<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>
Reptron Electronics, Inc.
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(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:
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(REPTRON LETTERHEAD)
May 3, 1999
Dear Shareholder:
I am pleased to invite you to the Annual Meeting of Shareholders to be held on
May 28, 1999, at Reptron's headquarters located at 14401 McCormick Drive, Tampa,
Florida 33626. As we have done in the past, in addition to considering the
matters described in the accompanying proxy statement, we will review major
developments since our last annual meeting.
We hope that you will attend the meeting in person, but even if you are planning
to come, we strongly encourage you to designate the proxies named on the
enclosed card to vote your shares. This will ensure that your common stock will
be represented at the meeting. The accompanying proxy statement explains more
about proxy voting. Please read it carefully. We look forward to your
participation.
Sincerely,
/s/ MICHAEL L. MUSTO
Michael L. Musto
Chairman of the Board of Directors,
President and Chief Executive Officer
<PAGE> 3
REPTRON ELECTRONICS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1999
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On Friday, May 28, 1999, Reptron Electronics, Inc. will hold its 1999 Annual
Meeting of Shareholders at Reptron's headquarters located at 14401 McCormick
Drive, Tampa, Florida 33626. The meeting will begin at 9:00 a.m., eastern time.
We are holding this meeting to:
1. Re-elect two Class I directors to hold office for three year terms
expiring in 2002;
2. Amend Reptron's Amended and Restated Incentive Stock Option Plan to
increase the number of shares available for issuance pursuant to the
plan from 1,500,000 shares to 2,000,00 shares and to modify the
provisions of the plan concerning duration of options, disposition of
options upon change of control of Reptron and amendment of the plan;
3. Amend Reptron's Non-Employee Director Stock Option Plan to increase the
number of shares available for issuance pursuant to the plan from
50,000 shares to 500,000 shares;
4. Approve the appointment of our independent auditors; and
5. Attend to other business properly presented at the meeting.
Your Board of Directors has selected April 15, 1999 as the record date for
determining shareholders entitled to vote at the meeting.
This proxy statement, proxy card and Reptron's 1998 Annual Report to
Shareholders are being mailed on or about May 3, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ LEIGH A. ADAMS
Leigh A. Adams
Secretary
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
QUESTIONS AND ANSWERS....................................... 1
PROPOSALS YOU MAY VOTE ON................................... 3
Proposal 1. Re-Election of Directors................ 3
Proposal 2. Amendment to the Reptron Electronics,
Inc. Amended and Restated Incentive
Stock Option Plan....................... 5
Proposal 3. Amendment to the Non-Employee Director
Stock Option Plan....................... 8
Proposal 4. Approval of the Appointment of Grant
Thornton LLP as Independent Auditors.... 10
STOCK OWNERSHIP............................................. 12
Section 16(a) Beneficial Ownership Reporting
Compliance......................................... 14
DIRECTORS AND EXECUTIVE OFFICERS............................ 15
EXECUTIVE COMPENSATION...................................... 18
Summary Compensation Table.......................... 18
Option Grants During Fiscal Year 1998............... 19
Option Exercises During Fiscal Year 1998 and Fiscal
Year End Option Values............................. 20
10-Year Option Repricings........................... 21
Compensation Committee Interlocks and Insider
Participation...................................... 21
Compensation Committee Report on Executive
Compensation....................................... 21
Stock Option Committee Report on Repricing of Stock
Options............................................ 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 25
REPTRON STOCK PRICE PERFORMANCE GRAPH....................... 26
SHAREHOLDER PROPOSALS....................................... 27
OTHER MATTERS............................................... 27
</TABLE>
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QUESTIONS AND ANSWERS
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Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?
A: We sent you this proxy statement and the enclosed proxy card because
Reptron's Board of Directors is soliciting your proxy to vote your shares at
Reptron's 1999 Annual Meeting of Shareholders. This proxy statement
summarizes information that we are required to provide to you under the rules
of the Securities and Exchange Commission ("SEC") and which is designed to
assist you in voting.
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Q: WHEN IS THE ANNUAL MEETING AND WHERE WILL IT BE HELD?
A: The Annual Meeting will be held on Friday, May 28, 1999, at 9:00 a.m. at our
headquarters located at 14401 McCormick Drive, Tampa, Florida 33626.
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Q: WHAT MAY I VOTE ON?
A: (1) The re-election of two Class I directors to hold office for three year
terms expiring in 2002;
(2) An amendment to Reptron's Amended and Restated Incentive Stock Option
Plan to increase the number of shares available for issuance pursuant to
the plan from 1,500,000 shares to 2,000,00 shares and to modify the
provisions of the plan concerning duration of options, disposition of
options upon change of control of Reptron and amendment of the plan;
(3) An amendment to Reptron's Non-Employee Director Stock Option Plan to
increase the number of shares available for issuance pursuant to the plan
from 50,000 shares to 500,000 shares; and
(4) The approval of the appointment of our independent auditors for the
fiscal year ending December 31, 1999.
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Q: HOW DOES REPTRON'S BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
A: Reptron's Board recommends a vote FOR each of the proposals.
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Q: WHO IS ENTITLED TO VOTE?
A: Only those who owned Reptron common stock at the close of business on April
15, 1999 (the "Record Date") are entitled to vote at the Annual Meeting.
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Q: HOW DO I VOTE?
A: You may vote your shares either in person or by proxy. Whether you plan to
attend the meeting and vote in person or not, we urge you to complete the
enclosed proxy card and return it promptly in the enclosed envelope. If you
return your signed proxy card
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but do not mark the boxes showing how you wish to vote, your shares will be
voted FOR the proposals. You have the right to revoke your proxy at any time
before the meeting by:
(1) notifying Reptron's Corporate Secretary;
(2) voting in person; or
(3) returning a later-dated proxy card.
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Q: HOW MANY SHARES CAN VOTE?
A: As of the Record Date, 6,147,119 shares of Reptron's common stock were issued
and outstanding. Every Reptron shareholder is entitled to one vote for each
share of common stock held on the Record Date.
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Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares of Reptron's common stock.
The shares may be present at the meeting or represented by proxy. There must
be a quorum for the meeting to be held. If you submit a properly executed
proxy card, even if you abstain from voting, you will be considered part of
the quorum.
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Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: Although we do not know of any business to be considered at the Annual
Meeting other than the proposals described in this proxy statement, if any
other business is properly presented at the Annual Meeting, your signed proxy
card gives authority to Leigh A. Adams, Reptron's Corporate Secretary and
William L. Elson, a member of Reptron's Board of Directors, or either of
them, to vote on such matters at their discretion.
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Q: WHEN ARE THE SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING OF
SHAREHOLDERS DUE?
A: All shareholder proposals to be considered for inclusion in next year's proxy
statement must be submitted in writing, no later than January 5, 2000, to
Leigh A. Adams, Corporate Secretary, Reptron Electronics, Inc., 14401
McCormick Drive, Tampa, Florida 33626.
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Q: WHO WILL PAY FOR THIS PROXY SOLICITATION?
A: Reptron will pay all the costs of soliciting these proxies. In addition to
mailing proxy solicitation materials, our directors and employees may also
solicit proxies in person, by telephone or by other electronic means of
communication. We will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to our shareholders.
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PROPOSALS YOU MAY VOTE ON
PROPOSAL 1. RE-ELECTION OF DIRECTORS
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Reptron's Board of Directors is divided into three classes serving
staggered three-year terms. The current terms of the three classes of directors
expire in 1999 (Class I directors), 2000 (Class III directors) and 2001 (Class
II directors). At the Annual Meeting, you and the other shareholders will elect
two individuals to serve as directors until the 2002 Annual Meeting. The Board
of Directors has nominated Michael L. Musto and Paul J. Plante to stand for
re-election at the Annual Meeting for Class I director seats. Detailed
information on each nominee is provided on pages 15 to 16. Each of the nominees
for director is a current member of the Board of Directors.
The individuals named as proxies will vote the enclosed proxy for the
re-election of Messrs. Musto and Plante unless you direct them to withhold your
votes. If any nominee becomes unable or unwilling to stand for re-election, the
Board may reduce its size or designate a substitute. If a substitute is
designated, proxies voting on the original nominee will be cast for the
substituted nominee.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
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The full Board of Directors considers all major decisions concerning
Reptron. However, the Board has established the following three standing
committees in order that certain important areas can be addressed in more depth
than may be possible in a full Board meeting:
- - COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
Reptron's compensation plans covering the chief executive officer; reviews
the compensation of the other executive officers; reviews the competitiveness
of Reptron's total compensation practices; determines the annual base salary
and incentive awards to be paid to the chief executive officer and reviews
the annual base salary and incentive awards to be paid to the other executive
officers. The members of the Compensation Committee are currently William L.
Elson and John J. Mitcham. The Compensation Committee held one meeting in
1998.
- - AUDIT COMMITTEE. The Audit Committee reviews the professional services and
independence of Reptron's independent auditors, and Reptron's accounts,
procedures and internal controls. The Audit Committee recommends to the Board
of Directors for appointment the firm selected to be independent public
accountants for Reptron and monitors the performance of such accounting firm;
reviews and approves the scope of the annual audit; reviews and evaluates
with the independent public accountants Reptron's annual audit and annual
consolidated financial statements; reviews with management the status of
internal accounting controls; evaluates problem areas having a potential
financial impact on Reptron that may be brought to its attention by
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management, the independent accountants or the Board; and evaluates all
public financial reporting documents of Reptron. The members of the Audit
Committee are currently William L. Elson and John J. Mitcham. The Audit
Committee held three meetings in 1998.
- - STOCK OPTION COMMITTEE. The Stock Option Committee is responsible for
selecting the recipients of options to purchase shares of Reptron's common
stock, determining the terms and conditions and number of shares of common
stock subject to each option and making any other determinations necessary or
advisable for the administration of Reptron's Incentive Stock Option Plan and
Non-Employee Director Stock Option Plan. The members of the Stock Option
Committee are currently Michael L. Musto and Leigh A. Adams. The Stock Option
Committee held two meetings in 1998.
Reptron does not have a nominating committee. This function is performed by
the Board of Directors. The Board of Directors met 12 times during 1998. Each
director attended more than 75% of the total number of meetings of the Board and
Committees on which he or she served.
COMPENSATION OF DIRECTORS
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Directors who are not employees of Reptron are paid $6,000 annually plus
$1,000 for each Board meeting attended, and $1,000 for each committee meeting
attended if such meeting occurs on a day other than a scheduled meeting of the
Board of Directors. In addition, Reptron reserved 50,000 shares (500,000 shares
if Proposal 3 is approved) of Reptron's common stock for future issuance upon
the exercise of stock options that may be granted to its non-employee directors.
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. No director who
is an employee of Reptron receives separate compensation for services rendered
as a director.
VOTE REQUIRED; RECOMMENDATION
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The two nominees for re-election as a director will be elected at the
meeting by a plurality of all the votes cast at the meeting, meaning that the
two nominees for director who receive the most votes will be elected. In an
uncontested election for directors, the plurality requirement is not a factor. A
properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the election
of one or more directors will not be voted with respect to the director or
directors indicated, although it will be counted for purposes of determining
whether there is a quorum. Your Board of Directors unanimously recommends a vote
FOR each of the nominees for re-election as a director.
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PROPOSAL 2. AMENDMENT TO THE REPTRON ELECTRONICS, INC. AMENDED AND RESTATED
INCENTIVE STOCK OPTION PLAN
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At the Annual Meeting, you are being asked to approve an amendment to the
Reptron Electronics, Inc. Amended and Restated Incentive Stock Option Plan (the
"Reptron ISO Plan") to provide for an increase of the number of shares of common
stock currently authorized for issuance under the Reptron ISO Plan from
1,500,000 shares to 2,000,000 shares. As of March 1, 1999, options to purchase a
total of 1,190,339 shares of Reptron common stock had been granted under the
Reptron ISO Plan.
The amendment also modifies the provisions of the Reptron ISO Plan
governing the duration of options and the disposition of options upon a change
of control of Reptron. Prior to the amendment, the Reptron ISO Plan provided
that an option would expire on the earliest of: (1) the 10th anniversary of the
date the option was granted; (2) one year after the option holder's death or
disability termination of employment; (3) 90 days after the option holder's
retirement; or (4) 45 days after the termination of the option holder's
employment with Reptron for any reason other than death, disability or
retirement. The amendment extends the duration of an option after the option
holder's retirement to the 10th anniversary of the date the option was granted
and increases the duration of an option after termination of the option holder's
employment for any reason other than death, disability or retirement from 45
days to 90 days. The amendment also permits the Reptron Stock Option Committee
to establish earlier or later expiration dates in the event of an option
holder's death, disability, retirement or termination of employment, provided
that no option will expire later than the 10th anniversary of the date the
option was granted. Furthermore, the amendment provides that if a recipient's
employment is terminated by Reptron following a change of control of Reptron for
any reason other than cause, each unexpired and unexercised option held by the
recipient shall become fully vested as of the date of termination and shall
expire on the earlier of the 90th day after the option holders' employment
terminates or the 10th anniversary of the date the option was granted. The
amendment also permits the Reptron Stock Option Committee to establish earlier
or later expiration dates in the event an option holder's employment is
terminated by Reptron following a change of control of Reptron for any reason
other than cause, provided that no option will expire later than the 10th
anniversary of the date the option was granted. Prior to the amendment, the
Reptron ISO Plan provided that an option would expire 45 days after the
termination of the option holder's employment by Reptron following a change of
control of Reptron for any reason other than cause.
