<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by 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 Materials Pursuant to Section. 240.14a-11(c) or
Section. 240.14a-12
CHASE INDUSTRIES INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CHASE INDUSTRIES INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:(1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth amount on which the filing is calculated and state how it was
determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
CHASE INDUSTRIES INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1999
The Annual Meeting of Stockholders of Chase Industries Inc. (the "Company")
will be held at the offices of Fulbright & Jaworski L.L.P., 666 5th Avenue, 31st
Floor, Room GH, New York, New York, on May 25, 1999, at 10:00 a.m. for the
following purposes:
1. To elect seven (7) directors of the Company, each to serve until
the 2000 annual meeting of stockholders of the Company or until his
successor is elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants for the Company for the year ending December 31,
1999; and
3. To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
A copy of the Proxy Statement in which the foregoing matters are described
in more detail accompanies this Notice of Annual Meeting of Stockholders.
The transfer books of the Company will not be closed, but only stockholders
of record at the close of business on March 29, 1999, are entitled to notice of
and to vote at the meeting or any adjournment thereof. A complete list of these
stockholders will be available for examination at the offices of Vinson & Elkins
L.L.P. located at 1325 Avenue of the Americas, New York, New York 10019 during
normal business hours for ten days before the meeting.
Please sign, date and return your proxy in the enclosed return envelope as
promptly as possible. You may revoke your proxy at any time before the shares to
which it relates are voted at the meeting.
By Order of the Board of Directors
/s/ MICHAEL T. SEGRAVES
MICHAEL T. SEGRAVES
Secretary
April 2, 1999
---------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ACCOMPANYING FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 3
CHASE INDUSTRIES INC.
14212 COUNTY ROAD M-50
MONTPELIER, OHIO 43543
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 1999
---------------------
SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS AND REVOCATION THEREOF
The accompanying Proxy is solicited by the Board of Directors of Chase
Industries Inc. (the "Company") for use at the Annual Meeting of Stockholders of
the Company to be held at the offices of Fulbright & Jaworski L.L.P., 666 5th
Avenue, 31st Floor, Room GH, New York, New York, on May 25, 1999, at 10:00 a.m.,
or any adjournment thereof (the "Annual Meeting"). The approximate date on which
this Proxy Statement and accompanying Proxy are first being sent to stockholders
is April 6, 1999.
The common stock of the Company, par value $.01 per share ("Common Stock"),
can be voted at the Annual Meeting only if the holder is present or represented
by proxy at the Annual Meeting. A stockholder executing and returning the Proxy
may revoke it at any time before it is exercised by giving written notice of the
revocation to the Secretary of the Company or by executing and delivering to the
Company a later-dated Proxy. Attendance at the Annual Meeting will not be
effective to revoke the Proxy unless written notice of revocation also has been
delivered to the Secretary of the Company before the Proxy is exercised.
The record date for the stockholders entitled to notice of and to vote at
the Annual Meeting is the close of business on March 29, 1999 (the "Record
Date").
QUORUM AND VOTING
The only class of outstanding voting securities of the Company is Common
Stock. As of the close of business on the Record Date, there were 9,084,052
shares of Common Stock outstanding and entitled to vote at the Annual Meeting
and 6,150,118 shares of nonvoting common stock, par value $.01 per share
("Nonvoting Common Stock"), outstanding. Each share of Nonvoting Common Stock is
convertible into one share of Common Stock at the option of the holder thereof
to the extent the conversion does not result in such holder or its affiliates,
directly or indirectly, owning or controlling a greater number of securities of
any kind issued by the Company than such holder and its affiliates are permitted
to own or control under the Small Business Investment Act of 1958, the Bank
Holding Company Act of 1956, and the regulations promulgated thereunder.
Holders of Common Stock of record at the close of business on the Record
Date are entitled to one vote for each share held on all matters submitted to a
vote of stockholders at the Annual Meeting or any adjournment thereof. Shares of
Common Stock issued upon the conversion of any Nonvoting Common Stock after the
Record Date will not be entitled to be voted at the Annual Meeting or any
adjournment thereof. The holders of shares of Common Stock do not have
cumulative voting rights.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. If a quorum is not present (either in person or by
proxy), the stockholders entitled to vote who are present in person or by proxy
have the power to adjourn the Annual Meeting from time to time without notice,
other than an announcement at the Annual Meeting, until a quorum is present. At
any adjourned Annual Meeting at which a quorum is present in person or by proxy,
any business may be transacted that might have been transacted at the Annual
Meeting as originally notified.
<PAGE> 4
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
an automated system administered by the Company's transfer agent and will
determine whether or not a quorum is present. Abstentions and broker non-votes
are treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum for the transaction of business.
Abstentions and broker non-votes are tabulated separately, with abstentions
counted in tabulations of the votes cast on a proposal for purposes of
determining whether a proposal has been approved while broker non-votes relating
to a proposal are not counted as a vote cast with respect to that proposal.
The election of directors will be determined by plurality vote and the
ratification of the appointment of PricewaterhouseCoopers LLP requires the
approval of a majority of the outstanding shares of Common Stock that are
present at the Annual Meeting in person or by proxy and entitled to vote
thereon. Therefore, abstentions will have a neutral effect on the election of
directors and will have the effect of votes against the proposal to ratify the
selection of independent accountants, whereas broker non-votes will have a
neutral effect on the election of directors and the proposal to ratify the
selection of independent accountants.
Shares represented by each Proxy that is properly executed and returned and
upon which no contrary instructions are indicated about a specified matter will
be voted as follows with respect to the specified matter: FOR the election of
the seven persons named in this Proxy Statement as the nominees of the Board of
Directors of the Company (the "Board of Directors") for election to the Board of
Directors; FOR the ratification of the appointment of PricewaterhouseCoopers LLP
as the independent accountants for the Company for 1999; and in accordance with
the discretion of the holders of the Proxy with respect to any other business
that properly comes before the stockholders at the Annual Meeting. Although
management currently is not aware of any other business that may come before the
stockholders at the Annual Meeting, pursuant to Rule 14a-4(c) of the Securities
Exchange Act of 1934 (the "Exchange Act") the Company will have discretionary
voting authority with respect to proxies submitted for the 1999 Annual Meeting
on any matter for which notice thereof is first provided to the Company after
March 15, 1999, without including any discussion of such matter in this Proxy
Statement.
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members. The Board of
Directors has designated the following nominees for election as directors of the
Company, with their terms to expire at the annual meeting of stockholders in
2000 or until their successors are elected and qualified:
Martin V. Alonzo
Raymond E. Cartledge
Charles E. Corpening
Donald J. Donahue
John R. Kennedy
Thomas F. McWilliams
William R. Toller
Each nominee currently is a director of the Company. For information about
each nominee, see "Directors and Executive Officers" below.
Should any nominee named in this Proxy Statement for the office of director
become unable or unwilling to accept nomination or election, the person acting
under the Proxy will vote for the election, in his stead, of any other person
whom the Board of Directors recommends. The Board of Directors has no reason to
believe that any nominee named above will be unable or unwilling to serve if
elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES.
2
<PAGE> 5
DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Board of Directors currently consists of one person who is an employee
of the Company and six persons who are not employees of the Company (i.e.,
outside directors). Set forth below are the names, ages and positions of the
Company's directors and executive officers as of the Record Date.
<TABLE>
<CAPTION>
NAME AGE POSITIONS(S)
---- --- ------------
<S> <C> <C>
Martin V. Alonzo..................................... 67 Chairman of the Board, President, Chief
Executive Officer and Director
Duane R. Grossett.................................... 64 President and Chief Operating Officer of
CBCC*
Parry D. Katsafanas.................................. 51 President and Chief Operating Officer of
Leavitt+
Michael T. Segraves.................................. 54 Chief Financial Officer, Vice President
and Secretary
Raymond E. Cartledge................................. 69 Director
Charles E. Corpening................................. 33 Director
Donald J. Donahue.................................... 74 Director
John R. Kennedy...................................... 68 Director
Thomas F. McWilliams................................. 56 Director
William R. Toller.................................... 68 Director
</TABLE>
- ---------------
* Chase Brass & Copper Company, Inc. ("CBCC"), is a wholly-owned subsidiary of
the Company through which the Company conducts its brass rod operations.
+ Leavitt Tube Company, Inc. ("Leavitt"), is a wholly-owned subsidiary of the
Company through which the Company conducts its steel tube operations.
The current term of office of each director will expire at the Annual
Meeting. At each annual meeting of stockholders, successors to the directors
will be elected to serve until the next annual meeting of stockholders and until
their successors are elected and qualified.
Executive officers of the Company are appointed by and serve at the
discretion of the Board of Directors.
