<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AUTOCAM 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)(4) 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.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
AUTOCAM LOGO
AUTOCAM CORPORATION
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 28, 1998
The Annual Meeting of the Shareholders of Autocam Corporation, a Michigan
corporation, will be held on Wednesday, October 28, 1998 at 4:00 p.m. at
Rembrandt's At Bridgewater, 333 Bridge Street, N.W., Grand Rapids, Michigan
49504 for the following purposes:
1. To elect two members of the Board of Directors whose terms expire at the
Annual Meeting.
2. To consider and act upon the ratification of the selection of Deloitte &
Touche LLP as independent auditors for the Company for the fiscal year
ending June 30, 1999.
3. To approve the Autocam Corporation 1998 Key Employee Stock Option Plan
and to reserve 300,000 shares thereunder.
4. 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 September 4, 1998, are
entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors
WARREN A. VELTMAN, Secretary
Grand Rapids, Michigan
September 18, 1998
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. SHOULD YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR YOUR CONVENIENCE.
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<PAGE> 3
AUTOCAM CORPORATION
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1998
This Proxy Statement is being furnished to you by the Board of Directors of
Autocam Corporation, a Michigan corporation (the "Company"), of 4070 East Paris
Avenue, Kentwood, Michigan 49512 (Tel. No. 616-698-0707), in connection with the
Annual Meeting of Shareholders of the Company to be held on Wednesday, October
28, 1998, at 4:00 p.m. at Rembrandt's At Bridgewater, 333 Bridge Street, N.W.,
Grand Rapids, Michigan 49504.
The solicitation of proxies is made primarily by this statement which is
first being mailed to shareholders on approximately September 18, 1998. If it is
necessary to assure adequate representation at the meeting, the Board of
Directors shall, if it deems it advisable, make a further solicitation by mail,
telephone, telegraph and/or personal interview. Any such solicitation will be
made by the officers or regular employees of the Company and its subsidiaries
and will be limited in extent. The total expense of soliciting proxies will be
borne by the Company. The Company may also reimburse brokers, dealers, banks,
voting trustees or other record holders for postage and other reasonable
expenses of forwarding proxy material to their principals who beneficially own
shares of the Company's stock.
The shares represented by your proxy will be voted if the proxy is duly
signed and returned prior to the meeting. You may revoke your proxy at any time
before it is exercised, provided that prior to exercise of the proxy, the
Secretary of the Company receives written notice of such revocation or such
revocation is made in open meeting.
The Board of Directors has fixed the close of business on September 4,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at said meeting. As of September 4, 1998, the Company's
outstanding voting securities consisted of 6,106,680 shares of common stock,
without par value. The common stock is entitled to one vote for each share on
each proposal and each director and there are no cumulative voting rights for
the election of directors. A majority of shares must be present in person or by
proxy in order to have a quorum and to conduct business at the meeting. The only
persons known by the Company to own five percent (5%) or more of the Company's
outstanding common stock are described in the section on "Principal
Shareholders" below. John C. Kennedy, beneficial owner of 58.8% of the Company's
outstanding common stock, intends to vote in favor of all directors and all
proposals identified in this Proxy Statement and, thus, election of all
directors and passage of all proposals is assured.
ELECTION OF DIRECTORS
The Board of Directors presently consists of seven members. The terms of
the two existing directors in Class I, Robert L. Hooker and Warren A. Veltman,
expire at this Annual Meeting. They have agreed to stand for reelection and
serve if elected. In the event any nominee withdraws his name, which is not now
anticipated, the persons named as proxies reserve full discretion to vote for
such other person or persons as may be nominated. However, if a nominee is
substituted by management, the proxies intend to vote for such nominee.
1
<PAGE> 4
Although it has no present plans to do so, the bylaws of the Company permit
the Board of Directors to further increase its number and to fill the vacancies
thus created. However, the persons named in the enclosed proxy cannot vote the
proxy for more than two members of the Board.
The Articles of Incorporation of the Company provide that the Directors are
elected by classes, indicated by the table below, with terms expiring upon
election of their successors at the Annual Meeting of Shareholders following the
close of the Company's fiscal years 1998, 1999 and 2000, respectively. Thus, one
class of directors, consisting of two or three members, as the case may be, are
elected each year to serve for a three-year term.
The table below identifies and provides certain information regarding each
of the existing directors and nominees and the class to which each Director is
now elected or is proposed to be elected at this meeting. The table below also
identifies and provides certain information regarding the executive officers and
certain key employees of the Company. The Company pays each director who is not
an employee a fee of $10,000 per year.
NOMINEES AS DIRECTORS
Class I -- Nominated for election at the meeting to serve until the Annual
Meeting of Shareholders in 2001 and until their successors are elected:
<TABLE>
<CAPTION>
PRINCIPAL HAS SERVED AS
NAME OCCUPATION AGE DIRECTOR SINCE
---- ---------- --- --------------
<S> <C> <C> <C>
Warran A. Veltman................. Secretary, Treasurer, Chief Financial 37 October 1991
Officer of Company
Robert L. Hooker(1)............... Chief Executive Officer, Mazda Great 68 January 1992
Lakes
</TABLE>
Warren A. Veltman has been with the Company since November 1990 as the
Chief Financial Officer and Secretary/Treasurer since August 1991. Mr. Veltman
graduated in 1983 with a Bachelor of Business Administration degree from the
University of Michigan.
Robert L. Hooker has been Chief Executive Officer of Mazda Great Lakes, a
Michigan corporation engaged in the distribution of automobiles and related
products, for more than five years.
