<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BANNER AEROSPACE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
BANNER AEROSPACE, INC.
300 WEST SERVICE ROAD
P.O. BOX 20260
WASHINGTON, DC 20041
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 1996
------------------------
To the Stockholders of Banner Aerospace, Inc.:
The Annual Meeting of Stockholders of Banner Aerospace, Inc., a Delaware
corporation (the "Company"), will be held at the Hilton Hotel, 13869 Park Center
Road, Herndon, Virginia 22071 on Friday, September 13, 1996, at 10:00 a.m., for
the following purposes:
1. To elect eleven directors of the Company for the ensuing year;
2. To amend the 1990 Non-Qualified and Incentive Stock Option Plan;
3. To approve the grant of options to non-employee directors;
4. To approve the 1996 Non-Employee Director Stock Option Plan;
5. To approve the Board of Directors' selection of independent auditors
of the Company; and
6. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record as of the close of business on July 22, 1996,
will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
By Order of the Board of Directors
Eugene W. Juris
Secretary
July 26, 1996
KINDLY DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE
ENCLOSED STAMPED, ADDRESSED ENVELOPE.
<PAGE> 3
BANNER AEROSPACE, INC.
300 WEST SERVICE ROAD
P.O. BOX 20260
WASHINGTON, DC 20041
JULY 26, 1996
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Banner Aerospace,
Inc. (the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m. on Friday, September 13, 1996 and at any
adjournments or postponements thereof, at the Hilton Hotel, 13869 Park Center
Road, Herndon, Virginia 22071. Only holders of record of the Company's common
stock, $1.00 par value ("Common Stock"), at the close of business on July 22,
1996 will be entitled to vote at the Annual Meeting. On July 22, 1996, there
were 23,409,610 shares of Common Stock outstanding and eligible to vote. Each
share of Common Stock entitles the holder thereof to one vote on each matter
scheduled to come before the Annual Meeting.
This Proxy Statement and enclosed proxy form are first being mailed to the
Company's shareholders on or about July 26, 1996.
Any proxy given pursuant to this solicitation and received in time for the
Annual Meeting will be voted as specified in such proxy. If no instructions are
given, proxies will be voted "FOR" the election of the nominees named below
under the caption "Election of Directors -- Information as to Nominees," and
"FOR" each of the other proposals set forth in the Notice of Annual Meeting and
this Proxy Statement.
The holders of record of a majority of the outstanding shares of Common
Stock will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes (shares held by a broker or nominee
which are represented at the Annual Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business.
In the election of directors, holders of Common Stock are entitled to elect
eleven directors with the eleven candidates who receive the highest number of
affirmative votes being elected. Votes against a candidate and votes withheld
have no legal effect.
The proposals in this Proxy Statement (other than the election of
directors) require the affirmative vote of a majority of shares of Common Stock
in person or represented by proxy and entitled to vote at the Annual Meeting.
Abstentions from voting in such proposals have the effect of a negative vote.
Broker non-votes are not deemed entitled to vote and have no effect for purposes
of determining whether a proposal has been approved. However, under New York
Stock Exchange rules, all votes cast either for or against such proposals must
(in the aggregate) represent at least 50% of the outstanding shares of Common
Stock. Abstentions and broker non-votes make it more difficult to meet this New
York Stock Exchange requirement.
The Board does not know of any matter, other than those specified herein,
which will be presented for action at the Annual Meeting. In the event that any
other matters should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote the proxy in
accordance with their best judgment on such matters.
<PAGE> 4
Any proxy may be revoked at any time prior to its exercise by notifying the
Company's Secretary in writing at the above address, by delivering a duly
executed proxy bearing a later date or by attending the Annual Meeting and
voting in person.
ITEM 1 -- ELECTION OF DIRECTORS
Eleven directors are to be elected for the ensuing year to hold office
until the next annual meeting of stockholders and until their successors are
elected and qualified.
INFORMATION AS TO NOMINEES
Set forth below is information about each nominee for election as a
director, based on information supplied by him, including his name, age and
principal occupations during the past five years, and certain directorships held
by him.
MICHAEL T. ALCOX, 48, has served as a Director of the Company since 1990.
He served as Vice President of the Company from March 1990 through May 1990.
Since 1987, he has served as Senior Vice President and the Chief Financial
Officer of The Fairchild Corporation ("Fairchild"), a worldwide aerospace
fasteners manufacturer and semiconductor process equipment company. Fairchild is
a substantial Company shareholder. Mr. Alcox is a director of Fairchild and RHI
Holdings, Inc. (2)
FREDERICK W. BRADLEY, JR., 69, has served as a Director of the Company
since 1995. He has served as advisor to the aerospace group of Long-Term Credit
Bank of Japan, Ltd. since 1992. In addition, Mr. Bradley is President of the
International Airline Training Fund of the United States, a fund set up by the
International Air Transport Association to provide professional training for
airline personnel. Prior thereto, Mr. Bradley was a senior vice president of
Citibank/Citicorp's Global Airline and Aerospace business. Mr. Bradley joined
Citibank/Citicorp in 1958 and was with them until he retired in 1992. Mr.
Bradley is the Chairman of the Board of Aircraft Lease Portfolio Securitization
92-1 Ltd. and Aircraft Lease Portfolio Securitization 94-1 Ltd., which are
special purpose entities that own aircraft and lease them to commercial
airlines. Mr. Bradley is also a director of America West Airlines, Inc.,
Shuttle, Inc., dba USAir Shuttle, First Citicorp Life Insurance Company and the
Institute of Air Transport, Paris, France. (2)
STEVEN L. GERARD, 51, has served as a Director of the Company since 1992.
Mr. Gerard has served as the Chairman and the Chief Executive Officer of
Triangle Wire and Cable, Inc., a manufacturer of insulated wire and cable, since
September 1992. Mr. Gerard previously served as the Chief Executive Officer and
a director of Mountleigh Group, plc, a London-based company engaged in property
management, from April 1992 until July 1992. Mr. Gerard was hired in connection
with a restructuring of Mountleigh. In connection with the restructuring,
Mountleigh was placed in U.K. receivership on May 23, 1992. From July 1990 to
April 1992, Mr. Gerard served as a Senior Managing Director of Citibank, N.A.
("Citibank") and was responsible for credit, portfolio and risk management for
Citibank's corporate and investment banking activities in the United States,
Japan, Europe and Australia. Mr. Gerard is also a director of Deeptech
International, Inc., Shuttle, Inc. dba USAir Shuttle and U.S. Home Corp. (2) (3)
(4)
CHARLES M. HAAR, 75, has served as a Director of the Company since 1992. He
has been a professor of law at Harvard University since 1956. He has served as a
consultant to Skadden, Arps, Slate, Meagher & Flom for more than the past five
years. Professor Haar is a director of American Health Properties. (3) (4) (5)
PHILIPPE HERCOT, 30, has served as a Director of the Company since 1995. He
has served as an associate for Donaldson, Lufkin & Jenrette (an investment
banking firm) since August 1993. Prior thereto, he received his M.B.A. in June
1993 from Harvard Business School. During his schooling, Mr. Hercot was a
consultant for McKinsey & Co. (a consulting firm) in
2
<PAGE> 5
Paris, France. From March 1991 to August 1991, he served as a consultant for
Matra Communications (the Communications Division of Matra, an industrial
company) in Paris, France. Mr. Hercot is the son-in-law of Mr. Jeffrey J.
Steiner.
SAMUEL J. KRASNEY, 71, has served as a Director of the Company since 1990.
Mr. Krasney served as Chairman of the Board, Chief Executive Officer and
President of the Company from June 1990 to September 1993. Mr. Krasney has
served as the managing partner of ABBA Capital Enterprises (investments) since
October 1985. Mr. Krasney is a director of Fairchild, FabriCenters of America,
Inc. and Waxman Industries, Inc.
WARREN D. PERSAVICH, 43, has served as Senior Vice President and Chief
Financial Officer of the Company since June 1990 and a Director since March
1990. From March 1990 to June 1990, he served as Vice President of the Company.
(1)
DR. ERIC I. STEINER, 34, has served as a Director of the Company since
1992. He has served as Senior Vice President -- Operations of Fairchild since
May 1992 and President of Fairchild Fasteners, a division of a Fairchild
subsidiary, since February 1995. Prior thereto, he served as President of
Camloc/RAM Products Division, a division of Fairchild Fasteners, from September
1993 to February 1995. He served as Vice President, Business Planning of
Fairchild from March 1991 to May 1992. Dr. Steiner is a director of Fairchild.
Dr. Eric I. Steiner is the son of Mr. Jeffrey J. Steiner. (1)
JEFFREY J. STEINER, 59, has served as Chairman of the Board, Chief
Executive Officer and President of the Company since September 1993. He served
as Vice Chairman of the Board of the Company from August 1990 to September 1993.
He has served as Chairman of the Board, Chief Executive Officer and President of
Fairchild for more than the past five years. Mr. Steiner is, and for the past
five years has served as, the President of Cedco Holdings, Ltd., a Bermuda
Corporation (an investment company). He is a director of The Franklin
Corporation, RHI Holdings, Inc., The Copley Fund and Shared Technologies
Fairchild, Inc. Mr. Jeffrey J. Steiner is the father of Dr. Eric I. Steiner and
the father-in-law of Philippe Hercot. (1)
LEONARD TOBOROFF, 63, has served as a Director of the Company since 1992.
He has served as Executive Vice President and a director of Riddell Sports,
Inc., a manufacturer and licenser of sports equipment, since April 1988. He has
also served as a Vice President and the Vice Chairman of the Board of
Allis-Chalmers Corporation, a holding company, since May 1988. For more than the
past five years, Mr. Toboroff has been a private investor. Mr. Toboroff is a
director of Amerscribe, Inc., Advanced NMR Corporation, Wavemat, Inc. and
Saratoga Mineral Water, Inc. (3) (4) (5)
JOHN C. WERTZ, 57, has served as Senior Vice President and Chief Operating
Officer of the Company since August 1993 and a Director since 1993. Prior
thereto, he was employed by the Hamilton Standard Division (manufacturer of
aerospace equipment) of United Technologies Corporation as Vice President of
Commercial Aftermarket Business from October 1990 to July 1993; as Vice
President of Manufacturing Planning and Support from March 1990 to October 1990;
and as Vice President-Operations from February 1988 to March 1990. (1)
- ------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation and Stock Option Committee.
(4) Member of the Nominating Committee.
(5) Member of the Ethics Committee.
3
<PAGE> 6
BOARD OF DIRECTORS AND CERTAIN COMMITTEE MATTERS
The Board held seven meetings during fiscal 1996. Except for Mr. Krasney,
who attended 71% of all meetings, no incumbent director attended less than 75%
of the total number of meetings of the Board during his term and all meetings of
each committee of the Board on which he served.
The Board has (1) an Executive Committee which has the authority to
exercise all the power of the Board when the latter is not in session; (2) an
Audit Committee whose primary functions are to assist the Board with respect to
internal control, accounting and reporting practices of the Company and to
maintain communication with the independent auditors of the Company; (3) a
Compensation and Stock Option Committee whose functions are to review and
approve the compensation and benefits of the corporate officers, to review and
advise management regarding the benefits, including bonuses, and other terms and
conditions of employment of other employees of the Company, to review and
recommend for the approval of the full Board the compensation of directors, to
administer the Company's Stock Option Plan and to award employee stock options;
(4) a Nominating Committee whose primary functions are to review possible
candidates for members of the Board of Directors and recommend a slate of
nominees for election as directors at the Company's Annual Meeting of
Stockholders; and (5) an Ethics Committee whose primary function is to oversee
and review the ethical standards of the Company. During fiscal 1996, the
Compensation and Stock Option Committee held four meetings and the Audit
Committee held two meetings. The Executive, Nominating and Ethics Committees did
not hold a meeting during the fiscal year.
