<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
GREENFIELD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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
GREENFIELD INDUSTRIES LOGO
March 27, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at the Radisson Riverfront Hotel -- Augusta, Two Tenth
Street, Augusta, Georgia 30901, at 9:30 a.m., Eastern Time, on Tuesday, May 6,
1997. On the following pages you will find the formal Notice of Annual Meeting
of Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted at the meeting. Accordingly, please
date, sign and return the enclosed proxy card promptly.
We hope that you will attend and look forward to seeing you there.
Sincerely,
/s/ Donald E. Nickelson
Donald E. Nickelson
Chairman of the Board
/s/ PAUL W. JONES
Paul W. Jones
President and Chief Executive Officer
<PAGE> 3
GREENFIELD INDUSTRIES, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 6, 1997
---------------------
To the Stockholders of
Greenfield Industries, Inc.:
The Annual Meeting of Stockholders of Greenfield Industries, Inc., a
Delaware corporation (the "Company"), will be held at the Radisson Riverfront
Hotel -- Augusta, Two Tenth Street, Augusta, Georgia 30901, on Tuesday, May 6,
1997, at 9:30 a.m., Eastern Time, for the following purposes:
(1) To elect eight directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified;
(2) To approve or disapprove amendments to the Company's Amended and
Restated Employee Stock Option Plan;
(3) To ratify or reject the appointment of Price Waterhouse LLP as
independent auditors of the Company for the year ending December 31, 1997;
and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof, according to the proxies' discretion,
and in their discretion.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 21, 1997, are
entitled to notice of and to vote at the meeting. A list of stockholders of the
Company as of the close of business on March 21, 1997 will be available for
inspection during normal business hours on or after April 20, 1997, at the
offices of the Company at 2743 Perimeter Parkway, Building 100, Suite 100,
Augusta, Georgia 30909 and will also be available at the meeting.
By Order of the Board of Directors,
/s/ Gary L. Weller
Gary L. Weller
Senior Vice President, Chief Financial
Officer and Secretary
Augusta, Georgia
March 27, 1997
PLEASE FILL OUT, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
IN THE ACCOMPANYING POSTAGE PAID ENVELOPE, EVEN IF YOU PLAN TO ATTEND
THE MEETING. YOU MAY REVOKE YOUR PROXY IN WRITING, OR AT THE ANNUAL
MEETING IF YOU WISH TO VOTE IN PERSON.
<PAGE> 4
GREENFIELD INDUSTRIES, INC.
2743 PERIMETER PARKWAY, BUILDING 100, SUITE 100
AUGUSTA, GEORGIA 30909
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 6, 1997
---------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Greenfield
Industries, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at 9:30 a.m., Eastern
Time, Tuesday, May 6, 1997, or at any adjournment thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held at the Radisson Riverfront Hotel -- Augusta, Two
Tenth Street, Augusta, Georgia 30901. The proxy is revocable at any time prior
to its exercise by delivering to the Company a written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting in person.
This proxy material is first being sent to stockholders on or about March
27, 1997.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on March 21, 1997 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on that date, there were outstanding and entitled to vote 16,398,257
shares of common stock, $.01 par value ("Common Stock"), each of which is
entitled to one vote. No cumulative voting rights exist under the Company's
Amended and Restated Certificate of Incorporation. For information regarding the
ownership of the Company's Common Stock by holders of more than five percent of
the outstanding shares and by the management of the Company, see "Security
Ownership of Certain Beneficial Owners and Management."
For purposes of determining the presence of a quorum and counting votes on
the matters presented, shares represented by abstentions and "broker non-votes"
will be counted as present, but not as votes cast, at the Annual Meeting. Under
Delaware law and the Company's By-laws, all matters expected to be submitted for
consideration at the Annual Meeting will be determined on the basis of a
percentage of votes cast at the Annual Meeting. All matters expected to be
brought before the meeting require the affirmative vote of the holders of a
majority of the Company's Common Stock represented and voting at the Annual
Meeting for approval.
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of a single class. The
directors are elected at the Annual Meeting of the stockholders of the Company
and each director elected holds office until his or her successor is elected and
qualified. The Board currently consists of nine members; however, in accordance
with the By-laws, the Board has determined to reduce the number of directors to
eight effective as of May 6, 1997. The stockholders will vote at the Annual
Meeting for the election of eight directors for the one-year term expiring at
the Annual Meeting of Stockholders in 1998. There are no family relationships
among any directors or executive officers of the Company.
The persons named in the enclosed proxy will vote for the election of the
nominees named below unless authority to vote is withheld. All nominees have
consented to serve if elected. In the event that any of the nominees should be
unable to serve, the persons named in the proxy will vote for such substitute
nominee or
<PAGE> 5
nominees as they, in their discretion, shall determine. The Board of Directors
has no reason to believe that any nominee named herein will be unable to serve.
The Board of Directors recommends voting "FOR" each of the nominees named
below.
The following material contains information concerning the nominees for
election as directors.
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------
<S> <C> <C> <C>
John W. Burge, Jr.................... 64 Principal of John W. Burge & Assoc., February 1995
Pensacola, Florida
Peter S. Finley...................... 41 Senior Vice President -- Corporate April 1986
Development of Harbour Group Industries,
Inc., St. Louis, Missouri
Paul W. Jones........................ 48 President and Chief Executive Officer of May 1993
the Company, Augusta, Georgia
Robert E. Lefton..................... 65 President and Chief Executive Officer of August 1993
Psychological Associates, Inc., St.
Louis, Missouri
Donald E. Nickelson.................. 64 Chairman of the Board of the Company, August 1993
Augusta, Georgia; private investor
Robert W. Pratt, Jr.................. 66 Strategic Management Consultant, Rye, New February 1995
York
Julian M. Seeherman.................. 67 Management Consultant, St. Louis, Missouri August 1993
Dennis W. Sheehan.................... 63 Chairman of the Board, President and Chief August 1993
Executive Officer of AXIA, Incorporated,
Lombard, Illinois
</TABLE>
Except as set forth below, each of the nominees has been engaged in his
principal occupation described above during the past five years.
Mr. Burge has been a Principal of John W. Burge & Assoc., a management
consulting firm, since 1980 and was an advisory director of Emerson Electric
Co., in St. Louis, Missouri, from 1980 to 1993. Prior to that time, he held the
positions of President and General Manager of the Electronics and Space Division
and Group Vice President, Government and Defense at Emerson Electric Co.
Mr. Finley has been Senior Vice President -- Corporate Development of
Harbour Group Industries, Inc., a company which provides corporate development
services to its affiliates, since 1990. From 1985 to 1990, he served as Vice
President of Harbour Group Industries, Inc. In addition, Mr. Finley holds
various officer positions with operating companies owned by affiliates of
Harbour Group Industries, Inc. He presently serves as a director of Omniquip
International, Inc.
Mr. Jones has been the President of the Company since 1989 and its Chief
Executive Officer since 1993. From 1988 to 1989, he served as General
Manager -- Manufacturing for General Electric Transportation Systems. Prior to
that time, Mr. Jones was the General Manager of General Electric Drives, Motor
and Generator Operations. Mr. Jones received a Bachelor of Science degree in
Engineering from the University of Evansville.
Dr. Lefton has served as President and Chief Executive Officer of
Psychological Associates, Inc., an international consulting, training and
development firm headquartered in St. Louis, Missouri, since 1958. He presently
serves as a director of Stifel Financial Corp., Wave Technology, Inc. and Allied
Healthcare Products, Inc.
Mr. Nickelson, a private investor, has served as Chairman of the Board of
the Company since 1993. From 1988 to 1990, he served as President of Paine
Webber Group, Inc., an investment banking and brokerage firm. Mr. Nickelson has
served as Vice Chairman of Harbour Group Industries, Inc. since 1990. Mr.
Nickelson
2
<PAGE> 6
currently serves as a trustee of Mainstay Mutual Funds, as a director of
Corporate Property Associates #10 and Carey Institutional Properties, two real
estate investment trusts located in New York, New York, Allied Healthcare
Products, Inc., DT Industries, Inc. and Sugen, Inc., and as a director and
Chairman of the Board of Omniquip International, Inc.
Dr. Pratt has been a consultant in marketing and strategic management since
1992. Also since 1992, he has been Marketing Executive-in-Residence and an
Adjunct Professor of Business at Columbia University's Graduate School of
Business. From 1988 to 1992, he served as Executive Vice President of Avon
Products, Inc., where he was responsible for business development and planning.
Prior to joining Avon in 1983, Dr. Pratt held planning and marketing positions
with R. J. Reynolds Industries, Heublein, Inc. and General Electric Company. He
is a member of the Board of Advisors of The Michael Allen Company, consultants
in strategic growth management.
Mr. Seeherman has been a consultant specializing in strategic management
since February 1996. Prior to such time, Mr. Seeherman served as the Chairman of
the Board of Venture Stores, Inc., a retail chain of mass merchandising stores,
from 1990 to 1996, as its Chief Executive Officer from 1990 to 1995 and as its
President and Chief Executive Officer from 1982 to 1990.
Mr. Sheehan has been Chairman of the Board, President and Chief Executive
Officer of AXIA Incorporated, a privately-owned manufacturer of various
commercial and industrial products, since 1984. Mr. Sheehan is a director of the
Chamber of Commerce of the United States of America, The National Chamber
Litigation Center, National Council on Crime and Delinquency, CST, Inc. (a paper
processor located in Wheeling, Illinois), Bradington-Young, Inc. (a furniture
manufacturer located in Hickory, North Carolina) and a director and Chairman of
the Board of Allied Healthcare Products, Inc.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board of Directors met six times during the fiscal year ended December
31, 1996. The Board of Directors presently maintains an Executive Committee, a
Compensation and Options Committee, a Nominating Committee and an Audit
Committee.
The Executive Committee consists of James C. Janning, a director who will
be retiring from the Board of Directors upon the expiration of his current term,
and Messrs. Jones, Nickelson and Pratt. The Executive Committee exercises all
powers of the Board of Directors, to the extent permitted by law, between
meetings of the Board. The Executive Committee met six times during the year
ended December 31, 1996.
The Compensation and Options Committee consists of Messrs. Janning, Lefton,
Nickelson and Sheehan and reviews and approves the Company's executive
compensation policy, makes recommendations concerning the Company's employee
benefit policies and administers the Company's incentive compensation bonus and
stock option plans in effect from time to time, unless otherwise specified in
such plan. The Compensation and Options Committee met five times during the year
ended December 31, 1996.
The Nominating Committee is comprised of Messrs. Burge, Janning, Lefton and
Sheehan and recommends nominees for election to the Board of Directors. The
Nominating Committee held one meeting during the year ended December 31, 1996.
The Nominating Committee will consider nominees submitted by stockholders for
inclusion on the recommended list of nominees submitted by the Company and voted
on at the Annual Meeting of Stockholders in 1998 if such nominations are
submitted in writing to the Company's headquarters, Attention: Nominating
Committee, no later than November 26, 1997.
