[GRAPHIC OMITTED]
April 3, 2000
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Aldila, Inc., to be held Wednesday,
May 10, 2000, at 9:00 a.m. at the Rancho Bernardo Inn, 17550 Bernardo Oaks
Drive, San Diego, California 92128. The formal notice and proxy statement
for the Annual Meeting are attached to this letter.
It is important that you vote your shares as soon as possible, either
by phone or by mail as explained on the enclosed proxy card, even if you
currently plan to attend the Annual Meeting. By doing so, you will ensure
that your shares are represented and voted at the meeting. If you decide to
attend, you can still vote your shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation
and I look forward to seeing you on May 10th.
Very truly yours,
/s/ Peter R. Mathewson
Peter R. Mathewson
Chairman of the Board
<PAGE>
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2000
TO THE STOCKHOLDERS OF ALDILA, INC.
Notice is hereby given that the Annual Meeting of Stockholders of
Aldila, Inc. (the "Company") will be held at the Rancho Bernardo Inn, 17550
Bernardo Oaks Drive, San Diego, California 92128, on Wednesday, May 10,
2000, at 9:00 a.m., Pacific time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect by vote of the holders of Common
Stock a total of nine persons to the Board of Directors to serve
until the next Annual Meeting of Stockholders and until their
successors are elected and have qualified. The Board of
Directors' nominees are:
Peter E. Bennett Donald C. Klosterman
Thomas A. Brand Wm. Brian Little
Marvin M. Giles, III Peter R. Mathewson
Vincent T. Gorguze Chapin Nolen
John J. Henry
2. AMENDMENT OF 1994 STOCK INCENTIVE PLAN. To act upon a proposal to
amend the Company's 1994 Stock Incentive Plan.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent accountants for the fiscal year
ending December 31, 2000.
4. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting.
Only stockholders of record at the close of business on March 24, 2000
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
Robert J. Cierzan
Secretary
Dated: April 3, 2000
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE VOTE BY PHONE OR BY MAIL, AS INSTRUCTED ON THE ENCLOSED PROXY CARD,
AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE YOUR PROXY (WHETHER GIVEN BY PHONE
OR MAIL) IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR
SHARES IN PERSON.
<PAGE>
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
(858) 513-1801
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
GENERAL
This proxy statement is furnished to stockholders of Aldila, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board" or "Board
of Directors") for use at the Annual Meeting of Stockholders to be held at
9:00 a.m., Pacific time, on Wednesday, May 10, 2000, at the Rancho Bernardo
Inn, 17550 Bernardo Oaks Drive, San Diego, California 92128, and any
adjournments thereof (the "Annual Meeting" or "Meeting").
Common stockholders of record as of the close of business on March 24,
2000, will be entitled to vote at the Meeting or any adjournments thereof.
As of the record date, the Company had outstanding 15,462,204 shares of
Common Stock, each entitled to one vote on all matters to be voted upon.
This proxy statement, the accompanying form of proxy and the Company's
annual report to stockholders for the fiscal year ended December 31, 1999
are being mailed on or about April 3, 2000, to each stockholder entitled to
vote at the Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is voted by telephone or executed and returned
by mail in time and not revoked, all shares represented thereby will be
voted. Each proxy will be voted in accordance with the stockholder's
instructions. If no such instructions are specified, the proxies will be
voted FOR the election of each person nominated for election as a director,
FOR the amendment of the Company's 1994 Stock Incentive Plan (the "1994
Stock Incentive Plan"), and FOR the ratification of the Board's selection
of Deloitte & Touche LLP as the Company's independent accountants for the
fiscal year ending December 31, 2000.
Assuming a quorum is present, the affirmative vote by the holders of a
plurality of the votes cast at the Meeting will be required for the
election of directors; the affirmative vote of a majority of the votes cast
at the Meeting will be required for the amendment of the Company's 1994
Stock Incentive Plan; the affirmative vote of a majority of the votes cast
at the Meeting will be required for the ratification of the Board's
selection of Deloitte & Touche LLP as the Company's independent
accountants; and the affirmative vote of a majority of the votes cast at
the Meeting will be required to act on all other matters to come before the
Annual Meeting. An automated system administered by the Company's transfer
agent tabulates the votes. For purposes of determining the number of votes
cast with respect to any voting matter, only those cast "for" or "against"
are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the Meeting. With
respect to all matters (other than the election of directors), abstentions
and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority of the votes cast.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is
voted by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy
by mail or by telephone will not prevent you from voting in person at the
Annual Meeting should you be present and wish to do so.
ELECTION OF DIRECTORS
The Company's Restated Bylaws give the Board the power to set the
number of directors at no less than one nor more than twenty-one. The size
of the Company's Board is currently set at nine. On May 10, 2000, Gary T.
Barbera's term as a member of the Board of Directors will expire. He will
not be nominated for reelection to the Board of Directors at the May 10,
2000 Annual Meeting. Directors hold office until the next annual meeting of
stockholders and until their successors are elected and have qualified.
Unless otherwise directed, proxies in the accompanying form will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will
be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may
be unable to serve or will or may withdraw from nomination. All of the
following nominees are current directors of the Company whose terms end at
the 2000 Annual Meeting. Information concerning the nominees for directors
is set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTORS'
NOMINEES FOR DIRECTORS TO BE ELECTED BY THE HOLDERS OF COMMON STOCK.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
THOMAS A. BRAND has been a director of the Company since November 3,
1997. Since January 1994, Mr. Brand has been an instructor at the
University of Phoenix and a consultant to the composite materials industry.
From 1983 to 1992, he was Senior Vice President/General Manager of Fiberite
Advanced Materials, a business unit of ICI-PLC. From 1964 to 1983, Mr.
Brand served as Vice President/General Manager, Fiberite West Coast Corp.,
which is a division of Fiberite Corporation. Age: 66.
PETER E. BENNETT has been a director of the Company since November
1994. Mr. Bennett has been the President and a Senior Partner of Liberty
Partners L.P. since September 1992. He is a director of Tnex.net, Internet
Healthcare Group, Datamax Corp., Norwood Promotional Products, Inc.,
PlayPower, Inc., PADCOM, Inc., and Regulus Group, LLC. Age: 58.
MARVIN M. GILES, III has been a director of the Company since October
1993. He has been President of Pros, Incorporated ("Pros") since he
co-founded that company in 1973. Pros is a business management firm that
specializes in representing professional athletes, particularly golfers
including Davis Love III, Tom Kite and Lanny Wadkins. Mr. Giles is also an
accomplished golfer. He was the 1972 U.S. Amateur Champion and the 1975
British Amateur Champion. Mr. Giles was the 1993 U.S. Walker Cup Captain
and played on four Walker Cup teams from 1969 to 1975. Age: 57.
VINCENT T. GORGUZE has been the Chairman of the Board of Directors of
Cloud Corporation LLC ("Cloud") since February 2000. Cloud is a privately
held food packaging company located in Illinois. Since September 1997, Mr.
Gorguze has been Chairman of the Board of Directors and Chief Executive
Officer of Carco Electronics Inc., a manufacturer of flight motion
simulators, target systems, radar sighting equipment and gyroscopes. Since
1978, Mr. Gorguze has been Chairman and CEO of Sinclair & Rush, Inc., a
plastics company, and since July 1995 has served as Chairman and CEO of
PlayPower, Inc. Since June 1992, Mr. Gorguze has served as Chairman of the
Board of Directors of Cameron Holdings Corporation, which is an investment
company. Mr. Gorguze previously served on the Board of Directors of the
Company (or its predecessors) from September 1998 until May 1999. He served
as Chairman of the Board of the Company (or its predecessors) from
September 1988 until December 31, 1995 and served as Chairman Emeritus of
the Company from 1995 until May 5, 1999. He was Chief Executive Officer of
the Company (or its predecessors) from September 1988 until June 1992 and
served as a consultant to the Company for five and one half years following
his service as Chief Executive Officer. Mr. Gorguze previously held various
executive positions with Emerson Electric from 1962 to 1978, including Vice
Chairman, President and Chief Operating Officer. Age: 84.
JOHN J. HENRY has been a director of the Company since November 1994.
Mr. Henry has been the Vice Chairman of Sinclair & Rush since September
1978. Mr. Henry previously held various executive positions with Rockwell
International Corp. from 1967 to 1978, including Sr. Vice President and
President of the Admiral Corporation. He is a director of PlayPower, Inc.
and Duquesne University. Age 73.
DONALD C. KLOSTERMAN has been a director of the Company since March
1994. Mr. Klosterman was the Chairman of the Board of NTN Communications,
Inc. ("NTN Communications") from April 1983 until September 1994. Since
September 1994, he has been a Director of NTN Communications. NTN
Communications is a satellite broadcasting company that provides
interactive entertainment programming. From July 1994 to November 1995, Mr.
Klosterman served as President of Pacific Casino Management Inc., a casino
operator. Age: 70.
WM. BRIAN LITTLE has been a director of the Company (or its
predecessors) since January 1992. Since January 1995 he has been a private
investor. From January 1994 to December 1994, he was a Special Limited
Partner of FLC Partnership, the General Partner of Forstmann Little & Co.
He is a director of The Topps Company, Inc., Department 56, Inc. and
Screaming Media.Com Inc. Age: 58.
PETER R. MATHEWSON has been a director of the Company since January
1997 and has been President, Chief Executive Officer and Chairman of the
Board of the Company effective January 1, 2000. From 1990 until December
31, 1999, he served as Vice President of the Company (or its predecessors).
Since January 1997, Mr. Mathewson has also served as President and Chief
Operating Officer of Aldila Golf Corp., the Company's operating subsidiary
that conducts its core golf operations. Mr. Mathewson has been with the
Company (or its predecessors) since September 1973 and has held various
positions, including: plant manager, production manager, shipping and
receiving supervisor, and purchasing agent. Age: 49.
CHAPIN NOLEN has been a director of the Company since November 1994.
Mr. Nolen has been a director and was President of Combe, Incorporated from
1970 to 1995 and is currently serving as Vice Chairman of its Board of
Directors. He is a director of Santa Barbara Olive Company and the Cosmetic
Toiletry and Fragrance Association. Age: 67.
<PAGE>
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company, as provided by Delaware law, and
conducts its business through meetings of the Board and four standing
committees: Executive, Audit, Compensation and Stock Option. In addition,
from time to time, special committees may be established under the
direction of the Board when necessary to address specific issues. The
Company has no nominating or similar committee.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held four meetings in fiscal
1999. Each director attended 75% or more of the aggregate of (i) meetings
of the Board held during the period for which he served as a director and
(ii) meetings of all committees held during the period for which he served
on those committees.
The EXECUTIVE COMMITTEE of the Board has the authority, between
meetings of the Board of Directors, to exercise all powers and authority of
the Board in the management of the business and affairs of the Company that
may be lawfully delegated to it under Delaware law. The Committee is
chaired by Peter R. Mathewson and its other members are Peter E. Bennett
and Wm. Brian Little. The Executive Committee held two meetings in fiscal
1999.
The AUDIT COMMITTEE's principal functions are to (i) review the
adequacy of the Company's system of internal control, (ii) review the
independent auditor's proposed audit scope and approach, (iii) conduct a
post-audit review of the financial statements and audit findings including
any significant suggestions for improvements provided to management by the
independent auditors, (iv) review the performance and fee arrangements of
the independent auditors and (v) recommend the appointment of the
independent auditors. The Audit Committee reports to the Board, and has
lines of communication with management and the independent auditors
(including private meetings). The Audit Committee is currently comprised of
John J. Henry, as chairman, Peter E. Bennett and Chapin Nolen. The Audit
Committee held four meetings in fiscal 1999.
The COMPENSATION COMMITTEE is charged with the responsibility of
supervising and administering the Company's compensation policies,
management awards, reviewing salaries, approving significant changes in
salaried employee benefits, and recommending to the Board such other forms
of remuneration as it deems appropriate. The Compensation Committee is
currently comprised of Mr. Little, as chairman, and Peter E. Bennett and
Donald C. Klosterman. The Compensation Committee held two meetings in
fiscal 1999.
