SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
BEI ELECTRONICS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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BEI ELECTRONICS, INC.
ONE POST STREET, SUITE 2500
SAN FRANCISCO, CA 94104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 6, 1997
TO THE STOCKHOLDERS OF BEI ELECTRONICS, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of BEI
Electronics, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, March 6, 1997 at 1:30 p.m. local time, at BEI Sensors & Systems
Company, Inc., Duncan Electronics Division, 15771 Red Hill Avenue, Tustin, CA
92680, for the following purposes:
1. To elect three directors to hold office until the Annual Meeting of
Stockholders to be held in the year 2000.
2. To approve the Company's 1987 Incentive Stock Option Plan, as amended,
to change the name to the Amended 1987 Stock Option Plan, to provide
that both incentive stock options and nonstatutory stock options may be
granted under such plan, to provide that consultants to the Company may
be granted stock options, to extend the term of the plan to January 15,
2007, to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 100,000 shares, to add
provisions with respect to Section 162(m) of the Internal Revenue Code
of 1986, as amended, and to add provisions with respect to Section 16
of the Securities Exchange Act of 1934, as amended.
3. To approve the Company's 1992 Restricted Stock Plan, as amended, to
extend the term of such plan to January 15, 2007, to increase the
aggregate number of shares of Common Stock authorized for issuance
under such plan by 350,000 shares, to add provisions with respect to
Section 162(m) of the Internal Revenue Code of 1986, as amended, and to
add provisions with respect to Section 16 of the Securities Exchange
Act of 1934, as amended.
4. To ratify the selection of Ernst & Young LLP as independent public
accountants of the Company for its fiscal year ending September 27,
1997.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 14, 1997
as the record date for the determination of stockholders entitled to notice
of and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ ROBERT R. CORR
Robert R. Corr
Corporate Secretary
San Francisco, California
January 27, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT ATTENDANCE AT THE MEETING WILL NOT BY ITSELF
REVOKE A PROXY. FURTHERMORE, IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN
FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
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BEI ELECTRONICS, INC.
ONE POST STREET, SUITE 2500
SAN FRANCISCO, CA 94104
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 6, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of BEI
Electronics, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on March 6, 1997, at 1:30 p.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at BEI Sensors & Systems
Company, Inc., Duncan Electronics Division, 15771 Red Hill Avenue, Tustin, CA
92680. The Company intends to mail this proxy statement and accompanying
proxy card on or about January 27, 1997 to all stockholders entitled to vote
at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy
statement, the proxy and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees
for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on January
14, 1997 will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on January 14, 1997, the Company had outstanding and
entitled to vote 6,982,509 shares of Common Stock. Each holder of record of
Common Stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining whether a matter
has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, One
Post Street, Suite 2500, San Francisco, California 94104, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Please note, however,
that attendance at the meeting will not by itself
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revoke a proxy. Furthermore, if the shares are held of record by a broker,
bank or other nominee and the stockholder wishes to vote at the meeting, the
stockholder must obtain from the record holder a proxy issued in the
stockholder's name.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company
not later than September 29, 1997 in order to be included in the proxy
statement and proxy relating to that annual meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and By-Laws provide
that the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board
may be filled by the affirmative vote of the holders of a majority of the
voting power of the then outstanding shares of Common Stock or by the
affirmative vote of a majority of the remaining directors. A director elected
by the Board to fill a vacancy (including a vacancy created by an increase in
the authorized number of directors on the Board) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and has qualified or
until his earlier death, resignation or removal.
The Board of Directors is presently composed of seven members. There are
three directors in the class whose term of office expires in 1997. The three
nominees for election to this class, Richard M. Brooks, William G. Howard,
Jr. and Peter G. Paraskos, are directors of the Company who were previously
elected by the stockholders. If elected at the Annual Meeting, each of the
nominees would serve until the 2000 annual meeting and until his successor is
elected and has qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of the two nominees named below. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence,
such shares will be voted for the election of such substitute nominee as the
Board of Directors may propose. Each person nominated for election has agreed
to serve if elected, and the Board of Directors has no reason to believe that
any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2000 ANNUAL
MEETING
RICHARD M. BROOKS
Mr. Brooks, age 68, has been a director of the Company since 1987. He is
currently an independent financial consultant. From 1987 to 1990, Mr. Brooks
served as President of SFA Management Corporation, the managing general
partner of St. Francis Associates, an investment partnership. He currently
serves as a director of Longs Drug Store Corporation, Granite Construction
Incorporated and the Western Farm Credit Bank, a private company. Mr. Brooks
holds a B.S. from Yale University and an M.B.A. from the University of
California, Berkeley.
WILLIAM G. HOWARD, JR.
Dr. Howard, age 55, has been a director of the Company since December
1992. Since 1990, he has been an independent consulting engineer in
microelectronics and technology-based business planning.
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From 1987 to 1990, Dr. Howard served as Senior Fellow of the National Academy
of Engineering and, prior to that time, held various technical and management
positions with Motorola, Inc., most recently as Senior Vice President and
Director of Research and Development. He is a member of the National Academy
of Engineering and a fellow of the Institute of Electrical and Electronics
Engineers and of the American Association for the Advancement of Science. Dr.
Howard also serves as a director of Ramtron International Corporation,
Lockheed Martin Energy Resource Corp., Credence Systems, Inc., VLSI
Technology, Inc., and Xilinx, Inc. Dr. Howard holds a B.E.E. and an M.S. from
Cornell University and a Ph.D. in electrical engineering and computer
sciences from the University of California, Berkeley.
PETER G. PARASKOS
Mr. Paraskos, age 68, has served as a director of the Company since 1990.
He served as a consultant to the Company from October 1, 1995 to September
30, 1996. Prior to that, he served as President and Chief Executive Officer
of the Company from July 1990 until his retirement on September 30, 1995. He
also served as President and Chief Executive Officer of BEI Systron Donner
Company, a wholly-owned subsidiary of the Company, from July 1990 to April
1994, when it was reorganized into BEI Sensors & Systems Company, Inc.
("Sensors & Systems"). Mr. Paraskos joined the Company following the
Company's acquisition of substantially all of the assets of four divisions of
Systron Donner Corporation ("Systron Donner"), a manufacturer of avionics and
aerospace sensors and subsystems. From 1986 to July 1990, Mr. Paraskos served
as President and Chief Executive Officer of Systron Donner and served in
positions as Executive Vice President and Chief Operating Officer and in
general management of Systron Donner from 1983 to 1986. Mr. Paraskos holds
two degrees in engineering from Columbia University and served in the Marine
Corps as an infantry officer, fighter pilot and test pilot. He is a member of
the Board of Nominations of the Aviation Hall of Fame and a life member of
the Society of Experimental Test Pilots.
The three candidates receiving the highest number of affirmative votes
cast at the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING
CHARLES CROCKER
Mr. Crocker, age 57, a founder of the Company, has served as Chairman of
the Board of Directors of the Company since 1974, and has served as President
and Chief Executive Officer of the Company since October 1995. Mr. Crocker
served as President of Crocker Capital Corporation, a Small Business
Investment Company, from 1970 to 1985. He also served as a general partner of
Crocker Associates, a venture capital investment partnership, from 1970 to
1990. He currently serves as a director of Fiduciary Trust Company
International, KeraVision, Inc., Superconductor Technologies Inc. and Pope &
Talbot, Inc. Mr. Crocker holds a B.S. from Stanford University and an M.B.A.
from the University of California, Berkeley.
GEORGE S. BROWN
Mr. Brown, age 75, a founder of the Company, has served as a director of
the Company since 1974. Mr. Brown served as President and Chief Executive
Officer of the Company from 1974 until his retirement from that position in
1990, when he became a consultant to the Company. Prior to co-founding the
Company, Mr. Brown served from 1971 until 1974 as Executive Vice President
and General Manager of Baldwin Electronics, Inc., a subsidiary of D.H.
Baldwin Company and the predecessor of the Company. Mr. Brown holds a
B.S.E.E. from the University of Oklahoma.
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DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
C. JOSEPH GIROIR, JR.
Mr. Giroir, age 57, served as Secretary of the Company from 1974 until
February 1995 and has served as a director of the Company since 1978. He is
currently a member of the law firm of Giroir & Gregory, a Professional
Association, which has rendered services to the Company. From 1965 to 1988,
Mr. Giroir was a member of Rose Law Firm, a Professional Association. Mr.
Giroir holds a B.A. and an L.L.B. from the University of Arkansas and an
L.L.M. from Georgetown University.
GARY D. WRENCH
Mr. Wrench, age 63, has served as Senior Vice President and Chief
Financial Officer of the Company since July 1993 and as a director of the
Company since February 1986. He served as Vice President of the Company from
1985 to July 1993, during which time he also served as President and Chief
Executive Officer of BEI Motion Systems Company, a wholly-owned subsidiary of
the Company which was reorganized into BEI Sensors & Systems Company, Inc. He
served as President of Wrench Consulting Group, an independent consulting
firm, from 1984 to 1985. From 1978 until 1983, Mr. Wrench served as Chief
Operating Officer of Kratos Incorporated, a measurement and control devices
manufacturer. From 1958 through 1978, he held various management positions
with Hughes Aircraft Company. Mr. Wrench holds a B.A. from Pomona College and
an M.B.A. from the University of California, Los Angeles.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 28, 1996, the Board of Directors
held four meetings. The Board has an Audit Committee and a Compensation
Committee, but does not have a Nominating Committee or any committee
performing a similar function.
