<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, Use of the Commission Only (as permitted by Rule
14a-6(e)(2))Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DAW TECHNOLOGIES, INC.
----------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
DAW TECHNOLOGIES, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 30, 1999
---------------------------------
To the Shareholders of DAW TECHNOLOGIES, INC.:
The Annual Meeting of Shareholders of Daw Technologies, Inc. (the
"Company") will be held at the corporate offices of the Company, 2700 South
900 West, Salt Lake City, Utah, on Friday, July 30, 1999, at 2:00 p.m. The
purpose of the Annual Meeting is to consider and vote upon the following
matters, as more fully described in the accompanying Proxy Statement:
(1) To elect six members of the Board of Directors, each to serve until
the next annual meeting of shareholders and until their respective
successors have been duly elected and qualified.
(2) To consider and act upon approval of the Daw Technologies, Inc. 1999
Omnibus Stock Incentive Plan.
(3) To ratify the appointment of Grant Thornton LLP as independent public
accountants for the year ending December 31, 1999.
(4) To consider such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on June 25, 1999 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
DATED: June 29, 1999 RONALD W. DAW
Chairman of the Board
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE DATE, FILL IN, SIGN AND
MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. YOUR PROXY
WILL NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE
YOUR SHARES PERSONALLY.
<PAGE>
DAW TECHNOLOGIES, INC.
2700 South 900 West
Salt Lake City, Utah 84119
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
JULY 30, 1999
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of Daw
Technologies, Inc., a Utah corporation (the "Company"), in connection with
the solicitation by the Board of Directors of the Company of proxies from
holders of outstanding shares of the Company's Common Stock, $0.01 par value
(the "Common Stock"), for use at the Annual Meeting of Shareholders of the
Company to be held Friday, July 30, 1999, and at any adjournment or
postponement thereof (the "Annual Meeting"). This Proxy Statement, the Notice
of Annual Meeting of Shareholders and the accompanying form of proxy are
first being mailed to shareholders of the Company on or about July 6, 1999.
The Company will bear all costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and
mailing to shareholders this Proxy Statement and accompanying material. In
addition to the solicitation of proxies by use of the mails, the directors,
officers and employees of the Company, without receiving additional
compensation therefor, may solicit proxies personally or by telephone or
telegram. Arrangements will be made with brokerage firms and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of the shares of Common Stock held by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by
them in connection therewith.
VOTING
RECORD DATE
The Board of Directors has fixed the close of business on June 25, 1999
as the record date (the "Record Date") for determination of shareholders
entitled to notice of and to vote at the Annual Meeting. As of the Record
Date, there were issued and outstanding 12,513,114 shares of Common Stock.
The holders of record of the shares of Common Stock on the Record Date
entitled to be voted at the Annual Meeting are entitled to cast one vote per
share on each matter submitted to a vote at the Annual Meeting.
PROXIES
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted
in accordance with the instructions indicated on such proxies. If no
instructions are indicated, such shares will be voted FOR the election of
each of the five director nominees; FOR approval of the 1999 Omnibus Stock
Incentive Plan ("Incentive Plan"); FOR the ratification of the appointment by
the Board of Directors of Grant Thornton LLP, as independent public
accountants of the Company for the year ending
1
<PAGE>
December 31, 1999; and, in the discretion of the proxy holder, as to any
other matters which may properly come before the Annual Meeting. A
shareholder who has executed and returned a proxy may revoke it at any time
prior to its exercise at the Annual Meeting by executing and returning a
proxy bearing a later date, by filing with the Secretary of the Company, at
the address set forth above, a written notice of revocation bearing a later
date than the proxy being revoked, or by voting the Common Stock covered
thereby in person at the Annual Meeting.
VOTE REQUIRED
The presence of a majority of the issued and outstanding shares of
Common Stock entitled to vote, represented in person or by properly executed
proxy, is required for a quorum at the Annual Meeting. Abstentions and broker
non-votes, which are indications by a broker that it does not have
discretionary authority to vote on a particular matter, will be counted as
"represented" for the purpose of determining the presence or the absence of a
quorum. Under Utah corporate law, once a quorum is established, shareholder
approval with respect to a particular proposal is generally obtained when the
votes cast in favor of the proposal exceed the votes cast against such
proposal.
In the election of directors, shareholders will not be allowed to
cumulate their votes. The six nominees receiving the highest number of votes
will be elected. The approval of the Incentive Plan, the ratification of the
selection of an independent auditor and any other matter presented for
approval by the shareholders will be approved, in accordance with Utah law,
if the votes cast in favor of a matter exceed the votes cast opposing such
matter. Accordingly, abstentions and broker non-votes will not affect the
outcome of the election of directors, the approval of the Incentive Plan, or
the ratification of the selection of the independent public accountants.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, a board of six directors will be elected to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified. Each of the nominees for director identified
below is currently a director of the Company.
Shareholders do not have cumulative voting rights in the election of
directors (each shareholder is entitled to vote one vote for each share held
for each director). Unless authority is withheld, it is the intention of the
persons named in the enclosed form of proxy to vote "FOR" the election of
each of the persons identified as nominees for directors below. If the
candidacy of any one or more of such nominees should, for any reason, be
withdrawn, the proxies will be voted "FOR" such other person or persons, if
any, as may be designated by the Board of Directors. The Board has no reason
to believe that any nominee herein named will be unable or unwilling to serve.
NOMINEES FOR ELECTION AS DIRECTORS
The following sets forth information about each nominee for election as
a director:
CHARLES L. BATES, 74, has been a director of the Company since October
1992, and prior thereto was a director of Daw Technologies Incorporated
("DTI"), the Company's predecessor, from 1990. Mr. Bates founded Valtek, a
Utah based company that manufactures automatic control valves, and served as
its Chairman from 1987 to 1993 and as its Chief Executive Officer from 1966
until 1987. Mr. Bates has a Bachelor of Science degree in Mechanical
Engineering from Northeastern University.
