SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ]Preliminary proxy statement
[X]Definitive proxy statement
[ ]Definitive additional materials
[ ]Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Smith Corona Corporation
(Name of Registrant as Specified In Its Charter)
Smith Corona Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X]$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ]$500 per each party to the controversy pursuant to Exchange
Act Rule 14A-6(i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(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:
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
_________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Smith Corona Corporation (the Company ) will be
held at One Landmark Square, Stamford, Connecticut 06901 on
November 15, 1994 at 10:30 a.m., for the following purposes:
1. To elect ten (10) directors to serve until the next
Annual Meeting of Stockholders and until their successors are
elected and qualified;
2. To consider and act upon a proposal to approve an
amendment to the Smith Corona Corporation 1990 Stock Option Plan;
3. To consider and act upon a proposal to ratify the
appointment of Deloitte & Touche LLP as independent certified
public accountants for the Company for the fiscal year ending
June 30, 1995; and
4. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on
September 23, 1994 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ G. William Sisley
G. William Sisley
Secretary
October 10, 1994
New Canaan, Connecticut
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY.
SMITH CORONA CORPORATION
65 Locust Avenue
New Canaan, Connecticut 06840
(203) 972-1471
________________________
PROXY STATEMENT
________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Smith Corona
Corporation (the "Company") for use at the Annual Meeting of
Stockholders (the "Meeting") to be held at One Landmark Square,
Stamford, Connecticut 06901 on November 15, 1994 at 10:30 a.m.,
and at any postponements or adjournments thereof. This Proxy
Statement and the related proxy card are first being mailed to
stockholders on or about October 10, 1994.
Only holders of record of the Company s common stock, par
value $.01 per share (the "Common Stock"), as of the close of
business on September 23, 1994 (the "Record Date") will be
entitled to notice of, and to vote at, the Meeting. As of the
Record Date, there were 30,250,000 shares of Common Stock issued
and outstanding, each of which is entitled to one vote. There is
no other class of voting securities issued and outstanding. The
presence in person or by proxy of the holders of a majority of
the outstanding Common Stock will be necessary to constitute a
quorum for the transaction of business at the Meeting.
All shares represented by properly executed proxies will be
voted in accordance with the instructions indicated thereon
unless such proxies previously have been revoked. If any proxies
do not contain voting instructions, the shares represented by
such proxies will be voted (1) FOR the election of the nominees
listed below, (2) FOR the approval of an amendment to the Smith
Corona Corporation 1990 Stock Option Plan and (3) FOR the
ratification of the appointment of Deloitte & Touche LLP as the
Company s independent certified public accountants for the fiscal
year ending June 30, 1995 ("Fiscal 1995"). It is not anticipated
that any matters other than those set forth in the Notice of
Annual Meeting dated October 10, 1994 (the "Notice of Meeting")
will be brought before the Meeting. If any other matters
properly come before the Meeting, the shares represented by all
properly executed proxies will be voted in accordance with the
judgment of the persons named on such proxies. Shares
abstaining, and shares held in street name as to which a broker
has not voted on some matters but has voted on other matters
("Broker Non-Votes"), will be included in determining whether a
quorum exists at the Meeting. Approval of each matter specified
in the Notice of Meeting requires the affirmative vote of a
majority, or, in the case of the election of directors, a
plurality, of shares of Common Stock present in person or by
proxy at the Meeting entitled to vote thereon. Stockholders may
not cumulate their votes. In determining whether a proposal
specified in the Notice of Meeting has received the requisite
number of affirmative votes, abstentions and Broker Non-Votes
will have the same effect as votes against the proposal, except
with respect to the election of directors where abstentions and
Broker Non-Votes will have no effect on the outcome of the vote.
Any stockholder who executes and delivers a proxy may revoke
it at any time prior to its exercise by (1)delivering to the
Secretary of the Company a duly executed proxy bearing a later
date; or (2) attending the Meeting and filing a written notice of
revocation with the Secretary of the Meeting.
In addition to solicitations by mail, some directors,
officers and employees of the Company may solicit proxies for the
Meeting personally or by telephone or telegram without extra
remuneration therefor. The Company will also provide persons,
firms, banks and corporations holding shares in their names or in
the names of nominees, which in either case are beneficially
owned by others, proxy material for transmittal to such
beneficial owners and will reimburse such record owners for their
expenses in doing so. The costs of soliciting proxies will be
borne by the Company.
PROPOSAL 1.
ELECTION OF DIRECTORS
Nominees
The Board of Directors has nominated ten persons for
election as directors of the Company at the Meeting, each to
serve until the 1995 Annual Meeting of Stockholders of the
Company and until his successor shall have been elected and
qualified. All of the nominees are currently serving as
directors of the Company.
Each nominee has consented to be named in this Proxy
Statement and to serve if elected. If, prior to the Meeting, any
nominee should become unavailable to serve for any reason, the
shares represented by all properly executed proxies will be voted
for such alternate individual as shall be designated by the Board
of Directors, unless the Board of Directors shall determine to
reduce the number of directors pursuant to the By-laws of the
Company.
Under the terms of a Stockholders Agreement with the
Company, Hanson Natural Resources Company ("HNR"), an indirect,
wholly-owned subsidiary of Hanson PLC ("Hanson"), as assignee
under the Stockholders Agreement of HM Holdings, Inc. ("HMH"),
has the right to designate up to four nominees for election to
the Company s Board of Directors. At the time of execution of
the Stockholders Agreement, there were nine members of the
Company's Board of Directors. On August 20, 1991, pursuant to
the Company's By-laws, the Board of Directors increased that
number to ten. HNR has designated David H. Clarke, John G. Raos,
George H. Hempstead, III and Craig C. Sergeant for election to
the Board. See Certain Transactions--Stockholders Agreement.
Certain information regarding each nominee is set forth
below, including such individual s age and principal occupations,
a brief account of business experience during at least the last
five years, other directorships currently held and the year in
which the individual was first elected a director of the Company.
G. Lee Thompson
Mr. Thompson, age 61, was elected as Chairman of the Board
of the Company in June 1989 and served as President of the
Company from 1986 until July 1, 1990. He has served as Chief
Executive Officer of the Company since 1986. From 1984 to 1985,
Mr. Thompson was President of SCM/Consumer Products, the division
of SCM Corporation ("SCM") that manufactured and sold Smith
Corona typewriters and Durkee Famous Foods products. In June
1993, Mr. Thompson was appointed to the Board of Overseers for
the School of Business Administration of the University of
Connecticut. Mr. Thompson has been a director of the Company
since June 1989.
David H. Clarke
Mr. Clarke, age 53, has served as Deputy Chairman and Chief
Executive Officer of Hanson Industries, which manages Hanson s
operations in the United States, since March 1992. Mr. Clarke
has also served as a director and President of Hanson Industries
and Vice Chairman of Hanson since 1978. Mr. Clarke has been a
director of Hanson since September 1989 and an Associate Director
of Hanson from 1978 to September 1989. Mr. Clarke serves as a
director of Marine Harvest International, Inc. and was previously
Chairman of the Board of that company. Mr. Clarke has been a
director of the Company since June 1989.
Thomas C. DeFazio
Mr. DeFazio, age 53, has served as Executive Vice President
and Chief Financial Officer of the Company since April 1991.
Prior to joining the Company, Mr. DeFazio served as an officer of
General Instrument Corporation from 1986 to 1990, most recently
as Vice President-Finance, Chief Financial Officer and Treasurer.
Mr. DeFazio has been a director of the Company since November
1991.
George H. Hempstead, III
Mr. Hempstead, age 50, has served as Senior Vice President
and General Counsel of Hanson Industries since 1994 and as Vice
President and General Counsel since 1982. He has served as a
director of Hanson Industries since 1986 and as an Associate
Director of Hanson since 1990. Mr. Hempstead also served as Vice
President and Secretary of the Company from 1985 to August 1989.
He serves as a director of Marine Harvest International, Inc. and
Beazer Homes USA, Inc. Mr. Hempstead has been a director of the
Company since September 1985.
William D. Henderson
Mr. Henderson, age 48, has served as President and Chief
Operating Officer of the Company since July 1990. Prior to
joining the Company, Mr. Henderson served as an Executive Officer
and Group Vice President of Hanson Industries since 1981. Mr.
Henderson previously served as President and Chief Executive
Officer of Durkee Famous Foods and as an executive at FMC
Corporation. Mr. Henderson has been a director of the Company
since November 1990.
John G. Raos
Mr. Raos, age 45, has served as President and Chief
Operating Officer of Hanson Industries since March 1992, and as a
director of Hanson Industries since 1986 and of Hanson since
1989. Mr. Raos served as Senior Vice President of Operations of
Hanson Industries from 1987 to 1992. Between 1979 and 1987, Mr.
Raos served as Vice President and Chief Financial Officer of
Hanson Industries. Mr. Raos also served as a Vice President of
the Company from 1985 to August 1989. He serves as a director of
Dataflex Corporation and Marine Harvest International, Inc., and
he is a Trustee of the American Management Association. Mr. Raos
has been a director of the Company since June 1989.
Craig C. Sergeant
Mr. Sergeant, age 48, has served as Group Vice President of
Hanson Industries for various consumer, building and industrial
products divisions since 1984. Prior to that time, commencing in
1974, Mr. Sergeant was Vice President and Chief Financial Officer
of Seacoast Products, Inc., formerly a subsidiary of Hanson
Industries. He has also served as an Associate Director of
Hanson since 1990. Mr. Sergeant has been a director of the
Company since June 1989.
Robert Van Buren
Mr. Van Buren, age 69, served as Chairman of the Board and
Chief Executive Officer of Midlantic Corporation, a bank holding
company, from 1978 until April 1991. Mr. Van Buren serves as a
director of Foster Wheeler Corporation. Mr. Van Buren has been a
director of the Company since August 1989.
