UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 ss.240.14a-11(c) or ss.240.14a-12
ANICOM, 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.
pursuant to Exchange Act Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
April 14, 1997
To the Stockholders of ANICOM, INC.:
You are cordially invited to attend the Annual Meeting of Stockholders of
Anicom, Inc. to be held at Harris Trust & Savings Bank, 111 West Monroe Street,
Chicago, Illinois 60603, on Wednesday, May 21, 1997 at 2:00 p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement fully describe the
formal business to be transacted at the Annual Meeting, which includes the
election of three directors of the Company, the approval of an amendment to the
Company's total authorized common stock and the ratification of increases to the
number of shares available under the Company's 1996 Stock Incentive Plan and the
Directors Option Plan.
Directors and officers of the Company will be present to help host the Annual
Meeting and to respond to any questions that our stockholders may have. By
attending the Annual Meeting, you will have an opportunity to hear the plans for
our Company's future, to meet your officers and directors and to participate in
the business of the Annual Meeting. Whether or not you plan to attend the Annual
Meeting, it is important that your shares be represented. Regardless of the
number of shares you own, please date, sign and mail the enclosed Proxy
promptly.
We look forward to seeing you on May 21, 1997.
Sincerely,
/s/ Alan B. Anixter /s/ Scott C. Anixter
ALAN B. ANIXTER SCOTT C. ANIXTER
Chairman of the Board Chairman and Chief Executive Officer
<PAGE>
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1997
----------------------
To the Stockholders of
Anicom, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders (the "Annual
Meeting") of Anicom, Inc. (the "Company") will be held at Harris Trust & Savings
Bank, 111 West Monroe Street, Chicago, Illinois 60603, on Wednesday, May 21,
1997 at 2:00 p.m., local time. A Proxy and a Proxy Statement for the Annual
Meeting are enclosed.
The Annual Meeting is for the following purposes:
(1) To elect three directors of the Company.
(2) To amend the Company's Restated Certificate of Incorporation to provide
for an increase in the total authorized shares of the Company's Common
Stock.
(3) To approve an amendment to the Anicom, Inc. 1996 Stock Incentive Plan.
(4) To approve an amendment to the Anicom, Inc. Amended and Restated
Directors Option Plan.
(5) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The close of business on April 7, 1997 has been fixed as the record date
for determining stockholders entitled to notice of, and to vote, at the Annual
Meeting or any adjournments thereof. For a period of at least ten days prior to
the Annual Meeting, a complete list of stockholders entitled to vote at the
Annual Meeting shall be open to the examination of any stockholder during
ordinary business hours at the offices of Harris Trust & Savings Bank, 111 West
Monroe Street, Chicago, Illinois 60603.
Information concerning the matters to be acted upon at the Annual Meeting
is set forth in the accompanying Proxy Statement.
By Order of the Board of Directors,
/S/ David R. Shevitz
David R. Shevitz
Corporate Secretary
Rosemont, Illinois
April 14, 1997
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING
IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
Anicom, Inc.
6133 North River Road
Suite 1000
Rosemont, Illinois 60018
(847) 518-8700
----------------------
PROXY STATEMENT
----------------------
ANNUAL MEETING OF STOCKHOLDERS
May 21, 1997
The accompanying Proxy is solicited by the Board of Directors of
Anicom, Inc. (the "Company") for use at the Annual Meeting of Stockholders to be
held on May 21, 1997, or at any adjournments thereof (the "Annual Meeting").
Giving the Proxy will not in any way affect a stockholder's right to attend the
Annual Meeting and to vote in person. The approximate date on which this Proxy
Statement and the accompanying Proxy will be mailed or otherwise delivered to
stockholders is April 14, 1997.
A Proxy in the accompanying form which is properly signed, dated,
returned and not revoked will be voted in accordance with the instructions
contained therein. Unless authority to vote for the election of directors (or
for any nominee) is withheld, Proxies will be voted for the directors proposed
by the Board, and, if no contrary instructions are given, Proxies will be voted
for approval of each of the remaining items on the Proxy. Discretionary
authority is provided in the Proxy as to any matters not specifically referred
to therein. Management is not aware of any other matters which are likely to be
brought before the Annual Meeting. However, if any such matters properly come
before the Annual Meeting, it is understood that the Proxy holder or holders are
fully authorized to vote thereon in accordance with his or their judgment and
discretion.
The Company's Annual Report to Stockholders for the year ended December
31, 1996, containing financial and other information pertaining to the Company,
is enclosed with this Proxy Statement. However, the Annual Report to
Stockholders does not constitute a part of this Proxy Statement.
The Proxy may be revoked at any time before it is exercised by
providing written notice of such revocation to Anicom, Inc., 6133 North River
Road, Suite 1000, Rosemont, Illinois 60018, Attn: Corporate Secretary. The Proxy
also may be revoked by the attendance and voting by a stockholder at the Annual
Meeting or by the execution and delivery to the Company of a Proxy dated
subsequent to a prior Proxy.
RECORD DATE AND OUTSTANDING SHARES
The Board of Directors has fixed the close of business on April 7, 1997
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. As of March 31, 1997, there were outstanding
15,912,999 shares of Common Stock. The outstanding shares of Common Stock
constitute the only outstanding voting securities of the Company entitled to be
voted at the Annual Meeting. Each holder of Common Stock is entitled to one vote
for each share held by such person with respect to each matter (including
election of directors) to be voted on at the Annual Meeting.
<PAGE>
REQUIRED VOTE
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote thereon is required to approve the amendment to the
Company's Restated Certificate of Incorporation. A plurality of the shares voted
in person or by proxy is required to elect the nominees for directors. The
affirmative vote of a majority of the shares of Common Stock entitled to vote
thereon that are present in person or by proxy at the Annual Meeting is required
to approve the amendment to the Anicom, Inc. 1996 Stock Incentive Plan (the
"1996 Stock Incentive Plan") and the amendment to the Amended and Restated
Anicom, Inc. 1995 Directors Stock Option Plan (the "Directors Option Plan").
Stockholders will not be allowed to cumulate their votes in the election of
directors.
QUORUM; ABSTENTIONS AND BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting will be a majority of the shares of Common Stock issued and outstanding
on the Record Date. Abstentions and broker non- votes will be included in
determining the presence of a quorum. Abstentions and broker non-votes will have
the same effect as votes against the proposal to approve the amendment to the
Company's Restated Certificate of Incorporation. Abstentions will be considered
present and entitled to vote with respect to the proposals to approve the
amendments to the 1996 Stock Incentive Plan and to the Directors Option Plan and
will have the same effect as votes against such proposal; broker non-votes will
not be considered present and entitled to vote with respect to such proposals
and will have no effect on the voting on such proposals. Neither abstentions nor
broker non-votes will have any effect on the voting on the proposal to elect
directors.
PROXIES
Scott C. Anixter and Donald C. Welchko, the persons named as proxies on
the Proxy accompanying this Proxy Statement, have been selected by the Board of
Directors of the Company to serve in such capacity. Messrs. Anixter and Welchko
are both directors of the Company. Each executed and returned Proxy will be
voted in accordance with the directions indicated thereon, or if no direction is
indicated, such Proxy will be voted in accordance with the recommendations of
the Board of Directors contained in this Proxy Statement.
ELECTION OF DIRECTORS
(Proposal 1)
The Restated Certificate of Incorporation of the Company provides that
the members of the Board of Directors shall be divided into three classes of
directors, each of which has three members. As specified in the Restated
Certificate of Incorporation of the Company, the initial term of the Class I
directors expired at the 1996 annual meeting of shareholders, the initial term
of the Class II directors expires at the 1997 annual meeting of stockholders and
the initial term of the Class III directors expires at the 1998 annual meeting
of stockholders. The Restated Certificate of Incorporation of the Company
provides that, at each annual meeting of stockholders thereafter, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. The term of the directors in Class II expires
with this Annual Meeting.
The persons named in the enclosed form of Proxy, unless otherwise
directed therein, intend to vote such Proxy FOR the election of the nominees
named below as director for the term specified. If the nominees become
unavailable for any reason, the persons named in the form of Proxy are expected
to consult with management of the Company in voting the shares represented by
them. Management has no reason to believe that the nominees will be unavailable
or unwilling to serve if elected to office. To the knowledge of management, the
nominees intend to serve the term for which election is sought.
2
<PAGE>
The Board of Directors has nominated three persons for election as
director in Class II at this Annual Meeting, to serve for a three-year term
expiring at the annual meeting of stockholders in 2000 or until his or her
successor is elected and qualified. The nominees are currently serving as
directors and have consented to serve for a new term.
Nominees for Election as Directors
The following persons, if elected at the Annual Meeting, will serve as
directors until the earlier of the 2000 annual meeting of stockholders or until
their successors are duly elected and qualified:
<TABLE>
<CAPTION>
Name Age Position With the Company and Principal Occupation Director Since
- ------------------------- ------ ---------------------------------------------------------- ----------------
<S> <C> <C>
Alan B. Anixter.......... 76 Chairman of the Board and Director 1993
Donald C. Welchko(1)..... 42 Vice President, Chief Financial Officer and Director 1995
Michael Segal(2)......... 54 Director; President and Chief Executive Officer of Near North 1994
Insurance Brokerage, Inc.
</TABLE>
- ------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee and the Audit Committee
Alan B. Anixter has been Chairman of the Board and a Director of the
Company since July 1993. Mr. Anixter served as Chairman and Chief Financial
Officer of A-Z Anicom, Inc., a predecessor to the Company (the "Predecessor
Corporation") from July 1991 to June 1993. Mr. Anixter was the co-founder and
Chairman of Anixter Bros., Inc., an international specialist in the distribution
of wire, cable and related products, and served as the Chairman of Anixter
Bros., Inc. until 1988. In 1989, Mr. Anixter founded Alanburt, Inc., a
management advisory firm, for which he continues to serve as President. Mr.
Anixter is the father of Scott C. Anixter and the brother of William R. Anixter.
