SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant N/A
Check the appropriate box:
__Preliminary Proxy Statement
X Definitive Proxy Statement
__Definitive Additional Materials
__Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Williams Controls, Inc.
______________________________________________
(Name of Registrant as Specified In Its Charter
Williams Controls, Inc.
______________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
__Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
__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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
Williams Controls, Inc.
14100 SW 72nd Avenue
Portland, Oregon 97224
Notice of Annual Meeting of Stockholders
to be held on March 24, 2000
The Annual Meeting of Stockholders of Williams Controls, Inc. (the
"Company") will be held at the offices of one of the Company's subsidiaries,
Premier Plastic Technologies, Inc., 42155 Merrill Street, Sterling Heights,
Michigan 48314, on Friday, March 24, 2000 at 10:00 a.m. Eastern Standard Time,
for the following purposes:
1. To elect one Class II director for a three year term expiring in 2003.
Directors are elected by a plurality vote of the stockholders present
in person or by proxy at the Meeting, assuming a quorum is present.
2. To consider and approve an amendment to the Company's 1995 Stock Option
Plan for Non-Employee Directors, to increase the number of shares
available for grant thereunder, from 200,000 to 400,000. Approval of
this proposal requires the affirmative vote of a majority of the shares
represented at the Meeting and entitled to vote on this proposal.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders holding shares of Common Stock and Series A Preferred
Stock of record at the close of business on February 18, 2000 will be
entitled to receive notice of and vote at the Meeting.
Stockholders, whether or not they expect to be present at the Meeting,
are requested to sign and date the enclosed proxy and return it promptly in the
envelope provided for that purpose. Any person giving a proxy has the power to
revoke it at any time by following the instructions provided in the Proxy
Statement.
February 25, 2000 By Order of the Board of Directors,
Portland, Oregon
Gerard A. Herlihy
Secretary
<PAGE>
WILLIAMS CONTROLS, INC.
14100 SW 72nd Avenue
Portland, Oregon 97224
Proxy Statement
for the 2000 Annual Meeting of Stockholders
to be held
Friday, March 24, 2000
General Information
This Proxy Statement is furnished to stockholders of Williams Controls,
Inc. (the "Company") in connection with the solicitation of proxies by and on
behalf of the Company's Board of Directors (the "Board") for use at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on Friday,
March 24, 2000 at the offices of one of the Company's subsidiaries, Premier
Plastic Technologies, Inc., 42155 Merrill Street, Sterling Heights, Michigan
48314, at 10:00 a.m., Eastern Standard Time, for the purposes set forth in the
Notice of Annual Meeting of Stockholders. The Notice of Annual Meeting, this
Proxy Statement and the accompanying proxy card (collectively the "Proxy
Materials") will be first sent to the Company's stockholders on or about March
2, 2000.
As of the close of business on February 18, 2000, the record date for
entitlement to notice of and vote at the Meeting, the Company had outstanding
19,917,478 shares of common stock, $.01 par value per share (the "Common Stock")
and 78,500 shares of Series A 7 1/2% Convertible Redeemable Preferred Stock,
$.01 par value per share (the "Preferred Stock"). The presence, in person or by
proxy, of holders of one-third of the shares of capital stock entitled to vote
at the Meeting constitutes a quorum for the transaction of business at the
Meeting.
Each share of Common Stock outstanding on the record date is entitled
to one vote on each matter presented at the Meeting. Each share of Preferred
Stock outstanding on the record date is convertible into 36.364 shares of Common
Stock and is entitled to that number of votes on each matter presented at the
Meeting. Directors are elected by a plurality of the votes of the shares present
in person or represented by proxy at the Meeting and entitled to vote in the
election of directors. Approval of the amendment to the 1995 Stock Option Plan
for Non-Employee Directors requires the affirmative vote of a majority of the
shares represented at the Meeting and entitled to vote on this proposal.
Abstentions will be treated as shares present or represented and
entitled to vote for purposes of determining the presence of a quorum, but will
not be considered as votes cast in determining whether a matter has been
approved by the stockholders. As to any shares a broker indicates on its proxy
that it does not have the authority to vote on any particular matter because it
has not received direction from the beneficial owner thereof, those shares will
not be counted as voting on the particular matter.
A stockholder who gives his proxy may revoke it at any time before it
is voted by giving notice of the revocation thereof to the Secretary of the
Company, by filing another proxy with said Secretary or by attending the Meeting
and voting in person. All properly executed and proxies delivered pursuant to
this solicitation, if received in time and have not been revoked, will be voted
in accordance with the instructions of the beneficial owners contained thereon.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy materials to the beneficial
owners of the Company's Common Stock and Preferred Stock for whom they hold
shares and will reimburse them for their reasonable expenses in so doing.
<PAGE>
Proposal 1 - Election of Directors
The Company's Certificate of Incorporation provides for three classes
of directors with staggered terms of office. Nominees of each class serve for
terms of three years and until the election and qualification of their
successors or until their resignation, death, disqualification or removal from
office.
At the date of this Proxy Statement, the Board consisted of five
members, including two Class I directors whose terms expire in 2001, one Class
II director whose term expires in 2000 and two Class III directors whose terms
expire in 2002. Timothy S. Itin is the Class II director who has been nominated
and has agreed to stand for reelection for an additional three-year term.
Directors are elected by a plurality of the votes cast. Unless you
withhold authority to vote for the nominee, your proxy will be voted for the
election of Timothy S. Itin.
If Timothy S. Itin becomes unavailable to serve as a director, the
proxy holders named in the accompanying proxy will have discretionary authority
to vote for a substitute nominee proposed by the Board. Neither management nor
the Board knows of any reason why Mr. Itin would be unavailable to serve on the
Board.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year First
Name Age Position/Offices with Company Elected
- ---------------------------------------------- ------------ ------------------------------------------ -----------------
Nominee:
Class II - New Term to Expire in 2003
- -------------------------------------
Timothy S. Itin 41 Director 1994
Continuing Directors:
Class I - Term Expires 2001
- ---------------------------
Thomas W. Itin 65 President, Chairman of the Board, Chief 1988
Executive Officer and Treasurer
H. Samuel Greenawalt 71 Director 1994
Class III - Term Expires 2002
- -----------------------------
Anthony B. Cashen 64 Director 1999
Charles G. McClure 46 Director 1999
</TABLE>
Timothy S. Itin has served as a director of the Company and a member of
the Audit and Compensation Committees of the Board since March 1994. Since
January 1999, he has been a Partner in the investment banking firm of Thomas
Weisel Partners in San Francisco, California. From July 1998 to December 1998,
he was a Principal in the investment banking firm NationsBank Montgomery
Securities, LLC, located in San Francisco, California. From January 1996 to June
1998, Mr. Itin was a Managing Director of the investment banking firm of Volpe
Brown Whelan & Company, LLC, in San Francisco. From 1991 through 1995, Mr. Itin
was a Managing Director of Jensen Securities, an institutional brokerage firm
located in Portland, Oregon, where he served on Jensen's management committee.
From 1983 to 1991, Mr. Itin was a Limited Partner at Montgomery. Mr. Itin has
earned the designation of Chartered Financial Analyst (CFA) and received a
Bachelor of Arts degree in economics from Dartmouth College.
Thomas W. Itin has been Chairman of the Board and Chief Executive
Officer of the Company since March 1989 and a Director since inception of the
Company in November 1988. In addition, Mr. Itin was elected President and
Treasurer of the Company in June 1993. Mr. Itin serves on the Cornell University
Council and is Chairman of the Technology Transfer Committee of the Council. Mr.
Itin has been Chairman, President and owner of TWI International, Inc. ("TWI")
2
<PAGE>
since he founded that entity in 1967. TWI acts as consultant for mergers,
acquisitions, financial structuring, new ventures and asset management. Mr. Itin
also is the owner and principal officer of Acrodyne Corporation. In addition,
Mr. Itin is Chairman of the Board and President of LBO Capital Corp. and Ajay
Sports, Inc. and its subsidiaries, both of which are publicly-held corporations.
Mr. Itin was awarded a Masters of Business Administration degree from New York
University and received a Bachelor of Science degree from Cornell University.
H. Samuel Greenawalt has served as a director of the Company and a
member of the Audit Committee of the Board since March 1994. From 1987 until his
retirement in June 1994, Mr. Greenawalt served as Senior Vice President,
Business Development, for Michigan National Bank in Detroit, Michigan. Mr.
Greenawalt continues to provide consulting services to Michigan National Bank.
From 1958 to 1987, Mr. Greenawalt served in various commercial lending
capacities at Michigan National Corporation. From 1954 to 1958, he was with the
investment firm of McNaughton-Greenawalt Company. Since June 1993, Mr.
Greenawalt has served as a director of Enercorp, Inc., a publicly traded
business development company that owns approximately ten percent of the Common
Stock of the Company. Mr. Greenawalt received a Bachelor of Science degree from
the Wharton School of the University of Pennsylvania, and is a graduate of the
University of Wisconsin Banking School.
Anthony B. Cashen has served as a director of the Company since
February 1999. For the past five years and until his retirement in December
1999, Mr. Cashen served as a Managing Partner, then as a Senior Partner, of LAI
Ward Howell, a publicly held management consulting and executive recruiting firm
located in New York City. He has served as Secretary, Treasurer and director of
LBO Capital Corp., a publicly held corporation, since its inception. He
currently serves as a director of Immucell Corp. and Ajay Sports, Inc., both
publicly held corporation. See "Certain Relationships and Related Transactions".
Previously, Mr. Cashen had been an officer and principal of the investment firms
A.G. Becker, Inc. and Donaldson Lufkin and Jenrette, Inc. He received an MBA
from the Johnson Graduate School of Management at Cornell University, and a
Bachelor of Science degree from Cornell University.