The STOCK OPTION COMMITTEE's principal functions are to determine
individuals to whom stock options will be granted under the Company's 1994
Stock Incentive Plan, the terms on which such options will be granted, and
to administer the 1994 Stock Incentive Plan. The Stock Option Committee is
currently comprised of Mr. Little, who is the chairman, Mr. Klosterman and
Marvin M. Giles, who are independent, "non-employee directors" (within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act")). The Stock Option Committee also retains administrative
responsibility over the Company's 1992 Stock Option Plan. The Stock Option
Committee held two meetings in fiscal 1999.
<PAGE>
AMENDMENT OF 1994 STOCK INCENTIVE PLAN
On March 22, 2000, the Board of Directors approved an amendment (the
"Plan Amendment") to the Company's 1994 Stock Incentive Plan (the "Plan").
According to the 1994 Stock Incentive Plan, the effectiveness of the Plan
Amendment is subject to the approval of the stockholders of the Company.
Currently, the maximum number of shares of Common Stock that may be made
the subject of options and awards under the 1994 Stock Incentive Plan is
3,100,000. The proposed Plan Amendment would increase the maximum number of
shares that may be made the subject of options and awards granted under the
1994 Stock Incentive Plan to 4,100,000.
As of March 24, 2000, under the 1994 Stock Incentive Plan, the Stock
Option Committee has granted an aggregate of 3,692,756, of which 836,683
options have been terminated and/or exercised, to eligible individuals and
is obligated to grant 26,314 options to Vincent Gorguze upon his election
to the Board and an additional aggregate of 70,000 options to the other
non-employee directors on May 31, 2000. There are currently 197,261 shares
of Common Stock available for grant under the 1994 Stock Incentive Plan
and, if the Plan Amendment is approved, there will be 1,197,261 shares of
Common Stock available for grant under the 1994 Stock Incentive Plan.
Approximately 70 persons are currently eligible to participate in the Plan.
The Board of Directors believes that the availability of these
additional options will be critical to the ability of the Company over the
next several years to attract and retain key employees, particularly in
light of the views of the Board of Directors generally and its Compensation
and Stock Option Committees specifically as to the importance of using
significant equity based incentive compensation to align the interests of
the management of the Company with those of its stockholders. In
determining the number of options to add to the Plan, the Board of
Directors took into account the Company's recent history of option grants
and the likely level of overall grants that would be appropriate to provide
incentives to current and future employees in connection with management's
efforts to improve the overall performance of the Company.
The principal provisions of the 1994 Stock Incentive Plan, giving
effect to the Plan Amendment, are summarized below. The following summary
of the material provisions of the 1994 Stock Incentive Plan does not
purport to be complete and is qualified in its entirety by the terms of the
1994 Stock Incentive Plan, a complete copy of which is attached hereto as
Exhibit A and incorporated herein by reference. All defined terms used
herein shall have the same meanings set forth in the 1994 Stock Incentive
Plan, unless otherwise indicated herein.
The 1994 Stock Incentive Plan is administered by a "Committee" which
is composed of at least two directors of the Company, each of whom is a
"non-employee director" within the meaning of Rule 16b-3 promulgated under
Section 16(b) ("Rule 16b-3") of the Exchange Act and an "outside director"
within the meaning of regulations promulgated under Section 162(m) of the
Code. Pursuant to the 1994 Stock Incentive Plan, the Committee selects
Participants to whom Options and Awards are to be granted and determines
the type, size, terms and conditions of Options and Awards, including the
per share purchase price and vesting provisions of Options and the
restrictions or performance criteria relating to Restricted Stock and
Performance Shares. The Company's Stock Option Committee serves as the
Committee and administers and interprets the 1994 Stock Incentive Plan.
PURPOSE OF THE 1994 STOCK INCENTIVE PLAN
The Board believes that it is important that directors, executives and
key employees have a significant financial stake in the growth in the value
of the Company so as to align their interests with those of the Company's
stockholders. The Board also believes that in the future it will be easier
to attract highly qualified individuals if the Company can offer them a
meaningful opportunity and incentive to participate in growth in the value
of the Company.
SECURITIES TO BE OFFERED
An aggregate of 4,100,000 Shares of Common Stock of the Company may be
issued or transferred pursuant to the 1994 Stock Incentive Plan; however,
not more than one-third of the allotted number of Shares in the aggregate
may be made the subject of Restricted Stock Awards and no Eligible
Individual may receive more than 820,000 Shares during the term of the Plan
in respect of Options and Awards. In the event of any Change in
Capitalization, the Committee may adjust the maximum number and class of
Shares with respect to which Awards may be granted under the 1994 Stock
Incentive Plan, the maximum number of Shares with respect to which Options
or Awards may be granted to any Eligible Individual during the term of the
Plan, the number and class of Shares which are subject to outstanding
Options or Awards granted under the 1994 Stock Incentive Plan and, if
applicable, the purchase price therefor, the number and class of Shares in
respect of which Director Options are to be granted, and the Performance
Objectives relating to Performance Shares. In addition, if any Option or
Award expires or terminates without having been exercised, the Shares
subject to that Option or Award again become available for grant under the
1994 Stock Incentive Plan.
INDIVIDUALS WHO MAY PARTICIPATE IN THE 1994 STOCK INCENTIVE PLAN
All of the Company's (and its subsidiaries') salaried employees and
officers and any advisors and consultants who receive cash compensation
from the Company (or any of its subsidiaries) are eligible to receive
Options or Awards under the 1994 Stock Incentive Plan. Options and Awards
under the Plan shall be granted at the sole discretion of the Committee.
The granting of an Option or Award does not confer upon the participant any
right to continue in the employ of the Company or affect any right or power
of the Company to terminate the services of such participant at any time.
Options are also conferred upon nonemployee directors upon their initial
appointment and annually on the last trading day in May provided the
Director has served at least one year and continues to serve as a Director
as of such date.
AWARDS
Options. The Committee may grant to eligible individuals Options to
purchase Shares. Subject to the provisions of the Code, Options may either
be Incentive Stock Options (within the meaning of Section 422 of the Code)
or Nonqualified Stock Options. The purchase price of each share of Common
Stock (the "Purchase Price") under each Option shall be established by the
Committee at the time the Option is granted. The Purchase Price of Options
shall not be less than 100% of the Fair Market Value of a Share on the date
the Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). Employee Options are exercisable at
such times and in such installments as determined by the Committee,
provided, however, that no Employee Option shall be exercisable after the
expiration of ten years from its grant date (five years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder). The Committee
may accelerate the exercisability of any Employee Option at any time. Under
the 1994 Stock Incentive Plan, each new non-employee director receives
Options to purchase 26,314 Shares at the time of joining the Board and
Options to purchase an additional 10,000 Shares each May after serving at
least one year on the Board. The Director Options vest in equal amounts on
the first, second and third anniversary of the date of grant and have a
term of 10 years from the date of grant. The Committee shall determine the
other terms and conditions of Director Options, which shall not be
inconsistent with the provisions of the Plan and which shall not vary the
price, amount or timing of Director Options provided in Section 6 of the
Plan.
Unless set forth in the Agreement evidencing the Option at the time of
grant or at any time thereafter, Options are not transferable by the
Optionee other than by will or the laws of descent and distribution or
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act) and may be exercised during the
Optionee's lifetime only by the Optionee or the Optionee's guardian or
legal representative. The Purchase Price for Shares acquired pursuant to
the exercise of an Employee Option must be paid (i) in cash, (ii) by
transferring Shares to the Company, or (iii) a combination of the
foregoing, upon such terms and conditions as determined by the Committee.
The Purchase Price for Shares acquired pursuant to the exercise of Director
Options must be paid in cash. Notwithstanding the foregoing, the Committee
may establish cashless exercise procedures which provide for the exercise
of an Option and sale of the underlying Share by a registered
broker-dealer. Upon a Change in Control, all Options outstanding under the
1994 Stock Incentive Plan will become immediately and fully exercisable. In
addition, the Optionee may, to the extent set forth in the Agreement
evidencing the grant of an Employee Option, during the sixty-day period
following the Change in Control surrender for cancellation any Option (or
portion thereof) to the extent unexercised for a cash payment in an amount
equal to the excess, if any, of the Fair Market Value (or in the case of a
Nonqualified Stock Option, the Adjusted Fair Market Value if greater), on
the date preceding the date of surrender, of the Shares subject to the
Option or portion thereof surrendered, over the aggregate purchase price
for such Shares under the Option or portion thereof surrendered.
Stock Appreciation Rights. The 1994 Stock Incentive Plan permits the
granting of Stock Appreciation Rights to participants either alone or in
connection with an Employee Option. A Stock Appreciation Right allows the
Grantee to receive, upon exercise, cash and/or Shares, at the discretion of
the Committee, in an amount equal in value to an amount determined by
multiplying (i) the excess, if any, of (x) for those granted in connection
with an Employee Option, the Fair Market Value per share of Common Stock on
the date preceding the exercise date over the Purchase Price per share of
Common Stock under the related Option, or (y) for those not granted in
connection with an Option, the excess of the Fair Market Value per share of
Common Stock on the date preceding the exercise date over the Fair Market
Value per share of Common Stock on the grant date of the Stock Appreciation
Right, by (ii) the number of Shares as to which such Stock Appreciation
Right is being exercised.
Stock Appreciation Rights granted in connection with an Employee
Option cover the same Shares as those covered by such Option and are
generally subject to the same terms. A Stock Appreciation Right granted in
connection with an Incentive Stock Option is exercisable only if the Fair
Market Value of a Share on the exercise date exceeds the Purchase Price
specified in the related Incentive Stock Option Agreement. Stock
Appreciation Rights unrelated to Options shall be granted on such terms and
conditions as shall be determined by the Committee, but shall not have a
term of greater than ten years. Upon a Change in Control, all Stock
Appreciation Rights become immediately and fully exercisable. Upon exercise
of a Stock Appreciation Right within sixty days of a Change in Control, the
Grantee will be entitled to receive a cash payment in an amount equal to
(A) the greater of (x) the Fair Market Value, on the date preceding the
date of surrender, of the Shares subject to the Stock Appreciation Right or
portion thereof surrendered, and (y) the Adjusted Fair Market Value of the
Shares subject to the Stock Appreciation Right or portion thereof
surrendered over (B) the Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock
Appreciation Right or portion thereof surrendered.
Restricted Stock. The terms of a Restricted Stock Award shall be
determined by the Committee at the time the Award is made. The Committee
may also determine at such time that dividends paid on such Restricted
Stock will be held for the account of the Grantee or deferred until the
lapsing of the restrictions thereon and, if deferred, whether such
dividends will be reinvested in shares of Common Stock or held in cash. If
deferred dividends are held in cash, they will be paid (together with any
interest accrued thereon) upon the lapsing of restrictions on Shares of
Restricted Stock or forfeited upon the forfeiture of Shares of Restricted
Stock. The extent, if any, to which the restrictions on Shares of
Restricted Stock shall lapse upon a Change in Control will be determined by
the Committee at the time of the grant of the Award of Restricted Stock and
set forth in the Agreement evidencing the Award.
Performance Shares. The 1994 Stock Incentive Plan permits the granting
of Performance Shares. Performance Shares will be awarded by the Committee
prior to the commencement of the Performance Cycle to which such shares
relate. Performance Shares will vest upon the attainment by the Company, a
Subsidiary, a Division, or any combination of the foregoing, of certain
Performance Objectives for a specified Performance Cycle. The Performance
Objectives shall be expressed in terms of earnings per share, pre-tax
operating profits, revenue, market share or any combination of the
foregoing. The Performance Objectives and the length of the Performance
Cycle will be determined by the Committee. The Performance Objectives with
respect to a Performance Cycle shall be established in writing by the
Committee by the earlier of (i) the date on which a quarter of the
Performance Cycle has lapsed or (ii) the date which is ninety (90) days
after the commencement of the Performance Cycle.
