<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 14a-11(c) or Rule 14a-12
OUTLOOK GROUP CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
- --------------------------------------------------------------------------------
<PAGE> 2
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
ON OCTOBER 21, 1999
To the Shareholders of Outlook Group Corp.:
The annual meeting of shareholders of Outlook Group Corp. (the
"Company") will be held at the Valley Inn, 123 East Wisconsin Avenue, Neenah,
Wisconsin on Thursday, October 21, 1999 at 2:00 p.m. CDT, for the following
purposes:
(1) To elect two directors for three-year terms expiring in the year
2002;
(2) To consider and approve the Company's 1999 Stock Option Plan; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on August 27, 1999 are
entitled to vote at this meeting or any adjournment of the meeting.
By Order of the Board of Directors
/s/ Annette S. Zoromski
Annette S. Zoromski, Secretary
September 15, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, WHETHER YOUR
HOLDINGS ARE LARGE OR SMALL. IF YOU DO ATTEND THE MEETING, OR FOR ANY OTHER
REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS
VOTED.
<PAGE> 3
OUTLOOK GROUP CORP.
1180 AMERICAN DRIVE
NEENAH, WISCONSIN 54956
TELEPHONE (920) 722-2333
* * * * * * * * * * * * * *
GENERAL
The enclosed proxy is solicited by the Board of Directors of Outlook
Group Corp. (the "Company") for use at its annual meeting of shareholders on
October 21, 1999. All properly executed proxies will be voted at the meeting in
accordance with their terms. A proxy may be revoked at any time before it is
voted, either by written notice filed with the Secretary of the Company or the
acting secretary of the meeting or by oral notice to the presiding officer. The
presence at the meeting of a shareholder who has filed a proxy shall not of
itself constitute a revocation.
Each shareholder of record at the close of business on August 27, 1999
will be entitled to one vote for each share registered in the shareholder's
name. At that date there were 4,623,432 outstanding shares of the Company's
Common Stock, $.01 par value (the "Common Stock"), the only class of stock of
which shares are outstanding. A majority of the votes entitled to be cast on a
matter, represented in person or by proxy, constitutes a quorum for action on
that matter. Abstentions and shares which are the subject of broker non-votes
will be counted for the purpose of determining whether a quorum exists at the
meeting. Shares represented at a meeting for any purpose are counted in the
quorum for all matters to be considered at the meeting. The voted proxies will
be tabulated by the persons appointed as inspectors of election.
Directors are elected by a plurality of the votes cast by the holders
of the Company's Common Stock entitled to vote in the election at a meeting at
which a quorum is present. "Plurality" means that the individuals who receive
the highest number of votes are elected as directors in a particular class, up
to the maximum number of directors in that class to be chosen at the meeting.
Any votes attempted to be cast "against" a candidate are not given legal effect
and are not counted as votes cast in an election of directors. Therefore, any
shares which are not voted (whether by withheld authority, broker non-vote or
otherwise) have no effect in the election of directors except to the extent that
the failure to vote for any individual results in another individual receiving a
larger number of votes. 4 If a quorum is present, the proposed 1999 Outlook
Group Corp. Stock Option Plan (the "1999 Plan") will be approved if the holders
of a majority of shares of the Company's Common Stock represented and entitled
to vote on the matter vote "FOR" the 1999 Plan. Any shares which are the subject
of broker non-votes are not deemed to be entitled to vote on the 1999 Plan;
therefore, such shares will have no effect on the voting on the 1999 Plan except
as they affect the number of shares voting.
The Company will bear the expense of printing and mailing proxy
material, including forwarding expense to beneficial owners of stock held in the
name of another. No solicitation other than by mail is contemplated, except that
Company officers or employees may solicit the return of proxies from certain
shareholders by telephone.
If you are a participant in the Employee Stock Fund of the Company's
401(k) Savings Plan (the "Savings Plan"), the shares of Company Common Stock
held in your account will be voted as designated on the blue proxy card, which
will be provided separately, relating to shares held through the Savings Plan.
Savings Plan shares not voted by employees will be voted as directed by the
persons administering the Savings Plan, as provided in the Savings Plan.
This proxy material is being mailed to shareholders commencing on or
about September 15, 1999. The Annual Report to Shareholders of the Company
covering the fiscal year ended May 31, 1999, including financial statements,
accompanies this proxy statement.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock of the Company, as of August 27, 1999, by each
director, nominee for director and named executive officer, by all directors and
executive officers of the Company as a group, and by each person known to the
Company to beneficially own more than 5% of the Company's Common Stock. Except
as otherwise indicated in the footnotes to the table, such persons have sole
voting and investment power as to the shares reported as beneficially owned.
<TABLE>
<CAPTION>
NAME AND NATURE NUMBER OF PERCENT
OF BENEFICIAL OWNERSHIP (1) SHARES OF CLASS
--------------------------- ------ --------
<S> <C> <C>
Joseph J. Baksha................................ 69,500 1.5%
Harold J. Bergman............................... 4,000 *
Jeffry H. Collier(2)(3)......................... 31,527 *
Paul M. Drewek(3)............................... 21,000 *
James L. Dillon................................. 32,750 *
Richard C. Fischer.............................. 22,200 *
Pat Richter..................................... 3,150 *
A. John Wiley, Jr.(2)........................... 83,188 1.8%
All directors and executive officers as
a group (8 persons)(2)(3)................... 267,315 5.7%
David L. Erdmann(4)............................. 326,049 7.1%
Dimensional Fund Advisors Inc.(5)............... 246,400 5.3%
Heartland Advisors, Inc.(6)..................... 1,082,300 23.4%
</TABLE>
- -------------------
*Less than 1%.
(1) Includes the following shares issuable under stock options: Mr. Baksha
- 20,000; Mr. Collier - 10,000; Mr. Drewek - 20,000; Messrs. Bergman,
Dillon, Fischer, Richter and Wiley - 3,000 each; all directors and
executive officers as a group-81,000.
(2) Voting and/or dispositive power is shared with respect to the indicated
number of shares: Mr. Collier--3,720 and Mr. Wiley--1,165; all
directors and executive officers as a group--4,885. See also footnote
(3).
(3) As of August 27, 1999, 89,565 shares of Common Stock were held in the
Savings Plan. Employees have the right to designate the vote of shares
of Common Stock allocated to their accounts. Shares allocated to named
participants' accounts as of June 30, 1999 (the date of the last
allocation) are included. No shares were not allocated on that date.
(4) According to information provided to the Company by Mr. Erdmann, he
shares voting and dispositive power as to 25,977 shares, and has sole
powers as to the remaining shares. The business address of Mr. Erdmann
is c/o Lake Country Foods, Inc., 132 South Concord Road, Oconomowoc,
Wisconsin 53066.