In addition, in March 1995, the Board appointed a special committee (the
"Special Harco Committee") which was comprised of three Directors of the Company
who were neither officers nor employees of the Company nor otherwise affiliated
with Fairchild. The purpose of the Special Harco Committee was to evaluate the
acquisition of Harco, Inc. ("Harco") from Fairchild. The Special Harco Committee
met several times with its financial and legal advisors to analyze the
suitability and value of the Harco acquisition. In January 1996, a tentative
agreement was reached between the Chairman of the Special Harco Committee and
Mr. Steiner on behalf of Fairchild. The agreement was approved by the Special
Harco Committee, the Board of Directors and shareholders.
The Nominating Committee will consider written recommendations for nominees
for next year's annual meeting submitted prior to March 28, 1997 by stockholders
to the Secretary of the Company. Biographical information and the written
consent of the potential nominee must accompany the recommendation.
INFORMATION AS TO EXECUTIVE OFFICERS
Set forth below is certain information about each executive officer of the
Company who is not a director of the Company or a nominee, based on information
supplied by him, including his name, age and principal occupations during the
past five years. All of the executive officers of the Company are elected by the
Board to serve until the next annual meeting of the Board and until their
successors are elected and qualified.
EUGENE W. JURIS, 38, has served as Vice President -- Finance and Secretary
of the Company since September 1993. Prior thereto, he served as the Treasurer
of the Company from June 1990 to September 1993, Vice President of the Company
from March 1990 to September 1993 and the Controller of the Company from June
1990 to December 1990.
No director or officer failed to file timely any Form 3, 4 or 5 required to
be filed by him or her during fiscal 1996.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the aggregate cash and
non-cash compensation paid or accrued for each of the last three fiscal years,
to the chief executive officer and each of the other executive officers whose
salary and bonus exceeded $100,000 for fiscal 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------------
--------------------------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS COMPENSATION(3)
- --------------------------------- ------ -------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey J. Steiner, 1996 $262,500 $157,500 $-- 150,000 $--
Chairman, President and 1995 250,000 75,000 -- 75,000 --
Chief Executive Officer 1994 250,000 150,000 -- -- --
John C. Wertz, 1996 162,750 81,375 -- 35,000 5,841
Senior Vice President and 1995 155,000 38,750 2,387 25,000 3,750
Chief Operating Officer 1994 103,000(4) 58,126 39,621 30,000 1,938
Warren D. Persavich, 1996 162,750 81,375 -- 46,000 5,841
Senior Vice President and 1995 155,000 38,750 (1,623) 25,000 3,750
Chief Financial Officer 1994 140,417 77,500 27,959 30,000 4,358
Eugene W. Juris, 1996 120,750 60,375 1,398 24,000 4,032
Vice President -- Finance 1995 115,000 28,750 13,440 20,000 3,450
and Secretary 1994 100,416 57,500 37,027 22,500 3,159
</TABLE>
- ------------
(1) Bonuses are shown for the year earned, but are paid in the following year.
(2) Tax gross-up payments related to reimbursement of relocation costs and
temporary living expenses.
(3) Company 401(k) matching contributions.
(4) Mr. Wertz became an employee of the Company on August 1, 1993.
OPTIONS GRANTED IN FISCAL YEAR 1996
The following table sets forth information concerning individual grants of
stock options made during the last fiscal year to each named executive officer.
<TABLE>
<CAPTION>
% OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL 1996 ($/SH) DATE VALUE(2)
- -------------------------- ---------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Jeffrey J. Steiner 150,000 54.5% $4.875 9/15/00 $358,800
John C. Wertz 35,000 12.7% 4.875 9/15/00 83,720
Warren D. Persavich 46,000 16.7% 4.875 9/15/00 110,032
Eugene W. Juris 24,000 8.7% 4.875 9/15/00 57,408
</TABLE>
- ------------
(1) Options granted vest ratably over three years.
(2) Value of Options using the Black-Scholes model.
5
<PAGE> 8
OPTION YEAR END VALUES
The following table sets forth information concerning the fiscal year end
value of unexercised stock options of each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS AT 3/31/96 UNEXERCISED OPTIONS AT 3/31/96
----------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jeffrey J. Steiner 25,000 200,000 $18,750 $ 187,500
John C. Wertz 28,333 61,667 18,750 53,750
Warren D. Persavich 28,333 72,667 18,750 64,750
Eugene W. Juris 21,667 44,833 14,375 38,688
</TABLE>
No options were exercised by the executive officers during fiscal 1996.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
Mr. Jeffrey J. Steiner has a three year employment agreement with the
Company which became effective September 9, 1992; however, each year the
remainder of the term of Mr. Steiner's employment is extended for an additional
one year period unless either party gives timely notice of its or his intention
not to extend further the term of the employment agreement. The employment
agreement provides for a base salary of not less than $250,000 per annum and
also provides for participation in the Company's Bonus Plan, retirement plan,
and other executive benefits. If Mr. Steiner dies during the term or any
extended term of the agreement, his legal representatives will receive monthly
or semi-monthly installments of his base salary up to and including the first
anniversary of the last day of the month in which Mr. Steiner's death occurs. In
addition, his legal representatives will receive benefits to which Mr. Steiner
would have been entitled, through the end of the fiscal year in which his death
occurs, under any additional compensation plan. For any fiscal year during which
the agreement is terminated due to Mr. Steiner's disability for more than nine
consecutive months, or shorter periods aggregating nine months during any twelve
month period, he will receive fifty percent of his base salary for two years,
plus all benefits to which he would have been entitled for the fiscal year
during which termination of his employment has occurred. The agreement also has
certain change in control provisions. Upon the occurrence of a change in control
or trigger event, Mr. Steiner is entitled to a cash payment equal to 2.99 times
the total of his then base salary plus bonus in the immediately preceding fiscal
year, less the portion of payments, under stock options vested solely due to a
change in control or trigger event, which is considered a parachute payment
under Section 280G of the Internal Revenue Code of 1986 ("Code"). A change in
control occurs if an event requires a response to Item 5(f) of Schedule 14A of
Regulation 14A under the Securities Exchange Act of 1934 as in effect January 1,
1986. There is a trigger event (i) if any person other than Jeffrey J. Steiner
or an affiliate of Jeffrey J. Steiner is or becomes the beneficial owner of
securities of the Company representing 20% of the then outstanding voting power
for the election of directors ("Voting Power"); (ii) if during a period of two
consecutive fiscal years individuals who at the beginning of such period
constitute the Board of Directors cease to be a majority of the Board unless the
election or nomination of each director was approved by a two-thirds vote of the
directors then still in office who were directors at the beginning of the
period; (iii) if the Company shall become a subsidiary of another corporation or
shall be reorganized, merged or consolidated into another corporation (unless it
is a reorganization under Section 368((a)(1)(f) of the Code) unless, in each
case, the holders of more than 80% of the Voting Power will retain similar
voting power of such other corporation's voting securities; (iv) if
substantially all the assets of the Company are sold to another company; (v) if
the Company is liquidated; or (vi) if the Company issues Common Stock
representing a majority of the Voting Power of the Company.
6
<PAGE> 9
Mr. Wertz has a letter agreement which provided for an initial term of
employment ending March 31, 1995; however, each year the term of Mr. Wertz's
employment is extended for an additional one year period unless either party
gives timely notice of its or his intention not to extend further the term of
the employment agreement. The agreement provides for a base salary of $155,000
per annum, plus a bonus arrangement of 50% of base compensation if certain
performance targets are met. If at any time during the term of employment, the
agreement shall be terminated by the Company for any reason other than with
cause, Mr. Wertz or his estate will receive a continuation of his base salary,
at its then current rate, through a period of six months from the effective date
of termination.
Mr. Persavich has an employment agreement which was amended on September 1,
1993 to provide for a salary of $155,000 per annum, plus a bonus arrangement of
50% of base compensation if certain performance targets are met. The amended
agreement will initially run for three years. Commencing on the first
anniversary of the amended agreement, the term will be extended each day by one
day so that the remaining term is always two years, until terminated by either
party. Termination without cause by the Company will result in a two year
severance payment to Mr. Persavich, plus bonuses and certain other fringe
benefits.
Mr. Juris has an employment agreement which was amended on September 1,
1993 to provide for a salary of $115,000 per annum, plus a bonus arrangement of
50% of base compensation if certain performance targets are met. The amended
agreement will initially run for three years. Commencing on the first
anniversary of the amended agreement, the term will be extended each day by one
day so that the remaining term is always two years, until terminated by either
party. Termination without cause by the Company will result in a two year
severance payment to Mr. Juris, plus bonuses and certain other fringe benefits.
RETIREMENT BENEFITS
The Company has a Supplemental Executive Retirement Plan for certain key
executives which provides a retirement benefit based on final average earnings
and years of service. Benefits which may be payable under this plan are not
included in the Summary Compensation Table. This plan provides a maximum
retirement benefit equal to the difference between sixty percent of the
participant's average base salary for the last five years of employment and the
participant's primary Social Security benefit. This plan is unfunded,
unqualified and is not subject to the Employee Retirement Income Security Act of
1974, as amended. The plan was adopted in September 1994 to provide for lump sum
pre-retirement advances on an actuarially reduced basis at the election of
participants age sixty-five or over, contingent upon approval of the
Compensation and Stock Option Committee. All persons named in the Summary
Compensation Table are eligible for participation in this plan.
DIRECTORS COMPENSATION
Outside directors are currently paid an annual retainer of $12,000, payable
in cash in equal quarterly payments of $3,000. In addition, each outside
director receives $1,000 for each Board meeting attended. If a committee meeting
is attended on a day other than a Board meeting, each outside director receives
$500. Travel expenses are reimbursed for all meetings.
Pursuant to the 1996 Non-Employee Director Stock Option Plan (subject to
approval at the Annual Meeting), outside directors receive initial options for
5,000 shares of Common Stock and, on a going forward basis, options for 1,000
shares of Common Stock for each additional year of service.
Subject to approval at the Annual Meeting, on September 15, 1995 the Board
granted options for 10,000 shares of Common Stock to each of Frederick W.
Bradley, Jr. and Philippe Hercot, newly elected Directors.
7
<PAGE> 10
In fiscal 1996, Messrs. Gerard, Haar and Toboroff served as members of a
Special Harco Committee of the Board to review and approve the Harco Transaction
(described below under "Certain Transactions"). For such services, the Company
paid such individuals as follows: Gerard (Chairman of the Special Committee),
$45,000; Haar, $15,000; Toboroff, $15,000.
During fiscal year 1996, total outside directors fees were $169,500 in the
aggregate. If the 1996 Non-Employee Director Stock Option Plan is approved at
the Annual Meeting, outside directors will receive as of such date options for
40,000 shares of Common Stock in the aggregate.
Management directors receive no fees for their services as directors.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors
("Committee") has furnished this report on executive compensation. The Committee
is comprised of the individuals listed below, all of whom are outside directors.
The Committee has responsibility for the compensation matters relating to
Company officers. The Committee makes recommendations for executive compensation
and submits the recommendations to the Board for approval. No member of the
Committee has served as an officer of the Company or is eligible to participate
in any of the compensation plans or programs it administers.