Charles G. McClure has served as a director of the Company since
February 1999. Since August 1997, he has been President of Detroit Diesel
Corporation, a publicly held company, and has been a director since November
1997. From 1995 to 1997, he was President, and before that Vice President and
General Manager, of the Americas Division of Johnson Controls, Inc., a publicly
held company. From 1992 to 1995, he was Vice President and managing director of
Johnson Controls' Automotive Systems Group's European Operations. Mr. McClure
serves on the Cornell University Council and is a member of the Technology
Transfer Committee of the Council. He received an MBA from the University of
Michigan and a Bachelor of Science degree from Cornell University.
During the fiscal year ended September 30, 1999, the Board held a total
of eight meetings and acted by unanimous written consent six times. The Board
maintains an Audit Committee, a Compensation Committee and a Nominating
Committee. The members of the Audit Committee are H. Samuel Greenawalt, Timothy
S. Itin, Anthony B. Cashen and Charles G. McClure. The Audit Committee primarily
reviews internal accounting procedures and oversees the review and engagement of
the Company's independent accountants. The Audit Committee met three times
during the 1999 fiscal year. The members of the Compensation Committee are
Timothy S. Itin, Anthony B. Cashen and Charles G. McClure. The Compensation
Committee primarily reviews and sets compensation paid to the Company's
executive officers and directors and makes recommendations to the Board
regarding awards under the Company's 1993 Stock Option Plan. The Compensation
Committee met three times during the 1999 fiscal year. The members of the
Nominating Committee are Timothy S. Itin and H. Samuel Greenawalt. The
Nominating Committee primarily recommends persons to serve as directors of the
Company. The Nominating Committee does not consider nominees recommended by
stockholders. The Nominating Committee met one time during the year. Each
director attended more than 75% of the meetings of the Board of Directors, the
Audit, Compensation and Nominating Committees during the period in which he
served.
Timothy S. Itin is the son of Thomas W. Itin. There are no other
family relationships between any director, executive officer or nominees for
director of the Company.
3
<PAGE>
Executive Officers
The following table sets forth, as of January 26, 2000, the names and
ages of the Company's executive officers, including all positions and offices
held by each such person. These officers serve at the pleasure of the Board.
- ---------------------------- ------ ---------------------------------------
Name Age Position
- ---------------------------- ------ ---------------------------------------
Thomas W. Itin 65 Chairman of the Board,
Chief Executive Officer,
President and Treasurer
Gerard A. Herlihy 47 Chief Administrative and
Chief Financial Officer,
and Secretary
Timothy J. Marker 50 Vice President - Sales and Marketing
Thomas K. Ziegler 54 Vice President and Counsel
Kim L. Childs 44 Corporate Controller
For information regarding Mr. Itin, see his biography above.
Gerard A. Herlihy has been Chief Financial and Administrative Officer
since February 1997, and Secretary of the Company since August 1997. Prior to
joining the Company, Mr. Herlihy directed turnarounds of financially troubled
companies. From 1994 to 1996, he was President and Chief Operating Officer and a
member of the Board of Directors of CliniCorp, Inc., a publicly-held healthcare
company. CliniCorp filed for Chapter 11 bankruptcy protection during the year
following Mr. Herlihy's resignation. Positions held prior to 1994 included
turnaround advisory work for privately owned companies, acquisition advisory
work for William E. Simon & Sons, Managing Director of Corporate Finance at
Thomson McKinnon Securities, and audit supervisor at Peat, Marwick, Mitchell &
Co. Mr. Herlihy has an MBA Degree from the Harvard Business School and a
Bachelor of Science Degree from the University of Rhode Island. He is also a
Certified Public Accountant ("Retired Status").
Timothy J. Marker has been Vice President, Sales and Marketing of the
Company since August 1997. Prior to joining the Company, from 1996 to 1997, he
was the President of Electro-Mechanical Products, a $50 million division of
Alcoa Fujikura Limited involved in the manufacture and sale of precision
switches, sensors and RFI noise suppression devices to the global automotive
industry. From 1989 to 1995, Mr. Marker was President of Electro-Mechanical
Products, a division of Electro-Wire Products, Inc. From 1982 to 1988, Mr.
Marker was Vice President of Sales/Engineering for this same company. From 1972
to 1982, Mr. Marker worked for General Motors' Packard Electric Division, where
his last position was Account Manager responsible for Packard's Chevrolet Truck
account with annual sales of $310 million. Mr. Marker has a Bachelor of Science
degree from Purdue University.
Thomas K. Ziegler has been Counsel since 1994, and was elected to the
position of Vice President in 1998. Since 1994, he has been President of
Williams Technologies, Inc., a wholly-owned subsidiary of the Company involved
in research and development and technology partnering on behalf of the Company's
subsidiaries. From 1989 to 1994, he was an attorney practicing patent law for
the firm Dykema Gossett in Bloomfield Hills, Michigan. He received a Juris
Doctor degree in Law and a Bachelor of Science degree in Electrical Engineering,
both from the University of Missouri.
Kim L. Childs has been Corporate Controller of the Company since March
1999. Prior to joining the Company, she was the Manager of Accounting Services
in 1997 and 1998 for PacifiCorp Group Holdings, Inc., which included accounting
for the unregulated activities of this Fortune 500 utility. From 1993 to 1997,
Ms. Childs was a senior manager with Talbot, Korvola & Warwick LLP, a public
accounting firm. In addition to her experience in the private sector, Ms. Childs
was with KPMG Peat Marwick and Deloitte & Touche for a combined total of seven
years, and left Peat Marwick as a senior manager. Ms. Childs has a bachelor of
science degree from Oregon State University and is a Certified Public Accountant
in the states of Oregon and Washington.
Section 16(a) Beneficial Ownership Reporting Compliance
4
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent shareholders are
required by the SEC regulation to furnish the Company with copies of Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations of the reporting persons,
the Company has determined that all required reports were timely filed during
the year except that one executive officer of the Company filed a late report on
Form 3.
Executive Compensation
Summary Compensation Table. The table below sets forth the compensation
received by the Chief Executive Officer of the Company and other executive
officers of the Company, for the past three fiscal years, who received
compensation in excess of $100,000 during the fiscal year ended September 30,
1999. The Company has no restricted stock award or long-term incentive plans.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Other Annual Securities
Name and Principal Position Year Salary ($) Bonus ($) Compensation Underlying All Other
(1)(5) ($) Options (#) Compensation ($)
- ---------------------------- ------- ---------------- ---------------- ---------------- ---------------- -----------------
Thomas W. Itin 1999 200,000 300,000
Chief Executive Officer 1998 150,000 150,000 300,000
1997 150,000 150,000 300,000
- ---------------------------- ------- ---------------- ---------------- ---------------- ---------------- -----------------
Gerard A. Herlihy 1999 139,402 75,000
Chief Financial Officer 1998 120,000 60,000 80,000
1997 75,000 (2) 50,000 20,000 (4) 70,000
- ---------------------------- ------- ---------------- ---------------- ---------------- ---------------- -----------------
Timothy J. Marker 1999 133,605 50,000
VP - Sales and 1998 120,000 (3) 50,000 70,000
Marketing 1997 12,500 (2) 5,000 30,000
- ---------------------------- ------- ---------------- ---------------- ---------------- ---------------- -----------------
Thomas K. Ziegler 1999 125,250 20,000
VP and Counsel 1998 120,000 35,000 30,000
1997 120,000 30,000 60,000
- ---------------------------- ------- ---------------- ---------------- ---------------- ---------------- -----------------
</TABLE>
(1) Bonuses for 1997 were not known or calculable at the date that the 1998
proxy was mailed to stockholders. The table above reflects the bonus paid
as 1997 compensation.
(2) The compensation reflects the fact that the executives noted, in the years
noted, did not work for the entire fiscal year. Mr. Herlihy started in
February 1997, and Mr. Marker started in August 1997.
(3) Reflects a performance-related bonus built into regular compensation of
$20,000.
(4) Other compensation reflects consulting fees paid prior
to Mr.Herlihy's initial date of employment.
(5) Mr. Itin did not receive a bonus for 1999. No 1999 bonuses have been
awarded for the remaining executives at the date of this filing.
Options/SAR Grants Table. The table below summarizes options granted
during the fiscal year ended September 30, 1999 to the executive officers
in the Summary Compensation Table. The Company has not granted any SARs.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------------------ ------------- ------------- ------------ -------------- ---------------------------------
# of
Securities % of Total Exercise Potential Realizable Value at
Name Underlying Options Price Expiration Assumed Ann'l Rate of Stk.
Options Granted to ($/Share) Date Price Appreciation for Option
Granted Employees Term
- ------------------------------ ------------- ------------- ------------ -------------- ---------------------------------
5% ($) 10% ($)
- ------------------------------ ------------- ------------- ------------ -------------- -------------- ------------------
Thomas W. Itin 300,000 40 2.20 10/16/04 105,769 306,306
- ------------------------------ ------------- ------------- ------------ -------------- -------------- ------------------
Gerard A. Herlihy 75,000 10 2.25 10/2/09 106,126 268,944
- ------------------------------ ------------- ------------- ------------ -------------- -------------- ------------------
Timothy J. Marker 50,000 7 2.25 10/2/09 70,751 179,296
- ------------------------------ ------------- ------------- ------------ -------------- -------------- ------------------
Thomas K. Ziegler 20,000 3 2.25 10/2/09 28,300 71,718
- ------------------------------ ------------- ------------- ------------ -------------- -------------- ------------------
</TABLE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table. The
table below summarizes fiscal year-end option values of the executive officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------- --------------- ---------------- ------------------------------- -------------------------------
# Shares Securities Underlying
Name Acquired on $ Value Unexercised Options at Value of In-the Money Options
Exercise Realized Year End (#) at Year End ($)
- ------------------------- --------------- ---------------- ------------------------------- -------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- --------------- ---------------- ------------- ----------------- -------------- ----------------
Thomas W. Itin 0 0 562,500 637,500 134,513 102,788
- ------------------------- --------------- ---------------- ------------- ----------------- -------------- ----------------
Gerard A. Herlihy 0 0 111,250 113,750 31,984 21,611
- ------------------------- --------------- ---------------- ------------- ----------------- -------------- ----------------
Timothy J. Marker 0 0 70,000 80,000 9,780 10,560
- ------------------------- --------------- ---------------- ------------- ----------------- -------------- ----------------
Thomas K. Ziegler 0 0 65,000 45,000 24,990 11,250
- ------------------------- --------------- ---------------- ------------- ----------------- -------------- ----------------
</TABLE>
Pension Plan. Under the Company's Pension Plan, the Company is required
to contribute amounts sufficient to fund specified retirement benefits for
covered employees. Benefits are calculated on the basis of an employee's final
average pay and length of service. Final average pay generally means the average
of the employee's three highest annual compensation amounts during the last ten
calendar years of employment. Compensation means taxable compensation plus any
salary deferrals allowable under the Internal Revenue Code Sections 125 or 402.