In addition, the amendment modifies the amendment provisions of the Reptron
ISO Plan to reflect revisions of Rule 16b-3 promulgated by the SEC under Section
16 of the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). Prior to
the amendment, the Reptron ISO Plan required shareholder approval of an
amendment that would: (1) materially increase the benefits accruing to
participants under the Reptron ISO Plan; (2) increase the aggregate number of
shares of common stock that may be delivered under the Plan; (3) materially
modify the eligibility requirements for participation in the
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Reptron ISO Plan; or (4) amend the requirements described in (1), (2) and (3) of
this sentence. The purpose of these requirements was to comply with the
requirements of the former Rule 16b-3 that shareholders must approve certain
amendments. Recent revisions to Rule 16b-3 eliminate this shareholder approval
requirement. The amendment provides that your Board of Directors may condition
any amendment on the approval of the shareholders if such approval is necessary
or advisable with respect to tax, securities or other applicable laws to which
Reptron, the Reptron ISO Plan, option holders or employees are subject.
If the proposed amendment to the Reptron ISO Plan is not approved by the
Reptron shareholders, the Reptron ISO Plan will remain in full force and effect,
without the amendment.
SUMMARY OF REPTRON ISO PLAN
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The following summary of the Reptron ISO Plan is qualified in its entirety
by the terms of the Reptron ISO Plan, which is attached hereto as Appendix A,
with the proposed amendments underlined.
GENERAL. Awards granted under the Reptron ISO Plan consist of options to
purchase a specified number of shares of Reptron's common stock at a stated
price per share ("Options"). Options granted under the Reptron ISO Plan are
intended to qualify as "incentive stock options" pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Generally, the exercise
price per share of an Option may not be less than the mean between the high and
low sales prices of a share on the Nasdaq National Market ("Nasdaq") on the date
the Option is granted. Although the Board of Directors may amend the Reptron ISO
Plan at any time, the Board may condition any amendment on the approval of the
shareholders if such approval is necessary or advisable with respect to tax,
securities or other applicable laws to which Reptron, the Reptron ISO Plan,
option holders or employees are subject. Upon exercise of any Option, payment
for shares of common stock as to which the Option is exercised shall be made in
cash, by check, or wholly or partially in the form of shares of common stock
having a fair market value equal to the exercise price. The aggregate fair
market value, determined as of the date(s) of grant, of the shares subject to
incentive stock Options granted to an employee under all of Reptron's plans and
any of Reptron's subsidiaries and that become exercisable for the first time
during any calendar year shall not exceed $100,000.
ADMINISTRATION. The Reptron ISO Plan is administered by the Stock Option
Committee. If the Board does not appoint a committee, the Board serves as the
Stock Option Committee. The Stock Option Committee selects the recipients of
Options, determines the terms and conditions and number of shares of common
stock subject to each Option, and makes any other determinations necessary or
advisable for the administration of the Reptron ISO Plan.
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SHARES SUBJECT TO THE REPTRON ISO PLAN. The Reptron ISO Plan provides that the
total number of shares of common stock that may be purchased pursuant to Options
shall not exceed 2,000,000 shares representing approximately 32.5% of the
currently outstanding shares. Authority to grant Options under the Reptron ISO
Plan will continue until November 15, 2003, subject to the continued
availability of shares for the granting of Options under the Reptron ISO Plan.
The shares subject to Options which expire unexercised or are terminated shall
again become available for the granting of Options under the Reptron ISO Plan.
In the event of changes in the number or kind of outstanding shares or certain
other events, an appropriate adjustment will be made with respect to existing
and future awards.
GRANTS. The Stock Option Committee is authorized to grant in its discretion an
Option under the Reptron ISO Plan to any of Reptron's employees. An Option
becomes vested and exercisable in accordance with the schedule specified by the
committee at the time of grant. The duration of an Option is 10 years from the
date of grant, or such shorter period as may be determined by the Committee at
the time of grant, or as may result from the death, disability, retirement or
termination of the employment of the employee to whom the Option is granted. An
Option expires in accordance with the terms specified by the Committee on the
date of grant.
CHANGE OF CONTROL. If a change of control occurs, the Board of Directors may
vote to immediately terminate all Options outstanding under the Reptron ISO Plan
as of the date of the change of control, or may vote to accelerate the
expiration of such Options to the 10th day after the effective date of the
change of control. If the Board votes to immediately terminate an Option,
Reptron shall make a cash payment to the recipient equal to the difference
between the Option exercise price and the fair market value of the shares of
common stock that would have been subject to the terminated Option on the date
of the change of control. If at any time following a change of control a Option
holder's employment is terminated by Reptron for a reason other than cause, all
unexercised Options that: (1) are held by the recipient on the date of such
termination; (2) have neither been terminated by the Board nor expired; (3) are
not vested as of the date of termination; and (4) with respect to which the
Stock Option Committee does not provide otherwise, shall become fully vested and
shall expire on the earlier of the 90th day after the date the Option holder's
employment terminates or the 10th anniversary of the date the Option was
granted.
TRANSFERABILITY. All Options granted under the Reptron ISO Plan will be
nontransferable and nonassignable except by will or by the laws of descent and
distribution.
FEDERAL INCOME TAX CONSEQUENCES. An Option granted pursuant to the Reptron ISO
Plan results in no taxable income to the Option recipient or deduction to
Reptron at the time it is granted or exercised. If the Option recipient retains
the stock received as a result of the exercise of an Option for at least two
years from the date of the grant and one year from the date of exercise, then
any gain on the sale of such stock will be treated as capital gain. If the
shares are disposed of during this period, the Option recipient realizes taxable
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ordinary income equal to the lesser of (1) the gain realized by the Option
recipient upon such disposition or (2) the difference between the exercise price
and the fair market value of the shares on the date of exercise. Reptron
receives a tax deduction only if the shares are disposed of during such period.
The deduction is equal to the amount of taxable income to the Option recipient.
VOTE REQUIRED; RECOMMENDATION
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The affirmative vote of a majority of the shares of common stock present
and entitled to vote at the Annual Meeting is required for approval. Neither
abstentions nor broker non-votes are counted in determining whether this
proposal has been approved. Your Board believes that the proposed increase in
the number of shares available for issuance under the Reptron ISO Plan and the
modifications to the option duration and change of control provisions are
necessary in order to continue to provide incentives to existing and future
officers and employees of Reptron. In addition, your Board believes that the
proposed modification of the amendment provision will enhance the efficiency of
the operation of the Reptron ISO Plan. Therefore, your Board has unanimously
approved, and recommends to you, the adoption of this amendment to the Reptron
ISO Plan.
PROPOSAL 3. AMENDMENT TO THE NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
- --------------------------------------------------------------------------------
At the Annual Meeting, you are being asked to approve an amendment to the
Reptron Electronics, Inc. Non-Employee Director Stock Option Plan (the "Reptron
Director Plan") to provide for an increase of the number of shares of common
stock currently authorized for issuance under the Reptron Director Plan from
50,000 shares to 500,000 shares. As of March 1, 1999, options to purchase a
total of 15,000 shares of common stock had been granted under the Reptron
Director Plan.
If the proposed amendment to the Reptron Director Plan is not approved by
the Reptron shareholders, the Reptron Director Plan will remain in full force
and effect, without the amendment.
SUMMARY OF REPTRON DIRECTOR PLAN
- --------------------------------------------------------------------------------
The following summary of the Reptron Director Plan is qualified in its
entirety by the terms of the Reptron Director Plan, which is attached hereto as
Appendix B, with the proposed amendment underlined.
GENERAL. Awards granted under the Reptron Director Plan consist of Director
Options to purchase a specified number of shares of Reptron common stock at a
stated price per share ("Director Options"). Director Options granted under the
Reptron Director Plan are not intended to qualify as "incentive stock options"
pursuant to Section 422 of the Code.
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Generally, the exercise price per share of a Director Option may not be less
than the mean between the high and low sales prices of a share on Nasdaq on the
date the Director Option is granted. Although the Board of Directors may amend
the Reptron Director Plan at any time without the approval of the Reptron
shareholders, no amendment will be effective that: (1) materially increases the
benefits accruing to participants under the Reptron Director Plan; (2) increases
the aggregate number of shares of common stock that may be delivered upon the
exercise of Director Options; (3) materially modifies the eligibility
requirements for participation in the Reptron Director Plan; or (4) modifies the
Reptron Director Plan provisions concerning shareholder approval. Upon exercise
of any Director Option, payment for shares of common stock as to which the
Director Option is exercised shall be made in cash, by check, or wholly or
partially in the form of shares of common stock having a fair market value equal
to the exercise price.
ADMINISTRATION. The Reptron Director Plan is administered by the Stock
Option Committee. If the Board does not appoint a committee, the Board serves as
the Stock Option Committee. The Stock Option Committee selects the recipients of
Director Options, determines the terms and conditions and number of shares of
common stock subject to each Director Option, and makes any other determinations
necessary or advisable for the administration of the Reptron Director Plan.
SHARES SUBJECT TO THE REPTRON DIRECTOR PLAN. The Reptron Director Plan
provides that the total number of shares of common stock that may be purchased
pursuant to Director Options shall not exceed 500,000 shares representing
approximately 8.1% of the currently outstanding shares. Authority to grant
Director Options under the Reptron Director Plan will continue until December
31, 2004, subject to the continued availability of shares for the granting of
Director Options under the Reptron Director Plan. The shares subject to Director
Options which expire unexercised or are terminated shall again become available
for the granting of Director Options under the Reptron Director Plan. In the
event of changes in the number or kind of outstanding shares or certain other
events, an appropriate adjustment will be made with respect to existing and
future awards.
GRANTS. The Stock Option Committee is authorized to grant in its discretion
a Director Option under the Reptron Director Plan to any non-employee director
of Reptron. Unless the Committee provides otherwise at the time of grant, a
Director Option becomes vested and exercisable on the earlier of eight months
from the date of grant or the death of the recipient. The duration of a Director
Option is 10 years from the date of grant, or such shorter period as may be
determined by the Committee at the time of grant, or as may result from the
death or termination of the recipient's services as a director of Reptron. A
Director Option expires 90 days following the termination of the recipient's
service as a director of Reptron. Upon termination of a director's service by
reason of death, an unexercised Director Option shall expire within 12 months of
the date of death.
CHANGE OF CONTROL. If a change of control occurs, the Board of Directors
may vote to immediately terminate all Director Options outstanding under the
Reptron Director Plan as of the date of the change of control, or may vote to
accelerate the expiration of the
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Director Options to the 10th day after the effective date of the change of
control. If the Board votes to immediately terminate a Director Option, Reptron
shall make a cash payment to the recipient equal to the difference between the
Director Option exercise price and the fair market value of the shares of common
stock that would have been subject to the terminated Director Option on the date
of the change of control.
TRANSFERABILITY. All Director Options granted under the Reptron Director
Plan will be nontransferable and nonassignable except by will or by the laws of
descent and distribution.
FEDERAL INCOME TAX CONSEQUENCES. A Director Option granted pursuant to the
Reptron Director Plan results in no taxable income to the Director Option
recipient or deduction to Reptron at the time it is granted. Upon exercising
such a Director Option, the Director Option recipient will realize taxable
ordinary income in the amount of the difference between the Director Option
exercise price and the then fair market value of the shares. Subject to the
applicable provisions of the Code, a deduction for federal income tax purposes
will be allowable to Reptron in the year of exercise in an amount equal to the
taxable ordinary income realized by the Director Option recipient.
VOTE REQUIRED; RECOMMENDATION
- --------------------------------------------------------------------------------
The affirmative vote of a majority of the shares of common stock present
and entitled to vote at the Annual Meeting is required for approval. Neither
abstentions nor broker non-votes are counted in determining whether this
proposal has been approved. Your Board believes that the proposed increase in
the number of shares of common stock available for issuance under the Reptron
Director Plan is necessary in order to continue to provide incentives to
existing and future directors of Reptron. Your Board also believes that the
availability of stock options for issuance to directors of acquired companies is
important to the success of such acquisitions. Therefore, your Board has
unanimously approved, and recommends to you, the adoption of this amendment to
the Reptron Director Plan.
