CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, DECEMBER 15, 1995
To the Stockholders of CERBCO, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
CERBCO, Inc., a Delaware corporation (the "Company"), for the fiscal year
ended June 30, 1995, will be held at the Holiday Inn/US Air Arena, 9100 Basil
Court, Landover, Maryland, on Friday, December 15, 1995, at 10:00 a.m. local
time, for the following purposes:
1. To elect directors of the Company;
2. To approve the Company's 1995 Board of Directors' Stock Option
Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 19,
1995, as the record date for determining stockholders entitled to notice of,
and to vote at, the Annual Meeting.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995, a Proxy, and a Proxy Statement accompany this Notice.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN,
DATE AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RESPONSE WILL
ASSURE YOUR PARTICIPATION IN THE MEETING AND REDUCE THE COMPANY'S EXPENSE IN
SOLICITING PROXIES. IF YOU ARE PRESENT AT THE MEETING, YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE YOUR SHARES PERSONALLY.
By Order of the Board of Directors,
Robert F. Hartman
Secretary
Landover, Maryland
October 27, 1995
<PAGE>
CERBCO, Inc.
3421 Pennsy Drive
Landover, Maryland 20785
Annual Meeting of Stockholders to be Held
December 15, 1995
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CERBCO, Inc., a Delaware corporation
("CERBCO" or the "Company"), for use at the Annual Meeting of Stockholders to
be held at the Holiday Inn/US Air Arena, 9100 Basil Court, Landover, Maryland,
on Friday, December 15, 1995, at 10:00 a.m. local time, and at any
adjournments thereof (the "Meeting").
Stockholders are requested to complete, sign and date the accompanying
proxy and return it promptly to the Company in the enclosed envelope. If the
enclosed proxy is executed and returned, it may be revoked at any time before
it is voted at the Meeting by a written notice of revocation to the Secretary
of the Company, or by executing a proxy bearing a later date, or by voting at
the Meeting.
Shares of Common Stock and shares of Class B Common Stock represented by
valid proxies received in time for the Meeting, and not revoked, will be voted
as specified therein. If no instructions are given, the respective shares of
common stock will be voted FOR the election as director of the Company that
nominee for director designated for election by the holders of Common Stock
and listed under the caption "Proposal No. 1 - Election of Directors" herein;
FOR the election as directors of the Company those nominees for director
designated for election by the holders of Class B Common Stock and listed
under the caption "Proposal No. 1 - Election of Directors" herein; FOR the
approval of the 1995 Board of Directors' Stock Option Plan as described in
"Proposal No. 2 - Approval of the 1995 Board of Directors' Stock Option Plan"
herein; and, if authority is given to them, at the discretion of the proxy
holders, on any other matters that may properly come before the Meeting.
The cost of solicitation will be borne by the Company. Additional
solicitations may be made by mail, telephone, telegraph, personal contact or
other means by the Company or by its directors or regular employees. The
Company may make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy statements to the
beneficial owners of shares of the Company's common stock and to reimburse
them for their reasonable expenses in so doing.
This Proxy Statement and the accompanying Notice of Annual Meeting, Proxy
and Annual Report on Form 10-K are first being mailed to the Company's
stockholders of record on or about October 27, 1995.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the close of business on October 19, 1995, the record date fixed for
the determination of stockholders entitled to notice of, and to vote at, the
Meeting (the "Record Date"), there were outstanding 1,461,956 shares,
comprised of 1,151,001 shares of Common Stock, $.10 par value (the "Common
Stock"), and 310,955 shares of Class B Common Stock, $.10 par value (the
"Class B Common Stock"), which are the only classes of stock of the Company
outstanding. A quorum shall be constituted by the presence at the Meeting of
one-third (1/3) of the outstanding shares of Common Stock, or 383,667 of such
shares, and one-third (1/3) of the outstanding shares of Class B Common Stock,
or 103,652 of such shares.
Each share of Common Stock is entitled to one vote, and each share of
Class B Common Stock is entitled to ten votes, except with respect to the
election of directors and any other matter requiring the vote of Common Stock
or Class B Common Stock separately as a class. The holders of Common Stock,
voting as a separate class, are entitled to elect that number of directors
which constitutes 25% of the authorized number of members of the Board of
Directors and, if such 25% is not a whole number, then the holders of Common
Stock are entitled to elect the nearest higher whole number of directors that
is at least 25% of such membership. The holders of Class B Common Stock, also
voting as a separate class, are entitled to elect the remaining directors.
The affirmative vote of the holders of a majority of each class of common
stock present in person or represented by proxy, provided a quorum of that
class is present, is necessary for the election of directors by the class.
The present authorized number of directorships of the Board of Directors is
five. However, the number of authorized directorships has been reduced to
four effective the date of the Meeting. (See section entitled "Proposal No. 1
- Election of Directors.") For purposes of determining whether a proposal has
received a majority vote, abstentions will be included in the vote totals with
the result that an abstention will have the same effect as a negative vote.
Where authority to vote shares is withheld, including instances where brokers
are prohibited from exercising discretionary authority for beneficial owners
who have not returned a proxy (so-called "broker non-votes"), those shares
will not be included in the vote totals and, therefore, will have no effect on
the vote.
SECURITY OWNERSHIP
The following information is furnished with respect to each person or
entity who is known to the Company to be a beneficial owner of more than five
percent of any class of the Company's voting securities as of the Record Date:
<TABLE>
<CAPTION>
Name & Address of Amount and Nature of Percent
Beneficial Owner Title of Class Beneficial Ownership of Class
<S> <C> <C> <C>
Robert W. Erikson Common Stock 56,200 (1) 4.9%
3421 Pennsy Drive Class B Common Stock 131,750 (2)(4) 42.4%
Landover, MD
George Wm. Erikson Common Stock 55,102 (3) 4.8%
3421 Pennsy Drive Class B Common Stock 115,814 (3)(4) 37.2%<PAGE>
Landover, MD
Koonce Securities, Inc. Common Stock 229,930 (5) 20.0%
6550 Rock Spring Dr
Bethesda, MD
Kennedy Capital Common Stock 108,300 (6) 9.4%
Management, Inc.
425 N. New Ballas Rd
St. Louis, MO
(1) Record and beneficial ownership, sole voting and sole investment power.
Does not include 10,125 shares owned by Mr. Erikson's spouse, the beneficial
ownership of which Mr. Erikson disclaims.
(2) Record and beneficial ownership, sole voting and sole investment power.
Does not include 125 shares owned by Mr. Erikson's spouse, the beneficial
ownership of which Mr. Erikson disclaims.
(3) Record and beneficial ownership. Includes 2,246 shares of each class of
stock owned jointly with Mr. Erikson's spouse, as to which there is shared
voting and investment power.
(4) See sections entitled "Voting Securities and Principal Holders Thereof"
and "Legal Proceedings."
(5) Beneficial ownership, sole voting and sole investment power as publicly
disclosed in current Schedule 13G Beneficial Ownership Report, reporting
securities acquired by such financial institution in the ordinary course of
its business.
(6) Beneficial ownership, shared voting and shared investment power as
publicly disclosed in current Schedule 13G Beneficial Ownership Report,
reporting securities acquired by such financial institution in the ordinary
course of its business.
</TABLE>
The following information is furnished with respect to all directors of
CERBCO who were the beneficial owners of any shares of CERBCO's Common Stock
and Class B Common Stock as of the Record Date, and with respect to all
directors and officers of CERBCO as a group:
<TABLE>
<CAPTION>
Amount & Nature of Beneficial Ownership
Name of Owned Exercisable Percent
Beneficial Owner Title of Class Outright Options of Class
<S> <C> <C> <C> <C> <C>
Robert W. Erikson Common Stock 56,200 (1) 9,668 5.7%
Class B
Common Stock 131,750 (2)(4) 0 42.4%
George Wm. Erikson Common Stock 55,102 (3) 9,668 5.6%
Class B
Common Stock 115,814 (3)(4) 0 37.2%
Webb C. Hayes, IV Common Stock 1,500 4,500 0.5%
Paul C. Kincheloe, Jr. Common Stock 1,500 4,500 0.5%
All Directors and
Officers as a Group Common Stock 114,302 28,336 12.1%<PAGE>
(6 persons including Class B
those named above) Common Stock 247,564 0 79.6%
(5)(6)
(1) Record and beneficial ownership, sole voting and sole investment power.
Does not include 10,125 shares owned by Mr. Erikson's spouse, the beneficial
ownership of which Mr. Erikson disclaims.
(2) Record and beneficial ownership, sole voting and sole investment power.
Does not include 125 shares owned by Mr. Erikson's spouse, the beneficial
ownership of which Mr. Erikson disclaims.
(3) Record and beneficial ownership. Includes 2,246 shares of each class of
stock owned jointly with Mr. Erikson's spouse, as to which there is shared
voting and investment power.
(4) See sections entitled "Voting Securities and Principal Holders Thereof"
and "Legal Proceedings."
(5) Mr. George Erikson also is the beneficial owner of 16,500 shares of
Common Stock (less than 1% of such class) of Insituform East, Incorporated, a
subsidiary of the Company. In addition, Messrs. George Erikson and Robert
Erikson each are the beneficial owners of exercisable options on 75,000 shares
of the Common Stock (approximately 1.8% of such class) of Insituform East,
Incorporated, pursuant to the Insituform East 1989 and 1994 Board of
Directors' Stock Option Plans.
(6) Mr. Armen Manoogian, President and Director of Capitol Copy Products,
Inc. ("CCP"), a subsidiary of the Company, is the beneficial owner of 400
shares (33 1/3%) of the Class B Stock of CCP.
</TABLE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The authorized number of directorships of the Board of Directors is
currently five. Four directors are presently serving, and one of the
authorized directorships is vacant. The Board of Directors has determined
that the authorized number of directorships be reduced to four and in
accordance with the Company's By-laws has reduced the authorized number of
directorships to four effective the date of the Meeting. Accordingly, in
accordance with the Company's Certificate of Incorporation and By-laws, the
Board has nominated one director to be elected by the holders of shares of
Common Stock and three directors to be elected by holders of shares of Class B
Common Stock. The terms of all presently serving directors expire upon the
election and qualification of the directors to be elected at the Meeting, and
the four persons presently serving as directors are all nominees to be elected
at the Meeting. The directors elected will serve subject to the Company's
By-laws until the next Annual Meeting of Stockholders for the fiscal year
ending June 30, 1996 and until their respective successors shall have been
duly elected and qualified.
It is intended that the individuals named in the enclosed form of proxy
will vote their proxies in favor of the election of the persons listed below
as the Board's nominees for the Company's directors, unless otherwise
directed. The Board has no reason to believe that any of the nominees for the
office of director will not be available for election as director. However,
should any of them become unwilling to be elected or unable to serve, it is
intended that the individuals named in the enclosed proxy may vote for the
election of such other person as the Board may recommend.
PRESENT DIRECTORS WHO ARE NOMINATED FOR RE-ELECTION
One of the four nominees for election to the Company's Board of Directors
identified below has been designated for election by the holders of shares of
Common Stock, and only the holders of such shares may vote with respect to
such nominee. The remaining three nominees have been designated for election
by the holders of shares of Class B Common Stock, and only the holders of such
shares may vote with respect to such nominees. Accordingly, the following
list contains a designation as to that nominee to be elected by holders of
shares of Common Stock and those nominees to be elected by holders of shares
of Class B Common Stock:
<TABLE>
<CAPTION>
Name, Age, Principal Occupation, First Class of Common
Business Experience Became A Stock For Which
and Directorships Director(1) Nominated
<S> <C> <C>
Robert W. Erikson, Age 50 (2)(3)(4) 1974 Class B
President, Treasurer and a Director of CERBCO Common Stock
since 1988; Insituform East, Inc. - Vice
Chairman since 1986 and President since 1991,
a Director since 1985 and Vice Chairman of the
Board of Directors from 1985 to 1986; Capitol
Copy Products, Inc. - Vice Chairman and a
Director since 1987; CERBERONICS, Inc. - a
Director since 1974, Chairman since 1988, and
President from 1977 to 1988; a Director of
Palmer National Bancorp, Inc. and The Palmer
National Bank since 1983.
George Wm. Erikson, Age 53 (2)(3) 1975 Class B
Chairman, General Counsel and a Director of Common Stock
CERBCO since 1988; Insituform East, Inc. -
Chairman and General Counsel since 1986, a
Director since 1984 and Chairman of the Board
of Directors from 1985 to 1986; Capitol Copy
Products, Inc. - Chairman, General Counsel
and a Director since 1987; CERBERONICS, Inc.
- a Director since 1975, General Counsel since
1976, Chairman from 1979 to 1988, and Vice
Chairman since 1988.