Compensation is limited in accordance with Internal Revenue Code Section
401(a)(17). For the 1999 calendar year, compensation considered under the plan
may not exceed $160,000. Benefits are payable under normal (age 65), early (age
55 with 10 years of service) or deferred (over age 65) retirement or death.
Employees who are officers or directors of the Company participate in
the Pension Plan on the same basis as other employees, however, the plan is
closed to new entrants. As a result, the only officer of the Company who is
eligible for the plan is Thomas Itin. In general, an employee retiring under the
plan will receive an annuity payable for life without any offsets.
The following table sets forth estimated annual benefits as retirement
under the Pension Plan for covered employees of the Company at various assumed
years of service and levels of final average pay. The calculations are shown for
an employee retiring at age 65 in the form of a level single life annuity to the
employee. The years of credited service and final average pay for Pension Plan
purposes as of September 30, 1999 for Thomas Itin is 6.75 years of service and
$156,666 final average pay.
6
<PAGE>
Estimated Annual Retirement Benefits
(nearest $100)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Years of Service
- --------------------------------------------------------------------------------------------------------------
Final Average
Salary 5 10 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------
$125,000 9,200 18,500 27,700 37,000 46,200 55,400 64,700
- --------------------------------------------------------------------------------------------------------------
$150,000 11,300 22,600 33,900 45,200 56,500 67,800 97,100
- --------------------------------------------------------------------------------------------------------------
$175,000 11,900 23,700 35,600 47,400 59,300 71,100 83,000
- --------------------------------------------------------------------------------------------------------------
$180,000 11,900 23,700 35,600 47,400 59,300 71,100 83,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation of Directors. The non-employee directors of the Company
are paid an annual retainer of $2,500 and $1,500 for each regular Board meeting
attended in person. No fees are paid for telephonic meetings or when action is
taken by unanimous written consent. The Company reimburses its directors for
reasonable costs incurred to attend Board and committee meetings.
In February 1999, H. Samuel Greenawalt, Timothy S. Itin, Anthony B.
Cashen and Charles G. McClure, the non-employee directors of the Company, each
received non-statutory stock options exercisable for ten years to purchase up to
10,000 shares of Common Stock for $2.44 per share. These stock options were
automatically granted under the 1995 Stock Option Plan for Non-Employee
Directors at 100% of the fair market value of the Common Stock on the date of
grant.
Employment Contracts, Termination of Employment and Change in Control
Arrangements. Since 1994, the Company has had an employment arrangement with Mr.
Itin under which he serves as Chief Executive Officer. Mr. Itin's salary was
$150,000 per year through fiscal 1998 and was increased to $200,000 per year in
fiscal 1999. This employment arrangement will continue through fiscal 2002. The
terms of this employment arrangement have never been formalized in a written
agreement.
Board Compensation Committee Report on Executive Compensation. The
Compensation Committee of the Board is responsible for reviewing and approving
the Company's compensation policies and the compensation paid to executive
officers. The Company's compensation philosophy is designed to achieve long-term
growth in stockholder value. The Company's compensation policies are intended to
attract, retain and motivate highly qualified executives who support a
performance-oriented environment that rewards achievement based upon the
Company's performance and the individual's contribution and performance. There
are three main components in the Company's executive compensation program: base
salary, annual bonus incentive and long-term incentive.
Base Salary. The base salary of each executive officer of the Company
is measured against the median base pay level for positions with comparable
functional responsibilities at companies with sales that are comparable in size
to the Company's sales. Executive salaries are reviewed but not necessarily
increased annually. Salary adjustments may be made by the Committee to recognize
individual contribution and performance or to reflect an increased scope of
responsibilities.
Annual Incentive. Annual incentive bonuses for executive officers are
intended to reflect the Committee's belief that a significant portion of the
annual compensation of each executive officer should be contingent upon the
performance of the Company, as well as the individual contribution of each
officer.
7
<PAGE>
The Company has implemented an annual incentive bonus, which provides
executive officers and other key management employees the opportunity to earn
annual incentive bonuses. As a pay-for-performance plan, the annual incentive
bonus is intended to motivate and reward executive officers and other key
employees by directly linking the amount of any cash bonus to two performance
components: (1) corporate and/or operating unit financial performance (specific
measurements are defined each year and threshold and payout levels are
established to reflect the Company's objectives); (2) management's overall
assessment of the executive officer/key employee performance. These criteria are
reviewed and approved by the Committee. Under the guidelines adopted by the
Committee, executive officers are eligible to receive up to 100% of their salary
as an annual bonus, depending on actual earnings performance compared to target
earnings goals.
Long-Term Incentive. The Company utilizes stock options as a long-term
incentive to reward and retain employees. The Committee believes that these
programs serve to link management and stockholder interest and to motivate
executive officers to make long-term decisions that are in the best interest of
the Company and the stockholders. The Committee also believes that executive
officers and other key employees should have significant ownership of the
Company stock. As a group, executive officers and directors beneficially own
approximately 41.1% of the outstanding common stock. In particular, Mr. Itin,
the Company's Chairman and Chief Executive Officer beneficially owns
approximately 29.4% of the outstanding shares.
The Committee believes that stock option grants provide an incentive
that focuses the executive's attention on managing the Company from the
perspective of an equity owner in the business. Stock options are granted from
time-to-time, generally on an annual basis, based upon recommendations from
management and the Committee. In general, stock options vest over ten years and
employees must be employed by the Company in order to continue to accrue time
towards the Plan's three year vesting schedule. As the stock options are granted
at the fair market value on the date of grant, the Company's stock options are
tied to the future performance of the Company's stock and will provide value to
the recipient only when the price of the Company's stock increases above the
option grant price.
It is the opinion of the Committee that the aforementioned compensation
program provides features, which appropriately align the Company's executive
compensation with corporate performance and the interest of its stockholders.
For the fiscal year ended September 30, 1999, the Company's Chief
Executive Officer was paid a base annual salary of $200,000. No bonus was paid
to Mr. Itin based on the financial performance of the Company for the 1999
fiscal year. In October 1999, Mr. Itin was granted stock options to purchase up
to 300,000 shares of Common Stock at an exercise price of $2.20 per share,
exercisable through October 16, 2004. While granted during fiscal 2000, these
options were granted based on Mr. Itin's performance during fiscal 1999.
Timothy S. Itin, Chairman
Anthony B. Cashen
Charles G. McClure
Performance Graph. The graph below compares the percentage changes in
the Company's cumulative stockholder return on its Common Stock for the
five-year period ended September 30, 1999, with the cumulative total return of
the Nasdaq Stock Market (US Companies) and a peer index of the Nasdaq Stocks -
Motor Vehicles and Motor Vehicle Equipment companies.
8
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
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<S> <C> <C> <C> <C> <C> <C> <C>
- --------------- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Legend Indices 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
- --------------- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Company Williams Controls 100 107 88 76 76 79
- --------------- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Nasdaq Stocks (SIC 3710-3719 US
Companies) Motor Vehicles and
Peer Index Motor Vehicle Equipment 100 111 126 180 159 203
- --------------- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Market Nasdaq Stock Market (US Companies) 100 138 164 225 229 372
- --------------- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
NOTES: The indices are reweighted daily, using market capitalization on the
previous trading day. If the monthly interval, based on the fiscal year-end, is
not a trading day, the preceding trading day is used. The index level for all
series was set at 100 on 9/30/94.
9
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth, as of December 31, 1999, the number of
shares of Common and Preferred Stock beneficially owned by each director and
executive officer of the Company listed in the Summary Compensation Table
individually, all executive officers and directors as a group and all beneficial
owners of more than five percent of the Common and/or Preferred Stock. The
following stockholders have sole voting and investment power with respect to
their holdings unless otherwise noted.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of Percentage of Preferred Stock Percentage of
Name and Address Common Stock Common Stock Beneficially Preferred Stock
Of Beneficial Owner Beneficially Owned Owned* Owned Owned**
- ------------------------------------- ------------------- ----------------- ---------------------- -----------------
Thomas W. Itin (1)(2)(4) 6,031,784 29.4 -0- -0-
7001 Orchard Lake Rd., Suite 424
West Bloomfield, MI 48322-3608
Enercorp, Inc. (5) 2,002,329 10.0 -0- -0-
7001 Orchard Lake Rd., Suite 424
West Bloomfield, MI 48322-3608
Acrodyne Corporation (6) 1,200,000 6.0 -0- -0-
7001 Orchard Lake Rd., Suite 424
West Bloomfield, MI 48322-3608
H. Samuel Greenawalt (7)(12) 2,195,329 11.0 -0- -0-
7001 Orchard Lake Rd., Suite 424
West Bloomfield, MI 48322-3608
Timothy S. Itin (7) 67,500 *** -0- -0-
1 Montgomery Street, Suite 3700
San Francisco, CA 94104
Anthony B. Cashen (11)(16) 161,719 *** -0- -0-
99 Park Avenue, 20th Floor
New York, NY 10016
Charles G. McClure (16) 5,000 *** -0- -0-
13400 Outer Drive, W.
Detroit, MI 48239
Gerard A. Herlihy (3)(8) 570,466 2.9 -0- -0-
700 NW 12th Avenue
Deerfield Beach, FL 33442
Thomas K. Ziegler (9) 126,000 *** -0- -0-
7001 Orchard Lake Road, Suite 422
West Bloomfield, MI 48322
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of Percentage of Preferred Stock Percentage of
Name and Address Common Stock Common Stock Beneficially Preferred Stock
Of Beneficial Owner Beneficially Owned Owned* Owned Owned**
- ------------------------------------- ------------------- ----------------- ---------------------- -----------------
Timothy J. Marker (10) 98,281 *** -0- -0-
42155 Merrill Street
Sterling Heights, MI 48314
Mark E. Brady (13) 1,011,994 4.93 17,500 22.3
Robert J. Suttman, II
Ronald L. Eubel
7777 Washington Village Drive
Suite 210
Dayton, OH 45459
E. H. Arnold (14) 181,818 *** 5,000 6.4
625 South Fifth Avenue
Lebanon, PA 17042
Dolphin Offshore Partners, L.P. (15) 1,445,456 7.0 12,750 16.2
c/o Dolphin Management Inc.