The Audit Committee meets with the Company's independent accountants at
least annually to review the results of the annual audit and to discuss the
financial statements; recommends to the Board the independent accountants to
be retained; receives and considers the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection
with audit and financial controls; and periodically reviews the results of
the Company's internal audit program and responses by management. During
fiscal 1996, the Audit Committee was composed of four directors: Mr. Brooks,
Chairman of the Committee, and Messrs. Paraskos, Howard and Giroir. The Audit
Committee met three times during fiscal 1996.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options and restricted stock to eligible
executives, employees and consultants under the Company's stock option plans
and restricted stock plan, administers the Company's employee stock purchase
plan, stock option plans and restricted stock plan, and otherwise determines
compensation levels and performs such other functions regarding compensation
as the Board may delegate. During fiscal 1996, the Compensation Committee was
composed of three non-employee directors: Mr. Brown, Chairman of the
Committee, and Messrs. Brooks and Giroir. The Compensation Committee met four
times during fiscal 1996.
During fiscal 1996, all directors except Mr. Giroir attended at least 75%
of the aggregate of the meetings of the Board and of the committees on which
he served during the period for which he was a director or committee member.
Mr. Giroir attended one of the four regular meetings of the Board and one of
the three meetings of the Audit Committee and three of the four meetings of
the Compensation Committee.
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PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE
1987 INCENTIVE STOCK OPTION PLAN
The Board adopted the Company's 1987 Incentive Stock Option Plan (the
"Incentive Plan") and 1987 Supplemental Stock Option Plan (the "Supplemental
Plan," and collectively, the "Plans") in November 1987. The Plans were
approved by the stockholders in February 1988.
In December 1989, the Board amended the Incentive Plan to enhance the
flexibility of the Board and the Compensation Committee in granting stock
options to the Company's employees. The amendments increased the aggregate
number of shares authorized for issuance under the Incentive Plan so that the
aggregate number of shares of the Company's Common Stock authorized for
issuance under a common pool for both the Incentive Plan and the Supplemental
Plan may not exceed 1,250,000 shares. In addition, the Board amended the
Incentive Plan to modify the requirements related to stockholder approval of
amendments to the Incentive Plan.
As of January 8, 1997, options (net of canceled or expired options)
covering an aggregate of 876,181 shares of the Company's Common Stock had
been granted under the Incentive and Supplemental Plans, and only 373,819
shares (plus any shares that might in the future be returned to the plans as
a result of cancellations or expirations of options) remained available for
future grant under the Plans.
During the last fiscal year, under the Incentive Plan, the Company granted
options to purchase 5,000 shares at an exercise price of $7.125 per share to
an employee who was not an executive officer. During the last fiscal year,
under the Incentive Plan, the Company did not grant stock options to any
other employees, including Named Executive Officers, or any current
directors. During the last fiscal year, under the Supplemental Plan, the
Company did not grant any stock options.
In January 1997, the Board decided to combine the Incentive Plan and the
Supplemental Plan into one plan. As such, it amended the Incentive Plan as
follows: (i) to change the name to the Amended 1987 Stock Option Plan (the
"Amended Plan"); (ii) to provide that both incentive stock options and
nonstatutory stock options, or options which are not intended to qualify as
incentive stock options, may be granted under the Amended Plan; (iii) to
provide that consultants to the Company may be granted stock options, as they
could under the Supplemental Plan; (iv) to increase the share reserve by
100,000 shares such that the aggregate share reserve under the Amended Plan
equals 1,350,000; (v) to impose a limit on the number of shares which any one
employee may be granted options under the Amended Plan during any one fiscal
year, in accordance with Code Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"); (vi) to extend the term of the Amended Plan to
January 15, 2007, and (vii) to make conforming changes to the Amended Plan in
accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which was amended by the Securities and
Exchange Commission (the "Commission") in May 1996. No further options will
be granted under the Supplemental Plan after the date of the January 1997
amendments.
Section 162(m) denies a deduction to any publicly-held corporation for
certain compensation paid to specified employees in a taxable year to the
extent that the compensation exceeds $1,000,000 for any covered employee. See
"Federal Income Tax Information" below for a discussion of the application of
Section 162(m). To comply with provisions in the Treasury regulations
promulgated under Section 162(m) related to qualifying compensation
attributable to stock options as "performance-based compensation," (as such
term is defined in the regulations), the Amended Plan provides that no
employee may be granted options to purchase more than 250,000 shares of
Common Stock during any one fiscal year. Previously, no such formal
limitation was placed on the number of shares available for option grants to
an employee during a fiscal year. This limitation is not intended to affect
the determination of the Compensation Committee as to the size or frequency
of grants made pursuant to the Amended Plan.
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Proposal 2 requests that the stockholders approve the January 1997
amendments to the Amended Plan. The affirmative vote of the holders of a
majority of the shares represented and entitled to vote at the Annual Meeting
will be required to approve this Proposal 2.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Amended Plan are outlined below.
GENERAL
Options granted under the Amended Plan are intended to be incentive stock
options which qualify as "incentive stock options" as defined by Section 422
of the Code or "nonstatutory stock options," options which do not qualify as
such. See "Federal Income Tax Information" for a discussion of the tax
treatment of incentive stock options and nonstatutory stock options.
PURPOSE
The purpose of the Amended Plan is to provide a means by which selected
employees of the Company and its affiliates and consultants to the Company
can be given the opportunity to acquire Common Stock of the Company, to
assist the Company in retaining the services of such persons, to secure the
services of such persons and to provide incentives for such persons to exert
maximum efforts for the success of the Company. Unless the context indicates
otherwise, an "affiliate" of the Company refers to any "parent" or
"subsidiary" of the Company as those terms are defined in Section 424 of the
Code.
ADMINISTRATION
The Board is authorized to delegate, and has delegated, administration of
the Amended Plan to a committee of the Board (the "Compensation Committee").
The Compensation Committee is currently comprised of three members of the
Board, and has the power to construe and interpret the Amended Plan and,
subject to the provisions of the Amended Plan, to determine the persons to
whom and the dates on which options will be granted, the number of shares to
be subject to each option, whether the option is designated an incentive
stock option or nonstatutory stock option, the time or times during the term
of each option within which all or a portion of such option may be exercised,
the exercise price, the type of consideration and other terms of the option.
The Board may at any time revest in itself administration of the Amended
Plan. As used herein with respect to the Amended Plan, the "Board" refers to
Board of Directors, or as applicable, the Compensation Committee.
ELIGIBILITY
Options may be granted under the Amended Plan to directors, key employees
(including officers) or consultants of the Company or any affiliates of the
Company.
No person may be granted options during any one fiscal year for more than
250,000 shares of the Company's Common Stock.
No incentive stock option may be granted under the Amended Plan to any
person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of the Company or
any affiliate of the Company, unless the option exercise price is at least
110% of the fair market value of the stock subject to the option on the date
of grant, and the term of the option does not exceed five years from the date
of grant. In addition, the aggregate fair market value, determined at the
time of grant, of the shares of Common Stock with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year (under the Amended Plan and all other such plans of the Company
and its affiliates) may not exceed $100,000.
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STOCK SUBJECT TO THE AMENDED PLAN
An aggregate of 1,350,000 shares are reserved for issuance under the
Amended Plan, including the 100,000 shares of this Proposal 2. Stock subject
to the Amended Plan may be unissued shares or reacquired shares, bought on
the market or otherwise. If options or rights granted under the Amended Plan
expire, lapse or otherwise terminate without being exercised, the Common
Stock not purchased under such options or rights again becomes available for
issuance under the Amended Plan.
TERMS OF OPTIONS
The following is a description of the option provisions permitted by the
Amended Plan. Individual option grants in any given case may be more
restrictive as to any or all of the provisions permitted by the Amended Plan
as described below.
EXERCISE PRICE; PAYMENT. The exercise price for any option may not be
less than the fair market value of the stock subject to the option on the
date of grant for options granted under the Amended Plan, and in some
cases (see "Eligibility" above), options under the Amended Plan may not be
granted at an exercise price of less than 110% of such fair market value.
As of January 14, 1997, the closing price of the Company's Common Stock as
reported on the Nasdaq National Market System was $10.50 per share.
The exercise price of options granted under the Amended Plan must be
paid either (i) in cash at the time the option is exercised or (ii) at the
discretion of the Board, (A) by delivery to the Company of other Common
Stock of the Company, (B) pursuant to a deferred payment arrangement
(which may include the use of other Common Stock of the Company), or (C)
in any other form of legal consideration that may be acceptable to the
Board. In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts
stated to be interest under the deferred payment arrangement.
OPTION EXERCISE. Shares covered by currently outstanding options under
the Amended Plan typically vest over three years. Shares covered by
options granted in the future may be subject to different vesting terms,
determined by the Board in its sole discretion. The Amended Plan does not
set forth any minimum number of shares with respect to which an option may
be exercised; however, individual option agreements currently outstanding
typically provide that an option may be exercised with respect to a
minimum of one hundred (100) shares, with the exception of (i) an
installment subject to exercise which consists of fewer than 100 shares,
or (ii) the last exercise, as to which no minimum number is required.
