<PAGE>1
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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
GEV CORPORATION
(Name of Registrant as Specified In Its Charter)
GEV CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total Fee paid:
[ ] Fee previously paid with preliminary materials.
<PAGE>2
[ ] 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) Amounts Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>1
Preliminary Proxy Materials
GEV CORPORATION
3 Greenwich Office Park
Greenwich, Connecticut 06831
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 27, 1995
------------
To the Stockholders of
GEV CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
GEV Corporation, a Delaware corporation formerly known as Finevest Foods, Inc.
(the "Company"), will be held at the Sheraton Stamford Hotel, One First
Stamford Place, Stamford, Connecticut 06902 on Monday, March 27, 1995 at 10:00
A.M. for the following purposes:
(1) To elect two directors to serve until their successors are duly
elected and qualified;
(2) To approve an amendment to the Company's Third Restated
Certificate of Incorporation (the "Certificate of
Incorporation") to effect a one-for-four reverse split of the
Company's Class A Common Stock and Class B Common Stock;
(3) To approve an amendment to the Certificate of Incorporation to
change the Company's name from GEV Corporation to Pioneer
Companies, Inc., subject to the consummation of the acquisition
described in the accompanying Proxy Statement;
(4) To approve the 1995 Stock Incentive Plan;
(5) To ratify the appointment of Deloitte & Touche LLP as
independent certified public accountants for the Company for
the fiscal year ending December 31, 1995; and
(6) To consider and act upon any other matters which may properly
come before the Annual Meeting or any adjournment thereof.
In accordance with the provisions of the Company's By-Laws, the
Board of Directors has fixed the close of business
<PAGE>2
on March 2, 1995 as the date for determining stockholders of record entitled
to receive notice of, and to vote at, the Annual Meeting.
As of March 2, 1995, Mr. William R. Berkley, Chairman of the Board
of Directors of the Company, owned approximately 53.1% of the Company's Class
A Common Stock (representing approximately 52.1% of the voting power of the
Company's outstanding capital stock) and thus has sufficient voting power to
determine the results of the matters to be considered at the Annual Meeting.
Mr. Berkley has advised the Company that he will vote FOR each of the
proposals to be considered at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
You are cordially invited to attend the Annual Meeting. If you do
not expect to attend the Annual Meeting in person, please vote, date, sign and
return the enclosed proxy as promptly as possible in the enclosed reply
envelope.
By Order of the Board of Directors,
Nelson A. Barber
Assistant Secretary
Dated: March [ ], 1995
<PAGE>3
GEV CORPORATION
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
March 27, 1995
------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of GEV
Corporation (formerly known as Finevest Foods, Inc. and referred to herein as
the "Company") for use at the Annual Meeting of Stockholders to be held at the
Sheraton Stamford Hotel, One First Stamford Place, Stamford, Connecticut 06902
on Monday, March 27, 1995, at 10:00 A.M. and at any adjournment thereof. The
giving of a proxy does not preclude a stockholder from voting in person at the
Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the
Secretary of the Company at its executive office at any time prior to voting
of the shares represented by the earlier proxy. In addition, stockholders
attending the Annual Meeting may revoke their proxies by voting at the Annual
Meeting. If a returned proxy does not specify a vote for or against a
proposal, it will be voted in favor thereof. The expense of preparing,
printing and mailing this Proxy Statement will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Company without additional compensation.
The Company will reimburse banks, brokers and other custodians, nominees and
fiduciaries for their costs in sending the proxy materials to the beneficial
owners of the Company's Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), and the Class B Common Stock, par value $.01 per
share (the "Class B Common Stock" and, together with the Class A Common Stock,
the "Common Stock"). The Company's Annual Report for the fiscal year ended
December 31, 1994 is being mailed simultaneously with this Proxy Statement.
The approximate mailing date of this Proxy Statement and the proxy is March [
], 1995.
BANKRUPTCY FILINGS
On February 11, 1991, the Company and each of its five operating
subsidiaries filed voluntary petitions seeking reorganization under chapter 11
of the United States Bankruptcy Code. On July 9, 1992, the Second Amended
Joint Plan of Reorganization filed by the Company and its dairy subsidiaries
(the "Reorganization Plan") became fully effective pursuant to a
<PAGE>4
confirmation order issued by the U.S. Bankruptcy Court. The Company's
operating subsidiaries subsequently ceased operations and disposed of
substantially all of their assets.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on March 2,
1995 are entitled to notice of and to vote at the Annual Meeting. The number
of shares of voting stock of the Company outstanding on that date and entitled
to vote was (i) 15,168,663 shares of Class A Common Stock and (ii) 3,077,419
shares of Class B Common Stock (which was issued to the Company's former
lending banks under the Reorganization Plan). Each share of Class A Common
Stock is entitled to one vote and each share of Class B Common Stock is
entitled to one-tenth of one vote. Class A Common Stock and Class B Common
Stock will vote together as a single class on all matters to be acted on at
the Annual Meeting. Class B Common Stock is fully convertible at any time into
Class A Common Stock on a share-for-share basis. Information as to persons
beneficially owning 5% or more of the Common Stock may be found under the
heading "Security Ownership of Certain Beneficial Owners and Management"
herein.
Unless otherwise directed in the proxy, the persons named therein
will vote "FOR" the election of the director nominees listed below and "FOR"
each of the other proposals to be considered at the Annual Meeting.
All matters to be acted on at the Annual Meeting, other than
Proposals 2 and 3, require the affirmative vote of a majority of the voting
power of the shares present in person or by proxy at the Annual Meeting to
constitute the action of the stockholders. Proposals 2 and 3 will each
require for approval the affirmative vote of a majority of the voting power of
the outstanding Common Stock. In accordance with Delaware law, abstentions
will, while broker nonvotes will not, be treated as present for purposes of
the preceding sentences. A broker nonvote is a proxy submitted by a broker in
which the broker fails to vote on behalf of a client on a particular matter
for lack of instruction when such instruction is required.
As of the date hereof, the Board of Directors knows of no other
business that will be presented for consideration at the Annual Meeting. If
other business shall properly come before the Annual Meeting, the persons
named in the proxy will vote according to their best judgment.
<PAGE>5
PROPOSED ACQUISITION
After the Company and its dairy subsidiaries emerged from bankruptcy
proceedings in 1992, substantially all of the operating assets of the
subsidiaries were sold, and the proceeds of such sales were used to pay
indebtedness and expenses. As a result, the Company does not presently
conduct any business. On January 24, 1995, the Company entered into a letter
of intent providing for the acquisition by the Company (the "Pioneer
Acquisition") of all of the outstanding shares of the capital stock of Pioneer
Americas, Inc. ("Pioneer"). Through its subsidiaries, Pioneer, which is based
in Houston, Texas and is privately held, manufactures and distributes
chlorine, caustic soda and related products used in a variety of applications,
including water treatment, plastics, detergents and agricultural chemicals.
Pioneer had revenues of approximately $165 million for the year ended December
31, 1994. The purchase price of the Pioneer Acquisition will be $152.5
million in cash, subject to provisions for adjustment, plus $10 million in
aggregate principal amount of subordinated notes of the Company and certain
amounts payable after the closing of the Acquisition and based upon earnings
or proceeds attributable to certain of Pioneer's assets. A portion of the
purchase price will be used to pay indebtedness of Pioneer existing on the
purchase date.
The Pioneer Acquisition is subject to various conditions, including
the execution of definitive documentation and the receipt of required
approvals and of the financing necessary to effect the acquisition. Such
financing is expected to include (i) the issuance by the Company of 11,363,636
shares of its Class A Common Stock to Interlaken Investment Partners, L.P., a
limited partnership (the "Interlaken Partnership") of which Mr. William R.
Berkley, through controlled entities, is the general partner, for a cash
purchase price of approximately $____ per share, (ii) the issuance by a
subsidiary of the Company of approximately $130 million aggregate principal
amount of senior notes and (iii) a bank credit facility for such subsidiary in
the amount of approximately $30 million. In addition, the Company expects
that it will issue to the sellers of the stock of Pioneer (the "Pioneer
Selling Stockholders") subordinated notes in an aggregate principal amount of
$10 million and that certain of the Pioneer Selling Stockholders, and certain
employees of Pioneer or its subsidiaries, will purchase approximately
4,545,455 shares of Class A Common Stock of the Company for a cash purchase
price of $____ per share.
THE PIONEER ACQUISITION AND THE RELATED TRANSACTIONS DESCRIBED IN
THE PRECEDING PARAGRAPH DO NOT REQUIRE THE APPROVAL OF THE STOCKHOLDERS OF THE
COMPANY, AND THE STOCKHOLDERS OF THE COMPANY ARE NOT BEING ASKED TO VOTE ON
SUCH MATTERS.
<PAGE>6
There can be no assurance that the Pioneer Acquisition will be
consummated. If the Pioneer Acquisition is not consummated, the Company would
not change its name to Pioneer Companies, Inc. as contemplated by
Proposal 3 being submitted to stockholders pursuant to this Proxy Statement.
PROPOSAL 1: ELECTION OF DIRECTORS
As permitted by Delaware law, the Board of Directors of the Company
is divided into three classes, the classes being divided as equally as
possible and each class having a term of three years. Each year the term of
office of one class expires. This year the term of a class consisting of two
directors expires, and it is the intention of the Board of Directors that the
shares represented by proxy, unless otherwise indicated thereon, will be voted
for the reelection of Donald J. Donahue and Jack H. Nusbaum as directors to
hold office for a term of three years until the Annual Meeting of Stockholders
in 1998 and until their successors are duly chosen.
The persons designated as proxies reserve full discretion to cast
votes for other persons in the event the nominees are unable to serve.
However, the Board of Directors has no reason to believe that the nominees
will be unable to serve if elected. The proxies cannot be voted for a greater
number of persons than the two named nominees.
The Board of Directors expects that, if the Pioneer Acquisition is
consummated, the number of directors constituting the Board will be increased
from six to eight and that the Board of Directors would elect Richard C.
Kellogg, Jr. and Thomas H. Schnitzius as directors to fill the positions
created by such increase, with terms expiring in 1998 and 1997, respectively.
Mr. Kellogg is the Chairman of the Board of Pioneer and Mr. Schnitzius is a
director of Pioneer. The Board of Directors of the Company also expects that,
if the Pioneer Acquisition is consummated, Mr. Kellogg would be elected
President and Chief Executive Officer of the Company. Stockholders of the
Company are not being asked to vote on the proposal to elect Mr. Kellogg and
Mr. Schnitzius as directors if the Pioneer Acquisition is consummated.
Certain information with respect to Mr. Kellogg and Mr. Schnitzius is set
forth below.
The following table sets forth information regarding the nominees
and the remaining directors who will continue in office after the Annual
Meeting.
<PAGE>7
<TABLE>
<CAPTION>
Served as
Director of Business Experience
the Company During Past 5 Years,
Name Continuously Since Age and Other Information
<S> <C> <C>
Nominees to Serve in Office Until 1998
Donald J. Donahue* 1988 Chairman of the Board of Magma Copper Company since
1987 and Chairman of Nacolah Holding Co., a life and
health insurance company, from 1990 to 1993. From
1984 to 1985, Mr. Donahue served as Chairman and was
a director of KMI Continental Group, Inc., a natural
resource conglomerate. From 1975 to 1984, he was Vice
Chairman and a director of Continental Group, Inc.
Mr. Donahue is a trustee of Northeast Utilities, Inc.
and a director of Signet Star Holdings, Inc., a
reinsurance holding company. He is also a director
of Counsellors Tandem Securities Fund, Inc. and
eleven other registered investment companies managed
by EMW Warburg Pincus Counsellors, Inc. (Warburg,
Pincus Fixed Income Fund; Warburg, Pincus New York
Municipal Bond Fund; Counsellors Global Fixed Income
Fund, Inc.; Counsellors Intermediate Maturity
Government Fund, Inc.; Warburg, Pincus Institutional
Fund, Inc.; Counsellors International Equity Fund,
Inc.; Counsellors New York Tax Exempt Fund, Inc.;
Counsellors Cash Reserve Fund, Inc.; Warburg, Pincus
Capital Appreciation Fund; Counsellors Emerging
Growth Fund, Inc.; and Counsellors Tandem Securities
Fund, Inc.). Mr. Donahue is 70 years of age.
* Member of Audit Committee.
</TABLE>
<PAGE>8
<TABLE>
<CAPTION>
Served as
Director of Business Experience
the Company During Past 5 Years,
Name Continuously Since Age and Other Information
<S> <C> <C>
Jack H. Nusbaum** 1988 Senior Partner and Co-Chairman in the New York law
firm of Willkie Farr & Gallagher. Mr. Nusbaum is a
director of W.R. Berkley Corporation, a property and
casualty insurance company, The Topps Company, Inc.,
a manufacturer of collectible picture products and
gum, Signet Star Holdings, Inc., Republic New York
Securities Corporation and Hirschl & Adler Galleries,
Inc. Mr. Nusbaum is a member of the Retention
Committee of the New York Partnership as well as a
director and member of the Executive Committee of the
New York City Economic Development Corporation. Mr.
Nusbaum is also a trustee of Blythedale Children's
Hospital, Prep for Prep, the Joseph Collins
Foundation and the Robert Steel Foundation. Mr.
Nusbaum is 54 years of age.
