<PAGE>
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:
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
Tivoli Industries, Inc.
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5. Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
------------------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3. Filing Party:
------------------------------------------------------------------------
4. Date Filed:
------------------------------------------------------------------------
<PAGE>
TIVOLI INDUSTRIES, INC.
1513 EAST ST. GERTRUDE PLACE
SANTA ANA, CALIFORNIA, CA 92705
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 21, 1997
TO THE SHAREHOLDERS OF TIVOLI INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of TIVOLI
INDUSTRIES, INC., a CALIFORNIA corporation (the "Company"), will be held on
Friday, March 21, 1997, at 1:00 p.m. local time at the Sutton Place Hotel, 4500
MacArthur Boulevard, Newport Beach, California for the following purposes:
1. To elect four directors to serve for the ensuing year until the Company's
1998 annual meeting of shareholders and until their successors are elected.
2. To approve the Company's 1997 Equity Incentive Plan.
3. To ratify the selection of Corbin & Wertz as independent auditors of the
Company for its fiscal year ending September 30, 1997.
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on February 7, 1997, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
Marie Paris
Secretary
Santa Ana, California
February 14, 1997
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECTED TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
TIVOLI INDUSTRIES, INC.
1513 East St. Gertrude Place
Santa Ana, California 92705
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
March 21, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Tivoli
Industries, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held on March 21, 1997, at 1:00 p.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the Sutton Place Hotel, 4500 MacArthur
Boulevard, Newport Beach, California. The Company intends to mail this proxy
statement and accompanying proxy card on or about February 14, 1997 to all
shareholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on February
7, 1997 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on February 7, 1997 the Company had outstanding and entitled
to vote 3,893,895 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon. With respect to the
election of directors, shareholders may exercise cumulative voting rights.
Under cumulative voting, each holder of Common Stock will be entitled to four
votes for each share held. Each shareholder may give one candidate, who has
been nominated prior to voting, all the votes such shareholder is entitled to
cast or may distribute such votes among as many such candidates as such
shareholder chooses. (However, no shareholder will be entitled to cumulate
votes unless the candidate's name has been placed in nomination prior to the
voting and at least one shareholder has given notice at the meeting, prior to
the voting, of his or her intention to cumulate votes.) Unless the proxyholders
are otherwise instructed, shareholders, by means of the accompanying proxy, will
grant the proxyholders discretionary authority to cumulate votes.
1
<PAGE>
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Under California law, abstentions and broker
non-votes are counted towards a quorum but are not counted for any purpose in
determining whether a matter is approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1513 East
St. Gertrude Place, Santa Ana, California 92705, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by
itself, revoke a proxy.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the Company's
1998 Annual Meeting of Shareholders must be received by the Company not later
than October 17, 1997 in order to be included in the proxy statement and proxy
relating to that annual meeting.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
There are four nominees for the four Board positions presently authorized by
the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of shareholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, having been elected
by the shareholders at the last Annual Meeting.
Shares represented by executed proxies will be voted, if authority to do so is
not withheld, for the election of the four nominees listed below, subject to the
discretionary power to cumulate votes. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
The four candidates receiving the highest number of affirmative votes cast at
the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION/POSITION
NAME AGE HELD WITH THE COMPANY
<S> <C> <C>
Terrence C. Walsh 50 President, Chief Executive Officer and Director
Vincent F. Monte 69 Chief Financial Officer and Director
Steven J. Goodman 57 Director
Gerald E. Morris 64 Director
</TABLE>
TERRENCE C. WALSH
Terrence C. Walsh has served as Chairman, President and Chief Executive
Officer of the Company since July 1991. From 1989 through 1991, Mr. Walsh was
President and Chief Executive Officer of Integrated Lighting Industries, a
specialty lighting company, and from 1986 to 1989 he served as Executive Vice
President and General Manager of Jacobsen Industries, a specialty lighting
company, in Greenwich, Connecticut. Mr. Walsh serves on the Board of Directors
of a privately held architectural millwork company.
VINCENT F. MONTE
Vincent F. Monte has served as the Company's Chief Financial Officer since
July 1991. Mr. Monte does not devote all of his time to the business of the
Company. From 1990 to 1991, he was the Chief
3
<PAGE>
Financial Officer for Integrated Lighting Industries and he remains an officer
and director of such company. From 1987 to 1990 Mr. Monte served as the Vice
President of Finance of DATA 3 Systems, Inc., a manufacturing application
software developer.
STEVEN J. GOODMAN
Steven J. Goodman, a Director of the Company since December 1994, has been
managing Director of the West Coast office of Creative Business Strategies,
Inc., a financial consulting company, since 1991. From 1985 to 1991, Mr.