(5) According to a report on Form 13G/A dated February 12, 1999,
Dimensional Fund Advisors Inc. ("Dimensional") held sole voting and
dispositive power as to 246,400 shares of Common Stock at December 31,
1998. Dimensional is an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act"). The business address of
Dimensional is 1299 Ocean Avenue, Santa Monica, California 90401.
(6) According to a report on Schedule 13G/A dated January 28, 1999,
Heartland Advisors, Inc. ("Heartland") had sole dispositive power as to
1,082,300 shares of Common Stock, and sole voting power as to 614,800
of those shares, as of December 31, 1998. Heartland is an investment
adviser registered under the Advisers Act. The business address of
Heartland is 790 North Milwaukee Street, Milwaukee, Wisconsin 53202.
-2-
<PAGE> 5
The above beneficial ownership information is based on information
furnished by the specified persons and is determined in accordance with Rule
13d-3, as required for purposes of this Proxy Statement. It is not necessarily
to be construed as an admission of beneficial ownership for other purposes.
ELECTION OF DIRECTORS
The Company's Articles and Bylaws provide for a Board of between seven
and eleven directors, and for classification of the Board of Directors into
three separate classes. The Board of Directors has set the number of directors
at seven. At each annual meeting of shareholders, the number of directors equal
to the number constituting the class whose term expires at such meeting is
elected to hold office until the third succeeding annual meeting or until their
successors have been elected.
The class of directors whose terms expire at the 1999 annual meeting
(two of the seven directors) are nominated for election at the 1999 annual
meeting to serve for terms expiring at the 2002 annual meeting. The remaining
five directors were elected by the shareholders at the 1998 annual meeting for
terms expiring in 2000 or 2001, as shown in the following table.
Proxies received by management will be voted FOR the election of the
three nominees named unless otherwise specified. If any such nominee is unable
to serve (which is not anticipated), proxies may be voted for another person
designated by the Board of Directors.
<TABLE>
<CAPTION>
Principal Occupation Director
Name and Age and Business Experience Since
- ------------ ----------------------- --------
<S> <C> <C>
NOMINEES (FOR TERMS EXPIRING IN 2002)
Harold J. Bergman, 63 (1)(2) Retired in 1999; previously President and Chief 1994
Executive Officer of Riverside Paper Corp. (specialty
paper manufacturer and converter)
Richard C. Fischer, 60(1)(3) Chairman and Chief Executive Officer of 1995
the Company since December 1997; also
an investment banker with B.C. Ziegler
and Company since 1999, Fischer &
Associates LLC from 1996 to 1999, and
Robert W. Baird & Co. Incorporated
prior thereto
CONTINUING DIRECTORS (TERMS EXPIRE IN 2000)
Jeffry H. Collier, 46 (3) Vice President and General Manager of 1993
the Graphics division of the Company
since 1996 and Executive Vice President
of the Company since 1994; previously,
Vice President
Pat Richter, 58(1)(2)(4) Director of Athletics, University of 1995
Wisconsin Madison
A. John Wiley, Jr., 57 (3) President of Elipticon Wood Products, 1978
Inc. (manufacturer) since 1995, Great
American Backyards L.L.C. since 1996
and The Playground Connection L.L.C.
since 1998; previously, salesperson
for, and officer of, the Company
</TABLE>
-3-
<PAGE> 6
<TABLE>
<S> <C> <C>
CONTINUING DIRECTORS (TERMS EXPIRE IN 2001)
James L. Dillon, 55(1)(2) Accountant practicing with the firm 1978
Dillon, Endries, Otto & Calmes LLC
since 1995; previously with the firm
DiRenzo, Simonis & Miller, Certified
Public Accountants
Joseph J. Baksha, 47(3) President and Chief Operating Officer 1998
of the Company since 1996; Vice
President and President of Outlook
Packaging in 1996; previously Executive
Vice President and COO of Washburn
International (manufacturer and
distributor) from 1994 to 1996; and
Executive Vice President and COO of
Alusuisse Flexible Packaging (flexible
packaging) prior thereto.
</TABLE>
- ---------------------
(1) Member of the Audit Committee of which Mr. Dillon is chairman. This
Committee, which held one meeting during fiscal 1999, reviews the
functions and findings of the Company's independent public accountants
and makes recommendations to the Board of Directors with respect
thereto.
(2) Member of the Compensation Committee, of which Mr. Richter is chairman.
This Committee, which held one meeting in fiscal 1999, reviews and
makes recommendations to the Board of Directors regarding overall
compensation policy and salaries, bonuses and benefits to officers and
other key employees and awards stock options under the Company's
existing stock option plan, and would administer the 1999 Plan.
(3) Member of the Nominating Committee, of which Mr. Fischer is chairman.
This committee, which held no meetings in fiscal 1999, reviews
potential candidates for, and makes recommendations to the Board of
Directors regarding, additional members of the Board of Directors.
Persons wishing to suggest names for consideration for nomination to
the Board may forward them to the Nominating Committee, in care of the
Company.
(4) Mr. Richter is also a director of Anchor BanCorp Wisconsin Inc., a
publicly held savings bank holding company, and Northland Cranberries,
Inc., a publicly held grower and marketer of cranberries and related
products.
The Board of Directors held eight meetings during fiscal 1999. During
fiscal 1999, each director of the Company attended at least 75% of the total
number of meetings of the Board and of all committees of the Board on which such
director served (during the period that he served).
Directors' Fees. Directors who are not employees of the Company receive
a fee of $3,600 per year, $300 for each meeting of the Board of Directors
attended and $100 ($150 in the case of the committee chairman) for each Board
committee meeting attended. Messrs. Baksha and Collier are currently employees
of the Company. See "Proposed 1999 Stock Option Plan" for options which may be
granted to non-employee directors under that plan. Director participation in the
1999 Plan has been proposed in lieu of an increase in cash board fees.
Fischer Arrangements. Mr. Fischer, although designated the Chief
Executive Officer of the Company, is not an employee of the Company. Rather, he
is compensated for his duties in that position as an independent contractor. The
Company's arrangements with Mr. Fischer provide that he will receive $125 per
hour for services as interim Chief Executive Officer, up to a maximum of 100
hours per month. Mr. Fischer is not entitled to receive employee benefits in
this position.