The Audit Committee consists of Messrs. Burge, Finley, Pratt, Seeherman and
Sheehan and recommends engagement of the Company's independent auditors and is
primarily responsible for approving the services performed by the Company's
independent auditors and for reviewing and evaluating the Company's accounting
principles and its systems of internal accounting controls. The Audit Committee
held four meetings during the year ended December 31, 1996.
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth information regarding all persons known to
the Company to be the beneficial owners of more than five percent of the
Company's Common Stock as of March 21, 1997:
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDING SHARES
- ------------------------------------ ------------ ------------------
<S> <C> <C>
FMR Corp.(1)............................................ 1,426,400 8.7%
82 Devonshire Street
Boston, Massachusetts 02109
J. & W. Seligman & Co. Incorporated(2).................. 1,211,591 7.4
100 Park Avenue
New York, New York 10017
Jurika & Voyles, Inc.(3)................................ 1,067,775 6.5
1999 Harrison Street, Suite 700
Oakland, California 94612
The Capital Group Companies, Inc.(4).................... 1,023,710 6.2
333 South Hope Street
Los Angeles, California 90071
Denver Investment Advisors LLC(5)....................... 941,115 5.7
1225 17th Street, 26th Floor
Denver, Colorado 80202
First Chicago NBD Corporation(6)........................ 893,050 5.4
One First National Plaza
Chicago, Illinois 60670
</TABLE>
- ---------------
(1) Information obtained from Amendment No. 3 to Schedule 13G, which was filed
with the Securities and Exchange Commission on or about February 14, 1997
by FMR Corp., as the parent holding company of several entities which
beneficially own the Company's Common Stock.
(2) Information obtained from Schedule 13G, which was filed with the Securities
and Exchange Commission on or about February 13, 1997 by J. & W. Seligman &
Co. Incorporated.
(3) Information obtained from Amendment No. 3 to Schedule 13G, which was filed
with the Securities and Exchange Commission on or about February 13, 1997
by Jurika & Voyles, Inc.
(4) Information obtained from Schedule 13G, which was filed with the Securities
and Exchange Commission on or about February 14, 1997 by The Capital Group
Companies, Inc., as the parent holding company of several entities which
beneficially own the Company's Common Stock.
(5) Information obtained from Amendment No. 1 to Schedule 13G, which was filed
with the Securities and Exchange Commission on or about February 10, 1997
by Denver Investment Advisors LLC.
(6) Information obtained from Schedule 13G, which was filed with the Securities
and Exchange Commission on or about February 4, 1997 by First Chicago NBD
Corporation, as the parent holding company of several entities which
beneficially own the Company's Common Stock.
4
<PAGE> 8
BENEFICIAL OWNERSHIP OF MANAGEMENT AND NOMINEES
The following table sets forth information regarding the ownership of
Common Stock of the Company for each director, each executive officer named in
the Summary Compensation Table and all directors and executive officers as a
group as of March 21, 1997. See "Executive Compensation."
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDING SHARES
- ------------------------ ------------ ------------------
<S> <C> <C>
Paul W. Jones(1)............................................ 165,932 1.0%
Gary L. Weller(2)........................................... 46,094 *
Peter K. Hunt(3)............................................ 23,185 *
Henry G. Libby(4)........................................... 12,741 *
Roger B. Farley(5).......................................... 9,197 *
John W. Burge, Jr.(6)....................................... 4,500 *
Peter S. Finley(7).......................................... 51,300 *
James C. Janning(8)......................................... 86,600 *
Robert E. Lefton(9)......................................... 6,300 *
Donald E. Nickelson(10)..................................... 11,500 *
Robert W. Pratt, Jr.(11).................................... 4,500 *
Julian M. Seeherman(12)..................................... 7,500 *
Dennis W. Sheehan(13)....................................... 13,000 *
All directors and executive officers as a group (15
persons).................................................. 454,906 2.8%
======= ===
</TABLE>
- ---------------
* Less than 1.0%.
(1) Represents 134,682 shares owned by Mr. Jones and 31,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Company's Employee Stock Option Plan (the "Employee
Plan"). Excludes an aggregate of 134,250 shares subject to the terms of the
Company's several employee benefit plans which are not currently
exercisable or which have not been earned. Also excludes 1,100 shares of
Common Stock owned by his spouse, as to which Mr. Jones disclaims
beneficial ownership.
(2) Represents 32,344 shares owned by Mr. Weller and 13,750 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 67,650 shares
subject to the terms of the Company's several employee benefit plans which
are not currently exercisable or which have not been earned.
(3) Represents 15,935 shares owned by Mr. Hunt and 7,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 64,400 shares
subject to the terms of the Company's several employee benefit plans which
are not currently exercisable or which have not been earned. Also excludes
100 shares of Common Stock owned by his daughter, as to which Mr. Hunt
disclaims beneficial ownership.
(4) Excludes an aggregate of 10,000 shares subject to the terms of the
Company's Employee Plan which are not currently exercisable.
(5) Represents 4,322 shares owned by Mr. Farley and 4,875 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 30,625 shares
subject to the terms of the Company's Employee Plan which are not currently
exercisable.
(6) Represents 1,000 shares owned by Mr. Burge and 3,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the 1993 Directors Non-Qualified Stock Option Plan (the "1993 Directors
Plan") and the 1995 Directors Non-Qualified Stock Option Plan (the "1995
Directors Plan" and, together with the 1993 Directors Plan, the "Directors
Plans"). Excludes 7,500 shares issuable pursuant to options granted under
the 1993 Directors Plan which are not currently exercisable.
(7) Represents 45,300 shares owned by Mr. Finley and 6,000 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 5,000 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
5
<PAGE> 9
(8) Represents 80,100 shares owned by Mr. Janning and 6,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 5,000 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable and 600 shares of Common Stock owned by his spouse,
as to which Mr. Janning disclaims beneficial ownership.
(9) Represents 300 shares owned by Dr. Lefton and 6,000 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 5,000 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
(10) Represents 3,000 shares owned by Mr. Nickelson and 8,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 7,500 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
(11) Represents 1,000 shares owned by Dr. Pratt and 3,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 7,500 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
(12) Represents 1,000 shares owned by Mr. Seeherman and 6,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 5,000 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
(13) Represents 6,500 shares owned by Mr. Sheehan and 6,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 5,000 shares issuable
pursuant to options granted under the 1993 Directors Plan which are not
currently exercisable.
6
<PAGE> 10
EXECUTIVE OFFICERS
The following provides certain information regarding the executive officers
of the Company who are appointed by and serve at the pleasure of the Board of
Directors:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Paul W. Jones............................ 48 President and Chief Executive Officer(1)
Gary L. Weller........................... 36 Senior Vice President and Chief Financial
Officer; Secretary(2)
Peter K. Hunt............................ 50 Senior Vice President-Industrial Products
Group(3)
Henry G. Libby, III...................... 57 Senior Vice President-Consumer Products
Group(4)
Roger B. Farley.......................... 53 Vice President-Human Resources(5)
Ajita G. Rajendra........................ 45 Vice President-Electronics Products
Group(6)
Mark R. Richards......................... 37 Vice President-Business Development(7)
</TABLE>
- ---------------
(1) See information under "Election of Directors."
(2) Mr. Weller has been the Senior Vice President and Chief Financial Officer
and Secretary of the Company since May 1993. From 1991 to 1993, he served as
the Company's Director of Operations in Greenfield, Massachusetts and from
1988 to 1991 he was the Corporate Controller of the Company. Prior thereto,
Mr. Weller, a Certified Public Accountant, served as an audit manager with
Price Waterhouse. He received a Bachelor of Science degree in Business
Administration from Central Missouri State University.
(3) Mr. Hunt has been the Senior Vice President-Industrial Products Group of the
Company since October 1995. From 1993 to 1995, he served as the Company's
Vice President-Manufacturing in Augusta, Georgia. Prior to joining the
Company, from 1988 to 1993, he served as Vice President-Operations of A.B.
Dick Company in Chicago, Illinois, a manufacturer of printing and
reprographics equipment and a wholly-owned subsidiary of GEC Plc UK. Mr.
Hunt, a Chartered Engineer, received a Bachelor of Technology degree, with
honors, in Industrial Engineering and Management from Loughborough
University in the United Kingdom.
(4) Mr. Libby has been the Senior Vice President-Consumer Products Group of the
Company since January 1996. From 1994 to 1996, Mr. Libby served as Vice
President of Rule Industries, Inc., a manufacturer of cutting tools and
marine products which was acquired by the Company in January 1996, and as
President of Rule Manufacturing, Inc., a subsidiary of Rule Industries, Inc.
From 1990 to 1994, he served as President and Chief Executive Officer of The
Disston Company, a manufacturer of cutting tools and power tool accessories,
the assets of which was acquired by Rule Industries, Inc., in 1994.
(5) Mr. Farley has been the Vice President-Human Resources of the Company since
June 1994. From 1981 to 1994, Mr. Farley served as Manager-Human Resources
for General Electric Industrial Systems and Services. He received a Bachelor
of Science degree in Business Administration from Eastern Kentucky
University.
(6) Mr. Rajendra has been the Vice President-Electronics Products Group since
July 1996. Prior to joining the Company, he worked in various capacities at
Corning, Inc. for 18 years. He served as Director, Retail Operations and
Development of Corning Inc. from 1994 to 1996, as Business Director,
Corning-Cookware from 1993 to 1994 and as President, Revereware Corporation
from 1991 to 1993 (a Corning subsidiary). He received a Bachelor of Science
degree in Chemical Engineering from Indian Institute of Technology and a
Masters of Business Administration from Carnegie-Mellon University.
(7) Mr. Richards has been the Vice President-Business Development of the Company
since July 1995. From 1992 to 1995, he served as Associate Director of
Corporate Strategic Marketing and Planning for Searle & Co., a
pharmaceutical manufacturer which is a wholly-owned subsidiary of Monsanto
Company. From 1989 to 1992, he served as a Senior Associate at Coopers &
Lybrand in the financial services group.
7
<PAGE> 11
Mr. Richards received a Bachelor of Science degree from Michigan State
University and a Masters of Management degree from the Kellogg School of
Management at Northwestern University.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years ended December 31, 1994, 1995 and
1996 to the chief executive officer and to the Company's four most highly
compensated executive officers whose total salary and bonus exceeded $100,000
during the year ended December 31, 1996 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------------
OTHER STOCK RESTRICTED RESTRICTED
ANNUAL OPTION STOCK AWARDS STOCK AWARDS ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS (BONUS PLAN) (EQUITY PLAN) COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) (SHARES) ($)(4)(6) ($)(5)(6) ($)
- ------------------ ---- -------- -------- ------------ -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul W. Jones.......... 1996 $424,622 $150,000 $20,244(7) -- $202,491 $169,875 $ 1,176(8)
President and 1995 395,333 225,000 21,910(7) -- 303,750 305,000 11,170(8)
Chief Executive 1994 330,953 320,000 17,196(7) 25,000 -- -- 1,212(8)
Officer
Gary L. Weller......... 1996 199,159 80,000 5,331(7) -- 23,985 60,400 530(8)
Senior Vice President 1995 185,767 120,000 5,331(7) -- 53,985 244,000 447(8)
and Chief Financial 1994 134,888 120,000 4,989(7) 15,000 -- -- 286(8)
Officer
Peter K. Hunt.......... 1996 210,295 49,000 -- -- 25,191 60,400 1,094(8)
Senior Vice 1995 180,950 87,500 -- -- 50,600 244,000 664(8)
President -- Industrial 1994 152,666 70,000 -- 14,000 -- -- 63,482(10)
Products Group(9)
Henry G. Libby......... 1996 393,687 50,000 -- 10,000 67,497 -- 384(8)
Senior Vice
President -- Consumer
Products Group(11)
Roger B. Farley........ 1996 154,692 33,000 -- 10,000 29,698 -- 2,602(8)
Vice President -- 1995 149,721 48,000 -- 6,000 43,188 -- 75,841(13)
Human Resources(12) 1994 67,000 83,000(14) -- 19,500 -- -- 62,060(15)
</TABLE>
- ---------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
Retirement Income Savings Plan.