Directors to Continue in Office Until
1996
** Member of Compensation and Stock Option Committee.
</TABLE>
<PAGE>9
<TABLE>
<CAPTION>
Served as
Director of Business Experience
the Company During Past 5 Years,
Name Continuously Since Age and Other Information
<S> <C> <C>
Philip J. Ablove* 1991 Restructuring consultant since July 1992. Mr. Ablove
was President and Chief Executive Officer of the
Company from January 1991 to July 1992, and a
consultant to the Company from October 1990 to
January 1991. He has served as an officer and
director specializing in restructuring
financially distressed companies since 1983. He was
a director of Ironstone Group, Inc. from June 1988
until June 1990, Executive Vice President and Chief
Financial Officer from September 1988 until February
1989 and President and Chief Operating Officer from
February 1989 until June 1990. Ironstone Group, a
publicly held holding company with interests in
wholesale plumbing distribution and oil and gas
exploration and production, filed a chapter 11
petition in January 1991 for reorganization under
federal bankruptcy law. Mr. Ablove was Chairman of
the Board of American National Petroleum Company, a
subsidiary of the Ironstone Group, from December 1989
until June 1990 and Executive Vice President and a
director of Iron-Oak Supply corporation from July
1988 until June 1990. Iron-Oak Supply Corporation
filed a bankruptcy petition in January 1991. Until
June 1988, Mr. Ablove had been Senior Vice President
and Chief Financial Officer (from April 1986) and a
director (from March 1986) of GCA Corporation, a
company that manufactures and distributes
semiconductor manufacturing equipment. Mr. Ablove is
55 years of age.
* Member of Audit Committee.
</TABLE>
<PAGE>10
<TABLE>
<CAPTION>
Served as
Director of Business Experience
the Company During Past 5 Years,
Name Continuously Since Age and Other Information
<S> <C> <C>
George H. Conrades 1988 President and CEO of Bolt Beranek and Newman Inc., a
company engaged in packet switching data
communications products and services, since January
1995. Mr. Conrades was Chairman of Conrades/Reilly
Associates, Inc., a software and services firm, from
August 1992 to January 1995. He joined International
Business Machines Corporation in 1961 and served as
an officer from 1978 until his retirement in March
1992, at which time he was a Senior Vice President.
Mr. Conrades is Chairman of the Board of Trustees of
Ohio Wesleyan University and a director of Bolt
Beranek and Newman Inc., LightStream Corporation and
Westinghouse Corporation. Mr. Conrades is 55 years
of age.
Andrew M. Bursky* 1994 Managing Director of Interlaken Capital, Inc., a
private investment and consulting firm, since May
1980. Mr. Bursky has been Chairman of the Board of
Strategic Distribution, Inc., a distributor of
maintenance and safety products to industry, since
July 1988. Mr. Bursky is an executive officer of
Idle Wild Farm, Inc., a privately owned manufacturer
of frozen food, which, in October 1993, while he was
an executive officer, filed a chapter 11 petition for
reorganization under federal bankruptcy law.
Interlaken Capital, Inc., Strategic Distribution,
Inc. and Idle Wild Farm, Inc. are corporations
controlled by William R. Berkley. Mr. Bursky is 38
years of age.
Director to Continue in Office Until
1997
* Member of Executive Committee.
</TABLE>
<PAGE>11
<TABLE>
<CAPTION>
Served as
Director of Business Experience
the Company During Past 5 Years,
Name Continuously Since Age and Other Information
<S> <C> <C>
William R. Berkley* ** 1988 Chairman of the Board of the Company since 1987. He
also serves as Chairman of the Board of several
companies which he controls or founded. These
include W.R. Berkley Corporation and Interlaken
Capital, Inc., a private investment and consulting
firm. Mr. Berkley is also a director of Strategic
Distribution, Inc. Mr. Berkley is 49 years of age.
</TABLE>
It is the intention of the persons named on the enclosed form of
proxy to vote "FOR" the election of the nominees for director named above.
The following table sets forth information regarding Richard C.
Kellogg, Jr. and Thomas H. Schnitzius, who are expected to be elected
directors of the Company by the Board of Directors if the Pioneer Acquisition
is consummated:
Business Experience During
Past 5 Years, Age and
Name Other Information
Richard C. Kellogg, Jr. Mr. Kellogg is a co-founder of Pioneer
and has served as Chairman of the
Board and as a director of Pioneer
since its inception in 1988. Mr.
Kellogg is also, for 1994 and 1995,
Chairman of the Board of Basic
Investments, Inc., a corporation in
which Pioneer holds an equity interest
of approximately 32%. This position
is rotated among representatives of
the equity owners of such corporation.
From 1983 to 1993, Mr. Kellogg served
as vice president of Trans Marketing
Houston, Inc. ("TMHI"), an
international trading company that he
co-founded dealing in refined
petroleum products and chemicals.
TMHI filed for bankruptcy in April
1993 and a liquidation plan was
approved by the bankruptcy court
in December 1993. Mr. Kellogg is 43
years of age.
* Member of Executive Committee.
** Member of Compensation and Stock Option Committee.
<PAGE>12
Thomas H. Schnitzius Mr. Schnitzius has been a principal in
the Houston investment banking firm of
Schnitzius & Vaughn since its
formation in October 1987. Prior to
1987, he was a principal in the
investment banking firm of Schnitzius
& Co., Ltd. Mr. Schnitzius has been a
director of Pioneer since October
1993. Mr. Schnitzius is 52 years of
age.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company met four times during 1994.
Each of the persons serving as a director in 1994 attended at least 75% of the
total number of meetings of the Board and meetings of the Committees of which
the director was a member during 1994. The Board has three standing
committees: the Executive Committee, the Compensation and Stock Option
Committee and the Audit Committee. The Board of Directors does not have a
Nominating Committee and the usual functions of such a committee are performed
by the entire Board of Directors.
The Executive Committee, composed of Messrs. Berkley and Bursky, is
authorized to act on behalf of the Board during periods between Board
meetings. The Committee did not meet during 1994.
The Compensation and Stock Option Committee, composed of Messrs.
Berkley and Nusbaum, establishes the level of compensation to be paid to the
officers of the Company and will administer the 1995 Stock Incentive Plan, if
approved by stockholders. The Committee met once during 1994 at a meeting
attended by Messrs. Berkley and Nusbaum.
The Audit Committee, composed of Messrs. Ablove and Donahue, advises
the Board as to the selection of the Company's independent public accountants,
monitors their performance, reviews all reports submitted by them and consults
with them with regard to the adequacy of internal controls. The Committee met
once during 1994 at a meeting attended by Messrs. Donahue and Ablove.
Compensation of Directors
In 1992, the Board of Directors established a policy update under
which each director receives an annual retainer of
<PAGE>13
$4,000 and a fee of $500 for each meeting attended. Pursuant to the Company's
1993 Non-Employee Director Stock Plan, the Company granted each non-employee
director 10,667 shares of Class A Common Stock in payment of the 1994 annual
retainer and 1,333 shares of Class A Common Stock for each Board of Directors
meeting attended in 1994.
<PAGE>14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 2, 1995 those persons
known by the Company to be the beneficial owners of more than 5% of the Class
A Common Stock or Class B Common Stock:
<TABLE>
<CAPTION>
Amount and
Nature
Name and Address of of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Class A Common Stock William R. Berkley* . . . . . . . . . . . . . . . 8,060,416 53.1
c/o GEV Corporation
3 Greenwich Office Park
Greenwich, CT 06831
Class B Common Stock Chemical Bank, Barnett Bank of South Florida, N.A. 3,077,419 100.0
and The Chase Manhattan Bank** . . . . . . . . .
c/o Chemical Bank
Special Loan Group
270 Park Avenue
48th Floor
New York, NY 10017
</TABLE>
The following table sets forth as of March 2, 1995 information
regarding ownership by all officers and directors of the Company, as a group,
and each director and officer individually, of Class A Common Stock. Except
as described in the footnotes below, all amounts reflected in the table
represent
* Mr. Berkley's holdings represent 52.1% of the voting power of the
Company's outstanding capital stock as of March 2, 1995.
** Information obtained from a Schedule 13G, dated July 21, 1992, filed with
the Securities and Exchange Commission by Chemical Bank ("Chemical"),
Barnett Bank of South Florida, N.A. ("Barnett") and The Chase Manhattan
Bank ("Chase"). The filing reported that (i) Chemical had acquired
2,305,676 shares of Class B Common Stock of which it was the beneficial
owner with sole voting and dispositive power, (ii) Barnett had acquired
456,621 shares of Class B Common Stock of which it was the beneficial
owner with sole voting and dispositive power and (iii) Chase had acquired
315,122 shares of Class B Common Stock of which it was the beneficial
owner with sole voting and dispositive power. The filing further stated
that while it had been made on a single basis under Rule
13d-1(b)(1)(ii)(H) of the Securities Exchange Act of 1934, the banks
disclaimed the existence of any group within the meaning of Exchange Act
Rule 13d-5(b)(1). The holdings of Chemical, Barnett and Chase represent
1.5%, 0.3% and 0.2%, respectively, of the voting power of the outstanding
Common Stock as of March 2, 1995. The holdings of Chemical, Barnett and
Chase represent 16.9% of the number of shares of Common Stock outstanding
as of March 2, 1995.
<PAGE>15
shares the beneficial owners of which have sole voting and investment power.
<TABLE>
<CAPTION>
Amount and
Nature
Name of of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class(1)
<S> <C> <C> <C>
Class A Common Stock Philip J. Ablove . . . . . . . . . . . 28,666 *
William R. Berkley(2) . . . . . . . . . 8,060,416 53.1
Andrew M. Bursky . . . . . . . . . . . 689,500 4.5
George H. Conrades . . . . . . . . . . 425,333 2.8
Donald J. Donahue . . . . . . . . . . . 736,666 4.9
Jack H. Nusbaum . . . . . . . . . . . . 27,666 *
Catherine B. James . . . . . . . . . . 100,000 *
Nelson A. Barber . . . . . . . . . . . 38,500 *
William L. Mahone . . . . . . . . . . . 1,000 *
Joshua A. Polan . . . . . . . . . . . . 60,000 *
All officers and directors as a group . 10,167,747 67.0
</TABLE>
* less than 1%
(1) Percentages of Class A Common Stock are based on the 15,168,663 shares
outstanding as of March 2, 1995.
(2) Mr. Berkley's holdings represent 52.1% of the voting power of the
Company's outstanding capital stock.
As discussed above under "Proposed Acquisition," the Company
proposes to sell shares of its Class A Common Stock to the Interlaken
Partnership and to certain of the Pioneer Selling Stockholders, and certain
employees of Pioneer or its subsidiaries, in connection with the Pioneer
Acquisition. If such additional shares are issued:
(i) The Interlaken Partnership would own
11,363,636 shares of the Class A Common Stock,
representing 36.6% of the Class A Common Stock and 36.2%
of the voting power of the outstanding capital stock.
(ii) Mr. Berkley would be the beneficial owner of
19,424,052 shares of the Class A Common Stock,
representing 62.5% of the Class A Common Stock and 61.9%
of the voting power of the outstanding capital stock, of
which 11,363,636 shares, or 36.6%
<PAGE>16
of the Class A Common Stock, would constitute the shares
owned by the Interlaken Partnership as indicated in paragraph (i)
above. Mr. Berkley, through controlled entities, is the sole
general partner of the Interlaken Partnership and owns
approximately 32% of the limited partnership interests in
the Interlaken Partnership.
(iii) Richard C. Kellogg, Jr., who is expected to be
elected a director and President and Chief Executive
Officer of the Company if the Pioneer Acquisition is
consummated, would be the beneficial owner of a number of
shares of the Class A Common Stock to be determined prior
to the execution of agreements for the Acquisition. The
Company presently expects that the shares to be acquired
by Mr. Kellogg would represent at least 6.1% (but not more
than 9.8%) of the Class A Common Stock and at least 6.0%
(but not more than 9.7%) of the voting power of the
outstanding capital stock.
(iv) All officers and directors as a group
(including Mr. Kellogg) would, upon consummation of the
Pioneer Acquisition, own beneficially (a) if Mr. Kellogg
acquires the minimum number of shares referred to in
clause (iii), above 23,425,322 shares of the Class A
Common Stock, representing 75.4% of the Class A Common
Stock and 74.6% of the voting power of the outstanding
capital stock and (b) if Mr. Kellogg acquires the maximum
number of shares referred to in clause (iii) above,
24,561,686 shares of Class A Common Stock, representing
79.0% of the Class A Common Stock and 78.3% of the voting
power of the outstanding capital stock.
The Company also expects that, if the Pioneer Acquisition is
consummated and the 1995 Stock Incentive Plan is approved by the stockholders,
Mr. Kellogg will be granted options to purchase 500,000 shares of Class A
Common Stock, for an exercise price equal to the fair market value of such
stock on the date of grant, pursuant to the 1995 Stock Incentive Plan. Such
options would be exercisable in three equal installments on each of the first
three annual anniversaries of the date of consummation of the Pioneer
Acquisition.
<PAGE>17
The Company knows of no current arrangements, including any pledge
by any persons of securities of the Company, the operation of which may at a
subsequent date result in a change of control of the Company.
EXECUTIVE COMPENSATION
The table below sets forth all compensation paid by the Company for
services in all capacities for the three fiscal years ended December 31, 1994
to William R. Berkley, Chairman of the Board of the Company, who receives no
compensation for acting in a capacity similar to that of a chief executive
officer, and Nelson Barber, Vice President-Chief Financial Officer and
Treasurer of the Company, who was compensated for his services through October
31, 1993. (In November 1993, Mr. Barber became Vice
President-Controller/Treasurer of Fine Host Corporation, a privately held
company of which Mr. Berkley is Chairman and majority stockholder.) Mr.