129 East 17th Street
New York, NY 10007
All executive officers and 8,663,463 41.1 -0- -0-
directors as a group (17) (9 persons)
* Based upon 19,878,728 shares outstanding at December 31, 1999.
** Based upon 78,500 shares outstanding at December 31, 1999.
*** Less than one percent.
</TABLE>
1) Includes 637,500 shares of Common Stock issuable upon exercise of
presently exercisable stock options held by Mr. Itin. Also includes
4,144,600 shares of Common Stock owned by family members and affiliates of
Mr. Itin, including ownership of Acrodyne Corporation and/or its
affiliates which also is reported separately in this table. Acrodyne
Corporation is owned by TWI and TWI is owned by a Michigan co-partnership
of which Mr. Itin is the sole equity owner. Also includes 58,200 shares of
Common Stock held in the name of Dearborn Wheels, Inc. Mr. Itin disclaims
beneficial ownership of the 58,200 shares. Also includes 402,600 shares of
Common Stock owned by certain trusts for which Mr. Itin's spouse serves as
trustee. Neither Mr. or Mrs. Itin is a beneficiary of these trusts, and
they disclaim beneficial ownership of the 402,600 shares owned by the
trusts. Also includes 156,719 shares of Common Stock owned by Ajay Sports,
Inc. Mr. Itin is President, CEO and a director of Ajay Sports, Inc., and
disclaims beneficial ownership of the 156,719 shares of Common Stock.
2) Includes 413,899 shares of Common Stock owned by the Company's Employee
Stock Ownership Plan Trust (the "ESOP"), of which Mr. Itin is the trustee.
Mr. Itin disclaims beneficial ownership of these shares, other than the
11,269 shares allocated for his benefit. Also includes 187,000 shares of
Common Stock owned by the Company's Union Employees Pension Plan, of which
Mr. Itin is a trustee. Mr. Itin disclaims beneficial ownership of these
shares. Also includes 115,000 shares of Common Stock owned by the
Company's Non-Union Employees Retirement Income Pension Plan, of which Mr.
Itin is the trustee. Mr. Itin disclaims beneficial ownership of these
shares. Also includes 221,499 shares of Common Stock owned by the
Company's 401(k) Plan for Non-Union Employees, of which Mr. Itin is a
trustee. Mr. Itin disclaims beneficial ownership of these shares except
for 25,800 shares allocated for his benefit. Also includes 97,367 shares
of Common Stock owned by the Company's 401(k) Plan for Union Employees, of
which Mr. Itin is a trustee. Mr. Itin disclaims beneficial ownership of
these shares. As a trustee, Mr. Itin shares voting and dispositive power
over the securities owned by these plans.
11
<PAGE>
3) Includes 221,499 shares of Common Stock owned by the Company's 401(k) Plan
for Non-Union Employees, of which Mr. Herlihy is trustee. Mr. Herlihy
disclaims beneficial ownership of these shares, other than 6,579 shares
allocated for his benefit. Also includes 97,367 shares of Common Stock
owned by the Company's 401(k) Plan for Union Employees, of which Mr.
Herlihy is trustee. Mr. Herlihy disclaims beneficial ownership of these
shares. Also includes 115,000 shares of Common Stock owned by the
Company's Non-Union Employees Retirement Income Pension Plan, of which Mr.
Herlihy is the trustee. Mr. Herlihy disclaims beneficial ownership of
these shares. As a trustee, Mr. Herlihy shares voting and dispositive
power over the securities owned by these plans.
4) Does not include the ownership by Enercorp, Inc. as reported separately in
this table. Mr. Itin owns approximately 7.1% of the outstanding voting
securities of Enercorp, Inc.
5) Includes 150,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days.
6) See Note (1) above regarding the ownership of Acrodyne Corporation. Mr.
Itin may be deemed to be a beneficial owner of the shares of Common Stock
owned by Acrodyne Corporation and its affiliates, and, therefore, these
shares are included in the ownership reported for Mr. Itin in this table.
7) Includes 52,500 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days of the date of this table.
8) Includes 130,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days.
9) Includes 70,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days.
10) Includes 82,500 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days.
11) Includes 156,719 shares of Common Stock held in the name of Ajay Sports,
Inc. Mr. Cashen is a director of Ajay Sports, Inc. and disclaims
beneficial ownership of the 156,719 shares of Common Stock.
12) Includes 1,852,329 shares of Common Stock and 150,000 options that are
exercisable within 60 days of the date of this table held in the name of
Enercorp, Inc. Mr. Greenawalt is a director of Enercorp, Inc. owns
approximately 2.1% of the outstanding voting shares of Enercorp, Inc. Mr.
Greenawalt disclaims beneficial ownership of the 1,852,329 shares of
Common Stock and 150,000 options.
13) Information is based on the Schedule 13G dated February 17, 1999 filed
with the SEC by these individuals. The Common Stock ownership includes
636,364 shares issuable upon conversion of the 17,500 shares of preferred
stock listed under preferred stock.
14) Information is based on the Company's records related to its sale of the
preferred stock to this individual. The Common Stock ownership includes
181,818 shares issuable upon conversion of the 5,000 shares of preferred
stock listed under preferred stock.
15) Information is based on the Schedule 13G dated August 3, 1999 filed with
the SEC by this entity. The Common Stock ownership includes 254,546 shares
issuable upon exercise of warrants currently exercisable within 60 days
and 463,637 shares issuable upon conversion of the 12,750 shares of
preferred stock listed under preferred stock.
12
<PAGE>
16) Includes 5,000 shares of Common stock issuable upon exercise of stock
options that are exercisable within 60 days of the date of this table.
17) Includes 4,633 shares attributed to one executive officer not named in the
Summary Compensation Table. This amount includes 3,750 shares of Common
stock issuable upon exercise of stock options that are exercisable within
60 days of this table.
Certain Relationships and Related Transactions
At September 30, 1999 the Company had an investment in and notes
receivable from Ajay Sports, Inc. ("Ajay") in the amount of $6,152,000 including
a $500,000 note receivable reflected as a reduction in the Company's
shareholders' equity relating to the issuance of 206,719 shares of the Company's
common stock to Ajay. Ajay manufactures and distributes golf accessories and
outdoor leisure furniture primarily to retailers in the United States and during
1999, purchased Pro Golf of America, Inc., franchisor Pro Golf Discount(R)
retail stores that sell golf equipment and accessories. The Company has
manufacturing rights in certain Ajay facilities through 2002, under a joint
venture agreement.
The Company's investment in and note receivable from affiliate at
September 30, 1999 is comprised of an investment in preferred stock of Ajay in
the amount of $4,565,000 and a secured note receivable in the amount of
$1,587,000. In August 1999, $500,000 was paid to a previous lender, on behalf of
Ajay, under the terms of an intercreditor agreement. In addition, the Company
could be obligated to advance to Ajay up to an additional $1,515,000 under the
terms of the intercreditor agreement. At September 30, 1999 the Company had
receivables of $245,000 from Ajay for unpaid interest and fees incurred from May
to September 1, 1999, which is included in trade and other accounts receivable
at September 30, 1999. At January 31, 2000, the Company had receivables of
$345,060 from Ajay for unpaid interest and fees incurred. The chairman of the
Company has provided a guarantee of the Company's investments in and loans to
Ajay.
From July 1997 through June 1998, the Company and Ajay had a joint and
several loan obligation to a bank. On June 30, 1998, the Company restructured
its investment in Ajay (the "Ajay Restructuring".) The objective of the Ajay
Restructuring is to separate the Company's and Ajay's financing, eliminate
Ajay's dependency on the Company for capital and provide Ajay with adequate
working capital to grow its operations and improve shareholder value that would
benefit the Company. The restructuring provides Ajay three years to improve
shareholder value at which time the notes receivable become due and payable.
As a result of the Ajay Restructuring, the bank provided separate loan
facilities to the Company and Ajay. As consideration to the bank for the
separate loan facilities, the Company provided Ajay $2,000,000 in additional
capital during 1998 which included the purchase of Ajay notes payable of
$948,000 previously provided by affiliated parties of the Company, and agreed to
convert $5,000,000 of advances to Ajay into a new cumulative convertible
preferred stock. The preferred stock is convertible into 3,333,333 shares of
Ajay common stock. . No dividends are accrued or payable on the preferred stock
through July 31, 2001. The preferred stock dividend rate will be 17% in 2001 and
24% in 2002, rates which the Company believes would require Ajay to raise
capital from new sources to redeem the preferred stock.
Interest accrues on the Company's loan to Ajay at the rate of 16% per
annum. The terms of the promissory note have been amended to provide that
interest will be payable annually instead of monthly, and will first become due
on December 31, 2000, with all remaining principal and interest due at maturity
on August 1, 2001. In addition, Ajay has agreed to pay the Company annual
administrative fees of $90,000 and annual management fees of $80,000 for
sourcing products overseas.