Webb C. Hayes, IV, Age 47 (4)(5) 1991 Class B
Chairman of the Board of Palmer National Common Stock
Bancorp, Inc. and The Palmer National Bank
since 1985, President and Chief Executive
Officer since 1983; a Director of the Federal
Reserve Bank of Richmond from 1992 to 1995;
Capitol Copy Products, Inc. - a Director since
1992; Insituform East, Inc. - a Director since
1994.
Paul C. Kincheloe, Jr., Age 54 (4)(5) 1991 Common Stock
Practicing attorney and real estate investor
since 1967; Partner in the law firm of
Kincheloe and Schneiderman since 1983; Director
of Herndon Federal Savings & Loan from 1970 to
1983; Director of First Federal Savings & Loan
of Alexandria from 1983 to 1989; Capitol Copy
Products, Inc. - a Director since 1992;
Insituform East, Inc. - a Director since 1994.
(1) Includes service as a director of CERBERONICS, Inc., now a wholly-owned
subsidiary of the Company. The Company discontinued the operations of
CERBERONICS in March 1991.
(2) Member of the Corporate Executive Committee of the Company, and the
Chief Executive Officer Committees of Insituform East, Incorporated and
Capitol Copy Products, Inc., which committees perform the functions of the
Chief Executive Officer of each of the respective companies.
(3) Messrs. Robert Erikson and George Erikson are brothers.
(4) Member of the Audit Committee.
(5) Member of the Stock Option Committee.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
The Board of Directors has an Audit Committee, a majority of the members
of which are outside directors, and a Stock Option Committee. The Board of
Directors does not have standing nominating or compensation committees, or
committees performing similar functions.
The Audit Committee, among its functions, reviews the Company's financial
policies and accounting systems and controls, reviews the scope of the
independent public accountants' audit and approves the duties and compensation
of the independent public accountants, both with respect to audit and any
non-audit services. The non-management members of the Audit Committee consult
with the independent public accountants outside the presence of corporate
management or other employees to discuss matters of concern, receive
recommendations or suggestions for change and have a free exchange of views
and information.
The Stock Option Committee administers the 1986 Employee Stock Option
Plan. Generally, this committee has the authority to determine, subject to
the provisions of such plan, to whom options are granted, the number of shares
to be subject to the options and the terms and conditions thereof, including
the duration of the options and the times at which they become exercisable.
During the fiscal year ended June 30, 1995, the Board of Directors of the
Company held five meetings, the Audit Committee held two meetings, and the
Stock Option Committee did not meet. Each of the Company's directors attended
75% or more of the total of (1) the number of meetings of the Board of
Directors and (2) the number of meetings held by all committees of the Board
on which such Director served during the fiscal year ended June 30, 1995.
EXECUTIVE COMPENSATION
JOINT COMPENSATION REPORT BY:
THE BOARD OF DIRECTORS AND THE STOCK OPTION COMMITTEE
GENERAL
CERBCO, Inc. ("CERBCO" or the "Company") is a parent holding company with
controlling interests in Insituform East, Incorporated ("Insituform East")
[excavationless sewer and pipeline rehabilitation], and Capitol Copy Products,
Inc. ("Capitol Copy") [copier and facsimile ("fax") equipment sales, service
and supplies].
The Company does not have a compensation committee. The Corporate
Executive Committee (the "CEC") (1), with the annual review and oversight of
the Board, determines the base salary for all officers of the Company except
the members of the CEC. The Board, as a whole, considers compensation
arrangements proposed by and for members of the CEC and, pursuant to the
By-laws, is the ultimate determiner of compensation arrangements for members
of the CEC. In addition, the Company's Stock Option Committee determines
whether options should be awarded to the Company's employees (including the
members of the CEC) under the Company's 1986 Employee Stock Option Plan (the
"Stock Option Plan"). When considering CEC compensation arrangements, a
portion of Board review may be conducted in camera, excluding CEC members, and
resolutions of the Board determining CEC compensation arrangements typically
are voted upon twice, once with CEC members abstaining.
(1) Pursuant to the Company's By-laws, the CEC performs the functions of the
Chief Executive Officer of the Company. The CEC presently has two members,
Messrs. George Wm. Erikson, Chairman and Robert W. Erikson, President.
PHILOSOPHY
The executive compensation philosophy of the Company (which is intended to
apply to all of the executive officers of the Company, including Messrs.
George and Robert Erikson) is aimed at: (i) attracting and retaining qualified
management to implement the Company's business plan; (ii) establishing a
direct link between management compensation and the achievement of the
Company's annual and long-term performance goals; and (iii) recognizing and
rewarding individual initiative and achievement. The Board believes
management compensation should be set at levels competitive with compensation
arrangements provided by other companies with which the Company competes for
executive talent, and by other companies of similar size, business or
location. It is also the Board's view that the compensation of management
should have a component contingent upon the Company's level of performance.
By aligning the financial interests of the Company's executive officers and
those of its shareholders, the Company encourages executive officers to
enhance the profitability of the Company and thus increase shareholders'
value. Since CERBCO officers devote a predominate portion of their time to
the affairs of the operating subsidiaries, the Board reviews and considers the
compensation decisions of such subsidiaries when determining the compensation
arrangements of its officers. The Board and the CEC review the compensation
arrangements of the Company's executive officers on a continuing basis to
ensure that such arrangements are consistent with this executive compensation
philosophy.
COMPONENTS OF COMPENSATION
The compensation program for the Company's officers, including members of
the CEC, consisting of compensation received both from CERBCO and/or from one
or more of its operating subsidiaries, consists of: (i) base salary; (ii)
compensation pursuant to plans; and (iii) incentive cash bonuses. The CEC and
the Board determine the base salary of CERBCO officers; the Board administers
the Company's Supplemental Executive Retirement Plan covering the Company's
officers (the "CERBCO Supplemental Retirement Plan"); and the members of the
CERBCO Stock Option Committee make decisions with respect to awarding stock
options under the CERBCO Stock Option Plan to all CERBCO employees. However,
each CERBCO officer additionally serves as an officer with one or more of the
Company's operating subsidiaries and receives significant compensation,
including base salary, compensation pursuant to plans and incentive bonuses,
from each of the relevant subsidiaries. Accordingly, the Company's officers
receive most of their total annual compensation from one or more of the
subsidiaries for employment responsibilities with such subsidiaries. The
CERBCO Board carefully reviews the compensation decisions of the subsidiaries
as they relate to the officers of CERBCO.
Commencing in 1994, a publicly held corporation may not, subject to
limited exceptions, deduct for federal income tax purposes certain
compensation paid to certain executives in excess of $1 million in any taxable
year (the "Deduction Limitation"). While the Company's compensation programs
generally are not intended to qualify for any of the exceptions to the
applicability of the Deduction Limitation, it is not expected that
compensation to executives of the Company will exceed the Deduction Limitation
in the foreseeable future.
(i) Base Salary. The base salary level for each executive officer
(including members of the CEC) is considered annually in September, and yearly
adjustments, if any, are made effective on or about October 1st of each year.
The timing of such yearly reviews permits consideration of information which
is developed each year for the Company's annual report, including audited
financial statements for the fiscal year then ended June 30th. The CEC is
empowered to adjust the annual base salary level of executive officers (other
than members of the CEC) at other times during the year should it deem any
such adjustments appropriate. Such adjustments are included in the annual
officer compensation review and approvals conducted by the Board each
September.
The annual September review of base salary levels is subjective. No
specific factors, targets or criteria, such as the market value of the
Company's stock, are employed in any formula or other quantitative
prescription to determine base compensation. However, consistent with the
Company's compensation philosophy, consideration is given to individual
initiative, individual achievement and the Company's performance, as well as
information on salaries and other remuneration at other companies of similar
size, business or location. Since the officers of CERBCO are employed by and
receive most of their salary from one or more of the Company's subsidiaries,
the CERBCO Board reviews and considers the base salary received from such
subsidiaries and determines whether the aggregate base compensation received
by each officer is commensurate with the time and effort devoted to the
activities of the Company and each subsidiary.
Applying the Company's compensation philosophy during the annual
review in September 1994, it was the judgment of the CEC and the Board that
the base salary level of each executive officer of the Company (including
members of the CEC) should be increased 3% effective October 1, 1994. In
addition, the Board concurred with the decision of (a) the Insituform East
Board of Directors, to increase by 3% the base salary of its officers, and (b)
the Capitol Copy Board of Directors to increase by approximately 4% the base
salary of its three senior officers who together function as the Chief
Executive Officer Committee.
(ii) Compensation Pursuant to Plans. The officers of CERBCO are eligible
to receive plan compensation through the CERBCO Supplemental Retirement Plan
and the Company's Stock Option Plan. In addition, the officers of CERBCO,
including members of the CEC, are eligible to participate in compensation
pursuant to plans offered to the employees of any subsidiary with which such
officer may also be employed. Participation in, and benefits acquired under,
such plans (other than stock option plans) are on a nondiscretionary formula
basis applicable to all employees (see "Compensation Pursuant to Plans").
Pursuant to the CERBCO Supplemental Retirement Plan, the members of
the CEC will receive a monthly retirement benefit for life equivalent to 50%
of the final aggregate monthly salary such executives received from the
Company and its operating subsidiaries. The other executives covered by the
CERBCO Supplemental Retirement Plan will receive a monthly retirement benefit
for life equivalent to 25% of the final aggregate monthly salary such
executives received from the Company and its operating subsidiaries. See
"Compensation Pursuant to Plans - Supplemental Executive Retirement Plan."
The terms of the CERBCO Supplemental Retirement Plan require the
Company to establish a trust to facilitate the Company's satisfaction of its
obligations thereunder to pay supplemental retirement benefits to the
Company's executive officers. The Company has established such a trust, which
has been funded by life insurance policies.
The Board views the CERBCO Supplemental Retirement Plan as providing
important benefits to the covered executives after their retirement. Further,
the Board believes that the adoption of the CERBCO Supplemental Retirement
Plan is fully consistent with CERBCO's compensation philosophy and is a
customary form of supplemental executive retirement similar to that adopted by
comparable companies.
Pursuant to the Company's Stock Option Plan, stock option awards to
any employee, including any officer, are discretionary and determined by the
Company's Stock Option Committee, which in fiscal year 1995 consisted of
Messrs. Kincheloe and Hayes. The Stock Option Committee must consider the
following factors, articulated in the Stock Option Plan and consistent with
the Company's compensation philosophy: (a) the duties and responsibilities of
eligible employees; (b) their past and prospective contributions to the
success of the Company; and (c) the extent to which they are performing, and
will continue to perform, outstanding service for the benefit of the Company.
No stock options were granted under this plan to, and no options available
under this plan were exercised by, any officer of the Company during fiscal
year 1995 (see "Compensation Pursuant to Plans - 1986 Employee Stock Option
Plan," "Option/SAR Grants in Last Fiscal Year" and "Aggregated Option/SAR
Exercises and Fiscal Year-End Option/SAR Values").
The Company's officers may also be eligible to receive stock options
under one or more of the stock option plans offered by any subsidiary with
which they may additionally be employed. No options available under the
Insituform East Employee Stock Option Plan were granted to, or exercised by,
any officers of Insituform East. With respect to Capitol Copy officers, no
options were granted under the Capitol Copy Incentive Stock Option Plan. The
CERBCO Board concurred with the granting of no stock options by such
subsidiaries in fiscal year 1995.
(iii) Incentive Cash Bonuses. CERBCO has deferred the direct employ of
an incentive cash bonus as part of the compensation package of its officers.
However, the Company believes that the compensation of its officers is
typically more directly linked to the overall profitability of the Company's
operations as a whole because each of the officers is employed by one or more
subsidiary which offers cash incentive bonuses. Insituform East and Capitol
Copy both employ an annual return-on-equity ("ROE") incentive cash bonus which
is tied to the respective subsidiaries' earnings. While all officers of
Insituform East are eligible to receive an ROE bonus, only the three senior
officers comprising the Chief Executive Officer Committee ("CEOC") of Capitol
Copy are eligible to receive an ROE bonus from Capitol Copy. The Insituform
East ROE incentive bonus amount is calculated by multiplying Insituform East's
annual ROE percentage (net earnings divided by weighted average equity less
current earnings) by the base compensation paid to the officer over the fiscal
year. In the case of Capitol Copy, the ROE formula equity factor is adjusted
to account for any purchase debt balances. The maximum annual individual
bonus available to any officer in either subsidiary is normally limited to an
upper cap of 30% of the officer's base compensation used in the respective ROE
formula. For the most recent fiscal year ended June 30, 1995, the ROE bonus
rate was 16.0% for Insituform East officers. At Capitol Copy, where the
annual shareholder ROE percentage for the fiscal year ended June 30, 1995 was
61.8%, the Capitol Copy Board awarded the CEOC members both a regular ROE
bonus at the capped rate of 30% and a discretionary, supplemental bonus of an
additional 15%. The Company's Board concurred with the incentive bonus
decisions made by Insituform East and Capitol Copy.