The Company, Citicorp Venture Capital Ltd. ("CVC" ) and Mr. Alonzo are
parties to a Voting Agreement (the "Voting Agreement") pursuant to which the
Company has agreed to use its best efforts to cause up to two designees of CVC
and one designee of Mr. Alonzo to be nominated for election as directors of the
Company, and each of CVC and Mr. Alonzo have agreed to vote their respective
shares of Common Stock in favor of such designees. Pursuant to the Voting
Agreement, at any time the Board of Directors consists of five or more directors
and CVC owns 20% or more of the outstanding Common Stock (after giving effect to
the full conversion of all outstanding shares of Nonvoting Common Stock), CVC
will be entitled to two such designees, and at any time the Board of Directors
consists of fewer than five directors or CVC owns less than 20% of the
outstanding Common Stock (after giving effect to the full conversion of all
outstanding shares of Nonvoting Common Stock), CVC will be entitled to one such
designee. CVC has designated Charles E. Corpening and Thomas F. McWilliams as
its director nominees and Mr. Alonzo has designated himself as a director
nominee pursuant to the Voting Agreement.
The Company's existing bank credit facility also requires Mr. Alonzo to
continue to serve on the Board of Directors as long as he is physically able to
do so.
There are no family relationships among the directors or executive officers
and, except as to the designation of Messrs. Corpening, McWilliams and Alonzo as
director nominees pursuant to the Voting
3
<PAGE> 6
Agreement, there were no arrangements or understandings between any such
director or executive officer and any other person pursuant to which his
selection as a director or an officer was made.
Set forth below is certain biographical information regarding the executive
officers and directors of the Company.
Martin V. Alonzo. Mr. Alonzo has served as Chairman of the Board, President
and Chief Executive Officer ("CEO") of the Company since the Company began
operations in August 1990. Mr. Alonzo also served as President of Leavitt from
August 1996 until March 1997. From 1987 until 1990, Mr. Alonzo pursued
entrepreneurial opportunities, which included advising the Maxxam Group in
connection with its acquisition of Kaiser Aluminum Corporation and, in
conjunction with CVC, analyzing prospective acquisitions, primarily of metals
related companies. From 1967 until 1987, Mr. Alonzo was employed by AMAX, Inc.,
a large mining and integrated aluminum company, in various capacities, including
senior vice president and president -- industrial minerals division, executive
vice president and president -- specialty and light metals operations and, from
1984 until July 1987, executive vice president and chief financial officer. Mr.
Alonzo also served as a director of Alumax Inc., an integrated aluminum company,
from 1974 to 1987.
Duane R. Grossett. Mr. Grossett has served as President and Chief Operating
Officer of CBCC since October 1996. Prior to such time, Mr. Grossett served as a
director of the Company since August 1990, a position from which he resigned
after accepting the positions with CBCC in 1996. From April 1994 to April 1995,
Mr. Grossett also was engaged by the Company as an independent consultant and,
in such capacity, performed the functions of President and Chief Operating
Officer of CBCC from April 1994 until February 1995. From 1989 until 1993, Mr.
Grossett served as president and chief executive officer of Easco Corp., a
manufacturer of extruded aluminum products. From 1980 until 1986, Mr. Grossett
served as president of Extruded Metals Inc. and, from 1986 until 1989, as
executive vice president and chief operating officer of Mueller Brass Co., Inc.
(predecessor to Mueller Industries, Inc.), each a competitor of the Company.
Parry D. Katsafanas. Mr. Katsafanas has served as President and Chief
Operating Officer of Leavitt since December 1997. Prior to such time, Mr.
Katsafanas served as Vice President -- Sales and Marketing of Leavitt since
Leavitt acquired the steel tubing operations from UNR Industries, Inc., in
August 1996. Prior to joining Leavitt, Mr. Katsafanas was employed by the steel
tubing division of UNR Industries, Inc., since 1974, serving in various sales
capacities, including as regional sales manager from 1981 until July 1993 and as
Vice President -- Sales and Marketing from July 1993 until August 1996.
Michael T. Segraves. Mr. Segraves has served as Vice President and
Secretary of the Company since September 1996, and as Chief Financial Officer
since February 1997. Prior to joining the Company, Mr. Segraves was employed
from 1992 to 1996 as vice president of administration and chief financial
officer of AMP Circuits, a wholly-owned subsidiary of AMP Incorporated, a
manufacturer in the electronics industry. From 1990 through 1992, Mr. Segraves
was chief financial officer of Browning Ferris Industries' European subsidiary,
headquartered in Utrecht, The Netherlands. Prior to these positions, Mr.
Segraves was employed at Ford Motor Company and Tenneco, Inc., in various
financial management positions.
Raymond E. Cartledge. Mr. Cartledge was elected as a director of the
Company in May 1995. Mr. Cartledge served as chairman of the board and chief
executive officer of Union Camp Corporation, a paper and packaging company, from
1986 until 1994, and as chairman of the board of Savannah Foods & Industries,
Inc., until his retirement in 1997. Mr. Cartledge also serves as a director of
Union Camp Corporation, Delta Air Lines Inc., Sun Company, Inc. and Blount Inc.
Charles E. Corpening. Mr. Corpening was elected as a director of the
Company in May 1995. Since 1994, Mr. Corpening has been a vice president of CVC,
which beneficially owns approximately 48.3% of the outstanding Common Stock (see
"Security Ownership of Certain Beneficial Owners and Management" below). Prior
to joining CVC, Mr. Corpening was a vice president of Roundtree Capital Corp., a
private investment firm based in Stamford, Connecticut from 1990 until 1994. Mr.
Corpening was employed in the merchant banking division of the Rockefeller Group
from 1988 until 1990 and worked in the mergers and acquisitions group of
PaineWebber, Inc. from January 1987 until December 1988. Mr. Corpening received
a
4
<PAGE> 7
masters of business administration from Columbia University Business School in
1993. Mr. Corpening also serves as a director of Davco Restaurants Inc. and
Kemet Corporation.
Donald J. Donahue. Mr. Donahue was elected as a director of the Company in
November 1994. From 1987 until February 1996, Mr. Donahue served as chairman of
the board of directors of Magma Copper Company, a fully-integrated producer of
electrolytic copper and related products. Mr. Donahue was chairman of the board
and chief executive officer of KMI Continental, Inc. ("KMI"), a natural resource
conglomerate, from 1984 to 1985, and vice chairman and chief operating officer
of KMI's predecessor firm from 1975 to 1984. From September 1990 until August
1993, Mr. Donahue also served as chairman of NAC Holding Corporation, a holding
company for the North American Company For Life And Health Insurance.
John R. Kennedy. Mr. Kennedy was elected as a director of the Company in
November 1994. From 1975 until his retirement in 1996, Mr. Kennedy served as
president and chief executive officer of Federal Paper Board Company, Inc. Mr.
Kennedy also serves as a director of De Vlieg-Bullard, Inc., International Paper
Company, Holnam Inc. and Spartech Corporation.
Thomas F. McWilliams. Mr. McWilliams has served as a director of the
Company since August 1990, and served as Vice President of the Company from July
1993 until September 1994. Since 1983, Mr. McWilliams has been affiliated with
CVC and has served as vice president and a managing director of CVC as well as a
member of CVC's investment committee. Mr. McWilliams also serves as a director
of each of MMI Products, Inc., Polar Corporation, HydroChem Industrial Services,
Inc., Ergo Science Corporation, Pen-Tab Industries and Airxcel Inc.
William R. Toller. Mr. Toller was elected as a director of the Company in
October 1996. From October 1990 until July 1996, Mr. Toller served as chairman
and chief executive officer of Witco Corporation, a specialty chemical company.
Mr. Toller currently serves as a director of Commodore Separation Technologies,
Inc., FusePlus, Inc., and The United States Chamber of Commerce. Mr. Toller also
is a member of the Board of Trustees of the International Center for the
Disabled in New York City and the National Advisory Board of the First
Commercial Bank in Little Rock, Arkansas.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors has an Audit Committee (the "Audit Committee") and a
Compensation Committee (the "Compensation Committee"). The Board of Directors
does not have a nominating committee.
The Audit Committee makes recommendations to the Board of Directors
concerning the selection of the Company's independent accountants, reviews and
approves the scope of the annual audit and discusses internal accounting
procedures and financial controls with the Company's management and auditors.
The Audit Committee also reviews compliance by Company management and employees
with Company policies and may initiate and supervise any special investigations
it deems necessary. The members of the Audit Committee are Messrs. Donahue
(Chairman), Kennedy and McWilliams, all of whom are independent outside
directors. The Audit Committee held one meeting in 1998.