Goodman was retired. From 1975 to 1981, Mr. Goodman was President of Tempo
Industries, Inc., a Los Angeles based consumer products manufacturer. Mr.
Goodman serves on the Board of Directors of Javelin Systems, Inc., a computer
peripherals company.
GERALD E. MORRIS
Gerald E. Morris, a Director of the Company since August 1995, has for over 30
years been President and CEO of Intalite International N.V., a company engaged
in the manufacture of metal ceilings for commercial use. Mr. Morris, a C.P.A.
is also Chairman of the Board of Alumet Building Products, Inc., a company
engaged in the manufacture of home improvement products, and serves on the Board
of Directors of Rexel, Inc., an electrical products distributor, and Beacon
Trust Company, a limited purpose bank.
BOARD COMMITTEES AND MEETING
During the fiscal year ended September 30, 1996 the Board of Directors held
five meetings. During such period each Board member attended all the meetings of
the Board held during the period for which he was a director.
In February 1995, the Board of Directors established an Audit Committee which
expects to meet with the Company's independent auditors at least annually to
review the results of the annual audit and discuss the financial statements,
recommend to the Board the independent auditors to be retained; and receive and
consider the accountants' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls. The Audit Committee, which is currently composed of Messrs. Goodman
and Morris, did not meet in fiscal 1996.
In January 1997, the Board of Directors established a Compensation Committee,
consisting of Messrs. Goodman and Morris, which will make recommendations to the
Board concerning salaries and incentive compensation for employees and
consultants of the Company.
4
<PAGE>
PROPOSAL 2
APPROVAL OF 1997 EQUITY INCENTIVE PLAN
In January 1997, the Board of Directors adopted the Company's 1997 Equity
Incentive Plan (the "1997 Plan"). There are 390,000 shares of the Company's
Common Stock authorized for issuance under the 1997 Plan. No awards have been
made under the 1997 Plan.
Shareholders are requested in this Proposal 2 to approve the 1997 Plan. If
the shareholders fail to approve this Proposal 2, options granted under the 1997
Plan after the Annual Meeting will not qualify as performance-based compensation
and, in some circumstances, the Company may be denied a business expense
deduction for compensation recognized in connection with the exercise of these
stock options. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and voting at the meeting will be
required to approve the 1997 Plan.
In order to take advantage of the exemption contained in Rule 16b-3
promulgated by the SEC, for purposes of this vote, abstentions will be counted
toward the tabulation of votes counted and will have the same effect as negative
votes, while broker non-votes will not be counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the 1997 Plan are outlined below.
GENERAL
The 1997 Plan provides for the grant of both incentive and nonstatutory stock
options, stock bonuses, and rights to purchase restricted stock (collectively,
the "Stock Awards"). Incentive stock options granted under the 1997 Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Nonstatutory
stock options granted under the 1997 Plan are intended not to qualify as
incentive stock options under the Code. See "Federal Income Tax Information"
for a discussion of the tax treatment of incentive and nonstatutory stock
options.
PURPOSE
The 1997 Plan was adopted to provide a means by which selected officers,
directors and employees of and consultants to the Company and its affiliates
could be given an opportunity to purchase stock in the Company, to assist in
retaining the services of employees holding key positions, to secure and retain
the services of persons capable of filling such positions and to provide
incentives for such persons to exert maximum efforts for the success of the
Company. All of the Company's approximately 45 employees and consultants are
eligible to participate in the 1997 Plan.
ADMINISTRATION
The 1997 Plan is administered by the Board of Directors of the Company. The
Board has the power to construe and interpret the 1997 Plan and, subject to the
provisions of the 1997 Plan, to determine the
5
<PAGE>
persons to whom and the dates on which options will be granted, the number of
shares to be subject to each option, the time or times during the term of each
option within which all or a portion of such option may be exercised, the
exercise price, the type of consideration and other terms of the option. The
Board of Directors is authorized to delegate administration of the 1997 Plan to
a committee composed of not fewer than two members of the Board. As used herein
with respect to the 1997 Plan, the "Board" refers to any such committee as well
as the Board of Directors.
Regulations under Section 162(m) require that the directors who serve as
members of such committee must be "outside directors." The applicability of the
1997 Plan provides that, in the Board's discretion, directors serving any such
committee will also be "outside directors" within the meaning of Section 162(m).
This limitation would exclude from the committee (i) current employees of the
Company, (ii) former employees of the Company receiving compensation for past
services (other than benefits under a tax-qualified retirement plan), (iii)
current and former officers of the Company and (iv) directors currently
receiving direct or indirect remuneration from the Company in any capacity
(other than as a director), unless any such person is otherwise considered an
"outside director" for purposes of Section 162(m). The Company currently intends
to monitor the applicability of the regulations to itself and will delegate
administrative responsibility to such a committee if and when the Company deems
it desirable.
