<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
Berg Electronics Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BERG ELECTRONICS CORP.
101 SOUTH HANLEY ROAD
ST. LOUIS, MISSOURI 63105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1998
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Berg Electronics Corp., a Delaware corporation (the "Corporation"),
will be held on Tuesday, May 5, 1998, at 8:30 a.m., local time, at the Hotel
Crescent Court, 400 Crescent Court, Dallas, Texas for the following purposes:
1. To elect two (2) Class III directors for terms expiring in 2001;
2. To consider and act upon a proposal to amend the Berg Electronics
Corp. 1993 Stock Option Plan to increase by 1,500,000 the number of
shares of common stock, par value $.01 per share ("Common Stock"), of
the Corporation authorized for issuance thereunder;
3. To consider and act upon a proposal to approve the Berg Electronics
Corp. 1998 Incentive Compensation Plan;
4. To consider and act upon a proposal to amend the Corporation's
Certificate of Incorporation, as amended, to increase by 60,000,000
the number of shares of Common Stock authorized for issuance; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The transfer books will not be closed, but only stockholders of record at
the close of business on March 20, 1998, will be entitled to notice of, and to
vote at, the Annual Meeting or any adjournments thereof. A complete list of the
stockholders entitled to vote at the Annual Meeting shall be open to the
examination of any stockholder, for any purpose germane to the meeting, at the
offices of the Corporation during the ten days preceding the meeting and will
also be available for inspection at the Annual Meeting.
The enclosed proxy is solicited by the Board of Directors of the
Corporation. Reference is made to the accompanying proxy statement for further
information with respect to the business to be transacted at the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Even if you plan to
attend, you are respectfully requested to date, sign and return the enclosed
proxy at your earliest convenience in the enclosed return envelope. You may
revoke your proxy at any time prior to exercise.
By Order of the Board of Directors,
W. Thomas McGhee
Secretary
St. Louis, Missouri
March 31, 1998
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE SIGNED, DATED AND PROMPTLY
RETURNED IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 3
BERG ELECTRONICS CORP.
101 SOUTH HANLEY ROAD
ST. LOUIS, MISSOURI 63105
-------------------------------
PROXY STATEMENT
MARCH 31, 1998
-------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of Berg Electronics
Corp., a Delaware corporation (hereinafter referred to as the "Corporation"), in
connection with the solicitation by the Corporation of proxies to be used in
voting at the Annual Meeting of Stockholders (together with any and all
adjournments thereof, the "Annual Meeting") to be held at 8:30 a.m., local time,
on Tuesday, May 5, 1998, at the Hotel Crescent Court, 400 Crescent Court,
Dallas, Texas, for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. This Proxy Statement, the foregoing notice, the
enclosed form of proxy and a copy of the Corporation's Annual Report to
Stockholders for the year ended December 31, 1997, are first being mailed to the
stockholders of the Corporation on or about March 31, 1998. THE ENCLOSED PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION.
A person giving the enclosed proxy has the power to revoke it by giving
notice to the Secretary of the Corporation in person, or by written notification
actually received by the Secretary (including by delivery of a later dated proxy
card), at any time prior to its being exercised. You may also revoke a
previously given proxy by appearing and voting at the Annual Meeting. Your
appearance at the Annual Meeting will not, in and of itself, constitute a
revocation of any proxy previously given. Unless previously revoked, the shares
represented by the enclosed proxy will be voted in accordance with the
stockholder's directions if the proxy is duly executed and returned prior to the
Annual Meeting. If no directions are specified, the shares will be voted FOR the
election of the Class III director nominees recommended by the Board of
Directors, FOR the approval of the amendment to the Berg Electronics Corp. 1993
Stock Option Plan (the "1993 Plan") to increase by 1,500,000 the number of
shares of common stock, par value $.01 per share ("Common Stock"), of the
Corporation authorized for issuance thereunder (the "Amendment to 1993 Plan"),
FOR the approval of the Berg Electronics Corp. 1998 Incentive Compensation Plan
(the "1998 Plan"), FOR the approval of the amendment to the Corporation's
Certificate of Incorporation, as amended, to increase by 60,000,000 the number
of shares of Common Stock authorized for issuance (the "Amendment to Certificate
of Incorporation"), and in accordance with the discretion of the named
attorneys-in-fact on other matters properly brought before the Annual Meeting.
As of March 20, 1998, the Corporation had 39,551,451 shares of Common Stock
and 1,908,554 shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), issued and outstanding. Each share of Common Stock and Class A
Common Stock entitles the holder thereof to one vote. Only stockholders of
record at the close of business on March 20, 1998, will be entitled to notice
of, and to vote at, the Annual Meeting.
The Corporation will bear the cost of preparing, printing and mailing this
Proxy Statement and of soliciting the proxies sought hereby. In addition to the
use of the mails, solicitation may be made in person or by telephone, facsimile
transmission or otherwise by officers, directors and regular employees of the
Corporation, none of whom will receive additional compensation for those
services. Further solicitation of proxies may be made by telephone or oral
communication with some stockholders of the Corporation following the original
solicitation. All such further solicitations will be made by regular employees
and officers of the Corporation, none of whom will be additionally compensated
therefor, and the cost will be borne by the Corporation.
<PAGE> 4
PROPOSAL FOR THE ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of two Class
III directors each of whom will serve for a three-year term expiring in 2001.
The Corporation does not have a nominating committee; the Board of Directors has
nominated the persons named below to stand for election as Class III directors
at the Annual Meeting. Each of the persons nominated presently serves as a Class
III director of the Corporation. Also listed below are each of the Class I and
Class II directors whose terms will continue after the meeting. It is intended
that the attorneys-in-fact named in the proxy card will vote FOR the election of
the Class III director nominees listed below, unless instructions to the
contrary are given therein. These nominees have indicated that they are able and
willing to serve as directors. However, if some unexpected occurrence should
require the substitution of some other person or persons for any one or more of
the nominees, it is intended that the attorneys-in-fact will vote FOR such
substitute nominees as the Board of Directors may designate. All directors
elected at the Annual Meeting will hold office for their respective terms and
until their respective successors are elected and qualified.
CLASS III DIRECTOR NOMINEES -- TERMS EXPIRE 2001
James N. Mills (Age 60) is Chairman of the Board and Chief Executive
Officer of the Corporation and has held such positions since November 1992. Mr.
Mills also served as President of the Corporation from November 1992 through
June 1995. Mr. Mills is the Chairman of the Board, President and Chief Executive
Officer of Mills & Partners, Inc., an investment and management services firm
headquartered in St. Louis. Mr. Mills is also Chairman of the Board and Chief
Executive Officer of International Wire Holding Company and Viasystems Group,
Inc. Mr. Mills was Chairman of the Board and Chief Executive Officer of Crain
Holdings Corp. from August 1995 through December 1997 and of Jackson Holding
Company from February 1993 through August 1995. Mr. Mills was Chairman of the
Board and Chief Executive Officer of Thermadyne Holdings Corporation from
February 1989 through February 1995 and Chairman of the Board and Chief
Executive Officer of Thermadyne Industries, Inc. from 1987 to 1995. In December
1985, Mr. Mills, together with Hicks & Haas Incorporated (a Dallas-based private
investment firm), formed and became Chairman of the Board, President and Chief
Executive Officer of Mills & Partners, Inc. (formerly the HHM Group, Inc.). Mr.
Mills was Executive Vice President of McGraw-Edison Company from 1978 to 1985,
and served as Industrial Group President and President of the Bussmann Division
of the McGraw-Edison Company from 1980 to 1984.
Thomas O. Hicks (Age 52) is a director of the Corporation and has held such
position since November 1992. Mr. Hicks is Chairman of the Board and Chief
Executive Officer of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"), a
private investment firm headquartered in Dallas with offices in New York, St.
Louis and Mexico City, specializing in strategic investments, leveraged
acquisitions and real estate equity investments. From 1984 to May 1989, Mr.
Hicks was Co-Chairman of the Board and Co-Chief Executive Officer of Hicks &
Haas Incorporated, a Dallas-based private investment firm. Mr. Hicks serves as a
director of Chancellor Media Corporation, Sybron International Corporation,
International Home Foods, Inc., D.A.C. Vision, Inc., Capstar Broadcasting
Partners, Inc., Cooperative Computing Holding Company, Inc. and Viasystems
Group, Inc.
CLASS I DIRECTORS -- TERMS EXPIRE 1999
Richard W. Vieser (Age 70) is a director of the Corporation and has held
such position since April 1993. Mr. Vieser is the retired Chairman of the Board,
Chief Executive Officer and President of Lear Siegler, Inc. (a diversified
manufacturing company), the former Chairman of the Board and Chief Executive
Officer of FL Industries, Inc. and FL Aerospace (also diversified manufacturing
companies) and the former President and Chief Operating Officer of McGraw-Edison
Co. (a company engaged in the electronic, industrial, commercial and automotive
industries). He is also a director of Ceridian Corporation (formerly Control
Data Corporation), Dresser Industries, Inc., INDRESCO, Inc., Sybron
International Corporation, Varian Associates, Inc. and Viasystems Group, Inc.
Kenneth F. Yontz (Age 53) is a director of the Corporation and has held
such position since March 1994. Mr. Yontz is the Chairman of the Board,
President and Chief Executive Officer of Sybron International
2
<PAGE> 5
Corporation, a manufacturer and marketer of laboratory apparatus products,
dental sundry supplies and orthodontic appliances. Prior to joining Sybron
International Corporation, Mr. Yontz was Group Vice President and Executive Vice
President of the Allen-Bradley Company. Mr. Yontz also held various managerial
and professional positions with Chemetron Inc. from 1974 to 1980 and at Ford
Motor Company from 1966 to 1974. Mr. Yontz is also a director of Playtex
Products, Inc. and Viasystems Group, Inc.
CLASS II DIRECTORS -- TERMS EXPIRE 2000
Charles W. Tate (Age 53) is a director of the Corporation and has held such
position since April 1993. Mr. Tate is a Managing Director and Principal of
Hicks Muse. Before joining Hicks Muse in 1991, Mr. Tate had over 19 years of
experience in investment and merchant banking with Morgan Stanley & Co.
Incorporated, including ten years in the mergers and acquisitions department and
the last two and one-half years as a managing director in Morgan Stanley & Co.
Incorporated's merchant banking group. Mr. Tate serves as a director of
International Wire Holding Company, International Home Foods, Inc., Seguros
Comercial America S.A. de C.V. and Vidrio Formas, S.A.
Timothy L. Conlon (Age 46) is a director of the Corporation and has held
such position since 1997. Mr. Conlon also serves as President and Chief
Operating Officer of the Corporation and has held such positions since January
1997. Mr. Conlon also has served as Executive Vice President and Chief Operating
Officer of the Corporation's wholly-owned subsidiary, Berg Electronics Group,
Inc. ("Berg"), since October 1993 and was appointed President of Berg effective
January 1, 1997. Prior to joining Berg, Mr. Conlon was employed as President of
the Cutting and Welding Division of Thermadyne Industries, Inc. from April 1993
to October 1993. Mr. Conlon also held various executive positions with
Thermadyne Industries, Inc. from July 1992 through April 1993. Prior to joining
Thermadyne Industries, Inc., Mr. Conlon spent nine years in the connector
industry including serving as General Manager of the Information Technologies
and Spectra Strip divisions of Amphenol Corporation from 1990 through July 1992
and President of Cambridge Products from 1988 through 1989.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Corporation has a standing Audit Committee, the members of which are
Messrs. Vieser and Yontz. Two meetings were held by the Audit Committee during
the year ended December 31, 1997. The principal functions performed by the Audit
Committee are the nomination of the independent public accountants of the
Corporation, the review of the proposed scope of the independent audit and the
results thereof, the review with management personnel of the public accountants'
observations on financial policy, controls and personnel and consultation with
the Chief Financial Officer of the Corporation concerning the audit.
The Corporation has a standing Compensation and Stock Option Committee (the
"Compensation Committee"). The current members of the Compensation Committee are
Messrs. Hicks, Vieser and Yontz. During the year ended December 31, 1997, the
composition of the Compensation Committee consisted of Messrs. Vieser and Yontz.
In February 1998, Mr. Hicks was appointed to serve as Chairman of the
Compensation Committee. One meeting was held by the Compensation Committee
during the year ended December 31, 1997, and the Compensation Committee acted by
unanimous written consent three times during the year ended December 31, 1997.
The principal functions of the Compensation Committee are to review the
compensation arrangements of the Corporation's executive officers, to submit
recommendations to the Board of Directors with respect to such arrangements and
to administer the Corporation's executive compensation and stock option plans.
See "Report of the Compensation Committee on Executive Compensation."
3
<PAGE> 6
The total number of meetings of the Board of Directors held during the year
ended December 31, 1997 was five. The Board of Directors voted by unanimous
written consent three times during the year ended December 31, 1997. During the
year ended December 31, 1997, no director of the Corporation attended less than
75% of the total number of meetings of the Board of Directors and all committees
on which such director served.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE INDIVIDUALS
NOMINATED FOR ELECTION AS CLASS III DIRECTORS.
PROPOSAL TO ADOPT AMENDMENT NO. 1 TO
THE BERG ELECTRONICS CORP. 1993 STOCK OPTION PLAN
THE PLAN
The Corporation has in effect the 1993 Plan, adopted by the Board of
Directors with stockholder approval in 1993.
Pursuant to the 1993 Plan, the Corporation may grant options to purchase
shares of its Common Stock to certain individuals and/or entities and key
employees of the Corporation, and any parent corporation or subsidiary
corporation thereof (such parent and subsidiary corporations are referred to
herein as "Related Entities"), including officers and directors who are also
employees and certain other eligible persons (collectively, the "Optionees").
The purpose of the 1993 Plan is to afford the Optionees who are responsible for
the continued growth of the Corporation an opportunity to acquire a proprietary
interest in the Corporation, thereby creating in such persons an increased
interest in and a greater concern for the welfare of the Corporation and any
Related Entities.
General. Subject to adjustment for certain changes in the capital structure
of the Corporation, the aggregate number of shares as to which options may be
granted under the 1993 Plan currently is 960,013. Options granted pursuant to
the 1993 Plan shall be either incentive options (which are intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code")), or non-qualified options (which do not meet the requirements of
Code Section 422). Pursuant to the 1993 Plan, no incentive options may be
granted after ten years from the earlier of (i) the date the 1993 Plan was
adopted by the Corporation and (ii) the date the 1993 Plan was adopted by the
Corporation's stockholders. Subject to certain additional limitations, no option
by its terms shall be exercisable after the expiration of ten years from the
date of grant of such option, or such other period (in the case of non-qualified
options) or such shorter period (in the case of incentive options) as the
Committee (as defined below) in its sole discretion may determine. The exercise
price of any non-qualified option may not be less than the par value of the
Common Stock on the date of grant of such option. The exercise price of any
incentive option or option intended to comply with Code Section 162(m) (and thus
be exempt from the deduction limitation imposed by Code Section 162(m)) shall be
not less than 100% of the fair market value per share of the Common Stock on the
date of grant of such option (or 110% in the case of certain incentive options).
Administration of the 1993 Plan. The 1993 Plan is administered by a
committee (the "Committee") consisting of not less than two directors of the
Corporation. Each member of the Committee is required to be a "disinterested
person" within the meaning of Rule 16b-3, as amended, or other applicable rules
promulgated under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Committee is appointed by the Board of
Directors of the Corporation, and each member of the Committee serves at the
pleasure of the Board of Directors. Removal from the Committee may be with or
without cause. Membership on the Committee shall from time to time be increased
or decreased and shall be subject to such conditions, in each case as the Board
of Directors deems appropriate, to permit certain transactions in the Common
Stock pursuant to the 1993 Plan to be exempt from liability under Section 16(b)
of the Exchange Act pursuant to Rule 16b-3 thereunder. During the fiscal year
ended December 31, 1997, Messrs. Vieser and Yontz were the members of the
Committee. In February 1998, Mr. Hicks was appointed Chairman of the Committee.
4
<PAGE> 7
Federal Tax Consequences of the 1993 Plan. See description entitled
"Certain Federal Income Tax Consequences -- Incentive Stock Options" and
"-- Non-Qualified Stock Options and Stock Appreciation Rights" beginning on page
10 hereof.
DESCRIPTION OF AMENDMENT NO. 1
At its meeting on December 18, 1997, the Board of Directors of the
Corporation adopted the Amendment to 1993 Plan (a copy of which is attached
hereto as Exhibit A) and directed that the Amendment to 1993 Plan be submitted
to the stockholders for their approval. The Amendment to 1993 Plan provides for
an increase in the aggregate number of shares of Common Stock as to which
options may be granted thereunder to 2,460,013 shares.