Barber currently receives no compensation for the services rendered as Vice
President-Chief Financial Officer and Treasurer of the Company. Mr. Barber
was the only executive officer of the Company during 1994.
<PAGE>18
<TABLE>
<CAPTION>
Name and Principal Position Annual Compensation
--------------------------- -------------------
Compensation Year Salary Other Annual Compensation
<S> <C> <C> <C>
William R. Berkley . . . . . . . . . . . 1994 $ 0 $6,000**
Chairman of the Board
1993 $2,000* $4,000**
1992 8,000***
Nelson A. Barber . . . . . . . . . . . . 1994 $ 0
Vice President-
Chief Financial Officer and
Treasurer****
1993 83,333*****
1992 100,000
</TABLE>
EXECUTIVE OFFICERS OF THE COMPANY
Mr. Barber, the only executive officer of the Company during 1994,
has been employed by the Company since June 1989. Mr. Barber was named Vice
President-Chief Financial Officer and Treasurer of the Company in June 1992.
Since November 1993, Mr. Barber has also served as Vice President,
Controller/Treasurer of Fine Host Corporation. From January 1990 through May
1992, Mr. Barber was Corporate Controller of the Company. Mr. Barber was
Director of Corporate and International Accounting at Combustion Engineering
from May 1987 to June 1989. Mr. Barber is 39 years of age.
* Director's meeting fees.
** Mr. Berkley is not an officer of the Company. Pursuant to the 1993
Non-Employee Director Stock Plan, he received a grant of 16,000 shares of
Class A Common Stock which was valued at $6,000 in payment of his 1994
annual director's retainer and director's meeting fees and 10,666 shares
of Class A Common Stock which was valued at $4,000 in payment of his 1993
annual director's retainer.
*** Director's compensation only, which includes an annual retainer and
meeting fees.
**** Mr. Barber was named Vice President-Chief Financial Officer and Treasurer
of the Company in June 1992. From January 1990 through May 1992, Mr.
Barber was Corporate Controller of the Company.
***** Mr. Barber was only compensated through October 31, 1993.
<PAGE>19
At a meeting of the Board of Directors of the Company held on
February 23, 1995, the following persons were elected officers of the Company
effective as of that date:
<TABLE>
<CAPTION>
Name and Position Business Experience During Past 5 Years, Age
with the Company and Other Information
<S> <C>
Catherine B. James Ms. James has been a Managing Director of Interlaken Capital, Inc. since January
President 1990. Ms. James has served as a member of the Board of Directors of Strategic
Distribution, Inc. since 1990, as Executive Vice President of Strategic
Distribution, Inc. since January 1989 and as its Secretary and Treasurer since
December 1989. She was Chief Financial Officer of Strategic Distribution, Inc.
from January 1989 until September 1993. From 1982 through 1988, she was
employed by Morgan Stanley & Co. Incorporated, serving as a Managing Director in
the corporate finance area during the last two years of her tenure. Ms. James
is 42 years of age.
William L. Mahone Mr. Mahone has served as Secretary of the Company since May 1993. He has served
Vice President - as Vice President, General Counsel and Secretary of Interlaken Capital, Inc.
General Counsel since September 1988. For the six years prior to September 1988, Mr. Mahone was
and Secretary an associate attorney at the New York law firm of Willkie Farr & Gallagher. Mr.
Mahone is 43 years of age.
Joshua A. Polan Mr. Polan has served as an executive officer of Interlaken Capital, Inc. since
Vice President June 1988, currently serving as a Managing Director. He has served as a member
of the Board of Directors of Strategic Distribution, Inc. since 1988. For more
than five years prior to June 1988, Mr. Polan was a partner in the accounting
firm of Touche Ross & Co. Mr. Polan is 47 years of age.
</TABLE>
The Board of Directors expects that, upon consummation of the
Pioneer Acquisition, Richard C. Kellogg, Jr. will be elected as President and
Chief Executive Officer of the Company. Certain information with respect to
Mr. Kellogg is set forth above under "Election of Directors."
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph set forth below compares the cumulative total shareholder
return on the Company's Common Stock for the period commencing December 31,
1989 and ending December 31, 1994 to the
<PAGE>20
cumulative total return on the Standard & Poor's 500 Stock Index and a peer
group (consisting of Dean Foods Co., Fleming Companies Inc., Supervalu Inc.
and Wetterau Inc. (which was acquired by Supervalu Inc. in October 1992))
consisting of those public companies whose business activities (wholesale food
and dairy distribution) were similar to those of the Company from December 31,
1988 through December 31, 1992. For the period beginning on July 9, 1992, the
graph relates to the Class A Common Stock, and the earlier period of the graph
relates to the Company's Common Stock as it existed prior to that date. Dates
are for fiscal years ending on December 31 in each of the years indicated.
Since July 9, 1992, the date when the Reorganization Plan became effective and
the Company emerged from bankruptcy proceedings, the Company believes that its
historical peer group may no longer be relevant because, as a result of the
Reorganization Plan, its operating subsidiaries had an independent board of
directors until January 1995 and, during that period, management of the
operating companies was vested in such independent board of directors. By the
close of the fiscal year ended December 31, 1994, the Company's operating
subsidiaries had ceased operations and disposed of substantially all of their
assets. This graph assumes a $100 investment in the Company's Common Stock
and in each index on December 31, 1989, and that all dividends paid by
companies included in each index and by the Company were reinvested.
[GRAPH APPEARS HERE. IT IS RESTATED BELOW IN TABULAR FORM]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG GEV CORPORATION, S&P 500 INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
S&P Peer
Measurement period GEV 500 Group
(Fiscal year Covered) Corporation Index Index
--------------------- ----------- ----- -----
<S> <C> <C> <C>
Measurement PT - 12/89 $ 100 $ 100 $ 100
FYE 12/90 $ 17.14 $ 96.90 $ 101.03
FYE 12/91 $ 2.50 $ 126.42 $ 109.84
FYE 12/92 $ 2.86 $ 136.05 $ 115.31
FYE 12/93 $ 2.86 $ 149.76 $ 126.17
FYE 12/94 $ 2.86 $ 151.74 $ 101.75
</TABLE>
<PAGE>21
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Compensation
Committee") determines the compensation of the Company's executive officers.
During the fiscal year ended December 31, 1994, the only executive officer of
the Company was its Vice President-Chief Financial Officer and Treasurer. The
only element of his compensation was salary for fiscal years 1992 and 1993.
While the Company was subject to the jurisdiction of the U.S. Bankruptcy
Court, all salaries of officers were established by the Court and such salary
levels were not changed through October 31, 1993. The Compensation Committee
maintained the compensation of the Company's Vice President-Chief Financial
Officer and Treasurer at the same level at which he was paid during 1992
because his duties and performance remained the same and the Company's
performance remained the same. The Compensation Committee was satisfied that
the Bankruptcy Court's analysis of the proper salary level remained
applicable. As of November 1, 1993, Mr. Barber no longer receives any
compensation from the Company although he continues to serve as the Company's
Vice President-Chief Financial Officer and Treasurer. This change recognizes
the diminution in Mr. Barber's post-reorganization responsibilities and that
the Company does not currently have any operations.
William R. Berkley
Jack H. Nusbaum
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William R. Berkley, a member of the Compensation Committee, is the
Chairman of the Board of Directors of the Company and as of March 2, 1995
owned approximately 53.1% of the Class A Common Stock (representing
approximately 52.1% of the voting power of the Company's outstanding capital
stock). Jack H. Nusbaum, a member of the Compensation Committee, is a Senior
Partner and Co-Chairman in the law firm of Willkie Farr & Gallagher, which
regularly acts as counsel to the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 1990, the Company's Southeast Frozen Foods, Inc. subsidiary
("Southeast") borrowed an aggregate of $5,000,000 on an unsecured demand note
basis from a private investment limited partnership in which companies
affiliated with Mr. Berkley are all of the limited partners. No principal
payments were made on the note. Mr. Berkley's indirect interest in the loans
was less than 10% of the aggregate principal amount thereof. The loans
represented an allowed unsecured claim subject to the same
<PAGE>22
treatment as all other similarly situated unaffiliated unsecured claims of the
bankruptcy estate of Southeast. In 1994, the limited partnership received in
satisfaction of such claims an amount equal to 3% of the aggregate principal
amount of the loans and the interest accrued thereon.
During 1991, the Company borrowed funds on an unsecured basis on
several occasions from Mr. Berkley for working capital purposes at times when
it had reached the borrowing limit under its bank credit agreement. Each such
loan was permitted indebtedness under the credit agreement, bore interest at
an annual rate of the prime rate plus 1% and was repaid as soon as funds were
available. On February 1 and February 4, 1991, Mr. Berkley loaned an
aggregate of $4,200,000 to the Company for working capital purposes. No
principal payments have been made on this loan. The loan represents an
allowed unsecured claim subject to the same treatment as all other similarly
situated unaffiliated unsecured claims of the bankruptcy estate of the
Company.
In February, 1994, the Company sold 4,410,000 shares of Class A
Common Stock to certain investors, including five of its directors and
officers, through a private placement for $.25 per share, resulting in
approximately $1,000,000 in net proceeds. In the private placement, Messrs.
Berkley, Bursky, Donahue, Conrades and Barber purchased 2,600,000 shares,
400,000 shares, 700,000 shares, 400,000 shares and 30,000 shares,
respectively. Catherine B. James and Joshua A. Polan, who were elected
officers of the Company in February 1995, purchased 100,000 shares and 60,000
shares, respectively, in the private placement.
As described above under "Proposed Acquisition," the Interlaken
Partnership is expected to purchase from the Company 11,363,636 shares of
Class A Common Stock for a cash purchase price of approximately $____ per
share, as part of the Company's financing of the Pioneer Acquisition. Mr.
Berkley, through controlled entities, is the general partner of the Interlaken
Partnership and also owns approximately 32% of the limited partnership
interests in the Interlaken Partnership. The Company's proposed sale of Class
A Common Stock to the Interlaken Partnership has been approved by a majority
of the Company's disinterested and independent directors, who determined that
the terms of the sale were at least as favorable to the Company as if they had
been reached with non-affiliated parties. The price per share to be paid by
the Interlaken Partnership for such shares will be the same as the price per
share that the Pioneer Selling Stockholders will pay for the shares of Class A
Common Stock to be purchased by them in connection with the Pioneer
Acquisition.
<PAGE>23
If the Pioneer Acquisition is consummated, the Company will pay
Interlaken Capital, Inc. a fee of approximately $1.6 million as compensation
for advisory services provided by Interlaken Capital, Inc. in connection with
the Acquisition. Interlaken Capital, Inc. is a private investment and
consulting firm controlled by William R. Berkley.
If the Pioneer Acquisition is consummated, the Company expects that
it will enter into an employment agreement with Richard C. Kellogg, Jr. and
will grant to Mr. Kellogg options to purchase 500,000 shares of Class A Common
Stock pursuant to the 1995 Stock Incentive Plan. See "Executive Officers of
the Company". The Company also expects that Mr. Kellogg will enter into a
stockholders agreement with the Company, Mr. Berkley and the Interlaken
Partnership providing that, so long as Mr. Kellogg's employment agreement is
in effect, Mr. Berkley and the Interlaken Partnership will vote their shares
of Common Stock for Mr. Kellogg's election to the Company's Board of Directors
and that Mr. Kellogg will vote his shares of Common Stock for the Board of
Directors' nominees for election as directors.
Jack H. Nusbaum, a director of the Company, is a Senior Partner and
Co-Chairman in the law firm of Willkie Farr & Gallagher, which regularly acts
as counsel to the Company.
Each transaction involving officers of the Company, its controlling
persons or affiliates was authorized at the time of the transaction or
subsequently ratified by a majority of the Company's disinterested directors.
In the future, the Company will not enter into any transactions with
affiliated parties unless a majority of the disinterested and independent
directors determines that the terms of such transactions will be at least as
favorable to the Company as if made with non-affiliated parties.
<PAGE>24
PROPOSAL 2: TO APPROVE AN AMENDMENT TO THE COMPANY'S THIRD RESTATED
CERTIFICATE OF INCORPORATION TO EFFECT A ONE-FOR-FOUR REVERSE
SPLIT OF THE COMPANY'S CLASS A COMMON STOCK AND CLASS B COMMON
STOCK
General
The Board of Directors of the Company has approved an amendment to
the Company's Third Restated Certificate of Incorporation (the "Certificate of
Incorporation") to effect a one-for-four reverse split of the Company's issued
and outstanding shares of Class A Common Stock and Class B Common Stock (the
"Reverse Stock Split"). A copy of the proposed amendment to the Certificate
of Incorporation effecting the Reverse Split is attached as Exhibit A. If the
Reverse Stock Split is approved by stockholders, the Board of Directors will
determine the date on which the Reverse Stock Split will become effective.
Each share of Class A Common Stock issued and outstanding immediately prior to
that effective date will be reclassified as and changed into one-fourth of one
share of Class A Common Stock and each share of Class B Common Stock then
outstanding will be reclassified as and changed into one-fourth of one share
of Class B Common Stock.