Performance Shares are awarded in the form of Shares. The Committee
will determine at the time an Award is made the total number of Performance
Shares subject to an Award and the time or times at which the Performance
Shares will be issued to the Grantee and such other terms as the Committee
shall determine. At the time an Award of Performance Shares is made, the
Committee may also determine that dividends paid on such Performance Shares
will be held for the account of the Grantee or deferred until the lapsing
of the restrictions thereon and, if deferred, whether such dividends will
be reinvested in shares of Common Stock or held in cash. If deferred
dividends are held in cash, they will be paid (together with any interest
accrued thereon) upon the lapsing of restrictions on Performance Shares or
forfeited upon the forfeiture of Performance Shares. Upon a Change in
Control, restrictions shall lapse on all or a percentage of the Performance
Shares, as determined by the Committee at the time the Award is made. In
addition, the Agreement evidencing the grant of Performance Shares shall
contain provisions for the treatment of such Awards (or portions thereof)
which do not become vested as a result of a Change in Control, including,
without limitation, provisions for the adjustment of applicable Performance
Objectives.
ADDITIONAL INFORMATION
The 1994 Stock Incentive Plan provides that in satisfaction of the
federal, state and local income taxes and other amounts as may be required
by law to be withheld (the "Withholding Taxes") with respect to an Option
or Award, the Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the Shares issuable to him or her
having an aggregate Fair Market Value equal to the Withholding Taxes.
The Committee shall have the authority at the time a grant of Options
or an Award is made to award designated Optionees or Grantees tax bonuses
that shall be paid on the exercise of such Options or payment of such
Awards. The Committee shall have full authority to determine the amount of
any such tax bonus and the terms and conditions affecting the vesting and
payment thereof.
The 1994 Stock Incentive Plan will terminate on the day preceding the
tenth anniversary of its effective date. The Board may terminate or amend
the 1994 Stock Incentive Plan at any time, except that (i) no such
amendment or termination may adversely affect outstanding Awards, and (ii)
to the extent necessary under applicable law, no amendment will be
effective unless approved by stockholders.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS
In general, an Optionee will not recognize taxable income upon grant
or exercise of an Incentive Stock Option and the Company will not be
entitled to any business expense deduction with respect to the grant or
exercise of an Incentive Stock Option. (However, upon the exercise of an
Incentive Stock Option, the excess of the Fair Market Value on the date of
the exercise of the Shares received over the exercise price of Shares will
be treated as an adjustment to alternative minimum taxable income). In
order for the exercise of an Incentive Stock Option to qualify for the
foregoing tax treatment, the Optionee generally must be an employee of the
Company or a Subsidiary from the date the Incentive Stock Option is granted
through the date three months before the date of exercise, except in the
case of death or disability, where special rules apply.
If the Optionee has held the Shares acquired upon exercise of an
Incentive Stock Option for at least two years after the date of grant and
for at least one year after the date of exercise, upon disposition of the
Shares by the Optionee, the difference, if any, between the sale price of
the Shares and the exercise price of the Option will be treated as
long-term capital gain or loss. If the Optionee does not satisfy these
holding period requirements, the Optionee will recognize ordinary income at
the time of the disposition of the Shares, generally in an amount equal to
the excess of the Fair Market Value of the Shares at the time the Option
was exercised over the exercise price of the Option. The balance of gain
realized, if any, will be long-term or short-term capital gain, depending
on whether or not the Shares were sold more than one year after the Option
was exercised. If the Optionee sells the Shares prior to the satisfaction
of the holding period requirements but at a price below the Fair Market
Value of the Shares at the time the Option was exercised, the amount of
ordinary income will be limited to the excess of the amount realized on the
sale over the exercise price of the Option. If the Optionee includes the
ordinary income in income or the Company complies with applicable reporting
requirements, it will be entitled to a business expense deduction in the
same amount and at the same time as the Optionee recognizes ordinary
income, subject to any deduction limitation under Section 162(m).
Upon exercise of a Stock Appreciation Right, the Optionee will
recognize ordinary income in an amount equal to the Fair Market Value of
the shares or cash received on the exercise date. If the Optionee includes
such amount in income or the Company complies with applicable reporting
requirements, it will be entitled to a business expense deduction in the
same amount and at the same time that the holder of the Stock Appreciation
Right recognizes ordinary income, subject to any deduction limitation under
Section 162(m).
In general, an Optionee to whom a Nonqualified Stock Option is granted
will recognize no income and the Company will not be entitled to any
business expense deduction at the time of the grant of the Option. Upon
exercise of a Nonqualified Stock Option, an Optionee will recognize
ordinary income in an amount equal to the amount by which the Fair Market
Value of the Shares on the date of exercise exceeds the exercise price of
the Option. If the Optionee includes such amount in income or the Company
complies with applicable reporting requirements, it will be entitled to a
business expense deduction in the same amount and at the same time as the
Optionee recognizes ordinary income, subject to any deduction limitation
under Section 162(m).
Section 162(m) of the Code and the regulations thereunder generally
would disallow the Company a federal income tax deduction for compensation
paid to the chief executive officer and the four other most highly
compensated executive officers to the extent such compensation paid to any
of such individuals exceeds one million dollars in any year. Section 162(m)
generally does not disallow a deduction for payments of qualified
"performance-based compensation" the material terms of which have been
disclosed to and approved by stockholders. The Company intends that
compensation attributable to Options, Stock Appreciation Rights and
Performance Shares granted under the 1994 Stock Incentive Plan will be
qualified "performance-based compensation."
Special rules may apply in the case of an Optionee who is subject to
Section 16(b) of the Exchange Act.
Under certain circumstances, the accelerated vesting or the cashout or
exercise of Options or Stock Appreciation Rights or the accelerated lapse
of restrictions on other Awards in connection with a Change in Control of
the Company might be deemed an "excess parachute payment" for purposes of
the golden parachute tax provisions of Section 280G of the Code. To the
extent it is so considered, the Optionee may be subject to a 20% excise tax
and the Company may be denied a tax deduction.
A copy of the Plan, as proposed to be amended and restated, is
attached hereto as Exhibit A and incorporated herein by reference.
MARKET VALUE OF THE SECURITIES UNDERLYING OPTIONS, STOCK APPRECIATION
RIGHTS AND OTHER AWARDS
As of March 24, 2000, the closing price of Common Stock as reported on
the NASDAQ Stock Market was $1.875 per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE 1994 STOCK INCENTIVE PLAN.
<PAGE>
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the accounting firm of Deloitte & Touche LLP to
audit the Company's financial statements for, and otherwise act as the
Company's independent accountants with respect to, the fiscal year ending
December 31, 2000. Deloitte & Touche LLP has acted as independent
accountants for the Company since the fiscal year ended December 31, 1991.
In accordance with the Board's resolution, its selection of Deloitte &
Touche LLP as the Company's independent accountants for the current fiscal
year is being presented to stockholders for ratification at the Annual
Meeting. The Company knows of no direct or material indirect financial
interest of Deloitte & Touche LLP in the Company or any connection of that
firm with the Company in the capacity of promoter, underwriter, voting
trustee, officer or employee.
Members of Deloitte & Touche LLP will be present at the Meeting, will
have an opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
shares of Common Stock beneficially owned as of March 24, 2000 by (a) each
person or entity who, insofar as the Company has been able to ascertain,
beneficially owned more than 5% of the Company's Common Stock as of such
date, (b) each of the directors of the Company (including all nominees for
election as a director of the Company), (c) the Company's Chief Executive
Officer and the three other most highly compensated executive officers of
the Company for the fiscal year ended December 31, 1999 (the "Named
Executive Officers") and (d) all current directors and executive officers
of the Company as a group (13 persons). Except as otherwise indicated, the
business address for each person is c/o Aldila, Inc., 12140 Community Road,
Poway, California 92064.
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME OWNED(1) SHARES(1)
-------------------------------------------- ------------ ----------
J. Carlo Cannell D/B/A Cannell
Capital Management (2).................... 1,010,000 6.5%
Dimensional Fund Advisors Inc.(3)............ 790,800 5.1%
Fuller & Thaler Asset Management, Inc.(4).... 1,634,800 10.6%
Gary T. Barbera(5)........................... 615,470 3.9%
Peter E. Bennett(6).......................... 76,313 *
Thomas A. Brand(7)........................... 22,542 *
Robert J. Cierzan(8)......................... 272,474 1.7%
Marvin M. Giles, III(9)...................... 61,313 *
Vincent T. Gorguze(10)....................... 599,086 3.8%
John J. Henry(11)............................ 64,513 *
Donald C. Klosterman(12)..................... 61,313 *
Wm. Brian Little(13)......................... 389,904 2.5%
Peter R. Mathewson(14)....................... 314,198 2.0%
Chapin Nolen(15)............................. 96,313 *
Michael J. Rossi(16)......................... 56,866 *
All directors and executive officers
as a group (12 persons)(17)............. 2,630,305 15.7%
- --------------------
* The percentage of shares of Common Stock beneficially owned does not
exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire within 60 days following March 24,
2000. For purposes of computing the percentage of outstanding shares
of Common Stock held by each person or group of persons named above,
any security which such person or persons has or have the right to
acquire within 60 days following March 24, 2000 is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) Based on a joint filing of a Schedule 13G dated January 10, 2000, J.
Carlo Cannell D/B/A Cannell Capital Management ("Cannell"), which is
an investment advisor, has shared dispositive power and shared voting
power with respect to 1,010,000 shares of Common Stock of the Company.
The address of Cannell's principal business office is 600 California
Street, San Francisco, California 94108.
(3) Based on a Schedule 13G dated February 12, 2000 (the "Dimensional
13G"), Dimensional Fund Advisors Inc. ("Dimensional"), which is an
investment advisor, has sole voting and dispositive power over 790,800
shares of Common Stock of the Company. Based on the Dimensional 13G,
all shares of Common Stock of the Company are owned by advisory
clients of Dimensional, no one of which to the knowledge of
Dimensional owns more than 5% of such shares. Dimensional disclaims
beneficial ownership of all such shares. Dimensional's principal
business office is located at 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401.
(4) Based on a Schedule 13G filed on February 15, 2000 (the "Fuller &
Thaler 13G"), by Fuller & Thaler Asset Management ("Fuller & Thaler"),
which is an investment advisor, and Russell J. Fuller ("Fuller"), the
president of Fuller & Thaler. Fuller & Thaler and Fuller report sole
dispositive power over all 1,634,800 shares beneficially owned by them
and sole voting power over 1,231,000 of such shares. Fuller & Thaler's
and Fuller's principal office is located at 411 Borel Avenue, Suite
402, San Mateo, California 94402.
(5) Includes options to acquire 413,816 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Barbera also
has options to purchase 38,334 shares of Common Stock that will not
have vested within 60 days following March 24, 2000. All of the
currently owned shares are owned by The Barbera Trust, of which Mr.
Barbera and his wife are the trustees. On December 31, 1999, Mr.
Barbera resigned in all capacities held with the Company, including
all subsidiaries thereof, with the exception of his Board membership
with the Company. While Mr. Barbera is currently a member of the Board
of Directors of the Company, he will not be standing for reelection at
the Annual Meeting of Stockholders. Mr. Barbera's options will cease
to vest upon the termination of his service as a director, and any
options vested at that time will expire on the first anniversary of
such termination of service if not previously exercised.
(6) Includes options to acquire 46,313 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Bennett also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 24, 2000.
(7) Includes options to acquire 17,542 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Brand also
had options to purchase 18,772 shares of Common Stock that will have
not vested within 60 days following March 24, 2000.
(8) Includes options to acquire 203,000 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Cierzan also
has options to purchase 65,000 shares of Common Stock that will not
have vested within 60 days following March 24, 2000. All of the
currently owned shares are owned by Robert J. Cierzan and Lynn M.
Cierzan, JTWROS.
(9) Includes options to acquire 56,313 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Giles also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 24, 2000.
