SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 11, 1996
- -------------------------------------------------------------------------------
(Date of Report - date of earliest event reported)
Arden Industrial Products, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Minnesota 0-23308 41-0980556
- -------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of file number) Identification No.)
incorporation)
560 Oak Grove Parkway, Vadnais Heights, Minnesota 55127
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 490-6800
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
ITEMS 1 THROUGH 4 AND 6 AND 8 ARE NOT APPLICABLE AND ARE THEREFORE
OMITTED.
ITEM 5. OTHER EVENTS.
Effective November 11, 1996, Michael J. Lindseth has been elected as
Chief Executive Officer and as a director of the Company. Mr. Lindseth succeeds
Larry A. Carlson as Chief Executive Officer. Mr. Carlson will remain as Chairman
of the Company's Board of Directors and as a director and also has been elected
as the Company's Senior Vice President of Marketing.
Between July 1995 and February 1996, Mr. Lindseth was employed by Video
Sentry Corporation, most recently as its Chief Executive Officer and as a
director since December 1994. Between 1979 and 1995, Mr. Lindseth was employed
by Cray Research, Inc., serving as Corporate Controller and Treasurer and
Managing Director of Cray's North Europe region before being named Executive
Vice President and Chief Financial Officer in 1990 and Executive Vice President
of Worldwide Sales in 1994.
The Company has entered into an employment agreement with Mr. Lindseth
pursuant to which Mr. Lindseth will be paid an annual salary of $150,000 and may
earn up to an additional $75,000 cash bonus pursuant to a performance-based
plan. The Company also has granted Mr. Lindseth five-year options to purchase up
to 350,000 shares of the Company's Common Stock at an exercise price of $5.00
per share, 50,000 of which will vest 90 days after his commencement of
employment and 75,000 of which will vest on each of the first through fourth
anniversary dates of his commencement of employment. Mr. Lindseth is entitled to
accelerated vesting of his options in the event of certain future changes of
control of the Company. In addition, the Company has agreed to register the
shares underlying Mr. Lindseth's options under the Securities Act of 1933, as
amended. The Company has agreed to pay the premiums for a long-term disability
for Mr. Lindseth's benefit pursuant to which, upon his permanent disability, he
would be paid $150,000 annually to age 65. Mr. Lindseth has agreed generally not
to compete against the Company for two years following his termination of
employment with the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
10.1 Employment Agreement dated November 6, 1996, between Arden
Industrial Products, Inc. and Michael J. Lindseth.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 13, 1996.
ARDEN INDUSTRIAL PRODUCTS, INC.
By /s/ Michael J. Lindseth
Michael J. Lindseth, Chief Executive
Officer
ARDEN INDUSTRIAL PRODUCTS, INC.
560 OAK GROVE PARKWAY
VADNAIS HEIGHTS, MINNESOTA 55127
November 6, 1996
Mr. Michael J. Lindseth
11797 Mt. Curve Road
Eden Prairie, Minnesota 55347
Re: Employment as Chief Executive Officer
Dear Michael:
I am writing to set forth our offer to engage you as the Chief Executive Officer
of Arden Industrial Products, Inc. starting on November 11, 1996. The terms of
your employment are as follows:
1. SALARY AND CASH BONUS. Your initial annual base salary is $150,000, payable
in bi-weekly increments. You are also entitled to an initial annual cash bonus
of up to $75,000, which bonus you may earn in whole or in part pursuant to a
performance-based cash bonus plan to be agreed upon between Arden and you.
During your tenure with Arden, your base salary and cash bonus plan are subject
to review annually by Arden's Board of Directors.
2. STOCK OPTIONS FOR YOU. You are granted the option to purchase up to 350,000
shares (subject to certain adjustments described below) of Arden's Common Stock,
as follows:
(a) Subject to certain adjustments described below, you may exercise
the options at a cash price per share of $5.00.
(b) You may only exercise options that you are vested in and vested
options must be exercised by you within five years of their respective dates of
vesting (or, if sooner, 90 days after your termination of employment with Arden,
regardless of cause).
(c) Your options will vest based on your period of service with Arden,
as follows: (i) 50,000 options will vest on the 90th day of your employment with
Arden and (ii) 75,000 options will vest on each of the first through fourth
anniversary dates of your employment with Arden. You must be employed with Arden
on the vesting date in order to vest in the options accruing on such date;
provided, however, that in the event Arden terminates your employment without
"cause" (as defined in Section 5 below), you will also vest in a pro rata
fraction (based on days of employment during the period) of the options next due
to vest under this subsection (c).
(d) In the event after your commencement of employment (and while you
are still employed by Arden), there is a sale of all or substantially all of the
assets of Arden or a change in the beneficial ownership (within the meaning of
the Securities Exchange Act of 1934, as amended) of at least a majority of
Arden's Common Stock (whether by outright sale, merger, consolidation, or other
similar corporate transaction), then despite subsection (c) above, you will
immediately vest (as of the date of closing of the triggering transaction) in
the next level (if any) of options in this paragraph. For example, if a sale of
Arden's assets closed within the first 45 days of your employment, you would
vest in 50,000 options, despite your not having served Arden for the full
initial 90 days. Despite the above, you will immediately vest in all 350,000
options if on the date of the triggering transaction, (a) you are still employed
by Arden and (b) the triggering transaction (i) occurs 12 or more months after
your commencement of employment and is effected by a cash tender offer or
privately negotiated purchase of Arden Common Stock at or less than $9.50 per
share (such price to be adjusted as described in subsection (e) below) or (ii)
occurs 18 or more months after your commencement of employment. Any options
which you vest in on an accelerated basis under this subsection (d) may be
exercised only for 90 days after they are vested, despite any other provisions
in this letter.