TERM. Options granted under the Amended Plan may have a maximum term of
ten years, except that in certain cases (see "Eligibility" above) the
maximum term is five years. Under the Amended Plan, an option will
terminate three months after the optionee ceases to render services to the
Company or an affiliate, unless (i) the termination of employment is due
to such person's permanent and total disability (as defined in the Code),
in which case the option may, but need not, provide that it may be
exercised at any time within one year of such termination; or (ii) the
optionee dies while employed by the Company or an affiliate, or within
three months after termination of such employment, in which case the
option may, but need not, provide that it may be exercised (to the extent
the option was exercisable at the time of the optionee's death) by the
person or persons to whom the rights of such option pass by will or the
laws of descent or distribution within eighteen months of the optionee's
death; or (iii) the option by its terms specifically provides otherwise.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Amended Plan or subject
to any option granted under the Amended Plan (through merger, consolidation,
reorganization, recapitalization, stock
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dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Amended Plan and options outstanding thereunder
will be appropriately adjusted as to the class and the maximum number of
shares subject to such plan and the class, number of shares and price per
share of stock subject to such outstanding options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Amended Plan provides that, in the event of a dissolution or
liquidation of the Company, specified type of merger or other corporate
reorganization, to the extent permitted by law, (i) any surviving corporation
will be required either to assume options outstanding under the Amended Plan
or to substitute similar options for those outstanding under such Plan, or
(ii) the time during which such options may be exercised shall be accelerated
and the options terminated if not exercised prior to such event, or (iii)
such outstanding options will continue in full force and effect.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Amended Plan without stockholder
approval at any time. Unless sooner terminated, the Amended Plan will
terminate on January 15, 2007. The Board may also amend the Amended Plan at
any time. However, no amendment of the Amended Plan will be effective unless
approved by the stockholders of the Company within twelve months before or
after its adoption by the Board if the amendment would require stockholder
approval in order to comply with Rule 16b-3, Section 422 of the Code, or any
Nasdaq or securities exchange requirements. Subject to the foregoing, the
Board may amend the Amended Plan in any respect the Board deems necessary or
advisable to provide optionees with the maximum benefits available under the
Code or to bring the Amended Plan or the incentive stock options granted
thereunder into compliance with the Code.
RESTRICTIONS ON TRANSFER
Under the Amended Plan, an option may not be transferred by the optionee
otherwise than by will or by the laws of descent and distribution. During the
lifetime of an optionee, an option may be exercised only by the optionee.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive Stock options are intended to be
eligible for the favorable federal income tax treatment accorded "incentive
stock options" under Section 422 of the Code. Incentive stock options
generally have the following tax consequences:
There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
optionee's alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option is granted
and more than one year from the date on which the shares are transferred to
the optionee upon exercise of the option, any gain or loss on a disposition
of such stock will be long-term capital gain or loss. Generally, if the
optionee disposes of the stock before the expiration of either of these
holding periods (a "disqualifying disposition"), at the time of disposition
the optionee will realize taxable ordinary income equal to the lesser of (i)
the excess of the stock's fair market value on the date of exercise over the
exercise price, or (ii) the optionee's actual gain, if any, on the purchase
and sale. The optionee's additional gain or any loss upon the disqualifying
disposition will be a capital gain or loss which will be long-term or
short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will be entitled (subject to the
requirement of reasonableness, Section 162(m) of the Code
8
<PAGE>
and the satisfaction of a withholding obligation) to a corresponding business
expense deduction in the tax year in which the disposition occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options, or options not
intended to qualify as incentive stock options, generally have the following
federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, normally the optionee will recognize taxable ordinary income
equal to the excess of the stock's fair market value on the date of exercise
over the exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages an amount based on the ordinary
income recognized. Generally, the Company will be entitled to a business
expense deduction equal to the taxable ordinary income realized by the
optionee. Upon disposition of the stock, the optionee will recognize a
capital gain or loss equal to the difference between the selling price and
the sum of the amount paid for such stock plus any amount recognized as
ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. In 1993, the Code was amended
to add Section 162(m), which denies a deduction to any publicly-held
corporation for compensation paid to certain employees in a taxable year to
the extent that compensation exceeds $1,000,000 for a covered employee. It is
possible that compensation attributable to stock options, when combined with
all other types of compensation received by a covered employee from the
Company, may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with proposed Treasury regulations issued under Section 162(m),
compensation attributable to stock options will qualify as performance-based
compensation, provided that the option is granted by a compensation committee
comprised solely of "outside directors" and either: (i) the option plan
contains a per-employee limitation on the number of shares for which options
may be granted during a specified period, the per-employee limitation is
approved by the stockholders, and the exercise price of the option is no less
than the fair market value of the stock on the date of grant; or (ii) the
option is granted (or exercisable) only upon the achievement (as certified in
writing by the compensation committee) of an objective performance goal
established in writing by the compensation committee while the outcome is
substantially uncertain, and the option is approved by stockholders.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE 1992 RESTRICTED STOCK PLAN
In February 1992, the Board adopted the 1992 Restricted Stock Plan (the
"Restricted Stock Plan"), and reserved for issuance 350,000 shares of the
Company's Common Stock under such plan. The stockholders approved the
Restricted Stock Plan at the 1993 Annual Meeting.
As of January 8, 1997, 334,250 shares of the Company's Common Stock had
been issued pursuant to awards of restricted stock granted under the
Restricted Stock Plan and only 15,750 shares (plus any shares that might in
the future be returned to the Restricted Stock Plan as a result of
termination or forfeiture) remained available for future issuance under the
Restricted Stock Plan. During the last fiscal year, under the Restricted
Stock Plan, the Company issued to all current executive officers as a group,
23,500 shares of restricted stock; and to all employees (excluding executive
officers) as a group, 54,000 shares of restricted stock; and to all current
directors who are not officers as a group, 10,000 shares of restricted stock.
9
<PAGE>
In January 1997, the Board amended the Restricted Stock Plan to (i)
increase the share reserve to an aggregate of 700,000 shares; (ii) impose a
limit on the number of shares which any one participant may receive under the
Restricted Stock Plan during any one fiscal year, in accordance with Code
Section 162(m); (iii) extend the term of the Restricted Stock Plan to January
15, 2007, and (iv) make conforming changes to the Restricted Stock Plan in
accordance with Rule 16b-3.
To comply with requirements set forth in the Treasury regulations
promulgated under Code Section 162(m), the Restricted Stock Plan was amended
to provide that no employee may be granted rights to purchase more than
75,000 shares of Common Stock during any one fiscal year. Previously, no such
formal limitation was placed on the number of shares available for purchase
to an individual during a fiscal year. This limitation is not intended to
affect the determination of the Compensation Committee as to the size or
frequency of awards made pursuant to the Restricted Stock Plan. See "Federal
Income Tax Information" in Proposal 2 above for a discussion of Section
162(m).
Stockholders are requested in this Proposal 3 to approve the January 1997
amendments to the Restricted Stock Plan. The affirmative vote of the holders
of a majority of the shares represented and entitled to vote at the Annual
Meeting will be required to approve the amendments to the Restricted Stock
Plan.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
The essential features of the Restricted Stock Plan are outlined below.
PURPOSE
The purpose of the Restricted Stock Plan is to promote the long-term
growth and profitability of the Company and the value of its Common Stock by
providing certain key employees of the Company with increased incentive to
contribute to the success of the Company and enabling the Company to attract,
retain and reward persons of exceptional skill for positions of substantial
responsibility.
ADMINISTRATION
The Restricted Stock Plan is administered by the Compensation Committee.
The Compensation Committee has the power to construe and interpret the
Restricted Stock Plan and, subject to the provisions of the Restricted Stock
Plan, to determine the persons to whom and the dates on which restricted
stock will be granted, the number of shares to be granted, the provisions of
each grant of restricted stock (which need not be identical), including the
conditions and restrictions, if any, to which such shares will be subject,
and the time or times when a person is permitted to purchase or receive stock
pursuant to a grant made under the Restricted Stock Plan. The Board may at
any time revest in itself administration of the Incentive Plan. As used
herein with respect to the Incentive Plan, the "Board" refers to Board of
Directors, or as applicable, the Compensation Committee.
ELIGIBILITY
Participation in the Restricted Stock Plan is limited to officers and
other employees of the Company or its subsidiaries (including directors who
are officers or employees of the Company) who the Committee has determined
are in a position to make substantial contributions to the success of the
Company. Directors who are not officers or employees of the Company or any
subsidiary of the Company are not eligible to participate in the Restricted
Stock Plan. The Committee may require that a participant in the Restricted
Stock Plan surrender for cancellation any or all outstanding stock options
held by such participant in order to receive a grant of restricted stock
under the Restricted Stock Plan.
No one individual may be granted during any one fiscal year more than
75,000 shares of the Company's Common Stock under the Restricted Stock Plan.
10
<PAGE>
STOCK SUBJECT TO THE RESTRICTED STOCK PLAN
Subject to certain adjustments, the stock that may be issued pursuant to
awards of restricted stock granted under the Restricted Stock Plan may not
exceed in the aggregate 700,000 shares of Company's Common Stock. This number
includes the 350,000 share reserve increase under this Proposal 3. Shares
issued pursuant to the Restricted Stock Plan may be authorized but unissued
shares, shares held in the treasury of the Company or shares purchased on the
open market. In the event that any grant of shares of restricted stock
expires or otherwise terminates or is forfeited, such shares of Common Stock
again become available for issuance under the Restricted Stock Plan.
TERMS OF GRANTS OF RESTRICTED STOCK
GENERAL. The Committee has the authority to grant restricted stock awards
under the Restricted Stock Plan in the form of stock bonuses or through the
sale of restricted stock. The terms of the stock bonus or restricted stock
purchase agreements may change from time to time, and may vary among
participants; however, each stock bonus or restricted stock purchase
agreement will include the substance of the following provisions:
CONSIDERATION. The purchase price under each stock purchase agreement
will be an amount determined by the Committee and designated in the stock
purchase agreement. Stock bonuses may, at the discretion of the Committee,
be awarded in consideration of past services actually rendered to or for
the benefit of the Company. The purchase price for restricted stock
acquired pursuant to a stock purchase agreement will be paid either in
cash at the time of purchase (or, at the discretion of the Committee,
within 60 days thereafter) or in any other form of legal consideration
that may be acceptable to the Committee.