COMPENSATION OF MEMBERS OF THE CEC
On September 13, 1994, the CERBCO Board approved an annual base salary of
$10,300 per year, effective October 1, 1994, for each current member of the
CEC, namely, Messrs. George Erikson and Robert Erikson. The decision made by
the CERBCO Board was subjective, taking into account the philosophical aim of
setting executive compensation and was not based on any particular performance
criteria. The Stock Option Committee did not award either member of the CEC
stock options pursuant to the CERBCO Stock Option Plan. As part of its
analysis when it determined the compensation packages for Messrs. George
Erikson and Robert Erikson, the Board reviewed the compensation they received
from both subsidiaries in order to ensure that their aggregate compensation
was reasonably apportioned in relation to the time, duties and
responsibilities among each of the three companies.
At Insituform East, the base salary of Messrs. George Erikson and Robert
Erikson increased to a rate of $194,450 per year, effective October 1, 1994,
from the base salary rate of $188,786 per year. Moreover, due to the positive
earnings results obtained by Insituform East for fiscal 1995, an incentive
cash bonus based upon the ROE formula previously discussed, in the amount of
$31,457 was earned by both Messrs. George Erikson and Robert Erikson. No
Insituform East stock options pursuant to the Insituform East Employee Stock
Option Plan were granted to either Mr. George Erikson or to Mr. Robert
Erikson.
As to Capitol Copy, the base salary received by Messrs. George Erikson and
Robert Erikson increased to a rate of $60,570 per year, effective October 1,
1994, from the base salary rate of $58,240 per year. Moreover, due to the
positive earnings results obtained by Capitol Copy for fiscal 1995, an earned
incentive cash bonus of 30%, based upon the ROE formula previously discussed,
and a discretionary, supplemental bonus of 15%, in the total amount of $28,267
was accorded to both Mr. George Erikson and Mr. Robert Erikson on September
12, 1995. Messrs. George Erikson and Robert Erikson are not eligible to
receive stock options under the Capitol Copy Stock Option Plan.
As previously discussed, in approving the compensation package for the CEC
members, the Board considered that Messrs. George Erikson and Robert Erikson
devote a predominate portion of their time and effort directly to the
activities of CERBCO's operating subsidiaries, and that their work for CERBCO
requires a smaller portion of their time and effort. The Board concurred in
the compensation paid to the members of the CEC by each such subsidiary and
believes the components of the aggregate compensation paid to Messrs. George
Erikson and Robert Erikson by the Company and its subsidiaries provide a
compensation package that fairly reflects the time and effort devoted by such
officers to the Company and each of its subsidiaries.
The Board of Directors The Stock Option Committee
Robert W. Erikson Webb C. Hayes, IV
George Wm. Erikson Paul C. Kincheloe, Jr.
Webb C. Hayes, IV
Paul C. Kincheloe, Jr.
SUMMARY COMPENSATION
CERBCO is a parent holding company with controlling interests in two principal
subsidiaries, Insituform East ("IEI") and Capitol Copy Products ("CCP").
CERBCO officers participate also in the management of these subsidiaries. The
following table sets forth information concerning the compensation paid to
each of the named executive officers of the Company and/or its subsidiaries
for the fiscal years ended June 30, 1995, 1994 and 1993:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
-------------------------------------------------
Name Other Total
and Annual Annual
Principal Salary Bonus Compensation Compensation
Position Year ($) ($) ($) (6) ($)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Erikson 1995 CERBCO $10,412 $0 $0 $10,412
Director, President IEI 196,555 31,457 0 228,012
& Treasurer (1) CCP 61,063 28,267 0 89,330
-------- ------- --- --------
$268,030 $59,724 $0 $327,754
======== ======= === ========
1994 CERBCO $10,000 $0 $0 $10,000
IEI 188,559 2,086 0 190,645
CCP 57,432 17,262 0 74,694
-------- ------- --- --------
$255,991 $19,348 $0 $275,339
======== ======= === ========
1993 CERBCO $10,000 $0 $0 $10,000
IEI 188,000 0 0 188,000
CCP 54,678 24,348 (4) 0 79,026
-------- ------- --- --------
$252,678 $24,348 $0 $277,026
======== ======= === ========
George Wm. Erikson 1995 CERBCO $10,412 $0 $0 $10,412
Director, Chairman IEI 196,555 31,457 0 228,012
& General Counsel (1) CCP 61,063 28,267 0 89,330
-------- ------- --- --------
$268,030 $59,724 $0 $327,754
======== ======= === ========
1994 CERBCO $10,000 $0 $0 $10,000
IEI 188,559 2,086 0 190,645
CCP 57,432 17,262 0 74,694
-------- ------- --- --------
$255,991 $19,348 $0 $275,339
======== ======= === ========
1993 CERBCO $10,000 $0 $0 $10,000
IEI 188,000 0 0 188,000
CCP 54,678 24,348 (4) 0 79,026
-------- ------- --- --------
$252,678 $24,348 $0 $277,026
======== ======= === ========
Robert F. Hartman 1995 CERBCO $10,412 $0 $0 $10,412
Vice President, IEI 83,664 13,390 0 97,054
Secretary & -------- ------- --- --------
Controller (2) $94,076 $13,390 $0 $107,466
======== ======= === ========
1994 CERBCO $10,000 $0 $0 $10,000
IEI 80,254 888 0 81,142
-------- ------- --- --------
$90,254 $888 $0 $91,142
======== ======= === ========
1993 CERBCO $9,808 $0 $0 $9,808
IEI 78,461 0 0 78,461
-------- ------- --- --------
$88,269 $0 $0 $88,269
======== ======= === ========
Armen A. Manoogian 1995 CCP $224,955 $105,962 $8,400 $339,317
[Subsidiary ======== ======== ======= ========
President, CCP] (3)
1994 CCP $215,775 $69,283 $7,996 $293,054
======== ======== ======= ========
1993 CCP $205,425 $91,083 (5) $7,615 $304,123
======== ======== ======= ========
Long-Term Compensation
-----------------------------------------------
Awards Payouts
-------------------------------- --------
Name Restricted
and Stock Options/ LTIP All Other
Principal Awards SARs Payouts Compensation
Position Year ($) (#) ($) ($)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Erikson 1995 CERBCO $0 1,500 $0 $0
Director, President IEI 0 15,000 0 10,118(7)
& Treasurer (1) CCP 0 0 0 1,549(8)
--- ------ --- -------
$0 16,500 $0 $11,667
=== ====== === =======
1994 CERBCO $0 1,500 $0 $0
IEI 0 15,000 0 18,322
CCP 0 0 0 1,501
--- ------ --- -------
$0 16,500 $0 $19,823
=== ====== === =======
1993 CERBCO $0 1,500 $0 $0
IEI 0 15,000 0 19,968
CCP 0 0 0 1,356
--- ------ --- -------
$0 16,500 $0 $21,324
=== ====== === =======
George Wm. Erikson 1995 CERBCO $0 1,500 $0 $0
Director, Chairman IEI 0 15,000 0 $12,033(7)
& General Counsel(1) CCP 0 0 0 1,549(8)
--- ------ ----- -------
$0 16,500 $0 $13,582
=== ====== ===== =======
1994 CERBCO $0 1,500 $0 $0
IEI 0 15,000 0 19,683
CCP 0 0 0 1,501
--- ------ --- -------
$0 16,500 $0 $21,184
=== ====== === =======
1993 CERBCO $0 1,500 $0 $0
IEI 0 15,000 0 20,004
CCP 0 0 0 1,356
--- ------ --- -------
$0 16,500 $0 $21,360
=== ====== === =======
Robert F. Hartman 1995 CERBCO $0 0 $0 $0
Vice President, IEI 0 0 0 $5,754(7)
Secretary & --- ------ --- -------
Controller (2) $0 0 $0 $5,754
=== ====== === =======
1994 CERBCO $0 0 $0 $0
IEI 0 0 0 6,632
--- ------ --- -------
$0 0 $0 $6,632
=== ====== === =======
1993 CERBCO $0 0 $0 $0
IEI 0 0 0 7,648
--- ------ --- -------
$0 0 $0 $7,648
=== ====== === =======
Armen A. Manoogian 1995 CCP $0 0 $0 $6,129(8)
[Subsidiary === ====== === =======
President, CCP] (3)
1994 CCP $0 0 $0 $5,898
=== ====== === =======
1993 CCP $0 0 $0 $5,345
=== ====== === =======
(1) The Company's Corporate Executive Committee, consisting of
the Chairman and the President, exercises the duties and
responsibilities of the Chief Executive Officer of the
Company. Information concerning Messrs. George Erikson and
Robert Erikson is provided under the section entitled,
"Proposal No. 1 - Election of Directors."
(2) Mr. Robert Hartman, age 48, has been Vice President and
Controller of CERBCO since February 1988 and Secretary
since June 1991. He has also been Vice President -
Administration and Secretary of Insituform East, Incorporated
since June 1991. From October 1985 to February 1988, Mr.
Hartman was Controller of Dynamac International, Inc. From
August 1979 to September 1985, Mr. Hartman served in various
capacities with CERBERONICS, Inc., including Vice President
and Treasurer.
(3) Capitol Copy's Chief Executive Officer Committee (the "CEOC"),
consisting of the Chairman, the Vice President and the President,
exercises the duties and responsibilities of the Chief Executive
Officer of Capitol Copy. Mr. Armen Manoogian, age 52, has been
President and a member of the CEOC of Capitol Copy since
October 1987. Prior to joining Capitol Copy, he served as
President of a publicly-traded East Coast computer retailing
organization. Mr. Manoogian served on the Company's Board
of Directors from October 1990 to April 1993.
(4) Consists of bonus paid for fiscal year 1992 ($8,348) and
earned for fiscal year 1993 ($16,000).
(5) Consists of bonus paid for fiscal year 1992 ($31,304) and
earned for fiscal year 1993 ($59,779).
(6) None of the named executive officers received perquisites
or other personal benefits in excess of the lesser of
$50,000 or 10% of his total salary and bonus. The amounts
reported represent payment for hours of leave in lieu of
time off.
(7) Insituform East contributions to the IEI Advantage Plan,
as described in section entitled, "Insituform East,
Incorporated Plans."
(8) Capitol Copy contributions to the CCP Profit Sharing Plan,
as described in section entitled, "Capitol Copy Products,
Inc. Plans."
</TABLE>
COMPENSATION PURSUANT TO PLANS
CERBCO, Inc. Plans
Supplemental Executive Retirement Plan
During fiscal year 1994, CERBCO entered into Supplemental Executive
Retirement Agreements with Messrs. Robert Erikson, George Erikson and Robert
Hartman pursuant to a Supplemental Executive Retirement Plan (the "CERBCO
Supplemental Retirement Plan"). The agreements provide for monthly retirement
benefits of 50% of the executive's final aggregate monthly salary from CERBCO
and its subsidiaries as defined in and limited by the executives' agreements,
for Messrs. Robert Erikson and George Erikson. In the case of Mr. Robert
Hartman, the agreement provides for 25% of the executive's final aggregate
monthly salary from CERBCO and its subsidiaries as defined in and limited by
the executive's agreement.
To compute the monthly retirement benefits, the percentage of final
monthly salary is multiplied by a ratio (not to exceed 1) of:
the completed years of employment by CERBCO after 1992
to
the total number of years of employment after 1992 that the executive
would have completed if he had continued in employment to age 65.
If the executive dies prior to retirement, the executive's beneficiary
will receive a pre-retirement death benefit of a percentage (50% in the case
of Messrs. Robert Erikson and George Erikson; 25% in the case of Mr. Robert
Hartman) of the executive's final monthly salary for 180 months. If the
executive dies after commencement of the payment of benefits, but before
receiving 180 monthly payments, the executive's beneficiary will receive
payments until the total payments received by the executive and/or his
beneficiary equal 180.
The CERBCO Supplemental Retirement Plan is technically unfunded, except as
described below. CERBCO will pay all benefits from its general revenues and
assets. To facilitate the payment of benefits and provide the executives with
a measure of benefit security without subjecting the CERBCO Supplemental
Retirement Plan to various rules under the Employee Retirement Income Security
Act of 1974, CERBCO has established an irrevocable trust (the "CERBCO, Inc.