PROPOSAL 4. APPROVAL OF THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT
AUDITORS
- --------------------------------------------------------------------------------
The Audit Committee has recommended, and your Board of Director's has
approved, the appointment of Grant Thornton LLP as our independent auditors for
1999. Grant Thornton LLP (or its predecessor firm) has served as our independent
auditors since 1984. They have unrestricted access to the Audit Committee to
discuss audit findings and other financial matters. Representatives of Grant
Thornton LLP will attend the Annual Meeting to answer appropriate questions.
They also may make a statement.
Audit services provided by Grant Thornton LLP during 1998 included an audit
of Reptron's consolidated financial statements, audits of employee benefit plan
financial statements and a review of Reptron's Annual Report and certain other
filings with the SEC
10
<PAGE> 15
and certain other governmental agencies. In addition, Grant Thornton LLP
provided various non-audit services to Reptron during 1998.
VOTE REQUIRED; RECOMMENDATION
- --------------------------------------------------------------------------------
The affirmative vote of a majority of the shares of common stock present
and entitled to vote at the Annual Meeting is required for approval. Neither
abstentions nor broker non-votes are counted in determining whether this
proposal has been approved. Your Board of Directors unanimously recommends a
vote FOR this proposal.
11
<PAGE> 16
STOCK OWNERSHIP
The following table shows the amount of Reptron common stock beneficially
owned (unless otherwise indicated) as of March 1, 1999 by: (1) any person who is
known by Reptron to be the beneficial owner of more than 5% of the outstanding
shares of common stock; (2) Reptron's directors; (3) the executive officers
named in the Summary Compensation Table below; and (4) all directors and
executive officers of Reptron as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Number Percent
----------- ---------
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Michael L. Musto (1)...................................... 2,082,902 33.9%
Paul J. Plante (2)........................................ 121,967 1.9%
Patrick J. Flynn (3)...................................... 80,000 *
Jack Killoren (4)......................................... 90,000 *
Gary Bolohan.............................................. 42,850 *
Michael R. Nichols (5).................................... 70,335 *
Leigh A. Adams (6)........................................ 3,799 *
William L. Elson (7)...................................... 12,500 *
John J. Mitcham (8)....................................... 10,000 --
All directors and executive officers as a group (12
persons, including those named above) (9)............... 2,622,665 41.3%
SHAREHOLDERS
Milan Mandaric (10)....................................... 1,006,100 16.4%
One Oakwood Boulevard, Suite 200
Hollywood, Florida 33020
American Express Company (11)............................. 483,090 7.9%
American Express Tower 200 Vesy Street
New York, New York 10285
Ryback Management Corporation (12)........................ 473,684 7.7%
7711 Carondelet Avenue
St. Louis, Missouri 63105
State Street Bank and Trust Company (13).................. 394,386 6.4%
225 Franklin Street
Boston, Massachusetts
First Pacific Advisors, Inc. (14)......................... 360,701 5.9%
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
</TABLE>
12
<PAGE> 17
<TABLE>
<CAPTION>
Shares Beneficially Owned
--------------------------
Number Percent
----------- ---------
<S> <C> <C>
Dimensional Fund Advisors, Inc. (15)...................... 344,000 5.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ------------------------------
* Less than 1% of the outstanding common stock.
(1) The number of shares shown in the table includes (i) 140,350 shares
issuable to the Michael L. Musto Revocable Living Trust (the "MLM Trust")
upon the conversion of the 6 3/4% Convertible Subordinated Notes due 2004
(the "Notes"), purchased by the MLM Trust on January 7, 1999, which are
convertible into shares of Reptron common stock at the rate of 35.0877
shares of common stock per $1,000 principal amount of the Notes; (ii)
1,477,704 shares held by MLM Investment Company Limited Partnership
("MLMLP") of which MLM, Inc., a Nevada corporation ("MLM, Inc."), is the
managing general partner; Mr. Musto is the president and controlling
shareholder of MLM, Inc., and has sole voting and dispositive power over
the shares held by MLMLP; and (iii) 464,848 held in Reptron's 401(k) plan.
Excludes 4,000 shares subject to options that are currently exercisable by
Mr. Musto's mother. Mr. Musto disclaims beneficial ownership of his
mother's shares.
(2) The number of shares shown in the table includes 112,500 shares subject to
options that are currently exercisable.
(3) The number of shares shown in the table includes 25,000 shares subject to
options that are currently exercisable.
(4) The number of shares shown in the table includes 5,000 shares subject to
options that are currently exercisable.
(5) The number of shares shown in the table includes 20,000 shares subject to
options that are currently exercisable.
(6) The number of shares shown in the table includes 2,500 shares subject to
options that are currently exercisable.
(7) The number of shares shown in the table includes 5,000 shares subject to
options that are currently exercisable.
(8) The number of shares shown in the table represents the number of shares
subject to options that are currently exercisable.
(9) The number of shares in the table includes 203,312 shares subject to
options that are currently exercisable.
(10) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on September 10, 1998.
(11) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on January 22, 1999. These shares have also been reported by
American Express Financial Corporation.
(12) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on February 10, 1999, and includes 473,684 shares issuable to
Lindner Dividend Fund upon the conversion of the Notes.
13
<PAGE> 18
(13) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on March 19, 1999 and represents the number of shares of
Reptron common stock issuable upon the conversion of the Notes. The shares
are held by State Street Bank and Trust Company, as trustee for General
Motors Employees Domestic Group Pension Trust and General Motors Employees
Global Group Pension Trust. The shares have also been reported by General
Motors Investment Management Corporation.
(14) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on February 12, 1999.
(15) The number of shares shown in the table is based upon a Schedule 13G filed
with the SEC on February 11, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Under U.S. securities laws, directors, executive officers and persons
holding more than 10% of Reptron's common stock must report their initial
ownership of the common stock and any changes in that ownership to the SEC. The
SEC has designated specific due dates for these reports and Reptron must
identify in this proxy statement those persons who did not file these reports
when due. Based solely on its review of copies of the reports filed with the SEC
and written representations of its directors and executive officers, Reptron
believes all persons subject to reporting filed the required reports on time in
1998, except for the following: Messrs. Jack Killoren, Keith Steenland and Neil
Kreitman each failed to timely file a Form 3; Mr. Patrick J. Flynn failed to
timely file a Form 4 relating to the exercise of a stock option; Messrs. Greg G.
Gross and John J. Mitcham each failed to timely file a Form 4 relating to the
grant of stock options; and Messrs. Paul J. Plante, Michael Branca, Patrick J.
Flynn, Michael Nichols and Greg J. Gross each failed to timely file a Form 5
relating to the repricing of certain stock options.
14
<PAGE> 19
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of March 1, 1999, concerning
Reptron's executive officers, continuing directors, and nominees for re-election
as directors.
<TABLE>
<CAPTION>
Year First
Became a
Name Position(s) Age Director
- ---- ----------- --- ----------
<S> <C> <C> <C>
Michael L. Musto (1).............. President, Chief Executive 57 1973
Officer, and Director (Class
I -- term expiring in 1999;
nominee for a term expiring in
2002)
Paul J. Plante.................... Chief Operating Officer and 41 1994
Director (Class I -- term expiring
in 1999; nominee for a term
expiring in 2002)
Michael Branca.................... Chief Financial Officer 39 --
Patrick J. Flynn.................. President -- K-Byte Manufacturing 58 --
Jack Killoren..................... Vice President -- Passive 47 --
Component Marketing
Michael R. Nichols................ Vice President -- Sales 42 --
Keith Steenland................... Vice President -- Semiconductor 51 --
Marketing
Neil Kreitman..................... Chief Operating Officer -- K-Byte 43 --
Manufacturing Division
Gregory J. Gross.................. Treasurer 35 --
Leigh A. Adams (1)(2)............. Corporate Credit Manager, 34 1994
Secretary, and Director (Class
III -- term expiring in 2000)
William L. Elson (3).............. Director (Class II -- term 51 1994
expiring in 2001)
John J. Mitcham (3)............... Director (Class II -- term 58 1998
expiring in 2001)
</TABLE>
- ---------------
(1) Mr. Musto and Ms. Adams serve on Reptron's Stock Option Committee.
(2) Ms. Adams is the daughter of Mr. Musto.
(3) Messrs. Elson and Mitcham serves on Reptron's Audit and Compensation
Committees.
MICHAEL L. MUSTO. Mr. Musto has been the President, Chief Executive Officer
and a director of Reptron since its inception in 1973. Prior to 1973, Mr. Musto
worked for nine
15
<PAGE> 20
years in electronic components distribution for Northland Electronics and
Diplomat Electronics.
PAUL J. PLANTE. Mr. Plante was appointed Chief Operating Officer of Reptron
in January 1997 and has been a director since 1994. Mr. Plante has been employed
by Reptron since 1986, and previously served as its Vice President of Finance,
Chief Financial Officer and Treasurer (1987-1997). From 1983-1986, he was
Controller of K-Byte Manufacturing, which is now a division of Reptron. Prior to
1983, Mr. Plante worked for a regional accounting firm (1980-83). Mr. Plante is
a Certified Public Accountant and is a graduate of Michigan State University,
with a Bachelor of Arts degree in accounting. He also has an MBA degree from the
University of South Florida.
MICHAEL BRANCA. Mr. Branca was appointed Chief Financial Officer in July
1997. Prior to joining Reptron, Mr. Branca served as Vice President of Business
Development and Financial Operations at Utility Partners, LC from 1996 to 1997
and Chief Financial Officer of IVANS, Inc.'s wholly owned subsidiary, Pivotal,
Inc., from 1995 to 1996. From 1982 to 1995, Mr. Branca held various positions
with IBM Corporation ("IBM"), including Division Controller for IBM's Multimedia
Systems Division and Controller for IBM's Enterprise Systems Division. Mr.
Branca has a Bachelor of Science degree in Business Management from Cornell
University and a MBA in Finance from the University of Scranton.
PATRICK J. FLYNN. Mr. Flynn has been employed by Reptron since 1986 as
President of K-Byte Manufacturing. He has over 30 years of experience in the
electronics business. He was employed by the KTB Group (an engineering firm) in
Detroit from 1966 to 1983. During his employment with the KTB Group, Mr. Flynn
served in a number of capacities, including as Executive Vice President and
Chief Operating Officer. He purchased K-Byte Manufacturing from the KTB Group in
1983 and was the sole owner of K-Byte Manufacturing prior to its acquisition by
Reptron in 1986. Mr. Flynn is a graduate of the University of Detroit with a
Bachelor of Science degree in electrical engineering.
JACK KILLOREN. Mr. Killoren has served as Reptron's Vice President of
Passive Component Marketing since 1998. Prior to joining Reptron, Mr. Killoren
was Senior Vice President of Marketing of Sterling Electronics, Inc.
(1987-1998). He is a graduate of Southwest Missouri State University with a
Bachelor of Science degree in industrial technology and minor in business
administration.
MICHAEL R. NICHOLS. Mr. Nichols was promoted to Vice President of Sales in
1990 and is responsible for all sales activity for Reptron Distribution. Prior
to his current role, Mr. Nichols held several positions with Reptron, including
southeast regional sales manager (1985-1990), sales manager for the Tampa sales
office (1982-1985), and field salesperson. Mr. Nichols has been employed by
Reptron since 1978. He is a graduate of the University of Florida with a
Bachelor of Arts degree in management and marketing.
KEITH STEENLAND. Mr. Steenland has served as Reptron's Vice President of
Semiconductor Marketing since 1998. Prior to joining Reptron, Mr. Steenland was
employed by
16
<PAGE> 21
Sterling Electronics, Inc. as Vice President of Semiconductor Marketing
(1994-1998) and General Manager (1993-1994).
NEIL KREITMAN. Mr. Kreitman joined Reptron as Vice President of K-Byte
Manufacturing in 1997 and became Chief Operating Officer of K-Byte Manufacturing
in January 1998. Prior to joining Reptron, Mr. Kreitman served as Director of
AT&T Paradyne Corporation (1991-1994) and Senior Vice President of Operations of
Westell Inc. (1995-1997).
GREGORY J. GROSS. Mr. Gross was appointed Treasurer of Reptron in 1997.
Prior to such appointment, he served as Assistant Treasurer of Reptron
(1996-1997). Mr. Gross was an audit manager for Grant Thornton LLP from
1991-1996. Mr. Gross is a Certified Public Accountant and a graduate of
University of South Florida, with a Bachelor of Science degree in accounting.
