SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CONCEPTS DIRECT, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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>
CONCEPTS DIRECT, INC.
2950 Colorful Avenue
Longmont, Colorado 80504
-------------------
Notice of Annual Meeting of Shareholders
To Be Held on April 24, 1998
-------------------
TO THE SHAREHOLDERS OF CONCEPTS DIRECT, INC.:
The Annual Meeting of Shareholders of Concepts Direct, Inc. (the
"Company") will be held at the Raintree Plaza Hotel, 1900 Ken Pratt Boulevard,
Longmont, Colorado 80501, on April 24, 1998, at 9:00 A.M., local time, for the
following purposes:
1. To elect six directors for the ensuing year;
2. To consider and vote upon a proposal to amend the Company's
1992 Stock Option Plan;
3. To consider and vote upon a proposal to adopt the Company's
1998 Non-Employee Directors Stock Option Plan;
4. To ratify the appointment of Ernst & Young LLP as the
independent public accountants for the Company for the fiscal
year ending December 31, 1998; and
5. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The close of business on February 25, 1998, has been fixed as the
record date for the Annual Meeting. All shareholders of record as of that date
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1997, is included with this Proxy Statement.
By Order of the Board of Directors
H. Franklin Marcus, Jr.
Secretary
March 10, 1998
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY. YOU MAY WITHDRAW THIS PROXY AT
ANY TIME BEFORE YOUR SHARES ARE ACTUALLY VOTED AND MAY VOTE YOUR OWN SHARES IF
YOU ATTEND THE MEETING IN PERSON.
<PAGE>
CONCEPTS DIRECT, INC.
2950 Colorful Avenue
Longmont, Colorado 80504
PROXY STATEMENT
TO BE MAILED ON OR ABOUT MARCH 10, 1998
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Concepts Direct, Inc. (the "Company"), for use at the Annual
Meeting of Shareholders of the Company to be held April 24, 1998, or any
adjournments thereof, for the purposes set forth in this Proxy Statement and the
attached Notice of Annual Meeting of Shareholders. If sufficient proxies are not
returned in response to this solicitation, supplementary solicitations may be
made by mail or by telephone, telegraph, electronic means or personal interview
by directors, officers, and regular employees of the Company, none of whom will
receive additional compensation for these services. Costs of solicitation of
proxies will be borne by the Company, which will reimburse banks, brokerage
firms, and other custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred by them in forwarding proxy materials to the
beneficial owners of stock held by them. The Company has also retained Corporate
Investor Communications, Inc., of Carlstadt, New Jersey, to assist in the
solicitation of proxies of shareholders whose shares are held in street name by
brokers, banks and other institutions at an approximate cost of $1,000 plus
out-of-pocket expenses. Such solicitation will be made by mail or by telephone,
telegraph, electronic means or personal interview. These costs will also be
borne by the Company.
The shares represented by all properly executed proxies received by the
Secretary of the Company and not revoked will be voted for the election of the
directors nominated and for the ratification of Ernst & Young LLP as independent
public accountants for the Company for the fiscal year ending December 31, 1998,
unless the shareholder directs otherwise in the proxy, in which event such
shares will be voted in accordance with such directions. Any proxy may be
revoked at any time before the shares to which it relates are voted either by
giving written notice (which may be in the form of a substitute proxy delivered
to the secretary of the meeting) or by attending the meeting and voting in
person.
In accordance with applicable law, all the shareholders of record on the
record date are entitled to receive notice of, and to vote at, the Annual
Meeting. On the record date there were issued and outstanding 4,957,286 shares
of the Company's common stock, $.10 par value (the "Common Stock"). All of such
shares were of one class, with equal voting rights, and each holder thereof is
entitled to one vote on all matters voted on at the Annual Meeting for each
share registered in such holder's name. Presence in person or by proxy of
holders of 2,478,644 shares of Common Stock will constitute a quorum at the
Annual Meeting. Shares for which the holder has elected to abstain or to
withhold the proxies' authority to vote on a matter will count toward a quorum.
Assuming a quorum is present, the affirmative vote by the holders of a plurality
of the shares represented at the Annual Meeting and entitled to vote will
Page 1 of 27
<PAGE>
be required to act on the election of directors and the affirmative vote by
the holders of a majority of the shares voting at the Annual Meeting will
be required to act on all other matters to come before the Annual
Meeting, including (i) the amendment to the Company's 1992 Stock Option Plan;
(ii) the approval of the Company's 1998 Non-Employee Directors Stock Option
Plan; and (iii) the ratification of the selection of Ernst & Young LLP as
independent auditors for the current fiscal year. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to shareholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Record Date
The Board of Directors has fixed the close of business on February 25,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. Each
holder of record of Common Stock on the record date will be entitled to one vote
for each share then registered in the holder's name. As of the close of business
on the record date, 4,957,286 shares were outstanding and entitled to vote at
the Annual Meeting.
Stock Ownership of Certain Beneficial Owners and Management
The table below sets forth information regarding beneficial ownership as
of February 25, 1998 of Common Stock by the Company's directors individually,
the executive officers named in the Summary Compensation Table individually,
the Company's directors and executive officers as a group, and persons known to
the Company to be beneficial owners of more than 5% of the Common Stock.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class
---------------- ----------------------- --------
Executive Officers and Directors
- --------------------------------
<S> <C>
Phillip A. Wiland 1,309,500(2) 26.15
2950 Colorful Avenue
Longmont, CO 80504
Michael T. Buoncristiano 59,063 1.18
450 7th Street, Suite LL8
Hoboken, NJ 07030
Robert L. Burrus, Jr. 11,333 *
One James Center
Richmond, VA 23219
Page 2 of 27
<PAGE>
H. Franklin Marcus, Jr. 83,196 1.66
2950 Colorful Avenue
Longmont, CO 80504
Phillip D. White 97,333 1.94
200 Camden Place
Boulder, CO 80302
J. Michael Wolfe 184,000 3.67
2950 Colorful Avenue
Longmont, CO 80504
Stephen R. Polk 111,333(3) 2.22
26955 Northwestern Highway
Southfield, MI 48034
All Directors and Executive Officers 1,855,758(4) 37.06
as a Group (7 Persons)
5% Owners
- ---------
Laifer Capital Management, Inc. 1,240,200(5) 24.77
114 West 47th Street
New York, NY 10036
Safeco Asset Management Company 650,600(6) 12.99
601 Union Street
Seattle, WA 98101
- ----------------
* Does not exceed 1% of the outstanding shares of the Company
(1) Except as described in footnotes (2) and (3) below, each individual
has sole voting power and sole investment power with respect to the Common Stock
set forth opposite his name. Includes, as to Mr. White 5,333, as to Messrs.