Supplemental Executive Retirement Trust Agreement"). This trust is subject to
the claims of CERBCO's creditors in the event of bankruptcy or insolvency.
The trust has purchased life insurance on the lives of the executive officers
covered by the Supplemental Executive Retirement Agreements to provide for
CERBCO's financial obligations under the Plan. Assets in the trust consist of
the cash surrender values of the executive life insurance policies and are
carried on CERBCO's balance sheet as assets. The trust will not terminate
until participants and beneficiaries are no longer entitled to benefits under
the plan. Upon termination, all assets remaining in the trust will be
returned to CERBCO. For additional information on the CERBCO Supplemental
Retirement Plan, see "Defined Benefit or Actuarial Plans."
1988 Plan of Reorganization and Merger
Pursuant to the Plan of Reorganization and Merger, approved by CERBERONICS
stockholder vote on February 26, 1988, CERBCO became a successor to the
CERBERONICS, Inc. 1986 Employee Stock Option Plan and the 1986 Board of
Directors' Stock Option Plan (now collectively the "CERBCO Plans") described
below. The CERBCO Plans are now deemed to relate to stock options to purchase
shares of CERBCO Common Stock. Each CERBERONICS stock option previously
outstanding was converted into an option to purchase, upon the same terms,
shares of CERBCO Common Stock in the same numbers as were provided by the
option with respect to Class A Common Stock of CERBERONICS. The CERBCO Plans
do not relate to shares of CERBCO Class B Common Stock. In all other
respects, the terms of the CERBCO Plans and the options outstanding, or which
may become outstanding, remain unchanged.
1986 Employee Stock Option Plan
CERBERONICS adopted, with stockholder approval at the 1986 Annual Meeting
of Stockholders, the CERBERONICS, Inc. 1986 Employee Stock Option Plan (now
called the "CERBCO Employee Plan"). The purpose of the CERBCO Employee Plan
is to promote the growth and general prosperity of the Company by permitting
key management employees to purchase shares, through the grant and exercise of
options, of CERBCO's Common Stock. Under the terms of the CERBCO Employee
Plan, which is administered by the Stock Option Committee appointed by and
comprised of members of the Board of Directors, both incentive and
nonstatutory stock options may be granted to eligible employees. Under the
CERBCO Employee Plan, 75,000 shares of Common Stock were reserved for issuance
upon the exercise of stock options granted.
The Stock Option Committee, in its sole discretion, has full power and
authority to designate eligible employees to whom an incentive stock option or
a nonstatutory stock option shall be granted, determine the number of shares
to be made available under any option granted, determine the periods in which
a participant may exercise his option (provided, however, no incentive stock
option may be exercised more than ten years after the date of its grant),
determine the option price and determine the date on which the option shall
expire. The grant of a stock option under the CERBCO Employee Plan is
contingent on the participant's continued services on behalf of CERBCO for a
period of not less than 24 months from the date of grant of the option.
During fiscal year 1995, no options were granted to executive officers of
CERBCO, and no options available under this plan were exercised by executive
officers of CERBCO.
1986 Directors' Stock Option Plan
CERBERONICS adopted, with stockholder approval at the 1986 Annual Meeting
of Stockholders, the CERBERONICS, Inc. 1986 Board of Directors' Stock Option
Plan (now called the "CERBCO Directors' Plan"). The purpose of the CERBCO
Directors' Plan is to promote the growth and general prosperity of CERBCO by
permitting the Company, through the granting of options to purchase shares of
CERBCO's Common Stock, to attract and retain the best available persons as
members of CERBCO's Board of Directors with an additional incentive for such
persons to contribute to the success of the Company. A maximum of 75,000
shares of Common Stock may be made subject to options under the CERBCO
Directors' Plan. Options may be granted to directors of CERBCO or any of its
subsidiaries. Each option granted under the CERBCO Directors' Plan entitles
each director to whom such option is granted the right to purchase shares of
CERBCO's Common Stock at a designated option price, any time and from time to
time, within three years from the date of grant.
The CERBCO Board of Directors administers the CERBCO Directors' Plan and
has exclusive authority to interpret, construe and implement the provisions of
the CERBCO Directors' Plan, except as may be delegated in whole or in part by
the Board to a committee of the Board which may consist of three or more
members of the Board. No such delegation of authority has been made. Each
determination, interpretation or other action that may be taken pursuant to
the CERBCO Directors' Plan by the Board is final and binding and conclusive
for all purposes and upon all persons. The Board from time to time may amend
the CERBCO Directors' Plan as it deems necessary to carry out the purposes
thereof.
The terms of the CERBCO Directors' Plan contemplated that each director of
the Company be granted an option to purchase 1,500 shares of the Company's
Common Stock each year for five years, for a total of 7,500 shares of Common
Stock per director, beginning in fiscal year 1986. On June 28, 1986, options
on 1,500 shares of Common Stock were granted to each of the six CERBERONICS
directors then in office. No additional options were granted until December
19, 1991. On December 19, 1991, the CERBCO Directors' Plan was amended by the
CERBCO Board of Directors to ensure its original purpose by granting options
to purchase 1,500 shares of Common Stock to CERBCO directors in fiscal 1992
and subsequent years, so that each director serving on the date of grant will
receive options for a total amount of 7,500 shares over a five year period.
Messrs. Robert Erikson and George Erikson, being the only current directors
having received options in 1986, will each receive options for a total amount
of 6,000 shares over a four year period, to the extent each is serving as a
director on the date of grant.
On December 16, 1994, options on a total of 6,000 shares of Common Stock
were granted to directors of the Company (options on 1,500 shares to each of
four directors) at a per share option price of $5.125. Options on a total of
4,500 shares available under this plan were exercised by directors of the
Company during fiscal year 1995.
Insituform East, Incorporated Plans
Insituform East Employee Advantage Plan
During fiscal year 1995, as executive officers of Insituform East, Messrs.
Robert Erikson, George Erikson and Robert Hartman participated in the
Insituform East, Incorporated Employee Advantage Plan (the "IEI Advantage
Plan"). The IEI Advantage Plan is a noncontributory profit sharing
(retirement) plan in which all employees not covered by a collective
bargaining agreement and employed with Insituform East for at least one year
are eligible to participate. No employee is covered by a collective
bargaining agreement. The IEI Advantage Plan is administered by the
Insituform East Board of Directors which determines, at its discretion, the
amount of Insituform East's annual contribution. The Insituform East Board of
Directors can authorize a contribution, on behalf of Insituform East, of up to
15% of the compensation paid to participating employees during the year. The
plan is integrated with Social Security. Each participating employee is
allocated a portion of Insituform East's contribution based on the amount of
that employee's compensation plus compensation above FICA limits relative to
the total compensation paid to all participating employees plus total
compensation above FICA limits. Amounts allocated under the IEI Advantage
Plan begin to vest after three years of service (at which time 20% of the
contribution paid vests) and are fully vested after seven years of service.
<TABLE>
<CAPTION>
Names and Capacities in Which Contributions for Vested Percent
Cash Contributions Were Made Fiscal Year 1995 (1) as of 10/19/95
<S> <C> <C>
George Wm. Erikson, Chairman $10,118 100%
Robert W. Erikson, President $10,118 100%
Robert F. Hartman, Vice
President - Administration
& Secretary $ 4,586 40%
Executive Officers of Insituform
East as a Group, (6 persons,
including those named above) $44,375 N/A
(1) Total contributions to employees of $212,646 include Insituform East's
contribution of $183,489 and reallocated amounts totaling $29,157 forfeited by
former participants who terminated employment with Insituform East during
fiscal year 1995.
</TABLE>
The IEI Advantage Plan also includes a salary reduction profit sharing
feature under Section 401(k) of the Internal Revenue Code. Each participant
may elect to defer a portion of his compensation by any whole percentage from
2% to 16% subject to certain limitations. During the fiscal year ended June
30, 1995, Insituform East contributed an employer matching contribution equal
to 25% of the participant's deferred compensation up to a maximum of 1.5% of
the participant's total paid compensation for the fiscal year. Participants
are 100% vested at all times in their deferral and employer matching accounts.
<TABLE>
<CAPTION>
Names and Capacities in Which Contributions for Vested Percent
Cash Contributions Were Made Fiscal Year 1995 as of 10/19/95
<S> <C> <C>
George Wm. Erikson, Chairman $1,915 100%
Robert W. Erikson, President $ 0 100%
Robert F. Hartman, Vice
President - Administration
& Secretary $1,168 100%
Executive Officers of Insituform
East as a Group, (6 persons,
including those named above) $6,623 N/A
</TABLE>
Insituform East 1985 Employee Stock Option Plan
Insituform East adopted, with stockholder approval at the 1985 Annual
Meeting of Stockholders, the Insituform East, Incorporated 1985 Employee Stock
Option Plan (the "IEI Employee Plan"). The purpose of the plan is to advance
the growth and development of Insituform East by affording an opportunity to
employees of Insituform East to purchase shares of Insituform East's Common
Stock and to provide incentives for them to put forth maximum efforts for the
success of Insituform East's business. Any employee of Insituform East who is
employed on a full-time basis is eligible for participation. The IEI Employee
Plan is administered by Insituform East's Stock Option Committee.
During fiscal year 1995, no options were granted to executive officers of
Insituform East. All options granted under this plan in past years expired
prior to fiscal year 1995.
Insituform East 1994 Board of Directors' Stock Option Plan
Insituform East adopted, with stockholder approval at the 1994 Annual
Meeting of Stockholders, the Insituform East, Incorporated 1994 Board of
Directors' Stock Option Plan (the "IEI 1994 Directors' Plan"). The purpose of
this plan is to promote the growth and general prosperity of Insituform East
by permitting Insituform East, through the granting of options to purchase
shares of its Common Stock, to attract and retain the best available persons
as members of Insituform East's Board of Directors with an additional
incentive for such persons to contribute to the success of Insituform East.
The IEI 1994 Directors' Plan is administered and options are granted by the
Insituform East Board of Directors. During fiscal year 1995, as directors of
Insituform East, Messrs. Robert Erikson and George Erikson participated in
this plan.
Each grant of options under the IEI 1994 Directors' Plan will entitle each
Insituform East director to whom such options are granted the right to
purchase 15,000 shares of Insituform East's Common Stock at a designated
option price, any time and from time to time, within five years from the date
of grant. Options are granted under the IEI Directors' Plan each year for
five years to each member of the Board of Directors of Insituform East serving
as such on the date of grant, i.e., for each director serving for five years,
a total of five options covering in the aggregate 75,000 shares of Common
Stock (subject to adjustments upon changes in the capital structure of
Insituform East) over a five year period. Under the terms of this plan, up to
525,000 shares of Insituform East's Common Stock have been reserved for the
directors of Insituform East.
On December 9, 1994, options on a total of 105,000 shares of Insituform
East's Common Stock were granted to directors of Insituform East (options on
15,000 shares to each of seven directors, including Messrs. Robert Erikson and
George Erikson) at a per share option price of $2.625. No options available
under this plan were exercised by directors of Insituform East during fiscal
year 1995.
Insituform East 1989 Board of Directors' Stock Option Plan
Insituform East adopted, with stockholder approval at the 1989 Annual
Meeting of Stockholders, the Insituform East, Incorporated 1989 Board of
Directors Stock Option Plan (the "IEI 1989 Directors' Plan"). The purpose of
this plan was the same as the IEI 1994 Directors' Plan. The term of the plan
is for ten years, unless terminated sooner by the Board of Directors. Options
were first granted to directors on December 1, 1989 and each of the four
succeeding Board of Directors meetings following the Annual Meetings of
Stockholders in 1990, 1991, 1992 and 1993. Each grant of options under the
plan entitles each director to whom such options were granted the right to
purchase 15,000 shares of Insituform East's Common Stock at a designated
option price, any time and from time to time, within five years from the date
of grant. Although no further options are anticipated to be granted under
this plan, options previously granted, and which have not already been
exercised or expired, will remain in effect until exercise or expiration,
whichever comes first. No options available under the plan were exercised by
directors of Insituform East during fiscal year 1995. Under the terms of this
plan, up to 240,000 shares of Insituform East Common Stock remain reserved for
the directors of Insituform East.
Capitol Copy Products, Inc. Plans
Capitol Copy Profit Sharing Plan
During fiscal year 1995, as executive officers of Capitol Copy, Messrs.
George Erikson, Robert Erikson and Armen Manoogian participated in the Capitol
Copy Products, Inc. Profit Sharing Plan (the "CCP Profit Sharing Plan"). All
full time employees who have been with Capitol Copy for at least one year are
eligible to participate in this noncontributory plan. Contributions are made
each year in an amount determined by Capitol Copy's Board of Directors. Each
participating employee is allocated a portion of the contribution based on the
amount of that employee's compensation relative to the total compensation paid
to all participating employees. Amounts allocated under the CCP Profit
Sharing Plan begin to vest after two years of service (at which time 20% of
the contribution paid vests) and are fully vested after six years of service.