COMPENSATION PHILOSOPHY
Since its initial public offering ("IPO") in August 1990, the Company's
compensation philosophy has been i) to provide a base compensation sufficient to
attract and retain key executives; ii) to provide an annual incentive program
related to specific performance goals designed to motivate key executives to
enhance stockholder value and to encourage the retention of a sound management
team; and iii) to provide a longer term incentive program where, through the
grant of stock options, rewards are related to the market performance of the
Company's Common Stock. The Committee believes its approach to compensation
should be consistent over time and be fair to the Company, its officers and
stockholders.
EMPLOYMENT AGREEMENT -- CEO
Mr. Steiner has had an employment agreement with the Company since
September 1992. He became the Chief Executive Officer ("CEO") of the Company
upon the retirement of Samuel J. Krasney in September 1993. He provides
direction and motivation to the management of the Company's subsidiaries and is
responsible for acquisitions and divestitures. The CEO formulates the goals and
objectives of the Company and is responsible for implementing strategies to
accomplish them. The employment agreement established Mr. Steiner's annual base
salary at $250,000. In April 1995, the Committee increased Mr. Steiner's annual
salary from $250,000 to $262,500, an increase of five percent. This increase was
based on the Committee's determination to continue providing Mr. Steiner with a
competitive salary and the fact that no increase had been given to Mr. Steiner
since 1990. Mr. Steiner's employment arrangements also provide for an annual
bonus award of 60% of base compensation if certain performance targets,
established by the Committee and approved by the Board, are achieved. Mr.
Steiner may also receive additional bonus awards if the performance targets are
exceeded.
EMPLOYMENT AGREEMENTS -- OTHER EXECUTIVE OFFICERS
The other executive officers of the Company also have existing employment
agreements. The employment agreements for Messrs. Persavich and Juris were
amended in fiscal 1994 to reflect the relocation of the corporate office from
Cleveland, Ohio to Washington, DC. In conjunction
8
<PAGE> 11
with the relocation, the base compensation for each of Messrs. Persavich and
Juris, which was established at the IPO in August 1990, was increased to reflect
the current market conditions for the positions held. In fiscal 1994, an
employment agreement for Mr. Wertz was established based on current market
conditions for individuals in similar capacities. In April 1995, the Committee
increased the base compensation of Messrs. Wertz, Persavich and Juris by five
percent. These salary increases were awarded so that the base salaries of the
executive officers remained competitive with other executives in similar
positions. The employment agreements for Messrs. Persavich, Juris and Wertz
provide for annual bonus awards of 50% of base compensation if certain
performance targets, established by the Committee and approved by the Board, are
achieved. Messrs. Wertz, Persavich and Juris may also receive additional bonus
awards if the performance targets are exceeded.
BONUS PLAN
The Committee believes that a substantial portion of the annual income of
executive officers should be based on the financial performance of the Company
for that year through a goal-based incentive compensation program ("Bonus
Plan"). The objective of the program is to provide total annual income to
officers that is competitive with compensation at other companies facing similar
challenges, while linking the payment of compensation to the Company's
achievement of certain financial goals. In fiscal 1996, bonuses awarded to the
CEO and other executive officers were based on qualitative and quantitative
factors, including the achievement of a number of key corporate objectives, such
as: i) improved operating results, ii) startup and operation of the new
Distribution Center, and iii) establishing an aggressive sales and marketing
organization. In the opinion of the Committee, Mr. Steiner and the other
executive officers achieved these objectives and Mr. Steiner was awarded a bonus
of $157,500 and the other executive officers were awarded a bonus of $223,125,
in the aggregate (representing a bonus of 50% of base compensation).
STOCK OPTION
The Committee also administers and grants stock options under the Company's
1990 Non-Qualified and Incentive Stock Option Plan. The Committee believes that
stock option grants provide a desirable long-term method of compensation because
they align management's longrange interests with those of the Company and its
stockholders by providing management with an opportunity to build a meaningful
stake in the Company. In fiscal 1996, the Committee granted options to Mr.
Steiner of 150,000 shares and the other executive officers of 105,000 shares in
the aggregate, in connection with the long-term goals established by the
Company. These stock options awards were granted following the expiration of
previous stock option grants which were granted in 1990. Mr. Steiner had stock
options for 140,000 shares that expired in fiscal 1996 and the other executive
officers had stock options for 35,000 shares which expired. In addition, the
Committee and the Board approved, subject to stockholder's approval at the 1996
Annual Meeting, the modification of Stock Option Award Agreements to all
employees, including the executive officers, to extend the term of the Stock
Option Award Agreements to seven years from the date of award. This modification
was made to better align management's long-range interests with those of the
Company and its stockholders.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has a Supplemental Executive Retirement Plan for the benefit of
the executive officers which provides a retirement benefit based on final
average earnings and years of service. The Plan provides a maximum retirement
benefit equal to the difference between sixty percent of the participant's
average base salary for the last five years of employment and the participant's
primary Social Security benefit.
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<PAGE> 12
INTERNAL REVENUE CODE SECTION 162(m)
The Committee has considered the impact of the recently enacted provision
of the Internal Revenue Code of 1986, as amended (the "Code"), which provision
in certain circumstances disallows income tax deductions for compensation in
excess of $1,000,000. No officer of the Company earns compensation in excess of
$1,000,000. However, if this provision ever becomes applicable to the Company,
the Committee intends to structure the Company's incentive compensation awards
in a manner that complies with the Code's requirements to ensure full
deductibility.
Leonard Toboroff, Chairman
Steven L. Gerard
Charles M. Haar
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<PAGE> 13
PERFORMANCE GRAPH
The following performance graph compares the total stockholder return on
the Company's Common Stock compared with the cumulative return on the S&P 500
Stock Index and a Peer Group. The graph assumes that the value of the investment
in the Company's Common Stock and each Index was $100 on March 31, 1991.
The Peer Group is weighted according to the respective issuer's stock
market capitalization on March 31, 1991, with all returns (capital gains and
dividends) reinvested. The Peer Group includes one aircraft parts distributor,
one airline, and the rest are companies which manufacture products for the
aircraft industry. Some of the companies in the Peer Group are suppliers to
and/or customers of the Company. The Peer Group consists of AAR Corp., Alaska
Air Group, Inc., Curtiss-Wright Corp., Fansteel, Inc., Hexcel Corp., Hi-Shear
Industries, Inc., Moog, Inc., Rohr, Inc., Trimble Navigation Ltd. and UNC
Incorporated.
<TABLE>
<CAPTION>
Measurement Period Banner S&P 500 In-
(Fiscal Year Covered) Aerospace Peer Group dex
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 74.68 87.89 108.61
1993 49.37 73.54 121.52
1994 59.49 77.63 119.93
1995 40.51 85.70 134.72
1996 59.49 126.25 173.67
</TABLE>
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<PAGE> 14
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The table below sets forth as of May 31, 1996 the number of shares and
percent of Common Stock beneficially owned by (i) each person known by the
Company to own beneficially more than 5% of any class of Common Stock together
with his address; (ii) each director and nominee; (iii) each executive officer
named in the summary compensation table; and (iv) the directors and officers of
the Company as a group. Except as otherwise indicated in the footnotes to the
table, the persons named possess sole voting power and investment power with
respect to all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF COMMON STOCK CLASS
-------------------------------- ---------------- ----------
<S> <C> <C>
Michael T. Alcox 39,000(1) *
Frederick W. Bradley, Jr. -- *
The Fairchild Corporation 13,886,477(2) 59.4%
Washington Dulles International Airport
300 West Service Road
Chantilly, Virginia 22021
Steven L. Gerard 10,000(3) *
Charles M. Haar 10,000(3) *
Philippe Hercot -- *
Eugene W. Juris 95,500(4) *
Samuel J. Krasney 91,000 *
Warren D. Persavich 148,000(5) *
Sasco Capital 1,204,100(6) 7.0%
10 Sasco Hill Road
Fairfield, CT 06430
Dr. Eric I. Steiner 12,500(3)(7) *
Jeffrey J. Steiner 14,302,589(8)(9) 59.9%
The Fairchild Corporation
Washington Dulles International Airport
300 West Service Road
Chantilly, Virginia 22021
Leonard Toboroff 10,000(3) *
John C. Wertz 145,000(10) *
All directors and officers of the 14,909,589(11) 61.0%
Company as a group (14 persons)
</TABLE>
- ------------
(1) Includes stock options for 7,000 shares.
(2) Includes shares of Common Stock owned of record by Fairchild and its
subsidiaries, as follows: Fairchild Holding Corp., 5,386,477 shares; RHI
Holdings, Inc., 8,488,194 shares; Banner Aerospace Holding Company II,
Inc., 11,806 shares. 13,262,971 of such shares of Common Stock have been
pledged by Fairchild or subsidiaries as collateral for a loan facility with
Citicorp N.A. and 611,700 shares have been pledged by Fairchild or
subsidiaries as collateral under an escrow agreement with BTR Dunlop
Holdings, Inc., a wholly-owned subsidiary of BTR plc. In connection with
the Harco Transaction (described below under "Certain Transactions")
Fairchild (through its subsidiaries) was issued 4,413,992 shares on March
12, 1996 and 972,485 shares on May 5, 1996. By virtue of the Harco
Transaction, Fairchild's beneficial ownership in the Company increased from
approximately 47.2% (as of May 31, 1995) to 59.4% (as of May 31, 1996).
(3) Includes stock options for 10,000 shares.
(4) Includes stock options for 81,500 shares.
(5) Includes stock options for 126,000 shares.
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<PAGE> 15
(6) Stock ownership based on information provided by Sasco Capital as of July
1996.
(7) The shares are held by Dr. Steiner as guardian for his minor children, and
he disclaims any beneficial interest therein.
(8) Includes 105,000 shares of Common Stock owned of record by Mr. Steiner and
3,612 shares owned by Mr. Steiner through the Company's Savings and
Retirement Plan. Also includes 13,886,477 shares owned directly or
indirectly by Fairchild; Mr. Steiner disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein. Also
includes 2,500 shares held by Mr. Steiner's spouse as custodian for minor
children; Mr. Steiner disclaims any beneficial ownership of such shares.
(9) Includes stock options for 305,000 shares.
(10) Includes stock options for 115,000 shares.
(11) Includes stock options for 720,000 shares.
* Less than 1%
As a result of their beneficial ownership of Common Stock, Fairchild and
Mr. Jeffrey J. Steiner will have a significant influence on the election of
directors and any other business that may come before the meeting.
CERTAIN TRANSACTIONS
RELATIONSHIPS BETWEEN THE COMPANY AND FAIRCHILD
The Company may be subject to various conflicts of interest arising out of
the relationships among it, Fairchild and their respective affiliates, such as
the purchase and sale of products in the ordinary course of business, the
purchase and sale of a business between the two companies and a business
opportunity of interest to both companies. Although no specific measures to
resolve such conflicts of interest have been formulated, management of the
Company has a fiduciary obligation to deal fairly and in good faith with the
Company, and will exercise reasonable judgment and take such steps as they may
then, under all the circumstances, deem necessary in resolving any specific
conflict of interest which may occur and what, if any, specific measures such as
retention of an independent advisor, independent counsel or special committee as
they may determine to be necessary or appropriate under the circumstances.
Fairchild is a substantial shareholder of the Company. Messrs. Jeffrey Steiner
(CEO and Director of the Company), Michael Alcox (Director of the Company) and
Eric Steiner (Director of the Company) are officers, directors and shareholders
of Fairchild.