Purpose and Effect of the Reverse Stock Split
The principal effect of the reverse Stock Split will be to decrease
the number of outstanding shares of Class A Common Stock from 15,168,663 (as
of March 2, 1995) to approximately 3,792,165 shares and the number of
outstanding shares of Class B Common Stock from 3,077,419 (as of March 2,
1995) to approximately 769,354 (assuming, in each case, that no additional
shares have been issued subsequent to March 2, 1995). The Common Stock issued
pursuant to the Reverse Stock Split will be fully paid and nonassessable. The
respective voting rights and other rights that accompany the Common Stock will
not be altered by the Reverse Stock Split (other than as a result of payment
of cash in lieu of fractional shares (as discussed below)), and the par value
of the Common Stock will remain at $.01 per share. Consummation of the
Reverse Stock Split will not alter the number of authorized shares of the
Company's capital stock, which will remain at 60,000,000.
The Company expects that, if the Pioneer Acquisition is consummated,
the Company will attempt to have the Class A Common Stock listed for trading
on the National Market System of NASDAQ (the "National Market System") or the
Nasdaq Small Cap Market. The Company currently does not qualify for admission
to the National Market System because, among other factors, its per-share
price is too low and it cannot meet certain financial
<PAGE>25
statement requirements. The Board of Directors believes that a decrease in
the number of shares of Class A Common Stock outstanding without any material
alteration of the proportionate economic interest in the Company represented
by individual shareholdings may increase the trading price of the Class A
Common Stock and that a higher price should be more appropriate for admission
to the National Market System or the Nasdaq Small Cap Market, although no
assurance can be given that the market price of the Class A Common Stock will
rise in proportion to the reduction in the number of shares outstanding
resulting from the Reverse Stock Split. The Company also believes that its
ability to have the Class A Common Stock accepted for trading on the National
Market System or the Nasdaq Small Cap Market may be enhanced by the Pioneer
Acquisition and the earnings and assets of Pioneer. The Company does not
expect that it will apply for listing on the National Market System or the
Nasdaq Small Cap Market if the Pioneer Acquisition is not consummated, and
there can be no assurance that, even if the Pioneer Acquisition is
consummated, the Company will be able to meet the requirements for listing on
the National Market System or the Nasdaq Small Cap Market or to obtain a
waiver of such requirements.
The Board of Directors further believes that the relatively low per-
share market price of the Class A Common Stock may impair the acceptability of
the Class A Common Stock to certain institutional investors and other members
of the investing public. While the number of shares outstanding should not,
by itself, affect the marketability of a stock, the type of investor who
acquires it or the Company's reputation in the financial community, the
Company believes that, in practice, this is not necessarily the case, as
certain investors view low-priced stock as unattractive or, as a matter of
policy, are precluded from purchasing low-priced shares. In addition, certain
brokerage houses, as a matter of policy, will not extend margin credit on
stocks trading at low prices. On the other hand, certain other investors may
be attracted to low-priced stock because of the greater trading volatility
sometimes associated with such securities.
There can be no assurance that the Reverse Stock Split will not
adversely impact the market price of the Class A Common Stock, that the
marketability of the Class A Common Stock will improve as a result of approval
of the Reverse Stock Split or that the approval of the Reverse Stock Split
will otherwise have any of the effects described herein.
Certificates and Fractional Shares
The certificates presently representing shares of Common Stock will
be deemed to represent one-fourth the number of
<PAGE>26
shares of Common Stock after the effective date of the Reverse Stock Split.
New certificates of Common Stock will be issued in due course as old
certificates are tendered to the transfer agent for exchange or transfer. No
fractional shares of Common Stock will be issued and, in lieu thereof,
stockholders holding a number of shares of Common Stock not evenly divisible
by four, and stockholders holding less than four shares of Common Stock, upon
surrender of their old certificates, will receive cash in lieu of fractional
shares of Common Stock. The price payable by the Company for the fractional
shares of Class A Common Stock or Class B Common Stock will be determined by
multiplying the fraction of a new share by the equivalent of the average of
the bid and asked prices for one old share of Class A Common Stock for the ten
business days immediately preceding the effective date of the Reverse Stock
Split for which transactions in the Common Stock are reported, as determined
from the NASD OTC Bulletin Board.
Source of Funds
The funds required to purchase the fractional shares are available
and will be paid from the current cash reserves of the Company. The Company's
stockholder list indicates that a portion of the outstanding Class A Common
Stock is registered in the names of clearing agencies and broker nominees. It
is, therefore, not possible to predict with certainty the number of fractional
shares and the total amount that the Company will be required to pay to redeem
such shares. However, it is not anticipated that the funds necessary to effect
the cancellation of fractional shares will be material.
Federal Income Tax Consequences
Except as described below with respect to cash received in lieu of
fractional share interests, the receipt of Common Stock in the Reverse Stock
Split should not result in any taxable gain or loss to stockholders for
federal income tax purposes. If the Reverse Stock Split is approved, the tax
basis of Common Stock received as a result of the Reverse Stock Split
(including any fractional share interests to which a stockholder is entitled)
will be equal, in the aggregate, to the basis of the shares exchanged for the
Common Stock. For tax purposes, the holding period of the shares immediately
prior to the effective date of the Reverse Stock Split will be included in the
holding period of the Common Stock received as a result of the Reverse Stock
Split, including any fractional share interests to which a stockholder is
entitled. A stockholder who receives cash in lieu of fractional shares of
Common Stock will be treated as first receiving such fractional shares and
then receiving cash as payment in exchange for such fractional shares of
Common Stock,
<PAGE>27
and will recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the adjusted basis of the fractional
shares treated as surrendered for cash.
Effectiveness
In accordance with Delaware law and notwithstanding approval of the
amendment by stockholders, at any time prior to the filing of the Certificate
of Amendment, the Board of Directors may, in its sole discretion, abandon the
proposed amendment without any further action by stockholders.
Voting
Assuming the presence of a quorum, the affirmative vote of the
holders of a majority of the voting power of the outstanding shares of Common
Stock is necessary for approval of the Reverse Stock Split.
The Board of Directors recommends that stockholders vote
"FOR" the approval of the Reverse Stock Split.
PROPOSAL 3: TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME FROM GEV CORPORATION TO PIONEER
COMPANIES, INC.
The Board of Directors has approved an amendment to the Certificate
of Incorporation that would change the Company's name from GEV Corporation to
"Pioneer Companies, Inc.". The Board is now submitting this amendment to the
stockholders for approval.
If the name change is approved by the stockholders, Article FIRST of
the Certificate of Incorporation will be amended to read in full as follows:
"FIRST: The name of the Corporation is: Pioneer Companies, Inc."
The Board of Directors is recommending the name change to
stockholders to identify the Company with Pioneer Americas, Inc., which will
become a wholly owned subsidiary of the Company from the consummation of the
Pioneer Acquisition and will then account for nearly all the Company's
revenues.
The proposal to change the Company's name requires the affirmative
vote of a majority of the voting power of the outstanding shares of Common
Stock. If the stockholders approve this amendment and the Pioneer Acquisition
is consummated, the Company intends to file a Certificate of Amendment to the
<PAGE>28
Certificate of Incorporation with the Secretary of State of the State of
Delaware to effect the name change promptly after the occurrence of both these
events. In accordance with the Delaware law and notwithstanding approval of
the amendment by the stockholders, at any time prior to the filing of the
Certificate of Amendment, the Board of Directors of the Company may, in its
discretion, abandon the proposed amendment without further action by the
stockholders. This proposal would be abandoned, and the name of the Company
would not be changed, if the Pioneer Acquisition is not consummated.
The Board of Directors recommends that stockholders vote "FOR" the
proposed name change.
PROPOSAL 4: APPROVAL OF THE 1995 STOCK INCENTIVE PLAN
On February 23, 1995, the Board of Directors adopted the 1995 Stock
Incentive Plan (the "Plan"), subject to stockholder approval, under which
3,000,000 shares of Class A Common Stock (before giving effect to the proposed
Reverse Stock Split) were reserved for issuance pursuant to the grant of stock
based awards under the Plan. The Company is seeking stockholder approval of
the Plan for the purpose of complying with Rule 16b-3 promulgated pursuant to
the Securities Exchange Act of 1934 and Sections 162(m) and 422(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
Purpose and Eligibility
The purpose of the Plan is to provide a means through which the
Company and its subsidiaries may attract able persons to enter and remain in
the employ of the Company and its subsidiaries and to provide a means whereby
those key employees upon whom the responsibilities for the successful
administration and management of the Company and its subsidiaries rest, and
whose present and potential contributions to the welfare of the Company and
its subsidiaries are of importance, can acquire and maintain stock ownership,
thereby strengthening their commitment to the welfare of the Company and its
subsidiaries and promoting an identity of interest between stockholders and
these employees.
Pursuant to the Plan, officers and employees of the Company and its
subsidiaries (other than employees subject to a collective bargaining
agreement) are eligible to be selected by the Compensation Committee as
participants to receive awards of various forms of equity-based incentive
compensation, including stock options, stock appreciation rights, restricted
stock awards, performance share unit awards and phantom stock unit awards, and
awards consisting of combinations of such incentives.
<PAGE>29
Assuming that the Pioneer Acquisition is consummated, approximately 450
employees would be eligible to participate in the Plan. There are currently 5
employees of the Company eligible to participate in the Plan.
Administration
The Plan will be administered by the Compensation Committee. The
Compensation Committee, in its sole discretion, will determine which eligible
employees of the Company and its subsidiaries may participate in the Plan and
the type, extent and terms of the equity-based awards to be granted to them.
No Compensation Committee member will be eligible to participate in the Plan.
Awards
Stock options granted under the Plan may be "incentive stock
options" ("ISOs"), within the meaning of Section 422 of the Code, or
nonqualified stock options ("NQSOs"). The exercise price of the options will
be determined by the Compensation Committee when the options are granted,
subject to a minimum price in the case of NQSOs intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code and ISOs of the Fair Market Value (as defined in the Plan) of the Class A
Common Stock on the date of grant and to a minimum price in the case of all
other NQSOs of the par value of the Class A Common Stock. The option exercise
price may be paid in cash or in shares of Class A Common Stock having a Fair
Market Value on the date of exercise equal to the exercise price or, in the
discretion of the Compensation Committee, by delivery to the Company of (i)
other property having a Fair Market Value on the date of exercise equal to the
option exercise price, or (ii) a copy of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the exercise price.
An SAR may be granted as a supplement to a related stock option or
may be granted independent of any option. SARs granted in connection with an
option will become exercisable and lapse according to the same vesting
schedule and lapse rules that are established for the corresponding option.
SARs granted independent of any option will vest and lapse according to the
terms and conditions set by the Compensation Committee. An SAR will entitle
its holder to be paid an amount equal to the excess of the Fair Market Value
of the Class A Common Stock subject to the SAR on the date of exercise over
the exercise price of the related stock option, in the case of an SAR granted
in connection with an option, or the Fair Market Value of the Class A Common
Stock subject to the SAR on the date of exercise over the Fair
<PAGE>30
Market Value of the Class A Common Stock on the date of grant, in the case of
an SAR granted independent of an option.
Shares of Class A Common Stock covered by a restricted stock award
will not be issued to the recipient at the time the award is granted but will
be deposited with an escrow agent until the end of the restricted period set
by the Compensation Committee. During the restricted period, restricted stock
will be subject to transfer restrictions and forfeiture in the event of
termination of employment with the Company or a subsidiary and other
restrictions and conditions established by the Compensation Committee at the
time the award is granted.
A phantom stock unit award will provide for the future payment of
cash or the issuance of shares of Common Stock to the recipient if continued
employment or other conditions established by the Compensation Committee at
the time of grant are attained.
A performance share unit award will provide for the future payment
of cash or the issuance of shares of Class A Common Stock to the recipient
upon the attainment of certain corporate performance goals established by the
Compensation Committee over three to five year performance award periods. At
the end of each performance award period, the Compensation Committee decides
the extent to which the corporate performance goals have been attained and the
amount of cash or Class A Common Stock to be distributed to the participant.
Participants may choose to defer the payment of a performance share unit award
by filing a deferral election form with the Compensation Committee prior to
the time the payment is due. At the election of the participant, deferred
amounts are deemed invested in an interest bearing account, phantom stock
units or other hypothetical investment equivalent from time to time made
available under the Plan.
Effect of Change in Control of the Company
In the event of a Change in Control of the Company (as defined
below) all options and SARs will become immediately vested and exercisable,
the restrictions with regard to restricted stock will lapse and phantom stock
unit awards will become immediately payable. In addition, in the event of
such an occurrence, the Compensation Committee will immediately determine the
extent to which any performance goals have been met with regard to any
outstanding performance share unit awards and will cause any amounts
determined to be earned due to the full or partial attainment of such goals to
be immediately paid to participants. Finally, all amounts deferred under the
Plan will be immediately paid out. For purposes of the Plan, a Change in
Control is defined as (1) the acquisition by any person or group
<PAGE>31
of persons, acting in concert, other than William R. Berkley or his
affiliates, of 30% or more of either the outstanding Common Stock or the
combined voting power of the Company's outstanding securities, (2) a change in
the majority membership of the Board over a two year period not authorized by
the members in office at the beginning of such two year period, or (3) a
liquidation or dissolution of the Company or a sale of substantially all of
the Company's assets.
Shares Subject to the Stock Incentive Plan
The Company has reserved 3,000,000 shares of Class A Common Stock
(before giving effect to the proposed Reverse Stock Split) for issuance under
the Plan. No more than 500,000 shares of Class A Common Stock (before giving
effect to the proposed Reverse Stock Split) may be issued to any one person
pursuant to awards of options or SARs during any one year.