ELIGIBILITY
Incentive stock options may be granted under the 1997 Plan only to selected
key employees (including officers) of the Company and its affiliates. Selected
key employees (including officers) and consultants are eligible to receive Stock
Awards other than stock options under the 1997 Plan.
No incentive stock option may be granted under the 1997 Plan to any person
who, at the time of the grant, owns (or is deemed to own) stock possessing more
than 10% of the total combined voting power of the Company or any affiliate of
the Company, unless the option exercise price is at least 110% of the fair
market value of the stock subject to the option on the date of grant, and the
term of the option does not exceed five years from the date of grant. For
incentive stock options granted under the 1997 Plan, the aggregate fair market
value, determined at the time of grant, of the shares of Common Stock with
respect to which such options are exercisable for the first time by an optionee
during any calendar year (under all such plans of the Company and its
affiliates) may not exceed $100,000.
No person shall be eligible to be granted options covering more than 150,000
shares of the Company's Common Stock in any calendar year. The purpose of this
limitation is generally to permit the Company to continue to be able to deduct
for tax purposes the compensation attributable to the exercise of options
granted under the 1997 Plan.
STOCK SUBJECT TO THE 1997 PLAN
If options granted under the 1997 Plan expire or otherwise terminate without
being exercised, the Common Stock not purchased pursuant to such options again
becomes available for issuance under the 1997 Plan.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under the
1997 Plan. Individual option grants may be more restrictive as to any or all of
the permissible terms described below.
6
<PAGE>
Exercise Price; Payment. The exercise price of incentive stock options under
the 1997 Plan may not be less than the fair market value of the Common Stock
subject to the option on the date of the option grant, and in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value. The
exercise price of nonstatutory options under the 1997 Plan may not be less than
85% of the fair market value of the Common Stock subject to the option on the
date of the option grant. If options are granted with exercise prices below
market value, deductions for compensation attributable to the exercise of such
options could be limited by Section 162(m). See "Federal Income Tax
Information." At February 7, 1997, the closing price of the Company's Common
Stock as reported on the Nasdaq SmallCap Market was $2.00 per share.
In the event of a decline in the value of the Company' s Common Stock, the
Board has the authority to offer employees the opportunity to replace
outstanding higher priced options, whether incentive or nonstatutory, with new
lower priced options. To the extent required by Section 162(m), an option
repriced under the 1997 Plan is deemed to be canceled and a new option granted.
Both the option deemed to be canceled and the new option deemed to be granted
will be counted against the 150,000 share limitation.
The exercise price of options granted under the 1997 Plan must be paid either:
(a) in cash at the time the option is exercised; or (b) at the discretion of the
Board, (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement or (c) in any other form of legal consideration
acceptable to the Board.
Option Exercise. Options granted under the 1997 Plan may become exercisable
in cumulative increments ("vest") as determined by the Board. The vesting of
shares covered by currently outstanding options under the 1997 Plan may vary
from option to option. The Board has the power to accelerate the time during
which an option may be exercised. In addition, options granted under the 1997
Plan may permit exercise prior to vesting, but in such event the optionee may be
required to enter into an early exercise stock purchase agreement that allows
the Company to repurchase shares not yet vested at their original purchase price
should the optionee's relationship with the Company terminate before vesting.
To the extent provided by the terms of an option, an optionee may satisfy any
federal, state or local tax withholding obligation relating to the exercise of
such option by a cash payment upon exercise, by authorizing the Company to
withhold a portion of the stock otherwise issuable to the optionee, by
delivering already-owned stock of the Company or by a combination of these
means.
Term. The maximum term of options under the 1997 Plan is 10 years, except
that in certain cases (see "Eligibility") the maximum term is five years.
Options under the 1997 Plan terminate three months after termination of the
optionee's continuous status as an employee, consultant or director of the
Company or any affiliate of the Company, unless (a) such termination is due to
such person's disability, in which case the option may, but need not, provide
that it may be exercised at any time within one year of such termination; (b)
the optionee dies while employed by or serving as a consultant or director of
the Company or any affiliate of the Company, or within three months after
termination of such relationship, in which case the option may, but need not,
provide that it may be exercised (to the extent the option was exercisable at
the time of the optionee's death) within eighteen months of the optionee's death
by the person or persons to whom the rights to such option pass by will or by
the laws of descent and distribution; or (c) the option by its terms
specifically provides otherwise. Individual options by their terms may provide
for exercise within a shorter or longer period of time following termination of
continuous status as an employee, director or consultant. The option term may
also be extended in the event that exercise of the option within these periods
is prohibited for specified reasons.
