SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SHOWPOWER, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
5) Total fee paid:
_____________________________________________________________________________
/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _________________________________________________
2) Form, Schedule or Registration No.: _____________________________________
3) Filing Party: ___________________________________________________________
4) Date Filed: _____________________________________________________________
<PAGE>
SHOWPOWER, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
The annual meeting of stockholders of Showpower, Inc. will be held at 18420
S. Santa Fe Avenue, Rancho Dominguez, California, on May 27, 1999, at 10:00
a.m., California time, for the following purposes:
(1) To elect three directors to serve until the 2002 annual meeting of
stockholders and until their successors are elected and have qualified;
(2) To approve or disapprove a proposed amendment to the Company's 1998
Stock Option and Incentive Plan which increases from 565,500 to 1,000,000 the
number of shares of Common Stock subject to issuance under the plan;
(3) To approve or disapprove the appointment of Deloitte & Touche LLP as
auditors for the Company for 1999; and
(4) To transact such other business as may properly come before the
meeting.
All stockholders of record at the close of business on April 23, 1999 will
be eligible to vote.
It is important that your shares be represented at this meeting. Whether or
not you expect to be present, please fill in, date, sign and return the enclosed
proxy form in the accompanying addressed, postage-prepaid envelope. Any
stockholder who executes and delivers a proxy may revoke the authority granted
thereunder at any time prior to its use by giving written notice of such
revocation to the undersigned at 18420 S. Santa Fe Avenue, Rancho Dominguez,
California 90221, by executing and delivering a proxy bearing a later date or by
attending and voting at the meeting. Your vote is important, regardless of the
number of shares you own.
The Annual Report for the year ended December 31, 1998 is also enclosed.
By Order of the Board of Directors
of Showpower, Inc.
Stephen R. Bernstein, Secretary
Dated: April 26, 1999
(ANNUAL REPORT CONCURRENTLY MAILED)
<PAGE>
SHOWPOWER, INC.
18420 S. Santa Fe Avenue
Rancho Dominguez, California 90221
PROXY STATEMENT
Annual Meeting of Stockholders
May 27, 1999
GENERAL
This statement is being furnished to stockholders of Showpower, Inc., a
Delaware corporation (the "Company") on or about April 26, 1999 in connection
with a solicitation of proxies by the Company's Board of Directors for use at
the annual meeting of stockholders, and at any adjournments or postponements
thereof, to be held at 10:00 a.m., California time, Thursday, May 27, 1999, at
18420 S. Santa Fe Avenue, Rancho Dominguez, California, for the purposes set
forth in the accompanying Notice.
Voting Securities
The holders of record of shares of the Company's Common Stock, $0.01 par
value per share ("Common Stock"), outstanding at the close of business on April
23, 1999, the record date for the meeting, are entitled to vote at the meeting.
On that date, there were 3,421,842 shares of Common Stock outstanding and
entitled to vote at the meeting. On all matters, including the election of
directors, each stockholder will have one vote for each share of Common Stock
held.
Required Vote
Election of directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposal 2 and
Proposal 3 will each be subject to the vote of the holders of a greater number
of shares favoring approval than those opposing it. A proxy may indicate that
all or a portion of the shares represented by such proxy are not being voted
with respect to a specific proposal. This could occur, for example, when a
broker is not permitted to vote shares held in street name on certain proposals
in the absence of instructions from the beneficial owner. Shares that are not
voted with respect to a specific proposal will be considered as not present and
entitled to vote on such proposal, even though such shares will be considered
present for purposes of determining a quorum and voting on other proposals.
Abstentions on a specific proposal will be considered as present, but not as
voting in favor of such proposal. As a result, with respect to all three
proposals, broker non-votes and abstentions will not affect the determination of
whether such proposals will be approved.
Proxies
Unless revoked, a valid proxy will be voted at the meeting in accordance
with the instructions of the stockholder in the proxy, or, if no instructions
are given, for the election as directors of all nominees listed under Proposal
1, for Proposal 2 and for Proposal 3. Any person giving a proxy may revoke it by
written notice to the Company at any time prior to its exercise or by executing
and delivering a proxy bearing a later date. Attendance at the meeting by a
stockholder will not constitute a revocation of a proxy unless such stockholder
affirmatively indicates at the meeting that such stockholder intends to vote in
person.
Other Business
The Board of Directors knows of no matters, other than those described in
the attached Notice of Annual Meeting, which are to be brought before the
meeting. If other matters properly come before the meeting, it is the intention
of the persons named in the accompanying form of proxy to vote such proxy in
accordance with their judgment on such matters.
<PAGE>
COSTS OF PROXY SOLICITATION
The cost of preparing, assembling, and mailing the proxy material will be
borne by the Company. It is expected that solicitation will be made primarily by
mail, but employees of the Company or other representatives of the Company may
also solicit proxies without additional compensation. The Company will also
request persons, firms and corporations holding shares in their names or in the
names of their nominees, which shares are beneficially owned by others, to send
the proxy material to, and to obtain proxies from, such beneficial owners and
will reimburse such holders for their reasonable expenses in doing so.
