<PAGE>
[LETTERHEAD]
May 5, 1997
Dear Shareholder:
We cordially invite you to attend our 1997 Annual Meeting of Shareholders
to be held at 10:00 a.m. Pacific Daylight Time on Tuesday, June 3, 1997, at Hot
Rods by Boyd located at 10541 Ashdale Street, Stanton, California 90680,
adjacent to the Company's headquarters. Enclosed are the Notice of Annual
Meeting, Proxy Statement and a Proxy Card relating to the Annual Meeting which
we urge you to read carefully. Also enclosed is the Company's 1996 Annual
Report to Shareholders. Whether or not you expect to attend the Annual Meeting,
please sign and date the enclosed Proxy Card and return it as promptly as
possible to ensure that your shares will be voted.
ON BEHALF OF YOUR
BOARD OF DIRECTORS
/s/ Boyd Coddington
BOYD CODDINGTON
Chairman of the Board and
Chief Executive Officer
<PAGE>
BOYDS WHEELS, INC.
8380 Cerritos Avenue, Stanton, California 90680
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 3, 1997
TO THE SHAREHOLDERS OF
BOYDS WHEELS, INC.
Notice is hereby given that the Annual Meeting of Shareholders
(the "Annual Meeting") of Boyds Wheels, Inc., a California
corporation (the "Company"), will be held adjacent to the Company's
headquarters at Hot Rods by Boyd located at 10541 Ashdale St.,
Stanton, California 90680, on Tuesday, June 3, 1997, beginning at
10:00 a.m. Pacific Daylight Time. The Annual Meeting will be held
for the following purposes:
1. To elect directors of the Company to serve until the Annual
Meeting of Shareholders to be held in 1998, until such
directors' successors have been duly elected and qualified or
until such directors have otherwise ceased to serve as
directors.
2. To approve an amendment to the Company's 1995 Stock Option
Plan to increase the number of shares reserved for issuance
thereunder by 300,000 shares to an aggregate of 750,000
shares.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as
independent accountants for the Company for the fiscal year
ending December 31, 1997.
4. To transact other business that may properly come before the
meeting or any postponements or adjournments thereof.
The Board of Directors has fixed April 16, 1997 as the record
date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any postponements or
adjournments thereof, and only shareholders of record at the close
of business on that date are entitled to such notice and to vote at
the Annual Meeting. A list of shareholders entitled to vote at the
Annual Meeting will be available at the offices of the Company for
ten (10) days prior to the Annual Meeting.
We hope that you will use this opportunity to take an active
part in the affairs of the Company by voting on the business to
come before the Annual Meeting either by executing and returning
the enclosed Proxy Card or by casting your vote in person at the
Annual Meeting.
SHAREHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. A STAMPED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. IF
A SHAREHOLDER RECEIVES MORE THAN ONE PROXY CARD BECAUSE HE OR SHE
OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY
CARD SHOULD BE COMPLETED AND RETURNED.
By Order of the
Board of Directors
/s/ Boyd Coddington
BOYD CODDINGTON
Chairman of the Board
Stanton, California and Chief Executive Officer
May 5, 1997
<PAGE>
BOYDS WHEELS, INC.
------------------------------
8380 Cerritos Avenue
Stanton, California 90680
----------------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held JUNE 3, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Boyds Wheels, Inc., a California
corporation (the "Company"), for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 10:00 a.m. Pacific Daylight Time on Tuesday,
June 3, 1997, at Hot Rods by Boyd located at 10541 Ashdale St., Stanton,
California 90680, adjacent to the Company's headquarters, and any
postponements or adjournments thereof for the purposes set forth in the
accompanying Notice of Annual Meeting. This Proxy Statement and the accompanying
form of Proxy were first mailed to shareholders on or about May 5, 1997.
RECORD DATE AND VOTING
April 16, 1997 has been fixed as the record date (the "Record Date") for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, and any postponements or adjournments thereof. As of April 16, 1997,
there were 3,847,723 shares of the Company's common stock, no par value per
share (the "Common Stock"), issued and outstanding. No shares of the Company's
preferred stock, no par value per share, were outstanding as of that date. A
majority of the shares of Common Stock entitled to vote, present in person or
represented by proxy, will constitute a quorum at the meeting.
Each shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which such
shareholder's shares are entitled (one vote per share of Common Stock), or
distribute such votes on the same principle among as many candidates as the
shareholder chooses, provided that votes cannot be cast for more than five
candidates. However, no shareholder may cumulate votes unless the name of the
candidate or candidates for whom such votes would be cast has been placed in
nomination prior to voting. Any such shareholder must have given notice prior to
voting at the Annual Meeting of such shareholder's intention to cumulate votes.
The candidates receiving the highest number of votes up to the number of
directors to be elected will be elected. On all other matters, each share of
Common Stock has one vote. Abstentions are included in the determination of the
number of shares present and entitled to vote for purposes of determining the
presence of a quorum and of determining the outcome of any matter submitted to
the shareholders for a vote. Abstentions, however, do not constitute a vote
"for" or "against" any matter and thus will be disregarded in the calculation of
a plurality of "votes cast." Broker non-votes are counted as shares that are
present and entitled to vote for purposes of determining a quorum. If a broker
indicates on the proxy that it does not have discretionary authority to vote on
a particular matter as to certain shares, those shares will be counted for
purposes of determining the presence of a quorum but will not be treated as
present and entitled to vote with respect to that matter (even though such
shares are considered present and entitled to vote for quorum purposes and may
be entitled to vote on other matters).