LEIGH A. ADAMS. Ms. Adams serves as Reptron's secretary and has been a
director since 1994. Ms. Adams has served in a number of administrative
positions, including Operations Manager (1989-1991) and Corporate Credit Manager
(1991-present).
WILLIAM L. ELSON. Mr. Elson has served as Reptron's outside general counsel
since 1979 and has been a director since 1994. He has practiced law as a sole
practitioner since 1975 and worked for Coopers & Lybrand from 1973 to 1975. Mr.
Elson is a Certified Public Accountant and is a graduate of Wayne State
University, with a J.D. degree and a Bachelor of Science degree in accounting.
JOHN J. MITCHAM. Mr. Mitcham has been a director of Reptron since 1998.
Since 1995, Mr. Mitcham has been President and Chief Executive Officer of
Tricord Systems, Inc., and serves on that Company's Board of Directors.
Previously, Mr. Mitcham served as President of AT&T Paradyne Corporation and
President of Paradyne Corporation (1988-1995). Mr. Mitcham holds a Bachelor's
degree in business administration from the University of Texas.
17
<PAGE> 22
EXECUTIVE COMPENSATION
Under rules established by the SEC, Reptron is required to provide certain
information concerning total compensation earned or paid to: (1) the Chief
Executive Officer of Reptron; (2) the four other most highly compensated
executive officers whose annual salaries and bonuses exceeded $100,000 during
1998; and (3) up to two additional officers whose annual salaries and bonuses
exceeded $100,000 during 1998 but who were not executive officers at the end of
fiscal year 1998 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
The following table sets forth certain compensation information for the
Named Executive Officers.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
FISCAL ----------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(2) BONUS($) COMPENSATION($)(3)
- --------------------------- ------ ------------ -------- ------------------
<S> <C> <C> <C> <C>
Michael L. Musto.......................... 1998 $400,000 $ -- $ 15
Chairman of the Board, President 1997 400,000 -- 41
and Chief Executive Officer 1996 400,000 -- 41
Paul J. Plante............................ 1998 $300,000 $ -- $915
Chief Operating Officer 1997 250,000 -- 941
1996 200,000 -- 941
Patrick J. Flynn.......................... 1998 $250,000 -- $915
President, 1997 225,000 -- 941
K-Byte Manufacturing 1996 225,000 -- 941
Michael R. Nichols........................ 1998 $200,000 $42,000 $ 15
Vice President, 1997 200,000 -- 41
Sales 1996 200,000 -- 41
Jack Killoren............................. 1998 $250,000 $ -- $915
Vice President, 1997 -- -- --
Passive Component Marketing 1996 -- -- --
Gary Bolohan(4)........................... 1998 $208,911 -- $ 15
President, 1997 225,000 -- 41
Reptron Distribution 1996 225,000 -- 41
</TABLE>
- ------------------------------
(1) The aggregate amount of perquisites and other personal benefits, if any, did
not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported for each Named Executive Officer and has therefore been omitted.
(2) Includes any amount deferred by the executive pursuant to Reptron's 401(k)
plan.
(3) Includes annual premiums paid by Reptron for a $10,000 life insurance policy
for each of the executive officers. Also includes the amount contributed by
Reptron to the account of each named executive officer under Reptron's
401(k) plan.
(4) Mr. Bolohan was not employed by Reptron at the end of fiscal year 1998.
18
<PAGE> 23
OPTION GRANTS DURING FISCAL YEAR 1998
- --------------------------------------------------------------------------------
The following table sets forth information concerning options granted to
the Named Executive Officers during 1998:
<TABLE>
<CAPTION>
Potential
Realizable Value
At Assumed Annual
Rates Of
Stock Price
Appreciation For
Individual Grants(1) Option Term(2)
- -------------------------------------------------------------------------------------------------- ---------------------------
Market
Percent of Total Price of
Number of Options Underlying
Securities Granted Exercise or Securities
Underlying to Employees in Base Price on Date Expiration
Name Options Granted Fiscal Year ($/Sh)(3) of Grant Date 5% ($) 10% ($)
- --------------------- --------------- ---------------- ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael L. Musto -- -- -- -- -- -- --
Paul J. Plante 150,000 24% $ 6.00 $4.16 1/05/08 $ 116,430.25 $ 718,495.30
150,000 24% $ 6.00 $4.16 12/28/08 $ 116,430.25 $ 718,495.30
Patrick J. Flynn -- -- -- -- -- -- --
Michael R. Nichols -- -- -- -- -- -- --
Jack Killoren 20,000 3% $ 6.00 $4.16 1/21/08 $ 15,524.03 $ 95,799.37
Gary Bolohan -- -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) Each of these options was granted pursuant to the Reptron ISO Plan and is
subject to the terms of such plan. As long as the optionee maintains
continuous employment with Reptron, these options vest over a four year
period at a rate of one-fourth of the shares on each anniversary of the date
of grant.
(2) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if they were exercised at the end of the
option term. The assumed 5% and 10% rates of stock appreciation are based on
appreciation from the exercise price per share. These rates are provided in
accordance with the rules of the SEC and do not represent Reptron's estimate
or projection of the future price of Reptron's Common Stock. Actual gains,
if any, on stock option exercises are dependent on the future financial
performance of Reptron, overall stock market conditions and the option
holders' continued employment through the vesting period.
(3) Effective as of November 2, 1998, Reptron's Board of Directors approved an
option repricing program whereby the executive officers that held options
with exercise prices in excess of $6.00 per share were offered the
opportunity to have such options repriced to $6.00 per share, provided such
officers agreed to not exercise the repriced option for a period of one year
from the date of the repricing. The information in the above table reflects
the option repricing program.
19
<PAGE> 24
OPTION EXERCISES DURING FISCAL YEAR 1998 AND FISCAL YEAR END OPTION VALUES
- --------------------------------------------------------------------------------
The following table sets forth information concerning options exercised by
the Named Executive Officers during fiscal year 1998 and the number and value of
options held at fiscal year end. Reptron does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options at
Shares December 31, 1998 December 31, 1998(2)
Acquired on Value --------------------------- ---------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Musto -- -- -- -- -- --
Paul J. Plante -- -- 112,500 287,500 $9,375 --
Patrick J. Flynn 55,000 $336,875 25,000 25,000 -- --
Michael R. Nichols -- -- 20,000 20,000 -- --
Jack Killoren -- -- 5,000 15,000 -- --
Gary Bolohan -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) Value realized is calculated based on the difference between the option
exercise price and the closing market price of Reptron's common stock on the
date of exercise multiplied by the number of shares to which the exercise
relates.
(2) The closing price for Reptron's common stock as reported on Nasdaq on
December 31, 1998, was $5.1875. Value is calculated on the basis of the
difference between the option exercise price and $5.1875 multiplied by the
number of shares of Reptron's common stock to which the exercise relates.
20
<PAGE> 25
10-YEAR OPTION REPRICINGS
- --------------------------------------------------------------------------------
The following table sets forth information concerning the repricing of
stock options held by the Named Executive Officers during the last 10 years. For
further information with respect to such option repricing, see "Stock Option
Committee Report on Repricing of Stock Options" below.
<TABLE>
<CAPTION>
Number Of
Securities Length Of Original
Underlying Market Price Of Exercise Price At Option Term
Options Stock At Time Of Time Of Remaining At Date
Repriced Or Repricing Or Repricing Or New Exercise Of Repricing Or
Name Date Amended Amendment Amendment Price Amendment(1)
---- -------- ----------- ---------------- ----------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Musto -- -- -- -- -- --
Paul J. Plante 11/02/98 50,000 $4.00 $18.00 $6.00 8 years
11/02/98 150,000 $4.00 $11.00 $6.00 9 years
Patrick J. Flynn 11/02/98 10,000 $4.00 $18.00 $6.00 8 years
11/02/98 40,000 $4.00 $18.00 $6.00 8 years
Michael R. Nichols 11/02/98 40,000 $4.00 $18.00 $6.00 8 years
Jack Killoren 11/02/98 20,000 $4.00 $12.07 $6.00 9 years
Gary Bolohan 11/02/98 -- -- -- -- --
</TABLE>
- ------------------------------
(1) The length of original option terms did not change as a result of the
repricing; represents approximate years remaining.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- --------------------------------------------------------------------------------
During 1998, the Compensation Committee consisted of Messrs. Elson and
Mitcham, both of whom are outside directors. Under rules established by the SEC,
Reptron is required to provide a description of certain transactions and
relationships between either Compensation Committee member and Reptron. Mr.
Elson provides legal services to Reptron and received approximately $374,000 for
services rendered during 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following Report of the Compensation Committee and the performance
graph included elsewhere in this Proxy Statement do not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Reptron filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent Reptron specifically incorporates this Report
or the performance graph by reference in such filings.
21
<PAGE> 26
COMPENSATION POLICY: Reptron's compensation program for executives consists of
three key elements:
- a base salary
- a performance-based annual bonus
- periodic grants of stock options
The Compensation Committee believes that this three-part approach best
serves the interests of Reptron and its shareholders because it enables Reptron
to meet the requirements of the highly competitive environment in which Reptron
operates while ensuring that executive officers are compensated in a way that
advances both the short-and long-term interests of shareholders. In determining
compensation, consideration is given both to Reptron's overall performance and
to individual performance, taking into account the contributions made by the
executive toward improving Reptron's performance. Consideration is also given to
the executive's position, location and level of responsibility, and the job
performance of the executive in planning, providing direction for, and
implementing Reptron's strategy. The Committee's primary objective in
establishing compensation programs is to support Reptron's goal of maximizing
the value of shareholders' investment in Reptron.
- - BASE SALARY. Base salaries for Reptron's executive officers, as well as
changes in such salaries, are based upon such factors as competitive industry
salaries; a subjective assessment of the nature of the position; the
contribution and experience of the executive, and the length of the
executive's service. The Committee believes that Reptron's compensation of its
executive officers falls within the median of industry compensation levels.
Base salaries are based upon qualitative and subjective factors, and no
specific formula is applied to determine the weight of each factor.
- - ANNUAL BONUS. Payments to Reptron's executive officers under annual bonus
plans are earned through successful completion of stated objectives, which
Reptron has determined to be critical elements for successful operations. The
Chief Executive Officer and Chief Operating Officer are eligible to receive
annual bonus payments based solely on achieving certain levels of
profitability.
- - STOCK OPTIONS. Reptron's long term incentives are in the form of stock option
awards. The objective of these awards is to advance Reptron's and its
shareholders' longer term interests and complement incentives tied to annual
performance. These awards provide rewards to executives upon the creation of
incremental shareholder value and attainment of long term earnings goals.
Stock options only produce value to executives if the price of Reptron's stock
appreciates, thereby directly linking the interests of our executives with
those of our shareholders. The executive's right to the stock options vests
over a period prescribed by Reptron's Stock Option Committee.
22
<PAGE> 27
COMPENSATION OF REPTRON'S CHIEF EXECUTIVE OFFICER: Mr. Michael L. Musto's
compensation results from his participation in the same compensation program as
the other executives of Reptron. Mr. Musto's 1998 compensation was reviewed by
the Compensation Committee applying the principles outlined above in the same
manner as they were applied to the other executives of Reptron. In addition, the
Committee reviews the compensation paid to chief executive officers of
comparable companies and considers those compensation levels in determining Mr.
Musto's compensation.
INTERNAL REVENUE CODE LIMITS ON DEDUCTIBILITY OF COMPENSATION: Section 162(m)
of the Internal Revenue Code generally disallows a tax deduction to public
corporations for compensation over $1,000,000 paid for any fiscal year to the
corporation's chief executive officer and four other most highly compensated
executive officers as of the end of any fiscal year. However, the statue exempts
qualifying performance-based compensation from the deduction limit if certain
requirements are met. Reptron expects no adverse tax consequences under Section
162(m) for 1998.
Submitted by the Compensation Committee
William L. Elson
John J. Mitcham
23
<PAGE> 28
STOCK OPTION COMMITTEE REPORT ON REPRICING OF STOCK OPTIONS
- --------------------------------------------------------------------------------
In November 1998, the Stock Option Committee reviewed the options held by
Reptron's employees and executive officers in light of the decline in the price
of Reptron's common stock. The decline in price had resulted in a substantial
number of stock options granted pursuant to the Reptron ISO Plan having exercise
prices well above the recent trading prices for Reptron's common stock. The
Stock Option Committee was of the view that stock options with exercise prices
well above the market value of Reptron's common stock was noncompetitive and
could result in the loss of key executive officers and employees, as well as
defeating the purpose of the options as an incentive to improve shareholder
value.
