UNIROYAL TECHNOLOGY CORPORATION
Suite 900
Two North Tamiami Trail
Sarasota, Florida 34236
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Uniroyal Technology Corporation
will be held at the Danbury Hilton & Towers, 18 Old Ridgebury Road, Danbury,
Connecticut, on March 16, 2001 at 10:00 a.m., Eastern Standard Time, for the
following purposes:
1. To elect seven directors for a term of one year;
2. to amend the Certificate of Incorporation to increase the
number of authorized shares of common stock;
3. to ratify the selection of Deloitte & Touche LLP to serve as
the independent public accountants for the Company for the
fiscal year ending September 30, 2001; and
5. to transact such other business as may properly come before
the meeting and any adjournment of the meeting.
The Board of Directors has fixed the close of business on January 17,
2001 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting. A complete list of stockholders entitled to vote
at the meeting will be available for examination by any stockholder for any
purpose germane to the meeting on and after March 6, 2001, during ordinary
business hours at the office of the Secretary of the Company, Two North Tamiami
Trail, Suite 900, Sarasota, Florida.
WHETHER OR NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IN THE UNITED STATES. PROMPT
RETURN OF THE PROXY WILL ASSURE A QUORUM AND SAVE THE COMPANY UNNECESSARY
EXPENSE.
OLIVER J. JANNEY
Secretary
Dated: January 29, 2001
<PAGE>
1
UNIROYAL TECHNOLOGY CORPORATION
Suite 900
Two North Tamiami Trail
Sarasota, Florida 34236
PROXY STATEMENT
This proxy statement and the accompanying form of proxy are being
furnished to the stockholders of Uniroyal Technology Corporation, a Delaware
corporation (the "Company"),on or about January 29, 2001 in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held on March 16, 2001 at 10 a.m., Eastern
Standard Time, at the Danbury Hilton & Towers, 18 Old Ridgebury Road,
Danbury, Connecticut, and any adjournment thereof. Any stockholder who
executes and delivers a proxy may revoke it at any time prior to its use
by (i) giving written notice of revocation to the Secretary of the Company,
(ii) executing a proxy bearing a later date, or (iii) appearing at the meeting,
giving notice of revocation of the proxy and voting in person.
Unless otherwise specified, all shares represented by effective proxies
will be voted by the proxy holder in favor of (i) the seven nominees as
directors; (ii) amendment of the Certificate of Incorporation to increase the
number of authorized shares of common stock from 35,000,000 to 100,000,000
shares; and (iii)ratification of the selection of Deloitte & Touche LLP to
serve as the independent public accountants for the Company for the fiscal
year ending September 30, 2001. The Board of Directors does not know of any
other business to be brought before the meeting, but, as to any such other
business, proxies will be voted upon any such matters in accordance with
the judgment of the person or persons acting under the proxies.
The cost of soliciting proxies will be borne by the Company. The
Company has retained Mellon Investor Services, LLC to assist in the
solicitation of proxies for a fee of $9,500, plus reasonable out-of-pocket
expenses. Original solicitation of proxies by mail may be supplemented by
telephone or telegram, by personal solicitation by directors, officers or
other regular employees of the Company, who will not receive additional
compensation for such services; the cost of any such solicitation is
expected to be nominal. Brokerage houses, nominees, custodians and
fiduciaries will be requested to forward soliciting material to beneficial
owners of stock held of record by them, and the Company, upon request, will
reimburse such persons for their reasonable out-of-pocket expenses in doing so.
Only holders of record of outstanding shares of the Common Stock, $.01
par value per share ("Common Stock"), of the Company at the close of business
on January 17, 2001, are entitled to notice of, and to vote at the meeting.
Each stockholder is entitled to one vote for each share held on the record
date. There were 25,779,354 shares of Common Stock outstanding and entitled
to vote on January 17, 2001.
When a quorum is present at the meeting, the vote of the holders of a
majority of the stock having voting power present in person or by proxy shall
decide the action proposed on each matter listed in the accompanying Notice of
Annual Meeting of Stockholders except the election of directors, who are
elected by a plurality of all votes cast, and the increase in the number of
authorized shares of Common Stock, which requires a vote of
not less than three-quarters of the outstanding capital stock of the Company.
Abstentions and broker "non-votes" will be counted as present in determining
whether the quorum requirement is satisfied. A "non-vote" generally occurs
when a nominee holding shares for a beneficial owner does not vote on a
proposal because the nominee has not received instructions as to such
proposal from the beneficial owner and does not have discretionary powers as to
such proposal. The aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the meeting,
whether those stockholders vote "For" or "Against" or abstain from voting,
will be counted for purposes of determining whether a quorum is present.
Abstentions from voting by stockholders and broker "non-votes" are not
counted for purposes of determining whether a proposal has been approved.
On April 5, 2000, the Company paid a dividend of one share of Common
Stock for each share of Common Stock that was outstanding as of March 10, 2000.
The information set forth below in this Proxy Statement concerning shares of
Common Stock and exercise prices of stock options have been restated to reflect
the stock dividend.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of November 30, 2000, by (a) each
person known to the Company to be the beneficial owner of more than five
percent of the Common Stock, (b) all directors and nominees, (c) the Chief
Executive Officer and the other four most highly compensated executive
officers of the Company and (d) all directors and executive officers of the
Company as a group:
<PAGE>
2
<TABLE>
At November 30, 2000
Common Stock
Name and Address of Beneficial Owner \1 Number of Shares Owned \2 Percent of Class \3
-------------------------------------- --------------------------- -------------------
<S> <C> <C>
Dr. Thomas J. Russell 3,578,410 14.06%
2 N. Tamiami Trail, Suite 1200
Sarasota, FL 34236
Enforcement Counsel for Superfund 1,740,936 6.84%
United States Environmental Protection Agency
401 M Street, N.W., Mail Code LE 134-5
Washington, D.C. 20460
Howard R. Curd 2,930,438 \4 11.10%
John A. Porter 1,578,948 \5 6.17%
Robert L. Soran 1,556,370 \6 5.86%
George J. Zulanas, Jr. 986,495 \7 3.80%
Oliver J. Janney 598,372 \8 2.32%
Roland H. Meyer 488,180 \9 1.91%
Richard D. Kimbel 247,430 \10 \11
Martin J. Gutfreund 241,179 \12 \11
Curtis L. Mack 137,516 \13 \11
Peter C.B. Bynoe 112,940 \14 \11
Thomas E. Constance 93,564 \15 \11
All directors and executive officers of the Company
as a group 8,934,290 \16 34.41%
</TABLE>
<PAGE>
3
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes of ownership with the
Securities and Exchange Commission (the "S.E.C.") and the Nasdaq National
Market. Officers, directors and beneficial owners of more than ten percent of
the Common Stock are required by S.E.C. regulations to furnish the Company with
copies of all reports that they file with the S.E.C. pursuant to Section 16(a)
of the Exchange Act. Based solely on a review of the copies of such forms
furnished to the Company, the Company believes that during fiscal 2000 its
officers, directors and beneficial owners of more than ten percent of the
Common Stock complied with all applicable Section 16(a) filing requirements,
except that each of Messrs. Bynoe, Curd, Kimbel, Meyer, Porter and Soran filed
late one report of an exercise of stock options, and Robert L. Soran
filed late an Annual Statement of Changes in Beneficial Ownership.
