[WTD Logo]
WTD INDUSTRIES, INC.
Lincoln Tower, Suite 900
10260 S.W. Greenburg Road
Portland, Oregon 97223
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held October 21, 1996
----------
To Our Shareholders:
WTD Industries, Inc. (the "Company") will hold its Annual Meeting of
Shareholders at 10:00 a.m. local time on Monday, October 21, 1996 at the Tigard
Courtyard by Marriott, 15686 S.W. Sequoia Parkway, Tigard, Oregon, for the
following purposes:
1. To elect four (4) directors to the Company's Board of Directors.
2. To ratify the appointment of Moss Adams LLP as the Company's
independent auditors for the fiscal year ending April 30, 1997.
3. To Approve the 1996 Stock Option Plan.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The nominees for election as directors are named in the enclosed Proxy
Statement.
The Board of Directors has fixed the close of business on September 16,
1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or postponements
thereof.
Whether you expect to attend the annual meeting or not, your vote is
important. Accordingly, we ask that you sign and date the enclosed proxy card
and return it in the enclosed envelope. If you do attend the meeting and wish to
vote in person, you may revoke your proxy at that time.
Very truly yours,
Robert J. Riecke
Secretary
Portland, Oregon
September 6, 1996
WTD INDUSTRIES, INC.
Lincoln Tower, Suite 900
10260 S.W. Greenburg Road
Portland, Oregon 97223
----------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
to be held October 21, 1996
----------
This Proxy Statement is furnished by the Board of Directors of WTD
Industries, Inc., an Oregon corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Company's 1996
Annual Meeting of Shareholders (the "Annual Meeting"), to be held at 10:00 a.m.
local time, on Monday, October 21, 1996 at Tigard Courtyard by Marriott, 15686
S.W. Sequoia Parkway, Tigard, Oregon. The mailing address of the principal
executive offices of the Company is P.O. Box 5805, Portland, Oregon 97228-5805.
The approximate date this proxy statement and the accompanying proxy form are
first being sent to shareholders is September 16, 1996.
SOLICITATION AND REVOCABILITY OF PROXY
The Company will bear the cost of preparing, printing and mailing this
Proxy Statement and the Proxy solicited hereto. Proxies will be solicited by use
of the mails. Officers and employees of the Company may also solicit proxies by
telephone or personal contact, without additional remuneration. Copies of
solicitation material will be furnished to fiduciaries, custodians, and
brokerage houses for forwarding to beneficial owners of the stock held in their
names. Your cooperation in promptly completing, signing, dating and returning
the enclosed proxy card will help avoid additional expense.
Any person giving a proxy pursuant to this solicitation may revoke it at
any time before its exercise by filing with the Company, attention Robert J.
Riecke, Secretary, an instrument of revocation or a duly executed proxy bearing
a later date. A shareholder may also revoke the proxy by affirmatively electing
to vote in person at the meeting. However, a shareholder who attends the Annual
Meeting need not revoke his proxy and vote in person unless he wishes to do so.
All valid, unrevoked proxies will be voted at the Annual Meeting.
QUORUM AND VOTING
The Common Stock, no par value ("Common Stock"), is the only outstanding
voting security of the Company. The record date for determining holders of
Common Stock entitled to vote at the Annual Meeting is September 16, 1996. As of
the date hereof there are 11,077,074 shares of Common Stock outstanding,
entitled to one vote per share. The Common Stock does not have cumulative voting
rights.
If a quorum is present, the four nominees for election as directors who
receive the greatest number of votes cast for the election of directors by the
shares of Common Stock present in person or represented by proxy at the meeting
and entitled to vote shall be elected directors. Proposal No. 2 to ratify the
appointment of Moss Adams LLP ("Moss Adams") as independent auditors for the
Company will be approved if the number of votes cast in favor of the Proposal
exceeds the number of votes cast against it. Proposal No. 3 to approve the 1996
Stock Option Plan will be approved if the number of votes cast in favor of the
Proposal exceeds the number of votes cast against it. With respect to the
election of directors, directors are elected by a plurality of the votes cast
and only votes cast in favor of a nominee will affect the outcome. Therefore,
abstention from voting or nonvoting by brokers will have no effect. With respect
to voting on Proposals No. 2 and 3, abstention from voting or nonvoting by
brokers will have no effect.
1
ELECTION OF DIRECTORS
(Proposal No. 1)
Nominees for Director
The nominees for director are listed below. Information about each nominee
is contained in the section entitled "Directors and Executive Officers."
Name Director Since
Richard W. Detweiler 1995
Bruce L. Engel 1983
K. Stanley Martin 1994
Robert J. Riecke 1986
The composition of the Board of Directors of the Company is determined by
The Company's Fourth Restated Articles of Incorporation and Article XII of its
Second Amended Joint Plan of Reorganization (the "Plan"). The Plan provides for
seven board seats until the Company's 1997 annual meeting of shareholders. Three
directors were elected at last year's annual meeting for a two year term
expiring in 1997. Two of those directors, Messrs. Wright and Christie, continue
to serve on the Board. The third director elected in 1995, H. Raymond Bingham,
resigned for personal reasons in March 1996. There is no present plan to fill
the seat vacated by Mr. Bingham, therefore there are fewer nominees than the
number of directors fixed by the Plan. Proxies, however, may not be voted for a
greater number of persons than the number of nominees named.
The Board has nominated Messrs. Detweiler, Engel, Martin and Riecke for
election in 1996. The elected Directors will each serve a one year term.
In the event the Company fails to make a certain number of scheduled
dividend payments or if a certain financial ratio covenant violation has
occurred and is continuing on its Series A preferred stock, holders of such
stock may, under the circumstances and in the manner provided in the Company's
Fourth Restated Articles of Incorporation, elect a majority of the Board of
Directors by replacing incumbent Board members or increasing the size of the
Board.
Committees and Meetings of the Board
The Board of Directors has standing Audit and Compensation Committees.
The Audit Committee meets from time to time with management, internal
auditors, and the Company's independent accountants to consider financial and
accounting matters. The Audit Committee reviews the scope, timing, and fees for
the annual audit. It also reviews policies and procedures respecting the
Company's internal auditing, accounting, and financial controls. The Audit
Committee met five times in fiscal 1996. Directors Detweiler, Riecke, and Wright
constitute the Audit Committee.