Donald C. Welchko has served as Vice President, Chief Financial Officer
and a Director of the Company since January 1995. From 1986 to December 1994,
Mr. Welchko served as a Vice President-- Corporate Lending of Harris Trust and
Savings Bank. Mr. Welchko previously served as a Vice President--Cash Management
of Harris Trust and Savings Bank.
Michael Segal has served as a Director of the Company since December
28, 1994. Since 1969, Mr. Segal has been the President and Chief Executive
Officer of Near North Insurance Brokerage, Inc., an insurance brokerage firm
located in Chicago, Illinois.
3
<PAGE>
Other Directors
The following persons will continue as directors of the Company after
the Annual Meeting until their terms of office expire (as indicated below) or
until their successors are elected and qualified.
<TABLE>
<CAPTION>
Class and Year In
Position With the Company and Principal Director Which Term Will
Name Age Occupation Since Expire
- ------------------------- ----- ---------------------------------------------- ------- --------------------
<S> <C> <C> <C>
Scott C. Anixter......... 47 Chairman, Chief Executive Officer and 1993 Class I 1999
Director
Carl E. Putnam........... 48 President, Chief Operating Officer and 1994 Class I 1999
Director
Lee B. Stern(1).......... 69 Director; President of LBS Co. 1994 Class I 1999
Robert Brzustewicz, Sr... 54 Senior Executive Vice President and Director 1996 Class III 1998
William R. Anixter(2).... 72 Director; President of Chama Resources, 1994 Class III 1998
Inc.
Ira J. Kaufman........... 67 Director; Senior Managing Director of 1994 Class III 1998
Mesirow Financial, Inc.
</TABLE>
- ------------------
(1) Member of the Compensation Committee.
(2) Member of the Compensation Committee and the Audit Committee.
Scott C. Anixter has been Chairman, Chief Executive Officer and a
Director of the Company since July 1993. In July 1991, Mr. Anixter founded the
Predecessor Corporation and served as its President and Chief Executive Officer
until April 1992. In April 1992, A-Z Industries, Inc., a distributor of wire and
cable that was controlled by James R. Anixter, the son of Alan B. Anixter and
the brother of Scott C. Anixter, was merged into the Predecessor Corporation.
From April 1992 to June 1993, Scott Anixter served as Vice President and Chief
Operating Officer of the Predecessor Corporation. From 1989 to July 1991, Mr.
Anixter was an officer and director of Alanburt, Inc., a management advisory
firm. Mr. Anixter is the son of Alan B. Anixter.
Carl E. Putnam has served as President and Chief Operating Officer of
the Company since July 1993 and was named a Director of the Company in December
1994. Mr. Putnam served as Executive Vice President of the Predecessor
Corporation from July 1991 to June 1993. Mr. Putnam spent 15 years at Anixter
Bros., Inc. where he last served as a Regional Vice President.
Robert Brzustewicz, Sr. has served as Senior Executive Vice President
and a Director of the Company since March 1996. Mr. Brzustewicz co-founded
Northern Wire & Cable, Inc. ("Northern"), an assembler and distributor of wire
and cable products and related connectivity and fiber optic products, located in
Troy, Michigan, and served as Northern's Chief Executive Officer from 1976 to
March 1996, when Anicom acquired Northern.
William R. Anixter has served as a Director of the Company since
December 28, 1994. Mr. Anixter was the co-founder and Vice-Chairman of Anixter
Bros., Inc., an international specialist in the distribution of wire, cable,
fiber optics and related network products, and served as the Vice-Chairman of
Anixter Bros., Inc. until 1987. Since 1989, Mr. Anixter has served as President
of Chama Resources, Inc. a real estate management company located in
Albuquerque, New Mexico. Mr. Anixter is the brother of Alan B. Anixter.
4
<PAGE>
Ira J. Kaufman has served as a Director of the Company since December
28, 1994. In September 1995, Mr. Kaufman joined Mesirow Financial, Inc., a
securities broker-dealer located in Chicago, Illinois, as Senior Managing
Director. From April 1990 to September 1995, Mr. Kaufman served as Chairman of
the Board Emeritus, and was employed by Rodman & Renshaw, Inc., a securities
broker-dealer and commodities futures commission merchant located in Chicago,
Illinois. From prior to January 1989 until April 1990, Mr. Kaufman served as
Chairman of the Board and Chief Executive Officer of Rodman & Renshaw, Inc.
Prior to that time, Mr. Kaufman served as Chairman of the Board and Chief
Executive Officer of Exchange National Bank in Chicago, Illinois. Mr. Kaufman
has served as a Director of American Ecology, a chemical and nuclear waste
company located in Houston, Texas, since May 1995, as a director of First Eagle
National Bank, an independent national bank located in Hanover Park, Illinois,
since September 1993, and as a director of Wells-Gardner Electronics
Corporation, a video monitor manufacturing company located in Chicago, Illinois
since February 1997.
Lee B. Stern has served as a Director of the Company since December 28,
1994. Since December 1992, Mr. Stern has served as the President of LBS Co., the
general partner of LBS Limited Partners, a member firm of the Chicago Board of
Trade. From January 1970 to December 1992, Mr. Stern served as President of Lee
B. Stern & Co., Ltd., a commodities futures commission merchant clearing member
of both the Chicago Board of Trade and the Chicago Mercantile Exchange. Mr.
Stern has been a member of the Chicago Board of Trade since 1949 and a member of
the Chicago Mercantile Exchange since 1963. Since 1982, Mr. Stern has been a
director of AAR Corp., a leading supplier of products and services for the
aviation industry, headquartered in Elk Grove Village, Illinois. Mr. Stern was
the founder of the Chicago Sting professional soccer team and has been a limited
partner and a director of the Chicago White Sox professional baseball team since
1976.
Meetings and Committees of the Board of Directors
During 1996, the total number of meetings of the Board of Directors was
four. During the last full fiscal year, each Director attended at least 75% of
the aggregate total number of meetings of the Board of Directors and the total
number of meetings held by all committees of the Board of Directors on which he
served except Mr. Kaufman who attended 50% of such meetings.
The Board of Directors has an Audit Committee currently composed of
Donald C. Welchko, William R. Anixter and Michael Segal. The Audit Committee met
on two occasions during 1996. The Audit Committee generally has responsibility
for recommending independent accountants to the Board for selection, reviewing
the plan and scope of the accountants' audit, reviewing the Company's audit and
control functions and reporting to the full Board of Directors regarding all of
the foregoing.
The Board of Directors established a Compensation Committee in March
1997. The Compensation Committee, which is composed of William Anixter, Lee
Stern and Michael Segal, has responsibility for reviewing with management the
overall compensation policies to be followed by the Company, establishing the
compensation of the Company's executive officers, and preparing the report of
the Compensation Committee for the Company's Proxy Statement in 1998 and in
future years.
The Company does not have a Nominating Committee.
Compensation of Directors
During 1996, members of the Board of Directors who were not also
employees or consultants of the Company were paid a fee of $1,000 for each Board
meeting they attended for their services as directors. Beginning in 1997,
non-employee directors will not receive any cash compensation but will receive
options to purchase 1,000 shares of Common Stock for each meeting they attend
pursuant to the
5
<PAGE>
Directors Option Plan. Non-employee directors also receive annual grants of
options under the Directors Option Plan.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following persons are executive officers of the Company who are not
identified in the tables entitled "Election of Directors - Nominees for Election
as Directors" and "Election of Directors -- Other Directors," above.
Name Age Position
- ----------------------------- ------- ---------------------------------
Glen M. Nast................. 44 Senior Executive Vice President
Robert L. Swanson............ 47 Senior Executive Vice President
Glen M. Nast has served as Senior Executive Vice President of the
Company since March 1996. Mr. Nast co-founded Northern and served as Northern's
President from 1976 to March 1996, when Anicom acquired Northern.
Robert L. Swanson was named a Senior Executive Vice President of the
Company in March 1996. Prior to that time, he had served as Executive Vice
President of the Company since July 1993. Mr. Swanson served as Vice
President--Sales of the Predecessor Corporation from July 1991 to June 1993.
Compliance with Section 16(a) of The Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires executive officers, directors and persons who
beneficially own more than ten percent (10%) of the Company's stock ("Reporting
Persons"), to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC") and Nasdaq.
Reporting Persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
Reporting Persons were complied with.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and
other compensation for services in all capacities to the Company for the last
three fiscal years of those persons who were at December 31, 1996 (i) the Chief
Executive Officer and (ii) the other highly compensated (combined salary and
bonus) executive officers of the Company whose total annual salary and bonus
equaled or exceeded $100,000 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
-------------------------------------- ------------
Securities All Other
Other Annual Underlying Compensation
Name and principal position Year Salary ($) Bonus ($) Compensation Options(#)(1) ($)
- ----------------------------------- ----- ---------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Scott C. Anixter
Chairman and 1996 240,000 10,000 38,110 225,000 2,500
Chief Executive Officer(2)....... 1995 150,000 --- 13,900 --- 1,500
1994 67,500 12,500 25,123 --- ---
Carl E. Putnam
President and 1996 220,000 12,000 --- 125,000 6,215
Chief Operating Officer(3)....... 1995 138,000 --- --- 60,000 5,266
1994 128,000 19,500 --- --- 1,701
Robert Brzustewicz, Sr.
Senior Executive
Vice President(4)................ 1996 192,658 --- --- 300,000 ---
Glen M. Nast
Senior Executive
Vice President(5)................ 1996 160,548 --- --- 5,000 1,500
Donald C. Welchko
Vice President and 1996 150,000 14,000 --- 81,000 1,550
Chief Financial Officer(6)....... 1995 110,000 --- --- 24,000 1,100
</TABLE>
- ------------------
(1) During 1996, the Company declared and paid a 100% stock dividend effected
in the form of a two-for-one stock split. The number of securities
underlying options granted during each year has been adjusted to
reflect the stock dividend.