The following table sets forth the number of shares underlying the stock
options which were granted under the 1993 Plan on December 18, 1997 (the
"December Grants") to (i) the named executive officers of the Corporation; (ii)
the current executive officers of the Corporation as a group; (iii) the current
directors of the Corporation who are not executive officers as a group; and (iv)
all employees, including all current officers who are not executive officers, as
a group.
NEW PLAN BENEFITS
BERG ELECTRONICS CORP. 1993 STOCK OPTION PLAN
---------------------------------------------------
<TABLE>
<CAPTION>
NAME AND POSITION SHARES
----------------- -------
<S> <C>
James N. Mills.............................................. -0-
Chairman of the Board and Chief Executive Officer of
the Corporation and Chairman of the Board of Berg
Timothy L. Conlon........................................... 75,000
President and Chief Operating Officer of the
Corporation and Berg
David M. Sindelar........................................... -0-
Senior Vice President and Chief Financial Officer of
the Corporation and Senior Vice President of Berg
Joseph S. Catanzaro......................................... 8,504
Chief Accounting Officer of the Corporation and Vice
President -- Finance of Berg
W. Thomas McGhee............................................ -0-
Secretary and General Counsel of the Corporation and
Berg
All current executive officers as a group................... 83,504
All current directors who are not executive officers as a
group..................................................... -0-
All employees, including current officers who are not
executive officers, as a group............................ 454,931
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO
1993 PLAN.
5
<PAGE> 8
PROPOSAL FOR APPROVAL OF THE BERG ELECTRONICS CORP.
1998 INCENTIVE COMPENSATION PLAN
BACKGROUND AND PURPOSE. At its meeting on March 16, 1998, the Board of
Directors of the Corporation adopted the 1998 Plan (a copy of which is attached
hereto as Exhibit B) and directed that the 1998 Plan be submitted to the
stockholders for their approval. The 1998 Plan is intended to motivate certain
employees, non-employee directors, affiliated persons and independent
contractors to put forth maximum efforts toward the growth, profitability and
success of the Corporation and its subsidiaries by providing incentives to such
persons through cash payments and/or through the ownership and performance of
the Common Stock. In addition, the 1998 Plan is intended to provide incentives
which will attract and retain highly qualified individuals as employees and
non-employee directors of the Corporation and to assist in aligning the
interests of such employees and non-employee directors with those of the
Corporation's stockholders.
ELIGIBILITY. All employees of the Corporation and its subsidiaries, the
Corporation's non-employee directors, certain affiliated persons who have been
designated as such by the Plan Committee (as defined below), and certain
independent contractors rendering services to the Corporation or any of its
subsidiaries will be eligible to participate in the 1998 Plan and to receive
awards under the 1998 Plan. Participants will consist of such employees,
non-employee directors, affiliated persons and independent contractors as the
Plan Committee in its sole discretion designates to receive awards under the
1998 Plan. Designation of a participant in any year will not require the Plan
Committee to designate such person or entity to receive an award in any other
year or, once designated, to receive the same type or amount of award as granted
to the participant in any other year. The Plan Committee will consider such
factors as it deems pertinent in selecting participants and in determining the
type and amount of their respective awards.
ADMINISTRATION. The 1998 Plan will be administered by the Compensation
Committee of the Board of Directors (the "Plan Committee"); provided, that for
purposes of determining the performance goals applicable to employees who
constitute "covered employees" within the meaning of Code Section 162(m), "Plan
Committee" shall mean the members of the Compensation Committee who qualify as
both a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) under the
Exchange Act and as an "outside director" within the meaning of Code Section
162(m) (the "Outside Directors"), and such performance goals shall be subject to
ratification by unanimous approval of the members of the Plan Committee. The
Plan Committee will have the responsibility, in its sole discretion, to control,
operate, manage and administer the 1998 Plan in accordance with its terms.
TYPES OF AWARDS UNDER THE 1998 PLAN. The 1998 Plan authorizes the following
types of awards:
- cash awards
- stock options
- stock appreciation rights
- stock awards
- stock units
- performance shares
- performance units
SHARES AVAILABLE UNDER THE 1998 PLAN. The aggregate number of shares of
Common Stock available for grants of awards under the 1998 Plan during its term
will be 977,713 shares, which number represents the number of shares of Common
Stock available for grant under the 1993 Plan, plus not more than 1,424,377
shares of Common Stock underlying awards which have been granted under the 1993
Plan (assuming the approval of the Amendment to 1993 Plan and after taking into
consideration the December Grants) and which terminate after the effective date
of the 1998 Plan by expiration, forfeiture, cancellation or otherwise without
the issuance of such shares under the 1993 Plan. On or about the date the 1998
Plan is approved by the Corporation's stockholders, the Board of Directors will
amend the 1993 Plan so that, except for the December Grants, no further grants
will be made under the 1993 Plan, and all available shares under the 1993
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<PAGE> 9
Plan (after taking into consideration the December Grants) will be transferred
to the 1998 Plan. As of March 20, 1998, there were 16,148 shares available under
the 1993 Plan, and it is intended that all such shares, together with the shares
of Common Stock authorized under the Amendment to 1993 Plan, if any, will be
transferred to the 1998 Plan upon approval of the 1998 Plan by the Corporation's
stockholders.
Shares of Common Stock available for issuance under the 1998 Plan may be
either authorized but unissued shares, shares of issued stock held in the
Corporation's treasury, or both, at the discretion of the Corporation, and
subject to any adjustments in accordance with the 1998 Plan. Any shares of
Common Stock underlying awards which terminate by expiration, forfeiture,
cancellation or otherwise without the issuance of such shares will again be
available for grants of awards under the 1998 Plan.
ADJUSTMENT TO SHARES. If there is any change in the Common Stock of the
Corporation, such as due to a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, dividend in kind
or other like change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Corporation, the 1998 Plan provides for
appropriate adjustments to be made to outstanding awards thereunder.
MAXIMUM INDIVIDUAL AWARDS. The maximum aggregate number of shares of Common
Stock underlying all awards measured in shares of Common Stock (whether payable
in cash, Common Stock or a combination of both) that may be granted to any
single participant during the life of the 1998 Plan is 250,000 shares. The
maximum aggregate amount of cash awards intended to qualify as Performance-Based
Awards (as described below) (but not measured in shares of Common Stock) that
may be paid to any single participant during the term of the 1998 Plan will be
200% of such participant's salary for all fiscal years ending during the term of
the 1998 Plan, regardless of the date of payment of such cash awards, but in no
event more than $25,000,000 during the term of the 1998 Plan in the aggregate
for any single participant.
CASH AWARDS. A cash award will be subject to such terms and conditions as
the Plan Committee, in its sole discretion, determines to be appropriate,
including, without limitation, determining the vesting date with respect to such
cash award, the criteria for the vesting of such cash award and the right of the
Corporation to require the participant to repay the cash award (with or without
interest) upon termination of the participant's employment within specified
periods.
STOCK OPTIONS. The Plan Committee will, in its sole discretion, determine
the employees, the non-employee directors, the affiliated persons and the
independent contractors who will receive stock options and the number of shares
of Common Stock underlying each stock option. The Plan Committee may grant
"incentive stock options" (as such options are described under Section 422 of
the Code); provided, that such options shall be granted only to employees of the
Corporation or its subsidiaries, or it may grant stock options which are not
incentive stock options ("non-qualified stock options") to all participants.
Each stock option will be subject to such terms and conditions consistent with
the 1998 Plan as the Plan Committee may impose from time to time. In addition,
incentive stock options are subject to certain restrictions imposed by the Code.
STOCK OPTION EXERCISE PRICE. The Plan Committee will determine the exercise
price of each stock option, which exercise price will not be lower than the fair
market value of the Common Stock on the date of grant; provided, however, that
the exercise price of any non-qualified stock option may be lower than the fair
market value of the Common Stock on the date of grant if the Plan Committee, in
its sole discretion and due to special circumstances, determines otherwise on
the date of grant. Stock options granted under the 1998 Plan cannot be exercised
after the tenth anniversary of the date of grant; provided, however, that
non-qualified stock options may be exercised after the tenth anniversary of the
date of grant if the Plan Committee, in its sole discretion, provides otherwise.
VESTING OF STOCK OPTIONS. The Plan Committee will determine when and to
what extent each stock option vests, but if the Plan Committee does not
determine the percent of a stock option that vests and the
7
<PAGE> 10
applicable date(s) of such vesting, then the stock options will vest according
to the vesting schedule set forth in the table below:
<TABLE>
<CAPTION>
ANNIVERSARY OF DATE OF GRANT PERCENT THAT VESTS
---------------------------- ------------------
<S> <C>
On or after 1st............................................. 20%
On or after 2nd............................................. 40%
On or after 3rd............................................. 60%
On or after 4th............................................. 80%
On or after 5th............................................. 100%
</TABLE>
Stock options granted under the 1998 Plan may also be subject to such other
terms and conditions as determined by the Plan Committee, including, without
limitation, accelerating the vesting (i) based on individual performance or (ii)
if certain performance goals are achieved.
PAYMENT OF STOCK OPTION EXERCISE PRICE. The stock option exercise price may
be paid in cash or, in the sole discretion of the Plan Committee, by (i) the
delivery of shares of Common Stock then owned by the participant, (ii) the
withholding of shares of Common Stock for which a stock option is exercisable or
(iii) a combination of (i) and (ii). In the sole discretion of the Plan
Committee, payment may also be made by delivering a properly executed exercise
notice to the Corporation together with a copy of irrevocable instructions to a
broker to deliver promptly to the Corporation the amount of sale or loan
proceeds to pay the exercise price. The Plan Committee may prescribe any other
method of payment of the exercise price that it determines to be consistent with
applicable law and the purposes of the 1998 Plan.
STOCK APPRECIATION RIGHTS. Generally, a stock appreciation right is a right
to receive a payment in cash, Common Stock or a combination of both, in an
amount equal to the excess of the fair market value of the Common Stock, or
other specified valuation, of a specified number of shares of Common Stock on
the date the stock appreciation right is exercised, over the fair market value
of the Common Stock, or other specified valuation (which will be no less than
the fair market value of the Common Stock), of such shares of Common Stock on
the date the stock appreciation right is granted, all as determined by the Plan
Committee.
STOCK AWARDS. A stock award consists of shares of Common Stock and is
subject to such terms and conditions as the Plan Committee, in its sole
discretion, determines appropriate, including, without limitation, restrictions
on the sale or other disposition of such shares, the vesting date with respect
to such shares and the right of the Corporation to reacquire such shares for no
consideration upon termination of the participant's employment within specified
periods. A participant who has been granted a stock award will have all of the
rights of a holder of shares of Common Stock, including the right to receive
dividends and to vote the shares, unless the Plan Committee determines otherwise
on the date of grant.
STOCK UNITS. A stock unit is a hypothetical share of Common Stock
represented by a notional account established and maintained by the Corporation
for a participant who receives a grant of stock units. Stock units will be
subject to such terms and conditions as the Plan Committee, in its sole
discretion, determines appropriate, including, without limitation,
determinations of the vesting date with respect to such stock units and the
criteria for the vesting of such stock units. A stock unit may be paid in cash,
shares of Common Stock or a combination of both, as determined by the Plan
Committee, and may provide for dividend equivalent rights.
PERFORMANCE SHARES. A performance share consists of a share or shares of
Common Stock which is/are subject to such terms and conditions as the Plan
Committee, in its sole discretion, determines appropriate, including, without
limitation, determining the performance goal or goals which, depending on the
extent to which such goals are met, will determine the number and/or value of
the performance shares that will be paid out or distributed to the participant
who has been granted performance shares. Performance goals may be based on,
without limitation, Corporation-wide, divisional and/or individual performance,
as the Plan Committee, in its sole discretion, may determine, and may be based
on the performance measures listed under "Performance-Based Awards" below.
8
<PAGE> 11
PERFORMANCE UNITS. A performance unit is a hypothetical share or shares of
Common Stock represented by a notional account established and maintained by the
Corporation for a participant who receives a grant of performance units.
Performance units will be subject to such terms and conditions as the Plan
Committee, in its sole discretion, determines appropriate, including, without
limitation, determining the performance goal or goals which, depending on the
extent to which such goals are met, will determine the number and/or value of
the performance units that will be accrued with respect to the participant who
has been granted performance units. Performance goals may be based on, without
limitation, Corporation-wide, divisional and/or individual performance, as the
Plan Committee, in its sole discretion, may determine, and may be based on the
performance measures listed in "Performance-Based Awards" below.
ADJUSTMENT OF PERFORMANCE GOALS UNDER PERFORMANCE SHARES AND PERFORMANCE
UNITS. With respect to performance shares or performance units that are not
intended to qualify as Performance-Based Awards (see "Performance-Based Awards"
below), the Plan Committee will have the authority at any time to make
adjustments to performance goals for any outstanding performance shares or
performance units which the Plan Committee deems necessary or desirable unless
at the time of establishment of the performance goals the Plan Committee
precludes itself from making such adjustments.
PAYOUT OF PERFORMANCE SHARES OR PERFORMANCE UNITS. Upon the vesting of a
performance share or a performance unit, the performance share or the
performance unit will be distributed to the participant in shares of Common
Stock, unless the Plan Committee, in its sole discretion, provides for the
payment of the performance share or performance unit in cash (or partially in
cash and partially in shares of Common Stock) equal to the value of the shares
of Common Stock which would otherwise be distributed to the participant.
PERFORMANCE-BASED AWARDS. The Plan Committee, in its sole discretion, may
designate and design awards granted under the 1998 Plan as "Performance-Based
Awards" if it determines that compensation attributable to such awards might not
otherwise be tax deductible by the Corporation due to the deduction limitation
imposed by Code Section 162(m). Accordingly, an award granted under the 1998
Plan may be granted in such a manner that the compensation attributable to such
award is intended by the Plan Committee to qualify as "performance-based
compensation" (as such term is used in Code Section 162(m)) and thus be exempt
from the deduction limitation imposed by such section. The Plan Committee may
use the following performance measures (either individually or in any
combination) to set performance goals with respect to awards intended to qualify
as Performance-Based Awards: net sales; pre-tax income before allocation of
corporate overhead and bonus; budget; cash flow; earnings per share; net income;
division, group or corporate financial goals; return on stockholders' equity;
return on assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Common Stock or any other
publicly-traded securities of the Corporation; market share; gross profits;
earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; economic value-added models; comparisons with
various stock market indices; increase in number of customers; and/or reductions
in costs. In addition, the material terms of performance goals as described
above will be disclosed to and reapproved by the Corporation's stockholders no
later than the first stockholder meeting that occurs in the fifth year following
the year in which the Corporation's stockholders previously approved such
performance goals.
CHANGE IN CONTROL. If there is a change in control of the Corporation, the
Plan Committee may accelerate the vesting date and/or payout of such awards.
TERMINATION OF EMPLOYMENT. If a participant's employment is terminated due
to death or disability, all non-vested portions of awards held by the
participant will immediately be forfeited and all vested portions of stock
options and stock appreciation rights held by the participant will remain
exercisable until the earlier of (i) the end of the 12-month period following
the date of death or termination of employment or (ii) the date the stock option
or stock appreciation right would otherwise expire. If a participant's
employment is terminated by the Corporation for cause or by the participant
voluntarily, all awards held by a participant, whether vested or non-vested,
will immediately be forfeited by such participant. If a participant's employment
is terminated for any reason other than for cause or such participant's death,
disability or voluntary resignation, all non-vested portions of awards held by
the participant will immediately be forfeited and all vested portions of stock
options and stock appreciation rights held by the participant will remain
exercisable until the earlier of
9
<PAGE> 12
(i) the end of the 90-day period following the date of the termination of
employment or (ii) the date the stock option or stock appreciation right would
otherwise expire. Except with respect to (i) the termination of a participant's
employment by the Company for cause or (ii) a participant's voluntary
resignation of his or her employment with the Company, the Plan Committee may,
in its sole discretion and at any time, provide that (a) any or all non-vested
portions of stock options and/or stock appreciation rights held by the
participant on the date of death and/or termination of employment will
immediately become exercisable and, except with respect to incentive stock
options, will remain exercisable until a date that occurs on or prior to the
date the stock option or stock appreciation right is scheduled to expire, (b)
any or all vested portions of non-qualified stock options and/or stock
appreciation rights held by the participant on the date of death and/or
termination of employment will remain exercisable until a date that occurs on or
prior to the date the stock option or stock appreciation right is scheduled to
expire or (c) any or all non-vested portions of stock awards, stock units,
performance shares, performance units and/or cash awards held by the participant
on the date of the participant's death and/or termination of employment will
immediately vest or will become vested on a date that occurs on or prior to the
date the award is scheduled to vest.