ELECTION OF DIRECTORS
Nominees
The Board of Directors of the Company currently consists of seven directors
divided into three classes and the term of one class of directors expires each
year. Generally, each director serves until the annual meeting of stockholders
held in the year that is three years after such director's election and until
such director's successor is elected and has qualified.
Three directors are to be elected at the meeting, each to hold office for a
term to expire at the 2002 annual meeting of stockholders and until his
successor is elected and has qualified. It is the intention of the persons named
in the accompanying form of proxy to vote such proxy for the election to the
Board of Directors of Messrs. David C. Bernstein, Masterson and Stone. Each of
the nominees for director is presently a director. If any such person is unable
or unwilling to accept nomination or election, it is the intention of the
persons named in the accompanying form of proxy to nominate such other person as
director as they may in their discretion determine, in which event the shares
will be voted for such other person. Unless otherwise indicated in a footnote to
the following table, each director or nominee possesses sole voting and
investment power with respect to the shares of Common Stock indicated as
beneficially owned by such nominee.
Name Age Director Since
- ----------------------- ----------------------- -----------------------
NOMINEES FOR DIRECTOR
(Nominees for three-year term to expire
at the annual meeting of stockholders in 2002)
David C. Bernstein (1) 41 1991
Robert E. Masterson (2) 53 1996
Jeffrey B. Stone (3) 43 1996
DIRECTORS CONTINUING IN OFFICE
(Term expiring at the annual meeting of stockholders in 2000)
Vincent A. Carrino (4) 43 1998
Eric C. Jackson (5) 54 1998
(Term expiring at the annual meeting of stockholders in 2001)
Joseph A. Ades (6) 37 1996
John J. Campion (7) 36 1997
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(1) David C. Bernstein became a director of the Company in 1991, and served as
Chairman of the Board from 1991 to May 1996. He has served as Chief
Executive Officer of Rock-It-Cargo, USA, Inc., a freight forwarding and
logistics company, since 1985. From June 1994 to January 1996, he was the
chief
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<PAGE>
executive officer of Viscount Air Services, Inc., a passenger charter
airline, which filed a voluntary petition for reorganization under Chapter
11 of the United States Bankruptcy Code in January 1996.
(2) Robert E. Masterson has served as a director of the Company since May 1996,
and previously served in the same capacity from 1991 to 1995. He has been
the Chief Executive Officer of Service Data Corporation, a data processing
service company, since 1991, and previously served as President of American
Express Travel Management Services, President and Chief Executive Officer
of American Express Data Base Services, Inc., and President and Chief
Executive of First Data Resources, Inc.
(3) Jeffrey B. Stone became Chairman of the Board of the Company in May 1996.
He has been the President of Ironhorse Ventures, Inc., a private investment
firm, since November 1992. Mr. Stone served as Chairman of the Board of
Darling International Inc., a food byproducts co-processor, from January
1993 to March 1994 and as its interim Chief Executive Officer from January
1994 to March 1994. Mr. Stone is also an advisory director of Stewart
Information Services Corporation, a title insurance and real estate
information company.
(4) Vincent A. Carrino is President of Brookhaven Capital Management, Co., Ltd,
an investment fund, and the Manager and Principal Member of Brookhaven
Capital Management LLC, an investment fund. Mr. Carrino is also a director
of Rentway, Inc., an operator of rent-to-own stores, Intrenet, Inc., a
holding company for truckload motor carriers and Cash Technologies, Inc.,
a coin processing services company.
(5) Eric C. Jackson is the Chairman and Chief Executive Officer of Great Basin
Companies, a group of truck dealerships which he founded in 1976. He is
also a director of Intrenet, Inc., a holding company for truckload motor
carriers.
(6) Joseph A. Ades became a director of the Company in May 1996. Since 1991, he
has been a partner in ABI Management Partners, a private investment firm.
(7) John J. Campion has served as Chief Executive Officer of the Company since
its founding in 1991. He has served as a director of the Company from March
1991 to May 1996 and from December 1997 to the present.
Stephen R. Bernstein, an executive officer of the Company, is the brother
of David C. Bernstein. Jeffrey B. Stone is the brother-in-law of Joseph A. Ades.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
Meetings and Committees
During 1998, the Board of Directors of the Company held three meetings.
Except for Messrs. Masterson and Jackson, each of whom missed one meeting, all
directors attended 75% or more of the total meetings of the Board of Directors
and each committee on which he served during the period in 1998 for which he
served as a director.
The Board of Directors has a Compensation Committee (the "Compensation
Committee"), which consists of Messrs. Ades and Jackson. The primary functions
of the Compensation Committee are to consider and recommend overall compensation
programs, to review and approve compensation payable to management and to
administer the Company's 1998 Stock Option and Incentive Plan. The Compensation
Committee met once during 1998.
The Board of Directors of the Company has an Audit Committee (the "Audit
Committee"), which consists of Messrs. Carrino and Jackson. The functions of the
Audit Committee are to make recommendations concerning the engagement of
independent public accountants of the Company, review with the independent
public accountants the scope and results of the audit engagement, approve
professional services provided by the independent public accountants, review the
independence of the independent
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<PAGE>
accountants, consider the range of audit and non-audit fees, review the adequacy
of the Company's internal accounting controls and perform such other duties as
shall be delegated to the Audit Committee by the Board of Directors. The Audit
Committee did not meet during 1998.