Market Value
On March 2, 1995, the mean of the bid and asked prices of Class A
Common Stock, as reported on the NASD OTC Bulletin Board, was $[______] per
share.
Federal Tax Consequences
Set forth below is a brief description of the federal income tax
consequences applicable to ISOs and NQSOs granted under the Plan.
ISOs
No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Class A Common Stock is issued to an optionee pursuant
to the exercise of an ISO, and if no disqualifying disposition of such shares
is made by such optionee within two years after the date of grant or within
one year after the transfer of such shares to such optionee, then (1) upon
sale of such shares, any amount realized in excess of the option price will be
taxed to such optionee as a long-term capital gain and any loss sustained will
be a long-term capital loss, and (2) no deduction will be allowed to the
optionee's employer for federal income tax purposes.
If the Class A Common Stock acquired upon the exercise of an ISO is
disposed of prior to the expiration of either holding period described above,
generally (1) the optionee will realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value
of such shares at exercise (or, if less, the amount realized on the
<PAGE>32
disposition of such shares) over the option price paid for such shares, and
(2) the optionee's employer will be entitled to deduct such amount for federal
income tax purposes if the amount represents an ordinary and necessary
business expense. Any further gain (or loss) realized by the optionee upon
the sale of the Class A Common Stock will be taxed as short-term or long-term
capital gain (or loss), depending on how long the shares have been held, and
will not result in any deduction by the employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income,
and compute the tax basis in the stock so acquired, in the same manner as if
the optionee had exercised an NQSO. Each optionee is potentially subject to
the alternative minimum tax. In substance, a taxpayer is required to pay the
higher of his/her alternative minimum tax liability or his/her "regular"
income tax liability. As a result, a taxpayer has to determine his/her
potential liability under the alternative minimum tax.
NQSOs
With respect to NQSOs: (1) no income is realized by the optionee at
the time the option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the optionee's employer is
generally entitled to a tax deduction in the same amount subject to applicable
tax withholding requirements; and (3) at sale, appreciation (or depreciation)
after the date of exercise is treated as either short-term or long-term
capital gain (or loss) depending on how long the shares have been held.
Optionees are strongly advised to consult with their individual tax
advisers to determine their personal tax consequences resulting from the grant
and/or exercise of options under the Plan.
<PAGE>33
Recommendation and Vote
Approval of the adoption of the Plan requires the affirmative vote
of the holders of a majority of the voting power of the shares of Common Stock
present, in person or by proxy, at the meeting.
The Board of Directors recommends a vote "FOR" the approval of the Plan.
NEW PLAN BENEFITS
The grant of equity-based awards under the Plan is entirely within
the discretion of the Compensation Committee. The Company cannot forecast the
nature or extent of awards that will be made in the future, nor the nature or
extent of awards that would have been granted in the last fiscal year had the
Plan been in operation during such time. Therefore, the Company has omitted
the tabular disclosure of the benefits or amounts to be allocated under the
Plan.
PROPOSAL 5: APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche LLP has been appointed by the Board of Directors
as independent certified public accountants to audit the financial statements
of the Company for the fiscal year ending December 31, 1995. The Board of
Directors is submitting this matter to a vote of stockholders in order to
ascertain their views. If the appointment of Deloitte & Touche LLP is not
ratified at the Annual Meeting, the Board of Directors will reconsider its
action and will appoint auditors for the 1995 fiscal year without further
stockholder action. Further, even if the appointment of auditors is ratified
by stockholder action, the Board of Directors may at any time in the future in
its discretion reconsider the appointment of auditors without submitting the
matter to a vote of stockholders.
It is expected that representatives of Deloitte & Touche LLP will
attend the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate
stockholder questions.
It is the intention of the persons named on the enclosed form of
proxy to vote "FOR" ratification of the selection of Deloitte & Touche LLP
unless otherwise directed.
<PAGE>34
REPORTING UNDER SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Company's Class A Common Stock or Class B Common Stock, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Based solely on its review of Section 16(a) reports furnished to
Company, the Company has identified the following instances of reports which
were not filed in a timely manner. The purchases by Messrs. Berkley, Bursky,
Conrades, Donahue and Barber of shares of Class A Common Stock from the
Company in a private placement were reported either one or two months late. A
sale of Class A Common Stock by Mr. Donahue was reported approximately 3 weeks
late and Mr. Bursky's initial report of ownership was reported 1 week late.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
It is anticipated that the next Annual Meeting of Stockholders after
the one scheduled for March 27, 1995 will be held on or about May 20, 1996.
All stockholder proposals relating to a proper subject for action at the 1996
Annual Meeting to be included in the Company's Proxy Statement and form of
proxy relating to that meeting must be received by the Company for its
consideration at its principal executive offices no later than December 30,
1995, all in accordance with the provisions of Rule 14a-8 promulgated under
the Securities Exchange Act of 1934. Any such proposal should be submitted by
certified mail, return receipt requested.
By Order of the Board of Directors,
WILLIAM R. BERKLEY
Chairman of the Board
<PAGE>35
Exhibit A
Proposed Amendment to the Certificate of
Incorporation to Effect the Reverse Stock Split
Article Fourth of the Certificate of Incorporation is hereby amended by
the addition of the following paragraphs immediately following paragraph D:
"E. Simultaneously with the effective date of this amendment (the
"Effective Date"), each share of Class A Common Stock issued and outstanding
immediately prior to the Effective Date (the "Old Class A Common Stock") shall
automatically and without any action on the part of the holder thereof be
reclassified as and changed into one-fourth (1/4) of a share of Class A Common
Stock (the "New Class A Common Stock"), subject to the treatment of fractional
share interests as described below. Such reclassification and change of Old
Class A Common Stock into New Class A Common Stock shall not change the par
value per share of the shares reclassified and changed, which par value shall
remain $.01 per share. Each holder of a certificate or certificates which
immediately prior to the Effective Date represented outstanding shares of Old
Class A Common Stock (the "Old Class A Certificates," whether one or more)
shall be entitled to receive upon surrender of such Old Class A Certificates
to the Corporation's Transfer Agent for cancellation, a certificate or
certificates (the "New Class A Certificates," whether one or more)
representing the number of whole shares of New Class A Common Stock into which
and for which the shares of the Old Class A Common Stock formerly represented
by such Old Class A Certificates so surrendered, are reclassified under the
terms hereof. From and after the Effective Date, Old Class A Certificates
shall represent only the right to receive New Class A Certificates (and, where
applicable, cash in lieu of fractional shares, as provided below) pursuant to
the provisions hereof. No certificates or scrip representing fractional share
interests in New Class A Common Stock will be issued, and no such fractional
share interest will entitle the holder thereof to vote, or to any rights of a
stockholder of the Corporation. A holder of Old Class A Certificates shall
receive, in lieu of any fraction of a share of New Class A Common Stock to
which the holder would otherwise be entitled, a cash payment therefor in an
amount equal to the product of (a) the fraction of such share and (b) the
average of the last reported bid and asked prices of one share of Old Class A
Common Stock, as reported on the NASD OTC Bulletin Board, for the ten business
days immediately preceding the Effective Date for which transactions in Old
Class A Common Stock are reported thereon. If more than one Old Class A
Certificate shall be surrendered at one time for the account of
<PAGE>36
the same stockholder, the number of full shares of New Class A Common Stock
for which New Class A Certificates shall be issued shall be computed on the
basis of the aggregate number of shares represented by the Old Class A
Certificates so surrendered. In the event that the Transfer Agent determines
that a holder of Old Class A Certificates has not tendered all the holder's
certificates for exchange, the Transfer Agent shall carry forward any
fractional share until all certificates of that holder have been presented for
exchange such that payment for fractional shares to any one holder shall not
exceed the value of one share. If any New Class A Certificate is to be issued
in a name other than that in which the Old Class A Certificates surrendered
for exchange are issued, the Old Class A Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite stock transfer tax
stamps to the Old Class A Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the Transfer Agent that such
taxes are not payable. From and after the Effective Date, the amount of
capital represented by the shares of the New Class A Common Stock into which
and for which the shares of the Old Class A Common Stock are reclassified
under the terms hereof shall be the same as the amount of capital represented
by the shares of Old Class A Common Stock so reclassified, until thereafter
reduced or increased in accordance with applicable law.
F. Simultaneously with the Effective Date, each share of Class B Common
Stock issued and outstanding immediately prior to the Effective Date (the "Old
Class B Common Stock") shall automatically and without any action on the part
of the holder thereof be reclassified as and changed into one-fourth (1/4) of a
share of Class B Common Stock (the "New Class B Common Stock"), subject to the
treatment of fractional share interests as described below. Such
reclassification and change of Old Class B Common Stock into New Class B
Common Stock shall not change the par value per share of the shares
reclassified, which par value shall remain $.01 per share. Each holder of a
certificate or certificates which immediately prior to the Effective Date
represented outstanding shares of Old Class B Common Stock (the "Old Class B
Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Class B Certificates to the Corporation's Transfer Agent
for cancellation, a certificate or certificates (the "New Class B
Certificates," whether one or more) representing the number of whole shares of
New Class B Common Stock into which and for which the shares of the Old Class
B Common Stock formerly represented by such Old Class B Certificates so
surrendered, are reclassified under the terms hereof. From and after the
Effective Date, Old Class B Certificates shall represent only the right to
receive
<PAGE>37
New Class B Certificates (and, where applicable, cash in lieu of fractional
shares, as provided below) pursuant to the provisions hereof. No certificates
or scrip representing fractional share interests in New Class B Common Stock
will be issued, and no such fractional share interest will entitle the holder
thereof to vote, or to any rights of a stockholder of the Corporation. A
holder of Old Class B Certificates shall receive, in lieu of any fraction of a
share of New Class B Common Stock to which the holder would otherwise be
entitled, a cash payment therefor in an amount equal to the product of (a) the
fraction of such share and (b) the average of the last reported bid and asked
prices of one share of Old Class A Common Stock, as reported on the NASD OTC
Bulletin Board, for the ten business days immediately preceding the Effective
Date for which transactions in Old Class A Common Stock are reported thereon.
If more than one Old Class B Certificate shall be surrendered at one time for
the account of the same stockholder, the number of full shares of New Class B
Common Stock for which New Class B Certificates shall be issued shall be
computed on the basis of the aggregate number of shares represented by the Old
Class B Certificates so surrendered. In the event that the Transfer Agent
determines that a holder of Old Class B Certificates has not tendered all the
holder's certificates for exchange, the Transfer Agent shall carry forward any
fractional share until all certificates of that holder have been presented for
exchange such that payment for fractional shares to any one holder shall not
exceed the value of one share. If any New Class B Certificate is to be issued
in a name other than that in which the Old Class B Certificates surrendered
for exchange are issued, the Old Class B Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite stock transfer tax
stamps to the Old Class B Certificates surrendered, or provide funds for their
purchase, or establish to the satisfaction of the Transfer Agent that such
taxes are not payable. From and after the Effective Date, the amount of
capital represented by the shares of the New Class B Common Stock into which
and for which the shares of the Old Class B Common Stock are reclassified
under the terms hereof shall be the same as the amount of capital represented
by the shares of Old Class B Common Stock so reclassified, until thereafter
reduced or increased in accordance with applicable law."
<PAGE>1
PROXY
GEV CORPORATION
This proxy is solicited on behalf of the Board of Directors of GEV Corporation
in connection with its Annual Meeting of Stockholders
to be held on March 27, 1995.
The undersigned hereby appoints William R. Berkley and Andrew M.
Bursky, and each of them, proxies with several powers of substitution, to vote
for the undersigned at the Annual Meeting of Stockholders of GEV Corporation
to be held on Monday, March 27, 1995, or any adjournment or postponement
thereof, upon the matters below as described in the notice of meeting and
accompanying proxy statement, according to the number of votes and as fully as
the undersigned would be entitled to vote if personally present. The
undersigned hereby revokes any prior proxy or proxies. If more than one of
the above named proxies shall be present in person or by substitute, a
majority of the proxies so present and voting shall have and may exercise all
the powers hereby granted.
This proxy is continued on the reverse side. Please sign on the
reverse side and return promptly.
<PAGE>2
____________ [X] Please mark
COMMON your votes
like this
(1) To elect two Directors to FOR each WITHHOLD
hold office for a term of nominee AUTHORITY
three years until the listed to vote for
Annual Meeting of Stock- (except as each nominee
holders in 1998 and until indicated listed
their successors are duly to the
chosen: contrary)
Donald J. Donahue and
Jack H. Nusbaum
INSTRUCTION: To withhold
authority to vote for any
individual nominee, write
such nominee's name in
the space provided below: [ ] [ ]
___________________________
(2) To approve an amendment FOR AGAINST ABSTAIN
to the Company's Third
Restated Certificate of
Incorporation (the
"Certificate of In-
Corporation") to effect a
one-for-four reverse
split of the Company's
Class A Common Stock and
Class B Common Stock. [ ] [ ] [ ]
(3) To approve an amendment FOR AGAINST ABSTAIN
to the Company's Cer-
tificate of Incorporation
to change the name of the
Company from GEV
Corporation to Pioneer
Companies, Inc. [ ] [ ] [ ]
(4) To approve the 1995 FOR AGAINST ABSTAIN
Stock Incentive Plan
[ ] [ ] [ ]
<PAGE>3
(5) To ratify the appointment FOR AGAINST ABSTAIN
of Deloitte & Touche LLP as
independent certified
public accountants for the
Company for the fiscal year
ending December 31, 1995. [ ] [ ] [ ]
Please SIGN exactly as name(s)
appear on your stock certificates.