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE ANNUAL MEETING
Class II -- To serve until the Annual Meeting of Shareholders in 1999 and
until their successors are elected:
<TABLE>
<CAPTION>
PRINCIPAL HAS SERVED AS
NAME OCCUPATION AGE DIRECTOR SINCE
---- ---------- --- --------------
<S> <C> <C> <C>
David J. Wagner(1)(2)............. Chairman, President, Chief Executive 44 October 1991
Officer of Old Kent Financial
Corporation
Kim Korth(1)...................... President, International Resource 43 August 1997
Network, Inc.
</TABLE>
David J. Wagner has been Chairman since November 1995 and President and
Chief Executive Officer since March 1995 and was President since March 1994 of
Old Kent Financial Corporation, a Michigan state
2
<PAGE> 5
bank holding company, and was Chief Executive Officer of Old Kent Bank and Trust
Company for more than the preceding five years.
Kim Korth has been the owner and President of International Resource
Network, Inc., an automotive consulting and market research firm, for more than
five years.
Class III -- To serve until the Annual Meeting of Shareholders in 2000 and
until their successors are elected:
<TABLE>
<CAPTION>
PRINCIPAL HAS SERVED AS
NAME OCCUPATION AGE DIRECTOR SINCE
---- ---------- --- --------------
<S> <C> <C> <C>
John C. Kennedy................... President, Chief Executive Officer of 40 April 1988
Company
Kenneth K. Rieth(2)............... President, Chief Executive Officer of 39 October 1991
Riviera Tool Company
Mark J. Bissell(1)................ President, Chief Executive Officer of 41 October 1997
BISSELL Inc.
</TABLE>
John C. Kennedy has been a Director and President of the Company since its
inception in April 1988. Mr. Kennedy graduated with a Bachelor of Science degree
in Accounting and Finance from the University of Detroit in 1979.
Kenneth K. Rieth is a principal owner and for the past five years has been
a director and the President and Chief Executive Officer of Riviera Tool
Company, a Michigan corporation engaged in the manufacture of sheet metal
stamping dies for the automotive industry.
Mark J. Bissell has been President and Chief Executive Officer since April
1996, and President and Chief Operating Officer from January 1994 to March 1996
of BISSELL Inc., a manufacturer of floor care cleaning products including carpet
vacuums, cleaners and sweepers. For more than two years prior to that, he served
as a Senior Vice President of BISSELL Inc., and as the General Manager of the
BISSELL Homecare Division.
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(1) Member of Compensation Committee
(2) Member of Audit Committee
KEY EMPLOYEES
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE
---- --------------------- ---
<S> <C> <C>
Edward W. Hekman................................ Manager of Corporate Planning 42
Thomas K. O'Mara................................ Sales and Marketing Manager 37
</TABLE>
Edward W. Hekman has been with the Company since 1988 and has served as the
Company's Manager of Corporate Planning since March of 1997. He served as the
Company's New Process Development Manager from September 1995 to February 1997
and from June 1990 to September 1993. He also served as the Company's
Engineering Manager form September 1993 until August 1995. Mr. Hekman received a
Bachelor of Science in Mechanical Engineering from General Motors Institute in
1978 and a Master's degree in Business Administration from Harvard University in
1980 and was registered with the State of Michigan as a Professional Engineer in
1984. Mr. Hekman is employed by the Company pursuant to a ten-year employment
agreement which terminates on August 31, 2001.
3
<PAGE> 6
Thomas K. O'Mara has been with the Company since November 1989 as the Sales
and Marketing Manager. Mr. O'Mara graduated in 1982 with a Bachelor of Science
degree in Marketing from Central Michigan University.
BOARD MEETINGS AND COMMITTEES
The Directors had four meetings during the past fiscal year. No director
attended less than 75% of directors meetings, including appropriate committee
meetings.
The Board of Directors has an audit committee which is responsible for
approving the services performed by the Company's independent public accountants
and reviewing and evaluating the Company's accounting principles, reporting
practices and systems of internal control. The current members of the committee
are Messrs. Rieth and Wagner. The committee held two meetings during the last
fiscal year.
The Board of Directors has a compensation committee which has the
responsibility of determining executive compensation and granting options
pursuant to the Company's 1991 incentive stock option plan. During fiscal 1998,
this committee consisted of Messrs. Wagner, Hooker and Ms. Korth and since
October 1997, Mr. Bissell. The committee met four times during the fiscal year
and acted once by consent resolution.
The Company has no nominating committee the functions of which are
performed by the Board of Directors.
4
<PAGE> 7
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the persons who beneficially own more
than 5% of its Common Stock, by each Director and Executive Officer, and by all
officers and directors of the Company as a group, as of September 4, 1998:
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
---------------- ------------------ ----------
<S> <C> <C>
John C. Kennedy(2)(3)............................ 3,587,783 58.8
Warren A. Veltman(2)(4).......................... 32,971 *
Robert L. Hooker(5).............................. 2,976 *
David J. Wagner.................................. 1,606 *
Kenneth K. Rieth................................. 4,502 *
Kim Korth........................................ 0 *
Mark J. Bissell.................................. 1,500 *
FMR Corporation(6)............................... 599,531 9.8
All officers and directors and nominees as a
group (7 persons)(2)(4)(5)..................... 3,631,338 59.5
</TABLE>
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(1) An asterisk indicates beneficial ownership of less than 1% of the Class.
(2) Includes shares allocated to the individual accounts within the Company's
401(k) plan.
(3) The business address for Mr. Kennedy is 4070 East Paris Avenue, Kentwood,
Michigan 49512.
(4) Includes 30,428 shares of Common Stock which Mr. Veltman has the right to
acquire within sixty days of September 4, 1998 through the exercise of stock
options. Total also includes 1,002 shares owned by Mr. Veltman's spouse and
over which she exercises sole voting control. For purposes of calculating
the percentage of outstanding shares owned by Mr. Veltman and the group,
these shares are deemed to be owned by Mr. Veltman.
(5) Includes 819 shares over which Mr. Hooker has voting control in a fiduciary
capacity. For purposes of calculating the percentage of outstanding shares
owned by Mr. Hooker and the group, these shares are deemed to be owned by
Mr. Hooker.