<TABLE>
<CAPTION>
Names and Capacities in Which Contributions for Vested Percent
Cash Contributions Were Made Fiscal Year 1995 as of 10/19/95
<S> <C> <C>
George Wm. Erikson, Chairman $ 1,549 100%
Robert W. Erikson, Vice Chairman $ 1,549 100%
Armen A. Manoogian, President $ 6,129 100%
Executive Officers of Capitol Copy as a Group,
(6 persons, including those named above) $ 14,390 N/A
</TABLE>
Capitol Copy 1987 Incentive Stock Option Plan
Capitol Copy adopted, with stockholder approval on October 1, 1987, the
Capitol Copy Products, Inc. 1987 Incentive Stock Option Plan (the "CCP
Incentive Plan"). The purpose of this plan is to advance the interests of
Capitol Copy by providing key employees with additional incentive for them to
promote the success of Capitol Copy, to increase their proprietary interest in
Capitol Copy and to remain in its employ. The term "key employee" means those
employees (including officers and directors who are also employees, but not
including Messrs. George Erikson and Robert Erikson) who, in the judgment of
the Capitol Copy Board of Directors, are important to the future of Capitol
Copy. The CCP Incentive Plan is administered and options are granted by the
Capitol Copy Board of Directors.
Each grant of options under the CCP Incentive Plan will entitle the
Capitol Copy key employee to whom such options are granted the right to
purchase a designated number of shares of Class B Stock at a designated price
for a designated option period. No part of any grant of options may be
exercised until the optionee has remained in the employ of Capitol Copy for a
period of time as specified by the Board of Directors in the option agreement.
No options were granted under this plan to executive officers of Capitol
Copy during fiscal year 1995. All options granted under this plan in past
years were exercised prior to fiscal year 1995.
OPTION/SAR GRANTS
No option or Stock Appreciation Right grants were made to any of the named
executive officers during fiscal year 1995 under the CERBCO Employee Plan, the
IEI Employee Plan, the IEI 1989 Directors' Plan or the CCP Incentive Plan.
The following table sets forth information concerning options granted to each
of the named executive officers during fiscal year 1995, under the CERBCO
Directors' Plan and the IEI 1994 Directors' Plan:
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realized
Value at
Assumed Annual
Rates of
Stock Price
Appreciation
Individual Grants for Option Term
------------------------------------------- ---------------
% of Total
Options/SARs
Granted to
Option/ Employees Exercise
SARs in Fiscal or Base Expiration
Name Granted(#) Year ($/Share) Date 5% ($) 10%($)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Erikson
CERBCO Directors'
Plan 1,500 25% $5.125 12/16/97 $1,212 $2,544
IEI 1994
Directors' Plan 15,000 14% $2.625 12/9/99 $10,875 $24,045
George Wm. Erikson
CERBCO Directors'
Plan 1,500 25% $5.125 12/16/97 $1,212 $2,544
IEI 1994
Directors' Plan 15,000 14% $2.625 12/9/99 $10,875 $24,045
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE
No option or Stock Appreciation Right grants made under the
CERBCO Employee Plan, or the IEI 1989 or 1994 Directors' Plans to
any of the named executive officers were exercised during fiscal
year 1995. During fiscal year 1995, Mr. George Erikson exercised
an option to purchase 1,500 shares of CERBCO Common Stock granted
under the CERBCO Directors' Plan. The following table sets forth
information concerning option or Stock Appreciation Right grants
held by each of the named executive officers under all plans as
of June 30, 1995:
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>
Value of
Number of Unexercised Unexercised in the Money
Options/SARs at FY-End(#) Options/SARs at FY-End($)
Shares ------------------------- -------------------------
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Robert W.
Erikson
CERBCO
Employee
Plan 0 $0 5,168 0 $0 $0
CERBCO
Directors'
Plan 0 $0 4,500 0 $5,250 $0
IEI 1994
Directors'
Plan 0 $0 15,000 0 $26,250 $0
IEI 1989
Directors'
Plan 0 $0 60,000 0 $29,063 $0
George Wm.
Erikson
CERBCO
Employee
Plan 0 $0 5,168 0 $0 $0
CERBCO
Directors'
Plan 1,500 $3,563 4,500 0 $5,250 $0
IEI 1994
Directors'
Plan 0 $0 15,000 0 $26,250 $0
IEI 1989
Directors'
Plan 0 $0 60,000 0 $29,063 $0
</TABLE>
REPRICING OF OPTIONS/SARs
Neither the Company nor its subsidiaries have adjusted or
amended the exercise price of stock options or SARs previously
awarded to any of the named executive officers during fiscal year
1995.
LONG-TERM INCENTIVE PLAN AWARDS
Neither the Company nor its subsidiaries have a long-term
incentive plan.
DEFINED BENEFIT OR ACTUARIAL PLANS
The Company maintains the CERBCO Supplemental Retirement
Plan to provide annual retirement benefits to covered executives
based on each executive's covered compensation. The following
tables set forth the annual retirement benefits that would be
received under the CERBCO Supplemental Retirement Plan at various
compensation levels after the specified years of service:
<TABLE>
Pension Plan Table Where Formula Provides 50% of Compensation (1)
<CAPTION>
(Final) Years of Service (Under Plan)
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $ 58,594 $ 62,500 $ 62,500 $ 62,500 $ 62,500
$150,000 $ 70,313 $ 75,000 $ 75,000 $ 75,000 $ 75,000
$175,000 $ 82,031 $ 87,500 $ 87,500 $ 87,500 $ 87,500
$200,000 $ 93,750 $100,000 $100,000 $100,000 $100,000
$225,000 $105,469 $112,500 $112,500 $112,500 $112,500
$250,000 $117,188 $125,000 $125,000 $125,000 $125,000
$300,000 $140,625 $150,000 $150,000 $150,000 $150,000
$350,000 $154,627 $175,000 $175,000 $175,000 $175,000
$400,000 $154,627 $182,101 $200,000 $200,000 $200,000
$450,000 $154,627 $182,101 $201,055 $221,961 $225,000
$500,000 $154,627 $182,101 $201,055 $221,961 $245,085
(1) Assumes at the time the Plan was established (i) the
individual is age 50, (ii) maximum covered compensation is
$250,000 and is increased 2% (compounded annually) each year of
service after 1992, and (iii) retirement is effective at the
beginning of the year.
</TABLE>
<TABLE>
Pension Plan Table Where Formula Provides 25% of Compensation (2)
<CAPTION>
(Final) Years of Service (Under Plan)
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$50,000 $ 8,929 $11,905 $12,500 $12,500 $12,500
$75,000 $13,393 $17,858 $18,750 $18,750 $18,750
$100,000 $17,858 $23,810 $25,000 $25,000 $25,000
$200,000 $21,206 $31,218 $36,190 $39,957 $44,115
$300,000 $21,206 $31,218 $36,190 $39,957 $44,115
$400,000 $21,206 $31,218 $36,190 $39,957 $44,115
$500,000 $21,206 $31,218 $36,190 $39,957 $44,115
(2) Assumes at the time the Plan was established (i) the
individual is age 45, (ii) maximum covered compensation is
$90,000 and is increased 2% (compounded annually) each year of
service after 1992, and (iii) retirement is effective at the
beginning of the year.
</TABLE>
Each executive's covered compensation under the CERBCO
Supplemental Retirement Plan is equal to his final base salary.
The maximum covered compensation for Messrs. Robert Erikson and
George Erikson is limited to $250,000 annually ($20,834 per
month), increased 2% annually beginning in 1993. The maximum
covered compensation for Mr. Robert Hartman is limited to $90,000
annually ($7,500 per month), increased 2% annually beginning in
1993.
The following table sets forth information concerning vested
annual benefits as of June 30, 1995 for the executives listed in
the Summary Compensation Table covered by the CERBCO Supplemental
Retirement Plan:
<TABLE>
<CAPTION>
Years of Current
Credited Annual Vested
Years of Service Covered Vested Annual
Name Service Under Plan Compensation Percentage Benefit
<S> <C> <C> <C> <C> <C>
Robert W.
Erikson 22 3 $260,100 16.67% $21,675
George Wm.
Erikson 19 3 $260,100 20.00% $26,010
Robert F.
Hartman 14 3 $ 93,068 15.00% $ 3,490
</TABLE>
See "Compensation Pursuant to Plans, CERBCO, Inc. Plans,
Supplemental Executive Retirement Plan" as to the basis upon
which benefits under the Plan are computed. Each covered
executive's benefit under the Plan is payable in equal monthly
amounts for the remainder of the covered executive's life
beginning as of any date on or after his 62nd birthday (at the
covered executive's election) but not before his termination of
service. In the event of a covered executive's death, his
beneficiary shall be entitled to receive monthly benefits equal
to the covered executive's accrued monthly benefit, for up to a
maximum of 180 months. Payments under the CERBCO Supplemental
Retirement Plan are not subject to any reduction for Social
Security or any other offset amounts but are subject to Social
Security and other applicable tax withholding.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
There are no employment contracts between the Company or its
subsidiaries and any named executive officer. There are no
arrangements between the Company or its subsidiaries and any
named executive officer, or payments made to an executive
officer, that resulted, or will result, from the resignation,
retirement or other termination of employment with the Company or
its subsidiaries, in an amount that exceeds $100,000.
COMPENSATION OF DIRECTORS
Each non-officer director of the Company is paid an annual
fee of $3,000 and an attendance fee of $500 for Board of
Directors meetings where he attends in person. The attendance
fee is $100 if he participates by telephone. Directors who are
also officers of the Company do not receive separate fees for
service as directors, but are eligible with all other directors
to participate in the CERBCO Directors' Stock Option Plan, as
described under the section entitled, "Compensation Pursuant to
Plans." All directors of the Company are reimbursed for Company
travel-related expenses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not have a
compensation committee; the Board of Directors as a whole serves
in that equivalent capacity. Messrs. George Erikson and Robert
Erikson, both members of the Board of Directors and executive
officers of the Company, holding the offices of Chairman &
General Counsel and President & Treasurer, respectively,
participate in, and during fiscal 1995 participated in,
deliberations of the Board of Directors concerning executive
officer compensation.
Messrs. George Erikson and Robert Erikson are both members
of the Board of Directors and executive officers of Insituform
East and Capitol Copy. In their capacities as directors of these
subsidiary companies, they participate in, and during fiscal 1995
participated in, deliberations of the respective subsidiaries'
Boards of Directors concerning executive officer compensation.
Mr. Robert Erikson serves, and served during fiscal 1995, as
a member of the Compensation Committee of the Board of Directors
of Palmer National Bancorp, Inc. and The Palmer National Bank.
Mr. Webb C. Hayes, IV, a director of the Company and a director
of Insituform East and Capitol Copy who participates in, and
during fiscal 1995 participated in, deliberations of the CERBCO
Board of Directors and the Boards of Directors of its
subsidiaries concerning executive officer compensation for CERBCO
and its subsidiaries, respectively, is Chairman of the Board and
an executive officer of Palmer National Bancorp, Inc. and The
Palmer National Bank.
PERFORMANCE GRAPH
The following graph compares the total stockholder return on the
Company's Common Stock to the Total Return Index for the NASDAQ Stock Market
(U.S. Companies) and to a Peer Group Index based on NASDAQ Stocks SIC Code
162, "Heavy Construction, Except Highway," and SIC Code 504, "Professional and
Commercial Equipment," for the last five fiscal years.
Comparison of Five-Year Cumulative Total Returns Performance Report for
CERBCO, Inc.