(10) Includes options to acquire 85,000 shares of Common Stock that will
have vested within 60 days following March 24, 2000. All of the shares
currently owned by Mr. Gorguze are owned by Gorguze Investments, L.P.,
a limited partnership ("Gorguze Investments, L.P."), of which Mr.
Gorguze is sole limited partner and a corporation, of which Lynn
Gorguze, his daughter, owns 100% of the capital stock, is sole general
partner.
(11) Includes options to acquire 46,313 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Henry also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 24, 2000.
(12) Includes options to acquire 56,313 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Klosterman
also has options to purchase 20,001 shares of Common Stock that will
not have vested within 60 days following March 24, 2000.
(13) Includes options to acquire 26,666 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Little also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 24, 2000. Also includes
26,858 shares held by Mr. Little's IRA. Also includes 2,350 shares
held by each of Mr. Little's wife and his adult son and daughter, as
to which Mr. Little disclaims beneficial ownership.
(14) Includes options to acquire 259,166 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Mathewson
also has options to purchase 95,834 shares of Common Stock that will
not have vested within 60 days following March 24, 2000.
(15) Includes options to acquire 46,313 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Nolen also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 24, 2000. All of the
currently owned shares are owned directly by the Nolen Millenium LLC,
a Delaware limited liability company ("Nolen LLC"), of which Mr. Nolen
has a 15.8% membership interest and shares the remaining membership
interests with his two adult daughters. As a result of his position as
sole manager of Nolen LLC, Mr. Nolen may be deemed to beneficially own
the shares of Common Stock held by Nolen LLC.
(16) Includes options to acquire 56,666 shares of Common Stock that will
have vested within 60 days following March 24, 2000. Mr. Rossi also
has options to purchase 58,334 shares of Common Stock that will not
have vested within 60 days following March 24, 2000.
(17) Includes beneficial ownership of shares of Common Stock subject to
options exercisable within 60 days following March 24, 2000 and
includes the shares held by Gorguze Investments, L.P. and Nolen LLC.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission (the "SEC")
reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company on Forms 3, 4 and 5. Based on a review of
such forms and written representations of reporting persons, the Company
believes that during the fiscal year ended December 31, 1999, its officers
and directors and holders of more than 10% of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements.
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. Information about Mr. Mathewson is
presented in "ELECTION OF DIRECTORS -- Nominees for Election by Holders of
Common Stock." Officers are appointed by and serve at the discretion of the
Board. Except as otherwise indicated, the positions listed are with Aldila,
Inc.
Name Age Position
- ---- --- --------
Peter R. Mathewson 49 Chairman of the Board of Directors,
Chief Executive Officer, President
and Director; President and Chief
Operating Officer of Aldila Golf
Corp.
Robert J. Cierzan 53 Vice President, Finance, Secretary
and Treasurer
Michael J. Rossi 46 Vice President, Sales and Marketing
of Aldila Golf Corp.
The principal occupations and positions for the past five years, and
in certain cases prior years, of the executive officers of the Company who
are not also nominees for election as a director, are as follows.
Robert J. Cierzan has been Secretary and Treasurer of Aldila (or its
predecessors) since January 1991 and Vice President, Finance since March
1989. From September 1988 to February 1989, Mr. Cierzan held the position
of Executive Vice President-Finance at Illinois Coil Spring Company, a
diversified manufacturer of springs, automotive push-pull controls and
rubber products.
Michael J. Rossi has been the Vice President, Sales and Marketing of
Aldila Golf Corp. since March 24, 1997 when he joined the Company. Prior to
that, from August 1994 to March 1997, Mr. Rossi was the Vice President and
General Manager of Fujikura Composite America which manufactures graphite
golf shafts and is a wholly owned subsidiary of Fujikura Rubber Limited, a
Japanese publicly held company. From November 1989 to August 1994, he was
Vice President, Sales and Marketing for True Temper Sports, a division of
the Black & Decker Corporation which manufactures steel golf shafts.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation (cash and non-cash, plan and non-plan) paid to each of the
Named Executive Officers for services rendered in all capacities to the
Company during the three fiscal years ended December 31, 1999, 1998 and
1997.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------------------------------- ---------------
Securities
Other Annual Underlying
Name and Principal Position Fiscal Year Base Salary Bonus Compensation Options
- ----------------------------------- --------------- ----------------- ------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Gary T. Barbera (1) 1999 $367,500 $ -- $ -- 25,000
Chairman of the Board and 1998 367,500 -- -- 40,000
Chief Executive Officer 1997 359,400 -- -- 250,000
Peter R. Mathewson (2) 1999 210,000 -- -- 87,500
Vice President; President and 1998 209,700 -- -- 25,000
Chief Operating Officer, 1997 200,800 -- -- 162,500
Aldila Golf Corp.
Robert J. Cierzan 1999 168,000 -- -- 60,000
Vice President, Finance; 1998 166,600 -- -- 15,000
Secretary and Treasurer 1997 159,000 -- -- 125,000
Michael J. Rossi 1999 157,500 -- -- 50,000
Vice President - Sales and 1998 155,700 -- -- 25,000
Marketing, Aldila Golf Corp. 1997 115,300(3) -- -- 40,000
- --------------------
<FN>
(1) On December 31, 1999, Mr. Barbera resigned in all capacities held with
the Company, including all subsidiaries thereof, with the exception of
his Board membership with the Company. While Mr. Barbera is currently
a member of the Board of Directors of the Company, he will not be
standing for reelection at the Annual Meeting of Stockholders on May
10, 2000.
(2) Effective as of January 1, 2000, Mr. Mathewson was elected to the
positions of Chairman of the Board, Chief Executive Officer and
President of the Company.
(3) As Mr. Rossi's employment started March 27, 1997, this amount reflects
the compensation received, rather than his base salary.
</FN>
</TABLE>
<PAGE>
The following table sets forth information concerning the grant of
stock options during the fiscal year ended December 31, 1999 to each of the
Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 1999
Individual Grants
-------------------------------------------------
Percent of
Total Potential Realizable
Options Value at Assumed
Granted to Annual Rates of
Employees Exercise or Stock Price
Options in Fiscal Base Price Expiration Appreciation for
Name Granted(1) Year 1999(2) (per share) Date(3) Option Term
- ----------------------- -------------- ---------------- -------------- ------------- ----------------------------
5%(4) 10%(4)
------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gary T. Barbera(5) 25,000 2.8% $1.91 06/10/09 $30,000 $76,000
Robert J. Cierzan 30,000 3.4% 1.91 06/10/09 36,000 91,000
30,000 3.4% 1.38 12/08/09 26,000 66,000
Peter R. Mathewson 37,500 4.2% 1.91 06/10/09 45,000 114,000
50,000 5.6% 1.38 12/08/09 43,000 110,000
Michael J. Rossi 25,000 2.8% 1.91 06/10/09 30,000 76,000
25,000 2.8% 1.38 12/08/09 22,000 55,000
- ---------------------
<FN>
(1) These options were granted pursuant to the Company's 1994 Stock
Incentive Plan, as amended and restated (the "1994 Stock Incentive
Plan"). One-third of the total number of options granted are
exercisable on the first anniversary of the option grant date and
thereafter, an additional one-third of the total number of options
granted are exercisable on each of the second and third anniversaries
of the option grant.
(2) In fiscal 1999, the Company granted a total of 887,500 options to its
employees under the Company's 1994 Stock Incentive Plan. This number
was used in calculating the percentages above.
(3) The options granted under the Company's 1994 Stock Incentive Plan
generally expire on the earliest of (a) the tenth anniversary of the
date of grant, (b) if the Optionee's employment is terminated as a
result of death, disability, retirement or within two years after a
change in control, one year following termination of employment, (c)
if the Optionee's employment is terminated for any other reason, 30
days following termination of employment or (d) the exercise in full
of the option.
(4) The assumed 5% and 10% annual rates of appreciation over the term of
the options are set forth in accordance with rules and regulations
adopted by the SEC and do not represent the Company's estimate of
stock price appreciation.
(5) On December 31, 1999, Mr. Barbera resigned in all capacities held with
the Company, including all subsidiaries thereof, with the exception of
his Board membership with the Company. While Mr. Barbera is currently
a member of the Board of Directors of the Company, he will not be
standing for reelection at the Annual Meeting of Stockholders on May
10, 2000. Mr. Barbera's options will cease to vest upon the
termination of his service as a director, and any options vested at
that time will expire on the first anniversary of such termination of
service if not previously exercised.
</FN>
</TABLE>
<PAGE>
Aggregated Option Exercises. The following table sets forth
information (on an aggregated basis) concerning each exercise of stock
options during the fiscal year ended December 31, 1999 by each of the Named
Executive Officers and the fiscal year-end value of unexercised options.
The Company has no outstanding stock appreciation rights, either
freestanding or in tandem with options.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES
IN THE FISCAL YEAR ENDED DECEMBER 31, 1999 AND
FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Securities Underlying "In-the-Money"
Shares Unexercised Options at Options at Fiscal
Shares Fiscal Year-End Year-End(1)
Acquired on -------------------------------- ------------------------------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ---------------- ---------------- ------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary T. Barbera (2) -- -- 317,149 135,001 -- --
Robert J. Cierzan -- -- 156,333 111,667 -- --
Peter R. Mathewson -- -- 196,665 158,335 -- --
Michael J. Rossi -- -- 34,999 80,001 -- --
- ---------------------
<FN>
(1) Options are "in-the-money" at the fiscal year-end if the fair market
value of the underlying securities on such date exceeds the exercise
price of the option. The closing price of the Company's Common Stock
on December 31, 1999 did not exceed the exercise price of the above
underlying securities and, accordingly, none of the options are
"in-the-money."
(2) On December 31, 1999, Mr. Barbera resigned in all capacities held with
the Company, including all subsidiaries thereof, with the exception of
his Board membership with the Company. While Mr. Barbera is currently
a member of the Board of Directors of the Company, he will not be
standing for reelection at the Annual Meeting of Stockholders on May
10, 2000. Mr. Barbera's options will cease to vest upon the
termination of his service as a director, and any options vested at
that time will expire on the first anniversary of such termination of
service if not previously exercised.
</FN>
</TABLE>
DIRECTOR COMPENSATION
Directors, other than management directors (Peter R. Mathewson),
currently receive for their service as directors $2,000 per quarter, $1,000
per Board meeting attended and $500 per committee meeting attended. Each
director, including each management director and other directors not
receiving directors' fees, is reimbursed for his or her out-of-pocket
expenses arising from attendance at meetings of the Board or committees
thereof.
Pursuant to the Company's 1994 Stock Incentive Plan, on May 28, 1999,
each of the non-employee directors who had more than one year of service
(Peter E. Bennett, Thomas A. Brand, Marvin M. Giles, III, John J. Henry,
Donald C. Klosterman, Wm. Brian Little, and Chapin Nolen) received an
annual stock option grant of 10,000 shares. Under the 1994 Stock Incentive
Plan, each non-employee director with more than one year of service
(currently, Messrs. Bennett, Brand, Giles, Henry, Klosterman, Little and
Nolen) will receive additional options to acquire 10,000 shares annually on
the last trading day in the month of May. In addition, under the 1994
Incentive Plan, each new non-employee director receives options to purchase
26,314 shares on his or her date of election to the Board.
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into a Severance Protection Agreement (the
"Severance Agreement") in March 1999, with each of the following Named
Executive Officers: Messrs. Barbera, Cierzan, Mathewson and Rossi. As a
result of his resignation on December 31, 1999, Mr. Barbera is no longer a
party to his Severance Agreement. All capitalized terms in the description
below have the same meaning as in the Severance Agreement. Pursuant to the
Severance Agreement, in the case of termination of employment as a result
of death, by the Company for Cause or Disability, or by the Executive other
than for Good Reason, the Executive is entitled to his Accrued
Compensation. In the case of termination for any other reason, the
Executive is entitled to the following: (i) Accrued Compensation and a Pro
Rata Bonus for the year of termination (typically computed based on the
average bonus paid for the prior two years), (ii) a lump sum payment equal
to twice the sum of the Executive's then annual base salary and his average
bonus for the prior two years, (iii) continued provision of insurance
(including life, disability and medical) for two years, "grossed up" to
cover any excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, and (iv) a lump sum equal to two years' automobile allowance (or
the length of the automobile lease, if longer, in the case of automobiles
leased by the Company for the Executive's use). These payments are in lieu
of any other severance benefit to which the Executive would otherwise have
been entitled. Upon a Change-in-Control, regardless of whether the
Executive's employment has terminated, the Company is required to
contribute to a grantor trust an amount sufficient to fund the payments
under clauses (i), (ii), and (iv) above.