ROBERT G. CHAMBERLAIN, 58, has been a director of the Company since
1991. He is currently the President and Chief Executive Officer of
Micromonitors, Inc., an instrumentation company. From April 1993 to December
1995, Mr. Chamberlain was Vice President and Manager of Operations in the
semiconductor equipment group for Watkins-Johnson Company. From July 1991 to
March 1992, he was the President of Insystems, a wafer inspection equipment
company. Mr. Chamberlain has twenty-five years of sales and marketing
management experience in the semiconductor component and semiconductor
equipment fields, including fifteen years of international management. Mr.
Chamberlain holds a Masters of Business Administration degree from Stanford
University and a Bachelor of Science degree in Engineering from Princeton
University.
2
<PAGE>
RONALD W. DAW, 47, is the Chairman of the Board, President and Chief
Executive Officer of the Company and has served in this capacity since
October 13, 1992. Prior thereto, he was the Chairman and Chief Executive
Officer of DTI from its inception in 1987. From 1984 to 1988, Mr. Daw was the
President of Daw Incorporated, an interior finish construction company. Since
1984, Mr. Daw has had broad experience in the cleanroom business. Mr. Daw is
currently a member of the Board of Trustees of Westminster College in Salt
Lake City and serves on the National Business Advisory Board for the David
Eccles School of Business at the University of Utah. Mr. Daw received his
Bachelor of Science degree in Accounting from the University of Utah.
ROBERT J. FRANKENBERG, 52, has been a director of the Company since
October 1996. He currently serves as President and CEO of Encanto Networks,
Inc., a company that develops, manufactures and installs internet products
and services. Mr. Frankenberg serves as a member of the Board of Directors
for ElectroGlas, Inc., Caere Corporation, Wall Data, Inc. and Secure
Computing, Inc. From April 1994 to August 1996, Mr. Frankenberg was CEO and
President of Novell, Inc., a software company. Mr. Frankenberg also served as
Chairman of Novell from August 1994 to August 1996. Prior to joining Novell,
Inc., he was Vice President and General Manager of the Personal Information
Products Group at Hewlett Packard (HP) from 1990 to 1994. He has broad
experience in the high tech industry, with specific knowledge of the
semiconductor sector. Mr. Frankenberg is a former member of the San Jose
State School of Engineering Advisory Board, where he earned a Bachelor's
degree in Computer Engineering, and is a SEP graduate of Stanford's Graduate
School of Business.
VIRGINIA GORE GIOVALE, 55, has been nominated for election as a director
of the Company. Ms. Giovale currently serves as a member of the Board of
Directors and the Compensation Committee of W.L. Gore and Assoc., Inc., a
privately-held company that develops and manufactures products for the
medical, fabric and electronic industries under the Gortex-Registered
Trademark- brand name. Ms. Giovale has served as a member of the Board of
Trustees of Westminster College, a private liberal arts college located in
Salt Lake City, Utah, since 1977 and has served as Chair of that Board since
1989. Ms. Giovale has also served as Co-Chair of the Flagstaff Community
Foundation since 1995 and as a Board Member of the Arizona Community
Foundation since 1996. Ms. Giovale received her Bachelor of Science degree in
mathematics from Westminster College.
JAMES S. JARDINE, 52, has been a director of the Company since October
1996. Mr. Jardine has been a practicing attorney for the law firm of Ray,
Quinney & Nebeker since 1975, and currently serves as its Managing Director.
He is presently Chairman of the Board of Trustees of the University of Utah
and a member of the Board of Directors of ZCMI, where he serves on the
Board's Executive Committee. He is also outside General Counsel to the Salt
Lake Olympic Committee for the Winter Olympic Games of 2002. Mr. Jardine
earned his Juris Doctor from Harvard Law School and his Bachelor of Arts from
the University of Utah.
BOARD AND COMMITTEE MEETINGS; LEGAL PROCEEDINGS
During the year ended December 31, 1998, the Board of Directors held
four meetings. Each member attended at least 75% of all board meetings and
applicable committee meetings held during the period he was a director of the
Company.
The Board of Directors has a Compensation Committee that is responsible
for determining and approving the compensation of the Company's officers,
reviewing matters pertaining to the compensation of the Company's employees,
and administering the Company's Option Plans. The current members of the
Compensation Committee are Robert G. Chamberlain and Robert J. Frankenberg.
The Compensation Committee met once during 1998. The Board of Directors has
an Audit Committee that is responsible for determining the adequacy of the
Company's internal accounting and financial controls, reviewing the auditor
reports and recommendations and interviewing and making recommendations to
the Board of Directors for the selection of the Company's independent public
accountants. The current members of the Audit Committee are Charles L. Bates
and James S. Jardine. The Audit Committee met once during 1998. The Board of
Directors does not have a Nominating Committee.
On April 4, 1997, the Securities and Exchange Commission issued a Cease
and Desist Order against Ronald W. Daw, a director and the Chief Executive
Officer of the Company, ordering him to cease and desist from committing or
causing any violation of, and committing or causing any future violation of,
Sections 13(g) and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, 16a-2
and 16a-3 promulgated thereunder.
3
<PAGE>
EXECUTIVE OFFICERS
In addition to Ronald W. Daw, certain information is furnished with
respect to the following executive officers of the Company:
MICHAEL J. SCHIFSKY, 38, joined the Company October 1, 1998 as Senior
Vice President and Chief Financial Officer. Prior to joining the Company, Mr.
Schifsky served from 1994 to 1998 as the Chief Financial Officer of Thatcher
Company, a national chemical manufacturing and distribution company. From
1988 to 1994, Mr. Schifsky was employed by Airgas, Inc., a large
international industrial gas company where he held several positions in the
Corporate Finance Department and ultimately became a division president. From
1984 to 1988, Mr. Schifsky was with Ernst & Young, an international
accounting firm. Mr. Schifsky is a licensed Certified Public Accountant and
holds a Bachelor of Science Degree in Accounting from Villanova University.
DAVID R. GROW, 42, is currently Executive Vice President of the Company,
with primary responsibility for the Company's Transportation Systems
Division. During 1995 to October 1998, he served as Chief Operating Officer,
Executive Vice President, Chief Financial Officer and Corporate Secretary.
From 1992 through September 1995, Mr. Grow was employed at WordPerfect
Corporation, a software company, which was acquired by Novell, Inc., a
software company, in 1994. Prior to the acquisition, Mr. Grow was the
corporate controller of WordPerfect. Subsequent to the acquisition, he served
as the senior director of administration for the Novell Applications Group.
