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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Wisconsin Central Transportation Corporation
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:------------------------------------------------------
Schedule 14A - Page 1
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OFFICE: MAILING ADDRESS:
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Suite 9000 P.O. Box 5062
One O'Hare Centre Rosemont, IL 60017-5062
6250 North River Road
Rosemont, IL 60018
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1999 annual meeting of the stockholders of Wisconsin
Central Transportation Corporation (the "Company") will be
held at 9:00 a.m., Central Time, on Thursday, May 20, 1999
in the ground floor auditorium of Riverway Complex, 6133
North River Road (across River Road from the Westin Hotel
and behind the Marriott Suites Hotel), Rosemont, Illinois
60018.
The purpose of the meeting is to elect ten directors and to
consider By-law amendments, an amendment to the Company's
Restated Certificate of Incorporation and an amendment to
the Director Stock Option Plan.
Stockholders of record at the close of business on March 24,
1999 are entitled to vote at the annual meeting.
By Order of the Board of Directors,
Thomas W. Rissman
Secretary
April 6, 1999
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Preliminary Proxy Statement. The Company plans to distribute the definitive
Proxy Statement to stockholders on April 6, 1999.
Wisconsin Central Transportation Corporation
Suite 9000, One O'Hare Centre, 6250 North River Road
Rosemont, IL 60018
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PROXY STATEMENT
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April 6, 1999
The Board of Directors of Wisconsin Central Transportation Corporation (the
"Company") solicits your proxy for use at the 1999 Annual Meeting of
Stockholders of the Company to be held on May 20, 1999. Stockholders may vote
their shares of the Company's Common Stock by proxy by signing and mailing the
enclosed proxy card or by following the instructions on the proxy card for
telephone or Internet voting. A proxy may be revoked at any time prior to the
voting at the meeting by submitting a later dated proxy or by giving written
notice of such revocation to the Secretary of the Company. If you plan to attend
the annual meeting in person, please mark the appropriate box on the proxy card
and return it promptly by mail.
Holders of the Company's Common Stock of record at the close of business on
March 24, 1999 are entitled to vote at the annual meeting. On that date,
51,145,644 shares of the Company's Common Stock were issued and outstanding.
Each share entitles the holder to one vote.
A quorum of stockholders is necessary to take action at the annual meeting.
A majority of the outstanding shares of Common Stock will constitute a quorum of
stockholders. The inspectors of election appointed for the annual meeting will
determine whether a quorum is present and will treat abstentions as shares of
Common Stock that are present and entitled to vote for purposes of determining
the presence of a quorum. If a broker indicates on a proxy that it does not have
the discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter. If a quorum of stockholders is present, action may be taken with
respect to each item of business by the required vote of stockholders specified
in the description of such item.
The persons appointed by the enclosed proxy card have advised the Board of
Directors that it is their intention to vote at the annual meeting in compliance
with the instructions on the proxy cards received and in their discretion on any
other matters that may properly come before the meeting, including matters that,
as of the date of this proxy statement, the Board of Directors does not know
will be brought before the meeting. If no directions are given on the proxy
card, the shares represented by the proxy will be voted FOR:
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1. approval of By-law amendments which establish a classified Board of
Directors and related procedures;
2. approval and adoption of an amendment to the Restated Certificate of
Incorporation to provide that stockholders of the Company may act only
at a duly and validly called meeting and not by written consent;
[Item 3 and Item 4 have been switched]
3. approval of an amendment to the Director Stock Option Plan; and
4. election of ten directors who (subject to approval of Item 1) will be
divided into three classes.
This proxy statement and the enclosed proxy card are being first mailed to
stockholders on or about April 6, 1999.
Your vote is important. Please sign and return the proxy card by mail or
vote your shares by telephone or the Internet, whether or not you plan to attend
the meeting.
PROPOSED AMENDMENTS TO THE BY-LAWS AND THE
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has proposed amendments to the
Company's By-laws ("By-law Amendment") and has proposed and approved an
amendment to the Company's Restated Certificate of Incorporation ("Certificate
Amendment"), and has directed that they be submitted to a vote at the meeting.
(The By-law Amendment and the Certificate Amendment are collectively referred to
as the "Proposed Amendments"). The Proposed Amendments could have the effect of
impacting the ability of a third party to obtain control of the Company.
Accordingly, set forth below is a discussion of matters related to the Proposed
Amendments and deemed to be material by the Board of Directors.
General
Certain provisions of the Company's Certificate of Incorporation and the
By-laws could have an antitakeover effect. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of the
Board of Directors of the Company and in the policies formulated by the Board of
Directors and to discourage certain types of transactions described below which
may involve an actual or threatened change of control of the Company. The
provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover of the Company that does not contemplate the
acquisition of all of its outstanding shares of Common Stock or an unsolicited
proposal for the restructuring or sale of all or part of the Company. The
provisions are also intended to discourage certain tactics that may be used in
proxy fights. The Board of Directors believes that as a general rule takeover
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proposals of that nature or use of those tactics would not be in the best
interests of the Company and its stockholders.
Purpose and Effect of the Proposed Amendments
The purpose and intended effect of the Proposed Amendments are to enhance
the continuity and stability of the Company's management and to protect the
stockholders by encouraging third parties that are interested in acquiring the
Company to approach the Board of Directors with their intentions first. The
Board of Directors believes that the Proposed Amendments will provide management
with increased flexibility and time with which to respond adequately to such
overtures and to represent stockholder interests.
In protecting stockholders from unwanted attempts to take control of the
Company, it is possible that the Proposed Amendments may also have a significant
effect on the ability of stockholders of the Company to change the composition
of the Board of Directors, even when such a change may be desired or deemed
beneficial by a majority of such stockholders. In this respect, the Proposed
Amendments may have the effect of making more secure the positions and decisions
of the existing members of the Board of Directors. The Proposed Amendments could
also have the effect of discouraging a potential acquirer from initiating or
completing an acquisition or tender offer which is desired or deemed beneficial
by stockholders of the Company. The Proposed Amendments could also deter certain
potential acquirers from making unsolicited offers for control of the Company,
if they anticipate that their offer will be viewed negatively by the Board of
Directors. Furthermore, the application of any or all of the Proposed
Amendments, either acting alone or together, may have the effect of decreasing
or eliminating altogether any premiums that are often placed on the value of
stock of a corporation which is receptive to or not protected from unsolicited
acquisition overtures. Because the Proposed Amendments may have the effect of
decreasing the likelihood of such unsolicited acquisition overtures, the
approval of the Proposed Amendments could effectively lower or exclude
altogether any such premiums from a determination of the value of the Company's
Common Stock, which could in turn lower the market value of such stock compared
to its potential market value had the Proposed Amendments not been adopted.
Although at the present time the Board of Directors is not aware of any
overtures to acquire the Company, management believes it is appropriate at this
time to propose provisions which could lessen the possibility of an attempt by a
potential acquirer to circumvent the Board of Directors to the detriment of
stockholders.
ANTITAKEOVER MEASURES CURRENTLY IN PLACE
The Company's By-laws and Restated Certificate of Incorporation currently
include several provisions which could serve to protect stockholders and the
Company from unwanted attempts to take control of the Company from the Board of
Directors or the stockholders. In addition certain provisions of the Delaware
General Corporation Law ("DGCL"), which are currently applicable to the Company
and will remain
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applicable after adoption of the Proposed Amendments, also serve to protect
stockholders in the event that such overtures are made.
Limitation of Persons Authorized to Call Special Stockholder Meetings
The Company's By-laws allow special meetings of the stockholders to be
called by the president, or by the Board of Directors, or by the secretary at
the request of holders of 60% of the voting power of all outstanding shares of
stock. This provision of the Company's By-laws is somewhat more restrictive than
is required by the DGCL. Section 211(d) of the DGCL provides that special
meetings of the stockholders may be called by the board of directors or by such
person or persons as may be authorized by the certificate of incorporation or
the by-laws. The Company has chosen to require holders of 60% of the voting
power of all outstanding shares of stock to call a meeting primarily for
administrative purposes of preventing unnecessary meetings of stockholders.
However, this requirement could have an antitakeover effect of preventing a
significant stockholder from calling a special meeting to elect or remove
directors. Operating in conjunction with the Proposed Amendments contained in
this proxy statement, this requirement has the effect of making removal of
directors between annual meetings more difficult.
Supermajority Vote Required to Change Number of Directors
The Company's By-laws require an affirmative vote of two-thirds of the
members of the Board of Directors to change the number of directors. The DGCL
provides that the board of directors may determine the number of directors
unless otherwise established in the certificate of incorporation. The
requirement of a two-thirds majority may provide protection against hostile
acquisition of board control. This By-law provision, together with the proposed
classification of the Board of Directors, limits the ability of a person
instituting a hostile takeover to alter the Board of Directors quickly.