Richard R. West
Mr. West, age 56, has served as Professor of Finance at the
Leonard N. Stern School of Business of New York University since
1984. He also served as the School s Dean from 1984 until 1993.
Mr. West previously was the Nathaniel Leverone Professor of
Management at Dartmouth s Amos Tuck School of Business
Administration, where he also served as Dean for seven years. He
also serves as a director of Alexander s, Inc., Vornado, Inc.,
Bowne & Co., Inc., Re Capital Corporation and various registered
investment companies managed by Merrill Lynch Asset Management,
Inc. Mr. West has been a director of the Company since August
1989.
Robert J. Kammerer
Mr. Kammerer, age 57, has been a Partner of Baldwin
Associates, Inc., a management consulting firm, since April 1992.
From July 1964 through March 1992, Mr. Kammerer was in management
at Xerox Corporation, serving as a Corporate Vice President of
that company from May 1979 through March 1992. Mr. Kammerer has
been a director of the Company since November 1993.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
ALL NOMINEES FOR DIRECTOR.
Meetings and Committees of the Board
The Board of Directors met ten times during the period from
July 1, 1993 to June 30, 1994 ("Fiscal 1994"). During Fiscal
1994, Mr. Clarke attended 70% of the meetings of the Board. All
other directors attended at least 75% of Board (and, where
applicable, Committee) meetings held in Fiscal 1994.
The Board has three standing committees, the Audit
Committee, the Compensation and Benefits Committee and the
Nominating Committee.
The principal responsibilities of each of the standing
committees and the members of such committees are set forth
below.
The Audit Committee met four times during Fiscal 1994. The
Audit Committee is responsible for (i) recommending to the Board
of Directors a firm of independent certified public accountants
to audit the Company s financial statements for the forthcoming
fiscal year; (ii) reviewing the scope and result of audits made
by such firm; (iii) reviewing the adequacy of internal accounting
and auditing procedures and (iv) directing and supervising
special audit inquiries. The Audit Committee is also responsible
for approving in advance all agreements between the Company and
Hanson or its affiliates. The Audit Committee consists of
Messrs. Kammerer, Van Buren and West.
The Compensation and Benefits Committee met seven times
during Fiscal 1994. The Compensation and Benefits Committee is
responsible for (i) reviewing and approving matters relating to
executive compensation; (ii) reviewing the structure of any long-
term management incentive plans and approving grants to officers
under such plans; (iii) reviewing and approving all employment
and consulting agreements between the Company and any of its
officers; and (iv) reviewing the retirement plans in which
Company officers participate. The Compensation and Benefits
Committee consists of Messrs. Kammerer, Raos, Sergeant and West.
On August 18, 1993, the Board of Directors created the
Nominating Committee. The Nominating Committee met one time
during Fiscal 1994. The Nominating Committee is responsible for
developing, interviewing and recommending for approval by the
Board of Directors nominees to the Board of Directors. The
Nominating Committee considers nominees recommended by
stockholders, although there is no established procedure
therefor. The Nominating Committee, which is comprised of
disinterested directors and the Chairman, currently consists of
Messrs. Kammerer, Van Buren, West and Thompson.
Compensation of Directors
Directors who are employees of the Company, Hanson or any
affiliate of Hanson do not receive any additional compensation
for their services as directors. Other directors are paid an
annual fee of $22,000 plus expenses. Committee members who are
not employees of the Company, Hanson or any affiliate of Hanson
receive an attendance fee of $500 plus expenses for each
committee meeting attended.
CERTAIN TRANSACTIONS
On August 3, 1989, the Company completed a registered
public offering of 14,750,000 shares of Common Stock in the
United States and abroad (the "Offerings"). In connection with
the Offerings, Hanson initiated a series of transactions to
combine its electronic typewriter, personal word processor and
office supplies businesses under a single parent entity, the
Company (the "Reorganization"). Prior to the closing of the
Offerings, the Company had been an indirect, wholly-owned
subsidiary of Hanson, an industrial management company. Pursuant
to the Offerings, the Company sold 14,750,000 shares of Common
Stock to the public in public offerings registered pursuant to
the Securities Act of 1933, as amended (the "1933 Act").
Following the Offerings, Hanson owned 47.9% of the outstanding
Common Stock and, pursuant to a Stockholders Agreement, retained
the right, subject to certain conditions, to elect four of the
Company s directors. See Stockholders Agreement below.
Subsequent to the Offerings, all proposed agreements between the
Company and Hanson or its affiliates must be approved in advance
by the Audit Committee. See Election of Directors--Meetings and
Committees of the Board above.
Stockholders Agreement
The Company and HNR, as assignee of HMH, have entered into
a Stockholders Agreement, dated as of June 2, 1989 (the
Stockholders Agreement ), which provides that, so long as HNR
and its affiliates own 38% or more of the outstanding Common
Stock, the Company shall nominate at least four designees of HNR
for election to the Company s Board of Directors. The Company
agreed in the Stockholders Agreement to use its best efforts to
cause the Board of Directors to consist of nine members during
the term of the Stockholders Agreement, which expires on June 2,
1999. However, HNR consented to the increase of the Company s
Board of Directors to ten members, and the Board of Directors
authorized such increase on August 20, 1991. The number of HNR
designees is subject to reduction as follows: (i) if HNR s share
ownership is at least 27% but less than 38%, three designees;
(ii) if HNR s share ownership is at least 16% but less than 27%,
two designees; and (iii) if HNR s share ownership is at least 5%
but less than 16%, one designee. In the Stockholders Agreement,
HNR agreed that immediately after the Reorganization and the
Offerings it would cause stockholders equity of the Company to
equal $50 million and the ratio of net debt (bank debt and
indebtedness to HNR less invested cash and cash equivalents) to
equity not to exceed 195%. The Stockholders Agreement also
grants HNR the right to require the Company to register under the
1933 Act shares of Common Stock held by HNR and its affiliates
and certain members of management on not more than two occasions
provided that at least 10% of the outstanding shares of Common
Stock are registered pursuant to each such request. It further
provides that HNR may require its shares to be registered if it
notifies the Company within 30 days of receiving notice that the
Company has determined to register its own securities. The
Company and HNR have agreed to indemnify each other against
certain liabilities incurred in connection with the registration
of such shares.
Cross-Indemnification Agreement
The Company and HMH entered into an Amended and Restated
Cross-Indemnification Agreement dated as of June 2, 1989 (the
Cross-Indemnity Agreement ). In the Cross-Indemnity Agreement,
the Company agreed generally to indemnify HMH and Hanson against
substantially all liabilities relating to the business of the
Company, including environmental liabilities but excluding tax
liabilities which are addressed under the Tax Sharing Agreement
(as defined below). HMH, in turn, agreed to indemnify the
Company against substantially all liabilities relating to the
business of Hanson (other than the business of the Company),
including environmental liabilities but excluding tax liabilities
which are addressed under the Tax Sharing Agreement described
below.
Tax Sharing Agreement
Following Hanson s acquisition of the Company s predecessor,
SCM, the Company and its subsidiaries were included as members of
the Hanson affiliated group of corporations, which filed a
consolidated United States federal income tax return (the
"Consolidated Group"). After the Offerings, the Company no
longer qualified to be a member of the Consolidated Group for
federal income tax purposes. The Company and HMH entered into an
Amended and Restated Tax Sharing and Indemnification Agreement
dated as of June 2, 1989 (the "Tax Sharing Agreement"). Under the
Tax Sharing Agreement, HMH generally will indemnify the Company
with respect to all income tax liabilities or obligations in
respect of all tax periods prior to the closing of the Offerings
and for all tax liabilities which arise solely with respect to
the Reorganization. Similarly, the Company agreed to indemnify
HMH for all income tax liabilities or obligations imposed on the
Company attributable to periods beginning on or after the closing
of the Offerings and all other tax liabilities and obligations
imposed on the Company for all prior and future periods. With
respect to income tax liabilities or obligations attributable to
periods prior to the date of the closing of the Offerings, but
which have been reserved for or accrued for in the ordinary
course of business prior to the closing of the Offerings, the
Company will indemnify HMH and HMH will be under no obligation to
indemnify the Company to the extent so reserved or accrued. The
Tax Sharing Agreement also provides that the Company will assign
to HMH (i) all refunds of taxes for which HMH indemnifies the
Company and (ii) any tax benefits realized by the Company on or
after the date on which the Company ceased to be a member of the
Consolidated Group as a result of payments by the Company
pursuant to the Supplemental Performance Plan (the "SPP") adopted
by Hanson and the Company soon after Hanson s acquisition of SCM
in 1986. The Tax Sharing Agreement also provides that HMH
generally will direct any audit, legal or administrative
proceedings concerning any tax matters for which HMH has
indemnified the Company or with respect to any refund to which
HMH is entitled. To implement the Tax Sharing Agreement, Hanson
funded certain tax liabilities which became liabilities of the
Company as a result of the Reorganization.
Other Agreements
Histacount Corporation ("Histacount"), a wholly-owned
subsidiary of the Company, leases its operating facility from a
Hanson affiliate. The annual lease payments through September
30, 1994 are approximately $75,000, which is substantially below
market. The lease has been extended to September 30, 1995 at an
annual amount of $75,000, which is substantially below market.