(2) Reflects bonus payments earned during the fiscal year, all or a portion of
which may have been paid in a subsequent fiscal year. Excludes a portion of
the bonus payments earned during the years ended December 31, 1995 and 1996
which the Named Executive Officers elected to receive in shares of
restricted Common Stock pursuant to the Company's 1995 Restricted Stock
Bonus Plan.
(3) Excludes certain personal benefits, the total value of which was less than
10% of the total annual salary and bonus for each of the executives.
(4) Represents the value of shares of restricted Common Stock, as of the bonus
award date, which each of the Named Executive Officers has elected to
receive in lieu of a portion of their 1996 and 1995 bonuses pursuant to the
terms of the Company's 1995 Restricted Stock Bonus Plan. For 1995, Messrs.
Jones, Weller, Hunt and Farley were awarded 9,959, 1,770, 1,659 and 1,416
shares of such restricted Common Stock, respectively, which vest ratably
over a five-year period from the date of grant. For 1996, Messrs. Jones,
Libby and Farley were awarded 8,223, 2,741 and 1,206 shares of such
restricted Common Stock, respectively, which vest ratably over a five-year
period from the date of grant, and Messrs. Weller and Hunt were awarded 974
and 1,023 shares of such restricted Common Stock, respectively, which vest
ratably over a three-year period from the date of grant.
(5) Represents the value as of the date restricted shares of Common Stock were
earned pursuant to the terms of the Company's 1995 Equity Incentive Plan.
8
<PAGE> 12
(6) As of December 31, 1996, the number and value of the aggregate shares of
restricted Common Stock earned and beneficially held by the Named Executive
Officers pursuant to the Company's 1995 Restricted Stock Bonus Plan and
1995 Equity Incentive Plan were as follows: Mr. Jones, 24,459 shares with a
value of $749,057; Mr. Weller, 11,370 shares with a value of $348,206; Mr.
Hunt, 11,259 shares with a value of $344,807; and Mr. Farley, 1,416 shares
with a value of $43,365. The executive officers retain dividend and voting
rights to the restricted shares.
(7) The amount shown represents a bonus paid to reimburse the interest cost on
a promissory note used to purchase certain shares of Common Stock. See
"Certain Transactions -- Agreements with Existing Stockholders."
(8) Reflects premiums paid on a term life insurance policy.
(9) Reflects compensation received by Mr. Hunt in his capacity as Senior Vice
President -- Industrial Products Group from October 1995 to present and as
Vice President -- Manufacturing from August 1993 to September 1995.
(10) Reflects premiums paid on a term life insurance policy of $641 and amounts
paid for relocation expenses totalling $62,841.
(11) Mr. Libby joined the Company as the Senior Vice President -- Consumer
Products Group in January 1996.
(12) Mr. Farley joined the Company as the Vice President -- Human Resources in
June 1994.
(13) Reflects premiums paid on a term life insurance policy of $791 and amounts
paid for relocation expenses totalling $75,050.
(14) Includes $35,000 paid to Mr. Farley as a signing bonus when he joined the
Company in June 1994.
(15) Reflects premiums paid on a term life insurance policy of $192 and amounts
paid for relocation expenses totalling $61,868.
The following table sets forth information concerning options granted
during the year ended December 31, 1996 under the Company's stock option plans
to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATE OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES PER SHARE OPTION TERM
OPTIONS IN FISCAL EXERCISE EXPIRATION ----------------------
NAME GRANTED 1996(1)(2) PRICE DATE 5% 10%
- ---- ---------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Jones....................... -- --% $ -- -- $ -- $ --
Gary L. Weller...................... -- -- -- -- -- --
Peter K. Hunt....................... -- -- -- -- -- --
Henry G. Libby...................... 5,000 2 30.00 1/12/06 94,334 239,061
5,000 2 26.50 11/12/06 83,329 211,171
Roger B. Farley..................... 2,000 0.8 30.00 1/12/06 37,734 95,625
4,000 1.6 30.50 8/14/06 76,725 194,437
4,000 1.6 26.50 11/12/06 66,663 168,937
</TABLE>
- ---------------
(1) Options to purchase a total of 245,900 shares were granted under the
Employee Plan in 1996, the purpose of which is to provide a financial
incentive to key employees who are in a position to make significant
contributions to the Company.
(2) Represents options granted pursuant to the Employee Plan with an exercise
price equal to the market price on the date of grant. Options become
exercisable with respect to one-fourth of the shares covered thereby on each
anniversary of the date of grant, commencing on the second anniversary of
such date.
9
<PAGE> 13
The following table sets forth information concerning option exercises and
the value of unexercised options held by the Named Executive Officers as of
December 31, 1996.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED,
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Jones.............. -- $ -- 31,250 43,750 $407,813 $492,188
Gary L. Weller............. -- -- 13,750 21,250 171,563 222,188
Peter K. Hunt.............. 3,750 77,812 7,250 18,000 78,344 180,188
Roger B. Farley............ -- -- 4,875 30,625 49,250 171,250
Henry G. Libby............. -- -- -- 10,000 -- 23,750
</TABLE>
EMPLOYMENT AGREEMENTS
Henry G. Libby, Senior Vice President -- Consumer Products Group of the
Company, is employed by the Company pursuant to an Employment and Noncompetition
Agreement dated January 12, 1996, which expires in 2001. Under the terms of the
agreement, Mr. Libby is entitled to receive a base salary of $400,000 per annum
and a minimum annual bonus of $100,000. The agreement also provides for certain
severance benefits in the event of termination of employment other than for
cause and obligates Mr. Libby to comply with certain confidentiality and
noncompetition provisions. Except for the agreement with Mr. Libby, the Company
does not have employment or severance agreements with any of its executive
officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Janning was appointed as a member of the Compensation and Options
Committee upon its formation in August 1993. Mr. Janning previously served as
Secretary-Treasurer of the Company and held offices with certain of the
Company's subsidiaries until May 1993. Mr. Janning was not compensated for these
officer positions. Mr. Janning was indebted to the Company during the fiscal
year ended December 31, 1996, as evidenced by certain promissory notes, in an
amount in excess of $60,000 and received a bonus in the amount of the interest
cost of such notes plus all federal and state income taxes applicable to such
payments. See "Certain Transactions -- Agreements with Existing Stockholders."
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
an annual fee of $15,000 for his services as a director and additional fees of
$1,000 for attendance at each meeting of the full Board of Directors and $750
for attendance at each meeting of committees of the Board of Directors.
Directors are also entitled to reimbursement for their expenses incurred in
attending meetings.
1993 Directors Plan. The Company maintains the 1993 Directors Plan which
provides for the granting of non-qualified stock options to the Company's
directors who are not employees of the Company, for up to 100,000 shares of
Common Stock (subject to adjustment in the event of a reorganization, merger,
consolidation, stock split, dividend payable in Common Stock, split-up,
combination or other exchange of shares).
The 1993 Directors Plan is administered by the Board of Directors. Options
granted under the 1993 Directors Plan may not be exercised for a period of two
years from the date of grant and thereafter become exercisable on a cumulative
basis in 25% increments beginning on the second anniversary of the date of grant
and concluding on the fifth anniversary thereof. All options granted under the
1993 Directors Plan expire ten years from the date of grant.
10
<PAGE> 14
Options granted under the 1993 Directors Plan are nontransferable, and the
exercise price must be equal to the fair market value of the Common Stock on the
date of grant. Upon exercise, the exercise price must be paid in full in cash or
such other consideration as the Board may permit.
The 1993 Directors Plan by its express terms provides for the grant of
options thereunder to each eligible director serving on the date of the
Company's initial public offering with respect to 10,000 shares of Common Stock,
and an additional option to the Chairman of the Board of Directors with respect
to 5,000 shares of Common Stock, in each case at the initial public offering
price. In addition, the 1993 Directors Plan provides for the grant of options to
each person first becoming an eligible director subsequent to the date of the
Company's initial public offering with respect to 10,000 shares of Common Stock
and the grant of an additional option to each person first becoming Chairman of
the Board subsequent to such date with respect to 5,000 shares of Common Stock.
In connection with the adoption of the 1995 Directors Plan, the 1993 Directors
Plan was terminated in May 1996.
The 1995 Directors Plan. The 1995 Directors Plan provides for the granting
of non-qualified stock options to purchase up to 125,000 shares of Common Stock
(subject to adjustment in the event of a reorganization, merger, consolidation,
stock split, dividend payable in Common Stock, split-up, combination or other
exchange of shares) to the members of the Board of Directors who are not
employees of the Company or any of its subsidiaries. Effective with the 1997
Annual Meeting of Stockholders, there are seven such directors.
Pursuant to the express terms of the 1995 Directors Plan, options to
purchase 10,000 shares of Common Stock are granted to each eligible director on
the date such person is first elected to the Board of Directors of the Company.
An option to purchase an additional 5,000 shares of Common Stock is granted to
each eligible director on the date such person is first elected to serve as
Chairman of the Board of the Company. These options may not be exercised for a
period of two years from the date of grant and thereafter become exercisable on
a cumulative basis in 25% increments beginning on the second anniversary of the
date of grant and concluding on the fifth anniversary of the date of grant.
In addition, the 1995 Directors Plan provides that options to purchase
1,000 shares of Common Stock are granted to each eligible director on the date
such person is re-elected to the Board of Directors by the vote of the
stockholders, at the annual or other meeting at which directors are elected, and
that options to purchase 500 shares of Common Stock are granted to each eligible
director on the date such person is elected or re-elected to serve as Chairman
of a standing committee maintained by the Board of Directors from time to time.
If a director is elected to serve a term of more than one year, in addition to
the option described in the preceding sentence, such director shall, during such
term, be granted an option with respect to 1,000 shares of Common Stock on each
anniversary of the date of reelection except in the year in which the term
expires. All options described in this paragraph may not be exercised for a
period of one year from the date of grant and thereafter are exercisable in
full.
Other options may be granted under the 1995 Directors Plan from time to
time pursuant to terms determined by the Board of Directors of the Company. All
options granted under the 1995 Directors Plan are nontransferable and subject to
certain limitations upon the removal or resignation of the director, as set
forth in the 1995 Directors Plan, and expire ten years from the date of grant.