The Compensation Committee reviews executive compensation matters and makes
recommendations to the Board. This Committee also administered the Company's
1986 Stock Option Plan. The Compensation Committee met once in fiscal 1996. The
Compensation Committee consists of directors Christie and Wright.
The Board of Directors met eight times during fiscal 1996. Each director
attended all of the meetings of the Board and the committees of which he was a
member.
2
Board Recommendation
Proxies will be voted for election of directors in accordance with the
instructions specified in the proxy form. If no instructions are given, proxies
will be voted for the election of the nominees named above. If for some
unforeseen reason one or more of the nominees becomes unavailable for any reason
as a candidate for director, the number of directors constituting the Board of
Directors may be reduced prior to the meeting or the proxies may be voted for
such other candidate or candidates as may be nominated by the Board of
Directors, in accordance with the authority conferred in the proxy.
The Board of Directors recommends a vote FOR the election of all nominees.
INDEPENDENT AUDITORS
(Proposal No. 2)
The Board of Directors will request that the shareholders ratify its
selection of Moss Adams as independent auditors to examine the financial
statements of the Company for the fiscal year ending April 30, 1997.
Moss Adams has audited the Company's financial statements for the 14 years
ended April 30, 1996. Representatives of Moss Adams are expected to be present
at the Annual Meeting, will have an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions from
shareholders.
Board Recommendation
The Board of Directors recommends a vote FOR the ratification of the
selection of Moss Adams as independent auditors of the Company.
APPROVAL OF THE 1996 STOCK OPTION PLAN
(Proposal No. 3)
The 1996 Stock Option Plan (the "1996 Plan") was adopted by the Company's
Board of Directors on August 20, 1996, subject to approval by the Company's
shareholders at the 1996 Annual Meeting. The 1996 Plan is the successor to the
Amended and Restated 1986 Stock Option Plan (the "1986 Plan"). Upon approval by
the shareholders, the 1996 Plan will supersede the 1986 Plan and no further
grants will be made under the 1986 Plan, which has expired. A copy of the 1996
Plan is attached to this Proxy Statement as Appendix A. The following
description of the 1996 Plan is a summary and does not purport to be fully
descriptive. Reference is made to Appendix A for more detailed information.
Introduction
The 1996 Plan generally includes provisions for the same kinds of awards
that could have been made under the 1986 Plan, except that the 1986 Plan
permitted the granting of both nonqualified stock options and incentive stock
options, whereas the 1996 Plan is limited to the grant of nonqualified stock
options. In addition, the 1986 Plan provided specific, automatic option grants
to nonemployee directors. Under the 1996 Plan, option grants to nonemployee
directors are solely within the discretion of the plan administrator.
The purpose of the 1996 Plan is to enhance the long-term value of the
Company by offering opportunities to those employees, directors, officers,
consultants, agents, advisors and independent contractors of the Company and its
subsidiaries who are key to the Company's growth and success, and to encourage
them to remain in the service of the Company and its subsidiaries and to acquire
and maintain stock ownership in the Company.
3
Stock Subject to the 1996 Plan. Subject to adjustment from time to time as
provided in the 1996 Plan, a maximum of 525,000 shares of Common Stock will be
available for issuance under the 1996 Plan. As of August 31, 1996 options to
purchase an aggregate of 731,600 shares of Common Stock were outstanding under
the 1986 Plan. Options outstanding under the 1986 Plan and the 525,000 shares
that will be available under the 1996 Plan, totaled approximately 11.4% of the
shares of Common Stock outstanding as of August 31, 1996. Shares issued pursuant
to the 1996 Plan will be drawn from authorized and unissued shares or shares now
held or subsequently acquired by the Company.
Subject to adjustment from time to time as provided in the 1996 Plan, not
more than 50,000 shares of Common Stock, in the aggregate, may be subject to
options under the 1996 Plan to any participant during any fiscal year of the
Company, except that onetime grants of options for up to 100,000 shares may be
made to newly hired participants. Such limitations are imposed to the extent
required for compliance with certain provisions of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), which precludes the
Company from taking a tax deduction for compensation payments to executives in
excess of $1 million, unless such payments qualify for the "performance based"
exemption from the $1 million limitation.
Any shares of Common Stock that cease to be subject to the option (other
than by reason of exercise), including, without limitation, in connection with
the cancellation of an award and the grant of a replacement award, will be
available for issuance in connection with future grants of awards under the 1996
Plan.
Eligibility to Receive Awards. Awards may be granted under the 1996 Plan to
those directors, officers and key employees of the Company and its subsidiaries
as the plan administrator from time to time selects. Awards may also be made to
consultants, agents, advisors and independent contractors who provide services
to the Company and its subsidiaries.
Terms and Conditions of Stock Option Grants. Options granted under the 1996
Plan will be "nonqualified stock options" (that is, options that are not
designed to qualify as "incentive stock options," as defined in Section 422 of
the Code). The option price for each option granted under the 1996 Plan will be
determined by the plan administrator, but will be not less than 85% of the
Common Stock's fair market value on the date of grant. For purposes of the 1996
Plan, "fair market value" means the last reported sales price for the Common
Stock as reported by the Nasdaq National Market for a single trading day.
The exercise price for shares purchased under options must be paid in cash
or by check, or, unless the plan administrator determines otherwise, if the
Common Stock is registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934 ("Exchange Act"), as amended, by delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker to
deliver sale proceeds to the Company, or such other consideration as the plan
administrator may specify.
The option term will be fixed by the plan administrator, but if not so
specified will be ten years. Each option will be exercisable pursuant to a
vesting schedule determined by the plan administrator. If not so established,
the option will vest over four years from the date of grant with 20% of the
shares of underlying Common Stock vesting on the six-month anniversary of the
grant date and an additional 20% of the shares vesting after every successive
year of the optionee's continuous employment or relationship with the Company.
The plan administrator will also determine the circumstances under which an
option will be exercisable in the event the optionee ceases to provide services
to the Company or one of its subsidiaries. If not so established, options
generally will be exercisable for one year after termination of services as a
result of disability or death and for one month after all other terminations. An
option will not be exercisable if the optionee's services are terminated for
cause, as defined in the 1996 Plan.