For joint accounts, all co-owners
should sign. Those signing as
attorney, administrator, trustee,
executor, guardian or corporate
executor, please give your full
title as such.
Dated _____________, 1995
Signature_____________________________________
Signature if held jointly_____________________
PLEASE MARK, SIGN, DATE AND
MAIL THIS PROXY IN THE
ENVELOPE PROVIDED.
<PAGE>1
GEV CORPORATION
1995 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the Plan is to provide a means through which the Company
and its Subsidiaries may attract able persons to enter and remain in the
employ of the Company and its Subsidiaries and to provide a means whereby
those key employees upon whom the responsibilities of the successful
administration and management of the Company and its Subsidiaries rest, and
whose present and potential contributions to the welfare of the Company and
its Subsidiaries are of importance, can acquire and maintain stock ownership,
thereby strengthening their commitment to the welfare of the Company and its
Subsidiaries and promoting an identity of interest between stockholders and
these employees.
A further purpose of the Plan is to provide such employees with
additional incentive and reward opportunities designed to enhance the
profitable growth of the Company and its Subsidiaries. So that the
appropriate incentive can be provided, the Plan provides for granting
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance
Share Unit Awards, or any combination of the foregoing.
2. Definitions
The following definitions shall be applicable throughout the Plan.
(a) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award or Performance Share Unit Award.
(b) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the Company or a Subsidiary having cause to terminate
a Participant's employment under any existing employment agreement between the
Participant and the Company or a Subsidiary or, in the absence of such an
employment agreement, upon (i) the determination by the Committee that the
Participant has ceased to perform his duties to the Company or a Subsidiary
(other than as a result of his incapacity due to physical or mental illness or
injury), which failure amounts to an
<PAGE>2
intentional and extended neglect of his duties to such party, (ii) the
Committee's determination that the Participant has engaged or is about to
engage in conduct materially injurious to the Company or a Subsidiary or (iii)
the Participant having been convicted of a felony.
(e) "Change in Control" shall, unless the Board otherwise directs by
resolution adopted prior thereto, be deemed to occur if (i) any "person" (as
that term is used in Sections 13 and 14(d)(2) of the Exchange Act) other than
William R. Berkley or his "affiliates" (as that term is defined in Rule 144
promulgated pursuant to the Securities Act) is or becomes the beneficial owner
(as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 30% or more of either the outstanding shares of Common Stock or
the combined voting power of the Company's then outstanding voting securities
entitled to vote generally, (ii) during any period of two consecutive years,
individuals who constitute the Board at the beginning of such period cease for
any reason to constitute at least a majority thereof, unless the election or
the nomination for election by the Company's shareholders of each new director
was approved by a vote of at least three-quarters of the directors then still
in office who were directors at the beginning of the period or (iii) the
Company undergoes a liquidation or dissolution or a sale of all or
substantially all of the assets of the Company. Any merger, consolidation or
corporate reorganization in which the owners of the combined voting power of
the Company's then outstanding securities entitled to vote generally prior to
said combination, own 50% or more of the resulting entity's outstanding
securities entitled to vote generally shall not, by itself, be considered a
Change in Control. Moreover, notwithstanding the above, the transactions
contemplated by, or actions taken in connection with, the Stock Purchase
Agreement By and Among Pioneer Americas Acquisition, Inc., GEV Corporation and
the shareholders of Pioneer Americas, Inc., dated on or about March 31, 1995,
shall not by themselves be considered a Change of Control or taken into
account in determining whether a Change of Control subsequently occurs.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations
under such section.
(g) "Committee" means the Compensation and Stock Option Committee of the
Board or such other committee of at least two people as the Board may appoint
to administer the Plan.
(h) "Common Stock" means the Class A common stock par value $0.01 per
share, of the Company.
<PAGE>3
(i) "Company" means GEV Corporation (or such other name as the Company
may adopt).
(j) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
(k) "Disability" means disability as defined in the Company's or a
Subsidiary's, as the case may be, long term disability plan then in effect,
or, in the absence of such a plan, the complete and permanent inability by
reason of illness or accident to perform the duties of the occupation at which
a Participant was employed when such disability commenced or, if the
Participant was retired when such disability commenced, the inability to
engage in any substantial gainful activity, as determined by the Committee
based upon medical evidence acceptable to it.
(l) "Disinterested Person" means a person who is (i) a "disinterested
person" within the meaning of Rule 16b-3 of the Exchange Act, or any successor
rule or regulation and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
(m) "Eligible Employee" means any person regularly employed by the
Company or a Subsidiary on a full-time basis who satisfies all of the
requirements of Section 6; provided, however, that no employee of the Company
covered by a collective bargaining agreement shall be an Eligible Employee
unless and to the extent that such eligibility is set forth in such collective
bargaining agreement.
(n) "Exchange Act" means the Securities Exchange Act of 1934.
(o) "Fair Market Value" on a given date means (i) if the Common Stock is
listed on a national securities exchange, the mean between the highest and
lowest sale prices reported as having occurred on the primary exchange with
which the Common Stock is listed and traded on the date prior to such date,
or, if there is no such sale on that date, then on the last preceding date on
which such a sale was reported; (ii) if the Common Stock is not listed on any
national securities exchange but is quoted in the National Market System of
the National Association of Securities Dealers Automated Quotation System on a
last sale basis, the average between the high bid price and low ask price
reported on the date prior to such date, or, if there is no such sale on that
date, then on the last preceding date on which a sale was reported; or (iii)
if the Common Stock is not listed on a national securities exchange nor quoted
in the National Market System of the National Association of Securities
Dealers Automated Quotation System on a last sale basis, the amount
<PAGE>4
determined by the Committee to be the fair market value based upon a good
faith attempt to value the Common Stock accurately and computed in accordance
with applicable regulations of the Internal Revenue Service.
(p) "Holder" means a Participant who has been granted an Option, a Stock
Appreciation Right, a Restricted Stock Award, a Phantom Stock Unit Award or a
Performance Share Unit Award.
(q) "Incentive Stock Option" means an Option granted by the Committee to
a Participant under the Plan which is designated by the Committee as an
Incentive Stock Option pursuant to Section 422 of the Code.
(r) "Interest Portion" has the meaning ascribed thereto in Section 9(g).
(s) "Nonqualified Stock Option" means an Option granted by the Committee
to a Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.
(t) "Normal Termination" means termination of employment with the
Company or a Subsidiary:
(i) Upon retirement pursuant to the Company's or a Subsidiary's
retirement plan, as the case may be, then in effect;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company or a Subsidiary without Cause.
(u) "Option" means an Award granted under Section 7 of the Plan.
(v) "Option Period" means the period described in Section 7(c).
(w) "Option Price" means the exercise price set for an Option described
in Section 7(a).
(x) "Participant" means an Eligible Employee who has been selected by
the Committee to participate in the Plan and to receive an Award pursuant to
Section 6.
(y) "Performance Goals" means the performance objectives of the Company
or a Subsidiary during an Award Period or Restricted Period established for
the purpose of determining whether, and to what extent, Awards will be earned
for an Award Period or Restricted Period.
<PAGE>5
(z) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 9 of the Plan.
(aa) "Phantom Stock Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 10 of the Plan, or credited with respect to Awards of Performance
Share Units which have been deferred under Section 9.
(ab) "Phantom Stock Unit Portion" has the meaning ascribed thereto in
Section 9(g).
(ac) "Plan" means the Company's 1995 Stock Incentive Plan.
(ad) "Restricted Period" means, with respect to any share of Restricted
Stock or any Phantom Stock Unit, the period of time determined by the
Committee during which such Award is subject to the restrictions set forth in
Section 10.
(ae) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the restrictions set forth in Section
10.
(af) "Restricted Stock Award" means an Award of Restricted Stock granted
under Section 10 of the Plan.
(ag) "Securities Act" means the Securities Act of 1933, as amended.
(ah) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as the Committee may from time to time authorize for use
under the Plan.
(ai) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.
(aj) "Stock Option Agreement" means the agreement between the Company and
a Participant who has been granted an Option pursuant to Section 7 which
defines the rights and obligations of the parties as required in Section 7(d).
(ak) "Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code.
(al) "Valuation Date" means the last day of an Award Period or the date
of death of a Participant, as applicable.
(am) "Vested Unit" shall have the meaning ascribed thereto in Section
10(e).
<PAGE>6
3. Effective Date, Duration and Shareholder Approval
The Plan is effective as of February 23, 1995, the date of adoption of
the Plan by the Board. The effectiveness of the Plan and the validity of any
and all Awards granted pursuant to the Plan is contingent upon approval of the
Plan by the stockholders of the Company in a manner which complies with
Rule 16b-3 promulgated pursuant to the Exchange Act and Sections 162(m) and
422(b)(1) of the Code. Unless and until the stockholders approve the Plan, in
compliance therewith, no Option granted under the Plan may be exercised.
Furthermore, to the extent that the Committee determines as of the Date of
Grant of an Award (other than an Option) that the Award is intended to comply
with Section 162(m) of the Code, no cash or Stock may be paid pursuant to such
Award until any stockholder approval required under said Section 162(m) has
been obtained.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be February 23, 2005; provided, however, that the
administration of the Plan shall continue in effect until all matters relating
to the payment of Awards previously granted have been settled.
4. Administration
The Committee shall administer the Plan. Each member of the Committee
shall, at the time he takes any action with respect to an Award under the
Plan, be a Disinterested Person. Two members of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.
No member of the Committee shall be eligible to receive an Award under
the Plan. Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Eligible Employees to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant;
(c) Determine the time or times when Awards will be made;
(d) Determine the duration of each Award Period and Restricted Period;
(e) Determine the conditions to which the payment of Awards may be
subject;
(f) Establish the Performance Goals for each Award Period;
<PAGE>7
(g) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
(h) Cause records to be established in which there shall be entered,
from time to time as Awards are made to Participants, the date of each Award,
the number of Incentive Stock Options, Nonqualified Stock Options, SARs,
Phantom Stock Units, Performance Share Units and shares of Restricted Stock
awarded by the Committee to each Participant, the expiration date, the Award
Period and the duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation
of the Plan or any documents evidencing Awards granted pursuant thereto and
all decisions and determinations by the Committee with respect to the Plan
shall be final, binding, and conclusive on all parties unless otherwise
determined by the Board.
5. Grant of Awards; Shares Subject to the Plan
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units and/or Performance
Share Units to one or more Participants; provided, however, that:
(a) Subject to Section 12, the aggregate number of shares of Stock
made subject to all Awards may not exceed 3,000,000;
(b) Such shares shall be deemed to have been used in payment of
Awards whether they are actually delivered or the Fair Market Value
equivalent of such shares is paid in cash. In the event any Option, SAR
not attached to an Option, Restricted Stock, Phantom Stock Unit or
Performance Share Unit, shall be surrendered, terminate, expire, or be
forfeited, the number of shares of Stock no longer subject thereto shall
thereupon be released and shall thereafter be available for new Awards
under the Plan to the fullest extent permitted by Rule 16b-3 under the
Exchange Act (if applicable at the time);
(c) Stock delivered by the Company in settlement of Awards under
the Plan may be authorized and unissued Stock or Stock held in the
treasury of the Company or may be purchased on the open market or by
private purchase at prices no higher than the Fair Market Value at the
time of purchase; and
<PAGE>8
(d) No person may be granted Options or SARs under the Plan
covering more than 500,000 shares of Stock in any one year.
6. Eligibility
Participation shall be limited to Eligible Employees who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. Stock Options
The Committee is authorized to grant one or more Incentive Stock Options
or Nonqualified Stock Options to any Participant. Each Option so granted
shall be subject to the following conditions, or to such other conditions as
may be reflected in the applicable Option Agreement.
(a) Option price. The exercise price ("Option Price") per share of
Stock for each Option shall be set by the Committee at the time of grant but
shall not be less than (i) in the case of an Incentive Stock Option, and
subject to Section 7(e), the Fair Market Value of a share of Stock at the Date
of Grant, and (ii) in the case of a Non-Qualified Stock Option, the par value
per share of Stock; provided, however, that all Options intended to qualify as
"performance-based compensation" under Section 162(m) of the Code shall have
an Option Price per share of Stock no less than the Fair Market Value of a
share of Stock on the Date of Grant.
(b) Manner of exercise and form of payment. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall
be payable in cash and/or shares of Common Stock valued at the Fair Market
Value at the time the Option is exercised, or, in the discretion of the
Committee, either (i) in other property having a fair market value on the date
of exercise equal to the Option Price, or (ii) by delivering to the Committee
a copy of irrevocable instructions to a stockbroker to deliver promptly to the
Company an amount of sale or loan proceeds sufficient to pay the Option Price.
(c) Option Period and Expiration. Options shall vest and become
exercisable in such manner and on such date or dates determined by the
Committee and shall expire after such period, not to exceed ten years, as may
be determined by the Committee (the "Option Period"); provided, however, that
notwithstanding any vesting dates set by the Committee, the Committee may in
its sole discretion accelerate the exercisability of any Option, which
acceleration shall not affect the terms and conditions of any such Option
other than with respect to exercisability. If an
<PAGE>9
Option is exercisable in installments, such installments or portions thereof
which become exercisable shall remain exercisable until the Option expires.
The Option may expire earlier than the end of the Option Period in the
following circumstances.