ELECTION OF DIRECTORS
Nominees for Director
<TABLE>
====================================================================================================================
NAME AGE POSITION DIRECTOR SINCE
<S> <C> <C> <C>
====================================================================================================================
--------------------------------------------------------------------------------------------------------------------
Peter C.B. Bynoe 49 Director 1992
--------------------------------------------------------------------------------------------------------------------
Thomas E. Constance 64 Director 1998
--------------------------------------------------------------------------------------------------------------------
Howard R. Curd Chairman of the Board, Chief
61 Executive Officer and Director 1992
--------------------------------------------------------------------------------------------------------------------
Curtis L. Mack 58 Director 1992
-------------------------------------------------------------------------------------------- ------------------------
Roland H. Meyer 73 Director 1992
--------------------------------------------------------------------------------------------------------------------
John A. Porter 57 Director 1994
--------------------------------------------------------------------------------------------------------------------
Robert L. Soran President, Chief Operating Officer
57 and Director 1993
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
4
Peter C.B. Bynoe is Chairman of the Audit Committee and a member of
the Executive Committee of the Board of Directors. Mr. Bynoe is Chairman of
Telemat Ltd., a project management and financial services consulting firm he
founded. He is also a partner in the law firm of Piper Marbury Rudnick &
Wolfe. Mr. Bynoe also formerly served as the Executive Director of the
Illinois Sports Facilities Authority, a joint venture of the City of Chicago
and the State of Illinois created to build a new Comiskey Park for the Chicago
White Sox. Mr. Bynoe is also a director of Blue Chip Broadcasting Co., which
owns approximately 17 radio stations in the Midwest. Mr. Bynoe was formerly
the co-owner and Managing General Partner of the National Basketball
Association's Denver Nuggets. Mr. Bynoe is also an Overseer of Harvard
University.
Thomas E. Constance is a member of the Compensation, Option, Trust
Fund and Executive Committees of the Board of Directors. Mr. Constance is
Chairman of Kramer, Levin, Naftalis & Frankel, a law firm in New York City. He
was a partner of Shea & Gould from 1971 to 1994 and served as Chairman of the
Executive Committee of that firm. Mr. Constance serves as a Trustee of the
M.D. Sass Foundation and St. Vincent's Services. He also serves on the
Advisory Boards of Barrington Capital, L.P. and Atwood Richards Inc. and serves
as a director of the Kroll-O'Gara Company.
Howard R. Curd was appointed Chief Executive Officer of the Company
as of September 21, 1992. Mr. Curd is also a member of the Executive Committee
of the Board of Directors. Mr. Curd is also a director of KeySpan Energy
Corporation and of Brothers Gourmet Coffees, Inc.
Curtis L. Mack is Chairman of the Trust Funds Committee and a member
of the Executive Committee of the Board of Directors. An attorney specializing
in labor law, Mr. Mack is a partner in the law firm of McGuire, Woods,
Battle & Boothe. Mr. Mack was formerly a partner in Mack, Haygood & McLean,
a law firm based in Atlanta, Georgia, from 1994 to 1999 and was before that
a partner in Mack & Bernstein, a law firm based in Atlanta, Georgia, from
1983 to 1994. Mr. Mack taught labor and employment law at the University of
Florida Law School in 1973-1974; he was General Counsel of the Florida
Public Employees Relations Commission from 1974 to 1975, and he was Chairman
of the Commission from 1975 to 1976; from 1976 to 1981 he was Regional Director
of the National Labor Relations Board in Atlanta, Georgia. Presently Mr.
Mack is an adjunct professor at the University of Michigan Law School, and
also serves on the Advisory Board to the School of Social Science at Michigan
State University. Mr. Mack has served as Special Assistant Attorney
General for the State of Georgia since 1989 and as Chairman of the Human
Relations Commission of the City of Atlanta since 1989.
Roland H. Meyer is Chairman of the Compensation Committee and the
Option Committee and a member of the Executive Committee of the Board of
Directors. Mr. Meyer was elected Vice Chairman of American National Can
Company, a leading manufacturer of metal, glass and plastic packaging
products, in 1987. He was elected Chief Operating Officer of American National
Can in 1988 and President in 1989. Mr. Meyer served as President and Chief
Operating Officer of American National Can until his retirement in June 1992.
Mr. Meyer was a director of Allied Van Lines from 1987 to 1992 and was a
director and Vice Chairman of the Can Manufacturers Institute, Inc. from 1985
to 1994. Mr. Meyer is currently a director of American National Can and is a
member of American National Can's Executive Committee. Mr. Meyer also served
for various periods as a director of certain subsidiaries of American National
Can. Mr. Meyer is also a director, Vice Chairman and Chairman of the
Executive Committee of First Commercial Bank of Tampa and a director of the
Catholic Education Foundation, Inc. of the Diocese of St. Petersburg, Florida.
John A. Porter is a member of the Audit and Executive
Committees of the Board of Directors. Mr. Porter is a director of Inktomi
Corporation. Mr. Porter was formerly a director of WorldCom Inc., one of the
largest telecommunications companies in the United States. He was Chairman of
the Board of Directors of LDDS Communications, Inc. ("LDDS") from 1988 until
its merger with Metromedia Communications in 1993 and was Vice Chairman of the
Board from 1993 to 1997. He served as President and Chief Executive Officer of
Telephone Management Corporation from 1987 until it was acquired by LDDS in
August 1988. Mr. Porter also serves as Chairman of the Board of Directors of
TelTek, Inc, a holding company that currently holds all of the stock of
Gladwin, Inc., an equipment manufacturer for deregulated electrical and
telecommunications markets, and Industrial Electric Manufacturing Inc. a
manufacturer of electrical power distribution products.
Robert L. Soran was elected President and Chief Operating Officer of
the Company as of September 21, 1992. Mr. Soran is also a member of the
Executive Committee of the Board of Directors. Mr. Soran was President and
Chief Executive Officer of Tropicana Products Inc., a fruit beverage processor
("Tropicana"), from 1986 until September 1991.