Transferability. No awards granted under the 1996 Plan will be assignable
or otherwise transferable by the holder other than by will or the laws of
descent and distribution and, during the holder's lifetime, may be exercised
only by the holder, except to the extent permitted by the plan administrator, in
its sole discretion.
4
Adjustment of Shares. The maximum aggregate number of and class of
securities subject to the 1996 Plan, the maximum number and class of securities
that may be made subject to awards to any participant, and the number and class
of securities that are subject to any outstanding award and the per share price
of securities (but not the total price) shall all be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
the Company resulting from any split-up or consolidation of shares or any like
capital adjustment or the payment of a stock dividend.
Corporate Transaction. Immediately prior to certain mergers,
consolidations, acquisitions of property or stock or similar reorganizations of
the Company, any option granted under the 1996 Plan may be exercised in whole or
in part whether or not the vesting requirements applicable to such options have
been satisfied, except that upon certain mergers, consolidations, acquisitions
of property or stock or similar reorganizations of the Company in which the
shareholders may receive stock of another corporation, all options granted under
the 1996 Plan will be converted into options to purchase shares of the other
corporation, unless otherwise determined by the Company and the other
corporation.
Further Adjustment of Awards. Subject to certain limitations with respect
to corporate transactions, the plan administrator shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation or change in control of the Company, as defined by the plan
administrator, to take such further action as it determines to be necessary or
advisable, and fair and equitable to holders, with respect to awards. Such
authorized action may include (but is not limited to) establishing, amending or
waiving the type, terms, conditions or duration of, or restrictions on, awards
so as to provide for earlier, later, extended or additional time for exercise or
other modifications, and the plan administrator may take such actions with
respect to all holders, certain categories of holders or only individual
holders. The plan administrator may take such actions before or after granting
awards to which the action relates and before or after any public announcement
with respect to such sale, merger, consolidation, reorganization, liquidation or
change in control that is the reason for such action.
Administration. The 1996 Plan will be administered by the Company's Board
of Directors. The Board may delegate the responsibility for administering the
1996 Plan to a committee or committees consisting of two or more members of the
Board of Directors, subject to such limitations as the Board deems appropriate.
Committee members will serve for such term as the Board may determine, subject
to removal by the Board at any time.
Amendment and Termination. The 1996 Plan may be terminated, modified or
amended by the Company's Board of Directors, subject to shareholder approval for
any amendment that will increase the total number of shares of Common Stock
subject to options or as otherwise required under any applicable law or
regulation.
Federal Income Tax Consequences
The federal income tax consequences to the Company and to any person
granted an award under the 1996 Plan under the existing applicable provisions of
the Code and the regulations thereunder are substantially as follows. Under
present law and regulations, no income will be recognized by a participant upon
the grant of stock options.
On the exercise of a nonqualified stock option, the optionee will recognize
taxable ordinary income in an amount equal to the excess of the fair market
value of the shares acquired over the option price. Upon a later sale of those
shares, the optionee will have short term or long term capital gain or loss, as
the case may be, in an amount equal to the difference between the amount
realized on such sale and the tax basis of the shares sold. If payment of the
option price is made entirely in cash, the tax basis of the shares will be equal
to their fair market value on the exercise date (but not less than the option
price), and the shares' holding period will begin on the day after the exercise
date.
Special rules apply to a director or officer subject to liability under
Section 16(b) of the Exchange Act.
5
The Company will be entitled to a deduction at the same time and in the
same amount as the participant recognizes ordinary income, subject to the
following limitations. Under Section 162(m) of the Code, certain compensation
payments in excess of $1 million are subject to a limitation on deductibility
for the Company. The limitation on deductibility applies with respect to that
portion of a compensation payment for a taxable year in excess of $1 million to
either the Company's Chief Executive Officer or any one of the other four most
highly compensated executive officers. Certain performance based compensation is
not subject to the limitation on deductibility. Options can qualify for this
performance based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for any period is
stated, and approval is obtained from a committee of outside directors and the
Company's shareholders. The 1996 Plan has been drafted to allow compliance with
those performance based criteria, but option grants may not be made in
compliance with all such requirements.
New Plan Benefits
Since awards under the 1996 Plan will be discretionary, awards thereunder
for the current fiscal year are not presently determinable. During fiscal year
1996, options to purchase an aggregate of 55,000 shares at an average exercise
price of $2.05 per share were granted under the 1986 Plan to three independent
nonemployee directors. No option grants were made during fiscal year 1996 to
executive officers or employees.
As of September 4, 1996, the last reported sale price per share of Common
Stock on the Nasdaq National Market was $1.62.
Board Recommendation
The Board of Directors Recommends a vote FOR approval of the 1996 Plan.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
Name Age Position
Scott Christie............. 47 Director
Richard W. Detweiler....... 54 Director
Bruce L. Engel............. 55 Director and President
David J. Loftus............ 54 Treasurer
K. Stanley Martin.......... 54 Director, Vice President-Finance and
Chief Financial Officer
Robert J. Riecke........... 46 Director, Vice President-Administration,
General Counsel and Secretary
John C. Stembridge......... 37 Vice President-Sales and Marketing
James R. Wilson............ 46 Vice President-Timber
William H. Wright.......... 61 Director
Scott Christie has been a director of the Company since 1988. Mr. Christie
is currently general partner of Christie Capital Management. Since 1987 Mr.
Christie has been engaged as an investment advisor for his own account and the
account of other individuals. From 1983 until 1987 Mr. Christie was senior vice
president of Kidder, Peabody & Co. Incorporated, an investment banking firm. Mr.
Christie headed Kidder, Peabody's underwriting team for the Company's initial
public offering and 1987 debenture offering.
6
Richard W. Detweiler has been a director of the Company since December 14,
1995. Since 1990 Mr. Detweiler has been chief executive officer of Precision
Aerotech, a diversified manufacturing company. Mr. Detweiler has 20 years of
manufacturing management experience.
Bruce L. Engel, the Company's founder, has been president and a director of
the Company since its inception. Mr. Engel, a graduate of the University of
Chicago Law School, practiced business and corporate law, including
representation of clients in the wood products industry, from 1964 to 1984. Mr.