<PAGE>
A shareholder giving a proxy has the power to revoke it at any time before it
is exercised by giving written notice of revocation to the Secretary of the
Company, by executing a subsequent proxy, or by attending the Annual Meeting and
voting in person. Subject to any such revocation, all shares represented by
properly executed proxies will be voted in accordance with the specifications on
the enclosed proxy card.
Unless otherwise instructed, proxies solicited by the Company will be voted
"FOR" the nominees named herein for election as directors, "FOR" the proposal to
increase the number of shares of the Common Stock reserved for issuance pursuant
to the Plan and "FOR" the ratification of the selection of Coopers & Lybrand
L.L.P. to provide audit services to the Company for the fiscal year ending
December 31, 1997.
ELECTION OF DIRECTORS
The Company's bylaws state that the Board of Directors shall consist of not
less than three nor more than five members. The specific number of Board
members within this range is established by the Board of Directors and is
currently set at four. A Board of four directors will be elected at the Annual
Meeting. Unless otherwise instructed, proxy holders will vote the proxies
received by them for the Company's four nominees named below. In the event that
any nominee of the Company is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who shall
be designated by the present Board of Directors to fill the vacancy. In the
event that additional persons are nominated for election as directors, the proxy
holders would vote all proxies received in accordance with cumulative voting to
assure the election of as many of the nominees listed below as possible. In such
circumstances, the specific nominees to be voted for will be determined by the
proxy holders. It is not expected that any nominee will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next annual meeting of shareholders at such
time as his or her successor is duly elected and qualified, or until his or her
earlier resignation, removal or death. The nominees have supplied the following
background information to the Company:
<TABLE>
<CAPTION>
Director
Name Age Principal Occupation Since
---- --- ------------------------------------------------- -----
<S> <C> <C> <C>
Boyd Coddington 53 Chairman of the Board and Chief Executive Officer 1988
of the Company since 1988
Marcus Sorenson 49 President of Cal West Marketing since 1976 1995
Curt Barwick 42 Corporate and Securities Attorney since 1983 1996
Melanie McCaffery 43 Certified Public Accountant since 1981 1996
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE ABOVE NOMINEES.
</TABLE>
<PAGE>
MANAGEMENT
Set forth below is certain information with respect to each of the nominees
for the office of director, each director whose term of office will continue
after the Annual Meeting and each executive officer of the Company:
Name Age Position
---- --- --------
Boyd Coddington (1) 53 Chairman of the Board and Chief Executive
Officer
Rex A. Ours 36 Chief Financial Officer and Secretary
Marcus Sorenson(2) 49 Director
Curt Barwick (1) 42 Director
Melanie McCaffery(1)(2) 43 Director
_________________
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
BOYD CODDINGTON founded the Company in 1988 and has served as a director and
chief executive officer of the Company since its inception. Mr. Coddington also
founded Hot Rods by Boyd in 1978, now a wholly owned subsidiary of the Company.
Mr. Coddington has also been featured over the years in many automotive and
general interest publications, including CAR AND DRIVER, AUTOWEEK, SMITHSONIAN,
FORTUNE and FORBES.
REX A. OURS joined the Company in June 1994 as chief financial officer. From
1993 to June 1994, Mr. Ours was an accountant in private practice specializing
in tax and general business matters. From 1991 to 1993, Mr. Ours was chief
financial officer of Russell Performance, Inc., a manufacturer of specialty
aftermarket automobile products and high performance hoses for racing engines,
and from 1990 to 1991, he was vice president of finance of Simpson Race
Products, Inc., a manufacturer of racing safety equipment. Mr. Ours, a
certified public accountant, was previously employed by B.D.O. Seidman and Ernst
& Whinney.
MARCUS SORENSON joined the Board of Directors in June 1995. From 1976 to
1996, Mr. Sorenson has been president of Calwest Marketing, a manufacturer's
representative specializing in consumer electronics and automotive electronics.
Mr. Sorenson is a co-founder of Mackie Designs, a manufacturer of recording
consoles used in professional and home recording studios, and since 1990, has
served as its vice president and director.
CURT BARWICK joined the Board of Directors in April 1996. From 1996 to the
present, Mr. Barwick has been a partner with the law firm of Higham, McConnell &
Dunning, and from 1994 to 1996, Mr. Barwick was an attorney with the law firm of
Day, Campbell & McGill. From 1992 to 1993, Mr. Barwick was vice president and
general counsel of DVI, Inc., a New York Stock Exchange listed company and a
health care finance and service provider. From 1985 until 1992, Mr. Barwick was
an attorney with the national law firm of Buchalter, Nemer, Fields & Younger.
Mr. Barwick is a member of the California and District of Columbia bar
associations and a specialist in corporate and securities law.