Buoncristiano and Burrus 3,999 shares, as to Mr. Marcus 6,000, as to Mr. Wiland
2,000 shares and as to Mr. Wolfe 12,000 shares of Common Stock, which could be
acquired through exercise of stock options within 60 days.
(2) Includes 1,292,000 shares owned in joint tenancy by Mr. Wiland and
his wife, who share voting and investment power as to the shares, 12,900 shares
held by Mr. Wiland as custodian for his minor children under the Uniform Gifts
to Minors Act and for which Mr. Wiland has sole voting and investment power and
4,600 shares owned by Mr. Wiland's daughter and for which Mr. Wiland shares
voting and investment power.
(3) Stephen R. Polk, a Director of the Company, is Chairman of the Board
and Chief Executive Officer of R.L. Polk & Co., and may by virtue of these
positions be deemed to share voting and investment
Page 3 of 27
<PAGE>
power over 100,000 shares owned by R.L. Polk & Co. Mr. Polk disclaims any
such shared control of shares owned by R.L. Polk & Co.
(4) Beneficial ownership of 100,000 shares is disclaimed.
(5) Ownership information is based on the Schedule 13D filed on January
15, 1998. According to this Schedule 13D, Laifer Capital Management, Inc. holds
819,300 shares with sole voting and dispositive power and 420,900 shares with
shared dispositive power.
(6) Ownership information is based on the Annual Questionnaire sent to
the directors, executive officers, persons nominated or chosen to become
directors or executive officers and 5% stockholders of the Company (the "Annual
Questionnaire") submitted to the Company on February 9, 1998. According to the
Annual Questionnaire, Safeco Asset Management Company holds 650,600 shares with
shared voting and dispositive power.
Page 4 of 27
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting to elect a Board of Directors
of six members. Unless otherwise instructed on the proxy, the shares represented
by proxies will be voted for the election as directors of all of the nominees
named below. Each of the nominees has consented to being named as a nominee and
has agreed that, if elected, he or she will serve on the Board of Directors for
a term which will run until the next annual meeting of shareholders and until
his or her successor has been elected. If any nominee becomes unavailable for
any reason the shares represented by proxies may be voted for a substitute
nominee designated by the Board of Directors.
The following table sets forth certain information as to the nominees and
certain executive officers.
</TABLE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director
and other information Since
- ----------------------------- ------
<S> <C>
PHILLIP A. WILAND (51) 1992
Chairman and Chief Executive Officer of the
Company since 1992. President and Chief
Executive Officer of Wiland Services, Inc.
from 1971 to 1992.
VIRGINIA B. BAYLESS (42) N/A
President of Bayless & Associates, Inc., a strategic financial planning
services company, since 1993. Vice President and stockholder, The Wallach
Company, an investment banking company specializing in mergers and
acquisitions, from 1989 to 1992.
MICHAEL T. BUONCRISTIANO (56) 1992
President, AVANTI! Direct Marketing Services,
Inc. since 1990.
ROBERT L. BURRUS, JR. (63) 1992
Chairman, Law Firm of McGuire, Woods, Battle &
Boothe LLP, Richmond, Virginia, since 1990.
Director, CSX Corporation, Heilig-Meyers
Company, O'Sullivan Corporation, S&K Famous
Brands, Inc. and Smithfield Foods, Inc.
</TABLE>
Page 5 of 27
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director
and other information Since
----------------------------- -------
<S> <C>
STEPHEN R. POLK (42) 1992
Chairman of the Board and Chief Executive Officer, R.L.
Polk & Co. since 1994. Previous employment with R.L.
Polk & Co. includes position as President, 1990 to 1994.
R.L. Polk & Co. owns approximately 2% of the
Common Stock.
PHILLIP D. WHITE (51) 1992
Associate Professor and past Chairman of
Marketing, College of Business and Administration,
University of Colorado at Boulder since 1976 (on
leave). Lecturer and writer on marketing. Ph.D.
in Marketing, University of Texas, 1976. President,
Phillip D. White & Associates, Inc. since 1996.
</TABLE>
Nominations for Director
The Bylaws of the Company provide that the only persons who may be
nominated for Directors are (i) those persons nominated by the Company's Board
of Directors, (ii) those persons nominated by the Compensation and Nominations
Committee of the Company's Board of Directors and (iii) those persons whose
names were personally delivered to the Secretary of the Company not later than
the close of business on the tenth day following the mailing date of the
Company's Proxy Statement for an annual meeting or delivered to the Secretary of
the Company by United States mail, postage prepaid, postmarked no later than 10
days after the mailing date of the Proxy Statement for an annual meeting. Any
shareholder wishing to nominate a person other than those listed in this Proxy
Statement must submit the following information in writing to the Office of
Secretary, Concepts Direct, Inc., 2950 Colorful Avenue, Longmont, Colorado
80504: (i) the name and address of the shareholder who intends to make the
nomination; (ii) the name, address, and principal occupation of each proposed
nominee; (iii) a representation that the shareholder is entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; and (iv) the written consent of
each proposed nominee to serve as a director of the Company if so elected. The
Chairman of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held six meetings during 1997. Each incumbent
director attended 75% or more of the aggregate of (1) such meetings of the Board
of Directors and (2) the total number of meetings held by all committees of the
Board of Directors on which he served.
Page 6 of 27
<PAGE>
Committees of the Board
The standing committees of the Board of Directors include an Audit
Committee and a Compensation and Nominations Committee.
Messrs. Polk, White and Buoncristiano are the members of the Audit
Committee, which met four times in 1997. The principal function of the Audit
Committee is to oversee the performance of the Company's independent
accountants. In this capacity, the Audit Committee recommends the firm to be
engaged by the Company for independent auditing and reviews the overall scope
and results of the annual audit. It also reviews, among other things, the
functions and performance of the Company's internal accounting controls, the
performance of nonaudit services, and changes in accounting policies.
Messrs. Burrus, Polk, White and Buoncristiano are the members of the
Compensation and Nominations Committee, which met one time in 1997. The
principal functions of the Compensation and Nominations Committee are to review
and set the direct and indirect compensation of the directors and officers of
the Company, to administer the Company's incentive compensation and stock option
plans and consider nominations for director made by shareholders of the Company.