TERMINATION AND AMENDMENT OF 1998 PLAN. The Board of Directors may amend,
suspend or terminate the 1998 Plan at any time with or without prior notice,
provided that such action does not reduce the amount of any outstanding award or
change the terms and conditions of any outstanding award without the
participant's consent. No amendment of the 1998 Plan will, without the approval
of the stockholders of the Corporation:
- increase the total number of shares which may be issued under the 1998
Plan;
- increase the maximum number of shares with respect to all awards measured
in Common Stock that may be granted to any individual under the 1998
Plan;
- increase the maximum dollar amount with respect to all awards measured in
cash that may be paid to any individual under the 1998 Plan; or
- modify the requirements as to eligibility for awards under the 1998 Plan.
In addition, the 1998 Plan may not be amended without the approval of the
Corporation's stockholders if such amendment (i) is required under the rules and
regulations of the stock exchange or national market system on which the Common
Stock is listed or (ii) will disqualify any incentive stock option granted under
the 1998 Plan.
MISCELLANEOUS. The Corporation, or the applicable subsidiary, may require a
participant to reimburse the corporation which employs such participant for any
taxes required by any governmental regulatory authority to be withheld or
otherwise deducted and paid by such corporation or entity with respect to any
award, and the corporation or entity which employs such participant has the
right to withhold the amount of such taxes from any other sums due or to become
due from such corporation or entity to the participant upon such terms and
conditions as the Plan Committee shall prescribe, which may include withholding
shares of Common Stock underlying any award. The Plan Committee may, in its sole
discretion, allow a participant to elect to defer the receipt of any
compensation attributable to an award under guidelines and procedures to be
established by the Plan Committee after taking into account the advice of the
Corporation's tax counsel. Awards granted under the 1998 Plan are not
transferable otherwise than by will or the laws of descent and distribution, and
stock options and stock appreciation rights are exercisable, during the
participant's lifetime, only by the participant; provided, however, that the
Plan Committee, in its sole discretion and on a case-by-case basis, may permit
the transferability of a non-qualified stock option by a participant, including
to, but not limited to, members of the participant's immediate family or trusts
or family partnerships or other similar entities for the benefit of such
persons, and all such transfers will be subject to such terms, conditions,
restrictions and/or limitations, if any, as the Plan Committee may establish.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The statements in the following
paragraphs are based on statutory authority and judicial and administrative
interpretations, as of the date of this Proxy Statement,
10
<PAGE> 13
which authorities and interpretations are subject to change at any time
(possibly with retroactive effect). The law is technical and complex and the
discussion below represents only a general summary.
Incentive Stock Options. Incentive stock options ("ISOs") granted under the
1998 Plan are intended to meet the definitional requirements of Code Section
422(b) for "incentive stock options."
An employee who receives an ISO does not recognize any taxable income upon
the grant of such ISO. Similarly, the exercise of an ISO generally does not give
rise to federal income tax to the employee, provided that (i) the federal
"alternative minimum tax", which depends on the employee's particular tax
situation, does not apply and (ii) the employee is employed by the Corporation
from the date of grant of the option until three months prior to the exercise
thereof, except where such employment terminates by reason of disability (where
the three-month period is extended to one year) or death (where this requirement
does not apply). If an employee exercises an ISO after these requisite periods,
the ISO will be treated as a NSO (as defined below) and will be subject to the
rules set forth below under the caption "Non-Qualified Stock Options and Stock
Appreciation Rights."
Further, if after exercising an ISO, an employee disposes of the Common
Stock so acquired more than two years from the date of grant and more than one
year from the date of transfer of the Common Stock pursuant to the exercise of
such ISO (the "applicable holding period"), the employee will generally
recognize capital gain or loss equal to the difference, if any, between the
amount received for the shares and the exercise price. If, however, an employee
does not hold the shares so acquired for the applicable holding period, thereby
making a "disqualifying disposition," the employee will recognize ordinary
income equal to the excess of the fair market value of the shares at the time
the ISO was exercised over the exercise price and the balance, if any, of the
gain would be capital gain (provided the employee held such shares as a capital
asset at such time). Capital gains are long-term and eligible for a maximum
federal income tax rate of 20% if the holder's holding period exceeds eighteen
months and are mid-term and eligible for a maximum federal income tax rate of
20% if such holding period is more than twelve but not more than eighteen
months. If the disqualifying disposition is a sale or exchange, and the sales
proceeds are less than the fair market value of the shares on the date of
exercise, the employee's ordinary income therefrom would be limited to the gain
(if any) realized on the sale.
An employee who exercises an ISO by delivering Common Stock previously
acquired pursuant to the exercise of another ISO is treated as making a
"disqualifying disposition" of such Common Stock if such shares are delivered
before the expiration of their applicable holding period. Upon the exercise of
an ISO with previously-acquired shares as to which no disqualifying disposition
occurs, despite some uncertainty, it appears that the employee would not
recognize gain or loss with respect to such previously-acquired shares.
The Corporation will not be allowed a federal income tax deduction upon the
grant or exercise of an ISO or the disposition, after the applicable holding
period, of the Common Stock acquired upon exercise of an ISO. In the event of a
disqualifying disposition, the Corporation generally will be entitled to a
deduction in an amount equal to the ordinary income recognized by the employee,
provided that such amount constitutes an ordinary and necessary business expense
to the Corporation and is reasonable and the limitations of Code Sections 280G
and 162(m) (discussed below) do not apply.
Non-Qualified Stock Options and Stock Appreciation Rights. Non-qualified
stock options ("NSOs") granted under the 1998 Plan are options that do not
qualify as ISOs. A participant who receives a NSO or a stock appreciation right
("SAR") will not recognize any taxable income upon the grant of such NSO or SAR.
However, the participant generally will recognize ordinary income upon exercise
of a NSO in an amount equal to the excess of (i) the fair market value of the
shares of Common Stock at the time of exercise over (ii) the exercise price.
Similarly, upon the receipt of cash or shares pursuant to the exercise of a SAR,
the participant generally will recognize ordinary income in an amount equal to
the sum of the cash and the fair market value of the shares received.
As a result of Section 16(b) of the Exchange Act, under certain
circumstances, the timing of income recognition may be deferred (generally for
up to six months following the exercise of a NSO or SAR (the "Deferral Period"))
for any participant who is an officer or director of the Corporation or a
beneficial owner of
11
<PAGE> 14
more than ten percent (10%) of any class of equity securities of the
Corporation. Absent a Section 83(b) election (as described below under "Other
Awards"), recognition of income by the participant will be deferred until the
expiration of the Deferral Period, if any.
The ordinary income recognized with respect to the receipt of shares or
cash upon exercise of a NSO or SAR will be subject to both wage withholding and
other employment taxes. In addition to the customary methods of satisfying the
withholding tax liabilities that arise upon the exercise of a SAR for shares or
upon the exercise of a NSO, the Corporation may satisfy the liability in whole
or in part by withholding shares of Common Stock from those that otherwise would
be issuable to the participant or by the participant tendering other shares
owned, valued at their fair market value as of the date that the tax withholding
obligation arises.
A federal income tax deduction generally will be allowed to the Corporation
in an amount equal to the ordinary income recognized by the participant with
respect to a NSO or SAR, provided that such amount constitutes an ordinary and
necessary business expense to the Corporation and is reasonable and the
limitations of Code Sections 280G and 162(m) do not apply.
If a participant exercises a NSO by delivering shares of Common Stock to
the Corporation, other than shares previously acquired pursuant to the exercise
of an ISO which is treated as a "disqualifying disposition" as described above,
the participant will not recognize gain or loss with respect to the exchange of
such shares, even if their then fair market value is different from the
participant's tax basis. The participant, however, will be taxed as described
above with respect to the exercise of the NSO as if the participant had paid the
exercise price in cash, and the Corporation likewise generally will be entitled
to an equivalent tax deduction.
Other Awards. With respect to other awards under the 1998 Plan that are
settled either in cash or in shares of Common Stock that are either transferable
or not subject to a substantial risk of forfeiture (as defined in the Code and
the regulations thereunder), participants generally will recognize ordinary
income equal to the amount of cash or the fair market value of the Common Stock
received.
With respect to awards under the 1998 Plan that are settled in shares of
Common Stock that are restricted as to transferability or subject to a
substantial risk of forfeiture, absent a written election pursuant to Code
Section 83(b) filed with the Internal Revenue Service within 30 days after the
date of transfer of such shares pursuant to the award (a "Section 83(b)
election"), an individual will recognize ordinary income at the earlier of the
time at which (i) the shares become transferable or (ii) the restrictions that
impose a substantial risk of forfeiture of such shares lapse, in an amount equal
to the excess of the fair market value (on such date) of such shares over the
price paid for the award, if any. If a Section 83(b) election is made, the
individual will recognize ordinary income, as of the transfer date, in an amount
equal to the excess of the fair market value of the Common Stock as of that date
over the price paid for such award, if any. The ordinary income recognized with
respect to the receipt of cash, shares of Common Stock or other property under
the 1998 Plan will be subject to both wage withholding and other employment
taxes.
The Corporation generally will be allowed a deduction for federal income
tax purposes in an amount equal to the ordinary income recognized by the
participant, provided that such amount constitutes an ordinary and necessary
business expense and is reasonable and the limitations of Code Sections 280G and
162(m) do not apply.
Dividends and Dividend Equivalents. To the extent awards under the 1998
Plan earn dividend or dividend equivalents, whether paid currently or credited
to an account established under the 1998 Plan, a participant generally will
recognize ordinary income with respect to such dividend or dividend equivalents
at the time paid in cash or shares of Common Stock.
Change of Control. In general, if the total amount of payments to a
participant that are contingent upon a "change of control" of the Corporation
(as defined in Code Section 280G), including payments under the 1998 Plan that
vest upon a "change of control," equals or exceeds three times the individual's
"base amount" (generally, such participant's average annual compensation for the
five calendar years preceding the change of control), then, subject to certain
exceptions, the payments may be treated as "parachute payments" under the Code,
in which case a portion of such payments would be non-deductible to the
Corporation and the individual would be subject to a 20% excise tax on such
portion of the payments.
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<PAGE> 15
Certain Limitations on Deductibility of Executive Compensation. With
certain exceptions, Code Section 162(m) denies a deduction to publicly-held
corporations for compensation paid to certain executive officers in excess of $1
million per executive per taxable year (including any deduction with respect to
the exercise of a NSO or SAR or the disqualifying disposition of stock purchased
pursuant to an ISO). One such exception applies to certain performance-based
compensation, provided that such compensation has been approved by stockholders
in a separate vote and certain other requirements are met. In general, the
Corporation intends for stock options, SARs and performance-based awards granted
under the 1998 Plan to qualify for the performance-based compensation exception
to Code Section 162(m).
STOCKHOLDER APPROVAL. The 1998 Plan will become effective on the date that
it is approved by the stockholders of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE BERG ELECTRONICS CORP. 1998 INCENTIVE COMPENSATION PLAN.
PROPOSAL FOR THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
At its meeting on March 16, 1998, the Board of Directors of the Corporation
adopted the Amendment to Certificate of Incorporation and directed that the
Amendment to Certificate of Incorporation be submitted to the stockholders for
their approval. The Amendment to Certificate of Incorporation, if approved by
the Corporation's stockholders, would increase the number of shares of Common
Stock authorized for issuance from 60,000,000 shares to 120,000,000 shares. The
additional 60,000,000 shares of Common Stock would be a part of the existing
class of Common Stock and, if and when issued, would have the same rights and
privileges as the shares of Common Stock presently issued and outstanding. As a
result of the Amendment to Certificate of Incorporation, the total number of
shares of all classes of capital stock (Common Stock, Class A Common Stock and
preferred stock) which the Corporation would have authority to issue would be
155,500,000.
As of March 20, 1998, 39,551,451 shares of Common Stock were outstanding
and an additional (i) 885,942 shares were reserved for issuance pursuant to the
exercise of options granted under the 1993 Plan (the "1993 Plan Shares"), (ii)
48,660 shares were reserved for issuance pursuant to the exercise of an option
granted under a stock option agreement between the Corporation and Mr. Vieser,
(iii) 538,435 shares will be reserved for issuance pursuant to the exercise of
options constituting the December Grants if the Amendment to 1993 Plan is
approved by the Corporation's stockholders and (iv) 1,908,554 shares have been
reserved for issuance pursuant to the conversion of shares of Class A Common
Stock into shares of Common Stock (collectively, the "Reserved Shares"). In
addition, the Corporation is requesting that the stockholders approve the
Amendment to 1993 Plan and the 1998 Plan. Assuming the approval of both the
Amendment to 1993 Plan and the 1998 Plan, and after taking into account the
December Grants, the 1998 Plan will authorize the issuance of up to 977,713
shares of Common Stock (the "1998 Plan Shares"). In the absence of the proposed
Amendment to Certificate of Incorporation, after taking into consideration the
shares of Common Stock outstanding, the 1993 Plan Shares, the Reserved Shares
and the 1998 Plan Shares, the Corporation will have only 16,089,245 shares of
Common Stock available for issuance.
The Board of Directors of the Corporation believes that the proposed
increase in the number of authorized shares of Common Stock from 60,000,000
shares to 120,000,000 shares is desirable and prudent so that additional
authorized shares of Common Stock are readily available for issuance in
connection with possible future financings, corporate mergers and acquisitions,
strategic relationships with corporate partners, employee benefit plans and
other general corporate purposes. Increasing the authorized shares of Common
Stock will also provide a reserve of shares available for issuance in connection
with possible stock splits or stock dividends if the Board of Directors of the
Corporation determines that it is desirable to facilitate a broader base of
stockholders. Currently, the Corporation has no plans, agreements or
arrangements in place requiring the issuance of additional shares of Common
Stock for the foregoing or other purposes, other than possible future issuances
pursuant to existing share reservations. However, having shares of Common Stock
available for issuance would enable the Corporation to take timely advantage of
market conditions and other favorable opportunities for raising new capital
without the delay and expense associated with holding special meetings of
stockholders as would otherwise be required by law or stock exchange rules and
regulations.
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<PAGE> 16
The ability of the Corporation's Board of Directors to issue additional
shares of Common Stock could be considered to have an anti-takeover effect to
the extent that the Board of Directors could use such shares to dilute the
percentage ownership or voting power of a person seeking to obtain control of
the Corporation. The Board of Directors of the Corporation will be authorized to
determine whether, when and on what terms the issuance of shares of Common Stock
may be warranted in connection with any of the foregoing purposes.
The Corporation's Certificate of Incorporation, as amended, and Amended and
Restated Bylaws ("Bylaws") contain certain provisions that are intended to
enhance the likelihood of continuity and stability in the composition of the
Corporation's Board of Directors and in the policies formulated by the Board of
Directors and to discourage an unsolicited takeover of the Corporation if the
Board of Directors determines that such a takeover is not in the best interests
of the Corporation and its stockholders. However, these provisions could have
the effect of discouraging certain attempts to acquire the Corporation or to
remove incumbent management even if some (or a majority) of the stockholders of
the Corporation deem such an attempt to be in their best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
AMENDMENT TO CERTIFICATE OF INCORPORATION.
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<PAGE> 17
VOTING SECURITIES OUTSTANDING AND SECURITY OWNERSHIP OF
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the voting securities of the Corporation as of March 20, 1998, by
(i) each person who is known by the Corporation to beneficially own more than 5%
of any class of the Corporation's voting securities; (ii) the directors and
certain executive officers of the Corporation, individually; and (iii) the
directors and all executive officers of the Corporation as a group. Except as
otherwise indicated below, the table set forth below does not give effect to the
conversion of any shares of Class A Common Stock into shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
------------------------------------------------------------
COMMON STOCK CLASS A COMMON STOCK
---------------------- ----------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS SHARES CLASS TOTAL
---------------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS:
HM Parties(1).............................. 3,841,970 9.7% -- -- 9.3%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
John R. Muse(2)............................ 2,015,844 5.1% -- -- 4.9%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
DIRECTORS AND OFFICERS:
James N. Mills(3).......................... 38,600 * 1,908,554 100.0% 4.7%
Thomas O. Hicks(1)......................... 3,841,970 9.7% -- -- 9.3%
Charles W. Tate(4)......................... 1,242,793 3.1% -- -- 3.0%
Richard W. Vieser(5)....................... 117,320 * -- -- *
Kenneth F. Yontz........................... 97,320 * -- -- *
Timothy L. Conlon(6)....................... 79,124 * -- -- *
David M. Sindelar(7)....................... 30,000 * 355,982 18.7% *
Joseph S. Catanzaro (8).................... 32,196 * -- -- *
W. Thomas McGhee(9)........................ 2,000 * 70,992 3.7% *
All directors and executive officers as a
group (10 persons)(10)................... 5,489,323 13.8% 1,908,554 100% 17.8%
c/o Berg Electronics Corp.