The Fastener Group of Fairchild, particularly Screwcorp, Voi-Shan, Tridair
and Camloc, has historically been a supplier of fasteners to the Company, and
the Company also competes with them, in the sale to some end users. All
transactions between the Company and Fairchild have been and will continue to be
on terms that are no less favorable to the Company than those that might be
obtained in arms-length transactions with unaffiliated third parties. Sales to
Fairchild amounted to $48,000 and purchases from Fairchild amounted to
$5,522,000 for the fiscal year ended March 31, 1996.
The Company has entered into a lease with Fairchild to lease approximately
10,000 square feet of office space in the Fairchild building for a term of ten
years with the option to terminate the lease after five years. The annual lease
rate is approximately $170,000 subject to escalation. The current lease
commenced on April 1, 1996 at which time the previous month-to-month lease was
terminated. The Company has a letter agreement with Fairchild in which Fairchild
provides tax preparation and consulting services to the Company. The agreement
terminates on September 30, 1996. The annual fee for the tax services rendered
is $90,875. The Company has a letter agreement with Fairchild in which Fairchild
will provide legal services to the Company. This agreement is on a
month-to-month basis and the Company pays Fairchild $8,950 per month. In
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<PAGE> 16
addition, an indirect 41% affiliate of Fairchild (Shared Technologies Fairchild
Telecom, Inc.), provides the Company with communication services for the office
space in the Fairchild building as well as at all subsidiary locations. All
services are provided in the normal course of business and are on terms that are
no less favorable to the Company than those that might be obtained in
arms-length transactions with unaffiliated third parties.
Under a Tax Indemnity Agreement ("Tax Indemnity"), Fairchild has agreed to
indemnify the Company from and against any federal, state, local and foreign
income, franchise, withholding and alternative minimum taxes (including
interest, additions to tax and penalties with respect thereto) for periods
ending on or before August 2, 1990 when the sale of 52.8% of the Common Stock
was sold in the IPO. The Company has agreed to pay Fairchild for any tax savings
it realizes after the IPO as a result of adjustments to, or utilization of net
operating loss or tax credit carryforwards attributable to, income tax returns
for prior periods. Although Fairchild has agreed to indemnify the Company for
taxes for periods ending on or before the IPO, the Tax Indemnity is not binding
upon either the IRS or upon state, local or foreign taxing authorities, any of
which are permitted to collect from the Company all relevant taxes owed by the
Company and, in certain instances, by Fairchild and its subsidiaries for periods
covered by the Tax Indemnity. The effectiveness of the Tax Indemnity is
therefore dependent on the ability of Fairchild to pay amounts owed, if any,
under the Tax Indemnity.
As long as Fairchild owns 15% or more of the issued and outstanding Common
Stock, it has the unlimited right to require the Company to use its best efforts
pursuant to a Registration Rights Agreement to register, under the Agreement,
all the shares of Common Stock beneficially owned by Fairchild at any time and
from time to time, at Fairchild's expense. In addition, Fairchild has piggyback
registration rights that are subject to certain limitations.
Pursuant to the Stock Exchange Agreement, as of February 25, 1996, the
Company acquired from a subsidiary of Fairchild all of the stock of Harco, Inc.
(the "Harco Transaction"). Harco, Inc. is one of the largest distributors of
aerospace self-locking nuts. In exchange for the Harco, Inc. stock, the Company
issued to a Fairchild subsidiary 5,386,477 shares of Common Stock with an
average market value (at the time of issuance) of $32,722,848. The Harco
Transaction was approved by a special committee of the Company's Board, and was
approved by the Company's stockholders at a meeting on March 12, 1996. Fairchild
is the Company's largest stockholder. Mr. Jeffrey Steiner, Mr. Michael Alcox and
Dr. Eric Steiner are officers, directors and stockholders of Fairchild.
In March 1996, the Company terminated an employment agreement with a senior
executive of one of its subsidiaries. In lieu of a severance payment to the
former employee, Fairchild agreed to employ the former employee and the Company
agreed to pay Fairchild up to $400,000 in severance and other compensation to
which the employee might otherwise have been entitled.
OTHER TRANSACTIONS
Mr. Samuel J. Krasney, a Director of the Company, entered into a sublease
agreement with the Company for 1,500 square feet of office space which is a
portion of what was formerly the corporate headquarters in Cleveland, Ohio. The
lease term commenced on October 1, 1993 and expires on October 31, 1998. The
annual rent is approximately $19,600 and is based on competitive market
conditions for similar office space.
Mr. Eugene W. Juris, an executive officer of the Company, borrowed $100,000
from the Company in conjunction with the execution of an amended employment
agreement in September 1993. The note bears interest at six percent per annum
and is to be repaid over five years. As of March 31, 1995, the balance of the
note was $71,500. As of June 30, 1996, the balance of the note was $59,800.
14
<PAGE> 17
In March 1994, the Company purchased a $750,000 certificate of deposit (the
"Certificate") from a foreign institution, which was subsequently forced by
governmental action to cease business. As an accommodation to the Company, in
December 1994, an affiliate of Mr. Jeffrey Steiner agreed to attempt to effect
collection of the Certificate and, to this end, acquired the Certificate from
the Company for $750,000, payable over two years. Mr. Steiner has paid the
Company $500,000, but has received no payments from the issuer of the
Certificate. On May 29, 1996, the Board agreed to make the last $250,000 payment
conditional upon the collection of any proceeds received by the affiliate from
the Certificate.
ITEM 2 -- APPROVAL OF AMENDMENTS TO THE 1990 NON-QUALIFIED AND
INCENTIVE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AUTHORIZED TO BE ISSUED UNDER THE PLAN AND TO
EXTEND THE PERIOD UNDER WHICH OPTIONS MAY BE EXERCISED
The Company's 1990 Non-Qualified and Incentive Stock Option Plan (the "1990
Plan") was originally approved by the Company's stockholders prior to the
Company's initial public offering. The purpose of the 1990 Plan is to encourage
ownership of Common Stock by officers and key employees of the Company and its
subsidiaries, to encourage their continued employment with the Company and to
provide them with additional incentive to promote the success of the Company.
There will be presented at the Annual Meeting a proposal to approve the
amendments to the 1990 Stock Option Plan adopted by the Board on May 29, 1996,
subject to stockholder approval. These amendments ("1996 Stock Option Plan
Amendments"), which are summarized below, increase the number of shares of
Common Stock authorized to be issued under the plan and extend the period under
which options may be exercised. The following summary is qualified in its
entirety by reference to the full text of the amended and restated 1996 Stock
Option Plan set forth in the attached Exhibit A.
DESCRIPTION OF THE PLAN
General Information. Prior to the 1996 Stock Option Plan Amendments,
1,000,000 shares of Common Stock were authorized for issuance upon exercise of
stock options under the 1990 Plan, such number shall be increased to 2,000,000
shares of Common Stock under the 1996 Stock Option Plan Amendments. As of May
31, 1996, four executive officers (including directors who are officers) and
approximately 100 employees were eligible to participate in the 1990 Plan,
including officers and employees of Company subsidiaries. As of May 31, 1996,
options to purchase 1,739,950 shares had been granted under the 1990 Plan, of
which 11,633 were exercised, 563,617 lapsed before exercise, 219,750 were
forfeited due to a reset of option price, and 944,950 are outstanding.
Adjustments shall be made in the number and kind of shares subject to the 1990
Plan, and in the exercise price of stock options under the 1990 Plan, to reflect
changes in the Common Stock as a result of corporate restructure,
reclassification, merger, stock split or similar events.
Stock Options. The 1990 Plan provides for the granting of options intended
to meet the requirements of Section 422A of the Internal Revenue Code of 1986,
as amended ("Incentive Stock Options"), as well as the granting of options that
do not meet those requirements ("Non-Qualified Stock Options"), or a combination
of the foregoing. Under the 1990 Plan, options must be granted at not less than
fair market value; however, Incentive Stock Options granted to participants
owning more than 10% of the total combined voting power of all classes of stock
of the Company or, if applicable, a subsidiary or parent of the Company must be
granted at not less than 110% of the fair market value. The exercise price is
payable in cash or, with the approval of the Stock Option Committee, in shares
of Common Stock (valued at their fair market value at the date of exercise) or a
combination of such stock and cash.
15
<PAGE> 18
Eligibility and Administration. Officers (including officers who are
members of the Board) and key employees of the Company or its subsidiaries are
eligible to receive Incentive Stock Options and/or Non-Qualified Stock Options
under the 1990 Plan. Non-employee consultants of the Company or its subsidiaries
are eligible to receive Non-Qualified Stock Options under the 1990 Plan. The
1990 Plan is administered by a committee (the "Stock Option Committee") of
members of the Board of Directors who are "disinterested persons" within the
meaning of Rule 16b-3 promulgated by the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The 1990 Plan provides that the Stock Option
Committee will select those employees to whom options under the 1990 Plan will
be granted and will otherwise administer the 1990 Plan, taking into account the
duties of the employees, their present and potential contributions to the
success of the Company and such other factors as the Stock Option Committee
deems relevant in connection with accomplishing the purposes of the 1990 Plan.
No stock options may be granted under the 1990 Plan after August 2, 2000. All
stock options outstanding as of August 2, 2000 shall continue to be exercisable
pursuant to their terms. The Board may from time to time amend the 1990 Plan,
provided, however, that no amendments shall be made without stockholder approval
if stockholder approval is required under Section 422A of the Internal Revenue
Code or Rule 16b-3 under the Exchange Act.
Exercise. Prior to the 1996 Stock Option Plan Amendments, each stock
option granted under the 1990 Plan could be exercisable for a term of not more
than five years from the date of grant; under the 1996 Stock Option Plan
Amendments, stock options granted under the 1990 Plan may be exercisable for a
term of not more than seven years from the date of grant. Each stock option
granted prior to May 29, 1996 will be amended to increase the term from five (5)
years to seven (7) years.
Typically, a stock option granted under the 1990 Plan is exercisable only
during the term of its holder's employment with the Company and for a prescribed
period thereafter. In the event of an unusual corporate event such as
liquidation, merger, other business combination, or acquisition or change in
control of the Company, the Board, in its sole discretion, and on a case-by-case
basis, may terminate options effective 90 days after the occurrence of such
unusual corporate event, in which event the right to exercise such terminated
options is accelerated.
Tax Consequences. The following discussion addresses certain federal
income tax consequences in connection with the 1990 Plan. State tax treatment is
subject to individual state laws and is not reviewed in this discussion.
Incentive Stock Options. An Incentive Stock Option results in no taxable
income to the optionee or a deduction to the Company at the time it is granted
or exercised. If the optionee retains the stock received as a result of an
exercise of an Incentive Stock Option for at least two years from the date of
the grant and one year from the date of exercise, then the gain is treated as
long-term capital gain. If the shares are disposed of during this period, the
options will be treated as a Non-Qualified Stock Option. The Company receives a
tax deduction only if the shares are disposed of during such period. The
deduction is equal to the amount of taxable income to the optionee.
Non-Qualified Stock Options. A Non-Qualified Stock Option results in no
taxable income to the optionee or deduction to the Company at the time it is
granted. An optionee exercising such an option will, at that time, realize
taxable compensation in the amount of the difference between the option price
and the then market value of the shares. Subject to the applicable provisions of
the Internal Revenue Code, a deduction for federal income tax purposes will be
allowable to the Company in the year of exercise in an amount equal to the
taxable compensation realized by the optionee.