The Committee reviews the salaries and bonuses for all officers and certain
other executives, recommends special benefits and perquisites for management,
and consults with management regarding employee benefits and general personnel
policies and recommends persons to be considered for election to the Board of
Directors, membership on committees of the Board of Directors, and positions as
executive officers of the Company. Recommendations by shareholders of persons to
serve on the Board of Directors should be submitted to the Compensation and
Nominations Committee in care of the Secretary of the Company in the manner
described under "Nominations for Director".
Compensation of Directors
The Company pays to each director who is not a Company employee an
annual retainer of $4,000 and $500 for each meeting of the Board of Directors or
any committee meeting of the Board of Directors attended. All directors are
reimbursed for travel expenses incurred as a result of service on the Board of
Directors.
Directors who are not employees of the Company also receive awards under
the 1992 Non-Employee Directors Stock Option Plan (the "1992 Plan"). Stock
option grants under the 1992 Plan are automatic. Each eligible director of the
Company on the effective date of the 1992 Plan, December 18, 1992, automatically
received an option to purchase 6,000 shares of Common Stock. Each eligible
director newly elected by the Company's shareholders on and after the effective
date of the 1992 Plan automatically receives options for 6,000 shares on the
date the director is elected by the shareholders. In addition, on the second
anniversary of the date on which an eligible director receives his or her
initial grant of an option, and biannually thereafter, each then eligible
director will automatically receive an option to acquire an additional 4,000
shares of Common Stock. The maximum number of shares of Common Stock subject to
the 1992 Plan is 80,000. The exercise price of the options granted under the
1992 Plan is the fair market value of the Common Stock on the date of the option
grant. Option grants under the 1992 Plan are exercisable in annual increments of
33.3% commencing one year following the date of grant.
Page 7 of 27
<PAGE>
During 1997, Mr. White exercised 2,000 stock options and Mr. Polk
exercised 8,666 stock options.
The 1992 Plan expires on May 1, 1998. See "Proposal No. 3 -- Approval of
the 1998 Non-Employee Directors Stock Option Plan" for a description of the
Company's proposed replacement plan.
Page 8 of 27
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the years ended December 31, 1995,
December 31, 1996, and December 31, 1997, certain compensation awarded to,
earned by, or paid to the Company's Chief Executive Officer and to the Company's
other executive officer whose annual compensation exceeded $100,000 for the year
ended December 31, 1997.
<TABLE>
<CAPTION>
Long Term
Compen-
Annual Compensation sation
Awards
- -------------------------------------------------------- ----------- -------------- ---------------- ------------------
Securities
Other Underlying All Other
Annual Options Compen-
Name and Principal Salary Bonus Compen- /SARs sation
Position Year ($) ($) sation (#) ($)(1)
- -------------------------------- ---------- ------------ ----------- -------------- ---------------- ------------------
<S> <C>
Phillip A. Wiland, 1997 198,723 60,840 (2) 0 5,011
Chairman and Chief Executive 1996 167,390 57,025 (2) 0 3,939
Officer 1995 133,424 31,860 (2) 0 3,403
J. Michael Wolfe, 1997 178,084 54,383 (2) 0 2,661
President and Chief Operating 1996 150,690 51,054 (2) 0 2,709
Officer 1995 131,597 30,654 (2) 0 1,427
H. Franklin Marcus, Jr. 1997 95,345 30,034 (2) 0 3,033
Chief Financial Officer and 1996 86,010 29,316 (2) 0 2,173
Secretary, Treasurer 1995 78,689 18,314 (2) 0 2,147
======================================================================================================================
</TABLE>
(1) These amounts were paid by the Company as matching contributions
under the Company's Retirement Savings Plan.
(2) None of the named executive officers received Other Annual
Compensation in excess of the lesser of $50,000 or 10% of combined salary and
bonus for fiscal 1995, 1996 or 1997.
Page 9 of 27
<PAGE>
Options/SAR Exercises and Year-End Value Table
The following table sets forth information concerning each exercise of
stock options and SARs during the fiscal year ended December 31, 1997, for each
of the executive officers named in the Summary Compensation Table and the fiscal
year-end value of unexercised options and SARs.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Values
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options/SARs at Options/SARs at
12/31/97 (#) 12/31/97(2) ($)
-------------------------------- --------------------------------
Shares Value
Acquired on Realized(1)
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- -------------- ------------ --------------- ---------------- -------------- -----------------
<S> <C>
Phillip A. Wiland 4,000 71,600 2,000 26,000 40,105 500,435
J. Michael Wolfe 0 0 12,000 36,000 240,690 701,050
H. Franklin Marcus, Jr. 0 0 6,000 18,000 120,345 350,525
======================================================================================================================
</TABLE>
(1) The value realized calculation is based on the fair market value of
the underlying stock on the date of exercise, minus the exercise price.
(2) The value calculation is based on the fair market value of the
underlying stock at year end, minus the exercise price.
Compensation Committee Interlocks and Insider Participation
Mr. Burrus, a member of the Compensation and Nominations Committee, is
Chairman and partner of the law firm of McGuire, Woods, Battle & Boothe LLP,
which was retained as general counsel by the Company during the fiscal year
ended December 31, 1997, and has been so retained during the current fiscal
year.
SECTION 16(a) COMPLIANCE
Section 16a of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission. Officers, directors and greater than 10 percent shareholders are
required by regulation to furnish the Company with copies of all Forms 3, 4 and
5 they file.
Page 10 of 27
<PAGE>
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified fiscal years, the Company
believes that all of its officers, directors and greater than 10 percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 1997, except that Messrs. Marcus, Wiland
and Wolfe filed late reports with respect to sale transactions which occurred in
connection with the Company's common stock offering during such fiscal year and
Messrs. Polk, White and Wiland filed late reports with respect to stock options
exercised during such fiscal year.
REPORT OF THE COMPENSATION AND NOMINATIONS COMMITTEE
General. During the calendar year ended December 31, 1997, the
Compensation and Nominations Committee of the Board of Directors (the
"Committee ") was comprised of four non-employee directors, Messrs. Michael
T. Buoncristiano, Robert L. Burrus, Jr., Stephen R. Polk, and Phillip D.
White. The Committee is responsible for setting compensation levels for the
Company's executive officers and for overseeing the administration of the
Concepts Direct, Inc. 1997 Incentive Compensation Plan (the "Incentive
Compensation Plan ") and the Concepts Direct, Inc. 1992 Employee Stock Option
Plan (the "Stock Option Plan ").