(2) "Other Annual Compensation" includes $14,000, $13,900 and $15,123 which are
attributable to club fees paid by the Company in 1996, 1995 and 1994,
respectively, and $15,000 which represents amounts paid by the Company for
a car allowance in 1996. "All Other Compensation" includes $2,500 and
$1,500 in Company matching contributions to the Company's 401(k) Plan in
1996 and 1995, respectively. The Company and Mr. Anixter have entered into
an employment agreement under which Mr. Anixter will receive an annual base
salary of $300,000 in 1997. See "Employment Agreements."
(3) "All Other Compensation" includes $4,095, $3,886 and $1,701 for premiums
paid by the Company for Mr. Putnam on life and disability insurance
policies in 1996, 1995 and 1994, respectively and $2,120 and $1,380 in
Company matching contributions to the Company's 401(k) Plan in 1996 and
1995, respectively. The Company and Mr. Putnam have entered into an
employment agreement under which Mr. Putnam will receive an annual base
salary of $260,000 in 1997. See "Employment Agreements."
(4) The Company and Mr. Brzustewicz, Sr. have entered into an employment
agreement under which Mr. Brzustewicz, Sr. will receive an annual base
salary of $240,000 in 1997. See "Employment Agreements."
(5) "All Other Compensation" includes $1,500 in Company matching contributions
to the Company's 401(k) Plan in 1996. The Company and Mr. Nast have entered
into an employment agreement under which Mr. Nast will receive an annual
base salary of $200,000 in 1997. See "Employment Agreements."
(6) "All Other Compensation" includes $1,550 and $1,100 in Company matching
contributions to the Company's 401(k) Plan in 1996 and 1995, respectively.
The Company and Mr. Welchko have entered into an employment agreement under
which Mr. Welchko will receive an annual base salary of $170,000 in 1997.
See "Employment Agreements."
7
<PAGE>
Option Grants in 1996
The following table provides information on grants of stock options in
1996 to the Named Officers pursuant to the Second Amended and Restated Anicom,
Inc. 1995 Stock Incentive Plan (the "1995 Stock Incentive Plan") or the 1996
Stock Incentive Plan. No stock appreciation rights were granted by the Company
in 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
Potential Realizable Value at
Number of Assumed Annual Rates of
Shares Percent of Total Stock Price Appreciation for
Underlying Options Granted Exercise or Option Terms (2)
Options to Employees In Base Price Expiration --------------------------
Name Granted (#)(1) Fiscal Year ($/Sh)(1) Date 5% ($) 10% ($)
- ------------------------ --------------- --------------- -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Scott C. Anixter........ 25,000(3) 2.0% $ 8.75 12/09/06 137,570 348,631
200,000(4) 15.7 8.75 05/24/06 1,100,566 2,789,049
Carl E. Putnam.......... 25,000(3) 2.0 8.75 12/09/06 137,570 348,631
100,000(4) 7.8 8.75 05/24/06 550,280 1,394,520
Robert Brzustewicz, Sr.. 300,000(5) 23.6 6.1875 03/12/06 1,167,386 2,958,384
Glen M. Nast............ 5,000(3) 0.4 8.75 12/09/06 27,500 69,726
Donald C. Welchko....... 25,000(3) 2.0 8.75 12/09/06 137,570 348,631
56,000(4) 4.4 8.75 05/24/06 308,157 780,931
</TABLE>
- ------------------
(1) Effective October 1 1996, the Company declared a stock split in the form of
a 100% stock dividend. The number of securities underlying options granted
during 1996 have been adjusted to reflect the stock dividend.
(2) Potential realizable value is presented net of the option exercise price
but before any Federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercise are dependent on the future
performance of the Common Stock, as well as the option holder's continued
employment throughout the vesting period. The amounts reflected in the
table may not necessarily be achieved.
(3) These Options become exercisable in five equal annual increments, beginning
on December 9, 1997, the first anniversary of the date of grant.
(4) These Options become exercisable in five equal annual increments, beginning
on May 24, 1997, the first anniversary of the date of grant.
(5) These Options become exercisable in three annual increments, beginning on
March 12, 1997, the first anniversary of the date of grant.
8
<PAGE>
Year-End 1996 Option Values
The following table provides information on the Named Officers'
unexercised options at December 31, 1996. All such options were granted under
either the Second Amended and Restated Anicom, Inc. 1995 Stock Incentive Plan
(the "1995 Stock Incentive Plan") or the 1996 Stock Incentive Plan. In June
1996, Carl E. Putnam exercised options to purchase 6,000 shares at an exercise
price of $3.00 per share.
<TABLE>
<CAPTION>
YEAR-END 1996 OPTION VALUE
Numbers of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/96 at Fiscal Year End(1)
------------------------- ------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------- ------------------------- ------------------------------
<S> <C> <C>
Scott C. Anixter............................. --/225,000 $--/$112,500
Carl E. Putnam............................... 6,000/173,000 31,500/338,500
Robert Brzustewicz, Sr....................... --/300,000 --/918,750
Glen M. Nast................................. --/5,000 --/2,500
Donald C. Welchko............................ 4,800/100,200 26,400/147,600
</TABLE>
- ------------------
(1) The value of the "in-the-money" options represents the difference between
the exercise price of such options and $9.25, the closing sale price of the
Common Stock on December 31, 1996.
Employment Agreements
The Company has entered into employment agreements with each of Scott
C. Anixter, Carl E. Putnam, Robert L. Swanson, Robert Brzustewicz, Sr., Glen M.
Nast and Donald C. Welchko. Each of Mr. Anixter's, Mr. Putnam's, Mr. Swanson's
and Mr. Welchko's employment agreements contains non-competition and
non-solicitation provisions commencing on the date of the employment agreement
and ending two years after termination of employment (unless such termination
occurs following a change in control). In the event of a change in control, the
employment agreements provide for severance payments to such employees. A
"change in control" of the Company is triggered upon the acquisition by any
individual, entity or group of a stated percentage of the then outstanding
shares of Common Stock of the Company (30% with respect to Mr. Anixter, 50% with
respect to Messrs. Putnam, Swanson and Welchko), the approval by the
stockholders of certain specified types of corporate transactions or business
combinations, or the replacement of a majority of the incumbent Board of
Directors.
Following a change in control of the Company, if (i) during the next 24
months, Mr. Anixter's employment with the Company is terminated by either Mr.
Anixter or the Company for any reason, or (ii) at any time Mr. Anixter's
employment with the Company is terminated by him for good reason or by the
Company without cause, the Company is obligated to pay Mr. Anixter the greater
of (i) $1,000,000 or (ii) three times Mr. Anixter's average annual compensation
during each of the five full fiscal years immediately prior to the date of
termination of employment. In the event of a change in control, if (i) during
the next 24 months, Mr. Anixter's employment with the Company is terminated for
any reason or (ii) at any time his employment is terminated by him with good
reason or by the Company without cause, Mr. Anixter will have the option of
extending the non-competition and non-solicitation provisions for two years
following termination for additional consideration in an amount equal to two
times his highest annual compensation during any of the five full fiscal years
immediately prior to termination of employment.
In the event of a change in control, if either Mr. Putnam's, Mr.
Swanson's, or Mr. Welchko's employment with the Company is terminated by such
employee for good reason or by the Company without cause during the next 36
months, the Company is obligated to pay such employee a lump sum cash payment
equal to the greater of (i) $1,000,000 for Mr. Putnam, $500,000 for Mr. Swanson,
9
<PAGE>
$750,000 for Mr. Welchko, or (ii) three times such employee's average annual
compensation during each of the five full fiscal years immediately prior to the
date of termination of employment. In addition, following a change in control,
if either Mr. Putnam, Mr. Swanson or Mr. Welchko terminates employment with the
Company without good reason during the next 6 months, the Company shall pay to
such employee an amount equal to 20% of the amount described in the prior
sentence. Following a change in control, if either Mr. Putnam's, Mr. Swanson's,
or Mr. Welchko's employment with the Company is terminated by such employee for
good reason or by the Company without cause during the next 36 months, such
employee will have the option of extending the non-competition and
non-solicitation provisions for an additional term of two years for additional
consideration in an amount equal to two times the highest annual compensation
during any of the five full fiscal years immediately prior to termination of
employment. Messrs. Anixter, Putnam, Swanson and Welchko also are entitled to
gross-up payments to the extent that the payments described above are subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code. The
aggregate base salary paid to Messrs. Anixter, Putnam, Swanson and Welchko in
1996 was $734,000 and the aggregate base salary to be paid to them in 1997 is
$870,000.
Each of Mr. Brzustewicz's and Mr. Nast's employment agreements provides
for an initial term of five years with a base salary of $240,000 per year for
Mr. Brzustewicz and $200,000 per year for Mr. Nast. Each of Mr. Brzustewicz's
and Mr. Nast's employment agreements also contains non-competition and
non-solicitation provisions commencing on the date of the employment agreement
and ending two years after termination of such person's employment. However, if
the Company fails to offer to renew Mr. Brzustewicz's or Mr. Nast's employment
agreement, then such person would no longer be subject to the non-competition or
non-solicitation provisions of his employment agreement.
If either Mr. Brzustewicz's or Mr. Nast's employment is terminated by
the Company during the initial five year term without cause, the Company is
obligated to continue to pay such person an annual amount equal to the sum of
his Base Salary and bonus earned for the year prior to the year in which the
employee is terminated, payable in equal monthly installments. If the Company
fails to pay such employee a severance payment due him, such employee would be
released from the non-competition or non-solicitation provisions of his
employment agreement. However, such release would not be the employee's only
remedy for such failure and the Company would still be obligated to pay any
post- termination benefits due to the employee under his agreement.
In connection with his employment agreement and as adjusted to reflect
the Company's 100% stock dividend in 1996, Mr. Brzustewicz was granted an option
to purchase 300,000 shares of the Company's common stock at an exercise price of
$6.1875 per share, which option vests in three equal annual installments,
commencing on March 12, 1997. In addition, Mr. Brzustewicz was elected to the
Company's Board of Directors as of the date of his employment agreement for a
term expiring in 1998. Furthermore, the Company agreed to use its reasonable
efforts to recommend Mr. Brzustewicz for election at the Company's 1998 annual
meeting of stockholders.