7
<PAGE>
TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
Purchase Price; Payment. The purchase price under each stock purchase
agreement will be determined by the Board, but in no event will it be less than
85% of the fair market value of the stock of the date of the award. The
purchase price of stock pursuant to a stock purchase agreement must be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other arrangement with the person to
whom the Common Stock is sold; or (iii) in any other form of legal consideration
that may be acceptable to the Board in its discretion. Eligible participants
may be awarded stock pursuant to a stock bonus agreement in consideration of
past services actually rendered to the Company or for its benefit.
Repurchase. Shares of the Common Stock sold or awarded under the 1997 Plan
may, but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule determined by the Board. In the event a
person ceases to be an employee of or ceases to serve as a director of or
consultant to the Company or an affiliate of the Company, the Company may
repurchase or otherwise reacquire any or all of the shares of the Common Stock
held by that person that have not vested as of the date of termination under the
terms of the stock bonus or restricted stock purchase agreement between the
Company and such person.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the 1997 Plan or subject to any
award granted under the 1997 Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the 1997 Plan and awards
outstanding thereunder will be appropriately adjusted as to the class and the
maximum number of shares subject to such plan, the maximum number of shares
which may be granted to an employee during a calendar year, and the class,
number of shares and price per share of stock subject to such outstanding
options.
EFFECT OF CERTAIN CORPORATE EVENTS
The 1997 Plan provides that, in the event of a dissolution or liquidation of
the Company, any options outstanding under the 1997 Plan shall terminate unless
exercised prior to such dissolution or liquidation. In the event of a specified
type of merger or other corporate reorganization, to the extent permitted by
law, any surviving corporation will be required to either assume options
outstanding under the 1997 Plan or substitute similar options for those
outstanding under such plan, or such outstanding options will continue in full
force and effect. In the event that any surviving corporation declines to
assume or continue options outstanding under the 1997 Plan, or to substitute
similar options, such options shall terminate unless exercised prior to such
merger or corporate reorganization.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the 1997 Plan without shareholder approval
or ratification at any time or from time to time. Unless sooner terminated, the
1997 Plan will terminate on January 7, 2007.
The Board may also amend the 1997 Plan at any time or from time to time.
However, no amendment will be effective unless approved by the shareholders of
the Company within twelve months before or after its adoption by the Board if
the amendment would: (a) modify the requirements as to
8
<PAGE>
eligibility for participation (to the extent such modification requires
shareholder approval in order for the Plan to satisfy Section 422 of the Code,
if applicable; (b) increase the number of shares reserved for issuance upon
exercise of options; or (c) change any other provision of the Plan in any other
way if such modification requires shareholder approval in order to satisfy the
requirements of Section 422 of the Code. The Board may submit any other
amendment to the 1997 Plan for shareholder approval, including, but not limited
to, amendments intended to satisfy the requirements of Section 162(m) of the
Code regarding the exclusion of performance-based compensation from the
limitation on the deductibility of compensation paid to certain employees.
RESTRICTIONS ON TRANSFER
Under the 1997 Plan, an incentive stock option may not be transferred by the
optionee otherwise than by will or by the laws of descent and distribution and
during the lifetime of the optionee, may be exercised only by the optionee. A
nonstatutory stock option may not be transferred except as provided in the
option agreement. In any case, the optionee may designate in writing a third
party who may exercise the option in the event of the optionee's death. No
rights under a stock bonus or restricted stock purchase agreement are
transferable except where required by law or expressly authorized by the
applicable stock bonus or restricted stock purchase agreement. In addition,
shares subject to repurchase by the Company under an early exercise stock
purchase agreement may be subject to restrictions on transfer which the Board
deems appropriate.
FEDERAL INCOME TAX INFORMATION
Incentive Stock Options. Incentive stock options under the 1997 Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or the
Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition will
be a capital gain or loss, which will be long-term or short-term depending on
whether the stock was held for more than one year. Long-term capital gains
currently are generally subject to lower tax rates than ordinary income. The
maximum capital gains rate for federal income tax purposes is currently 28%
while the maximum ordinary income rate is effectively 39.6% at the present time.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
9
<PAGE>
Nonstatutory Stock Options. Nonstatutory stock options granted under the 1997
Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of the
grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
Restricted Stock and Stock Bonuses. Restricted stock and stock bonuses
granted under the 1997 Plan generally have the following federal income tax
consequences:
Upon acquisition of stock under a restricted stock or stock bonus award, the
recipient normally will recognize taxable ordinary income equal to the excess of
the stock's fair market value over the purchase price, if any. However, to the
extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
recipient elect to be taxed on receipt of the stock. Generally, with respect to
employees, the Company is required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, Section 162(m) of the Code and the
satisfaction of a tax reporting obligations, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the recipient. Upon disposition of the stock, the recipient will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock, if any, plus any amount
recognized as ordinary income upon acquisition (or vesting) of the stock. Such
gain or loss will be long or short-term depending on whether the stock was held
for more than one year from the date ordinary income is measured.