Change-in-Control means (1) an acquisition of 40% of the Company's
Common Stock, (2) a change in two-thirds of the composition of the Board of
Directors of the Company without the approval of the existing members of
the Board, (3) the completion of a merger where the existing stockholders
and Board of Directors do not retain control of the surviving company, or
(4) the liquidation or sale of substantially all the assets of the Company.
Except as provided above and except for the provisions of the 1994
Stock Incentive Plan and related agreements thereto, there are no
compensatory plans or arrangements with respect to any of the above
executive officers (including each of the Named Executive Officers) which
are triggered by, or result from, the resignation, retirement or any other
termination of such executive officer's employment, a change-in-control of
the Company or a change in such executive officer's responsibilities
following a change-in-control.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
From January 1992 until April 23, 1993, Wm. Brian Little, who was on
the Compensation Committee throughout 1997, served as President of the
Company and also served in an executive officer capacity at Aldila Golf
Corp. Mr. Little received no compensation from the Company or any of its
subsidiaries for services rendered in any of such capacities.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
Introduction. The Compensation Committee of the Board of Directors in
1999 was comprised of Peter E. Bennett, Donald C. Klosterman and Wm. Brian
Little. The Company's employee stock option plans, including its 1994 Stock
Incentive Plan, are administered by the Stock Option Committee, which was
comprised in 1999 of Marvin M. Giles, III, Mr. Klosterman and Mr. Little.
Compensation Objectives and Policies. The principle objectives of the
Company's executive compensation are to: (i) support the achievement of
desired Company performance, (ii) align the executive officers' interests
with the success of the Company and with the interests of the Company's
stockholders and (iii) provide compensation that will attract and retain
superior talent and reward performance. These objectives are principally
achieved through compensation in the form of annual base salaries, bonuses
and equity investment opportunities. In line with these objectives, the
Company's executive compensation system consists generally of base salary,
bonuses based on corporate performance under the Company's Executive Bonus
Plan (the "Bonus Plan"), and the grant of stock options under the 1994
Stock Incentive Plan. The Compensation Committee believes that overall 1999
executive compensation levels adequately reflected (i) each executive's
business results and performance in his area of responsibility, (ii) each
executive's contribution to the overall management team and (iii) each
executive's then expected future contributions to the Company.
Executive officers generally receive salary increases at the time of
their respective employment anniversaries as approved by the Compensation
Committee, taking into consideration the recommendations of the Company's
Chairman and Chief Executive Officer. In 1999, executive officer salaries
were not increased due to the overall financial performance of the Company.
In lieu of a base salary increase in 1999, the Company awarded merit
bonuses to each of the executive officers at the end of 1999 (other than
Mr. Barbera, who was resigning at that point) equal to 5% of their 1999
base salaries. At the end of the year, the Compensation Committee, in
recognition of the commitment and hard work of the remaining executive
officers during 1999 and the need for that commitment and hard work to
continue in 2000 as the Company tries to improve its performance, approved
in advance 5% increases in base salaries for the executive officers (other
than Peter R. Mathewson) effective as of their anniversary dates in 2000.
In addition, the Compensation Committee approved an increase in Mr.
Mathewson's base salary to $250,000 effective January 1, 2000, as a result
of his promotion to the positions of Chairman of the Board, Chief Executive
Officer and President on that date.
Principally as a result of the continued price pressures for the
Company's shaft products as well as continued delays in bringing the carbon
fiber plant to full production and profitability, the Company did not
perform at a level that warranted any bonuses under the Company's Bonus
Plan as described below.
Bonus awards to be granted under the Bonus Plan were predicated on the
actual financial performance of the Company at the end of the Company's
fiscal year as compared to the target financial performance objectives
established by the Compensation Committee in late 1998 based on the
Company's 1999 operating plan. The bonuses to be awarded were dependent
upon the Company achieving a specified dollar amount of pretax profits and
increased to the extent pretax profits exceeded that minimum level and
achieved various higher levels. The bonus for each participant was set at a
percentage of the participant's base salary, with the percentage depending
on what level of pretax profits the Company achieved. In establishing the
targets and resulting bonuses, the Committee determined that it was
important that the bonus payment structure be designed to reward executive
officers for high levels of performance by the Company, weighted so that
superior performance (viewed against the performance then expected in
accordance with management's internal projections for 1999 performance as
approved by the Board of Directors) would result in substantially higher
bonuses than would result from merely acceptable performance. While a
substantial portion of the bonus was subject solely to the Company
attaining its quantitative objectives, a portion of the total bonus award
was also subject to a discretionary modifier determined by the Chairman and
Chief Executive Officer allowing him to reduce the bonus if the executive's
individual performance so warranted. As indicated above, the Company's
pre-tax profits did not meet the minimum thresholds in the Bonus Plan, and
no bonuses were paid under the Bonus Plan for 1999. The Company will
continue to make the Bonus Plan available to its executive officers for
2000.
The Board of Directors believes that executive officers who are in a
position to make a substantial contribution to the long-term success of the
Company and to build stockholder value should have a significant stake in
the Company's on-going success. To this end, the Company's compensation
objectives have been designed to be achieved through significant stock
ownership in the Company by executive officers in addition to base salary
and bonus payments.
The purpose of the 1994 Stock Incentive Plan is to provide an
additional incentive to employees to work to maximize stockholder value and
to facilitate broadening and increasing stock ownership by executives and
other key employees. In 1999, options to purchase an aggregate of 887,500
shares were granted to employees of the Company as a group, with 222,500 of
those being granted to the Named Executive Officers. The Stock Option
Committee believes that these stock option grants were appropriate in light
of the policy of the Board of Directors that significant equity ownership
by executive officers is an important contributor to aligning the interests
of executive officers with those of the stockholders of the Company, and
the number of options awarded to individual officers were set based on the
Stock Option Committee's perception, in part in light of recommendations by
the Company's Chairman and Chief Executive Officer, as to each officer's
ability to affect the Company's overall future performance.
The Stock Option Committee believes that these options, together with
the shares and options previously made available to executive officers,
have provided significant incentives for executives to increase the value
of the Company for the benefit of all stockholders and have offered
executives significant opportunities to profit personally from their
efforts to increase that value.
The Compensation Committee and the Stock Option Committee have
considered the impact of Section 162(m) of the Internal Revenue Code on
their executive compensation decisions. Section 162(m) generally disallows
a federal income tax deduction to any publicly-held corporation for
compensation paid to the chief executive officer and the four other most
highly compensated executive officers to the extent that such compensation
in a taxable year exceeds $1 million. Section 162(m), however, does not
disallow a deduction for qualified "performance-based compensation" the
material terms of which are disclosed to and approved by stockholders. The
Company's Bonus Plan as in effect in 1995 does not qualify as
performance-based compensation for the purposes of Section 162(m), although
the 1992 Plan and the 1994 Stock Incentive Plan each so qualify. During
1999, the Compensation Committee believed it unlikely that any executive
officer of the Company would receive in excess of $1 million in
compensation, other than performance-based compensation, and the
Compensation Committee believes that it unlikely that any executive officer
will receive in excess of that amount in 2000. As a result, the
Compensation Committee has not taken any steps to qualify the bonus plan as
performance-based compensation, although it anticipates that the Company
would do so before any executive receives salary, bonus and other
non-performance based compensation in excess of $1 million.
Compensation of Chief Executive Officer. Gary T. Barbera's
compensation during 1999 as Chairman of the Board and Chief Executive
Officer was reviewed in connection with the Compensation Committee's
overall review of executive officer compensation, under which, as indicated
above, no increase in base salary was provided. As described above, Mr.
Barbera also did not receive any bonus under the Bonus Plan. The
Compensation Committee believed that Mr. Barbera's current compensation
continued to be appropriate given his responsibilities at the Company and
the recent and expected future performance of the Company, particularly
related to the slowdown in golf shaft sales due to overall golf industry
market conditions and resulting potential cash flow issues for the Company
and the difficulties in bringing the carbon fiber operations up to
anticipated levels of profitability, all of which had been reflected in
continued depressed levels for the market price of the Company's Common
Stock. In June 1999, as part of the general grant referred to above, the
Stock Option Committee awarded Mr. Barbera options to acquire 25,000 shares
of the Company's Common Stock. The Stock Option Committee believed that
this number of options was appropriate in light of the importance of Mr.
Barbera's position to the Company and his level of stock ownership. The
Compensation Committee also continues to believe that Mr. Barbera's
participation in the Bonus Plan in conjunction with his stock ownership and
employee stock options have provided substantial incentives for him to
create stockholder value.
Upon his promotion to Chief Executive Officer, as noted above, the
Compensation Committee increased Peter R. Mathewson's base salary to
$250,000 per year (a 19% increase over his base salary in his prior
position), starting at the beginning of 2000. The Compensation Committee
believes that this was an appropriate increase given his substantially
increased responsibilities in his new position. The Compensation Committee
also took into account Mr. Barbera's final base salary, which was $367,500.
Compensation Committee Stock Option Committee
---------------------- ----------------------
Peter E. Bennett Marvin M. Giles, III
Donald C. Klosterman Donald C. Klosterman
Wm. Brian Little Wm. Brian Little
The Board Compensation Committee Report on Executive Compensation
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act and shall not otherwise be deemed filed under such Acts.
PERFORMANCE GRAPH FOR ALDILA, INC. COMMON STOCK
The performance graph for the Company's Common Stock compares the
cumulative total return (assuming reinvestment of dividends) on the
Company's Common Stock with (i) the Center for Research in Security Prices
("CRSP") Index for NASDAQ Stock Market (U.S. Companies) (the "Market
Index") and (ii) the CRSP Index for NASDAQ Stocks (SIC 3940 - 3949) --
Dolls, Toys, Games and Sporting and Athletic Goods (the "Peer Index"),
assuming an investment of $100 on December 31, 1994 (the date the Common
Stock commenced trading on the NASDAQ Stock Market) in each of the Common
Stock, the stock comprising the Market Index and the stock comprising the
Peer Index.
[OBJECT OMITTED]
INDEXED/CUMULATIVE RETURN
------------------------------------------------
12/31 12/31 12/31 12/31 12/31
COMPANY/INDEX 1995 1996 1997 1998 1999
------------- ---- ---- ---- ---- ----
Aldila 37.0 42.1 38.0 21.7 12.0
Market Index 141.3 173.9 213.1 300.2 542.4
Peer Index 95.7 59.3 52.6 27.4 17.6
NOTES:
A. The index levels are derived from compounded daily returns that
include all dividends.
B. The index levels for the Company, the Market Index and the Peer Index
were each set to 100 at December 31, 1994.
<PAGE>
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31,
1999 (the "1999 Annual Report") is included with the mailing of this Proxy
Statement. The 1999 Annual Report contains consolidated financial
statements of the Company and its subsidiaries and the report thereon of
Deloitte & Touche LLP, independent accountants.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company.
ChaseMellon Shareholder Services, 300 South Grand Avenue, 2nd Floor, Los
Angeles, California 90071, has been retained to solicit proxies by mail,
telephone or personal solicitation for a fee of $6,500 plus expenses. The
Company has also arranged for reimbursement, at the rate suggested by the
New York Stock Exchange, of brokerage houses, nominees, custodians and
fiduciaries for the forwarding of proxy materials to the beneficial owners
of shares held of record. Proxies may also be solicited by directors,
officers and employees of the Company, but such persons will not be
specially compensated for such services.