The Compensation Committee is responsible for setting annual base and cash
bonus compensation levels of executive officers and for establishing and
administering the Company's compensation policies and practices, administering
the Company's stock option plans, and supervising the administration of the
Company's other employee benefit plans. The members of the Compensation
Committee are Messrs. Kennedy (Chairman), Donahue and McWilliams. The
Compensation Committee held two meetings in 1998.
During 1998, the Board of Directors held five meetings. Each of the
directors attended at least 75% of the aggregate of all meetings held by the
Board of Directors and (if applicable) all meetings of committees of the Board
of Directors on which such director served during 1998.
5
<PAGE> 8
MANAGEMENT COMPENSATION
BOARD COMPENSATION
Cash Compensation. Each member of the Board of Directors who is not an
employee or officer of the Company or any subsidiary of the Company
("Non-Employee Director") receives an annual retainer of $15,000 for service as
a director, plus $1,000 for each meeting of the Board of Directors attended and
$500 for each meeting of a committee of the Board of Directors attended, and
reimbursement of all ordinary and necessary expenses incurred in attending any
meeting of the Board of Directors or any committee of the Board of Directors.
Employees of the Company who also serve as members of the Board of Directors do
not receive any additional compensation for service as a director, but are
reimbursed for related expenses.
Stock Option Awards. Each Non-Employee Director is granted, on the date
such person is elected or appointed as a director, stock options to purchase
7,500 shares of Common Stock at an exercise price equal to the average closing
price of the Common Stock on the New York Stock Exchange for the five trading
days immediately preceding the date of grant (the "Average Fair Market Value").
All stock options granted to Non-Employee Directors vest in equal proportions on
each of the first five anniversaries of the date of grant, provided that the
person has been a director of the Company continuously through that date.
Non-Employee Directors reelected to successive terms do not receive additional
grants of stock options upon any such reelection. Prior to May 14, 1997, these
grants of stock options were made pursuant to the Company's 1994 Long-Term
Incentive Plan (the "1994 Incentive Plan"). As of May 14, 1997, all such awards
are to be made pursuant to the Company's 1997 Non-Employee Director Stock Option
Plan, as amended, (the "Director Stock Option Plan").
Also, pursuant to the Director Stock Option Plan, each Non-Employee
Director may elect to defer all or a portion (in 25% increments) of such
director's annual cash retainer for a calendar year and, if such director elects
to defer all or a portion of his or her annual retainer, such Non-Employee
Director also may elect to defer the total amount of the fees that such director
is entitled to receive for attending board and committee meetings, and receive,
in lieu thereof, stock options equal to the value of such deferred retainer and
meeting fees. Stock options granted in lieu of a director's deferred retainer
and meeting fees will be granted as of the last day of each calendar quarter
(the date on which the meeting fees for such quarter and the quarterly payments
of the annual cash retainer are paid, in arrears) in the year to which the
election relates. The number of stock options granted each quarter is determined
by dividing the sum of (i) 25% of the total annual retainer amount deferred and
(ii) if meeting fees have been deferred, the total amount of meeting fees to
which the Non-Employee Director is entitled for such calendar quarter, by 50% of
the Average Fair Market Value (as defined above) for the last five trading days
of that calendar quarter, and also will have an exercise price equal to 50% of
that Average Fair Market Value. Each stock option granted to Non-Employee
Directors in lieu of their annual retainer and, if applicable, meeting fees
vests fully and is exercisable immediately upon grant. If a Non-Employee
Director is elected or appointed during a calendar year and elects to receive
stock options under the Director Stock Option Plan in lieu of such director's
pro rated annual cash retainer for the remainder of such calendar year, the
numerator of the formula will be adjusted to reflect the portion of the deferred
annual cash retainer attributable to each remaining calendar quarter (or portion
thereof) in the year to which any such initial election relates.
In 1998, each of Messrs. Cartledge, Donahue and Toller elected to defer 50%
of their respective annual retainers, while each of Messrs. Corpening, Kennedy
and McWilliams elected to defer 100% of their respective annual retainers. For
1999, each director has elected to defer the same percentage as deferred in
1998, except for Mr. Cartledge, who has elected to defer 100% of his annual
retainer. Messrs. Corpening and McWilliams elected to defer their respective
fees for meetings held in 1998 subsequent to the 1998 annual stockholders
meeting at which the amendment to the Director Stock Option Plan providing for
deferral of the meeting fees was approved. For 1999, Messrs. Corpening, Kennedy
and McWilliams have elected to defer their respective meeting fees.
The Director Stock Option Plan provides that, upon a "change in control" of
the Company, (i) all outstanding stock options will become immediately and fully
vested and exercisable in full and (ii) each
6
<PAGE> 9
holder of a stock option will be granted a corresponding stock appreciation
right. For the definition of "change in control" as used in the Director Stock
Option Plan, see "Other Change in Control Arrangements -- Stock Option Plans"
below.
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid by the Company to its executive officers is
administered by the Compensation Committee and generally consists of base
salaries, annual cash incentives, equity incentives in the form of stock
options, contributions to Company-sponsored 401(k) plans and miscellaneous
perquisites.
The following table sets forth the total compensation awarded to, earned by
or paid by the Company to its CEO and to each of the other three executive
officers of the Company whose total cash compensation exceeded $100,000 for
services rendered during 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
-----------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(2) OPTIONS(3) ($)(4)
- --------------------------- ---- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Martin V. Alonzo................ 1998 350,000 250,000 0 75,000(5) 45,445
Chairman of the Board, 1997 300,000 450,000 0 55,762(6) 45,524
President and CEO 1996 300,000 375,000 0 0 44,460
Duane R. Grossett............... 1998 225,000 140,000 0 75,000(5) 18,577
President and Chief Operating 1997 190,000 140,000 0 0 19,071
Officer of CBCC 1996(7) 31,826 20,000 0 75,000(5) 4,060
Parry D. Katsafanas............. 1998 200,000 0 0 27,000(5) 16,639
President and Chief Operating 1997 155,000 36,503 0 0 14,298
Officer of Leavitt 1996(8) 50,000 13,050 0 18,000(5) 5,110
Michael T. Segraves............. 1998 168,750 80,000 0 30,000(5) 14,712
Chief Financial Officer 1997 153,750 80,000 0 0 14,315
1996(9) 57,313 15,000 0 30,000(5) 1,142
</TABLE>
- ---------------
(1) No restricted stock awards were granted to any named executive officer
during the period reported.
(2) While the named executives may have received certain perquisites in 1998,
such perquisites did not exceed the lesser of $50,000 or 10% of such
executive's salary and bonus.
(3) Number of Securities underlying options has been adjusted to reflect the
three-for-two split of the Company's outstanding Common Stock effective June
6, 1998 (the "Stock Split").
(4) The amounts disclosed in this column for 1998 include:
(i) premiums and imputed income paid by the Company with respect to term
life insurance for the benefit of Messrs. Alonzo, Grossett, Katsafanas
and Segraves in the amounts of $16,195, $5,577, $1,314 and $1,712,
respectively;
(ii) contributions by the Company to the Company's 401(k) Profit Sharing
Plan in the amount of $8,000 for the benefit of each of Messrs.
Alonzo, Grossett, Katsafanas and Segraves;
(iii) contributions by the Company to the Company's 401(k) Savings and
Investment Plan for the benefit of Messrs. Alonzo, Grossett,
Katsafanas and Segraves in the amounts of $5,000 $5,000, $3,500 and
$5,000, respectively; and
(iv) contributions by the Company to the Company's supplemental retirement
plans for the benefit of Messrs. Alonzo and Katsafanas in the amounts
of $16,250 and $3,825, respectively.
(5) Options were awarded pursuant to the 1994 Incentive Plan, vest in 20%
increments on each anniversary of the date of grant, and have an exercise
price equal to the closing price of the Common Stock as reported in the New
York Stock Exchange composite transactions listing on the date of grant. See
also the "Option Grants In Last Fiscal Year" table below.
(6) Stock Options were granted pursuant to the Company's 1997 Executive Deferred
Compensation Stock Option Plan (the "Executive Stock Option Plan"). Under
the Executive Stock Option Plan, each eligible employee may elect to defer
all or a portion (in 25% increments) of such employee's annual cash bonus
for such calendar year (which bonus will be determined after that calendar
year end) and receive, in lieu thereof, stock options equal to the value of
the deferred cash bonus. Stock options granted in lieu of an employee's
foregone cash bonus are granted as of the date the annual cash bonus for the
year to which an election relates is determined. The stock options related
to each annual bonus amount deferred are granted in four series, with the
number of stock options granted with respect to each series determined by
dividing 25% of the cash bonus amount deferred by 50% of the average
7
<PAGE> 10
closing price of the Common Stock on the New York Stock Exchange for the
last five trading days of each calendar quarter (in each case, the "Average
Quarter-End Price") in the calendar year to which the bonus relates, with
the stock options calculated for each calendar quarter representing one
series. Stock options granted in each series have an exercise price equal to
50% of the Average Quarter-End price for the calendar quarter to which such
series relates. Each stock option granted to eligible employee in lieu of
their annual cash bonus will vest fully immediately upon grant. Mr. Alonzo
was awarded a $450,000 cash bonus in 1998 for his services during 1997.