The Company owns 686,274 shares of common stock in Ajay that represent
approximately 16% of Ajay's outstanding common stock. The investment is recorded
using the equity method of accounting based on the common ownership of Ajay and
the Company by the chairman of the Company who is also the chairman of Ajay. For
the three years ended September 30, 1999, 1998 and 1997, the Company reported
13
<PAGE>
losses on its investment in Ajay in the amount of $488,000, $506,000 and
$384,000 respectively. In addition, the Company has options to purchase
1,851,813 shares of common stock at an exercise price of $1.08 per share. The
Company has reduced the value of its investment in Ajay common stock to zero on
its consolidated balance sheet based on the Company's equity interest in Ajay's
losses since the date the common stock was acquired. During the year ended
September 30, 1999, the Company reduced its investment in Ajay's preferred stock
by $435,000 as a result of continuing recognition of the Company's equity
interest in Ajay's losses.
At September 30, 1999, based upon the closing bid price, the market
value of the Company's investment in Ajay common stock was approximately
$558,000. At this date, Ajay had approximately 4,205,000 shares of common stock
outstanding. In addition to the Company's options and convertible preferred
stock at September 30, 1999, Ajay had approximately 230,000 of outstanding
preferred stock that is convertible to approximately 64,000 shares of Ajay
common stock and outstanding options and warrants to purchase approximately
756,000 shares of Ajay common stock at prices ranging from $1.08 to $4.13 per
share.
During the year ended September 30, 1999, the Company engaged
Compusonics Video Corp. for website development and e-commerce designs and paid
an aggregate of $157,000 to that company for services rendered. The Company's
Chief Executive Officer is a controlling shareholder of Compusonics Video Corp.
Proposal 2
Approval of an Amendment to the
Company's 1995 Stock Option Plan For Non-Employee Directors
The Board has approved, and is requesting that the stockholders of the
Company approve, an amendment (the "Amendment") to the Company's 1995 Stock
Option Plan for Non-Employee Directors, as amended (the "Directors' Plan"), to
increase the number of shares reserved for issuance upon exercise of stock
options granted thereunder from an aggregate of 200,000 shares of Common Stock
to 400,000 shares of Common Stock (the "Available Shares").
The Directors? Plan is designed to provide additional incentive for
persons to become directors of the Company, to reward non-employee directors for
services to the Company, to encourage stock ownership by directors and to
encourage such persons to remain associated with the Company. The Directors'
Plan was adopted by the Company's Board of Directors in January 1995 for a
ten-year term, and was approved by the Company's stockholders at the annual
meeting of stockholders held in February 1995. The only persons eligible to
participate in the Directors' Plan are the non-employee directors of the
Company. At the date of this proxy statement, the directors eligible for
participation in the Directors' Plan include Timothy S. Itin, H. Samuel
Greenawalt, Anthony B. Cashen and Charles G. McClure.
The Directors' Plan is a formula plan that provides each non-employee
director who is serving as a director of the Company immediately following the
annual meeting of stockholders shall be granted a ten-year option to purchase
10,000 shares of common stock at the fair market value of the common stock on
the date of grant. Grants under the Directors' Plan are automatic and the
options become exercisable as to 25% of the shares six months after the date of
grant and, cumulatively, as to an additional 25% of the shares covered thereby
on the first, second and third anniversaries of the date of grant and remain
exercisable until ten years after the date of grant.
The Directors' Plan is administered by the Board of Directors. The
Board may adopt, amend and rescind any rules and regulations relating to the
Directors' Plan as in its opinion may be advisable for the administration of the
Directors?' Plan without amending the Directors' Plan.
The Board may terminate, modify or amend the Directors' Plan in its
discretion, except that it may not increase the number of shares of common stock
as to which options may be granted to eligible directors of the Company, grant
eligibility to directors not included within the terms of the Directors' Plan
prior to the amendment, or increase the benefits to be received by directors of
14
<PAGE>
the Company who are participants in the Directors' Plan unless approved by the
stockholders. The Board may not adversely affect the rights of any participant
under any unexercised option or any portion thereof without the consent of such
participant.
Options granted under the Directors' Plan contain provisions for
proportionate adjustment of the number of shares for outstanding options and the
option price per share in the event of a stock dividend or recapitalization
resulting in a stock split or combination or exchange of shares.
Upon dissolution, liquidation, corporate separation or division,
including but not limited to, a split-up or spin-off, or the merger or
consolidation of the Company (a "Corporate Change"), the Board may provide that
either (i) each option holder shall have the right to exercise his option, to
the extent then exercisable at the option price, solely for the kind and amount
of shares of stock and other securities, property, cash or any combination
thereof receivable upon such Corporate Change by a holder of the number of
shares of Common Stock for which such option might have been exercised
immediately prior to the Corporate Change; or (ii) each option granted under the
Directors'? Plan shall terminate as of a date fixed by the Board and that, prior
to the termination date, the option holders may exercise their options as to all
or any part of the shares covered, whether or not then vested.
The Directors' Plan also provides that all outstanding options
thereunder automatically shall become fully vested after a specified period of
time (as specified in the Directors' Plan, depending on the event) if there is a
tender offer or exchange offer for the Company, certain mergers or
consolidations of the Company or certain changes in control of the Company,
including the acquisition by any person or group of a majority of the
outstanding voting securities of the Company.
To exercise an option, the optionee must pay the full option price
either in cash or securities, which may include shares of the Company'?s Common
Stock having a fair market value equal to the option price, or a combination of
cash and securities. The optionee may use cash received from the Company at the
time of exercise as a compensatory payment or borrowed from the Company on terms
and conditions ii~ compliance with applicable law and determined by the Board in
its discretion separately with respect to each option exercise and each
optionee. The Board shall determine the value of any securities tendered in
payment of an option exercise price.
The term of each option shall be ten years. If an optionee ceases to be
a director of the Company for any reason other than death, disability,
retirement or termination for cause, the optionee may exercise all vested
options within three months following such cessation. If an optionee is removed
for cause, all options (whether or not vested) held by him will terminate
immediately.
If an optionee dies while a director of the Company, or during the
three-month period following termination as a director (other than for cause),
or if the optionee retires or becomes disabled, the optionee?s options, whether
or not otherwise exercisable, unless previously terminated, may be exercised by
the optionee or his legal representative or the person who acquires the options
by bequest or inheritance at any time within one year following the date of
death, disability or retirement of the optionee.
The Directors' Plan provides that options granted thereunder confer no
right upon any participant with respect to continuation as a director and do not
interfere with the stockholders? right to remove him as a director as provided
by applicable law.
An option granted under the Directors' Plan is not transferable by the
optionee other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code. During
the lifetime of the optionee, options may be exercised only by the optionee and,
thereafter, only by his legal representative.
An optionee has no rights as a stockholder with respect to any shares
covered by an option granted under the Directors' Plan until the option has been
exercised.
If a registration statement and a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act relating to the shares issuable upon
the exercise of options granted pursuant to the Directors' Plan are not in
effect at the time of the exercise of such options, the optionee must represent
15
<PAGE>
and warrant, in writing to the Company, that the shares to be issued are not
being acquired with a view toward distribution thereof. No shares will be issued
upon the exercise of any option unless and until there has been full compliance
with any then applicable requirements of the SEC, state securities commissions
or other regulatory agencies having jurisdiction, and of any securities exchange
upon which the shares may be listed.
In addition, unless a current registration statement under the
Securities Act is in effect, an optionee who exercises options to purchase
shares will acquire "restricted securities" as that term is used in Rule 144
adopted under the Securities Act and will be able to sell such shares only in
compliance with such rule (or another applicable exemption from registration).
The following table shows, as of September 30, 1999, the status of
Available Shares:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Avail. For
Shares Reserved # of Options Granted # of Options Exercised Shares Subject to Grant of Future
(Net of Forfeitures) Outstanding Options Options
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
200,000 170,000 -0- 170,000 30,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
If the Amendment is approved, 200,000 additional shares of Common Stock
will be added to the total number of shares reserved under the Directors' Plan,
making an aggregate of 230,000 shares available for the grant of future options
under the Directors' Plan.
Federal Income Tax Consequences. The federal income tax discussion set
forth below is included for general information only. Optionees are urged to
consult their tax advisors to determine the particular tax consequences
applicable to them, including the application and effect of foreign, state and
local income and other tax laws. All grants of options under the Directors' Plan
are non-statutory options.
No compensation will be realized by the optionee of a non-statutory
option at the time it is granted, provided the exercise price is at least equal
to the value of the underlying shares at the time of the grant. Upon the
exercise of a non-statutory option, an optionee will realize compensation for
federal income tax purposes on the difference between the exercise price and the
fair market value of the shares acquired at the time of exercise. If the
optionee exercises a non-statutory option by surrendering shares of the
Company's Common Stock, the optionee will not recognize income or gain at the
time of exercise.
The Company recognizes no deduction at the time of grant of a
non-statutory option provided the exercise price of the option is at least equal
to the value of the underlying shares. The Company will recognize a deduction at
the time of exercise of a non-statutory option to the extent the exercise price
is less than the value of the shares acquired upon exercise.
Recommendation and Vote Required
- --------------------------------
Management and the Board of Directors recommend that the stockholders
vote "FOR" approval of the Amendment. Approval of this proposal requires the
affirmative vote of a majority of the shares represented at the Meeting and
entitled to vote on this proposal.
Timothy J. Itin, H. Samuel Greenawalt, Anthony B. Cashen and Charles G.
McClure, the non-employee directors of the Company, have an interest in this
proposal in that if this proposed amendment to the Directors' Plan is approved
by the Company's stockholders, they will be eligible to receive additional
grants of options under the Directors' Plan.
Independent Public Accountants
The Company's financial statements for the fiscal year ended September
30, 1999 were audited by Arthur Andersen & Company, LLC ("Andersen"). Andersen
has been reappointed to audit the Company's financial statements for the fiscal
16
<PAGE>
year ending September 30, 2000. Representatives of Andersen are not expected to
be present at the Meeting.