10
<PAGE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Historically, annual compensation and bonuses for the Company's
executive officers (other than the Chief Executive Officer) have been determined
by the Company's Chief Executive Officer in consultation with the Board of
Directors due to the relatively small number of executive officers and the Chief
Executive Officer's personal knowledge of the relative performance and
responsibilities of each executive officer. The annual compensation and bonuses
for the Company's Chief Executive Officer have been subject to the review and
approval of the Board of Directors. Option grants to all executive officers have
been determined by the Option Committee under the Stock Incentive Plan.
Executive compensation for the Company's executive officers in 1996 was
established in this manner.
In March 1997, the Board of Directors established a Compensation
Committee, composed of William Anixter, Lee Stern and Michael Segal. The
Compensation Committee has responsibility for reviewing with management the
overall compensation policies to be followed by the Company, establishing the
compensation of the Company's executive officers, and preparing the report of
the Compensation Committee for the Company's Proxy Statement in 1998 and in
future years.
The compensation policy of the Company has been, and will remain, to
provide a total compensation package that attracts and retains quality
individuals that possess the extent of industry experience necessary for the
Company to continue to maintain strong relationships with major vendors and
customers and to implement the Company's integrated growth strategy. The
executive compensation program is intended to recognize individual contribution
to corporate performance and to increases in stockholder value.
Base Compensation
Individual base compensation levels for executive officers are
established based upon a variety of factors, including the particular
executive's scope of responsibilities, tenure with the Company and industry
experience, and attainment of performance goals in recent years. To date, the
Company has not focused on compensation levels of executives at competing
businesses in establishing base compensation for its executives. However, the
Board of Directors believes that the current base compensation levels of
executive officers of the Company are comparable to the market. The "market"
refers to all companies against which the Company competes for executive talent,
and is not limited to those companies that specialize in the sale and
distribution of communications related wire, cable, fiber optics and computer
network and connectivity products.
Bonuses
Historically, the Company has awarded annual cash bonuses to its
executive personnel that are paid at the beginning of the year and are subject
to vesting over the course of the year. Individual amounts for each year are
determined based upon an evaluation of individual performance during the prior
year as compared to such person's performance goals. Generally, performance
criteria are established by the Company's Chief Executive Officer in
consultation with the other executive officers. The performance goals for each
officer take into account a wide range of departmental and company-wide
objectives.
Stock Options
The Company currently has in place two stock incentive plans: The 1995
Stock Incentive Plan and the 1996 Stock Incentive Plan. The purpose of each of
the plans is to promote the overall financial objectives of the Company and its
stockholders by motivating eligible participants to achieve long-term growth in
stockholder equity in the Company and to retain the association of these
individuals. Each of the executive officers of the Company is eligible to
participate in each of these plans. Each of these plans is administered by the
Option Committee, which has consisted of William Anixter and Lee Stern.
11
<PAGE>
Effective with its formation on March 11, 1997, the Compensation Committee will
take over the responsibilities of, and serve as, the Option Committee under each
of these plans. Thus, Michael Segal will join Messrs. Anixter and Stern in
determining future option grants to executive officers. In addition, in October
1997, the Option Committee took action to delegate authority to Alan Anixter,
the Company's Chairman of the Board, and Scott Anixter, the Company's Chairman
and Chief Executive Officer, with respect to all grants to be made under each of
the plans to all persons eligible to participate in such plans other than
executive officers.
Compensation of the Chief Executive Officer
Compensation for the Company's Chief Executive Officer, Scott C.
Anixter, was determined by the Board of Directors in 1996. In 1996, Mr.
Anixter's base compensation was $240,000, as compared to $150,000 in 1995. This
increase was determined based upon the significant growth experienced by the
Company and based upon an evaluation of the Chief Executive Officer's
contribution to achieving such growth. As with the other executive officers of
the Company, Mr. Anixter's performance based compensation consisted primarily of
stock option grants rather than a cash bonus so that his interest would continue
to be closely aligned with the interests of the Company's stockholders and the
enhancement of stockholder value.
Section 162(m)
The Board of Directors currently intends for all compensation paid to
executive officers to be tax deductible to the Company pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Section
162(m) of the Code provides that compensation paid to executive officers in
excess of $1 million cannot be deducted by the Company for federal income tax
purposes unless, in general, such compensation is performance based, is
established by an independent committee of directors, is objective and the plan
or agreement providing for such performance based compensation has been approved
in advance by stockholders. The requirements of Section 162(m) of the Code,
however, are uncertain at this time and, the Company believes, arbitrary and
inflexible. In the future, the Board of Directors may determine to adopt a
compensation program that does not satisfy the conditions of Section 162(m) of
the Code if, in the Board of Directors' judgment, after considering the
additional costs of not satisfying Section 162(m) of the Code, such program is
appropriate.
Board of Directors
Alan B. Anixter
Scott C. Anixter
Carl E. Putnam
Donald C. Welchko
Robert Brzustewicz, Sr.
William R. Anixter
Ira J. Kaufman
Michael Segal
Lee B. Stern
Board of Director Interlocks and Insider Participation
Scott C. Anixter, the Chairman and Chief Executive Officer of the Company,
Carl E. Putnam, the President and Chief Operating Officer of the Company, Donald
C. Welchko, the Vice-President and Chief Financial Officer of the Company, and
Robert Brzustewicz, Sr., the Senior Executive Vice-President of the Company, are
members of the Board of Directors.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Common Stock of the Company since its initial public offering on February
22, 1995 with the cumulative total return of all stocks in the Nasdaq
Non-Financial Sector and all companies in the SIC Group (1) (assuming the
investment of $100 in the Common Stock at its closing price on February 22, 1995
and in each index on January 31, 1995 and the reinvestment of all dividends).
====================================================================
2/23/95 12/31/95 12/31/96
- --------------------------------------------------------------------
Anicom, Inc. 100 177 308
- --------------------------------------------------------------------
SIC Group 100 133 145
- --------------------------------------------------------------------
Nasdaq Non-Financial 100 140 170
====================================================================
- --------
(1) The SIC Group is an index of the thirty-two (32) domestic companies
listed on the NASDAQ National Market which have indicated that their
primary industry is electrical goods (SIC Codes 5063-5065) (compiled by
FactSet Research Systems, Inc.).
13
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of March 31, 1997, certain
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock, (ii) each director of the Company,
(iii) each Named Officer and (iv) all executive officers and directors as a
group.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address(1) Beneficially Owned Ownership
- ---------------------------------------------------------------------- ------------------------- --------------
<S> <C> <C>
Scott C. Anixter(2)................................................... 2,128,000 13.4%
Alan B. Anixter(3).................................................... 150,002 *
Carl E. Putnam(4)..................................................... 159,202 1.0
Robert L. Swanson(5).................................................. 142,302 *
Donald C. Welchko(6).................................................. 23,002 *
Robert Brzustewicz, Sr.(7)............................................ 215,816 1.4
Glen M. Nast.......................................................... 68,766 *
William R. Anixter(8)................................................. 70,000 *
Ira J. Kaufman(8)(9).................................................. 68,000 *
Michael Segal(8)...................................................... 40,000 *
Lee B. Stern(8)....................................................... 90,000 *
Northwestern Mutual Life Insurance Company(10)........................ 1,461,540 9.2
Directors and executive officers as a group (11 persons).............. 3,155,090 19.4%
</TABLE>
- ------------------
* less than one percent.
(1) Except as otherwise indicated, the address of each stockholder listed is
c/o Anicom, Inc., 6133 North River Road, Suite 1000, Rosemont, Illinois
60018.
(2) Includes 704,426 shares held by trusts for the benefit of Scott C.
Anixter's children of which Penny W. Anixter has sole voting and investment
power as investment advisor, 604,800 shares held in custodial accounts for
the benefit of Scott C. Anixter's children of which Scott C. Anixter has
sole voting and investment power as custodian and 778,773 shares held by
Anixter Enterprises, L.P. Also includes 40,000 shares issuable on or before
May 30, 1997 upon exercise of options granted pursuant to the 1996 Stock
Incentive Plan.
(3) Includes 100,002 shares held in a trust for the benefit of Mr. Anixter's
wife, Gail Anixter, of which Alan B. Anixter has sole voting and investment
power as trustee and of which Alan B. Anixter disclaims beneficial
ownership. Also includes 50,000 shares issuable on or before May 30, 1997
upon exercise of options granted pursuant to the 1995 Stock Incentive Plan
or the 1996 Stock Incentive Plan.
(4) Includes 34,000 shares issuable on or before May 30, 1997 upon exercise of
options granted pursuant to the 1995 Stock Incentive Plan or the 1996 Stock
Incentive Plan.
(5) Includes 3,400 shares held in custodial accounts for the benefit of Mr.
Swanson's children and 2,000 shares held in a custodial account for the
benefit of Mr. Swanson's spouse, over which Mr. Swanson's spouse has sole
voting and investment power. Also includes 16,800 shares issuable on or
before May 30, 1997 upon exercise of options granted pursuant to the 1995
Stock Incentive Plan or the 1996 Stock Incentive Plan.
(6) Includes 600 shares held in custodial accounts for the benefit of Mr.
Welchko's children and includes 18,400 shares issuable on or before May 30,
1997 upon exercise of options granted pursuant to the 1995 Stock Incentive
Plan or the 1996 Stock Incentive Plan.
(7) Includes 100,000 shares issuable upon exercise of options granted pursuant
to the 1995 Stock Incentive Plan.
(8) Includes 20,000 shares issuable upon exercise of options granted pursuant
to the Anicom, Inc. 1995 Directors Stock Option Plan.
(9) Includes 28,000 shares issuable upon exercise of common stock warrants.