Limit on Shares Issuable to Chief Executive Officer. Pursuant to the 1996
Stock Option Plan Amendments, the maximum number of shares of Common Stock
subject to options granted under the 1990 Plan to Mr. Jeffrey Steiner, Chairman
and Chief Executive Officer (including all
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<PAGE> 19
presently outstanding options and all future options granted through August 2,
2000), shall not exceed a total of 1,700,000.
Beneficiaries of Plan. As a result of the 1996 Stock Option Plan
Amendments, the number of options available under the 1990 Plan shall be
increased to 2,000,000 shares. Because awards are made on a case by case basis
by the Stock Option Committee, it is not possible to determine at this time how
many options are available to issuance for named executive officers. The tables
in this Proxy Statement under "Executive Compensation -- Options Granted in
Fiscal Year 1996" and "Executive Compensation -- Option Year End Values"
summarize the outstanding options under the 1990 Plan, prior to the 1996 Stock
Option Plan Amendments. As a result of the 1996 Stock Option Plan Amendments,
the exercise period on all such outstanding options will be extended for an
additional two years. Since future awards under the 1990 Plan (as amended) are
subject to approval by the Stock Option Committee, it is not possible to
determine how many stock options will be awarded to the named executive
officers, to executive officers as a group, or to other employees as a group,
nor the dollar value of such future stock options. Assuming that all remaining
stock options presently available for award under the 1990 Plan (including the
increase in options pursuant to the 1996 Stock Option Plan Amendments) were
granted to executive officers only, such group would receive additional options
for 1,055,050 shares of Common Stock in the aggregate. On July 1, 1996, the
closing price on the New York Stock Exchange for the Common Stock was $8.00 per
share, as reported in The Wall Street Journal.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENTS TO
THE 1990 NON-QUALIFIED AND INCENTIVE STOCK OPTION PLAN.
ITEM 3 -- APPROVAL OF GRANTS OF STOCK OPTIONS TO CERTAIN NON-EMPLOYEE DIRECTORS
At the Annual Meeting, the Stockholders will be asked to approve the grant
of stock options for certain non-employee directors. On September 15, 1995, the
Board of Directors authorized stock options for the following non-employee
directors: (i) Frederick W. Bradley, Jr., options for 10,000 shares of Common
Stock; and (ii) Philippe Hercot, options for 10,000 shares of Common Stock.
Messrs. Bradley and Hercot were newly elected directors at the time of the
Board's approval of such stock options. Such stock options are subject to
stockholder approval and will be effective on the date of such approval. The
exercise price for such stock options shall be the fair market value of the
Common Stock at the time of stockholder approval of the stock options. The
exercise price is payable in cash. Each stock option vests immediately, and is
exercisable for a term of not more than five years from the date of stockholder
approval. On July 1, 1996, the closing price on the New York Stock Exchange for
the Common Stock was $8.00 per share, as reported in The Wall Street Journal.
Tax Consequences. For federal income tax purposes, such stock options
constitute Non-Qualified Stock Options. Please see discussion under Item 2 above
(Approval of Amendments to the 1990 Non-Qualified and Incentive Stock Option
Plan), under caption "Tax Consequences - Non-Qualified Stock Options" for a
discussion of the tax consequences of Non-Qualified Stock Options.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE GRANT OF
STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS.
ITEM 4 -- APPROVAL OF THE 1996 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
At the Annual Meeting, the Stockholders will be asked to approve the 1996
Banner Aerospace, Inc. Non-Employee Director Stock Option Plan (the "1996 NED
Plan"). The 1996
17
<PAGE> 20
NED Plan is designed to maintain the Company's ability to attract and retain
qualified and competent persons to serve as outside directors of the Company by
providing a means whereby such persons acquire an equity interest in the
Company, and to secure for the Company and its stockholders the benefit of the
incentives inherent in such equity ownership by persons whose advice and counsel
are important to the Company's future growth and continued success. The
following summary describing material provisions of the 1996 NED Plan is
qualified in its entirety by reference to the full text of the 1996 NED Plan set
forth in the attached Exhibit B.
DESCRIPTION OF THE PLAN:
Participation. Participation in the 1996 NED Plan is limited to members of
the Board of Directors who are not currently, and have not been for the last
three fiscal years, employees of the Company or any of its subsidiaries
("Non-Employee Directors"). Assuming that all the directors nominated in this
Proxy Statement are elected at the Annual Meeting, there will be immediately
after the Annual Meeting eight directors meeting the definition of Non-Employee
Directors.
Stock Option Grants. If approved by the Stockholders, the 1996 NED Plan
will automatically grant (as of the date of the Annual Meeting) options for
5,000 shares of Common Stock for each Non-Employee Director ("Initial Stock
Option Grant"). Each person who becomes a Non-Employee Director after the Annual
Meeting shall be granted an option for 5,000 shares of Common Stock at the time
such person first becomes a Non-Employee Director ("New Director Stock Option
Grant"). On the date of each annual meeting following the Annual Meeting, each
person elected as a director at such meeting shall be granted an option for
1,000 additional shares of Common Stock (an "Annual Stock Option Grant"),
provided that such person has served as a Non-Employee Director for at least six
months prior to such annual meeting.
Shares Available Under the 1996 NED Plan. An aggregate of 150,000 shares
of Common Stock will be subject to the 1996 NED Plan. Shares subject to options
which terminate unexercised will be available for future option grants. No
options may be granted under the 1996 NED Plan after May 29, 2006 (ten years
from the date the 1996 NED Plan was adopted by the Board). All stock options
outstanding as of May 29, 2006 shall continue to be exercisable pursuant to
their terms. Adjustments shall be made in the number and kind of shares subject
to the 1996 NED Plan, and in the exercise price of stock options under the 1996
NED Plan, to reflect changes in the Company's Common Stock as a result of
corporate restructure, reclassification, merger, stock split or similar events.
Exercise of Stock Options. Each stock option granted under the 1996 NED
Plan shall expire five years after the date they were granted. If a Non-Employee
Director ceases to serve as a member of the Board (other than due to death or
disability), all options granted to such director under the 1996 NED Plan shall
expire three months after such person ceases to be a member of the Board, or on
their stated expiration date, whichever occurs first. If a Non-Employee Director
ceases to serve as a member of the Board due to death or disability, all options
granted to such director under the 1996 NED Plan shall expire one year from the
director's death or disability, or on their stated expiration date, whichever
occurs first. The exercise price for each stock option under the 1996 NED Plan
shall be the fair market value of the Common Stock on the date of grant. (The
date of the grant for the Initial Stock Option Grant is the date of the Annual
Meeting.) The exercise price is payable in cash or, with the approval of the
Stock Option Committee, in shares of Common Stock (valued at their fair market
value at the date of exercise) or a combination of such stock and cash.
Administration. The 1996 NED Plan will be administered by the Board
(excluding the participation of Non-Employee Directors) or by a committee of
three or more directors (excluding Non-Employee Directors) (the "Plan
Administrator"). The Plan Administrator will be authorized to interpret the 1996
NED Plan but will have no discretion with respect to the
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selection of directors to receive options, the number of shares subject to the
1996 NED Plan or to each grant thereunder, or the purchase price for shares
subject to options. The Plan Administrator shall have no authority to materially
increase the benefits under the 1996 NED Plan. The Board may terminate, amend or
modify the 1996 NED Plan at any time. However, any amendment or modification
that increases the total amount of Common Stock on which options may be granted
under the 1996 NED Plan, changes the manner of determining the option price,
changes the classes of individuals eligible to receive options, changes the
number of options which may be granted to each director, changes the times when
such options are granted, or materially increases the benefits under the 1996
NED Plan, will require the approval of Company stockholders.
Tax Consequences. For federal income tax purposes, options under the 1996
NED Plan constitute Non-Qualified Stock Options. Please see discussion under
Item 2 above (Approval of Amendments to the 1990 Non-Qualified and Incentive
Stock Option Plan), under caption "Tax Consequences -- Non-Qualified Stock
Options" for a discussion of the tax consequences of Non-Qualified Stock
Options.
Beneficiaries of Plan. If the 1996 NED Plan is approved at the Annual
Meeting, the following directors will immediately receive stock options: Michael
Alcox, 5,000 shares; Frederick Bradley, Jr., 5,000 shares; Steven Gerard, 5,000
shares; Charles Haar, 5,000 shares; Philippe Hercot, 5,000 shares; Samuel
Krasney, 5,000 shares, Eric Steiner, 5,000 shares; and Leonard Toboroff, 5,000
shares. This constitutes stock options for an aggregate 40,000 shares of Common
Stock issued to Non-Employee Directors as a group. Such stock options shall be
exercisable at the fair market value of the Common Stock as of the date of the
Annual Meeting. On July 1, 1996, the closing price on the New York Stock
Exchange for the Common Stock was $8.00 per share, as reported in The Wall
Street Journal.
All Non-Employee Directors are entitled to receive additional options for
1,000 shares each year, up to an aggregate of 150,000 shares for all options
issued under the 1996 NED Plan.
Executive officers and management directors are not eligible to participate
in the 1996 NED Plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
ITEM 5 -- APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
Although the bylaws of the Company do not require the submission of the
election of independent public accountants to the stockholders for approval, the
Board considers it desirable that its designation of independent public
accountants be ratified by the stockholders. The firm of Arthur Andersen LLP, an
international firm of public accountants, has audited the annual financial
statements of the Company since 1990. The Board considers them to be well
qualified and will ask the stockholders at the Annual Meeting to approve the
designation of this firm as independent public accountants for the Company for
the year ending March 31, 1997.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and they will have an opportunity to make a statement, should
they desire to do so, and to respond to appropriate questions.
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THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
To the extent that information contained in this Proxy Statement is
peculiarly within the knowledge of persons other than the management of the
Company, it has relied upon such persons for the accuracy and completeness
thereof.
EXPENSES OF SOLICITATION
The cost of soliciting these proxies will be borne by the Company. In
addition to the use of the mail, proxies may be solicited by directors, officers
or employees of the Company, in person or by telephone or fax. The Company will
also reimburse brokerage firms and others for forwarding proxy material to
beneficial owners of the Common Stock.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material to be disseminated by the Company in connection with its annual meeting
for fiscal 1997 must do so no later than March 28, 1997 and such proposal must
conform to the requirements set forth in Regulation 14A under the Securities
Exchange Act of 1934.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended March
31, 1996, has previously been, or will simultaneously herewith be, furnished to
stockholders of record. A copy of the Annual Report on Form 10-K of the Company
for fiscal year 1996 is included with the Annual Report. THE ANNUAL REPORT ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, MAY BE OBTAINED BY ANY
PERSON WITHOUT CHARGE ON WRITTEN REQUEST TO: BANNER AEROSPACE, INC., P.O. BOX
20260, WASHINGTON, DC 20041, ATTENTION: WARREN D. PERSAVICH, SENIOR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER.
By Order of the Board of Directors
Eugene W. Juris
Secretary
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EXHIBIT A
(Language to be added is indicated by underlining.)
1990 NON-QUALIFIED & INCENTIVE
STOCK OPTION PLAN OF
BANNER AEROSPACE, INC.
1. PURPOSE OF THE PLAN.
This 1990 Non-Qualified and Incentive Stock Option Plan of Banner
Aerospace, Inc. adopted initially as of the 2nd day of August 1990, amended as
of May 29, 1996, is intended to encourage key employees of the Company and its
Subsidiaries, as well as officers and independent consultants who provide
services to the Company or its Subsidiaries, to acquire or increase their
ownership of common stock of the Company on reasonable terms. The opportunity so
provided is intended to foster in participants a strong incentive to put forth
maximum effort for the continued success and growth of the Company and its
Subsidiaries, to aid in retaining individuals who put forth such efforts, and to
assist in attracting the best available individuals to the Company and its
Subsidiaries in the future.