The Board of Directors does not have a nominating committee. The Board of
Directors nominates persons for election as director. The Board will consider
persons nominated by stockholders. Stockholders who wish to nominate persons for
election as director must comply with the advance notice and eligibility
provisions of the Company's By-laws. The Company's By-Laws provide that
stockholders are required to give advance notice to the Company of any
nomination by a stockholder of candidates for election as directors.
Specifically, the By-Laws provide that for a stockholder to nominate a person
for election to the Company's Board of Directors, the stockholder must be
entitled to vote for the election of directors at the meeting and must give
timely written notice of the nomination to the Secretary of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Common Stock, to file reports of ownership with the Securities and Exchange
Commission. Such persons also are required to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during 1998, all filing
requirements applicable to its executive officers, directors, and greater than
10% stockholders were complied with.
Executive Officers
Laurence Anderson has served as President since August 1996 and prior
thereto as a Vice President since 1991.
Stephen R. Bernstein has served as Executive Vice President, General
Counsel and Secretary of the Company since May 1996. From July 1991 to May 1996,
he served as Executive Vice President and General Counsel of Rock-It-Cargo, USA,
Inc., a freight forwarding and logistics company. From June 1994 to May 1995, he
was an officer of Viscount Air Services, Inc., a passenger charter airline,
which filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code in January 1996.
Gary M. Rosner has served as Vice President/Operations of the Company since
May 1991.
Michael W. Crabbe has served as Chief Financial Officer of the Company
since December 1997. From November 1996 to July 1997 Mr. Crabbe served as Vice
President Finance, Chief Financial Officer of Industrial Wire Products. From
January 1996 to October 1996, he served as Assistant Controller, Sony Television
Entertainment and from November 1988 to October 1996 served as Vice President,
Controller with E! Entertainment Television, Inc. Prior to October 1988, Mr.
Crabbe held the position of Senior Manager with Deloitte & Touche LLP. He is a
certified public accountant.
Gregory S. Landa has served as Vice President/Sales of the Company since
June 1998 and prior thereto as Director of Broadcast Services since August 1995.
From July 1992, to August 1995, he served as President of Chandler/Chase
Corporation, doing business as Power Plus.
Mr. Campion is an executive officer and a director, and certain information
about him is discussed above under "--Nominees."
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth compensation for services in all capacities
to the Company during each of the Company's last two years for (i) the Company's
Chief Executive Officer and (ii) the Company's four other most highly
compensated individuals who were serving as executive officers on December 31,
1998 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------ ---------------------------
Awards
---------------------------
Securities
Other Annual Restricted Underlying All Other
Compensation Stock Options/ Compensation
Name and Position Year Salary Bonus (1) Awards ($) SARs (#)(2) (3)
----------------- ---- ------ ----- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Campion, 1998 $240,000 $ -- $25,402 $ -- 141,357 $6,832
Chief Executive Officer 1997 240,000 133,000 28,135 256,170 77,260 9,868
Laurence Anderson, 1998 150,000 -- 14,897 -- 70,688 4,580
President 1997 150,000 67,000 11,847 170,780 51,507 4,376
Stephen R. Bernstein, 1998 150,000 -- 5,233 -- 25,000 5,478
Executive Vice President 1997 148,990 -- 5,179 -- -- 4,928
Gregory S. Landa, 1998 100,388 104,682 8,400 -- 25,000 4,286
Vice President/Sales
Michael W. Crabbe, 1998 109,154 -- -- -- 25,000 --
Vice President/Chief
Financial Officer
</TABLE>
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(1) Represents club membership and/or automobile allowance.
(2) Represents restricted stock and securities underlying options. The Company
has no SARs.
(3) Represents matching contributions by the Company to the Company's 401(k)
tax deferred savings plan (the "401(k) Plan") for the benefit of the
executive, and life insurance.
Employment Contracts
Each of Messrs. Campion, Anderson, Stephen R. Bernstein and Landa has
entered into an employment agreement with the Company.
The employment agreement with Mr. Campion provides for his employment as
Chief Executive Officer at an annual base salary of $240,000, plus a bonus to be
awarded annually. The agreement with Mr. Campion expires in May 2001.
The employment agreement with Mr. Anderson provides for his employment as
President at an annual base salary of $150,000, plus a bonus to be awarded
annually. The agreement with Mr. Anderson expires in May 1999.
The employment agreement with Mr. Bernstein provides for his employment as
Executive Vice President at an annual base salary of $150,000, plus a bonus to
be awarded annually at the discretion of the Board. The agreement with
Mr. Bernstein expires in June 1999.
The employment agreement with Mr. Landa provides for his employment as Vice
President/Sales at an annual base salary of $60,000, plus bonus compensation
based on gross sales meeting specified criteria. The agreement with Mr. Landa
expires August 25, 2001.
These employment agreements entitle these executive officers to participate
in the health, insurance, pension and other benefits, if any, generally provided
to employees of the Company and, in some cases, automobile allowances.