In July 1998, the Company's Board of Directors elected to change
independent accounting firms and engaged Andersen to audit the Company's
financial statements for the fiscal year ending September 30, 1998. This
decision was not based on any disagreement with the Company's former independent
accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The reports issued by the
Company's former independent accountants for the two years preceding the change
did not contain any adverse opinion or disclaimer of opinion, and they were not
qualified or modified as to uncertainty, audit scope or accounting procedures.
Stockholder Proposals
All proposals of stockholders intended to be presented at the next
Annual Meeting of Stockholders must be received at the Company's corporate
offices at 14100 SW 72nd Avenue, Portland, Oregon 97224, Attention: Corporate
Secretary, on or before October 1, 2000, in order to be considered for inclusion
in the proxy statement for the year 2001 meeting. The Company did not receive
any stockholder proposals for inclusion in this Proxy Statement.
Other Business
Management does not know of any other business to be brought before the
Meeting. If any such matters are brought before the Meeting, the proxies named
in the enclosed form of proxy will vote proxies received by them as they deem
best with respect to all such matters.
Annual Report
The Company's 1999 Annual Report to Stockholders is being sent to all
stockholders with this Proxy Statement but is not incorporated herein by
reference and is not to be considered a part of the Proxy Materials.
By Order of the Board of Directors,
Gerard A. Herlihy
Secretary
17
<PAGE>
PROXY
- --------------------------------------------------------------------------------
WILLIAMS CONTROLS, INC.
14100 SW 72nd Avenue
Portland, OR 97224
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 24, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Williams Controls, Inc. (the "Company")
hereby constitutes and appoints Thomas W. Itin or Gerard A. Herlihy as attorneys
and proxies, to appear, attend and vote all of the shares of the Common Stock
and/or the Series A Preferred Stock of Williams Controls, Inc. standing in the
name of the undersigned at the Annual Meeting of Stockholders of Williams
Controls, Inc. to be held at the offices of Premier Plastic Technologies, Inc.,
42155 Merrill Street, Sterling Heights, Michigan 48314, on Friday, March 24,
2000 at 10:00 a.m. Eastern Standard Time, and at any postponements or
adjournments thereof:
1. To elect the following one Class II director to serve for a three
year term expiring in 2003:
For nominee Timothy S. Itin ____________.
Withhold authority to vote for nominee Timothy S. Itin ____________.
2. To consider and vote upon an amendment to the Company's 1995 Stock
Option Plan for Non-Employee Directors, to increase the
number of shares available for grant thereunder from 200,000 to
400,000.
FOR ______ AGAINST ______ ABSTAIN ______
3. To transact such other business as may properly come before the
meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH
RESPECT TO PROPOSAL TWO AND FOR THE NOMINEE LISTED IN PROPOSAL ONE, BUT THEY
WILL BE VOTED FOR THE NOMINEE LISTED IN PROPOSAL ONE AND FOR PROPOSAL TWO IF NO
SPECIFICATION IS MADE. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
Please mark, date and sign your name exactly as it appears hereon and
return the Proxy in the enclosed envelope as promptly as possible. It is
important to return this Proxy properly signed in order to exercise your right
to vote if you do not attend the meeting and vote in person. When signing as
agent, partner, attorney, administrator, guardian, trustee or in any other
fiduciary or official capacity, please indicate your title. If stock is held
jointly, each joint owner must sign.
Date: ____________, 2000
_________________________________________
Signature(s)
Address if differentfrom that on label:
_________________________________________
Street Address
_________________________________________
City, State and Zip Code
_________________________________________
Number of shares of Common Stock
_________________________________________
Number of shares of Series A Preferred
Stock
Please check if you intend to be present at the meeting: ___________
<PAGE>
WILLIAMS CONTROLS. INC.
1995 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
1. Purpose: Restrictions on Amount Available Under the Plan. This 1995
Formula Stock Option Plan (the "Plan") is intended to encourage stock ownership
by directors of WILLIAMS CONTROLS, INC. (the "Corporation") who are not
employees of the Corporation and thereby to induce qualified persons to be
willing to serve in such capacity. It is intended that options granted under
this Plan shall constitute "non-statutory stock options" ("Options")
2. Definitions. As used in this Plan, the following words and phrases
shall have the meanings indicated:
(a) "Disability" shall mean a Recipient's inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
12 months.
(b) "Market Value" per share as of a particular date shall
mean the last sale price of the Corporation's Common Stock as reported on a
national securities exchange or on the NASDAQ National Market System or, if a
last sale reporting quotation is not available for the Corporation's Common
Stock, the average of the bid and asked prices of the Corporation's Common Stock
as reported by NASDAQ or on the electronic bulletin board, or if not so
reported, as listed in the National Quotation Bureau, Inc.'s "Pink Sheets" or,
if such quotations are unavailable, the value determined by the Board in
accordance with their discretion in making a bona fide, good faith determination
of fair market value. Market Value shall be determined without regard to any
restriction other than a restriction which, by its terms, will never lapse.
(c) "Internal Revenue Code" shall mean the United States
Internal Revenue Code of 1986, as amended from time to time (codified at Title
26 of the United States Code) (the "Internal Revenue Code"), and any successor
legislation.
3. Administration.
(a) The Plan shall be administered by the Board of Directors
(the "Board") , but this Plan is intended to be a "formula plan" as that term is
defined in Rule l6b-3 under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). It is intended, therefore, that Options granted hereunder qualify
as exempt purchases under Rule 16b-3 of the 1934 Act.
(b) The Board shall have the authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including (without limitation) the authority to:
determine who qualifies for the receipt of Options; to determine the purchase
price of the shares of Common Stock covered by each Option pursuant to the
formula (the "Option Price"); to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan provided such actions are
consistent with this Plan; and to make all other determinations deemed necessary
or advisable for the administration of the Plan.
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(c) Because this Plan is intended to be a formula plan,
Options granted under the Plan need not be evidenced by duly adopted resolutions
of the Board.
(d) The Board shall endeavor to administer the Plan and grant
Options hereunder in a manner that is compatible with the obligations of persons
subject to Section 16 of the 1934 Act, although compliance with Section 16 is
the obligation of the Recipient, not the Corporation. Neither the Board nor the
Corporation assumes any responsibility for a Recipient's compliance with his
obligations under Section 16 of the 1934 Act.
(e) No member of the Board shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Option
granted hereunder.
4. Eligibility. Only directors of the Corporation who are not
employees of the Corporation are eligible to receive Options granted pursuant
hereto. A Recipient shall be eligible to receive more than one grant of an
Option during the term of the Plan, on the terms and subject to the restrictions
herein set forth.
5. Stock Reserved.
(a) The stock subject to Options hereunder shall be shares of
the Corporation's Common Stock, $.01 par value per share ("Common Stock"). Such
shares may, in whole or in part, be authorized but unissued shares or shares
that shall have been or that may be reacquired by the Corporation. The aggregate
number of shares of Common Stock as to which Options may be granted from time to
time under the Plan shall not exceed 200,000. The limitation established by the
preceding sentences shall be subject to adjustment as provided in Section 6(g)
hereof.
(b) If any outstanding Option under the Plan for any reason
expires or is terminated without having been exercised in full the shares of
Common Stock allocable to the unexercised portion of such Option shall become
available for subsequent grants of Options under the Plan, unless the Plan shall
have been terminated.
6. Terms and Conditions of Options. Each Option granted pursuant to
the Plan shall be evidenced by a written Option Agreement between the
Corporation and the Recipient, which agreement shall be substantially in the
form of Exhibit "A' attached hereto as modified from time to time by the Board
in its discretion, and which shall comply with and be subject to the following
terms and conditions:
(a) Grant. Each Recipient who is a director and not an
employee of the Corporation on the date of the Corporation's annual (or special
in lieu of annual) meeting of stockholders (the "Date of Grant") shall be
automatically granted an Option to acquire 10,000 shares of Common Stock
exercisable at the Option Price described in paragraph 6(c), exercisable for ten
years from the Date of Grant, subject to the other terms and conditions hereof.
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(b) Vesting. Subject to earlier termination or acceleration
as provided herein, each Option granted under this Plan is subject to the
following vesting schedule: (i) 25% of the Option shall be exercisable on the
Date of Grant; (ii) cumulatively an additional 25% of the Option shall become
exercisable on the first anniversary of the Date of Grant; (ii) cumulatively an
additional 25% of the Option shall become exercisable on the second anniversary
of the Date of Grant; and (iii) cumulatively the remaining 25% of the Option
shall become exercisable on the third anniversary of the Date of Grant.
(c) Option Price. Options granted under this Plan will have
an Option Price equal to 100% of the Market Price on the Date of Grant. The
Option Price shall be subject to adjustment as provided in Section 6(g) hereof.
(d) Method of Exercise and Medium and Time of Payment.
(i) An Option may be exercised, as to any or
all whole shares of Common Stock as to which the Option
has become exercisable.
(ii) Each exercise of an Option granted hereunder,
whether in whole or in part, shall be by written
notice to the Secretary of the Corporation designating the number of shares as
to which the Option is exercised, and shall be accompanied by payment in full of
the Option Price for the number of shares so designated, together with any
written statements reasonably required by the Corporation in order to fulfill
its obligations under any applicable securities laws.
(iii) The Option Price shall be paid in cash, in
shares of Common Stock having a market value equal to
such Option Price or in property or in a combination of cash, shares and
property, and (subject to approval of the Board of Directors) may be effected in
whole or in part (A) with monies received from the Corporation at the time of
exercise as a compensatory cash payment, or (B) with monies borrowed from the
Corporation pursuant to repayment terms and conditions as shall be determined
from time to time by the Board, in its discretion, separately with respect to
each exercise of Options and each Recipient; provided, however, that each such
method and time for payment and each such borrowing and terms and conditions of
repayment shall be permitted by and be in compliance with applicable law.
(iv) The Board of Directors shall have the sole and
absolute discretion to determine whether or not
property other than cash or Common Stock may be used to satisfy the Option
Price and, if so, to determine the value of the property received.