PROPOSALS OF STOCKHOLDERS
If a stockholder desires to have a proposal included in the proxy
materials for the 2001 Annual Meeting of Stockholders, such proposal shall
conform to the applicable proxy rules of the SEC concerning the submission
and content of proposals and must be received by December 10, 2000 at the
executive offices of the Company, 12140 Community Road, Poway, California
92064, Attention: Secretary. The Company's receipt of notice of a
stockholder's intent to submit a proposal outside of Rule 14a-8 at the 2001
Annual Meeting of Stockholders after February 23, 2001 will be considered
untimely under Rule 14a-4(c)(1).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements
and other information with the SEC. Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's Regional
Offices located at 7 World Trade Center (13th Floor), New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates or, at no charge, may be obtained at the
SEC's web site: http://www.sec.gov. In addition, such material may also be
inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006-1500.
<PAGE>
OTHER MATTERS
The Board knows of no matters other than those listed in the attached
Notice of Annual Meeting which are likely to be brought before the Meeting.
However, if any other matter properly comes before the Meeting, the persons
named on the enclosed proxy card will vote the proxy in accordance with
their best judgment on such matter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
Robert J. Cierzan
Secretary
April 3, 2000
<PAGE>
EXHIBIT A
ALDILA, INC.
1994 STOCK INCENTIVE PLAN
(AS PROPOSED TO BE AMENDED AND RESTATED)
<PAGE>
ALDILA, INC.
1994 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Plan is to strengthen Aldila,
Inc., a Delaware corporation (the "Company"), by providing an incentive to
its officers, employees, consultants, directors and advisors and thereby
encouraging them to devote their abilities and industry to the success of
the Company's business enterprise. It is intended that this purpose be
achieved by extending to officers, employees, consultants and directors of
the Company and its subsidiaries an added long-term incentive for high
levels of performance and unusual efforts through the grant of Incentive
Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
Performance Shares and Restricted Stock (as each term is hereinafter
defined).
2. Definitions. For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a
Change in Control, the greater of (i) the highest price per Share paid to
holders of the Shares in any transaction (or series of transactions)
constituting or resulting in a Change in Control or (ii) the highest Fair
Market Value of a Share during the ninety (90) day period ending on the
date of a Change in Control.
2.2 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an Option or
Award and setting forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock
Appreciation Right, a Performance Share or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement, misappropriation
or conversion of assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but not
limited to, a change in value) in the Shares or exchange of Shares for a
different number or kind of shares or other securities of the Company, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash
dividend, property dividend, combination or exchange of shares, repurchase
of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during
the term of the Plan of:
(a) Any acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any 'Person' (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), immediately after
which such Person has 'Beneficial Ownership' (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty-one
percent (51%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change in
Control has occurred, Shares or Voting Securities which are
acquired in a 'Non-Control Acquisition' (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in
Control. A 'Non-Control Acquisition' shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting
equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
'Subsidiary'), (ii) the Company or its Subsidiaries, or (iii) any
Person in connection with a 'Non-Control Transaction' (as
hereinafter defined);
(b) The individuals who, as of March 2, 1994, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of the
Board; provided, however, that if the election, or nomination for
election by the Company's common stockholders, of any new
director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened 'Election
Contest' (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy
Contest; or
(c) The consummation of the Company of:
(i) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are
issued, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean
a merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued where:
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own,
directly or indirectly, immediately following such merger,
consolidation or reorganization, at least sixty percent
(60%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members
of the board of directors of the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by
the Company, or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty-one percent
(51%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of fifty-one percent (51%)
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock;
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding
Shares or Voting Securities as a result of the acquisition of Shares or
Voting Securities by the Company which, by reducing the number of Shares or
Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of
the acquisition of Shares or Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Shares or Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as
amended.
2.9 "Committee" means a committee consisting of at least two
(2) persons appointed by the Board from time to time to administer the Plan
and to perform the functions set forth herein, each of whom is a
Nonemployee Director and an Outside Director.
2.10 "Company" means Aldila, Inc.
2.11 "Director Option" means an Option granted pursuant to
Section 6.
2.12 "Disability" means a physical or mental infirmity which
impairs the Optionee's ability to perform substantially his or her duties
for a period of one hundred eighty (180) consecutive days.
2.13 "Division" means any of the operating units or
divisions of the Company designated as a Division by the Committee.
2.14 "Eligible Director" means a director of the Company who
is not an employee of the Company.
2.15 "Eligible Individual" means any salaried employee or
officer of the Company or a Subsidiary, or any consultant or advisor who is
receiving cash compensation by the Company or a Subsidiary, designated by
the Committee as eligible to receive Options or Awards subject to the
conditions set forth herein.
2.16 "Employee Option" means an Option granted pursuant to
Section 5.
2.17 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
2.18 "Fair Market Value" on any date means the average of
the high and low sales prices of the Shares on such date on the principal
national securities exchange on which such Shares are listed or admitted to
trading, or if such Shares are not so listed or admitted to trading, the
arithmetic mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association of
Securities Dealers Automated Quotation System or such other market in which
such prices are regularly quoted, or, if there have been no published bid
or asked quotations with respect to Shares on such date, the Fair Market
Value shall be the value established by the Board in good faith and, in the
case of an Incentive Stock Option, in accordance with Section 422 of the
Code.
2.19 "Grantee" means a person to whom an Award has been
granted under the Plan.
2.20 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as
an Incentive Stock Option.
2.21 "Nonemployee Director" means a director of the Company
who is a "nonemployee director" within the meaning of Rule 16b-3
promulgated under the Exchange Act.
2.22 "Nonqualified Stock Option" means an Option which is
not an Incentive Stock Option.
2.23 "Option" means an Employee Option, a Director Option,
or either or both of them.
2.24 "Optionee" means a person to whom an Option has been
granted under the Plan.
2.25 "Outside Director" means a director of the Company who
is an "outside director" within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder.
2.26 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) with respect
to the Company.
2.27 "Performance Cycle" means the time period specified by
the Committee at the time Performance Shares are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.28 "Performance Objectives" has the meaning set forth in
Section 10.2.
2.29 "Performance Shares" means Shares issued or transferred
to an Eligible Individual under Section 10.1.
2.30 "Plan" means the Aldila, Inc. 1994 Stock Incentive
Plan, as amended from time to time.
2.31 "Pooling Period" means, with respect to a Pooling
Transaction, the date on which the combined entity resulting from such
Pooling Transaction publishes thirty days of combined operating results, or
if the Board makes a determination, such other period following the Pooling
Transaction which the Board reasonably determines is appropriate in
connection with the Pooling Transaction as a means of qualifying for and
pursuing "pooling of interests" accounting treatment.
2.32 "Pooling Transaction" means an acquisition of or by the
Company in a transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles.
2.33 "Restricted Stock" means Shares issued or transferred
to an Eligible Individual pursuant to Section 9.
2.34 "Shares" means the common stock, par value $.01 per
share, of the Company.
2.35 "Stock Appreciation Right" means a right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 8 hereof.
2.36 "Subsidiary" means any corporation which is a
subsidiary corporation (within the meaning of Section 424(f) of the Code)
with respect to the Company.
2.37 "Successor Corporation" means a corporation, or a
parent or subsidiary thereof within the meaning of Section 424(a) of the
Code, which issues or assumes a stock option in a transaction to which
Section 424(a) of the Code applies.
2.38 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him or her,
owns (within the meaning of Section 422(b)(6) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its
meetings. A quorum shall consist of not less than two members of the
Committee and a majority of a quorum may authorize any action. Any decision
or determination reduced to writing and signed by a majority of all of the
members of the Committee shall be as fully effective as if made by a
majority vote at a meeting duly called and held. Each member of the
Committee shall be a Nonemployee Director and an Outside Director. No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder, except for liability arising from his or
her own willful misfeasance, gross negligence or reckless disregard of his
or her duties. The Company hereby agrees to indemnify each member of the
Committee for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending
against, responding to, negotiation for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of such Employee
Options to be granted and to prescribe the terms and conditions (which need
not be identical) of each such Employee Option, including the purchase
price per Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall
be granted under the Plan and to determine the number of Stock Appreciation
Rights, Performance Shares, and/or Shares of Restricted Stock to be granted
pursuant to each Award, the terms and conditions of each Award, including
the restrictions or Performance Objectives relating to Shares, the maximum
value of each Performance Share and make any amendment or modification to
any Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable so that the Plan complies with
applicable law including Rule 16b-3 under the Exchange Act and the Code to
the extent applicable, and otherwise to make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries,
the Optionees and Grantees and all other persons having any interest
therein;
(d) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual
basis without constituting a termination of employment or service for
purposes of the Plan;
(e) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the
subject of Options and Awards granted under the Plan is 4,100,000; provided
however, that, in the aggregate, not more than one-third of the number of
allotted shares may be made the subject of Restricted Stock Awards under
Section 9 of the Plan and, provided further, however, that the maximum
number of Shares that any Eligible Individual may receive during the term
of the Plan in respect of Options and Awards may not exceed 820,000 Shares.
Upon a Change in Capitalization, the maximum number of Shares shall be
adjusted in number and kind pursuant to Section 12. The Company shall
reserve for the purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company's treasury, or partly out of
each, such number of Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number
of Shares available under Section 4.1 for the granting of further Options
and Awards shall be reduced by the number of Shares in respect of which the
Option or Award is granted or denominated.
4.3 Whenever any outstanding Option or Award or portion
thereof expires, is canceled or is otherwise terminated for any reason
without having been exercised or payment having been made in respect of the
entire Option or Award, the Shares allocable to the expired, canceled or
otherwise terminated portion of the Option or Award may again be the
subject of Options or Awards granted hereunder.
4.4 Notwithstanding anything contained in this Section 4,
the number of Shares available for Options and Awards at any time under the
Plan shall be reduced to such lesser amount as may be required pursuant to
the methods of calculation necessary so that the exemptions provided
pursuant to Rule 16b-3 under the Exchange Act will continue to be available
for transactions involving all current and future Options and Awards. In
addition, during the period that any Options and Awards remain outstanding
under the Plan, the Committee may make good faith adjustments with respect
to the number of Shares attributable to such Options and Awards for
purposes of calculating the maximum number of Shares available for the
granting of future Options and Awards under the Plan, provided that
following such adjustments the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions
involving all current and future Options and Awards.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those
Eligible Individuals who will receive Employee Options, the terms and
conditions of which shall be set forth in an Agreement; provided, however,
that no person shall receive any Incentive Stock Options unless he or she
is an employee of the Company, a Parent or a Subsidiary at the time the
Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price or the manner in
which the purchase price is to be determined for Shares under each Employee
Option shall be determined by the Committee and set forth in the Agreement;
provided, however, that the purchase price per Share under each Employee
Option shall not be less than 100% of the Fair Market Value of a Share on
the date the Employee Option is granted (110% in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder
shall be for such term as the Committee shall determine, provided that an
Incentive Stock Option shall not be exercisable after the expiration of ten
(10) years from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder) and a
Nonqualified Stock Option shall not be exercisable after the expiration of
ten (10) years from the date it is granted. The Committee may, subsequent
to the granting of any Employee Option, extend the term thereof but in no
event shall the term as so extended exceed the maximum term provided for in
the preceding sentence.
5.4 Vesting. Subject to Section 7.4 hereof, each Employee
Option shall become exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and set
forth in the Agreement. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the Employee Option
expires. The Committee may accelerate the exercisability of any Employee
Option or portion thereof at any time.
5.5 Modification. No modification of an Employee Option
shall adversely alter or impair any rights or obligations under the
Employee Option without the Optionee's consent.
6. Option Grants for Eligible Directors.
6.1 (a) Initial Grant. Upon his or her initial appointment
or election to the Board, each Eligible Director who becomes a member of
the Board after May 17, 1995 shall be granted a Director Option in respect
of 26,314 Shares.
(b) Annual Grant. On the last trading day in the month
of May on the principal national securities exchange on which the Shares
are listed or admitted to trading thereafter, each Eligible Director shall
be granted a Director Option in respect of 10,000 Shares; provided,
however, that the Eligible Director has been a member of the Board for at
least one year as of such date and continues to serve as a Director as of
such date.