His experience also includes ten years with Price Waterhouse, a national
accounting firm. Mr. Grow is a licensed Certified Public Accountant and holds
a Bachelor of Science degree in Accounting from the University of Utah.
STEVEN R. BURT, 44, has been the Senior Vice President of Field
Operations for the Company since December 1995. From June 1994 to December
1995, he was Vice President of Sales and Marketing for the Company. From 1993
to June 1994 he was Vice President of International Operations for the
Company. From 1992 until 1993 he was Vice President of Asian/Pacific Rim
Operations for the Company and from 1991 to 1992, he served in this capacity
for DTI. Mr. Burt was also the Vice President of Design/Engineering/Testing
for DTI from 1988 to 1991. His previous experience includes project architect
for FFKR Architects/Planners and Director of Architecture for DMJM
Engineers/Architects in Salt Lake City, Utah. Mr. Burt holds a Bachelor of
Science degree in Economics and a Masters of Architecture degree from the
University of Utah.
MICHAEL J. SHEA, 38, rejoined Daw Technologies in August of 1997 as
Senior Vice President of Marketing & Sales. Mr. Shea was previously with the
Company from 1987 to 1992. Prior to his appointment, he most recently, 1995
to 1997, served as President of Scientific Air Systems (SAS), a Portland,
Oregon based manufacturer of cleanroom entry systems, fixtures and
accessories. From 1992 to 1995, Mr. Shea was Senior Vice President, Marketing
& Sales for Numa Technologies, a start-up company specializing in the
fabrication and manufacturing of aluminum raised access flooring systems. Mr.
Shea began his career in the cleanroom industry in 1979 with Liebert White
Cube, Inc., a California based company which designed, manufactured and
constructed turnkey cleanrooms, an early prototype of Daw Technologies. He
left Liebert White Cube in 1985 to join Mechanical Planning, Inc., a San
Jose, California based mechanical HVAC consulting and engineering firm. He
served as Director of Business Development promoting engineering services to
architects and end users in the Silicon Valley.
4
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the other
executive officers of the Company whose annual salary and bonus exceeded
$100,000 (collectively the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(4)
------------------- -----------------------------
OPTIONS
NAME AND POSITION YEAR SALARY BONUS Granted(3)
- -------------------------- ------ -------- ------- -----------------------------
<S> <C> <C> <C> <C> <C>
Ronald W. Daw 1998 $215,000 $ 0 $ 30,000 $ 9,432
Chief Executive Officer 1997 215,000 0 0 10,396
and President 1996 215,000 0 30,000 9,911
David R. Grow 1998 166,154 0 20,000 9,368
Executive Vice 1997 150,769 0 0 7,807
President 1996 140,000 0 40,000 6,054
Steven R. Burt 1998 140,000 0 10,000 8,731
Senior Vice President 1997 140,000 0 10,000 8,355
of Field Operations 1996 142,500 2,059 6,500 7,930
Michael J. Shea(1) 1998 130,000 0 10,000 4,954
Senior Vice President 1997 51,951 0 20,000 3,664
of Sales & Marketing
William J. Sawaya(2) 1998 126,879 0 10,000 2,600
Senior Vice President 1997 140,000 0 0 3,186
Manufacturing and 1996 140,000 0 35,000 0
Products
</TABLE>
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(1) Mr. Shea commenced his employment with the Company in August 1997.
(2) Mr. Sawaya terminated his employment with the Company on December 29, 1998.
(3) Includes shares subject to options which were repriced in February 1998.
See "--Ten-Year Option Repricing."
(4) Consists of matching contributions to the Company's 401(k) Plan and health
insurance premiums paid to or on behalf of the named executive officers.
For the year ended December 31, 1998, such amounts were as follows: Ronald
W. Daw, $4,928 matching contributions and $4,504 insurance premiums; David
R. Grow, $5,014 matching contributions and $4,354 insurance premiums;
Steven R. Burt, $4,377 matching contributions and $4,354 insurance
premiums; Michael J. Shea, $600 matching contributions and $4,354 insurance
premiums; and William J. Sawaya, $2,600 matching contributions.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth individual grants of stock options
made to the Named Executive Officers during the year ended December 31, 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- ----------------------- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw ........ 30,000 10.7% $ 2.66 05/27/08 $ 50,186 $127,181
David R. Grow ........ 20,000 7.1% 2.66 05/27/08 33,457 84,787
Steven R. Burt ....... 10,000 3.6% 2.66 05/27/08 16,729 42,394
Michael J. Shea ...... 10,000 3.6% 2.66 05/27/08 16,729 42,394
William J. Sawaya .... 10,000 3.6% 2.66 05/27/08 16,729 42,394
</TABLE>
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(1) Consists of non-qualified options granted under the Company's 1993 Stock
Option Plan. Fifty percent of the options become exercisable one year from
the date of grant and the remaining 50% become exercisable two years from
the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1998 None of the Named Executive Officers exercised
options during the year ended December 31, 1998.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(1)
-------------- -------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------- -------------- -------------
<S> <C> <C>
Ronald W. Daw............................... 115,000/30,000 $0/$0
David R. Grow............................... 60,000/20,000 $0/$0
Steven R. Burt.............................. 45,000/15,000 $0/$0
Michael J. Shea............................. 10,000/20,000 $0/$0
William J. Sawaya........................... 35,000/10,000 $0/$0
</TABLE>
- ---------------------------
(1) Calculated based on the difference between the exercise price and the price
of a share of the Common Stock on December 31, 1998. As of December 31,
1998, the exercise prices of each of the options held by the Named
Executive Officers exceeded the price of a share of the Common Stock
($1.125).
6
<PAGE>
TEN-YEAR OPTION REPRICINGS
The following table sets forth information with respect to the repricing
of outstanding stock options that was effected on October 24, 1996 and on
February 24, 1998. See "--Report of the Compensation Committee--Repricing of
Options."
