Company or a Subsidiary shall be
required to withhold any amounts by reason of any Federal, State or local tax
rules or regulations in respect of the issuance of Shares pursuant to the grant
or exercise of any Incentive Award, the Company or the Subsidiary shall be
entitled to deduct and withhold such amounts from any cash payments to be made
to the holder of such Incentive Award. In any event, the holder shall make
available to the Company or Subsidiary, promptly when requested by the Company
or such Subsidiary, sufficient funds to meet the requirements of such
withholding; and the Company or Subsidiary shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds made
available to the Company or Subsidiary out of any funds or property due or to
become due to the holder of such Incentive Award.
19. Administration and Amendment of the Plan. Except as hereinafter
provided, the Board of Directors or the Committee may at any time withdraw or
from time to time amend the Plan as it relates to, and the terms and conditions
of, any Incentive Awards not theretofore granted, and the Board of Directors or
the Committee, with the consent of the affected holder of an Incentive Award,
may at any time withdraw or from time to time amend the Plan as it relates to,
and the terms and conditions of, any outstanding Incentive Award.
Notwithstanding the foregoing, any amendment by the Board of Directors or the
Committee which would increase the number of Shares issuable under the Plan or
change the class of Eligible Persons shall be
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<PAGE> 48
subject to the approval of the stockholders of the Company within one year of
such amendment.
Determinations of the Committee as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Incentive
Awards shall be final. The Committee may authorize and establish such rules,
regulations and revisions thereof not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Incentive Awards effective
or provide for their administration, and may take such other action with regard
to the Plan and Incentive Awards as it shall deem desirable to effectuate their
purpose.
The Plan is intended to comply with Rule l6b-3 under the Exchange Act.
Any provision inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
20. No Right of Employment. Nothing contained herein or in an
Incentive Award shall be construed to confer on any employee any right to be
continued in the employ of the Company or any Subsidiary or derogate from any
right of the Company and any Subsidiary to request the resignation of or
discharge such employee (without or with pay), at any time, with or without
cause.
21. Effective Date of the Plan. This Plan is conditioned upon its
approval by the stockholders of the Company on or before February 2, 1995
by the vote of the holders of a majority of the stock of the Company voting at
such meeting in person or by proxy; except that this Plan is adopted and
approved by the Board of Directors effective February 2, 1994 to permit
the grant of Incentive Awards prior to the approval of the Plan by the
stockholders of the Company as aforesaid. In the event that this Plan is not
approved by the stockholders of the Company as aforesaid, this Plan and any
Incentive Awards granted hereunder shall be void and of no force or effect.
22. Final Issuance Date. No Incentive Award shall be granted under
the Plan after February 1, 2004.
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