RESTRICTIONS. Each stock bonus or restricted stock purchase agreement
will specify the restrictions applicable to the restricted stock award
made thereunder, the duration of such restrictions and the time or times
at which such restrictions lapse with respect to all or a specified number
of shares that are subject to such stock bonus or restricted stock
purchase agreement. Unless otherwise determined by the Committee, the
restrictions on awards of restricted stock will typically lapse with
respect to 15% of the total number of shares per year on the first,
second, third, fourth and fifth anniversaries of the date of grant and
with respect to the remaining shares subject to such award on the sixth
anniversary of the date of grant. The Committee may accelerate the rate at
which such restrictions lapse in the event certain stockholder value
improvement goals established in the stock bonus or restricted stock
purchase agreement have been met. Shares of restricted stock granted
pursuant to a stock bonus or restricted stock purchase agreement will be
held in escrow by the Company during the period such shares are subject to
restriction. During such period, the participant will have all of the
rights of a stockholder of the Company with respect to such shares of
restricted stock unless otherwise determined by the Committee.
NONTRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement are not assignable by any participant under the
Restricted Stock Plan otherwise than by will or the laws of descent and
distribution during the period when such stock remains subject to
restrictions under the terms of the applicable stock bonus or restricted
stock purchase agreement.
TERMINATION. Under the Restricted Stock Plan, in the event of
termination of a participant's employment (other than termination of
employment resulting from such participant's death, retirement or
permanent and total disability, as defined in the Company's long-term
disability insurance plan or the Code) during the period in which such
shares remain subject to restriction under the stock bonus or restricted
stock purchase agreement pursuant to which such shares were awarded, all
shares as to which restrictions have not lapsed will be forfeited and
subject to repurchase by the Company at the price per share paid by the
participant for such shares. In the event of termination of a
participant's employment as a result of such participant's death,
retirement or permanent and total disability during such period, all
remaining restrictions will lapse.
11
<PAGE>
ADJUSTMENT PROVISIONS
If any change is made in the stock subject to the Restricted Stock Plan or
subject to any award granted under the plan (through reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation, spin-off or any other change in the
corporation structure of the Company or the Common Stock), the Committee will
make appropriate adjustments in the classes and maximum number of shares
subject to the plan and the classes, number of shares and price per share of
stock subject to outstanding awards granted under the Restricted Stock Plan.
Subject to certain limitations, in the event of a Change in Control of the
Company, to the extent permitted by applicable law, any remaining
restrictions on all shares of restricted stock granted under the Restricted
Stock Plan will immediately terminate, and the Committee, as constituted
before such Change of Control, may take any one or more of the following
actions with respect to any outstanding award: (a) provide for the repurchase
of such restricted stock by the Company at the request of the participant at
the fair market value as of the date of such repurchase (which shall be the
closing price of the Common Stock as reported in the Nasdaq National Market
for the date in question, or if no sales of the Common Stock were reported as
of such date, the closing price of the Common Stock on the most recent
preceding day on which sales occurred; (b) make additional grants of
restricted stock under the Restricted Stock Plan as the Committee deems
appropriate to reflect such Change of Control; or (c) cause any new grant of
restricted stock then outstanding or new rights substituted in exchange
therefor to be assumed by the acquiring or surviving corporation upon such
Change in Control. A Change in Control is defined in the Restricted Stock
Plan to include (1) the acquisition of 50% or more of the then outstanding
shares of Common Stock in a transaction or series of transactions by any
entity, person or group of persons other than the Company or its
subsidiaries, (2) a merger, consolidation or sale of all or substantially all
of the assets of the Company, (3) a contested election of directors of the
Company which results in a majority of the members of the Board recommended
for election by the Company not being elected, (4) a change in the
composition of a majority of the Board within a sixty-day period, or (5) any
other event which results in change of voting power sufficient to elect a
majority of the Board.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Restricted Stock Plan without
stockholder approval or ratification at any time or from time to time. Unless
sooner terminated, the Restricted Stock Plan will terminate on January 15,
2007.
The Board may also amend the Restricted Stock Plan at any time or from
time to time. However, no amendment will be effective unless approved by the
stockholders of the Company within twelve months before or after its adoption
by the Board if the amendment would change any provision of the Restricted
Stock Plan in any way if such modification requires stockholder approval in
order to comply with Rule 16b-3 of the Exchange Act or any Nasdaq or
securities exchange requirements. The Compensation Committee may amend or
modify any outstanding grant of restricted stock to the extent that the
Committee would have had the authority to make such grant as so modified or
amended, except that any modification or amendment that would materially
adversely affect any grant previously made under the Restricted Stock Plan
may not be made unless the participant to whom such grant was made consents
in writing to such modification or amendment.
FEDERAL INCOME TAX INFORMATION
Upon acquisition of stock under the Restricted Stock Plan, the recipient
normally will recognize taxable ordinary income equal to the excess of the
stock's fair market value over the purchase price, if any. However, to the
extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
recipient elects to be taxed on receipt of the stock. Generally, with respect
to employees, the Company is required to withhold from regular
12
<PAGE>
wages an amount based on the ordinary income recognized. The Company will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the recipient. Upon disposition of the stock, the
recipient will recognize a capital gain or loss equal to the difference
between the selling price and the sum of the amount paid for such stock plus
any amount recognized as ordinary income upon acquisition (or vesting) of the
stock. Such gain or loss will be long or short-term depending on whether the
stock was held for more than one year from the date ordinary income is
measured. Slightly different rules may apply to persons who acquire stock
subject to forfeiture or who are subject to Section 16(b) of the Exchange
Act.
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending September 27, 1997.
Ernst & Young LLP (including its predecessor, Ernst & Whinney) has audited
the Company's financial statements since 1975. A representative of Ernst &
Young LLP is expected to be present at the Annual Meeting, will have an
opportunity to make a statement if he or she so desires and will be available
to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent public accountants is not required by the Company's
By-Laws or otherwise. However, the Board is submitting the selection of Ernst
& Young LLP to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee or the Board at
its discretion may direct the appointment of a different independent
accounting firm at any time during the year if it determines that such a
change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting will be required to
ratify the selection of Ernst & Young LLP as the Company's independent public
accountants for the fiscal year ending September 27, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 4
13
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of January 8, 1997 by: (i) each director;
(ii) each of the executive officers named in the Summary Compensation Table
and employed by the Company in that capacity on January 8, 1997; (iii) all
executive officers and directors of the Company as a group; and (iv) all
those known by the Company to be beneficial owners of more than five percent
of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
----------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL(2)
- ---------------- ------------- -------------
<S> <C> <C>
Mr. Charles Crocker(3) ............. 1,557,904 22.3%
One Post Street
Suite 2500
San Francisco, CA
Brinson Partners, Inc.(4) ......... 627,100 9.0%
209 S. LaSalle Street
Chicago, IL
Kennedy Capital Management ........ 416,100 6.0%
10821 Olive Boulevard
St. Louis, MO
SoGen International Fund, Inc.(5) . 400,000 5.7%
1221 Avenue of the Americas
8th Floor
New York, NY 10020
Dimensional Fund Advisors,
Inc.(6) .......................... 398,900 5.7%
1299 Ocean Avenue
Penthouse
Santa Monica, CA 90402-1005
Mr. Richard M. Brooks(7) ........... 10,000 *
Mr. George S. Brown(7)(8) .......... 106,752 1.5%
Mr. Robert R. Corr(7) .............. 28,700 *
Mr. C. Joseph Giroir, Jr.(7) ...... 10,000 *
Dr. William G. Howard, Jr(7) ...... 0 *
Dr. Asad M. Madni(7) ............... 60,267 *
Mr. Peter G. Paraskos(7)(9) ....... 96,603 1.4%
Dr. Lawrence A. Wan(7) ............. 39,250 *
Mr. Gary D. Wrench(7)(10) .......... 120,419 1.7%
All executive officers and directors
as a group (10 persons)(11) ...... 2,029,895 28.0%
</TABLE>
- --------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders of the Company and upon certain filings made with
the Commission. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, the
Company believes that each of the stockholders named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned.
(2) Applicable percentages are based on 6,982,509 shares outstanding on
January 8, 1997, adjusted as required by rules promulgated by the
Commission. Outstanding shares do not include 2,530,372 shares held as
Treasury Stock as of January 8, 1997.
14
<PAGE>
(3) Includes 400,000 shares held by Charles Crocker as trustee for his adult
children, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 54,936 shares held in a trust of which Mr. Crocker is
beneficiary and sole trustee. Mr. Crocker, acting alone, has the power
to vote and dispose of the shares in each of these trusts.
(4) Represents shares held by Brinson Partners, Inc. ("Partners") which has
the sole power to vote and dispose of the shares held by it and shares
held by Brinson Trust Company ("Trust") which has the sole power to vote
and dispose of the shares held by it. Trust is a wholly-owned subsidiary
of Partners which is a wholly-owned subsidiary of Brinson Holdings, Inc.
("Holdings"), which is a wholly-owned subsidiary of SBC Holding (USA),
Inc. ("SBCUSA"), a wholly-owned subsidiary of Swiss Bank Corporation
("SBC"). SBC, SBCUSA and Holdings may be deemed to share the power to
vote and dispose of all shares held by Partners and Trust, and Partners
may be deemed to share the power to vote and dispose of all shares held
by itself or Trust. Therefore, SBC, SBCUSA, Holdings and Partners each
may be deemed a beneficial owner of all the shares held by Partners and
Trust.
(5) SoGen International Fund, Inc. shares with Societe Generale Asset
Management Corp. the power to vote and dispose of all shares held by it.
(6) Represents shares held by Dimensional Fund Advisors, Inc., DFA
Investment Dimensions Group Inc. and The DFA Investment Trust Company.