(10) As reported on a Schedule 13G filed by The Northwestern Mutual Life
Insurance Company on February 3, 1997. According to such Schedule 13G, The
Northwestern Mutual Life Insurance Company has sole voting power and sole
dispositive power with respect to all of these shares. The address of this
stockholder is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
14
<PAGE>
CERTAIN TRANSACTIONS
In connection with the formation of the Company, on June 30, 1993, the
Company, Alan B. Anixter, Scott C. Anixter, individually and as custodian of
certain accounts for the benefit of his children, Carl E. Putnam, Robert L.
Swanson and William K. Leino entered into a shareholders agreement. Under this
agreement, certain parties to this agreement and their affiliates may not sell
or otherwise transfer any of their shares of Common Stock to anyone not a party
to this agreement, except certain permitted transferees (as defined), unless he
or she has first provided other parties to this agreement or the Company an
option to purchase such shares at a price computed in accordance with the terms
of the agreement. This agreement also provides Scott C. Anixter and certain
affiliated parties of Scott C. Anixter with the first option to purchase shares
of Common Stock owned by other parties to this agreement upon the occurrence of
certain events including, but not limited to, death, disability or bankruptcy.
This agreement terminates on the first to occur of (i) the dissolution of the
Company, (ii) a shareholder becoming the beneficial owner of all of the shares
of Common Stock which are subject to this agreement and (iii) notice of
termination executed by all of the parties to this agreement.
The Company entered into a tax indemnification agreement with each of
the stockholders of the Company prior to its initial public offering which
provides for, among other things, the indemnification of each such stockholder
for any losses or liabilities with respect to any additional taxes (including
interest, penalties and legal fees) resulting from the Company's operations
during the period in which it was an S corporation. Management believes that the
Company's maximum exposure pursuant to this agreement is not material.
On July 31, 1995, Pinnacle Wire & Cable, Inc. ("Pinnacle") was merged
into the Company. Raymond J. Costello, a shareholder and director of Pinnacle,
is the brother-in-law of Carl E. Putnam, President and a director of Anicom.
Effective upon closing of the Pinnacle acquisition, Mr. Costello resigned as an
officer, director and employee of Pinnacle.
Ira J. Kaufman, a director of the Company, is a Senior Managing
Director of Mesirow Financial, Inc., which served as a managing underwriter on
the Company's follow-on offering in November 1995, and was, at the time of the
Company's initial public offering in 1995, Chairman of the Board Emeritus of
Rodman & Renshaw, Inc., which was the lead underwriter for such offering.
In 1996, Near North Insurance Brokerage, Inc. received approximately
$89,000 in commissions earned from insurance premiums paid by the Company to
Near North Insurance Brokerage, Inc. Michael Segal, a director of the Company,
is the President and Chief Executive Officer of Near North Insurance Brokerage,
Inc.
AMENDMENT OF COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE TOTAL AUTHORIZED COMMON STOCK
(Proposal 2)
In March 1997, the Board of Directors proposed and recommended for
adoption by the Company's stockholders an amendment to the Company's Certificate
of Incorporation that would increase the total authorized common stock of the
Company from 30,000,000 shares to 60,000,000 shares. No change will be made to
the number of authorized shares of Preferred Stock. The Company's Restated
stockholders are asked to approve this amendment.
The proposed amendment provides that paragraph A of Article Four of the
Company's Restated Certificate of Incorporation be amended to read in its
entirety as follows:
15
<PAGE>
"A. The Corporation shall have authority to issue the following
classes of stock, in the number of shares and at the par value
as indicated opposite the name of the class:
Number of Par Value
Class Shares Authorized Per Share
------------------- ------------------- ------------------
Common Stock 60,000,000 $.001
Preferred Stock 1,000,000 $.01"
Reasons for the Proposal -- As of March 31, 1997, there were 15,912,999
shares of Common Stock issued and outstanding, and 3,300,000 shares reserved for
issuance under the Company's stock option and stock incentive plans including
shares under the 1995 Stock Incentive Plan, the 1996 Stock Incentive Plan and
the Directors Option Plan, subject to stockholder approval at the Annual
Meeting of the increase in shares available under the 1996 Stock Incentive Plan
and the Directors Option Plan. In addition, 114,364 shares were reserved for
issuance pursuant to certain warrants. Consequently, 10,672,637 shares of Common
Stock were available for future issuance as of March 31, 1997.
The Board of Directors believes that it is desirable for the Company to
have available additional authorized but unissued shares of Common Stock to
provide the Company with shares of Common Stock to be used for general corporate
purposes, future acquisitions and equity financings. Approval of the proposed
amendment now will eliminate the delays and expense which otherwise would be
incurred if stockholder approval were required to increase the authorized number
of shares of Common Stock for possible future transactions involving the
issuance of additional shares. The Company does not have any current plan or
intention to issue any of the additional authorized shares of Common Stock for
which approval is sought.
Effect of Increase -- The additional shares of Common Stock may be
issued, subject to certain exceptions, by the Board of Directors at such times,
in such amounts and upon such terms as the Board may determine without further
approval of the stockholders. The Company's current stockholders could suffer a
dilution of voting rights, net income and net tangible book value per share of
the Common Stock as the result of any such issuance of Common Stock depending on
the number of shares issued and the purpose, terms and conditions of the
issuance.
The Board of Directors recommends that stockholders vote FOR the
amendment to the Company's Certificate of Incorporation to increase the
Company's number of authorized shares of Common Stock.
AMENDMENT TO 1996 STOCK INCENTIVE PLAN
(Proposal 3)
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors approved an amendment to the 1996 Stock
Incentive Plan to increase the number of shares of common stock reserved for
issuance under the Plan from 1,200,000 to 1,800,000. The 1996 Stock Incentive
Plan, as amended, remains in all other respects identical to the 1996 Stock
Incentive Plan as originally adopted by the Company's stockholders. A copy of
the amendment to the 1996 Stock Incentive Plan is set forth in Appendix A
hereto.
Stockholder approval of the amendment to the 1996 Stock Incentive Plan
is sought to continue (i) to qualify the 1996 Stock Incentive Plan, as amended,
under Rule 16b-3 of the Act and thereby render certain transactions under the
1996 Stock Incentive Plan exempt from certain provisions of Section 16
16
<PAGE>
of the Act and (ii) to qualify certain compensation under the 1996 Stock
Incentive Plan as performance based compensation that is tax deductible without
limitation under Section 162(m) of the Code.
The following is a brief summary of certain features of the 1996 Stock
Incentive Plan, as amended.
General
The 1996 Stock Incentive Plan is a flexible plan that provides the
Option Committee broad discretion to fashion the terms of the awards to provide
eligible participants with stock-based incentives including: (i) non-qualified
and incentive stock options for the purchase of Common Stock, (ii) stock
appreciation rights ("SARs"), (iii) restricted stock ("Restricted Stock"), and
(iv) deferred stock ("Deferred Stock"). The persons eligible to participate in
the 1996 Stock Incentive Plan are officers, directors, employees and consultants
of the Company. It is estimated that approximately 500 persons are eligible to
participate in the 1996 Stock Incentive Plan. The purpose of the 1996 Stock
Incentive Plan is to promote the overall financial objectives of the Company and
its stockholders by motivating eligible participants to achieve long-term growth
in stockholder equity in the Company and to retain the association of these
individuals. The 1996 Stock Incentive Plan will be administered by the Option
Committee. The Option Committee is and shall remain comprised of at least two
independent directors, within the meaning of Rule 16b-3. Members of the Option
Committee will not be eligible to participate in the 1996 Stock Incentive Plan.
The 1996 Stock Incentive Plan provides for the grant of options and
other awards of up to 1,800,000 shares of Common Stock. In the discretion of the
Option Committee, shares of Common Stock subject to an award under such Plan
that remain unissued upon termination of such award, are forfeited or are
received by the Company as consideration for the exercise or payment of an award
shall become available for additional awards under the Plan. In the event of a
stock dividend, stock split, recapitalization, sale of substantially all of the
assets of the Company, reorganization or other similar event, the Option
Committee will adjust the aggregate number of shares of Common Stock subject to
the 1996 Stock Incentive Plan and the number, class and price of such shares
subject to outstanding awards.
The Board of Directors or Option Committee may amend, modify or
discontinue the 1996 Stock Incentive Plan at any time, except if such amendment
(i) impairs the rights of a participant without the participant's consent, or
(ii) would disqualify the Plan from the exemption provided by Rule 16b-3 under
the Act. Amendments may be subject to stockholder approval under applicable law.
Any amendment by the Option Committee is subject to approval of the Board of
Directors. The Option Committee may amend the terms of any award granted under
the Plan (other than to decrease the option price), subject to the consent of a
participant if such amendment impairs the rights of such participant.
Awards Under the 1996 Stock Incentive Plan
Stock Options. The Option Committee shall determine the number of
shares of Common Stock subject to the options to be granted to each participant.
During any three-calendar-year period, options to purchase no more than 400,000
shares of Common Stock may be granted to any participant in the 1996 Stock
Incentive Plan. The Compensation Committee may grant non-qualified stock
options, incentive stock options or a combination thereof to a participant. Only
persons who on the date of the grant are employees of the Company may be granted
options which qualify as incentive stock options. Options granted under the 1996
Stock Incentive Plan will provide for the purchase of Common Stock at prices
determined by the Option Committee, but in no event will an option intended as
an incentive stock option be granted at less than fair market value on the date
of grant. When incentive stock options are granted to an individual who owns
Common Stock possessing more than 10% of the combined voting power of all
classes of stock of the Company, the option price shall not be less than 110% of
fair market value.
17
<PAGE>
No non-qualified stock option or incentive stock option shall be exercisable
later than the tenth anniversary date of its grant. In the case of an incentive
stock option granted to a participant who owns more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
of the Company, such option shall not be exercisable later than the fifth
anniversary date of its grant. No incentive stock option shall be granted later
than the tenth anniversary date of the adoption of the 1996 Stock Incentive Plan
or its approval by the stockholders of the Company, whichever is earlier.