-4-
<PAGE> 7
Bergman Arrangements. Mr. Bergman is performing consulting services for
the Company on an occasional, as-needed basis. He is compensated on an hourly
basis at $100 per hour. During fiscal 1999, Mr. Bergman received $3,700 for
these services.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation in fiscal year 1999 and in the two prior fiscal years of (i) each
person who served as Chief Executive Officer and (ii) the only other executive
officers who received total annual salary and bonus in excess of $100,000 during
the last fiscal year for services in all capacities to the Company and its
subsidiaries.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
---------------------- ------------
AWARDS
NAME AND PRINCIPAL FISCAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY($) BONUS($)(2) #(3) COMPENSATION($)(4)
-------- ---- --------- ----------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Richard C. Fischer, 1999 $ 85,250 -0- -0- -0-
Chairman and CEO (5) 1998 43,375 -0- -0- -0-
Joseph J. Baksha, 1999 $200,000 $30,875 10,000 $3,884
President and COO 1998 166,346 $89,832 -0- 5,797
1997 162,787 48,831 30,000 -0-
Jeffry H. Collier, 1999 $120,000 $39,098 4,000 $2,995
Executive Vice President 1998 115,000 $5,687 -0- 2,998
1997 111,165 -0- -0- 2,860
Paul M. Drewek 1999 $161,596 $35,000 20,000 -0-
Chief Financial Officer (6)
</TABLE>
- ------------------
(1) While the named individuals received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations, the
value of these benefits are not shown since they did not exceed, in the
aggregate, the lesser of $50,000 or 10% of the individual's salary and
bonus in any year.
(2) Annual bonus amounts, if any, are earned and accrued during the fiscal
years indicated but paid in the following fiscal year.
(3) Represents number of shares for which options were granted under the
Company's 1990 Stock Option Plan (the "1990 Option Plan"). No SARs have
been granted.
(4) Reflects the Company's contributions to the executive officer's account
in the Savings Plan.
(5) See "Election of Directors - Fischer Arrangements" for further
information on Mr. Fischer's compensation arrangements.
(6) Mr. Drewek became Chief Financial Officer in November 1998, after
having served as interim Chief Financial Officer from May to November.
Prior to November 1998, Mr. Drewek was an independent contractor,
rather than a Company employee. Includes amounts paid in fiscal 1999 to
Mr. Drewek as an independent contractor. During the period when Mr.
Drewek was an independent contractor, he was paid at a higher rate than
his salary as an employee because he was not eligible for employee
benefits and was responsible for self-employment taxes. Mr. Drewek's
base salary for fiscal 2000 is $105,000.
-5-
<PAGE> 8
OPTIONS OUTSTANDING AT YEAR END
The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning the number
and value of options outstanding at May 31, 1999.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN THE
UNEXERCISED OPTIONS MONEY OPTIONS
SHARES AT FY END (1) AT FY END(1)(2)
ACQUIRED ON VALUE ------------- ---------------
NAME EXERCISE REALIZED EXERCISABLE(#)(3) EXERCISABLE($)(3)
---- -------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Richard C. Fischer -0- -0- 3,000 -0-
Joseph J. Baksha -0- -0- 40,000 -0-
Jeffry H. Collier -0- -0- 10,000 -0-
Paul M. Drewek -0- -0- 20,000 -0-
</TABLE>
- ------------------
(1) No SARs have been granted.
(2) Based upon the $3.75 closing price of Company Common Stock on May 28,
1999, the last trading day before fiscal year end.
(3) All such outstanding options were exercisable at May 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information about options granted to the
executive officers named in the Summary Compensation Table during fiscal 1999.
<TABLE>
<CAPTION>
Individual Grants(1)
--------------------------------------------------------------------
Potential
Realized Value at
Number of % of Assumed Annual
Securities Total Options Rates of Stock Price
Underlying Granted Appreciation
Options to Employees Exercise or for Option Term (2)
Granted in Fiscal Base Price Expiration -------------------
Name (#) Year ($/sh) Date 5% 10%
- ---- ----------- ------------- ----------- ---------- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Baksha 10,000 11.6% $3.9375 11-17-03 $10,879 $24,039
Jeffry H. Collier 4,000 4.6% $3.9375 11-17-03 4,351 9,615
Paul M. Drewek 20,000 23.1% $3.9375 11-17-03 21,757 48,077
</TABLE>
- ------------------
(1) All grants reflect stock options under the 1990 Option Plan. Mr.
Fischer did not receive a grant of stock options in fiscal 1999.
(2) Assumes the stated appreciation from the date of grant.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
As of June 1, 1999, the Company entered into an employment agreement
with Joseph J. Baksha, President and Chief Operating Officer of the Company, for
a term of two years, renewable June 1, 2001. It followed a prior two year
-6-
<PAGE> 9
agreement entered into in 1997. Under the 1999 employment agreement, Mr. Baksha
will earn an annual salary of $225,000 in each of fiscal 2000 and 2001, and can
earn an incentive equal to a five percent of earnings for interest and taxes
which exceed $2,500,000 per year. (The incentive is capped at 75% of Mr.
Baksha's annual salary.) Under the terms of the 1997 employment agreement, Mr.
Baksha earned an annual salary of $175,000 and an incentive equal to a
percentage of operating income capped at 100% of Mr. Baksha's annual salary;
base pay was increased to $200,000 in fiscal 1998. Prior to a change in control,
Mr. Baksha's employment agreement may be terminated by either party, at any
time, with or without cause or reason, upon 30 days written notice. The
employment agreement also imposes certain non-competition and confidentiality
obligations on Mr. Baksha. In the event the employment agreement is terminated
by the Company other than for cause (as defined in the agreement), Mr. Baksha
would be entitled to receive his annual salary for the year following his
termination plus any bonus earned through the last day of active employment. If
there is a change of control of the Company and Mr. Baksha is terminated without
cause, Mr. Baksha's employment status changes (as specified in the agreement) or
Mr. Baksha's employment agreement is not renewed (as specified in the
agreement), Mr. Baksha shall be entitled to receive his annual salary for the
two years following an event as set forth above plus any bonus earned through
the last day of active employment. Mr. Baksha is subject to a covenant not to
compete and confidentiality provisions for the duration of this employment and
for six months following termination of his employment with the Company.
In Mr. Baksha's 1997 employment agreement, the Company committed to
grant Mr. Baksha an option to purchase an additional 10,000 shares of Common
Stock under the provisions of the Option Plan. That option was granted in
November 1998 at $3.9375 per share. In the 1997 employment agreement, the
Company also agreed to make a loan available to Mr. Baksha up to $100,000 to
purchase Common Stock at such time as Mr. Baksha, as an officer of the Company,
would be able to purchase Common Stock in the market. The term of the loan would
be five years at the same rate of interest charged the Company pursuant to its
line-of-credit at the time of such loan. Such a loan was made to Mr. Baksha in
July 1998, at an interest rate of 8% per annum. The loan is due in July 2003.