Officers of Dimensional Fund Advisors, Inc. have sole power to vote and
dispose of shares beneficially owned by it, including shares held by DFA
Investment Dimensions Group Inc. and The DFA Investment Trust Company.
(7) Includes shares which certain officers and directors have the right to
acquire within 60 days after the date of this table pursuant to
outstanding options as follows: Mr. Brooks, 10,000 shares; Mr. Brown,
39,624 shares; Mr. Corr, 16,000 shares; Mr. Giroir, 10,000 shares; Dr.
Madni, 20,000 shares; Mr. Paraskos, 55,234 shares; Dr. Wan, 20,000
shares; Mr. Wrench, 82,400 shares; and all executive officers and
directors as a group, 253,258 shares. Also includes shares which certain
officers and directors have the right to vote pursuant to unvested
portions of restricted stock awards as follows: Mr. Corr, 9,488 shares;
Dr. Madni, 28,887 shares; Mr. Paraskos, 16,769 shares; Dr. Wan, 13,902
shares; Mr. Wrench, 16,743 shares; and all executive officers and
directors as a group, 85,789 shares.
(8) Includes 67,128 shares held in a revocable trust of which Mr. Brown and
his wife, Mildred S. Brown, are beneficiaries and sole trustees. Mr. and
Mrs. Brown, acting alone, each have the power to vote and dispose of
such shares.
(9) Includes 23,100 shares held jointly by Mr. Paraskos and his wife, Mary
Paraskos. Mr. and Mrs. Paraskos have shared power to vote and dispose of
such shares.
(10) Includes 21,276 shares held jointly by Mr. Wrench and his wife,
Jacqueline Wrench. Mr. and Mrs. Wrench have shared power to vote and
dispose of such shares.
(11) Includes the shares described in the Notes above.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the
Company's Common Stock, to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock of the Company.
Officers, directors and greater than ten percent stockholders are required by
the Commission's regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 28, 1996, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
During fiscal 1996, each non-employee director of the Company received a
monthly fee of $1,000, with the exceptions of George Brown and Peter Paraskos
(who served as consultants to the Company). Each non-employee director of the
Company received a fee of $500 for each Board meeting attended and for each
committee meeting attended by committee members and a fee of $250 for each
telephone conference Board meeting in which such director participated. In
the fiscal year ended September 28, 1996, the total compensation paid to
non-employee directors for services as directors was $47,500. The members of
the Board of Directors are also eligible for reimbursement for their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.
15
<PAGE>
Mr. Brown provides consulting services to the Company pursuant to an
agreement under which he is paid a retainer of $3,000 per month and a fee of
$750 per day of service. In the fiscal year ended September 28, 1996, the
Company paid Mr. Brown $41,250 under the agreement.
Pursuant to his employment agreement with the Company, Mr. Paraskos will
continue to be covered under the Company's medical benefits plan and will
receive certain other benefits from the Company not to exceed $6,000
annually.
On September 30, 1995, the Company and Mr. Paraskos entered into a
consulting agreement, which has now terminated, pursuant to which Mr.
Paraskos received $8,333.33 per month for a one-year term and a single
payment of $2,000 for consulting services provided to the Company.
Pursuant to their consulting agreements with the Company, Mr. Brown and
Mr. Paraskos participated in the Company's life insurance plan. The Company
paid $606 in premiums in fiscal year 1996 on behalf of Mr. Paraskos and $372
in premiums on behalf of Mr. Brown.
Dr. Howard provides consulting services to the Company pursuant to an
agreement under which he is paid $1,000 per day of service in addition to his
monthly director's fee of $1,000. In the fiscal year ended September 28,
1996, the Company paid Dr. Howard $500 under the agreement.
16
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows, for the fiscal years ended September 28, 1996,
September 30, 1995 and October 1, 1994, compensation awarded or paid to or
earned by the Company's Chief Executive Officer and its four other most
highly compensated executive officers for fiscal 1996 (the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
--------------- ------------
RESTRICTED ALL OTHER
SALARY(2) BONUS STOCK AWARDS(3)(4) COMPENSATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
- ---------------------------- ------ ---------- ----- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Mr. Charles Crocker ........ 1996 260,775 35,000 0 3,252
Chairman of the Board, 1995 195,150 0 0 3,240
President and Chief 1994 195,150 0 0 3,830
Executive Officer
Mr. Gary D. Wrench ......... 1996 264,000 35,000 48,750 4,370
Senior Vice President and 1995 264,000 0 0 4,223
Chief Financial Officer 1994 246,000 0 0 5,314
Dr. Asad M. Madni .......... 1996 239,312 95,000 65,000 5,488
President, BEI Sensors &
Systems Company, Inc.
Dr. Lawrence A. Wan ........ 1996 190,922 45,000 26,000 7,792
Vice President, 1995 182,100 45,000 15,000 6,920
Corporate Technology 1994 187,100 0 10,247 6,631
Mr. Robert R. Corr ......... 1996 149,600 16,000 13,000 3,681
Secretary, Treasurer 1995 139,600 12,000 7,875 3,635
and Controller 1994 132,600 8,000 6,958 3,235
</TABLE>
- --------
(1) As permitted by rules promulgated by the Commission, no amounts are shown
for "Other Annual Compensation" because no Named Executive Officer
received "perquisites" in an amount exceeding the lesser of 10% of annual
salary plus bonus or $50,000.
(2) Includes annual cash payments designated as automobile allowances, which
did not exceed $11,400 for any individual in any year; also includes
amounts earned but deferred at the election of the Named Executive
Officer pursuant to the Company's Retirement Savings Plan.
(3) Represents the dollar value of shares awarded, calculated by multiplying
the market value based on the closing sales price on the date of grant by
the number of shares awarded. At September 28, 1996, the aggregate
holdings and value (based on the closing sales price at fiscal year end
1996 of the Company's Common Stock as reported on the Nasdaq National
Market multiplied by the number of shares held) of restricted stock of
the Named Executive Officers was as follows: Gary D. Wrench, 18,419
shares, valued at $202,609; Asad M. Madni, 32,267 shares, valued at
$354,937; Lawrence A. Wan, 14,250 shares, valued at $156,750; Robert
Corr, 9,700 shares, valued at $106,700. The restrictions on awards of
restricted stock lapse with respect to 15% of the total number of shares
per year on the first, second, third, fourth and fifth anniversaries of
the date of grant and with respect to the remaining shares subject to
such award on the sixth anniversary of the date of grant. Dividends are
paid on shares of restricted stock when, as and if the Board declares
dividends on the Common Stock of the Company.
(4) During the past three fiscal years, the Company did not grant any stock
options or issue any stock appreciation rights to any Named Executive
Officer.
(5) Includes $2,078, $3,000, $2,999, $3,164 and $2,988 paid in fiscal 1996,
to Messrs. Crocker, Wrench, Madni, Wan and Corr, respectively, and
$2,150, $2,655, $2,796 and $2,854 paid in fiscal 1995 and $2,602, $3,936,
$2,790 and $2,471 paid in fiscal 1994 to Messrs. Crocker, Wrench, Wan and
Corr, respectively, as a normal contribution pursuant to the Company's
Retirement Savings Plan. The remaining sum for each Named Executive
Officer is attributable to premiums paid by the Company for group term
life insurance.
17
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers and key employees
under the Incentive Plan and the Supplemental Plan. As of January 8, 1997,
options to purchase a total of 411,696 shares had been granted and were
outstanding under the Plans. Options to purchase 373,819 shares remained
available for grant thereunder. During the fiscal year ended September 28,
1996, there were no stock options granted to the Named Executive Officers.
The Company has not issued any stock appreciation rights. The following table
shows, for fiscal 1996, certain information regarding options exercised, and
held at year end, by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#) AT FY-END ($)
--------------------------- ---------------------------
NAME EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(3)
- ---- ---------------------------- ----------------------------
<S> <C> <C>
Mr. Crocker ..... 0 / 0 0 / 0
Mr. Wrench ...... 92,000 / 0 624,500 / 0
Dr. Madni ....... 20,000 / 0 75,000 / 0
Dr. Wan ......... 20,000 / 0 162,400 / 0
Mr. Corr ........ 16,000 / 0 85,000 / 0
</TABLE>
- --------
(1) Mr. Wrench exercised an option to purchase 4,000 shares of the Common
Stock. None of the other Named Executive Officers exercised any stock
options.
(2) Includes both "in-the-money" and "out-of-the-money" options.
(3) The fair market value of the underlying shares on the last day of the
fiscal year less the exercise price.
EMPLOYMENT AGREEMENTS
The employment arrangements between the Company and Mr. Wrench, Senior
Vice President, Chief Financial Officer and a director of the Company,
provide that if Mr. Wrench is terminated by the Company, he will receive from
the Company his then full-time current salary for twelve months after such
termination.
The employment agreement between the Company and Dr. Madni, President of
BEI Sensors & Systems Company, Inc., renew annually on the anniversary date
of the agreement. The agreement provides that if the Company terminates Dr.
Madni without cause or a change in control of the Company occurs and Dr.
Madni executes a general release of liability, he will receive from the
Company his then current full-time salary and medical, dental and life
insurance benefits for the 12 months following the termination or change of
control, his annual bonus prorated to the date of termination or change in
control and an amount equal to the average of the bonuses paid Dr. Madni over
the prior 3 completed fiscal years. The employment arrangements include an
agreement that Dr. Madni will refrain from activities of a competitive nature
for a period of 2 years after termination of employment or a change in
control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee consists of Messrs. Brown,
Brooks and Giroir. Mr. Brown retired in July 1990 as President of the Company
and continues to serve as a consultant to the Company. Mr. Giroir served as
Corporate Secretary of the Company until February 1995 for which he received
no compensation in addition to that received as director's fees.