Blank Check Preferred Stock
The term "Blank Check Preferred Stock" generally refers to the inclusion of
a provision in a company's certificate of incorporation which allows for the
issuance of preferred stock and does not specify the characteristics or terms of
the preferred stock to be issued. The Company has a Blank Check Preferred Stock
provision in its Restated Certificate of Incorporation. The provision authorizes
the Board of Directors to issue shares of preferred stock in one or more series
and to determine the characteristics and terms of the preferred stock. In
addition, the Board of Directors may redeem all or any part of any series of
preferred stock at any time in compliance with the terms of the preferred stock.
Faced with an attempted hostile takeover, a board of directors could use
Blank Check Preferred Stock to create dilution effects, voting impediments or
buyout obstacles, or to frustrate generally persons seeking to effect a merger
or to otherwise gain control of the Company. It should be noted that most uses
of the Company's
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Blank Check Preferred Stock as a takeover protection measure would require
approval by the stockholders under the NASDAQ Marketplace Rules.
Delaware Takeover Statute
The Company is subject to Section 203 of the DGCL ("Section 203") because
neither the Company's Restated Certificate of Incorporation nor the By-laws
include a provision which opts out of the restrictions imposed by Section 203.
Section 203 provides that, subject to certain exceptions specified therein, a
Delaware corporation shall not engage in any business combination, including
mergers or consolidations or acquisitions of additional shares of the
corporation, with an "Interested Stockholder" owning 15% or more of the
corporation's outstanding voting stock, for a period of three years from the
date the stockholder becomes an "Interested Stockholder" unless (i) prior to
such time, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an "Interested Stockholder", (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "Interested Stockholder," the
"Interested Stockholder" owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding certain
shares), or (iii) subsequent to such time, the business combination is approved
by the board of directors of the corporation and authorized at an annual or
special meeting of stockholders by the affirmative vote of at least two-thirds
of the outstanding voting stock which is not owned by the "Interested
Stockholder". Except as otherwise specified in Section 203, an "Interested
Stockholder" is defined to include (i) any person who is the owner of 15% or
more of the outstanding voting stock of the corporation, or is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within three years immediately prior
to the relevant date and (ii) the affiliates and associates of any such person.
No Cumulative Voting
The Company does not currently authorize cumulative voting for election of
directors. Cumulative voting would enable substantial minority stockholders to
have representation on the Board of Directors. Absence of cumulative voting
could be seen as an antitakeover measure.
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The Board of Directors has no present intention to put before the
stockholders any proposals, other than the Proposed Amendments, which would
impact an attempt by a third party to obtain control of the Company.
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ITEM 1. AMENDMENT TO BY-LAWS
The proposed By-law Amendment would establish a classified board of
directors and establish related procedures governing the selection and removal
of directors.
Text of Proposed Amendments
Under the proposed By-law Amendment, Section 3.2 of the By-laws will read
as follows:
The number of directors which shall constitute the whole board
shall consist of not less than four (4) nor more than twelve (12)
persons. The exact number of directors within the minimum and
maximum limitations specified in the preceding sentence shall be
fixed from time to time by the board of directors pursuant to a
resolution adopted by two-thirds of the entire board of
directors, but no decrease in the number of directors
constituting the board of directors shall shorten the term of any
incumbent director. At the 1999 annual meeting of stockholders,
the directors shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first
class to expire at the 2000 annual meeting of stockholders, the
term of office of the second class to expire at the 2001 annual
meeting of stockholders and the term of office of the third class
to expire at the 2002 annual meeting of stockholders, and with
each class to hold office until its successors are elected and
qualified or until his or her earlier death, resignation or
removal in a manner permitted by statute or these by-laws. At
each annual meeting of stockholders following such initial
classification and election, directors elected to succeed those
directors whose terms expire shall be elected for a term of
office to expire at the third succeeding annual meeting of
stockholders after their election. Directors need not be
stockholders.
To conform with the amendment to Section 3.2, under the proposed By-law
Amendment, Section 3.3 of the By-laws will read as follows:
Except as provided in the certificate of incorporation of the
corporation, vacancies occurring in the board of directors and
newly-created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the
directors then in office, although less than a quorum, or by a
sole remaining director. Any newly-created directorships shall be
allocated among the classes of directors so as to cause the three
classes to be as nearly equal in number as possible. Any director
elected in accordance with this paragraph will hold office for
the remainder of the full term of the class of directors in which
the new directorship was created or such vacancy occurred or
until his or her earlier death, resignation or removal in a
manner permitted by statute or these by-laws.
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(Note that vacancies may be filled by the Board of Directors to serve for
the remainder of the term of the applicable class.)
To conform with the DGCL, which provides that stockholders in a company
with a classified board of directors may remove directors only for cause, under
the proposed By-law Amendment, Section 3.13 of the By-laws will read as follows:
Except as otherwise provided by statute or the certificate of
incorporation of the corporation, so long as the board of
directors is classified in accordance with Section 141(d) of the
General Corporation Law of Delaware, any director or the entire
board of directors may be removed by the stockholders only for
cause by a majority of the votes entitled to be cast at an
election of directors.
Reasons for and Effects of Proposed Amendment
At present, the Company's By-laws provide that all directors shall be
elected at the annual meeting of stockholders to hold office until the next
annual meeting and until their respective successors are duly elected and
qualified. Currently a change in control of the Board of Directors could be
effected in one annual or special stockholder meeting. Although there have been
no problems in the past with respect to continuity or stability of the Board of
Directors, classification of the Board of Directors, which in usual
circumstances would prevent more than approximately one-third of the Board of
Directors from being replaced at any annual meeting, will help assure the
continuity and stability of the Company's management and policies. With a
classified board of directors, in usual circumstances a majority of the
directors will have prior experience as directors of the Company.
Although neither the Board of Directors nor the management of the Company
is aware of any actual or threatened change in the direction of control of the
Company proposed by a third party, another purpose of this By-law Amendment is
to protect stockholders from the possibility of a sudden change in the direction
of the Company not supported by management or the Board of Directors, including
an actual or threatened change in control. This By-law Amendment would make it
more time-consuming to effect a change in the majority control of the Board of
Directors and thus would reduce the vulnerability of the Company to an
unsolicited proposal for the acquisition of the Company that does not
contemplate the acquisition of all of the Company's outstanding shares of Common
Stock at a fair price, or an unsolicited proposal for the restructuring or sale
of all or part of the Company. A classified Board of Directors upon which
directors serve three year terms requires at least two annual stockholder
meetings in order to effect a change in control of the Board of Directors in
usual circumstances.
Often third parties accumulate stock in public companies with a view toward
using a control block of stock to force a restructuring, merger or consolidation
or forcing a corporation to repurchase the control block of stock at a premium.
Such actions are often taken without advance notice to or consultation with the
board of directors or management of the corporation. In many cases, such third
parties seek representation on the corporation's board of directors in order to
increase the likelihood that their proposals will be implemented by the
corporation. If the corporation resists such efforts
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to obtain representation on the corporation's board of directors, such parties
may commence proxy contests to have themselves or their nominees elected to the
board of directors in place of certain directors or the entire board of
directors. In some cases, the third party may not be interested in taking over
the corporation, but may use the threat of a proxy fight or acquisition bid as a
means of forcing the corporation to repurchase its holdings at a substantial
premium over market price, possibly to the detriment of other stockholders.
The Board of Directors of the Company believes that the threat of removal
of the Company's directors in such situations would curtail the Board of
Directors' ability to negotiate effectively with such persons. Management would
be deprived of the time and information necessary to evaluate the particular
proposal, to study alternative proposals and to help ensure that the best price
is obtained for all stockholders in any transaction involving the Company that
may ultimately be undertaken. By stabilizing the composition of the Board of
Directors, the proposed By-law Amendment is designed to encourage any person who
might seek to acquire control of the Company to consult first with the Company's
Board of Directors and to negotiate with the Board of Directors the terms of any
proposed business combination or tender offer.
Acquisition overtures or changes in the directors of the Company that are
proposed and effected without prior consultation and negotiation with the
Company's Board of Directors may not necessarily be detrimental to the Company
and its stockholders, and the adoption of this proposed By-law Amendment could
discourage or frustrate future attempts to acquire control of the Company or
shares of its stock that are not approved by the incumbent Board of Directors,
but which a majority of stockholders might deem to be in their best interests.
This proposed By-law Amendment, if adopted, could also delay or frustrate the
assumption of control by a holder of a large block of shares of the Company's
Common Stock or the removal of incumbent directors, even if a majority of the
stockholders considered such events to be beneficial.
Another effect of establishing a classified board is that it would be more
difficult for stockholders to change the composition of the Company's Board of
Directors, even when the only reason for such a change might be the performance
of the incumbent directors. This occurs because the classification of the board
affects every election of directors and is not triggered by the occurrence of a
particular event, such as an unsolicited acquisition overture by a third party.