2. DEFINITIONS.
When used herein, the following terms shall have the meaning set forth
below:
2.1 "Award" means an Option.
2.2 "Award Agreement" means a written agreement in such form as may be,
from time to time, hereafter approved by the Committee, which shall
be duly executed by the Company and the Participant and which sets
forth the terms and conditions of an Award under the Plan.
2.3 "Board" means the Board of Directors of Banner Aerospace, Inc.
2.4 "Code" means the Internal Revenue Code of 1986, as in effect at the
time of reference, or any successor revenue code which may hereafter
be adopted in lieu thereof, and reference to any specific provisions
of the Code shall refer to the corresponding provisions of the Code
as it may hereafter be amended or replaced.
2.5 "Committee" means the Stock Option Committee of the Board or any
other committee appointed by the Board whose members meet the
requirements for eligibility to serve set forth in Section 4 of the
Plan which is invested by the Board with responsibility of the
administration of the Plan; provided, however, that until the Board
appoints the Committee, the term "Committee" shall mean the Board;
and provided further that, until the date on which the Registration
Statement is declared effective by the Securities and Exchange
Commission, the Board may appoint a Committee whose members do not
meet the requirements for eligibility to serve set forth in Section
4 of the Plan.
2.6 "Company" means Banner Aerospace, Inc.
2.7 "Eligible Administrators" means persons who meet the requirements of
Rule 16b-3.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and reference to any specific provisions of the
Exchange Act, shall refer to the corresponding provisions of the
Exchange Act as it may hereafter be amended or replaced.
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2.9 "Fair Market Value" means with respect to the Company's Shares the
closing price of the Shares as of the date on which the value is to
be determined as reported on the New York Stock Exchange Composite
Tape or such other source of quotation for, or reports of, trading
activity in Shares as the Committee may from time to time select.
Notwithstanding the above, (i) in the event that Shares are not then
being traded on a public market, Fair Market Value shall mean the
fair market value of the Shares as of the date on which the value is
to be determined, as determined by the Committee in its discretion,
and (ii) in the event the Shares are granted on or as of the
effective date of the initial public offering pursuant to which the
Company filed the Registration Statement, Fair Market Value shall
mean the initial public offering price.
2.10 "Incentive Stock Option" means an Option meeting the requirements
and containing the limitations and restrictions set forth in
Section 422A of the Code.
2.11 "Non-Qualified Stock Option" mean an Option other than an Incentive
Stock Option.
2.12 "Option" means the right to purchase, at a price and for a term
fixed by the Committee in accordance with the Plan, and subject to
such other limitations and restrictions as the Plan and the
Committee impose, the number of Shares specified by the Committee.
2.13 "Parent" means any corporation, other than the Company, in an
unbroken chain of corporations ending with the Company if each of
the corporations other than the Company owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
2.14 "Participants" means key employees of the Company or any of its
Subsidiaries, as well as, officers and independent consultants who
provide services to the Company or any of its Subsidiaries
(including officers and independent consultants who are also
members of the Board), and persons who execute letters of intent to
become employees, officers or independent consultants of the
Company of any of its Subsidiaries. The execution by a person
becoming an officer of the Company of a consent to be named as a
director-elect of the Company in the Registration Statement shall
be deemed the execution of a "letter of intent" to become an
officer.
2.15 "Plan" means the 1990 Non-Qualified and Incentive Stock Option Plan
of the Company, as amended from time to time.
2.16 "Registration Statement" means the Form S-1, Registration Statement
No. 33-34775, as amended from time to time, initially filed by the
Company with the Securities and Exchange Commission on May 14,
1990, in connection with the Company's initial public offering of
Shares.
2.17 "Rule 16b-3" means Rule 16b-3 of the General Rules and Regulations
of the Exchange Act or any successor rule or regulation.
2.18 "Shares" means shares of the Company's $1.00 par value common stock
or, if by reason the adjustment provisions contained herein any
rights under an Award under the Plan pertain to any other security,
such other security.
2.19 "Subsidiary" means any corporation other than the Company in an
unbroken chain of corporations beginning with the Company if each
of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty
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percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
2.20 "Successor" means the legal representative of the estate of a
deceased Participant or the other person or persons who shall
acquire the right to exercise an Award by bequest or inheritance or
by reason of the death of the Participant.
2.21 "Term" means the period during which a particular Award may be
exercised.
3. STOCK SUBJECT TO THE PLAN.
There will be reserved for use, upon the exercise of Awards to be granted
from time to time under the Plan, an aggregate of two million (2,000,000)
Shares, which Shares may be, in whole or in part, as the Board shall from time
to time determine, authorized but unissued Shares, or issued Shares which shall
have been reacquired by the Company. Any Shares subject to issuance upon
exercise of Options but which are not issued because of a surrender, lapse,
expiration or termination of any such Option prior to issuance of the Shares
shall once again be available for issuance in satisfaction of Awards.
4. ADMINISTRATION OF THE PLAN.
Prior to or within thirty (30) days after the date the Registration
Statement is declared effective by the Securities and Exchange Commission, the
Board shall appoint the Committee, which shall consist of not less than that
number of Eligible Administrators required by Rule 16b-3. Subject to the
provisions of the Plan, the Committee shall have full authority, in its
discretion, to determine the Participants to whom Awards shall be granted, the
number of Shares to be covered by each of the Awards, and the terms of any such
Award; to amend or cancel Awards (subject to Section 17 of the Plan); to
accelerate the vesting of Awards; to require the cancellation or surrender of
any options previously granted under this Plan or any other plans of the Company
as a condition to the granting of an Award; to interpret the Plan; and to
prescribe, amend, and rescind rules and regulations relating to the Plan, and
generally to interpret and determine any and all matters whatsoever relating to
the administration of the Plan and the granting of Awards hereunder. After the
Committee is appointed by the Board, the Board may, from time to time, appoint
members to the Committee in substitution for or in addition to members
previously appointed and may fill vacancies, however caused, in the Committee.
After the Committee is appointed by the Board, the Board, or the Committee if
the Board does not appoint a Committee member as Chairman, shall select one of
the Committee members to act as Chairman of the Committee. The Committee shall
hold its meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum. Any action of the Committee
may be taken by a written instrument signed by all of the members, and any
action so taken shall be fully as effective as if it had been taken by a vote of
a majority of the members at a meeting duly called and held. After the Committee
is appointed by the Board, the Committee shall make such rules and regulations
for the conduct of its business as it shall deem advisable and shall appoint a
Secretary who shall keep minutes of its meetings and records of all action taken
in writing without a meeting. No member of the Committee shall be liable, in the
absence of bad faith, for any act or omission with respect to his service on the
Committee.
5. PARTICIPANTS TO WHOM AWARDS MAY BE GRANTED.
Awards may be granted while the Plan is in effect to such of the
Participants as the Committee, in its discretion, shall determine; provided,
however, that Incentive Stock Options may only be granted to Participants who
are officers or employees of the Company or any of its Subsidiaries. In
determining the Participants to whom Awards shall be granted and the number of
Shares to be subject to purchase under such Awards, the Committee shall take
into account
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the services performed by the respective Participants, their present and
potential contributions to the success of the Company and its Subsidiaries, and
such other factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.
After the Committee is appointed by the Board, no Award under this Plan
shall be granted to any member of the Committee so long as his membership on the
Committee continues or to any member of the Board who is not also an officer,
key employee, or independent consultant (other than in his role as a member of
the Board) who provides services to the Company or any Subsidiary, unless such
member of the Board has executed a letter of intent to become an employee,
officer or independent consultant of the Company or any Subsidiary.
6. STOCK OPTIONS.
6.1 Types of Options. Options granted under this Plan may be (i) Incentive
Stock Options, (ii) Non-Qualified Stock Options, or (iii) a combination of the
foregoing. The Committee shall designate in the Award Agreement whether an
Option is an Incentive Stock Option or a Non-Qualified Stock Option and separate
Award Agreements shall be issued for each type of Option when an Incentive Stock
Option and a Non-Qualified Stock Option are granted on the same date to the same
Participant. Any Option which is designated as a Non-Qualified Stock Option
shall not be treated by the Company or the Participant to whom the Option is
granted as an Incentive Stock Option for federal income tax purposes.
6.2 Option Price. The option price per share of any Option granted under
the Plan shall not be less than the Fair Market Value of the Shares covered by
the Option on the date the Option is granted.
Notwithstanding anything herein to the contrary, in the event an Incentive
Stock Option is granted to an Participant who, at the time such Incentive Stock
Option is granted, owns, as defined in Section 425 of the Code, stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of:
(i) the Company; or
(ii) if applicable, a Subsidiary; or
(iii) if applicable, a Parent,
then the option price per share of any Incentive Stock Option granted to such
Participant shall not be less than one hundred ten percent (110%) of the Fair
Market Value of the Shares covered by the Option on the date the Option is
granted.
6.3 Term of Options. Options granted hereunder shall be exercisable for a
Term of not more than seven (7) years from the date of grant thereof. All
options shall be subject to earlier termination as provided in Section 13. Each
Award Agreement issued hereunder shall specify the Term of the Option, which
Term shall be determined by the Committee in accordance with its discretionary
authority hereunder.
6.4 Limit on Grant of Options. From and after May 29, 1996, the number of
shares of Common Stock subject to Awards granted under the Plan to Jeffrey
Steiner, Chairman and Chief Executive Officer (including all unexercised Awards
outstanding as of May 29, 1996 and all Awards granted from and after May 29,
1996 through August 2, 2000), shall not exceed a total of 1,700,000 shares.
Determinations under this Section shall be made in a manner consistent with
Section 162(m) of the Code.
7. LIMIT ON FAIR MARKET VALUE OF INCENTIVE STOCK OPTIONS.
No Participant may be granted an Incentive Stock Option hereunder to the
extent that the aggregate Fair Market Value (such Fair Market Value being
determined as of the date of grant
A-4
<PAGE> 27
of the Option) of the stock with respect to which incentive stock options are
first exercisable under the terms of the Plan by any Participant during any
calendar year (under all such plans of the Company and its Parent and Subsidiary
corporations) exceeds the sum of One Hundred Thousand Dollars ($100,000). For
purposes of the preceding sentence, options shall be taken into account in the
order in which they were granted. Any Option granted under the Plan which is
intended to be an Incentive Stock Option, but which exceeds the limitation set
forth in this Section 7, shall be a Non-Qualified Stock Option.
8. DATE OF GRANT.
The date of grant of an Award granted hereunder shall be the date on which
the Committee acts in granting the Award.
9. EXERCISE OF RIGHTS UNDER AWARDS.
A Participant entitled to exercise an Award may do so by delivery of a
written notice to that effect specifying the number of Shares with respect to
which the Award is being exercised and any other information the Committee may
prescribe. The notice shall be accompanied by payment in full of the purchase
price of any Shares to be purchased, which payment may be made in cash or, with
the Committee's approval, in Shares held by the Participant for more than six
(6) months, valued at Fair Market Value at the time of exercise or a combination
thereof. No shares shall be issued upon exercise of an Option until full payment
has been made thereof. No Award shall be exercisable prior to the three year
anniversary of the date the Registration Statement is declared effective by the
Securities and Exchange Commission; provided that, in the event of the death,
disability (as defined in Section 22(e) (3) of the Code) or retirement at or
after age sixty-five (65) of a Participant, such Participant may, if the Award
Agreement so provides, exercise his Award(s) without regard to this three year
limitation on exercise. All notices or request provided for herein shall be
delivered to the Chief Financial Officer of the Company.