The maximum amount outstanding under the loan during fiscal 1999 was $100,000,
which was the amount outstanding at fiscal year end.
Messrs. Collier and Drewek also have change in control arrangements
under their terms of employment. In the event of a change in control in the
Company, in the event there is not an ongoing arrangement for continued
employment, and assuming no termination for cause, each of Messrs. Collier and
Drewek would be entitled to receive twelve-months salary (and accrued bonus) as
a severance benefit, in addition to continuation of benefits for the twelve
month period.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The general compensation policies of the Company and its subsidiaries
are set by the Compensation Committee of the Board of Directors. During fiscal
1999, this Committee was composed of three independent non-employee directors.
Compensation decisions with respect to the Company's Chief Executive Officer and
its President are made primarily by the Committee; compensation decisions as to
all other officers of the Company, including its subsidiaries, are recommended
by the Chief Executive Officer and then approved by the Committee. All
compensation programs, such as the Savings Plan and the Option Plans, are either
originated or approved by the Committee.
It is the policy of the Company to fairly compensate individuals for
their contributions to the Company's business, being mindful of the ability of
the Company to fund such compensation plans or programs and the need to provide
fair value to the Company's shareholders. To be effective in attracting and
retaining competent individuals, compensation packages must balance short-term
and long-term considerations, as well as provide incentives to individuals based
upon the performance of the Company and be competitive with other companies. In
recent years, the objective of fairly compensating executive officers has been
evaluated in the context of the divestiture of certain operations and improving
financial results. In view of these changes, the Compensation Committee has
tended to review historical performance, rather than to set compensation on a
prospective basis.
-7-
<PAGE> 10
The Compensation Committee reviews numerous factors in determining the
compensation of the Chief Executive Officer including Company performance and
salaries at other area companies. Upon Mr. Fischer's assumption of the position
of Chief Executive Officer, the Committee, as ratified by the Board of
Directors, determined that compensation of Mr. Fischer as an independent
contractor would be appropriate to reflect his then-interim status. It was
determined that compensation based upon number of hours actually worked would be
appropriate to reflect the nature of the role being played by Mr. Fischer. Mr.
Fischer's hourly rate was determined by reference to the prior CEO's salary
prior to his resignation. Mr. Fischer is not entitled to receive bonus payments.
The Committee considered the arrangement appropriate to continue when Mr.
Fischer's "interim" status was dropped in 1998.
The Company has also established the 1990 Option Plan, and has proposed
the 1999 Plan, as an additional incentive to its officers and key employees,
including the Chief Executive Officer (if a full-time employees). The Committee
believes that such a plan provides participants with an incentive, extending
beyond the current fiscal year, to increase the overall value of the Company, by
providing them with a greater stake in the increasing value of the Company's
Common Stock on a longer-term basis. The option plans are designed to complement
the incentive provided by the annual cash bonus. The Committee granted options
for 34,000 shares to executive officers in 1999, after not being able to grant
options in fiscal 1998 due to contractual restrictions that are no longer
applicable.
The factors considered to determine compensation of the other executive
officers in 1999 were essentially the same (other than part-time status) as
those considered with respect to the Chief Executive Officer. Bonuses for other
executive officers are dependent upon the level of the Company's pre-tax
earnings and individual achievement. Individual awards would be recommended by
the Chief Executive Officer based upon individual and team contributions,
accomplishment of any pre-established goals and such other factors as the Chief
Executive Officer may consider appropriate. The Committee believes that these
arrangements establish objective criteria for determining whether management
bonuses are appropriate yet provides flexibility in allowing the Chief Executive
Officer to recommend particular designations of awards based upon all of the
factors. Also, see above for a discussion of Mr. Baksha's employment agreement.
The Committee believes it is highly unlikely that the compensation of
any executive officer will exceed $1 million in any fiscal year, and therefore
has not taken any action with respect to the provisions of Section 162 of the
Internal Revenue Code which limit the deductibility of compensation to certain
executives of over $1 million in any fiscal year. However, the Committee
believes that any compensation income pursuant to the 1990 Option Plan would not
be subject to that limitation under applicable "grandfathering" provisions, and
that income under the 1999 Plan would not be subject to those limitations due to
the requested shareholder approval.
Members of the Compensation Committee:
Pat Richter, Chairman James L. Dillon
Harold J. Bergman
-8-
<PAGE> 11
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Company
Common Stock with The Nasdaq Stock Market Index for U.S. Companies and an index
of "peer" commercial printing companies created by the Company. The "peer" index
reflects the performance, weighted by period beginning market capitalization, of
the common stocks of the following companies: Laser Master International;
Littlefield, Adams & Co.; Multi-Color Corp.; Northstar Computer Forms; Paxar
Corporation; Shorewood Packaging Corporation; and Topps Inc. These companies are
relatively small publicly-held graphics services companies and were chosen in
consultation with the Company's investment adviser.
The Company formerly used another self-generated index of companies. It
was originally chosen because these companies were identified in the 1993 Keeley
Report, a third party report of corporate development activities and strategies
in the printing and packaging industry, as publicly traded "commercial" printing
companies. However, due to subsequent acquisitions and business cessations, only
two companies in that index (Paxar and Shorewood) remained publicly-traded, and
that index therefore was no longer meaningful.
The values on the graph show the relative performance of an investment
of $100 made on May 31, 1994, in Company Common Stock and each of the indices.
In the case of the NASDAQ and "peer" indices, the values reflect reinvestment of
dividends.
<TABLE>
<CAPTION>
OUTLOOK GROUP NASDAQ US STOCKS PEER GROUP
------------- ---------------- ----------
<S> <C> <C> <C>
'1994' 100.00 100.00 100.00
'1995' 77.00 119.00 101.00
'1996' 47.00 173.00 118.00
'1997' 38.00 195.00 135.00
'1998' 50.00 247.00 120.00
'1999' 32.00 347.00 127.00
</TABLE>
CERTAIN TRANSACTIONS
It is the policy of the Company that all material transactions between
the Company, its officers, directors or principal shareholders, or affiliates of
any of them, shall be on terms no less favorable to the Company than those which
could have been obtained if the transaction had been with unaffiliated third
parties on an arm's length basis, and such transactions will be approved by a
majority of the members of the Audit Committee of the Board of Directors, or a
majority of the directors who are independent and not financially interested in
the transaction. See "Executive Compensation - Employment Contracts and
Change-in-Control Arrangements" regarding a loan to Mr. Baksha.