Moreover, the presence of a classified board could have the effect of depressing
the market price of the Company's Common Stock. Because of the possible effect
of a classified board of directors upon unsolicited acquisition overtures, this
proposed By-law Amendment could result in a minimization or elimination of
acquisition market premiums associated with the Company's Common Stock, which
could lower the value of such stock to stockholders of the Company.
The Board of Directors believes that the benefits of seeking to protect its
ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure the Company, by means of the existing and proposed
measures described above, outweigh the disadvantages of discouraging such
proposals and the disadvantages of restricting the removal of members of the
Board of Directors.
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Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the annual meeting is
required for the approval and adoption of the By-law Amendment.
Recommendation
The Board of Directors recommends a vote FOR the approval and adoption of
the proposed By-law Amendment.
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ITEM 2. AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The proposed Certificate Amendment would require that all stockholder
actions be taken at a stockholder meeting and not by written consent.
Text of Proposed Amendment
The Board of Directors recommends that the Company's Restated Articles of
Incorporation be amended to add a new Article 11, which would read as follows:
No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the corporation may
be taken without a meeting, and the power of stockholders to
consent in writing, without a meeting, to the taking of any
action is specifically denied.
Reasons for and Effects of the Proposed Amendment
Under the DGCL, unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be taken by stockholders of
the Company may be taken without a meeting, without prior notice and without a
stockholder vote if a written consent setting forth the action to be taken is
signed by the holders of shares of outstanding stock having the requisite number
of votes that would be necessary to authorize such action at a meeting of
stockholders at which all shares of stock entitled to vote thereon were present
and voted. The Company's Restated Certificate of Incorporation currently
contains no provision restricting or regulating stockholder action by written
consent. The adoption of this proposed Certificate Amendment would eliminate the
ability of the Company's stockholders to act by written consent in lieu of a
meeting. It is intended to prevent solicitation of consents by stockholders
seeking to effect changes without giving all of the Company's stockholders
entitled to vote on a proposed action an adequate opportunity to participate at
a meeting where such proposed action is considered. The proposed Certificate
Amendment would prevent someone who holds or controls a large block of the
Company's Common Stock from using the written consent procedure to take
stockholder action outside of a stockholder meeting of which all stockholders
would receive notice. The proposed Certificate Amendment would also protect
stockholders from actions taken without their approval and outside of a forum in
which they could express their opinions for or against such actions. It will
enable the Company to set a record date for any stockholder voting and should
reduce the possibility of disputes or confusion regarding the validity of
purported stockholder action. The proposed Certificate Amendment could also
provide some encouragement to a potential acquirer to negotiate directly with
the Board of Directors.
The Board of Directors does not believe that the elimination of stockholder
action by written consent will create a significant impediment to a tender offer
or other effort to take control of the Company. Nevertheless, the effect of this
proposal may be to make more difficult or delay certain actions by a person or a
group acquiring a substantial percentage of the Company's Common Stock, even
though such actions might be desired by, or beneficial to, the holders of a
majority of the Company's
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Common Stock. Stockholders wishing to effectuate such a change would by required
to bring their proposals to a properly called meeting. The Certificate Amendment
could also hinder the ability of the holders of a majority of the Company's
Common Stock to take legitimate or necessary action on behalf of all the
stockholders without bringing such action before a properly called meeting of
stockholders.
The Board of Directors believes that the benefits of orderly and informed
stockholder action that would result from the Certificate Amendment outweigh any
disadvantages of eliminating the ability of stockholders to act by written
consent.
Vote Required
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the approval and adoption of the Certificate
Amendment.
Recommendation
The Board of Directors recommends a vote FOR the approval and adoption of
the Certificate Amendment.
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[Item 3 and Item 4 have been switched]
ITEM 3. APPROVAL OF AMENDMENT TO DIRECTOR STOCK OPTION PLAN
The Board of Directors adopted on March 17, 1999 Amendment No. 1 (the
"Amendment") to the Company's Director Stock Option Plan (the "Plan"), subject
to the approval of the Amendment by the stockholders at the annual meeting. The
proposed Amendment is part of the Company's proposed revised arrangement for
compensation of directors. See Item 4. "Election of Directors-Compensation of
Directors".
Description of Amendment
The Plan was adopted in 1994 and approved by the stockholders at the 1994
annual meeting. It provides for automatic grants of options to all directors and
an additional automatic grant of options to newly elected directors.
The proposed Amendment will modify the Plan in three respects:
(i) Limit participation in the Plan to directors who are not
employees of the Company;
(ii) Eliminate the automatic grant of additional options to newly
elected directors after providing options for directors, other
than employees of the Company or its subsidiaries, who are first
elected at the 1999 annual meeting of stockholders; and
(iii)Authorize the board of directors to grant options to persons,
other than employees of the Company or its subsidiaries, who
become directors in the future in connection with their selection
as directors.
Description of Plan as Amended
The following is a description of the Plan as amended by the proposed
Amendment:
The purpose of the Plan is to promote the long-term interests of the
Company by attracting and retaining qualified and experienced persons to serve
as directors of the Company and by providing additional incentive for directors
of the Company to work for the success of the Company through continuing
ownership of Common Stock.
The Plan provides for the automatic annual grant to members of the Board of
Directors who are not employees of the Company of options to purchase a
specified number of shares of Common Stock at a price equal to the fair market
value of those shares as of the date of grant. Seven persons are currently
eligible to participate in the Plan. The options are granted to the directors as
part of the consideration for their services to the Company as directors.
Under the terms of the Plan, on the day after each annual meeting of
stockholders of the Company, each director who is not an employee of the Company
will be granted an option to purchase 6,000 shares of Common Stock. Options to
acquire up
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to an aggregate of 666,000 shares of Common Stock are available to be granted
under the Plan (subject to adjustment for any stock dividends, reclassifications
or similar events).
The Plan provides for the grant of 5,500 additional options to directors,
other than employees of the Company or its subsidiaries, who are first elected
as directors at the 1999 annual meeting of stockholders. Thereafter, there will
be no automatic grants of additional options to new directors, but the Board of
Directors will have authority to grant options to new directors, other than
employees of the Company or its subsidiaries, in connection with their selection
as directors of the Company.
Each option will entitle the holder to purchase Common Stock at fair market
value as of the date of grant of the option. Each option may be exercised at any
time after six months after it is granted. The exercise price is payable in cash
or in shares of Common Stock already owned by the holder, valued at fair market
value. Each option will have a term of 10 years, subject to earlier termination
one year after the holder ceases to be a member of the Board of Directors.
The Board of Directors is authorized to administer and interpret the Plan.
The Board of Directors may amend or terminate the Plan, but stockholder approval
is required of any amendment which would:
(i) increase the aggregate number of shares of Common Stock that may
be issued under the Plan (except for adjustments for stock
dividends, reclassifications or similar events);
(ii) materially increase the benefits accruing to participants under
the Plan;
(iii)materially modify the requirements as to eligibility for
participating in the Plan; or
(iv) amend (directly or indirectly) the provisions of the Plan
relating to eligible recipients or the number or terms of options
to be granted (except for adjustments for stock dividends,
reclassifications or similar events).
For tax purposes, options granted under the Plan will not be "incentive
stock options" under the Internal Revenue Code. The grant of an option is not
expected to result in any taxable income for the recipient or to have any tax
consequences for the Company. Upon exercise of an option, the holder will
recognize income equal to the excess of the fair market value of the shares of
Common Stock purchased over the exercise price, and the Company will be entitled
to a deduction in that amount.
At March 31, 1999, the closing price of one share of Common Stock was
$13.25.
The following table sets forth the options to be received under the Plan on
the day after the 1999 annual meeting by certain persons and groups of persons,
if the Amendment is approved by the stockholders (assuming the nominees for
director named in this proxy statement are elected). The following table also
sets forth the options such persons and groups of persons would have received
under the Plan in the Company's fiscal year ended December 31, 1998, if the Plan
(as amended) had been in effect during such fiscal year.
Proxy - Page 13
<PAGE>
PLAN BENEFITS
Director Stock Option Plan
Number of Shares
Subject to Option
Name and Position 1999 1998
- ----------------- -----------------
Edward A. Burkhardt, - -
Chairman, President and
Chief Executive Officer
Thomas F. Power, Jr., - -
Executive Vice President
and Chief Financial Officer
J. Reilly McCarren, - -
Executive Vice President and
Chief Operating Officer of
North American Operating Subsidiaries
Earl J. Currie, - -
Vice President, Planning
Glenn J. Kerbs, - -
Vice President, Engineering
of North American Operating Subsidiaries
Executive Group - -
Non-Executive Director Group 53,000(1) 30,000(2)
Non-Executive Officer Employee Group - -
- ----------------
(1) After the 1999 annual meeting of stockholders, each nominee for election
who is elected will receive options for 6,000 shares and each of Thomas E.