10. RIGHTS OF AWARD HOLDER.
The holder of an Award shall not have any of the rights of a stockholder
with respect to the Shares subject to purchase under his Award, except to the
extent that one or more certificates for such Shares shall be delivered to him
upon the due exercise of the Award.
11. NONTRANSFERABILITY OF AWARDS.
An Award shall not be transferable, other than by will or the laws of
descent and distribution, and an Award may only be exercised in compliance with
the conditions set forth in Rule 16b-3.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of changes in all of the outstanding Shares by reason of stock
dividends, stock splits, recapitalization, mergers, consolidations,
combinations, or exchanges of shares, separations, reorganizations or
liquidations, or similar transactions or, in the event of extraordinary cash or
non-cash dividends being declared with respect to the Shares, or similar
transactions, the number and class of Shares available under the Plan in the
aggregate, the number and class of Shares subject to Awards theretofore granted,
applicable purchase prices and all other applicable provisions, shall, subject
to the provisions of the Plan, be equitably adjusted by the Committee (which
adjustment may, but need not, include payment in cash or in Shares in an amount
equal to the difference between the then current fair market value of the Shares
subject to such Award, as equitably determined by the Committee, and the price
at which such Award may be exercised). The foregoing adjustment and the manner
of application of the foregoing
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provisions shall be determined by the Committee in its sole discretion. Any such
adjustment may provide for the elimination of any fractional Share which might
otherwise become subject to an Award.
13. UNUSUAL CORPORATE EVENTS.
Notwithstanding anything to the contrary, in the case of an unusual
corporate event such as liquidation, merger, reorganization (other than a
reorganization as defined by Section 368(a)(1)(F) of the Code), or other
business combination, acquisition or change in the control of the Company
through a tender offer or otherwise, the Board may, in its sole discretion,
determine, on a case by case basis, that each Award granted under the Plan shall
terminate ninety (90) days after the occurrence of such unusual corporate event,
but, in the event of any such termination, the Award holder shall have the
right, commencing at least five (5) days prior to such unusual corporate event
(and continuing until the Award terminates) to immediately exercise any Awards
in full, without regard to the three (3) year limitation on exercise provided
for in Section 9 of the Plan, but subject to any other limitation on the
exercise of such Awards in effect on the date of exercise, to the extent they
shall not have been exercised; provided, however, that no Award shall terminate
prior to thirty (30) days after the first date on which such Award is
exercisable pursuant to Rule 16b-3.
14. FORM OF AWARDS.
Nothing contained in the Plan nor any resolution adopted by the Board or
the stockholders of the Company after the Committee is appointed by the Board
shall constitute the granting of any Award. An Award shall be granted hereunder
only by action taken by the Committee in granting an Award. Whenever the
Committee shall designate a Participant for the receipt of an Award, the
Secretary or the President of the Company, or such other person as the Committee
shall appoint, shall forthwith send notice thereof to the Participant, in such
form as the Committee shall approve, stating the number of Shares subject to
Award, its Term, and the other terms and conditions thereof. The notice shall be
accompanied by a written Award Agreement in such form as may from time to time
hereafter be approved by the Committee, which shall have been duly executed by
or on behalf of the Company. If the surrender of previously issued Awards is
made a condition of the grant, the notice shall set forth the pertinent details
of such conditions. Execution by the Participant to whom such Award is granted
of said Award Agreement in accordance with the provisions set forth in this Plan
shall be a condition precedent to the exercise of any Award.
15. TAXES.
The Company shall have the right to require a person entitled to receive
Shares pursuant to the exercise of an Award under the Plan to pay the Company
the amount of any taxes which the Company is or will be required to withhold
with respect to such Shares before the certificate for such Shares is delivered
pursuant to the Award. Furthermore, the Company may elect to deduct such taxes
from any other amounts payable in cash then or any time thereafter to the
Participant. If the Participant disposes of Shares acquired pursuant to an
Incentive Stock Option in any transaction considered to be a disqualifying
transaction under Sections 421 and 422A of the Code, the Participant shall so
notify the Company as soon as possible after such disqualifying transaction, and
the Company shall have the right to deduct any taxes required by law to be
withheld from any amounts otherwise payable in cash then or at any time
thereafter to the Participant.
16. TERMINATION OF THE PLAN.
The Plan shall terminate ten (10) years from the date hereof (i.e., on
August 2, 2000), and an Award shall not be granted under the Plan after that
date although the terms of any Awards
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may be amended at any date prior to the end of its Term in accordance with the
Plan. Any Awards outstanding at the time of termination of the Plan shall
continue in full force and effect according to the terms and conditions of the
Award and this Plan.
17. AMENDMENT OF THE PLAN.
The Plan may be amended at any time and from time by the Board, but no
amendment without the approval of the stockholders of the Company shall be made
if stockholder approval under Section 422A of the Code or Rule 16b-3 would be
required. Notwithstanding the discretionary authority granted to the Committee
in Section 4 of the Plan, no amendment or cancellation of the Plan or any Award
granted under the Plan shall impair any of the rights of any person, without his
consent, under any Award theretofore granted under the Plan.
18. DELIVERY OF SHARES ON EXERCISE.
Delivery of certificates for Shares pursuant to an Award exercise may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any applicable requirements of any federal,
state or local law or regulation or any administrative or quasi-administrative
requirement applicable to the sale, issuance, distribution or delivery of such
Shares. The Committee may, in its sole discretion, require a Participant to
furnish the Company with appropriate representations and a written investment
letter prior to the exercise of an Award or the delivery of any Shares pursuant
to an Award.
19. FEES AND COSTS.
The Company shall pay all original issue taxes (not including income taxes)
on the exercise of any Award granted under the Plan and all other fees and
expenses necessarily incurred by the Company in connection therewith.
20. EFFECTIVENESS OF THE PLAN.
The Plan first became effective when approved by the Board. The Plan was
thereafter submitted to the Company's stockholders for approval, which approval
was obtained.
The Plan was amended by the Board on May 29, 1996 (the "1996 Plan
Amendments"). The 1996 Plan Amendments shall thereafter be submitted to the
Company's stockholders for approval and unless the 1996 Plan Amendments is
approved by the affirmative votes of the holders of shares having a majority of
the voting power of all shares represented at a meeting duly held in accordance
with Delaware law within twelve (12) months after being approved by the Board,
the 1996 Plan Amendments and all Awards made pursuant to the 1996 Plan
Amendments shall be void and of no force and effect.
21. OTHER PROVISIONS.
As used in the Plan, and in Awards and other documents prepared in
implementation of the Plan, references to the masculine pronoun shall be deemed
to refer to the feminine or neuter, and references in the singular or plural
shall refer to the plural or the singular, as the identity of the person or
persons or entity or entities being referred to may require. The captions used
in the Plan and in such Awards and other documents prepared in implementation of
the Plan are for convenience only and shall not affect the meaning of any
provision hereof or thereof.
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EXHIBIT B
1996 BANNER AEROSPACE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSES.
The purposes of the Banner Aerospace, Inc. Non-Employee Directors' Stock
Option Plan (the "Plan") are to attract and retain qualified and competent
persons for service as members of the board of directors (the "Board") of Banner
Aerospace, Inc. (the "Company") by providing a means whereby such persons
acquire an equity interest in the Company and to secure for the Company and its
stockholders the benefit of the incentives inherent in such equity ownership by
persons whose advice and counsel are important to the Company's future growth
and continued success.
2. ADMINISTRATION.
(a) The Board (excluding participation by Non-Employee Directors) shall (i)
administer the Plan, (ii) establish, subject to the provisions of the
Plan, such rules and regulations as it may deem appropriate for the
proper administration of the Plan, and (iii) make such determinations
under, and such interpretations of, and take such steps in connection
with, the Plan or the options issued thereunder as it may deem
necessary or advisable.
(b) The Board may from time to time appoint a Committee (the "Committee"),
which shall be comprised of at least three members of the Board who are
not Non-Employee Directors and may delegate to the Committee full power
and authority to take any and all action required or permitted to be
taken by the Board under the Plan, whether or not the power and the
authority of the Committee is hereinafter fully set forth. The Board or
the Committee, as applicable, shall hereinafter be referred to as the
"Administrator".
(c) The Administrator shall have no discretion with respect to the
selection of directors to receive options, the number of shares subject
to the Plan or to each Option Grant hereunder, or the purchase price
for shares subject to Option Grants hereunder. The Administrator shall
have no authority to materially increase benefits under the Plan.
(d) The Administrator may establish from time to time such regulations,
provisions, and procedures within the terms of the Plan as, in its
opinion, may be advisable in the administration of the Plan.
(e) The Administrator may designate the Secretary of the Company or other
employees of the Company to assist the Committee in the administration
of the Plan and may grant authority to such persons to execute
documents on behalf of the Administrator.
3. STOCK.
The common stock (the "Common Stock") to be made the subject of an option
under the Plan shall be the shares of Common Stock of the Company, $1.00 par
value per share, whether authorized and unissued or treasury stock. The total
amount of Common Stock for which options may be granted under the Plan shall not
exceed, in the aggregate, 150,000 shares, subject to adjustment in accordance
with the provisions of Section 12 hereof. Any shares of Common Stock which were
the subject of unexercised portions of any terminated or expired options may
again be subject to the grant of options under the Plan during the remaining
term of the Plan.
B-1
<PAGE> 31
4. AWARD OF OPTIONS.
(a) Options shall be granted only to directors of the Board who are not
employees of the Company or who have not been employees of the Company
for the past three (3) years ("Non-Employee Directors").
(b) All options granted under the Plan shall be non-qualified options not
entitled to special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended (the "IRC").
(c) Any and all options granted under this Plan shall be granted not later
than ten (10) years from May 29, 1996, the date the Plan was adopted by
the Board.
(d) Every recipient of options pursuant to this Plan shall be bound by the
terms and provisions of this Plan (including the restriction on
assignability of options set forth in Section 8 below); and, the
acceptance of options pursuant to this Plan shall constitute a binding
agreement between the recipient and the Company.
5. NUMBER OF SHARES TO BE GRANTED.
Each person who is a Non-Employee Director of the Company at the time of
adoption of the Plan by the stockholders shall be granted an option for 5,000
shares of Stock (an "Initial Stock Option Grant") at the time of such adoption.
Each person who becomes a Non-Employee Director of the Company after the
adoption of the Plan by the stockholders shall be granted an option for 5,000
shares of Common Stock at the time such person first becomes a Non-Employee
Director of the Company (a "New Director Stock Option Grant"). On the date of
each annual meeting or special meeting in lieu of annual meeting of the
stockholders of the Company, each person who continues to serve as a
Non-Employee Director of the Company immediately after such meeting shall be
granted an option for 1,000 additional shares of Common Stock (an "Annual Stock
Option Grant"); provided that he or she has served as a Non-Employee Director
for at least six months prior to such meeting. Initial Stock Option Grants, New
Director Stock Option Grants and Annual Stock Option Grants are collectively
referred to herein as "Option Grants". The options shall be deemed automatically
granted at the times, in the amounts and at the option prices set forth herein
without any further action on the part of the Administrator and the proper
officers of the Company are authorized, empowered and directed to execute and
deliver a confirmation of Option Grants ("Option Grant Confirmation") to reflect
each such grant at the times, in the amounts and at the option prices determined
in accordance with the Plan.