The Board of Directors held nine meetings during fiscal 2000. The
average attendance by directors at these meetings was over 75%, and all
incumbent nominees attended at least 75% of the Board and committee meetings
that they were scheduled to attend.
Among the committees of the Board of Directors are an Audit Committee,
a Compensation Committee, an Executive Committee, an Option Committee and a
Trust Funds Committee. The Board of Directors does not have a Nominating
Committee.
<PAGE>
5
The Audit Committee recommends to the Board the selection of
independent accountants to audit the annual financial statements of the
Company, reviews the annual financial statements and meets with the
Company's Chief Financial Officer and independent accountants to review the
acope and results of the audit of the financial statements and other matters
regarding the Company's accounting, financial reporting and internal control
systems. The Audit Committee has also reviewed periodically the Company's
management of Year 2000 issues. During fiscal 2000 the Audit Committee met
seven times. The members of the committee are Messrs. Bynoe (Chairman), Porter
and Richard D. Kimbel. The Audit Committee consists of independent directors,
except Mr. Kimbel, who was employed by the Company as a consultant. During
fiscal 2000 the Board of Directors adopted a charter for the Audit Committee.
The charter is set forth in Exhibit A at the end of this Proxy Statement.
The Compensation Committee reviews management's recommendations with respect
to salary and incentive compensation of executive officers and other key
employees, as well as the Company's benefit plans and arrangements other than
Stock Option Plans, and makes recommendations to the Board with respect to such
plans. During fiscal 2000 the Compensation Committee met five times. The
members of the Compensation Committee are Messrs. Meyer (Chairman), Constance
and Richard D. Kimbel.
The Option Committee administers all of the stock option plans of the
Company and the 2000 Stock Plan. The members of the Option Committee are
Messrs. Meyer (Chairman) and Constance. The Option Committee met four times
during fiscal 2000.
The Trust Funds Committee reviews the Company's handling of trust funds under
its employee benefits plans. During fiscal 2000 the Trust Funds Committee met
once. The members of the Trust Funds Committee are Messrs. Mack (Chairman),
Constance and Richard D. Kimbel.
Compensation of Directors
Each director who is not an officer of the Company receives an annual
fee (the "Annual Retainer Fee") of $25,000, plus $1,000 for each meeting of the
Board of Directors attended, $2,500 per annum for service on a committee
(except the chairman of a committee, who receives $3,000 per annum) (the
"Committee Retainer Fees") and $500 to $1,000 for each committee meeting
attended, depending upon whether the committee meeting is held in conjunction
with a meeting of the Board of Directors, independent of a meeting of the Board
of Directors or by teleconference. Each director receives reimbursement of his
expenses incurred in attending each meeting of the Board of Directors or of a
committee. In addition, each director who was not an officer of the Company was
paid a bonus of $50,000 in fiscal 2000 in respect of the successful sale
of the assets of the Company's subsidiary, High Performance Plastics, Inc.
Directors who are not officers of the Company may elect to apply up to
the entire amount of their Annual Retainer Fees and Committee Retainer Fees in
exchange for options to purchase Common Stock pursuant to the 1992 Non-
Qualified Stock Option Plan (the "1992 Non-Qualified Plan"). The 1992 Non-
Qualified Plan provides that Common Stock underlying each option issued
pursuant to such Plan may be purchased for 100% of the market price of the
Common Stock on the date of grant. Although the amount of the Annual Retainer
Fee and Committee Retainer Fees is initially paid for the option, such amount
also constitutes 50% of the consideration payable for the underlying Common
Stock. When the Director exercises the option, the additional 50% of the
purchase price of the Common Stock must be paid in cash by the Director. If
the Director does not timely exercise the option to purchase the Common Stock,
the Annual Retainer Fee and Committee Retainer Fees applied to acquire the
option will be forfeited by the Director. In addition, each director of the
Company has received options to purchase shares of Common Stock under the 1995
Non-Qualified Stock Option Plan. No director who is not an officer of the
Company may receive options to purchase more than an aggregate of 60,000
shares of Common Stock in any calendar year under all of the Company's Stock
Option Plans.
Compensation Committee Interlocks and Insider Participation
Mr. Kimbel, who has served as a member of the Compensation Committee,
was employed by the Company and certain of its predecessor companies from 1962
through December 2000. Mr. Kimbel was employed as an engineer by certain of
such predecessor companies and the Company from 1962 until June 1994, when he
became Manager of Human Resources for the Ensolite and Uniroyal Adhesives and
Sealants divisions of the Company; he was a consultant to the Company on
special projects until December 31, 2000.
No executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
<PAGE>
6
Executive Officers of the Company
Officers of the Company are appointed to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders or until
their respective successors have been duly elected and qualified. Any officer
of the Company may be removed, pursuant to the Company's By-Laws, with or
without cause, by a vote of a majority of the entire Board of Directors. The
following table sets forth the name, age and position of each executive officer
of the Company:
<TABLE>
====================================================================================================================
NAME AGE POSITION
<S> <C> <C>
====================================================================================================================
--------------------------------------------------------------------------------------------------------------------
Howard R. Curd 61 Chairman of the Board of Directors and Chief
Executive Officer
--------------------------------------------------------------------------------------------------------------------
Robert L. Soran 57 Director, President and Chief Operating Officer
--------------------------------------------------------------------------------------------------------------------
George J. Zulanas, Jr. Executive Vice President, Chief Financial
56 Officer and Treasurer
--------------------------------------------------------------------------------------------------------------------
Oliver J. Janney 54 Executive Vice President, General Counsel and
Secretary
--------------------------------------------------------------------------------------------------------------------
Martin J. Gutfreund 59 Vice President, Human Resources and
Administration
--------------------------------------------------------------------------------------------------------------------
</TABLE>
The business experience of Messrs. Curd and Soran is described above
under "Election of Directors - Nominees for Director".
Messrs. Zulanas, Janney and Gutfreund were elected to the positions set
forth above as of September 21, 1992, except that Messrs. Zulanas and Janney
were elected to the office of Executive Vice President on March 10, 2000.
<PAGE>
7
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee and the Option Committee
Roles of the Compensation and Options Committees
As was earlier described in the section on committees of the Board of
Directors, the Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company, and the Option
Committee administers the Company's stock option programs.
Compensation Philosophy
The Company's compensation philosophy with respect to the compensation
of the Company's executive officers consists of the following core principles:
o Base salary should be competitive in order to attract, retain
and motivate well-qualified executives. o Incentive compensation
should be directly related to achieving specified levels of
corporate financial performance. A significant part of the
executive officers' compensation should be at risk, based upon the
success of the Company.
o Long-term stock ownership of the Company's Common Stock by the
Company's executive officers creates a valuable link between the
Company's management and stockholders. Stock ownership gives
management strong incentives to properly balance the need for
short-term profits with long-term goals and objectives and to
develop strategies that build and sustain stockholder returns.