Evans and John W. Rowe will receive options for an additional 5,500 shares.
(2) If the Plan as amended had been in effect in the fiscal year ended 1998,
five nominees for director at the 1999 annual meeting (Carl Ferenbach,
Roland V. McPherson, Thomas W. Rissman, A. Francis Small and Robert H.
Wheeler) each would have received options for 6,000 shares.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the annual meeting is
required for approval and adoption of the proposed Amendment.
Recommendation
The Board of Directors recommends a vote FOR approval of the proposed
amendment to the Plan.
Proxy - Page 14
<PAGE>
ITEM 4. ELECTION OF DIRECTORS
Assuming adoption and effectiveness of the By-law Amendment, the Board of
Directors will be divided into three classes, two of which will consist of three
directors and one of which will consist of four directors. If for any reason the
By-law Amendment is not adopted, each person elected as a director at the annual
meeting will serve until the next annual meeting of stockholders or until a
successor is duly elected and qualified.
Ten persons have been nominated by the Board of Directors for election at
the stockholders' meeting to serve for the applicable terms indicated below or
until their respective successors are elected and qualified. The ten nominees
receiving the highest number of votes at the stockholders' meeting will be
elected as directors, with three of such nominees serving for a three-year term
which expires at the Company's 2002 annual meeting of stockholders, three of
such nominees serving for a two-year term which expires at the Company's 2001
annual meeting of stockholders, and four of such nominees serving for a one-year
term which expires at the Company's 2000 annual meeting of stockholders. If for
any reason any of these nominees becomes unable or is unwilling to serve at the
time of the meeting, the persons named in the enclosed proxy card will have
discretionary authority to vote for a substitute nominee or nominees. It is not
anticipated that any nominee will be unavailable for election.
The following information regarding the nominees for election to the Board
of Directors includes each nominee's present principal occupation, period of
service as a director of the Company and its subsidiaries, other business
experience during the last five years and directorships in affiliates of the
Company and in other publicly held companies:
Nominees for Three-Year Term Expiring at the 2002 Annual Meeting
Edward A. Burkhardt, age 60, has served as a director, President and Chief
Executive Officer of the Company since its formation in 1987. He was elected to
the additional position of Chairman in January 1996. He also serves as a
director, President and Chief Executive Officer of each of the Company's
subsidiaries. Mr. Burkhardt is also a director and Chairman of the Board of
Tranz Rail Holdings Limited ("Tranz Rail"), the publicly held New Zealand
railroad in which the Company has an investment, a director, Chairman and Chief
Executive Officer of English Welsh & Scottish Railway Holdings Limited ("EW&S"),
the United Kingdom railroad in which the Company has an investment, and a
director and the Chairman of the Board of Australian Transport Network Limited
("ATN"), the Australian rail holding company in which the Company has an
investment. He is also the President and Treasurer of the San Luis Central
Railroad Company (a privately owned company). From 1967 to 1987, Mr. Burkhardt
was employed by the Chicago and North Western Transportation Company, most
recently as Vice President, Transportation. Mr. Burkhardt has 38 years of
railroad management experience.
Proxy - Page 15
<PAGE>
Thomas W. Rissman, age 41, has served as a director of the Company since
January 1992 and is also a director of each of the subsidiaries of the Company
other than Algoma Central Railway Inc. ("ACRI") and WC Canada Holdings, Inc.
("WCCHI"). Mr. Rissman also has served as Secretary of the Company, a
non-executive office, since June 1991. Mr. Rissman also serves as a director of
Tranz Rail, EW&S and ATN. Mr. Rissman has been a member of the law firm of
McLachlan, Rissman & Doll since December 1987.
John W. Rowe, age 53, has served as a director of the Company since July
1998. Since March 1998, he has served as chairman, president and chief executive
officer of Unicom Corporation in Chicago, Illinois. From 1989 to 1998, Mr. Rowe
served as president, chief executive officer and a director of New England
Electric System. From 1984 to 1989, he served as president and chief executive
officer of Central Maine Power Company. Mr. Rowe served as senior vice president
of law for Consolidated Rail Corporation from 1980 to 1984. Mr. Rowe began his
career with the Chicago law firm of Isham, Lincoln and Beale where he became a
partner in 1978. Mr. Rowe also serves as a director of BankBoston Corporation
and UNUM Corporation.
Nominees for Two-Year Term Expiring at the 2001 Annual Meeting
Thomas E. Evans, age 47, has served as a director of the Company since July
1998. Since 1995, Mr. Evans has been employed by Tenneco Automotive in Lake
Forest, Illinois, where he currently serves as president. Prior to 1995 he
served six years in various senior management positions with Case Corporation,
two years with Federal-Mogul Corporation and fourteen years with Rockwell
International's Automotive Operations.
Thomas F. Power, Jr., age 58, has served as a director, Executive Vice
President and Chief Financial Officer of the Company since its formation in
1987. He serves as Executive Vice President and Chief Financial Officer of each
of the Company's subsidiaries and as a director of each of the Company's
subsidiaries other than ACRI and WCCHI. Mr. Power also serves as a director of
Tranz Rail, EW&S and ATN. From 1970 to 1985, Mr. Power was employed by the
Chicago, Milwaukee, St. Paul and Pacific Railroad Company, most recently as
Chief Financial Officer. Mr. Power has over 31 years of railroad management
experience.
Robert H. Wheeler, age 53, has served as a director of the Company since
its formation in 1987 and is also a director of each of the subsidiaries of the
Company other than ACRI and WCCHI. Mr. Wheeler also serves as a director of
Tranz Rail. Mr. Wheeler was a member of the law firm of Oppenheimer Wolff &
Donnelly from December 1987 to August 1994 and is now of counsel to that firm.
Proxy - Page 16
<PAGE>
Nominees for One-Year Term Expiring at the 2000 Annual Meeting
Carl Ferenbach, age 56, has served as a director of the Company since 1987.
He also serves as a director of three of the Company's principal subsidiaries,
Wisconsin Central Ltd. ("WCL"), Fox Valley & Western Ltd. ("FVW") and Wisconsin
Central International, Inc. ("WCI"). Mr. Ferenbach also serves as a director of
Tranz Rail, EW&S, ATN and US Can Corporation and serves as Chairman of the Board
of Crown Castle International Corporation (U.S.). Since 1986, he has been a
Managing Director of Berkshire Partners LLC, Boston, Massachusetts, a private
equity firm sponsoring and investing in acquisitions and recapitalizations.
J. Reilly McCarren, age 42, has served as a director of the Company since
December 1998. Since July 8, 1996, Mr. McCarren has also served as the Executive
Vice President and Chief Operating Officer of the Company's North American
Operating Subsidiaries. From 1990 to 1996, Mr. McCarren served as the president
of Gateway Western Railway Company. From 1988 to 1990, Mr. McCarren served as
the General Superintendent - Transportation of the Chicago, Missouri and Western
Railway. From 1978 to 1988, Mr. McCarren held various operating positions with
Conrail. Mr. McCarren has 20 years of railroad management experience.
Roland V. McPherson, age 64, has served as a director of the Company since
1987. He also serves as a director of WCL, FVW and WCI. Mr. McPherson is
currently self-employed. From 1989 to 1998, he was employed as the Chairman and
Chief Executive Officer of Sullivan Industries, Inc. (a manufacturer of air
compressors). From May 1976 until 1988, Mr. McPherson was employed as Chairman
and Chief Executive Officer of Armstrong Containers, Inc. (a manufacturer of
metal containers).
A. Francis Small, age 53, has served as a director of the Company since
December 1996. Dr. Small has been a director and the Managing Director of Tranz
Rail and its predecessors since 1990 and has been employed by Tranz Rail and its
predecessors for 33 years. Dr. Small also serves as a director and the Managing
Director of ATN. Dr. Small has 23 years of railroad management experience.
Vote Required
Election of nominees to the Board of Directors requires the approval of the
holders of a plurality of the total votes cast at the stockholders' meeting.
Recommendation
The Board of Directors recommends a vote FOR the slate of nominees set
forth above.
Proxy - Page 17
<PAGE>
Information Regarding Board of Directors
Committees of the Board of Directors. The Board of Directors of the Company
currently maintains an Executive Committee, an Audit Committee, a Compensation
Committee, a Finance Committee and a Governance Committee. The Board of
Directors does not maintain a Nominating Committee.
The Executive Committee is authorized to meet between meetings of the Board
of Directors and, except as restricted by law, possesses the authority to act
for and on behalf of the Board of Directors. The members of the Executive
Committee are Edward A. Burkhardt (Chairman), Carl Ferenbach, Thomas F. Power,
Jr. and Robert H. Wheeler.