(6) The business address for FMR Corporation is 82 Devonshire Street, Boston,
Massachusetts, 02109-3614.
5
<PAGE> 8
COMPENSATION COMMITTEE REPORT
The Company's compensation program for officers is administered by the
Compensation Committee of the Board of Directors which is currently composed of
Ms. Korth and Messrs. Hooker, Wagner and Bissell.
Overall Officer Compensation Policy
The Company's compensation policy for executive officers is designed to
support the overall objective of enhancing value for shareholders by attracting,
developing, rewarding, and retaining highly qualified and productive
individuals; relating compensation to both Company and individual performance;
and ensuring compensation levels that are externally competitive and internally
equitable. To that end the committee had an updated executive compensation
review performed in June 1998 by an independent compensation consultant, Watson
Wyatt Worldwide. In short, the report concluded that total compensation levels
for the Company's top executives is "lower than would be expected" with the base
salaries paid particularly low in comparison to comparable companies and that
"Stock option award levels for top Autocam executives are substantially below
competitive norms."
The key elements of the Company's officer compensation consist of base
salary, a maximum formula bonus for Mr. Kennedy, the Company's chief executive
officer, and a discretionary bonus and stock options for Mr. Veltman, the
Company's chief financial officer. The Compensation Committee's policies with
respect to each of these elements, including the bases for the compensation
awarded to Mr. Kennedy are discussed below. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual, including insurance and other benefits.
Base Salary
The Committee reviews each officer's salary annually. In determining
appropriate salary levels, consideration is given to scope of responsibility,
experience, Company and individual performance as well as pay practices of other
companies relating to executives with similar responsibility.
With respect to the base salary of Mr. Kennedy in 1998, the Compensation
Committee took into account a comparison of base salaries of chief executive
officers of peer companies known to the members of the Committee, the Company's
continued financial success, and the assessment by the Compensation Committee of
Mr. Kennedy's individual performance. The Compensation Committee also took into
account the longevity of Mr. Kennedy's service to the Company and its belief
that Mr. Kennedy is an excellent representative of the Company to the public by
virtue of his stature in the community and the industry. Mr. Kennedy's base
salary was established by the Board of Directors in September 1991 and has been
continued since then. This base compensation consists of a regular payroll
payment of $150,000 per year and a split dollar arrangement for payment of
premiums on four (4) life insurance policies owned by Mr. Kennedy. Mr. Kennedy
pays the Company the portion of the premiums equal to the price of an equivalent
amount of term insurance. The benefit to Mr. Kennedy of premiums paid by the
Company is the interest-free use of the non-term portion of the premium. Such
benefit was estimated at $81,537 as the present value of the interest payments
not required to be made assuming Mr. Kennedy would not repay the non-term
portion until age 65, discounted at a market rate of 8.0%. (See Summary
Compensation Table, below). The Company has a lien on the cash value and
proceeds of each policy equal to the premiums paid by the Company. This lien
amounted to $811,204 at June 30, 1998 and is carried as an officer receivable on
the books of the Company.
6
<PAGE> 9
Bonus Awards
The Company's officers may be considered for annual cash bonuses which are
awarded to recognize and reward corporate and individual performance based on
meeting specified goals and objectives. The plan in effect for 1998 for Mr.
Kennedy provides that a bonus, not exceeding 3 1/2% of the Company's Income from
Operations before such bonus expense, will be awarded. This formula was
established by the Board of Directors in 1991 and has been continued. In
awarding a bonus to Mr. Kennedy, the board reviews compensation levels and
financial results available to it for chief executive officers for similarly
sized companies as well as those located near the Company's headquarters. Mr.
Kennedy sets Mr. Veltman's bonus based on his review of corporate and Mr.
Veltman's individual performance as well as the performance bonus the management
team awards to employees of the Company generally other than Messrs. Veltman and
Kennedy.
Stock Options
Under the Company's 1991 Incentive Stock Option Plan, which was approved by
the shareholders, stock options are granted to the Company's key employees
including Mr. Veltman. The number of options granted is determined by the
subjective evaluation of the person's ability to influence the Company's
long-term growth and profitability.
Stock options are granted with an exercise price equal to the market price
of the Common Stock on the date of grant. In fiscal 1998, no new incentive
options were granted to any executive officers and no options were granted to
any individual under the Autocam Corporation 1998 Key Employee Stock Option
Plan. Since the value of an option bears a direct relationship to the Company's
stock price, it is an effective incentive for employees to create value for
shareholders. The Committee therefore views stock options as an important
component of its compensation policy and supports the proposal to approve the
Autocam Corporation 1998 Key Employee Stock Option Plan, below.
COMPENSATION COMMITTEE MEMBERS:
Robert L. Hooker
David J. Wagner
Kim Korth
Mark J. Bissell
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the total compensation earned by each
executive officer during the fiscal years ended June 30, 1998, 1997, and 1996
for services rendered to the Company in all capacities during such years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------------------------------- AWARDS
NAME AND OTHER ------------
PRINCIPAL POSITION ANNUAL STOCK ALL OTHER
AT JUNE 30, 1998 YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)(2)(3)
------------------ ---- --------- -------- --------------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
John C. Kennedy....... 1998 150,000 313,900 6,136 0 81,537
Chairman, President 1997 150,000 202,557 6,136 0 82,776
and Chief Executive 1996 150,000 205,047 6,136 0 82,090
Officer(4)
Warren A. Veltman..... 1998 75,000 110,900 0 0 14,760
Secretary, Treasurer 1997 75,000 86,686 0 9,450 15,639
and Chief Financial 1996 75,000 76,400 0 0 13,495
Officer(5)
</TABLE>
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(1) Does not include any value that might be attributable to job-related
personal benefits, the amount of which did not exceed the lesser of 10% of
annual salary plus bonus or $50,000 for each executive officer.