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<PAGE>
The Company may terminate the employment of the executive officers upon
death or extended disability or for cause (as defined). If employment is
terminated by the Company without cause, the Company must pay the executive
officer's salary and health and insurance benefits until the scheduled
termination date of the employment agreement.
401(k) Plan
Upon completion of one year of employment, all Company employees are
eligible to participate in the 401(k) Plan and may make elective salary
reduction contributions to the 401(k) Plan of up to 15% of their annual
compensation, subject to a dollar limit established by law. In addition, until
January 21, 1999, the Company provided a matching contribution of up to 50% of
the employee's contribution, subject to a maximum of six percent of the
employee's salary. Participants are fully vested at all times in the amounts
they contribute to the 401(k) Plan; however amounts contributed by the Company
are subject to vesting over a five-year period. The Company's contributions are
tax deductible to the Company. Benefits under the 401(k) Plan generally become
payable upon retirement, death or disability.
Compensation of Directors
The Company has entered into an employment agreement with Mr. Stone which
provides for his employment as Chairman at an annual base salary of $12,000,
plus a bonus to be awarded annually at the discretion of the Board. The
agreement with Mr. Stone expires in May 2000. Other than Mr. Stone, Chairman of
the Board, directors historically have not received any compensation for their
services as directors. Directors receive reimbursements of expenses incurred in
attending meetings. In addition, the Company expects to compensate non-employee
directors in the form of a grant of options to purchase 2,000 shares of Common
Stock in 1999 and annual grants thereafter.
Stock Options
Effective January 1, 1998, the Board of Directors and the stockholders of
the Company adopted the 1998 Stock Option and Incentive Plan (the "Plan"). Under
the Plan, the Company may award stock options and performance shares to
employees and directors of the Company. The aggregate number of shares of Common
Stock that may be awarded under the Plan is 565,500, subject to adjustment in
certain events. No individual participant may receive awards for more than
141,375 shares in any calendar year.
The Company's Board of Directors has proposed amending the Plan. For a
description of the proposed amendment, see "Proposal of Amendment to the
Company's 1998 Stock Option and Incentive Plan."
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<PAGE>
The following table sets forth information with respect to options granted
by the Company under the Plan to the Named Executive Officers during 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise
Name Granted Fiscal Year Price Expiration Date
--------------------- ------------ -------------- -------- ---------------
<S> <C> <C> <C> <C>
John J. Campion 141,375 (1) 29% $11.00 May 18, 2008
Laurence Anderson 70,688 (1) 15% $11.00 May 18, 2008
Stephen R. Bernstein 25,000 (1) 5% $11.00 May 18, 2008
Gregory S. Landa 25,000 (1) 5% $11.00 May 18, 2008
Michael W. Crabbe 25,000 (1) 5% $11.00 May 18, 2008
</TABLE>
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(1) The Compensation Committee granted the non-qualified stock options on
May 18, 1998, effective at the closing date of the Company's initial public
offering. The options vest in three equal annual installments commencing on June
16, 1998.
Option Exercises and Year-End Values
The following table sets forth information with respect to the unexercised
stock options held by the Named Executive Officers at December 31, 1998. The
Named Executive Officers exercised no options to acquire Common Stock during
1998.
AGGREGATED OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1998 December 31, 1998 (1)
------------------------------ -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
--------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John J. Campion 47,125 94,250 $0 0
Laurence Anderson 23,563 47,125 0 0
Stephen R. Bernstein 8,333 16,667 0 0
Gregory S. Landa 8,333 16,667 0 0
Michael W. Crabbe 8,333 16,667 0 0
</TABLE>
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(1) The closing price of the Company's Common Stock as reported by the American
Stock Exchange on December 31, 1998, was $8.50. There were no
"in-the-money" options on December 31, 1998.
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<PAGE>
CERTAIN TRANSACTIONS
The Company has historically engaged and continues to engage in
transactions with entities controlled by its stockholders and their affiliates
if economically advantageous to the Company. Related party transactions are
subject to the review and approval of the Company's Audit Committee, which is
composed exclusively of the Company's outside directors, and such transactions
are on terms no less favorable to the Company than those that could be obtained
from unaffiliated third parties.
Transactions with Officers
In March 1997, the Company issued and sold 754,000 shares of Common Stock
to existing stockholders, including three directors and four officers of the
Company, and seven additional investors for an aggregate purchase price of
$2,500,000. In connection with this transaction, the Company loaned Messrs.
Campion, Anderson and Stephen R. Bernstein an aggregate of $476,770 to purchase
shares of Common Stock. Of such loans, an aggregate of $457,270 are evidenced by
promissory notes which mature in 2002, bear interest at the rate of 6.25% per
annum and are secured by a pledge of other shares of Common Stock owned by the
makers of the notes. Interest and principal is payable at maturity of the notes.
The principal obligations outstanding at December 31, 1998 were as follows: Mr.
Campion - $249,263; Mr. Anderson - $113,338 and Stephen R. Bernstein - $114,169.