EXECUTIVE COMPENSATION
Set forth below is information concerning the Company s
compensation of its chief executive officer and the other four
most highly compensated executive officers of the Company.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Fiscal Other Annual Restricted All Other
Name and Year Compen- Stock Options/ LTIP Compen-
Principal Ending Salary(1) Bonus (1) sation(2),(3) Award(s)(4) SARs(5) Payouts(6) sation(3)
Position June 30, ($) ($) ($) ($) (#) ($) ($)
- - -------- ------- -------- -------- ------------- ----------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Lee Thompson 1994 360,222 257,250 479 0 50,000 0 10,240 (9)
Chairman and 1993 350,016 - 756 0 150,000 0 9,957(10)
Chief Executive 1992 337,764 129,605 - 0 60,000 0 -
Officer
William D.Henderson 1994 283,762 173,700 1,257 0 45,000 0 9,228 (9)
President and Chief 1993 275,712 - 34,876(8) 0 50,000 0 8,670(10)
Operating Officer 1992 269,112 70,701 - 0 25,000 0 -
Thomas C. DeFazio 1994 205,833 126,000 2,075 0 45,000 0 7,923 (9)
Executive Vice 1993 200,000 - 1,541 0 80,000 0 7,484(10)
President and Chief 1992 192,500 63,480 - 0 25,000 0 -
Financial Officer
John R. Noblitt(7) 1994 144,283 161,920(12) - 0 15,000 0 4,329 (9)
President of SCM 1993 140,200 - - 0 25,000 0 4,364(10)
Office Supplies, 1992 136,850 79,157 - 0 10,000 0 -
Inc. ("OSI")
Manfred J. Eckhardt 1994 122,000 55,575 - 0 9,000 0 4,015(9)
Vice President, 1993 117,500 - - 0 25,000 0 4,329(10)
Treasurer and 1992 114,950 27,971 - 0 8,000 0 -
Assistant Secretary
<FN>
(1) Amounts shown include compensation deferred under the Company s Retirement Savings and
Investment Plan ("RSIP").
(2) None of the executive officers, except for Mr. Henderson during the fiscal year ended 1993
("Fiscal 1993"), received perquisites or other personal benefits, securities or property that
exceeded the lesser of $50,000 or 10 percent of such officer s salary and bonus.
(3) Other Annual Compensation and All Other Compensation are required to be reported for Fiscal
1993 and Fiscal 1994 only.
(4) No restricted stock awards have been made since shortly after the closing of the Offerings.
At that time, restricted shares were awarded to certain key executives pursuant to the
Supplemental Performance Plan ("SPP"), which plan thereupon terminated. Of the five
executives named in the Summary Compensation Table only Mr. Thompson was awarded restricted
shares under the SPP. As of the end of Fiscal 1994, Mr. Thompson owned 197,880 restricted
shares.
(5) The Company does not grant Stock Appreciation Rights ("SARs").
(6) The Company has no long-term incentive plans.
(7) Following the sale of OSI by the Company on July 5, 1994, Mr. Noblitt ceased to be employed by
the Company.
(8) Amount shown includes $28,601 paid by the Company for Mr. Henderson s club initiation fees.
(9) Includes matching contributions by the Company under the RSIP for Messrs. Thompson, Henderson,
DeFazio, Noblitt and Eckhardt of $4,500, $4,704, $4,647, $4,329 and $3,660, respectively.
Includes term life insurance premium payments by the Company for Messrs. Thompson, Henderson,
DeFazio, Noblitt and Eckhardt of $5,740, $4,524, $3,276, $0 and $355, respectively.
(10) Includes matching contributions by the Company under the RSIP for Messrs. Thompson, Henderson,
DeFazio, Noblitt and Eckhardt of $4,497, $4,364, $4,364, $4,364 and $3,993, respectively.
Includes term life insurance premium payments by the Company for Messrs. Thompson, Henderson,
DeFazio, Noblitt and Eckhardt of $5,460, $4,306, $3,120, $0 and $336, respectively.
(11) Amounts shown indicate the annual bonus earned by the executive officers under the Company's
Bonus Plan (as hereinafter defined) in the fiscal years shown. The Company pays such bonus
amounts to the executive officers in the subsequent fiscal year.
(12) Includes $88,320 paid by the Company under the Bonus Plan (as hereinafter defined) and $73,600
paid by the Company under a retention agreement between Mr. Noblitt and the Company relating
to the sale of OSI.
</TABLE>
The following table sets forth certain specific information regarding
options granted to the five executive officers named in the Summary
Compensation Table under the Company s 1990 Stock Option Plan, as
amended (the "Stock Option Plan").
OPTION GRANTS IN FISCAL 1994
<TABLE>
<CAPTION>
Number of
Securities
Underlying Percent of Total Exercise
Options Options Granted or Base Grant Date
Granted (1),(2) to Employees in Price (3) Expiration Present Value(5)
Name (#) Fiscal Year (1) ($/Sh) Date (4) ($)
- - ---------------- --------------- ---------------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
G. Lee Thompson 50,000 10.1% 5.75 11/15/03 127,500
William D. Henderson 45,000 9.1% 5.75 11/15/03 114,750
Thomas C. DeFazio 45,000 9.1% 5.75 11/15/03 114,750
John R. Noblitt 15,000 3.0% 5.75 11/15/03 38,250
Manfred J. Eckhardt 9,000 1.8% 5.75 11/15/03 22,950
All Other Employees 330,500(7) 66.9% Various Various 843,785
494,500(7) 100.0% 1,261,985
Number of
Outstanding Shares 30,250,000
Value on 6/30/94
($4.625 Per Share) $139,906,250
Value At $7.177 Per
Share (6) $217,104,250
<FN>
(1) The Company does not grant SARs.
(2) All options granted in fiscal 1994 to the five executive officers named in the Summary
Compensation Table were awarded on November 16, 1993 and will vest on the date three years
from the date of grant or on November 16, 1996.
(3) The exercise price is the fair market value of the Company s Common Stock on the date of
grant.
(4) The options granted expire the day before the tenth anniversary of the date of grant.
(5) The grant date present value, calculated using the Black-Scholes option pricing method, is
based on certain assumptions as to interest rates, stock price volatility and future dividend
yield. There is no assurance that these assumptions will prove to be true in the future. The
actual value, if any, that an executive will realize upon exercise of an option will be the
excess of the stock price over the exercise price.
(6) In order for the named executives to realize the value stated in the "Grant Date Present
Value" column upon the exercise of their options, the price of the Common Stock on the date of
exercise must be $7.177 per share. At that price per share, the aggregate value of all
outstanding shares (30,250,000 shares) would be $217,104,250. On June 30, 1994 when the stock
price was $4.625 per share, the aggregate value of the same number of outstanding shares was
$139,906,250.
(7) Amount shown is net of 34,000 options which the Company granted in Fiscal 1994 but which
lapsed due to termination of employment and retirement.
</TABLE>
The following table sets forth certain information about outstanding
stock options held by the five executive officers named in the Summary
Compensation Table pursuant to the Stock Option Plan. No stock
options have been exercised under the Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Options at Options at Fiscal
on Exercise Value Realized Fiscal Year-End (1) Year-End (1)
Name (#) ($) (#) ($)
Exercisable Unexercisable
- - -------------- -------------- -------------- --------- ------- ------------------
<S> <C> <C> <C> <C> <C>
G. Lee Thompson - - 40,000(2) 260,000 0
William D. Henderson - - 160,000(3) 120,000 0
Thomas C. DeFazio - - 40,000(4) 150,000 0
John R. Noblitt - - 18,000(5) 50,000 0
Manfred J. Eckhardt - - 15,000(6) 42,000 0
<FN>
(1) The Company does not grant SARs.
(2) The options became exercisable on:
January 22, 1993 at an exercise price of $12.50 per share (20,000).
November 13, 1993 at an exercise price of $6.00 per share (20,000).
(3) The options became exercisable on:
July 2, 1993 at an exercise price of $5.625 per share (145,000).
November 13, 1993 at an exercise price of $6.00 per share (15,000).
(4) The options became exercisable on:
April 1, 1994 at an exercise price of $9.25 per share (40,000).
(5) The options became exercisable on:
January 22, 1993 at an exercise price of $12.50 per share (9,000).
November 13, 1993 at an exercise price of $6.00 per share (9,000).
(6) The options became exercisable on:
January 22, 1993 at an exercise price of $12.50 per share (7,500).
November 13, 1993 at an exercise price of $6.00 per share (7,500).
</TABLE>
The table below illustrates the estimated annual benefits upon
retirement under the Smith Corona Corporation Salaried Employees
Retirement Plan (the "Pension Plan") to persons in the specified
compensation and years-of-service classifications. Prior to the sale of
OSI by the Company, Mr. Noblitt participated in the SCM Office Supplies
Salaried Employees Retirement Plan (the "OSI Plan"), a defined benefit
plan which is identical to the Pension Plan. See "Summary Compensation
Table" above.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $ 24,700 $ 32,930 $ 41,170 $ 49,400 $ 49,400
$150,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$175,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$200,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$225,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$250,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$300,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$350,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$400,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$450,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$500,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$600,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
$700,000 $ 30,330 $ 40,430 $ 50,540 $ 60,650 $ 60,650
</TABLE>
The amounts set forth in the table above as estimated benefits are
computed on a straight life annuity basis and include an offset for a
percentage of Social Security benefits. Effective on January 1, 1989, the
amount of compensation taken into account under a qualified plan is limited
(the "Annual Compensation Limitation") under Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the "Code"), subject to a cost-
of-living adjustment announced by the Secretary of the Treasury. The cap
on pension earnings has been limited to $150,000 as of January 1, 1994 due
to the Omnibus Budget Reconciliation Act of 1993. This limit is reflected
in the above chart. The above chart does not, however, reflect any
additional benefits payable pursuant to grandfathering as a result of
changes in the earnings cap. This Annual Compensation Limitation may
reduce future benefit accruals payable to highly compensated individuals
under the Pension Plan.