(2) Represents the benefit of the interest-free use of the non-term portion of
the premium paid by the Company on insurance policies owned by the
individual under split dollar arrangements. Such benefit was estimated as
the present value of the interest payments which are not required to be made
assuming the executive would not repay the non-term portion until age 65,
discounted at a market rate of 8.0%. The portion of such premiums equal to
the price of equivalent amounts of term insurance are paid to the Company by
Messrs. Kennedy and Veltman.
(3) Includes $1,000, $2,000 and $1,000 for Messrs. Kennedy and Veltman
contributed by the Company during fiscal 1998, 1997, and 1996, respectively,
to the 401(k) plan maintained by the Company for its employees generally.
(4) Mr. Kennedy's current base compensation is $150,000 per annum. He is also
entitled to receive annual bonus compensation not greater than 3 1/2% of the
Company's Income from Operations prior to such bonus calculation.
(5) Mr. Veltman's current base compensation is $75,000 per annum.
8
<PAGE> 11
Option Values at Fiscal Year End
The following table provides information on the value of options held by
each of the executive officers of the Company at June 30, 1998 measured in terms
of the closing price of the Company's common stock on that day. There were no
options exercised by any officer during the year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JUNE 30, 1998(#) JUNE 30, 1998
------------------------------- -------------------------------
NAME EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Warren A. Veltman.................. 30,428 5,953 $282,763 $46,286
</TABLE>
- ---------------
(1) Includes 1,984 options which Mr. Veltman may exercise within sixty days of
September 4, 1998.
Compensation Committee Interlocks and Insider Participation
Mr. Kennedy serves as President and Chief Executive Officer of the Company
and serves on the Board of Directors of Riviera Tool Company, where Mr. Rieth is
president, CEO and also on the Board of Directors.
The Company has entered into four Stock Redemption Agreements
("Agreements") dated as of November 6, 1992, September 20, 1993, August 1, 1996
and September 1, 1998 with John C. Kennedy and Nancy G. Kennedy, his wife, in
their individual capacities and as Co-Trustees of the John C. Kennedy Living
Trust u/a dated February 14, 1986, as amended. The Agreements provide that upon
the death of the last to die of John C. Kennedy and Nancy G. Kennedy, the
Company shall redeem up to $23,000,000 of Common Stock in a redemption under
Section 303 of the Internal Revenue Code of 1986, as amended, in order to pay
estate and inheritance taxes, and funeral and administrative expenses of the
estate. It is the Company's belief that these Agreements will avoid a
potentially significant market price impact that could result from the Kennedy
estates needing to sell Company stock in order to pay death taxes and expenses.
Pursuant to the Agreements, the Company maintains some life insurance policies
in order to fund its obligations.
The Company leases certain real property and equipment from its majority
shareholder. At the beginning of fiscal 1994, all such leases were on a
month-to-month basis. Effective May 1994, the Company and its majority
shareholder executed a long-term lease covering the equipment. The lease expires
May 31, 2001 and grants the Company an option to purchase the equipment at the
expiration of the term. Total lease expense for all items leased from the
majority shareholder was $351,000 for fiscal 1998.
The Company leases a building at 4060 East Paris Avenue, S.E., Grand
Rapids, Michigan, adjacent to its primary facility, with approximately 100,000
square feet suitable for industrial use. Kenneth K. Rieth, directly or
indirectly through his spouse, owns a fifty percent (50%) interest in such
building. The lease expires in March 2005 and contains an option to purchase the
facility for a fixed price of $3,125,000 at the expiration of the lease. Rent
under the lease is fixed at $25,000 per month for its entire term but will be
adjusted to reflect changes in the interest rate charged by the landlord's
mortgage lender. Currently, that rate is fixed until the year 2000. The Company
pays all taxes, maintenance, insurance and utilities. The Company subleases
approximately 75,000 square feet of this building on a month-to-month basis to
Conway Products Corporation ("Conway"), which is 100% owned by Mr. Kennedy, at a
monthly rental charge, plus occupancy expense, taxes, utilities and insurance of
approximately $280,700 in the aggregate during fiscal 1998.
The Company leases an aircraft for use in its business activities. From
time to time Mr. Kennedy used the aircraft for personal use and paid the Company
for the variable costs of operating the aircraft incurred by the Company. This
reimbursement totaled $15,110 during fiscal 1998.
9
<PAGE> 12
On August 13, 1998, the Company committed to acquire an aircraft for use in
its business operations from Cessna Aircraft Corporation ("Cessna") pursuant to
a fifteen-year lease based upon a market value of Four Million Seven Hundred
Thousand Dollars. This acquisition occurred in connection with a trade-in of the
aircraft by Mazda Great Lakes Corporation ("Mazda") to Cessna. Robert L. Hooker
is an officer, director and greater than 10% shareholder of Mazda.
On May 12, 1995, the Company obtained an equipment loan from Old Kent Bank,
a division of Old Kent Financial Corporation of which Mr. Wagner is President
and Chief Executive Officer. At the end of fiscal 1998, the principal balance of
the note was $1,458,330, which amount was secured by certain equipment of the
Company. The Company pays this obligation in monthly installments of $41,660,
plus interest of 8.35% per annum.
On June 27, 1997, the Company entered into a credit agreement with its
primary commercial lender, Comerica Bank, which included a $10,000,000 term loan
payable in monthly principal installments of $138,889, plus interest of 7.76%
per annum. Old Kent Bank has purchased a participation in this term loan from
Comerica Bank and the principal amount of $3,555,555 was due to Old Kent Bank at
the end of fiscal 1998.
On December 23, 1997, the Company issued $9,000,000 in industrial revenue
bonds, the entire amount of which was outstanding at the end of fiscal 1998.