(e) The number of shares which you may acquire pursuant to your
options, and the exercise price under your options, will be proportionally
adjusted for any stock splits or dividends, reverse stock splits, or other
similar corporate transactions occurring after your commencement of employment
with Arden.
(f) Arden will take action within 90 days to register the Arden Common
Stock underlying your options on Arden's S-8 Registration Statement and will use
its best efforts to keep such Registration Statement effective with the
Securities and Exchange Commission during the period for which you may exercise
your options. The grant of your options (and the exercise thereof) will be
exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended,
pursuant to Rule 16b-3(d) of such Act.
3. STOCK OPTIONS FOR OTHER EMPLOYEES. Arden's Board of Directors will reserve
400,000 of Arden's authorized, but unissued, shares of Common Stock for possible
issuance upon exercise of stock options which you periodically may recommend for
issuance to existing and future employees of Arden (other than you). Grants of
stock options will be subject to approval of Arden's Board of Directors.
4. BENEFITS. You will receive health and term life insurance, the right to
participate in Arden's 401(k) plan, and other general company benefits described
in Arden's Employee Handbook (a copy of which has been provided to you), all to
the extent generally available to other senior corporate executives of Arden and
subject to Arden's general corporate vesting policies. During your employment
with Arden, Arden will also pay for your benefit the premiums on a long-term
disability insurance policy selected by Arden and owned by you pursuant to
which, in the event that you become permanently disabled within the meaning of
such policy, you would be paid (after the policy's elimination period) $150,000
annually under such policy to age 65.
5. TERM AND TERMINATION. Your employment is for an indefinite term and may be
terminated by Arden or you at any time, subject to the following. If you
voluntarily resign (other than on account of a permanent disability as defined
in the insurance policy referred to above), or if Arden terminates your
employment for cause (as defined below), Arden will pay you your base salary
through your date of termination, and you may exercise options vested through
your date of termination to the extent described above. If Arden terminates your
employment without cause within the first 90 days of your employment, Arden will
pay you your base salary and any accrued cash bonus under the cash bonus plan
through your date of termination and continue your base salary for 90 days as
severance pay, and you may exercise options vested as described above to the
extent described above. If Arden terminates your employment without cause after
the first 90 days of your employment, Arden will pay you your base salary and
any accrued cash bonus under the cash bonus plan through your date of
termination and continue your base salary for one year as severance pay, and you
may exercise options vested as described above to the extent described above. If
Arden terminates your employment, or you voluntarily resign, on account of your
permanent disability (as defined in the insurance policy referred to above),
Arden will pay you your base salary through the end of the elimination period
under the disability insurance referred to above, and you may exercise options
vested through your date of termination to the extent described above.
"Cause" means (i) your willful disregard (for reasons other than your
permanent disability as defined in the insurance policy referred to above) to
perform your duties, responsibilities, and objectives as an employee of Arden
following at least one written direction from the Board of Directors to do so,
(ii) gross misconduct, dishonesty, or self-dealing with respect to Arden, (iii)
any fraud, theft, or embezzlement by you of Arden's assets, or (iv) conviction
of you or entry of a plea of NOLO CONTENDERE by you of a crime which is
punishable as a felony.
6. NONDISCLOSURE, NONSOLICITATION, AND NONCOMPETITION. At all times whether
during or after your employment with Arden, you will keep confidential and not,
directly or indirectly, use or disclose to others any confidential or
proprietary information of Arden's, including customer lists, marketing, sales,
and other strategic plans, financial information and data, and inventory and
warehousing procedures.
For two years after your termination of employment with Arden for any
reason, you will not, directly or indirectly, (i) solicit or otherwise encourage
any employees of Arden to terminate employment with Arden, (ii) solicit or
otherwise encourage any customers of Arden to terminate or reduce their business
relationships with Arden, or (iii) whether as an employee, agent, shareholder,
partner, or otherwise, engage in the business of industrial fastener
distribution in the United States. Despite the above, you may invest as a
passive shareholder in a competing business or as an investor in a mutual fund
which holds securities of a competing business; provided, that you are not the
beneficial owner (within the meaning of the Securities Exchange Act of 1934, as
amended) of 5% or more of the equity securities of the competing business.
Further despite the above, if (i) your employment is terminated without cause
within 12 months after the date of a triggering transaction described in Section
2(d) above and (ii) such triggering transaction is effected by a cash tender
offer to Arden's shareholders not approved or ratified prior to or after the
tender offer by a majority of Arden's directors serving immediately prior to the
commencement date of such tender offer, your covenants above in this paragraph
shall run only during the period that Arden continues severance pay to you as
described in Section 5 above.
Arden may enforce these various covenants against you in the state and
federal courts located in St. Paul, Minnesota. If the court determines that the
covenants above are overbroad as to time period and/or geographic coverage, then
the court is authorized to modify and enforce the covenants to the extent the
court determines reasonable.
If you agree with the terms of this letter, please indicate so by your
signature below. We look forward to having you on the Arden team!
Very truly yours,
Arden Industrial Products, Inc.
By /s/ Larry A. Carlson
Larry A. Carlson, Chairman and
Chief Executive Officer
Agreed to and accepted:
/s/ Michael J. Lindseth
Michael J. Lindseth
