<Page>
SCHEDULE 14A INFORMATION
(RULE 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
<Table>
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 Rule 14a-11(c) or Rule
14(a)-12
GODDARD INDUSTRIES, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</Table>
Payment of Filing Fee (Check the appropriate box):
<Table>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
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/ / 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.:
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(3) Filing Party:
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(4) Date Filed:
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</Table>
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GODDARD INDUSTRIES, INC.
705 PLANTATION STREET
WORCESTER, MASSACHUSETTS 01605
NOTICE OF ANNUAL MEETING
OF
STOCKHOLDERS
TO BE HELD MARCH 8, 2002
To: The Stockholders of
Goddard Industries, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Goddard
Industries, Inc., a Massachusetts corporation, will be held on March 8, 2002 at
10:00 a.m. at 705 Plantation Street, Worcester, Massachusetts 01605 for the
following purposes:
1. To elect two directors to hold office until the Annual Meeting of
Stockholders in 2005 and until their successors are duly elected and
qualified.
2. To approve amendments to the Corporation's 1998 Equity Incentive Plan
(the "1998 Plan") to: (a) increase the number of shares of Common Stock
available and reserved for issuance under the 1998 Plan from 600,000 to
1,000,000 shares; (b) provide for indemnification of directors, officers
and employees in connection with the carrying out of their
responsibilities with respect to the 1998 Plan; and (c) make certain
technical changes.
3. To consider and act upon any matters incidental to the foregoing
purposes and any other matters which may properly come before the meeting
or any adjournments thereof.
Information regarding matters to be acted upon at the Annual Meeting of
Stockholders is contained in the proxy statement attached to this notice.
Only stockholders of record at the close of business on January 24, 2002 are
entitled to notice of, or to vote at, the meeting or any adjournments thereof.
By Order of the Board of Directors
Joel M. Reck, CLERK
WORCESTER, MASSACHUSETTS
JANUARY 25, 2002
YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING IN PERSON, BUT IF YOU
CANNOT DO SO, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY AT
YOUR EARLIEST CONVENIENCE. FOR YOUR CONVENIENCE, WE HAVE PROVIDED A REPLY
ENVELOPE THAT NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
<Page>
GODDARD INDUSTRIES, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 8, 2002
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Goddard Industries, Inc. (the "Company")
for use at the Annual Meeting of Stockholders to be held at 10:00 a.m. on
March 8, 2002 at the corporate headquarters of the Company located at 705
Plantation Street, Worcester, Massachusetts, and at any adjournment or
adjournments thereof (the "Meeting"). Solicitation of proxies may be made in
person or by mail, telephone or telegram by directors, officers and regular
employees of the Company, for which no additional compensation will be received.
The Company may also request banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation material to the
beneficial owners of Common Stock held of record by such persons, and the
Company will reimburse the forwarding expense. All costs of preparing, printing,
assembling and mailing the form of proxy and proxy statement will be borne by
the Company. It is expected that this proxy statement and the accompanying proxy
will be mailed to the stockholders on or about January 25, 2002. The principal
executive offices of the Company are located at 705 Plantation Street,
Worcester, Massachusetts 01605.
Only stockholders of record at the close of business on January 24, 2002 are
entitled to notice of, and to vote at, the Meeting. As of that date, there were
outstanding and entitled to vote 2,560,684 shares of Common Stock, $.01 par
value (the "Common Stock"), of the Company. Each share of Common Stock is
entitled to one vote on all matters to come before the Meeting. Provided a
quorum (consisting of a majority of the shares outstanding and entitled to vote)
is present in person or by proxy at the meeting, a plurality of the votes cast
for any nominee is required for election of directors, and the affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Meeting and entitled to vote thereon is required to
approve the amendments to the Company's 1998 Equity Incentive Plan (the "1998
Plan"). Under Massachusetts law and the Company's By-laws, all shares present or
represented by proxy, whether they vote or abstain, will be counted as present
for purposes of determining a quorum and for purposes of determining the number
of shares present and entitled to vote. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of the vote for the election of
directors. For purposes of the vote on the approval of the amendments to the
1998 Plan, abstentions will have the same effect as votes against the amendments
and broker non-votes will not be counted as shares entitled to vote on the
matter and will have no effect on the outcome of the vote.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy and, in the absence of such direction, for the election of the
nominees as directors, for the proposal to approve the amendments to the 1998
Plan, and in accordance with their best judgment by the proxies if any other
matter shall properly come before the Meeting. The proxy may be revoked at any
time prior to exercise by filing with the Clerk of the Company a written
revocation, by executing a proxy with a later date, or by attending and voting
at the Meeting. The Board of Directors knows of no matters, other than the
election of directors and the proposal to approve the amendments to the 1998
Plan, to be presented for consideration at the Meeting.