(c) Agreements. Director Options shall be evidenced by
an Agreement containing such other terms and conditions not inconsistent
with the provisions of this Plan as determined by the Board; provided,
however, that such terms shall not vary the price, amount or timing of
Director Options provided under this Section 6, including provisions
dealing with vesting, forfeiture and termination of such Director Options.
6.2 Purchase Price. The purchase price for Shares under each
Director Option shall be equal to 100% of the Fair Market Value of such
Shares on the date immediately preceding the date of grant.
6.3 Vesting. Subject to Sections 6.4 and 7.4, each Director
Option shall become exercisable with respect to one-third of the Shares
subject thereto effective as of each of the first, second and third
anniversaries of the grant date, with any fractional shares to become
exercisable in the last installment; provided, however, that the Optionee
continues to serve as a Director as of such dates.
6.4 Duration. Each Director Option shall terminate on the
date which is the tenth anniversary of the grant date, unless terminated
earlier as follows:
(a) If an Optionee ceases to serve as a Director for
any reason, that portion of the Director Option which has not become
exercisable pursuant to the preceding Section or Section 7.4 shall
terminate immediately upon the Director's termination of his service as a
Director.
(b) If an Optionee's service as a Director terminates
for any reason other than death or Cause, the Optionee may for a period of
three (3) months after such termination exercise his or her Option to the
extent, and only to the extent, that such Option or portion thereof was
exercisable as of the date the Optionee's service as a Director terminated,
after which time the Option shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates
for Cause, the Option granted to the Optionee hereunder shall immediately
terminate in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within
three (3) months after termination of service as a Director as described in
clause (b) of this Section 6.4 or within twelve (12) months after
termination of service as a Director as described in clause (c) of this
Section 6.4, the Option granted to the Optionee may be exercised at any
time within twelve (12) months after the Optionee's death by the person or
persons to whom such rights under the Option shall pass by will, or by the
laws of descent or distribution, to the extent, and only to the extent,
that the Option or portion thereof was exercisable on the date of death or
earlier termination of the Optionee's services as a Director, after which
time the Option shall terminate in full.
6.5 Limitations on Amendment. The provisions in this Section
6 shall not be amended more than once every six months, other than to
comport with changes in the Code or the rules and regulations thereunder.
7. Terms and Conditions Applicable to All Options.
7.1 Non-transferability. Unless set forth in the Agreement
evidencing the Option at the time of grant or at any time thereafter, an
Option granted hereunder shall not be transferable by the Optionee to whom
granted otherwise than by will or the laws of descent and distribution or
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act, and an Option may be exercised during
the lifetime of such Optionee only by the Optionee or his or her guardian
or legal representative. The terms of such Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which
the Option was granted. The purchase price for any Shares purchased
pursuant to the exercise of an Employee Option shall be paid in full upon
such exercise by any one or a combination of the following: (i) cash or
(ii) transferring Shares to the Company upon such terms and conditions as
determined by the Committee. The purchase price for exercise of a Director
Option shall be paid in cash. Options may be exercised through a registered
broker-dealer pursuant to such cashless exercise procedures which are
established by the Committee. Any Shares transferred to the Company as
payment of the purchase price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such Option. If
requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such Agreement to the
Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased
upon exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and
until (i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares to the
Optionee and (iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to
such Shares.
7.4 Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary (other than Section
16), in the event of a Change in Control, (A) all Options outstanding on
the date of such Change in Control shall become immediately and fully
exercisable and (B) upon termination of an Optionee's employment with, or
service as a Director of, the Company following a Change of Control,
Options held by such Optionee shall remain exercisable until the later of
(x) one year after termination and (y) sixty (60) days following the
expiration of the Pooling Period (in the event the Change of Control
constitutes a Pooling Transaction), but in no event beyond the stated term
of the Option. In addition, as and to the extent set forth in an Agreement
evidencing the grant of an Employee Option, an Optionee will be permitted
to surrender for cancellation within sixty (60) days after such Change in
Control, any Option or portion of an Option, to the extent not yet
exercised, and the Optionee will be entitled to receive a cash payment in
an amount equal to the excess, if any, of (A) (x) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to the Option
or portion thereof surrendered or (2) the Adjusted Fair Market Value of the
Shares subject to the Option or portion thereof surrendered or (y) in the
case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or
portion thereof surrendered, over (B) the aggregate purchase price for such
Shares under the Option or portion thereof surrendered.
8. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an Employee
Option, grant Stock Appreciation Rights in accordance with the Plan, the
terms and conditions of which shall be set forth in an Agreement. If
granted in connection with an Employee Option, a Stock Appreciation Right
shall cover the same Shares covered by the Employee Option (or such lesser
number of Shares as the Committee may determine) and shall, except as
provided in this Section 8, be subject to the same terms and conditions as
the related Employee Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option, or (ii) if related to an
Employee Option, either at the time of grant, or at any time thereafter
during the term of the Option.
8.2 Stock Appreciation Right Related to an Employee Option.
(a) Exercise. Subject to Section 8.7, a Stock
Appreciation Right granted in connection with an Employee Option shall be
exercisable at such time or times and only to the extent that the related
Employee Option is exercisable, and will not be transferable except to the
extent the related Employee Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date
of exercise exceeds the purchase price specified in the related Incentive
Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Employee Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the excess of
the Fair Market Value of a Share on the date preceding the date of exercise
of such Stock Appreciation Right over the per Share purchase price under
the related Employee Option, by (B) the number of Shares as to which such
Stock Appreciation Right is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount payable with respect to
any Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right
granted in connection with an Employee Option, the Employee Option shall be
canceled to the extent of the number of Shares as to which the Stock
Appreciation Right is exercised, and upon the exercise of an Employee
Option granted in connection with a Stock Appreciation Right or the
surrender of such Employee Option pursuant to Section 7.4, the Stock
Appreciation Right shall be canceled to the extent of the number of Shares
as to which the Employee Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The
Committee may grant to Eligible Individuals Stock Appreciation Rights
unrelated to Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability (subject to Sections
8.6 and 8.8), vesting and duration as the Committee shall determine, but in
no event shall they have a term of greater than ten (10) years. Upon
exercise of a Stock Appreciation Right unrelated to an Option, the Grantee
shall be entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date preceding the date
of exercise of such Stock Appreciation Right over the Fair Market Value of
a Share on the date the Stock Appreciation Right was granted, by (B) the
number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Employee Option to
the Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Grantee.
8.5 Form of Payment. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee,
solely in whole Shares in a number determined at their Fair Market Value on
the date preceding the date of exercise of the Stock Appreciation Right, or
solely in cash, or in a combination of cash and Shares. If the Committee
decides to make full payment in Shares and the amount payable results in a
fractional Share, payment for the fractional Share will be made in cash.
Notwithstanding the foregoing, no payment in the form of cash may be made
upon the exercise of a Stock Appreciation Right pursuant to Sections 8.2(b)
or 8.3 to an officer of the Company or a Subsidiary who is subject to
liability under Section 16(b) of the Exchange Act, unless the exercise of
such Stock Appreciation Right is made either (i) during the period
beginning on the third business day and ending on the twelfth business day
following the date of release for publication of the Company's quarterly or
annual statements of earnings or (ii) pursuant to an irrevocable election
to receive cash made at least six months prior to the exercise of such
Stock Appreciation Right.
8.6 Modification. No modification of an Award shall
adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
8.7 Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary (other than Section
16), in the event of a Change in Control, (A) all Stock Appreciation Rights
outstanding on the date of such Change of Control shall become immediately
and fully exercisable and (B) upon termination of a Grantee's employment
with, or Service as a Director of, the Company following a Change in
Control, Stock Appreciation Rights held by such Grantee shall remain
exercisable until the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in the event the
Change in Control constitutes a Pooling Transaction), but in no event
beyond the stated term of the Stock Appreciation Right. In addition, as to
the extent set forth in an Agreement evidencing the grant of a Stock
Appreciation Right unrelated to an Option, a Grantee will be permitted to
surrender for cancellation, within sixty (60) days after such Change in
Control, any Stock Appreciation Right or portion thereof, to the extent not
yet exercised, and the Grantee will be entitled to receive a cash payment
in an amount equal to the excess, if any, of (A) the greater of (x) the
Fair Market Value, on the date preceding the date of surrender, of the
Shares subject to the Stock Appreciation Right, or portion thereof
surrendered, and (y) the Adjusted Fair Market Value of the Shares subject
to the Stock Appreciation Right or portion thereof surrendered over (B) the
aggregate Fair Market Value, on the date the Stock Appreciaton Right was
granted, of the Shares subject to the Stock Appreciation Right or portion
thereof surrendered.
9. Restricted Stock.
9.1 Grant. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee
as soon as reasonably practicable after the Award is granted provided that
the Grantee has executed an Agreement evidencing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a
condition to the issuance of such Shares. If a Grantee shall fail to
execute the Agreement evidencing a Restricted Stock Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require within
the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall
be deposited together with the stock powers with an escrow agent (which may
be the Company) designated by the Committee. Unless the Committee
determines otherwise and as set forth in the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have all of the rights of
a stockholder with respect to such Shares, including the right to vote the
Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.
9.3 Non-transferability. Until all restrictions upon the
Shares of Restricted Stock awarded to a Grantee shall have lapsed in the
manner set forth in Section 9.4, such Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee.
9.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine, which restrictions shall be set
forth in the Agreement evidencing the Award.
(b) Effect of Change in Control. The Committee shall
determine at the time of the grant of an Award of Restricted Stock the
extent, if any, to which the restrictions upon Shares of Restricted Stock
shall lapse upon a Change in Control. The Agreement evidencing the Award
shall set forth such provisions.
9.5 Modification. No modification of an Award shall
adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
9.6 Treatment of Dividends. At the time an Award of Shares
of Restricted Stock is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on such Shares by the Company shall be
(i) deferred until the lapsing of the restrictions imposed upon such Shares
and (ii) held by the Company for the account of the Grantee until such
time. In the event that dividends are to be deferred, the Committee shall
determine whether such dividends are to be reinvested in shares of Stock
(which shall be held as additional Shares of Restricted Stock) or held in
cash. If deferred dividends are to be held in cash, there may be credited
at the end of each year (or portion thereof) interest on the amount of the
account at the beginning of the year at a rate per annum as the Committee,
in its discretion, may determine. Payment of deferred dividends in respect
of Shares of Restricted Stock (whether held in cash or as additional Shares
of Restricted Stock), together with interest accrued thereon, if any, shall
be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions
on Shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.
10. Performance Shares.
10.1 Performance Shares. The Committee, in its discretion,
may grant Awards of Performance Shares to Eligible Individuals prior to the
commencement of the Performance Cycle to which such Shares relate, the
terms and conditions of which, including the relevant Performance
Objectives and Performance Cycle, shall be set forth in an Agreement
between the Company and the Grantee. Each Agreement may require that an
appropriate legend be placed on Share certificates. Awards of Performance
Shares shall be subject to the following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made, the time or times at which
the actual Shares represented by such Award shall be issued in the name of
the Grantee; provided, however, that no Performance Shares shall be issued
until the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require as
a condition to the issuance of such Performance Shares. If a Grantee shall
fail to execute the Agreement evidencing an Award of Performance Shares,
the appropriate blank stock powers and, in the discretion of the Committee,
an escrow agreement and any other documents which the Committee may require
within the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with an Award of Performance Shares
shall be deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of the Shares to
the escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions upon
the Performance Shares awarded to a Grantee shall have lapsed in the manner
set forth in Sections 10.3(c) or 10.4, such Performance Shares shall not be
sold, transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee. The
Committee may also impose such other restrictions and conditions on the
Performance Shares, if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Section 10.3,
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time as the Performance
Objectives set forth in the Agreement are satisfied on such terms and
conditions as the Committee may, in its discretion, determine at the time
an Award is granted, provided that the Compensation Committee has certified
in writing that the Performance Objectives and other material terms of the
relevant Award were satisfied.