No payments or contributions are required to be made by the directors other than
in connection with the exercise of options. The 1995 Directors Plan will
terminate on the tenth anniversary of its effective date, which is the date of
approval by the stockholders, and no further options may be granted after such
date.
The purchase price for shares of Common Stock to be purchased upon the
exercise of options is equal to the last reported sales price per share of
Common Stock on the Nasdaq National Market on the date of grant (or the last
reported sales price on such other exchange or market on which the Common Stock
is traded from time to time). As of March 21, 1997, such price was $22.75. Upon
exercise of an option, the purchase price therefor shall be payable in full to
the Company in cash or in kind or a combination thereof, by delivery of shares
having a fair market value, or surrender of currently exercisable options having
a value on the date of exercise, equal to the portion of the exercise price so
paid, as determined by the Board of Directors.
11
<PAGE> 15
As adopted, the 1995 Directors Plan was intended to provide formula awards
in accordance with certain then applicable exemptive rules of the SEC and is
administered by the Board of Directors of the Company, which may delegate
administration thereof to a committee of the Board. The Board may, in its
discretion, terminate or suspend the 1995 Directors Plan at any time. The Board
may also amend or revise the 1995 Directors Plan, or the terms of any option
granted under such plan, without stockholder approval, provided that such
amendment or revision does not, except as otherwise permitted, increase the
number of shares reserved for issuance under the plan, change the purchase price
established or expand the category of individuals eligible to participate in
such plan. No amendment, suspension or termination will alter or impair any
rights or obligations under any option previously granted without the consent of
the grantee.
Set forth below is information with respect to options outstanding under
the Directors Plans.
<TABLE>
<CAPTION>
EXERCISE PRICE
NAME DATE OF GRANT NUMBER OF SHARES PER SHARE
- ---- ------------- ---------------- --------------
<S> <C> <C> <C>
John W. Burge, Jr................................. 2/28/95 10,000 $25.75
5/01/96 1,000 37.00
Peter S. Finley................................... 7/29/93 10,000 15.50
5/01/96 1,000 37.00
James C. Janning.................................. 7/29/93 10,000 15.50
5/01/96 1,500 37.00
Robert E. Lefton.................................. 8/10/93 10,000 16.00
5/01/96 1,000 37.00
Donald E. Nickelson............................... 8/10/93 15,000 16.00
5/01/96 1,000 37.00
Robert W. Pratt, Jr............................... 2/28/95 10,000 25.75
5/01/96 1,000 37.00
Julian M. Seeherman............................... 8/10/93 10,000 16.00
5/01/96 1,500 37.00
Dennis W. Sheehan................................. 8/10/93 10,000 16.00
5/01/96 1,500 37.00
-------
Total................................... 94,500
=======
</TABLE>
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors for money damages, and the Company's By-laws provide for
the indemnification of the Company's directors and officers, to the full extent
permitted by the Delaware General Corporation Law.
BOARD COMPENSATION AND OPTIONS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Options Committee (the "Committee"), whose purpose is
to administer the Company's executive compensation policies, is composed
entirely of non-employee members of the Board of Directors and reviews,
recommends and approves changes to the Company's compensation policies and
programs for the chief executive officer, other senior executives and certain
key employees. In addition to the delegated authority in areas of compensation,
the Committee administers the Company's employee benefit plans and arrangements
and approves annual or other awards to be made in connection therewith.
In the Committee's discharge of its responsibilities, it considers the
compensation, primarily of the chief executive officer, all other executive
officers and certain other officers, sets overall policy and considers in
general the basis of the levels of compensation of other key employees.
Policy and Objectives. Recognizing its role as a key representative of the
stockholders, the Committee seeks to promote the interests of stockholders by
attempting to align management's remuneration, benefits and
12
<PAGE> 16
perquisites with the economic well-being of the Company. Since the achievement
of operational objectives should, over time, represent the primary determinant
of share price, the Committee links certain elements of compensation of
executive officers and certain key employees with the Company's operating
performance. In this way, objectives under a variety of compensation programs
should eventually reflect the overall performance of the Company. By adherence
to the above program, the compensation process should provide for enhancement of
shareholder value. Basically, the Committee seeks the successful implementation
of the Company's business strategy by attracting and retaining talented managers
motivated to accomplish these stated objectives. The Committee attempts to be
fair and competitive in its views of compensation. Thus, rewards involve both
business and individual performance. The key ingredients of the program consist
of base salary, annual cash incentives and long range incentives, consisting of
stock options and grants of restricted stock.
Base Salary. As a general principle, base salaries for the chief executive
officer, as well as other executive officers of the Company, are determined by
comparing salary data for similar positions in companies that match the
Company's size in sales and earnings. In 1993, the Committee commissioned a
study, which was updated in 1995, performed by an independent employee benefits
consulting firm to evaluate executive compensation at such companies. The
results of this study were considered by the Committee in setting target
compensation, composed of base salary and bonus, for the executive officers of
the Company, including the chief executive officer. Target base salary for each
of the Company's executive officers generally approximates the 50th percentile
amount in the salary survey for the corresponding position. The Committee
anticipates that it will periodically use updated versions of this study or
other independent studies or salary surveys of companies comparable to the
Company as a component in the determination of base salary for executive
officers. In addition, the performance of each executive officer is evaluated
annually and salary adjustments are also based on various factors including
revenue growth, earnings per share improvement, increases in cash flow, new
product development, market appreciation for publicly traded securities,
reduction of debt, personal performance and position in the salary study or
survey range. The Committee approves base salary adjustments for the Named
Executive Officers, including the chief executive officer.
In fiscal 1996, the Committee increased the chief executive officer's base
salary to $430,000, effective May 1, 1996. The increase was based primarily on
an evaluation of salaries for chief executive officers of comparable companies,
as indicated in an independent salary survey, and was set to approximate the
50th percentile amount in such salary survey. In addition, Mr. Jones played a
major role in integrating new acquisitions into the Company's existing
businesses, successfully managed the Company through a major reorganization and
developed sound strategic and operating plans for the Company's future. No
specific weighting was assigned to any of these factors in determining the base
salary increase.
Cash Incentive Compensation. To reward performance, the chief executive
officer and other executive officers are eligible for annual cash bonuses.
Target bonuses for each of the Company's executive officers generally
approximate the 50th percentile amount in the salary survey for the
corresponding position, with the ability to earn additional amounts based upon
performance. Generally, these additional amounts have approximated the 75th
percentile. The actual amount of incentive compensation paid to each executive
officer is predicated on the financial performance of the Company and an
assessment of each participant's relative role in achieving the annual financial
objectives of the Company as well as each such person's contributions of a
strategic nature in maximizing shareholder value and may vary from the target
amounts in the discretion of the Committee. Bonuses are calculated first, by
reviewing corporate performance and determining, based on such performance, what
percentage of the target compensation each of the executive officers, including
the chief executive officer, should receive; and second, by reviewing previously
established individual goals for each executive officer. Corporate performance
and individual goals each comprise a pre-set percentage of annual cash incentive
compensation. Actual bonuses for fiscal 1996 for the chief executive officer and
several of the other Named Executive Officers approximated the 50th percentile
in the salary survey, based on actual corporate performance and the attainment
of individual goals.
Stock-Based Incentives. The Committee also utilizes stock-based incentives
which attempt to reflect the executive's potential impact on corporate financial
and operational performance. The first of these, the Employee Plan, is a
long-term stock incentive program for the executive officers and key employees.
The basic
13
<PAGE> 17
objective of this plan is the specific and solid alignment of executive and
stockholder interests by forging a direct relationship between this element of
compensation and the stockholders' level of return. This program represents a
desire by the Company to permit executives and other key employees to obtain an
ownership position and a proprietary interest in the Company's Common Stock.
Under the Employee Plan, approved by the stockholders, stock option grants are
approved periodically by the Committee. Stock options granted under the plan
have an exercise price equal to the market price of the Common Stock on the date
of grant, expire after ten years, and, after two years, vest 25% annually.
During 1995, the Board of Directors adopted two other long-term incentive
programs for the chief executive officer, other executive officers and certain
other key employees. The Company's 1995 Equity Incentive Plan (the "Incentive
Plan") is intended to provide performance- and retention-based stock incentives
for the chief executive officer and up to three additional executive officers.
The objective of this plan is similar to that of the Employee Plan, in that it
seeks to align senior executive and stockholder interests by forging a direct
relationship between stock-based compensation and stockholders' level of return
as measured by increases in stock price and earnings per share. The Incentive
Plan provides for three types of stock grants, each of which has separate
criteria for vesting but all of which are subject to the continued employment of
the executive. The first type of stock grant, time-lapse restricted stock, is
intended as the primary retention device and vests ratably four, five and six
years after the date of grant. Performance-contingent restricted stock granted
under the Incentive Plan is earned by the executive in increments based on
specified increases in stock price over the market price on the date of grant.
Once earned, performance-contingent restricted stock vests in full three years
from the date on which it is earned, provided, however, that no
performance-contingent restricted stock may vest less than five years from the
date of grant. The third type of stock grant, performance shares, are earned at
the end of the fourth full fiscal year following the date of grant based on
increases in earnings per share. The executive may earn a range of performance
shares based on the level of the increase in earnings. Once earned, these shares
vest ratably one, two and three years after the earned date. The executives have
voting rights and earn dividends with respect to time-lapse restricted stock and
earned performance-contingent restricted stock and performance shares.
Awards under the Incentive Plan have been made to four executives,
including the chief executive officer. In determining the size of each grant,
the Committee considered past performance of the executive, the performance of
the Company, the size of similar grants made to chief executive officers and
other senior executives at companies similar in size to the Company and the key
role the executive is expected to play in the Company's future success. To earn
all of the shares granted pursuant to the Incentive Plan, the executive must
remain in the employ of the Company for at least seven years and the Company
must achieve aggressive earnings per share and stock price appreciation goals
over specified periods of time.
The Committee intends grants under the Incentive Plan to qualify as
performance-based compensation pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended ("Section 162(m)") so that all such
compensation will be deductible by the Company. Section 162(m) qualification
requires, among other factors, the administration of the Incentive Plan by
"outside directors," as that term is defined in the current regulations
promulgated pursuant to Section 162(m). Accordingly, the Committee has
designated two of its members, Messrs. Sheehan and Lefton, each of whom qualify
as "outside directors" under such regulations, as the committee responsible for
administering the Incentive Plan. The Committee may also, from time to time,
take such additional measures as are appropriate to ensure compliance of the
Incentive Plan with Section 162(m). Other than in respect of the Incentive Plan,
the Committee has not adopted a policy with respect to compliance with Section
162(m) for other compensation payable to covered executive officers.
14
<PAGE> 18
The Company's 1995 Restricted Stock Bonus Plan is intended to permit
executives and other key employees to obtain a proprietary interest in the
Company's Common Stock and to increase the retention of such executives by
providing an economic incentive to remain with the Company. Pursuant to this
plan, executives designated by the Committee as eligible to participate may
elect to receive up to 50% of their annual cash incentive compensation in
restricted stock. The executive receives stock having a value of 120% or 135% of
the bonus deferred by selecting a three or five year period of restriction,
respectively. The restricted stock then vests ratably over such three or five
year period, subject to the executive's continued employment with the Company.