These bonds are backed in part by letters of credit issued by Comerica Bank. Old
Kent Bank has agreed to assume responsibility for satisfying 40%, or $3,600,000,
of the letters of credit and the Company has agreed to be indebted to Old Kent
Bank in the amount of any such satisfaction. The total cost to the Company of
the letters of credit during fiscal 1998 was $45,690, 40% of which was paid by
Comerica Bank to Old Kent Bank. The bonds amortize their entire principal in
fifteen annual payments with the first payment due in December 1998. The
interest rate for the bonds is set each week and the rate was 3.7% per annum as
of June 30, 1998.
The Company has utilized and expects to continue utilizing the consulting
services of International Resource Network, Inc. where Ms. Korth is President.
During fiscal 1998, the Company incurred $79,236 in expense for such services.
The Company believes that all of the transactions described above were at
rents, prices and terms which were no less favorable to the Company than would
have been available in similar transactions with unaffiliated third parties. The
policy of the Company is that proposed transactions with affiliates of the
Company must have the prior approval of a majority of the disinterested members
of the Board of Directors and, as in prior transactions, will be made on terms
no less favorable to the Company than could be obtained from unaffiliated
parties.
10
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the cumulative total return of the Company's
Common Stock, for periods subsequent to June 30, 1993, with the Standard &
Poor's 500 Composite Index and an index of peer companies selected by the
Company.
The comparison assumes $100 was invested on June 30, 1993 in the Company's
Common Stock, the Standard & Poor's 500 Composite Index, and the peer group. The
companies in the peer group, all of which are in the automotive parts industry,
are as follows:
Arvin Industries, Inc.
Dana Corp.
Defiance, Inc.
Douglas & Lomason Company(1)
Excel Industries, Inc.
Federal Screw Works
Gentex Corp.
Howell Industries, Inc.
The Lamson & Sessions Company
MascoTech, Inc.
Modine Manufacturing Company
Newcor, Inc.
Redlaw Industries
Simpson Industries, Inc.
SPX Corp.
Sudbury, Inc.(2)
Walbro Corp.
Worthington Industries, Inc.
- ---------------
(1) Douglas & Lomason was acquired by Magna International on November 18, 1996.
(2) Sudbury, Inc. was acquired by Intermet Corporation on February 26, 1997.
<TABLE>
<CAPTION>
Measurement Period AUTOCAM S&P 500 PEER
(Fiscal Year Covered) CORP INDEX GROUP
<S> <C> <C> <C>
Jun93 100 100 100
Jun94 189.31 101.41 95.18
Jun95 152.66 127.84 99.74
Jun96 136.91 161.08 110.33
Jun97 169.21 216.98 134.46
Jun98 247.49 282.42 166.28
</TABLE>
11
<PAGE> 14
PROPOSAL TO APPROVE THE 1998 KEY EMPLOYEE STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to shareholder
approval, the Autocam Corporation 1998 Key Employee Stock Option Plan (the
"Plan"). The purpose of the Plan is to make options available to key employees
of the Company in excess of that available under the Company's 1991 Incentive
Stock Option Plan in order to give them a greater personal interest in the
success of the Company. The adoption of the Plan is consistent with the
observations of Watson Wyatt Worldwide noted under the Compensation Committee
Report above and its recommendation that additional stock options be granted to
the Company's top executives.
The following is a summary of the principal provisions of the Plan:
Administration. The Plan is administered by the Compensation Committee of
the Board of Directors of the Company, comprised of directors who are not
eligible to participate in the Plan. The Committee makes recommendations
periodically to the Board of Directors with respect to the officers and other
employees who shall participate in the Plan and the extent of their
participation. In making such determinations, the Committee considers the
position and responsibilities of the employee, the nature and value to the
Company of his or her services and accomplishments, the present and potential
contribution of the employee to the success of the Company and such other
factors as the Committee may deem relevant.
Shares. The shares covered by the Plan may be either authorized and
unissued shares or issued shares which have been reacquired by the Company. The
Board of Directors has reserved 300,000 shares for issuance under the Plan.
Price. The option price shall not be less than one hundred percent (100%)
of the market value of the shares of Common Stock on the date of the
Compensation Committee's approval of the grant.
Duration and Exercise of Options. An option granted under the Plan must be
exercised by the optionee by the date specified by the Compensation Committee,
which shall be a maximum of ten years from the date of grant during employment
of the optionee, or in any event within three months after termination of
employment for any cause other than death or total or permanent disability. The
Compensation Committee may in its discretion provide that an option may not be
exercised in whole or in part for any period or periods of time specified by the
Compensation Committee. Except as otherwise provided, any option may be
exercised in whole or in part from time to time during its term. If an optionee
becomes totally and permanently disabled while in the employ of the Company, the
option granted such optionee may, but only within the year next succeeding such
death or disability, be exercised as and to the extent that the optionee was
entitled to exercise the option at the date of death or disability, and the
option period shall terminate at the end of the year next succeeding such event
or, if earlier, the expiration of the option. In addition, in the event a person
first becomes, after the date of adoption of the Plan, beneficial owner of more
than thirty percent (30%) of the Company's Common Stock otherwise than through a
transaction arranged with the prior approval of the Company's Board of
Directors, all options then outstanding may be exercised immediately.
Adjustments. The Compensation Committee may make appropriate adjustments in
the price of the shares and the number allotted or subject to allotment if there
is any change in the Common Stock as a result of a share dividend, share split,
recapitalization or otherwise.
Payment of Option Price. The option price shall be paid in cash or through
the delivery of previously owned shares of the Company's Common Stock or by a
combination of cash and Common Stock.
Amendment and Termination of Plan. The Board of Directors may from time to
time amend, suspend or discontinue the Plan; provided, however, that the Board
of Directors may not amend the Plan to increase the number of shares of Common
Stock on which options may be granted under the Plan, materially increase the
12
<PAGE> 15
benefits accruing to optionees under the Plan, or materially modify the
provision of the Plan relating to eligibility to be granted an option, without
further shareholder approval.