The Audit Committee annually recommends the selection of a firm of
independent public accountants to audit the consolidated financial statements of
the Company and its subsidiaries for the coming year. The Audit Committee also
reviews with representatives of the independent public accountants the auditing
arrangements and scope of the independent public accountants' audits of the
accounting records, the results of those audits, the independent public
accountants' fees, any issues identified by the independent public accountants
regarding internal accounting controls and related recommendations. The
Company's internal audit department reports to the Audit Committee. The members
of the Audit Committee are Roland V. McPherson (Chairman), John W. Rowe and
Thomas W. Rissman. No member of the Audit Committee is an executive officer of
the Company.
The Compensation Committee makes recommendations to the Board of Directors
as to the salaries and other compensation of all elected officers and as to the
benefit plans for all Company employees. The members of the Compensation
Committee are Robert H. Wheeler (Chairman), Thomas E. Evans and Carl Ferenbach.
No member of the Compensation Committee is an executive officer of the Company.
The Finance Committee makes recommendations to the Board of Directors and
is given specific authority by the Board of Directors from time to time to act
on behalf of the Board of Directors in approving certain matters relating to the
issuance of securities by the Company. The members of the Finance Committee are
Carl Ferenbach (Chairman), Thomas W. Rissman and Robert H. Wheeler.
The Governance Committee is responsible for establishing the agenda and
meeting dates for the Board of Directors and makes recommendations to the Board
of Directors for establishing procedures for the conduct of the Board of
Directors' meetings and related matters. The members of the Governance Committee
are Robert H. Wheeler (Chairman), Carl Ferenbach and John W. Rowe.
Proxy - Page 18
<PAGE>
Meetings of the Board of Directors and Committees. During 1998, the Board
of Directors of the Company met seven times, the Audit Committee met two times
and the Compensation Committee met five times. The Finance Committee and the
Executive Committee did not meet. The Governance Committee was established on
March 17, 1999.
Compensation of Directors. The following table sets forth the compensation
earned by the directors of the Company for 1998.
Director Compensation for Last Fiscal Year
Name Annual Meeting Security Grants
Retainer Fees($) Fees($) Stock Options (Shares)
- -------------------- --------------- --------- ------------------------
Edward A. Burkhardt (1) (1) 6,000
Thomas E. Evans 10,417 3,000 12,500
Carl Ferenbach 25,000 7,750 6,000
J. Reilly McCarren (1) (1) -
Roland V. McPherson 25,000 10,000 6,000
Thomas F. Power, Jr. (1) (1) 6,000
Thomas W. Rissman 25,000 8,250 6,000
John W. Rowe 10,417 3,750 12,500
A. Francis Small 25,000 7,000 6,000
Robert H. Wheeler 25,000 10,000 6,000
- --------------
(1) Directors who are full-time employees of the Company do not receive
additional cash compensation for their services as directors.
Proxy - Page 19
<PAGE>
Executive Compensation
Summary of Compensation. The following table summarizes the total
compensation of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company for fiscal year 1998 and the total
compensation of each such individual for the Company's two previous fiscal
years.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
Name and Principal Salary Bonus Stock Options
Position Year ($) ($)(1) (Shares)(2)
- ------------------------- ---- -------- -------- -------------------
Edward A. Burkhardt, 1998 525,000 349,125 6,000
President and Chief 1997 472,000 106,294 6,000
Executive Officer 1996 450,000 - 6,000
Thomas F. Power, Jr., 1998 430,000 285,950 6,000
Executive Vice President 1997 388,500 87,490 6,000
and Chief Financial Officer 1996 370,000 - 6,000
J. Reilly McCarren, 1998 225,000 149,625 -
Executive Vice President 1997 204,000 45,941 -
and Chief Operating Officer 1996 96,212 210,000 90,000
of North American Operating
Subsidiaries (3)
Earl J. Currie, 1998 160,000 84,320 -
Vice President, Planning (4) 1997 153,000 27,571 -
1996 100,000 - 30,000
Glenn J. Kerbs, 1998 153,000 80,631 -
Vice President, Engineering 1997 145,800 26,273 -
of North American Operating 1996 140,000 - -
Subsidiaries
- --------------
(1) Annual bonus amounts were earned and accrued during the fiscal years
indicated and paid after the end of each applicable fiscal year.
(2) Adjusted as appropriate for the three-for-one stock split which was
effective on May 31, 1996.
(3) Mr. McCarren became an employee of the Company in July 1996. His 1996 bonus
was paid in connection with his becoming an employee of the Company. North
American Operating Subsidiaries are WCL, FVW, Sault Ste. Marie Bridge
Company and ACRI.
(4) Mr. Currie became an employee of the Company in May 1996.
Proxy - Page 20
<PAGE>
Stock Option Grants in 1998. The following table sets forth information
concerning the grant of stock options during 1998 to the Chief Executive Officer
and the four other most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Potential
Realizable
Value at
Percentage Assumed
of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation
Underlying Employees Exercise For
Options in Price Option Term(2)
Granted Fiscal Year ($ Per Expiration --------------------
Name (Shares) 1998(%) Share) Date 5%($) 10%($)
- ------------------------- ---------- ------------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Edward A. Burkhardt(1) 6,000 6.2 22.5625 5/21/08 85,137 215,753
Thomas F. Power, Jr.(1) 6,000 6.2 22.5625 5/21/08 85,137 215,753
J. Reilly McCarren - - - - - -
Earl J. Currie - - - - - -
Glenn J. Kerbs - - - - - -
<FN>
- ----------------
(1) Options were granted to Mr. Burkhardt and Mr. Power under the Company's
Director Stock Option Plan.
(2) Potential realizable value is based on an assumption that the stock price
appreciates from the stated exercise price at the annual rate shown
(compounded annually) from the date of grant until the end of the ten-year
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price.
</FN>
</TABLE>
Option Exercises and Year-End Value of Options. The following table sets
forth information concerning the exercise of stock options during 1998, and the
year-end value of unexercised options, for the Chief Executive Officer and the
four other most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
Option Exercises and Year-End Value Table
Value of Unexercised
Shares Number of Securities In-the-Money Options at
Acquired Underlying Options at December 31, 1998($)(1)
on Value December 31, 1998 ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- -------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward A. Burkhardt - - 30,000 - 73,215 -
Thomas F. Power, Jr. - - 30,000 - 73,215 -
J. Reilly McCarren - - 30,000 60,000 - -
Earl J. Currie - - 15,000 15,000 - -
Glenn J. Kerbs - - 30,000 - 113,025 -
<FN>
- ----------------
(1) Based on the closing price of one share of Common Stock on December 31,
1998 ($17.1875) less the exercise price.
</FN>
</TABLE>
Proxy - Page 21
<PAGE>
The Company has adopted a revised compensation arrangement for directors to
be effective after the 1999 annual meeting, subject to approval by the
stockholders of the amendment to the Director Stock Option Plan described in
Item 3. Under the new arrangement directors who are not employees of the Company
or its subsidiaries will receive annual compensation in the amount of $30,000
and options to acquire 6,000 shares (subject to adjustment for stock dividends,
stock splits and similar events). Additional fees for attending meetings will be
discontinued, and directors who are employees will not receive additional
compensation for their services as directors. Of the $30,000 of compensation,
50% will be in the form of awards of phantom stock priced at fair market value
and subject to mandatory redemption after the recipient ceases to be a director
of the Company. The other 50% will be payable in cash or, at the option of the
director, in additional phantom stock with the same terms. Each person who
becomes a director in the future may be issued additional options under the
amended Director Stock Option Plan as determined by the Board of Directors in
connection with selection of the new director.
Compensation Committee Interlocks and Insider Participation
Robert H. Wheeler, the Chairman of the Compensation Committee, is of
counsel to Oppenheimer Wolff & Donnelly, which has provided legal and other
services to the Company in connection with various labor matters, litigation,
regulatory issues and corporate and acquisition issues since shortly after the
Company's formation and continues to provide such services to the Company.
Compensation Committee Report on Executive Compensation
The following is a report of the Compensation Committee of the Board of
Directors:
The Compensation Committee reviews the salaries of each executive officer
of the Company annually. It consults with the Chief Executive Officer regarding
salaries other than those of the two executive directors, and it makes
recommendations to the Board of Directors for salaries of the executive
officers. In performing its duties the Compensation Committee has used the
services of outside compensation consultants and has reviewed compensation
surveys that are periodically published by compensation consulting firms. Each
year the Compensation Committee also recommends specific implementation of the
Company's management incentive compensation plan for the year, for consideration
by the Board of Directors. That plan, as implemented for 1998, provides for cash
payments to management based on the North American Operating Subsidiaries'
achieving operating income, after certain adjustments, at or above a target
level and on certain additional performance and safety results. The annual
performance targets have been established for each year based upon the North
American Operating Subsidiaries' operating plan for that year and are designed
to provide incentives to meet or exceed the operating plan. The amount of
incentive compensation paid to executive officers for 1998 was a percentage of
base salary based on the amount by which the performance targets for the year
were exceeded, in accordance with a schedule approved when the targets for the
year were established.