Compensation Committee
Dennis W. Sheehan, Chair
James C. Janning
Robert E. Lefton
Donald E. Nickelson
15
<PAGE> 19
PERFORMANCE GRAPH
The following table presents the cumulative return for the Company, the
CRSP Index for Nasdaq Stock Market (U.S. Companies) and an index comprised of
six companies traded on various exchanges which the Company believes to present
a representative peer group of the Company. The Nasdaq Stock Market and the peer
group data have been provided by the Center for Research in Security Prices,
Chicago, Illinois, without independent verification by the Company.
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
CRSP INDEX FOR
NASDAQ STOCK
MEASUREMENT PERIOD GREENFIELD MARKET (US SELF-DETERMINED
(FISCAL YEAR COVERED) INDUSTRIES, INC. COMPANIES) PEER GROUP
<S> <C> <C> <C>
7/30/93 100.000 100.000 100.000
12/31/93 132.066 110.427 120.078
6/30/94 124.365 100.838 104.566
12/30/94 153.440 107.940 108.775
6/30/95 185.824 134.598 133.421
12/29/95 200.672 152.549 135.135
6/28/96 212.390 172.823 133.445
12/31/96 197.757 187.765 132.441
</TABLE>
Companies in the Self-Determined Peer Group:
<TABLE>
<S> <C>
Cincinnati Milacron, Inc. Kennametal Inc.
Devlieg-Bullard Inc. Regal-Beloit Corporation
Giddings & Lewis, Inc. The L.S. Starrett Company
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to 100.0 on 7/30/93 .
16
<PAGE> 20
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of information furnished
to the Company, reports filed through the Company and representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent beneficial owners
were complied with during the year ended December 31, 1996, except that Peter K.
Hunt, an executive officer of the Company, failed to timely file one Form 4
relating to the acquisition of 100 shares of the Company's Common Stock by his
daughter.
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
On January 26, 1994, the Company entered into an Operations Consulting and
Advisory Services Agreement (the "HGL Services Agreement") with Harbour Group
Ltd. ("HGL"), pursuant to which HGL provides management consulting services to
the Company for a one year term, which term will automatically renew from year
to year until terminated by the Company or HGL upon 30 days' notice. Certain of
the Company's directors serve as executive officers or directors of HGL or its
affiliates. Specifically, Mr. Janning serves as an executive officer and Mr.
Nickelson serves as a director of HGL. In addition, Mr. Finley serves as an
executive officer of an affiliate of HGL. Under the HGL Services Agreement, the
Company compensates HGL for management consulting services at HGL's approximate
costs incurred in performing such services. The HGL Services Agreement was
amended and restated on March 20, 1996 to provide that management consulting
services performed thereunder be compensated pursuant to a set fee schedule. The
Company also entered into a Corporate Development Consulting and Advisory
Services Agreement (the "HGI Services Agreement") with Harbour Group Industries,
Inc. ("HGI") on January 26, 1994 pursuant to which HGI provides corporate
development services to the Company for a one year term, which term will
automatically renew from year to year until terminated by the Company or HGI
upon 30 days' notice. Two of the Company's directors, Messrs. Finley and
Nickelson, serve as executive officers of HGI. In addition, Mr. Janning serves
as an executive officer of an affiliate of HGI. Under the HGI Services
Agreement, the Company compensates HGI for corporate development services by
paying an annual fee equal to the greater of $100,000 or HGI's approximate costs
incurred in performing such services, plus a transaction fee equal to an amount
which ranges from 2.5% of the first $1 million of the purchase price to 0.5% of
the portion of the purchase price in excess of $4 million for each completed
acquisition or disposition by the Company in which HGI performs services during
the term of the HGI Services Agreement, subject to a minimum fee per transaction
of $125,000. On March 20, 1996 the HGI Services Agreement was amended and
restated to eliminate the minimum annual fee and to provide that corporate
development services performed thereunder be compensated pursuant to a set fee
schedule. In addition, under the amended and restated HGI Services Agreement,
the Company may receive fees for the performance of corporate development
services for HGI.
The terms of the HGL Services Agreement were determined by HGL and the
Company to preserve the historical arrangement between the Company and HGL
whereby HGL provided the Company with management consulting and advisory
services at approximate cost prior to the Company's initial public offering in
1993. The terms of the HGI Services Agreement were determined in part to
reimburse HGI for the estimated approximate annual cost of HGI personnel engaged
in performing services for the Company thereunder and in part with reference to
customary formulas utilized by financial advisors for providing acquisition
and/or divestiture-related services. The Company believes that the rates agreed
to by the Company and HGI under such HGI Services Agreement is less than the
rate customarily charged by other
17
<PAGE> 21
financial advisory service providers. The terms of each of these arrangements
and the method of establishing the fees payable thereunder have been reviewed
and approved by the Company's Audit Committee, whose membership consists of a
majority of directors who are neither employees of the Company nor affiliates of
HGL or HGI. Fees totalling approximately $53,000 and $580,000 were paid by the
Company to HGL and HGI, respectively, during the year ended December 31, 1996.
On August 5, 1994, the HGL Services Agreement was amended to confirm that
the agreement applied to services relating to the feasibility of conducting
manufacturing operations in Russia and other emerging market countries, as well
as services incident thereto. On December 9, 1994, the Company entered into a
letter agreement (the "HGTC Agreement") with Harbour Group Trading Corp.
("HGTC"), an affiliate of HGL and HGI, providing for the procurement of tungsten
carbide and other materials. Under the terms of the HGTC Agreement, HGTC is
entitled to receive, for the first two years of the agreement's term, a fee from
the Company equal to 15% of the pre-tax savings realized by the Company based
upon material purchases through HGTC. The HGTC Agreement also sets forth an
understanding whereby the Company and HGTC would collectively explore the
possibility of establishing a joint venture for the procurement of raw materials
and, in connection therewith, share certain expenses. The terms of these
arrangements were established by negotiation between the Company and HGTC and
have been reviewed and approved by the Company's Audit Committee. No fees were
paid by the Company under the HGTC Agreement during the fiscal year ended
December 31, 1996.
The Company believes that each of the related party transactions described
herein was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
In connection with the acquisition of Rule Industries, Inc. ("Rule"), the
Company loaned Henry G. Libby, an officer of Rule and Senior Vice
President -- Consumer Products Group of the Company since the Rule acquisition,
approximately $291,000 in 1995 for the payment of withholding taxes incurred by
Mr. Libby in connection with the exercise of options to purchase an aggregate of
100,000 shares of Rule common stock. The loan bore interest at 8% and was paid
in full on April 4, 1996. The Company also paid in 1996 approximately $222,000
in obligations of The Disston Company ("Disston"), an entity wholly-owned by Mr.
Libby. In connection with the acquisition of Rule, the Company assumed certain
obligations of Rule to Disston for the payment of expenses associated with the
conduct of an arbitration proceeding as well as certain expenses related to
maintenance of a facility owned by Disston. Disston was dissolved in 1996 and
the Company has no further obligations to Disston pursuant to undertakings made
in connection with the acquisition of Rule.
Various members of management of the Company and its subsidiaries acquired
common stock of the Company and its predecessors at prices determined by the
Board of Directors of such companies, and the purchase price therefor was paid
partly in cash and partly by delivery of promissory notes payable to the Company
secured by the purchased shares. Such notes have a ten-year maturity, bear
interest at fixed rates of interest from 6.39% to 10% per annum and are payable
interest only annually, with one principal payment at maturity. In connection
with such promissory notes, the companies agreed to pay annual bonuses to such
stockholders in amounts equal to the annual interest payments on the notes plus
all federal and state income taxes applicable to such payments. Each such
stockholder entered into separate agreements with the companies and Harbour
Group Investments, L.P., formerly a controlling stockholder of the Company (the
"Stockholder Agreements"), providing for, among other things, restrictions on
transfer of such shares, registration rights with respect to such shares, the
mandatory repurchase of such shares upon termination of the holder's employment
at a price based on a predetermined formula and a right of first refusal for the
companies in the event of a bona fide offer from a third party. In connection
with the consolidation of certain cutting tool companies owned by Harbour Group
Investments, L.P. into the Company, the Company amended the Stockholder
Agreements to eliminate substantially all of their provisions except those
relating to noncompetition and confidentiality. The Company also amended each of
the promissory notes issued in connection with purchases of common stock of the
cutting tool companies to permit partial prepayments.
18
<PAGE> 22
At December 31, 1996, the following executive officer and directors had
promissory notes in excess of $60,000 outstanding to the Company, each of which
were issued in connection with the acquisition of Common Stock by such executive
officer or director. Set forth below is certain information with respect to such
promissory notes.
<TABLE>
<CAPTION>
BALANCE
HIGHEST OUTSTANDING
BALANCE AT INTEREST DUE
STOCKHOLDER POSITION OUTSTANDING 12/31/96 RATE DATE
- ----------- -------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Paul W. Jones............. President and Chief $82,270 $82,270 8.1% 12/31/99
Executive Officer;
Director 66,263 66,263 6.5 4/26/03
James C. Janning.......... Director 10,736 10,736 10.0 5/31/98
26,374 26,374 6.5 4/26/03
20,608 20,608 10.0 5/31/98
15,920 15,920 9.4 4/15/99
7,920 7,920 10.0 5/31/98
19,354 19,354 9.4 4/15/99
</TABLE>
APPROVAL OR DISAPPROVAL OF AMENDMENTS TO THE COMPANY'S
AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
The Board of Directors of the Company recently adopted amendments to the
Employee Plan, subject to shareholder approval, to increase the number of shares
for which stock options may be granted thereunder to 2,000,000 shares (subject
to adjustment in the event of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares or the
like) and to change certain provisions in connection with recent SEC regulatory
amendments. Currently, the Employee Plan provides for the granting of
non-qualified and incentive stock options (the "Options") for up to 1,000,000
shares (subject to adjustment in the event of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like) of the Common Stock to certain key employees of the Company
and its subsidiaries (the "Optionees"). Incentive options are intended to
qualify as options described in Section 422 of the Internal Revenue Code of
1986, as amended. A key employee is one upon whose effort the Company is
dependent for the successful conduct of its business. All officers and key
salaried employees are eligible to participate in such Employee Plan subject to
the Board of Directors' discretion to designate employees who are to receive
Options. As of the date hereof, approximately 200 employees are eligible to
participate in the Employee Plan.
CURRENT EMPLOYEE PLAN
If any outstanding Options under the Employee Plan for any reason expire or
are terminated, the shares of Common Stock subject to the unexercised portion of
such Option or Options are again available for grants under the Employee Plan as
if no Option had been granted with respect to such shares. There is no
restriction on the number of Options or the maximum number of shares that may be
granted to one person. However, the aggregate fair market value (determined as
of the date an Option is granted) of the shares with respect to which incentive
stock options are exercisable by any single employee during any calendar year
cannot exceed $100,000.