Engel became engaged in sawmill operations in 1981 with the acquisition of a
mill in Glide, Oregon, now owned by a subsidiary of the Company. Mr. Engel is
involved in various other businesses. Mr. Engel is president and a director of
Encore Group, Inc.
David J. Loftus was appointed treasurer of the Company in October 1993 and
continues to serve as vice president-finance of TreeSource, the Company's
marketing subsidiary, a position he has held since May 1986. As treasurer, Mr.
Loftus is primarily responsible for cash management matters and credit and
banking relationships. For the eight years prior to joining TreeSource, Mr.
Loftus served as the assistant treasurer for a publicly-traded company with
operations in the forest products industry.
K. Stanley Martin has served as vice president-finance of the Company since
September 1983, and has been chief financial officer since April 1991. Mr.
Martin has been a director of the Company since January 1994. Mr. Martin is
responsible for all financial affairs of the Company. For the eleven years prior
to 1983, Mr. Martin served as a financial officer for publicly-traded companies
having all or a substantial portion of their operations in the forest products
industry. Mr. Martin is a certified public accountant.
Robert J. Riecke became vice president-administration of the Company in May
1989, has been general counsel of the Company since January 1987, assistant
secretary from March 1983 until January 1994, and a director of the Company
since March 1986. Mr. Riecke was named corporate secretary in January 1994. Mr.
Riecke has primary responsibility for the Company's legal, risk management,
environmental compliance, investor relations, and human resources functions.
From 1976 through 1986, Mr. Riecke was in private law practice. Since 1983, Mr.
Riecke has devoted much of his professional endeavors to legal matters relating
to the Company and its subsidiaries. Mr. Riecke is a graduate of the University
of Illinois School of Law.
John C. Stembridge was appointed vice president-sales and marketing of the
Company in February 1995. Mr. Stembridge joined TreeSource, the Company's
marketing subsidiary, in 1989 and continues to serve as its vice president and
general manager, a position he has held since June 1991. Mr. Stembridge has
primary responsibility for managing all aspects of the Company's lumber sales
and transportation. For the nine years prior to joining TreeSource, Mr.
Stembridge was involved in domestic and export lumber sales, primarily with
North Pacific Lumber Co.
James R. Wilson was appointed vice president-timber of the Company in
October 1993. Mr. Wilson has primary responsibility for the Company's timber
supply program. Prior to his present position, Mr. Wilson served at both mill
and corporate levels of WTD Industries commencing in February 1992. Prior to
1992, Mr. Wilson served as general manager of Estacada Lumber Company, a
division of RSG Forest Products. From 1973 to 1984, Mr. Wilson was involved in
all phases of the wood products industry with Crown Zellerbach Corporation.
William H. Wright has been a director of the Company since April 1992. Mr.
Wright has held a variety of management positions in the forest products
industry since 1957. He is currently president of Heartwood Consulting Service,
which advises forest products clients. From 1989 until 1994 he was president and
chief executive officer of Dee Forest Products Inc., a manufacturer of hardboard
and related products. From 1984 to 1989 Mr. Wright was general manager of
Stevenson Co-Ply Inc., a manufacturer of veneer and plywood.
7
Reporting of Securities Transactions
Under the federal securities laws, officers and directors of the Company
and persons holding more than 10 percent of the Company's Common Stock are
required to report, within specified monthly and annual due dates, their initial
ownership in the Company's Common Stock and all subsequent acquisitions,
dispositions or other transfers of beneficial interests therein, if and to the
extent reportable events occur which require reporting by such due dates. The
Company is required to describe in this section whether, to its knowledge, any
person required to file such a report may have failed to do so in a timely
manner.
Based solely on its review of the copies of such forms received by it and
written representations that no other reports were required for those persons,
the Company believes that, during fiscal 1996, all Section 16(a) filing
requirements applicable to its executive officers, directors and owners of more
than 10 percent of the Company's Common Stock were complied with except that
Scott Christie filed his Form 4 seven days late for a transaction for 400 shares
occurring in December 1995.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the cash and non-cash compensation paid by the
Company for the last three fiscal years to the chief executive officer and the
four other most highly compensated executive officers.
Annual Compensation
--------------------
Name and Principal Position Year Salary Bonus
- - --------------------------- ---- -------- --------
Bruce L. Engel 1996 $300,000 $ 23,142
President 1995 $300,000 $ 48,200
1994 $300,000 $151,936
K. Stanley Martin 1996 $120,000 $ 9,256
Vice President-Finance and 1995 $120,000 $ 19,280
Chief Financial Officer 1994 $104,250 $ 51,659
Robert J. Riecke 1996 $132,000 $ 10,183
Vice President- 1995 $132,000 $ 21,209
Administration, General 1994 $132,000 $ 66,853
Counsel and Secretary
John C. Stembridge 1996 $100,000 $ 12,197
Vice President-Sales and 1995 $ 86,667 $ 15,539
Marketing 1994 $ 80,000 $ 45,944
James R. Wilson 1996 $100,000 $ 7,714
Vice President-Timber 1995 $ 85,833 $ 12,853
1994 $ 70,250 $ 41,245
Option Grants in Last Fiscal Year
No executive officer named above received option grants during the fiscal
year ended April 30, 1996.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides information on option exercises for the
last fiscal year by the named executive officers and the value of such officers'
unexercised options as of April 30, 1996:
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at April 30, 1996 at April 30, 1996
------------------------- -------------------------
Shares
Acquired
Name or Exercised Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ------------- ----------- -------------
Bruce L. Engel -- 307,200 76,800 $ -- $ --
K. Stanley Martin -- 28,000 3,800 $ -- $ --
Robert J. Riecke -- 31,200 3,800 $ -- $ --
John C. Stembridge -- 6,000 4,000 $ -- $ --
James R. Wilson -- 6,000 4,000 $ -- $ --
9
Benefits
The Company maintains a Code 401(k) retirement savings plan under which
employees, including executive officers, are permitted to make salary deferral
contributions. Executive officers are not entitled to employer matching
contributions pursuant to this plan.
Compensation of Directors
Each of the Company's outside directors is paid an annual retainer of
$15,000 for attending up to six Board meetings, plus $750 for each additional
meeting attended and $225 for each telephone conference meeting attended or
written consent minutes executed. Directors who are also employees of the
Company do not receive additional compensation for their services as directors.