<TABLE>
<CAPTION>
NUMBER LENGTH OF
OF ORIGINAL
SECURITIES MARKET EXERCISE OPTION TERM
UNDERLYING PRICE OF PRICE AT REMAINING AT
OPTIONS/SARS STOCK AT TIME OF DATE
REPRICED TIME OF REPRICING NEW OF REPRICING
OR REPRICING OR OR EXERCISE OR
NAME DATE AMENDED AMENDMENTS AMENDMENT PRICE AMENDMENT
- ------------------------ ------------- ------------ --------------- -------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw 10/24/96 30,000 $3.50 $3.56 $3.50 85
President and Chief 10/24/96 30,000 3.50 5.75 3.50 97
Executive Officer 10/24/96 25,000 3.50 6.63 3.50 109
02/24/98(1) 30,000 1.40 3.50 1.40 69
02/24/98(1) 30,000 1.40 3.50 1.40 81
02/24/98(1) 25,000 1.40 3.50 1.40 93
02/24/98 30,000 1.40 3.50 1.40 104
David R. Grow 10/24/96 20,000 3.50 7.38 3.50 107
Executive Vice 10/24/96 20,000 3.50 4.68 3.50 113
President 02/24/98(1) 20,000 1.40 3.50 1.40 91
02/24/98(1) 20,000 1.40 3.50 1.40 97
02/24/98 20,000 1.40 3.50 1.40 104
Steven R. Burt 10/24/96 10,000 3.50 5.75 3.50 97
Senior Vice 10/24/96 3,500 3.50 6.25 3.50 108
President 10/24/96 15,000 3.50 6.63 3.50 109
of Field Operations 10/24/96 6,500 3.50 4.68 3.50 113
02/24/98(1) 10,000 1.40 3.50 1.40 81
02/24/98(1) 3,500 1.40 3.50 1.40 92
02/24/98(1) 15,000 1.40 3.50 1.40 93
02/24/98(1) 6,500 1.40 3.50 1.40 97
02/24/98 10,000 1.40 3.00 1.40 108
Michael J. Shea 10/24/96 20,000 3.50 -- 3.50 106
Senior Vice President 02/24/98(1) 20,000 1.40 3.50 1.40 90
of Sales and Marketing
William J. Sawaya 10/24/96 20,000 3.50 5.88 3.50 111
Senior Vice 02/24/98(1) 20,000 1.40 3.50 1.40 95
President 02/24/98 15,000 1.40 3.50 1.40 104
of Manufacturing
and Products
</TABLE>
- ---------------------------
(1) Reflects options previously repriced on October 24, 1996 which were
repriced again on February 24, 1998.
COMPENSATION COMMITTEE INTERLOCKS
Robert G. Chamberlain and Robert J. Frankenberg served on the
Compensation Committee during the year ended December 31, 1998.
DIRECTOR'S COMPENSATION
The Company's non-employee directors are paid $1,000 for each meeting of
the Board of Directors (or committee thereof) attended in person, $400 for
each meeting of the Board of Directors at which such director participates by
telephone, and $300 for each meeting of a committee of the Board of Directors
at which such director participates by telephone. All of the directors are
reimbursed for their expenses for each Board and committee meeting attended.
In addition, each non-employee director of the Company receives annually
options to purchase 5,000 shares of Common Stock.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT INCORPORATE BY
REFERENCE, IN WHOLE OR IN PART, SUBSEQUENT FILINGS INCLUDING, WITHOUT
LIMITATION, THIS PROXY STATEMENT, THE FOLLOWING REPORT OF THE COMPENSATION
COMMITTEE AND THE PERFORMANCE GRAPH SET FORTH ON PAGE 11 HEREOF SHALL NOT BE
DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Securities and Exchange Commission's ("SEC") rules addressing
disclosure of executive compensation in proxy statements require a report
from the Compensation Committee of the Board of Directors (the "Committee")
addressing, with respect to the most recently completed fiscal year, (a) the
Company's policies regarding executive compensation generally, (b) the
factors and criteria considered in setting the compensation of the Company's
Chief Executive Officer, Ronald W. Daw, and (c) any relationship between such
compensation and the Company's performance.
COMPENSATION COMMITTEE
This report was prepared by the Committee, which is composed of
independent directors who are not employees of the Company. The current
members of the Committee are Robert G. Chamberlain and Robert J. Frankenberg.
The Committee has the responsibility for (i) reviewing, developing and
establishing the Company's executive compensation policies, (ii) all
compensation matters for the Company's executive officers, including
reviewing and establishing the amount and type of compensation provided to
the Company's Chief Executive Officer, and (iii) administering the Company's
option plans.
COMPENSATION OBJECTIVES AND POLICIES
In determining the amount and composition of compensation for the Company's
executive officers and in administering the option plans, the Committee is
guided by the following fundamental objectives and philosophies:
- Providing a competitive compensation package which will allow the
Company to attract and retain qualified and outstanding executive
officers.
- Providing a compensation package that is based on the performance of
the Company as well as the individual contributions of the Company's
executive officers.
- Ensuring that a portion of an executive officer's compensation is
variable and at risk, to be earned only if the Company and the
executive officer meet projected performance levels.
- Facilitating the acquisition of Common Stock by the executive officers
through the granting of stock options in order to align the interests
of stockholders and the executive officers.
COMPENSATION COMPONENTS
The Company's compensation to its executive officers consists of three
major components: (i) base salary; (ii) short-term cash incentive awards; and
(iii) long-term incentive awards in the form of stock options.
BASE SALARY. The Committee establishes base salary based primarily on
its subjective judgment taking into consideration both qualitative and
quantitative factors. Among the factors considered by the Committee are: (i)
salaries provided by other companies in the industry and companies of a
comparable size to the Company located in the geographic area where the
Company's headquarters are located as determined by the Committee based on
its review of available industry and geographic compensation surveys; (ii)
the qualifications and performance of each executive officer; (iii) the
financial performance of the Company as measured by such factors as revenue
growth, market share growth and earnings per share; and (iv) for officers
other than the Chief Executive Officer, the recommendations of the Chief
Executive Officer as to salary levels. The Committee does not assign any
specific weights to these factors in determining salaries, but it does place
a greater emphasis on the salaries provided by other companies in order to
ensure that the salaries provided by the Company are competitive and enable
the Company to attract and retain qualified and outstanding executive
officers.