Tax Aspects. Options granted under the Plan are not incentive stock options
for federal income tax purposes. The holder of an option granted under the Plan
would not be subject to any tax with respect to the grant of the option, but the
holder will recognize taxable income upon the exercise of the option equal to
the excess of the fair market value of the stock at the time of exercise over
the option price. If the holder sells the stock after the exercise of the
option, the difference between the sale price and the exercise price will be
taxable as a capital gain.
Proposed Option Grants. The Compensation Committee has not granted any
options under the Plan.
On September 4, 1998, the market value of the Common Stock of the Company
was $12.50 per share.
The Board of Directors favors a vote FOR the proposal to approve the
Autocam Corporation 1998 Key Employee Stock Option Plan. Proxies solicited by
the Board of Directors will be so voted unless shareholders specify a different
choice in their proxies.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST WITH RESPECT TO THE
PLAN IS REQUIRED FOR ITS APPROVAL, PROVIDED THE TOTAL VOTE CAST ON THE PROPOSAL
REPRESENTS OVER 50% OF ALL SHARES ENTITLED TO VOTE THEREON.
13
<PAGE> 16
RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the public accounting
firm of Deloitte & Touche LLP to report on the Company's financial statements
for fiscal 1999, and the shareholders are being asked to ratify this selection.
Deloitte & Touche LLP has been the public accounting firm retained by the
Company since 1988. Deloitte & Touche LLP has indicated that a representative of
that firm will be present at the shareholders' meeting. Such representative
shall be given an opportunity to make a statement, if he or she so desires, and
it is expected that such representative will be available to respond to
appropriate questions presented at the meeting.
OTHER MATTERS
The Board of Directors knows of no other business to come before the
meeting. In the event that any other business not known or determined at this
time does come before the meeting, the persons named in the enclosed Proxy
intend to vote in accordance with their best judgment.
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and certain officers and persons who own ten percent (10%)
or more of the Company's common stock file with the SEC and the NASDAQ National
Market System initial reports of ownership and reports of changes in ownership
of Company Common Stock. These officers, directors and 10% shareholders are
required by SEC regulation to furnish the Company with copies of these reports.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended June 30, 1998, all Section
16(a) requirements applicable to its officers, directors and 10% beneficial
owners were complied with except that Mr. Bissell was late in filing his initial
required Form 4, reporting his purchase of 1,500 shares of Company Common Stock
in one transaction.
VOTING OF PROXIES
Proxies which are signed and returned will be voted for the nominees named
above to serve until the Annual Meeting of Shareholders in 2001 unless authority
to vote upon the election of directors is withheld. Proxies will be voted as
specified by the shareholder either for or against the proposal to approve the
Autocam Corporation 1998 Key Employee Stock Option Plan and ratification of the
selection of auditors. If no specification is given, Proxies will be voted for
approval of the Plan and for ratification of the selection of auditors.
Abstentions will be treated as shares present for determining a quorum but
unvoted for determining ratification of auditors.
SHAREHOLDERS' PROPOSALS
FOR FISCAL 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 1999
Annual Meeting must be received by the Company at 4070 East Paris Avenue,
Kentwood, Michigan 49512, no later than June 1, 1999, in order to be eligible
for inclusion in the Proxy Statement and form of Proxy relating to that meeting.
A shareholder who desires to submit any such proposal should refer to the
applicable rules and regulations of the Securities and Exchange Commission,
Washington, D.C. 20549.
14
<PAGE> 17
AVAILABILITY OF S.E.C. FORM 10-K
A copy of the Company's 10-K Annual Report, filed with the Securities and
Exchange Commission, is available without charge to shareholders by written
request to:
Warren A. Veltman
Autocam Corporation
4070 East Paris Avenue
Kentwood, Michigan 49512
15
<PAGE> 18
AUTOCAM CORPORATION
PROXY FOR ANNUAL MEETING OCTOBER 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints John C. Kennedy and
Warren A. Veltman and each or either of them, proxies with full power of
substitution, to vote all stock of Autocam Corporation, a Michigan corporation,
which the undersigned is entitled to vote at the Annual Meeting of the
Shareholders of the Company to be held at Rembrandt's At Bridgewater, 333 Bridge
Street, N.W., Grand Rapids, Michigan 49504, on Wednesday, October 28, 1998, at
4:00 p.m. and at any adjournment.
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) To vote for all nominees listed below
Robert L. Hooker
Warren A. Veltman
(Instruction: To withhold authority to vote for an individual nominee, write the nominee's name on the space provided below)
2. RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP [ ] FOR [ ] AGAINST [ ] ABSTAIN
AS AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR
ENDING JUNE 30, 1999.
3. APPROVAL OF THE AMENDED AUTOCAM CORPORATION [ ] FOR [ ] AGAINST [ ] ABSTAIN
1998 KEY EMPLOYEE STOCK OPTION PLAN.
IF YOU SIGN AND RETURN THIS PROXY, THE SHARES REPRESENTED HEREON WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF NOT OTHERWISE SPECIFIED,
THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS NOMINATED AND THE
RATIFICATION OF THE AUDITORS. THE PROXIES WILL VOTE IN ACCORDANCE WITH THEIR
BEST JUDGMENT ON ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
(Continued and to be signed on reverse side)
</TABLE>
<PAGE> 19
The undersigned hereby acknowledge receipt of the Annual Report of the
Company for its fiscal year ended June 30, 1998, and Notice of Annual Meeting of
Shareholders and Proxy Statement dated September 18, 1998.