(e) Termination. Except as provided in this Section 6(d) and
in Section 6(e) hereof, an Option may not be exercised unless the Recipient is
then a director of the Corporation, and unless the Recipient has remained
continuously as a director of the Corporation since the Date of Grant of the
Option.
(i) If the Recipient ceases to be director of
the Corporation because the Recipient resigned or declined to stand for
reelection as a director, all Options of such Recipient that are exercisable
at the time of such cessation shall terminate three months after the date of
such cessation.
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(ii) If the Recipient ceases to be a director of the
Corporation because the Recipient is removed for cause, all Options granted to
such Recipient but not thereto exercised shall terminate on the effective
date of the Recipient's removal.
(iii) Nothing in the Plan or in any Option granted
pursuant hereto shall confer upon an individual any
right to continue as a director of the Corporation.
(f) Death, Disability or Retirement of Recipient. If a
Recipient shall die while a director of the Corporation or if the Recipient's
directorship shall terminate by reason of Disability, all Options theretofore
granted to such Recipient (whether or not otherwise exercisable; unless earlier
terminated in accordance with their terms), may be exercised by the Recipient or
by the Recipient's estate or by a person who acquired the right to exercise such
Option by bequest or inheritance or otherwise by reason of the death or
Disability of the Recipient, at any time within one year after the date of death
or Disability of the Recipient.
(g) Transferability Restriction. (i) Options granted under
the Plan shall not be transferable other than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Internal Revenue Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. Options may be exercised, during the
lifetime of the Recipient, only by the Recipient and thereafter only by his
legal representative.
(ii) Any attempted sale, pledge, assignment,
hypothecation or other transfer of an Option contrary to the
provisions hereof and the levy of any execution, attachment or similar process
upon an Option shall be null and void and without force or effect and shall
result in termination of the Option.
(iii) (A) As a condition to the transfer of any
shares of Common Stock issued upon exercise of an Option
granted under this Plan, the Corporation may require an opinion of counsel,
satisfactory, to the Corporation, to the effect that such transfer will not be
in violation of the Securities Act of 1933 or any other applicable securities
laws or that such transfer has been registered under federal and all applicable
state securities laws. (B) Further, the Corporation shall be authorized to
refrain from delivering or transferring shares of Common Stock issued under this
Plan until the Board of Directors determines that such delivery or transfer will
not violate applicable securities laws and the Recipient has tendered to the
Corporation any federal, state or local tax owed by the Recipient as a result of
exercising the Option, or disposing of any Common Stock, when the Corporation
has a legal liability to satisfy such tax. (C) The Corporation shall not be
liable for damages due to delay in the delivery or issuance of any stock
certificate for any reason whatsoever, including, but not limited to, a delay
caused by listing requirements of any securities exchange or the National
Association of Securities Dealers, or any registration requirements under the
Securities Act of 1933, the 1934 Act, or under any other state or federal law,
rule or regulation. (D) The Corporation is under no obligation to take any
action or incur any expense in order to register or qualify the delivery or
transfer of shares of Common Stock under applicable securities laws or to
perfect any exemption from such registration or qualification. (E) The
Corporation will have no liability to any Recipient for refusing to deliver or
transfer shares of Common Stock if such refusal is based upon the foregoing
provisions of this Paragraph.
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(h) Effect of Certain Changes.
(i) If there is any change in the number of
outstanding shares of Common Stock through the
declaration of stock dividends, or through recapitalization resulting in stock
splits, or combinations or exchanges of such shares, the number of shares of
Common Stock available for Options, the number of such shares covered by
outstanding Options, and the price per share of such Options, shall be
proportionately adjusted by the Board to reflect any increase or decrease in the
number of issued shares of Common Stock; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.
(ii) In the event of the proposed dissolution
or liquidation of the Corporation, in the event of anycorporate separation or
division, including, but not limited to, split-up or spin--off, or in the
event of a merger or consolidation of the Corporation with another
corporation, the Board may provide that the holder of each Option then
exercisable shall have the right to exercise such Option (at its then Option
Price) solely for the kind and amount of shares of stock and other securities,
property, cash or any combination thereof which would be receivable upon such
dissolution, liquidation, or corporate separation or division, or merger or
consolidation by a holder of the number of shares of Common Stock for which such
Option might have been exercised immediately prior to such event; or the Board
may provide, in the alternative, that each Option granted under the Plan shall
terminate as of a date to be fixed by the Board; provided, however, that not
less than 30 days' written notice of the date so fixed shall be given to each
Recipient, who shall have the right, during the period of 30 days preceding such
termination, to exercise the options as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such Options would
not otherwise be exercisable.
(iii) Paragraph (ii) of this Section 6(g) shall not
apply to a merger or consolidation in which the
Corporation is the surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any other corporation, cash
or any other thing of value. Notwithstanding the preceding sentence, in case of
any consolidation or merger of another corporation into the Corporation in which
the Corporation is the surviving corporation and in which there is a
reclassification or change (including a change which results in the right to
receive cash or other property) of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in such shares into two or
more classes or series of shares) , the Board may provide that the holder of
each Option then exercisable shall have the right to exercise such Option solely
for the kind and amount of shares of stock and other securities (including those
of any new direct or indirect parent of the Corporation) , property, cash or any
combination thereof receivable upon such reclassification, change, consolidation
or merger by the holder of the number of shares of Common Stock for which such
Option might have been exercised.
(iv) Notwithstanding paragraph (ii) of this Section
6(g), in the event of any merger or consolidation in which the Corporation is
not the surviving corporation or any sale or transferby the Corporation of all
or substantially all its assets or any tender offer or exchange offer for
or the acquisition, directly or indirectly, by any person or group of
all or a majority of the then outstanding voting securities of the Corporation,
all Options granted under the Plan shall become exercisable in full,
notwithstanding any other provision of the Plan or of any outstanding Options
granted thereunder, including provisions providing for staggered vesting of
options, on and after (i) the fifteenth day prior to the effective date of
such merger, consolidation, sale, transfer or acquisition or (ii) the date of
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commencement of such tender offer or exchange offer, as the case may be.
notwithstanding the foregoing, in no event shall any Option be exercisable after
the date of termination of the exercise period of such Option specified in
Sections 6(d) or 6(e), as applicable.
(v) In the event of a change in the Common Stock of
the Corporation as presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any such
change shall be deemed to be the Common Stock within the meaning of the Plan.
(vi) To the extent that the foregoing adjustments
relate to stock or securities of the corporation, such adjustments shall be
made by the Board, whose determination in that respect shall be final,
binding and conclusive.
(vi) Except as expressly provided in this Section
6(g), the Recipient shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares
of stock of any class or by reason of any dissolution, liquidation, merger,
consolidation or split-up or spin-off of assets or stock of another corporation;
and any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to the Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or part of its business or assets.
(i) Rights as Shareholder - Non-Distributive Intent.
(i) Neither a person to whom an Option is granted,
nor such person's legal representative, heir, legatee
or distributee, shall be deemed to be the holder of, or to have any rights of a
holder with respect to, any shares of Common Stock subject to such Option, until
after the Option is exercised and the shares are issued to the person exercising
such Option.
(ii) Upon exercise of an Option at a time when there
is no registration statement in effect under the
Securities Act of 1933 relating to the shares issuable upon exercise, shares may
be issued to the Recipient only if the Recipient represents and warrants in
writing to the Corporation that the shares purchased are being acquired for
investment and not with a view to the distribution thereof. A form of
subscription agreement is attached hereto as Exhibit B.
(iii) No shares shall be issued upon the exercise of
an Option unless and until there shall have been compliance with any
then applicable requirements of the Securities and Exchange Commission, or
any other regulatory agency having jurisdiction over the Corporation.
(iv) No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or
other property) or distribution or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 6(g) hereof.
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(j) Other Provisions. Option Agreements authorized under the
Plan shall contain such other provisions, including, without limitation, the
imposition of restrictions upon the exercise of an Option, as the Board shall
deem advisable.
7. Agreement by Recipient Regarding Taxes.
(a) Each Recipient agrees that the Corporation, to the extent
permitted or required by law, shall deduct a sufficient number of shares due to
the Recipient upon exercise of the Option to allow the Corporation to pay
federal, state and local taxes of any kind required by law to be withheld upon
the exercise of such Option from any payment of any kind otherwise due to the
Recipient. The Corporation shall not be obligated to advise any Recipient of the
existence of any tax or the amount which the Corporation will be so required to
withhold.
(b) Each Option Recipient must acknowledge the possible
availability of an election under Section 83(b) of the Code, or any successor
provision.
8. Term of Plan. Options may be granted pursuant to the Plan from time
to time within a period of ten years from the date the Plan is adopted by the
Board.
9. Amendment and Termination of the Plan.
(a) (i) The Board at any time and from time to time may
terminate, modify or amend the Plan;
(ii) provided, however, that any amendment that
would: (A) materially increase the number of securities issuable under the
Plan to persons who are subject to Section 16(a) of the 1934 Act; or
(B) grant eligibility to a class of persons who are subject to Section
16(a) of the 1934 Act not included within the terms of the Plan prior to the
amendment; (C) materially increase the benefits accruing under the Plan to
persons who are subject to Section 16(a) of the 1934 Act; or (D) require
shareholder approval under applicable state law, the rules and regulations of
any national securities exchange on which the Corporation's securities then may
be listed, the Internal Revenue Code or any other applicable law, shall be
subject to the approval of the shareholders of the Corporation as provided in
Section 10 hereof;
(iii) provided further that any such increase or
modification that may result from adjustments authorized by Section 6(g) hereof
or which are required for compliance with the 1934 Act, the Internal Revenue
Code, the Employee Retirement Income Security Act of 1974, their rules or
other laws or judicial order, shall not require approval of shareholders.
(b) Except as provided in Section 6 hereof, no termination,
modification or amendment of the Plan may adversely affect any Option previously
granted, unless the written consent of the Recipient is obtained.