Potential Limitation on Company Deductions. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m), which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1,000,000 for a covered employee. It is possible that
compensation attributable to stock options, when combined with all other types
of compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that the option is granted by a compensation committee comprised solely
of "outside directors" and either: (i) the option plan contains a per-employee
limitation on the number of shares for which options may be granted during a
specified period, the per-employee limitation is approved by the shareholders,
and the exercise price of the option is no less than the fair market value of
the stock on the date of grant; or (ii) the option is granted (or exercisable)
only upon the achievement
10
<PAGE>
(as certified in writing by the compensation committee) of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, and the option is approved by shareholders.
11
<PAGE>
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Corbin & Wertz as the Company's
independent auditors for the fiscal year ending September 30, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the shareholders at the Annual Meeting. Corbin & Wertz has
audited the Company's financial statements since September 1993.
Representatives of Corbin & Wertz are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
Shareholder ratification of the selection of Corbin & Wertz as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Corbin & Wertz to the
shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and voting at the Annual Meeting will be required
to ratify the selection of Corbin & Wertz.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
12
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of January 31, 1997 by: (i) each director and
nominee for director; (ii) the named executive officer; (iii) all executive
officers and directors of the Company as a group; and (iv) all those known by
the Company to be beneficial owners of more than five percent of its Common
Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------------------
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL
- -------------------------------------------- ---------------- -----------------
<S> <C> <C>
Terrence C. Walsh........................... 1,156,900 29.7%
1513 E. St. Gertrude Pl.
Santa Ana, CA 92705
Alva L. Stevens(2).......................... 262,200 6.7
P.O. Box 381
2552 Caballo Ranchero Drive
Diablo, CA 94528
Steven J. Goodman(3)........................ 193,729 4.9
Revocable Living Trust
24843 Del #536
Dana Point, CA 92629
Vincent F. Monte(4)......................... 85,100 2.2
107 Neptune Pl.
San Ramon, CA 95832
Gerald E. Morris(5)......................... 14,426 *
437 Madison Ave.
39th Floor
New York, NY 10022
All directors and executive officers as a 1,450,155 36.8
group (4 persons)(6).......................
</TABLE>
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable. The Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
3,893,895 shares outstanding on January 31, 1997, adjusted as required by
rules promulgated by the SEC.
(2) Includes 209,300 shares held by the A.L. Stevens, Inc. Money Purchase Plan
and Trust. Mr. Stevens resigned as a director of the Company on November
21, 1994.
13
<PAGE>
(3) Includes 20,000 options, exercisable within 60 days of January 31, 1997.
(4) Includes 23,000 options, exercisable within 60 days of January 31, 1997.
(5) Includes 5,000 options, exercisable within 60 days of January 31, 1997.
(6) Includes 48,000 options, exercisable within 60 days of January 31, 1997.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1995, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10 percent beneficial owners were complied with, except that Mr.
Monte filed one transaction report late, due to an inadvertent failure to report
an option grant of 15,000 shares, and Mr. Morris filed one transaction report
late due to an inadvertent failure to report 9,524 shares acquired by Mr. Morris
as the result of a corporate liquidation and distribution.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each director of the Company receives an annual retainer of $500 plus a per-
meeting fee of $250. In the fiscal year ended September 30, 1996, the total
compensation paid to directors was $3,250. The members of the Board of
Directors are also eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
Each non-employee director also receives stock option grants under the 1995
Non-Employee Directors Stock Option Plan (the "Directors' Plan"). Only non-
employee directors of the Company or an affiliate of such directors (as defined
in the Code) are eligible to receive options under the Directors' Plan. Options
granted under the Directors' Plan are intended by the Company not to qualify as
incentive stock options under the Code.
Option grants under the Directors' Plan are non-discretionary. Each person
who is, after February 1995, elected for the first time to be a non-employee
Director, is automatically granted, without further action by the Company, an
option to purchase 25,000 shares of Common Stock upon the date of his or her
initial election. No other options may be granted at any tune under the
Directors' Plan. The exercise price of options granted under the Directors'
Plan is 100% of the fair market value of the Common Stock on the date of the
option grant. The options vest at a rate of 20% per year, beginning one year
from the date of grant, and expire ten years from the date of grant. In the
event of a merger, consolidation, reverse merger or any other capital
reorganization in which more than 50% of the shares of the Company
14
<PAGE>
entitled to vote are exchanged, the time during which options outstanding under
the Directors' Plan may be exercised shall be accelerated and the options
terminated if not exercised prior to such reorganization.
In fiscal year 1996, no option grants were made under the Directors' Plan. As
of December 31, 1996, no options had been exercised under the Directors Plan.