(i) If prior to the end of the Option Period, the Holder shall
cease to be employed by the Company or a Subsidiary by reason of Normal
Termination, the Option shall expire on the earlier of the last day of the
Option Period or the date that is three months after the date of cessation of
such employment. In such event, the Option shall remain exercisable by the
Holder, until its expiration, only to the extent the Option was exercisable at
the time of cessation of employment.
(ii) If the Holder dies prior to the end of the Option Period and
while still employed by the Company or a Subsidiary, or within three months of
Normal Termination, the Option shall expire on the earlier of the last day of
the Option Period or the date that is twelve months after the date of death of
the Holder. In such event, the Option shall remain exercisable by the person
or persons to whom the Holder's rights under the Option pass by will or the
applicable laws of descent and distribution, until its expiration, only to the
extent the Option was exercisable by the Holder at the time of death.
(iii) If the Holder ceases to be employed by the Company or a
Subsidiary for reasons other than Normal Termination or death, the Option
shall expire immediately upon such cessation of employment.
(d) Stock Option Agreement other terms and conditions. Each Option
granted under the Plan shall be evidenced by a "Stock Option Agreement"
between the Company and the Holder of the Option containing such provisions as
may be determined by the Committee, which Stock Option Agreement shall be
subject to the following terms and conditions.
(i) Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof, except as
otherwise determined by the terms of the Stock Option Agreement.
(ii) Each share of Stock purchased through the exercise of an Option
shall be paid for in full at the time of the exercise. Each Option shall
cease to be exercisable, as to any share of Stock, when the Holder
purchases the share or exercises a related SAR or when the Option
expires.
(iii) Subject to Section 11(k), Options shall not be transferable by
the Holder except by will or the laws of
<PAGE>10
descent and distribution and shall be exercisable during the Holder's
lifetime only by him.
(iv) Each Option shall vest and become exercisable by the Holder in
accordance with the vesting schedule established by the Committee and set
forth in the Stock Option Agreement.
(v) Each Stock Option Agreement may contain a provision that, upon
demand by the Committee for such a representation, the Holder shall
deliver to the Committee at the time of any exercise of an Option a
written representation that the shares to be acquired upon such exercise
are to be acquired for investment and not for resale or with a view to
the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise
of an Option shall be a condition precedent to the right of the Holder or
such other person to purchase any shares. In the event certificates for
Stock are delivered under the Plan with respect to which such investment
representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference
to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.
(vi) Each Incentive Stock Option Agreement shall contain a
provision requiring the Holder to notify the Company in writing
immediately after the Holder makes a disqualifying disposition of any
Stock acquired pursuant to the exercise of such Incentive Stock Option.
A disqualifying disposition is any disposition (including any sale) of
such Stock before the later of (a) two years after the Date of Grant of
the Incentive Stock Option or (b) one year after the date the Holder
acquired the Stock by exercising the Incentive Stock Option.
(e) Incentive Stock Option grants to 10% holders of Company voting
stock. Notwithstanding anything to the contrary in this Section 7, if an
Incentive Stock Option is granted to a Holder who owns stock representing more
than ten percent of the voting power of all classes of stock of the Company or
of the Company and its Subsidiaries, the Option Period shall not exceed five
years from the Date of Grant of such Option and the Option Price shall be at
least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock
subject to the Option.
(f) $100,000 per year limitation for Incentive Stock Options. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant) of
Stock for which Incentive Stock Options are exercisable for the first time by
any
<PAGE>11
Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.
(g) Voluntary Surrender. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option and its
corresponding SAR, if any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
shares as the Option surrendered or require such voluntary surrender as a
condition precedent to a grant of a new Option to such Participant. Such new
Option shall be exercisable at an Option Price, during an Option Period, and
in accordance with any other terms or conditions specified by the Committee at
the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, Option Period, or
any other terms and conditions of the Nonqualified Stock Option surrendered.
(h) Order of exercise. Options granted under the Plan may be exercised
in any order, regardless of the Date of Grant or the existence of any other
outstanding Option.
8. Stock Appreciation Rights
Any Option granted under the Plan may include SARs, either at the Date of
Grant or by amendment except that in the case of an Incentive Stock Option,
SARs shall be granted only at the Date of Grant of the related Option. The
Committee also may award SARs to Participants independent of any Option. An
SAR shall be subject to such terms and conditions not inconsistent with the
Plan as the Committee shall impose, including, but not limited to, the
following:
(a) Vesting. SARs granted in connection with an Option shall become
exercisable, be transferable and shall expire according to the same vesting
schedule, transferability rules and expiration provisions as the corresponding
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the
Committee. Notwithstanding the above, an SAR shall not be exercisable by a
person subject to Section 16(b) of the Exchange Act for at least six months
following the Date of Grant.
(b) Automatic exercise. If on the last day of the Option Period (or in
the case of an SAR independent of an Option, the period established by the
Committee after which the SAR shall expire), the Fair Market Value of the
Stock exceeds the Option Price (or in the case of an SAR granted independent
of an Option,
<PAGE>12
the Fair Market Value of the Stock on the Date of Grant), the Holder has not
exercised the SAR or the corresponding Option, and neither the SAR nor the
corresponding Option has expired, such SAR shall be deemed to have been
exercised by the Holder on such last day and the Company shall make the
appropriate payment therefor.
(c) Payment. Upon the exercise of an SAR, the Company shall pay to the
Holder an amount equal to the excess, if any, of the Fair Market Value of one
share of Stock on the exercise date over the Option Price, in the case of an
SAR granted in connection with an Option, or the Fair Market Value of one
share of Stock on the Date of Grant, in the case of an SAR granted independent
of an Option. With respect to SARs exercised before the Company has been
subject to the reporting requirements of Section 13(a) of the Exchange Act for
one year, the Company shall issue or transfer to the Participant shares of
Stock with a Fair Market Value at such time equal to 100 percent of any such
excess. With respect to SARs exercised after the Company has been subject to
such reporting requirements for at least one year, the Company shall pay such
excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Fractional shares shall
be settled in cash.
(d) Method of exercise. A Participant may exercise an SAR at such time
or times as may be determined by the Committee at the time of grant by filing
an irrevocable written notice with the Committee or its designee, specifying
the number of SARs to be exercised, and the date on which such SARs were
awarded. Such time or times determined by the Committee may take into account
any applicable "window periods" required by Rule 16b-3 under the Exchange Act.
(e) Expiration. Except as otherwise provided in the case of SARs
granted in connection with Options, an SAR shall expire on a date designated
by the Committee which is not later than ten years after the Date of Grant of
the SAR.
9. Performance Shares
(a) Award grants. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods of not less than
three years nor more than five years. At the beginning of each Award Period,
the Committee will establish in writing Performance Goals based upon financial
objectives for the Company for such Award Period and a schedule relating the
accomplishment of the Performance Goals to the Awards to be earned by
Participants. Performance Goals may include absolute or relative growth in
earnings per share or rate of return on stockholders' equity or other
measurement of corporate performance and may be determined on an individual
<PAGE>13
basis or by categories of Participants. The Committee may adjust Performance
Goals or performance measurement standards as it deems equitable in
recognition of extraordinary or non-recurring events experienced during an
Award Period by the Company or by any other corporation whose performance is
relevant to the determination of whether Performance Goals have been attained;
provided, however, that, with respect to Performance Share Unit Awards
intended to qualify as "performance-based compensation" under Section 162(m)
of the Code, such adjustment shall be made only to the extent that the
Committee determines that such adjustments may be made without a loss of
deductibility for such Award under Section 162(m) of the Code. The Committee
shall determine the number of Performance Share Units to be awarded, if any,
to each Participant who is selected to receive such an Award. The Committee
may add new Participants to a Performance Share program after its commencement
by making pro rata grants.
(b) Determination of Award. At the completion of a Performance Share
Award Period, or at other times as specified by the Committee, the Committee
shall calculate the amount earned with respect to each Participant's award by
multiplying the Fair Market Value of the Stock on the Valuation Date by the
number of Performance Share Units granted to the Participant and multiplying
the amount so determined by a performance factor representing the degree of
attainment of the Performance Goals.
(c) Partial Awards. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) Payment of Non-deferred Awards. The amount earned with respect to
an Award shall be payable 100% in shares of Stock based on the Fair Market
Value of the Stock on the Valuation Date; provided, however, that, at its
discretion, the Committee may vary such form of payment as to any Participant
upon the specific request of such Participant. The amount of any payment made
in cash shall be based upon the Fair Market Value of the Stock on the seventh
business day prior to payment. Except as provided in subparagraph 9(e),
payments of Awards shall be made as soon as practicable after the completion
of an Award Period.
(e) Deferral of Payment. A Participant may file a written election with
the Committee to defer the payment of any amount otherwise payable pursuant to
subparagraph 9(d) or 9(k) to a period commencing at such future date as
specified in the election. Such election must be filed with the Committee no
later than one year prior to the end of such related Award Period.
Additionally, a Participant may elect to further defer payment of such amount
following an initial election to defer, if such redeferral election is made at
least one year prior to the
<PAGE>14
time payment is scheduled to begin pursuant to the initial deferral election.
(f) Separate Accounts. At the conclusion of each Award Period, the
Committee shall cause a separate account to be maintained in the name of each
Participant with respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All amounts credited to
such account shall be fully vested at all times.
(g) Election of Form of Investment. No later than the effective date of
the deferral or redeferral of amounts earned pursuant to an Award of
Performance Share Units, and at such other time or times, if any, as the
Committee may permit, a Participant may file a written election with the
Committee indicating (i) the percentage of the deferred portion of any Award
of Performance Share Units which is to be expressed in the form of dollars and
credited with interest (the "Interest Portion"), (ii) the percentage of such
Award which is to be expressed in the form of Phantom Stock Units (the
"Phantom Stock Unit Portion"), and (iii) the percentage of such Award which is
to be deemed invested in any other hypothetical investment equivalent from
time to time made available under the Plan by the Committee. Until the
Participant files such election and in the event a Participant fails to file
an election within the time prescribed, one hundred percent (100%) of the
deferred portion of such Participant's Award shall be expressed in the form of
Phantom Stock Units.
(h) Interest Portion. The amount of interest credited with respect to
the Interest Portion shall be equal to the amount such portion would have
earned had it been credited with interest from the date such amounts are
credited to the Interest Portion until the seventh business day preceding the
date as of which payment is made, compounded annually, at the Company's rate
of return on stockholders' equity for each fiscal year that payment is
deferred, or at such other rate as the Committee may from time to time
determine. The Committee may, in its sole discretion, credit interest on
amounts payable prior to the date on which the Company's rate of return on
stockholders' equity becomes ascertainable at the rate applicable to such
deferred amounts during the year immediately preceding the year of payment.
(i) Phantom Stock Unit Portion. The number of Phantom Stock Units
credited pursuant to an election to allocate an amount to the Phantom Stock
Unit Portion shall be equal to the result of dividing (i) the Phantom Stock
Unit Portion by (ii) the Fair Market Value of the Stock on the effective date
of such election, with the result rounded to the nearest one-tenth of a share.
<PAGE>15
(j) Dividend Equivalents. Within thirty (30) days from the payment of a
dividend by the Company on its Stock, the Phantom Stock Unit Portion of each
Participant's account shall be credited with additional Phantom Stock Units
the number of which shall be determined by (i) multiplying the dividend per
share paid on the Company's Stock by the number of Phantom Stock Units
credited to his account at the time such dividend was declared, then (ii)
dividing such amount by the Fair Market Value of the Stock on the payment date
for such dividend, with the result rounded to the nearest one-tenth of a
share.
(k) Payment of Deferred Awards. Payment with respect to amounts
deferred and credited to the account of a Participant shall be made in a
series of annual installments over a period of ten (10) years, or such other
period as the Committee may direct, or as the Committee may allow the
Participant to elect, in either case at the time of the original deferral
election or any subsequent election which supersedes such original election.
Except as otherwise provided by the Committee, each installment shall be
withdrawn proportionately from the Interest Portion and from the Phantom Stock
Unit Portion of a Participant's account based on the percentage of the
Participant's account which is attributable to the Interest Portion, and the
Phantom Stock Unit Portion. Payments shall commence on the date specified by
the Participant in his last deferral election, unless the Committee in its
sole discretion determines that payment shall be made over a shorter period or
in more frequent installments, or commence on an earlier date, or any or all
of the above. If a Participant dies prior to the date on which payment with
respect to all amounts credited to his account shall have been completed,
payment with respect to such amounts shall be made to the Participant's
beneficiary in a series of annual installments over a period of five (5)
years, unless the Committee in its sole discretion determines that payment
shall be made over a shorter period or in more frequent installments, or both.
To the extent practicable, each installment payable hereunder shall
approximate that part of the amount then credited to the Participant's or
beneficiary's account which, if multiplied by the number of installments
remaining to be paid would be equal to the entire amount then credited to the
Participant's account.
(l) Composition of Payment. Payment with respect to the Interest
Portion and the Phantom Stock Unit Portion of a Participant's account shall be
paid in cash and Stock as the Committee shall determine in its sole
discretion. The determination of any amount to be paid in cash for Phantom
Stock Units shall be made by multiplying (i) the Fair Market Value of one
share of Stock on the seventh business day prior to the date as of which
payment is to be made, by (ii) the number of Phantom Stock Units for which
payment is being made. The determination of the number of shares of Stock, if
any, to be distributed with respect to any amount of the Interest Portion of a
Participant's
<PAGE>16
account shall be made by dividing (i) the value of such amount on the seventh
business day prior to the date as of which payment is made, by (ii) the Fair
Market Value of one share of Stock on such date. Fractional shares shall be
paid in cash.