Accordingly, in an effort to ensure that Reptron continues to provide
meaningful, long-term incentive compensation to and retains its employees and
executive officers through stock option grants, effective November 2, 1998, the
Committee recommended and the Board approved the repricing of all outstanding,
unexercised stock options held by Reptron's employees and executive officers. In
response to the offer, options for 1,133,264 shares, with exercise prices
ranging from $10.00 to $18.00, were repriced to $6.00 per share, which was $2.00
per share above the $4.00 closing price of Reptron's stock on November 2, 1998.
The repriced options retained the same vesting schedule, however, as a condition
to repricing of the options held by Reptron's executive officers, the executive
officers agreed not to exercise their repriced options for a period of one year
from the date of repricing.
Submitted by the Stock Option Committee
Michael L. Musto
Leigh A. Adams
24
<PAGE> 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, Reptron and its subsidiaries engages in transactions
with companies where one of Reptron's executive officers or directors or a
member of his or her immediate family has a direct or indirect interest. All of
these transactions, including those described below, are in the ordinary course
of business and at competitive rates and prices.
Reptron leases one of its sales offices (located in Detroit, Michigan) from
Michael L. Musto, Reptron's Chief Executive Officer. This facility was the
headquarters of Reptron prior to the relocation to Tampa in 1986. The building
includes office and warehouse space and totals approximately 10,000 square feet.
Rent expense on this facility totalled $68,000 in 1998. The lease expires in
November 2003. Reptron's K-Byte Manufacturing division leases a total of 110,000
square feet of manufacturing and administrative offices in Hibbing, Minnesota,
which facility is owned in part by four individuals on the senior management
team of K-Byte Manufacturing. Rent expense on these offices totalled $336,000 in
1998. The lease expires in December 2002.
Until August 1998, Reptron leased an aircraft from a corporation controlled
by Mr. Musto. Reptron terminated the lease in conjunction with the sale of the
aircraft. Rent paid for the use of the aircraft totaled approximately $160,000
in 1998. Reptron was responsible for all costs associated with the operation of
the aircraft, including fuel, maintenance, storage and crew salary and expenses.
To the extent that Mr. Musto used the aircraft for personal purposes, he was
required to reimburse Reptron for the costs associated with such personal use.
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<PAGE> 30
REPTRON STOCK PRICE PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total returns for
Reptron's common stock as compared with the cumulative total return for the
NASDAQ Stock Market (U.S.) Index and the average performance of a group
consisting of Reptron's peer corporations on a line-of-business basis. The
corporations making up the peer group are Bell Microproducts, Benchmark
Electronics, DII Group, Inc., IEC Electronics, Jaco Electronics, Kent
Electronics, Nu Horizons Electronics and Sanmina. The cumulative return of
Reptron was computed by dividing the difference between the price of Reptron's
common stock at the end and the beginning of the measurement period (March 28,
1994 to December 31, 1998) by the price of Reptron's common stock at the
beginning of the measurement period. The total return calculations are based
upon an assumed $100 investment on March 28, 1994, the date of Reptron's initial
public offering.
COMPARISON OF 57 MONTH CUMULATIVE TOTAL RETURN*
AMONG REPTRON ELECTRONICS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
NASDAQ
REPTRON STOCK
MEASUREMENT PERIOD ELECTRONICS, MARKET
(FISCAL YEAR COVERED) INC. PEER GROUP (U.S.)
<S> <C> <C> <C>
3/28/94 100 100 100
3/94 98 93 96
6/94 86 88 92
9/94 70 106 99
12/94 68 106 98
3/95 97 106 107
6/95 122 125 122
9/95 138 160 137
12/95 117 175 139
3/96 127 188 145
6/96 138 188 167
9/96 137 163 183
12/96 159 198 171
3/97 157 178 162
6/97 185 264 191
9/97 141 338 224
12/97 80 263 210
3/98 88 238 245
6/98 86 243 252
9/98 39 167 228
</TABLE>
26
<PAGE> 31
SHAREHOLDER PROPOSALS
Shareholders interested in presenting a proposal for consideration at
Reptron's annual meeting of shareholders in 2000 may do so by following the
procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934
and Reptron's bylaws. To be eligible for inclusion, shareholder proposals must
be received by Reptron's Corporate Secretary no later than January 5, 2000.
OTHER MATTERS
As of the date of this proxy statement, Reptron knows of no business that
will be presented for consideration at the Annual Meeting other than the items
referred to above. If any other matter is properly brought before the meeting
for action by shareholders, proxies in the enclosed form returned to Reptron
will be voted in accordance with the recommendation of the Board of Directors
or, in the absence of such a recommendation, in accordance with the judgment of
the proxy holder.
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<PAGE> 32
APPENDIX A
REPTRON ELECTRONICS, INC.
AMENDED AND RESTATED INCENTIVE STOCK OPTION PLAN
1. PURPOSE. The purpose of this Incentive Stock Option Plan (the "Plan") is to
further the interest of Reptron Electronics, Inc., a Florida corporation
(the "Company"), its subsidiaries and its shareholders by providing
incentives in the form of stock option grants to key employees who
contribute materially to the success and profitability of the Company. The
grants will recognize and reward outstanding individual performances and
contributions and will give such persons a proprietary interest in the
Company, thus enhancing their personal interest in the Company's continued
success and progress. This program will also assist the Company and its
subsidiaries in attracting and retaining key persons. The options granted
under this Plan are intended to be incentive stock options as defined under
Section 422 of the Internal Revenue Code of 1986, as amended, and will be
taxed under that Section.
2. DEFINITIONS. The following definitions shall apply to this Plan:
(A) "AGREEMENT" means a written agreement entered into between the Company
and a Recipient which sets out the terms and restrictions of the
Option granted to the Recipient.
(B) "BOARD" means the board of directors of the Company.
(C) "CAUSE" shall exist upon any of the following:
(1) Any intentional misapplication by the Recipient of the Company's
funds, intended to result directly or indirectly in significant gain
or personal enrichment at the expense of the Company, or any other
act of dishonesty committed by the Recipient in connection with the
Company's business;
(2) The Recipient's conviction of a crime involving moral turpitude;
(3) The Recipient's non-performance or non-observance in any material
respect of any requirement with respect to the Recipient's
employment; or
(4) Any other action by the Recipient involving willful and deliberate
malfeasance or negligence in the performance of the Recipient's
duties.
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(D) "CHANGE OF CONTROL" means any replacement of 50 percent or more of
the members of the Board which follows, and is directly or indirectly
a result of, any one or more of the following:
(1) a cash tender offer or exchange offer for the Common Stock;
(2) a solicitation of proxies other than by the Company's management or
the Board;
(3) acquisition of beneficial ownership of shares having 50 percent or
more of the total number of votes that may be cast for the election
of members of the Board by any person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, for the purpose of changing control of the Company; or (iv)
any merger, business combination, sale of assets or other
extraordinary corporate transaction undertaken for the purpose of
changing control of the Company.
(E) "CODE" means the Internal Revenue Code of 1986, as amended.
(F) "COMMITTEE" MEANS THE STOCK OPTION COMMITTEE APPOINTED BY THE BOARD
FOR THE PURPOSE OF ADMINISTERING THE PLAN. IF THE BOARD DOES NOT
APPOINT A STOCK OPTION COMMITTEE, "COMMITTEE" MEANS THE BOARD.
(G) "COMMON STOCK" means the Common Stock, par value $.01 per share of
the Company or such other class of shares or securities as to which
the Plan may be applicable pursuant to Section 12 herein.
(H) "COMPANY" means Reptron Electronics, Inc.
(I) "DATE OF GRANT" means the date on which the Option is granted.
(J) "DISPOSE OF" means pledge, hypothecate, give, assign, encumber,
sell, grant an option with respect to, or otherwise transfer, to any
party whether or not such party is a shareholder of the Company.
(K) "EMPLOYEE" means any person employed on an hourly or salaried basis
by the Company or any parent or Subsidiary of the Company that now
exists or hereafter is organized or acquired by or acquires the
Company.
(L) "FAIR MARKET VALUE" means the fair market value of the Common Stock.
If the Common Stock is not publicly traded on the date as of which
fair market value is being determined, the Board shall determine the
fair market value of the Shares, using such factors as the Board
considers relevant, such as the price at which recent sales have been
made, the book value of the Common Stock, and the Company's current
and projected earnings. If the Common Stock is publicly traded on the
date as of which fair market value is being determined, the fair
market value is the average of the high and low sale prices of the
Common Stock as reported by the National Association of Securities
Dealer Automated
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Quotations ("NASDAQ") on that date or, if the Common Stock is listed
on a stock exchange, the average of the high and low sale prices of
the Common Stock on that date, as reported in The Wall Street
Journal. If trading in the stock or a price quotation does not occur
on the date as of which fair market value is being determined, the
next preceding date on which the stock was traded or a price was
quoted will determine the fair market value.
(M) "INCENTIVE STOCK OPTION" means a stock option granted pursuant to
either this Plan or any other plan of the Company that satisfies the
requirements of Section 422 of the Code and that entitles the
Recipient to purchase stock of the Company or in a corporation that
at the time of grant of the option was a parent or subsidiary of the
Company or a predecessor corporation of any such corporation.
(N) "OPTION" means a stock option granted pursuant to the Plan.
(O) "OPTION SHAREHOLDER" shall mean an Employee who has exercised his or
her Option.
(P) "OPTION SHARES" means Shares issued upon exercise of an Option.
(Q) "PLAN" means this Reptron Electronics, Inc. Amended and Restated
Incentive Stock Option Plan.
(R) "RECIPIENT" means an Employee who receives an Option.
(S) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 12 of the Plan.
(T) "SUBSIDIARY" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the Company
at any time during the existence of this Plan.
3. ADMINISTRATION. THE COMMITTEE SHALL ADMINISTER THE PLAN. THE COMMITTEE HAS
THE EXCLUSIVE POWER TO SELECT THE RECIPIENTS OF OPTIONS PURSUANT TO THE
PLAN, TO ESTABLISH THE TERMS OF THE OPTIONS GRANTED TO EACH RECIPIENT, AND
TO MAKE ALL OTHER DETERMINATIONS NECESSARY OR ADVISABLE. THE COMMITTEE HAS
THE SOLE DISCRETION TO DETERMINE WHETHER THE PERFORMANCE OF AN EMPLOYEE
WARRANTS AN OPTION, AND TO DETERMINE THE SIZE AND TYPE OF THE OPTION. THE
COMMITTEE HAS FULL AND EXCLUSIVE POWER TO CONSTRUE AND INTERPRET THE PLAN,
TO PRESCRIBE, AMEND, AND RESCIND RULES AND REGULATIONS RELATING TO THE PLAN,
AND TO TAKE ALL ACTIONS NECESSARY OR ADVISABLE FOR THE PLAN'S
ADMINISTRATION. THE COMMITTEE, IN THE EXERCISE OF ITS POWERS, MAY CORRECT
ANY DEFECT OR SUPPLY ANY OMISSION, OR RECONCILE ANY INCONSISTENCY IN THE
PLAN, OR IN ANY AGREEMENT, IN THE MANNER AND TO THE EXTENT IT DEEMS
NECESSARY OR EXPEDIENT TO MAKE THE PLAN FULLY EFFECTIVE. IN EXERCISING THIS
POWER, THE COMMITTEE MAY RETAIN COUNSEL AT THE EXPENSE OF THE COMPANY. THE
COMMITTEE ALSO HAS THE POWER TO DETERMINE THE DURATION AND PURPOSES OF
LEAVES OF ABSENCE WHICH MAY BE GRANTED TO A RECIPIENT
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<PAGE> 35
WITHOUT CONSTITUTING A TERMINATION OF THE RECIPIENT'S EMPLOYMENT FOR
PURPOSES OF THE PLAN. ANY OF THE COMMITTEE'S DETERMINATIONS SHALL BE FINAL
AND BINDING ON ALL PERSONS. A MEMBER OF THE COMMITTEE SHALL NOT BE LIABLE
FOR PERFORMING ANY ACT OR MAKING ANY DETERMINATION IN GOOD FAITH.
4. SHARES SUBJECT TO PLAN. SUBJECT TO THE PROVISIONS OF SECTION 12 OF THE
PLAN, THE MAXIMUM AGGREGATE NUMBER OF SHARES THAT MAY BE SUBJECT TO OPTIONS
UNDER THE PLAN SHALL BE 2,000,000. If an Option should expire or become
unexercisable for any reason without having been exercised, the unpurchased
Shares that were subject to the Option shall, unless the Plan has then
terminated, be available for other Options under the Plan.