101 South Hanley Road
St. Louis, Missouri 63105
</TABLE>
- ---------------
* Represents less than 1%
(1) Represents (i) 67,451 shares owned of record by Hicks Muse Fund I
Incorporated ("Fund I"); (ii) 3,440,119 shares owned of record by Thomas O.
Hicks; (iii) 331,968 shares owned of record by six children's trusts for
which Mr. Hicks serves as trustee; and (iv) 2,432 shares owned of record by
an employee of Hicks Muse and subject to an irrevocable proxy in favor of
Mr. Hicks. Mr. Hicks is the controlling stockholder of Fund I and serves as
Chairman of the Board, President and Chief Executive Officer of Fund I.
Accordingly, Mr. Hicks may be deemed to be the beneficial owner of all of
the shares owned of record by Fund I. Messrs. John R. Muse, Charles W. Tate
and Jack D. Furst serve as officers, directors and minority stockholders of
Fund I and as such, may be deemed to share the power to vote or dispose of
shares of Common Stock held by Fund I. Accordingly, Messrs. Hicks, Muse,
Tate and Furst may be deemed to be the beneficial owners of shares of
Common Stock owned by Fund I. In addition, Messrs. Muse and Furst own of
record 2,008,546 and 1,111,865 shares of Common Stock, respectively,
15
<PAGE> 18
representing approximately 5.1% and 2.8%, respectively, of the outstanding
shares of Common Stock. Each of Messrs. Hicks, Muse, Tate and Furst
disclaims the existence of a group and disclaims beneficial ownership of
shares of Common Stock not owned of record by him.
(2) Represents 2,008,546 shares owned of record by Mr. Muse and 7,298 shares
owned of record by a children's trust for which Mr. Muse is the custodian.
(3) Represents 38,600 shares of Common Stock and 960,568 shares of Class A
Common Stock owned of record by James N. Mills, and 947,986 shares of Class
A Common Stock which Mr. Mills has the power to vote by proxy.
(4) Represents 1,190,079 shares owned of record by Mr. Tate and 52,714 shares
owned of record by the Charles W. Tate 1992 Trust.
(5) Represents 48,660 shares owned of record by Mr. Vieser, 20,000 shares owned
of record by Mr. Vieser's spouse, and 48,660 shares of Common Stock subject
to options that are exercisable within 60 days. Mr. Vieser disclaims
beneficial ownership of shares of Common Stock not owned of record by him.
(6) Represents 3,000 shares of Common Stock owned of record by three minor
children of which Mr. Conlon is the custodian, and 76,124 shares of Common
Stock subject to options that are exercisable within 60 days.
(7) Represents 30,000 shares of Common Stock and 282,990 shares of Class A
Common Stock owned of record by Mr. Sindelar, and 72,992 shares of Class A
Common Stock owned of record by two children's trusts of which Mr. Sindelar
serves as trustee. Mr. Sindelar disclaims beneficial ownership of shares of
Common Stock not owned of record by him.
(8) Represents 1,000 shares of Common Stock owned of record by three children's
trusts of which Mr. Catanzaro serves as trustee and 31,196 shares of Common
Stock subject to options that are exercisable within 60 days.
(9) Represents 2,000 shares of Common Stock owned of record by the W. Thomas
McGhee Living Revocable Trust (the "McGhee Trust"), 24,992 shares of Class
A Common Stock owned of record by a trust for which Mr. McGhee's spouse
serves as trustee, 26,000 shares of Class A Common Stock owned of record by
the McGhee Trust, and 20,000 shares of Class A Common Stock owned of record
by the McGhee Family L.P. of which Mr. McGhee and his spouse are both
general and limited partners with an aggregate ownership interest of
approximately 89%. Mr. McGhee disclaims beneficial ownership of shares of
Class A Common Stock not owned of record by him.
(10) Represents 5,333,343 outstanding shares of Common Stock, 1,908,554
outstanding shares of Class A Common Stock and 155,980 shares of Common
Stock subject to options that are exercisable within 60 days, in each case
owned beneficially by the directors and executive officers.
16
<PAGE> 19
EXECUTIVE OFFICERS
In addition to Messrs. James N. Mills and Timothy L. Conlon, listed above
under the caption "PROPOSAL FOR THE ELECTION OF DIRECTORS", set forth below are
each of the Corporation's executive officers and his name, age, all positions
and offices held by him with the Corporation and Berg and his principal
occupations and business experience for the past five years. All officers are
elected by the Board of Directors, each to hold office until his successor is
duly elected and qualified, or if earlier, until his resignation, removal from
office or death.
David M. Sindelar (Age 40) is Senior Vice President and Chief Financial
Officer of the Corporation and Senior Vice President of Berg and has held such
positions since November 1992. Mr. Sindelar is also Senior Vice President and
Chief Financial Officer of Mills & Partners, Inc., International Wire Holding
Company and Viasystems Group, Inc. Mr. Sindelar was Senior Vice President and
Chief Financial Officer of Crain Holdings Corp. from August 1995 through
December 1997 and of Jackson Holding Company from February 1993 through August
1995. From 1987 to February 1995, Mr. Sindelar held various positions at
Thermadyne Holdings Corporation including Senior Vice President, Chief Financial
Officer and Vice President -- Corporate Controller and Controller.
Larry S. Bacon (Age 51) is Senior Vice President -- Human Resources of the
Corporation and Berg and has held such positions since March 1993. Mr. Bacon is
also Senior Vice President -- Human Resources of Mills & Partners, Inc.,
International Wire Group, Inc. and Viasystems Group, Inc. Mr. Bacon was Senior
Vice President -- Human Resources of Crain Holdings Corp. from August 1995
through December 1997 and of Jackson Holding Company from February 1993 through
August 1995. Previously, Mr. Bacon was Senior Vice President -- Human Resources
of Thermadyne Holdings Corporation from September 1987 until February 1995.
W. Thomas McGhee (Age 61) is Secretary and General Counsel of the
Corporation and Berg and has held such positions since March 1993. Mr. McGhee is
also a partner in the law firm of Herzog, Crebs and McGhee where he has been a
partner since helping to found that firm in 1987. In addition, Mr. McGhee serves
as Secretary and General Counsel of Mills & Partners, Inc., International Wire
Holding Company and Viasystems Group, Inc. Mr. McGhee was Secretary and General
Counsel of Crain Holdings Corp. from August 1995 through December 1997 and of
Jackson Holding Company from March 1993 through August 1995. Mr. McGhee was
Secretary and General Counsel of Thermadyne Holdings Corporation from March 1993
through February 1995.
Joseph S. Catanzaro (Age 45) is Chief Accounting Officer of the Corporation
and Vice President -- Finance of Berg and has held such positions since June
1996 and April 1993, respectively. Prior to joining Berg, Mr. Catanzaro was
employed by a petroleum trading company subsidiary of Mitsui & Co. (USA), Inc.
as Controller from 1990 through April 1993. From 1980 through 1989, Mr.
Catanzaro held several positions at Apex Oil Co., including Corporate
Controller.
17
<PAGE> 20
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned by
the Chief Executive Officer of the Corporation and Berg and the four other most
highly compensated executive officers of the Corporation during 1997, 1996 and
1995. As of the date hereof, the Corporation has not granted any stock
appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL -------------
COMPENSATION(1) SECURITIES
NAME AND PRINCIPAL ----------------------- UNDERLYING ALL OTHER
POSITION DURING 1996 YEAR SALARY($) BONUS(2)($) OPTIONS(#)(3) COMPENSATION(4)($)
-------------------- ---- --------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
James N. Mills.................... 1997 685,000 685,000 -- 25,900
Chairman of the Board and 1996 685,000 1,370,000 -- 23,000
Chief Executive Officer of the 1995 685,000 800,000 -- 16,500
Corporation and Chairman of the
Board of Berg
Timothy L. Conlon................. 1997 400,000 300,000 115,000 7,000
President and Chief Operating 1996 311,250 404,625 48,660 11,000
Officer of the Corporation and 1995 290,000 225,000 -- 10,000
Berg
David M. Sindelar................. 1997 194,800 126,620 -- 6,000
Senior Vice President and 1996 194,808 389,600 -- 10,000
Chief Financial Officer of the 1995 193,000 200,000 -- 10,000
Corporation and Senior Vice
President of Berg
Joseph S. Catanzaro............... 1997 198,000 160,000 18,504 5,100
Chief Accounting Officer of 1996 172,000 172,000 -- 4,700
the Corporation and Vice 1995 154,000 100,000 -- 4,700
President -- Finance of Berg
W. Thomas McGhee.................. 1997 153,000 99,450 -- 18,100
Secretary and General Counsel 1996 153,000 306,000 -- 17,000
of the Corporation and Berg 1995 152,000 120,000 -- 10,000
</TABLE>
- ---------------
(1) The Corporation and Berg provide to certain executive officers a car
allowance, reimbursement for club memberships, insurance and certain other
benefits. The aggregate incremental costs of these benefits to the
Corporation and Berg for each officer do not exceed the lesser of $50,000
or 10.0% of the total of annual salary and bonus reported for each such
officer.
(2) Bonuses earned in 1997, 1996 and 1995 were paid in 1998, 1997 and 1996,
respectively.
(3) Adjusted to reflect 2-for-1 stock split on October 20, 1997.
(4) All Other Compensation for the year ended December 31, 1997 includes the
following: (i) contributions made by the Corporation for the benefit of
each of the named executive officers of the Corporation in the amount of
$4,800 to the Corporation's 401(k) Savings Plan; (ii) the following amounts
paid by the Corporation as premiums for term life insurance policies: Mr.
Mills $16,300, Mr. Conlon $2,200, Mr. Sindelar $1,200, Mr. Catanzaro $300
and Mr. McGhee $13,300; and (iii) $4,800 paid by the Corporation for the
benefit of Mr. Mills to the Corporation's 401(k) Savings Plan as
"transition" payments related to a pension plan formerly maintained by the
Corporation and terminated in 1995.
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<PAGE> 21
The following table summarizes option grants made during 1997 to the
executive officers named above.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL EXERCISE
UNDERLYING OPTIONS GRANTED OR BASE GRANT DATE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE VALUE(2)($)
---- -------------- ---------------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
James N. Mills............ -- -- -- -- --
Timothy L. Conlon......... 40,000 4.8% 14.69 01/01/07 364,000
75,000 9.0% 20.75 12/18/07 937,500
David M. Sindelar......... -- -- -- -- --
Joseph S. Catanzaro....... 10,000 1.2% 14.63 02/03/07 91,000
8,504 1.0% 20.75 12/18/07 106,300
W. Thomas McGhee.......... -- -- -- -- --
</TABLE>
- ---------------
(1) The options to purchase shares of Common Stock were granted under the 1993
Plan and become exercisable in five equal annual installments commencing on
the first anniversary of the date of grant. All options become exercisable
upon a change of control (as defined in the 1993 Plan).
(2) The grant date present value was determined using the Black-Scholes option
pricing method with the following assumptions: (i) dividend yield of 0%;
(ii) expected volatility of 37.5%; (iii) risk free interest rate ranging
from 5.74% to 6.53%; and (iv) expected life of ten years. No adjustments
were made for non-transferability or risk of forfeiture.
There were no exercises of stock options by any of the named executive
officers during the fiscal year ended December 31, 1997. The table below lists
the number of shares of Common Stock underlying each option held by the named
executive officers as of December 31, 1997.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
----------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------------------------- -------------------------
<S> <C> <C>
James N. Mills......................... 0/0 0/0
Timothy L. Conlon...................... 58,392/166,094 1,145,359/1,264,965
David M. Sindelar...................... 0/0 0/0
Joseph S. Catanzaro.................... 29,196/25,804 609,685/254,170
W. Thomas McGhee....................... 0/0 0/0
</TABLE>
- ---------------
(1) Represents the difference between the market value at December 31, 1997 of
the Common Stock underlying the options and the exercise price of such
options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
James N. Mills, David M. Sindelar and W. Thomas McGhee Employment
Agreements. James N. Mills, David M. Sindelar and W. Thomas McGhee entered into
employment agreements with the Corporation, Berg and each other subsidiary of
the Corporation on March 1, 1993. Such employment agreements were amended and
restated on February 1, 1996, further amended on August 5, 1996 and amended and
restated on November 1, 1997. Pursuant to their respective employment
agreements, as amended and restated, Mr. Mills will serve as the Chairman of the
Board of the Corporation, Mr. Sindelar will serve as Senior Vice President and
Chief Financial Officer of the Corporation and Mr. McGhee will serve as
Secretary and General Counsel of the Corporation through October 30, 2002 and
for one-year periods thereafter until terminated in accordance with the
provisions thereof. Messrs. Mills, Sindelar and McGhee are required to devote
such
19
<PAGE> 22
business time and attention to the transaction of the Corporation's business as
is reasonably necessary to discharge their duties under the employment
agreements. Subject to the foregoing limitation on their activities, Messrs.
Mills, Sindelar and McGhee are free to participate in other business endeavors.
The compensation provided to Messrs. Mills, Sindelar and McGhee under their
respective employment agreements includes annual base salaries of not less than
$685,000, $194,800 and $153,000, respectively, subject to adjustment at the sole
discretion of the Board of Directors of the Corporation, and such benefits as
are customarily accorded the executives of the Corporation and Berg for as long
as the employment agreements are in force. At a meeting of the Compensation
Committee held on February 4, 1998, the annual base salaries of Messrs. Sindelar
and McGhee were adjusted to $230,000 and $150,000, respectively, for the fiscal
year ending December 31, 1998. Messrs. Mills, Sindelar and McGhee are entitled
to annual bonuses pursuant to their respective employment agreements, in amounts
to be determined in accordance with the terms of the Corporation's Senior
Executive Incentive Compensation Plan.
Messrs. Mills', Sindelar's and McGhee's employment agreements also provide
that if Messrs. Mills', Sindelar's or McGhee's employment is terminated due to
disability or death, Messrs. Mills, Sindelar and McGhee or their estates, heirs
or beneficiaries, as the case may be, will receive, in addition to any other
benefits provided under any benefit plan of the Corporation, their then current
salary for a period of 18 months from their disability or death. In the event
that Messrs. Mills', Sindelar's or McGhee's employment is terminated for a
reason other than death, disability or cause, Messrs. Mills, Sindelar or McGhee
will continue to receive their then current salary (which will be not less than
$685,000, $194,800 and $150,000, respectively, per year) through October 30,
2002, or for one year, whichever is longer, and any other benefits to which they
would otherwise be entitled under the employment agreements.
Timothy L. Conlon Employment Agreement. Timothy L. Conlon entered into an
employment agreement with Berg on March 1, 1993, which was amended and restated
on February 1, 1996, further amended on January 1, 1997 and amended and restated
on November 1, 1997. Pursuant to such amended and restated employment agreement,
Mr. Conlon will serve as the President and Chief Operating Officer of the
Corporation and Berg through October 30, 2002 and for one-year periods
thereafter until terminated in accordance with the provisions thereof, and will
receive an annual base salary of not less than $400,000, subject to adjustment
at the sole discretion of the Board of Directors of the Corporation, and such
benefits as are customarily accorded the executives of Berg for as long as the
employment agreement is in force. At a meeting of the Compensation Committee
held on February 4, 1998, Mr. Conlon's annual base salary was adjusted to
$425,000 for the fiscal year ending December 31, 1998. In addition, Mr. Conlon's
employment agreement currently provides that he is entitled to annual bonuses in
amounts to be determined in accordance with the Corporation's Senior Executive
Incentive Compensation Plan.
Mr. Conlon's employment agreement also provides that if his employment is
terminated due to disability or death, his estate, heirs or beneficiaries, as
the case may be, will receive, in addition to any other benefits provided him
under any benefit plan of the Corporation, Mr. Conlon's then current salary for
a period of 18 months from Mr. Conlon's disability or death. In the event that
his employment is terminated for a reason other than death, disability or cause,
Mr. Conlon will continue to receive his then current salary (which under the
terms of his current employment agreement will be not less than $400,000 per
year) through October 30, 2002, or for one year, whichever is longer, and any
other benefits to which he would otherwise be entitled under the employment
agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1997, the members of the Compensation
Committee of the Board of Directors were Messrs. Vieser and Yontz. Neither Mr.
Vieser nor Mr. Yontz served as an officer or employee of the Corporation or any
of its subsidiaries during fiscal 1997. In February 1998, Mr. Hicks was
appointed to serve as Chairman of the Compensation Committee. Mr. Hicks is a
principal of Hicks Muse. See "Related Party Transactions -- Monitoring and
Oversight Agreement."