Directors who were not employees of the Company each received initial option
grants with respect to 35,000 shares of the Company's Common Stock and receive
option grants with respect to 10,000 shares in subsequent fiscal years to a
maximum aggregate of 80,000 shares. One Director received options for 35,000
shares upon his initial election to the Board in fiscal 1996 and the other
outside Directors were each granted options with respect to 10,000 shares in
fiscal 1996.
Executive Bonuses
Monthly discretionary bonuses are paid to the Company's executive officers,
as well as other management and administrative employees, pursuant to the
Company's profit sharing bonus plan. The bonuses are based upon net pretax
profits and are generally allocated according to base salary level. Bonuses paid
to executive officers for services rendered to the Company during the year ended
April 30, 1996 are included in the amounts shown in the "Summary Compensation
Table."
Change-In-Control Arrangements
Immediately prior to certain mergers, consolidations, acquisitions of
property or stock or similar reorganizations of the Company, any option granted
under the 1996 Plan may be exercised in whole or in part whether or not the
vesting requirements applicable to such options have been satisfied, except that
upon certain mergers, consolidations, acquisitions of property or stock or
similar reorganizations of the Company in which the shareholders may receive
stock of another corporation, all options granted under the 1996 Plan will be
converted into options to purchase shares of the other corporation, unless
otherwise determined by the Company and the other corporation.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is composed of Mr.
Christie and Mr. Wright. The Compensation Committee determines compensation for
executive officers, including executive officers who are directors. It also
administered the Company's 1986 Stock Option Plan.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of two independent non-employee
directors.
The Compensation Committee is responsible for recommending to the full
Board of Directors, for its approval, the base compensation for all executive
officers. Executive officers who serve on the Company's Board of Directors do
not participate in any deliberations or decisions regarding their own
compensation. The Compensation Committee receives recommendations from the chief
executive officer regarding appropriate levels of base compensation for the
other executive officers.
10
Awards to executive officers (and other employees) under the Company's 1986
Plan were made by the Compensation Committee acting as an Administrative
Committee.
The Company's executive officer compensation policies are designed to
attract, motivate and retain senior management by providing an opportunity for
overall competitive compensation based on an adequate base compensation amount
and participation in a profit based bonus system in effect for all salaried
employees of the Company.
The profit sharing component of the overall compensation system is
designed to reward all salaried employees, including executive officers, in
relation to the Company's monthly performance and to encourage salaried
employees at all levels of the Company to work together for the common goal of
maximizing profits. Salaried employees at the WTD corporate level (including all
executive officers) receive 10% of monthly consolidated pre-tax profits,
allocated according to base salary level.
It is the Company's practice to participate in and use, as a basis for
comparison, an analysis of executive compensation in the Northwest prepared by
the compensation consulting group of Milliman & Robertson, Inc. This analysis is
useful in establishing base salary levels and monitoring overall compensation
levels as compared to other publicly-traded companies of similar size. Executive
officers' compensation paid during fiscal year 1996, with respect to bonus and
total cash compensation, was below the median levels published in the 1995/1996
Milliman & Robertson compensation survey of all industries, and except as noted
below, base salaries of executive officers were below the published median
levels.
The Company also uses long-term stock-based incentive opportunities in
the form of options to purchase the Company's Common Stock. The Company's 1986
Plan provided for the grant of stock options to employees of the Company to
purchase shares of the Company's Common Stock subject to minimum exercise price
limitations imposed by the Company's Plan of Reorganization. Stock option awards
were determined on a discretionary basis by the Compensation Committee. No stock
options were awarded to executive officers during the 1996 fiscal year and the
1986 Plan has terminated. The Board adopted a new stock option plan, the 1996
Plan, on August 20, 1996. Subject to approval by shareholders, the 1996 Plan
generally provides the same kinds of rewards that could have been made under the
1986 Plan.
The Committee believes that stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders' interests
in the advancement of shareholder value.
Although the 1996 Plan includes language to comply with Section 162(m)
of the Code, it is the Company's current intention to grant awards that do not
comply with the requirements of Section 162(m). The Company, however, currently
does not intend to make compensation payments to executives in excess of
$1,000,000.
WTD provides the same group life and health insurance coverage to
executive officers as other employees and requires all employees, including
executive officers, to pay approximately 25% of health insurance premiums by
payroll deduction.
The Company allows its executive officers and all other employees to
contribute a percentage of their compensation to the Company-sponsored 401(k)
Retirement Savings Plan. Executive officers and other salaried employees are not
generally entitled to matching contributions.
Neither the executive officers nor other employees are covered by any
other Company-sponsored retirement plans.
11
Chief Executive Officer Compensation
All of the policies described above apply to Mr. Engel's compensation. No
additional benefits or requirements specifically apply to the chief executive
officer.
Mr. Engel's base salary for fiscal year 1996 was $300,000. The median base
salary for chief executive officers of comparably sized public companies, as
published by the Milliman & Robertson compensation survey, is $285,582.
Mr. Engel received a cash bonus of $23,142 during fiscal year 1996 under
the profit sharing plan described above, reflecting profitable operations during
three months of the fiscal year. Mr. Engel's bonus and total cash compensation
amounts were below the published median levels; the published median levels were
$171,926 and $425,882, respectively.
Compensation Committee Members
Scott Christie
William H. Wright
12
Stock Performance Graph
The following graph provides a comparison of the five-year cumulative total
return (assuming reinvestment of dividends) for the STANDARD & POOR'S 500 INDEX,
the STANDARD & POOR'S PAPER & FOREST PRODUCTS INDEX, and the Company:
(Graph omitted.)
The omitted graph shows the following five-year cumulative return data:
Base
Period Return Return Return Return Return
Company/Index Name April 1991 April 1992 April 1993 April 1994 April 1995 April 1996
- - --------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
WTD Industries, Inc 100 100.00 81.82 89.09 50.92 19.99
S&P 500 Index 100 114.03 124.56 131.19 154.10 200.66
S&P Paper & Forest Products Index 100 126.32 129.57 130.12 156.45 175.98
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows beneficial ownership of the Company's Common
Stock by (i) each director, (ii) shareholders known to the Company to
beneficially own more than 5 percent of the Common Stock, (iii) executive
officers named in the Summary Compensation Table, and (iv) directors and
officers as a group. Except as otherwise specifically noted, each person noted
below has sole investment and voting power with respect to shares indicated.