8
<PAGE>
CASH INCENTIVE AWARDS. The Company also provides its executive officers
with the opportunity to earn short-term cash incentive awards. Under this
program, the Committee established a targeted level of Company performance
for the year as measured by earnings per share. In addition, certain
performance goals for each of the Company's executive officers were
established at the beginning of the year. A bonus range was then established,
with the actual amount of the bonus being determined by the extent to which
the targeted earnings per share and performance goals had been met or
exceeded. The Committee also has the right to adjust the bonuses levels at
the end of the year based on its subjective determination as to the
individual performance of each of the executive officers. The performance
goals for the executive officers, other than the Chief Executive Officer, are
proposed by the Chief Executive Officer and reviewed and approved or adjusted
by the Committee. The Committee is responsible for establishing the
performance goals for the Chief Executive Officer of the Company. No
executive bonuses were paid in 1998.
STOCK OPTIONS. The Committee believes it is essential for all executive
officers to receive stock options, thereby aligning the long-term interests
of executive officers with those of the shareholders. The Committee awards
stock options each year to the executive officers based on a subjective
determination by the Committee concerning the position of the executive
officer, the value of the executive officer's contributions to the
performance of the Company, and the responsibilities associated with the
executive officer's position. The Committee believes that the grant of
options to executive officers is an important component of the Company's
compensation package because it provides an incentive for executive officers
to maximize the growth and profitability of the Company in order to increase
their compensation, and provides an incentive for officers to continue their
employment with the Company.
CHIEF EXECUTIVE COMPENSATION FOR 1998
Based upon the Committee's subjective review of chief executive
officers' salaries in the industry and in the intermountain region, the
Company's financial performance in 1998, as measured by earnings per share,
revenue growth and market share growth, and the individual performance of
Ronald W. Daw, the Committee maintained Mr. Daw's base salary at $215,000 in
1998. Based on the actual performance of the Company for 1998 compared to the
targeted level of performance under the cash incentive program, no bonus was
awarded to Mr. Daw in 1998 under the Company's cash incentive program. The
Committee granted 30,000 stock options to Mr. Daw in 1998. The number of
stock options granted to Mr. Daw is lower than the Committee would normally
grant to a Chief Executive Officer because the Committee believes Mr. Daw
already has a significant ownership position in the Company which aligns his
interests with the long-term interests of the Company's shareholders.
REPRICING OF OPTIONS
In February 1998, the Committee reviewed the status of outstanding
stock options under the Company's 1993 Stock Option Plan which had been
granted to directors, executive officers and key employees. Notwithstanding
the repricing of some of these options in October 1996, the Committee
determined that with the continued industry downturn and decline in the
market value of the Common Stock, outstanding options were not providing any
meaningful incentive to their holders. The Committee also considered the
significant efforts of option holders to continue the operations of the
Company during a very difficult period and that the executive officers and
key employees possess unique experiences and skills that are critical to the
Company's future success such that their retention, through ownership of
options which represent a meaningful inducement to continue their employment,
was determined to be in the best interest of the Company.
Accordingly, on February 24, 1998, all options with an exercise price
greater than $1.40 were repriced to $1.40, which was the market price of the
Common Stock on that date and vesting was increased by one year for all
options repriced. The table below sets forth information with respect to
repricing of options granted to the executive officers of the Company in
October 1996 and February 1998.
COMPENSATION COMMITTEE
Robert G. Chamberlain
Robert J. Frankenberg
9
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative shareholder return
on Daw Technologies, Inc.'s Common Stock against the cumulative total return
on the CRSP Index for NASDAQ Stock Market (US Companies) and the CRSP Index
for Nasdaq Stocks (SIC 3550-3559 US Companies) (an index composed of
companies in the special industry machinery, except metalworking machinery,
standard industrial classification) for the periods indicated. The graph
assumes an initial investment of $100.00 with dividends reinvested over the
periods indicated.
[GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SYMBOL INDEX DESCRIPTION 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
________ Daw Technologies, Inc. $144 $144 $ 69 $ 45 $ 28
- -------------------------------------------------------------------------------------------------------------------------
-- -- -- CRSP Index for Nasdaq Stock Market $113 $172 $162 $196 $204
(US Companies)
- -------------------------------------------------------------------------------------------------------------------------
........ CRSP Index for Nasdaq Stocks $ 98 $138 $170 $208 $294
(SIC 3550-3559 US Companies)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
A. The lines represent quarterly index levels derived from compounded daily
returns that include all dividends.
B. If the quarterly interval is not a trading day, the preceding trading day
is used.
C. The index level for all series was set to 100.0 on December 30, 1993.
D. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 25, 1999, information with
respect to the Common Stock owned beneficially by each director or nominee
for director, by the Named Executive Officers, by all officers and directors
as a group and by each person known by the Company to be a beneficial owner
of more than 5% of the outstanding Common Stock of the Company. Except as
otherwise indicated below, each person named has sole voting and investment
power with respect to the shares indicated.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENTAGE
BENEFICIAL OF
NAME OF BENEFICIAL OWNERS OWNERSHIP CLASS(1)
- ------------------------------------------ ------------------------- ---------------
<S> <C> <C>
J. Weston Daw(2) 2,214,643(3) 17.2%
Beverly Daw
2700 South 900 West
Salt Lake City, Utah 84119
Ronald W. Daw(2) 2,031,699(4) 15.7%
Tracey Daw
2700 South 900 West
Salt Lake City, Utah 84119
Dimensional Fund Advisors Inc. 647,900 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
David R. Grow 92,137(5) **
Steven R. Burt 62,178(6) **
Dr. William J. Sawaya, Jr 46,611(7) **
Michael J. Shea 30,000(8) **
Robert G. Chamberlain 25,000(9) **
Charles L. Bates, Jr 20,000(10) **
James S. Jardine 10,000(11) **
Robert J. Frankenberg 10,000(12) **
All Officers and Directors 2,281,014(13) 17.7%
as a Group (9 Persons)
- ---------------
</TABLE>
** Less than 1%.
(1) Based on 12,513,114 shares of Common Stock outstanding as of June 25, 1999.
(2) Ronald W. Daw is the son of J. Weston Daw.