18
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee is composed of three non-employee directors.
The Committee is responsible for, among other things, setting the
compensation of executive officers, including any stock-based awards to such
individuals under the Company's 1987 Plan, Supplemental Plan and 1992
Restricted Stock Plan (collectively, the "Plans"). The current members of the
Committee are Messrs. Brown, Brooks and Giroir. Mr. Brown retired in July
1990 as President of the Company and continues to serve as a consultant to
the Company.
The Committee seeks to compensate executive officers in a manner designed
to achieve the primary goal of the Company's stockholders: increased
stockholder value. In furtherance of this goal, the Committee determines a
compensation package that takes into account both competitive and performance
factors. Annual compensation of Company executives is comprised of salary and
bonus, an approach consistent with the compensation programs of most
electronics companies. A substantial portion of the cash compensation of each
executive officer is contingent upon the Company's performance. Bonuses,
therefore, may be substantial, may vary significantly for an individual from
year to year, and may vary significantly among the executive officers.
Another significant component of compensation of executive officers is
restricted stock grants which vest at approximately 15% per annum over a six
year period. In the past, incentive stock options also were a significant
part of the compensation of some of the executive officers.
The Committee determined salaries for fiscal 1996 in November 1995 for all
executive officers. In adjusting the base salary of the executive officers,
the Compensation Committee examines both competitive and qualitative factors
relating to Corporate and individual performance. In connection with its
examination of competitive factors, the Committee reviewed an independent
survey of base salaries paid by other electronics companies of comparable
size. In many instances, assessment of qualitative factors necessarily
involves a subjective assessment by the Committee. In determining salaries
for executive officers for fiscal 1996, the Committee relied primarily on the
evaluation and recommendation of Mr. Crocker of each officer's
responsibilities for fiscal 1996 and performance during fiscal 1995.
In November 1995, for fiscal 1996, the Committee increased the base
compensation of Mr. Corr by 7.3%, Dr. Madni by 6.7% and Dr. Wan by 5.0%.
Based on the Committee's review of competitive factors and performance, the
base compensation for the remaining executive officers was not increased. No
change to Mr. Crocker's base salary was made at the November 1995 meeting
although he had assumed the positions of President and Chief Executive
Officer in addition to that of Chairman of the Board on October 1, 1995.
However, in the Compensation Committee meeting of March 1996, the Committee
increased Mr. Crocker's salary to an annual rate of $326,400 (a 67.3%
increase) effective April 1, 1996.
The Company has a Management Incentive Bonus Plan under which members of
management are eligible to receive cash bonuses based on the achievement of
specific operating results established at the beginning of the fiscal year.
In December 1996, the Committee evaluated operating results for fiscal 1996
against the established targets. Determining that such targets were generally
achieved, the Committee awarded Mr. Corr $16,000; Mr. Crocker $35,000; Dr.
Madni $95,000; Dr. Wan $45,000 and Mr. Wrench $35,000.
The Company uses the Plans to further align the interests of stockholders
and management by creating common incentives related to the possession by
management of a substantial economic interest in the long-term appreciation
of the Company's stock. In determining the size of a restricted stock
- --------
(1) This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, whether made before or after the date hereof
and irrespective of any general incorporation language in any such
filing.
19
<PAGE>
award or incentive stock option to be granted to an executive officer, the
Committee takes into account the officer's position and level of
responsibility within the Company, the officer's existing equity holdings,
the potential reward to the officer if the stock appreciates in the public
market, the incentives to retain the officer's services to the Company, the
competitiveness of the officer's overall compensation arrangements and the
performance of the officer. Based on a review of this mix of factors, during
fiscal 1996 the Committee made no grants of incentive stock options to any
executive officers, but awarded in December 1996, restricted stock grants to
Mr. Corr (3,000 shares), Dr. Madni (8,000 shares), Dr. Wan (5,000 shares) and
Mr. Wrench (6,000 shares).
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to
certain Named Executive Officers in a taxable year. Compensation above $1
million may be deducted if it is "performance-based compensation" within the
meaning of the Code. The Committee has determined that stock options granted
under the Company's Amended Plan with an exercise price at least equal to the
fair market value of the Company's Common Stock on the date of grant and any
shares of Company's Common Stock sold under the Restricted Stock Plan at a
price at least equal to the fair market value of the Company's Common Stock
on the date of the award shall be treated as "performance-based
compensation." As a result, the Company's stockholders have been asked to
approve amendments to these plans which would allow any compensation
recognized by a Named Executive Officer as a result of the grant of such a
stock option or award of a purchase right to be deductible by the Company.
George S. Brown Richard M. Brooks C. Joseph Giroir, Jr.
20
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the value of an investment of $100 on September
28, 1991 in cash of (i) the Company's Common Stock, (ii) the Center for
Research in Securities Prices ("CRSP") Total Return Index for the Nasdaq
Stock Market (U.S. Companies) and (iii) the CRSP Total Return Industry Index
for Nasdaq Non-Financial Companies. All values assume reinvestment of the
full amount of all dividends and are calculated as of the last trading day of
the applicable fiscal year of the Company(2):
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN ON INVESTMENT
BEI ELECTRONICS, INC.
PROXY PERFORMANCE GRAPH
FOR THE YEAR ENDED 9/28/96
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BEI Electronics, Inc. ......... $100.0 $ 83.9 $ 94.9 $ 58.3 $ 85.6 $131.1
NASDAQ U.S. Companies ......... $100.0 110.3 $147.4 $148.7 $205.4 $244.5
NASDAQ Non-Financial Companies $100.0 $103.7 $138.5 $137.7 $191.9 $224.7
</TABLE>
- --------
(1) This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of
the Company under the Securities Act or the Exchange Act, whether made
before or after the date hereof and irrespective of any general
incorporation language in any such filing.
(2) Fiscal year ending on the Saturday nearest September 30.
21
<PAGE>
CERTAIN TRANSACTIONS
The Company's By-Laws provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers,
employees and other agents to the extent not prohibited by Delaware law.
Under the Company's By-Laws, indemnified parties are entitled to
indemnification for negligence, gross negligence and otherwise to the fullest
extent permitted by law. The By-Laws also require the Company to advance
litigation expenses in the case of stockholder derivative actions or other
actions, against an undertaking by the indemnified party to repay such
advances if it is ultimately determined that the indemnified party is not
entitled to indemnification.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ ROBERT R. CORR
Robert R. Corr
Corporate Secretary
January 27, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 1996 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, BEI
ELECTRONICS, INC., ONE POST STREET, SUITE 2500, SAN FRANCISCO, CA 94104.
22
<PAGE>
APPENDIX A
<PAGE>
BEI ELECTRONICS, INC.
AMENDED 1987 STOCK OPTION PLAN
Adopted November 10, 1987
Approved by Stockholders February 22, 1988
As last amended January 1997
Approved by Stockholders March, 1997
INTRODUCTION
This Amended 1987 Stock Option Plan (the "Plan") was initially adopted in
1987 as the 1987 Incentive Stock Option Plan (the "Incentive Plan"), and
provided only for the grant of options intended to qualify as incentive stock
options. In 1987 the Company also adopted the 1987 Supplemental Stock Option
Plan (the "Supplemental Plan") to provide for the grant of options not intended
to qualify as incentive stock options. In January 1997, the Incentive Plan was
amended and restated to provide for, among other things, the grant of options
which are not intended to qualify as incentive stock options. No options will be
granted under the Supplemental Plan after the date of the January 1997
amendments to this Plan.
1. PURPOSE.
(a) The purpose of this Plan is to provide a means by which
selected key employees and directors of and consultants to BEI Electronics, Inc.
(the "Company") and its Affiliates, as defined in subparagraph 1(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now holding key positions, to secure and retain the services
of persons capable of filling such positions, and to provide incentives for such
persons to exert maximum efforts for the success of the Company.
(d) The Company intends that the options designated as
"incentive stock options" be incentive stock options as that term is used in
Section 422 of the Code. Options which are not intended to qualify as "incentive
stock options" are designated as "nonstatutory stock options."
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
(the "Board") of the Company unless and until the Board delegates administration
to a committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall
1.
<PAGE>
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted options; whether an option
shall be an incentive stock option or a nonstatutory stock option; when and how
the option shall be granted; the provisions of each option granted (which need
not be identical), including the time or times during the term of each option
within which all or portions of such option may be exercised; and the number of
shares for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of two (2) or more persons (the "Committee"). In the
discretion of the Board, a Committee may consist solely of two (2) or more
Outside Directors, in accordance with Code Section 162(m), or solely of two (2)
or more Non-Employee Directors, in accordance with Rule 16b-3 ("Rule 16b-3")
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If administration is delegated to a Committee, the Committee shall have,
in connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board of Directors
shall thereafter be to the Committee). The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
(d) The term "Non-Employee Director" as used in this Plan
shall mean a member of the Board who either (i) is not a current employee or
officer of the Company or any Affiliate, does not receive compensation (directly
or indirectly) from the Company or any Affiliate for services rendered as a
consultant or in any capacity other than as a member of the Board (except for an
amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act of 1933 ("Regulation
S-K")), does not possess an interest in any other transaction as to which
disclosure would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
2.
<PAGE>
(e) The term "Outside Director" as used in this Plan shall
mean a director who either (i) is not a current employee of the Company or an
"affiliated corporation" (within the meaning of Treasury regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an
"affiliated corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an "affiliated corporation" at any time, and is not currently receiving
direct or indirect remuneration from the Company or an "affiliated corporation"
for services in any capacity other than as a director, or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate one million
three hundred fifty thousand (1,350,000) shares of the Company's common stock.