5. PARTICIPANTS.
(A) ELIGIBLE EMPLOYEES. Each Employee, as the Committee in its sole
discretion designates, is eligible to participate in this Plan. The
Committee's award of an Option to a participant in any year does not
require the Committee to award an Option to that participant in any
other year. Furthermore, the Committee may award different Options to
different participants and has full discretion to choose whether to
grant Options to any eligible participant. The Committee may consider
such factors as it deems pertinent in selecting participants and in
determining the amount of their Options, including, without
limitation, (i) the financial condition of the Company or its
Subsidiaries; (ii) expected profits for the current or future years;
(iii) the contributions of a prospective participant to the
profitability and success of the Company or its Subsidiaries; and (iv)
the adequacy of the prospective participant's other compensation.
Participants may include persons to whom stock, stock options, stock
appreciation rights, or other benefits previously were granted under
this or another plan of the Company or any Subsidiary, whether or not
the previously granted benefits have been fully exercised or vested.
(B) NO RIGHT OF EMPLOYMENT. A Recipient's right, if any, to continue to
serve the Company and its Subsidiaries as an officer, Employee, or
otherwise will not be enlarged or otherwise affected by his
designation as a participant under this Plan, and such designation
will not in any way restrict the right of the Company or any
Subsidiary, as the case may be, to terminate at any time the
employment or affiliation of any participant.
6. OPTION REQUIREMENTS. Each Option granted to an Employee under the Plan
shall contain such provisions as the Committee at the Date of Grant shall
deem appropriate. Each Option granted to an Employee will satisfy the
following requirements:
(A) WRITTEN AGREEMENT. Each Option granted to an Employee will be
evidenced by an Agreement. The terms of the Agreement need not be
identical for different participants. The Agreement shall include a
description of the substance of each of the requirements in this
Section with respect to that particular Option.
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<PAGE> 36
(B) NUMBER OF SHARES. Each Agreement shall specify the number of Shares
that may be purchased by exercise of the Option.
(C) EXERCISE PRICE. Except as provided in Section 6(l), the exercise
price of each Share subject to an Option shall equal the exercise
price designated by the Committee, but shall not be less than the Fair
Market Value of the Share on the Option's Date of Grant.
(D) DURATION OF OPTION. Except as provided in Section 6(l), each Option
granted to an Employee shall expire on the tenth anniversary of its
Date of Grant or, at such earlier date as is set by the Committee in
establishing the terms of the Option at grant. If the Recipient's
employment with the Company terminates before the expiration date of
an Option, the Options owned by the Recipient shall expire on the
earlier of the date stated in this subsection or the date stated in
following subsections of this Section. Furthermore, expiration of an
Option may be accelerated under subsection (j) below.
(E) VESTING OF OPTION. Each Agreement shall specify the vesting schedule
applicable to the Option. The Committee, in its sole and absolute
discretion, may accelerate the vesting of any option at any time.
(F) DEATH. IN THE CASE OF THE DEATH OF A RECIPIENT, THE OPTION SHALL
EXPIRE ON THE ONE-YEAR ANNIVERSARY OF THE RECIPIENT'S DEATH, OR IF
EARLIER, THE DATE SPECIFIED IN SUBSECTION (D) ABOVE, UNLESS THE
COMMITTEE SETS AN EARLIER OR LATER EXPIRATION DATE ON THE DATE OF
GRANT, OR A LATER EXPIRATION DATE SUBSEQUENT TO THE DATE OF GRANT BUT
PRIOR TO THE ONE-YEAR ANNIVERSARY OF THE RECIPIENT'S DEATH. DURING THE
PERIOD FOLLOWING THE RECIPIENT'S DEATH AND PRIOR TO THE EXPIRATION OF
THE OPTION, THE OPTION MAY BE EXERCISED TO THE EXTENT IT COULD HAVE
BEEN EXERCISED AT THE TIME THE RECIPIENT DIED, SUBJECT TO ANY
ADJUSTMENT UNDER SECTION 12 HEREIN.
(G) DISABILITY. IN THE CASE OF THE TOTAL AND PERMANENT DISABILITY OF A
RECIPIENT AND A RESULTING TERMINATION OF EMPLOYMENT WITH THE COMPANY,
THE OPTION SHALL EXPIRE ON THE ONE-YEAR ANNIVERSARY DATE OF THE
RECIPIENT'S LAST DAY OF EMPLOYMENT, OR, IF EARLIER, THE DATE SPECIFIED
IN SUBSECTION (D) ABOVE, UNLESS THE COMMITTEE SETS AN EARLIER OR LATER
EXPIRATION DATE ON THE DATE OF GRANT OR A LATER EXPIRATION DATE
SUBSEQUENT TO THE DATE OF GRANT BUT PRIOR TO THE ONE-YEAR ANNIVERSARY
OF THE RECIPIENT'S LAST DAY OF EMPLOYMENT. DURING THE PERIOD FOLLOWING
THE RECIPIENT'S TERMINATION OF EMPLOYMENT BY REASON OF DISABILITY AND
PRIOR TO THE EXPIRATION OF THE OPTION, THE OPTION MAY BE EXERCISED AS
TO THE NUMBER OF SHARES FOR WHICH IT COULD HAVE BEEN EXERCISED AT THE
TIME THE RECIPIENT BECAME DISABLED, SUBJECT TO ANY ADJUSTMENTS UNDER
SECTION 12 HEREIN.
(H) RETIREMENT. IF THE RECIPIENT'S EMPLOYMENT TERMINATES BY REASON OF
NORMAL RETIREMENT UNDER THE COMPANY'S NORMAL RETIREMENT POLICIES, THE
OPTION SHALL EXPIRE ON THE DATE SPECIFIED IN SUBSECTION (D) ABOVE,
UNLESS THE COMMITTEE SETS AN EARLIER EXPIRATION DATE ON THE DATE OF
GRANT. DURING THE PERIOD FOLLOWING THE
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RECIPIENT'S NORMAL RETIREMENT AND PRIOR TO THE EXPIRATION OF THE
OPTION, THE OPTION MAY BE EXERCISED AS TO THE NUMBER OF SHARES FOR
WHICH THE OPTION COULD HAVE BEEN EXERCISED ON THE RETIREMENT DATE,
SUBJECT TO ANY ADJUSTMENT UNDER SECTION 12 HEREIN.
(I) TERMINATION OF SERVICE. IF THE RECIPIENT CEASES EMPLOYMENT FOR ANY
REASON OTHER THAN (I) DEATH, (II) DISABILITY, (III) RETIREMENT (AS
DESCRIBED ABOVE), OR (IV) TERMINATION BY THE COMPANY FOR A REASON
OTHER THAN CAUSE FOLLOWING A CHANGE OF CONTROL, AN OPTION GRANTED TO
THE RECIPIENT WILL EXPIRE 90 DAYS FOLLOWING THE LAST DAY OF THE
RECIPIENT'S EMPLOYMENT WITH THE COMPANY, UNLESS THE COMMITTEE SETS AN
EARLIER OR LATER EXPIRATION DATE ON THE DATE OF GRANT OR A LATER
EXPIRATION DATE SUBSEQUENT TO THE DATE OF GRANT BUT PRIOR TO THE 90TH
DAY FOLLOWING THE RECIPIENT'S LAST DAY OF EMPLOYMENT. DURING THE
PERIOD FOLLOWING THE TERMINATION OF THE RECIPIENT'S EMPLOYMENT AND
PRIOR TO THE EXPIRATION OF THE OPTION, THE OPTION MAY BE EXERCISED
ONLY FOR THE NUMBER OF SHARES FOR WHICH IT COULD HAVE BEEN EXERCISED
ON SUCH TERMINATION DATE, SUBJECT TO ANY ADJUSTMENT UNDER SECTION 12
HEREIN. Notwithstanding any provisions set forth herein or in the
Plan, if the Recipient shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or any parent or Subsidiary, (ii)
breach any covenant not to compete or employment agreement with the
Company or any parent or Subsidiary, or (iii) engage in conduct that
would warrant the Recipient's discharge for Cause, any unexercised
part of the Option shall lapse immediately upon the earlier of the
occurrence of such event or the last day the Recipient is employed by
the Company.
(J) CHANGE OF CONTROL.
(1) If a Change of Control occurs, the Board may vote to immediately
terminate all Options outstanding under the Plan as of the date of
the Change of Control or may vote to accelerate the expiration of
the Options to the 10th day after the effective date of the Change
of Control. If the Board votes to immediately terminate the Options,
it shall make a cash payment to the Recipient equal to the
difference between the Exercise Price and the Fair Market Value of
the Shares that would have been subject to the terminated Option on
the date of the Change of Control.
(2) IF AT ANY TIME FOLLOWING A CHANGE OF CONTROL THE RECIPIENT'S
EMPLOYMENT IS TERMINATED BY THE COMPANY FOR A REASON OTHER THAN
CAUSE, ALL UNEXERCISED OPTIONS THAT (I) ARE HELD BY THE RECIPIENT ON
THE DATE OF SUCH TERMINATION, (II) HAVE NEITHER TERMINATED NOR
EXPIRED IN ACCORDANCE WITH SUBSECTION (J)(1) ABOVE, AND (III) ARE
NOT VESTED AS OF THE DATE OF SUCH TERMINATION SHALL BECOME FULLY
VESTED AND IMMEDIATELY EXERCISABLE AS OF THE DATE OF SUCH
TERMINATION AND SHALL EXPIRE 90 DAYS AFTER THE LAST DAY OF
EMPLOYMENT, OR, IF EARLIER, ON THE DATE SPECIFIED IN SUBSECTION (D)
ABOVE, UNLESS THE COMMITTEE SETS AN EARLIER OR LATER EXPIRATION DATE
ON THE DATE OF GRANT OR A LATER
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EXPIRATION DATE SUBSEQUENT TO THE DATE OF GRANT BUT PRIOR TO THE
90TH DAY FOLLOWING THE RECIPIENT'S LAST DAY OF EMPLOYMENT.
(K) CONDITIONS REQUIRED FOR EXERCISE. Options granted to Recipients
under the Plan shall be exercisable only to the extent they are
vested according to the terms of the Agreement. Furthermore, Options
granted to Employees under the Plan shall be exercisable only if the
issuance of Shares pursuant to the exercise would be in compliance
with applicable securities laws, as contemplated by Section 10 of
the Plan. Each Agreement shall specify any additional conditions
required for the exercise of the Option.
(L) TEN PERCENT SHAREHOLDERS. An Incentive Stock Option granted to an
individual who, on the Date of Grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock
of either the Company or any parent or Subsidiary, shall be granted
at an exercise price of 110% of Fair Market Value on the Date of
Grant and shall be exercisable only during the five-year period
immediately following the Date of Grant. In calculating stock
ownership of any person, the attribution rules of Code Section
424(d) will apply. Furthermore, in calculating stock ownership, any
stock that the individual may purchase under outstanding options
will not be considered.
(M) MAXIMUM OPTION GRANTS. The aggregate Fair Market Value determined
on the Date of Grant, of stock in the Company with respect to which
any Incentive Stock Options under the Plan and all other plans of
the Company or its Subsidiaries (within the meaning of Section
422(b) of the Code) may become exercisable by any individual for the
first time in any calendar year shall not exceed $100,000.
7. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (1) delivers
written notice to the President of the Company (or his delegate, in his
absence) of the decision to exercise, (2) concurrently tenders to the
Company full payment for the Shares to be purchased pursuant to the
exercise, and (3) complies with such other reasonable requirements as the
Committee establishes pursuant to Section 10 of the Plan. Payment for Shares
with respect to which an Option is exercised may be made in cash, or by
certified check or wholly or partially in the form of Common Stock having a
Fair Market Value equal to the exercise price. No person will have the
rights of a shareholder with respect to Shares subject to an Option granted
under this Plan until a certificate or certificates for the Shares have been
delivered to him. An Option granted under this Plan may not be exercised in
increments of less than 100 Shares, or, if less, 100% of the full number of
Shares as to which it can be exercised. A partial exercise of an Option will
not affect the holder's right to exercise the Option from time to time in
accordance with this Plan as to the remaining Shares subject to the Option.
8. LOAN FROM COMPANY TO EXERCISE OPTION. The Committee may, in its discretion
and subject to the requirements of applicable law, recommend to the Company
that it lend
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the Recipient the funds needed by the Recipient to exercise an Incentive
Stock Option. The Recipient shall make application to the Company for the
loan, completing the forms and providing the information required by the
Company. The loan shall be secured by such collateral as the Company may
require, subject to its underwriting requirements and the requirements of
applicable law. The Recipient shall execute a Promissory Note and any other
documents deemed necessary by the Committee.
9. DESIGNATION OF BENEFICIARY. Each Recipient shall designate in the Agreement
he executes, a beneficiary to receive Options awarded hereunder in the event
of his death prior to full exercise of such Options; provided, that if no
such beneficiary is designated or if the beneficiary so designated does not
survive the Recipient, the estate of such Recipient shall be deemed to be
his beneficiary. Recipients may, by written notice to the Committee, change
the beneficiary designated in any outstanding Agreements.