All decisions by the Committee are reviewed by the entire Board of
Directors. It has been the practice of the Committee to meet with the Company's
Chief Executive Officer ("CEO") in reviewing the compensation of senior
officers.
The compensation of the Company's senior executives is generally made up
of three components. These components include base salary, performance bonuses
under the Incentive Compensation Plan, and stock options granted under the Stock
Option Plan. At the Committee's discretion, an executive's compensation may also
include an award of stock appreciation rights under the Stock Option Plan. No
stock appreciation rights were awarded by the Committee during 1997.
An executive officer's base salary is a function of the executive
officer's responsibilities. The Committee believes that the compensation of
executive officers should be closely aligned with the performance of the Company
on both a short-term and long-term basis.
Prior to the beginning of 1997, the Committee established the formula to
be used to determine performance bonuses during 1997. The Committee determined
the amount of the performance bonus awarded to each executive officer who is
eligible for such an award as a percentage of such executive officer's base
salary. Quarterly and annual bonuses are paid under the Incentive Compensation
Plan based on the performance of the Company using a variety of measures
including net profit, earnings per share, revenues, and market capitalization.
The Committee's decisions were incorporated into the Incentive Compensation Plan
which was approved by the Board. Each calendar quarter, executive officers are
eligible to receive performance bonuses under the Incentive Compensation Plan.
The Committee believes that an executive officer should have an opportunity to
receive a performance bonus based on his or her performance during the
applicable quarter.
Page 11 of 27
<PAGE>
The long-term performance based compensation of executive officers takes
the form of stock option awards under the Stock Option Plan. The Committee
believes that compensation in the form of equity in the Company ensures that the
executive officers will have a continuing stake in the long-term success of the
Company and help further the alignment of their interests with those of the
shareholders. All options granted under the Stock Option Plan have an exercise
price equal to the market price of the Company's Common Stock on the date of the
grant. Thus, the stock options granted to an executive officer will have value
only if the Company's stock price increases.
In granting options under the Stock Option Plan, the Committee takes
into account each executive officer's responsibilities, relative position in the
Company and past grants. The Committee does not follow an established formula in
awarding stock options. Factors considered in making option awards to the
Company's officers include past grants, the importance of retaining the officer,
and the potential of the officer to contribute to the future success of the
Company.
The compensation currently paid by the Company is not subject to
Internal Revenue Code Section 162(m) which limits the income tax deductibility
of certain forms of compensation paid to its named executive officers in excess
of $1 million per year. Section 162(m) allows full deductibility of certain
types of performance-based compensation. If these limitations should become
applicable to the Company in the future, the Committee will consider
modifications to the Company's compensation practices, to the extent
practicable, to provide the maximum deductibility for compensation payments.
Compensation for Mr. Phillip A. Wiland, Chairman and Chief Executive
Officer. The base salary for Mr. Wiland during the 1997 calendar year was
$198,000. Mr. Wiland's salary was recommended to the Board of Directors by
the Committee following consultation with Mr. Wiland. The Committee reviewed
CEO performance in relation to the Company's goals in formulating its salary
recommendation for Mr. Wiland. Mr. Wiland's salary for 1997 was
recommended and approved by the Board of Directors. Mr. Wiland does not have
an Employment Agreement with the Company.
It is the Committee's view that Mr. Wiland's base salary of $198,000 and
bonus opportunity are in line with the compensation paid to the CEOs of other
corporations, including direct marketing businesses of similar size. Bonuses
were paid to Mr. Wiland under the Incentive Compensation Plan. No stock options
were granted to Mr. Wiland under the Stock Option Plan during 1997.
Compensation and Nominations Committee
Phillip D. White, Chairman
Michael T. Buoncristiano
Robert L. Burrus, Jr.
Stephen R. Polk
Page 12 of 27
<PAGE>
PERFORMANCE GRAPH
The following graph represents the cumulative total return on the
Company's Common Stock, with the cumulative total return of the companies
included in the Standard & Poor's Specialty Retail Index and the Standard &
Poor's 500 Index for the last five fiscal years. Cumulative total shareholder
return is defined as share price appreciation assuming reinvestment of
dividends. The dollar amounts shown on the following graph assume that $100 was
invested on December 31, 1992 in Company Common Stock, stocks constituting the
Standard & Poor's Specialty Retail Index and stocks constituting the Standard
and Poor's 500 Index with all dividends being reinvested.
Comparison of Five-Year Total Return
Among Concepts Direct, Inc., S&P Specialty Retail Index and
S&P 500 Index
[Proxy graph]
<TABLE>
<CAPTION>
Value of $100 invested on December 31, 1992
-------------------------------------------
Fiscal Year 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ----------- -------- -------- -------- -------- -------- --------
<S> <C>
Concepts Direct, Inc. $100 $59 $364 $964 $1,491 $3,054
S&P Specialty Retail-500 100 98 75 57 80 80
S&P 500 Index 100 110 112 153 189 252
======================================================================================================================
</TABLE>
Page 13 of 27
<PAGE>
PROPOSAL NO. 2
APPROVAL OF THE AMENDMENT OF THE 1992 STOCK OPTION PLAN
Introduction
The Board of Directors of the Company has approved, subject to
shareholder approval, an amendment to the Company's 1992 Stock Option Plan (the
"Stock Option Plan"). The amendment is summarized below.
Amendment to the Plan
The amendment to the Stock Option Plan increases the number of shares of
Common Stock reserved for issuance thereunder from 280,000 shares (the 70,000
shares originally reserved under the Stock Option Plan have been adjusted to
take account for the 2 for 1 stock split effected December 15, 1994 and the 2
for 1 stock split effected March 31, 1997) to 380,000 shares and imposes an
annual per participant limit of 50,000 shares.
Reason for Amendment
The amendment will add an additional 100,000 shares to the 280,000
shares originally reserved for the Stock Option Plan. This additional grant is
expected to allow the normal operation of the Stock Option Plan until its
termination in 2002. This will enable the continuation of the Company's policy
of offering options to salaried employees, thereby stimulating the efforts of
these employees and strengthening their desire to remain with the Company.
The annual per participant limit is recommended to retain full tax
deductibility for the Company with respect to any grants. Under Section 162(m)
of the Internal Revenue Code, the Company is limited in the deductibility of
compensation over $1 million for certain officers. If a plan provides a maximum
annual limit on option grants, the income from exercise of the options is exempt
from this limit. While the Company has never been and does not expect to be
subject to the limit in the near future, the amendment would ensure
deductibility if income is created from exercise of option grants in the future.