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Ownership(1)(2) Percent
- - ----------------------------------------- ----------------------------- -------
Quinault Corporation
P.O. Box C 1,854,600 16.7%
Aberdeen, WA 98570
Amount and Nature
Name of Directors and Executive Officers of Beneficial Ownership(2)(3) Percent
- - ----------------------------------------- ----------------------------- -------
Scott Christie 65,000 .6%
Richard W. Detweiler 8,750 .1%
Bruce L. Engel(4) 660,040 5.8%
K. Stanley Martin 38,000 .3%
Robert J. Riecke 31,200 .3%
John C. Stembridge 9,300 .1%
James R. Wilson(5) 8,100 .1%
William H. Wright 65,000 .6%
All directors and executive officers
as a group (9 persons) 889,390 7.7%
- - ----------
(1) As determined by reference to the beneficial owner's most recent Form 4
or 13D filing.
(2) Beneficial Ownership is calculated as of June 28, 1996 except that the
holdings of Quinault Corporation were determined as of August 14, 1996.
(3) Includes shares reserved for issuance under options exercisable within
60 days of June 28, 1996 as follows: Mr. Christie 65,000; Mr. Detweiler
8,750; Mr. Engel 307,200; Mr. Martin 28,000; Mr. Riecke 31,200; Mr.
Stembridge 8,000; Mr. Wilson 8,000; and Mr. Wright 65,000.
(4) Mr. Engel shares with his spouse Teri E. Engel voting and investment
power as to 352,840 shares beneficially owned. See Note 3 above for
details of individual option rights. Mr. Engel's shares are pledged
to third parties in connection with certain personal obligations.
(5) Mr. Wilson shares with his spouse Christine R. Wilson voting and
investment power as to 100 shares beneficially owned. See Note 3 above
for details of individual option rights.
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the 1996 fiscal year the Company purchased on behalf of itself and
three subsidiaries operating in the area advertising and promotional services
from Grays Harbor Gulls, a professional baseball team located near the Company's
hardwood lumber facility. Messrs. Engel and Wilson are officers and shareholders
of Grays Harbor Gulls. The total cost of the two-season advertising and
promotional program is $50,000.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders provides for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than those referred to above. However, the enclosed proxy gives
discretionary authority in the event that any other matters should be presented.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in proxy material
for the Company's September 1997 annual meeting must be received at the
principal executive offices of the Company not later than April 10, 1997.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S
FISCAL YEAR ENDED APRIL 30, 1996. WRITTEN REQUESTS SHOULD BE MAILED TO THE
SECRETARY, WTD INDUSTRIES, INC., P.O. BOX 5805, PORTLAND, OREGON 97228.
By Order of the Board of Directors
Robert J. Riecke
Secretary
September 6, 1996
15
Appendix A
WTD INDUSTRIES, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the WTD Industries, Inc. 1996 Stock Option Plan (the
"Plan") is to enhance the long-term shareholder value of WTD Industries, Inc.,
an Oregon corporation (the "Company"), by offering opportunities to employees,
directors, officers, consultants, agents, advisors and independent contractors
of the Company and its Subsidiaries (as defined in Section 2) to participate in
the Company's growth and success, and to encourage them to remain in the service
of the Company and its Subsidiaries and to acquire and maintain stock ownership
in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 Award
"Award" means an award or grant of Nonqualified Stock Options made to a
Participant pursuant to the Plan.
2.2 Board
"Board" means the Board of Directors of the Company.
2.3 Cause
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 Code
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 Common Stock
"Common Stock" means the common stock, no par value, of the Company.
2.6 Disability
"Disability" means "disability" as that term is defined for purposes of
the Company's Long Term Disability Plan or other similar successor plan
applicable to salaried employees.
2.7 Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-1-
2.8 Fair Market Value
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or, if the Common Stock is listed on the Nasdaq National Market,
the last reported sales price for the Common Stock as reported by the Nasdaq
National Market for a single trading day. If there is no such reported price for
the Common Stock for the date in question, then such price on the last preceding
date for which such price exists shall be determinative of the Fair Market
Value.
2.9 Grant Date
"Grant Date" means the date the Plan Administrator adopted the granting
resolution or a later date designated in a resolution of the Plan Administrator
as the date an Award is to be granted.
2.10 Holder
"Holder" means the Participant to whom an Award is granted or, for a
Holder who has died, the personal representative of the Holder's estate, the
person(s) to whom the Holder's rights under the Award have passed by will or the
applicable laws of descent and distribution or the beneficiary designated
pursuant to Section 8.
2.11 Nonqualified Stock Option
"Nonqualified Stock Option" means an Option to purchase Common Stock
granted under Section 7 that does not qualify as an "incentive stock option" as
that term is defined in Section 422 of the Code.
2.12 Option
"Option" means the right to purchase Common Stock granted under Section
7.
2.13 Participant
"Participant" means an individual who is a Holder of an Award or, as
the context may require, any employee, director, officer, consultant, agent,
advisor or independent contractor of the Company or a Subsidiary who has been
designated by the Plan Administrator as eligible to participate in the Plan.
2.14 Plan Administrator
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.15 Securities Act
"Securities Act" means the Securities Act of 1933, as amended.
2.16 Subsidiary
"Subsidiary" means any entity that is directly or indirectly controlled
by the Company or in which the Company has a significant ownership interest, as
determined by the Plan Administrator, and any entity that may become a direct or
indirect parent of the Company.
-2-
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board. If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall
consider in selecting the Plan Administrator and the membership of any committee
acting as Plan Administrator for the Plan with respect to any persons subject or
likely to become subject to Section 16 under the Exchange Act the provisions
regarding (a) "outside directors" as contemplated by Section 162(m) of the Code
and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act. The Board may delegate the responsibility for administering the Plan with
respect to designated classes of eligible Participants to different committees,
subject to such limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to removal by the
Board at any time.