MELANIE MCCAFFERY is a certified public accountant and the president of
McCaffery & Associates, a financial and accounting firm, which she founded in
October 1995. From October 1988 through September 1995, Ms. McCaffery was a
partner with the international accounting firm of Coopers & Lybrand L.L.P. From
1978 through October 1988, Ms. McCaffery served as a staff member at Coopers &
Lybrand L.L.P.
For information concerning beneficial ownership of Common Stock by directors
and executive officers, see "Security Ownership of Certain Beneficial Owners and
Management" below. The Board of Directors met five times during fiscal 1996,
with each director then in office attending all meetings.
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
AUDIT COMMITTEE - The Board has a standing Audit Committee that reviews the
audit and control functions of the Company, the Company's accounting principles,
policies and practices and financial reporting, the scope of the audit conducted
by the Company's auditors, the fees and all non-audit services of the
independent auditors and the independent auditors' opinion and letter of comment
to management and management's response thereto. The Audit Committee did not
meet in fiscal 1996. At the date of this Proxy Statement, the Audit Committee
was comprised of Messrs. Coddington and Barwick and Ms. McCaffery.
COMPENSATION COMMITTEE - The Board has a Compensation Committee (the
"Compensation Committee") whose members at the date of this Proxy Statement were
Mr. Sorenson and Ms. McCaffery. The Compensation Committee is authorized to
review and recommend to the Board the salaries, bonuses and prerequisites of the
Company's executive officers. The Compensation Committee also reviews and
recommends to the Board any new compensation or retirement plans and administers
the Company's 1995 Stock Option Plan. The Compensation Committee met twice in
fiscal 1996.
DIRECTOR COMPENSATION
STANDARD COMPENSATION - Directors who are not employees of the Company or its
subsidiaries ("Non-employee Directors") receive $1,000 for attendance at the
Company's Annual Meeting of Shareholders plus $500 for each meeting of the Board
or committee meetings that they attend, plus reimbursement of any expenses they
may incur with respect to such meeting. Directors who are employees of the
Company or its subsidiaries serve as directors without compensation.
STOCK OPTIONS - Non-employee Directors receive additional compensation in the
form of stock options granted automatically under the Company's 1995 Stock
Option Plan. Upon their initial election to the Board of Directors,
Non-employee Directors automatically receive options to purchase 3,000 shares of
Common Stock. Such options vest on the Director's first anniversary with the
Company. In addition, such Non-employee Director will automatically be granted
each year options to purchase 1,000 shares of Common Stock. Such additional
options will be fully vested and exercisable after each additional full year of
service. All options granted to non-employee Directors have an exercise price
equal to the fair market value of the shares on the date of grant of such
option. See "1995 Stock Option Plan -- Awards to non-employee Directors."
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the year ended December 31, 1996, the cash
compensation of the Chief Executive Officer and the three other most highly
compensated executive officers of the Company who received compensation in
excess of $100,000 in that year (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
Other annual
Name and principal position Year Salary Bonus(1) compensation Options/SAR
--------------------------- ---- ------ ------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Boyd Coddington, Chairman and
Chief Executive Officer (2) 1996 $ 171,731 $60,000 $ 13,200 150,000
1995 173,675 - 15,200 60,000
Brad Fanshaw, President (3) 1996 $ 13,846 - $487,200 -
1995 124,146 - 13,200 30,000
Stanley Clark, Chief Operating 1996 $ 91,560 - $ 450 25,000
Officer (4) 1995 - - - -
Rex A. Ours, Chief Financial 1996 $ 90,058 $35,000 $ 2,250 25,000
Officer (5) 1995 57,583 - - 5,000
</TABLE>
(1) Amounts stated reflect bonuses earned prior to December 31, 1995, which
were paid in the 1996 fiscal year.
(2) Pursuant to a five-year employment agreement between the Company and Boyd
Coddington, Mr. Coddington currently receives an annual salary of $225,000
together with an annual bonus in an amount to be determined by the
Compensation Committee of the Board of Directors. Mr. Coddington is
required to devote his entire productive time, with certain limited
exceptions described in his employment agreement, to the business of the
Company. In addition to salary and bonus under the terms of his employment
agreement, the Company is required to provide Mr. Coddington with a
non-accountable automobile expense allowance of at least $1,100 per month,
pay all health insurance premiums for him and his spouse and pay the
premiums of a term life insurance policy. Other annual compensation
included the above-described annual automobile allowances of $13,200 and
$15,200 for 1996 and 1995, respectively, from the Company for a vehicle
used by Mr. Coddington.
(3) Mr. Fanshaw's employment with the Company terminated in February 1996.
During fiscal 1996, Mr. Fanshaw received, in addition to salary, a non
accountable automobile expense allowance of $1,100 per month, payment of
health insurance premiums for him and his spouse and payment of the premium
of a term life insurance policy. Other annual compensation included the
above-described annual automobile allowances of $2,200 and $13,200 in 1996
and 1995, respectively, for a vehicle used by Mr. Fanshaw, the exercise of
nonqualified options with a net compensation value of $485,000. Amount
stated does not include a cash payment of $125,000 related to the
settlement of Mr. Fanshaw's employment contract. (See certain transactions)
<PAGE>
(4) Mr. Clark's employment with the Company terminated in March 1997.