Date Signed:
- -------------------- ---------------------- -----------------
Signature Signature
Please sign exactly as your name appears hereon. If stock is held jointly, each
holder should sign. When signing as attorney, executor, administrator, trustee,
guardian, corporate officer or in any other capacity, please state title in
full.
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY
<PAGE> 20
AUTOCAM CORPORATION
1998 KEY EMPLOYEE STOCK OPTION PLAN
ARTICLE I. - PURPOSE
The purpose of the Autocam Corporation 1998 Key Employee Stock Option Plan
(the "Plan") is to enable key employees of Autocam Corporation (the "Company")
to participate in the Company's future growth and profitability by offering them
long-term performance-based incentive compensation. The Plan also provides a
means through which the Company can attract and retain key employees.
ARTICLE II. - DEFINITIONS
2.1 The following terms have the meaning described below when used in
the Plan:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time.
(c) "Committee" shall mean the Stock Option Committee of the Board
of Directors.
(d) "Common Stock" shall mean the Common Stock no par value of the
Company.
(e) "Fair Market Value" shall mean as of any given date the closing
price of the Common Stock on the NASDAQ National Market System rounded, if
necessary, to the next full one cent, or if there is no such price published,
then on the most recent preceding date on which such prices are published.
(f) "Option" shall mean a stock option granted under Article VI.
(g) "Participant" shall mean an eligible employee who has been
granted an Option.
(h) "Subsidiary" shall mean a corporation a majority of the
outstanding voting capital stock of which is owned by the Company.
ARTICLE III. - ADMINISTRATION
3.1 Compensation Committee. (a) The Compensation Committee appointed by
the Board of Directors of the Company (the "Committee") shall administer the
Plan. The members of the Committee shall not be eligible to receive an Option
under the
<PAGE> 21
Plan. The Committee shall have full power and authority, subject to such orders
or resolutions not inconsistent with the provisions of the Plan as may from time
to time be issued or adopted by the Board of Directors, to grant to eligible
employees Options under Article VI of the Plan, to interpret the provisions of
the Plan and any agreements relating to Options granted under the Plan and to
supervise the administration of the Plan.
(b) Decisions of Committee. All decisions made by the Committee
pursuant to the provisions of the Plan and related resolutions of the Board of
Directors shall be final, conclusive and binding on all persons, including the
Company, its shareholders and employees, and beneficiaries of employees.
ARTICLE IV. - SHARES SUBJECT TO THE PLAN
4.1 (a) Number of Shares. Subject to adjustment as provided for in
Section 4.1(b), the maximum number of shares of Common Stock with respect to
which Options may be granted shall be 300,000 shares of Common Stock. Shares of
Common Stock shall be made available from the authorized but unissued shares of
the Company. If an Option granted under the Plan shall expire or terminate for
any reason, the shares subject to, but not delivered, under such Option shall be
available for other Options to be issued under the Plan.
(b) Adjustments. All as may be deemed appropriate by the Committee, the
aggregate number of shares of Common Stock which may be issued under the Plan,
the number of shares covered by each outstanding Option, and the price per share
in each Option, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a subdivision or consolidation of shares or any other capital adjustment, a
stock split, the payment of a stock dividend in excess of 5% per fiscal year of
the Company, or other increase or decrease in such shares effected without
receipt of consideration by the Company.
ARTICLE V. - ELIGIBILITY
5.1 The persons eligible to participate in the Plan and receive Options
under the Plan shall consist of officers and other key employees of the Company
and its subsidiaries, including directors who are full time employees, as
determined by the Committee.
ARTICLE VI. - STOCK OPTIONS
6.1 Grant of Options. Subject to the limitations of the Plan, the
Committee, after such consultation with and consideration of the recommendations
of management as the Committee considers desirable, shall select from eligible
employees Participants to be granted Options and determine the time when each
Option shall be granted and the number of shares subject to each Option. More
than one Option may be granted to the same person. Options granted under the
Plan are not intended to be qualified under Section 422 of the Internal Revenue
Code of 1986, as amended, or successor provisions thereto.
6.2 Option Agreements. Each Option under the Plan shall be evidenced by
an option agreement that shall be signed by an officer of the Company and the
2
<PAGE> 22
Participant and shall contain such provisions as may be approved by the
Committee. Any such option agreement may be amended from time to time as
approved by the Committee and the Participant, provided that the terms of such
option agreement after being amended conform to the terms of the Plan.
6.3 Option Price. The price at which shares may be purchased upon
exercise of an Option shall be not less than one hundred percent (100%) of the
Fair Market Value of such shares on the date such Option is granted.
6.4 Exercise of Options.
(a) The period during which each Option may be exercised shall be
fixed by the Committee at the time such Option is granted and shall not exceed
10 years.
(b) Subject to the terms and conditions of the option agreement and
unless cancelled prior to exercise, each Option shall be exercisable in whole or
in part in installments at such time or times as the Committee may prescribe and
specify in the applicable option agreement.
(c) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment shall be made in cash or, at the discretion of the
Committee, through the delivery of shares of Common Stock of the Company with a
value equal to the total option price or a combination of cash and shares. Any
shares so delivered shall be valued at their Fair Market Value on the exercise
date. No Participant shall be deemed to be a holder of any shares subject to any
Option prior to the issuance of such shares upon exercise of such Option.
6.5 Non-Transferability of Options. No Option or any rights with respect
thereto shall be subject to any debts or liabilities of a Participant, nor be
assignable or transferable except by Will or the laws of descent and
distribution, nor be exercisable during the Participant's lifetime other than by
the Participant, nor shall Common Stock be issued to or in the name of one other
than the Participant; provided, however, that an Option may after the death or
disability of a Participant be exercised pursuant to Section 6.6(b); and
provided further than any Common Stock issued to a Participant hereunder may at
the request of the Participant be issued in the names of the Participant and one
other person, as joint tenants with right of survivorship and not as tenants in
common, or in the name of a trust for the benefit of the Participant or for the
benefit of the Participant and others.