Principal Features of the Stock Option Plan
The principal features of the Stock Option Plan are summarized below.
The summary is qualified by reference to the actual provisions of the Stock
Option Plan, a copy of which is available to any shareholder upon written
request to the Company.
The Stock Option Plan authorizes incentive awards in the form of stock
options, stock appreciation rights, restricted stock or incentive stock. All
present and future employees of the Company who hold positions with management
responsibilities are eligible to receive incentive awards under the Stock Option
Plan.
Page 14 of 27
<PAGE>
The Compensation and Nominations Committee (the "Committee") administers
the Stock Option Plan and has the complete discretion to determine when to grant
incentive awards, which eligible employees will receive incentive awards,
whether the award will be an option, stock appreciation right, restricted stock
or incentive stock, whether stock appreciation rights will be attached to
options, and the number of shares to be allocated to each incentive award. The
Committee may impose conditions on the exercise of options and stock
appreciation rights and upon the transfer of restricted stock or incentive stock
received under the Stock Option Plan and may impose such other restrictions and
requirements as it may deem appropriate.
Options to purchase shares of Common Stock granted under the Stock
Option Plan may be incentive stock options or nonstatutory stock options. The
option price of Common Stock covered by an incentive stock option may not be
less than 100 percent (or, in the case of an incentive stock option granted to a
10 percent shareholder, 110 percent) of the fair market value of the Common
Stock on the date of the option grant. The value of incentive stock options,
based on the exercise price, that can be exercisable for the first time in any
calendar year is limited to $100,000. The option price of Common Stock covered
by a nonstatutory option may not be less than 85% of the fair market value of
the common stock on the date of grant.
Options may only be exercised at such times as specified by the
Committee, provided, however, that incentive stock options may be exercised only
within the periods permitted by the Internal Revenue Code.
If the option so provides, an optionee exercising an option may pay the
purchase price in cash; by delivering or causing to be withheld from the option
shares, shares of Common Stock; by delivering a promissory note; or by
delivering an exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds from the
option shares to pay the exercise price.
The Committee may award stock appreciation rights under the Stock Option
Plan with related options. When the stock appreciation right is exercisable, the
holder may surrender to the Company all or a portion of the unexercised stock
appreciation right and receive in exchange an amount equal to the difference
between (i) the fair market value on the date of exercise of the Common Stock
covered by the surrendered portion of the stock appreciation right and (ii) the
exercise price of the Common Stock under the related option. The Company's
obligation arising upon exercise of a stock appreciation right may be paid in
Common Stock or in cash, or in any combination of the two, as the Committee may
determine.
Restricted stock issued pursuant to the Stock Option Plan is subject to
the following general restrictions: (i) no shares may be sold, transferred,
pledged, or otherwise encumbered or disposed of until the restrictions have
lapsed or been removed under the provisions of the Stock Option Plan, and (ii)
if a holder of restricted stock ceases to be employed by the Company, any shares
of restricted stock on which the restrictions have not lapsed or been otherwise
removed will be forfeited. The Committee may impose further restrictions on
restricted stock awards, including additional events of forfeiture.
Page 15 of 27
<PAGE>
For incentive stock, the Committee may establish performance programs
with fixed goals and designate key employees as eligible to receive incentive
stock if the goals are achieved. Incentive shares will only be issued in
accordance with the program established by the Committee.
No options or stock appreciation rights and no shares of restricted
stock (during the applicable period of restriction) may be sold, transferred,
pledged, or otherwise disposed of, other than by will or by the laws of descent
and distribution. All rights granted to a participant under the Stock Option
Plan shall be exercisable during his or her lifetime only by such participant,
or his or her guardians or legal representatives. Upon the death of a
participant, his or her personal representative or beneficiary may exercise the
rights under the Stock Option Plan.
The Board of Directors may amend the Stock Option Plan in such respects
as it deems advisable provided that the shareholders of the Company must approve
any amendment that would (i) materially increase the benefits accruing to
participants under the Stock Option Plan, (ii) materially increase the number of
shares of Common Stock that may be issued under the Stock Option Plan or (iii)
materially modify the requirements of eligibility for participation in the Stock
Option Plan.
Federal Income Tax Consequences
An employee does not incur federal income tax when granted a
nonstatutory stock option, an incentive stock option, a stock appreciation
right, restricted stock or incentive stock.
Upon exercise of a nonstatutory option or a stock appreciation right, an
employee generally will recognize ordinary compensation income, which is subject
to income tax withholding by the Company, equal to the difference between the
fair market value of the Common Stock on the date of the exercise and the option
price. When an employee exercises an incentive stock option, the employee
generally will not recognize income, unless the employee is subject to the
alternative minimum tax.
An employee may deliver shares of Common Stock instead of cash to
acquire shares under an incentive stock option or nonstatutory stock option
without having to recognize taxable gain (except in some cases with respect to
'statutory option stock') on any appreciation in value of the shares delivered.
'Statutory option stock' is stock acquired upon the exercise of incentive stock
options.
In general, an employee who has received shares of restricted stock,
will include in gross income as compensation income an amount equal to the fair
market value of the shares of restricted stock at the time the restrictions
lapse or are removed. An employee who receives shares of incentive stock will
include in his or her gross income as compensation an amount equal to the fair
market value of the shares of incentive stock on the date of transfer to the
employee. Such amount will be included in income in the tax year in which such
event occurs.
The Company usually will be entitled to a business expense deduction at
the time and in the amount that the recipient of an incentive award recognizes
ordinary compensation income in connection therewith. No deduction is allowed in
connection with an incentive stock option, unless the employee disposes of
Page 16 of 27
<PAGE>
Common Stock received upon exercise in violation of the holding period
requirements. Moreover, there can be circumstances when the Company may not be
entitled to a deduction for certain transfers of Common Stock or payments to an
employee upon the exercise of an incentive award that has been accelerated as a
result of a change of control. This summary of federal income tax consequences
of incentive awards granted under the Stock Option Plan does not purport to be
complete. State, local and foreign income taxes may also be applicable to the
transactions described above.
Vote Required
Approval of the amendment to the Company's 1992 Stock Option Plan
requires the affirmative vote of the holders of a majority of the shares of
Common Stock voting at the Annual Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1992 STOCK OPTION PLAN IS IN THE BEST INTEREST OF ALL SHAREHOLDERS
AND, ACCORDINGLY, RECOMMENDS A VOTE 'FOR' THE AMENDMENT TO THE COMPANY'S 1992
STOCK OPTION PLAN.