6. PRICE.
(a) In the case of an Initial Stock Option Grant, the exercise price of
such Option shall be the closing price of the Common Stock on the New
York Stock Exchange (the "NYSE") on the date the stockholders approve
the Plan.
(b) In the case of a New Director Stock Option Grant, the exercise price of
such Option shall be the closing price of the Common Stock on the NYSE
on the date of the New Director Stock Option Grant.
(c) In the case of an Annual Stock Option Grant, the exercise price of such
Option shall be the closing price of the Common Stock on the NYSE on
the date of the Annual Stock Option Grant.
(d) The closing price of the Common Stock, as of any particular day, shall
be as reported in The Wall Street Journal; provided, however, that if
the Common Stock is not listed on the NYSE on the date the option price
is to be determined, the option price shall be the last price reported
in The Wall Street Journal prior to the option date.
B-2
<PAGE> 32
7. TERM.
Subject to Section 9, 10 and 20 hereof, an option will vest immediately and
may be exercised by the holder thereof (a "Holder") in whole at any time, but no
option may be exercised in any amount later than five (5) years from the date
such option was granted.
8. TRANSFERABILITY.
No option may be transferable by a Holder other than by will or the laws of
descent and distribution. During the lifetime of a Holder, the option may be
exercisable only by such Holder. A Holder who acquires Common Stock hereunder
may only transfer such Common Stock in compliance with applicable federal and
state securities laws.
9. TERMINATION OF DIRECTORSHIP.
If, on or after the date an option is granted under the Plan, a Holder
ceases to serve as a director of the Company for any reason other than death or
disability (including: (i) resignation, (ii) removal as a director of the
Company by the stockholders of the Company, with or without cause, or (iii)
Holder's decision not to stand for reelection at the next shareholders meeting),
the Holder shall have the right subject to Section 10 not later than the earlier
of (A) three months after such resignation or removal or (B) the termination
date of the option as set forth in the Option Grant Confirmation to exercise
such option, to the extent the right to exercise such option shall have accrued
at the date of such resignation or removal, except to the extent that such
option theretofore shall have been exercised.
10. DEATH OR DISABILITY.
If a Holder dies or becomes disabled (within the meaning of Section
22(e)(3) of the IRC) while a director of the Company, the Holder, the personal
representative of the Holder or the person or persons to whom the option shall
have been transferred by will or by the laws of decent and distribution, or the
disabled Holder, shall have the right not later than the earlier of: (i) one
year from the date of the Holder's death or disability, or (ii) the termination
date of the option as set forth in the Option Grant Confirmation, to exercise
such option to the extent the right to exercise such option shall have accrued
at the date of death or disability, except to the extent such option theretofore
shall have been exercised.
11. PAYMENT FOR STOCK.
(a) The purchase price of Common Stock issued upon exercise of options
granted hereunder shall be paid in full on the date of purchase.
Payment shall be made either in cash or such other consideration as the
Administrator deems appropriate, including, without limitation, Common
Stock already owned by the Holder or Common Stock to be acquired by the
Holder upon exercise of the option having a total fair market value, as
determined by the Administrator, equal to the purchase price, or a
combination of cash and Common Stock having a total fair market value,
as so determined, equal to the purchase price.
(b) Common Stock shall not be issued upon the exercise of options unless
and until the aggregate amount of federal, state or local taxes of any
kind required by law to be withheld, if any, with respect to the
exercise of such options have been paid or satisfied or provision for
their payment and satisfaction has been made upon such terms as the
Administrator may prescribe, including, without limitation, payment of
any such taxes by exchanging shares of Common Stock previously owned by
the Holder or acquired upon the exercise of an option.
B-3
<PAGE> 33
12. STOCK ADJUSTMENTS.
(a) The total amount of Common Stock for which options shall be granted
under the Plan and option terms (both as to the number of shares of
Common Stock and the price of the option) shall be appropriately
adjusted for any increase or decrease in the number of outstanding
shares of Common Stock resulting from payment of a Common Stock
dividend on the Common Stock, a subdivision or combination of the
Common Stock, or a reclassification of the Common Stock, and (in
accordance with the provisions contained in the following paragraph) in
the event of a consolidation or a merger in which the Company will be
the surviving corporation.
(b) After the merger of one or more corporations into the Company in which
the Company shall be the surviving corporation, or after any
consolidation of the Company and one or more other corporations, each
Holder shall, at no additional cost, be entitled, upon any exercise of
his option, to receive, in lieu of the number of shares of Common Stock
as to which such option shall then be so exercised, the number and
class of shares of Common Stock or other securities to which such
Holder would have been entitled pursuant to the terms of the applicable
agreement of merger or consolidation if at the time of such merger or
consolidation such Holder had been a Holder of record of a number of
shares of Common Stock equal to the number of shares for which such
option may then be so exercised. Comparable rights shall accrue to each
Holder in the event of successive mergers or consolidations of the
character described above.
(c) In the event of any sale of all or substantially all of the assets of
the Company, or any merger of the Company into another corporation, or
any dissolution or liquidation of the Company or, in the discretion of
the Board, any consolidation or other reorganization in which it is
impossible or impracticable to continue in effect any options, all
options granted under the Plan and not previously exercised shall
terminate unless exercised at least one business day before the
scheduled closing of such event; provided that any such exercise or
termination shall be conditioned on the closing of such transaction;
and provided further that the Board may in its discretion, require
instead that all options granted under the Plan and not previously
exercised shall be assumed by such other corporation on the basis
provided in the preceding paragraph to the extent possible or
practical.
(d) The adjustments described in this Section 12 and the manner of
application of the foregoing provisions shall be determined by the
Board in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become
subject to an option.
13. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option shall have no rights as a stockholder
with respect to any share of Common Stock covered by such Holder's option until
such Holder has become the holder of record of such share of Common Stock, and,
except for stock dividends as provided in Section 12 hereof, no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights in respect of such share for
which the record date is prior to the date on which he or she shall become the
holder of record thereof.
14. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Plan in any
respect it deems suitable; provided, however, that no such action of the Board,
without the approval of the stockholders of the Company, may: (i) increase the
total amount of Common Stock on which options may be granted under the Plan,
(ii) change the manner of determining the option price,
B-4
<PAGE> 34
(iii) change the class of individuals eligible to receive options, (iv) change
the number of options which may be granted to each director, (v) change the
times when such options are granted, or (vi) materially increase the benefits
under the Plan; provided further that no amendment, modification or termination
of the Plan may in any manner affect any option theretofore granted under the
Plan without the consent of the then Holder. Notwithstanding the foregoing, the
Plan may not be amended more than once in any six-month period except to comply
with changes in the IRC, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any rules or regulations promulgated under either the IRC
or ERISA.
15. INVESTMENT PURPOSE.
At the time of exercise of any option, the Company may, if it shall deem it
necessary or desirable for any reason, require the Holder to (i) in the absence
of an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), represent in writing to the Company that it is
such Holder's then intention to acquire the Common Stock for investment and not
with a view to the distribution thereof, or (ii) postpone the date of exercise
until such time as the Company has available for delivery to the Holder a
prospectus meeting the requirements of all applicable securities laws.
16. RIGHT TO REMOVE DIRECTOR.
Nothing contained herein or in any Option Grant Confirmation shall restrict
the right of the stockholders of the Company to remove any Holder as director at
any time, with or without cause, or shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company shall retain a
director for any period of time, or at any particular rate of compensation.
17. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Plan by the Administrator shall be final and be binding
and conclusive for all purposes.
18. INDEMNIFICATION OF DIRECTORS.
Each director of the Company, solely in his or her capacity as a director,
shall be indemnified by the Company against all costs and expenses reasonably
incurred by such director in connection with any action, suit or proceeding to
which he or she or any of the other directors may be a party by reason of any
action taken or failure to act under or in connection with the Plan, or any
option granted thereunder, and against all amounts paid in settlement thereof
(provided such settlement shall be approved by independent legal counsel) or
paid in satisfaction of a judgment in any such action, suit or proceeding, to
the extent permitted by Delaware law. Upon the institution of any such action,
suit or proceeding, a director of the Company shall notify the Company in
writing, giving the Company an opportunity, at its own expense, to handle and
defend the same before such director undertakes to handle it on his or her own
behalf.
19. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
20. EFFECTIVE DATE.
The Plan shall become effective upon the date of its adoption by the Board
(May 29, 1996), subject to approval by the stockholders of the Company at the
Annual Meeting held in September 1996. If the Plan is approved by the
stockholders at such Annual Meeting, Initial
B-5
<PAGE> 35
Stock Option Grants (as defined in Section 5 of the Plan) shall be issued as of
such Annual Meeting date, with the exercise price determined as of such date and
the expiration date for such options being five years from such date. If the
Plan is not approved by the stockholders at such Annual Meeting, the Plan shall
be null and void.
21. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with applicable conditions of
Rule 16b-3 or its successors under the Exchange Act. To the extent any provision
of the Plan or action by the Administrator fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Administrator.
22. TERMINATION OF THE PLAN.
The Plan shall terminate ten (10) years from May 29, 1996. No Option Grants
shall be granted under the Plan after such date. Any Option Grants outstanding
at the time of termination of the Plan shall continue in full force and effect
according to the terms and conditions of such Option Grants.
B-6
<PAGE> 36
BANNER AEROSPACE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints Jeffrey J. Steiner, Warren D. Persavich and
Eugene W. Juris as proxies, each with the power to appoint his substitute
R and hereby authorizes them to represent and to vote, as designated below,
all the shares of Common Stock, par value $1.00 per share, of Banner
O Aerospace, Inc. held of record by the undersigned on July 22, 1996, at the
Annual Meeting of Stockholders to be held on September 13, 1996 and at any
X adjournments of postponements thereof.
Y THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MATTER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL LISTED NOMINEES AND FOR APPROVAL OF PROPOSALS 2, 3, 4
AND 5.
PLEASE MARK, SIGN. DATE AND RETURN THIS PROXY CARD PROMPTLY.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 37
/X/ Please mark
your votes as in this
example
<TABLE>
<S> <C>
WITHHOLD
FOR AUTHORITY
1. Election of Directors / / / / Michael T. Alcox, Frederick W. Bradley, Jr.,
Steven L. Gerard, Charles M. Haar, Philippe
Hercot, Samuel J. Krasney, Warren D.
Persavich, Dr. Eric I. Steiner, Jeffrey J.
For, except vote withheld from the following Steiner, Leonard Toboroff and John C. Wertz.
nominees(s):
- -------------------------------------------------------
</TABLE>
FOR AGAINST ABSTAIN
2. A proposal to amend the 1990 / / / / / /
Non-Qualified and Incentive Stock
Option Plan.
3. A proposal to approve the grant / / / / / /
of options to non-employee
directors.
4. A proposal to approve the 1996 / / / / / /
Non-Employee Director Stock
Option Plan.
5. A proposal to approve the Board / / / / / /
of Directors' selection of Auditors.
6. In their discretion, the proxies are
authorized to vote upon such
other business as may properly
come before the meeting.
SIGNATURE(S): DATED , 1996
------------------------ --------------
SIGNATURE(S): DATED , 1996
------------------------ --------------
NOTE: Please sign exactly as name(s) appears below. When signing as attorney,
executor, administrator, trustee, guardian or corporate officer, please give
title as such.