6.6 Death and Disability. Subject to the condition that no Option may be
exercised in whole or in part after the expiration of the option period
specified in the applicable option agreement:
(a) Except as hereinafter provided, an Option may be exercised by
the Participant only while such Participant is in the employ of the Company or a
subsidiary. In the event that the employment of a Participant to whom an Option
has been granted under the Plan shall terminate (except as set forth below) such
Option may be exercised, to the extent that the Option was exercisable on the
date of termination of employment, only until the earlier of three (3) months
after such termination or the original expiration date of the Option; provided,
however, that if termination of employment results from death or total and
permanent disability, such three (3) month period shall be extended to twelve
(12) months; and provided, further, that any Option held by a Participant whose
employment shall be terminated either (i) for cause as
3
<PAGE> 23
determined by the Committee or (ii) voluntarily by the Participant and without
the consent of the Company shall, to the extent not theretofore exercised,
forthwith terminate.
(b) In the event of the permanent disability of a Participant as
determined by the Committee, an Option which is otherwise exercisable may be
exercised by the Participant's legal representative or guardian. In the event of
the death of the Participant, an Option which is otherwise exercisable may be
exercised by the person or persons whom the Participant shall have designated in
writing on forms prescribed by and filed with the Committee ("Beneficiaries"),
or, if no such designation has been made, by the person or persons to whom the
Participant's rights shall have passed by Will or the laws of descent and
distribution, including a personal representative ("Successors"). The Committee
may require an indemnity and/or such evidence or other assurances as it may deem
necessary in connection with an exercise by a legal representative, guardian,
Beneficiary or Successor.
ARTICLE VII. - GENERAL PROVISIONS
7.1 Change in Control.
(a) In the case of a Change in Control (as defined below) of the
Company, unless the Committee determines otherwise, each Option then outstanding
shall immediately become exercisable in full.
(b) Any determination by the Committee made pursuant to this Section
may be made as to all outstanding Options or only as to certain Options
specified by the Committee and any such determinations shall be made in cases
covered by subparagraphs 7.1(c)(i) and (ii) below prior to or as soon as
practicable after the occurrence of such event and in the cases covered by
subparagraphs 7.1(c)(iii) or (iv) prior to the occurrence of such event.
(c) A Change in Control shall occur if:
(i) Any "person" or "group of persons" as such terms are
defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") directly or indirectly purchases or otherwise becomes the
"beneficial owner" (as defined in the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is exercised immediately,
with the passage of time or subject to any condition) of voting securities
representing thirty percent (30%) or more of the combined voting power of all
outstanding voting securities of the Company,
(ii) The shareholders of the Company shall approve an
agreement to merge or consolidate the Company with or into another corporation
as a result of which less than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting entity are or are to be owned by the
former shareholders of the Company, or
(iii) The shareholders of the Company shall approve the sale
of all or substantially all of the Company's business and/or assets to a person
or entity that is not a wholly-owned subsidiary of the Company.
7.2 No Right of Continued Employment. Neither the establishment of the
Plan, the granting of Options or the payment of any benefits hereunder or any
action of
4
<PAGE> 24
the Company or of the Board of Directors or of the Committee shall be held or
construed to confer upon any person any legal right to be continued in the
employ of the Company or its subsidiaries, each of which expressly reserves the
right to discharge any employee whenever the interest of any such company in its
sole discretion may so require without liability to such company, the Board of
Directors or the Committee except as to any rights that may be expressly
conferred upon such employee under the Plan.
7.3 No Segregation of Cash or Shares. The Company shall not be required to
segregate any shares of Common Stock that may at any time be represented by
Options, and the Plan shall constitute an "unfunded" plan of the Company. No
employee shall have rights with respect to shares of Common Stock prior to the
delivery of such shares. The Company shall not, by any provisions of the Plan,
be deemed to be a trustee of any Common Stock or any other property and the
liabilities of the Company to any employee pursuant to the Plan shall be those
of a debtor pursuant to such contract obligations as are created by or pursuant
to the Plan, and the rights of any employee, former employee or beneficiary
under the Plan shall be limited to those of a general creditor of the Company.
7.4 Delivery of Shares. No shares shall be delivered pursuant to any
exercise of an Option under the Plan unless the requirements of such laws and
regulations as may be deemed by the Committee to be applicable thereto are
satisfied. All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
7.5 Governing Law. The Plan and all determinations made and action taken
pursuant thereto shall be governed by the laws of the State of Michigan and
construed in accordance therewith.
7.6 Payments and Tax Withholding. The delivery of any shares of Common
Stock under the Plan shall be for the account of the Company and any such
delivery or distribution shall not be made until the recipient shall have made
satisfactory arrangements for the payment of any applicable withholding taxes.
ARTICLE VIII. - AMENDMENT AND TERMINATION
8.1 Amendment or Termination. The Board of Directors may amend or
terminate the Plan provided, however, that no such amendment or termination
shall adversely affect any Option then in effect unless the prior approval of
the Participant so affected is obtained and provided further that any amendment
to the Plan shall be subject to shareholder approval to the extent necessary to
satisfy the requirements of Section 16 under the Securities Exchange Act of
1934.
ARTICLE IX. - EFFECTIVENESS OF PLAN
9.1 The Plan was adopted by the Board of Directors on September 14, 1998,
subject to the approval by the shareholders of the Company.
5
<PAGE> 25
ARTICLE X. - SEVERABILITY
10.1 If any provision of the Plan, or any term or condition of any Option
granted thereunder, is invalid, such provision, term, condition or application
shall to that extent be void (or, in the discretion of the Board of Directors,
such provision, term or condition may be amended so as to avoid such invalidity
or failure), and shall not affect other provisions, terms or conditions or
applications thereof, and to this extent such provisions, terms and conditions
are severable.
6