Executive Compensation Program
The Company's executive compensation program contains three components
which are intended to reflect the Company's compensation philosophy.
Base Salary. Base salary and adjustments to base salary are set by
employment agreements with Messrs. Curd, Soran, Zulanas and Janney. The base
salaries for executive officers are targeted at the upper quartiles of the
competitive market. For this purpose, the Compensation Committee reviews and
considers the salary ranges of executive officers in comparable positions at
companies comparable to the Company in various industries. The Compensation
Committee's practice is to review the base salary of each executive officer
annually, at which time the executive officer's base salary may be increased
beyond the contractually mandated incremental increases based upon the
executive officer's individual performance and contributions to the Company.
The Committee has not made any such increase in the past.
Annual Bonus. The Company's executive officers, as well as a number of
other key employees of the Company, are eligible for an annual cash bonus
pursuant to the Company's Management Incentive Plan (the "MIP"). Target annual
bonus amounts for the executive officers are established at the beginning of
the fiscal year by the Compensation Committee. For this purpose, the
Compensation Committee reviews and considers bonus amounts awarded to officers
of companies in comparable positions in various industries comparable in size
to the Company and also considers Company performance and the achievement of
each executive officer in his area of responsibility and the resulting
contribution to overall corporate performance. Total payments into the MIP Plan
for all participants, including executive officers, were approximately
$1,948,000 for fiscal 1998, approximately $1,955,000 for fiscal 1999, and
approximately $2,365,591 for fiscal 2000. Under the MIP the Compensation
Committee has discretion to adjust an individual's actual bonus payment from
the amount that would otherwise be payable under the formula, subject to
approval by the full Board of Directors.
Long-Term Incentives. The executive officers of the Company and 78
other current members of management and other key employees have been granted
and currently hold stock options pursuant to the Company's stock option plans.
The Company's stock option plans are intended to provide opportunities for
stock ownership by management and other key employees, which will increase
their proprietary interest in the Company and, consequently, their
identification with the interests of the stockholders of the Company. In
addition, the executive officers have purchased stock on their own as a
demonstration of their commitment to the Company. Stock options granted under
the 1992 and 1994 Stock Option Plans have exercise prices equal to the fair
market value of the Company's Common Stock on the dates of grant. The stock
options have a ten-year term, except certain stock options granted for three-
year terms. A deferred compensation plan was instituted for the executive
officers in fiscal 1995; this improves the Company's short-term cash flow. A
split-dollar life insurance plan was also instituted, to facilitate executive
officers' saving for retirement; this plan was revised in March 2000, so that
each participant may purchase for a nominal sum the paid-up policy at
retirement or such earlier date on which benefits would be payable. At the
same time the Board of Directors amended the Deferred Compensation Plan to
reduce the rate of interest paid by the Company on balances held under the
plan. Effective October 1, 1998, the Board of Directors approved a defined
contribution retirement plan to provide benefits for certain
executives for ten years after their retirement; benefits under such plan are
conditional on an executive's being employed by the Company until retirement;
in March 2000 the Board of Directors approved an additional ten years of
paid-up benefits. On March 10, 2000, the stockholders approved a stock grant
plan for directors and key employees, including the executive officers; no
grants were made under the plan in fiscal 2000.
Commissions. In 1996 the Board of Directors directed management of the
Company to deploy a significant portion of the assets of the Company from
mature businesses to high technology businesses. In March 2000 the Board of
Directors determined that the actions of the Chief Executive Officer, the
President and the Chief Financial Officer in consummating the sale of the
assets of High Performance Plastics, Inc. on terms highly favorable to the
Company had accelerated the achievement of the goals set by the Board of
Directors. In the spring of 2000, the Board of Directors took a number of
actions to reward such officers for the sale of the High Performance Plastics
business, including payment of commissions in the form of cash and funding of
supplemental retirement benefits. The total commissions involved an
expenditure of $3,677,489, after provisions for income tax benefits.
Internal Revenue Code Section 162(m). Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") generally disallows a tax
deduction to publicly held companies for compensation to the chief executive
officer and the four other most highly compensated executive officers to the
extent that it exceeds $1 million per covered officer in any fiscal year.
ertain exceptions are provided for non-discretionary, performance-related
compensation.
The Company's stock option plans have been structured so that any
compensation deemed paid in connection with the exercise of options granted
under such plans will qualify as performance-based compensation. The
Compensation Committee will review the effects of Section 162(m), from time to
time, as it reviews changes in the compensation arrangements, to the extent it
deems appropriate. The Compensation Committee may recommend payments that are
not deductible when it considers them in the best interests of the Company and
its stockholders.
Chief Executive Officer's Performance
The Compensation Committee has reviewed the compensation of the Chief
Executive Officer and has found the level appropriate in comparison with
persons holding similar positions in comparable companies and in light of
extraordinarily favorable developments at the Company during fiscal 2000,
including the following: increase in the Company's sales by ongoing operations
by 16 percent, continuation of the acquisition program to increase earnings
and broaden the product mix and the capital expenditure program to provide
additional opportunities for the Company, disposition of the assets of the
High Performance Plastics business on highly favorable terms, reducing the
Company's debt to equity ratio from 2.47 to 0.78 and increasing the visibility
of the Company's common stock in the market. All of these developments have
contributed to an increase in the price of the Company's stock by 204% during
the 2000 fiscal year. $1,633,100 million of the cash commissions described
above was paid to or on behalf of the chief executive officer to reward the
extraordinary benefits that he realized for the Company in the sale of the
High Performance Plastics business. The Compensation Committee believes that
the Chief Executive Officer is being appropriately compensated in a manner
that relates to the performance of the Company.
Compensation Committee Option Committee
------------------------------- --------------------------------
ROLAND H. MEYER, CHAIRMAN ROLAND H. MEYER, CHAIRMAN
THOMAS E. CONSTANCE THOMAS E. CONSTANCE
RICHARD D. KIMBEL
<PAGE>
8
Summary Compensation Table
The following table sets forth the cash and other compensation paid by
the Company in respect of the fiscal year ended October 1, 2000, to the Chief
Executive Officer and the other four most highly compensated officers of the
Company. Certain of the executive officers of the Company also received
certain other compensation, including automobile allowances. The amount of
such other compensation received by each of these officers was less than the
lesser of $50,000 or 10% of his respective cash compensation as set forth in
the Salary and Bonus columns of this table.