The total compensation set forth in the Summary Compensation Table
above is, in general, compensation covered by the Pension Plan for those
respective individuals. As of June 30, 1994, Messrs. Thompson, Henderson,
DeFazio and Eckhardt had 11, 4, 4 and 5 years of credited service under the
Pension Plan, respectively, for purposes of calculating annual retirement
benefits under the Pension Plan. As of June 30, 1994, Mr. Noblitt had 19
years of credited service under the OSI Plan for purposes of calculating
annual retirement benefits under that plan.
Summarized below are estimated accrued benefits under the Pension Plan
as of June 30, 1994 for the five executive officers named in the Summary
Compensation Table.
<TABLE>
<S> <C>
G. Lee Thompson $ 45,000
William D. Henderson $ 12,700
Thomas C. DeFazio $ 9,800
John R. Noblitt $ 49,800
Manfred J. Eckhardt $ 9,500
</TABLE>
These benefits represent the annual benefit payable at normal
retirement age. Unlike the pension plan table, these benefits include the
grandfathered portion of the benefit attributable to the prior pay cap.
Smith Corona has decided to use the transitional method under the Omnibus
Budget Reconciliation Act of 1933 which produces the largest possible
benefit under the Pension Plan.
Supplemental Executive Retirement Plan
Certain executive officers of the Company participate in the Smith
Corona Supplemental Executive Retirement Plan (the "SERP") which provides
additional retirement benefits in excess of the maximum allowable under
plans qualified under the Code. As of November 19, 1992, all executive
officers of the Company participated in the SERP. The SERP provides for
payment of 100% of participant s retirement benefit upon retirement from
the Company at age 62, and permits earlier retirement, with a reduced
benefit, in certain cases, but only if approved by the Plan Administrator.
The amount of the retirement benefit payable under the SERP at age 62 is
equal to the difference between (i) a percentage (based on years of
credited service (maximum 30 years) with the Company) of the executive s
Average Final Compensation (as defined below), less an offset for the
primary Social Security benefit, and (ii) the sum of amounts payable under
the Pension Plan. Average Final Compensation is defined as the greater
of the executive s average earnings (excluding Company payments or awards
made under the RSIP, SPP or Pension Plan, as such terms are described
herein, or the stock option plan of Hanson, and any income from other
benefits) (x) in any three highest paid years of the last ten calendar
years of employment or (y) during the last 36 months of employment.
Executives with at least 5 and less than 10 years of credited service
receive 12.5% of Average Final Compensation plus 2.5% for each year over 5
years; those with at least 10 but less than 20 years of credited service
receive 25% of Average Final Compensation, plus 1.5% for each year over 10
years; those with at least 20 but less than 30 years, receive 40% of
Average Final Compensation, plus 1% for each year over 20 years; and those
with 30 years or more receive 50% of Average Final Compensation.
Notwithstanding the early retirement provisions described in the
previous paragraph, if a Change of Control shall occur, any executive with
fewer than 5 years of credited service would receive 2.5% of Average Final
Compensation for each year of credited service. "Change of Control" is
defined as (1) a reorganization, consolidation or merger of the Company
with or into another entity, (2) a sale, transfer or lease of substantially
all of the Company s property or (3) the acquisition by an entity or group
not affiliated with Hanson or the Company, of 20% or more of the
outstanding shares of Common Stock of the Company, unless Hanson also owns
20% or more of such shares on and after such acquisition.
The table below illustrates the estimated annual benefits upon
retirement pursuant to the SERP to persons in the specified compensation
and years-of-service classifications.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Average Final
Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $ 12,500 $ 12,500 $ 9,380 $ 6,250 $ 6,250
$150,000 $ 15,000 $ 15,000 $ 11,250 $ 7,500 $ 7,500
$175,000 $ 23,120 $ 25,000 $ 22,500 $ 20,000 $ 20,000
$200,000 $ 31,250 $ 35,000 $ 33,750 $ 32,500 $ 32,500
$225,000 $ 39,380 $ 45,000 $ 45,000 $ 45,000 $ 45,000
$250,000 $ 47,500 $ 55,000 $ 56,250 $ 57,500 $ 57,500
$300,000 $ 63,750 $ 75,000 $ 78,750 $ 82,500 $ 82,500
$350,000 $ 80,000 $ 95,000 $101,250 $107,500 $107,500
$400,000 $ 96,250 $115,000 $123,750 $132,500 $132,500
$450,000 $112,500 $135,000 $146,250 $157,500 $157,500
$500,000 $128,750 $155,000 $168,750 $182,500 $182,500
$600,000 $161,250 $195,000 $213,750 $232,500 $232,500
$700,000 $193,750 $235,000 $258,750 $282,500 $282,500
</TABLE>
The total compensation set forth in the Summary Compensation Table
above is, in general, compensation covered by the SERP. The amounts set
forth on the table above are computed on a straight life annuity basis and
include offsets for the primary Social Security benefit and for the amount
payable under the Pension Plan.
Under the SERP, the Plan Administrator (as defined in the SERP) may
grant up to 5 years age and up to 5 years credited service to a
participant. In July of 1990, the Plan Administrator granted Mr. Thompson
3 years adjusted credited service and 3 years adjusted credited age.
As of June 30, 1994, the five executive officers named in the Summary
Compensation Table had the credited age and credited service set forth
below:
<TABLE>
<CAPTION>
Name Credited Age Credited Service
<S> <C> <C>
G. Lee Thompson 64 14
William D. Henderson 48 4
Thomas C. DeFazio 53 4
John R. Noblitt 58 19
Manfred J. Eckhardt 66 5
</TABLE>
Supplemental Pension Benefit
On November 16, 1992, the Compensation and Benefits Committee
authorized the Company to enter into agreements with Messrs. Henderson and
DeFazio pursuant to which the Company agreed to pay supplemental retirement
benefits to these two officers. The Company also agreed on August 30, 1989
to pay supplemental retirement benefits to Mr. Eckhardt. In Mr.
Henderson s case, his supplemental pension benefit will be equal to (a) the
amount that would be payable to Mr. Henderson under the Pension Plan based
on credited service with Hanson and the Company, minus (b) the amount
payable to Mr. Henderson under the Pension Plan based on his credited
service at the Company, minus (c) the amount payable to Mr. Henderson under
Hanson s pension plan. Mr. DeFazio would receive a supplemental pension
benefit equal to (a) the amount that would be payable to Mr. DeFazio under
the Pension Plan based on his credited service with SCM and the Company,
minus (b) the amount that would be payable to Mr. DeFazio under the Pension
Plan based on his credited service at the Company, minus (c) the amount
payable to Mr. DeFazio under the SCM Corporation Salaried Retirement Plan.
Mr. Eckhardt would receive a supplemental pension benefit equal to (a) the
amount that would be payable to Mr. Eckhardt under the Pension Plan based
on his credited service with SCM and the Company, minus (b) the amount that
would be payable to Mr. Eckhardt under the Pension Plan based on his
credited service at the Company, minus (c) the amount payable to Mr.
Eckhardt under the SCM Corporation Salaried Retirement Plan.
John F. Bendik, President and Chief Executive Officer of Histacount,
has also been given a supplemental pension benefit similar to those
described above. No other officers have received this benefit.
Employment Agreements
On May 23, 1990, the Company entered into an employment agreement with
Mr. Henderson providing that he would serve as President and Chief
Operating Officer of the Company from July 1, 1990 through June 30, 1992.
This agreement has been extended through June 30, 1995. The agreement
provides that Mr. Henderson is to be paid an initial annual base salary of
$250,000 and such additional compensation as may be provided under the
Company s benefit plans including the SERP, which provides additional
retirement benefits in excess of the maximum allowable under plans
qualified under the Code. If Mr. Henderson s employment is terminated by
the Company for reasons other than cause, or if he terminates his
employment for good reason (as defined in the agreement), he will continue
to receive his base salary at the rate then in effect for the longer period
of (a) the remainder of the term of the agreement or (b) 24 months. This
continuation of salary is not applicable if Mr. Henderson obtains
employment or enters into any personal service arrangement with a
competitor of the Company. If Mr. Henderson s employment is terminated
following a Change-in-Control (as defined in the agreement), the
continuation of salary would be for a term of 2.9 years.
On January 23, 1991, the Company entered into an employment agreement
with Mr. DeFazio providing that he would serve as Executive Vice President
and Chief Financial Officer of the Company from April 1, 1991 through June
30, 1993. This agreement has been extended through June 30, 1995. The
agreement provides that Mr. DeFazio is to be paid an initial annual base
salary of $185,000 and such additional compensation as may be provided
under the Company s benefit plans, including the SERP. If Mr. DeFazio s
employment is terminated by the Company for reasons other than cause, he
will continue to receive his base salary at the rate then in effect for a
period of 24 months. This continuation of salary is not applicable if Mr.
DeFazio obtains employment or enters into any personal service arrangement
with a competitor of the Company. If Mr. DeFazio s employment is
terminated following a Change-in-Control (as defined in the agreement), the
continuation of salary would be for a term of 2.9 years.
On August 30, 1989, the Company entered into an employment agreement
with Mr. Eckhardt providing that he would serve as Vice President and
Treasurer of the Company. Mr. Eckhardt s employment agreement has no
expiration date. The agreement provides that Mr. Eckhardt is to be paid an
initial annual base salary of $102,000 and such additional compensation as
may be provided under the Company s benefit plans, including the SERP. If
Mr. Eckhardt s employment is terminated by the Company for reasons other
than cause, he will continue to receive his base salary at the rate then in
effect for a period of 12 months.