In September 1994, Steven J. Goodman entered into a consulting contract with
the Company under which he receives a consulting fee of $1,500 per month. Mr.
Goodman became a Director of the Company in November 1994.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended September 30, 1993, 1994
and 1995, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION(2) $
- ------------------------------ ---- -------- ------- -----------------
<S> <C> <C> <C> <C>
Terrence C. Walsh, Chief 1996 $103,788 -- $11,143
Executive Officer (1)
1995 110,000 -- 10,925
1994 86,635 -- 7,495
- --------------
</TABLE>
(1) Mr. Walsh was the only executive officer of the Company who received
compensation of more than $100,000 in fiscal 1996.
(2) Represents automobile allowance and reimbursements.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1994 Stock
Option Plan (the "1994 Plan") and its 1995 Stock Option Plan (the "1995 Plan").
As of December 31, 1996, options to purchase a total of 335,000 shares were
outstanding under the 1994 Plan, and 35,000 options remained available for grant
thereunder. Options were granted at an exercise price equal to the fair market
value of the of the Company's Common Stock at the date of each grant. The
options vest at a rate of 20% per year, beginning one year from the date of
grant, and expire ten years from the date of grant. As of December 31, 1996,
options to purchase a total of 220,000 shares of the Company's Common Stock had
been granted under the 1995 Plan, and options to purchase 30,500 shares remained
available for grant thereunder. Each option was granted at the fair market
value of the Company's Common Stock at the date of grant. The options vest at a
rate of 20% per year, beginning one year from the date of grant, and expire ten
years from the date of grant. In the event of a merger, consolidation, reverse
merger or any other capital reorganization in which more than 50% of the shares
of the Company entitled to vote are
15
<PAGE>
exchanged, any surviving corporation shall assume any options outstanding under
the 1995 Plan, or substitute equivalent options; in the event any surviving
corporation refuses to assume or substitute options, then such options shall be
terminated if not exercised prior to such reorganization.
During the fiscal year ended September 30, 1996, there were no options granted
to, exercised by, or held at year end by, the Named Executive Officer.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Terrence C. Walsh on
April 1, 1994 for a term of three years. Under the employment agreement, the
annual base salary of Mr. Walsh is $100,000. The base salary is to be increased
by not less than 5% a year, and Mr. Walsh is entitled to receive such bonuses,
if any, as are determined each year by the Company's Compensation Committee.
Mr. Walsh's employment agreement provides that in the event of a voluntary
termination of employment for "good reason" (deflated as constructive
termination of employment by the Company due to a substantial, detrimental
alteration in Mr. Walsh's duties, a failure to pay or maintain agreed upon
compensation or benefits or requiring Mr. Walsh to relocate to a location more
than fifty miles from the Company's current headquarters), or an involuntary
termination of employment without cause, Mr. Walsh will receive a lump sum in
cash equal to (a) the amount of the base salary that would have been payable
over the remainder of the term of the agreement had Mr. Walsh not been
terminated (subject to minimum amount equal to eighteen months' base salary;
such eighteen month period being a "Minimum Severance Period"); and (b) the
amount of annual bonus that would have been payable for the Minimum Severance
Period for Mr. Walsh, which is deemed to be equal to the average annual bonus
received by Mr. Walsh during the three years preceding the date of termination
in which a bonus was paid. In connection with Mr. Walsh's employment the
Company plans to obtain a $1 million term life insurance policy with the Company
as beneficiary.
CERTAIN TRANSACTIONS
In September 1996, the Company extended a loan of $50,000 to Terrence C.
Walsh, President and Chief Executive Officer of the Company. The loan bears
interest at a 6% annualized rate, and is due and payable in September 1999. The
loan is collateralized by 70,000 shares of the Company's Common Stock owned by
Mr. Walsh.
16
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
Marie Paris
Secretary
February 14, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, TIVOLI
INDUSTRIES, INC., 1513 ST. GERTRUDE PL., SANTA ANA, CA 92705.
17
<PAGE>
TIVOLI INDUSTRIES, INC.
1997 EQUITY INCENTIVE PLAN
ADOPTED JANUARY 8, 1997
1. PURPOSES.
(A) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants may be given an opportunity to
benefit from increases in value of the stock of the Company through the granting
of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock
bonuses, and (iv) rights to purchase restricted stock.
(B) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure and retain
the services of new Employees, Directors and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(C) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
2. DEFINITIONS.
(A) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(B) "BOARD" means the Board of Directors of the Company.
(C) "CODE" means the Internal Revenue Code of 1986, as amended.
(D) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(E) "COMPANY" means Tivoli Industries, Inc., a California corporation.