During fiscal 1996, pursuant to a verbal agreement between the Company
and Stanley Clark, the Company provided Mr. Clark with a
non-accountable phone expense allowance of $150 per month, in addition
to salary and bonus. Other annual compensation for 1996 included the
above-described phone allowances of $450. Amounts stated do not include
a $20,000 signing bonus paid to Mr. Clark in fiscal 1997.
(5) Pursuant to a verbal agreement between the Company and Rex Ours, Mr.
Ours currently receives an annual salary of $115,000 together with an
annual bonus in an amount to be determined by the Compensation
Committee of the Board of Directors. In addition to salary and bonus,
the Company provides Mr. Ours with a non-accountable automobile
expense allowance of $600 per month, and a non-accountable phone
allowance of $150 per month. Other annual compensation for 1996
included the above-described allowances of $2,250.
STOCK OPTION GRANTS IN 1996
INDIVIDUAL GRANTS
The following table sets forth information with respect to options to
purchase shares of the Company's Common Stock granted in 1996 to the Chief
Executive Officer and the Named Executive Officers.
<TABLE>
<CAPTION>
% Of Total
Options Granted Exercise Market price
Options To Employees Price At Date Expiration
Name Granted # In 1996 (Per Share) Of Grant Date
- ---- --------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Boyd Coddington 150,000 62% $ 10.75 $ 10.75 7/23/06
Brad Fanshaw --- --- --- --- ---
Stanley Clark 5,000 2% $ 6.25 $ 8.75 4/01/06
25,000 10% $ 10.75 $ 10.75 7/23/06
Rex A. Ours 25,000 10% $ 10.75 $ 10.75 7/23/06
</TABLE>
The following table sets forth, for the Chief Executive Officer and the
Named Executive Officers, information with respect to options exercised,
unexercised options and year-end option values, in each case with respect to
options to purchase shares of the Company's Common Stock.
<TABLE>
<CAPTION>
Unexercised Value of Unexercised
Shares Options at in the Money Options at
Acquired on Value December 31, 1996 (#) December 31, 1996
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BOYD CODDINGTON --- --- 210,000 --- $952,500 ----
BRAD FANSHAW --- --- 34,429 --- $447,577 ----
STANLEY CLARK --- --- 30,000 --- $120,000 ----
REX A. OURS --- --- 30,000 --- $120,000 ----
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following security ownership information is set forth, as of April 30,
1997, with respect to: certain persons or groups known to the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock; to
each director of the Company; each of the executive officers named in the
Summary Compensation Table currently employed by the Company; and all current
directors, nominees and executive officers as a group (six persons). Other than
as set forth below, the Company is not aware of any other person who may be
deemed to be a beneficial owner of more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner (1)(2) Beneficial Ownership (3) Class
------------------------------------------- ----------------------- ------
<S> <C> <C>
Boyd Coddington(3)(4) 531,232 12.01%
Diane Coddington(3) 356,013 8.10%
Rex A. Ours(5) 33,500 *
Marcus Sorenson(6) 4,000 *
Melanie McCaffery(6) 3,000 *
Curt Barwick(6) 4,000 *
------- ------
All directors and executive officers as a group(2)(7) 931,745 20.11%
(6 persons) ------- ------
</TABLE>
(1) The address of each beneficial owner is 8380 Cerritos Avenue, Stanton,
California 90680.
(2) Unless otherwise noted, sole voting and dispositive power are possessed
with respect to all shares of Common Stock owned.
(3) Boyd Coddington and Diane Coddington are married, and therefore, each has a
beneficial interest in the other's shares.
(4) Includes 210,000 shares purchasable upon exercise of options to
purchase Common Stock.
(5) Includes 30,000 shares purchasable upon exercise of options to
purchase Common Stock.
(6) Consists solely of shares purchasable upon exercise of options to
purchase Common Stock.
(7) Includes 356,013 shares of Common Stock owned individually by Mr.
Coddington's spouse, Diane Coddington.
* Percentage of shares beneficially owned does not exceed 1% of the class so
owned.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Common Stock (collectively "Insiders") to file initial reports
of ownership (Forms 3) and reports of changes in ownership of Common Stock
(Forms 4 and Forms 5) with the Securities and Exchange Commission as well as the
Company and the Nasdaq National Market.
<PAGE>
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations from each Insider
known to the Company that no other reports were required during the fiscal year
ended December 31, 1996, all insiders filed all required reports on a timely
basis except for Boyd Coddington, who filed one report relating to three sales
transactions approximately one month late.
CERTAIN TRANSACTIONS
In December 1996, the Company exercised an option agreement with Boyd and
Diane Coddington pursuant to which the Company had the option to purchase all of
the outstanding shares of common stock of Hot Rods by Boyd for up to $750,000,
payable in shares of the Company's Common Stock at its then fair market value.
This option was exercisable by the Company commencing after delivery to it of
audited financial statements of Hot Rods by Boyd for the years ended December
31, 1995 and December 31, 1996, but in no event after September 30, 1997, unless
extended pursuant to the terms of the option agreement.
The Company has been subleasing a portion of the premises located at 10541
Ashdale Street to Hot Rods by Boyd since the commencement of the lease term.