Severance Agreements
Messrs. Thompson and Noblitt have entered into severance agreements
with the Company. The severance agreements provide for the continued
regular payment of an amount equal to the executive s annual rate of base
pay in effect on the date of cessation of employment for a period of two
years, or, in Mr. Thompson s case, 2.99 years, following the involuntary
termination (as defined in the severance agreement) of an executive
officer. Mr. Thompson s severance agreement has no expiration date. The
severance agreement of Mr. Noblitt was to expire on June 30, 1993; it was
amended to extend the expiration date to June 30, 1995. The severance
agreements provide for the lump sum payment of all accrued vacation time in
the current year, Pension Plan credit only for service attributable to the
severance period allotted under the Company s Corporate Policy on
Termination Allowance for Company salaried employees generally,
continuation of participation in the Company s medical and life insurance
programs during the period that the executive officer is receiving
severance payments, and outplacement assistance at the Company s expense up
to $10,000, or, in Mr. Thompson s case, $25,000. Upon Mr. Noblitt's
termination of employment with the Company as a result of the sale of OSI
by the Company on July 5, 1994, Mr. Noblitt received severance benefits
pursuant to the terms of his severance agreement with the Company.
Certain other officers and employees of the Company have entered into
similar severance agreements with terms of either one or two years. The
Company believes that these agreements are immaterial in both amount and
significance.
Compensation Committee Interlocks and Insider Participation
During the period from July 1, 1991 to June 30, 1992 ("Fiscal 1992"),
the Company retained Hartland & Co. to provide certain pension consulting
services. Francis Lucier, who, until November 1993, was both a director of
the Company and a member of the Company's Compensation and Benefits
Committee, is the Chairman of the Board and 20% stockholder of Hartland &
Co. Hartland & Co. receives a fee for its services equal to (a) .10% on
the first $50 million of pension plan assets and (b) .05% on pension plan
assets in excess of $50 million. Fees paid to Hartland & Co. by the
Company equaled approximately $28,875 in Fiscal 1994.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors of
the Company is comprised of directors who are not and have not been
employees of the Company. The Committee is responsible for reviewing and
approving all matters related to executive compensation and reviewing the
structure of long-term incentive plans and approving grants to executives
under such plans.
The Company adheres to a policy of blending several components of
executive compensation in order to attract and retain top employees, reward
its executives for performance that results in profits to the Company, and
motivate management to continue to optimize value for the Company s
shareholders. The three aspects of each executive s compensation are:
- base salary,
- short-term incentive compensation based on the Company s annual
performance, and
- stock option grants to reward successful long-range planning.
Base Salary. In 1993, the Company engaged a consultant to perform a
study of its executive officers base salaries as compared with those of
other durable manufacturing companies. The study revealed that the
Company s executive officers salaries ranged from 19% below average market
value to 15% above. Based on the findings of this study, as well as
ongoing research performed by the Company, the Company believes that the
base salaries paid to its executives compare favorably overall with those
paid to executives of similar companies.
Increases in base salary are considered annually and reflect the
Company s profitability and return on capital employed, the individual
executive s salary level as compared with those of similar executives of
the Company s competitors, and the individual executive s level of
responsibility and performance. Executive performance is measured using a
management by objectives system. Salary increases for executives other
than the Chief Executive Officer are recommended to the Committee by the
Chief Executive Officer.
Short-Term Incentive Compensation. The Company maintains a short-term
incentive compensation plan ("Bonus Plan"), pursuant to which management
establishes graduated performance targets for the Company and its two major
subsidiaries. At each level of performance target reached, a portion of
the bonus amount is paid to top management pursuant to a schedule of
payments established at the beginning of the fiscal year. Typically,
payments under the Bonus Plan are tied to levels of operating income
generated and return on capital employed by the Company and its two major
subsidiaries during the fiscal year. In Fiscal 1994, the payments under
the Bonus Plan to certain employees were also tied to other factors,
including gross margin, inventory control, research and development costs
and manufacturing performance. Performance levels are established in
coordination with the Company s operating plan for the fiscal year.
All of the named executives, including Mr. Thompson, participate in
the Bonus Plan. Payments have been made during Fiscal 1995 under the Bonus
Plan with respect to Fiscal 1994.
Stock Option Grants. In order to encourage executives to make
decisions for the Company based on long-range planning, and to stress the
importance of maximizing shareholder returns through strong performance,
the Company instituted the Stock Option Plan in 1990. The Company has made
a number of option grants to date under the Stock Option Plan. See
Executive Compensation--Option Grants in Fiscal 1994 above. Option
grants are made by the Company based upon each recipient s performance,
impact on profitability, level of responsibility and salary level. The
exercise price of any option granted under the Stock Option Plan may not be
less than the fair market value of the Company s stock on the date of
grant. Options may not be exercised until at least three years after they
were granted, thereby creating a personal incentive for executives to
maximize shareholder gains over the long-term.
Compensation of the Chief Executive Officer
Mr. Thompson s compensation, like that of the other executive officers
of the Company, is comprised of base salary, bonus, and stock options. The
Committee s policy with respect to determining Mr. Thompson s base salary
is determined using the same criteria used for determining the base salary
of other executives of the Company. Mr. Thompson s base salary was
increased in Fiscal 1994. The criteria for bonus payments made and stock
options granted to Mr. Thompson are the same as those described above for
other executives. Mr. Thompson received a payment with respect to the
Bonus Plan for Fiscal 1994 in Fiscal 1995.
Richard R. West, Chairman
John G. Raos
Craig C. Sergeant
Robert J. Kammerer
COMPANY PERFORMANCE
The chart below compares the Company s Common Stock performance with
the performance of the Standard & Poor s 500 Composite Stock Price Index
("S&P 500 Index") and a Peer Group Index by valuing the changes in common
stock prices from July 28, 1989 plus reinvested dividends and
distributions. The Securities and Exchange Commission requires that a
company create a peer group index with which to compare its own stock
performance (if a published peer group index does not exist) by selecting a
grouping of companies that includes companies whose lines of business are
similar to its own. Because the Company is the only U.S. manufacturer of
portable electronic typewriters and personal word processors whose stock is
publicly traded, no grouping of companies could closely mirror the
Company s business. A Peer Group was, however, created for comparison
purposes by selecting several companies which had similar sales levels and
market capitalization. Those companies selected (A.T. Cross, General
Binding, NU-Kote Holdings, Royal Appliance, Toro Co., and Zenith
Electronics) are manufacturers and sellers of consumer durable products
with like channels of distribution and compete for the same discretionary
consumer dollars. Some of the peer group companies were selected to
parallel the Company s office supply business which makes up 6.3% of the
Company s net sales. The chart assumes $100 was invested on July 28, 1989
in each of the Company s Common Stock, the S&P 500 Index and the Peer Group
Index and reflects reinvestment of dividends and distributions on a
quarterly basis and market capitalization weighting.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURNS
DESCRIPTION OF GRAPH: The graph is a line graph plotting the yearly change
in cumulative total returns over a five-year period from July 28, 1989 to
June 30, 1994. The graph compares the value of $100 invested on July 28,
1989 in the Company's Common Stock, the Standard & Poor's 500 Composite
Price Index ("S&P 500 Index") and a Peer Group Index. The Y axis on the
graph represents $20 increments, within the range of $0 to $180, and the X
axis represents the five-year period from July 28, 1989 to June 30, 1994.
The chart below reflects the data points used for the graph.
<TABLE>
<CAPTION>
Value at Smith Corona Peer Group S&P 500
June 30, Common Stock Index Index
<S> <C> <C> <C>
1989 $100.00 $100.00 $100.00
1990 31.29 78.41 116.49
1991 40.69 68.34 125.10
1992 41.12 74.84 141.88
1993 28.12 58.18 161.22
1994 26.38 62.46 162.84
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of June 30, 1994, certain
information regarding beneficial ownership of Common Stock by (a) each
person known by the Company to own beneficially more than 5% of its
outstanding Common Stock, (b) each director and nominee for director of
the Company, (c) the Chief Executive Officer and the four other most highly
compensated executive officers named in the Summary Compensation Table, and
(d) all directors and executive officers as a group. Unless otherwise
indicated, each person has sole investment and voting power with respect to
the shares indicated.
<TABLE>
<CAPTION>
Percent of
Common
Number of Stock
Name of Beneficial Owner Shares Outstanding
<S> <C> <C>
Hanson PLC(1) 14,480,000 47.9%
G. Lee Thompson 200,096 *
David H. Clarke 1,000 *
John G. Raos 6,077(2) *
William D. Henderson 3,008(2) *
Thomas C. DeFazio 7,590 *
George H. Hempstead, III 950 *
Craig C. Sergeant 0 *
Robert Van Buren 2,500 *
Richard R. West 1,000 *
Robert J. Kammerer 500 *
Manfred J. Eckhardt 2,697 *
John R. Noblitt 4,202 *
All directors and
executive officers
as a group (20 persons) 400,256(3) 1.3%
<FN>
* Less than one percent of the outstanding shares of Common Stock.
(1)Record ownership of the shares indicated is in the name of Hanson
Natural Resources Company. The business address of Hanson PLC is 1
Grosvenor Place, London SWlX 7JH, England. The business address of
Hanson Natural Resources Company is c/o Hanson Industries, 99 Wood
Avenue South, Iselin, New Jersey 08830.
(2)Includes shares reported by Messrs. Raos and Henderson as held
directly by, or in the name of, spouses or children as to which
beneficial ownership may have been disclaimed.
(3)Of this total, beneficial ownership of 1,677 shares may have been
disclaimed. See note (2) above.
</TABLE>
PROPOSAL 2.
APPROVAL OF AMENDMENT TO THE
SMITH CORONA CORPORATION 1990 STOCK OPTION PLAN
The Board of Directors has adopted, effective June 1, 1994 and subject
to stockholder approval, an amendment to the Stock Option Plan. Approval
of the amendment by the stockholders at the Meeting will require the
affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote.