Pursuant to the Executive Stock Option Plan. Mr. Alonzo had elected in 1997
to defer 100% of such cash bonus and received, in lieu thereof, options to
purchase an aggregate of 55,762 shares of Common Stock (as adjusted to
reflect the Stock Split), as reported in the Company's 1998 Proxy Statement.
On February 10, 1998, the actual date of grant, the closing price of the
Company's Common Stock was $17.96 (as adjusted to reflect the Stock Split).
Mr. Alonzo did not elect to participate in the Executive Stock Option Plan
for 1998.
(7) Mr. Grossett accepted the position as President and Chief Operating Officer
of CBCC effective October 28, 1996. Prior to such date, Mr. Grossett served
only as a Non-Employee Director, and compensation reported for 1996 reflects
compensation for the period from October 28 through December 31.
(8) Mr. Katsafanas was first employed by Leavitt on August 30, 1996, and
compensation reported for 1996 reflects compensation for the period from
August 30 through December 31.
(9) Mr. Segraves was first employed by the Company on September 23, 1996, and
compensation reported for Mr. Segraves for 1996 reflects compensation from
September 23, 1996, through December 31, 1996.
The following table sets forth options granted during 1998 to the executive
officers named in the Summary Compensation Table ("Named Executive Officers").
No stock appreciation rights were granted during 1998.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL MARKET
SECURITIES OPTIONS PRICE ON GRANT DATE
UNDERLYING GRANTED TO EXERCISE DATE OF PRESENT
OPTIONS EMPLOYEES IN PRICE GRANT EXPIRATION VALUE
NAME GRANTED(#) FISCAL YEAR ($/SHARE) ($/SHARE)(2) DATE ($)(3)
- ---- ---------- ------------ --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin V. Alonzo(4)...... 75,000(5) 17.8 17.96 17.96 02/10/08 543,000
Duane R. Grossett........ 75,000(5) 17.8 17.96 17.96 02/10/08 543,000
Parry D. Katsafanas...... 27,000(5) 6.4 17.96 17.96 02/10/08 195,480
Michael T. Segraves...... 30,000(5) 7.1 17.96 17.96 02/10/08 217,200
</TABLE>
- ---------------
(1) All of the stock option information set forth in the table has been adjusted
to reflect the Stock Split.
(2) The grant date market price reported represents the closing market price of
the Common Stock on February 10, 1998, the actual date of grant, adjusted to
give effect to the Stock Split.
(3) The grant date present value was determined by using a modified
Black-Scholes pricing model with the following assumptions and adjustments:
(i) stock price volatility of 29.16%, calculated using monthly stock prices
of the Company's peer group used in the Performance Graph contained in this
Proxy Statement for the period of years during and prior to the grant date
equal to the expected term of the option as specified in clause (iv) below;
(ii) risk-free rates of return of 5.61 % representing the interest rates on
6 year U.S. Treasury securities on the date of grant; (iii) no dividends
paid on the Company's Common Stock consistent with current Company practice;
and (iv) an assumed exercise date of 6 years.
The Company's use of this model should not be construed as an endorsement of
its accuracy. Whether the model's assumptions will prove to be accurate
cannot be known as of the date of this Proxy Statement. The ultimate value
of the options, if any, will depend on the future value of the Company's
Common Stock, which cannot be forecast with reasonable accuracy, and the
optionees' investment decisions.
(4) As reported in the Company's 1998 Proxy Statement, stock options to purchase
55,762 shares were awarded to Mr. Alonzo in 1998 for service in 1997. See
"Summary Compensation Table" above and note 6 thereto.
(5) Options were granted pursuant to the 1994 Incentive Plan, vest in 20%
increments on each anniversary of the date of grant, and have an exercise
price equal to the closing price of the Common Stock as reported in the New
York Stock Exchange composite transactions listing on the date of grant.
8
<PAGE> 11
The following table sets forth information with respect to options to
purchase the Company's Common Stock held by the Named Executive Officers during
and as of the end of fiscal year 1998. No options or stock appreciation rights
were exercised by such persons during 1998.
AGGREGATED OPTION EXERCISES IN 1998
AND 1998 YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS OPTIONS
ACQUIRED ON VALUE AT FY-END(#) AT FY-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mr. Alonzo............... 0 N/A 370,762/135,000 1,262,232/282,563
Mr. Grossett............. 0 N/A 45,000/105,000 0/0
Mr. Katsafanas........... 0 N/A 12,600/32,400 0/0
Mr. Segraves............. 0 N/A 18,000/42,000 0/0
</TABLE>
- ---------------
(1) All of the stock option information set forth in the table has been adjusted
to reflect the Stock Split.
(2) Based on the closing price ($10.4375) of the Company's Common Stock on
December 31, 1998, as reported in the New York Stock Exchange composite
transactions listing.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Employment Agreements
Martin V. Alonzo. The Company and Mr. Alonzo are parties to an employment
agreement which is effective through December 31, 1999, and automatically will
be extended on a year-to-year basis unless terminated by the Company or Mr.
Alonzo on 30 days' notice before the start of the following year. The employment
agreement provides for a current annual salary of $300,000 (which was increased
to $350,000 by the Compensation Committee effective January 1, 1998), subject to
future annual increases at the discretion of the Board of Directors. Mr. Alonzo
also is entitled to annual cash incentives at the discretion of the Board of
Directors.
Under the employment agreement, if Mr. Alonzo's employment is terminated in
certain circumstances, including a termination by the Company in violation of
the agreement or a termination by Mr. Alonzo for good reason (as defined in the
employment agreement), the Company will be required to pay Mr. Alonzo a
severance payment in an amount equal to one and one-half times the sum of Mr.
Alonzo's then current base salary and the average of Mr. Alonzo's bonus for the
three previous years. If Mr. Alonzo's employment is terminated by the Company in
violation of the agreement or by Mr. Alonzo for good reason following a "change
in control" of the Company, Mr. Alonzo also will be entitled (in addition to any
other severance payments he may be owed) to receive a lump sum payment of cash
in an amount equal to 2.99 times Mr. Alonzo's annualized includable compensation
(determined within the meaning of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code")), and to continue participation for four years in
all employee benefit plans in which he was entitled to participate immediately
before termination of his employment (or in substantially similar plans). A
"change in control" of the Company has the same meaning in Mr. Alonzo's
employment agreement as discussed below under "Other Change-in-Control
Arrangements -- Stock Option Plans." The Company also has agreed to reimburse
Mr. Alonzo for reasonable legal fees and costs that Mr. Alonzo incurs in
connection with the resolution in Mr. Alonzo's favor of any dispute or
controversy under his employment agreement.
Duane R. Grossett. CBCC entered into an employment agreement with Duane R.
Grossett upon the commencement of his employment as CBCC's President and Chief
Operating Officer in October 1996. Mr. Grossett's employment agreement is
effective through January 4, 2000, and provides for an annual salary of $190,000
(which was increased to $225,000 by the Compensation Committee effective January
1, 1998), plus annual cash incentives at the discretion of the board of
directors of CBCC and the Compensation Committee of the Company.
9
<PAGE> 12
If Mr. Grossett's employment is terminated by CBCC without cause (as
defined in Mr. Grossett's employment agreement) or by Mr. Grossett for good
reason (as defined in Mr. Grossett's employment agreement), CBCC will be
required to pay to Mr. Grossett a severance payment in an amount equal to Mr.
Grossett's then-current base salary and maintain for one year health insurance
for the benefit of Mr. Grossett and his family to the extent in effect prior to
his termination. If Mr. Grossett's employment is terminated by CBCC in violation
of the agreement or by Mr. Grossett for good reason following a "change in
control" of the Company or at any time after the Company ceases to own a
majority of the voting stock of CBCC, Mr. Grossett also will be entitled (in
addition to any other severance payments he may be owed) to receive a lump sum
payment in cash in an amount equal to Mr. Grossett's prior year's bonus. A
"change in control" of the Company has the same meaning in Mr. Grossett's
employment agreement as discussed below under "Other Change-in-Control
Arrangements -- Stock Option Plans." CBCC also has agreed to reimburse Mr.
Grossett for reasonable legal fees and costs that Mr. Grossett incurs in
connection with the resolution in Mr. Grossett's favor of any dispute or
controversy under his employment agreement.