20
<PAGE> 23
COMPENSATION OF DIRECTORS
Current directors who are officers, employees or affiliates of the
Corporation or Berg receive no additional compensation for their services as
directors. Each Outside Director (currently only Messrs. Vieser and Yontz)
receives an annual retainer of $12,000 and a fee of $1,000 for each meeting of
the Board of Directors at which such Outside Director is present. Each Outside
Director who is a member of a committee of the Board of Directors also receives
a fee of $500 for each meeting of such committee at which such Outside Director
is present. Directors of the Corporation are entitled to reimbursement of their
reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the Board of Directors or committees thereof.
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock of the Corporation during the period beginning on March 1, 1996
(the date the Corporation went public) and ending on December 31, 1997, with the
cumulative total return on the Standard & Poor's 500 Index and the Morgan
Stanley High Tech Index over the same period (assuming an investment of $100 in
the Corporation's Common Stock, the Standard & Poor's 500 Index and the Morgan
Stanley High Tech Index on March 1, 1996, and the reinvestment of dividends).
The Corporation's Common Stock trades on the New York Stock Exchange under the
trading symbol "BEI."
<TABLE>
<CAPTION>
Morgan
Measurement Period Stanley High
(Fiscal Year Covered) BEI S&P 500 Tech 35
<S> <C> <C> <C>
3/1/96 100.00 100.00 100.00
12/31/96 139.88 115.66 114.71
12/31/97 218.45 151.53 141.36
</TABLE>
21
<PAGE> 24
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for the
Corporation's executive compensation programs. The Compensation Committee is
composed of three members of the Board of Directors, two of whom are neither
current employees nor officers of the Corporation (the "Outside Directors").
This report is provided by the Compensation Committee to describe the philosophy
and objectives underlying the compensation of the Corporation's senior
executives.
COMPENSATION POLICY
Under the direction of the Compensation Committee and in consultation with
an outside independent compensation consultant, the Corporation's senior
executive compensation program is based upon a "pay for performance" philosophy
and is designed to attract and retain highly qualified, key executives by
offering competitive base compensation supplemented with performance-based
incentives linked to corporate performance factors and position within the
Corporation. The Corporation has designed and administered its executive
compensation programs so that compensation is linked to the Corporation's
performance and so that the interests of senior executives are aligned with the
interests of the Corporation's stockholders. This philosophy is articulated in
the following guiding principles of the Corporation's compensation programs:
- A significant percentage of compensation will be determined by the
Corporation's annual and long term financial performance, including the
creation of stockholder value;
- Compensation programs will be designed to encourage and balance the
attainment of short term operational goals and long term strategic goals;
- Total compensation will be targeted at competitive levels to allow the
Corporation to attract, retain and motivate highly qualified employees;
however, a greater percentage of compensation will be performance-based
and variable (versus fixed compensation) than competitive practices might
suggest; and
- Compensation programs will be designed to more closely align the
interests of senior executives with the interests of the Corporation's
stockholders by encouraging stock ownership by senior executives.
There are three elements to the Corporation's compensation program, each
consistent with its compensation philosophy: annual base salary, annual cash
bonus incentives and long term incentives. The total compensation package is
designed to be competitive with compensation programs offered to comparable
senior executive officers in a survey group of eighteen electronic equipment
manufacturers (the "Peer Group"). The Corporation believes that its total
compensation practices will be competitive if the Corporation performs within
the targets established by the Compensation Committee both on the basis of short
term and long term goals.
COMPLIANCE WITH CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), imposes a limit, with certain exceptions, on the amount that a publicly
held corporation may deduct in any year for the compensation paid or accrued
with respect to its Chief Executive Officer and four other most highly
compensated executive officers. However, to the extent compensation is
"performance-based compensation" within the meaning of Code Section 162(m), it
will not be subject to the Code Section 162(m) deduction limitation. As a newly
publicly traded company in 1996, the Corporation falls under certain transition
provisions that relieve it from compliance with Code Section 162(m) with respect
to certain agreements and plans that were in existence on the date the
Corporation became a publicly traded corporation. In formulating the
Corporation's executive compensation policies, the Compensation Committee
considers the relevant provisions of the Code that limit the deductibility of
certain executive compensation and the consequences to the Corporation if the
compensation paid to the Corporation's executive officers is not deductible.
All members of the Compensation Committee are involved in administering the
Corporation's executive compensation programs. However, with respect to
incentive compensation payable to the Corporation's Chief Executive Officer and
four other most highly compensated executive officers, which incentive
compensation is
22
<PAGE> 25
intended to comply with Code Section 162(m), the performance goals will be
established by the Outside Directors and subsequently submitted to the
Compensation Committee as a whole for ratification by a unanimous vote of all
members of the Compensation Committee. The Outside Directors are also solely
responsible for certifying the attainment of the performance goals with respect
to such executive officers and for issuing any and all stock options and other
Awards (as defined below) granted to such executive officers under the
Corporation's 1998 Incentive Compensation Plan.
BASE SALARIES
All senior executive officer base salaries are reviewed and adjustments, if
any, are approved annually by the Compensation Committee. The Corporation's
senior executive officers' base salaries are targeted to be at the 50th
percentile of the base salaries of similarly situated executive officers within
the Peer Group. The Compensation Committee may choose to set salaries above or
below the 50th percentile target based on an executive's position, contribution,
experience, etc. No specific weighting of these elements is used to determine
base salary levels.
ANNUAL INCENTIVE AWARDS
The annual incentive award component of the Corporation's senior executive
incentive compensation is determined pursuant to the terms of the Corporation's
Senior Executive Incentive Compensation Plan and is based on achieving certain
earnings per share objectives (determined without consideration of extraordinary
items) for the Corporation's consolidated fiscal year. The program provides for
the payment of cash incentive awards to participants to the extent that actual
consolidated earnings per share results meet or exceed certain pre-determined
levels. The Compensation Committee establishes pre-determined consolidated
earnings per share objectives at four distinct levels which trigger progressive
incentive payout. These objectives are based on profit levels for the fiscal
year. To the extent that the Corporation attains or exceeds a pre-determined
performance level, each participant is entitled to receive a cash incentive
award and, in the sole discretion of the Compensation Committee, such award may
be increased based upon exceptional performance by a participant. The maximum
annual incentive award under the Corporation's Senior Executive Incentive
Compensation Plan is 200% of base salary. The Compensation Committee generally
targets short term incentive compensation to the 50th percentile of the Peer
Group. However, exceptional earnings per share performance can produce an
exceptional short term incentive payout.
LONG TERM INCENTIVE AWARDS
Long term incentive awards in the form of stock options are granted by the
Compensation Committee to aid in the retention of key executives and to align
the interests of key executives with those of the stockholders of the
Corporation. Specifically, stock options directly link a portion of a key
executive's compensation to the interests of stockholders by providing an
incentive to maximize stockholder value.
Stock options have historically been granted under the Corporation's 1993
Stock Option Plan which was approved by the Board of Directors and a majority of
stockholders on August 4, 1993. However, no further grants of stock options will
be made under the Corporation's 1993 Stock Option Plan (other than those grants
identified in the table set forth under "Proposal to Adopt Amendment No. 1 to
the Berg Electronics Corp. 1993 Stock Option Plan -- Description of Amendment
No. 1") if the stockholders of the Corporation approve the Corporation's 1998
Incentive Compensation Plan which was approved by the Board of Directors on
March 16, 1998. In such event, the Compensation Committee will have the
flexibility to grant cash awards, stock options, stock appreciation rights,
stock awards, stock units, performance shares and/or performance units (the
"Awards") to employees of the Corporation and certain other persons identified
in the Corporation's 1998 Incentive Compensation Plan.
23
<PAGE> 26
The Corporation has set guidelines to grants of long term incentive
compensation between the 50th and 75th percentiles of the Peer Group.
Additionally, the Compensation Committee grants Awards to employees based on
several factors, including:
- Current base pay and annual incentive opportunity as compared with the
Peer Group's total direct compensation levels (base, annual incentive and
long term incentive value);
- Position with the Corporation and ability to impact stockholder value;
and
- Current holdings of the Corporation's stock.
No specific weighting of these factors is used to determine long term
incentive grants. However, grants of Awards are reviewed annually by the
Compensation Committee.
CEO COMPENSATION
Mr. Mills' base salary was set by the Board of Directors pursuant to Mr.
Mills' employment agreement on March 1, 1993, and has remained unchanged.
Pursuant to his employment agreement, Mr. Mills was paid a base salary in the
amount of $685,000 for the year ended December 31, 1997. The Compensation
Committee approved an annual incentive award under the Corporation's Senior
Executive Incentive Compensation Plan equal to 100% of the bonus target for Mr.
Mills (which was set at 100% of Mr. Mills' base salary for 1997) based on the
Corporation's achieving an increase in earnings per share in 1997, which
increase was over 20% compared with the Corporation's earnings per share for the
year ended December 31, 1996. Since Mr. Mills holds a large block of Class A
Common Stock, the Compensation Committee believes that his interests are clearly
aligned with the Corporation's stockholders, and, accordingly, no long term
incentive compensation was awarded in 1997.
Thomas O. Hicks, Chairman
Richard W. Vieser
Kenneth F. Yontz
RELATED PARTY TRANSACTIONS
MONITORING AND OVERSIGHT AGREEMENT
In February 1993, the Corporation entered into a Monitoring and Oversight
Agreement (herein so called) with Hicks Muse which provided for a payment from
the Corporation to Hicks Muse of approximately $400,000 per year for monitoring
and oversight services to the Corporation and its subsidiaries, such payment to
be adjusted annually for changes in the consumer price index. In March 1996, the
Corporation (pursuant to the approval of the Board of Directors in February
1996) amended and restated such Monitoring and Oversight Agreement to increase
the annual fee payable thereunder to the greater of $700,000 or one-tenth of 1%
of net sales during such year. In addition, Hicks Muse is entitled to an
acquisition advisory fee equal to 1.5% of the purchase price of any acquisition
effected by the Corporation, Berg or any of their subsidiaries. Messrs. Hicks
and Tate, directors of the Corporation, are each principals of Hicks Muse. In
connection with the Monitoring and Oversight Agreement, the Corporation has
agreed to indemnify Hicks Muse, its affiliates and stockholders, and their
respective directors, officers, agents, employees and affiliates from and
against any claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and expenses, arising
out of or in connection with the services rendered by Hicks Muse in connection
with the Monitoring and Oversight Agreement. The primary term of the Monitoring
and Oversight Agreement expires on March 6, 2006.
The Monitoring and Oversight Agreement makes available to the Corporation
the resources of Hicks Muse concerning a variety of financial and operational
matters. The services that have been and will continue to be provided by Hicks
Muse could not otherwise be obtained by the Corporation without the addition of
24
<PAGE> 27
personnel or the engagement of outside professional advisors. In management's
opinion, the fees provided for under this agreement reasonably reflect the
benefits received by the Corporation and are no less favorable to the
Corporation than could be obtained by the Corporation with a non-affiliated
third party.
The Corporation did not effect any acquisitions in 1997 requiring the
payment of acquisition advisory fees to Hicks Muse.
VIASYSTEMS RELATIONSHIP
The Corporation sells certain connectors and other products needed to
manufacture printed circuit boards and backpanel assemblies to Viasystems, Inc.
("Viasystems"). In December 1996, a wholly-owned subsidiary of Viasystems
acquired substantially all of the assets of the Interconnection Technologies
Unit of the Microelectronics Group (the "Lucent Division") of Lucent
Technologies Inc. Prior to the acquisition by Viasystems of the Lucent Division,
the Lucent Division purchased certain electronic connectors from the Corporation
pursuant to a written supply contract (the "Supply Agreement"). The Corporation
and Viasystems have continued to supply and purchase products on the same terms
and conditions as set forth in the Supply Agreement. Viasystems is controlled by
Hicks Muse, through its affiliates, and managed by Mills & Partners, Inc. In
addition, certain of the Corporation's directors and executive officers have
financial interests in Viasystems. For the year ended December 31, 1997, the
Corporation's net sales to Viasystems were approximately $41.0 million. The
Corporation expects to continue to sell products to Viasystems on terms and
conditions substantially similar to the terms and conditions of the Supply
Agreement, which the Corporation believes to be comparable to the terms that
would be reached in an arm's-length transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, certified public accountants, served as independent
auditors of the Corporation and Berg for the fiscal year ended 1997. The Board
of Directors of the Corporation anticipates appointing Arthur Andersen LLP to
serve as independent public accountants of the Corporation for fiscal year 1998,
subject to their nomination by the Audit Committee. A representative of Arthur
Andersen LLP will be present at the Annual Meeting. Such representative will be
given the opportunity to make a statement if he or she desires to do so and will
be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any additional matters are properly brought before
the Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to the proposal for the Election of Directors, votes may be
cast for or votes may be withheld from each nominee. No stockholder may vote for
more than two nominees. Directors will be elected by plurality vote. Therefore,
votes that are withheld will be excluded entirely from the vote and will have no
effect. Abstentions may not be specified with respect to the election of
directors.
With regard to the proposal for the approval of the Amendment to 1993 Plan,
votes may be cast for or against the amendment, or stockholders may abstain from
voting on the particular matter. Approval of the amendment requires the
affirmative vote of at least a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting and entitled to vote.
With regard to the proposal for the approval of the 1998 Plan, votes may be
cast for or against the 1998 Plan, or stockholders may abstain from voting on
the particular matter. Approval of the 1998 Plan requires the affirmative vote
of at least a majority of the shares of Common Stock present or represented by
proxy at the Annual Meeting and entitled to vote.
25
<PAGE> 28
With regard to the proposal for the approval of the Amendment to
Certificate of Incorporation, votes may be cast for or against the amendment, or
stockholders may abstain from voting on the particular matter. Approval of the
amendment requires the affirmative vote of at least a majority of the shares of
Common Stock present or represented by proxy at the Annual Meeting and entitled
to vote.
Under Delaware law, abstentions are counted as present for quorum purposes
and are included in the calculation of shares "entitled to vote". Abstentions on
a particular matter (other than the election of directors) will not be counted
as votes cast in the affirmative and will therefore have the same effect as a
vote against a particular matter (other than the election of directors) because
each proposal (other than the election of directors) requires the affirmative
vote of a specific number of shares.
Under the rules of the New York Stock Exchange, Inc. (the "NYSE"), a broker
who holds securities in street name has limited authority to vote on matters
submitted at a stockholders' meeting in the absence of specific instructions
from the beneficial owner. In the absence of instructions from the beneficial
owner or authorization from the NYSE to vote on specific matters without the
necessity of obtaining instructions from the beneficial owner, a broker will
specify a "non-vote" on particular matters. For purposes of Delaware law, a
broker non-vote is counted as present for quorum purposes, but is excluded from
the calculation of shares "entitled to vote". Accordingly, a broker non-vote is
not considered in determining whether a particular matter has been approved.
If no directions are specified in any duly signed and dated proxy card
received by the Corporation, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the Class III director
nominees recommended by the Board of Directors, FOR the approval of the
amendment to the Berg Electronics Corp. 1993 Stock Option Plan to increase by
1,500,000 the number of shares of Common Stock authorized for issuance
thereunder, FOR the approval of the Berg Electronics Corp. 1998 Incentive
Compensation Plan, FOR the approval of the amendment to the Corporation's
Certificate of Incorporation, as amended, to increase by 60,000,000 the number
of shares of Common Stock authorized for issuance, and in accordance with the
discretion of the named attorneys-in-fact on other matters properly brought
before the Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's directors and
executive officers, and persons who own more than 10% of the Common Stock, to
file with the Securities and Exchange Commission (the "Commission") initial
reports of beneficial ownership and reports of changes in beneficial ownership
of Common Stock and other equity securities of the Corporation. Officers,
directors and greater than 10% beneficial owners are required by the Commission
to furnish the Corporation with copies of all Section 16(a) reports they file.
Except for the late filing of a Form 4 by W. Thomas McGhee, to the Corporation's
knowledge, based solely on a review of the copies of Section 16(a) reports
furnished to the Corporation, all Section 16(a) filing requirements applicable
to its officers and directors were complied with for the year ended December 31,
1997.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Corporation's proxy statement
relating to the 1999 Annual Meeting of Stockholders of the Corporation must be
received no later than November 30, 1998 at the Corporation's principal
executive offices, 101 South Hanley Road, St. Louis, Missouri 63105, Attention:
Secretary. Stockholders of the Corporation who intend to nominate candidates for
election as a director or to bring other business before the meeting must also
comply with the applicable procedures set forth in the Corporation's Bylaws. See
"Stockholder Nomination of Director Candidates." The Corporation will furnish
copies of such Bylaw provisions upon written request to the Secretary of the
Corporation at the aforementioned address. It is suggested that proponents
submit their proposals by certified mail, return receipt requested.