The total current monthly rent under this lease is $14,991, with the Company's
share being $10,000. The rent is subject to annual adjustment based on increases
in the Consumer Price Index.
From time to time the Company has loaned amounts to Hot Rods by Boyd on an
interest-free basis, for use as working capital and to cover certain expenses,
including the build-out of the premises occupied by Hot Rods by Boyd. As of
December 31, 1996, the amount owed to the Company from Hot Rods by Boyd was
approximately $346,000, representing amounts previously advanced by the Company
and the portion of the salary payments made to such employees by the Company,
which are allocable to Hot Rods by Boyd.
In June 1995, the Company entered into a marketing/promotion agreement
with Hot Rods by Boyd pursuant to which Hot Rods by Boyd was required to (i)
endorse, promote and market the wheels manufactured by the Company as the
"official wheel" of Hot Rods by Boyd; (ii) use the Company's wheels on vehicles
produced by Hot Rods by Boyd; and (iii) allow the Company to use vehicles
produced by Hot Rods by Boyd for promotional displays and photographs, including
the likeness of Boyd Coddington and the vehicles for printed and electronic
media in connection with the design, manufacture and sale of automotive wheels,
motorcycle wheels, steering wheels, car care products and related accessories.
The Company was required to sell to Hot Rods by Boyd wheels and parts
manufactured by the Company at the lowest price for which such wheels and
accessories are offered and sold to third parties and to provide wheels and
accessories for 10 vehicles at no charge. This agreement was terminated upon
the exercise of the Company's option to purchase Hot Rods by Boyd on December
30, 1996.
Codde, Inc., a company in which Mr. Coddington is an officer, director and
principal shareholder, leases one 70 foot semi-tractor/trailer rig to the
Company for special event and on-site presentations for a monthly fee of
approximately $6,200. The Company believes that its agreement with Codde, Inc.
is on terms no less favorable than could be obtained from a non-affiliated
party. Also, during 1996 the Company purchased for $125,000 an additional 70
foot semi-tractor/trailer from Codde, Inc. Based upon appraisals, the Company
believes that the purchase was at terms no less favorable than could be obtained
from a non-affiliated party.
<PAGE>
In February 1996, the Company entered into an agreement with Brad Fanshaw,
formally president and a director of the Company, pursuant to which Mr. Fanshaw
was released from his duties under an employment contract. Under the agreement,
the Company paid total consideration of $275,000 comprising $150,000 for a
five-year covenant not to compete and $125,000 for compensation expense. Of such
consideration, $225,000 was paid in cash and shares of the Company's Common
Stock were issued for the remaining $50,000. All other amounts due to/from the
Company and Mr. Fanshaw were canceled.
In February 1996, the Company also finalized an Agreement for the Purchase
and Sale of Assets of Velocity Distribution Inc. (the "Velocity Agreement") with
Brad Fanshaw. Under the Velocity Agreement, the Company assumed the assets and
liabilities of Velocity Distribution Inc. and entered into a five-year covenant
not to compete with Mrs. Fanshaw for a total amount of approximately $25,000.
Curt Barwick, a director of the Company, is a partner with the law firm of
Higham, McConnell & Dunning, which has been retained by the Company in
connection with certain legal matters.
1995 STOCK OPTION PLAN
The Company's 1995 Stock Option Plan (the "Plan") was adopted by the Board
of Directors in June 1995 and was approved by the shareholders at the Company's
annual meeting of shareholders in July 1995. The Plan is administered by the
Compensation Committee (the "Committee") of the Board of Directors, except that
grants to Non-employee Directors are automatically made pursuant to a
predetermined formula. The Committee consists solely of Non-employee Directors.
The Committee has broad authority in administering and interpreting the Plan.
The purpose of the Plan is to enable the Company to attract, retain and
motivate employees by providing for or increasing their proprietary interests in
the Company and, in the case of Non-employee Directors, to attract such
Directors and further align their interests with those of the Company's
shareholders by providing for or increasing their proprietary interests in the
Company. Under the Plan, officers, directors, employees and independent
consultants of the Company are eligible to receive options to purchase Common
Stock. As of the date of this Proxy Statement, approximately 361 persons were
eligible. The Company's Common Stock has no par value, and the closing price of
the Common Stock on the Nasdaq National Market on April 24, 1997 was $5.00 per
share.
The aggregate number of shares that may be issued pursuant to the grant of
Awards under the Plan is 450,000 subject to adjustment for certain circumstances
such as a stock exchange reorganization, recapitalization, stock split, reverse
stock split, stock dividend or other capital change or adjustment. At the
Annual Meeting, the shareholders are being requested to consider and approve the
proposed amendment to the Plan to increase the number of shares of Common Stock
reserved for issuance thereunder by 300,000 shares, bringing the total number of
shares issuable under the Plan to 750,000 shares. The Board of Directors
approved such amendment, subject to shareholder approval, in June 1997.
AWARDS TO EMPLOYEES
Options granted under the Plan may be options intended to qualify as
incentive stock options (the "Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options not intended
to so qualify (the "Non-Qualified Stock Options").