Description of the Proposed Amendment
The proposed amendment would amend Sections 2.4, 2.7(i), 2.12 and
8.7(d) of the Stock Option Plan to provide that, upon the sale of a
subsidiary of the Company, option holders of the Company s stock options
who are employees of such subsidiary shall be treated as if they incurred a
Special Employment Termination as defined under the Stock Option Plan.
Description of the Stock Option Plan
The following summary is qualified in its entirety by reference to the
Stock Option Plan, as amended, a copy of which is attached hereto as
Exhibit A.
Purpose and Principal Features of the Stock Option Plan
Effective December 1, 1989, the Board of Directors, with stockholder
approval, adopted the Stock Option Plan. The purpose of the Stock Option
Plan is to assist the Company in retaining valued employees by offering
them a stake in the Company s success and to promote decision-making at the
executive level that leads to the enhancement of stockholder value.
Upon the adoption of the Stock Option Plan, the Board of Directors
reserved an aggregate of 900,000 shares of Common Stock for issuance upon
the exercise of options granted under the Stock Option Plan. On each of
November 19, 1991 and November 16, 1993, the stockholders approved
amendments to the Stock Option Plan to permit an additional 1,500,000
shares to be reserved by the Board for issuance pursuant to the Stock
Option Plan upon exercise of options granted, bringing to 3,900,000 the
total number of shares reserved for such purpose. Shares so delivered
under the Stock Option Plan may be either treasury stock or originally
issued shares. If any option granted under the Stock Option Plan covering
such shares either terminates or expires without having been exercised in
full, other options under the Stock Option Plan may be granted covering the
shares as to which the unexercised option relates.
The Stock Option Plan is administered by the Compensation and Benefits
Committee of the Board of Directors (the "Committee"), which is composed of
no fewer than three (3) directors of the Company, each of whom at the time
of appointment is not, and within a one-year period prior thereto shall not
have been, eligible to receive options under the Stock Option Plan or
eligible to be selected as a participant under any discretionary plan of
the Company or any of its affiliates entitling such director to acquire
stock of the Company or stock options or stock appreciation rights covering
or relating to stock of the Company.
Employees eligible for options to be granted under the Stock Option
Plan are limited to officers and other key employees of the Company
(including persons who are also directors) and other employees of
corresponding level employed by subsidiaries of the Company, including but
not limited to, OSI (prior to the sale of OSI by the Company on July 5,
1994) and Histacount. An eligible employee may receive one or more option
grants under the Stock Option Plan. As of June 30, 1994, approximately 72
employees or retirees of the Company and its subsidiaries participated in
the Stock Option Plan.
It is not possible at the present time to determine which officers or
key employees may be granted options in the future under the Stock Option
Plan although it is anticipated that the number of participating employees
will continue to be approximately 72. The number of shares of Common Stock
covered by options, the date of grant and the identity of eligible
employees to receive such grants under the Stock Option Plan shall be
determined by the Committee. It is expected that such determinations will
be made primarily on the basis of the individual s present and potential
contribution to the management of the Company s business.
The type of options which may be granted under the Stock Option Plan
are non-statutory stock options ("nonqualified options"). All such options
shall be evidenced by stock option agreements between the Company and the
option recipient embodying all the terms and conditions of the option
grant, all as the Committee may determine; provided, however, that (A) all
options must be granted within 10 years from the earlier of (i) the Stock
Option Plan effective date, or (ii) approval of the Stock Option Plan by
the stockholders of the Company, (B) the option exercise price per share of
Common Stock shall be no less than the fair market value of such share as
determined by the average of the high and low sale prices of such shares on
the New York Stock Exchange (as reported on the composite transaction
table) on the date of grant, (C) no option shall be transferable or
assignable otherwise than by will or the laws of descent and distribution
and, during the lifetime of the recipient, such option shall be exercisable
only by such recipient, (D) upon the death of the recipient of an option
grant, the person to whom the rights shall have passed by will or by the
laws of descent and distribution may exercise any such option only in
accordance with the provisions of Section 8.7(a) of the Stock Option Plan,
(E) no option shall be exercisable after the Expiration Date as set forth
in Section 2.6 of the Stock Option Plan, (F) an option shall not be
exercisable, in whole or in part, until the recipient shall have completed
3 years of service (including any approved leave of absence) with the
Company or its subsidiary, as the case may be, after the date of grant
except where the recipient terminates service because of death, disability
(as defined in the Stock Option Plan), retirement (as defined in the Stock
Option Plan) or Special Employment Termination (as defined in the Stock
Option Plan), (G) only whole shares of Common Stock shall be issuable upon
exercise of an option, with fractional shares, if any, being paid in cash,
(H) upon exercise of an option, full payment for the shares covered by such
option exercise shall be made either (i) in cash, (ii) in shares of Common
Stock already owned by the holder having a total fair market value at
exercise (as determined under the Stock Option Plan) equal to the total
option price, or (iii) a combination of cash and such shares having a fair
market value equal to the total option price, and (I) the date of exercise
of all options shall be the date on which written notice of exercise
addressed to the Company at its main office is either hand delivered,
telecopied or mailed first class postage prepaid; provided, however, that
the Company shall not be obligated to deliver any shares of Common Stock
covered by an option exercise (or check for any fractional shares) until
full payment of the total option price shall have been made and there shall
have been compliance with such laws or regulations as the Company may deem
applicable, including without limitation, tax withholding laws.
The exercise price under each option granted under the Stock Option
Plan will remain constant during the term of the option grant (subject to
adjustment in certain events set forth in Section 10.1 of the Stock Option
Plan) regardless of changes in market value of Common Stock. The closing
price of the Common Stock on September 12, 1994, as reported in the
composite transaction table covering transactions of New York Stock
Exchange-listed securities, was $4.875 per share.
Miscellaneous
The Stock Option Plan may be amended or terminated by the Board of
Directors, but any amendment requiring approval of stockholders under Rule
16b-3 of the Securities and Exchange Commission shall be approved by
stockholders in accordance with applicable state law, and any amendment
adversely affecting any outstanding option granted under the Stock Option
Plan shall be consented to in writing by the holder thereof.
This is the first and only plan adopted by the Company which permits
the grant to employees of stock options covering Common Stock. The Company
does not maintain any other plan permitting the grant to any employee
either of stock appreciation rights relating to Common Stock or stock
awards covering such Common Stock.
The Stock Option Plan will terminate on November 30, 1999, unless
sooner terminated by action of the Board of Directors.
Taxes
For federal income tax purposes, the grant of a stock option at or
above fair market value on the date of grant does not create income for the
recipient or a deduction for the Company. If the holder of an option
granted under the Stock Option Plan upon exercise of such option is not
subject to the trading restrictions ("Trading Restrictions") imposed under
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
excess of the fair market value of the stock acquired over the option price
is (a) taxable to the employee as personal service income and (b)
deductible by the Company. The tax basis of the stock acquired by such
individual is its fair market value at the date of exercise. Under current
law and as the Stock Option Plan is currently structured, at the time of
exercise of an option the holder will not be subject to the Trading
Restrictions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS APPROVE THE
AMENDMENT TO THE STOCK OPTION PLAN.
PROPOSAL 3.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
has appointed the firm of Deloitte & Touche LLP to continue as independent
certified public accountants of the Company for the fiscal year ending June
30, 1995. Deloitte & Touche LLP, or its predecessor, has served as
independent certified public accountants for the Company and its
predecessor, SCM, since 1958. Services performed by Deloitte & Touche LLP
for the Company during the past fiscal year have included the examination
of the financial statements of the Company for inclusion in the Annual
Report on Form 10-K filed by the Company with the Securities and Exchange
Commission and consultations on matters related to accounting, taxes and
financial reporting.
A representative of Deloitte & Touche LLP is expected to be present
at the Meeting, will be afforded an opportunity to make a statement if he
or she desires to do so, and will be available to respond to appropriate
questions raised at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED
On December 1, 1992, Alfred N. Scallon, Vice President, International
Operations, sold shares of Common Stock. Mr. Scallon is subject to the
requirements of Section 16(a) and therefore was required to report the sale
of these securities to the Commission by January 10, 1993. However Mr.
Scallon did not report the sale until September 1, 1994. Mr. Scallon's
report is considered to be a late filing under Section 16(a).
Based solely on its review of the copies furnished to the Company of
the reports required to be filed with the Commission by Section 16(a), or
written representations that no reports were required, the Company
believes, other than as set forth in the preceding paragraph, that all of
its executive officers and directors complied with the Section 16(a)
requirements in Fiscal 1994.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at the Company s annual meetings, consistent with
regulations adopted by the Securities and Exchange Commission. Proposals
to be considered for inclusion in the Proxy Statement for the 1995 Annual
Meeting must be received by the Company at its principal executive offices,
not later than June 3, 1995. Proposals should be directed to the attention
of the Secretary, Smith Corona Corporation, 65 Locust Avenue, New Canaan,
Connecticut 06840.
By Order of the Board of Directors.