(3) Includes 5,000 shares underlying presently exercisable options
(4) Includes 1,211,499 shares owned jointly by Ronald and Tracey Daw, 219,300
shares owned by the Ronald Daw Family Limited Partnership, 455,200 shares
held by Ronald Daw, 100 shares held by Tracey Daw, 600 shares held by
trusts for the benefit of Mr. Daw's children, and 145,000 shares underlying
presently exercisable options.
(5) Includes 12,137 shares held by David R. Grow and Morgan Grow and 80,000
shares underlying presently exercisable options.
(6) Includes 2,178 shares held in the names of Steven R. Burt and Janet Burt
and 60,000 shares underlying presently exercisable options.
(7) Includes 20,000 shares underlying presently exercisable options.
(8) Includes 30,000 shares underlying presently exercisable options.
(9) Includes 20,000 shares underlying presently exercisable options.
(10) Includes 20,000 shares underlying presently exercisable options.
(11) Includes 10,000 shares underlying presently exercisable options.
(12) Includes 10,000 shares underlying presently exercisable options.
(13) Includes 375,000 shares underlying presently exercisable options.
11
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers and directors are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company and written representations from the Company's
executive officers and directors, no late reports were filed.
RELATED PARTY TRANSACTIONS
James S. Jardine is a practicing attorney and Managing Director of the
law firm of Ray, Quinney & Nebeker which provides legal services to the
Company.
In the regular course of its business, the Company periodically engages
in constructed-related transactions with Daw Incorporated, an interior finish
construction company of which Ronald W. Daw, the Chief Executive Officer of
the Company, is an officer and principal shareholder. These transactions
include the Company's purchase of construction-related supplies and equipment
and the Company's engagement of Daw Incorporated to perform construction
services. The total amount paid by the Company to Daw Incorporated during the
year ended December 31, 1998 was approximately $400,000. Management believes
the terms of its transactions with Daw Incorporated have been at least as
favorable as could be obtained from unaffiliated third parties.
PROPOSAL NO. 2 -- APPROVAL OF
1999 OMNIBUS STOCK INCENTIVE PLAN
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
The Board of Directors has adopted and recommends that shareholders vote
to approve the Daw Technologies, Inc. 1999 Omnibus Stock Incentive Plan (the
"Incentive Plan"). The Incentive Plan will, if approved, be substituted in
part for the Daw Technologies, Inc. 1993 Stock Option Plan, as amended (the
"Predecessor Plan") and, therefore, shares of Common Stock previously
authorized for the granting of stock options under the Predecessor Plan but
not granted prior to December 31, 1998 will no longer be available under the
Predecessor Plan but will, instead, be available under the Incentive Plan.
Any stock options previously granted under the Predecessor Plan will remain
outstanding pursuant to the terms of the Predecessor Plan. If the Incentive
Plan is not approved, the Predecessor Plan will remain in effect in its
present form. The terms of the Incentive Plan are summarized below.
Capitalized terms used herein will, unless otherwise defined, have the
meanings assigned to them in the text of the Incentive Plan.
GENERAL
The Incentive Plan is intended to promote the interests of the Company
and the stockholders of the Company by providing directors, officers,
employees and others who are expected to contribute to the success of the
Company with appropriate incentives and rewards to encourage them to enter
into and continue in the employ of the Company and to acquire a proprietary
interest in the long-term success of the Company thereby aligning their
interest more closely to the interest of the stockholders.
The Incentive Plan is intended to comply with the requirements of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended. In addition, the Plan is intended to provide performance-based
compensation so as to be eligible for compliance with Section 162(m)
("Section 162(m)") which denies a deduction by an employer for certain
compensation in excess of $1 million per year paid by a publicly traded
corporation to the following individuals who are employed at the end of the
employer's taxable year ("Covered Employees"): the chief executive officer
and the four most highly compensated executive officers (other than the chief
executive officer), for whom compensation disclosure is required under the
proxy rules. Certain compensation, including compensation based on the
attainment of performance goals, is excluded from this deduction limit if
certain requirements are met. Among the requirements for compensation to
qualify for this exception is that the material terms pursuant to which the
compensation is to be paid be disclosed to and approved by the stockholders
in a separate vote prior to the payment. Accordingly, if the Incentive Plan
is approved by stockholders and the other conditions of Section 162(m)
relating to
12
<PAGE>
performance-based compensation are satisfied, compensation paid to Covered
Employees pursuant to the Incentive Plan will not be subject to the deduction
limit of Section 162(m).
SUMMARY OF TERMS
The Incentive Plan authorizes an aggregate of 1,250,000 shares of Common
Stock that may be subject to awards, subject to adjustment as described
below; however, upon approval of the Incentive Plan, no future options may be
granted under the Predecessor Plan and 245,500 shares of Common Stock
previously available for stock options under the Predecessor Plan but not
covered by outstanding stock options will no longer be available under the
Predecessor Plan but will, instead, be available under the Incentive Plan.
Accordingly, only an additional 1,005,000 shares of Common Stock would be
available for awards under the Incentive Plan in excess of the number of
shares currently available under the Predecessor Plan. Such shares may be
authorized and unissued shares, treasury shares or shares acquired by the
Company for purposes of the Incentive Plan. Generally, shares subject to an
award that remain unissued upon expiration or cancellation of the award will
be available for other awards under the Incentive Plan. The total number of
shares of Common Stock subject to awards (including awards paid in cash but
denominated in shares of Common Stock) granted to any Participant in the
Incentive Plan during any taxable year of the Company will not exceed
100,000. In the event that the Compensation Committee of the Board of
Directors (the "Committee") determines that any dividend or other
distribution, stock split, recapitalization, reorganization, merger or other
similar corporate transaction or event affects the Common Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Incentive Plan, then the Committee will make
such equitable changes or adjustments as it deems necessary to the aggregate
number of shares available under the Incentive Plan, the limit on individual
awards, the number of shares subject to each outstanding award, and the
exercise price of each outstanding option or stock appreciation right.
Awards under the Incentive Plan may be made in the form of (i) Incentive
Stock Options, (ii) Non-Qualified Stock Options, (iii) Stock Appreciation
Rights, (iv) Restricted Stock, (v) Phantom Stock and (vi) Stock Bonuses.