Options granted under the 1996 Stock Incentive Plan shall be
exercisable at such times and subject to such terms and conditions set forth in
the 1996 Stock Incentive Plan and as the Option Committee shall determine or
provide in an option agreement. Except as provided in any option agreement,
options may only be transferred under the laws of descent and distribution or,
if permitted without liability under applicable law, pursuant to a qualified
domestic relations order. Otherwise, options shall be exercisable only by the
participant during such participant's lifetime. The option exercise price shall
be payable by the participant (i) in cash, (ii) in shares of Common Stock having
a fair market value equal to the exercise price, (iii) by delivery of evidence
of indebtedness, (iv) by authorizing the Company to retain shares of Common
Stock having a fair market value equal to the exercise price, (v) by "cashless
exercise" as permitted under the Federal Reserve Board's Regulation T, (vi) by
certifying ownership of shares of Common Stock to the satisfaction of the Option
Committee for later delivery to the Company as specified by the Option Committee
or (vii) by any combination of the foregoing. Upon termination of a
participant's employment with the Company due to death or Disability (as defined
in the 1996 Stock Incentive Plan), all of such participant's options shall be
exercisable for the shorter of their remaining term or one year after
termination of employment (or such other period as the Option Committee may
determine). If a participant retires, all of such participant's options shall
terminate, except that, to the extent such options are then exercisable, such
options may be exercised for the shorter of their remaining terms or one year
(or such shorter period as the Option Committee may specify) after termination
of employment. If a participant involuntarily ceases to be an employee of the
Company (other than due to death, Disability or as a result of termination for
Cause), all of such participant's options shall terminate, except that, to the
extent such options are then exercisable, such options may be exercised for the
shorter of their remaining terms or three months (or such shorter period as the
Option Committee may specify) after termination of employment. If a participant
voluntarily ceases to be an employee of the Company (other than due to
retirement) or is terminated as a result of Cause (as defined in the Plan), all
of his outstanding options shall terminate immediately.
Upon receipt of a notice from a participant to exercise an option, the
Option Committee may elect to cash out all or part of any such option by paying
the participant, in cash or shares of Common Stock, the following amount: (i)
the excess of the fair market value of the Common Stock subject to the
unexercised option over the exercise price of the option, multiplied by (ii) the
number of shares for which the option is to be exercised.
Stock Appreciation Rights. An SAR shall entitle a participant to
receive Common Stock, cash or a combination thereof. If granted in conjunction
with an option, the exercise of an SAR shall require the cancellation of the
corresponding portion of the option. SARs may be granted on or after the
corresponding grant of non-qualified stock options, but only at the same time as
the corresponding grant of incentive stock options. The Option Committee in its
discretion shall determine the number of SARs awarded to a participant, but in
no event shall SARs covering more than 400,000 shares of Common Stock be granted
to any participant during any three-calendar-year period. The Option Committee
shall determine the terms and conditions of any SAR which shall be subject to an
agreement between the Company and the participant. If granted in conjunction
with options, the SAR shall be exercisable for and during the same period as the
corresponding options. Upon exercise of an SAR, a participant shall receive an
amount in cash, shares of Common Stock or both equal to (i) the excess of the
fair market
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<PAGE>
value of the Common Stock over the option price per share (if the SAR is granted
in conjunction with an option), multiplied by (ii) the number of shares of
Common Stock subject to the SAR. In the case of an SAR granted on a stand alone
basis, the Option Committee shall determine in its discretion the value to be
used in lieu of the option price. In no event shall an SAR granted in tandem
with an incentive stock option be exercised unless the fair market value of the
Common Stock at the time of the exercise exceeds the option price. With respect
to participants who are subject to Section 16(b) of the Exchange Act (generally
officers and directors of the Company) ("16(b) Persons"), the Option Committee
may require that the SARs be exercised in compliance with Rule 16b-3, including
the restriction that an SAR shall not be exercisable within the first six months
of its term. The transferability and termination provisions of an SAR are as set
forth above with respect to stock options.
Restricted Stock. Restricted Stock awards are grants of shares of
Common Stock, usually without cash consideration from the participant, that are
subject to restrictions on transferability and ownership. The Option Committee
in its discretion shall determine the persons to whom Restricted Stock shall be
granted, the number of shares of Restricted Stock to be granted to each
participant, the periods for which Restricted Stock is restricted, and any other
restrictions to which the Restricted Stock is subject. The Option Committee may
condition the award of Restricted Stock on such performance goals and other
criteria as it may determine. The terms and conditions of the Restricted Stock
shall be confirmed in and subject to an agreement between the Company and the
participant. During the restriction period, the Option Committee may require
that the certificates evidencing the Restricted Stock be held by the Company.
During the restriction period, the Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered. Other than the foregoing
restrictions, the participant shall have all the rights of a holder of Common
Stock. If a restriction relates to a period of employment and the participant's
employment terminates during the restriction period due to death or Disability,
the restrictions on the Restricted Stock shall lapse. If a participant's
employment terminates for any other reason, unless otherwise agreed by the
Option Committee, the remaining Restricted Stock shall be forfeited by the
participant to the Company.
Deferred Stock. Deferred Stock awards are grants of shares of Common
Stock, usually without cash consideration, that are to be delivered in the
future. The Option Committee in its discretion shall determine the persons to
whom Deferred Stock shall be granted, the number of shares of Deferred Stock to
be granted to each participant, the duration of the period prior to which Common
Stock will be delivered, the conditions under which receipt of the Common Stock
will be deferred, and any other terms and conditions of the granting of the
award. The terms and conditions of the Deferred Stock shall be confirmed in and
subject to an agreement between the Company and the participant. The Option
Committee may condition the award of Deferred Stock on such performance goals
and criteria as it may determine. During the deferral period, the Deferred Stock
may not be sold, assigned, transferred, pledged or otherwise encumbered. At the
expiration of the deferral period, the Option Committee may deliver to the
participant Common Stock, cash equal to the fair market value of such Common
Stock or a combination thereof for the shares covered by the Deferred Stock
awards. Cash dividends on Common Stock subject to Deferred Stock awards shall be
automatically deferred and reinvested in Deferred Stock, and stock dividends on
Common Stock subject to Deferred Stock awards shall be paid in the form of
Deferred Stock. If a participant's employment terminates during the deferred
period due to death or Disability, the deferral restrictions shall lapse. If a
participant's employment terminates for any other reason, unless otherwise
agreed by the Option Committee, the rights to the shares still covered by
Deferred Stock awards shall be forfeited by the participant.
Changes in Control
Upon the occurrence of a Change in Control (as defined in the 1996
Stock Incentive Plan), the following shall occur: (i) all unexercised stock
options and SARs shall become immediately exercisable,
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<PAGE>
and (ii) all restrictions on the Restricted Stock and deferral limitations on
the Deferred Stock shall lapse.
Discussion of Federal Income Tax Consequences
The following summary of tax consequences with respect to the awards
granted under the 1996 Stock Incentive Plan is not comprehensive and is based
upon laws and regulations in effect as of March 1, 1997. Such laws and
regulations are subject to change.
Non-Qualified Stock Options
Participant. Generally, a Participant receiving a non-qualified stock
option does not realize any taxable income for Federal income tax purposes at
the time of grant. Upon exercise of such Option, the excess of the fair market
value of the shares of Common Stock subject to the non-qualified stock option on
the date of exercise over the exercise price will be taxable to the Participant
as ordinary income. The Participant will have a capital gain (or loss) upon the
subsequent sale of the shares of Common Stock received upon exercise of the
option in an amount equal to the sale price reduced by the fair market value of
the shares of Common Stock on the date the option was exercised. The holding
period for purposes of determining whether the capital gain (or loss) is a
long-term or short-term capital gain (or loss) will commence on the date the
non-qualified stock option is exercised.
Tax Withholding. The amount of income that is taxable to a Participant
upon the exercise of a non-qualified stock option will be treated as
compensation income. Accordingly, such amount will be subject to applicable
withholding of Federal, state and local income taxes and Social Security taxes.
If the Participant Uses Company Stock to Pay the Option Exercise Price.
If the Participant who exercises a non-qualified stock option pays the exercise
price by tendering shares of Common Stock and receives back a larger number of
shares of Common Stock, the Participant will realize taxable income in an amount
equal to the fair market value of the additional shares of Common Stock received
on the date of exercise, less any cash paid in addition to the shares of Common
Stock tendered. Upon a subsequent sale of the Common Stock received, the number
of shares of Common Stock equal to the number delivered as payment of the
exercise price will have a tax basis equal to that of the shares of Common Stock
originally tendered. The additional newly-acquired shares of Common Stock
obtained upon exercise of the non-qualified stock option will have a tax basis
equal to the fair market value of such shares on the date of exercise.
The Company. The Company generally will be entitled to a tax deduction
in the same amount and in the same year in which the Participant recognizes
ordinary income resulting from the exercise of a non-qualified stock option.
Incentive Stock Options
Participant. Generally, a Participant will not realize any taxable
income for Federal income tax purposes at the time an Incentive Stock Option is
granted. Upon exercise of the Incentive Stock Option, the Participant will incur
no income tax liability (other than pursuant to the alternative minimum tax, if
applicable). If the Participant transfers shares of Common Stock received upon
the exercise of an Incentive Stock Option within a period of two years from the
date of grant of such Incentive Stock Option or one year from the date of
receipt of the shares of Common Stock (the "Holding Period"), then, in general,
the Participant will have taxable ordinary income in the year in which the
transfer occurs in an amount equal to the excess of the fair market value on the
date of exercise over the exercise price, and will have long-term or short-term
capital gain (or loss) in an amount equal to the difference between the sale
price of the shares of Common Stock and the fair market value of such shares on
the date of exercise. However, if the sale price is less than the fair market
value of such shares on the date of
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<PAGE>
exercise, the ordinary income will be not more than the difference between the
sale price and the exercise price. If the Participant transfers the shares of
Common Stock after the expiration of the Holding Period, he or she will
recognize income taxable at the capital gains tax rate on the difference between
the sale price and the exercise price.