3.2 Administration and Interpretation by the Plan Administrator
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the number of shares of Common Stock
subject to an Award, all terms, conditions, restrictions and limitations, if
any, of an Award and the terms of any instrument that evidences the Award. The
Plan Administrator shall also have exclusive authority to interpret the Plan and
may from time to time adopt, and change, rules and regulations of general
application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Plan Administrator pursuant to the Plan, shall be
conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 9.1, a
maximum of 525,000 shares of Common Stock shall be available for issuance under
the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company.
4.2 Limitations
Subject to adjustment from time to time as provided in Section 9.1, not
more than 50,000 shares of Common Stock may be made subject to Awards under the
Plan to any individual Participant in the aggregate in any one fiscal year of
the Company, except that the Plan Administrator may make additional onetime
grants of up to 100,000 shares to newly hired Participants, such limitation to
be applied in a manner consistent with the requirements of, and only to the
extent required for compliance with, the exclusion from the limitation on
deductibility of compensation under Section 162(m) of the Code.
4.3 Reuse of Shares
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for in shares) shall again be available
for issuance in connection with future grants of Awards under the Plan;
provided, however, that for purposes of Section 4.2, any such shares shall be
counted in accordance with the requirements of Section 162(m) of the Code.
-3-
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
key employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects. Awards may also be made to consultants, agents, advisors
and independent contractors who provide services to the Company and its
Subsidiaries.
SECTION 6. AWARDS
6.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole
discretion, to determine the Awards to be made under the Plan. Such Awards shall
consist of Nonqualified Stock Options.
6.2 Acquired Company Awards
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b3 under the Exchange Act, and the persons holding such
Awards shall be deemed to be Participants and Holders.
SECTION 7. AWARDS OF OPTIONS
7.1 Grant of Options
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Nonqualified Stock Options.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 85% of the Fair
Market Value of the Common Stock on the Grant Date.
7.3 Term of Options
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not so established in the instrument
evidencing the Option, the Option will become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator at
any time:
-4-
Period of Holder's Continuous Employment or Service
With the Company or Its Subsidiaries Percent of Total Option
From the Option Grant Date That Is Exercisable
- - --------------------------------------------------- -----------------------
After 6 months 20%
After 1 year 40%
After 2 years 60%
After 3 years 80%
After 4 years 100%
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described in Section 7.5. The Plan
Administrator may determine at any time that an Option may not be exercised as
to less than 100 shares at any one time (or the lesser number of remaining
shares covered by the Option).
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check, or, unless the Plan Administrator at any time
determines otherwise, a combination of cash and/or check: if and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
delivery of a properly executed exercise notice, together with irrevocable
instructions, to (i) a brokerage firm designated by the Company to deliver
promptly to the Company the aggregate amount of sale proceeds to pay the Option
exercise price and any withholding tax obligations that may arise in connection
with the exercise and (ii) the Company to deliver the certificates for such
purchased shares directly to such brokerage firm, all in accordance with the
regulations of the Federal Reserve Board. In addition, the exercise price for
shares purchased under an Option may be paid, either singly or in combination
with one or more of the alternative forms of payment authorized by this Section
7.5, or by such other consideration as the Plan Administrator may permit.
7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.
In case of termination of the Holder's employment or services, the
Option shall be exercisable, to the extent of the number of shares purchasable
by the Holder at the date of such termination, only (a) within one year if the
termination of the Holder's employment or services is coincident with Disability
or (b) within one month after the date the Holder ceases to be an employee,
director, officer, consultant, agent, advisor or independent contractor of the
Company or a Subsidiary if termination of the Holder's employment or services is
for any reason other than death or Disability, but in no event later than the
remaining term of the Option. Any Option exercisable at the time of the Holder's
death may be exercised, to the extent of the number of shares purchasable by the
Holder at the date of the Holder's death, by the personal representative of the
Holder's estate, the person(s) to whom the Holder's rights under the Award have
passed by will or the applicable laws of descent and distribution, or the
beneficiary designated pursuant to Section 8 at any time or from time to time
within one year after the date of death, but in no event later than the
remaining term of the Option. Any portion of an Option that is not
-5-
exercisable on the date of termination of the Holder's employment or services
shall terminate on such date, unless the Plan Administrator determines
otherwise. In case of termination of the Holder's employment or services for
Cause, the Option shall automatically terminate upon first notification to the
Holder of such termination, unless the Plan Administrator determines otherwise.
If a Holder's employment or services with the Company are suspended pending an
investigation of whether the Holder shall be terminated for Cause, all the
Holder's rights under any Option likewise shall be suspended during the period
of investigation.
A transfer of employment or services between or among the Company and
its Subsidiaries shall not be considered a termination of employment or
services. The effect of a Company approved leave of absence on the terms and
conditions of an option shall be determined by the Plan Administrator, in its
sole discretion.
SECTION 8. ASSIGNABILITY
No Award granted under the Plan may be assigned, pledged or transferred
by the Holder other than by will or by the laws of descent and distribution,
and, during the Holder's lifetime, such Awards may be exercised only by the
Holder. Notwithstanding the foregoing, the Plan Administrator, in its sole
discretion, may permit such assignment, transfer and exercisability and may
permit a Holder of such Awards to designate a beneficiary who may exercise the
Award or receive compensation under the Award after the Holder's death;
provided, however, that any Award so assigned or transferred shall be subject to
all the same terms and conditions contained in the instrument evidencing the
Award.
SECTION 9. ADJUSTMENTS
9.1 Adjustment of Shares
The aggregate number and class of shares for which Options may be
granted under the Plan, the maximum number and class of securities that may be
made subject to Awards to any individual Participant as set forth in Section
4.2, the number and class of shares covered by each outstanding Option and the
exercise price per share thereof (but not the total price) shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment, or the payment of any stock dividend.
9.2 Cash, Stock or Other Property for Stock
Except as provided in Section 9.3, upon a merger (other than a merger
of the Company in which the holders of shares of Common Stock immediately prior
to the merger have the same proportionate ownership of shares of Common Stock in
the surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, any Option granted hereunder shall terminate, but the Participant
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise such Participant's Option in whole or in part whether or not the
vesting requirements set forth in the option agreement have been satisfied.