(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on actual Shares represented by such
Award which have been issued by the Company to the Grantee shall be (i)
deferred until the lapsing of the restrictions imposed upon such
Performance Shares and (ii) held by the Company for the account of the
Grantee until such time. In the event that dividends are to be deferred,
the Committee shall determine whether such dividends are to be reinvested
in shares of Stock (which shall be held as additional Performance Shares)
or held in cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the
amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of deferred
dividends in respect of Performance Shares (whether held in cash or in
additional Performance Shares), together with interest accrued thereon, if
any, shall be made upon the lapsing of restrictions imposed on the
Performance Shares in respect of which the deferred dividends were paid,
and any dividends deferred (together with any interest accrued thereon) in
respect of any Performance Shares shall be forfeited upon the forfeiture of
such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder or on such later date
as the Committee may determine at the time of the granting of the
Performance Shares, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all
restrictions hereunder.
10.2 Performance Objectives. Performance objectives for
Performance Shares (the "Performance Objectives") shall be expressed in
terms of (i) earnings per Share, (ii) pre-tax operating profits, (iii)
revenue, (iv) market share, or (v) any combination of the foregoing.
Performance Objectives may be in respect of the performance of the Company
and its Subsidiaries (which may be on a consolidated basis), a Subsidiary,
a Division or any combination of the foregoing. Performance Objectives may
be absolute or relative and may be expressed in terms of a progression
within a specified range. The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the Committee by the
earlier of (i) the date on which a quarter of the Performance Cycle has
elapsed or (ii) the date which is ninety (90) days after the commencement
of the Performance Cycle.
10.3 Effect of Change in Control. Notwithstanding anything
contained in the Plan or any Agreement to the contrary, in the event of a
Change in Control, restrictions shall lapse immediately on all or a portion
of the Performance Shares, as determined by the Committee at the time of
the Award of such Performance Shares and as set forth in the Agreement, and
the Agreement shall provide for the treatment of such Awards (or portions
thereof) which do not become vested as the result of a Change in Control,
including, but not limited to, provisions for the adjustment of applicable
Performance Objectives.
10.4 Modification. No modification of a Performance Share
shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
11. Effect of a Termination of Employment. The Agreement
evidencing the grant of each Employee Option and each Award shall set forth
the terms and conditions applicable to such Employee Option or Award upon a
termination or change in the status of the employment of the Optionee or
Grantee by the Company, a Subsidiary or a Division (including a termination
or change by reason of the sale of a Subsidiary or a Division), as the
Committee may, in its discretion, determine at the time the Employee Option
or Award is granted or thereafter.
12. Adjustment Upon Changes in Capitalization.
12.1 In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any,
to the (i) maximum number and class of Shares or other stock or securities
with respect to which Options or Awards may be granted under the Plan, (ii)
maximum number of Shares with respect to which Options or Awards may be
granted to any Eligible Individual during the term of the Plan, (iii) the
number and class of Shares or other stock or securities which are subject
to outstanding Employee Options or Awards granted under the Plan, and the
purchase price therefor, if applicable, (iv) the number and class of Shares
or other securities in respect of which Director Options are to be granted
under Section 6, and (v) the Performance Objectives.
12.2 Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and
only to the extent otherwise permitted by Sections 422 and 424 of the Code.
12.3 If, by reason of a Change in Capitalization, a Grantee
of an Award shall be entitled to, or an Optionee shall be entitled to
exercise an Option with respect to, new, additional or different shares of
stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Award or
Option, as the case may be, prior to such Change in Capitalization.
13. Effect of Certain Transactions. Subject to Sections 7.4, 8.7,
9.4(b) and 10.3 or as otherwise provided in an Agreement, in the event of
(i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the Options
and Awards issued hereunder shall continue in effect in accordance with
their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or
Awards, as the case may be, upon exercise of any Option or payment or
transfer in respect of any Award, the same number and kind of stock,
securities, cash, property, or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share,
provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions
and performance criteria which were applicable to the Options and Awards
prior to such Transaction.
14. Interpretation. Unless otherwise expressly stated in the
relevant Agreement, each Option, Stock Appreciation Right and Performance
Share is intended to be performance-based compensation within the meaning
of Section 162(m)(4)(C) of the Code. The Committee shall not be entitled to
exercise any discretion otherwise authorized hereunder with respect to such
Options or Awards if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation
attributable to such Options or Awards to fail to qualify as
performance-based compensation.
15. Termination and Amendment of the Plan. The Plan shall
terminate on the day preceding the tenth anniversary of the date of its
adoption by the Board and no Option or Award may be granted thereafter. The
Board may sooner terminate the Plan and the Board may at any time and from
time to time amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted
under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through
or as a result of the Plan; and
(b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law.
16. Pooling Transactions. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event of a Change in
Control which is also intended to constitute a Pooling Transaction, the
Committee shall take such actions, if any, which are specifically
recommended by an independent accounting firm retained by the Company to
the extent reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including but not limited to (i)
deferring the vesting, exercise, payment, settlement, or lapsing of
restrictions with respect to any Option or Award, (ii) providing that the
payment or settlement in respect of any Option or Award be made in the form
of cash, Shares or securities of a successor or acquirer of the Company, or
a combination of the foregoing and (iii) providing for the extension of the
term of any Option or Award to the extent necessary to accommodate the
foregoing, but not beyond the maximum term permitted for any Option or
Award.
17. Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on
the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including, without limitation, the granting of stock
options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
18. Limitation of Liability. As illustrative of the limitations
of liability of the Company, but not intended to be exhaustive thereof,
nothing in the Plan shall be construed to:
(i) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to terminate
the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at any
particular rate of compensation or for any particular period of time.
19. Regulations and Other Approvals; Governing Law.
19.1 Except as to matters of federal law, this Plan and the
rights of all persons claiming hereunder shall be construed and determined
in accordance with the laws of the State of Delaware without giving effect
to conflicts of law principles thereof.
19.2 The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall be subject
to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the
Committee.
19.3 The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.
19.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
19.5 (a) Each Option and Award is subject to the requirement
that, if at any time the Committee determines, in its discretion, that the
listing, registration or qualification of Shares issuable pursuant to the
Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant
of an Option or Award or the issuance of Shares, no Options or Awards shall
be granted or payment made or Shares issued, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected
or obtained free of any conditions as acceptable to the Committee.
(b) Unless the Committee determines otherwise and
notwithstanding any other provision of the Plan, each Option or Award is
subject to the requirement that an Optionee or Grantee deliver a fully
executed Stockholders Agreement prior to the issuance of Shares pursuant to
an Option or other Award.
19.6 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended, and is not
otherwise exempt from such registration, such Shares shall be restricted
against transfer to the extent required by the Securities Act of 1933, as
amended, and Rule 144 or other regulations thereunder. The Committee may
require any individual receiving Shares pursuant to an Option or Award
granted under the Plan, as a condition precedent to receipt of such Shares,
to represent and warrant to the Company in writing that the Shares acquired
by such individual are acquired without a view to any distribution thereof
and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable
under the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares
shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
20. Miscellaneous.
20.1 Multiple Agreements. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than one
Option or Award to a given Eligible Individual during the term of the Plan,
either in addition to, or in substitution for, one or more Options or
Awards previously granted to that Eligible Individual.
20.2 Withholding of Taxes. (a) At such times as an Optionee
or Grantee recognizes taxable income in connection with the receipt of
Shares or cash hereunder (a "Taxable Event"), the Optionee or Grantee shall
pay to the Company an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld by the
Company in connection with the Taxable Event (the "Withholding Taxes")
prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding
Taxes. In satisfaction of the obligation to pay Withholding Taxes to the
Company, the Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the Shares then issuable to him or
her having an aggregate Fair Market Value equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Optionee pursuant to the
exercise of an Incentive Stock Option within the two-year period commencing
on the day after the date of the grant or within the one-year period
commencing on the day after the date of transfer of such Share or Shares to
the Optionee pursuant to such exercise, the Optionee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of
written notice to the Company at its principal executive office.
(c) The Committee shall have the authority, at the time
of grant of an Option or Award under the Plan, to award tax bonuses to
designated Optionees or Grantees, to be paid upon their exercise of
Employee Options or payment in respect of Awards granted hereunder. The
amount of any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to determine
the amount of any such tax bonus and the terms and conditions affecting the
vesting and payment thereof.
21. Effective Date. The effective date of the Plan shall be as
determined by the Board, subject only to the approval by the affirmative
vote of the holders of a majority of the securities of the Company present,
or represented, and entitled to vote at a meeting of stockholders duly held
in accordance with the applicable laws of the State of Delaware within
twelve (12) months of the adoption of the Plan by the Board.
<PAGE>
ALDILA, INC.
The undersigned stockholder of ALDILA, INC. hereby appoints PETER R.
MATHEWSON and WM. BRIAN LITTLE, or either of them, Proxies of the
undersigned, each with full power to act without the other and with the
power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders of Aldila, Inc., to be held at the Rancho Bernardo Inn,
17550 Bernardo Oaks Drive, San Diego, California 92128 on Wednesday, May
10, 2000 at 9:00 a.m. (Pacific time), and at any adjournments or
postponements thereof, and to vote all shares of stock of the Company
standing in the name of the undersigned with all the powers the undersigned
would possess if personally present, in accordance with the instructions
below and on the reverse hereof, and in their discretion upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND WILL BE VOTED IN
FAVOR OF PROPOSALS 1, 2, 3 AND 4 IF NO INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
- --------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK
COMMENT/ADDRESS CHANGE BOX ON REVERSE SIDE
(Continued and to be marked,
signed and dated on reverse side
FOLD AND DETACH HERE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
[X] PLEASE MARK YOUR VOTES AS
INDICATED IN THIS EXAMPLE
1. ELECTION OF DIRECTORS. FOR all nominees WITHHOLD
listed (except as AUTHORITY to
marked to the vote for all
contrary) nominees listed
[ ] [ ]
Nominees: Peter E. Bennett, Thomas A. Brand, Marvin M. Giles, III, Vincent
T. Gorguze, John J. Henry, Donald C. Klosterman, Wm. Brian Little, Peter R.
Mathewson, Chapin Nolen
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- -------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to amend the 1994
Stock Incentive Plan. [ ] [ ] [ ]
3. Ratification of the
appointment of Deloitte
& Touche LLP as the
independent accountants
of the Company. [ ] [ ] [ ]
4. In their discretion, the
Proxies are authorized
to vote upon such other
business as may properly
come before the meeting
or any adjournment thereof. [ ] [ ] [ ]
I PLAN TO ATTEND THE MEETING [ ]
COMMENTS/ADDRESS CHANGE
Please mark this box if you
have written comments
or an address change on
the reverse side. [ ]
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders to be held May 10, 2000 and the Proxy
Statement furnished herewith.
Signature(s) Date , 2000
-------------------------------------- ----------
Please sign as name appears hereon, date and return the proxy card
promptly using the enclosed envelope. When signing as attorney,
executor, administrator, trustee or guardian, give full title as such.
If more than one name appears hereon, all parties should sign.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
<PAGE>
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
==============================================================================
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE 1-800-840-1208
ON A TOUCH TONE TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK.
There is NO CHARGE to you for this call. Have your proxy card in hand.
You will be asked to enter a Control Number, which is located
in the box in the lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
OPTION 2: If you choose to vote on each proposal separately, Press 0.
You will hear these instructions:
Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1;
to WITHHOLD FOR ALL nominees, press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee,
Press 0 and listen to the instructions.
Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST,
press 9; ABSTAIN, press 0
The instructions are the same for all other proposals.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
==============================================================================
OR
==============================================================================
VOTE BY PROXY CARD: Mark, sign and date your proxy card
and return it promptly in the enclosed envelope.
NOTE: If you voted by telephone,
THERE IS NO NEED TO MAIL BACK your proxy card.
==============================================================================
THANK YOU FOR VOTING.