1
<PAGE>
(F) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(G) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means that
the service of an individual to the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive
officer of the Company may determine, in that party's sole discretion, whether
Continuous Status as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the chief executive officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.
(H) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to shareholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(I) "DIRECTOR" means a member of the Board.
(J) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(K) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(L) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows.
(1) If the common stock is listed on any established stock exchange or
traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of common stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Company's common stock) on the last market trading day prior to
the day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the Fair
Market Value shall be determined in good faith by the Board.
(M) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
2
<PAGE>
(N) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.
(O) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(P) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(Q) "OPTION" means a stock option granted pursuant to the Plan.
(R) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(S) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.
(T) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(U) "PLAN" means this 1997 Equity Incentive Plan.
(V) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.
(W) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(X) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
3
<PAGE>
(Y) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
3. ADMINISTRATION.
(A) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(B) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall be
granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory
Stock Option, a stock bonus, a right to purchase restricted stock, or a
combination of the foregoing; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; and the number of shares
with respect to which a Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 13.
(4) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
which are not in conflict with the provisions of the Plan.
(C) The Board may delegate administration of the Plan to a committee of the
Board composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors and/or Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a committee of one or more
members of the Board the authority to grant Stock Awards to eligible persons who
(1) are not then subject to Section
4
<PAGE>
16 of the Exchange Act and/or (2) are either (i) not then Covered Employees and
are not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award, or (ii) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(A) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate three hundred ninety thousand (390,000) shares of
the Company's common stock. If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan.
(B) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(A) Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted only to Employees, Directors
or Consultants.
(B) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
(C) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than one hundred fifty thousand (150,000) shares of the Company's common
stock in any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(A) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
5
<PAGE>
(B) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted; the exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(C) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement (however, in the event the Company
reincorporates in Delaware, then payment of the common stock's "par value" (as
defined in the Delaware General Corporation Law) shall not be made by deferred
payment), or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the Company) with
the person to whom the Option is granted or to whom the Option is transferred
pursuant to subsection 6(d), or (C) in any other form of legal consideration
that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(D) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person. A Nonstatutory Stock Option may be transferable to the extent
provided in the Option Agreement. The person to whom the Option is granted may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(E) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
6
<PAGE>
(F) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise the Option (to the extent that the Optionee was entitled
to exercise it as of the date of termination) but only within such period of
time ending on the earlier of (i) the date three (3) months following the
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (or such longer or shorter period specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee is not entitled to
exercise the entire Option, the shares covered by the unexercisable portion of
the Option shall revert to and again become available for issuance under the
Plan. If, after termination, the Optionee does not exercise the Option within
the time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or Consultant (other than upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the first paragraph of this
subsection 6(f), or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant during which the exercise of the Option would not be in violation of
such registration requirements.
(G) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise the Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise the entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(H) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the
7
<PAGE>
Optionee was entitled to exercise the Option as of the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(d), but only within the period ending
on the earlier of (i) the date eighteen (18) months following the date of death
(or such longer or shorter period specified in the Option Agreement), or (ii)
the expiration of the term of such Option as set forth in the Option Agreement.
If, at the time of death, the Optionee was not entitled to exercise the entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to and again become available for issuance under the Plan. If, after
death, the Option is not exercised within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate agreements need not be identical, but each stock bonus or
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions as appropriate:
(A) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such award is made. Notwithstanding the foregoing, the Board
or the Committee may determine that eligible participants in the Plan may be
awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(B) TRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement shall be transferable only by will or the laws of descent and
distribution, so long as stock awarded under such Stock Award Agreement remains
subject to the terms of the Agreement.
(C) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement (however, in the event the Company reincorporates
in Delaware, then payment of the common stock's "par value" (as
8
<PAGE>
defined in the Delaware General Corporation Law) shall not be made by deferred
payment), or other arrangement with the person to whom the stock is sold; or
(iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee in its discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(D) VESTING. Shares of stock sold or awarded under the Plan may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board or the Committee.
(E) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event a Participant's Continuous Status as an Employee, Director or
Consultant terminates, the Company may repurchase or otherwise reacquire,
subject to the limitations described in subsection 7(d), any or all of the
shares of stock held by that person which have not vested as of the date of
termination under the terms of the stock bonus or restricted stock purchase
agreement between the Company and such person.
8. CANCELLATION AND RE-GRANT OF OPTIONS.
(A) The Board or the Committee shall have the authority to effect, at any
time and from time to time, (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of the affected holders of Options, the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of stock, but having an exercise price per share not
less than eighty-five percent (85%) of the Fair Market Value (one hundred
percent (100%) of the Fair Market Value in the case of an Incentive Stock
Option) or, in the case of a 10% shareholder (as described in subsection 5(b))
receiving a new grant of an Incentive Stock Option, not less than one hundred
ten percent (110%) of the Fair Market Value) per share of stock on the new grant
date. Notwithstanding the foregoing, the Board or the Committee may grant an
Option with an exercise price lower than that set forth above if such Option is
granted as part of a transaction to which section 424(a) of the Code applies.