Tax Withholding. If the Participant makes any disqualifying disposition
prior to the completion of the Holding Period with respect to shares of Common
Stock acquired upon the exercise of an Incentive Stock Option granted under the
Plan, then such Participant must remit to the Company an amount sufficient to
satisfy all Federal, state, and local withholding taxes thereby incurred.
If the Participant Uses Common Stock to Pay the Option Exercise Price.
If a Participant who exercises an Incentive Stock Option pays the option
exercise price by tendering shares of Common Stock, such Participant will
generally incur no income tax liability (other than pursuant to the alternative
minimum tax, if applicable), provided any Holding Period requirement for the
tendered shares is met. If the tendered stock was subject to the Holding Period
requirement when tendered, payment of the exercise price with such stock
constitutes a disqualifying disposition. If the Participant pays the exercise
price by tendering shares of Common Stock and the Participant receives back a
larger number of shares, under proposed Treasury Regulations, the Participant's
basis in the number of shares of newly acquired stock equal to the number of the
shares delivered as payment of the exercise price will have a tax basis equal to
that of the shares originally tendered, increased, if applicable, by any amount
included in the Participant's gross income as compensation. The additional newly
acquired shares obtained upon exercise of the Option will have a tax basis of
zero. All Common Stock acquired upon exercise will be subject to the Holding
Period requirement, including the number of shares equal to the number tendered
to pay the exercise price. Any disqualifying disposition will be deemed to be a
disposition of Common Stock with the lowest basis.
The Company. The Company is not entitled to a tax deduction upon grant,
exercise or subsequent transfer of shares of Common Stock acquired upon exercise
of an Incentive Stock Option, provided that the Participant holds the shares
received upon the exercise of such Option for the Holding Period. If the
Participant transfers the Common Stock acquired upon the exercise of an
Incentive Stock Option prior to the end of the Holding Period, the Company
generally is entitled to a deduction at the time the Participant recognizes
ordinary income in an amount equal to the amount of ordinary income recognized
by such Participant as a result of such transfer.
Stock Appreciation Rights
Upon the grant of a Stock Appreciation Right ("SAR"), the Participant
will not recognize any taxable income and the Company will not be entitled to a
deduction. Upon the exercise of an SAR, the consideration paid to the
Participant upon exercise of the SAR will constitute compensation taxable to the
Participant as ordinary income. In determining the amount of the consideration
paid to the Participant upon the exercise of an SAR for the Common Stock, the
fair market value of the shares on the date of exercise is used, except that in
the case of an Insider, the fair market value will be determined six months
after the date on which the Common Stock is transferred unless such Participant
makes an election under Section 83(b) of the Code to be taxed based on the fair
market value on the date of exercise. The Company in computing its Federal
income tax generally will be entitled to a deduction in an amount equal to the
compensation taxable to the Participant.
Other Awards
With respect to other Awards granted under the Plan that result in the
payment or issuance of cash or shares of Common Stock or other property that is
either not restricted as to transferability or not subject to a substantial risk
of forfeiture, the Participant must generally recognize ordinary income equal
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<PAGE>
to the cash or the fair market value of shares of Common Stock or other property
received. Thus, deferral of the time of payment or issuance will generally
result in the deferral of the time the Participant will be liable for income
taxes with respect to such payment or issuance. The Company generally will be
entitled to a deduction in an amount equal to the ordinary income received by
the Participant. With respect to Awards involving the issuance of shares of
Common Stock or other property that is restricted as to transferability and
subject to a substantial risk of forfeiture, the Participant must generally
recognize ordinary income equal to the fair market value of the shares of Common
Stock or other property received at the first time the shares of Common Stock or
other property become transferable or not subject to a substantial risk of
forfeiture, whichever occurs earlier. The Company generally will be entitled to
a deduction in an amount equal to the ordinary income received by the
Participant. A Participant may elect under Section 83(b) of the Code to be taxed
at the time of receipt of shares of Common Stock or other property rather than
upon lapse of restrictions on transferability or the substantial risk of
forfeiture, but if the Participant subsequently forfeits such shares or property
the Participant would not be entitled to any tax deduction, including a capital
loss, for the value of the shares or property on which he previously paid tax.
The Participant must file such election with the Internal Revenue Service within
30 days of the receipt of the shares of Common Stock or other property.
Parachute Payments
In the event any payments or rights accruing to a Participant upon a
Change in Control, or any other payments Awarded under the Plan, constitute
"parachute payments" under Section 280G of the Internal Revenue Code, depending
upon the amount of such payments accruing and the other income of the
Participant from the Company, the Participant may be subject to an excise tax
(in addition to ordinary income tax) and the Company may be disallowed a
deduction for the amount of the actual payment.
The Board of Directors recommends that stockholders vote FOR the
amendment to the Company's 1996 Stock Incentive Plan.
AMENDMENT TO THE AMENDED AND RESTATED
ANICOM, INC. 1995 DIRECTORS STOCK OPTION PLAN
(Proposal 4)
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors approved an amendment to the Directors Option
Plan to (i) increase the number of shares of common stock reserved for issuance
under the Directors Option Plan from 200,000 to 300,000, (ii) grant to each
non-employee director an Option to purchase 1,000 shares of Common Stock for
each Board meeting such director attends (including attendance at any Board
meeting after December 31, 1996 but prior to the Annual Meeting) as compensation
for his or her services, and (iii) increase the maximum total number of shares
covered by options which may be granted to any such director under the Directors
Option Plan from 50,000 to 75,000. A copy of the amendment to the Directors
Option Plan is set forth in Appendix B hereto.
Stockholder approval of the Directors Option Plan is sought to continue
(i) to qualify the Directors Option Plan, as amended, under Rule 16b-3 of the
Act and thereby render certain transactions under the Directors Option Plan
exempt from certain provisions of Section 16 of the Act and (ii) to qualify the
Directors Option Plan as performance based compensation that is tax deductible
without limitation under Section 162(m) of the Code.
The Board of Directors originally adopted the Directors Option Plan,
effective January 20, 1995, in order to provide for the grant of options to
acquire shares of the Company's Common Stock to the non-employee directors of
the Company. In adopting the Directors Option Plan, the Board of Directors
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<PAGE>
noted that many other companies had adopted equity plans to compensate their
non-employee directors and that such plans appropriately compensate non-employee
directors. The Board continues to believe that equity plans are appropriate to
compensate non-employee directors and to align the interests of the non-employee
directors with the interests of the Company's stockholders.
The Directors Option Plan is administered by the Option Committee of
the Company's Board of Directors. The following is a brief summary of certain
features of the Directors Option Plan, as amended.
Terms of the Directors Option Plan
The Directors Option Plan provides for the issuance of options to
purchase up to 300,000 shares of Common Stock, which shares are reserved and
available for purchase upon the exercise of options granted under the Directors
Option Plan. Only directors who are not employees or officers of the Company are
eligible to participate in the Directors Option Plan. There currently are four
non-employee directors eligible to participate in the Directors Option Plan.
Under the Directors Option Plan, giving effect to the Company's stock
split in October 1996, each non-employee director, William R. Anixter, Lee B.
Stern, Ira J. Kaufman and Michael Segal, was granted an option to purchase 5,000
shares of Common Stock at an exercise price of $3.00 per share, which was the
offering price of the Common Stock in the Company's initial public offering.
Each non-employee director was granted an additional option to purchase 5,000
shares of Common Stock at an exercise price of $5.75 per share, which was the
closing price of the Common Stock on February 22, 1996 as quoted on the NASDAQ
National Market. Each non-employee director who was a director of the Company on
September 25, 1996 received an option to purchase an additional 10,000 shares of
Common Stock at an exercise price of $8.375 per share, which was the closing
price of the Common Stock on September 25, 1996. Thus, each of the Company's
four non-employee directors has been granted options to purchase a total of
20,000 shares of Common Stock. The closing price of the Company's Common Stock
on March 31, 1997 was $8.4688.
Each non-employee director who becomes a director of the Company in the
future will be granted an option to purchase 10,000 shares of the Company's
Common Stock on the date he or she becomes a director of the Company (the
"Initial Grant Date"). On the date of the Company's 1997 annual meeting of
stockholders, or the Initial Grant Date in the case of a new director, and on
the date of each annual meeting of stockholders thereafter, each non-employee
director who is still a director on such date will be granted an option to
purchase 10,000 shares of Common Stock. Upon stockholder approval of the
amendment to the Directors Option Plan (the "Amendment Effective Date"), each
non-employee director will be granted an Option to purchase 1,000 shares of
Common Stock for each Board meeting that such director has attended in 1997 up
to the Amendment Effective Date and for each meeting he or she attends
thereafter. The total number of shares for which options may be granted to a
director under the Directors Option Plan shall not exceed 75,000 shares. If
there are not sufficient shares remaining and available to all non-employee
directors eligible for an automatic grant at the time at which an automatic
grant would otherwise be made, then each eligible non-employee director shall
receive an option to purchase a pro rata number of shares.
All options granted under the Directors Option Plan are immediately
exercisable on the date of grant. If any options under the Directors Option Plan
are surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved for grant will revert to the status of available shares. All
options expire on the earlier to occur of (a) seven years following the grant
date and (b) the termination of the non-employee director's directorship for
"Cause" (as defined in the Directors Option Plan). In the event of a
non-employee director's death or "Disability" (as defined in the Directors
Option Plan), any vested, unexpired and unexercised option granted to such
non-employee Director shall become
23
<PAGE>
immediately exercisable for a period of one (1) year (or such other period as
the Option Committee may specify) or until the expiration of the option period,
whichever is shorter.
Except as provided in any option agreement or as determined by the
Option Committee, options may only be transferred under the laws of descent and
distribution or, if permitted without liability under applicable law, pursuant
to a qualified domestic relations order. Otherwise, options shall be exercisable
only by the director during such director's lifetime. The option exercise price
is payable by the director (i) in cash, (ii) in shares of Common Stock having a
fair market value equal to the exercise price, (iii) by delivery of evidence of
indebtedness, (iv) by authorizing the Company to retain shares of Common Stock
having a fair market value equal to the exercise price, (v) by "cashless
exercise" as permitted under the Federal Reserve Board's Regulation T, or (vi)
by any combination of the foregoing.