/s/ G. William Sisley
G. WILLIAM SISLEY
Secretary
October 10, 1994
New Canaan, Connecticut
<PAGE>
EXHIBIT A
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
ADOPTED EFFECTIVE AS OF
DECEMBER 1, 1989
AMENDED THROUGH NOVEMBER 15, 1994
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE OF PLAN. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishment of Plan. . . .. . . . . . . . . . . . . . . . . 1
1.2 Plan Purpose . . . . . . . .. . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 "Board" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 "Change of Control". . . . . . . . . . . . . . . . . . . . . 1
2.3 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 "Date of Grant". . . . . . . . . . . . . . . . . . . . . . . 1
2.6 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . 1
2.7 "Expiration Date". . . . . . . . . . . . . . . . . . . . . . 1
2.8 "Option" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 "Optionee" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 "Retirement" . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 "Share" or "Shares". . . . . . . . . . . . . . . . . . . . . 2
2.12 "Special Employment Termination" .. . . . . . . . . . . . . . 2
2.13 "Terminated" or "Termination for Cause". .. . . . . . . . . . 2
ARTICLE III RIGHTS TO BE GRANTED . . . . . . . . . . . .. . . . . . . . 3
3.1 Non qualified Options. . . . . . . . . . . . .. . . . . . . . 3
ARTICLE IV STOCK SUBJECT TO PLAN . . . . .. . . . . . . . . . . . . . . 3
4.1 Shares Available . . . . . . . .. . . . . . . . . . . . . . . 3
4.2 Stock Subject to Expired Options. . . . . . . . . . . . . . . 3
ARTICLE V ADMINISTRATION OF PLAN . . . . . . . . . . . . .. . . . . . . 3
5.1 Administration . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VI GRANT OF RIGHTS . . . . . . . . . . . . . . . .. . . . . . . 3
6.1 Option Grants. . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VII ELIGIBILITY. . . . . . . . . . . . . . . . . .. . . . . . . 3
7.1 Eligibility. . . . . . . . . . . . . . . . . . .. . . . . . . 3
ARTICLE VIII OPTION AGREEMENTS AND TERMS . . . . . . . . . . . . . . . 4
8.1 Time of Grant. . . . . . . . . . . . . . . . . . . . . . . . 4
8.2 Option Price . . . . . . . . . . . . . . . . . . . . . . . . 4
8.3 Restrictions on Transferability. . . . . . . . . . . . . . . 4
8.4 Payment Upon Exercise of Options . . . . . . . . . . . . . . 4
8.5 Issuance of Certificate Upon Exercise of Options . . . .. . . 4
8.6 Fractional Shares. . . . . . . . . . . . . . . . . . . .. . . 4
8.7 Vesting of Options . . . . . . . . . . . . . . . . . . .. . . 5
8.8 Expiration of Options. . . . . . . . . . . . . . . . . .. . . 5
8.9 Date of Exercise . . . . . . . . . . . . . . . . . . . .. . . 5
8.10 Multiple Grants of Options . . . . . . . . . . . . . . .. . . 5
ARTICLE IX RIGHTS AS SHAREHOLDERS. . . . . . . . . . . . . . . . . . . 5
9.1 Shareholder Rights . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE X CHANGES IN CAPITALIZATION, MERGERS, DISPOSITIONS AND
CERTAIN OTHER TRANSACTIONS . . . . . . . . .. . . . . . . . . 6
10.1 Changes in Capitalization. . . . . . . . . .. . . . . . . . . 6
10.2 Other Transactions . . . . . . . . . . . . .. . . . . . . . . 6
ARTICLE XI PLAN NOT TO AFFECT EMPLOYMENT . . . . . . . . .. . . . . . . 6
11.1 Employment . . . . . . . . . . . . . . . . . . .. . . . . . . 6
ARTICLE XII INTERPRETATION . . . . . . .. . . . . . . . . . . . . . . . 6
12.1 In General . . . . . . . . . .. . . . . . . . . . . . . . . . 6
12.2 Securities Laws. . . . . . . .. . . . . . . . . . . . . . . . 6
ARTICLE XIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 7
13.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE XIV EFFECTIVE DATE AND TERM OF PLAN. . . . . . . . . . . . . . 7
14.1 Effective Date and Term. . . . . . . . . . . . . . . . . . . 7
ARTICLE XV GENERAL . . . . . . . . . . . .. . . . . . . . . . . . . . . 7
15.1 Applicable Law . . . . . . . . .. . . . . . . . . . . . . . . 7
SMITH CORONA CORPORATION
1990 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
1.1 Establishment of Plan. The Company (as herein defined) hereby
establishes a stock option plan, as set forth herein, which shall be known
as the Smith Corona Corporation 1990 Stock Option Plan (hereinafter the
"Plan").
1.2 Plan Purpose. The purpose of the Plan is to assist the Company
in retaining valued employees by offering them a stake in the Company s
success and to promote decision-making at the executive level that leads to
the enhancement of shareholders value.
ARTICLE II
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below unless otherwise expressly provided. Any masculine
terminology shall be deemed to refer either to a male or a female, and the
definition of any terms in the singular shall also include the plural,
whichever is appropriate in the context.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Change of Control" means (1) a reorganization, consolidation or
merger of the Company with or into another entity, (2) a sale, transfer or
lease of substantially all of the Company s property or (3) the acquisition
by an entity or group not affiliated with Hanson PLC or the Company, of 20%
or more of the outstanding Shares unless Hanson PLC also owns 20% or more
of the outstanding Shares on and after such acquisition.
2.3 "Committee" means the committee described in Article V.
2.4 "Company" means Smith Corona Corporation and, where the context
requires, a subsidiary of Smith Corona Corporation.
2.5 "Date of Grant" means the date on which an Option is granted.
2.6 "Disability" means disability as defined in the Company s
Long-Term Disability Plan.
2.7 "Expiration Date" means the earliest of the following:
(i) if Optionee shall cease to be employed by the Company for
any reason other than death, Disability, Retirement or Termination for
Cause, thirty (30) days after the date of termination of employment;
or
(ii) if Optionee shall cease to be employed by the Company
because of Disability, death or as a result of a Special Employment
Termination, the date twelve(12) months after the date Optionee
terminates employment because of Disability, death or a Special
Employment Termination; or
(iii) if Optionee shall cease to be employed by the Company
because of Retirement, the later of twelve (12) months from the date
of Retirement, or three (3) years and six (6) months from the Date of
Grant; or
(iv) if the Optionee is Terminated for Cause, the date of
termination of employment; or
(v) the day before the tenth anniversary of the Date of Grant.
2.8 "Option" means any stock option granted under the Plan and
described in Article III.
2.9 "Optionee" means a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
2.10 "Retirement" means retirement on or after the earliest date
permitted under the terms of the Company s pension plans as amended from
time to time.
2.11 "Share" or "Shares" means a share or shares of Common Stock,
$.01 par value, of the Company.
2.12 "Special Employment Termination" means either (A) termination of
employment within eighteen (18) months after a Change of Control either (i)
by action of the Company other than a Termination for Cause or (ii)
voluntarily by the Optionee on account of (a) reduction in the Optionee s
base salary in effect immediately prior to the Change of Control, (b)
discontinuance of any bonus or other compensation plan (including, without
limitation, the Company s Supplemental Executive Retirement Plan), any
stock-related plan (including, without limitation, the Plan), life
insurance plan, health plan, disability plan, vacation plan, severance plan
or similar benefit plan (as the same existed immediately prior to the
Change of Control) in which the Optionee participated or was eligible to
participate immediately prior to the Change of Control unless the Optionee
is simultaneously accorded an equivalent benefit or opportunity or any
amendment to any such plan which adversely affects the Optionee s
participation in, eligibility for, or materially reduces benefits under,
any such plan, unless the Optionee is simultaneously accorded an equivalent
benefit or opportunity, (c) the Optionee s demotion or a material reduction
in the Optionee s duties or responsibilities from those which existed
immediately prior to the Change of Control other than as a natural
consequence, after the Change of Control, of the Company no longer being
subject to the requirements of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or the Company being a
subsidiary or division of the acquiror or (d) the assignment of new duties
requiring a relocation of the Optionee s domicile; or (B) with respect to
any Optionee employed by a subsidiary of the Company, a sale or other
disposition of such subsidiary to an entity or group not affiliated with
Hanson PLC or the Company irrespective of whether the Optionee continues in
the employment of the acquiror.
2.13 "Terminated" or "Termination for Cause" means a termination on
account of (i) a material breach by Optionee of his or her obligations to
the Company, (ii) employment by another firm while in the Company s employ,
(iii) theft, embezzlement, bribery or act of comparable dishonesty or
disloyalty or breach of trust against the Company, (iv) the conviction of
the Optionee for a felony (or a plea of nolo contendere thereto), or (v)
the willful engaging by the Optionee in conduct materially injurious to the
Company.
ARTICLE III
RIGHTS TO BE GRANTED
3.1 Non-qualified Options. Rights that may be granted under the Plan
are non-qualified stock options, which give the Optionee the right to
purchase a specified number of Shares for a price established by the
Committee for a specified period of time all as set forth in the Option
Agreement.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Shares Available. A total of 3,900,000 Shares in the aggregate
will be reserved for and may be issued pursuant to the Plan upon exercise
of Options. The Shares so delivered may, at the option of the Company, be
either treasury Shares or Shares originally issued for such purposes.
4.2 Stock Subject to Expired Options. If an Option covering Shares
terminates or expires without having been exercised in whole or in part,
other Options may be granted covering the Shares as to which the
unexercised Option relates.
ARTICLE V
ADMINISTRATION OF PLAN
5.1 Administration. The Plan shall be administered by the
Compensation and Benefits Committee of the Board ("Committee"), which shall
be composed of not less than three (3) directors of the Company appointed
by the Board, none of whom shall be eligible (or shall have been eligible
within one (1) year prior to the date of his appointment) to be granted
Options under the Plan or to be selected as a participant under any other
discretionary plan of the Company or any of its affiliates entitling him or
her to acquire stock, stock options or stock appreciation rights of the
Company.
ARTICLE VI
GRANT OF RIGHTS
6.1 Option Grants. The Committee may grant Options to eligible
employees of the Company in such number and with such frequency as the
Committee determines in its sole discretion.
ARTICLE VII
ELIGIBILITY
7.1 Eligibility. Eligible employees to whom Options may be granted
shall be officers and other key employees of the Company, including persons
who are also officers and other key employees of a subsidiary of the
Company.