Page 17 of 27
<PAGE>
PROPOSAL NO. 3
APPROVAL OF THE 1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
Introduction
The Board of Directors recommends approval of the Concepts Direct, Inc.
1998 Non-Employee Directors Stock Option Plan (the "Directors Plan"). The
Directors Plan will replace the Concepts Direct, Inc. 1992 Non-Employee
Directors Stock Option Plan which will expire on May 1, 1998. A brief summary of
the Directors Plan follows, with the full text printed in Exhibit A. Exhibit A
contains definitions for many terms used in this summary.
Administration of the Plan; Eligibility
The Directors Plan will be administered by the Board. All directors of
the Company who are not employees of Concepts Direct and its subsidiaries are
eligible to receive options under the Directors Plan. Currently four directors
may receive awards under the Directors Plan. If all of the directors nominated
for election at the Annual Meeting are elected, five directors will be eligible
to receive awards under the Directors Plan.
Amount of Stock Available for Incentive Awards
Fifty-two thousand (52,000) shares of Company Stock will be reserved and
available for issuance under the Directors Plan.
Types of Options That May be Granted Under the Directors Plan
Directors may receive only non-statutory options under the Directors
Plan. The Board will establish the amount of shares covered by an option and the
other terms and conditions for exercising an Option. The exercise price of an
Option will be at least 100% of the fair market value of Company Stock on the
date that the Option is granted.
Transferability of Awards; Modification of Awards
When granting options, the Board can allow the options to become fully
exercisable or vested upon a Change of Control. Options may be made transferable
by a Director to immediate family members and trusts or other similar entities
for the benefit of family members, according to the terms and conditions of the
option.
Page 18 of 27
<PAGE>
Term; Modification of Plan
The Directors Plan will become effective upon shareholder approval and
meeting Federal or State securities laws requirements. The Directors Plan will
terminate at the end of six years unless the Board of Directors terminates it
prior to that date.
The Board of Directors can amend or terminate the Directors Plan, except
that only shareholders can approve amendments that would (i) increase the number
of shares of Company Stock that are reserved and available for issuance under
the Directors Plan; or (ii) materially change or impact which employees are
eligible to participate in the Directors Plan.
Federal Income Tax Consequences
A Director will not incur federal income tax liabilities when granted an
option. Upon exercise of an option, the Director will be treated as having
received ordinary income equal to the difference between the fair market value
of Company Stock on the date of the exercise and the Option Price. The Company
will be entitled to a business expense deduction at the time and in the amount
that the Director recognizes ordinary income.
Vote Required
Approval of the Company's 1998 Non-Employee Directors Stock Option Plan
requires the affirmative vote of the holders of a majority of the shares of
Common Stock voting at the Annual Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE COMPANY'S 1998
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN IS IN THE BEST INTEREST OF ALL
SHAREHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE 'FOR' THE COMPANY'S 1998
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
PROPOSAL NO. 4
SELECTION OF PRINCIPAL ACCOUNTANT
Ernst & Young LLP served during the Company's year ended December 31,
1997, as its independent certified public accountants and has been selected by
the Board of Directors to serve as the Company's independent certified public
accountants for the current fiscal year, subject to ratification by the
shareholders of the Company. The Board of Directors expects that representatives
of Ernst & Young LLP will be present at the Annual Meeting of Shareholders, with
the opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
Page 19 of 27
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the meeting. If any other matters are properly presented, however, or if any
question arises as to whether any matter has been properly presented and is a
proper subject for shareholder action, the persons named as proxies in the
accompanying proxy intend to vote the shares represented by such proxy in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
The shareholders may present proposals for consideration at the 1998
Annual Meeting of Shareholders to the Company for inclusion in its proxy
materials for such meeting. Any such proposal should be submitted in writing in
accordance with Securities and Exchange Commission rules to Concepts Direct,
Inc., 2950 Colorful Avenue, Longmont, Colorado 80504, Attention: Corporate
Secretary. Shareholder proposals must be received by November 10, 1998, to be
included in the proxy materials for the 1998 Annual Meeting.
FURTHER INFORMATION
The Company will provide without charge to each person from whom a proxy
is solicited by the Board of Directors, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements and schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 for the Company's fiscal year ended December 31, 1997. Such written request
should be sent to Concepts Direct, Inc., 2950 Colorful Avenue, Longmont,
Colorado 80504, Attention: Corporate Secretary.
By Order of the Board of Directors
H. FRANKLIN MARCUS, JR.
Secretary
March 10, 1998
Page 20 of 27
<PAGE>
EXHIBIT A
CONCEPTS DIRECT, INC.
1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this 1998 Non-Employee Directors Stock Option
Plan (the "Plan") of Concepts Direct, Inc. (the "Company") is to encourage
ownership in the Company's common stock (the "Common Stock") by non-employee
members of the Board of Directors (the "Board") of the Company, in order to
promote long-term shareholder value and to provide non-employee members of the
Board with an incentive to continue as directors of the Company. The Plan
conforms to the provisions of Securities and Exchange Commission Rule 16b-3
("Rule 16b-3") under the Securities Exchange Act of 1934 (the "34 Act"), as
presently in effect.
2. Administration. The Plan shall be administered by the Board. The
Board shall have all powers vested in it by the terms of the Plan, including,
without limitation, the authority (within the limitations described herein) to
prescribe the form of the agreement embodying awards of Options under the Plan,
to construe the Plan, to determine all questions arising under the Plan, and to
adopt and amend rules and regulations for the administration of the Plan as it
may deem desirable. Any decision of the Board in the administration of the Plan,
as described herein, shall be final and conclusive. The Board may act only by a
majority of its members in office, except that members thereof may authorize any
one or more of their number or any officer of the Company to execute and deliver
documents on behalf of the Board. No member of the Board shall be liable for
anything done or omitted to be done by that Board member or any other member of
the Board in connection with the Plan, except for that Board member's own
willful misconduct or as expressly provided by statute.
3. Participation in the Plan. Each director of the Company who is not a
full-time employee of the Company or any subsidiary corporation (a "Director")
shall be eligible to participate in the Plan. The term "subsidiary corporation,"
as used in this Plan, shall have the meaning given it in Section 424 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
4. Stock Subject to the Plan. The Company has reserved an aggregate of
52,000 shares of Common Stock (the "Shares") for issuance pursuant to the
exercise of Options granted under the Plan. The aggregate number is subject to
future adjustments as hereinafter provided in Section 13. The aggregate number
of Shares reserved shall be reduced by the issuance of Shares upon the exercise
of Options, but it shall not be reduced if Options, for any reason, expire or
terminate unexercised.