(B) Shares subject to an Option canceled under this Section 8 shall
continue to be counted against the maximum award of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this Section 8, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a substitute
Option; in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 8(b) shall be applicable only to the extent required by Section
162(m) of the Code.
9
<PAGE>
9. COVENANTS OF THE COMPANY.
(A) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.
(B) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
11. MISCELLANEOUS.
(A) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest pursuant to subsection 6(e) or 7(d), notwithstanding the
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
(B) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d) or 7(b) shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.
(C) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Director, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate (or to continue acting as a Director or Consultant) or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee with or without cause the right of the Company's Board of Directors
and/or the Company's shareholders to remove any Director as provided in the
Company's Bylaws and the provisions of the applicable laws of the Company's
state of incorporation, or the right to terminate the relationship of any
Consultant subject to the terms of such Consultant's agreement with the Company
or Affiliate.
(D) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time
10
<PAGE>
by any Optionee during any calendar year under all plans of the Company and its
Affiliates exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(E) The Company may require any person to whom a Stock Award is granted, or
any person to whom a Stock Award is transferred pursuant to subsection 6(d) or
7(b), as a condition of exercising or acquiring stock under any Stock Award, (1)
to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(F) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) If any change is made in the stock subject to the Plan, or subject to
any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person during any calendar year pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the type(s) and
number of securities and price per share of stock subject to such outstanding
Stock Awards.
11
<PAGE>
Such adjustments shall be made by the Board or the Committee, the determination
of which shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration by the Company".)
(B) In the event of: (1) a dissolution, liquidation or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors then: (i) any surviving corporation or
acquiring corporation shall assume any Stock Awards outstanding under the Plan
or shall substitute similar stock awards (including an award to acquire the same
consideration paid to the shareholders in the transaction described in this
subsection 12(b)) for those outstanding under the Plan, or (ii) in the event any
surviving corporation or acquiring corporation refuses to assume such Stock
Awards or to substitute similar stock awards for those outstanding under the
Plan, (A) with respect to Stock Awards held by persons then performing services
as Employees, Directors or Consultants, the vesting of such Stock Awards (and,
if applicable, the time during which such Stock Awards may be exercised) shall
be accelerated prior to such event and the Stock Awards terminated if not
exercised (if applicable) after such acceleration and at or prior to such event,
and (B) with respect to any other Stock Awards outstanding under the Plan, such
Stock Awards shall be terminated if not exercised (if applicable) prior to such
event.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(A) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company to the extent such approval is necessary for the Plan to satisfy the
requirements of Section 422 of the Code or any Nasdaq or securities exchange
listing requirements.
(B) The Board may in its sole discretion submit any other amendment to the
Plan for shareholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(C) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits
12
<PAGE>
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.
(D) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
(E) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(A) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth anniversary of
the date the Plan was adopted by the Board or approved by the shareholders of
the Company, whichever is earlier. No Stock Awards may be granted under the
Plan while the Plan is suspended or after it is terminated.
(B) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the written consent of the person to whom the Stock Award was granted.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
13
<PAGE>
TIVOLI INDUSTRIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS--MARCH 21, 1997
Terrence C. Walsh or Marie Paris, or either of them, each with the power of
substitution and revocation, are hereby authorized to represent the
undersigned, with all powers which the undersigned would possess if personally
present, to vote the Common Stock of the undersigned at the annual meeting of
shareholders of TIVOLI INDUSTRIES, INC. to be held at the Sutton Place Hotel,
4500 MacArthur Blvd., Newport Beach, California 92660, at 1:00 p.m., local
time, on Friday, March 21, 1997 and at any postponements or adjournments of
that meeting, as set forth below, and in their discretion upon any business
that may properly come before the meeting.
1. ELECTION OF DIRECTORS.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through such nominee's name.)
Terrence C. Walsh, Vincent F. Monte, Steven J. Goodman, Gerald E. Morris
2. APPROVAL OF 1997 EQUITY INCENTIVE PLAN.
FOR [_] AGAINST [_] ABSTAIN [_]
3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS.
FOR [_] AGAINST [_] ABSTAIN [_]
================================================================================
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAMED, IN FAVOR OF THE MATTERS DESCRIBED
IN PROPOSALS 2 AND 3, AND AS SAID PROXIES DEEM ADVISABLE, ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _____________________, 1997
----------------------------------
----------------------------------
(Please sign exactly as your name
appears hereon indicating your
official title when signing in a
representative capacity.)