9.3 Conversion of Options on Stock for Stock Exchange
If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger, consolidation, acquisition of property or
stock, separation or reorganization, all Options granted hereunder shall be
converted into options to purchase shares of Exchange Stock, unless the Company
and the corporation issuing the Exchange Stock, in their sole discretion,
determine that any or all such Options granted hereunder shall not be converted
into options to purchase shares of Exchange Stock but instead shall terminate in
accordance with the provisions of Section 9.2. The amount and price of converted
options shall be determined by adjusting the amount and price of the options
-6-
granted hereunder in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the shares of Common Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization. In any such transaction, other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger or a mere reincorporation or the creation of a holding company,
the converted options shall be fully vested whether or not the vesting
requirements set forth in the option agreement have been satisfied; provided
that such acceleration will not occur if, in the opinion of the Company's
outside accountants, such acceleration would render unavailable "pooling of
interests" accounting treatment for any reorganization, merger or consolidation
of the Company for which pooling of interests accounting treatment is sought by
the Company.
9.4 Fractional Shares
In the event of any adjustment in the number of shares covered by any
Option, any fractional shares resulting from such adjustment shall be
disregarded and each such Option shall cover only the number of full shares
resulting from such adjustment.
9.5 Determination of Board to Be Final
All Section 9 adjustments shall be made by the Board, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
9.6 Further Adjustment of Awards
Subject to Sections 9.2 and 9.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to Participants (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise and other modifications, and the Plan
Administrator may take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants. The Plan
Administrator may take such actions before or after granting Awards to which the
action relates and before or after any public announcement with respect to such
sale, merger, consolidation, reorganization, liquidation or change in control
that is the reason for such action.
9.7 Limitations
The grant of Awards will in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SECTION 10. WITHHOLDING
The Company may require the Holder to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant or exercise of any Award. The Company shall have the right to withhold
from any shares of Common Stock issuable pursuant to an Award or from any cash
amounts otherwise due or to become due from the Company to the Participant an
amount equal to such taxes. The Company may also deduct from any Award any other
amounts due from the Participant to the Company or a Subsidiary.
-7-
SECTION 11. AMENDMENT AND TERMINATION OF PLAN
11.1 Amendment of Plan
The Plan may be amended only by the Board as it shall deem advisable;
however, to the extent required for compliance with any applicable law or
regulation, shareholder approval will be required for any amendment that will
(a) increase the total number of shares as to which Options may be granted under
the Plan or (b) otherwise require shareholder approval under any applicable law
or regulation.
11.2 Termination of Plan
The Company's shareholders or the Board may suspend or terminate the
Plan at any time. The Plan will have no fixed expiration date.
11.3 Consent of Holder
The amendment or termination of the Plan shall not, without the consent
of the Holder of any Award under the Plan, impair or diminish any rights or
obligations under any Award theretofore granted under the Plan.
SECTION 12. GENERAL
12.1 Award Agreements
Awards granted under the Plan shall be evidenced by a written agreement
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
12.2 Continued Employment or Services; Rights in Awards
None of the Plan, participation in the Plan as a Participant or any
action of the Plan Administrator taken under the Plan shall be construed as
giving any Participant or employee of the Company any right to be retained in
the employ of the Company or limit the Company's right to terminate the
employment or services of the Participant.
12.3 Registration; Certificates for Shares
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the non issuance or
sale of such shares as to which such requisite authority shall not have been
obtained.
12.4 No Rights as a Shareholder
No Award shall entitle the Holder to any dividend, voting or other
right of a shareholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Award, free of all applicable
restrictions.
-8-
12.5 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
12.6 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant, and no Participant shall have any rights that are greater than
those of a general unsecured creditor of the Company.
12.7 Severability
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
SECTION 13. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.
Adopted by the Board on August 20, 1996 and approved by the Company's
shareholders on __________, 199__.
-9-
WTD INDUSTRIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING
OCTOBER 21, 1996
The undersigned, revoking all prior proxies, hereby appoints Bruce L.
Engel and Robert J. Riecke, and each of them, as proxies, with full power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of WTD Industries, Inc. (the "Company") to be held on Monday,
October 21, 1996, or at any adjournments thereof, all shares of the undersigned
in the Company. The proxies are instructed to vote as indicated on the reverse
hereof.
The shares represented by this proxy will be voted in accordance with
the instructions given.
This proxy is solicited on behalf of the Company's Board of Directors.
The Board of Directors recommends a vote FOR all the Nominees and FOR the
Proposals.
This proxy when properly executed will be voted as directed or, if no
direction is given, the shares will be voted for the Nominees, for the
Proposals, and on any other business that may properly come before the meeting
or any adjournments thereof in accordance with the recommendations of
management.
(Continued and to be signed on other side)
FOLD AND DETACH HERE
WTD INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TIGARD COURTYARD BY MARRIOTT
15686 SW SEQUOIA PARKWAY
TIGARD, OREGON
MONDAY, OCTOBER 21, 1996
10:00 A.M. PACIFIC TIME
-1-
1. ELECTION OF DIRECTORS
Nominees: Richard W. Detweiler, Bruce L. Engel,
K. Stanley Martin, Robert J. Riecke
FOR all the WITHHOLD
nominees AUTHORITY
listed to vote for
(except as all nominees
marked to the listed
contrary)
-------- --------
(To withhold your vote for any individual nominee, strike a line through the
nominee's name in the list above.)
2. PROPOSAL TO RATIFY THE APPOINTMENT
OF MOSS ADAMS LLP AS INDEPENDENT AUDITORS
FOR AGAINST ABSTAIN
-------- -------- --------
3. PROPOSAL TO APPROVE THE 1996 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
-------- -------- --------
I PLAN TO ATTEND THE MEETING
--------
Please sign exactly as your name appears on this card. Persons signing as
executor, administrator, trustee, guardian or in any other official or
representative capacity should sign their full title.
Date: ,1996
-----------------------------
- - ---------------------------------------
Signature(s)
- - ---------------------------------------
Please mark, date, sign and return the proxy promptly.
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
WTD INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TIGARD COURTYARD BY MARRIOTT
15686 SW SEQUOIA PARKWAY
TIGARD, OREGON
MONDAY, OCTOBER 21, 1996
10:00 A.M. PACIFIC TIME
-2-