-9-
<PAGE> 12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders (collectively, "insiders") are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
All publicly held companies are required to disclose the names of any
persons who fail to make any such filing on a timely basis and the number of
delinquent filings and transactions, based solely on a review of the copies of
the Section 16(a) forms furnished to the Company, or written representations
that no such forms were required. On that basis, the Company believes that
during fiscal 1999 the Company's insiders have complied with all Section 16(a)
filing requirements applicable to them.
APPROVAL OF 1999 STOCK OPTION PLAN
Shareholders of the Company are being asked to approve the Outlook
Group Corp. 1999 Stock Option Plan (the "1999 Plan").
On August 18, 1999, subject to shareholder approval, the Board of
Directors adopted the 1999 Plan. The Plan is intended to provide certain key
employees, and non-employee directors, of the Company an increased
identification with the shareholders of the Company by offering increased stock
ownership. No options have yet been granted under the 1999 Plan, nor is it
anticipated that any such options or other rights will be granted prior to
shareholder approval. Options previously granted under the 1990 Option Plan will
remain in effect, subject to the terms of the 1990 Plan, until they have been
exercised or have expired.
A copy of the 1999 Plan is attached hereto as Exhibit A. Descriptions
herein of certain provisions of the 1999 Plan are qualified in their entirety by
reference to the complete text of the 1999 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF THE 1999 PLAN.
The 1999 Plan provides for the granting of stock options which may be
designated as either "incentive stock options" ("ISOs") within the meaning of
Section 422 of the Internal Revenue Code (the "Code") or as "non-qualified stock
options" ("NSOs") under the Code. (ISOs and NSOs shall together be referred to
as "Options"). The purposes of the 1999 Plan are to provide to participating
officers and other key employees, and non-employee directors, long-term
incentive for high levels of performance and for unusual efforts to improve the
financial performance of the Company. In addition, the 1999 Plan will provide a
form of compensation specifically linked to the performance of the Common Stock,
helping officers become further identified with shareholders of the Company.
The 1999 Plan is intended to continue the incentives to employees which
had been provided under the 1990 Option Plan, and include directors to provide
an alternative to increasing cash directors' fees. At August 27, 1999, of the
200,000 shares which were available for option under the 1990 Option Plan,
options for a total of 17,750 have been exercised and 178,500 shares are subject
to currently outstanding options, leaving only 3,750 shares available for future
Options. Therefore, either the 1990 Option Plan needs to be amended, or a new
plan created, to continue to provide this type of stock-based incentive.
Officers and other key employees of the Company and its subsidiaries,
and non-employee directors of the Company, are eligible to receive Options under
the 1990 Option Plan. The Company currently estimates that the number of key
employees and directors eligible to participate in the 1999 Plan is
approximately 70 persons; the total number of persons who received options under
the 1990 Option Plan since its inception was approximately 200, plus six
-10-
<PAGE> 13
directors who received options apart from the 1990 Option Plan. The Company
cannot determine at this time the number of Options to be granted in the future
to the persons named in the Summary Compensation Table, to all current executive
officers as a group, to non-employee directors or to all other employees as a
group.
The following table indicates the benefits received by the named
persons or groups in fiscal 1999, and to date in fiscal 2000, under the 1990
Option Plan.
<TABLE>
<CAPTION>
Name and Position Dollar Value (1) Number of Shares
- ------------------------------------------------------------------ ------------------- ---------------------
<S> <C> <C>
Richard C. Fischer, Chairman and CEO - -0-
Joseph J. Baksha, President, COO and Director $625 32,500
Jeffry H. Collier, Senior Vice President and Director $250 14,000
Paul M. Drewek, Chief Financial Officer $1,250 20,000
All executive officers as a group $2,125 56,500
All employees, excluding executive officers, as a group $4,359 69,750
All non-employee directors, as a group - -0-
</TABLE>
- -----------------
(1) At August 27, 1999, based upon the $4.00 closing price of Company
Common Stock on that date.
The 1999 Plan will be administered by the Compensation Committee of the
Board of Directors. The Committee will be constituted so as to permit the Plan
to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of
1934 and Section 162(m) of the Code. The Committee will designate the persons to
whom Options are to be granted, the number of shares subject to each Option, the
date when Options may first be exercised and any other conditions on the Options
as the Committee shall deem desirable. Subject to the terms and conditions of
the 1999 Plan, the Committee may also modify, extend or renew outstanding
Options granted under the 1999 Plan, accept the surrender of outstanding Options
(to the extent not already exercised), reduce the exercise price of outstanding
Options, or authorize the granting of new Options in substitution therefor (to
the extent not already exercised).
The aggregate number of shares of Common Stock which may be issued
pursuant to Options under the 1999 Plan is 200,000. No individual may be granted
Options under the 1999 Plan covering more than 25,000 shares in any calendar
year. In the event that any Option granted under the 1999 Plan expires or for
any reason terminates without having been exercised in full, the remaining
shares under such Option shall again become available for the granting of
additional Options. The Board proposed this number of shares to allow for option
grants during the term of the 1999 Plan, and to avoid the cost and expense of
obtaining additional shareholder votes in the near future. Based upon the recent
levels of grant awards, the 1999 Plan would provide capacity for options for
approximately three more years.
The exercise price at which shares may be purchased under each Option
must be at least 100% of the Fair Market Value (as defined in the 1999 Plan) of
the Company's Common Stock on the date that the Option is granted. If a person
owns, directly or indirectly, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
subsidiaries at the time an ISO is granted ("10% Owner"), the price at which
shares of stock may be purchased by such 10% Owner under the ISO shall not be
less than 110% of the Fair Market Value of such shares on the date of grant. The
aggregate Fair Market Value (determined as of the date the ISO is granted) of
shares with respect to which ISOs are first exercisable by a grantee during any
calendar year shall not exceed $100,000.
Unless the Committee determines otherwise, Options vest from one to
three years after grant, with one-third of an award vesting on each of the first
three anniversaries of the grant. No Option may be exercised more than ten years
from the date of grant or, in the case of an ISO, five years for a 10% Owner.
Unless the Committee determines otherwise, the grantee must generally exercise
an Option while employed by the Company or a subsidiary, on the date the grantee
causes to perform services if such cessation is for cause, within 90 days after
termination of employment (for reasons other than death, disability or cause),
or if termination is caused by a disability or death, or retirement in the case
-11-
<PAGE> 14
of an NSO, within one year after such termination. In certain circumstances,
options exercise periods and vesting may be extended in the case of retirement.
Options will fully vest on a change of control, as defined in the 1999 Plan.