26
<PAGE> 29
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Corporation provide that any stockholder of record who is
entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
As described more fully in the Corporation's Bylaws, a stockholder desiring
to nominate a person for election to the Board of Directors must send a written
notice to the Secretary of the Corporation setting forth (i) as to each person
who the stockholder proposes to nominate, all information required to be
disclosed in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected) and (ii) as to the
stockholder giving the notice: (a) the name and address of such stockholder as
it appears on the Corporation's books and (b) the class and number of shares of
the Corporation that are owned of record by such stockholder. To be timely,
notice of persons to be nominated by a stockholder as a director at a meeting of
stockholders must be delivered to or mailed and received at the principal
executive offices of the Corporation not more than 90 nor less than 60 days
before the first anniversary of the preceding year's annual meeting.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS UPON RECEIPT BY THE
CORPORATION OF A REQUEST ADDRESSED TO:
GARY D. STRONG
DIRECTOR, INVESTOR RELATIONS
BERG ELECTRONICS CORP.
101 SOUTH HANLEY ROAD, SUITE 400
ST. LOUIS, MISSOURI 63105
The enclosed form of proxy has been prepared at the direction of the
Corporation, of which you are a stockholder, and is sent to you at the request
of the Board of Directors. The proxies and attorneys-in-fact named herein have
been designated by your Board of Directors.
The Board of Directors of the Corporation urges you, even if you presently
plan to attend the Annual Meeting in person, to execute the enclosed proxy and
mail it as indicated immediately. You may revoke your proxy and vote in person
if you are in fact able to attend the Annual Meeting.
BERG ELECTRONICS CORP.
By Order of the Board of Directors
W. Thomas McGhee
Secretary
St. Louis, Missouri
March 31, 1998
27
<PAGE> 30
EXHIBIT A
AMENDMENT NO. 1 TO THE BERG ELECTRONICS CORP.
1993 STOCK OPTION PLAN
I. The first sentence of Section 3 of the 1993 Plan shall be deleted and
restated in its entirety as follows:
"Subject to the adjustments provided in Section 9, the maximum aggregate
number of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") which may be granted for all purposes under the Plan shall be
2,460,013 shares."
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EXHIBIT B
BERG ELECTRONICS CORP.
1998 INCENTIVE COMPENSATION PLAN
1.0 DEFINITIONS
The following terms shall have the following meanings unless the context
indicates otherwise:
1.1 "Affiliated Person" shall mean an employee of an entity other than the
Company whose activities may benefit the Company and who has been
designated by the Committee to be eligible to participate in the Plan.
1.2 "Award" shall mean either a Stock Option, a SAR, a Stock Award, a Stock
Unit, a Performance Share, a Performance Unit or a Cash Award.
1.3 "Award Agreement" shall mean a written agreement between the Company and
the Participant that establishes the terms, conditions, restrictions
and/or limitations applicable to an Award in addition to those established
by the Plan and by the Committee's exercise of its administrative powers.
1.4 "Board" shall mean the Board of Directors of the Company.
1.5 "Cash Award" shall mean the grant by the Committee to a Participant of an
Award of cash as described in Section 11 below.
1.6 "Change in Control" shall mean (a) the principals, officers, directors and
employees of HMTF and Mills & Partners and management of the Company
together with their affiliates (the "Control Group") shall cease to own of
record and beneficially an amount of Common Stock equal to at least 25% of
the amount of Common Stock owned by the Control Group of record and
beneficially as of the date on which the Plan is approved by the
stockholders of the Company, (b) any Person or related group (as defined
in Rule 13(d) under the Exchange Act), excluding the Control Group, shall
be or become the "beneficial owner" (as defined in Rules 12(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of a greater
percentage of the outstanding Common Stock than is owned beneficially by
the Control Group or (c) the Board shall not consist of a majority of
Continuing Directors.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.8 "Committee" shall mean the Compensation Committee of the Board; provided
that for purposes of determining the performance goals applicable to
Employees who constitute "covered employees" within the meaning of Code
Section 162(m), "Committee" shall mean the members of the Compensation
Committee of the Board who qualify as (x) a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) (or any successor rule) under the Exchange
Act and (y) an "outside director" within the meaning of Code Section
162(m), and such performance goals shall be subject to ratification by
unanimous approval of the members of the Compensation Committee of the
Board. In the event the Board fails to establish or maintain a
Compensation Committee of the Board, "Committee" shall mean the Board or
any other committee or subcommittee of the Board appointed by the Board
from among its members.
1.9 "Common Stock" shall mean the common stock, $.01 par value per share, of
the Company.
1.10 "Company" shall mean Berg Electronics Corp., a Delaware corporation.
1.11 "Continuing Directors" shall mean the directors of the Company on the date
on which the Plan is approved by the stockholders of the Company and each
other director, if in each case, such other director's nomination for
election to the Board is recommended by a majority of the then Continuing
Directors or such other director receives the vote of HMTF.
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1.12 "Dividend Equivalent Right" shall mean the right to receive an amount
equal to the amount of any dividend paid with respect to a share of Common
Stock multiplied by the number of hypothetical shares of Common Stock
underlying a Stock Unit or a Performance Unit, and which shall be payable
in cash, in Common Stock, in the form of additional Stock Units or
Performance Units (as the case may be) or a combination of all of the
foregoing.
1.13 "Effective Date" shall mean the date on which the Plan is approved by the
Company's stockholders.
1.14 "Employee" shall mean an employee or officer of the Company or any
Subsidiary as described in Treasury Regulation Section 1.421-7(h).
1.15 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, including applicable regulations thereunder.
1.16 "Fair Market Value of the Common Stock" shall mean:
(a) if the Common Stock is readily tradeable on a national securities
exchange or other market system, the closing price of the Common
Stock on the date of calculation (or on the last preceding trading
date if Common Stock was not traded on such date), or
(b) if the Common Stock is not readily tradeable on a national securities
exchange or other market system:
(i) the book value of a share of Common Stock as of the last day of
the last completed fiscal quarter preceding the date of
calculation; or
(ii) any other value as otherwise determined in good faith by the
Board.
1.17 "HMTF" shall mean Hicks, Muse, Tate & Furst Incorporated, a Delaware
corporation.
1.18 "Independent Contractor" shall mean a person or an entity that renders
services to the Company, but, if a person, is not an Employee or a
Nonemployee Director.
1.19 "ISO" shall mean an "incentive stock option" as such term is used in Code
Section 422.
1.20 "Mills & Partners" shall mean Mills & Partners, Inc., a Delaware
corporation.
1.21 "Nonemployee Director" shall mean a member of the Board who is not an
Employee.
1.22 "Nonqualified Stock Option" shall mean a Stock Option that does not
qualify as an ISO.
1.23 "Participant" shall mean any Employee, Nonemployee Director, Affiliated
Person or Independent Contractor to whom an Award has been granted by the
Committee under the Plan.
1.24 "Performance-Based Award" shall mean an Award subject to the achievement
of certain performance goal(s) as described in Section 12 below.
1.25 "Performance Share" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.1 below.
1.26 "Performance Unit" shall mean the grant by the Committee to a Participant
of an Award as described in Section 10.2 below.
1.27 "Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
1.28 "Plan" shall mean the Berg Electronics Corp. 1998 Incentive Compensation
Plan.
1.29 "SAR" shall mean the grant by the Committee to a Participant of a stock
appreciation right as described in Section 8 below.
1.30 "Stock Award" shall mean the grant by the Committee to a Participant of an
Award of Common Stock under Section 9.1 below.
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1.31 "Stock Option" shall mean the grant by the Committee to a Participant of
an option to purchase Common Stock under Section 7 below.
1.32 "Stock Unit" shall mean the grant by the Committee to a Participant of an
Award as described in Section 9.2 below.
1.33 "Subsidiary" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the common stock entitled to vote
generally in the election of directors of such corporation or any other
business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
1.34 "Treasury Regulations" shall mean the regulations promulgated under the
Code by the United States Department of the Treasury, as amended from time
to time.
1.35 "Vest" shall mean:
(a) with respect to Stock Options and SARs, when the Stock Option or SAR
(or a portion of such Stock Option or SAR) first becomes exercisable
and remains exercisable subject to the terms and conditions of such
Stock Option or SAR; or
(b) with respect to Awards other than Stock Options and SARs, when the
Participant has an unrestricted right, title and interest to receive
the compensation (whether payable in cash, Common Stock or a
combination of both) attributable to an Award (or a portion of such
Award) or to otherwise enjoy the benefits underlying such Award,
subject to restrictions and/or limitations no greater than the
restrictions and/or limitations imposed by Sections 14, 17.2, 17.3,
17.4 and 17.7 below.
1.36 "Vesting Date" shall mean the date or dates on which an Award Vests.
2.0 PURPOSE AND TERM OF PLAN
2.1 PURPOSE. The purpose of the Plan is to motivate certain Employees,
Nonemployee Directors, Affiliated Persons and Independent Contractors to
put forth maximum efforts toward the growth, profitability and success of
the Company and its Subsidiaries by providing incentives to such persons
through cash payments and/or through the ownership and performance of the
Common Stock. In addition, the Plan is intended to provide incentives
which will attract and retain highly qualified individuals as Employees
and Nonemployee Directors and to assist in aligning the interests of such
Employees and Nonemployee Directors with those of the stockholders of the
Company.
2.2 TERM. The Plan shall be effective as of the Effective Date. The Plan shall
terminate on the 10th anniversary of the Effective Date (unless sooner
terminated by the Board).
3.0 ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION. All Employees, Nonemployee Directors,
Affiliated Persons and Independent Contractors shall be eligible to
participate in the Plan and to receive Awards. Participants shall consist
of such Employees, Nonemployee Directors, Affiliated Persons and
Independent Contractors as the Committee in its sole discretion designates
to receive Awards under the Plan. Designation of a Participant in any year
shall not require the Committee to designate such person or entity to
receive an Award in any other year or, once designated, to receive the
same type or amount of Award as granted to the Participant in any other
year. The Committee shall consider such factors as it deems pertinent in
selecting Participants and in determining the type and amount of their
respective Awards.
4.0 ADMINISTRATION
4.1 RESPONSIBILITY. The Committee shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in
accordance with its terms.
4.2 AWARD AGREEMENT. Each Award granted under the Plan shall be evidenced by
an Award Agreement which shall be signed by the Committee and the
Participant; provided, however, that in the event of
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<PAGE> 34
any conflict between a provision of the Plan and any provision of an Award
Agreement, the provision of the Plan shall prevail.
4.3 AUTHORITY OF THE COMMITTEE. The Committee shall have all the discretionary
authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan, including but not limited to
the following:
(a) to determine eligibility for participation in the Plan;
(b) to determine eligibility for and the type and size of an Award
granted under the Plan;
(c) to supply any omission, correct any defect or reconcile any
inconsistency in the Plan in such manner and to such extent as it
shall deem appropriate in its sole discretion to carry the same into
effect;
(d) to issue administrative guidelines as an aid to administer the Plan
and make changes in such guidelines as it from time to time deems
proper;
(e) to make rules for carrying out and administering the Plan and make
changes in such rules as it from time to time deems proper;
(f) to the extent permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions and limitations;
(g) to accelerate the Vesting of any Award when such action or actions
would be in the best interest of the Company;
(h) to grant Awards in replacement of Awards previously granted under the
Plan or any other executive compensation plan of the Company; and
(i) to take any and all other actions it deems necessary or advisable for
the proper operation or administration of the Plan.
4.4 ACTION BY THE COMMITTEE. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a
meeting, by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or more of its
members to execute and deliver documents on behalf of the Committee.
4.5 DELEGATION OF AUTHORITY. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has
delegated duties under this Section 4.5, may employ one or more persons to
render advice with respect to any responsibility the Committee or such
person may have under the Plan. The Committee may employ such legal or
other counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by
the Committee in the engagement of such counsel, consultant or agent shall
be paid by the Company or the Subsidiary whose employees have benefitted
from the Plan, as determined by the Committee.
4.6 DETERMINATIONS AND INTERPRETATIONS BY THE COMMITTEE. All determinations
and interpretations made by the Committee shall be binding and conclusive
on all Participants and their heirs, successors and legal representatives.
4.7 LIABILITY. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act
hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties
in connection with the administration of the Plan have been delegated.
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4.8 INDEMNIFICATION. The Company shall indemnify members of the Committee and
any agent of the Committee who is an employee of the Company against any
and all liabilities or expenses to which they may be subjected by reason
of any act or failure to act with respect to their duties on behalf of the
Plan, except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
5.0 SHARES SUBJECT TO PLAN
5.1 AVAILABLE SHARES. The aggregate number of shares of Common Stock which
shall be available for grants of Awards under the Plan during its term
shall be 977,713, which number represents the number of shares of Common
Stock available for grants as of the Effective Date under the Company's
1993 Stock Option Plan (the "1993 Plan"), plus not more than 1,424,377
shares of Common Stock underlying Awards which have been granted under the
1993 Plan and which terminate after the Effective Date by expiration,
forfeiture, cancellation or otherwise without the issuance of such shares
under the 1993 Plan. On or about the Effective Date, the Board shall amend
the 1993 Plan so that, except for grants of stock options approved by the
Committee on December 18, 1997 (the "December Grants"), no further grants
shall be made under the 1993 Plan and all available shares under the 1993
Plan as of the Effective Date (after taking into consideration the
December Grants) shall be transferred to the Plan. Shares of Common Stock
available for issuance under the Plan may be either authorized but
unissued shares, shares of issued stock held in the Company's treasury or
both, at the discretion of the Company, and subject to any adjustments
made in accordance with Section 5.2 below. Any shares of Common Stock
underlying Awards which terminate by expiration, forfeiture, cancellation
or otherwise without the issuance of such shares shall again be available
for grants of Awards under the Plan.
5.2 ADJUSTMENT TO SHARES. If there is any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares, dividend in kind or
other like change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Company, an adjustment shall be
made to each outstanding Award so that each such Award shall thereafter be
with respect to or exercisable for such securities, cash and/or other
property as would have been received in respect of the Common Stock
subject to such Award had such Award been paid, distributed or exercised
in full immediately prior to such change or distribution. Such adjustment
shall be made successively each time any such change shall occur. In
addition, in the event of any such change or distribution, in order to
prevent dilution or enlargement of Participants' rights under the Plan,
the Committee shall have the authority to adjust, in an equitable manner,
the number and kind of shares that may be issued under the Plan, the
number and kind of shares subject to outstanding Awards, the exercise
price applicable to outstanding Stock Options and SARs, and the Fair
Market Value of the Common Stock and other value determinations applicable
to outstanding Awards. Appropriate adjustments may also be made by the
Committee in the terms of any Awards granted under the Plan to reflect
such changes or distributions and to modify any other terms of outstanding
Awards on an equitable basis, including modifications of performance goals
and changes in the length of performance periods; provided, however, that
with respect to Performance-Based Awards, such modifications and/or
changes do not disqualify compensation attributable to such Awards as
"performance-based compensation" under Code Section 162(m). In addition,
the Committee is authorized to make adjustments to the terms and
conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events affecting the Company or the financial
statements of the Company, or in response to changes in applicable laws,
regulations or accounting principles; provided, however, that with respect
to Performance-Based Awards, such modifications and/or changes do not
disqualify compensation attributable to such Awards as "performance-based
compensation" under Code Section 162(m). Notwithstanding anything
contained in the Plan, any adjustment with respect to an ISO due to a
change or distribution described in this Section 5.2 shall comply with the
rules of Code Section 424(a), and in no event shall any adjustment be made
which would render any ISO granted hereunder other than an incentive stock
option for purposes of Code Section 422.
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6.0 MAXIMUM INDIVIDUAL AWARDS
6.1 MAXIMUM AGGREGATE NUMBER OF SHARES UNDERLYING STOCK-BASED AWARDS GRANTED
UNDER THE PLAN TO ANY SINGLE PARTICIPANT. The maximum aggregate number of
shares of Common Stock underlying all Awards measured in shares of Common
Stock (whether payable in cash, Common Stock or a combination of both)
that may be granted to any single Participant during the life of the Plan
shall be 250,000 shares (without regard to any options granted under the
1993 Plan), subject to adjustment as provided in Section 5.2 above. For
purposes of the preceding sentence, such Awards that are cancelled or
repriced shall continue to be counted in determining such maximum
aggregate number of shares of Common Stock that may be granted to any
single Participant during the life of the Plan.