During the fourth quarter of 1997, the Company extended interest-free
advances to two executive officers in the aggregate amount of $90,340 in
anticipation of salary and bonus payments. All such advances have been repaid in
full. During the fourth quarter of 1998, the Company loaned $60,000 to two
executive officers evidenced by promissory notes which are due in April 2000
with interest payable biweekly at the Company's bank borrowing rate (8.5% at
December 31, 1998). Other loans to officers at December 31, 1998 totaled $38,000
and were repaid in March 1999.
Rock-It Cargo, USA, Inc. and Air Apparent, Inc.
During 1997 and 1998, the Company purchased freight forwarding services in
the amounts of approximately $217,000 and $228,000, respectively, from Rock-It
Cargo, USA, Inc., which is an affiliate of David C. Bernstein, a director of the
Company, and Mr. Masterson, a director of the Company. During 1997 and 1998, the
Company purchased travel agency services, primarily in the form of airline
tickets, in the amounts of approximately $118,000 and $125,000, respectively,
from Air Apparent, Inc., which is an affiliate of David C. Bernstein and Mr.
Masterson, and Andrew Dietz and Donna Dietz, two stockholders of the Company.
The Company believes that all of the foregoing transactions were made on terms
no less favorable to the Company than could have been obtained from unaffiliated
third parties. All future transactions between the Company and any entities
controlled by directors and stockholders of the Company will also be on terms
believed to be no less favorable to the Company than could be obtained from
unrelated third parties.
APPROVAL OF AMENDMENT TO THE COMPANY'S
1998 STOCK OPTION AND INCENTIVE PLAN
On April 15, 1999, the Board of Directors of the Company adopted an
amendment to the Company's 1998 Stock Option Plan (the "Plan") and directed that
the amendment be submitted to the stockholders of the Company for consideration
and approval at the 1999 annual meeting. The amendment would increase from
565,500 to 1,000,000 the number of shares of Common Stock available for issuance
pursuant to awards made under the Plan.
As of March 1, 1999, there were options to purchase an aggregate of 479,563
shares of Common Stock outstanding and unexercised that had been granted under
the Plan.
The following is a summary of the principal features of the Plan. The
summary is qualified in its entirety be reference to the complete text of the
Plan, as proposed to be amended. The proposed amendment is set forth as Appendix
A to this Proxy Statement.
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<PAGE>
Purpose
The purpose of the Plan is to promote the long-term interests of the
Company and its stockholders by providing a means of attracting and retaining
employees and directors of the Company. The Company believes that employees and
directors who own shares of Common Stock will have a closer identification with
the Company and greater motivation to work for the Company's success by reason
of their ability as stockholders to participate in the Company's growth and
earnings.
Eligible Persons
Recipients of awards under the Plan must be, or have been at the time of
grant, employees or directors of the Company. There are presently approximately
100 persons who are presently eligible for awards under the Plan.
Shares Subject to the Plan
If the amendment to the Plan is approved by the stockholders, the number of
shares of Common Stock subject to the Plan would be increased from 565,500 to
1,000,000. The number of shares of Common Stock subject to the Plan is subject
to adjustment in certain events. No individual participant may receive awards
for more than 141,375 shares in any calendar year.
The number of shares covered by an award under the Plan reduces the number
of shares available for future awards; however, any awards that terminate or are
surrendered or forfeited without exercise or issuance will become available for
further awards under the Plan.
The closing sale price of Common Stock on April 19, 1999, as quoted on The
American Stock Exchange, Inc. was $4 7/8 per share.
Administration of the Plan
The Plan is administered by the Compensation Committee of the Board of
Directors. Subject to the terms of the Plan, the Compensation Committee has sole
authority to determine and designate persons who are to be granted awards under
the Plan and the nature and terms of the awards to be granted, including the
number of shares to be subject to such awards.
Grant of Stock Options
With respect to the grant of stock options under the Plan that are intended
to qualify as "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), the option price must be at least
100% (or 110% in the case of any holder of 10% or more of the voting power of
the Company) of the fair market value of the Common Stock on the date of the
grant of the stock option. The aggregate fair market value (determined on the
date of grant) of the shares of stock subject to "incentive stock options" that
become exercisable for the first time by a grantee in any calendar year may not
exceed $100,000. The Compensation Committee establishes the exercise price of
nonqualified stock options at the time the options are granted, which may not be
less than 85% of the fair market value of the Common Stock on the date of grant.
The number and class of shares subject to an option will be adjusted by the
Compensation Committee in the event of stock splits, stock dividends,
recapitalizations and certain other events involving changes in the Company's
capital.
Exercise of Stock Options
No incentive stock options granted under the Plan may be exercised more
than ten years, or five years in the case of any holder of 10% or more of the
voting power of the Company, (or such shorter period as the Compensation
Committee may determine) from the date it is granted. Nonqualified stock options
may be exercised during such period as the Compensation Committee determines at
the time of grant.
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Stock options granted under the Plan become exercisable in one or more
installments in the manner and at the time or times specified by the
Compensation Committee at the time of grant.
Performance Shares
The Compensation Committee may grant awards of performance shares, in which
case the grantee could be granted shares of the Company's Common Stock, subject
to satisfaction of specified performance goals established by the Compensation
Committee. Performance goals may be established on one or more of the following
business criteria: earnings per share; return on equity; return on assets;
operating income; or market value per share. The applicable performance goals
and all other terms and conditions of the award are determined in the discretion
of the Compensation Committee.