In the event of any stock dividends, stock splits, combinations,
recapitalizations, reorganizations, liquidations or similar transactions, the
Company will appropriately adjust the number of shares available under the
Directors Option Plan, the number of shares covered by outstanding options and
the exercise prices of such outstanding options.
The Board of Directors or the Option Committee may amend the Directors
Option Plan, subject to stockholder approval if required by applicable law. No
amendment may impair the rights of a holder of an outstanding option without the
consent of such holder, nor may an amendment be made in any manner which fails
to comply with Rule 16b-3(c)(2)(ii)(B) under the Act. In addition, any amendment
by the Option Committee is subject to approval by the Board of Directors.
Discussion of Federal Income Tax Consequences
The following summary of tax consequences with respect to options under
the Directors Option Plan is not comprehensive and is based upon laws and
regulations in effect on March 1, 1997. Such laws and regulations are subject to
change.
A director granted an option under the Directors Option Plan does not
recognize taxable income upon grant, and the Company is not entitled to a
deduction for Federal income tax purposes upon such grant. Upon exercise of an
option, participants generally will be taxed at ordinary income tax rates on the
difference between the exercise price of the option and the fair market value of
the Common Stock issued thereunder. In determining the amount of the difference,
the fair market value will be determined on the date of exercise. The Company
will receive a corresponding deduction for the amount of income recognized by a
participant upon exercise of an option. Any gain or loss realized upon the
subsequent sale of the Common Stock issued upon exercise of the option (measured
by the difference between the fair market value, determined or utilized by the
optionee as described above, and the sale price) will be taxed at either
long-term or short-term capital gain (or loss) rates, depending on the selling
stockholder's holding period. Such subsequent sale would have no tax
consequences for the Company.
The Board of Directors recommends that stockholders vote FOR the
amendment to the Company's Amended and Restated Directors Stock Option Plan.
24
<PAGE>
INDEPENDENT AUDITORS
The Company's Board of Directors, upon recommendation of the Audit
Committee, has selected Coopers & Lybrand to audit the financial statements of
the Company for the year ended December 31, 1997. It is expected that
representatives of Coopers & Lybrand will be present at the Annual Meeting and
available to respond to questions. Such representatives will be given an
opportunity to make a statement if they desire to do so.
OTHER MATTERS
Solicitation
The cost of soliciting Proxies in the accompanying form will be borne
by the Company. In addition to the solicitation of Proxies by the use of the
mails, certain officers and associates (who will receive no compensation
therefor in addition to their regular salaries) may be used to solicit Proxies
personally and by telephone and telegraph. In addition, banks, brokers and other
custodians, nominees and fiduciaries will be requested to forward copies of the
Proxy material to their principals and to request authority for the execution of
Proxies. The Company will reimburse such persons for their expenses in so doing.
In addition, the Company has engaged MacKenzie Partners, New York, New York to
assist in soliciting Proxies for a fee of approximately $5,000 plus reasonable
out of pocket expenses.
Proposals of Stockholders
Proposals of stockholders intended to be considered at the 1998 annual
meeting of stockholders must be received by the Corporate Secretary of the
Company no earlier than November 15, 1997 and no later than December 15, 1997.
Stockholder List
A list of stockholders entitled to vote at the Annual Meeting, arranged
in alphabetical order, showing the address of and number of shares registered in
the name of each stockholder, will be open to the examination of any
stockholder, for any purpose germane to the Annual Meeting, during ordinary
business hours, for a period of at least ten days prior to the Annual Meeting
and continuing through the date of the Annual Meeting, at the principal offices
of Harris Trust & Savings Bank, 111 West Monroe Street, Chicago, Illinois 60603.
Annual Report on Form 10-KSB
The Company will furnish without charge to each person whose Proxy is
being solicited, upon request of any such person, a copy of the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996 as filed with
the Securities and Exchange, including the financial statements and the
schedules thereto. Such Form 10-KSB was filed with the Securities and Exchange
Commission on March 21, 1997. Requests for copies of such report should be
directed to Anicom, Inc., Attention: Corporate Secretary, 6133 North River Road,
Suite 1000, Rosemont, Illinois 60018-5171.
Incorporation by Reference
No documents are incorporated herein by reference.
25
<PAGE>
Please date, sign and return the enclosed Proxy at your earliest
convenience in the enclosed envelope. No postage is required for mailing in the
United States. A prompt return of your Proxy will be appreciated.
By Order of the Board of Directors,
/S/ David R. Shevitz
David R. Shevitz, Corporate Secretary
26
<PAGE>
APPENDIX A
AMENDMENT TO THE
1996 STOCK INCENTIVE PLAN
RESOLVED, that the 1996 Stock Incentive Plan (the "Plan") be and hereby
is amended, subject to and effective upon stockholders' approval at the Annual
Meeting of Stockholders on May 21, 1997, as follows:
Section 4.1 of the Plan is amended to read as follows:
"4.1 Number of Shares. Subject to adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Options under the Plan shall be 1,800,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares."
Except as herein amended, the Plan shall remain in full force and
effect.
ANICOM, INC.
/s/ Scott C. Anixter
By: _______________________
Scott C. Anixter
Chief Executive Officer
<PAGE>
APPENDIX B
AMENDMENT TO THE AMENDED AND RESTATED ANICOM, INC.
1995 DIRECTORS STOCK OPTION PLAN
RESOLVED, that the Amended and Restated Anicom, Inc. 1995 Directors
Stock Option Plan (the "Plan") be and hereby is amended, subject to and
effective upon stockholders' approval at the Annual Meeting of Stockholders on
May 21, 1997, as follows:
Section 4.1 of the Plan is amended to read as follows:
"4.1 Number of Shares. Subject to adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Options under the Plan shall be 300,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares."
The first paragraph of Section 5.2 of the Plan is amended to read as follows:
"5.2 Grant and Exercise. Each Director who is a Director on the
Effective Date shall be granted an Option on such date to purchase 10,000 shares
of Common Stock without further action by the Board or the Committee. Each
Director who joins the Board after the Effective Date shall be granted an Option
on the Initial Grant Date to purchase 10,000 shares of Common Stock without
further action by the Board or the Committee. On the date of the Company's
annual meeting of stockholders in the calendar year following the Effective Date
and on the date of each annual meeting of stockholders thereafter, each such
Director who is still a Director on such anniversary date shall be granted an
additional Option to purchase 10,000 shares of Common Stock without further
action by the Board or the Committee. In addition, each Director shall receive
an Option to purchase 1,000 shares of Common Stock without further action by the
Board or the Committee as of the date of each Board Meeting that such Director
attends, whether in person or by telephone; provided however, that if such
Director attended any Board meeting that was held on or after January 1, 1997
but prior to the Annual Meeting of Stockholders on May 21, 1997 (the "1997
Annual Meeting"), such Director shall be granted, on the date of the 1997 Annual
Meeting, an Option to purchase 1,000 shares of Common Stock for each such prior
attendance. Notwithstanding anything to the contrary herein, the total number of
shares for which Options have been granted to a Director under this Plan shall
not exceed 75,000 shares."
Except as herein amended, the Plan shall remain in full force and
effect.
ANICOM, INC.
/s/ Scott C. Anixter
By: ________________________
Scott C. Anixter
Chief Executive Officer
<PAGE>
PROXY ANICOM, INC. This proxy is
6133 North River Road, Suite 1000, solicited on
Rosemont, Illinois 60018 behalf of the
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS Board of Directors
To Be Held On May 21, 1997
TO VOTE AT THE ANNUAL MEETING IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS OF ANICOM, INC., SIGN AND DATE THE REVERSE SIDE OF THIS CARD
WITHOUT CHECKING ANY BOX.
The undersigned holder of Common Stock, par value $.001 per share, of
Anicom, Inc. (the "Company") hereby appoints Scott C. Anixter and Donald C.
Welchko, or either of them, with full power of substitution in each, as proxies
to cast all votes which the undersigned stockholder is entitled to cast at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday
May 21, 1997 at 2:00 p.m. local time, at Harris Trust & Savings Bank, 111 West
Monroe Street, Chicago, Illinois 60603, and at any adjournments thereof, upon
the following matters. The undersigned stockholder hereby revokes any proxy or
proxies heretofore given.
1. ELECTION OF DIRECTORS
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote
for the nominees listed below
Alan B. Anixter, Donald C. Welchko and Michael Segal
INSTRUCTION: To withhold authority to vote for an individual nominee mark
"|_| FOR all nominees listed below" and strike a line through that
nominee's name in the list above.
If a nominee becomes unavailable for election or unable to serve as a
director, the votes will be cast for a person that will be designated by
the Board of Directors of the Company.
2. PROPOSAL TO AMEND ANICOM, INC.'S RESTATED CERTIFICATE OF INCORPORATION
|_| FOR |_| AGAINST |_| ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE ANICOM, INC.
1996 STOCK INCENTIVE PLAN
|_| FOR |_| AGAINST |_| ABSTAIN
4. PROPOSAL TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
1995 DIRECTORS STOCK OPTION PLAN
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting, or any
adjournments thereof.
(continued, and to be signed, on reverse side)
<PAGE>
(continued from other side)
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4 AND IN ACCORDANCE WITH THE
DETERMINATION OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS. The undersigned
stockholder may revoke this proxy at any time before it is voted by delivering
to the Corporate Secretary of the Company either a written revocation of the
proxy or a duly executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting in person. The undersigned stockholder hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement. PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. If you receive more than one proxy card, please sign and
return ALL cards in the enclosed envelope.
DATED: ________________________________
_______________________________________
Signature
_______________________________________
Signature (if held jointly)
Please date and sign exactly as the name appears
hereon. When signing as executor, administrator,
trustee, guardian, attorney-in-fact or other
fiduciary, please give title as such. When signing as
corporation, please sign in full corporate name by
President or other authorized officer. If you sign
for a partnership, please sign in partnership name by
an authorized person.