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10. Approval of Shareholders. The Plan shall take effect upon its
adoption by the Board but shall be subject to approval at a duly called and held
meeting of shareholders in conformance with the vote required by the
Corporation's charter documents, resolution of the Board, any other applicable
law and the rules and regulations thereunder, or the rules and regulations of
any national securities exchange upon which the Corporation's Common Stock is
listed and traded, each to the extent applicable. No Option granted prior to the
approval of this Plan by the shareholders of the Corporation shall be effective
until after such approval has been obtained.
11. Assumption. The terms and conditions of any outstanding Options
granted pursuant to this Plan shall be assumed by, be binding upon and inure to
the benefit of any successor corporation to the Corporation and shall continue
to be governed, to the extent applicable, by the terms and conditions of this
Plan. Such successor corporation shall not otherwise be obligated to assume this
Plan.
12. Termination of Right of Action. Every right of action arising out
of or in connection with the Plan by or on behalf of the Corporation, or by any
shareholder of the Corporation against any past, present or future member of the
Board, or against any employee, or by an employee (past, present or future)
against the Corporation, will, irrespective of the place where an action may be
brought and irrespective of the place of residence of any such shareholder,
director or employee, cease and be barred by the expiration of three years from
the date of the act or omission in respect of which such right of action is
alleged to have risen.
13. Adoption.
(a) This Plan was approved by the Board of Directors of the
Corporation on January __, 1995.
(b) This Plan was approved by the shareholders of the
Corporation at a meeting on February 22, 1995.
WILLIAMS CONTROLS, INC.
(the Corporation)
By /s/ Thomas W. Itin
-------------------------
Thomas W. Itin, President
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EXHIBIT "A"
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made as of this ___ day of ______ , 199_
between WILLIAMS CONTROLS, INC., a Delaware corporation (the "Corporation") ,
and ______________ (the "Recipient")
In accordance with its 1995 stock Option Plan for Non-Employee
Directors (the "Plan") as adopted by the Board of Directors of the Corporation
on ________ ___ , 1995, the Corporation desires, in connection with the services
of the Recipient, to provide the Recipient with an opportunity to acquire $.0l
par value common stock (the "Common Stock") of the Corporation on favorable
terms and thereby increase the Recipient's proprietary interest in the continued
progress and success of the business of the Corporation.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein set forth and other good and valuable consideration, the Corporation and
the Recipient agree as follows:
1. Confirmation of Grant of Option. pursuant to the requirements of
the Plan (but subject to shareholder approval of the Plan as required by
Securities and Exchange Commission Rule l6b-3), and effective ___________ ___,
199_ (the "Date of Grant"), the Corporation, subject to the terms of the Plan
and of this Agreement, confirms that the Recipient has been irrevocably granted
on the Date of Grant, as a matter of separate inducement and agreement, and in
addition to and not in lieu of salary or other compensation for services, a
Non-Statutory Stock Option (the "Option") to purchase an aggregate of ______
shares of Common Stock on the terms and conditions herein set forth, subject to
adjustment as provided in Section 8 hereof.
2. Purchase Price. The purchase price of shares of Common Stock
covered by the Option will be $_____ per share (the "Option Price") subject to
adjustment as provided in Section 8 hereof.
3. Exercise of Option. Except as otherwise provided in Section 6 of
the Plan, the Option may be exercised in whole or part at any time during the
term of the Option, provided, however, no option shall be exercisable after the
expiration of the term thereof, and no Option shall be exercisable unless the
holder shall at the time of exercise have been an employee or director of or a
consultant to the Corporation or of any subsidiary of the Corporation for a
period of at least three months.
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The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 10 hereof and
Section 6(c) of the Plan.
4. Term of Option. The term of the Option will be through __________
__, 199_ , subject to earlier termination or cancellation as provided in this
Agreement. Except as otherwise provided in paragraph 7 hereof, the Option will
not be exercisable unless the Recipient shall, at the time of exercise, be a
director of the Corporation.
The holder of the Option will not have any rights to dividends or any
other rights of a shareholder with respect to any shares of Common Stock subject
to the Option until such shares shall have been issued to him (as evidenced by
the appropriate transfer agent of the Corporation) upon purchase of such shares
through exercise of the Option.
5. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated in any way
(whether by operation of law or otherwise) otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder, and shall not be subject to
execution, attachment, or other process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt to make any such
levy of execution, attachment or other process will cause the Option to
terminate immediately upon the happening of any such event, provided, however,
that any such termination of the Option under the foregoing provisions of this
paragraph S will not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
6. Exercise Upon Termination. The Recipient's rights to exercise this
Option upon cessation as a director of the Corporation shall be as set forth in
Section 6(d) of the Plan.
7. Death or Disability of Recipient. The Recipient's rights to
exercise this Option upon death or Disability shall be as set forth in Section
6(e) of the Plan.
8. Adjustments. The Option shall be subject to adjustment upon the
occurrence of certain events as set forth in Section 6(g) of the plan.
9. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as amended (the
"Act") and that the Corporation has no obligation to register the shares of
Common Stock subject thereto and issuable upon the exercise thereof under the
Act. The Recipient represents that the Option is being acquired by him and that
such shares of Common Stock will be acquired by him for investment and all
certificates for the shares issued upon exercise of the Option will bear the
following legend unless such shares are registered under the Act prior to their
issuance.
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The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act"), and
are "restricted securities" as that term is defined in Rule
144 under the Act- The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, the availability of
which is to be established to the satisfaction of the
Corporation.
The Recipient further understands and agrees that the Option may only
be exercised if, at the time of such exercise, the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Act and applicable state laws, and both the Recipient and the Corporation agree
to use their best efforts to attempt to establish such exemption.
10. Notices. Each notice relating to this Agreement will be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Corporation shall be addressed to it at its office at 14100 SW 72nd
Avenue, Portland, Oregon 97224, Attn: Corporate Secretary. All notices to the
Recipient or other person or persons then entitled to exercise the Option shall
be addressed to the Recipient or such other person or Persons at the Recipient's
address below specified. Anyone to whom a notice may be given under this
Agreement may designate a new address by notice to that effect.
ii. Agreement by Recipient Regarding Taxes. The Recipient acknowledges
the possible availability of an election under Section 83(b) of the Code and
agrees to give the Corporation prompt written notice of any election made by
such person under Section 82(b) of the Code, or any similar provision thereof.
12. Section 16 Compliance. The Recipient acknowledges that it is
solely responsible for filing all reports that may be required under Section 16
of the Securities Exchange Act of 1924, and that the filing of such reports is
not the responsibility of the Corporation or the Committee, or any person
thereof.
13. Approval of Counsel. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of the Act, the Securities
Exchange Act of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any stock exchange upon
which the Common Stock may then be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit of
and be binding upon each successor and assign of the Corporation. All
obligations imposed upon the Recipient and all rights granted to the Corporation
under this Agreement will be binding upon the Recipient's heirs, legal
representatives and successors.
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15. Governmental and Other Regulations. The exercise of the Option and
the Corporation's obligation to sell and deliver shares upon the exercise of
rights to purchase shares is subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or governmental
agency which may, in the opinion of counsel for the Corporation, be required.
16. Incorporation of the Plan. The Plan is attached hereto and
incorporated herein by reference. In the event that any provision in this
Agreement conflicts with a provision in the Plan, the Plan shall govern.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed in its name by its President or a Vice President and the Recipient has
executed this Agreement all as of the date first above written.
WILLIAMS CONTROLS, INC.
By___________________________
Thomas W. Itin, President
The undersigned Recipient understands the terms of this Option
Agreement and the attached Plan and hereby agrees to comply therewith. Date
______________ ___, 199_
Recipient:_____________________
Tax ID Number: ________________
Address: ______________________
EXHIBIT "B"
FORM OF
SUBSCRIPTION AGREEMENT
THE SECURITIES OF WILLIAMS CONTROLS, INC. BEING SUBSCRIBED FOR HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND ARE RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE CORPORATION.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
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BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
This Subscription Agreement is entered for the purpose of the
Undersigned acquiring _______ shares of the $.0l par value common stock (the
"securities") of WILLIAMS CONTROLS, INC., a Delaware corporation (the
"Corporation") from the Corporation upon the exercise of an Option pursuant to
the Williams Controls, Inc. 1995 Stock Option Plan for Non-Employee Directors
(the "Plan"). It is understood that exercise of an Option at a time when no
registration statement relating thereto is effective under the Securities Act of
1933, as amended (the "Securities Act") can not be completed until the
Undersigned executes this Subscription Agreement and delivers it to the
Corporation, and then such exercise is effective only in accordance with the
terms of the Plan and this Subscription Agreement.
In connection with the Undersigned's acquisition of the Securities,
the Undersigned represents and warrants to the Corporation as follows:
1. The Undersigned is a director of the Corporation and has access to
financial and other information which he may deem relevant to make an investment
decision regarding the acquisition of the Securities.
2. The Securities are being acquired by the undersigned for his own
account and not on behalf of any other person or entity. The Undersigned's
present financial condition is such that it is unlikely that it would be
necessary for the Undersigned to dispose of any portion of the Securities in the
foreseeable future.
3. The Undersigned understands that the Securities being acquired
hereby have not been registered under the Securities Act or any state or foreign
securities laws, and are and will continue to be restricted securities within
the meaning of Rule 144 of the General Rules and Regulations under the
Securities Act and applicable state statutes, and consents to the placement of
an appropriate restrictive legend or legends on any certificates evidencing the
Securities and any certificates issued in replacement or exchange therefor and
acknowledges that the Corporation will cause its stock transfer records to note
such restrictions.
4. By the Undersigned's execution below, it is acknowledged and
understood that the Corporation is relying upon the accuracy and completeness
hereof in complying with certain obligations under applicable securities laws.
5. This Agreement binds and inures to the benefit of the
representatives, successors and permitted assigns of the respective parties
hereto.
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(Undersigned)
_______________ ___, 19__
Recipient: _________________________
Tax ID Number: ____________________
Address: __________________________
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