Proxy - Page 22
<PAGE>
The Company has not established incentive compensation based on the
performance of the Common Stock of the Company. All executive officers of the
Company hold stock of the Company and options to acquire additional shares of
Common Stock of the Company. In most cases the executive officer's holdings of
Company securities represent a substantial proportion of his net worth. The
Committee believes that these holdings have created economic interests for
management consistent with those of the Company's other stockholders.
The Chief Executive Officer receives a base salary as recommended by the
Compensation Committee and approved by the Board of Directors. In addition, the
Chief Executive Officer participates in the incentive compensation program
described above. The salary of the Chief Executive Officer was first negotiated
in October 1987 when the Company was organized and has been increased in each
succeeding year after an annual review by the Compensation Committee. In its
annual review of the Chief Executive Officer's base salary, the Compensation
Committee considers the Chief Executive Officer's responsibilities and
performance, as well as the compensation paid to chief executives of other rail
transportation companies and other industrial companies of comparable size. As
described above for all executive officers, the incentive compensation of the
Chief Executive Officer for fiscal year 1998 was paid in accordance with the
terms of the management incentive compensation plan. The Chief Executive
Officer's incentive compensation is not based upon performance of the stock of
the Company. A significant factor in the Compensation Committee's consideration
of incentive compensation for the Chief Executive Officer is his ownership of
3,583,004 shares of Common Stock and the resulting consistency of his economic
interests with those of the Company's other stockholders.
The Company's policy with respect to executive compensation is to have all
compensation qualify for deductibility under the provisions of the Internal
Revenue Code.
The Compensation Committee
Robert H. Wheeler, Chairman
Thomas E. Evans
Carl Ferenbach
Proxy - Page 23
<PAGE>
Transactions With Management And Others
Affiliates of Berkshire Partners LLC ("Berkshire"), of which Carl Ferenbach
is an executive officer, director and beneficial owner, granted the Company an
option to purchase up to 266,200 shares of ATN, in connection with the
investment by both the Company and Berkshire in ATN in November 1997. The
options may be exercised at any time prior to November 14, 2002 and currently
have an exercise price of Aust$1.07 per share or Aust$285,000 in the aggregate
(approximately US$179,000 at current exchange rates). The exercise price
increases approximately 3.5% at each November 14th.
Oppenheimer Wolff & Donnelly, to which Robert H. Wheeler is of counsel, has
provided legal and other services to the Company in connection with various
labor matters, litigation, regulatory issues and corporate and acquisition
issues since shortly after the Company's formation and continues to provide such
services to the Company. The amounts paid during 1998 were $1,054,000.
McLachlan, Rissman & Doll, of which Thomas W. Rissman is a member, has
provided legal and other services to the Company in connection with various
corporate, acquisition and financing matters since December 1, 1987 and
continues to provide such services to the Company. The amounts paid during 1998
were $334,000.
Tranz Rail, of which six directors of the Company are directors and hold
shares or both options and shares, is party to a Management Services Agreement
with the Company under which the Company provides management services to Tranz
Rail. The amounts earned by the Company for services under the Tranz Rail
Management Services Agreement in 1998 were $700,000.
EW&S, of which four directors of the Company are directors and hold shares
and options, is party to a Management Services Agreement with the Company under
which the Company provides management services to EW&S. The amounts earned by
the Company for services under the EW&S Management Services Agreement in 1998
were $2,282,000.
Stock Price Performance Graph
The following graph compares the cumulative total stockholder return on the
Company's Common Stock during the period from December 31, 1993 through December
31, 1998 with the cumulative total return on the S&P 500 Index and the S&P
Railroads Index during that period assuming the investment of $100 in the
Company's Common Stock and in each such index at the beginning of such period
and the reinvestment of all dividends.
Proxy - Page 24
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG WISCONSIN CENTRAL TRANSPORTATION CORPORATION,
THE S & P 500 INDEX AND THE S & P RAILROADS INDEX
Tabular Representation of Omitted Graph
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
Company 100 138 220 398 235 173
S & P 500 100 101 139 171 229 294
S & P Railroads 100 86 126 157 177 163
Principal Stockholders
The following table sets forth the beneficial ownership of the Company's
Common Stock (i) by each person who is known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock, (ii) by each director,
(iii) by each of the executive officers listed in the Summary Compensation Table
and (iv) by all directors and executive officers as a group. Except as indicated
in notes to the table, each beneficial owner listed in the table has advised the
Company or indicated in filings with the Securities and Exchange Commission that
such owner has sole investment and voting power with respect to the shares of
Common Stock indicated. The information in the table is provided based on
information known to the Company as of March 31, 1999.
Proxy - Page 25
<PAGE>
Principal Stockholders
Shares Beneficially Owned (1)
-----------------------------
Name Number Percent
- ------ ------ -------
Southeastern Asset Management, Inc. (2) 5,504,500 10.76
Edward A. Burkhardt (3) 3,583,604 6.99
Capital Research and Management Company (4) 2,999,300 5.86
Scudder Kemper Investments, Inc. (5) 2,770,925 5.42
Thomas F. Power, Jr. (6) 1,031,418 2.01
Robert H. Wheeler 532,000 1.04
Roland V. McPherson 507,582 *
Glenn J. Kerbs 249,198 *
J. Reilly McCarren 180,400 *
Thomas W. Rissman (7) 116,514 *
Carl Ferenbach 104,926 *
Earl J. Currie 60,194 *
A. Francis Small (8) 33,000 *
John W. Rowe (9) 6,000 *
Thomas E. Evans 5,000 *
Directors and executive officers as a group
(19 persons) (10) 8,122,927 15.64
- ----------------------
* Percentage beneficially owned does not exceed 1%.
(1) Any shares of Common Stock which a person has the right to acquire through
exercise of options exercisable within 60 days after March 31, 1999 are
considered to be outstanding for purposes of this table. Listed
stockholders have such options to acquire shares of Common Stock in the
following numbers: Mr. Burkhardt: 100,000; Mr. Power: 85,000; Mr. Wheeler:
30,000; Mr. McPherson: 30,000; Mr. Kerbs: 40,000; Mr. Rissman: 30,000; Mr.
Ferenbach: 30,000; Mr. McCarren: 129,000; Dr. Small: 24,000; and Mr.
Currie: 58,000.
(2) According to a Schedule 13G filed as of March 9, 1999 with the Securities
and Exchange Commission by Southeastern Asset Management, Inc.
("Southeastern") and Longleaf Partners Small Cap-Fund ("Longleaf") which
indicates that Southeastern has sole voting power with respect to 337,000
of these shares, sole dispositive power with respect to 735,100 of these
shares, shared voting power with respect to 2,670,800 of these shares, no
voting power with respect to 398,100 of these shares and shared dispositive
power with respect to 2,670,800 of these shares; and Longleaf has no sole
voting or sole dispositive power with respect to these shares but has
shared voting and shared dispositive power with respect to 4,769,400 of
these shares. Beneficial ownership of these shares is disclaimed by
Southeastern. The address of Southeastern and Longleaf is 6410 Poplar Ave.,
Suite 900, Memphis, Tennessee 38119.
(3) Includes 600 shares held by Mr. Burkhardt's daughter and as to which Mr.
Burkhardt disclaims beneficial ownership. The address of Mr. Burkhardt is
Suite 9000, One O'Hare Centre, 6250 North River Road, Rosemont, Illinois
60018.
(4) According to a Schedule 13G filed as of February 11, 1999 with the
Securities and Exchange Commission by Capital Research and Management
Company ("CRMC") which indicates that CRMC has sole dispositive power with
respect to these shares and does not have sole or shared voting power with
respect to these shares. Beneficial ownership of these shares is disclaimed
by CRMC. The
Proxy - Page 26
<PAGE>
address of CRMC is 333 South Hope Street, 55th Floor, Los Angeles,
California 90071.
(5) According to a Schedule 13G filed as of February 11, 1999 with the
Securities and Exchange Commission by Scudder Kemper Investments, Inc.
("Scudder") which indicates that Scudder has sole voting power with respect
to 793,625 of these shares, shared voting power with respect to 1,122,600
of these shares and sole dispositive power with respect to all these
shares. The address of Scudder is 345 Park Avenue, New York, New York
10154.
(6) Includes 57,000 shares held for the benefit of Mr. Power's spouse who has
sole voting and sole dispositive power with respect to those 57,000 shares.
(7) Mr. Rissman serves as one of two co-trustees who share voting and
dispositive power with respect to 1,068,066 shares held by the Mary Cynthia
K. McLachlan Trust.
(8) Dr. Small reports that he has shared voting and dispositive power with
respect to these shares.
(9) Includes 2,000 shares held by Mr. Rowe's spouse who has sole voting and
sole dispositive power with respect to those 2,000 shares.