This number reflects the one million two hundred fifty thousand (1,250,000)
shares of the Company's common stock reserved for issuance under the common
share reserve for the Incentive Plan and the Supplemental Plan plus (ii) an
additional one hundred thousand (100,000) shares reserved for issuance under
this Plan in January 1997. If any option granted under this Plan, the Incentive
Plan or the Supplemental Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such option
shall again become available for this Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
(c) An incentive stock option may not be granted to an
eligible person under the Plan if the aggregate fair market value (determined at
the time the option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by such optionee during any
calendar year under all incentive stock option plans of the Company and its
Affiliates exceeds one hundred thousand dollars ($100,000). Should it be
determined that the options or portions thereof exceeds such maximum, such
options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as nonstatutory stock options.
4. ELIGIBILITY.
(a) Incentive stock options may be granted only to key
employees (including officers) of the Company or its Affiliates. Nonstatutory
stock options may be granted only to key employees (including officers),
directors and consultants of the Company or its Affiliates.
(b) No person shall be eligible for the grant of an incentive
stock option under the Plan if, at the time of grant, such person owns (or is
deemed to own pursuant to the attribution rules of Section 424(d) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any of its Affiliates unless the
option price is at least one hundred ten percent (110%) of the fair market
3.
<PAGE>
value of such stock at the date of grant and the term of the option does not
exceed five (5) years from the date of grant.
(d) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, no person shall be eligible to be granted
options covering more than two hundred fifty thousand (250,000) shares of the
Company's common stock in any fiscal year.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms
and conditions as the Board or the Committee shall deem appropriate. The
provisions of separate options need not be identical, but each option shall
include (through incorporation of provisions hereof by reference in the option
or otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10)
years from the date it was granted.
(b) The exercise price of each option shall be not less than
one hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an
option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of grant or
exercise of the option (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the option is granted or to
whom the option is transferred pursuant to subparagraph 5(d), or (C) in any
other form of legal consideration that may be acceptable to the Board or
Committee in their discretion. In the case of any deferred payment arrangement,
interest shall be payable at least annually and shall be charged at the minimum
rate of interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts stated to
be interest under the deferred payment arrangement.
(d) An incentive stock option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the option is granted only
by such person. A nonstatutory stock option shall be transferable to the extent
specifically provided for in the option agreement; provided, however, that if
the option agreement does not specifically provide for the transferability of
the nonstatutory stock option, then such option shall not be transferable except
by will or by the laws of descent and distribution or pursuant to a domestic
relations order satisfying the requirements of Rule 16b-3 and any administrative
interpretations or pronouncements thereunder, and shall be exercisable during
the lifetime of the person to whom the option is granted only by such person or
any transferee pursuant to such domestic relations order. Notwithstanding the
foregoing, the person to whom the option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the optionee, shall thereafter be
entitled to exercise the option.
4.
<PAGE>
(e) The total number of shares of stock subject to an option
may, but need not, vest in periodic installments (which may, but need not, be
equal). From time to time, the option may be exercised with respect to some or
all of the vested shares which have not previously been exercised. The
provisions of this subparagraph 5(e) are subject to any option provisions
governing the minimum number of shares as to which an option may be exercised.
(f) The Company may require any optionee, or any person to
whom an option is transferred under subparagraph 5(d), as a condition of
exercising any such option: (1) to give written assurances satisfactory to the
Company as to the optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the option; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii), as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under
the then applicable securities laws.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or service with the Company or an
Affiliate, unless (i) the termination of employment or service of the optionee
is due to such person's permanent and total disability, within the meaning of
Section 422(c)(6) of the Code, in which case the option may, but need not,
provide that it may be exercised at any time within one (1) year following such
termination; or (ii) the optionee dies while in the employ or service of the
Company or an Affiliate, or within not more than three (3) months after
termination of such employment or service, in which case the option may, but
need not, provide that it may be exercised at any time within eighteen (18)
months following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifies either (a) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment or service, or (b) that it may be exercised more than three (3)
months after termination of the optionee's employment or service with the
Company or an Affiliate. This subparagraph 5(g) shall not be construed to extend
the term of any option or to permit anyone to exercise the option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount exercisable on the
date of termination of the optionee's employment or service.
(h) The option may, but need not, include a provision whereby
the optionee may elect at any time during the term of his or her employment or
service with the Company or any Affiliate to exercise the option as to any part
or all of the shares subject to the option prior to the stated vesting date of
the option or of any installment or installments specified in the option. Any
shares so purchased from any unvested installment or option may be subject to a
repurchase right in favor of the Company or to any other restriction the Board
or the Committee determines to be appropriate.
5.
<PAGE>
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan,
the Company shall keep available at all times the number of shares of stock
required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option granted
under the Plan or any stock issued or issuable pursuant to any such option. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company deems
necessary for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell stock upon
exercise of such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted
under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised, or the time during
which an option or any portion thereof will vest pursuant to subparagraph 5(e),
notwithstanding the provisions in the option stating the time during which it
may be exercised or the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.
(d) Nothing in the Plan or any instrument executed or option
granted pursuant thereto shall confer upon any eligible employee or optionee any
right to continue in the employ or service of the Company or any Affiliate or
shall affect the right of the Company or any Affiliate to terminate the
employment or service of any eligible employee or optionee with or without
cause.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan,
or subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
6.
<PAGE>
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, at the sole discretion of the
Board and to the extent permitted by applicable law: (i) any surviving
corporation shall assume any options outstanding under the Plan or shall
substitute similar options for those outstanding under the Plan, or (ii) the
time during which such options may be exercised shall be accelerated and the
options terminated if not exercised prior to such event, or (iii) such options
shall continue in full force and effect.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in paragraph 9 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or
any Nasdaq or securities exchange listing requirements.
(b) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide optionees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to incentive stock
options and/or to bring the Plan and/or incentive stock options granted under it
into compliance therewith.
(c) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the
option was granted and (ii) such person consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on January 15, 2007. No
options may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the option was
granted.
7.
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12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no options granted under the Plan shall be exercised unless and until the
Plan has been approved by the vote of the holders of a majority of the
outstanding shares of the Company entitled to vote.
8.
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APPENDIX B
<PAGE>
BEI ELECTRONICS, INC.
1992 Restricted Stock Plan
As amended January, 1997
1. Purpose
The purpose of this Plan is to promote the long-term growth and
profitability of the Company and the value of its Common Stock by (i) providing
certain individuals who provide services to the Company with increased incentive
to contribute to the success of the Company and (ii) enabling the Company to
attract, retain and reward persons of exceptional skill for positions of
substantial responsibility.
2. Definitions
Whenever used herein, the following terms shall have the meanings set
forth below:
(a) "Board" or "Board of Directors" means the Board of Directors
of BEI Electronics, Inc.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee designated by the
Board which shall consist of two (2) or more members of the
Board who shall, in the discretion of the Board, consist
solely of two (2) or more Outside Directors, in accordance
with Section 162(m) of the Code, or solely of two (2) or more
Non- Employee Directors, in accordance with Rule 16b-3.
(d) "Common Stock" shall mean the Common Stock, $.001 par value,
of BEI Electronics, Inc.
(e) "Company" means BEI Electronics, Inc. and/or its Subsidiaries.
(f) "Disability" means a permanent and total disability as defined
in the BEI Long- term Disability Plan or, if designated by the
Committee with respect to a grant under the Plan, Section
22(e)(3) of the Code.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means the closing price of the Common
Stock as reported on the Nasdaq National Market (or other
securities exchange) for the date in question, or if no sales
of the Common Stock were reported on such day, the closing
price of the Common Stock on the last preceding day when the
sale of Common Stock was reported on the Nasdaq National
Market.
(i) "Non-Employee Director" means a member of the Board who either
(i) is not a current employee or officer of the Company or any
"affiliate," does not receive compensation (directly or
indirectly) from the Company or any "affiliate" for
1.
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services rendered as a consultant or in any capacity other
than as a member of the Board (except for an amount as to
which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act of
1933, as amended ("Regulation S-K"), does not possess an
interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship as to which disclosure
would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes
of Rule 16b-3.
(j) "Outside Director" means a member of the Board who either (i)
is not a current employee of the Company or an "affiliated
corporation" (within the meaning of Treasury regulations
promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the
Company or an "affiliated corporation" at any time, and is not
currently receiving direct or indirect remuneration from the
Company or an "affiliated corporation" for services in any
capacity other than as a member of the Board, or (ii) is
otherwise considered an "outside director" for purposes of
Section 162(m) of the Code.
(k) "Participant" means an individual to whom Restricted Stock is
granted under the Plan.
(l) "Restricted Stock" means Common Stock granted to a Participant
pursuant to section 6 of the Plan.
(m) "Retirement" means retirement as that word is defined in any
pension or retirement plan sponsored by the Company which is
applicable to a Participant.
(n) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 in effect when discretion is being
exercised with respect to the Plan.
(o) "Subsidiary" means a corporation, 50% or more of whose voting
securities are owned by the Company.
3. Administration
The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee is authorized to (i) select Participants,
(ii) determine the form and substance of grants made under the Plan to each
Participant, and the conditions and restrictions, if any, subject to which such
grants will be made, (iii) interpret the Plan and (iv) adopt, amend, or rescind
such rules and regulations for carrying out the Plan as it may deem appropriate.
Decisions of the Committee on all matters relating to the Plan shall be in the
Committee's sole discretion and shall be conclusive and binding on all parties,
including the Company, its stockholders and the Participants in the Plan. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
2.
<PAGE>
4. Shares Available for the Plan
Subject to adjustments as provided in section 12 of the Plan, up to an
aggregate of 700,000 shares of Common Stock may be issued pursuant to the Plan.