5. Non-Statutory Stock Options. All Options granted under the Plan shall
be non-statutory in nature and shall not be entitled to special tax treatment
under Section 422 of the Internal Revenue Code.
6. Option Exercise Price. The exercise price of an Option shall be the
fair market value of the Shares of the Common Stock on the date the Option is
granted, which shall be the average of the closing prices of the sales of shares
of Common Stock on the national securities exchanges on which the Common Stock
may at any time be listed or, if there shall have been no sales on any such day,
the average of the
Page 21 of 27
<PAGE>
highest bid and the lowest asked prices on all such exchanges at the end of such
day, or, if on any day the Common Stock shall not be so listed, the
average of the representative bid and asked prices quoted in the NASDAQ
system at the close of trading on such day, or, if on any day the Common Stock
shall not be quoted in the NASDAQ system, the average of the high and low bid
and asked prices on such day in the over-the-counter market as reported by
National Quotation Bureau Incorporated, or any similar successor organization.
7. Terms, Conditions and Form of Stock Options. Each Option shall be
evidenced by a written agreement in such form as the Board shall from time to
time approve, which agreement shall comply with and be subject to the following
terms and conditions:
(a) The Board may make grants of Options to Directors at the times and
in the amounts that it deems appropriate. Whenever the Board deems it
appropriate to grant Options, notice shall be given to the Director
stating the number of Shares for which Options are granted and the
conditions to which the grant and exercise of the Options are subject.
This notice, when duly accepted in writing by the Director, shall become
a stock option agreement.
(b) An Option shall not be transferable by the optionee except by will,
or by the laws of descent and distribution, and shall be exercised
during the lifetime of the optionee only by the optionee or by the
optionee's guardian or legal representative; provided, however, that the
optionee shall have the right to transfer rights under the Options
granted hereunder during the optionee's lifetime subject to the
following limitations:
(i) transfers may be made only to the following transferees: (A)
the optionee's children, step-children, grandchildren,
step-grandchildren or other lineal descendants including
relationships arising from legal adoptions) (such individuals are
hereinafter referred to as "Immediate Family Members"); (B)
trust(s) for the exclusive benefit of any one or more of the
optionee's Immediate Family Members (the optionee's spouse may
also be a beneficiary); or (C) partnership(s), limited liability
compan(ies) or other entit(ies), the only partners, members or
interest holders of which are among the optionee's Immediate
Family Members (the optionee's spouse may also hold an interest);
(ii) there may be no consideration for the transfer;
(iii) there may be no subsequent transfer of the transferred
Options except by will or the laws of descent or distribution;
(iv) following transfer, the Options shall continue to be subject
to the same terms and conditions as were applicable immediately
prior to transfer (including the conditions under which the
Options may terminate prior to their expiration); except that the
transferee rather than the optionee may deliver the Option
exercise notice and payment of the exercise price; and
Page 22 of 27
<PAGE>
(v) written notice of any transfer must be delivered to Chief
Financial Officer of the Company;
and provided, further, that the optionee's estate may transfer the Options
to the beneficiaries of such estate, subject to the limitations set forth in
items (ii) through (v) above.
(c) Options may not be exercised:
(i) before the Plan is approved by the shareholders of the
Company;
(ii) after the expiration of ten (10) years from the date the
Option is granted; provided, however, that each Option shall be
subject to termination before its date of expiration as provided
herein; and
(iii) except by written notice to the Company at its principal
office, stating the number of Shares the optionee has elected to
purchase, accompanied by payment in cash, by delivery to the
Company of Shares (valued at fair market value on the date of
exercise) in the amount of the full Option exercise price for the
Shares being acquired thereunder or in any combination thereof.
In lieu of physical delivery of Shares as payment of the Option
exercise price, the optionee may either (a) if the Shares are
held by a registered securities broker for the optionee, provide
a notarized statement attesting to the number of shares owned
that are intended to be delivered, or (b) if the Shares are
actually held by the optionee, provide a notarized statement with
certificate numbers of the shares owned that are intended to be
delivered.
(d) The Company shall not be required to issue or deliver any Shares of
its Common Stock purchased upon the exercise of any part of an Option
before (i) the admission of such Shares to listing on the NASDAQ or the
exchange, if any, on which shares are then listed; (ii) completion of
any registration or other qualification of such Shares under any state
or federal law or regulation that the Company's counsel shall determine
is necessary or advisable, and (iii) compliance by the Company with such
other legal requirements as the Company's counsel shall advise is
necessary or advisable.
(e) Notwithstanding anything herein to the contrary, Options shall
always be granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3, or any replacement rule adopted pursuant to
the provisions of the 34 Act, as the same now exists or may, from time
to time, be amended.
Page 23 of 27
<PAGE>
8. Change of Control. A "Change of Control" is defined as:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Act, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of 20% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors, but excluding for this purpose,
any such acquisition by the Company or any of its subsidiaries, or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by the individuals and entities who were the
beneficial owners, respectively, of the common stock and voting
securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior
to such acquisition, of the then outstanding shares of common stock of
the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, as the case may be; or
(b) Individuals who, as of the date hereof, constitute the Board (as of
the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's shareholders was
approved by a vote of at least a majority of the directors comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Act);
(c) Approval by the shareholders of the Company of a reorganization,
merger of consolidation, in each case, with respect to which the
individuals and entities who were the respective beneficial owners of
the common stock and voting securities of the Company immediately prior
to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete liquidation or
dissolution of the Company or of its sale or other disposition of all or
substantially all of the assets of the Company.
Page 24 of 27
<PAGE>
9. Death of Optionee. In the event of the death of an optionee at a time
when Options granted to such optionee hereunder are outstanding and exercisable,
the personal representative of the estate of the optionee may exercise such
Options in the same manner as could the optionee before death; provided,
however, that no such Option may be exercised after the expiration date of the
Option.
10. Election to Defer Receipt of Stock.
(a) An optionee may elect to defer receipt of Shares that the optionee
would otherwise receive upon exercise of an Option by completing a
deferral election (a "Deferral Election"). A Deferral Election must be
in writing and shall be delivered to the Chief Financial Officer of the
Company at least six months before the Option(s) will be exercised. A
Deferral Election shall be irrevocable in respect to the Options to
which it pertains. A Deferral Election must specify the applicable
number or percentage of the Shares on which the optionee wishes to defer
receipt.