Other Change-in-Control Arrangements
Stock Option Plans
The 1994 Incentive Plan provides for the granting of incentive awards to
the Company's officers and employees in the form of stock options, stock
appreciation rights and restricted stock. Pursuant to the 1994 Incentive Plan,
upon a "change in control" of the Company, (1) each holder of a stock option
will be granted a corresponding stock appreciation right, (2) all outstanding
stock appreciation rights and stock options will become immediately and fully
vested and exercisable in full, and (3) the restriction period on any restricted
stock award will be accelerated and the restrictions will expire.
The Executive Stock Option Plan permits eligible employees to defer all or
a portion of their annual cash bonus and receive, in lieu thereof, immediately
exercisable stock options with a value calculated based on the value of the
bonus amount deferred. See "Management Compensation -- Compensation of Executive
Officers -- Summary Compensation Table" above and note 5 thereto. The Executive
Stock Option Plan provides that, upon a "change in control" of the Company, each
holder of a stock option will be granted a corresponding stock appreciation
right.
The Director Stock Option Plan provides for the granting of stock options
to Non-Employee Directors of the Company upon their election to the Board of
Directors and, at the election of each Non-Employee Director, in lieu of all or
a portion of such Non-Employee Director's annual retainer and in lieu of all
(but not just a portion of cash payments payable by the Company to such
Non-Employee Director as compensation for attending meetings of the Board of
Directors and committees thereof. The Director Stock Option Plan provides that,
upon a "change in control,"(1) all outstanding stock options become immediately
and fully vested and exercisable in full and (2) each holder of a stock option
will be granted a corresponding stock appreciation right. In addition, if a
"change in control" occurs in connection with a merger or consolidation of the
Company pursuant to which the Company is not the surviving corporation, then
each holder of a stock option or stock appreciation right is entitled to receive
(upon payment of the exercise price, if applicable) the same consideration to
which such holder would have been entitled had they exercised such stock option
or stock appreciation right immediately prior to such transaction. See
"Management Compensation -- Board Compensation -- Stock Option Awards" above.
In general, under each of the 1994 Incentive Plan, the Executive Stock
Option Plan and the Director Stock Option Plan (see "Management
Compensation -- Board Compensation -- Stock Option Awards" above), a "change in
control" of the Company occurs in any of the following four situations: (1) a
person other than (a) the Company, certain companies affiliated with the
Company, benefit plans of the Company or of certain companies affiliated with
the Company or of a company with the same ownership as the Company, (b) CVC or
(c) certain affiliates of CVC, acquires 50% or more of the voting power of the
Company's outstanding voting securities; (2) a person described in clause (1)
announces a tender offer for 50% or more of the Company's outstanding voting
securities and the Board of Directors approves or does not oppose the tender
offer, provided an event described in clause (1), (3) or (4) occurs within one
year of such tender offer;
10
<PAGE> 13
(3) the Company merges or consolidates with another corporation or partnership,
or the Company's stockholders approve such a merger or consolidation, other than
mergers or consolidations in which the Company's voting securities are converted
into securities having the majority of voting power in the surviving company; or
(4) the Company liquidates or sells all or substantially all its assets, or the
Company's stockholders approve such a liquidation or sale, except sales to
corporations having substantially the same ownership as the Company.
Change of Control Agreement
The Company and Michael T. Segraves are parties to a change of control
agreement which is effective through December 31, 1999, and automatically will
be extended on a year-to-year basis unless terminated by the Company or Mr.
Segraves on 30 days' notice before the start of the following year. If Mr.
Segraves' employment with CBCC is terminated by the Company without cause (as
defined in Mr. Segraves' change of control agreement) or by Mr. Segraves for
good reason (as defined in Mr. Segraves' change of control agreement) following
a "change in control," the Company will be required to pay to Mr. Segraves a
lump sum severance payment in an amount equal to the sum of (1) Mr. Segraves'
then current base salary (or, if greater, Mr. Segraves' base salary at the time
of the change in control or, if applicable, the occurrence of the event giving
rise to Mr. Segraves' right to terminate his employment for good reason) and (2)
Mr. Segraves' prior year's bonus, and to maintain for one year health insurance
for the benefit of Mr. Segraves and his family as in effect prior to the
termination of his employment. For purposes of Mr. Segraves' change in control
agreement, a "change in control" occurs in any of the situations that
constitutes a change in control as defined above under "-- Stock Option Plans"
or in the event (1) CBCC liquidates or sells all or substantially all its assets
or the Company approves such a liquidation or sale, except sales to corporations
owned (directly or indirectly) by the Company's stockholders in the same
proportions as their ownership of the Company's stock or (2) the Company ceases
to own at least a majority of the voting securities of CBCC, other than pursuant
to a transaction after which all of the voting securities of CBCC (or a company
into which it is merged) which are not owned by the Company are owned by the
Company's stockholders in the same proportion as their ownership of the Company.
The Company also has agreed to reimburse Mr. Segraves for reasonable legal fees
and costs that Mr. Segraves incurs in connection with the resolution in Mr.
Segraves' favor of any dispute or controversy under his change of control
agreement.
INDEMNITY AGREEMENTS
The Company has entered into indemnity agreements with each of its
directors and executive officers. Those agreements require the Company, to the
extent permitted under applicable law, to indemnify such persons against all
expenses, judgments, fines and penalties incurred in connection with the defense
or settlement of any actions brought against them by reason of the fact that
they are or were directors or executive officers of the Company or assumed
certain responsibilities at the direction of the Company. Each indemnification
agreement also provides that, upon a potential change in control of the Company
and if the indemnified director or executive officer so requests, the Company
will create a trust for the benefit of the indemnified director or executive
officer in an amount sufficient to satisfy payment of any liabilities and suits
against which the Company has indemnified the director or executive officer. The
Company expects to enter into similar agreements with persons selected to be
directors and executive officers in the future.
11
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kennedy, Donahue and McWilliams served as members of the
Compensation Committee during 1998. None of such persons are officers or
employees or former officers or employees of the Company, except for Mr.
McWilliams who served as Vice President of the Company from July 1993 until
September 1994. During the period that Mr. McWilliams served as Vice President
of the Company, he did not receive any compensation from the Company for his
service as an officer.
None of the executive officers of the Company served as a member of the
Compensation Committee or board of directors of any other company during 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
STRATEGY AND OBJECTIVES
The Company's executive compensation program is administered by the
Compensation Committee, which is comprised entirely of Non-Employee Directors.
The Compensation Committee determines any annual increase in the base salary of
the CEO, the annual bonus to be paid to the CEO, and, based on recommendations
of the CEO, the compensation to be provided to the other executive officers. The
Compensation Committee also administers the 1994 Incentive Plan pursuant to
which equity incentives are provided to employees at the discretion of the
Compensation Committee.
In determining compensation levels and developing compensation programs for
the Company's executive officers, the Compensation Committee analyzes the
relationship between base salary, annual cash incentives, equity incentives and
benefits. The underlying objectives of the Company's compensation strategy
include the following:
- Attract and retain superior executive talent, and motivate those
executives to achieve optimum short-term and long-term corporate
operating results;
- Align the interests of executive officers with the creation of
stockholder value and ensure long-term growth orientation through
equity-based plans; and
- Provide a compensation package that recognizes individual contributions
as well as overall business results.
COMPONENTS OF COMPENSATION
The key elements of the Company's executive compensation program are base
salary, annual cash bonuses and equity incentive compensation. These elements
are addressed separately.
The Compensation Committee does not exclusively use quantitative methods or
mathematical formulas in setting any element of compensation. In determining
each component of compensation, the Compensation Committee considers all
elements of an executive's total compensation package, recommendations of the
CEO (as discussed below) and other objective and subjective criteria the
Compensation Committee deems appropriate with respect to each executive officer.
Base Salaries. The base salary of each of the executive officers, other
than the CEO, is reviewed annually, with adjustments made based primarily on the
recommendations of the CEO. In reviewing base salaries the CEO considers various
factors, including the performance of the executive officer with respect to
specific objectives and increases in responsibilities. The specific objectives
for each executive officer are established by such officer after consultation
with the CEO, and vary for each executive position and for each year. In
addition, in the first quarter of each year, the Board of Directors approves the
Company's business plan developed by management for the current year. The
business plan establishes objectives for the current year with respect to areas
such as marketing, operations, capital expenditures and financial performance.
In reviewing annual base salaries, the CEO and the Compensation Committee also
consider each executive officer's responsibilities related to achieving the
objectives in the business plan and, in an effort to provide
12
<PAGE> 15
competitive compensation, from time to time reviews salaries of similarly
situated employees in comparator companies.