<PAGE>
An Award to an employee may permit the employee to pay all or part of the
purchase price of the shares issuable pursuant thereto, and/or to pay all or
part of such employee's tax withholding obligation with respect to such
issuance, by (i) delivering previously owned shares of capital stock of the
Company or (ii) reducing the amount of shares otherwise issuable pursuant to the
award. If an option granted to an employee permitted the employee to pay for
the shares issuable pursuant thereto with previously owned shares, the employee
would be able to exercise the option in successive transactions, known as
pyramiding, to acquire a large number of shares with no more investment than the
original share or shares delivered upon exercise of the option.
Upon the grant of an option under the Plan, the person receiving the grant
(the "Option Holder") must enter into a written option agreement with the
Company that contains terms, provisions and conditions that are consistent with
the Plan and have been determined from time to time by the Committee. Incentive
Stock Options granted under the Plan may not expire later than 10 years after
the date of grant, except that an Incentive Stock Option granted to an
individual owning (after the application of the family and other attribution
rules of Section 424(d) of the Code), at the time the option was granted, more
than 10% of the total combined voting power of all classes of stock of the
Company or of any of its subsidiaries (a "10% Shareholder"), may not expire
later than five years from the date the option is granted. The exercise price
for any Incentive Stock Option may not be less than 100% of the fair market
value of Common Stock of the Company at the date the Option is granted. The
exercise price of an Incentive Stock Option granted to a 10% Shareholder may not
be less than 10% of the fair market value of the Common Stock of the Company on
the date such option is granted. The Plan as amended, provides that the
maximum number of shares of Common Stock that may be issued pursuant to
Incentive Stock Options, in the aggregate, is 450,000 shares.
An Award granted under the Plan to an employee may include a provision
terminating the Award upon termination of employment under certain circumstances
or accelerating the receipt of benefits upon the occurrence of specified events,
such as a change of control of the Company or a dissolution, liquidation,
merger, reclassification, sale of substantially all of the property and assets
of the Company or other significant corporate transaction. Options granted to
Non-employee Directors must be exercised by the first anniversary of the date of
grant if the grantee ceases to be a Director of the Company as a result of death
or disability, and the three months after such grantee ceases to be a Director
for any other reason other than cause, in which case the option terminates
immediately.
AWARDS TO NON-EMPLOYEE DIRECTORS
Non-qualified Stock Options to purchase 3,000 shares of Common Stock are
automatically granted to Non-employee Directors upon their election to the
Board. Such options will vest on the first anniversary of the date of
appointment or election of grant. Non-qualified Stock Options to purchase an
additional 1,000 shares will be granted to each Non-employee Director each year
provided such individual continues to serve as a Director. Such additional
options will vest after each additional year of service.
FEDERAL INCOME TAX TREATMENT FOR THE PLAN
The following is a brief description of the federal income tax treatment
that will generally apply to Awards made under the Plan, based on federal income
tax laws in effect on the date hereof. The exact federal income tax treatment
of Awards will depend on the specific nature of the Award. Because the
following is only a brief summary of the general federal income tax rules,
recipients of Awards should not rely thereon for individual tax advice, as each
taxpayer's situation and the consequences of any particular transaction will
vary depending upon the specific facts and circumstances involved. EACH
TAXPAYER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR FOR PARTICULAR
FEDERAL, AS WELL AS STATE AND LOCAL, INCOME AND ANY OTHER TAX ADVICE.
<PAGE>
INCENTIVE STOCK OPTIONS
Pursuant to the Plan, employees may be granted Incentive Stock Options.
Generally, the optionee is not taxed and the Company is not entitled to a
deduction on the grant or the exercise of an Incentive Stock Option. However,
if the optionee sells the shares acquired upon the exercise of an Incentive
Stock Option (the "Option Shares") at any time within (a) one year after the
date of transfer of shares to the optionee pursuant to the exercise of such
Incentive Stock Option or (b) two years after the date of grant of such
Incentive Stock Option, then (1) such optionee will recognize capital gain in an
amount equal to the excess, if any, of the sales price over the fair market
value of the Option Shares on the date of exercise, (2) such optionee will
recognize ordinary income in an amount equal to the excess, if any, of the
lesser of the sales price or the fair market value of the Option Shares on the
date of exercise, over the exercise price of such Incentive Stock Option, (3)
such optionee will recognize capital loss equal to the excess, if any, of the
exercise price of such Incentive Stock Option over the sales price of the Option
Shares, and (4) the Company will generally be entitled to a deduction in an
amount equal to the amount of any ordinary income recognized by such optionee.
If the optionee sells the Option Shares at any time after the optionee has held
the Option Shares for at least (a) one year after the date of transfer of the
Option Shares to the optionee pursuant to the exercise of the Incentive Stock
Option and (b) two years after the date of grant of the Incentive Stock Option,
then the optionee will recognize capital gain or loss equal to the difference
between the sales price and the exercise price of such Incentive Stock Option,
and the Company will not be entitled to any deduction.