Company Index: CUSIP Ticker Class Sic Exchange
15671310 CERB 1620 NASDAQ
Fiscal Year-end is 06/30/95
Market Index: NASDAQ Stock Market (US Companies)
Peer Index: CRSP Index for NASDAQ Stocks (SIC 1620-1629, 5040-5049)
(US & Foreign)
<TABLE>
<CAPTION>
Date Company Market Market Peer Peer
Index Index Count Index Count
<S> <C> <C> <C> <C> <C>
06/29/90 100.000 100.000 4082 100.000 35
07/31/90 86.667 94.973 4078 89.857 35
08/31/90 77.778 82.976 4071 71.739 35
09/28/90 53.333 75.107 4044 62.279 35
10/31/90 53.333 72.149 4018 53.965 37
11/30/90 46.667 79.033 3987 57.891 34
12/31/90 44.444 82.456 3970 58.943 34
01/31/91 37.778 91.597 3937 65.618 34
02/28/91 48.889 100.407 3923 74.030 35
03/28/91 62.222 107.125 3910 80.891 34
04/30/91 115.556 107.804 3872 82.355 33
05/31/91 113.333 112.752 3871 85.005 31
06/28/91 73.333 105.886 3894 84.131 31
07/31/91 86.667 112.153 3893 92.971 32
08/30/91 75.556 117.727 3907 98.566 32
09/30/91 97.778 118.158 3911 110.336 33
10/31/91 80.000 122.075 3924 122.306 32
11/29/91 86.667 117.984 3936 116.331 30
12/31/91 93.333 132.386 3944 123.708 28
01/31/92 93.333 140.128 3954 134.628 28
02/28/92 93.333 143.302 3958 150.975 27
03/31/92 82.222 136.538 3970 140.339 27
04/30/92 71.111 130.680 3969 129.442 28
05/29/92 75.556 132.379 3957 132.518 28
06/30/92 71.111 127.204 3935 124.855 28
07/31/92 73.333 131.706 3899 120.135 28
08/31/92 82.222 127.682 3880 110.506 30
09/30/92 82.222 132.427 3878 118.651 31
10/30/92 82.222 137.644 3890 126.213 31
11/30/92 124.444 148.594 3906 142.911 32
12/31/92 111.111 154.066 3930 147.107 35
01/29/93 106.667 158.451 3918 153.969 36
02/26/93 111.111 152.541 3949 149.048 37
03/31/93 104.445 156.955 3973 144.882 36
04/30/93 95.556 150.257 4007 135.492 36
05/28/93 71.111 159.234 4035 140.935 37
06/30/93 68.889 159.969 4072 136.804 39
07/30/93 62.222 160.161 4104 139.968 42
08/31/93 77.778 168.437 4139 146.802 43
09/30/93 73.333 173.453 4175 149.651 44
10/29/93 75.556 177.357 4223 156.488 43
11/30/93 128.889 172.077 4306 150.824 43
12/31/93 142.222 176.872 4378 156.205 43
01/31/94 115.556 182.232 4402 157.918 44
02/28/94 135.556 180.572 4440 163.590 44
03/31/94 146.667 169.453 4493 148.493 46
04/29/94 133.333 167.255 4522 144.098 46
05/31/94 122.222 167.673 4561 145.728 47
06/30/94 113.333 161.561 4574 127.171 47
07/29/94 108.889 164.873 4591 128.600 47
08/31/94 100.000 175.379 4609 132.494 50
09/30/94 124.445 174.932 4610 132.112 49
10/31/94 126.667 178.341 4631 132.788 51
11/30/94 160.000 172.408 4647 128.079 51
12/30/94 173.334 172.935 4651 126.794 52
01/31/95 153.334 173.897 4639 131.652 57
02/28/95 175.556 183.054 4642 131.154 59
03/31/95 160.000 188.388 4637 136.153 58
04/28/95 151.111 194.432 4648 138.457 56
05/31/95 168.889 199.521 4645 143.294 55
06/30/95 173.334 215.363 4662 151.738 55
The index level for all series was set to 100.0 on 06/29/90.
</TABLE>
PROPOSAL NO. 2 - APPROVAL OF THE 1995 BOARD OF DIRECTORS
STOCK OPTION PLAN
The CERBCO, Inc. 1995 Board of Directors' Stock Option Plan (the "1995
Directors' Plan") was adopted by the Board of Directors on September 12, 1995,
subject to approval by the stockholders. The purpose of the 1995 Directors'
Plan is to promote the growth and general prosperity of the Company by
permitting the Company, through the granting of options to purchase shares of
its Common Stock, to attract and retain the best available persons as members
of the Company's Board of Directors with an additional incentive for such
persons to contribute to the success of the Company. The plan is non-
qualified for federal income tax purposes and only members of the Board of
Directors would be entitled to grant of options thereunder. The Board is
submitting the plan for approval by the stockholders at the Meeting. It is
intended that the individuals named in the enclosed form of Proxy will vote
their proxies to approve the plan, unless otherwise directed. A vote of the
majority shares of both Common Stock and Class B Common Stock, voting
together, and shares of Common Stock, voting separately as a class, will be
required for the approval of the plan.
The following is a summary of the 1995 Directors' Plan, and reference
should be made to the full text of the plan contained in Appendix A.
General. A maximum of 125,000 shares of Common Stock may be made subject
to options under the plan, subject to adjustments upon changes in capital
structure of the Company. Options may only be granted to directors of the
Company. Each option granted under the plan will entitle each director to
whom such option is granted the right to purchase 5,000 shares of the
Company's Common Stock (subject to adjustment upon changes in capital
structure of the Company) at a designated option price (the "Option Price"),
at any time and from time to time, within five years from the date of grant.
If the four nominees named under Proposal No. 1 of this Proxy statement are
elected as directors, they would be eligible, in consideration for serving as
directors of the Company, to receive grants of options entitling each such
director to purchase at any time until December 15, 2000 up to 5,000 shares of
the Company's Common Stock (subject to adjustment for change in capital
structure of the Company) at the Option Price determined on December 15, 1995.
Two of such nominees, George Wm. Erikson and Robert W. Erikson, are current
executive officers, and Messrs. Hayes and Kincheloe are current directors who
are not executive officers; thus, if all nominees are elected, options for a
total of 10,000 shares of Common Stock would be granted to current executive
officers as a group and options for a total of 10,000 shares of Common Stock
would be granted to the two current directors who are not executive officers.
Administration. The Board of Directors shall administer the 1995
Directors' Plan and shall have exclusive authority to interpret, construe and
implement the provisions of the plan, except as may be delegated in whole or
in part by the Board to a committee of the Board (the "Committee") which shall
consist of two or more members of the Board. Each determination,
interpretation or other action that may be taken pursuant to the plan by the
Board or Committee shall be final and shall be binding and conclusive for all
purposes and upon all persons. The Board from time to time may amend the plan
as it deems necessary to carry out the purposes thereof, provided, however,
the provisions of the plan with respect to eligibility for participation or
the timing or amounts of grants of options not be amended more than every six
months.
Terms and Conditions of Options. Each director granted an option under
the 1995 Directors' Plan shall enter into a separate written agreement (the
"Option Agreement") with the Company covering each such option granted, in
such form and containing such terms and conditions as are not inconsistent
with the plan, as the Board or the Committee shall from time to time
determine. Each option granted under the plan and pursuant to each Option
Agreement will entitle each director to whom such option is granted the right
to purchase 5,000 shares of the Company's Common Stock (subject to adjustment
upon changes in capital structure of the Company) at the Option Price, any
time and from time to time, within five (5) years from the date of grant.
Options will be granted under the plan each year for five (5) years to each
member of the Board of Directors of the Company serving as such on the date of
grant, i.e., for each director serving five (5) years, a total of five options
covering in the aggregate 25,000 shares of Common Stock (subject to
adjustments upon changes in capital structure of the Company) over a five (5)
year period. To the extent the 1995 Directors' Plan is approved by the
stockholders at the Annual Meeting of Stockholders on December 15, 1995, the
first option grant will be made on the date of such annual meeting and the
Option Price with respect to such option shall be as of the date of such
annual meeting. Each of the succeeding four grants will be made by the Board
on the date of each succeeding Annual Meeting of Stockholders and the Option
Price shall be determined in accordance with the plan's provisions by the
Board as of each respective date.
Federal Income Tax Consequences. The options granted under the plan are
not eligible for the special tax treatment afforded statutory stock options
under the Internal Revenue Code. Under existing federal income tax law and
regulations, an optionee will not recognize taxable income, and the Company
will not be entitled to a deduction, upon the grant of a non-statutory stock
option. Upon exercise of such an option, an optionee will recognize ordinary
income in an amount equal to the amount by which the fair market value of each
share on the date of exercise exceeds the Option Price. The amount so
recognized as income by the optionee will be deductible by the Company.
The foregoing summary of the principal federal income tax considerations
applicable to non-statutory stock options does not include all aspects of
federal income tax law which may be relevant to a particular director. The
federal income tax laws, the regulations or interpretations by the Internal
Revenue Service or the courts could be changed after the date of this Proxy
Statement. The effect might be to change some or all of the federal income
tax consequences pertaining to the plan described in this Proxy Statement. In
addition, the receipt of a grant under the plan, the exercise of a grant or
the sale of stock acquired upon exercise may create tax liabilities for the
optionee under the laws of any state or other taxing jurisdiction. No attempt
is made in this Proxy Statement to summarize these tax consequences.
TRANSACTIONS WITH MANAGEMENT
Pursuant to authorizations by the Board of Directors on the dates
indicated below, the Company has made certain advancements to Mr. George
Erikson, Director, Chairman & General Counsel, and certain advancements to Mr.
Robert Erikson, Director, President & Treasurer (together the "Eriksons") for
their respective legal fees and expenses which each has incurred, and may
incur in the future, for personal legal representation in connection with the
stockholder lawsuit filed in August 1990 challenging a proposed but
unconsummated transaction between each of the Eriksons and Insituform
Technologies, Inc. (see sections entitled, "Voting Securities and Principal
Holders Thereof" and "Legal Proceedings" below).
<TABLE>
<CAPTION>
Board Authorizations Board Authorizations
for Advancements for Advancements
to Mr. George Wm. Erikson to Mr. Robert W. Erikson
<S> <C> <S> <C>
Amount Amount
Date Authorized Date Authorized
April 12, 1991 $ 12,500 April 12, 1991 $ 12,500
December 19, 1991 12,500 December 19, 1991 12,500
March 17, 1992 12,500 March 17, 1992 12,500
September 15, 1992 25,000 September 15, 1992 25,000
December 18, 1992 50,000 December 18, 1992 50,000
March 16, 1993 50,000 March 16, 1993 50,000
December 17, 1993 12,500 December 17, 1993 12,500
June 7, 1994 50,000 June 7, 1994 50,000
September 13, 1994 75,000 September 13, 1994 75,000
December 16, 1994 100,000 December 16, 1994 100,000
March 7, 1995 75,000 March 7, 1995 75,000
September 12, 1995 25,000 September 12, 1995 25,000
-------- --------
$500,000 $500,000
======== ========
</TABLE>
As of October 20, 1995, pursuant to such Board authorizations, the Company
has advanced and expensed in total $477,871 to Mr. George Erikson and has
advanced and expensed in total $477,871 to Mr. Robert Erikson.
While a decision has been rendered by the Delaware Chancery Court in favor
of the Eriksons in the above-referenced lawsuit, that decision is currently on
appeal. Pending a final outcome thereof, the Board of Directors has deferred
consideration or ultimate determination of entitlement of Mr. George Erikson
and/or Mr. Robert Erikson to indemnification by the Company for such legal
fees and expenses. If it is ultimately determined by the Board of Directors
or otherwise in accordance with Section 145 of Delaware Corporation Law that
Mr. George Erikson and/or Mr. Robert Erikson are not entitled to
indemnification for any such legal fees and expenses under Section 145 of
Delaware Corporation Law, such advances shall be reimbursed by Mr. George
Erikson and/or Mr. Robert Erikson to the Company pursuant to an agreement with
the Company executed by each of the Eriksons and delivered to the Board of
Directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As previously reported by the Company, on March 12, 1990, the controlling
stockholders of the Company, Messrs. George Erikson and Robert Erikson
(together, the "Eriksons"), executed a letter of intent and subsequently
executed four amendments thereto (collectively referred to herein as the
"Letter of Intent") with Insituform Technologies, Inc. ("ITI") (formerly
Insituform of North America, Inc. ) to effect a sale of their controlling
interest in the Company to ITI for $6,000,000 (the "Proposed Transaction").
The Proposed Transaction, had it been consummated, would have had the effect
of making ITI the controlling stockholder of the Company and, indirectly, of
each of the Company's three direct subsidiaries at the time, Insituform East,
Capitol Copy and CERBERONICS. On September 19, 1990, however, the Company
issued a press release announcing that the Eriksons had informed the Company
that the Letter of Intent had expired without consummation of any transaction,
that it would not be further extended, that negotiations had ceased and that
the Eriksons had no further intention at the time of pursuing the proposed
sale of their controlling interest in the Company to ITI.
LEGAL PROCEEDINGS
The only material pending legal proceedings to which the Company is a
party or any such legal proceedings contemplated of which the Company is aware
are (a) a previously disclosed lawsuit in the Court of Chancery of the State
of Delaware currently on appeal, and (b) a previously disclosed lawsuit
pending in the Superior Court of the District of Columbia.
(a) As previously reported by the Company, on March 12, 1990, the
controlling stockholders of the Company, George Wm. Erikson and Robert W.