The financial performance of the Company, primarily operating income,
EBITDA (earnings before interest, taxes, depreciation and amortization) and net
income, also is considered in determining annual adjustments to base salaries,
but more emphasis is placed on divisional financial performance in determining
annual cash bonuses rather than base salaries. When the CEO completes his
reviews, he makes a recommendation to the Compensation Committee for its review
and approval.
Annual Cash Bonuses. Annual cash bonuses to executive officers, other than
the CEO, are determined by the Compensation Committee based upon the
recommendations of the CEO. The CEO in developing his bonus recommendations for
the other executive officers, as well as the Compensation Committee in
evaluating the CEO's recommendations, consider primarily the financial
performance of the Company as described above, the performance of the division
at which an executive officer is employed and whether such division attained or
exceeded the objectives set forth in the Company's annual business plan, and the
performance of the Company and the executive's division in relation to industry
conditions and performance of comparable companies. The CEO and the Compensation
Committee also consider individual performance which contributed to the
Company's financial performance or otherwise assisted the Company's efforts to
achieve the objectives set forth in its business plan. Failure of the Company or
an executive's division to attain or exceed the objectives in the business plan
does not, however, necessarily prevent any cash bonus from being paid, although
it may affect the size of cash bonuses paid. No specific weighting was assigned
to any of the factors considered in determining annual adjustments to base
salaries and cash bonuses for the executive officers.
Certain executive officers may elect to defer all or a portion of their
annual cash bonus and receive, in lieu thereof, stock options under the
Company's 1997 Executive Deferred Compensation Stock Option Plan as described
below under "Equity Incentive Compensation."
Equity Incentive Compensation. The Compensation Committee endorses the view
that equity ownership by management is beneficial in aligning management's and
stockholders' interests in the enhancement of stockholder value. The
equity-based compensation plans described below facilitate equity ownership by
management.
1994 Incentive Plan. Through the 1994 Incentive Plan, the Company has
utilized stock options (and has the ability to utilize stock appreciation rights
and restricted stock) as components of executive compensation to ensure external
competitiveness of the total executive compensation package, motivate executives
to improve long-term stock performance, encourage equity ownership of the
Company by executive officers and align executive interests with the enhancement
of stockholder value.
In granting stock options or other stock-based compensation under the 1994
Incentive Plan, the Compensation Committee considers the total number of shares
available for future grants under the 1994 Incentive Plan, prior grants
outstanding and estimated requirements for future grants. Individual awards,
with the exception of grants to the CEO, generally are proposed to the
Compensation Committee by the CEO. The Compensation Committee then discusses
with the CEO his proposals and recommendations and determines individual awards,
taking into consideration the CEO's recommendations, each participant's position
and scope of responsibilities, the strategic and operational goals of the
Company, the expected future performance of each participant to achieve these
goals and unvested options, if any, held by each participant. Awards granted to
the CEO are determined separately by the Compensation Committee based on the
same criteria as grants to other employees, as well as the Compensation
Committee's perception of the CEO's expected future contributions to the
Company's achievement of its long-term performance goals. In granting awards
under the 1994 Incentive Plan, the Compensation Committee also considers the
value of long-term compensation provided by stock options held by each executive
officer as compared to the Company's relative return to stockholders and to the
same factors of comparable companies. The Compensation Committee historically
has elected to grant more options in one lump sum, rather than grant a smaller
number on an annual basis, to create an immediately meaningful incentive to
enhance stockholder value in the Company at the time of grant.
13
<PAGE> 16
The exercise price for awards granted under the 1994 Incentive Plan, the
term of such awards, the vesting of such awards and the other terms and
conditions of such awards are determined by the Compensation Committee, in its
discretion. All stock options previously granted to executive officers under the
1994 Incentive Plan have an exercise price equal to the market price on the date
of grant and vest in 20% increments over five years from the date of grant.
Stock options granted under the 1994 Incentive Plan must expire not more than
ten years from their date of grant.
Executive Stock Option Plan. In 1997, the stockholders of the Company
adopted the 1997 Executive Deferred Compensation Stock Option Plan (the
"Executive Stock Option Plan"), which provides for the granting of stock options
to eligible executive employees of the Company and its subsidiaries, at the
employee's election, in lieu of all or a portion of such employee's annual cash
bonus. Under the Executive Stock Option Plan, grants of stock options are made
only to those executive officers and key management personnel of the Company and
its subsidiaries as the Compensation Committee from time to time may designate.
The Compensation Committee designated Martin V. Alonzo (Chairman of the Board,
President and CEO of the Company), Duane R. Grossett (President and Chief
Operating Officer of CBCC) and Parry D. Katsafanas (President and Chief
Operating officer of Leavitt) as eligible to participate in the Executive Stock
Option Plan for 1998, and have designated the same individuals as eligible to
participate in the Executive Stock Option Plan for 1999. See "Compensation of
Executive Officers" above. None of Messrs. Alonzo, Grossett or Katsafanas
elected to participate in the Executive Stock Option Plan for 1998.
Compensation Review. The Compensation Committee engaged William M. Mercer,
Incorporated ("Mercer"), an executive compensation consultant, to review the
Company's 1997 compensation program for the Company's CEO, Martin V. Alonzo, and
the officers of CBCC and Leavitt. Mercer compared the Company's compensation
program for these officers with a broad group of companies deemed comparable for
compensation purposes, which included companies in addition to companies in the
peer group used in the Performance Graph below (selected on the basis of their
operations in the metals manufacturing industry). The 1997 annual revenues of
the Company were between the twenty-fifth percentile and the median of revenues
of the companies surveyed, with the Company's 1997 stockholder return falling
between the median and seventy-fifth percentile and three year stockholder
return exceeding that for the comparator companies. Based on the results of its
survey, Mercer provided to the Compensation Committee a comprehensive analysis
of the components of and total remuneration levels for Mr. Alonzo and the
officers of CBCC and Leavitt as compared to the companies surveyed. Messrs.
Grossett's, Katsafanas' and Segraves' 1998 base salaries were increased to
approximate between the median and seventy-fifth percentile of base salaries for
their positions at the comparator companies.
COMPENSATION OF THE CEO
The 1997 base compensation of Mr. Alonzo, the Chairman of the Board,
President and CEO of the Company, was governed by the terms of the employment
agreement entered into between Mr. Alonzo and the Company in November 1994 in
conjunction with the Company's initial public offering. See "Management
Compensation -- Compensation of Executive Officers -- Employment Agreements and
Termination of Employment and Change-in-Control Arrangements." Mr. Alonzo's
employment agreement provides that Mr. Alonzo's base salary will be reviewed
annually and may be increased at the discretion of the Compensation Committee.
Based on findings set forth in the Mercer study, Mr. Alonzo's 1997 base salary
of $300,000 was below median for the companies surveyed. For 1998, the
Compensation Committee increased Mr. Alonzo's base salary from $300,000 to
$350,000 based on the Company's 1997 financial performance and operating
accomplishments and to increase Mr. Alonzo's base salary to a level more
competitive with the median CEO salaries for the comparator companies set forth
in Mercer's study. The Compensation Committee anticipates that any future
increase in the CEO's base salary will be based on the Compensation Committee's
assessment of the CEO's performance and its expectations as to his future
contributions to the Company and salaries provided by comparator companies.
In 1999, the Company also paid to Mr. Alonzo a cash bonus of $250,000 for
1998 services. In determining Mr. Alonzo's cash bonus, the Compensation
Committee considered the Company's financial and operating performance in 1998,
as well as the Company's efforts in attaining strategic objectives. Under the
14
<PAGE> 17
terms of his employment agreement, Mr. Alonzo will continue to be eligible for
annual cash bonuses at the discretion of the Compensation Committee. The
Compensation Committee anticipates that future cash bonuses paid to the CEO will
be based primarily on the financial performance of the Company, as well as the
individual performance of Mr. Alonzo in supporting the Company's financial
performance and attainment of strategic Company objectives.
POLICY WITH RESPECT TO $1 MILLION DEDUCTION LIMIT
The Company's executive compensation strategy is to be cost and tax
effective. Therefore, the Company's policy is to avail itself of all proper
deductions under the Internal Revenue Code, where practical, while maintaining
the flexibility to approve compensation arrangements which it deems to be in the
best interests of the Company and its stockholders, but which may not always
qualify for full tax deductibility. Section 162(m) of the Internal Revenue Code
generally imposes a $1 million per person annual limit on the amount the Company
may deduct as compensation expense for its CEO and its four other highest paid
officers. Although the total compensation of the executive officers did not
exceed this deduction limitation in 1998, certain factors involved in the
Company's compensation program may impact on whether the deduction limitation is
exceeded in the future. The 1994 Incentive Plan is intended to permit
compensation associated with stock options and stock appreciation rights to be
excluded from the deduction limitations, but certain payments under the 1994
Incentive Plan, including grants of restricted stock, may be included as
compensation for purposes of calculating the deduction limitation, potentially
impacting the deduction limitation. In addition, under current Internal Revenue
Service regulations, income attributable to options (and stock appreciation
rights) granted under the Executive Stock Option Plan may not qualify for an
exemption from the $1 million annual limit on deductible compensation imposed by
Section 162(m) of the Internal Revenue Code. To the extent the total non-exempt
compensation paid (or deemed paid) by the Company to such an officer for a year
exceeds $1 million, such excess is not deductible by the Company if the officer
is employed by the Company as of the end of that year.