Such reserve is comprised of (i) 350,000 shares reserved for issuance upon
adoption of the Plan plus (ii) an additional 350,000 approved by the Committee
in January 1997. Shares issued under the Plan may be authorized but unissued
shares, shares held in the treasury of the Company, or shares purchased on the
open market. To the extent any grant under the Plan expires, terminates
unexercised, becomes unexercisable or is forfeited, such shares shall thereafter
be available for further grants under the Plan.
5. Participation
Participation in the Plan shall be limited to those officers, directors
and other employees of the Company who are believed by the Committee to be in a
position to make a substantial contribution to the success of the Company.
Nothing in the Plan or in any grant thereunder shall confer any right on any
employee or director to continue in the employ or service of the Company or
shall interfere in any way with the right of the Company to terminate an
employee or director at any time.
Subject to the provisions of section 12 relating to adjustments upon
changes in stock, no person shall be eligible to receive more than seventy-five
thousand (75,000) shares of Restricted Stock in any fiscal year.
6. Restricted Stock
The Committee may at any time and from time to time grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
determines. Each grant of Restricted Stock under the Plan shall be evidenced by
a restricted stock agreement which shall contain such terms and conditions not
inconsistent with the Plan as the Committee shall determine; provided, however,
that each grant of Restricted Stock shall satisfy the following requirements:
(a) Shares of Restricted Stock may be granted as a bonus and
issued for no consideration other than services rendered, or
may be sold to a Participant at such price and for such
consideration as may be determined by the Committee, provided,
however, that the Company shall receive the minimum amount
required for such shares to be fully paid, nonassessable
shares under Delaware law. To the extent that consideration is
to be paid for Restricted Stock, the Participant will be
required to make such purchase within sixty (60) days of the
grant of the award.
(b) Each grant of Restricted Stock shall specify the restrictions
applicable thereto, the duration of such restrictions, and the
time or times at which such restrictions shall lapse with
respect to all or a specified number of shares that are part
of the grant. The restricted period shall terminate for 15% of
the shares so granted on each of the first five anniversaries
of the grant and the final 25% restriction will terminate
3.
<PAGE>
on the sixth anniversary of the grant unless the Committee
shall otherwise determine. The Committee may elect to
accelerate the vesting should certain preestablished three (3)
year stockholder wealth improvement goals be met.
(c) The Committee may require, at its discretion, that
Participants surrender for cancellation any outstanding stock
options granted to such Participants pursuant to the Company's
stock option plans.
(d) The Participant shall be required to deposit the shares of
Restricted Stock with the Company during the restriction
period and to execute a blank stock power therefor.
(e) The Participant shall, during the restriction period, have all
of the rights of a stockholder of the Company, including the
right to vote the shares and to received dividends (or amounts
equivalent to dividends), unless the Committee shall otherwise
determine.
(f) Upon termination of a Participant's employment during the
restriction period, all shares of Restricted Stock as to which
restrictions have not lapsed shall be forfeited; provided,
however, that no shares of Restricted Stock shall be forfeited
upon termination of employment due to Retirement, Disability
or death. In any such event, any remaining restriction period
shall terminate for all Restricted Stock of the retired,
disabled or deceased Participant, as the case may be. In the
event that a Participant forfeits any shares of Restricted
Stock, the Company shall reacquire such shares and shall pay
to the Participant an amount equal to the amount, if any, paid
by the Participant for such shares.
7. Change in Control
In the event of a Change in Control, any remaining restrictions on all
shares of Restricted Stock shall immediately terminate and the Committee, as
constituted before such Change in Control, may, as to any outstanding grant,
take any one or more of the following actions: (i) provide for the purchase of
such Restricted Stock by the Company, upon a Participant's request in an amount
equal to such stock's Fair Market Value; (ii) make additional grants of
Restricted Stock as the Committee deems appropriate to reflect such Change in
Control; or (iii) cause any such new grant then outstanding, or new rights
substituted therefor, to be assumed by the acquiring or surviving corporation
upon such Change in Control. The Committee may, in its discretion, include such
further provisions and limitations in any agreement pertaining to such grants as
it may deem equitable and in the best interests of the Company.
For purposes of the Plan "Change in Control" shall be deemed to have
occurred if (a) any entity, person or Group (other than the Company or a
Subsidiary) acquires shares of Common Stock in a transaction or in a series of
transactions that result in such entity, person or Group directly or indirectly
owning beneficially more than fifty percent (50%) of the outstanding shares of
Common Stock; (b) there is a merger, consolidation or sale of all or
substantially all of the assets of the Company; (c) there is a contested
election of directors of the Company which results in a majority of the members
of the Board recommended by the
4.
<PAGE>
Company not being elected; (d) there is a change in composition within a sixty
(60) day period of a majority of the Company's Board of Directors; or (e) there
is any other event which results in change in voting power sufficient to elect a
majority of the Board.
A "Group" shall consist of two or more persons acting as a partnership,
limited partnership, syndicated, or other group for the purpose of acquiring,
holding or disposing of voting securities of the Company.
8. Withholding Taxes
The Company may require, as a condition to any grant under the Plan or
to the delivery of certificates for Common Stock issued thereunder, that the
Participant pay to the Company, in cash, any federal, state or local taxes of
any kind required by law to be withheld with respect to any grant or any
delivery of Common Stock. The Company, to the extent permitted or required by
law, shall have the right to deduct from any payment of any kind (including
salary or bonus) otherwise due to a Participant any federal, state or local
taxes of any kind required by law or be withheld with respect to any grant or to
the delivery of Common Stock under the Plan.
Subject to Committee approval, a Participant may elect to deliver
shares of Common Stock (or have the Company withhold shares of Restricted Stock)
to satisfy, in whole or in part, the amount the Company is required to withhold
for taxes in connection with a grant or a delivery of Common Stock under the
Plan. Such election must be made on or before the date the amount of tax is to
be withheld is determined and, if applicable, subject to rules and regulations
under Section 16(b) of the Exchange Act. Once made, the election shall be
irrevocable. The fair market value of the shares to be withheld or delivered
will be the Fair Market Value on the date last preceding the date the amount of
tax to be withheld is determined.
9. Transferability
No Restricted Stock granted under the Plan shall be transferable other
than by will or the laws of descent and distribution during the restriction
period.
10. Listing and Registration
If the Committee determines that the listing, registration, or
qualification upon any securities exchange or under any law of shares subject to
any Restricted Stock grant is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of shares
thereunder, no such shares shall be issued unless such listing, registration or
qualification is effected free of any conditions not acceptable to the
Committee.
11. Transfers
Transfer of a Participant from the Company to a Subsidiary, from a
Subsidiary to the Company, and from one Subsidiary to another shall not be
considered a termination of employment or service. Nor shall it be considered a
termination of employment or service if a Participant is placed on military or
sick leave or such other leave of absence which is
5.
<PAGE>
considered as continuing intact the employment or service relationship; in such
a case, the employment or service relationship shall be continued until the date
when the Participant's employment or service shall be terminated.
12. Adjustments
In the event of any change affecting shares of Common Stock by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, spin-off, or any other
change in the corporate structure of BEI Electronics, Inc. or the Common Stock,
the Committee shall make such substitution or adjustment as appropriate in the
number and kind of shares reserved for issuance under the Plan and in the number
and kind of shares covered by grants made under the Plan.
13. Termination and Modification of Plan
The Board of Directors, without further approval of the stockholders,
may amend, suspend or terminate the Plan, except that no amendment shall become
effective without prior approval of the stockholders of the Company if such
approval would be required for continued compliance with Rule 16b-3, Section 422
of the Code, or any Nasdaq or securities exchange listing requirements.
The Committee may amend or modify the grant of any outstanding
Restricted Stock in any manner to the extent that the Committee would have had
the authority to make such grant as so modified or amended, including without
limitation to change the date or dates as of which restrictions on shares are to
be removed, except that no modification may be made that would materially
adversely affect any grant previously made under the Plan without the written
approval of the Participant. The Committee is authorized to make minor or
administrative modifications to the Plan as well as modifications to the Plan
that may be dictated by requirements of federal or state laws applicable to the
Company or that may be authorized or made desirable by such laws.
14. Effective Date
The Plan shall be effective as of January 1, 1992.
6.
<PAGE>
BEI ELECTRONICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 6, 1997
The undersigned hereby appoints Charles Crocker and Gary D. Wrench, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of BEI Electronics, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders of
BEI Electronics, Inc. to be held at BEI Sensors & Systems Company, Inc., Duncan
Electronics Division, 15771 Red Hill Avenue, Tustin, CA 92680 on Thursday, March
6, 1997 at 1:30 p.m. (local time), and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
materials and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
(continued and to be signed on other side)
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4 AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW.
Proposal 1: To elect three directors to hold office until the 2000 Annual
Meeting of Stockholders.
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed
below.
Nominee: Richard M. Brooks, William G. Howard, Jr., and Peter G. Paraskos.
To withhold authority to vote for any nominee(s), write such nominee(s)' name(s)
below:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2, 3 AND 4.
Proposal 2: To approve the Company's 1987 Incentive Stock Option Plan, as
amended, as proposed in the proxy statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3: To approve the Company's 1992 Restricted Stock Plan, as amended, as
proposed in the proxy statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4: To ratify the selection of Ernst & Young LLP as independent public
accountants of the Company for its fiscal year ending September 27, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears hereon.
If the stock is registered in the names of two or
more persons, each should sign. Executors,
administrators, trustees, guardians and
attorneys-in-fact should add their titles. If
signer is a corporation, please give full
corporate name and have a duly authorized officer
sign, stating title. If signer is a partnership,
please sign in partnership name by authorized
person.
Dated: ____________, 1997
___________________________________________________
___________________________________________________
Signature(s)
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