10. TAXES; COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES; LEGENDS. The
Company shall have the right to withhold from payments otherwise due and
owing to the Recipient (or his beneficiary) or to require the Recipient (or
his beneficiary) to remit to the Company in cash upon demand an amount
sufficient to satisfy any federal (including FICA and FUTA amounts), state,
and/or local withholding tax requirements at the time the Recipient (or his
beneficiary) recognizes income for federal, state, and/or local tax purposes
as the result of the receipt of Shares pursuant to the Plan as a condition
to the issuance of Shares upon Option exercise (whether to the Recipient or
to his beneficiary).
Options are exercisable, and Shares can be delivered under this Plan, only
in compliance with all applicable federal and state laws and regulations and
the rules of all stock exchanges on which the Company's stock is listed at
any time. An Option is exercisable only if either (a) a registration
statement pertaining to the Shares to be issued upon exercise of the Option
has been filed with and declared effective by the Securities and Exchange
Commission and remains effective on the date of exercise, or (b) an
exemption from the registration requirements of applicable securities laws
is available. This Plan does not require the Company, however, to file such
a registration statement or to assure the availability of such exemptions.
Any certificate issued to evidence Shares issued under the Plan may bear
such legends and statements, and shall be subject to such transfer
restrictions, as the Committee deems advisable to assure compliance with
federal and state laws and regulations and with the requirements of this
Section. No Option may be exercised, and Shares may not be issued under this
Plan, until the Company has obtained the consent or approval of every
regulatory body, federal or state, having jurisdiction over such matters as
the Committee deems advisable.
Each person who acquires the right to exercise an Option or to ownership of
Shares by bequest or inheritance may be required by the Committee to furnish
reasonable evidence of ownership of the Option as a condition to his
exercise of the Option. In
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addition, the Committee may require such consents and releases of taxing
authorities as the Committee deems advisable.
With respect to persons subject to Section 16 of the Securities Exchange Act
of 1934 ("1934 Act"), transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the 1934 Act or its
successor under the 1934 Act. To the extent any provision of the Plan or
action by the Plan administrators fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Plan administrators.
11. ASSIGNABILITY. An Option granted under this Plan is not transferable except
by will or the laws of descent and distribution. During the lifetime of a
Recipient, all rights of the Options are exercisable only by the Recipient.
12. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange
of shares, stock split, stock dividend, rights offering, or other expansion
or contraction of the Common Stock of the Company occurs, the number and
class of Shares for which Options are authorized to be granted under this
Plan, the number and class of Shares then subject to Options previously
granted to Employees under this Plan, and the price per Share payable upon
exercise of each Option outstanding under this Plan shall be equitably
adjusted by the Committee to reflect such changes. To the extent deemed
equitable and appropriate by the Board, subject to any required action by
shareholders, in any merger, consolidation, reorganization, liquidation or
dissolution, any Option granted under the Plan shall pertain to the
securities and other property to which a holder of the number of Shares of
stock covered by the Option would have been entitled to receive in
connection with such event.
13. LIABILITY OF THE COMPANY. The Company, its parent and any Subsidiary that
is in existence or hereafter comes into existence shall not be liable to any
person for any tax consequences expected but not realized by a Recipient or
other person due to the exercise of an Option.
14. AMENDMENT AND TERMINATION OF PLAN. THE BOARD MAY ALTER, AMEND, OR TERMINATE
THE PLAN FROM TIME TO TIME WITHOUT APPROVAL OF THE SHAREHOLDERS OF THE
COMPANY THE BOARD MAY, HOWEVER, CONDITION ANY AMENDMENT ON THE APPROVAL OF
THE SHAREHOLDERS OF THE COMPANY IF SUCH APPROVAL IS NECESSARY OR ADVISABLE
WITH RESPECT TO TAX, SECURITIES OR OTHER LAWS APPLICABLE TO THE COMPANY, THE
PLAN, RECIPIENTS OR EMPLOYEES. ANY AMENDMENT, WHETHER WITH OR WITHOUT THE
APPROVAL OF SHAREHOLDERS OF THE COMPANY, THAT ALTERS THE TERMS OR PROVISIONS
OF AN OPTION GRANTED BEFORE THE AMENDMENT (UNLESS THE ALTERATION IS
EXPRESSLY PERMITTED UNDER THE PLAN) SHALL BE EFFECTIVE ONLY WITH THE CONSENT
OF THE RECIPIENT OF THE OPTION OR THE HOLDER CURRENTLY ENTITLED TO EXERCISE
THE OPTION.
15. EXPENSES OF PLAN. The Company shall bear the expenses of administering the
Plan.
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<PAGE> 41
16. DURATION OF PLAN. Options may be granted under this Plan only during the 10
years immediately following the effective date of this Plan.
17. APPLICABLE LAW. The validity, interpretation, and enforcement of this Plan
are governed in all respects by the laws of Florida and the United States of
America.
18. EFFECTIVE DATE. The effective date of this Plan, as amended, shall be the
date on which the Board adopts the amended Plan.
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<PAGE> 42
APPENDIX B
REPTRON ELECTRONICS, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of this Non-Employee Director Stock Option Plan
(the "Plan") is to further the interest of the Company and its shareholders by
providing incentives in the form of stock option grants to Non-Employee
Directors who contribute materially to the success and profitability of the
Company. The grants will recognize and reward outstanding individual
performances and contributions and will give such persons a proprietary interest
in the Company, thus enhancing their personal interest in the Company's
continued success and progress. This program will also assist the Company in
attracting and retaining key directors. The options granted under this Plan will
be nonstatutory stock options taxed under Section 83 of the Internal Revenue
Code of 1986, as amended.
2. DEFINITIONS. The following definitions shall apply to this Plan:
(A) "AGREEMENT" means a written agreement entered into between the Company
and a Recipient which sets out the terms and restrictions of the Option granted
to the Recipient.
(B) "BOARD" means the board of directors of the Company.
(C) "CHANGE OF CONTROL" occurs when (i) any person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
becomes the beneficial owner of forty percent or more of the total number of
shares entitled to vote in the election of directors of the Board, (ii) the
Company is merged into any other company or substantially all of its assets are
acquired by any other company, or (iii) three or more directors nominated by the
Board to serve as a director, each having agreed to serve in such capacity, fail
to be elected in a contested election of directors.
(D) "CODE" means the Internal Revenue Code of 1986, as amended.
(E) "COMMITTEE" means the Committee appointed by the Board in accordance
with Section 3. If no Committee is appointed, the term "Committee" means the
Board, except in those instances where the text clearly indicates otherwise.
(F) "COMMON STOCK" means the Common Stock, par value $.01 per share of the
Company or such other class of shares or securities as to which the Plan may be
applicable pursuant to Section 13 herein.
(G) "COMPANY" means Reptron Electronics, Inc.
(H) "DATE OF GRANT" means the date on which the Option was granted.
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(I) "DISPOSE OF" shall mean pledge, hypothecate, give, assign, encumber,
sell, grant an option with respect to, or otherwise transfer, to any party
whether or not such party is a shareholder of the Company.
(J) "FAIR MARKET VALUE" means the fair market value of the Common Stock on
the Date of Grant. If the Common Stock is not publicly traded on the Date of
Grant, the Board shall determine the fair market value of the Shares as of that
date, using such factors as the Board considers relevant, such as the price at
which recent sales have been made, the book value of the Common Stock, and the
Company's current and projected earnings. If the Common Stock is publicly traded
on the Date of Grant, the fair market value on that date is the average of the
high and low sale prices of the Common Stock as reported by the National
Association of Securities Dealer Automated Quotations ("NASDAQ") on that date
or, if the Common Stock is listed on a stock exchange, the average of the high
and low sale prices of the Common Stock on that date, as reported in The Wall
Street Journal. If trading in the stock or a price quotation does not occur on
the Date of Grant, the next preceding date on which the stock was traded or a
price was quoted will determine the fair market value.
(K) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not employed
on an hourly or salaried basis by the Company or any parent or Subsidiary of the
Company that now exists or hereafter is organized or acquired by or acquires the
Company.
(L) "OPTION" means a stock option granted pursuant to the Plan.
(M) "OPTION SHAREHOLDER" means a Non-Employee Director who has exercised
his or her Option.
(N) "OPTION SHARES" means Shares issued upon the exercise of an Option.
(O) "PLAN" means the Reptron Electronics, Inc. Non-Employee Director Stock
Option Plan.
(P) "RECIPIENT" means a Non-Employee Director who receives an Option.
(Q) "SHARE" means the Common Stock, as adjusted in accordance with Section
13 of the Plan.
(R) "SUBSIDIARY" means any corporation 50% or more of the voting securities
of which are owned directly or indirectly by the Company at any time during the
existence of this Plan.
3. ADMINISTRATION. This Plan will be administered by a Committee of two or
more directors of the Company who are serving as members of the Board during
their membership on the Committee. The Board is authorized to appoint a
successor to any Committee member who ceases to serve. The Board shall not
appoint to the Committee any person who, for at least one year prior to his
appointment to the Committee, received any grant, award, allocation of stock,
stock options, or stock appreciation rights of the
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<PAGE> 44
Company or its affiliates, pursuant to a discretionary grant under either this
Plan or any other plan of the Company or its affiliates; provided, however, that
the Board may appoint to the Committee a person who has received such a grant
during the one year period prior to his appointment to the Committee if the
Board determines that his appointment would not jeopardize the Plan's
qualification under Rule 16b-3, promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934. A Committee member is
ineligible to participate in this Plan during the time that he serves on the
Committee. A majority of the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the Committee shall be made by
a majority of the members present at a meeting at which a quorum is present or
by the unanimous, written consent of the Committee.
The Committee has the exclusive power to select the participants in this
Plan, to establish the terms of the Options granted to each participant, and to
make all other determinations necessary or advisable under the Plan. The
Committee has the sole and absolute discretion to determine whether the
performance of an eligible participant warrants an award under this Plan, and to
determine the amount of the award. The Committee has full and exclusive power to
construe and interpret this Plan, to prescribe, amend, and rescind rules and
regulations relating to this Plan, and to take all actions necessary or
advisable for the Plan's administration. The Committee, in the exercise of its
powers, may correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any Agreement, in the manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective. In
exercising this power, the Committee may retain counsel at the expense of the
Company. The Committee shall also have the power to determine the duration and
purposes of leaves of absence which may be granted to a Recipient without
constituting a termination of the Recipient's status as a director for purposes
of the Plan. Any determinations made by the Committee will be final and binding
on all persons. A member of the Committee will not be liable for performing any
act or making any determination in good faith.
4. SHARES SUBJECT TO PLAN. SUBJECT TO THE PROVISIONS OF SECTION 13 OF THE
PLAN, THE MAXIMUM AGGREGATE NUMBER OF SHARES THAT MAY BE SUBJECT TO OPTIONS
UNDER THE PLAN SHALL BE 500,000. Shares subject to this Plan may be authorized,
but unissued, or may be treasury shares. If an Option should expire or become
unexercisable for any reason without having been exercised, the unpurchased
Shares that were subject to the Option shall, unless the Plan has then
terminated, be available for other Options under the Plan.
5. PARTICIPANTS. Each Non-Employee Director, as the Committee in its sole
discretion designates, is eligible to participate in this Plan. The Committee's
award of an Option to a participant in any year does not require the Committee
to award an Option to that participant in any other year. Furthermore, the
Committee may award different Options to different participants and has full
discretion to choose whether to grant Options to any eligible participant. The
Committee may consider such factors as it deems pertinent in selecting
participants and in determining the amount of their Options, including, without
limitation, (i) the financial condition of the Company or its Subsidiaries; (ii)
expected
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<PAGE> 45
profits for the current or future years; (iii) the contributions of a
prospective participant to the profitability and success of the Company or its
Subsidiaries; and (iv) the adequacy of the prospective participant's other
compensation. Participants may include persons to whom stock, stock options,
stock appreciation rights, or other benefits previously were granted under this
or another plan of the Company or any Subsidiary, whether or not the previously
granted benefits have been fully exercised or vested.
6. OPTION REQUIREMENTS. Each Option granted to a Non-Employee Director
under the Plan shall contain such provisions as the Committee at the Date of
Grant shall deem appropriate. Each Option granted to a Non-Employee Director
will satisfy the following requirements:
(A) WRITTEN AGREEMENT. Each Option granted to a Non-Employee Director will
be evidenced by a written Agreement and the terms of the Agreement need not be
identical for different participants. The written Agreement shall include a
description of the substance of each of the requirements in this Section with
respect to that particular Option and shall state that the Option is a
nonstatutory option.