Erikson (together, the "Eriksons"), executed a letter of intent and
subsequently executed four amendments thereto (collectively referred to herein
as the "Letter of Intent") with Insituform Technologies, Inc. ("ITI")
(formerly Insituform of North America, Inc. or "INA") to effect a sale of
their controlling interest in the Company to ITI for $6,000,000 (the "Proposed
Transaction"). The Proposed Transaction, if consummated, would have had the
effect of making ITI the controlling stockholder of the Company, and,
indirectly, of each of the Company's three direct subsidiaries at the time,
Insituform East, Capitol Copy, and CERBERONICS. On September 19, 1990, the
Eriksons informed the Company that the Letter of Intent had expired without
consummation of any transaction, that it would not be further extended, that
negotiations had ceased, and that the Eriksons had no further intention at the
time of pursuing the proposed sale of their controlling interest in the
Company to ITI.
As previously reported by the Company, on August 24, 1990, a complaint was
filed in the Court of Chancery of the State of Delaware in and for New Castle
County (the "Court of Chancery") by two stockholders of the Company, Merle
Thorpe, Jr. and the Foundation for Middle East Peace. The complaint is
captioned Merle Thorpe, Jr. and Foundation for Middle East Peace v. CERBCO,
Inc., et al., C.A. No. 11713. The complaint, as amended, is hereinafter
referred to as the "Complaint." Defendants to the Complaint are the Company
and the Eriksons.
The Complaint, which stated that it was filed by plaintiffs on their own
behalf and derivatively on behalf of the Company, sought (i) damages against
the individual defendants for alleged breach of fiduciary duties in an amount
not less than $6,000,000, together with interest thereon from March 12, 1990;
(ii) to permanently enjoin the Eriksons from completing any transaction
between the Eriksons and ITI similar in substance to the Proposed Transaction;
(iii) a declaration of the invalidity of the 1982 authorization for and
issuance of the Company's Class B Common Stock, and, therefore, of the
entitlement of holders of Class B Common Stock to elect any members of the
Company's Board; (iv) a declaration of the invalidity of the 1990 election of
the Company's directors and the issuance of new proxy materials that fully and
fairly disclose all facts which plaintiffs claim are material to the election
of directors; (v) an award to plaintiffs of their costs of bringing the
action, including reasonable attorneys' fees; and (vi) an award to plaintiffs
of such further relief as the Court of Chancery deemed appropriate. In
addition, the Complaint asserted a claim against the individual defendants
alleging that the Company has forgone a corporate opportunity by the continued
failure to pursue a transaction with ITI.
On May 1, 1991, the Company and the Eriksons filed with the Court of
Chancery a Motion to Dismiss the Complaint. Oral argument on the Motion to
Dismiss was heard on November 7, 1991 and, on November 15, 1991, the Court
issued its Memorandum and Order on the motion. The Court granted defendants'
motion to dismiss some of the claims, but denied defendants' motion with
respect to two of the counts in the litigation. The claims remaining in the
litigation at that time were plaintiffs' allegations in Count I that the
Proposed Transaction was an opportunity belonging to the Company and that the
Eriksons breached their duty to the Company by precluding the Company from
taking advantage of that opportunity so that the Eriksons might have a chance
to do so, and in Count II that the Company's 1982 proxy statement was false or
misleading and, as a result, the Company's recapitalization should be
rescinded.
Following receipt of the Court of Chancery's opinion and order, as part of
the discovery process, the parties began responding to written interrogatories
and producing documents. Plaintiffs began taking the oral depositions of
witnesses, and the Eriksons took the oral deposition of plaintiffs. On
September 16, 1992, the Company filed a Motion for Summary Judgment on Count
II of the Complaint, which related to the 1982 recapitalization. The basis of
this motion was that the plaintiffs lacked standing to make claims relating to
the recapitalization since they were not stockholders at the time. The
Eriksons also filed a Motion for Summary Judgment as to Count II of the
Complaint on the same basis. Following briefing on the motions, the Court
issued its Memorandum Opinion and Order on January 26, 1993. The Court
granted Summary Judgment and dismissed Count II of the Complaint, which sought
rescission of the Company's 1982 recapitalization.
On December 21, 1992, the Eriksons filed a Motion for Summary Judgment on
Count I of the Complaint. The basis of this motion was that the plaintiffs
are not proper derivative representatives and that their counsel, Hogan &
Hartson, is not appropriate derivative counsel. The Eriksons also filed a
Motion for Summary Judgment on the merits of Count I of the Complaint. The
basis of this motion was that (i) there never was a corporate opportunity
available to the Company to sell its controlling position in Insituform East
to ITI; (ii) the Eriksons did not preclude a transaction between the Company
and ITI or misuse their fiduciary positions; and (iii) plaintiffs have not
shown any damages. The Company informed the Court of Chancery that it
supported the Motion for Summary Judgment on the merits of Count I. Oral
argument on both of the motions was held before the Court of Chancery on July
23, 1993.
On October 29, 1993, the Court of Chancery issued its Memorandum Opinion
on the Eriksons' Motion for Summary Judgment on the merits of Count I. The
Court of Chancery did not grant summary judgment, because it did not believe
that the record was sufficiently established.
On November 1, 1993, plaintiffs served the Company and the Eriksons with
additional discovery requests. On November 5, 1993, the Eriksons filed a
Motion for Clarification, Reargument or Supplemental Briefing, together with a
Motion to Stay the Discovery served by plaintiffs until the issues raised by
their other motions were resolved. The Company informed the Court of Chancery
that it supported the motions filed by the Eriksons.
On January 20, 1994, the Court of Chancery issued its opinion denying the
Eriksons' Motion for Clarification, Reargument, or Supplemental Briefing. The
Court reiterated its prior holding that the record was not sufficiently
established to grant the Eriksons' Motion for Summary Judgment.
On May 6, 1994, the Eriksons filed a Motion for Summary Judgment on the
issue of whether any corporate opportunity existed for the Company to enter
into a transaction with ITI. On May 31, 1994, the Court of Chancery issued an
opinion stating that a full factual record should be developed at trial before
it ruled on the legal issues presented in the Eriksons' motion. Trial in this
matter was held before Chancellor Allen beginning on February 21, 1995.
Following post-trial briefing and argument, Chancellor Allen issued an
opinion on August 9, 1995, in which he ruled in favor of the Eriksons. The
court determined that, while the Eriksons failed in certain limited respects
to meet the standards of loyalty required of them under Delaware corporate
law, that "deviation from proper corporate practice" neither caused injury to
CERBCO nor resulted in any substantial gain to the Eriksons. The Court also
found that the Eriksons met their burden of showing that their conduct was
"wholly fair to the corporation." With this decision, all of the plaintiffs'
claims have been resolved in favor of CERBCO and/or the Eriksons.
On August 25, 1995, the Court of Chancery issued its Memorandum and Order
on Final Judgment and a corresponding Final Order and Judgment, which latter
document formally entered judgment in favor of the Eriksons and denied in toto
the plaintiffs' request for legal fees and expenses totaling $1,513,499. The
Court concluded that the litigation conferred no substantial benefit on
CERBCO, so that it would be inappropriate to require CERBCO and its
stockholders to share the costs that plaintiffs incurred.
Plaintiffs filed a Notice of Appeal with the Delaware Supreme Court on
August 30, 1995 and filed their opening appellant brief with such court on
October 16, 1995.
(b) As previously reported by the Company, on January 5, 1993, a
separate lawsuit arising out of the subject matter of Count I of the Court of
Chancery lawsuit was filed in the Superior Court of the District of Columbia
(the "Superior Court"). The plaintiffs are Merle Thorpe, Jr. and the
Foundation for Middle East Peace, the same two stockholders who filed the
lawsuit in the Court of Chancery, and George Davies, a former director of the
Company. The complaint is captioned Merle Thorpe, Jr., George Davies and
Foundation for Middle East Peace v. John Paul Ketels, et al., C.A. No.
93-CA00051. That complaint is hereinafter referred to as the "D.C.
Complaint." Defendants to the D.C. Complaint are partners in the law firm of
Rogers & Wells and the Company.
The D.C. Complaint, which states that it was filed on behalf of the
Company, alleges that Rogers & Wells breached its duty of loyalty and care to
the Company by representing allegedly conflicting interests of the Eriksons in
the Proposed Transaction with ITI. The plaintiffs also claim that Rogers &
Wells committed malpractice by allegedly making misrepresentations to the
Company's Board and allegedly failing to properly inform the Company's Board.
The plaintiffs claim that the conduct of Rogers & Wells caused the Company to
lose an opportunity to sell its control of Insituform East to ITI, caused the
Company to incur substantial expense, and unjustly enriched Rogers & Wells.
The D.C. Complaint seeks to recover from Rogers & Wells (i) damages in an
amount equal to all fees paid to Rogers & Wells, (ii) damages in an amount not
less than $6,000,000 for the loss of the opportunity for the Company to sell
its control of Insituform East to ITI, and (iii) punitive damages.
The plaintiffs did not make a demand on the Company's Board that the
Company sue Rogers & Wells. The Company does not believe that Rogers & Wells
should be sued on any of the claims set forth in the D.C. Complaint. On
February 23, 1993, the Company filed a motion to dismiss the D.C. Complaint
for failure of the plaintiffs to make a proper demand on the Company's Board.
The Company also filed a motion to stay the proceedings to the Superior Court
until the lawsuit pending in the Delaware Court of Chancery has been
concluded. Similar motions were filed by Rogers & Wells. On March 14, 1993,
the Superior Court denied the motions to dismiss, but granted a stay of the
proceedings in that court until a ruling was made on the motions pending in
the Delaware Court of Chancery.
On January 14, 1994, the plaintiffs and Rogers & Wells submitted status
reports to the Superior Court. The Superior Court held a status conference on
February 16, 1994 and established a tentative trial date for November 28,
1994. On July 28, 1994, in light of the scheduled trial in the Delaware Court
of Chancery, the Superior Court stayed all proceedings in this case until
further order. A status report on the Delaware action was submitted by the
parties on April 3, 1995.
After the Court of Chancery's August 9, 1995 opinion was rendered, the
parties to the Superior Court action filed additional status reports. The
Superior Court has scheduled the next status hearing for October 30, 1995.
Management believes there are valid defenses to all of plaintiffs'
allegations in each of the above actions and that ultimate resolution of these
matters will not have a material effect on the financial statements.
Accordingly, no provision for these contingencies has been reflected therein.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche was engaged to audit the financial
statements of the Company for the fiscal year ended June 30, 1995. A
representative of Deloitte & Touche will be at the Meeting and will have an
opportunity to make a statement if he or she desires to do so. The
representative will also be available to respond to appropriate questions from
any stockholders present at the Meeting.
The Audit Committee of the Board of Directors has not yet recommended, and
the Board has not yet approved, the appointment of independent public
accountants to audit the financial statements of the Company for the fiscal
year ending June 30, 1996. It is anticipated that the Audit Committee will
make its recommendation to the Board and that the appointment of independent
public accountants will be made by the Board prior to June 30, 1996.
OTHER MATTERS
The Board of Directors is not aware of any other matters which are likely
to be brought before the Meeting. However, if any other matters are properly
brought before the Meeting, it is the intention of the individuals named in
the enclosed form of Proxy to vote the proxy in accordance with their judgment
on such matters.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Financial statements of the Company are contained in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995, a copy of which
is enclosed herewith.
DEADLINE FOR SUBMITTING STOCKHOLDER PROPOSALS
FOR INCLUSION IN THE BOARD'S PROXY STATEMENT IN CONNECTION
WITH THE FISCAL YEAR 1996 ANNUAL MEETING
A proposal submitted by a stockholder for action at the Company's Annual
Meeting of Stockholders for the fiscal year ending June 30, 1996 must be
received no later than June 30, 1996, in order to be included in the Company's
Proxy Statement for that meeting. It is suggested that proponents submit
their proposals by certified mail-return receipt requested.
A proponent of a proposal must be a record or beneficial owner entitled to
vote at the next Annual Meeting on the proposal and must continue to be
entitled to vote through the date on which the meeting is held.
By Order of the Board of Directors,
Robert F. Hartman
Secretary
Landover, Maryland
October 27, 1995
<PAGE>
APPENDIX A
CERBCO, INC.
1995 BOARD OF DIRECTORS'
STOCK OPTION PLAN
1. Purpose.
The purpose of the CERBCO, Inc. 1995 Board of Directors Stock Option
Plan (the "Plan") is to promote the growth and general prosperity of CERBCO,
Inc. (the "Company") by permitting the Company, through the granting of
Options to purchase shares of its Common Stock, par value $.10 per share (the
"Common Stock"), to attract and retain the best available persons as members
of the Company's Board of Directors with an additional incentive for such
persons to contribute to the success of the Company.