Option holders must comply with all income tax withholding obligations
under the exercise of any Option. The 1999 Plan provides that such withholding
obligations may be satisfied by the Company withholding from the shares to be
issued that number of shares of Common Stock calculated to have a Fair Market
Value equal to the withholding obligation.
In the event of a stock dividend, stock split, merger, reorganization,
or other similar change affecting the Common Stock, the Compensation Committee
shall adjust the number of shares which may thereafter be granted under the 1999
Plan and the number and exercise price of shares subject to outstanding Options.
The Option exercise price for shares purchased under the 1999 Plan must
be paid in full at the time of exercise. Such payment may be made either in
cash, by delivering shares of Company Common Stock which the optionee, the
optionee's spouse or both have beneficially owned for at least six months prior
to the time of exercise ("Delivered Stock"), or a combination of cash and
Delivered Stock. Options granted under the 1999 Plan may not be transferred or
assigned except by will or the laws of descent and distribution and, during the
grantee's lifetime, may be exercised only by the grantee; however, the 1999 Plan
provides that, with the express authorization of the Committee, an option holder
may transfer NSOs to family members.
Each Option granted under the 1999 Plan will be evidenced by an
agreement between the Company and the grantee containing certain terms required
by the 1999 Plan and such other conditions or restrictions as the Committee may
deem appropriate.
The 1999 Plan is effective August 18, 1999, subject to shareholder
approval. It provides that options may be granted at any time prior to August
18, 2009. On that date, the 1999 Plan will expire, except as to Options then
outstanding, which will remain in effect until they have been exercised or
expired or otherwise terminated. The 1999 Plan may be terminated at any time by
the Board of Directors. The Board of Directors may amend the 1999 Plan from time
to time, but shareholder approval is required in specified circumstances.
The closing sale price of Company Common Stock on August 27, 1999, as
reported on the NASDAQ Stock Market, was $4.00.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of NSOs or ISOs granted under the 1999 Plan, in each case based on
applicable provisions of the Code now in effect.
Incentive Stock Options. An optionee will not recognize taxable income
at the time an ISO is granted. Further, an optionee will not recognize taxable
income upon exercise of an ISO if the optionee complies with two separate
holding periods; shares acquired upon exercise of an ISO must be held for at
least two years after the date of grant and for at least one year after the date
of exercise. The difference between the exercise price and the fair market value
of the Common Stock at the date of exercise is, however, a tax preference item.
When the shares of Common Stock received pursuant to the exercise of an ISO are
sold or otherwise disposed of in a taxable transaction, the optionee will
recognize a capital gain or loss, measured by the difference between the
exercise price and the amount realized.
Ordinarily, an employer granting ISOs will not be allowed any business
expense deduction with respect to stock issued upon exercise of an ISO. However,
if all of the requirements for an ISO are met except for the holding period
rules set forth above, the optionee will be required, at the time of the
disposition of the stock, to treat the lesser of the gain realized or the
difference between the exercise price and the fair market value of the stock at
the date of exercise
-12-
<PAGE> 15
as ordinary income and the excess, if any, as capital gain. The Company will be
allowed a corresponding business expense deduction to the extent of the amount
of the optionee's ordinary income.
Non-qualified Stock Options. An optionee will not recognize taxable
income at the time an NSO is granted. Upon exercise of an NSO, an optionee will
recognize compensation income in an amount equal to the difference between the
exercise price and the fair market value of the shares of Common Stock at the
date of exercise. The amount of such difference will be a deductible expense to
the Company for tax purposes. On a subsequent sale or exchange of shares
acquired pursuant to the exercise of an NSO, the optionee will recognize a
capital gain or loss, measured by the difference between the amount realized on
the disposition and the tax basis of such shares. The tax basis will, in
general, be the amount paid for the shares plus the amount treated as
compensation income at the time the shares were acquired pursuant to the
exercise of the option.
When the NSO exercise price is paid in Delivered Stock, the exercise is
treated as: (a) a tax-free exchange of the shares of Delivered Stock (without
recognizing any taxable gain with respect thereto) for a like number of new
shares (with such new shares having the same basis and holding period as the
old); and (b) an issuance of a number of additional shares having a fair market
value equal to the "spread" between the exercise price and the fair market value
of the shares for which the NSO is exercised. The optionee's basis in the
additional shares will equal the amount of compensation income recognized upon
exercise of the NSO and the holding period for such shares will begin on the
date the optionee acquires them. This mode of payment does not affect the
ordinary income tax liability incurred upon exercise of the NSO described above.
AUDITORS
During fiscal 1999, the Board of Directors, upon the recommendation of
the Audit Committee, appointed the firm of PricewaterhouseCoopers LLP (formerly
Coopers & Lybrand LLP) as independent public accountants to audit the books and
accounts of the Company for fiscal 1999. PricewaterhouseCoopers LLP has acted as
the Company's independent public accountants since fiscal 1993, and the Board of
Directors expects to appoint that firm to audit the books and accounts of the
Company for fiscal 2000. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the annual meeting to respond to appropriate questions
and to make a statement if they so desire.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than May
18, 2000 in order to be considered for inclusion in next year's annual meeting
proxy material.
Under a recent Securities and Exchange Commission rule relating to the
discretionary voting of proxies at shareholder meetings, if a proponent of a
matter for shareholder consideration (other than a shareholder proposal) notify
the Company at least 45 days prior to the month and day of mailing the prior
year's proxy statement, then management proxies are allowed to use their
discretionary voting authority if a proposal is raised at the annual meeting,
without any discussion of the matter in the proxy statement. Thus, such matters
must be received by the Company by August 1, 2000 in the case of the 2000 annual
meeting.
-13-
<PAGE> 16
OTHER MATTERS
Although the Board of Directors is not aware of any other matters which
may come before the meeting, if any such matter should be presented, the persons
named in the accompanying proxy intend to vote such proxy in accordance with
their best judgment.
By Order of the Board of Directors
/s/ Annette S. Zoromski
Annette S. Zoromski, Secretary
September 15, 1999
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED MAY
31, 1999, WILL BE PROVIDED WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF
THE COMPANY'S COMMON STOCK, AS OF THE RECORD DATE FOR THE ANNUAL MEETING, UPON
THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO: CHIEF FINANCIAL OFFICER, OUTLOOK
GROUP CORP., 1180 AMERICAN DRIVE, NEENAH, WISCONSIN 54956.
-14-
<PAGE> 17
EXHIBIT A
OUTLOOK GROUP CORP.