(B) NUMBER OF SHARES. Each Agreement shall specify the number of Shares
that may be purchased by exercise of the Option.
(C) EXERCISE PRICE. The exercise price of each Share subject to an Option
shall equal the exercise price designated by the Committee on the Option's Date
of Grant.
(D) DURATION OF OPTION. Each Option granted to an Employee shall expire on
the tenth anniversary of its Date of Grant or, at such earlier date as is set by
the Committee in establishing the terms of the Option at grant. If the
Recipient's services as a director of the Company terminate before the
expiration date of an Option, the Options owned by the Recipient shall expire on
the earlier of the date stated in this subsection or the date stated in
following subsections of this Section.
(E) VESTING OF OPTION AND EXERCISABILITY. Each Option granted to a Non-
Employee Director shall be exercisable in such installments (which need not be
equal) and at such times as designated by the Committee. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming vested and exercisable, but not later than the
date the Option expires. If the Committee does not otherwise provide, the Option
shall be one hundred percent (100%) vested eight months from the Date of Grant.
Notwithstanding any other vesting schedule designated by the Committee, all
Options granted under the Plan shall be one hundred percent (100%) vested on the
participant's death (as described in subsection (f) below). Furthermore, the
Committee may accelerate the vesting of any Option at any time.
(F) DEATH. In the case of the death of a Recipient, the Option shall expire
on the one year anniversary of the Recipient's death, or if earlier, the date
specified in subsection (d) above. During the one year period following the
Recipient's death, the Option may be
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<PAGE> 46
exercised for one hundred percent (100%) of the Shares subject to the Option
notwithstanding the vesting requirements of subsection (e) above.
(G) TERMINATION OF SERVICE AS A DIRECTOR. If the Non-Employee Director's
services as a director of the Company are terminated for any reason other than
death, all Options held by the Non-Employee Director shall expire ninety (90)
days after termination of the Non-Employee Director's services as a director of
the Company. During such ninety (90) day period, the Option may be exercised
only for the number of Shares for which it could have been exercised on the
termination date, subject to any adjustment under Section 13 herein.
(H) CHANGE OF CONTROL. If a Change of Control occurs, the Board may vote to
"cash out" and immediately terminate all Options outstanding under the Plan as
of the date of the Change of Control or may vote to accelerate the expiration of
the Options to the 10th day after the effective date of the Change of Control.
If the Board votes to cash out or accelerate Options, then all Options
outstanding on the date of Change of Control shall be immediately one hundred
percent (100%) vested as of such date. If the Board votes to cash out and
immediately terminate the Options, it shall extend a cash payment to the
Recipient equal to the difference between the Exercise Price and the Fair Market
Value of the Shares that would have been subject to the terminated Option on the
date of the Change of Control.
(I) CONDITIONS REQUIRED FOR EXERCISE. Options granted to Non-Employee
Directors under the Plan shall be exercisable only to the extent they are vested
as described in subsection (e) above. In addition, each Option issued under the
Plan is exercisable only if the issuance of Shares pursuant to the exercise
would be in compliance with applicable securities laws, as contemplated by
Section 11 of the Plan.
(J) METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
exercised when the Non-Employee Director entitled to exercise the Option (1)
delivers written notice to the President of the Company (or his delegate, in his
absence) of the decision to exercise, (2) concurrently tenders to the Company
full payment for the Shares to be purchased pursuant to the exercise, and (3)
complies with such other reasonable requirements as the Committee establishes
pursuant to Section 11 of the Plan. Payment for Shares with respect to which an
Option is exercised may be made in cash, or by certified check or wholly or
partially in the form of Common Stock having a Fair Market Value equal to the
exercise price. No person will have the rights of a shareholder with respect to
Shares subject to an Option granted under this Plan until a certificate or
certificates for the Shares have been delivered to him. An Option granted under
this Plan may not be exercised in increments of less than one hundred (100)
Shares, or, if less, one hundred percent (100%) of the full number of Shares as
to which it can be exercised. A partial exercise of an Option will not affect
the holder's right to exercise the Option from time to time in accordance with
this Plan as to the remaining Shares subject to the Option.
7. COMPANY'S RIGHT OF FIRST REFUSAL. An Option Shareholder who desires to
Dispose Of any Option Shares shall first offer the Option Shares to the Company.
The Option
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<PAGE> 47
Shareholder shall provide notice signed by the Option Shareholder to the Company
indicating the Option Shareholder's desire to Dispose Of Option Shares. The
notice shall also specify the number of Option Shares. The Company shall have
the irrevocable and exclusive first option, but not the obligation, to purchase
all or a portion of the Option Shares, provided the Company provides notice of
its election to purchase the Option Shares within thirty (30) days after the
Company receives the Option Shareholder's notice. The purchase price to be paid
by the Company for the Option Shares being offered by the Option Shareholder
shall be the Fair Market Value on the date of the Option Shareholder's notice,
and payment shall be made in full in cash at closing.
8. COMPANY RIGHT TO REPURCHASE OPTION SHARES. The Company shall have the
right to repurchase any Option Shares purchased by a Non-Employee Director
within the six month period preceding such Non-Employee Director's termination
of service to the Company for any reason. The price for repurchasing the Option
Shares shall be that price specified in the Option exercised by the Employee
with respect to such Option Shares. Should the Company fail to exercise such
repurchase right within sixty (60) days following the date of such Non-Employee
Director's termination of service, the Company shall be deemed to have waived
such right.
9. LOAN FROM COMPANY TO EXERCISE OPTION. The Committee may, in its
discretion and subject to the requirements of applicable law, recommend to the
Company that it loan the Recipient the funds needed by the Recipient to exercise
the Option. The Recipient shall make application to the Company for the loan,
completing the forms and providing the information required by the Company. The
loan shall be secured by such collateral as the Company may require, subject to
its underwriting requirements and the requirements of applicable law. The
Recipient shall execute a Promissory Note and any other documents deemed
necessary by the Committee.
10. DESIGNATION OF BENEFICIARY. Each Recipient shall designate in the
Agreement he executes, a beneficiary to receive Options awarded hereunder in the
event of his death prior to full exercise of such Options; provided, that if no
such beneficiary is designated or if the beneficiary so designated does not
survive the Recipient, the estate of such Recipient shall be deemed to be his
beneficiary. Recipients may, by written notice to the Committee, change the
beneficiary designated in any outstanding Agreements.
11. TAXES; COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES. The Company
shall have the right to withhold from payments otherwise due and owing to the
Recipient (or his beneficiary) and/or to require the Recipient (or his
beneficiary) to remit to the Company in cash upon demand an amount sufficient to
satisfy any federal (including FICA and FUTA amounts), state, and/or local
withholding tax requirements at the time the Recipient (or his beneficiary)
recognizes income for federal, state, and/or local tax purposes as the result of
the receipt of Shares pursuant to the Plan as a condition to the issuance of
Shares upon Option exercise (whether to the Recipient or to his beneficiary).
Options are exercisable, and Shares can be delivered under this Plan, only
in compliance with all applicable federal and state laws and regulations,
including, without
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<PAGE> 48
limitation, state and federal securities laws, and the rules of all stock
exchanges on which the Company's stock is listed at any time. An Option is
exercisable only if either (a) a registration statement pertaining to the Shares
to be issued upon exercise of the Option has been filed with and declared
effective by the Securities and Exchange Commission and remains effective on the
date of exercise, or (b) an exemption from the registration requirements of
applicable securities laws is available. This Plan does not require the Company,
however, to file such a registration statement or to assure the availability of
such exemptions. Any certificate issued to evidence Shares issued under the Plan
may bear such legends and statements, and shall be subject to such transfer
restrictions, as the Committee deems advisable to assure compliance with federal
and state laws and regulations and with the requirements of this Section. Each
Option may not be exercised, and Shares may not be issued under this Plan, until
the Company has obtained the consent or approval of every regulatory body,
federal or state, having jurisdiction over such matters as the Committee deems
advisable.
Each person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence of
ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and releases of taxing
authorities as the Committee deems advisable.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the 1934 Act or its successor
under the 1934 Act. To the extent any provision of the Plan, or action by the
Plan administrators fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan administrators.
12. ASSIGNABILITY. An Option granted under this Plan is not transferable
except by will or the laws of descent and distribution. During the lifetime of a
Recipient, all rights of the Options are exercisable only by the Recipient.
13. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Options are authorized to be granted under this Plan, the
number and class of Shares then subject to Options previously granted to
Non-Employee Directors under this Plan, and the price per Share payable upon
exercise of each Option outstanding under this Plan shall be equitably adjusted
by the Committee to reflect such changes. To the extent deemed equitable and
appropriate by the Board, subject to any required action by stockholders, in any
merger, consolidation, reorganization, liquidation or dissolution, any Option
granted under the Plan shall pertain to the securities and other property to
which a holder of the number of Shares of stock covered by the Option would have
been entitled to receive in connection with such event.
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<PAGE> 49
14. LIABILITY OF THE COMPANY. The Company, its parent and any Subsidiary
that is in existence or hereafter comes into existence shall not be liable to
any person for any tax consequences expected but not realized by a Recipient or
other person due to the exercise of an Option.
15. AMENDMENT AND TERMINATION OF PLAN. The Board may alter, amend, or
terminate this Plan from time to time without approval of the shareholders.
However, without the approval of the shareholders, no amendment will be
effective that:
(A) materially increases the benefits accruing to participants under the
Plan;
(B) increases the aggregate number of Shares that may be delivered upon the
exercise of Options granted under the Plan;
(C) materially modifies the eligibility requirements for participation in
the Plan; or
(D) amends the requirements of subparagraphs (a)-(c) of this paragraph.
Any amendment, whether with or without the approval of shareholders, that
alters the terms or provisions of an Option granted before the amendment (unless
the alteration is expressly permitted under this Plan) will be effective only
with the consent of the Recipient to whom the Option was granted or the holder
currently entitled to exercise it.
16. EXPENSES OF PLAN. The Company shall bear the expenses of administering
the Plan.
17. DURATION OF PLAN. Options may be granted under this Plan only during
the ten (10) years immediately following the effective date of this Plan.
18. APPLICABLE LAW. The validity, interpretation, and enforcement of this
Plan are governed in all respects by the laws of Florida and the United States
of America.
19. EFFECTIVE DATE. The effective date of this Plan, as amended, shall be
the earlier of (i) the date on which the Board adopts the amended Plan or (ii)
the date on which the Shareholders approve the amended Plan.
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DETACH HERE
REPTRON ELECTRONICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints LEIGH A. ADAMS and WILLIAM L. ELSON, or
either of them, each with power of substitution and revocation, as the proxy or
proxies of the undersigned to represent the undersigned and vote all shares of
the Common Stock of Reptron Electronics, Inc., that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
Reptron Electronics, Inc., to be held at Reptron's headquarters located at 14401
McCormick Drive, Tampa, Florida 33626, on May 28, 1999, at 9:00 a.m., and at any
adjournments thereof, upon the matters set forth on the reverse side and more
fully described in the Notice and Proxy Statement for said Meeting and in their
discretion upon all other matters that may properly come before said Meeting.
<TABLE>
<S> <C>
------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
------------------------
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
PLEASE MARK DETACH HERE
[X] VOTES AS IN
THIS EXAMPLE.
</TABLE>
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
MADE. WHEN NO CHOICE IS MADE, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES
FOR DIRECTOR, FOR PROPOSALS 2, 3 AND 4 AND AS THE PROXYHOLDERS DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
1. Election of Directors NOMINEES: Michael L. Musto and Paul J. Plante
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ]
------------------------------------------------------------------------------
For all nominees except as noted on the line above
2. To approve an amendment to the Reptron's Amended and Restated Incentive Stock
Option Plan to increase the number of shares available for issuance pursuant
to the plan from 1,500,000 shares to 2,000,000 shares and to modify the
provisions of the plan concerning duration of options, disposition of options
upon a change of control of Reptron and amendment of the plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to Reptron's Non-Employee Director Stock Option Plan
to increase the number of shares available for issuance pursuant to the plan
from 50,000 shares to 350,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of Grant Thornton LLP as independent auditors for
Reptron.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. With discretionary authority on such other matters as may properly come
before the Annual Meeting.
MARK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
The Annual Meeting may be held as scheduled only if a majority of the shares
outstanding are represented at the Annual Meeting by attendance or proxy.
Accordingly, please complete this proxy, and return it promptly in the
enclosed envelope.
Please date and sign exactly as your name(s) appear on your shares. If
signing for estates, trusts, partnerships, corporations or other entities,
your title or capacity should be stated. If shares are held jointly, each
holder should sign.
DATED: , 1999
----------------------------------------------------------------
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
---------------------------------------
Signature
---------------------------------------
Signature, if held jointly