6.2 MAXIMUM PERFORMANCE-BASED CASH AWARDS TO ANY PARTICIPANT. The maximum
aggregate amount of Cash Awards intended to qualify as Performance-Based
Awards (but not measured in shares of Common Stock) and granted to any
single Participant with respect to any fiscal year of the Company ending
during the term of the Plan shall be 200% of such Participant's salary for
such fiscal year and 200% of such Participant's salary for all fiscal
years ending during the term of the Plan, regardless of the date of
payment of such Cash Awards, but in no event more than $25 million during
the term of the Plan in the aggregate for any single Participant.
7.0 STOCK OPTIONS
7.1 IN GENERAL. The Committee may, in its sole discretion, grant Stock Options
to Employees, Nonemployee Directors, Affiliated Persons and/or Independent
Contractors. The Committee shall, in its sole discretion, determine the
Employees, the Nonemployee Directors, the Affiliated Persons and the
Independent Contractors who will receive Stock Options and the number of
shares of Common Stock underlying each Stock Option. With respect to
Employees who become Participants, the Committee may grant such
Participants ISOs or Nonqualified Stock Options or a combination of both.
With respect to Nonemployee Directors, Affiliated Persons and Independent
Contractors who become Participants, the Committee may grant such
Participants only Nonqualified Stock Options. Each Stock Option shall be
subject to such terms and conditions consistent with the Plan as the
Committee may impose from time to time. In addition, each Stock Option
shall be subject to the terms and conditions set forth in Sections 7.2
through 7.8 below.
7.2 EXERCISE PRICE. The Committee shall specify the exercise price of each
Stock Option in the Award Agreement; provided, however, that (i) the
exercise price of any ISO shall not be less than 100 percent of the Fair
Market Value of the Common Stock on the date of grant and (ii) the
exercise price of any Nonqualified Stock Option shall not be less than 100
percent of the Fair Market Value of the Common Stock on the date of grant
unless the Committee, in its sole discretion and due to special
circumstances, determines otherwise on the date of grant.
7.3 TERM OF STOCK OPTION. The Committee shall specify the term of each Stock
Option in the Award Agreement; provided, however, that:
(a) no ISO shall be exercised after the 10th anniversary of the date of
grant of such ISO; and
(b) no Nonqualified Stock Option shall be exercised after the 10th
anniversary of the date of grant of such Nonqualified Stock Option,
unless the Committee, in its sole discretion, provides otherwise.
Each Stock Option shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall, in its sole
discretion, set forth in the Award Agreement on the date of grant.
7.4 VESTING DATE. The Committee shall specify the Vesting Date with respect to
each Stock Option in the Award Agreement. The Committee may grant Stock
Options that are Vested, either in whole or in part, on the date of grant.
If the Committee fails to specify in the Award Agreement the percent of a
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Stock Option that Vests and the applicable date(s) of such Vesting, such
Stock Option shall become exercisable in accordance with the following
schedule:
<TABLE>
<CAPTION>
ANNIVERSARY OF DATE OF GRANT PERCENT THAT VESTS
---------------------------- ------------------
<S> <C>
On or after 1st..................................... 20%
On or after 2nd..................................... 40%
On or after 3rd..................................... 60%
On or after 4th..................................... 80%
On or after 5th..................................... 100%
</TABLE>
Notwithstanding any provision in the Plan or an Award Agreement to the
contrary, a Stock Option shall not become exercisable with respect to a
fractional share of Common Stock, and the portion of such Stock Option
that otherwise would have become Vested may Vest, if at all, at a later
Vesting Date or shall be subject to the provisions of Section 17.10. The
Vesting of a Stock Option may also be subject to such other terms and
conditions as shall be determined by the Committee, including, without
limitation, accelerating the Vesting (i) based on individual performance
or (ii) if certain performance goals are achieved.
7.5 EXERCISE OF STOCK OPTIONS. The Stock Option exercise price may be paid in
cash or, in the sole discretion of the Committee, by the delivery of
shares of Common Stock then owned by the Participant, by the withholding
of shares of Common Stock for which a Stock Option is exercisable or by a
combination of these methods. In the sole discretion of the Committee,
payment may also be made by delivering a properly executed exercise notice
to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or
more brokerage firms. The Committee may prescribe any other method of
paying the exercise price that it determines to be consistent with
applicable law and the purposes of the Plan, including, without
limitation, in lieu of the exercise of a Stock Option by delivery of
shares of Common Stock then owned by a Participant, providing the Company
with a notarized statement attesting to the number of shares owned by the
Participant, where, upon verification by the Company, the Company would
issue to the Participant only the number of incremental shares to which
the Participant is entitled upon exercise of the Stock Option. In
determining which methods a Participant may utilize to pay the exercise
price, the Committee may consider such factors as it determines are
appropriate; provided, however, that with respect to ISOs, all such
discretionary determinations by the Committee shall be made at the time of
grant and specified in the Award Agreement.
7.6 RESTRICTIONS RELATING TO ISOS. In addition to being subject to the terms
and conditions of this Section 7, ISOs shall comply with all other
requirements under Code Section 422. Accordingly, ISOs may be granted only
to Participants who are Employees (as described in Treasury Regulation
Section 1.421-7(h)) of the Company or of any "Parent Corporation" (as
defined in Code Section 424(e)) or of any "Subsidiary Corporation" (as
defined in Code Section 424(f)) on the date of grant. The aggregate market
value (determined as of the time the ISO is granted) of the Common Stock
with respect to which ISOs (under all option plans of the Company and of
any Parent Corporation and of any Subsidiary Corporation) are exercisable
for the first time by a Participant during any calendar year shall not
exceed $100,000. For purposes of the preceding sentence, (i) ISOs shall be
taken into account in the order in which they are granted and (ii) ISOs
granted before 1987 shall not be taken into account. ISOs shall not be
transferable by the Participant otherwise than by will or the laws of
descent and distribution and shall be exercisable, during the
Participant's lifetime, only by such Participant. The Committee shall not
grant ISOs to any Employee who, at the time the ISO is granted, owns stock
possessing (after the application of the attribution rules of Code Section
424(d)) more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any Parent Corporation or of any
Subsidiary Corporation unless the exercise price of the ISO is fixed at
not less than 110 percent of the Fair Market Value of the Common Stock on
the date of grant and the
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exercise of such ISO is prohibited by its terms after the 5th anniversary
of the ISO's date of grant. In addition, no ISO shall be issued to a
Participant in tandem with a Nonqualified Stock Option issued to such
Participant in accordance with Treasury Regulation Section 14a.422A-1,
Q/A-39.
7.7 ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of the Award
Agreements or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option, provided
they are not inconsistent with the Plan, including, without limitation,
the requirement that the Participant not engage in competition with the
Company.
7.8 CONVERSION STOCK OPTIONS. The Committee may, in its sole discretion, grant
a Stock Option to any holder of an option (an "Original Option") to
purchase shares of the stock of any corporation:
(i) the stock or assets of which were acquired, directly or indirectly,
by the Company or any Subsidiary; or
(ii) which was merged with and into the Company or a Subsidiary;
so that the Original Option is "converted" into a Stock Option (a
"Conversion Stock Option"); provided, however, that such Conversion Stock
Option as of the date of its grant (the "Conversion Stock Option Grant
Date") shall have the same economic value as the Original Option as of the
Conversion Stock Option Grant Date. In addition, unless the Committee in
its sole discretion determines otherwise, a Conversion Stock Option which
is converting an Original Option intended to qualify as an ISO shall have
the same terms and conditions as applicable to the Original Option in
accordance with Code Section 424 and the Treasury Regulations thereunder
so that the conversion (x) is treated as the issuance or assumption of a
stock option under Code Section 424(a) and (y) is not treated as a
modification, extension or renewal of a stock option under Code Section
424(h).
8.0 SARS
8.1 IN GENERAL. The Committee may, in its sole discretion, grant SARs to
Employees, Nonemployee Directors, Affiliated Persons and/or Independent
Contractors. A SAR is a right to receive a payment in cash, Common Stock
or a combination of both, in an amount equal to the excess of:
(x) the Fair Market Value of the Common Stock, or other specified
valuation, of a specified number of shares of Common Stock on the
date the SAR is exercised; over
(y) the Fair Market Value of the Common Stock, or other specified
valuation (which shall be no less than the Fair Market Value of the
Common Stock), of such shares of Common Stock on the date the SAR is
granted, all as determined by the Committee;
provided, however, that if a SAR is granted retroactively in tandem with
or in substitution for a Stock Option, the designated Fair Market Value of
the Common Stock in the Award Agreement may be the Fair Market Value of
the Common Stock on the date such Stock Option was granted. Each SAR shall
be subject to such terms and conditions, including, but not limited to, a
provision that automatically converts a SAR into a Stock Option on a
conversion date specified at the time of grant, as the Committee shall
impose from time to time in its sole discretion and subject to the terms
of the Plan.
9.0 STOCK AWARDS AND STOCK UNITS
9.1 STOCK AWARDS. The Committee may, in its sole discretion, grant Stock
Awards to Employees, Nonemployee Directors, Affiliated Persons and/or
Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Stock Award shall consist of
shares of Common Stock which shall be subject to such terms and conditions
as the Committee, in its sole discretion, determines appropriate,
including, without limitation, restrictions on the sale or other
disposition of such shares, the Vesting Date with respect to such shares
and the right of the Company to reacquire such shares for no consideration
upon termination of the Participant's employment within specified periods.
The Committee may require the Participant to deliver a duly signed stock
power, endorsed in blank, relating to the Common Stock covered by such
Stock Award and/or that the stock certificates evidencing such shares be
held in custody or bear restrictive legends until the restrictions
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thereon shall have lapsed. With respect to the shares of Common Stock
subject to a Stock Award granted to a Participant, such Participant shall
have all of the rights of a holder of shares of Common Stock, including
the right to receive dividends and to vote the shares, unless the
Committee determines otherwise on the date of grant.
9.2 STOCK UNITS. The Committee may, in its sole discretion, grant Stock Units
to Employees, Nonemployee Directors, Affiliated Persons and/or Independent
Contractors as additional compensation or in lieu of other compensation
for services to the Company. A Stock Unit is a hypothetical share of
Common Stock represented by a notional account established and maintained
(or caused to be established or maintained) by the Company for such
Participant who receives a grant of Stock Units. Stock Units shall be
subject to such terms and conditions as the Committee, in its sole
discretion, determines appropriate, including, without limitation,
determinations of the Vesting Date with respect to such Stock Units and
the criteria for the Vesting of such Stock Units. A Stock Unit granted by
the Committee shall provide for payment in shares of Common Stock at such
time or times as the Award Agreement shall specify. The Committee shall
determine whether a Participant who has been granted a Stock Unit shall
also be entitled to a Dividend Equivalent Right.
9.3 PAYOUT OF STOCK UNITS. Subject to a Participant's election to defer in
accordance with Section 17.3 below, upon the Vesting of a Stock Unit, the
shares of Common Stock representing the Stock Unit shall be distributed to
the Participant, unless the Committee, in its sole discretion, provides
for the payment of the Stock Unit in cash (or partially in cash and
partially in shares of Common Stock) equal to the value of the shares of
Common Stock which would otherwise be distributed to the Participant.
10.0 PERFORMANCE SHARES AND PERFORMANCE UNITS
10.1 PERFORMANCE SHARES. The Committee may, in its sole discretion, grant
Performance Shares to Employees, Nonemployee Directors, Affiliated Persons
and/or Independent Contractors as additional compensation or in lieu of
other compensation for services to the Company. A Performance Share shall
consist of a share or shares of Common Stock which shall be subject to
such terms and conditions as the Committee, in its sole discretion,
determines appropriate, including, without limitation, determining the
performance goal or goals which, depending on the extent to which such
goals are met, will determine the number and/or value of the Performance
Shares that will be paid out or distributed to the Participant who has
been granted Performance Shares. Performance goals may be based on,
without limitation, Company-wide, divisional and/or individual
performance, as the Committee, in its sole discretion, may determine, and
may be based on the performance measures listed in Section 12.3 below.
10.2 PERFORMANCE UNITS. The Committee may, in its sole discretion, grant
Performance Units to Employees, Nonemployee Directors, Affiliated Persons
and/or Independent Contractors as additional compensation or in lieu of
other compensation for services to the Company. A Performance Unit is a
hypothetical share or shares of Common Stock represented by a notional
account which shall be established and maintained (or caused to be
established or maintained) by the Company for such Participant who
receives a grant of Performance Units. Performance Units shall be subject
to such terms and conditions as the Committee, in its sole discretion,
determines appropriate, including, without limitation, determining the
performance goal or goals which, depending on the extent to which such
goals are met, will determine the number and/or value of the Performance
Units that will be accrued with respect to the Participant who has been
granted Performance Units. Performance goals may be based on, without
limitation, Company-wide, divisional and/or individual performance, as the
Committee, in its sole discretion, may determine, and may be based on the
performance measures listed in Section 12.3 below.
10.3 ADJUSTMENT OF PERFORMANCE GOALS. With respect to those Performance Shares
or Performance Units that are not intended to qualify as Performance-Based
Awards (as described in Section 12 below), the Committee shall have the
authority at any time to make adjustments to performance goals for any
outstanding Performance Shares or Performance Units which the Committee
deems necessary or
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desirable unless at the time of establishment of the performance goals the
Committee shall have precluded its authority to make such adjustments.
10.4 PAYOUT OF PERFORMANCE SHARES OR PERFORMANCE UNITS. Subject to a
Participant's election to defer in accordance with Section 17.3 below,
upon the Vesting of a Performance Share or a Performance Unit, the
Performance Share or the Performance Unit shall be distributed to the
Participant in shares of Common Stock, unless the Committee, in its sole
discretion, provides for the payment of the Performance Share or a
Performance Unit in cash (or partially in cash and partially in shares of
Common Stock) equal to the value of the shares of Common Stock which would
otherwise be distributed to the Participant.
11.0 CASH AWARDS
11.1 IN GENERAL. The Committee may, in its sole discretion, grant Cash Awards
to Employees, Nonemployee Directors, Affiliated Persons and/or Independent
Contractors as additional compensation or in lieu of other compensation
for services to the Company. A Cash Award shall be subject to such terms
and conditions as the Committee, in its sole discretion, determines
appropriate, including, without limitation, determining the Vesting Date
with respect to such Cash Award, the criteria for the Vesting of such Cash
Award and the right of the Company to require the Participant to repay the
Cash Award (with or without interest) upon termination of the
Participant's employment within specified periods.
12.0 PERFORMANCE-BASED AWARDS
12.1 IN GENERAL. The Committee, in its sole discretion, may designate and
design Awards granted under the Plan as Performance-Based Awards if it
determines that compensation attributable to such Awards might not
otherwise be tax deductible by the Company due to the deduction limitation
imposed by Code Section 162(m). Accordingly, an Award granted under the
Plan may be granted in such a manner that the compensation attributable to
such Award is intended by the Committee to qualify as "performance-based
compensation" (as such term is used in Code Section 162(m) and the
Treasury Regulations thereunder) and thus be exempt from the deduction
limitation imposed by Code Section 162(m) ("Performance-Based Awards").
12.2 QUALIFICATION OF PERFORMANCE-BASED AWARDS. Awards shall qualify as
Performance-Based Awards under the Plan only if:
(a) at the time of grant at least two members of the Committee, acting as
a separate committee, qualify as "outside directors" (as such term is
used in Code Section 162(m) and the Treasury Regulations thereunder);
(b) with respect to either the granting or Vesting of an Award (other
than (i) a Nonqualified Stock Option or (ii) a SAR, either of which
is granted with an exercise price at or above the Fair Market Value
of the Common Stock on the date of grant), such Award is subject to
the achievement of a performance goal or goals based on one or more
of the performance measures specified in Section 12.3 below;
(c) the Committee establishes in writing (i) the objective
performance-based goals applicable to a given performance period and
(ii) the individual employees or class of employees to which such
performance-based goals apply no later than 90 days after the
commencement of such performance period (but in no event after 25
percent of such performance period has elapsed);
(d) no compensation attributable to a Performance-Based Award will be
paid to or otherwise received by a Participant until the Committee
certifies in writing that the performance goal or goals (and any
other material terms) applicable to such performance period have been
satisfied; and
(e) after the establishment of a performance goal, the Committee shall
not revise such performance goal (unless such revision will not
disqualify compensation attributable to the Award as
"performance-based compensation" under Code Section 162(m)) or
increase the amount of
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compensation payable with respect to such Award upon the attainment
of such performance goal.