As the Company moves forward in its efforts to create stockholder value in
the years ahead, the Compensation Committee will continue to review, monitor and
evaluate the Company's program for executive compensation to assure that it is
internally effective in support of the Company's strategy, competitive in the
marketplace to attract, retain and motivate the talent needed to achieve the
Company's financial objectives, and appropriately rewards the creation of value
on behalf of the Company's stockholders.
This report has been provided by the Compensation Committee, which consists
of the following members:
John R. Kennedy, Chairman
Donald J. Donahue
Thomas F. McWilliams
15
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a graph comparing the total stockholder return on the
Company's Common Stock, the Standard & Poor's 500 Composite Index, the Russell
2000 Index, the Dow Jones Industrials Index, and a group of the Company's
current peers. The peer group consists of Brush Wellman, Inc., Mueller
Industries, Inc., Olin Corporation, Wolverine Tube, Inc. and Maverick Tube, Inc.
The graph illustrates total stockholder return at each of December 31, 1994,
1995, 1996, 1997 and 1998 and at February 28, 1999, of $100 invested at November
4, 1994 (the date the Common Stock began trading), and assumes reinvestment of
all dividends. The return of each company in the peer group has been weighted
according to its respective market capitalization.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Chase Dow Jones
Covered) Industries Peer Group S&P 500 Russell 2000 Industrials
<S> <C> <C> <C> <C> <C>
11/4/94 100 100 100 100 100
12/31/94 92.25 97.65 99.60 99.38 101.43
12/31/95 126.25 144.63 137.02 127.65 138.79
12/31/96 198.75 155.48 168.48 148.70 178.82
12/31/97 255.00 217.84 224.67 181.95 223.37
12/31/98 156.56 288.86 177.34 263.94 134.67
12/31/99 120.94 291.58 165.14 268.25 114.98
</TABLE>
16
<PAGE> 19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, set forth below is certain information, as of
the Record Date, regarding ownership of Common Stock by (i) each person who
beneficially owns 5% or more of the Common Stock, (ii) each director and
executive officer of the Company and (iii) all directors and executive officers
of the Company as a group. To the Company's knowledge, each person holds sole
voting and investment power over the shares shown unless otherwise indicated.
All of the stock information set forth in the table below and related notes has
been adjusted to reflect the three-for-two split of the Company's outstanding
Common Stock effective June 6, 1998 (the "Stock Split").
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME OWNERSHIP CLASS(1)
---- ---------- ----------
<S> <C> <C>
Citigroup Inc. ............................................. 7,328,645(2) 48.1%(3)
399 Park Avenue
New York, New York 10043
Martin V. Alonzo............................................ 1,466,606(4) 15.5%
c/o Chase Industries Inc.
14212 County Road M-50
Montpelier, Ohio 43543
FMR Corp. .................................................. 796,400(5) 8.8%
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company of America................. 607,050(6) 6.7%
751 Broad Street
Newark, New Jersey 07102-3777
Dimensional Fund Advisors Inc. ............................. 544,700(7) 6.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Thomas F. McWilliams........................................ 9,523(8) *
Duane R. Grossett........................................... 49,500(9) *
Michael T. Segraves......................................... 18,750(10) *
Parry D. Katsafanas......................................... 12,600(11) *
Donald J. Donahue........................................... 10,794(12) *
John R. Kennedy............................................. 10,586(13) *
Raymond E. Cartledge........................................ 10,544(14) *
Charles E. Corpening........................................ 9,523(15) *
William R. Toller........................................... 4,544(16) *
All directors and executive officers as a group (10
persons).................................................. 1,602,970(17) 16.7%
</TABLE>
- ---------------
* Less than one percent
(1) Based on 9,084,052 shares of Common Stock outstanding as of the Record
Date.
(2) Amount reported includes 6,150,118 shares of Nonvoting Common Stock held of
record by Citicorp Venture Capital Ltd. ("CVC"). Each share of Nonvoting
Common Stock is convertible into one share of Common Stock at the option of
the holder thereof. See "Quorum and Voting" above. Based on information set
forth in Amendment No. 1 to Schedule 13G dated February 3, 1999, filed with
the SEC by Citigroup, Inc., Citicorp, Citibank, N.A. and CVC (the
"Citigroup Schedule 13G"). The Citigroup Schedule 13G reflects that each of
Citicorp, Citibank, N.A. and CVC, a wholly-owned subsidiary of Citibank
N.A., which is a wholly-owned subsidiary of Citicorp, which is a
wholly-owned subsidiary of Citigroup Inc., has shared voting power and
shared dispositive power for 1,139,827 shares of Common Stock and that
Citibank Inc. has shared voting power and shared dispositive power for
1,178,527 shares of Common Stock.
(3) Gives effect to 6,150,118 shares of Nonvoting Common Stock held by CVC,
which are not included for purposes of calculating the percentage ownership
of any other stockholder. See note 2 above. Without giving effect to the
outstanding Nonvoting Common Stock held by CVC such percentage would be
13.0%.
(4) Excludes 37,500 shares of Common Stock held by Mr. Alonzo's wife, as to
which Mr. Alonzo disclaims beneficial ownership. Includes 315,000 shares
subject to stock options granted under the 1994 Incentive Plan and 55,762
shares subject to such options granted under the Executive Stock Option
Plan, all of which currently are exercisable.
17
<PAGE> 20
(5) Based on information set forth in Amendment No. 1 to Schedule 13G dated
February 1, 1999 (the "Fidelity Schedule 13G"), filed with the SEC by FMR
Corp., Edward C. Johnson 3D, and Abigail P. Johnson. The Fidelity Schedule
13G reflects that (i) Fidelity Management & Research Company ("Fidelity"),
a wholly owned subsidiary of FMR Corp. ("FMR"), is the beneficial owner of
796,400 shares of Common Stock as a result of acting as investment advisor
to the Fidelity Low-Priced Stock Fund (the "LP Fund"), an investment
company registered under Section 8 of the Investment Company Act of 1940,
(ii) the LP Fund holds all 796,400 shares of the Common Stock reported,
(iii) Edward C. Johnson 3D, FMR (through its control of Fidelity), and the
LP Fund each has sole power to dispose of the 796,400 shares owned by the
LP Fund, and (iv) sole voting power of the shares reported resides with the
LP Fund's board of trustees. Fidelity carries out the voting of the shares
under written guidelines established by the LP Fund's boards of trustees.
(6) Based on information set forth in Amendment No. 1 to Schedule 13G dated
January 26, 1999 (the "Prudential Schedule 13G"), filed with the SEC by The
Prudential Insurance Company of America ("Prudential"). The Prudential
Schedule 13G reflects that Prudential may have direct or indirect voting
and/or investment discretion over 607,050 shares of Common Stock which are
held for the benefit of Prudential's clients by its separate accounts,
externally managed accounts, registered investment companies, subsidiaries
and/or other affiliates. Of these 607,050 shares, Prudential has sole
voting power and sole dispositive power for 165,600 shares and shared
voting power and shared dispositive power for 441,450 shares.
(7) Based on information set forth in Schedule 13G dated February 12, 1999 (the
"DMF Schedule 13G"), filed with the SEC by Dimensional Fund Advisors Inc.
("DMF"). The DMF Schedule 13G reflects that DMF, an investment advisor
registered under the Investment Advisors Act of 1940, serves as investment
manager for certain other investment vehicles, including commingled group
trusts (collectively, the "Portfolios") and, in its role as investment
advisor and investment manager, possesses both voting and investment power
over 544,700 shares of Common Stock, all of which are held by the
Portfolios and beneficial ownership of which is disclaimed by DMF.
(8) Includes 3,523 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan and 6,000 shares subject to stock
options granted under the 1994 Incentive Plan, all of which currently are
exercisable. Excludes 223,045 shares of Common Stock held by a family trust
in which shares Mr. McWilliams has an indirect pecuniary interest but not a
beneficial ownership interest under Rule 13d-3 of the Securities Act of
1933.