(b) The following provisions apply with respect to all Options for which
a Deferral Election is made. The optionee must pay the exercise price of
the Options by delivery to the Company of Shares (the Exercise Shares)
in the amount of the full Option exercise price for the Shares being
acquired. Delivery of the Exercise Shares may be made as provided in
Section 7(c)(iv). Upon payment of the exercise price, the Company shall
issue Shares equal to the sum of (1) the number of Shares on which the
Option was exercised reduced by the number of Exercise Shares (the
Deferred Shares), and (2) if the optionee surrendered the Exercise
Shares, Shares equal to the number of the Exercise Shares. The Deferred
Shares shall be credited to the optionee's account (the Deferred Shares
Account) established under a trust (the Deferred Shares Trust). Any
additional Shares shall be delivered to the optionee.
(c) The Deferred Shares Trust shall secure the Company's obligation to
transfer the Deferred Shares to the director. The Deferred Shares Trust
and its assets shall remain subject to the claims of the Company's
creditors and any interest the director may be deemed to have in the
Deferred Shares Trust may not be sold, hypothecated or transferred
(including, without limitation, transfer by gift), except by will or the
laws of descent and distribution. The certificates for shares issued to
the Deferred Shares Trust shall be issued in the name of the trustee.
For accounting purposes, the trustee shall maintain records of the
Deferred Shares Account for each director. All dividends and other
distributions paid or made with respect to the Common Stock in a
Deferred Shares Account shall be held in the account. All cash dividends
or other distributions shall be invested in additional shares of Common
Stock. The director shall have the right to direct the trustee as to the
voting of shares of Common Stock in the Deferred Shares Account.
(d) A Deferral Election shall provide for payment of at a future date or
dates elected by optionee. In addition, the optionee may elect to
receive the Deferred Shares Account in a single lump sum payment upon
the occurrence of a Change of Control in lieu of any other form that
would otherwise
Page 25 of 27
<PAGE>
be payable pursuant to a prior election. The single lump sum payment
shall be paid as practicable after the Change of Control occurs.
Except for an election made within 30 days of the effective date of this
Plan which shall be immediately effective, any election or
revocation of an election by the director as to the date of payment or
payment upon a Change of Control shall be effective six months after it
is made.
(e) The Board may establish such procedures as are necessary or
appropriate to implement the provisions of this Section 10 and may
delegate the administration to one or more employees of the Company.
11. Modification, Extension and Renewal of Options. The Board shall have
the power to modify, extend or renew any outstanding Option, provided that any
such action may not have the effect of changing the Option exercise price or the
number of Shares subject to the Option or altering or impairing any rights or
obligations of any person under any Option previously granted without the
consent of the optionee.
12. Termination. The plan shall terminate upon the earlier of:
(a) the adoption of a resolution of the Board terminating the Plan;
or
(b) six years following the date this Plan is approved by the Company's
shareholders.
No termination of the Plan shall without the optionee's consent
materially and adversely affect any of the rights or obligations of any optionee
under any Option previously granted under the Plan.
13. Limitations of Rights.
(a) Neither the Plan nor the granting of an Option nor any other action
taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will
retain any person as a director for any period of time.
(b) An optionee shall have no rights as a shareholder with respect to
Shares covered by Options until the date of exercise of the Option, and,
except as provided in Section 13, no adjustment will be made for
dividends or other rights for which the record date is before the date
of such exercise.
14. Changes in Capital Structure. Appropriate adjustments shall be made
to the price of the Shares and the number (and, if necessary, the series) of
Shares subject to outstanding Options and the number of Shares of each series of
Common Stock issuable under the Plan if there are any changes in the Company's
Common Stock by reason of stock dividends, stock splits, reverse stock splits,
recapitalization, mergers, or consolidations.
15. Effective Date of the Plan. Subject to the approval of the
shareholders of the Company, the Plan shall be effective on the date the Plan is
adopted by the Board.
Page 26 of 27
<PAGE>
16. Amendment to the Plan. The Board may suspend or discontinue the Plan
or revise or amend the Plan in any respect; provided that, if and to the extent
required by Rule 16b-3, no revision or amendment shall be made that increases
the total number of Shares reserved for issuance pursuant to Options under the
Plan subject to the Plan (except as provided in Section 13) or expands the class
of persons eligible to receive Options, unless such change is authorized by
shareholders.
<PAGE>
17. Notice. Any written notice to the Company required by any of the
provisions of the Plan shall be addressed to the Chief Financial Officer of the
Company and delivered personally or mailed first class, postage prepaid to the
Company at its principal business address.
18. Miscellaneous. By accepting any Option or other benefit under the
Plan, each optionee and each person claiming under or through such person shall
be conclusively deemed to have given acceptance and ratification of, and consent
to, any action taken with respect thereto by the Company or the Board.
Page 27 of 27
<PAGE>
PROXY CONCEPTS DIRECT, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 24, 1998
The undersigned having received the Annual Report to the Shareholders and
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
dated March 10, 1998, hereby appoints H. Franklin Marcus, Jr., and Robert L.
Burrus, Jr. (each with power to act alone and with power of substitution) as
proxies and hereby authorizes them to represent and vote, as directed below,
all the shares of common stock of Concepts Direct, Inc. (the "Company"), held
of record by the undersigned on February 25, 1998, at the annual meeting of
shareholders to be held on April 24, 1998, and any adjournment thereof.
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to (except as
indicated below) vote for all
nominees listed below
Virginia B. Bayless, Robert L. Burrus, Jr., Michael T. Buoncristiano,
Stephen R. Polk, Phillip D. White, Phillip A. Wiland
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Approval of the amendment to the Company's 1992 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
3. Approval of the adoption of the Company's 1998 Non-Employee Directors Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the Selection of Ernst & Young LLP as Independent Accountants
for the Year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION the proxies are authorized to vote such other business as
may properly come before the meeting and any adjournments thereof.
This proxy, when properly executed, will be voted as directed. Where no
direction is given, this proxy will be voted FOR Proposals 1, 2, 3 and 4.
Any proxy or proxies previously given for the meeting are revoked.
Please sign your name(s) exactly as
shown below. If signer is a
corporation, please sign the full
corporate name by duly authorized
officer. If an attorney, guardian,
administrator, executor, or trustee,
please give full title as such. If a
partnership, please sign in
partnership name by authorized person.
Dated: , 1998
---------------------------------
--------------------------------------
--------------------------------------
Please complete, date, sign, and
return this proxy promptly in the
enclosed envelope.