<TABLE>
==================================================================================================================================
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------------------------------------------------------------------
===================================== ============= ================ ================ ==================== ==================
Other Securities
Salary Bonus Annual Compensation Underlying Options
Name and Principal Position Fiscal Year ($) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
===================================== ============= ================ ================ =================== ===============
------------------------------------- ------------- ---------------- ---------------- ----------------------- ----------------
Howard R. Curd 2000 571,939 400,357 1,637,039 \17 773,106
Chairman of the Board & Chief 1999 559,373 500,000 9,639 17,500
Executive Officer 1998 550,262 500,000 6,461 184,053
---------------------------------- ------------- ---------------- ---------------- ----------------------- -------------------
Robert L. Soran 2000 470,364 329,255 1,308,119 \18 701,484
President & Chief 1999 460,030 400,000 5,205 17,500
Operating Officer 1998 452,219 350,000 3,488 168,242
------------------------------------- ------------- ---------------- ---------------- ----------------------- ---------------
George J. Zulanas, Jr. 2000 244,625 171,237 740,145 \19 394,864
Executive Vice President, Chief 1999 232,936 180,000 4,279 0
Financial Officer & Treasurer 1998 228,971 180,000 2,868 97,432
------------------------------------- ------------- ---------------- ---------------- ----------------------- ---------------
Oliver J. Janney 2000 239,121 517,385 330,709 \20 343,242
Executive Vice President, General 1999 227,686 175,000 2,945 0
Counsel & Secretary 1998 223,977 175,000 1,974 81,621
------------------------------------- ------------- ---------------- ---------------- ----------------------- ---------------
Martin J. Gutfreund 2000 139,030 194,642 453,570 \21 65,000
Vice President, 1999 135,976 95,014 3,012 0
Human Resources and Administration 1998 145,409 95,014 2,088 12,500
===================================== ============= ================ ================ ======================= ===============
</TABLE>
<PAGE>
9
Compensation Pursuant to Other Programs; Stock Option Plan
In addition to the salary administration program and MIP, in order to
retain and attract quality management, the Company maintains a compensation
program that includes stock option plans, a stock grant plan and benefit
programs such as disability and health insurance and death benefits. Stock
options for key employees are granted by the Option Committee, and the
Compensation Committee reviews the other benefit programs. The Option
Committee has delegated to the Vice President, Human Resources and
Administration the authority to grant limited stock options to key employees
other than executive officers following written approval by the Chief Executive
Officer and the Chief Operating Officer of the Company, acting as a
subcommittee of the Board of Directors.
The options granted in the last fiscal year to the Chief Executive
Officer and the four most highly compensated executive officers of the Company
other than the Chief Executive Officer are set forth in the following table:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
==================================================================================================================================
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option Term
Individual Grants
< <S>
<C>
==================================================================================================================================
============================== ================ ================ ================ ============== =============== ===========
% of Total
Number of Options
Securities Granted to
Underlying Employees in Exercise Price Expiration 5% 10%
Name Options Granted Fiscal Year ($/Share) Date ($) ($)
======================= ================ ================ ================ ============== =============== ================
<S> <C> <C> <C> <C> <C> <C>
----------------------- ---------------- ---------------- ---------------- -------------- --------------- ----------------
Howard R. Curd 358,106 12% 4.50 10/25/09 1,013,449 2,568,279
35,000 1% 23.0625 04/09/03 127,233 267,179
380,000 13% 17.25 04/03/10 4,122,404 10,446,982
----------------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Robert L. Soran 326,484 11% 4.50 10/25/09 923,958 2,341,491
35,000 1% 23.0625 04/09/03 127,233 267,179
340,000 11% 17.25 04/03/10 3,688,467 9,347,300
----------------------- ---------------- ---------------- ---------------- -------------- --------------- ----------------
George J. Zulanas, Jr. 194,864 6% 4.50 10/25/09 551,470 1,397,534
200,000 7% 17.25 04/03/10 2,169,686 5,498,411
----------------------- ---------------- ---------------- ---------------- -------------- --------------- -----------------
Oliver J. Janney 163,242 5% 4.50 10/25/09 461,979 1,170,746
180,000 6% 17.25 04/03/10 1,952,718 4,948,570
----------------------- ---------------- ---------------- ---------------- -------------- --------------- -----------------
Martin J. Gutfreund 25,000 1% 4.50 10/25/09 70,751 179,296
40,000 1% 17.25 04/03/10 433,937 1,099,682
======================= ================ ================ ================ ============== =============== =================
</TABLE>
<PAGE>
10
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR END OPTION VALUES
============================== ============== ================ ========================== ============================
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired in Value Realized Options at October 1, October 1, 2000 \22
Exercise (#) ($) 2000 ($)
============================== ============== ================ ========================== ============================
============================== ============== ================ ========================== ============================
Name Exercisable/ Exercisable/
Unexercisable Unexercisable
============================== ============== ================ ========================== ============================
<S> <C> <C> <C> <C>
------------------------------ -------------- ---------------- -------------------------- ----------------------------
Howard R. Curd 185,840 961,396 321,266/916,350 3,520,605/5,219,411
------------------------------ -------------- ---------------- -------------------------- ----------------------------
Robert L. Soran 197,882 1,085,509 675,558/832,078 8,264,009/4,758,508
------------------------------ -------------- ---------------- -------------------------- ----------------------------
George J. Zulanas, Jr. 192,592 1,044,977 289,074/472,810 3,490,963/2,840,147
------------------------------ -------------- ---------------- -------------------------- ----------------------------
Oliver J. Janney 37,906 300,864 229,824/408,540 2,628,904/2,379,264
------------------------------ -------------- ---------------- -------------------------- ----------------------------
Martin J. Gutfreund 0 0 1,362/75,000 1,959,921/364,375
============================== ============== ================ ========================== ============================
</TABLE>
<PAGE>
11
CERTAIN TRANSACTIONS
Transactions with Directors
Thomas E. Constance, a director of the Company, is Chairman of
the law firm of Kramer, Levin, Naftalis & Frankel, which performed legal
services for the Company during fiscal 2000. Peter C. B. Bynoe, a director of
the Company, is a partner of the law firm of Piper Marbury Rudnick & Wolfe,
which performed legal services for the Company during fiscal 2000.
Agreements with Executives
Mr. Curd, Chairman of the Board and Chief Executive Officer of the
Company, is employed pursuant to an agreement which was amended and restated as
of April 25, 1995. The agreement provides for a base salary of $480,300. Mr.
Curd's base salary is subject to adjustment annually during the term of the
agreement based on changes in the U.S. Consumer Price Index for all Urban
Consumers, U.S. City Average (the "CPI"). Pursuant to this provision, Mr.
Curd's base salary was increased by 3.66% effective September 1, 2000. Mr. Curd
is also entitled to receive a bonus pursuant to the MIP at the end of each
fiscal year. Mr. Curd's employment agreement provides for a three-year base
term subject to automatic one-year extensions on each anniversary date of the
agreement unless such agreement is terminated by either party. In addition, Mr.