The amount by which the fair market value of Option Shares on the date of
exercise exceeds the exercise price will be included as a positive adjustment in
the calculation of an optionee's "alternative minimum taxable income" ("AMTI")
in the year of exercise. The "alternative minimum tax" imposed on individual
taxpayers is generally equal to the amount by which 26% or 28% (depending on the
amount of such taxpayer's AMTI) of the individual's AMTI (reduced by certain
exemption amounts) exceeds his or her regular income tax liability for the year.
Insiders (as defined below) should consult their tax advisors concerning the
possibility of making an 83(b) Election (as defined below) upon the exercise of
an Incentive Stock Option.
NON-QUALIFIED OPTIONS
The grant of a Non-qualified Stock Option is generally not a taxable event
for the optionee. Upon exercise of the option, the optionee will generally
recognize ordinary income in an amount equal to the excess of the fair market
value of the stock acquired upon exercise (determined as of the date of the
exercise) over the exercise price of such option, and the Company will be
entitled to a deduction equal to such amount. See, however, '"SPECIAL RULES FOR
AWARDS GRANTED TO INSIDERS," below. A subsequent sale of the Common Stock
generally will give rise to capital gain or loss equal to the difference between
the sales price and the sum of the exercise price paid for such shares plus the
ordinary income recognized with respect to such shares.
<PAGE>
SPECIAL RULES FOR AWARDS GRANTED TO INSIDERS
Special rules apply, however, where an optionee is a Director (including a
Non-employee Director), officer or shareholder subject to Section 16 of the
Exchange Act (an "Insider") and during any period of time (the "Section 16(b)
Period") a sale of the stock acquired upon exercise of the option could subject
such optionee to suit under Section 16. In such case, the optionee will not
recognize ordinary income and the Company will not be entitled to a deduction
until the expiration of the Section 16(b) Period. Upon such expiration, the
optionee will recognize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the stock (determined
as of the expiration of the Section 16(b) Period) over the option exercise
price. Such an optionee may elect under Section 83(b) of the Internal Revenue
Code, as amended, to recognize ordinary income on the date of exercise (an
"83(b) Election"), in which case the Company would be entitled to a deduction
equal to the amount of ordinary income so recognized. Insiders should consult
their tax advisors to determine the tax consequences to them of exercising
Options granted to them pursuant to the Plan.
MISCELLANEOUS TAX ISSUES
The Company generally will be required to make arrangements for withholding
applicable taxes with respect to any ordinary income recognized by a participant
in connection with Awards made under the Plan.
With certain exceptions, an individual may not deduct investment-related
interest to the extent such interest exceeds the individual's net investment
income for the year. Investment interest generally includes interest paid on
indebtedness incurred to purchase Common Stock. Interest disallowed under this
rule may be carried forward to and deducted in later years, subject to the same
limitations.
Special rules will apply in cases where a recipient of an Award pays the
exercise or purchase price of the Award or applicable withholding tax
obligations under the Plan by delivering previously owned Common Stock or by
reducing the amount of Common Stock otherwise issuable pursuant to the award.
The surrender or withholding of such shares will in certain circumstances result
in the recognition of income with respect to such shares.
The terms of the Awards under the Plan may provide for accelerated vesting
or payment of Awards in connection with a change in ownership or control of the
Company. In that event and depending upon the individual circumstances of the
recipient, certain amounts with respect to such Awards may constitute "excess
parachute payments" under the "golden parachute" provisions of the Code.
Pursuant to these provisions, a recipient will be subject to a 20% excise tax on
any "excess parachute payments" and the Company will be denied any deduction
with respect to such payment. Recipients of Awards should consult their tax
advisors as to whether accelerated vesting of an Award in connection with a
change of ownership or control of the Company would give rise to an excess
parachute payment.
APPLICATION OF CERTAIN LAWS
The acquisition of shares of Common Stock by Directors, certain officers,
or 10% shareholders of the Company could be subject to the provisions of Section
16(b) of the Exchange Act under which a purchase of the Company's Common Stock
within six months before or after any sale of such stock could result in
recovery by the Company of all or a portion of any amount by which the sale
proceeds exceed the purchase price. Such officers, Directors and 10%
shareholders are required to file reports of changes in beneficial ownership
under Section 16(a) of the Exchange Act. Rule 16b-3 under the Exchange Act
provides an exemption from Section 16(b) liability for certain transactions
pursuant to employee benefit plans. Officers, Directors and 10% shareholders
should consult their counsel with respect to the effect of Section 16 upon their
participation in the Plan.
<PAGE>
Resale of shares received on grants of Awards or purchased on exercise of
Awards by any person who has a control relationship with the Company may be
restricted under the provisions of the Securities Act and the rules and
regulations of the Commission, including Rule 144.
APPROVAL OF AMENDMENT TO 1995 EMPLOYEE
STOCK OPTION PLAN
The Company's Board of Directors and shareholders previously adopted and
approved the Plan. A total of 250,000 shares were originally reserved for
issuance under the Plan. In June 1996, the Plan was amended to increase the
number of shares reserved for issuance thereunder to 450,000 shares. In April
1997, the Board of Directors authorized that the Plan be further amended,
subject to shareholder approval, to increase the number of shares reserved for
issuance thereunder by 300,000 shares, bringing the total number of shares
issuable under the Plan to 750,000 shares.