After an award of performance shares has vested (that is, after the
applicable performance goal or goals have been achieved), the grantee will be
entitled to a payment of shares of the Company's Common Stock, cash or a
combination thereof. However, no grantee shall receive any such payment unless
the Compensation Committee has certified, by resolution or other appropriate
action in writing, that the amount thereof has been accurately determined in
accordance with the terms, conditions and limits of the Plan and that the
performance goals and any other material terms previously established by the
Compensation Committee or set forth in the Plan were in fact satisfied. If a
grantee terminates employment prior to the end of the period of time over which
the performance shares are being earned for any reason other than death,
disability or retirement, all of such grantee's rights with respect to
performance shares that have not yet been earned shall be forfeited. However, a
grantee shall be entitled to receive any performance shares earned as of the
date of termination if the specified performance goals have been attained.
As of the date of this Proxy Statement, the Company has not made any awards
of performance shares.
Miscellaneous Provisions
The Compensation Committee may accelerate the period of exercise or vesting
of any incentive award, either absolutely or contingently, for such reasons as
the Compensation Committee may deem appropriate.
In general, if the employment of a recipient of performance shares is
involuntarily terminated within 12 months following a change in control of the
Company, the recipient is entitled to a pro rata payment as though the recipient
had retired. In addition, in the event of a tender offer or exchange offer for
the Common Stock or upon the occurrence of certain other events, all options
granted under the Plan will become exercisable in full, unless otherwise
provided by the Compensation Committee.
Amendment of the Plan
The Board, or the Compensation Committee with the approval of the Board,
may at any time terminate or amend the Plan. No amendments to the Plan will
require shareholder approval unless such approval is required to comply with
Rule 16b-3 under the Securities Exchange Act of 1934; Section 422 of the Code or
the requirements of The American Stock Exchange, Inc.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of awards under the Plan. The summary is based on current federal
income tax laws and interpretations thereof, all of which are subject to change
at any time, possibly with retroactive effect. The summary is not intended to be
exhaustive.
Limitation on Amount of Deduction. The Company generally will be entitled
to a tax deduction for awards under the Plan only to the extent that the
participants recognize ordinary income from the award. Section 162(m) of the
Code contains special rules regarding the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers of the Company. The
general rule is that annual compensation paid to any of these specified
executives will be deductible only to the extent that it does not exceed
$1,000,000 or it qualifies as "performance-based compensation" under section
162(m). The Plan has been designed to permit the Compensation Committee to grant
awards which qualify for deductibility under section 162(m).
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<PAGE>
Taxation of Ordinary Income and Capital Gains. Subject to certain
exceptions, the maximum federal tax rate on "net capital gains" from the sale or
exchange of capital assets is 20%. "Net capital gain" is the excess of net
long-term capital gain over net short-term capital loss. Short-term capital
gains are taxed at the same rates applicable to ordinary income. Gains or losses
from the sale or exchange of capital assets will be "long-term" if the capital
asset was held for more than one year and "short-term" if the capital asset was
held for one year or less. For taxpayers with certain income levels, the
marginal tax rate applicable to ordinary income can range up to 39.6%. The
classification of income as ordinary compensation income or capital gain is also
relevant for income tax purposes for taxpayers who have capital losses and
investment interest.
Nonqualified Stock Options. An employee who is granted a nonqualified
option does not recognize taxable income upon the grant of the option, and the
Company is not entitled to a tax deduction. The employee will recognize ordinary
income upon the exercise of the option in an amount equal to the excess of the
fair market value of the option shares on the exercise date over the option
price. Such income will be treated as compensation to the employee subject to
the applicable withholding requirements. The Company is generally entitled to a
tax deduction in an amount equal to the amount taxable to the employee as
ordinary income in the year the income is taxable to the employee. Any
appreciation in value after the time of exercise will be taxable to the employee
as capital gain and will not result in a deduction by the Company.
The employee may also be required to recognize gain or loss upon the sale
of the option shares. If the selling price of the option shares exceeds the
employee's basis in the shares, the employee will recognize long-term capital
gain if the option shares were held for more than one year, and short-term
capital gain if the shares were held for one year or less. If the selling price
of the option shares is less than the employee's basis in the shares, the
employee will recognize long-term or short-term capital loss depending on how
long the shares were held. The employee's basis in the option shares will equal
the amount of ordinary income recognized by the employee upon exercise of the
option, plus any cash paid to exercise the option.
Incentive Stock Options. An employee who receives an incentive stock option
does not recognize taxable income upon the grant or exercise of the option, and
the Company is not entitled to a tax deduction. The difference between the
option price and the fair market value of the option shares on the date of
exercise, however, will be treated as a tax preference item for purposes of
determining the alternative minimum tax liability, if any, of the employee in
the year of exercise. The Company will not be entitled to a deduction with
respect to any item of tax preference.