1999 STOCK OPTION PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Outlook Group Corp. 1999
Stock Option Plan (the "Plan"). The Plan provides for the granting of (i)
incentive stock options ("ISOs") intended to qualify as such within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
(ii) non-qualified stock options ("NSOs"). (ISOs and NSOs shall together be
referred to as "Options".) The purposes of the Plan are to provide to
participating officers and other key employees, and non-employee directors,
long-term incentive for high levels of performance and for unusual efforts to
improve the financial performance of Outlook Group Corp. (the "Company"). In
addition, the Plan will provide a form of compensation specifically linked to
the performance of the stock of the Company, causing the participants to become
further identified with Company shareholders.
1.02 Effective Date. The effective date of the 1999 Plan shall be
August 18, 1999, subject to approval of the 1999 Plan by the shareholders of
Outlook Group Corp. at the 1999 annual meeting.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change in Control" shall mean: (a) the sale of over 50% of
the stock of the Company; or (b) the sale by the Company of
over 50% of its business or assets in one or more transactions
over a consecutive 12-month period; or (c) a merger or
consolidation by the Company with or into any other
corporation or entity such that the Company's shareholders
prior to the transaction or transactions do not own at least
50% of the surviving entity measured in terms of voting power.
(c) "Committee" shall mean the Compensation Committee of the
Board, as described in Section 4.01.
(d) "Company" shall mean Outlook Group Corp.
(e) "Company Stock" shall mean Common Stock of the Company $.01
par value, and such other stock and securities as may be
substituted therefor pursuant to Section 3.02.
(f) "Eligible Participant" shall mean any officer or other
employee of the Company or a Subsidiary who satisfies all of
the requirements of Section 5.01 and any director of the
Company; provided, however that any director of the Company
who is not also an employee of the Company shall not be
eligible to receive an incentive stock option.
<PAGE> 18
(g) "Fair Market Value" on any date shall mean the average of the
highest and lowest sale prices of the shares on such date (or,
if such date is not a trading date, on the next preceding
trading date) as reported by NASDAQ (the National Association
of Securities Dealers, Inc. Automated Quotation System).
However, if any time the Company stock is listed on any
exchange, the "Fair Market Value" shall be the average of the
reported highest and lowest prices at which shares are sold on
such exchange on such date (or, if such date is not a trading
date, on the next preceding trade date). In the absence of
reported sales on NASDAQ or on such exchange of any trading
date, the "Fair Market Value" shall be the average of the
reported closing bid and asked prices for the shares on NASDAQ
or such exchange on such date.
(h) "Optionee" shall mean any person who has been granted an
Option under the Plan.
(i) "Option Period" shall mean the period of time provided
pursuant to Section 6.04 within which a stock option may be
exercised.
(j) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly, a
voting stock interest of more than fifty percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock that
may be issued under the Plan, shall in the aggregate not exceed two hundred
thousand (200,000) shares. Shares subject to and not issued under an Option
which expires, terminates, is canceled or forfeited for any reason shall again
become available for the granting of Options.
3.02 Changes in the Number of Available Shares. If any stock dividend
is declared upon the Company Stock, or if there is any stock split, stock
distribution, dividend in partial liquidation, or other recapitalization of the
Company, the aggregate number and kind of shares which may thereafter be offered
under the Plan shall, in the discretion of the Committee, be proportionately and
appropriately adjusted and the number and kind of shares then subject to options
granted to employees under the Plan and the per share option price therefor
shall be proportionately and appropriately adjusted, without any change in the
aggregate purchase prices to be paid therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered by
the Compensation Committee of the Board, or such other committee of the Board as
the Board may from time to time determine. The Committee shall be constituted so
as to permit the Plan to comply with the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor rule) and Section 162(m) of
the Code.
4.02 Committee Powers. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it shall deem necessary
or proper for the administration of the Plan and, in its discretion, may modify,
extend or renew any option theretofore granted. The Committee shall also have
authority to interpret the Plan, and the decision of the Committee on any
questions concerning the interpretation of the Plan shall be final and
conclusive. The Committee may consult with counsel, who may
A-2
<PAGE> 19
be counsel for the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
Subject to the provisions of the Plan, the Committee shall have full
and final authority to:
(a) designate the persons to whom Options shall be granted;
(b) grant Options in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any
such Option as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Option as the Committee shall
deem appropriate.
V. PARTICIPATION
5.01 Eligibility. Officers, other key employees and directors of the
Company and its Subsidiaries who, in the sole opinion of the Committee,
contribute significantly to the growth and success of the Company or a
Subsidiary shall be eligible for Options under the Plan. From among all such
Eligible Participants, the Committee shall determine from time to time those
Eligible Participants to whom Options shall be granted. No Eligible Participants
may be granted an Option or Options covering more than 25,000 shares of Company
Stock in any calendar year. No Eligible Participant shall have any right
whatsoever to receive an Option unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of employment, nor
shall it interfere with the rights of the Company or any Subsidiary to terminate
the employment of any person or to take any other action affecting such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in the form
of ISOs or NSOs. Each option granted under the Plan shall be evidenced by a
stock option agreement between the Company and the Optionee which shall contain
the terms and conditions required by this Article VI, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem appropriate in
each case. The provisions of option grants need not be the same with respect to
each recipient.
6.02 Option Price. The price at which each share of Company Stock
covered by an option may be purchased shall be determined in each case by the
Committee and set forth in each stock option agreement. In no event shall such
price be less than one hundred percent (100%) of the Fair Market Value of the
Company Stock when the option is granted. Employees who own, directly or
indirectly, within the meaning of Code Section 425(d), more than 10% of the
voting power of all classes of stock of the Company or any parent or subsidiary
corporation shall not be eligible to receive an incentive stock option hereunder
unless the purchase price per share under such option is at least 110% of the
Fair Market Value of the stock subject to the option and such option by its
terms is not exercisable after the expiration of five (5) years from the date
such option is granted.
A-3
<PAGE> 20
6.03 Date Option Granted. For purposes of the Plan, a stock option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the option, except where the Committee has designated a
later date, in which event the later date shall constitute the date of grant of
the option; provided, however, that in either case notice of the grant of the
option shall be given to the Optionee within a reasonable time.
6.04 Period for Exercise. Each stock option agreement shall state the
period or periods of time within which the option may be exercised by the
Optionee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that:
(a) Unless otherwise determined by the Committee, Options will
vest from one to three years after grant, with one-third of an
Option vesting on each of the first three anniversaries of
grant.
(b) No Option Period for an incentive stock option may exceed ten
(10) years from the date the option is granted.
(c) Unless otherwise determined by the Committee, Options must be
exercised while the Optionee is employed by the Company or a
Subsidiary or within 90 days after termination of employment
(for reasons other than death, disability or cause), or if
termination is caused by a disability or death, or retirement
in the case of an NSO, within one year after such termination.