Curd is entitled to receive the base salary that he would have received for the
balance of the term of the agreement plus an amount equal to two years' salary
as severance upon termination of his employment by the Company.
Mr. Soran, President and Chief Operating Officer of the Company,
is employed pursuant to an agreement which was amended and restated as of April
25, 1995. The agreement is for a two-year term subject to automatic annual
one-year extensions on each anniversary date of the agreement unless such
agreement is terminated by either party. Mr. Soran's employment agreement
provides for a base salary of $395,000. Mr. Soran's base salary is subject to
adjustment annually during the term of the agreement based on changes in the
CPI. Pursuant to this provision, Mr. Soran's base salary was increased by
3.66%, effective September 1, 2000. Mr. Soran is also entitled to receive a
bonus pursuant to the MIP at the end of each fiscal year, as determined
by the Board of Directors. In addition, Mr. Soran is entitled to receive
the base salary that he would have received for the balance of the term of
the agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company.
Mr. Zulanas, Executive Vice President, Treasurer and Chief
Financial Officer of the Company, is employed pursuant to an agreement which
was amended and restated as of April 25, 1995. The agreement is for a two-year
term subject to annual one-year automatic extensions on each anniversary
date of the agreement unless such agreement is terminated by either party.
Mr. Zulanas' employment agreement provides for a base salary of $200,000.
Mr. Zulanas' base salary is subject to adjustment annually during the term of
the agreement based on changes in the CPI. Pursuant to this provision, Mr.
Zulanas' base salary was increased by 3.66%, effective September 1, 2000. Mr.
Zulanas is also entitled to receive a bonus pursuant to the MIP at the
end of each fiscal year, as determined by the Board of Directors. In
addition, Mr. Zulanas is entitled to receive the base salary that he would
have received for the balance of the term of the agreement plus an amount
equal to one year's salary as severance upon termination of his employment by
the Company.
<PAGE>
12
Mr. Janney, Executive Vice President, Secretary and General Counsel of
the Company, is employed pursuant to an agreement which was amended and
restated as of April 25, 1995. The agreement provides for a base salary of
$195,500. Mr. Janney's base salary is subject to adjustment annually during the
term of the agreement based on changes in the CPI. Pursuant to this provision,
Mr. Janney's base salary was increased by 3.66%, effective September 1, 2000.
Mr. Janney is also entitled to receive a bonus pursuant to the MIP at the end
of each fiscal year. Mr. Janney's employment agreement provides for a two-year
base term subject to automatic one-year extensions on each anniversary date of
the agreement unless such agreement is terminated by either party. In addition,
Mr. Janney is entitled to receive his base salary for the balance of the term
of the agreement plus an amount equal to one year's salary as severance upon
termination of his employment by the Company.
<PAGE>
13
STOCK PERFORMANCE GRAPH
The following graph is a comparison of the five-year cumulative total
return among the Company, the Standard & Poor's 500 Composite Index and the
Standard & Poor's Chemical Index.
<TABLE>
TOTAL SHAREHOLDER RETURNS
-------------------------------- -----------------------------------------------------------------------------------
ANNUAL RETURN PERCENTAGE
Years Ending
================================ ===================================================================================
-------------------------------- ------------------ --------------- ---------------- -------------- ----------------
Company/Index Sept. 96 Sept. 97 Sept. 98 Sept. 99 Sept. 00
================================ ================== =============== ================ ============== ================
<S> <C> <C> <C> <C> <C>
-------------------------------- ------------------ --------------- ---------------- -------------- ----------------
Uniroyal Technology Corp. -21.90 40.02 100.04 5.41 207.69
-------------------------------- ------------------ --------------- ---------------- -------------- ----------------
S&P 500 Index 20.33 40.45 9.05 27.80 13.28
-------------------------------- ------------------ --------------- ---------------- -------------- ----------------
Chemicals (Specialty) - 500
7.74 12.97 -21.36 21.10 -21.59
-------------------------------- ------------------ --------------- ---------------- -------------- ----------------
</TABLE>
<TABLE>
------------------------------ ------------- -----------------------------------------------------------------------
Base INDEXED RETURNS
Period Years Ending
============================== =======================================================================
------------------------------ ------------- -------------- ------------- ------------- ------------- --------------
Company/Index Sept.95 Sept.96 Sept.97 Sept.98 Sept.99 Sept.00
============================== ============= ============== ============= ============= ============= ==============
<S> <C> <C> <C> <C> <C> <C>
------------------------------ ------------- -------------- ------------- ------------- ------------- --------------
Uniroyal Technology Corp.
100 78.10 115.60 231.25 243.75 750.00
------------------------------ ------------- -------------- ------------- ------------- ------------- --------------
S&P 500 Index 100 120.33 169.00 184.29 235.53 266.82
------------------------------ ------------- -------------- ------------- ------------- ------------- --------------
Chemicals (Specialty) - 500
100 107.74 121.72 95.72 115.92 90.90
------------------------------ ------------- -------------- ------------- ------------- ------------- --------------
</TABLE>
Source: Standard & Poor's Compustat
This comparison of five-year cumulative returns assumes that $100 was invested
on October 1, 1995, in Common Stock, the S&P 500 Composite Index and the S&P
Chemicals (Specialty) Index. No dividends were paid on the Common Stock.
<PAGE>
14
REPORT OF THE AUDIT COMMITTEE
In accordance with the written charter adopted by the Board of
Directors (the "Board"), the Audit Committee of the Board assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. During
fiscal 2000 the Committee met seven times and discussed, among other things,
the interim financial information contained in each quarterly earnings
announcement with the Chief Financial Officer of the Company and
representatives of the independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process,
the Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company
that might bear on the auditors' independence consistent with Independence
Standards Board Standard Number 1, "Independence Discussions with Audit
Committees", and the auditors' judgement that they are, in fact, independent
and discussed with the auditors the disclosures therein. The Committee also
discussed with management and the independent auditors the quality and adequacy
of the Company's internal controls. The Committee reviewed with the independent
auditors their audit plans, audit scope, and identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards Number 61, as amended,
"Communication with Audit Committees", and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Committee reviewed the audited financial statements of the Company
as of and for the fiscal year ended October 1, 2000, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements, and the independent auditors have the
responsibility for the examination of those statements. The Committee's job is
one of oversight. As noted in the Committee's charter, the Committee and the
Board recognize that management and the independent auditors have more
resources and time, and more detailed knowledge and information regarding the
Company's accounting, financial and auditing practices than the Committee does;
accordingly the Committee's oversight role does not provide any expert or
special assurance as to the Company's financial statements.