Awards may be granted to such directors, officers, employees and others
expected to contribute to the long-term success of the Company and its
subsidiaries as the Committee shall, in its discretion, select.
The Incentive Plan will be administered by the Committee which shall, at
all times, consist of two or more persons each of whom is an "outside
director" within the meaning of Section 162(m) and a non-employee director
within the meaning of Rule 16b-3. The Committee is authorized, among other
things, to construe, interpret and implement the provisions of the Incentive
Plan, to select the persons to whom awards will be granted, to determine the
terms and conditions of such awards and to make all other determinations
deemed necessary or advisable for the administration of the Incentive Plan.
AWARDS UNDER THE PLAN
STOCK OPTIONS. Unless the Committee expressly provides otherwise, an
option will not be exercisable prior to one year after the date of grant and
will become exercisable as to 25% of the shares subject thereto on each of
the first through fourth anniversaries of the grant. The Committee will
determine each option's expiration date; provided, however, that no incentive
stock opinion may be exercised more than ten years after the date of grant.
The purchase price per share payable upon the exercise of an option (the
"option exercise price") will be established by the Committee, but may be no
less than the Fair Market Value of a share of Common Stock on the date of
grant. The option exercise price is payable (i) in cash, by certified check,
bank cashier's check or wire transfer, (ii) by delivering instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
to pay the full amount of the Purchase Price, (iii) by delivering shares of
Common Stock owned by the Participant with appropriate stock powers, (iv) by
electing to have the Company retain shares of Common Stock which would
otherwise be issued on the exercise of the Option, (v) any combination of the
foregoing forms or (vi) by such other payment method as the Committee may
prescribe.
STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted in
connection with all or any part of, or independently of, any option granted
under the Incentive Plan. A stock appreciation right granted independently of
any option will be subject to the same vesting rules as described above for
options. A stock appreciation right granted in tandem with any stock option
will be exercisable only when and to the extent the option to which it
relates is exercisable. The grantee of a stock appreciation right has the
right to surrender the stock appreciation right and receive from the Company,
in cash, an amount equal to the excess of the Fair Market Value of a share of
Common Stock over the
13
<PAGE>
exercise price of the stock appreciation right for each share of Common Stock
in respect of which such stock appreciation right is being exercised.
RESTRICTED STOCK. The Committee may grant restricted shares of Common
Stock to such persons, in such amounts, and subject to such terms and
conditions (including the attainment of performance goals) as the Committee
shall determine in its discretion. Awards of Restricted Stock granted to
Executive Officers of the Company will be contingent on the attainment by the
Company or a subsidiary of the Company, if applicable, of one or more
pre-established performance goals (the "Performance Goals") established by
the Committee. The Performance Goals may be based on the attainment by the
Company (and/or its subsidiaries, if applicable) of any one or more of the
following criteria: (i) a specified percentage return on total stockholder
equity of the Company; (ii) a specified percentage increase in earnings per
share from continuing operations of Common Stock; (iii) a specified
percentage increase in net income of the Company; and (iv) a specified
percentage increase in profit before taxation of the Company.
PHANTOM STOCK. The Committee may grant shares of Phantom Stock to such
persons, in such amounts, and subject to such terms and conditions (including
the attainment of performance goals) as the Committee shall determine in its
discretion. If the requirements specified by the Committee are met, the
grantee of such an award will receive a cash payment equal to the Fair Market
Value of the shares covered thereby plus the dividends that would have been
paid on such shares had they actually been outstanding following the grant
date. Awards of Phantom Stock granted to Executive Officers of the Company
will be contingent on the attainment by the Company or a subsidiary of the
Company, if applicable, of any one or more of the Performance Goals noted
above.
STOCK BONUS. The Committee may grant bonuses comprised of shares of
Common Stock free of restrictions to such persons, in such amounts, as the
Committee shall determine in its discretion. No Executive Officer shall be
eligible to receive a Stock Bonus under the Incentive Plan unless a prior
determination of eligibility is made by the Committee.
The Board may suspend, discontinue, revise, terminate or amend the
Incentive Plan at any time; provided, however, that stockholder approval will
be obtained if and to the extent that the Board deems it appropriate to
satisfy Section 162(m).
In the event of a Change in Control, all outstanding awards will become
fully vested and/or immediately exercisable.
PLAN BENEFITS
The Company cannot now determine the exact number of Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Phantom Stock and Stock Bonuses to be granted in the future to the
executive officers named under the "Executive Compensation--Summary
Compensation Table" below, to all current executive officers as a group, or
to all employees (including executive officers). See "Executive
Compensation--Options Granted in Last Fiscal Year" below for the number of
options granted under the Stock Option Plan to the executive officers named
in the Summary Compensation Table in the year ended December 31, 1998. During
the year ended December 1998, options to purchase 100,000 shares of Common
Stock were granted to all current executive officers as a group.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a brief summary of the principal United
States Federal income tax consequences under current Federal income tax laws
relating to awards under the Incentive Plan. This summary is not intended to
be exhaustive and, among other things, does not describe state, local or
foreign income and other tax consequences.
NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable
income upon the grant of a Non- Qualified Stock Option. The Company will not
be entitled to a tax deduction with respect to the grant of a Non-Qualified
Stock Option. Upon exercise of a Non-Qualified Stock Option, the excess of
the Fair Market Value of the Common Stock on the exercise date over the
option exercise price will be taxable as compensation income to the optionee
and will be subject to applicable withholding taxes. The Company will
generally be entitled to a tax deduction at such time in the amount of such
compensation income. The optionee's tax basis for the Common Stock received
14
<PAGE>
pursuant to the exercise of a Non-Qualified Stock Option will equal the sum
of the compensation income recognized and the exercise price.
In the event of a sale of Common Stock received upon the exercise of a
Non-Qualified Stock Option, any appreciation or depreciation after the
exercise date generally will be taxed as capital gain or loss and will be
long-term capital gain or loss if the holding period for such Common Stock is
more than one year.