ARTICLE VIII
OPTION AGREEMENTS AND TERMS
All Options shall be evidenced by Option Agreements that shall be
executed on behalf of the Company and by the Optionee to whom such Options
are granted. The terms of each Option Agreement shall be determined from
time to time by the Committee, consistent, however, with the following:
8.1 Time of Grant. All Options shall be granted within ten (10)
years from the earlier of (a) the effective date of adoption of the Plan by
the Board or (b) approval of the Plan by the shareholders of the Company.
8.2 Option Price. The option price per Share shall be determined by
the Committee but shall be equal to or greater than the fair market value
of a Share. For the purposes of this Plan, the fair market value on any
date shall be the average of the high and low sale prices of a Share as
quoted on the New York Stock Exchange.
8.3 Restrictions on Transferability. No Option shall be transferable
or assignable otherwise than by will or the laws of descent and
distribution and, during the lifetime of the Optionee, an Option shall be
exercisable only by such Optionee. Upon the death of an Optionee, the
person to whom the rights shall have passed by will or by the laws of
descent and distribution may exercise any Options only in accordance with
the provisions of Section 8.7(a).
8.4 Payment Upon Exercise of Options. Full payment for Shares
purchased upon the exercise of an Option shall be made in cash or in Shares
already owned by the Optionee having a total fair market value upon such
exercise, as determined by the Committee, equal to the option price or a
combination of cash and Shares having a total fair market value, as so
determined, equal to the option price.
8.5 Issuance of Certificate Upon Exercise of Options. Upon payment
of the option price and satisfaction of the requirements of the Option
Agreement, a certificate for the number of whole Shares and a check for the
fair market value on the date of exercise of any fractional Share to which
the Optionee is entitled shall be delivered to such Optionee by the
Company; provided, however, that the Optionee has remitted to the Company
an amount determined by the Company, necessary to satisfy applicable
federal, state or local tax withholding requirements. The Company shall
not be obligated to deliver any certificates for Shares until there has
been such compliance with such laws or regulations as the Company may deem
applicable including tax withholding requirements under federal, state, or
local laws. The Company shall use its best efforts to effect such
compliance.
8.6 Fractional Shares. Only whole Shares shall be issuable upon
exercise of Options. Any right to a fractional Share shall be satisfied in
cash.
8.7 Vesting of Options. An Option shall not be exercisable, in whole
or in part, until the completion of three (3) years of service with the
Company (including any approved leave of absence) following the Date of
Grant, except, however,
(a) In the event an Optionee ceases to be employed by the
Company by reason of his death, any Option held by such Optionee shall
be exercisable for a period of up to twelve (12) months from the date
of death by the person to whom the rights of the Optionee shall have
passed by will or by the laws of descent and distribution.
(b) In the event an Optionee ceases to be employed by the
Company by reason of his Disability, an Option held by such Optionee
shall be exercisable for a period of up to twelve (12) months from the
date of such termination.
(c) In the event an Optionee ceases to be employed by the
Company by reason of his Retirement, an Option held by such Optionee
shall be exercisable for a period not to exceed the later of,
(1) twelve (12) months from the date of retirement, or
(2) three (3) years and six (6) months from the Date
of Grant.
(d) In the event an Optionee incurs a Special Employment
Termination, any Option held by such Optionee shall be exercisable for
a period of up to twelve (12) months from the effective date of such
Special Employment Termination.
8.8 Expiration of Options. No Option granted hereunder shall be
exercisable after the Expiration Date.
8.9 Date of Exercise. The date of exercise of an Option shall be the
date on which written notice of exercise, addressed to the Company at its
main office, is hand delivered, telecopied, or mailed first class postage
prepaid; provided, however, that the Company shall not be obligated to
deliver any certificates for Shares pursuant to the exercise of an Option
until the Optionee shall have made payment in full of the option price for
such Shares in accordance with Section 8.5 and applicable income
withholding taxes.
8.10 Multiple Grants of Options. The grant, exercise, termination or
expiration of any Option shall have no effect upon any other Option held by
the same Optionee.
ARTICLE IX
RIGHTS AS SHAREHOLDERS
9.1 Shareholder Rights. An Optionee shall not have any right as a
shareholder with respect to any Shares subject to his Options until the
date of the issuance to him of a stock certificate for such Shares.
ARTICLE X
CHANGES IN CAPITALIZATION, MERGERS,
DISPOSITIONS AND CERTAIN OTHER TRANSACTIONS
10.1 Changes in Capitalization. In the event of a stock dividend,
stock split, recapitalization, subdivision, issuance of rights, or other
similar corporate change, the Board or Committee shall make full
anti-dilution adjustments in the aggregate number of Shares that may be
covered by Options issued pursuant to the Plan and the number of Shares
subject to, and the option price of, each then outstanding Option.
10.2 Other Transactions. If during the term of any Option, the
Company shall be merged into or consolidated with or otherwise combined
with or acquired by another person or entity, or there is a divisive
reorganization or a liquidation or partial liquidation of the Company, the
Company may take such action as the Board shall determine to be reasonable
under the circumstances in order to permit Optionees to realize the value
of rights granted to them under the Plan.
ARTICLE XI
PLAN NOT TO AFFECT EMPLOYMENT
11.1 Employment. Neither the Plan nor any Option shall confer upon
any employee of the Company any right to continue in the employment of the
Company.
ARTICLE XII
INTERPRETATION
12.1 In General. The Committee shall have the power to interpret the
Plan and to make and amend rules for putting it into effect and
administering it. All interpretations and determinations of the Committee
shall be final, conclusive and binding on all interested parties. Options
granted under the Plan shall be non-qualified options, which shall
constitute property subject to federal income tax pursuant to the
provisions of Section 83 of the Internal Revenue Code of 1986, as amended,
and the Plan shall qualify for the exemption available under Rule 16b-3 (or
any similar rule) of the Securities and Exchange Commission. The
provisions of the Plan shall be interpreted and applied insofar as possible
to carry out such intent.
12.2 Securities Laws. The Committee shall have the power to make
each grant under the Plan subject to such conditions as it deems necessary
or appropriate to comply with the then existing requirements of the
Securities Act of 1933 or the Securities Exchange Act of 1934, and any
applicable state securities laws.
ARTICLE XIII
AMENDMENTS
13.1 Amendments. The Plan may be amended by the Board, but any
amendment that requires the approval of the shareholders of the Company in
order to maintain the exemption available under Rule 16b-3 (or any similar
rule) of the Securities and Exchange Commission, shall require the approval
of the holders of such portion of the shares of the capital stock of the
Company present and entitled to vote on such amendment as is required by
applicable state law and the terms of the Company s By-laws, as then in
effect, to make the amendment effective. No outstanding Option shall be
adversely affected by any amendment without the written consent of the
Optionee or other person then entitled to exercise such Option.
ARTICLE XIV
EFFECTIVE DATE AND TERM OF PLAN
14.1 Effective Date and Term. The Plan shall become effective on the
date determined when the Plan is adopted by the Board, and shall expire no
later than ten (10) years from such date, unless sooner terminated by the
Board. The Board shall submit the Plan to the shareholders of the Company
for their approval following the adoption of the Plan by the Board. Any
Option granted before the approval of the Plan by the Company s
shareholders shall be expressly conditioned upon, and shall not be
exercisable until, such approval. If such shareholder approval is not
received before one (1) year from the effective date of adoption, the Board
shall have the right to terminate the Plan, in which case all Options
granted under the Plan shall expire.
ARTICLE XV
GENERAL
15.1 Applicable Law. The issuance of Shares on the exercise of an
Option shall be subject to all of the applicable requirements of the
Delaware General Corporation Law and other applicable laws, including
federal or state securities laws, and all Shares issued under the Plan
shall be subject to the terms and restrictions contained in the By-laws of
the Company, as amended from time to time. The interpretation or
construction of the Plan shall be governed by the laws of the State of New
York, without bringing into effect the principles of conflicts of law.
APPENDIX
1.) Omitted Graphic Material:
Performance Graph in the Company Performance Section of the Proxy
Statement.
FORM OF PROXY CARD
PROXY
SMITH CORONA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
65 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
The undersigned hereby appoints Thomas C. DeFazio and G. William
Sisley, and each of them, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote,
as designated on the reverse side, all the shares of common stock
of Smith Corona Corporation held of record by the undersigned on
September 23, 1994, at the annual meeting of the Stockholders to
be held on November 15, 1994, or any adjournment thereof.
(Continued and to be signed on other side)
<PAGE>
This proxy when properly executed will be voted in the manner
directed herein by the undersigned Stockholder. If no direction
is made, this proxy will be voted for the nominees listed in
Proposal 1, for Proposals 2 and 3 and in the proxies' discretion
with respect to Proposal 4.
1. ELECTION OF DIRECTORS (Instructions: To withhold authority to
vote for any individual nominee, strike
a line through the nominee's name in the
list below)
FOR all nominees WITHHOLD William D.Henderson David H.Clarke
listed (except as AUTHORITY John G.Raos Craig C.Sergeant
marked to the to vote for Thomas C.DeFazio G. Lee Thompson
contrary to the all nominees George H.Hempstead,III RobertJ.Kammerer
right) to the right Robert Van Buren Richard R. West
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2. PROPOSAL TO APPROVE AN 3. PROPOSAL TO APPROVE THE
AMENDMENT TO THE COMPANY'S APPOINTMENT OF DELOITTE & TOUCHE
1990 STOCK OPTION PLAN LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
___ ___ ___ ___ ___ ___
4.IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
Please sign exactly as name appears at left. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or the
authorized officer. If a partnership, please sign in partnership name
by authorized person.
DATED: ___________________________________
__________________________________________
Signature
__________________________________________
Signature, if held jointly
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL
RECORD YOUR VOTES"
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