Based on the above-mentioned review and discussions with management and
the independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended October 1, 2000, for filing with the Securities
and Exchange Commission. The Committee also recommended the reappointment,
subject to shareholder approval, of the independent auditors, Deloitte & Touche,
LLP, and the Board concurred in such recommendation.
PETER C. B. BYNOE, CHAIRMAN
RICHARD D. KIMBEL
JOHN A. PORTER
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP as
independent public accountants for the Company for the fiscal year ending
September 30, 2001, subject to approval by the stockholders. The Board of
Directors recommends that such appointment be ratified.
Representatives of Deloitte & Touche LLP will be present at the meeting
and will have the opportunity to make a statement, if they desire to do so, and
respond to appropriate questions.
<PAGE>
15
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
Proposed Amendment
The Board of Directors on November 30, 2000 adopted a resolution approving
amendments of the Company's Certificate of Incorporation to increase the
authorized shares of Common Stock from 35,000,000 shares to 100,000,000 shares
and directing that the proposed amendment be submitted to a vote of the
stockholders at the Annual Meeting. The Board of Directors determined that the
amendment is in the best interests of the Company and unanimously recommends
approval by the stockholders. If the amendment is approved by the
stockholders, the Company will file an Amended and Restated Certificate of
Incorporation with the Secretary of State of Delaware reflecting the amendment,
which will become effective on the date the Amended and Restated Certificate of
Incorporation is accepted for filing by the Secretary of State of Delaware.
Assuming the presence of a quorum, the Company's Certificate of
Incorporation requires that, for approval of the amendment, the votes cast in
favor of the amendment must be at least three-quarters of the shares of
capital stock entitled to vote on the proposal. The Board of Directors
recommends that stockholders vote for this proposal.
Background and Reasons for the Proposed Amendment
The Articles of Incorporation presently authorize the issuance of up to
35,000,000 shares of Common Stock and 1,000 shares of Preferred Stock. No
shares of Preferred Stock are issued and outstanding. 475 shares of Series C
Preferred Stock have been reserved for the Company's Shareholders Rights Plan.
Of the 35,000,000 shares of Common Stock authorized, as of the close of
business on November 30, 2000, there were 25,444,859 shares issued and
outstanding and 8,099,685 shares reserved for future issuance. Of the shares
then reserved for future issuance, (i) 735,770 shares were reserved for
issuance pursuant to outstanding warrants; (ii) 857,186 shares were reserved
for issuance pursuant to outstanding options granted to directors under the
Company's 1992 Non-Qualified and 1995 Non-Qualified Stock Option Plans; (iii)
6,406,729 shares were reserved for issuance under the Company's 1992 and 1994
Stock Option Plans; and (iv) 100,000 shares were reserved for issuance under
the Company's 2000 Stock Plan.
After deducting outstanding and reserved shares, of the 35,000,000 shares
of Common Stock presently authorized there are 1,455,456 authorized shares that
have not been issued and are not reserved for a specific purpose. The Board of
Directors believes that it is in the Company's best interests to increase the
number of authorized shares of Common Stock to make additional shares available
for issuance to meet the Company's future business needs.
The Company's management has no present arrangements, agreements,
understandings or plans for the issuance or use of the additional shares of
Common Stock proposed to be authorized by the amendment. The
Board of Directors believes that the availability of such shares will benefit
the Company by providing flexibility to issue stock for a variety of proper
corporate purposes as the Board of Directors may deem advisable without further
action by the Company's stockholders, except as may be required by law,
regulation or Nasdaq National Market System rule. These purposes could include,
among other things, the sale of stock to obtain additional capital funds, the
purchase of property, the acquisition or merger into the Company of other
companies, the use of additional shares for various equity compensation and
other employee benefit plans, the declaration of stock dividends or
distributions and other bona fide corporate purposes. Were any of these
situations to arise, the issuance of additional shares of stock could have a
dilutive effect on earnings per share, and, for a person who does not purchase
additional shares, to maintain his, her or its pro rata interest, on a
stockholder's percentage voting power in the Company. In addition, preferred
stock could be issued with rights and preferences senior to those of holders of
the Common Stock. Holders of the Common Stock do not have preemptive rights to
subscribe to additional securities that may be issued by the Company, which
means that current stockholders do not have a prior right to purchase any new
issue of stock of the Company in order to maintain their proportionate
ownership interest.
Although an increase in the authorized shares of Common Stock could, under
certain circumstances, have an anti-takeover effect (for example, by diluting
the stock ownership of a person seeking to effect a change in the composition
of the Board of Directors or contemplating a tender offer or other transaction
directed to the combination of the Company with another company), the current
proposal to amend the Certificate of Incorporation is not in response to any
effort to accumulate the Company's stock or to obtain control of the Company by
means of a merger, tender offer, solicitation in opposition to management or
otherwise. As of the date of this Proxy Statement, management is not aware of
any actions taken by any person or roup to obtain control of the Company. In
addition, the proposal is not part of any plan by management to recommend a
series of similar amendments to the Board of Directors and the stockholders.
Existing Antitakeover Provisions
Although the purpose of seeking an increase in the number of authorized
shares of Common Stock is not intended for anti-takeover purposes, the rules of
the Securities and Exchange Commission require disclosure of the provisions of
the Certificate of Incorporation and the Company's By-Laws that could have an
anti-takeover effect. These provisions are described below.
Certificate of Incorporation and By-Laws. The Certificate of Incorporation
and By-Laws contain provisions that may have the effect of delaying, deterring
or preventing a change in control of the Company, including: (i) the ability of
the Board of Directors under the Certificate of Incorporation to authorize the
issuance of shares of Preferred Stock, in one or more series, having such
preferences, limitations and relative rights as are determined by the Board of
Directors; and (ii) the requirement under the By-Laws that a shareholder who
wishes to nominate directors at an annual or special meeting or submit a
proposal for consideration at an annual meeting must provide notice to the
Company during a certain period prior to the meeting.