2. Administration.
The Board of Directors shall administer the Plan and shall have
exclusive authority to interpret, construe and implement the provisions of the
Plan, except as may be delegated in whole or in part by the Board to a
committee of the Board (the "Committee") which shall consist of two or more
members of the Board. Each determination, interpretation or other action that
may be taken pursuant to the Plan by the Board or the Committee shall be final
and shall be binding and conclusive for all purposes and upon all persons.
3. Eligibility.
All members of the Board of Directors shall receive Options pursuant to
the terms of the Plan, as set forth herein.
4. Shares of Common Stock Subject to Options.
Subject to the provisions of Sections 10 and 11 hereof, the maximum
number of shares of Common Stock which may be optioned and sold under the Plan
is 125,000 shares of authorized but unissued, or reacquired, shares of Common
Stock of the Company. In the event any shares of Common Stock subject to an
Option are not issued for any reason at the expiration or termination of such
Option, such shares may again be subject to an Option under the Plan.
5. The Options.
Each Director granted an Option under this Plan shall enter into a
separate written Option Agreement with the Company covering each such Option
granted, in such form containing such terms and conditions as are not
inconsistent with the Plan, as the Board or the Committee shall from time to
time determine. Except as provided in this Section, each Option granted
hereunder and pursuant to each such agreement will entitle each Director to
whom such Option is granted the right to purchase 5,000 shares of the
Company's Common Stock at the Option Price, at any time and from time to time,
up to five (5) years from the date of grant. Options will be granted
hereunder each year for five (5) years to each member of the Board of
Directors of the Company serving as such on the date of grant, i.e., for each
director, a total of five (5) Options covering in the aggregate 25,000 shares
of Common Stock over a five (5) year period. The first Option grant will be
made on December 15, 1995, and the Option Price with respect to such Option
shall be determined as of such date, subject to approval of the Plan by the
Company's Stockholders at the Annual Meeting of Stockholders to be held on
December 15, 1995. Each of the succeeding four grants will be made on the
date of each succeeding Board of Directors meeting, which follows each
succeeding Annual Meeting of Stockholders, i.e., 1996, 1997, 1998, 1999, and
the Option Price shall be determined as of each such respective date.
6. Option Price.
The Option Price for each share of the Common Stock to be issued upon
exercise of Options under the Plan shall be determined on the date of grant in
the following manner: (i) if the trading prices for the Common Stock are
reported on the consolidated transaction reporting system (the "consolidated
system") operated by the Consolidated Tape Association, whether or not the
Common Stock is traded on an exchange, the average of the high and low prices
at which the Common Stock is reported in the consolidated system to have been
traded on such date; (ii) if the principal market for the Common Stock is an
exchange and if the trading prices for the Common Stock are not reported in
the consolidated system, the average of the high and low prices at which the
Common Stock is reported to have traded on such exchange on such date; (iii)
if the principal market for the Common Stock is otherwise than on an exchange,
trading prices for the Common Stock are not reported on the consolidated
system, and bids and offers for such security are reported in the automated
quotation system operated by the National Association of Securities Dealers,
Inc. ("NASDAQ"), the mean between the highest current independent bid price
and the lowest current independent asked price reported on "level 2" of the
NASDAQ on such date; (iv) if the principal market for the Common Stock is
otherwise than on an exchange, trading prices for the Common Stock are not
reported on the consolidated system, and bids and offers for the Common Stock
are not reported in NASDAQ, the mean between the highest current independent
bid and the lowest current independent asked price on such date, determined on
the basis of reasonable inquiry; or (v) if there is no market for the Common
Stock, such price as the Board in its discretion, acting in good faith, shall
determine, but not less than the price of any contemporaneous sales of the
Common Stock. If there is a market for the Common Stock and if, on the
pertinent date, no transactions or bid and asked prices, as the case may be,
are reported for the Common Stock under the relevant clause above, the Option
Price of the Common Stock shall be determined on the next day on which
transactions or bid and asked prices, as the case may be, are reported for the
Common Stock under such clause. The Option Price shall be subject to
adjustment as set forth in Section 10 hereof.
7. Exercise of Option.
(a) An Option may be exercised at any time and from time to time
within a period of five (5) years from the date of grant of such Option with
respect to all or part of the shares covered thereby, subject however, to the
further restriction contained in this Section 7.
In the event the Company or the Stockholders of the Company enter
into an agreement to dispose of all or substantially all of the assets or
stock of the Company by means of a sale, a reorganization, a liquidation or
otherwise, each outstanding Option shall be exercisable with respect to the
full number of shares subject to that Option, notwithstanding the preceding
paragraph of this Section 7(a), only during the period commencing as of the
date of such agreement and ending when the disposition of assets or stock
contemplated by the Agreement is consummated.
(b) An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company at its principal business office
by the person entitled to exercise the Option and full payment for the shares
with respect to which the Option is exercised has been received by the
Secretary of the Company. As soon as practicable after the date an Option is
exercised, the Company shall deliver to the Director a certificate or
certificates for the number of shares of Common Stock acquired upon such
exercise, registered in the name of the Director or the name of any other
person entitled to such shares as contemplated by Section 7(c).
(c) An Option may be exercised by the optionee only (i) while he is,
and has continually been since the date of the grant of the Option, a Director
of the Company or its Successor Company, or (ii) for a period ending thirty
(30) days after the Director has terminated his services in all of such
capacities; except that if a Director's continuous service terminates by
reason of his death, such Option may be exercised within six (6) months after
the death of such Director, but in no event later than five (5) years after
the date of grant of such Option, by (and only by) the person or persons to
whom his right under such Option shall have passed by will or by laws of
descent and distribution.
(d) An Option may be exercised in accordance with this Section 7 as to
all or any portion of the shares subject to the Option from time to time, but
shall not be exercisable with respect to fractions of a share.
8. Options not Transferable.
Options under the Plan may not be sold, pledged, assigned or transferred
in any manner otherwise than by will or the laws of descent or distribution,
and may be exercised during the lifetime of an optionee only by such optionee.
9. Amendment or Termination of the Plan.
(a) The Board of Directors may amend the Plan from time to time in
such respects as the Board may deem advisable.
(b) The Board of Directors may at any time terminate the Plan. Any
such terminations of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had not
been terminated.
(c) Notwithstanding the foregoing, to the extent necessary for
compliance with Rule 16b-3 of the Securities and Exchange Commission, the
provisions of the Plan with respect to eligibility for participation or the
timing or amounts of grants of Options shall not be amended more than once
every six months (other than to comport with changes in the Internal Revenue
Code of 1986, as amended, or the regulations thereunder, or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder).
10. Adjustments Upon Changes in Capitalization.
If all or any portion of the Option is exercised subsequent to any stock
dividend, split-up, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, reorganization, or
other similar change or transaction of or by the Company, as a result of which
shares of any class shall be issued in respect of outstanding shares of the
class covered by the Option, or shares of the class covered by the Option
shall be changed into the same or different number of shares of the same or
another class or classes, the person or persons so exercising such an Option
shall receive, for the aggregate option price payable upon such exercise of
the Option, an aggregate number and class of shares equal to the number and
class of shares he would have had on the date of exercise had the shares been
purchased for the same aggregate price at the date the Option was granted and
not been disposed of, taking into consideration any such stock dividend,
split-up, recapitalization, combination or exchange of shares, merger,
consolidated, acquisition of property or stock, separation, reorganization or
other similar change or transaction; provided, however, that no fractional
shares shall be issued upon any such exercise, and the aggregate price paid
shall be approximately reduced on account of any fractional shares not issued.
11. Changes in Capital Structure of Company.
In the event of a change in the capital structure of the Company, the
number of shares specified in Section 5 of the Plan, the number of shares
covered by each outstanding Option and the price per share shall be adjusted
proportionately for any increase or decrease in the number of issued shares of
Common Stock resulting from the splitting or consolidation of shares, or the
payment of a stock dividend or effected in any other manner without receipt of
additional or further consideration by the Company.
12. Agreement and Representations of Director.
As a condition to the exercise of any portion of an Option, the Company
may require the person exercising such Option to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is
required under the Securities Act of 1933, as amended, or any other applicable
law, rule or regulation.
13. Reservation of Shares of Common Stock.
The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority in order to issue and sell, such number
of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Company to obtain from any
regulatory body having jurisdictional authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of shares of Common
Stock under the Plan shall not result in any liability of the Company in
respect of the nonissuance or sale of such stock as to which such requisite
authority shall not have been obtained.
14. Six-Month Holding Period.
Common Stock received pursuant to the exercise of an Option shall not be
disposed of until six months have elapsed from the date of the grant of such
Option.
15. Term.
The Plan shall be effective upon its adoption by the Board of Directors
and approval by the Company's Stockholders. It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 9.
16. Definitions.
As used herein, the following definitions shall apply:
(a) "Common Stock" shall mean Common Stock, par value $.10 per share,
of the Company.
(b) "Continuous Service" shall mean service as a member of the Board
of Directors, without interruption, of the Company or its
Successor Company.
(c) "Option" shall mean a stock option granted pursuant to the Plan.
(d) "Option Price" means the purchase price, as determined in
accordance with Section 6 of the Plan, for each share of the
Common Stock issued upon the exercise of Options.
(e) "Plan" shall mean the Company's Board of Directors' 1995 Stock
Option Plan.
(f) "Stockholders" shall mean the holders of outstanding shares of the
Company's Common Stock.
(g) "Successor Company" means any company which acquires all or
substantially all of the stock or assets of the Company.
Dated: September 12, 1995
<PAGE>
APPENDIX B
TEXT OF COMMON STOCK PROXY CARD:
COMMON STOCK
CERBCO, Inc.
3421 Pennsy Drive, Landover, Maryland 20785, (301) 773-1784
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 15, 1995
PROXY - COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.W. Erikson and G.Wm. Erikson, and each
of them, with full power of substitution, the Proxies of the undersigned to
represent and to vote, as designated on the reverse side of this proxy card,
all the shares of Common Stock of CERBCO, Inc. held of record by the
undersigned on October 19, 1995, at the Annual Meeting of Stockholders to be
held on December 15, 1995 or any adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
[ x ] Please mark your
votes as in this
example.
1. Proposal - Election of Director.
FOR, the nominee WITHHOLD
listed at right authority to vote Nominee: P.C. Kincheloe, Jr.
(except as noted for the nominee
to the contrary listed at right
below)
[ ] [ ]
(INSTRUCTION: To indicate that you do not wish to have your shares voted for
the nominee, print that nominee's name in the space provided below.)
---------------------------------------------------------------
2. Proposal - Approval of the Corporation's 1995 Directors' Stock Option
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their own discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
-------------------------- ------------------------ Dated: --------, 1995
SIGNATURE SIGNATURE (IF HELD JOINTLY)
NOTE: Signature(s) should be exactly as name(s) appearing on your
certificate. If stock is held jointly, each holder should sign. If
signing is by attorney, executor, administrator, trustee, guardian or
corporate officer, etc., please give your full title as such.
<PAGE>
TEXT OF CLASS B COMMON STOCK PROXY CARD:
CLASS B COMMON STOCK
CERBCO, Inc.
3421 Pennsy Drive, Landover, Maryland 20785, (301) 773-1784
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 15, 1995
PROXY - CLASS B COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.W. Erikson and G.Wm. Erikson, and
each of them, with full power of substitution, the Proxies of the undersigned
to represent and to vote, as designated on the reverse side of this proxy
card, all the shares of Class B Common Stock of CERBCO, Inc. held of record by
the undersigned on October 19, 1995, at the Annual Meeting of Stockholders to
be held on December 15, 1995 or any adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
[ x ] Please mark your
votes as in this
example.
1. Proposal - Election of Director.
FOR, all nominees WITHHOLD
listed at right authority to vote Nominees: R.W. Erikson
(except as noted for all nominees G.Wm. Erikson
to the contrary listed at right W.C. Hayes, IV
below)
[ ] [ ]
(INSTRUCTION: To indicate that you do not wish to have your shares voted for
an individual nominee, print that nominee's name in the space provided below.)
---------------------------------------------------------------
2. Proposal - Approval of the Corporation's 1995 Directors' Stock Option
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their own discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
-------------------------- ------------------------ Dated: --------, 1995
SIGNATURE SIGNATURE (IF HELD JOINTLY)
NOTE: Signature(s) should be exactly as name(s) appearing on your
certificate. If stock is held jointly, each holder should sign. If
signing is by attorney, executor, administrator, trustee, guardian or
corporate officer, etc., please give your full title as such.