The Employee Plan is administered by the Board of Directors. Within the
limitations of the Employee Plan, the Board will determine the individuals, if
any, to whom Options shall be granted, the period or periods of exercisability
of each Option, the number of shares subject to each Option, the Option price,
and all other terms, including any reload options. No Options may be granted
after July 1, 2004.
No payments or contributions are required to be made by the Optionees other
than in connection with the exercise of the Options. An Optionee may exercise
each Option granted to such Optionee in such installments as the Board shall
determine at the time of the grant thereof. Except as otherwise set forth in the
Employee
19
<PAGE> 23
Plan or the applicable non-qualified stock option agreement or incentive stock
option agreement, an Option may be exercised in whole or in part at any time or
from time to time. Upon exercise of an Option, the purchase price therefor shall
be payable in full in cash or upon such terms as determined by the Board within
the limitations of the Employee Plan. Options are nontransferable and subject to
forfeiture or limitations upon termination of employment, as set forth therein.
The purchase price for shares of Common Stock to be purchased upon the
exercise of Options shall be established by the Board of Directors. Except as
otherwise set forth in the Employee Plan, the Option price shall not be less
than the fair market value of the Common Stock on the date of grant, which is
presently equal to the last transaction price per share as reported by the
Nasdaq Stock Market on that date.
The Board may, in its discretion, terminate or suspend the Employee Plan at
any time. The Board may also amend or revise the Employee Plan, or the terms of
any Option granted under the Employee Plan, without shareholder approval,
provided that such amendment or revision does not, except as otherwise
permitted, increase the number of shares reserved for issuance under the
Employee Plan, change the purchase price established, or expand the category of
individuals eligible to participate in the Employee Plan. No amendment,
suspension, or termination shall alter or impair any rights or obligations under
any Option previously granted without the consent of the Optionee.
AMENDMENTS TO THE EMPLOYEE PLAN
The amendments to the Employee Plan increase the number of shares for which
stock options may be granted to 2,000,000 shares (subject to adjustment in the
event of a merger, consolidation, recapitalization, reclassification, stock
split, stock dividend, combination of shares or the like). In accordance with
certain regulatory changes recently promulgated by the SEC, the amendments also
eliminate the requirement that certain amendments to the Employee Plan be
approved by stockholders.
TAX AND OTHER INFORMATION
Under current federal income tax laws, the grant of a non-qualified Option
pursuant to the Employee Plan generally has no tax effect on the Company or the
Optionee. Exercise of a non-qualified Option under the Employee Plan will result
in taxable compensation income to the Optionee in the amount by which the fair
market value of the Common Stock issued pursuant to the exercise, at the time of
the exercise, exceeds the purchase price of such Common Stock under the
non-qualified Option, and the Company generally will be entitled to a tax
deduction equal to the amount of compensation income taxable to the Optionee
upon exercise of a non-qualified Option. Any transfer of Common Stock acquired
upon exercise of a non-qualified Option may result in taxable income.
The grant of an incentive Option pursuant to the Employee Plan generally
has no tax effect on the Company or the Optionee. Exercise of an incentive
Option under the Employee Plan will not be subject to the regular federal income
tax, but may be subject to the alternative minimum tax. The Company will not be
entitled to a tax deduction upon the exercise of an incentive Option. Any
transfer of Common Stock acquired upon exercise of an incentive Option may
result in taxable income, and the character of any such income as capital gain
or ordinary income will depend on whether certain holding period requirements
have been satisfied.
Information relating to the Employee Plan and the amendments thereto is
qualified in its entirety by reference to the Employee Plan, as amended, which
is incorporated in full by reference thereto. Copies of the Employee Plan, as
amended, are available at no charge upon written request directed to Greenfield
Industries, Inc., 2743 Perimeter Parkway, Building 100, Suite 100, Augusta,
Georgia 30909, Attention: Roger B. Farley, Vice President -- Human Resources.
The Board of Directors recommends voting "FOR" the amendments to the
Employee Plan.
20
<PAGE> 24
PLAN BENEFITS UNDER THE EMPLOYEE PLAN
As of March 21, 1997, the market value of the Common Stock underlying the
Options was $22.75. Within the limitations of the Employee Plan, the Board has
sole discretion in granting Options under the Employee Plan. Therefore, the
benefits of any Options to be granted, if any, to the Named Executive Officers,
to the current directors, to each nominee for election as a director, to each
associate of any such directors, executive officers or nominees, to each other
person who may receive five percent of such Options, and to all other employees
who are not Named Executive Officers are not determinable.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Price Waterhouse LLP to be the
independent auditors of the Company for the year ending December 31, 1997.
A representative of Price Waterhouse LLP is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions.
The Board of Directors recommends voting "FOR" approval and ratification of
such selection.
OTHER INFORMATION
On February 6, 1996, the Board of Directors declared a dividend
distribution of a right to purchase one one-hundredth of a share of Series A
Preferred Stock (a "Right") to each share of Common Stock outstanding at the
close of business on February 20, 1996 at an exercise price of $150.00 per
Right. The Rights will be exercisable only if a person or group acquires 15% or
more or the outstanding Common Stock of the Company or announces a tender offer
following which it would hold 15% or more of such outstanding Common Stock. When
exercisable, the Rights entitle the holders, other than the acquiring person, to
purchase Common Stock having a market value of two times the exercise price of
the Right. If, following the acquisition by a person or group of 15% or more of
the Company's outstanding shares of Common Stock, the Company were acquired in a
merger or other business combination, each Right would be exercisable for that
number of the acquiring company's shares having a market value of two times the
exercise price of the Right. The Company may redeem the Rights at one cent per
Right at any time until ten days following the occurrence of an event that
causes the Rights to become exercisable. The Rights expire in ten years.
The foregoing description of the Rights is qualified in its entirety by the
terms of the Rights Agreement dated February 6, 1996 between the Company and
First Chicago Trust Company of New York, as Rights Agent, a copy of which has
been filed as an exhibit to the Company's Current Report on Form 8-K dated
February 6, 1996 which is incorporated herein by reference thereto.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by officers, directors and
regular employees of the Company personally or by telephone or facsimile for no
additional compensation. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to forward solicitation material to
beneficial owners of the Common Stock held of record by such persons, and the
Company will reimburse such persons for their reasonable out-of-pocket expenses
incurred by them in so doing. The Company has engaged MacKenzie Partners, Inc.
to solicit proxies in connection with this Proxy Statement, and employees of
that company are expected to solicit proxies in person, by telephone and by
mail. The anticipated cost to the Company of such solicitation is not expected
to exceed $10,000, plus reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The rules of the SEC currently provide that stockholder proposals for the
1998 Annual Meeting must be received at the Company's principal executive office
not less than 120 calendar days prior to the anniversary
21
<PAGE> 25
date of the release of the Company's proxy statement to stockholders in
connection with the 1997 Annual Meeting to be considered by the Company for
possible inclusion in the proxy materials for the 1998 Annual Meeting.
Accordingly, any proposal received by the Company on or before November 26, 1997
will be considered for possible inclusion in the proxy materials for the 1998
Annual Meeting.
FINANCIAL INFORMATION
The Company's 1996 Annual Report is being mailed to the stockholders on or
about the date of mailing this Proxy Statement. The Company will provide,
without charge, to any record or beneficial stockholder as of March 21, 1997,
who so requests in writing, a copy of such 1996 Annual Report or the Company's
1996 Annual Report on Form 10-K (without exhibits), including the financial
statements and the financial statement schedules, filed with the SEC. Any such
request should be directed to Greenfield Industries, Inc., 2743 Perimeter
Parkway, Building 100, Suite 100, Augusta, Georgia 30909, Attention: Gary L.
Weller, Senior Vice President, Chief Financial Officer and Secretary.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters to
come before the meeting. If any other matters should come before the meeting,
the persons named in the enclosed proxy intend to vote the proxy according to
their best judgment.
You are urged to complete, sign, date and return your proxy to make certain
your shares of Common Stock will be voted at the Annual Meeting. For your
convenience in returning the proxy, an addressed envelope is enclosed, requiring
no additional postage if mailed in the United States.
By Order of the Board of Directors,
/s/ Gary L. Weller
Gary L. Weller
Senior Vice President, Chief Financial
Officer and Secretary
March 27, 1997
22
<PAGE> 26
APPENDIX A
AMENDED AND RESTATED
GREENFIELD INDUSTRIES, INC.
EMPLOYEE STOCK OPTION PLAN
ARTICLE I
INTRODUCTION
1. Adoption and Purpose.
---------------------
a. Greenfield Industries, Inc., a Delaware corporation (the "Company"),
hereby adopts this Greenfield Industries, Inc. Employee Stock Option Plan
(the "Plan"), dated July 1, 1993 and reserves from the authorized but unissued
shares of its Common Stock, par value $0.01 per share (the "Common Stock"), a
total of 2,000,000 shares (the number of such shares being subject to
adjustment as provided in Article III hereof) for issuance pursuant to the
Plan, all on the terms set forth in the Plan.
b. The purpose of the Plan is to provide selected key employees of the
Company, key employees of any subsidiary corporation or parent corporation
of the Company now existing or hereafter formed or acquired, upon whose efforts
the Company is dependent for the successful conduct of its business, an
opportunity to obtain a proprietary interest in the Company, to increase such
proprietary interest, or to benefit from the appreciation in the value of the
Common Stock. The Plan will provide a means for such selected key employees to
purchase shares of Common Stock pursuant to non-qualified stock options
(the "Non-Qualified Options") and for such key employees to purchase shares of
common stock pursuant to incentive stock options (the "Incentive Options,"
and, together with the Non-Qualified Options, the "Options"). Incentive
Options are intended to qualify as options described in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), but the Company
makes no warranty as to the qualification of any Option as an Incentive Option.
c. As used in the Plan, the terms "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within
the definition of such terms contained in Sections 424(f) and 424(e) of the
Code.
d. Shares issued pursuant to the Plan shall be fully paid and
nonassessable.
<PAGE> 27
2. Administration.
--------------
a. The Plan shall be administered by the Board of Directors (the "Board")
or such committee thereof as may be appointed from time to time by the Board
of Directors. Any such committee shall consist of two or more individuals who
shall be members of the Board and shall be comprised solely of directors
who are "Non-Employee Directors" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Any reference to the Board of Directors contained herein shall mean and
include any such duly authorized committee thereof.
b. Subject to the terms and conditions of the Plan, the Board shall have
full and complete discretionary authority: (i) to construe and interpret
the Plan; (ii) to define the terms used herein; (iii) to prescribe,
amend and rescind rules and regulations relating to the Plan; (iv)
subject to the conditions set forth in the Plan, to determine the individuals,
if any, to whom Options shall be granted (the "Optionees"), the time or times
at which Options shall be granted, the period or periods of exercisability of
each Option, the number of shares to be subject to each Option, and the
Option price; and (v) to make all other determinations necessary or advisable
for the administration of the Plan. All determinations and interpretations
made by the Board shall be binding and conclusive on all Optionees and on their
legal representatives and beneficiaries.
c. In making any determination as to the individuals to whom Options shall
be granted under the Plan and as to the number of shares of Common Stock to
be covered by such Options, the Board shall take into account the duties of
the respective individuals, their length of service, their amount of earnings,
their present and potential contributions to the success of the Company,
and such other factors as the Board shall deem relevant in connection with
accomplishing the purposes of the Plan; provided, however, that no
participant shall be granted Incentive Options in any calendar year to
purchase shares of stock in the Company or in any subsidiary corporation
or parent corporation of the Company in excess of the maximum allotment
described in Section 5 of Article II of the Plan.
d. No member or former member of the Board shall be liable for any action
or determination made in good faith with respect to the Plan or any
Option granted hereunder.