(m) Alternative Investment Equivalents. If the Committee shall have
permitted Participants to elect to have deferred Awards of Performance Share
Units invested in one or more hypothetical investment equivalents other than
interest or Phantom Stock Units, such deferred Awards shall be credited with
hypothetical investment earnings at such rate, manner and time as the
Committee shall determine. At the end of the deferral period, payment shall
be made in respect of such hypothetical investment equivalents in such manner
and at such time as the Committee shall determine.
(n) Adjustment of Performance Goals. The Committee may, during the
Award Period, make such adjustments to Performance Goals as it may deem
appropriate, to compensate for, or reflect, any significant changes that may
have occurred during such Award Period in (i) applicable accounting rules or
principles or changes in the Company's method of accounting or in that of any
other corporation whose performance is relevant to the determination of
whether an Award has been earned or (ii) tax laws or other laws or regulations
that alter or affect the computation of the measures of Performance Goals used
for the calculation of Awards; provided, however, that, with respect to
Performance Share Unit Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, such adjustment shall be made
only to the extent that the Committee determines that such adjustments may be
made without a loss of deductibility for such Award under Section 162(m) of
the Code.
10. Restricted Stock Awards and Phantom Stock Units
(a) Award of Restricted Stock and Phantom Stock Units.
(i) The Committee shall have the authority (1) to grant Restricted
Stock and Phantom Stock Unit Awards, (2) to issue or transfer Restricted
Stock to Participants, and (3) to establish terms, conditions and
restrictions applicable to such Restricted Stock and Phantom Stock Units,
including the Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock or Phantom Stock
Units shall be granted or become vested and the number of shares or units
to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Secretary of the Company (i) an agreement with respect to
the Restricted Stock setting forth the restrictions applicable to such
Restricted Stock, (ii)
<PAGE>17
an escrow agreement satisfactory to the Committee, and (iii) the appropriate
blank stock powers with respect to the Restricted Stock covered by such
agreements. If a Participant shall fail to execute a Restricted Stock
agreement, an escrow agreement and stock powers, the Award shall be null and
void. Subject to the restrictions set forth in Section 10(b), the Holder
shall generally have the rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such Restricted Stock. At the
discretion of the Committee, cash dividends and stock dividends with respect
to the Restricted Stock may be either currently paid to the Holder or withheld
by the Company for the Holder's account, and interest may be paid on the
amount of cash dividends withheld at a rate and subject to such terms as
determined by the Committee. Cash dividends or stock dividends so withheld by
the Committee shall not be subject to forfeiture.
(iii) Upon the Award of Restricted Stock, the Committee shall cause a
stock certificate registered in the name of the Holder to be issued and
deposited together with the stock powers with an escrow agent designated
by the Committee. The Committee shall cause the escrow agent to issue to
the Holder a receipt evidencing any stock certificate held by it
registered in the name of the Holder.
(iv) In the case of a Phantom Stock Unit Award, no shares of Common
Stock shall be issued at the time the Award is made, and the Company will
not be required to set aside a fund for the payment of any such Award.
Holders of Phantom Stock Units shall receive an amount equal to the cash
dividends paid by the Company upon one share of Common Stock for each
Phantom Stock Unit then credited to such Holder's account ("Dividend
Equivalents"). The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units such Dividend Equivalents. Dividend
Equivalents credited to a Holder's account shall be subject to forfeiture
and may bear interest at a rate and subject to such terms as are
determined by the Committee.
(b) Restrictions.
(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the Restricted Period:
(1) the Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the restrictions on
transferability set forth in the grant; (3) the shares shall be subject
to forfeiture to the extent provided in subparagraph (d) and, to the
extent such shares are forfeited, the stock certificates shall be
returned to the
<PAGE>18
Company, and all rights of the Holder to such shares and as a shareholder
shall terminate without further obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant shall be subject
to the following restrictions until the expiration of the Restricted
Period: (1) the units shall be subject to forfeiture to the extent
provided in subparagraph (d), and to the extent such units are forfeited,
all rights of the Holder to such units shall terminate without further
obligation on the part of the Company and (2) any other restrictions
which the Committee may determine in advance are necessary or
appropriate.
(iii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock and Phantom Stock Units whenever
it may determine that, by reason of changes in applicable laws or other
changes in circumstances arising after the date of the Restricted Stock
Award or Phantom Stock Award, such action is appropriate.
(c) Restricted Period. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee.
(d) Forfeiture Provisions. In the event a Holder terminates employment
with the Company or a Subsidiary during a Restricted Period, that portion of
the Award with respect to which restrictions have not expired ("Non-Vested
Portion") shall be treated as follows.
(i) Upon the voluntary resignation of a Participant or discharge by
the Company or a Subsidiary for Cause, the Non-Vested Portion of
the Award shall be completely forfeited.
(ii) Upon Normal Termination, the Non-Vested Portion of the Award
shall be prorated for service during the Restricted Period and
shall be received as soon as practicable following termination.
(iii) Upon death, the Non-Vested Portion of the Award shall be prorated
for service during the Restricted Period and paid to the
Participant's beneficiary as soon as practicable following death.
(e) Delivery of Restricted Stock and Settlement of Phantom Stock Units.
Upon the expiration of the Restricted Period with respect to any shares of
Stock covered by a Restricted Stock Award, the Company shall deliver to the
Holder, or his
<PAGE>19
beneficiary, without charge, the stock certificate evidencing the shares of
Restricted Stock (free of all restrictions under the Plan) which have not then
been forfeited and with respect to which the Restricted Period has expired (to
the nearest full share) and any cash dividends or stock dividends credited to
the Holder's account with respect to such Restricted Stock and the interest
thereon, if any.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver
to the Holder, or his beneficiary, without charge, one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("Vested Unit") and cash equal to any
Dividend Equivalents credited with respect to each such Vested Unit and the
interest thereon, if any; provided, however, that the Committee may, in its
sole discretion, elect to pay cash or part cash and part Stock in lieu of
delivering only Stock for Vested Units. If cash payment is made in lieu of
delivering Stock, the amount of such payment shall be equal to the Fair Market
Value of the Stock as of the date on which the Restricted Period lapsed with
respect to such Vested Unit.
(f) Stock Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the end of the
Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated
as of , between GEV Corporation and . A
copy of such Agreement is on file at the offices of the Company in
Greenwich, Connecticut."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
11. General
(a) Additional provisions of an Award. Awards under the Plan also may
be subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in
financing the purchase of Common Stock upon the exercise of Options,
provisions for the forfeiture of or restrictions on resale or other
disposition of shares of Stock acquired under any Award, provisions giving the
Company the right to repurchase shares of Stock acquired under any Award in
the event the Participant elects to dispose of such shares, and provisions to
comply with
<PAGE>20
Federal and state securities laws and Federal and state tax withholding
requirements.
(b) Privileges of stock ownership. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) Government and other regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any
shares of Stock pursuant to an Award unless such shares have been properly
registered for sale pursuant to the Securities Act with the Securities and
Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms
and conditions of such exemption have been fully complied with. The Company
shall be under no obligation to register for sale under the Securities Act any
of the shares of Stock to be offered or sold under the Plan. If the shares of
Stock offered for sale or sold under the Plan are offered or sold pursuant to
an exemption from registration under the Securities Act, the Company may
restrict the transfer of such shares and may legend the Stock certificates
representing such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
(d) Tax withholding. Notwithstanding any other provision of the Plan,
the Company or a Subsidiary, as appropriate, shall have the right to deduct
from all Awards cash and/or Stock, valued at Fair Market Value on the date of
payment, in an amount necessary to satisfy all Federal, state or local taxes
as required by law to be withheld with respect to such Awards and, in the case
of Awards paid in Stock, the Holder or other person receiving such Stock may
be required to pay to the Company or a Subsidiary, as appropriate, prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock.
Subject in particular cases to the disapproval of the Committee, the Company
may accept shares of Stock of equivalent Fair Market Value in payment of such
withholding tax obligations if the Holder of the Award elects to make payment
in such manner at least six months prior to the date such tax obligation is
determined.
<PAGE>21
(e) Claim to Awards and employment rights. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any
other Award. Neither this Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ of
the Company or a Subsidiary.
(f) Designation and change of beneficiary. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect
to an Award of Performance Share Units, Phantom Stock Units or Restricted
Stock, if any, due under the Plan upon his death. A Participant may, from
time to time, revoke or change his beneficiary designation without the consent
of any prior beneficiary by filing a new designation with the Committee. The
last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant's
death, and in no event shall it be effective as of a date prior to such
receipt.
(g) Payments to persons other than Participants. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has
died, then any payment due to such person or his estate (unless a prior claim
therefor has been made by a duly appointed legal representative), may, if the
Committee so directs the Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Committee and the Company therefor.
(h) No liability of Committee members. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall
indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated
or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim) arising out of any
act or omission to act in connection with the Plan unless arising out of such
person's own fraud or bad faith; provided, however, that approval of the Board
shall be required for the payment of any amount in settlement of a claim
against any such person. The foregoing
<PAGE>22
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
(i) Governing law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Connecticut without
reference to the principles of conflicts of law thereof.
(j) Funding. Except as provided under Section 10, no provision of the
Plan shall require the Company, for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to segregate any assets,
nor shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no rights under the
Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law.
(k) Nontransferability. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred
or otherwise disposed of, mortgaged, pledged or encumbered except, in the
event of a Holder's death, to a designated beneficiary to the extent permitted
by the Plan, or in the absence of such designation, by will or the laws of
descent and distribution; provided, however, the Committee may, in its sole
discretion, allow for transfer of Awards other than Incentive Stock Options to
other persons or entities, subject to such conditions or limitations as it may
establish to ensure that Awards intended to comply with Rule 16b-3 promulgated
pursuant to the Exchange Act continue to so comply or for other purposes.
(l) Reliance on Reports. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act,
and shall not be liable for having so relied, acted or failed to act in good
faith, upon any report made by the independent public accountant of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(m) Relationship to other benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or
<PAGE>23
other benefit plan of the Company or any Subsidiary except as otherwise
specifically provided.
(n) Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
(o) Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(p) Titles and headings. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
(q) Termination of employment. For all purposes herein, a person who
transfers from employment with the Company to employment with a Subsidiary or
vice versa shall not be deemed to have terminated employment with the Company
or a Subsidiary.
12. Changes in Capital Structure
Awards granted under the Plan and any agreements evidencing such Awards,
Performance Goals, the maximum number of shares of Stock subject to all Awards
and the maximum number of shares of Stock issued to any one person pursuant to
Options during any year shall be subject to adjustment or substitution, as
determined by the Committee in its sole discretion, as to the number, price or
kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company,
or of any other corporation whose performance is relevant to the attainment of
Performance Goals hereunder, by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances
which results in or would result in any substantial dilution or enlargement of
the rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the
intended operation of the Plan. In addition, in the event of any such
adjustments or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 12 shall be made only to the extent not constituting a
"modification" within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. Further, with respect to Awards intended
<PAGE>24
to qualify as "performance-based compensation" under Section 162(m) of the
Code, such adjustments or substitutions shall be made only to the extent that
the Committee determines that such adjustments or substitutions may be made
without a loss of deductibility for Awards under Section 162(m) of the Code.
The Company shall give each Participant notice of an adjustment hereunder and,
upon notice, such adjustment shall be conclusive and binding for all purposes.
13. Effect of Change in Control
(a) In the event of a Change in Control, notwithstanding any vesting
schedule provided for hereunder or by the Committee with respect to an Award
of Options, SARs, Phantom Stock Units or Restricted Stock, such Option or SAR
shall become immediately exercisable with respect to 100 percent of the shares
subject to such Option or SAR, and the Restricted Period shall expire
immediately with respect to 100 percent of the Phantom Stock Units or shares
of Restricted Stock subject to Restrictions.
(b) In the event of a Change in Control, all incomplete Award Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall, (i) determine the extent to which Performance
Goals with respect to each such Award Period have been met based upon such
audited or unaudited financial information then available as it deems
relevant, (ii) cause to be paid to each Participant partial or full Awards
with respect to Performance Goals for each such Award Period based upon the
Committee's determination of the degree of attainment of Performance Goals,
and (iii) cause all previously deferred Awards to be settled in full as soon
as possible.
(c) The obligations of the Company under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company. The Company agrees that it will make appropriate
provisions for the preservation of Participant's rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
14. Nonexclusivity of the Plan
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under this Plan, and
<PAGE>25
such arrangements may be either applicable generally or only in specific
cases.
15. Amendments and Termination
The Board may at any time terminate the Plan. With the express written
consent of an individual Participant, the Board or the Committee may cancel or
reduce or otherwise alter the outstanding Awards thereunder if, in its
judgment, the tax, accounting, or other effects of the Plan or potential
payouts thereunder would not be in the best interest of the Company. The
Board or the Committee may, at any time, or from time to time, amend or
suspend and, if suspended, reinstate, the Plan in whole or in part, provided,
however, that without further stockholder approval neither the Board nor the
Committee shall:
(a) Increase the maximum number of shares of Stock which may be
issued pursuant to Awards, except as provided in Section 12;
(b) Change the maximum Option Price;
(c) Extend the maximum Option Period;
(d) Extend the termination date of the Plan; or
(e) Change the class of persons eligible to receive Awards under
the Plan.
* * *
As adopted by the Board of Directors of
GEV Corporation as of February 23, 1995