An employee will recognize gain or loss upon the disposition of shares
acquired from the exercise of incentive stock options. The nature of the gain or
loss depends on how long the option shares were held. If the option shares are
not disposed of pursuant to a "disqualifying disposition" (i.e., no disposition
occurs within two years from the date the option was granted nor one year from
the date of exercise), the employee will recognize long-term capital gain or
capital loss depending on the selling price of the shares. If option shares are
sold or disposed of as part of a disqualifying disposition, the employee must
recognize ordinary income in an amount equal to the lesser of the amount of gain
recognized on the sale, or the difference between the fair market value of the
option shares on the date of exercise and the option price. Any additional gain
will be taxable to the employee as a long-term or short-term capital gain,
depending on how long the option shares were held. The Company is generally
entitled to a deduction in computing its federal income taxes for the year of
disposition in an amount equal to any amount taxable to the employee as ordinary
income.
Performance Shares. A participant who receives performance shares will
generally recognize additional compensation taxable as ordinary income and
subject to withholding, and the Company will be entitled to a tax deduction, at
the time payment is made, whether in the form of cash or shares of the Company's
Common Stock. To the extent that payment is made in the form of stock, the
amount taxable as compensation to the participant and deductible by the Company
is measured by the then fair market value of the shares, which constitutes an
addition to the participant's tax basis in such shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
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<PAGE>
APPOINTMENT OF AUDITORS
The appointment of Deloitte & Touche LLP as auditors for the Company during
1999 will be submitted at the meeting in order to permit the stockholders to
express their approval or disapproval. In the event of a negative vote, a
selection of other auditors will be made by the Board. The Company expects that
representatives of Deloitte & Touche LLP will be present at the meeting, and
will be given an opportunity to make a statement if they desire to do so. The
Company also expects that such representatives will respond to appropriate
questions addressed to the officer presiding at the meeting. Notwithstanding
approval by the stockholders, the Board of Directors reserves the right to
replace the auditors at any time upon the recommendation of the Audit Committee
of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 1, 1999, certain information
with respect to the beneficial ownership of the Common Stock by: (i) each person
(or group of affiliated persons) known by the Company to own beneficially more
than five percent of the outstanding Common Stock; (ii) each director of the
Company; (iii) the Named Executive Officers; and (iv) all directors and
executive officers as a group. Except as indicated in the footnotes to this
table, the persons named in the table, based on information provided by such
persons, have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
Shares of
Common Stock Percentage of
Name of Beneficial Owner Beneficially Owned Total Shares
------------------------ ------------------ ------------
John J. Campion 251,309(1) 7.2%
Laurence Anderson 127,574(2) 3.7
Stephen R. Bernstein 142,163(3) 4.1
Jeffrey B. Stone 354,828 10.4
Joseph A. Ades 218,752(4) 6.4
Robert E. Masterson 244,329 7.1
David C. Bernstein 180,093(5) 5.3
Gregory S. Landa 8,733(6) *
Michael W. Crabbe 9,333(6) *
Gary M. Rosner 8,333(6) *
Vincent A. Carrino 145,612(7) 4.3
Eric C. Jackson 75,493 2.2
Albert J. Ades 208,952(4) 6.4
All directors and executive officers
as a group (13 persons) 1,915,184(8) 54.3
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* Less than 1%
(1) Mr. Campion shares voting and investment power with respect to 126,925
shares with his spouse. Includes 77,260 shares granted by the Company as a
Restricted Stock Award, which are subject to certain forfeiture provisions
until March 18, 2000. Includes 47,125 shares issuable upon the exercise of
vested options.
(2) Mr. Anderson shares voting and investment power with respect to 52,505
shares with his spouse. Includes 51,507 shares granted by the Company as a
Restricted Stock Award, which are subject to certain forfeiture provisions
until March 18, 2000. Includes 23,563 shares issuable upon the exercise of
vested options.
(3) Includes 20,159 shares owned by a family trust of which Mr. Bernstein is a
trustee. Mr. Bernstein has sole voting power but shares investment power
with respect to such 20,159 shares. Includes 8,333 shares issuable upon the
exercise of vested options.
(4) Includes 60,320 shares owned by a general partnership of which Mr. Ades is
a partner and 9,800 shares owned by a corporation of which Mr. Ades is a
stockholder. Mr. Ades shares voting and investment power with his partners
and other stockholders with respect to such 70,120 shares.
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<PAGE>
(5) Mr. Bernstein shares voting and investment power with respect to these
shares with his spouse.
(6) Includes 8,333 shares issuable upon the exercise of vested options.
(7) Includes 90,480 shares owned by two limited partnerships, the general
partner of which is a corporation controlled by Mr. Carrino.
(8) Includes 104,020 shares issuable upon the exercise of vested options.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the year ended December 31,
1998, which includes the Company's audited financial statements is being mailed
with this proxy statement. A copy of any exhibits to the report (for which a
reasonable fee will be charged) will be sent to any stockholder, upon written
request to Stephen R. Bernstein, Showpower, Inc., 18420 S. Santa Fe Avenue,
Rancho Dominguez, California, 90221. A copy of the Annual Report on Form 10-K
(including exhibits) is also available through the SEC's Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system by accessing the SEC's web
site at http://www.sec.gov.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The date by which stockholder proposals must be received by the Company for
inclusion in proxy materials relating to the 2000 Annual Meeting of Stockholders
is December 24, 1999. In order to be considered at the 2000 Annual Meeting,
stockholder proposals must comply with the advance notice and eligibility
requirements contained in the Company's By-Laws. The By-Laws provide that for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must give written notice not less than 30 days nor more than 60 days
prior to the meeting. In the event that less than 40 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder must be received not later than the close of business
on the tenth day following the day on which notice of the date of the meeting
was mailed or public disclosure was made. The notice must contain specified
information about the proposed business and the stockholder making the proposal.