(9) Includes 45,000 shares subject to stock options granted under the 1994
Incentive Plan that currently are exercisable.
(10) Includes 18,000 shares subject to stock options granted under the 1994
Incentive Plan that currently are exercisable.
(11) Consists solely of stock options granted under the 1994 Incentive Plan that
currently are exercisable.
(12) Includes 1,544 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan and 6,000 shares subject to stock
options granted under the 1994 Incentive Plan, all of which currently are
exercisable.
(13) Consists of 3,086 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan that currently are exercisable and
6,000 shares subject to stock options granted under the 1994 Incentive
Plan, all of which currently are exercisable.
(14) Includes 1,544 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan that currently are exercisable and
6,000 shares subject to stock options granted under the 1994 Incentive Plan
that are exercisable within 60 days of the Record Date.
(15) Consists solely of 3,523 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan that currently are exercisable and
6,000 shares subject to stock options granted under the 1994 Incentive Plan
that are exercisable within 60 days of the Record Date.
(16) Consists solely of 1,544 shares subject to stock options granted under the
Non-Employee Director Stock Option Plan and 3,000 shares subject to stock
options granted under the 1994 Incentive Plan, all of which currently are
exercisable.
(17) Includes 494,126 shares subject to stock options that currently are
exercisable or that are exercisable within 60 days of the Record Date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and each of CVC and Mr. Alonzo are parties to a Registration
Rights Agreement (the "Registration Rights Agreement") pursuant to which each of
CVC and Mr. Alonzo are entitled to require the Company to file a registration
statement under the Securities Act of 1933 ("Securities Act") covering the sale
of some or all of the shares of Common Stock held by CVC and Mr. Alonzo, subject
to certain conditions. Pursuant to the Registration Rights Agreement, the
Company may be required to file on behalf of each of CVC and Mr. Alonzo an
unlimited number of registration statements on Form S-2 or Form S-3 under the
Securities Act, when available. At any time that the Company is not eligible to
use a Form S-2 or Form S-3 registration statement, CVC and Mr. Alonzo also may
require the Company to file a registration statement on their behalf on an
appropriate registration form, provided that the Company will not be required to
effect more than two such registrations on behalf of CVC or one such
registration on behalf of Mr. Alonzo during the term of the Registration Rights
Agreement. All such demand registrations require that the registration statement
relate to a minimum of, in the case of CVC, 5% of the outstanding Common Stock
or, in the case of
18
<PAGE> 21
Mr. Alonzo, 2% of the outstanding Common Stock. In addition, in the event the
Company proposes to register any of its shares of Common Stock under the
Securities Act, CVC and Mr. Alonzo will be entitled to require the Company to
include all or a portion of their shares in such registration, subject to
certain conditions. Each demand registration pursuant to the Registration Rights
Agreement must be at least 180 days apart.
Generally, all fees, costs and expenses of any registration under the
Registration Rights Agreement will be borne by the Company, provided that CVC
and Mr. Alonzo will be required to bear their respective pro rata share of
underwriting discounts and commissions. CVC and Mr. Alonzo may assign their
respective rights under the Registration Rights Agreement to persons to whom
they transfer or otherwise assign shares of the Common Stock that they hold,
provided that the shares transferred or assigned to that person represent five
percent or more of the outstanding Common Stock on a fully-diluted basis at the
time of transfer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the copies of Forms 3, 4, and 5 required to be
filed with the Securities and Exchange Commission pursuant to Section 16(a) of
the Exchange Act, and written representations from the Company's executive
officers and directors, the Company believes that all persons who were subject
to Section 16(a) of the Exchange Act during 1998 complied with the filing
requirements thereof.
PROPOSAL 2.
RATIFICATION OF AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
auditors of the Company for the current fiscal year. Coopers & Lybrand L.L.P.,
predecessor company of PricewaterhouseCoopers LLP, has audited the Company's
financial statements since the Company was formed in 1990. The Company expects
that representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to respond to appropriate questions and will have an opportunity to make
a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE
FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S AUDITORS FOR 1999.
OTHER BUSINESS
Management knows of no other matters that will come before the Annual
Meeting. However, if other matters do come before the Annual Meeting, as
permitted by Rule 14a-4(c) of the Exchange Act the Proxy holders will vote in
accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
To qualify for inclusion in the proxy statement and form of proxy relating
to the 2000 annual meeting of stockholders, pursuant to Rule 14a-8 of the
Exchange Act a proposal intended by a stockholder for presentation at that
meeting must be received by the Company at its principal executive offices on or
before December 4, 1999. Pursuant to Rule 14a-4(c) of the Exchange Act, the
Board of Directors may exercise discretionary voting authority under proxies
solicited by it with respect to any matter properly presented by a stockholder
at the Company's 2000 annual meeting that the stockholder does not seek to have
included in the Company's proxy statement pursuant to Rule 14a-8 of the Exchange
Act if (except as described in the following sentence) the proxy statement
discloses the nature of the matter and how the Board of Directors intends to
exercise its discretion to vote on such matter, unless the Company is notified
of the proposal on or prior to February 21, 2000, and the stockholder satisfies
the other requirements of Rule 14a-4(c)(2). If the Company first receives notice
of such matter after February 21, 2000, the Board of Directors may exercise
discretionary voting authority with respect to any such matter, without
including any discussion of the matter in the proxy statement for the 2000
annual meeting. The Company reserves the right to reject, rule out of
19
<PAGE> 22
order or take other appropriate action with respect to any proposal that does
not comply with the requirements described above and other applicable
requirements.
GENERAL
Solicitation of Proxies may be made by mail, personal interview, telephone,
or telegraph by officers, directors, and regular employees of the Company. The
Company also may request banking institutions, brokerage firms, custodians,
nominees, and fiduciaries to forward solicitation material to the beneficial
owners of the Common Stock that those companies or persons hold of record, and
the Company will reimburse the forwarding expenses. The Company will bear all
costs of solicitation.
The Company's Annual Report to Stockholders for the year ended December 31,
1998, and the Company's Form 10-K for the year ended December 31, 1998, are
being sent to stockholders with this Proxy Statement and do not form any part of
the material for the solicitation of proxies.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS INCLUDED AS PART OF THE COMPANY'S ANNUAL
REPORT TO STOCKHOLDERS WHICH ACCOMPANIED THIS PROXY STATEMENT. ADDITIONAL COPIES
OF THE FORM 10-K WILL BE SENT TO ANY STOCKHOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST ADDRESSED TO MICHAEL T. SEGRAVES, SECRETARY, AT THE OFFICES OF THE
COMPANY, 14212 COUNTY ROAD M-50, MONTPELIER, OHIO 43543.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
RETURN THE PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
By Order of the Board of Directors
/s/MICHAEL T. SEGRAVES
MICHAEL T. SEGRAVES
Secretary
Montpelier, Ohio
April 2, 1999
20
<PAGE> 23
PROXY CHASE INDUSTRIES INC. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Martin V. Alonzo and Thomas F.
McWilliams, or any of them, lawful attorneys and proxies of the undersigned
with full power of substitution, for and in the name place and stead of the
undersigned to attend Annual Meeting of Stockholders of Chase Industries Inc.
(the "Company") to be held at the offices of Fulbright & Jaworski L.L.P., 666
5th Avenue, 31st Floor, Room GH, New York, New York, on Tuesday, May 25, 1999,
at 10:00 a.m., EDT, and any adjournment(s) or postponements(s) thereof, with
all powers the undersigned would possess if personally present and to vote the
number of votes the undersigned would be entitled to vote if personally present.
(TO BE SIGNED ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 24
PLEASE MARK [X]
YOUR VOTE AS
INDICATED IN
THIS EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
PROPOSAL 1 - THE ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD Nominees: Martin V. Alonzo, Raymond E. Cartledge, Charles E. Corpening,
listed to the right AUTHORITY Donald J. Donahue, John R. Kennedy, Thomas F. McWilliams, William R. Toller
(except as marked to vote for all nominees
to the contrary) listed to the right Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name here:
[ ] [ ]
--------------------------------------------------------------------------------
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS L.L.P. The undersigned hereby revokes any proxies
AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR 1999. heretofore given to vote upon or act with
respect to such shares and hereby ratifies and
FOR AGAINST ABSTAIN confirms all that said attorneys, proxies, the
[ ] [ ] [ ] substitutes or any of them may lawfully do by
virtue hereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY, USING THE ENCLOSED ENVELOPE,
THANK YOU.
Date
------------------------------------------
----------------------------------------------
Signature(s)
NOTE: Please sign exactly as your name appears
hereon. When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee or
corporation, please sign in full corporate
name by president or other authorized person.
If a partnership, please sign in partnership
name by authorized person.
</TABLE>
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