<PAGE> 28
ARTICLE II
STOCK OPTIONS
-------------
1. Eligibility; Participation; Special Limitations.
-----------------------------------------------
a. Key employees of the Company, or of any subsidiary corporation or
parent corporation of the Company, including directors who are employees,
except as otherwise provided in the Plan, shall be eligible to receive
Non-Qualified and Incentive Options under the Plan. The Board may determine
by resolution that certain employees or classes of employees are not
eligible to receive Options under the Plan. An individual who has been
granted an Option may, if otherwise eligible, be granted additional Options
if the Board shall so determine, provided, however, the number of
Incentive Options which may be granted to an individual shall not exceed the
maximum allotment described in the Plan.
b. At the time a Non-Qualified Option is granted, there shall be a written
non-qualified stock option agreement (the "Non-Qualified Stock
Option Agreement") between the participant and the Company setting forth the
terms and exercise periods with respect to the Non-Qualified Options granted.
c. At the time an Incentive Option is granted, there shall be a written
incentive stock option agreement (the "Incentive Stock Option
Agreement") between the participant and the Company setting forth the terms
and exercise periods with respect to the Incentive Options granted.
d. Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or the shareholders of the Company, and no action taken
by the Board, shall entitle a person to receive or have a right to receive
any Option unless and until the Optionee has executed and delivered to the
Company a Non-Qualified Stock Option Agreement or an Incentive Stock Option
Agreement with respect to such option.
2. Option Price.
------------
a. The initial per share option price of any Non-Qualified Option shall be
established by the Board, provided that the option price shall not be less
than the fair market value of the Common Stock on the date of grant.
b. The per share exercise price of any Incentive Option shall not be less
than the fair market value of the Common Stock on the date of grant;
provided, however, that, in the case of a participant who owns more than ten
percent (10%) of the total combined voting power of all classes of stock in the
Company, or to the extent applicable, any subsidiary corporation or parent
corporation of the Company at the time an Incentive Option is granted to the
participant (a "10% Shareholder"), the initial per share option price
shall not be less than one hundred ten percent (110%) of the fair market
value of the Common Stock on the date of grant.
<PAGE> 29
c. For the purposes of this Section, the fair market value of a share of
Common Stock on any date shall be equal to the closing sale price of a share
of the Common Stock as published by a national securities exchange on which
the shares of the Common Stock are traded on such date or, if there is no
sale of the Common Stock on such date, the average of the bid and asked
prices on such exchange at the close of trading on such date or, if shares of
Common Stock are not listed on a national securities exchange on such date but
are authorized for quotation in the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market System ("NMS"), the last
transaction price per share as reported by NASDAQ NMS on such date or, if
shares of Common Stock are not authorized for quotation in NASDAQ NMS on such
date, the average of the bid and asked prices in the over the counter market
or, if the Common Stock is not listed on a national securities exchange,
quoted in NASDAQ NMS or quoted in the over the counter market, the fair market
value of a share of the Common Stock on such date as shall be determined in
good faith by the Board. In rendering its determination of the Common
Stock's fair market value, the Board shall comply with Section 422(b)(4) of
the Code and the applicable regulations promulgated thereunder.
d. For purposes of the Plan, the determination of the Board of the fair
market value of a share shall be conclusive.
3. Term During Which Options May Be Granted.
----------------------------------------
No Option may be granted after the date on which Options granted to all
Optionees shall equal 2,000,000 shares of Common Stock (the number of
such shares being subject to adjustment as provided in Article III hereof).
If an Option shall expire or terminate without having been exercised in
full, any shares of Common Stock covered by that Option which are not
purchased may be added to the shares otherwise available for Options to be
granted pursuant to the Plan. Notwithstanding any other provision of this
Plan to the contrary, any Option granted pursuant to this Plan must be granted
within ten (10) years from the earlier of the date the Plan is adopted
by the Board or the date of shareholder approval described in Section 4 of
Article IV.
4. Term During Which Options May be Exercised.
------------------------------------------
Participants shall be granted Options for such term as the Board shall
determine. The term of any Option which is an Incentive Option shall not
exceed ten (10) years from the date of the granting thereof; provided,
however, in the case of a participant who is a 10% Shareholder at the time an
Incentive Option is granted to the participant, the term with respect to
such Incentive Option shall not be in excess of five (5) years from the
granting thereof.
5. Maximum Allotment of Incentive Options.
--------------------------------------
The aggregate fair market value of the shares of Common Stock (determined
on the date of grant) for which a participant may be granted Incentive
Options which are exercisable for the first time in any particular
calendar year (whether under the terms of the Plan or any other stock
option plan of the Company, its parent corporation or any subsidiary
corporation) shall not exceed $100,000. To the extent any Option which is
intended to be an Incentive Option is granted to any participant fails to
satisfy the requirements of this Section, the Incentive Option shall be
treated as a Non-Qualified Option. This Section shall be applied by taking
Options into account in the order in which they are granted.
<PAGE> 30
6. Exercise of Options.
-------------------
a. A participant may exercise each Option granted to the participant
in such installments as the Board shall determine at the time of the grant
thereof.
b. Except as otherwise set forth in the Plan or the applicable
Non-Qualified Stock Option Agreement or Incentive Stock Option Agreement,
an Option may be exercised in whole or in part at any time or from time to
time.
c. An option may be exercised only by a written notice of intent to
exercise such Option with respect to a specified number of shares of the
Common Stock and payment to the Company of the amount of the Option price
for the number of shares of the Common Stock so specified: provided, however,
that, if the Board shall in its sole discretion so determine at the time of
the grant or exercise of any Option, all or any portion of such payment may
be made in kind by the delivery of shares of the Common Stock having a fair
market value, on the date of delivery (as determined in the manner set forth
in Section 2(c) of this Article), equal to the portion of the Option price
so paid. Options granted pursuant to the Plan shall be exercised by the
Optionee as to all or part of the shares covered thereby by giving written
notice of the exercise thereof to the corporate secretary of the Company at
the principal business office of the Company, specifying the number of
shares to be purchased and accompanied by payment of the full purchase
price therefor: (i) in cash or by certified or official bank check, (ii) if
the Board in its sole discretion determines under this Section 6(c) of Article
II of the Plan, in shares of Common Stock, valued as of the date of
exercise, of the same class as those to be granted by the exercise of the
Option, or (iii) if the Board in its sole discretion determines, in a
combination of the methods described in (i) and (ii) above. The Company will
deliver the shares being purchased within five business days of receipt of
notice, payment and any other items required under this Plan or the
applicable Non-Qualified Stock Option Agreement or Incentive Stock Option
Agreement to exercise Options by an Optionee.
d. An Option may, in the discretion of the Board, include a reload stock
option right which shall entitle the Optionee, upon (i) the exercise of
such original Option prior to the Optionee's termination of employment
and (ii) payment of the appropriate exercise price in shares of Common Stock
that have been owned by such Optionee for at least six months prior to
the date of exercise, to receive a new option (the "Reload Option") to
purchase, at the fair market value on the date of the exercise of the original
Option, the number of shares of Common Stock equal to the number of whole
shares delivered by the Optionee in payment of the exercise price of the
original Option. Such Reload Option shall be subject to the same terms and
conditions, including expiration date, and shall be exercisable at the same
time or times as the original Option with respect to which it is granted,
except that in no event shall such Reload Option be exercisable within six
months of its date of grant.
e. To the extent that an Option is not exercised within the period of
exercisability specified in the applicable Non-Qualified Stock Option
Agreement or Incentive Stock Option Agreement, it shall expire as to the then
unexercised part.
f. In no event shall an Option granted pursuant to this Plan be
exercised for a fraction of a share.
<PAGE> 31
7. Transferability.
---------------
An Option granted pursuant to the Plan shall not be assignable or
transferable by the Optionee, either voluntarily or by operation of law,
other than by will or by the laws of descent and distribution. Each Option
granted to the Optionee may be exercised only by the Optionee, and after
the death of Optionee, only by the person or persons to whom the rights
under such Option pass by the laws of descent and distribution, all in
accordance with this Plan.
8. Termination of Employment.
-------------------------
a. Upon termination of employment of any participant with the Company and
all subsidiary corporations and parent corporations of the Company, any
Option previously granted to the participant, unless otherwise specified by
the Board, shall, to the extent not previously exercised, terminate and
become null and void provided that:
(i) if any participant shall die while in the employ of such corporation
or during either the three (3) month or one (1) year period, whichever
is applicable, specified in clause (ii) below and at a time when such
participant was entitled to exercise an Option as herein provided, the legal
representative of such participant, or such person who acquired such
Option by bequest or inheritance or by reason of the death of the
participant, may, not later than one (1) year from the date of death,
exercise such Option with respect to the number of shares as to which such
option was exercisable on the date of death, to the extent the Option has not
been exercised with respect to all such shares;
(ii) if the employment of any participant to whom such Option shall
have been granted shall terminate by reason of the participant's retirement
(at such age or upon such conditions as shall be specified by the Board),
disability (as described in Section 22(e)(3) of the Code) or dismissal by the
employer other than for cause (as defined below), and such participant is
entitled to exercise such Option on the date of death, retirement, disability
or dismissal, such participant shall have the right to exercise such
Option so granted, to the extent the Option has not been exercised, in
respect of any or all of such number of shares to which such Option has not
been exercised at any time up to and including (A) three (3) months
after the date of such termination of employment in the case of termination
by reason of retirement or dismissal other than for cause and (B) one (1) year
after the date of termination of employment in the case of termination by
reason of disability.
b. If an employee voluntarily terminates his or her employment, or is
discharged for cause, any Option granted hereunder shall, unless
otherwise specified by the Board, immediately terminate with respect to any
unexercised portion thereof. For the purposes of the plan, the term "for
cause" shall mean (i) with respect to an employee who is a party to a written
agreement with, or alternatively, participates in a compensation or benefit
plan of the Company or a subsidiary corporation or parent corporation of the
Company, which agreement or plan contains a definition of "for cause" or
"cause" (or words of like import) for purposes of termination of employment
thereunder by the Company or such subsidiary corporation or parent corporation
of the Company, "for cause" or "cause" as defined in the most recent of such
agreements or plans, or (ii) in all other cases, as determined by the Board
in its sole discretion, the term "for cause" shall mean: (A) the willful
commission by an employee of a criminal or other act that causes or is likely
to cause substantial economic damage to the Company or a subsidiary
corporation or parent corporation of the Company or substantial injury to the
business reputation of the Company or a subsidiary corporation or parent
corporation of the Company; (B) the commission by an employee of an act of
fraud in the performance of such employee's duties on behalf of the Company
or a subsidiary corporation or parent corporation of the Company; or (C) the
continuing willful failure of an employee to perform the duties of such
employee to the Company or a subsidiary corporation or parent corporation
of the Company (other than such failure resulting from the employee's
incapacity due to physical or mental illness) after written notice thereof
(specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to
the employee by the Board. For purposes of the Plan, no act, or failure to
act, on the employee's part shall be considered "willful" unless done or
omitted to be done by the employee not in good faith without reasonable
belief that the employee's action or omission was in the best interest of
the Company or a subsidiary corporation or parent corporation of the Company.