The specific requirements of these advance notice and eligibility provisions are
set forth in the Company's By-Laws, a copy of which is available upon request.
Such requests and any stockholder proposals should be sent to the Secretary of
the Company at the principal executive offices of the Company.
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<PAGE>
Appendix A
FIRST AMENDMENT TO SHOWPOWER, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
WHEREAS, the Board of Directors of Showpower, Inc. (the "Company") adopted
the Showpower, Inc. 1998 Stock Option and Incentive Plan (the "Plan") on
January 1, 1998; and
WHEREAS, the Plan was approved by the stockholders of the Company on
January 1, 1998; and
WHEREAS, the Company now desires to amend the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 7 of the Plan is hereby amended to read in its entirety
as follows:
7. Shares Subject to Plan, Limitations on Grants and
Exercise Price. Subject to adjustment by the operation of Section
12 of the Plan:
(a) The maximum number of Shares which may be issued under
Awards under the Plan shall not exceed 1,000,000 Shares. The Shares
may be either authorized and unissued Shares or Shares acquired by
the Company and held as treasury Shares. Shares that are withheld
to satisfy payment of the Exercise Price or any tax withholding
obligation and any Shares subject to an Award which expires,
terminates or is surrendered for cancellation may be subject to new
Awards under the Plan.
(b) The number of Shares which may be issued hereunder to
any Employee during any calendar year under all forms of Awards
shall not exceed 141,375 Shares.
(c) The Exercise Price for Shares awarded under Incentive
Stock Options may not be less than the Market Value of the Shares
on the Date of Grant; provided, however, the Exercise Price may not
be less than 110% of Market Value with respect to Incentive Stock
Options granted to any Employee who, together with persons whose
stock ownership is attributed to the Employee pursuant to Code
Section 424(d), owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
of its Affiliates. The Exercise Price for Shares awarded under
Nonqualified Stock Options may not be less than 85% of the Market
Value of the Shares on the Date of Grant.
2. Except as expressly amended by this Amendment, the terms and
conditions of the Plan shall remain in effect.
3. This Amendment to the Plan shall become effective upon its
approval by the Board of Directors and stockholders of the Company.
Approved by the Board of Directors of
Showpower, Inc. as of April 15, 1999
Approved by the Stockholders of
Showpower, Inc. as of May ___, 1999
<PAGE>
SHOWPOWER, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned holder(s) of shares of Common Stock of Showpower, Inc. (the
'Company') hereby appoints Stephen R. Bernstein and Laurence Anderson and each
of them, the Proxies of the undersigned, with full power of substitution, to
attend and represent the undersigned at the Annual Meeting of Stockholders of
the Company to be held at 18420 S. Santa Fe Ave., Rancho Dominguez, California,
on Thursday, May 27, 1999, at 10:00 a.m., California time, and any adjournment
or adjournments thereof, and to vote all of such shares that the undersigned is
entitled to vote at such Annual Meeting or at any adjournment or postponement
thereof:
1. ELECTION OF DIRECTORS
To elect three directors of the Company to serve until the 2002 annual
meeting of stockholders:
Nominees:
David C. Bernstein; Robert E. Masterson; and Jeffrey B. Stone.
FOR ALL nominees listed above / / WITHHOLD AUTHORITY to vote for all
nominees listed above / /
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.
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2. To approve a proposed amendment to the Company's 1998 Stock Option and
Incentive Plan which increases from 565,500 to 1,000,000 the number of shares
of Common Stock subject to issuance under the plan.
/ / For / / Against / / Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED UNDER PROPOSAL 1, FOR
PROPOSAL 2 AND FOR PROPOSAL 3.
(THIS PROXY CONTINUES AND MUST BE SIGNED AND DATED ON THE REVERSE SIDE)
<PAGE>
3. To ratify the appointment of Deloitte & Touche LLP as auditors of the Company
for 1999.
/ / For / / Against / / Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
matters (none known at the time of solicitation of this proxy) as may
properly come before the Annual meeting or any adjournment or postponement
thereof.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders, the Proxy Statement furnished therewith, and the
1998 Annual Report to Shareholders. Any proxy heretofore given to vote the
shares which the undersigned is entitled to vote at the Annual Meeting of
Stockholders is hereby revoked.
NOTE: Please fill in, sign and return this proxy in the enclosed envelope.
When signing as Attorney, Executor, Administrator, Trustee or Guardian,
please give full title as such. If signer is a corporation, please sign the
full corporate name by authorized officer. Joint owners should each sign
individually. (Please note any change of address on this proxy.)
Please sign exactly as name appears hereon.
Dated: , 1999
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Signature(s)