INCENTIVE STOCK OPTIONS. An optionee will not recognize any taxable
income at the time of grant or timely exercise of an Incentive Stock Option
and the Company will not be entitled to a tax deduction with respect to such
grant or exercise. Exercise of an Incentive Stock Option may, however, give
rise to taxable compensation income subject to applicable withholding taxes,
and a tax deduction to the Company, if the Incentive Stock Option is not
exercised or if the optionee subsequently engages in a "disqualifying
disposition," as described below.
A sale or exchange by an optionee of shares acquired upon the exercise
of an Incentive Stock Option more than one year after the transfer of the
shares to such optionee and more than two years after the date of grant of
the Incentive Stock Option will result in any difference between the net sale
proceeds and the exercise price being treated a long-term capital gain (or
loss) to the optionee. If such sale or exchange takes place within two years
after the date of grant of the Incentive Stock Option or within one year from
the date of transfer of the Incentive Stock Option shares to the optionee,
such sale or exchange will generally constitute a "disqualifying disposition"
of such shares that will have the following results: any excess of (i) the
lesser of (a) the Fair Market Value of the shares at the time of exercise of
the Incentive Stock Option and (b) the amount realized on such disqualifying
disposition of the shares over (ii) the option exercise price of such shares,
will be ordinary income to the optionee, subject to applicable withholding
taxes, and the Company will be entitled to a tax deduction in the amount of
such income. Any further gain or loss after the date of exercise generally
will qualify as capital gain or loss and will not result in any deduction by
the Company.
RESTRICTED STOCK. A grantee will not recognize any income upon the
receipt of Restricted Stock unless the holder elects under Section 83(b) of
the Code, within thirty days of such receipt, to recognize ordinary income in
an amount equal to the Fair Market Value of the Restricted Stock at the time
of receipt. If the election is made, the holder will not be allowed a
deduction for amounts subsequently required to be returned to the Company. If
the election is not made, the holder will generally recognize ordinary
income, on the date that the restrictions to which the Restricted Stock are
subject are removed, in an amount equal to the Fair Market Value of such
shares on such date, less any amount paid for the shares. At the time the
holder recognizes ordinary income, the Company generally will be entitled to
a deduction in the same amount.
Generally, upon a sale or other disposition of Restricted Stock with
respect to which the holder has recognized ordinary income (i.e., a Section
83(b) election was previously made or the restrictions were previously
removed), the holder will recognize capital gain or loss in an amount equal
to the difference between the amount realized on such sale or other
disposition and the holder's basis in such shares. Such gain or loss will be
long-term capital gain or loss if the holding period for such shares is more
than one year.
OTHER AWARDS. The grant of a Stock Appreciation Right or Phantom Stock
award will not result in income for the grantee or in a tax deduction for the
Company. Upon the settlement of such a right or award, the grantee will
recognize ordinary income equal to the aggregate value of the payment
received, and the Company generally will be entitled to a tax deduction in
the same amount. A Stock Bonus generally will result in compensation income
for the grantee and a tax deduction for the Company, equal to the Fair Market
Value of the shares of Common Stock granted.
Inasmuch as awards under the Incentive Plan will be granted at the sole
discretion of the Committee and that performance goal criteria may vary from
year to year and from Participant to Participant, benefits under the
Incentive Plan are not determinable. Compensation paid and other benefits
granted for the 1998 fiscal year are set forth above in the section entitled
"Executive Compensation" commencing on page 5.
PROPOSAL NO. 3 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the appointment by the Board of Directors of the
independent public accountants for the Company for the year ending December
31, 1999 is to be voted upon at the Annual Meeting. The Board of Directors
15
<PAGE>
recommends shareholder ratification of the appointment of Grant Thornton LLP
whose appointment has been approved, subject to shareholder approval, by the
Board of Directors. Representatives of Grant Thornton LLP are expected to be
present at the Annual Meeting to answer any questions shareholders may have
and will be given the opportunity to make a statement if they desire to do so.
The affirmative vote of a majority of the votes cast on this proposal
shall constitute ratification of the appointment of Grant Thornton LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999.
OTHER MATTERS
OTHER BUSINESS
The Board of Directors does not know of any matter to be presented at
the Annual Meeting that is not listed in the Notice of Annual Meeting and
discussed above. If other matters should come before the Annual Meeting,
however, the proxy holders will vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS FOR 2000 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 2000 Annual Meeting will be required to submit them to the Company in
writing on or before April 1, 2000. Any shareholder proposal must also be
proper in form and substance, as determined in accordance with the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 will be furnished without charge upon receipt of a written
request. The exhibits to that Report will also be provided upon request and
payment of copying charges. Requests should be directed to the Corporate
Secretary, Daw Technologies, Inc., 2700 South 900 West, Salt Lake City, Utah
84119.
16
<PAGE>
DAW TECHNOLOGIES
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald W. Daw and David R. Grow, and each of
them, as proxies, with full power of substitution, and hereby authorizes them
to represent and vote, as designated below, all shares of the Common Stock of
Daw Technologies, Inc., a Utah corporation (the "Company"), held of record by
the undersigned on June 25, 1999, at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the corporate offices of the Company, 2700
South 900 West, Salt Lake City, Utah, on July 30, 1999, at 2:00 P.M., local
time, or at any adjournment or postponement thereof, upon the matters set
forth below, all in accordance with and as more fully described in the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement,
receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS, each to serve until the next Annual Meeting of
Shareholders of the Company or until their respective successors shall
have been duly elected and qualified.
/ / FOR all nominees listed below (except as marked to the contrary).
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES L. BATES ROBERT G. CHAMBERLAIN RONALD W. DAW
ROBERT J. FRANKENBERG JAMES J. JARDINE VIRGINIA GORE GIOVALE
2. PROPOSAL TO APPROVE the Daw Technologies, Inc. 1999 Omnibus Stock
Incentive Plan
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY the appointment of Grant Thornton LLP as independent
public accountants of the Company. / / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREON BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL OF THE DIRECTOR NOMINEES NAMED ABOVE,
FOR THE APPROVAL OF THE DAW TECHNOLOGIES, INC. 1999 OMNIBUS STOCK INCENTIVE
PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
Dated: _____________________________, 1999 Signature:_________________________
Signature if held jointly: ____________________________________________________
(Please sign the above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized offer. If a partnership, please sign in partnership name by
authorized person.)