At the Annual Meeting, the shareholders are being requested to consider and
approve the proposed amendment to the Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 300,000 shares, bringing the
total number of shares issuable under the Plan to 750,000 shares. The amendment
to increase the number of shares issuable under the Plan will enable the Company
to continue its policy of employee stock ownership as a means to attract and
retain highly qualified personnel, to motivate high levels of performance and to
recognize key employee accomplishments.
For a description of the principal features of the Plan, see "1995 Stock
Option Plan."
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The approval of the amendment to the Plan requires the affirmative vote of
a majority of the shares represented, in person or by proxy, and voting at the
Annual Meeting (which shares voting affirmatively also constitute at least a
majority of the required quorum).
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT TO THE PLAN
AND RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
For the 1996 fiscal year, Coopers & Lybrand L.L.P. provided audit services
which included audit of the Company's annual financial statements, and
assistance and consultation in connection with the Company's registration
statements on Form SB-2 and S-8 filed with the Commission. Audit services were
provided with the approval of the Board of Directors which among other things,
considered the independence of the public accountants. Arrangements for
non-audit services, if any, are made by management with the knowledge of the
Board of Directors. Upon the recommendation of the Audit Committee, the Board
has selected Coopers & Lybrand L.L.P. to provide audit services to the Company
for the fiscal year ending December 31, 1997. The shareholders are being
requested to ratify such selection at the Annual Meeting.
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR
1998 ANNUAL MEETING
Any proposal relating to a proper subject which an eligible shareholder may
intend to present for action at the Company's 1998 Annual Meeting of
Shareholders and which such shareholder may wish to have included in the proxy
materials for such meeting in accordance with the provisions of Rule 14a-8
promulgated under the Exchange Act must be received as far in advance of the
meeting as possible in proper form by the Secretary of the Company at 8380
Cerritos Avenue, Stanton, California 90680 and in any event not later than
January 5, 1998. It is suggested that any such proposal be submitted by
certified mail, return receipt requested.
OTHER BUSINESS OF THE ANNUAL MEETING
Management is not aware of any matters to come before the Annual Meeting or
any postponement or adjournment thereof other than the election of directors,
the proposal to amend the Plan, and ratification of Coopers & Lybrand L.L.P as
the Company's independent auditors. However, inasmuch as matters of which
Management is not now aware may come before the meeting or any postponement or
adjournment thereof, the proxies confer discretionary authority with respect to
acting thereon, and the persons named in such proxies intend to vote, act and
consent in accordance with their best judgment with respect thereto, provided
that, to the extent the Company becomes aware a reasonable time before the
Annual Meeting of any matter to come before such meeting, the Company will
provide an opportunity to vote by proxy directly on such matter. Upon receipt
of such proxies in time for voting, the shares represented thereby will be voted
as indicated thereon and as described in this Proxy Statement.
MISCELLANEOUS
The solicitation of proxies is made on behalf of the Company and all the
expenses of soliciting proxies from shareholders will be borne by the Company.
In addition to the solicitation of proxies by mail, officers and regular
employees may communicate with shareholders personally or by mail, telephone,
telegram or otherwise for the purpose of soliciting such proxies, but in such
event no additional compensation will be paid to any such persons for such
solicitation. The Company will reimburse banks, brokers and other nominees for
their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of shares held of record by such persons.
By Order of the Board of Directors
/s/ Boyd Coddington
BOYD CODDINGTON
Chairman of the Board and Chief Executive Officer
Stanton, California
May 5, 1997
<PAGE>
BOYDS WHEELS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 3, 1997
The undersigned shareholder of Boyds Wheels, Inc., in a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated May 5, 1997, and hereby appoints
Boyd Coddington and Rex A. Ours, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1997 Annual Meeting
of Shareholders of Boyds Wheels, Inc., to be held on June 3, 1997 at 10:00 a.m.,
local time, at Hot Rods By Boyd located 10541 Ashdale St., Stanton California
90680, and at any adjournment thereof, and to vote all the shares of Common
Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below:
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: / / FOR all nominees listed / / WITHHOLD AUTHORITY
below to vote for all nominees listed below
(except as indicated)
</TABLE>
If you wish to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the following list:
Boyd Coddington, Marcus Sorenson, Curt Barwick and Melanie
McCaffrey
<TABLE>
<S> <C> <C> <C>
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED
FOR ISSUANCE THEREUNDER BY 300,000 SHARES TO AN AGGREGATE OF 750,000 SHARES
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR 1997
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
And in their discretion, upon such other matter or matters that may properly
come before the meeting or any adjournment thereof.
(CONTINUED ON REVERSE)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION AND NO
ABSTENTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER BY 300,000 SHARES TO AN
AGGREGATE 750,000 SHARES, FOR THE RATIFICATION OF THE APPOINTMENT OF COOPERS &
LYBRAND, L.L.P. AS INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
DATED: ________________, 1997
_____________________________
Signature
______________________________
Signature
(This Proxy should be marked,
dated and signed by the
shareholder(s) exactly as his
or her name appears heron, and
returned promptly in the
enclosed envelope. Persons
signing in a fiduciary
capacity should so indicate.
If shares are held by joint
tenants or as community
property, both should sign.)