(10) Includes (i) the 600 shares held by Mr. Burkhardt's daughter and referred
to in Note 3, (ii) the 57,000 shares owned by Mr. Power's spouse and
referred to in Note 6, (iii) the 1,068,066 shares owned by the Mary Cynthia
K. McLachlan Trust and referred to in Note 7, (iv) the 2,000 shares owned
by Mr. Rowe's spouse and referred to in Note 9, and (v) 796,200 shares
which directors and executive officers have the right to acquire through
exercise of options within 60 days after March 31, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
officers and beneficial owners of more than 10% of the Company's Common Stock
(collectively "Reporting Persons") to file reports of ownership and changes in
ownership with the Commission. Reporting Persons are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms which
they file. Based solely on its review of the copies of such forms received or
written representations from certain Reporting Persons, the Company believes
that during fiscal 1998 all Reporting Persons complied with all applicable
filing requirements.
Proxy - Page 27
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP as independent public
accountants to conduct the annual audit of the financial statements of the
Company for the fiscal year ending December 31, 1999.
Representatives of KPMG LLP are expected to be present at the annual
meeting. They will have the opportunity to make a statement if they desire to do
so, and they are expected to be available to respond to appropriate questions.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each stockholder, on written
request, a copy of the Company's Annual Report on Form 10-K, including the
financial statements and the financial statement schedules, but excluding the
exhibits, required to be filed with the Securities and Exchange Commission for
the fiscal year ended December 31, 1998. Written requests should be directed to:
Investor Relations
Wisconsin Central Transportation Corporation
Post Office Box 5062
Rosemont, Illinois 60017-5062
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the 2000 annual meeting
of the Company must be received by the Company no later than December 31, 1999
to be eligible for inclusion in the Company's proxy statement and form of proxy
relating to the 2000 annual meeting. Any stockholder proposal received after
December 31, 1999 will be considered untimely and will not be eligible for
inclusion in the Company's proxy statement and form of proxy relating to the
2000 annual meeting.
OTHER MATTERS
The cost of soliciting proxies by mail, telephone, telecopy or in person,
as needed, will be borne by the Company. Officers or regular employees of the
Company may, without additional compensation, engage in the solicitation of
proxies by telecopy, telephone or personal calls.
Highlights of the meeting will be included in the report to stockholders on
the second quarter of 1999, to be mailed on or about August 15, 1999.
By Order of the Board of Directors,
Thomas W. Rissman
Secretary
Proxy - Page 28
<PAGE>
APPENDIX 1 TO PROXY STATEMENT - FORM OF PROXY
PROXY
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors of
Wisconsin Central Transportation Corporation
The undersigned appoints Edward A. Burkhardt, Thomas F. Power, Jr., Robert H.
Wheeler, Thomas W. Rissman, or any of them, proxies, with full power of
substitution, to vote all shares of Common Stock of Wisconsin Central
Transportation Corporation ("WCTC") owned of record by the undersigned upon all
matters properly coming before the 1999 Annual Meeting of Stockholders to be
held on May 20, 1999 and any adjournments thereof.
This proxy is to be voted as directed on the reverse side of this card. IN THE
ABSENCE OF SPECIFIC DIRECTION, THE PROXIES WILL VOTE THE SHARES OF THE PERSON
WHO SIGNS THE REVERSE SIDE OF THIS PROXY (1) FOR ITEM 1--APPROVAL OF THE
AMENDMENT TO THE BY-LAWS, (2) FOR ITEM 2--APPROVAL OF THE AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION, (3) FOR ITEM 3--APPROVAL OF THE AMENDMENT
TO DIRECTOR STOCK OPTION PLAN, (4) FOR ITEM 4--ELECTION OF THE DIRECTOR NOMINEES
LISTED ON THE REVERSE SIDE AND (5) IN THEIR DISCRETION ON ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE MEETING.
Please sign and date this proxy on the reverse side and return it promptly in
the enclosed envelope or vote by telephone or via the Internet.
SEE REVERSE SIDE (To be signed on reverse side) SEE REVERSE SIDE
Appendix 1 - Page 1
<PAGE>
Vote by Telephone Vote by Internet
It's fast, convenient, and immediate! It's fast, convenient, and your vote is
Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683) or
call collect on a touch-tone phone
1-201-536-8073.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683) http.//www.eproxyvote.com/wclx
or call collect on a touch-tone
phone 1-201-536-8073.
3. Enter your 14-digit Control Number 3. Enter your 14-digit Control Number
located on your Proxy Card above located on your Proxy Card above
your name. your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/wclx
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
THANK YOU FOR VOTING
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH HERE
[ X ] Please mark votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4, all of which
are proposed by WCTC.
1. Approval of Amendment to By-laws
[ _ ] For [ _ ] Against [ _ ] Abstain
2. Approval of Amendment to Restated Certificate of Incorporation
[ _ ] For [ _ ] Against [ _ ] Abstain
3. Approval of Amendment to Director Stock Option Plan
[ _ ] For [ _ ] Against [ _ ] Abstain
4. Election of Ten Directors
For Three-Year Term*:
(01)Edward A. Burkhardt, (02)Thomas W. Rissman, (03)John W. Rowe
For Two-Year Term*:
(04)Thomas E. Evans, (05)Thomas F. Power, Jr., (06)Robert H. Wheeler
For One-Year Term:
(07)Carl Ferenbach, (08)J. Reilly McCarren, (09)Roland V. McPherson,
(10)A. Francis Small
*If Item 1 is not approved, vote is for a one-year term for all nominees.
[ _ ] For all nominees
[ _ ] Withhold from all nominees
[ _ ] For all nominees except
-------------------------------
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE LEFT [ ]
Please sign and date this proxy and return it promptly whether or not you plan
to attend the meeting.
Sign exactly as name appears on this card. Joint owners should both sign. If
signing for a corporation or partnership or as agent, attorney or fiduciary,
indicate the capacity in which you are signing.
Signature: Signature:
------------------------- -----------------------------
Date: Date:
------------------------------ ----------------------------------
Appendix 1 - Page 2
<PAGE>
APPENDIX 2 TO PROXY STATEMENT - AMENDMENT TO DIRECTOR STOCK OPTION PLAN
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
AMENDMENT NO. 1 TO DIRECTOR STOCK OPTION PLAN
1. The Wisconsin Central Transportation Corporation Director Stock Option Plan
(the "Plan") is amended as follows:
(a) Section 3.1 is amended to read in its entirety as follows:
"3.1. Eligibility and Participation. Participants in this Plan shall
be each of those persons who, at the date of a grant of Options under
Section 6 of this Plan, are directors of the Company and are not employees
of the Company or its subsidiaries."
(b) Section 4.1 is amended to read in its entirety as follows:
"4.1. Limited Power to Grant Options. Except as provided in Section
6.3(c) with respect to the granting of options to new directors, the Board
shall have no power to determine the granting of Options under this Plan.
Except as provided in Section 6.3(c), all Options under this Plan will be
granted as provided herein without further action by the Board."
(c) Section 6.1 is amended to read in its entirety as follows:
"6.1. Grants of Options. All grants of options shall be subject to the
terms and conditions of this Section 6. Except for options granted pursuant
to section 6.3(c), all grants of options under this Plan shall be automatic
and non-discretionary."
(d) Section 6.3 is amended to read in its entirety as follows:
"6.3.Subsequent Grants of Options.
(a) On the day after the annual meeting of stockholders of the Company
held in 1999 and each year thereafter, each person who on that day is
a director and not an employee of the Company or its subsidiaries,
shall be granted on that day an Option to purchase 6,000 shares of
Stock.
(b) On the day after the annual meeting of stockholders of the Company
held in 1999, each director who is first elected to serve as director
at that annual meeting shall be granted on that day an Option to
purchase an additional 5,500 shares of Stock.
(c) The Board may approve the grant of additional options under this Plan
to persons other than employees of the Company who become new
directors of the Company after the date of the annual meeting of
stockholders in 1999, in connection with their selection as directors
of the Company."
2. The amendments provided in Section 1 shall be effective upon approval by
the stockholders of the Company.
Appendix 2 - Page 1
<PAGE>
3. The amendments provided in Section 1 shall have no effect on the validity
of options granted under the Plan prior to the effective date of such
amendments.
Adopted by the Board of Directors on March 17, 1999.
Approved by the Stockholders on __________.
Appendix 2 - Page 2
<PAGE>
APPENDIX 3 TO PROXY STATEMENT - DIRECTOR STOCK OPTION PLAN, AS AMENDED
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
DIRECTOR STOCK OPTION PLAN
as supplemented and amended
SECTION 1.
PURPOSE
The purpose of this DIRECTOR STOCK OPTION PLAN (this "Plan") of WISCONSIN
CENTRAL TRANSPORTATION CORPORATION (the "Company") is to promote the long-term
interests of the Company by attracting and retaining qualified and experienced
persons to serve as directors of the Company and by providing additional
incentive for directors of the Company to work for the success of the Company
through continuing ownership of the Company's common stock.