<PAGE> 32
c. For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the
time of the determination, the individual was an "employee" of such corporation
for purposes of Section 422 of the Code. If an individual is on military, sick
leave or other bona fide leave of absence such individual shall be considered
an "employee" for purposes of the exercise of an option and shall be
entitled to exercise such Option during such leave if the period of such
leave does not exceed 90 days, or, if longer, so long as the individual's
right to reemployment with the Company (or a related corporation) is
guaranteed either by statute or by contract. If the period of leave
exceeds ninety (90) days, the employment relationship shall be deemed to
have terminated on the ninety-first (91st) day of such leave, unless the
individual's right to reemployment is guaranteed by statute or contract.
d. A termination of employment shall not be deemed to occur by reason
of (i) the transfer of an employee from employment by the Company to
employment by a subsidiary corporation or a parent corporation of the
Company or (ii) the transfer of an employee from employment by a subsidiary
corporation or a parent corporation of the Company to employment by the Company
or by another subsidiary corporation or parent corporation of the Company.
e. Notwithstanding anything contained in this Plan to the contrary, no
person shall be entitled to exercise any Option after the period
of exercisability of such Option as specified in the applicable Non-Qualified
Stock Option Agreement or Incentive Stock Option Agreement.
f. The Board may in its discretion extend the period during which
a Non-Qualified Option may be exercised to such period, not to exceed three
years following the termination of a participant's employment or service
with the Company or subsidiary corporation or parent corporation of the
Company, as the Committee may determine in its discretion to be appropriate
in any particular instance.
9. Change of Position; Disclaimer of Rights
----------------------------------------
Except as otherwise provided in a Non-Qualified Stock Option Agreement
or Incentive Stock Option Agreement, any change of an Optionee's duties
or positions with the Company or with any subsidiary corporation or
parent corporation of the Company shall not affect the Optionee's right to
exercise Options granted pursuant to the Plan; provided, however, that no
provision in the Plan or any Option shall be construed to confer upon the
Optionee any right to be employed by the Company or any subsidiary
corporation or parent corporation of the Company, or to interfere in any
way with the right and authority of the Company or any subsidiary
corporation or parent corporation of the Company either to increase or decrease
the compensation of the Optionee, at any time, or to terminate any
relationship or employment between the Optionee and the Company or any
subsidiary corporation or parent corporation of the Company.
<PAGE> 33
10. Compliance with Law.
-------------------
Any person exercising an Option shall make such representations and
agreements and furnish such information as the Board may in its discretion
deem necessary or desirable to assure compliance by the Company, on terms
acceptable to the Company, with the provisions of the Securities Act of
1933, as amended (the "Securities Act"), and any other applicable legal
requirements.
11. Issuance of Certificates; Legends.
---------------------------------
a. Upon any exercise of an Option which may be granted hereunder and
payment of the Option's purchase price, a certificate for the shares of
Common Stock as to which the Option has been exercised shall be issued by the
Company in the name of the person exercising the Option and shall be
delivered to or upon the order of such person or persons. The Company may
endorse such legend or legends upon the certificates for shares issued
upon exercise of an Option granted hereunder and may issue such "stop
transfer" instructions to its transfer agent in respect of such shares as, in
its discretion, it determines to be necessary or appropriate to (i) prevent
a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, (ii) implement the provisions of the
Plan and any agreement between the Company and the Optionee with respect to
such shares, or (iii) permit the Company to determine the occurrence of a
disqualifying disposition, as described in Section 421(b) of the Code, of
shares transferred upon exercise of an Incentive Option granted under the
Plan.
b. The Company shall pay all issue or transfer taxes with respect to
the issuance or transfer of shares of Common Stock, as well as all fees and
expenses necessarily incurred by the Company in connection with such
issuance or transfer.
c. The Company, in its discretion, may postpone the issuance and
delivery of shares of Common Stock upon any exercise of an Option until
completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or
regulation as the Company may consider appropriate.
12. Listing of Shares and Related Matters.
-------------------------------------
If at any time the Board shall determine in its discretion that
the listing, registration or qualification of the shares of Common Stock
covered by the Plan upon any national securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of shares under the Plan, no Option
may be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board.
<PAGE> 34
ARTICLE III
STOCK ADJUSTMENTS
1. The provisions of this Article shall be applicable to any Non-Qualified
Option or Incentive Option awarded to any individual pursuant to Article II.
Any adjustment of an Incentive Stock Option under this Article shall be made in
such manner as not to constitute a "modification" within the meaning of
Section 424(h)(3) of the Code.
2. In the event that at any time after the effective date of the Plan
the outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the Board shall make an
appropriate and equitable adjustment in the number and kind of shares
as to which all outstanding Options granted pursuant to the Plan, or
portions thereof then unexercised, shall be exercisable, to the end that
after such event the shares subject to the Plan and each Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Any such adjustment made by the Board shall be final and binding upon
all Optionees, the Company, and all other interested persons.
3. Adjustments under this Article III shall be made by the Board, whose
determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding, and conclusive. No fractional shares of
Common Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.
ARTICLE IV
MISCELLANEOUS
1. Amendment and Termination of Plan.
---------------------------------
a. The Board may, in its discretion, at any time suspend or terminate
the Plan. The Board may also at any time amend or revise the terms of the
Plan or any Option granted under the Plan.
b. No amendment, suspension, or termination of the Plan shall, subject
to Article III hereof, alter or impair any rights or obligations under any
Option granted under the Plan without the consent of the Optionee.
2. Fees and Expenses.
-----------------
Except as otherwise provided in this Plan, the Company will pay any and
all fees and expenses necessarily incurred by the Company in connection
with the administration of the Plan.
<PAGE> 35
3. Withholding for Taxes.
---------------------
Any issuance of Common Stock pursuant to the exercise of an Option
under the Plan shall not be made until appropriate arrangements satisfactory
to the Board have been made for the payment of any tax amounts (federal,
state, local or other) that may be required to be withheld or paid by the
Company (or any subsidiary or parent thereof) with respect to such Optionee.
Such arrangements may, at the discretion of the Board, include allowing the
Optionee to tender to the Company shares of Common Stock owned by the
Optionee, which have an aggregate fair market value per share as of the date
of such withholding that is not greater than the sum of all tax amounts to be
withheld with respect thereto, together with payment of any remaining portion
of such tax amounts in cash or by check payable and acceptable to the Board.
Notwithstanding the foregoing, if on the date of an event giving rise to
a tax withholding obligation on the part of the Company the Optionee is an
officer or individual subject to Rule 16b-3, such tax withholding shall be
automatically effectuated by the Company withholding the necessary number of
shares of Common Stock (at the highest applicable marginal tax rate for
individuals) from such Option exercise.
4. Adoption and Effectiveness of Plan.
----------------------------------
The Plan shall be adopted by resolution of the Company's Board on
July 1, 1993, and shall be effective as of such date or a subsequent date set
forth in such resolution, subject to approval by the holders of a
majority of the outstanding shares of Common Stock of the Company within
one (1) year of such adoption. Prior to such shareholder approval, Options
may be granted under the Plan, but any such Option by its terms shall not be
exercisable prior to such approval. If the Plan is not approved by the
shareholders of the Company, the Plan shall terminate, and all Options granted
under the Plan shall terminate and become null and void.
5. No Obligation to Exercise Option.
--------------------------------
The granting of an Option shall impose no obligation on the Optionee
to exercise such Option.
6. Number; Gender.
--------------
Whenever used herein, nouns in the singular shall include the plural, and
the masculine pronoun shall include the feminine gender.
7. Partial Invalidity.
------------------
The invalidity of any provision contained in the Plan or any
Non-Qualified Stock Option Agreement, Incentive Stock Option Agreement or any
other documents or instrument evidencing the granting of an Option shall not be
deemed to affect the validity of any other provision contained in the Plan
or the applicable document.
8. Governing Law.
-------------
The Plan and any related documents or instruments shall be governed
and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed
by its authorized officers as of the 1st day of July, 1993, as amended and
restated on November 12, 1996 and as further amended on February 18, 1997.
<PAGE> 36
APPENDIX B
PROXY
GREENFIELD INDUSTRIES, INC.
Annual Meeting of Stockholders-May 6, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY
The undersigned acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement of Greenfield Industries, Inc. (the
"Company"), each dated March 25, 1997, and the Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and appoints Gary L.
Weller and Glenda K. Moehlenpah, or either of them, as the proxies and
attorneys-in-fact, with full power to each of substitution on behalf and in
the name of the undersigned to vote and otherwise represent all of the
shares registered in the name of the undersigned at the 1997 Annual Meeting of
Stockholders of the Company to be held on May 6, 1997 at 9:30 a.m.,
Eastern Time, at the Radisson Riverfront Hotel__Augusta, Two Tenth
Street, Augusta, Georgia 30901 and any adjournments thereof with the same
effect as if the undersigned were present and voting such shares on the
following matters and in the following manner:
1. To elect the following persons as directors of the Company to serve for
a term of one year or until their successors are elected and qualified:
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as marked to the contrary) to vote all nominees listed below
John W. Burge, Jr.
Peter S. Finley
Paul W. Jones
Robert E. Lefton
Donald E. Nickelson
Robert W. Pratt, Jr.
Julian M. Seeherman
Dennis W. Sheehan
2. To approve or disapprove amendments to the Companys Amended and
Restated Employee Stock Option Plan:
____ FOR ____ AGAINST ____ ABSTAIN
3. To ratify or reject the appointment of Price Waterhouse LLP as
independent auditors for the Company for the fiscal year ending December 31,
1997:
____ FOR ____ AGAINST ____ ABSTAIN
4. To transact such other business as may properly come before the meeting
or any adjournment thereof, according to the proxies discretion, and in their
discretion.
<PAGE> 37
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, "FOR"
PROPOSALS 2 and 3 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Date:_______________________, 1997
___________________________________
Name typed or printed
___________________________________
Signature
___________________________________
Capacity (Title or Authority, i.e.,
Executor, Trustee)
Please date and sign exactly as
your name(s) appears on the stock
certificate. If shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person. This proxy votes
all shares held in all capacities
unless otherwise specified.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. IN ADDITION, PLEASE MARK THE FOLLOWING BOX IF YOU
PLAN TO ATTEND THE MEETING.