In certain circumstances, the option period and vesting may be
extended in the case of retirement.
(d) Unless permitted by the Committee, no option may be exercised
by an employee who has been terminated for cause, as
determined by the Committee.
(e) Unless otherwise determined by the Committee, all options
shall become immediately exercisable in full upon a Change in
Control.
6.05 Special Rule for Incentive Stock Options. For so long as Section
422 (or any successor provision) of the Code so provides, the aggregate Fair
Market Value (determined as of the date the incentive stock option is granted)
of the number of shares with respect to which incentive stock options are
exercisable for the first time by a Optionee during any calendar year shall not
exceed One Hundred Thousand Dollars ($100,000) or such other limit as may be
required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock option
agreement. Each Optionee may exercise an option by giving written notice of the
exercise to the Company, specifying the number of shares to be purchased,
accompanied by payment in full of the purchase price therefor. The purchase
price may be paid in cash, by check, or, with the approval of the Committee, by
delivering shares of Company Stock which have been beneficially owned by the
Optionee, the Grantee's spouse, or both of them for a period of at least six
months prior to the time of exercise ("Delivered Stock") or a combination of
cash and Delivered Stock. Delivered Stock shall be valued at its Fair Market
Value determined as of the date of exercise of the option. No Optionee shall be
under any obligation to exercise any option hereunder. The holder of an option
shall not have any rights of a stockholder with respect to the shares subject to
the option until such shares shall have been delivered to him or her.
A-4
<PAGE> 21
6.07 Merger, Consolidation or Reorganization. In the event of a merger,
consolidation or reorganization with another corporation in which the Company is
not the surviving corporation, the Committee may, subject to the approval of the
Board of Directors of the Company, or the board of directors of any corporation
assuming the obligations of the Company hereunder, take action regarding each
outstanding and unexercised option pursuant to either clause (a) or (b) below:
(a) Appropriate provision may be made for the protection of such
option by the substitution on an equitable basis of
appropriate shares of the surviving corporation, provided that
the excess of the aggregate Fair Market Value of the shares
subject to such option immediately before such substitution
over the exercise price thereof is not more than the excess of
the aggregate fair market value of the substituted shares made
subject to option immediately after such substitution over the
exercise price thereof; or
(b) The Committee may cancel such option. In such event, the
Company, or the corporation assuming the obligations of the
Company hereunder, shall pay the employee an amount of cash
(less normal withholding taxes) equal to the excess of the
highest Fair Market Value per share of the Company Stock
during the 60-day period immediately preceding the merger,
consolidation or reorganization over the option exercise
price, multiplied by the number of shares subject to such
option.
VII. WITHHOLDING TAXES.
7.01 General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise of
an Option. The Company may require, as a condition to the exercise of an Option,
that the Optionee concurrently pay to the Company (either in cash or, at the
request of Optionee but in the discretion of the Committee and subject to such
rules and regulations as the Committee may adopt from time to time, in shares of
Delivered Stock) the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine.
7.02 Withholding from Shares to be Issued. In lieu of part or all of
any such payment, the Optionee may elect, subject to such rules and regulations
as the Committee may adopt from time to time, or the Company may require that
the Company withhold from the shares to be issued that number of shares having a
Fair Market Value equal to the amount which the Company is required to withhold.
VIII. GENERAL
8.01 Nontransferability. No Option shall be transferable by a Optionee
otherwise than by will or the laws of descent and distribution, provided that in
accordance with Internal Revenue Service guidance, the Committee, in its
discretion, may grant nonqualified stock options that are transferable, without
payment of consideration, to family members of the Optionee or to trusts or
partnerships for such family members.
8.02 General Restriction. Each Option shall be subject to the
requirement that if at any time the Board or the Committee shall determine, in
its discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Option or the issue or
purchase of securities thereunder, such Option may not be exercised in whole
A-5
<PAGE> 22
or in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board or the Committee.
8.03 Expiration and Termination of the Plan. The Plan will terminate
ten (10) years after the effective date of the Plan, except as to Options then
outstanding under the Plan, which Options shall remain in effect until they have
been exercised, the restrictions have lapsed or the Options have expired or been
forfeited. The Plan may be abandoned or terminated at any time by the Board of
Directors of the Company, except with respect to any Options then outstanding
under the Plan.
8.04 Amendments. The Board may from time to time amend, modify, suspend
or terminate the Plan; pro-vided, however, that no such action shall be made
without shareholder approval where such change would be required in order to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) or the Code. Subject to the terms and conditions and within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options granted under the Plan, accept the surrender of outstanding options (to
the extent not theretofore exercised), reduce the exercise price of outstanding
options, or authorize the granting of new options in substitution therefor (to
the extent not theretofore exercised). Notwithstanding the foregoing, no
modification of an Option (either directly or through modification of the Plan)
shall, without the consent of the Optionee, alter or impair any rights of the
Optionee under the Option.
8.05 Construction. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the laws
of the State of Wisconsin.
A-6
<PAGE> 23
1999 ANNUAL MEETING OF SHAREHOLDERS OF OUTLOOK GROUP CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard C. Fischer, Joseph J. Baksha and Annette
Zoromski, and each of them, proxies, each with full power of substitution, to
represent and to vote all shares of stock the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Outlook Group Corp. to be held at the
Valley Inn, 123 East Wisconsin Avenue, Neenah, Wisconsin, on Thursday, October
21, 1999, at 2:00 p.m. CDT, and at any adjournment thereof, hereby revoking any
and all proxies heretofore given.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
OUTLOOK GROUP CORP. 1999 ANNUAL MEETING
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C>
(for terms expiring in 2002) 1- Richard C. Fischer 2 - Harold J. Bergman
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed to the left (except to vote for all nominees
as specified below). listed to the left.
</TABLE>
(Instructions: To withhold authority to vote for any indicated
nominee, write the number of the nominee(s) in the box provided to the
right. / /
2. APPROVAL OF 1999 STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion on such other matters as may properly come before
the meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the meeting,
receipt of which are hereby acknowledged.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the persons named in Proposal 1 and FOR Proposal 2.
Dated: , 1999 ----------------------------------
------------------ Signature(s) in box
Check appropriate box. Please sign exactly as name
Indicate changes below: appears hereon. If stock is owned
by more than one person, all
Address change? / / Name change? / / owners should sign. Persons
signing as executors,
administrators, trustees or in
similar capacities should so
indicate. If a corporation, please
sign in full corporate name by the
president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
/ / Please check box if you plan to
attend in person.