SECTION 2.
DEFINITIONS
2.1. Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Company" means Wisconsin Central Transportation Corporation, a
Delaware corporation, and any successor thereto.
(d) "Fair Market Value" means, with respect to the Stock on any date, the
closing price per share of the Stock on the last trading day prior to
that date, as reported by NASDAQ and published in The Wall Street
Journal (Midwest Edition) or, if listed on a stock exchange, as
reported in the published reports of composite transactions for the
exchange.
(e) "Option" means the right to purchase Stock at a stated price for a
specified period of time.
(f) "Participant" means any holder of an Option granted pursuant to this
Plan.
(g) "Stock" means the common stock of the Company, $0.01 par value.
Appendix 3 - Page 1
<PAGE>
SECTION 3.
ELIGIBILITY AND PARTICIPATION
3.1. Eligibility and Participation. Participants in this Plan shall be each
of those persons who, at the date of a grant of Options under Section 6 of this
Plan, are directors of the Company and are not employees of the Company or its
subsidiaries.
SECTION 4.
POWERS OF THE BOARD
4.1. Limited Power to Grant Options. Except as provided in Section 6.3(c)
with respect to the granting of options to new directors, the Board shall have
no power to determine the granting of Options under this Plan. Except as
provided in Section 6.3(c), all Options under this Plan will be granted as
provided herein without further action by the Board.
4.2. Administration. Subject to the provisions of Section 4.1, the Board
shall be responsible for the administration of this Plan. The Board, by majority
action, shall have the sole and absolute power and authority to prescribe, amend
and rescind rules and regulations relating to this Plan, to provide for
conditions and assurances deemed necessary or advisable to protect the interests
of the Company and to make all other determinations necessary or advisable for
the administration and interpretation of this Plan in order to carry out its
provisions and purposes. Determinations, interpretations, or other actions made
or taken by the Board pursuant to the provisions of this Plan shall be final,
binding and conclusive for all purposes and upon all persons.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1. Maximum Number of Shares. The aggregate number of shares of Stock
which may be issued after May 31, 1996 pursuant to Options granted under this
Plan shall not exceed 900,000, subject to adjustment pursuant to Sections 5.2
and 5.3. Such shares may be authorized and unissued shares or shares reacquired
by the Company and held as treasury shares.
5.2. Canceled or Terminated Options. Any shares of Stock subject to an
Option which for any reason is canceled or terminated without the issuance of
any Stock shall again be available for Options under this Plan.
5.3. Adjustments in Capitalization. In the event of any stock dividend or
stock split, recapitalization, merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares or other similar
corporate change, the aggregate number of shares of Stock available for Options
under Section 5.1, the number of shares subject to Options granted annually
under Section 6.3, the number of shares subject to outstanding Options, and the
respective prices applicable to outstanding Options, may be appropriately
adjusted by the Board, whose determination shall be conclusive, provided,
however, that any fractional shares resulting from any
Appendix 3 - Page 2
<PAGE>
such adjustment shall be disregarded. Upon a merger of the Company in which the
Company is not the surviving corporation, each Option granted under this Plan
and outstanding at the effective date of the transaction which is neither
assumed by the surviving corporation nor replaced with options issued by the
surviving corporation shall expire on the effective date of the transaction.
SECTION 6.
STOCK OPTIONS
6.1. Grants of Options. All grants of options shall be subject to the terms
and conditions of this Section 6. Except for options granted pursuant to section
6.3(c), all grants of options under this Plan shall be automatic and
non-discretionary.
6.2. Initial Grant of Options. Each director who is in office on the day
after the 1994 annual meeting of stockholders of the Company shall be granted on
that day an Option to purchase 1,000 shares of Stock, and any director in office
on that day who was first elected at the 1993 annual meeting of stockholders of
the Company shall be granted on that day an Option to purchase an additional
3,000 shares of Stock.
6.3. Subsequent Grants of Options.
(a) On the day after the annual meeting of stockholders of the Company
held in 1999 and each year thereafter, each person who on that day is
a director and not an employee of the Company or its subsidiaries,
shall be granted on that day an Option to purchase 6,000 shares of
Stock.
(b) On the day after the annual meeting of stockholders of the Company
held in 1999, each director who is first elected to serve as director
at that annual meeting shall be granted on that day an Option to
purchase an additional 5,500 shares of Stock.
(c) The Board may approve the grant of additional options under this Plan
to persons other than employees of the Company who become new
directors of the Company after the date of the annual meeting of
stockholders in 1999, in connection with their selection as directors
of the Company.
6.4. Option Price. The purchase price of each share of Stock that may be
purchased upon exercise of an Option shall be the Fair Market Value of one share
of Stock on the date the Option is granted.
6.5. Exercisability of Options. Options awarded under this Plan shall be
exercisable at any time not earlier than six months after the date of grant and
not later than 10 years after the date of grant (subject to earlier termination
as provided in this Plan).
6.6. Tax Status of Options. Options granted pursuant to this Plan shall not
be "incentive stock options" as defined in Section 422 of the Code.
Appendix 3 - Page 3
<PAGE>
6.7. Option Agreements. Options granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall refer to this Plan, specify the
terms of the Option and make such other provisions (consistent with the other
provisions of this Plan) as the Board considers appropriate.
6.8. Exercise and Payment. A Participant may exercise an Option by delivery
to the Company of a written notice specifying the number of shares of Stock with
respect to which the Option is being exercised, accompanied by payment (in
accordance with Section 6.10) of the purchase price of the shares to be
purchased. As soon as practicable after receipt of a written exercise notice and
full payment of the exercise price and compliance with all other conditions of
the Option grant, the Company shall issue to the Participant a certificate
representing the acquired shares of Stock.
6.9. Withholding Taxes. The Company shall have the right, prior to delivery
of any certificate representing shares of Stock acquired upon exercise of an
Option, to require the Participant to pay to the Company (in accordance with
Section 6.10) an amount sufficient to satisfy any applicable withholding tax
requirements, as determined by the Company.
6.10. Payments. Payments of exercise price and of any amounts required in
respect of withholding taxes shall be made (i) in the form of a check or wire
transfer or (ii) by surrendering a number of shares of Stock already owned by
the Participant with a Fair Market Value on the date of exercise equal to the
purchase price (or some combination of (i) and (ii)).
SECTION 7.
TERMINATION OF OPTIONS
7.1. Termination of Options. Options granted to a Participant under this
Plan will terminate one year after the Participant ceases for any reason to be a
director of the Company.
SECTION 8.
AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
8.1. Amendments by the Board. The Board at any time may terminate or
suspend this Plan, and from time to time may amend or modify this Plan,
provided, however, that:
(a) without further approval of the Company's stockholders, no amendment
or modification shall:
(i) increase the aggregate number of shares of Stock that may be
issued under this Plan (except for adjustments authorized by
Section 5.2 or 5.3);
(ii) materially increase the benefits accruing to Participants under
this Plan;
(iii)materially modify the requirements as to eligibility for
participating in this Plan; or
Appendix 3 - Page 4
<PAGE>
(iv) amend (directly or indirectly) the provisions of Section 6 of
this Plan; and
(b) the provisions of Section 6 of this Plan may not be amended (directly
or indirectly) more than once every six months (even with approval of
stockholders as required by Section 8.1(a)) other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or
the rules thereunder.
8.2. No Impairment of Outstanding Options. No amendment, modification or
termination of this Plan shall in any manner adversely affect any Option
theretofore granted under this Plan, without the consent of the Participant.
SECTION 9.
MISCELLANEOUS PROVISIONS
9.1. Nontransferability of Options. No Options granted under this Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. All rights with
respect to Options granted to a Participant under this Plan shall be exercisable
during the Participant's lifetime only by the Participant or, in the event of
his legal incapacity to do so, by his guardian or legal representative acting in
a fiduciary capacity under state law on behalf of the Participant and under
court supervision.
9.2. Beneficiary Designation. Each Participant under this Plan may from
time to time name any beneficiary or beneficiaries by whom any right under this
Plan is to be exercised in case of Participant's death. In the absence of any
such designation or if all persons designated shall not survive the Participant,
the beneficiary under this Plan shall be, and rights under this Plan may be
exercised by, the Participant's surviving spouse, if any, or otherwise by his
estate.
9.3. Requirements of Law. The granting of Options and the issuance of
shares of Stock shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
9.4. Term of Plan. This Plan shall be effective upon its adoption by the
Board and approval by the Company's stockholders. No Option may be granted under
this Plan more than ten years after the date this Plan was adopted by the Board.
9.5. Governing Law. This Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
Adopted by the Board of Directors on March 17, 1999.
Approved by the Stockholders on ______________.
Appendix 3 - Page 5