Shareholder Rights Plan. On December 18, 1996, the Board of Directors
declared a dividend distribution of one preferred share purchase right (a
"Right") for each share of the Common Stock, outstanding as of December 30,
1996. Each Right entitles the holder to purchase from the Company 1/100,000 of
a share of participating preferred stock of the Company for $17.00, subject to
adjustment. Initially, the Rights are attached to the Common Stock and are not
represented by separate certificates or exercisable until the earlier to occur
of (i) ten days after the public announcement (the date of such first public
announcement being the "Stock Acquisition Date") that a person or group has
acquired 15% or more of the Common Stock (other than the existing 15% owners
who do not increase their ownership), or (ii) ten business days (or such later
date as may be determined by the Board) after the commencement of a tender or
exchange offer that would result in an Acquiring Person owning 15% or more of
the Common Stock, the earlier of such dates being the "Distribution Date". If
after the Distribution Date a person shall become an Acquiring Person (other
than pursuant to certain offers approved by the Board), each holder of a Right
(other than the Acquiring Person and, in certain circumstances, the Acquiring
Persons's transferees) will have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the purchase price of the Right. In
addition, if after a Stock Acquisition Date the Company enters into certain
business combinations, or 50% or more of the Company's assets or earning power
is sold or transferred, each holder of a Right shall have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to
two times the purchase price of the Right. The Board may, subject to certain
limitations, amend the Rights and may redeem all but not less than all of the
Rights for $0.001 per Right. The Rights have certain anti-takeover effects.
The Rights will expire on December 18, 2006 unless earlier redeemed.
The Rights could cause substantial dilution to a person that attempts
to acquire the Company without the approval of the Board unless the offer is
conditioned on a substantial number of Rights being acquired or on redemption
of the Rights. The Rights, however, should not affect offers for all
outstanding shares of Common Stock at a fair price and otherwise in the best
interests of the Company and its stockholders as determined by the Board.
Stock Option Plans. The Company's stock option plans provide that, in the
event of a change in control of the Company, options granted under the plans to
the extent not previously vested and exercisable, will be deemed fully vested
and exercisable effective immediately.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated
above which are to be brought before the meeting. However, if any such other
matters should be presented for consideration and voting, it is the intention
of the persons named in the proxy to vote on such matters in accordance with
their judgment.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals by stockholders intended to be presented at the 2002 annual
meeting must be forwarded in writing and received at the principal executive
offices of the Company not later than November 19, 2001, directed to the
attention of the Secretary, for consideration for inclusion in the Company's
proxy statement for the Annual Meeting of Stockholders to be held in 2002. Any
such proposals must comply in all respects with the rules and regulations of
the Securities and Exchange Commission.
OLIVER J. JANNEY
Secretary
January 29, 2001
<PAGE>
16 FOOTNOTES
1 The address for all directors and executive officers is c/o the Company,
Two North Tamiami Trail, Suite 900, Sarasota, Florida 34236.
2 Information contained in the table reflects "beneficial ownership" as
defined in Rule 13d-3 under the Securities Exchange Act of 1934. This
table is based on information supplied by directors, officers and
beneficial owners of ten percent or more of the Common Stock, Forms 13D
and 13G filed with the Securities and Exchange Commission by
beneficial owners of 5% or more of the Common Stock and information
published by the Nasdaq National Market. Unless otherwise indicated, the
stockholders identified in this table have sole voting and investment
power with respect to the shares beneficially owned by them.
3 Applicable percentages are based on 25,444,859 shares of Common Stock
outstanding, plus, for each person or group, shares issuable pursuant to
options exercisable within 60 days under the Company's stock option plans
and shares issuable pursuant to outstanding warrants.
4 Includes 814,616 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans, 152,600
shares of Common Stock issuable pursuant to warrants and 36,050 shares of
Common Stock in the Company's Savings Plan.
5 Includes 141,438 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
6 Includes 1,124,636 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans and 2,529
shares of Common Stock in the Company's Savings Plan. Does not include
70,000 shares held by family members residing in Mr. Soran's household, as
to which Mr. Soran disclaims beneficial ownership.
7 Includes 518,884 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's stock option plans and
7,275 shares of Common Stock in the Company's Savings Plan.
8 Includes 370,844 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's stock option plans and
2,529 shares of Common Stock in the Company's Savings Plan.
9 Includes 135,696 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
10 Includes 109,552 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock and option plans,
1,592 shares of Common Stock in the Company's Savings Plan.
11 Less than one percent.
12 Includes 154,836 shares of Common Stock issuable pursuant to currently
exercisable options granted under the Company's stock option plans and
30,743 shares of Common Stock in the Company's Savings Plan. Does not
include 16,600 shares held by members of Mr. Gutfreund's immediate family,
as to which Mr. Gutfreund disclaims beneficial ownership.
13 Includes 128,916 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1992 Non-Qualified Stock
Option Plan and 1995 Non-Qualified Stock Option Plan.
14 Includes 80,000 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's 1995 Non-Qualified Stock
Option Plan.
15 Consists of Common Stock issuable pursuant to options exercisable within 60
days under the Company's 1992 Non-Qualified Stock Option Plan and 1995
Non-Qualified Stock Option Plan.
16 Includes 3,672,982 shares of Common Stock issuable pursuant to options
exercisable within 60 days under the Company's stock option plans and
80,718 shares of Common Stock in the Company's Savings Plan.
17 Includes commission of $1,633,100.
18 Includes commission of $1,305,992.
19 Includes commission of $738,397.
20 Includes funding of supplemental retirement benefits in the amount of
$329,505.
21 Includes funding of supplemental retirement benefits in the amount of
$452,345.
22 The values are based on the closing price of the Common Stock on
the Nasdaq National Market on September 29, 2000, which was $15.00
per share.
<PAGE>
17
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial
reports and other financial information provided by the Corporation to any
governmental body or the public; the Corporation's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal
control system
- Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
auditing department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management the director of the
internal auditing department and the independent accountants in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or eview rendered
by the independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditing department and management's response.
4. Review with financial management and the independent accountants the
10-Q prior to its filing or prior to the release of earnings. The Chair
of the Committee may represent the entire Committee for purposes of this
review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees
and other compensation to be paid to the independent accountants. On an annual
basis, the Committee should review and discuss with the accountants all
significant relationships the accountants have with the Corporation to
determine the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.
7. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy
of the organization's financial statements.
<PAGE>
18
Financial Reporting Processes
8. In consultation with the independent accountants and the internal auditors,
review the integrity of the organization's financial reporting processes,
both internal and external.
9. Consider the independent accountants' judgments about the quality
and appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested by
the independent accountants, management, or the internal auditing department.
Process Improvement
11. Establish regular and separate systems of reporting to the Audit
Committee by each of Management, the independent accountants and the
internal auditors regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
12. Following completion of the annual audit, review separately with each
of management, the independent accountants and the internal auditing department
any significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
14. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements in
financial or accounting practices, as approved by the Audit Committee, have
been implemented.
Ethical and Legal Compliance
15. Establish, review and update periodically a Code of Ethical Conduct
and ensure that management has established a system to enforce this Code.
16. Review management's monitoring of the Corporation's compliance with
the organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that Corporation's financial statements,
reports and other financial information disseminated to governmental
organizations, and the public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications of the
internal audit department.
18. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter that could have
a significant impact on the organization's financial statements.
20. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