12.3 PERFORMANCE MEASURES. The Committee may use the following performance
measures (either individually or in any combination) to set performance
goals with respect to Awards intended to qualify as Performance-Based
Awards: net sales; pre-tax income before allocation of corporate overhead
and bonus; budget; cash flow; earnings per share; net income; division,
group or corporate financial goals; return on stockholders' equity; return
on assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Common Stock or any
other publicly-traded securities of the Company; market share; gross
profits; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; economic value-added models;
comparisons with various stock market indices; increase in number of
customers; and/or reductions in costs.
12.4 SHAREHOLDER REAPPROVAL. As required by Treasury Regulation Section
1.162-27(e)(vi), the material terms of performance goals as described in
this Section 12 shall be disclosed to and reapproved by the Company's
stockholders no later than the first stockholder meeting that occurs in
the 5th year following the year in which the Company's stockholders
previously approved such performance goals.
13.0 CHANGE IN CONTROL
13.1 ACCELERATED VESTING OR PAYOUT. Notwithstanding any other provision of this
Plan to the contrary, if there is a Change in Control of the Company, the
Committee may accelerate the Vesting Date and/or payout of such Awards;
provided, however, that such action shall not conflict with any provision
contained in an Award Agreement unless such provision is amended in
accordance with Section 16.3 below.
14.0 TERMINATION OF EMPLOYMENT IF PARTICIPANT IS AN EMPLOYEE
14.1 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. Subject to Section
14.4 and any written agreement between the Company and a Participant, if a
Participant's employment is terminated due to death or disability:
(a) all non-Vested portions of Awards held by the Participant on the date
of the Participant's death or the date of the termination of his or
her employment, as the case may be, shall immediately be forfeited by
such Participant as of such date; and
(b) all Vested portions of Stock Options and SARs held by the Participant
on the date of the Participant's death or the date of the termination
of his or her employment, as the case may be, shall remain
exercisable until the earlier of:
(i) the end of the 12-month period following the date of the
Participant's death or the date of the termination of his or her
employment, as the case may be; or
(ii) the date the Stock Option or SAR would otherwise expire.
14.2 TERMINATION OF EMPLOYMENT FOR CAUSE. Subject to any written agreement
between the Company and a Participant, if such Participant's employment is
terminated by the Company for cause or voluntarily by such Participant,
all Awards held by a Participant on the date of any such termination of
his or her employment, whether Vested or non-Vested, shall immediately be
forfeited by such Participant as of such date.
14.3 OTHER TERMINATIONS OF EMPLOYMENT. Subject to any written agreement between
the Company and a Participant, if such Participant's employment is
terminated for any reason other than for cause or such Participant's
death, disability or voluntary resignation:
(a) all non-Vested portions of Awards held by the Participant on the date
of the termination of his or her employment shall immediately be
forfeited by such Participant as of such date; and
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(b) all Vested portions of Stock Options and/or SARs held by the
Participant on the date of the termination of his or her employment
shall remain exercisable until the earlier of:
(i) the end of the 90-day period following the date of the
termination of the Participant's employment; or
(ii) the date the Stock Option or SAR would otherwise expire.
14.4 COMMITTEE DISCRETION. Notwithstanding anything contained in the Plan to
the contrary, except in the event (i) a Participant is terminated by the
Company for cause or (ii) a Participant voluntarily resigns his or her
employment with the Company, the Committee may, in its sole discretion and
at any time, provide that:
(a) any or all non-Vested portions of Stock Options and/or SARs held by
the Participant on the date of the Participant's death and/or the
date of the termination of his or her employment shall immediately
become exercisable as of such date and, except with respect to ISOs,
shall remain exercisable until a date that occurs on or prior to the
date the Stock Option or SAR is scheduled to expire;
(b) any or all Vested portions of Nonqualified Stock Options and/or SARs
held by the Participant on the date of the Participant's death and/or
the date of the termination of his or her employment shall remain
exercisable until a date that occurs on or prior to the date the
Stock Option or SAR is scheduled to expire; and/or
(c) any or all non-Vested portions of Stock Awards, Stock Units,
Performance Shares, Performance Units and/or Cash Awards held by the
Participant on the date of the Participant's death and/or the date of
the termination of his or her employment shall immediately Vest or
shall become Vested on a date that occurs on or prior to the date the
Award is scheduled to vest.
14.5 ISOS. Notwithstanding anything contained in the Plan to the contrary, (i)
the provisions contained in this Section 14 shall be applied to an ISO
only if the application of such provision maintains the treatment of such
ISO as an ISO and (ii) the exercise period of an ISO in the event of a
termination of the Participant's employment due to disability provided in
Section 14.1 above shall be applied only if the Participant is
"permanently and totally disabled" (as such term is defined in Code
Section 22(e)(3)).
15.0 TAXES
15.1 WITHHOLDING TAXES. With respect to Employees, the Company, or the
applicable Subsidiary, may require a Participant who has become Vested in
his or her Stock Award, Stock Unit, Performance Share or Performance Unit
granted hereunder, or who exercises a Stock Option or SAR granted
hereunder to reimburse the corporation which employs such Participant for
any taxes required by any governmental regulatory authority to be withheld
or otherwise deducted and paid by such corporation or entity in respect of
the issuance or disposition of such shares or the payment of any amounts.
In lieu thereof, the corporation or entity which employs such Participant
shall have the right to withhold the amount of such taxes from any other
sums due or to become due from such corporation or entity to the
Participant upon such terms and conditions as the Committee shall
prescribe. The corporation or entity that employs such Participant may, in
its discretion, hold the stock certificate to which such Participant is
entitled upon the Vesting of a Stock Award, Stock Unit, Performance Share
or Performance Unit or the exercise of a Stock Option or SAR as security
for the payment of such withholding tax liability, until cash sufficient
to pay that liability has been accumulated.
15.2 USE OF COMMON STOCK TO SATISFY WITHHOLDING OBLIGATION. With respect to
Employees, at any time that the Company, Subsidiary or other entity that
employs such Participant becomes subject to a withholding obligation under
applicable law with respect to the Vesting of a Stock Award, Stock Unit,
Performance Share or Performance Unit or the exercise of a Nonqualified
Stock Option (the "Tax Date"), except as set forth below, a holder of such
Award may, with the prior written consent of the Committee, elect to
satisfy, in whole or in part, the holder's related personal tax
liabilities (an
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"Election") by (i) directing the Company, Subsidiary or other entity that
employs such Participant to withhold from shares issuable in the related
Vesting or exercise either a specified number of shares or shares of
Common Stock having a specified value (in each case not in excess of the
related personal tax liabilities), (ii) tendering shares of Common Stock
previously issued pursuant to the exercise of a Stock Option or other
shares of the Common Stock owned by the holder or (iii) combining any or
all of the foregoing Elections in any fashion. An Election shall be
irrevocable. The withheld shares and other shares of Common Stock tendered
in payment shall be valued at their Fair Market Value of the Common Stock
on the Tax Date. The Committee may suspend or terminate the right to make
Elections or provide that the right to make Elections shall not apply to
particular shares or exercises. The Committee may impose any additional
conditions or restrictions on the right to make an Election as it shall
deem appropriate, including conditions or restrictions with respect to
Section 16 of the Exchange Act.
15.3 COMPLIANCE WITH CODE SECTION 162(M). Unless otherwise determined by the
Committee in its discretion, any performance goals applicable to any
Employee who is a "covered employee" within the meaning of Code Section
162(m) shall be determined by the Committee by its members who qualify as
"non-employee directors" within the meaning of Rule 16b-3(b)(3) of the
Exchange Act and as "outside directors" within the meaning of such Code
Section, and such members of the Committee shall also certify in
accordance with the provisions of such Code Section and applicable
Treasury Regulations whether such performance goals have been attained for
purposes of an Award. The Committee may delegate any other matters
relating to Employees qualifying as "covered employees" to its members who
qualify as non-employee, outside directors. The performance goals
determined by the members of the Committee who qualify as non-employee,
outside directors and such other matters as may be delegated by the
Committee to such members shall be subject to separate ratification by the
unanimous approval of all members of the Committee, unless the Committee
determines otherwise.
15.4 NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the Plan in any
capacity, including, but not limited to, the Company and any Subsidiary
and their directors, officers, agents and employees makes any
representation, commitment or guarantee that any tax treatment, including,
but not limited to, federal, state and local income, estate and gift tax
treatment, will be applicable with respect to amounts deferred under the
Plan, or paid to or for the benefit of a Participant under the Plan, or
that such tax treatment will apply to or be available to a Participant on
account of participation in the Plan.
16.0 AMENDMENT AND TERMINATION
16.1 TERMINATION OF PLAN. The Board may suspend or terminate the Plan at any
time with or without prior notice; provided, however, that no action
authorized by this Section 16.1 shall reduce the amount of any outstanding
Award or change the terms and conditions thereof without the Participant's
consent.
16.2 AMENDMENT OF PLAN. The Board may amend the Plan at any time with or
without prior notice; provided, however, that no action authorized by this
Section 16.2 shall reduce the amount of any outstanding Award or change
the terms and conditions thereof without the Participant's consent. No
amendment of the Plan shall, without the approval of the stockholders of
the Company:
(a) increase the total number of shares which may be issued under the
Plan;
(b) increase the maximum number of shares with respect to all Awards
measured in Common Stock that may be granted to any individual under
the Plan; or
(c) modify the requirements as to eligibility for Awards under the Plan.
In addition, the Plan shall not be amended without the approval of such
amendment by the Company's stockholders if such amendment (i) is required
under the rules and regulations of the stock exchange or national market
system on which the Common Stock is listed or (ii) will disqualify any ISO
granted hereunder.
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16.3 AMENDMENT OR CANCELLATION OF AWARD AGREEMENTS. The Committee may amend or
modify any Award Agreement at any time by mutual agreement between the
Committee and the Participant or such other persons as may then have an
interest therein. In addition, by mutual agreement between the Committee
and a Participant or such other persons as may then have an interest
therein, Awards may be granted to an Employee, Nonemployee Director,
Affiliated Person or Independent Contractor in substitution and exchange
for, and in cancellation of, any Awards previously granted to such
Employee, Nonemployee Director, Affiliated Person or Independent
Contractor under the Plan, or any award previously granted to such
Employee, Nonemployee Director, Affiliated Person or Independent
Contractor under any other present or future plan of the Company or any
present or future plan of an entity which (i) is purchased by the Company,
(ii) purchases the Company or (iii) merges into or with the Company.
17.0 MISCELLANEOUS
17.1 OTHER PROVISIONS. Awards granted under the Plan may also be subject to
such other provisions (whether or not applicable to the Award granted to
any other Participant) as the Committee determines on the date of grant to
be appropriate, including, without limitation, for the installment
purchase of Common Stock under Stock Options, to assist the Participant in
financing the acquisition of Common Stock, for the forfeiture of, or
restrictions on resale or other dispositions of, Common Stock acquired
under any Stock Option, for the acceleration of Vesting of Awards in the
event of a Change in Control of the Company, for the payment of the value
of Awards to Participants in the event of a Change in Control of the
Company, or to comply with federal and state securities laws, or
understandings or conditions as to the Participant's employment in
addition to those specifically provided for under the Plan.
17.2 TRANSFERABILITY. Each Award granted under the Plan to a Participant and
any interest therein shall not be transferable otherwise than by will or
the laws of descent and distribution, and Stock Options and SARs shall be
exercisable, during the Participant's lifetime, only by the Participant.
In the event of the death of a Participant, each Stock Option or SAR
theretofore granted to him or her shall be exercisable during such period
after his or her death as the Committee shall, in its sole discretion, set
forth in the Award Agreement on the date of grant and then only by the
executor or administrator of the estate of the deceased Participant or the
person or persons to whom the deceased Participant's rights under the
Stock Option or SAR shall pass by will or the laws of descent and
distribution. Any purported transfer of an Award or any interest therein
to a creditor of a Participant shall be void, and the Award may be
forfeited at the discretion of the Committee. Notwithstanding the
foregoing, the Committee, in its sole discretion and on a case-by-case
basis, may permit the transferability of a Nonqualified Stock Option by a
Participant, including to, but not limited to, members of the
Participant's immediate family or trusts or family partnerships or other
similar entities for the benefit of such persons, and all such transfers
shall be subject to such terms, conditions, restrictions and/or
limitations, if any, as the Committee may establish and include in the
Award Agreement or any amendment thereto.
17.3 ELECTION TO DEFER COMPENSATION ATTRIBUTABLE TO AWARD. The Committee may,
in its sole discretion, allow a Participant to elect to defer the receipt
of any compensation attributable to an Award under guidelines and
procedures to be established by the Committee after taking into account
the advice of the Company's tax counsel.
17.4 LISTING OF SHARES AND RELATED MATTERS. If at any time the Committee shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to any Award on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of, or in connection
with, the granting of an Award or the issuance of shares of Common Stock
thereunder, such Award may not be exercised, distributed or paid out, as
the case may be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
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17.5 NO RIGHT, TITLE OR INTEREST IN COMPANY ASSETS. Participants shall have no
right, title or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or other person. To the extent that any
person acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall
be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
17.6 NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE OR TO GRANTS. The
Participant's rights, if any, to continue to serve the Company as a
director, officer, employee, independent contractor or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a
Participant under the Plan, and the Company or the applicable Subsidiary
reserves the right to terminate the employment of any Employee or the
services of any Independent Contractor or director at any time. The
adoption of the Plan shall not be deemed to give any Employee, Nonemployee
Director, Affiliated Person or Independent Contractor or any other
individual any right to be selected as a Participant or to be granted an
Award.
17.7 AWARDS SUBJECT TO FOREIGN LAWS. The Committee may grant Awards to
individual Participants who are subject to the tax laws of nations other
than the United States, and such Awards may have terms and conditions as
determined by the Committee as necessary to comply with applicable foreign
laws. The Committee may take any action which it deems advisable to obtain
approval of such Awards by the appropriate foreign governmental entity;
provided, however, that no such Awards may be granted pursuant to this
Section 17.7 and no action may be taken which would result in a violation
of the Exchange Act or any other applicable law.
17.8 GOVERNING LAW. The Plan, all Awards granted hereunder and all actions
taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws, except as superseded by applicable federal
law.
17.9 OTHER BENEFITS. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary nor affect any benefits or compensation
under any other benefit or compensation plan of the Company or any
Subsidiary now or subsequently in effect.
17.10 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, Common Stock, Stock Options or other property
shall be issued or paid in lieu of fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
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BERG ELECTRONICS CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BERG ELECTRONICS CORP.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 5, 1998
The undersigned, having received the notice and accompanying
Proxy Statement for said meeting, hereby appoints James N. Mills and David M.
Sindelar, and each of them, with full power of substitution, as the
undersigned's proxy and attorney-in-fact to vote at the Annual Meeting of
Stockholders of Berg Electronics Corp. to be held on May 5, 1998, or at any
adjournment thereof, all shares of Berg Electronics Corp. which the undersigned
may be entitled to vote.
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN
THE MANNER SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFIC
DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
UNDER PROPOSAL 1 AND FOR THE PROPOSALS SPECIFIED IN PROPOSALS 2, 3 AND 4.
CONTINUED AND TO BE COMPLETED, SIGNED AND DATED ON THE REVERSE SIDE
<PAGE> 47
BERG ELECTRONICS CORP.
[X] Please mark your votes as in this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF NO
SPECIFIC DIRECTIONS ARE GIVEN, ALL THE VOTES ATTRIBUTABLE TO YOUR
VOTING SHARES WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER
PROPOSAL 1 AND FOR THE PROPOSALS SPECIFIED IN PROPOSALS 2, 3 AND 4.
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<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF CLASS III DIRECTORS 2. Proposal to approve the FOR AGAINST ABSTAIN
James N. Mills amendment to the Berg Electronics
Thomas O. Hicks Corp. 1993 Stock Option Plan. [ ] [ ] [ ]
FOR ALL 3. Proposal to approve the FOR AGAINST ABSTAIN
NOMINEES WITHHOLD Berg Electronics Corp. 1998
(except as AUTHORITY Incentive Compensation Plan. [ ] [ ] [ ]
indicated in [ ] FOR ALL [ ]
space below) NOMINEES
4. Proposal to approve the FOR AGAINST ABSTAIN
- ---------------------------------------- amendment to the Corporation's
(To withhold authority to vote for any individual Certificate of Incorporation, [ ] [ ] [ ]
nominee, print the nominee's name above) as amended.
PLEASE SIGN, DATE AND PROMPTLY MARK HERE PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD
RETURN THIS PROXY USING THE IF YOU PLAN EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
ENCLOSED ENVELOPE EVEN IF TO ATTEND [ ] TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
YOU PLAN TO ATTEND THE MEETING THE MEETING
Signature: Date
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Signature: Date
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