The Annual Report to Stockholders of the Company for the fiscal year ended
September 29, 2001, including audited financial statements, is being mailed to
each of the stockholders of the Company simultaneously with this proxy
statement.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, two directors (constituting 40% of the Board of Directors)
are to be elected to serve until the 2005 annual meeting of stockholders and
until their successors are duly elected and qualified. The proxy cannot be voted
for a greater number of persons than two.
The Company's Restated Articles of Organization, as amended, and By-laws
provide that the Board of Directors shall be composed of three classes of
directors, one class to be elected each year.
It is the intention of the persons who are named in the accompanying form as
proxies to vote for the election of Salvatore J. Vinciguerra and Dr. Jacky
Knopp, Jr. to the class of directors indicated, and for the term set forth
therein. In the unanticipated event that either or both of the nominees are
unable to serve, the persons named as proxies will vote for such substitute, if
any, as the present Board of Directors may designate or to reduce the number of
directors. Directors are elected by a plurality of the votes cast for election
of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF
SALVATORE J. VINCIGUERRA AND DR. JACKY KNOPP, JR.
INFORMATION AS TO OFFICERS, DIRECTORS AND BENEFICIAL OWNERS
The following table sets forth certain information, as of December 31, 2001,
with respect to the nominees, each of the directors whose term extends beyond
the Meeting, each named executive officer in the Summary Compensation Table
under "Executive Compensation," all executive officers and directors as a group
(9 persons) and each person known to the Company to own five percent or more of
the Company's Common Stock. This table is based on information furnished by such
persons.
<Table>
<Caption>
NUMBER OF
SHARES OF YEAR TERM
DIRECTOR COMMON STOCK PERCENT WOULD
OR OFFICER BENEFICIALLY OF EXPIRE
NAME(1) SINCE OWNED COMMON STOCK AND CLASS
- ------- ---------- ------------ ------------ ---------
Salvatore J. Vinciguerra............................ 1999 502,300(2) 18.0% 2002
Class 3
Dr. Jacky Knopp, Jr................................. 1972 121,000(3) 4.7% 2002
Class 3
Saul I. Reck........................................ 1959 338,930(4) 13.2% 2003
Class 1
Lyle E. Wimmergren.................................. 1978 25,000(5) 1.0% 2004
Class 2
Dr. Robert E. Humphreys............................. 1997 575,950(6) 22.3% 2004
Class 2
Donald R. Nelson.................................... 1973 118,400(7) 4.5% --
All executive officers and directors as a group (9 -- 1,724,080 59.0% --
persons)..........................................
Joseph A. Lalli..................................... -- 183,550(8) 7.2% --
6 Middlemont Way, Stow, MA
Stanley A. Goldstein and Audrey I. Goldstein........ -- 117,500(9) 4.6% --
2 No. Montgomery Ave.,
Atlantic City, NJ
</Table>
- --------------------------
(1) Unless otherwise noted, each person's address is c/o Goddard
Industries, Inc., 705 Plantation Street, Worcester, Massachusetts 01605, and
each person identified possesses sole voting and investment power with respect
to the shares set forth opposite such person's name.
(2) Includes options exercisable within 60 days to acquire 227,500 shares
held by Mr. Vinciguerra.
2
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(3) Includes 32,000 shares owned by Dr. Knopp's wife, as to which he
disclaims beneficial ownership, and options exercisable within 60 days to
acquire 20,000 shares held by Dr. Knopp.
(4) Includes 5,250 shares held by Mr. Reck's wife, as to which he disclaims
beneficial ownership, and options exercisable within 60 days to acquire 15,000
shares held by Mr. Reck.
(5) Consists of options exercisable within 60 days to acquire 20,000 shares
held by Mr. Wimmergren.
(6) Includes 217,650 shares as to which Dr. Humphreys has sole voting and
dispositive power and 240,300 shares as to which Dr. Humphreys shares voting and
dispositive power by virtue of a power of attorney over the investment accounts
of seven persons. Dr. Humphreys and certain other persons, acting as a group,
beneficially own an aggregate of 457,950 shares. Also includes options
exercisable within 60 days to acquire 20,000 shares held by Dr. Humphreys.
Dr. Humphreys' address is One Innovation Drive, Worcester, Massachusetts 01605.
(7) Includes 19,900 shares owned jointly with Mr. Nelson's wife and options
exercisable within 60 days to acquire 42,500 shares held by Mr. Nelson.
(8) Based upon information reported in Schedule 13D, Amendment No. 6 filed
with the Securities and Exchange Commission. Mr. Lalli has sole voting and
dispositive power over 154,050 shares and shared voting and dispositive power
with his wife over 29,500 shares.
(9) Based upon information reported in a Schedule 13G filed with the
Securities and Exchange Commission. Mr. and Mrs. Goldstein share voting and
dispositive power over 117,500 shares.
Mr. Saul I. Reck, age 83, the founder and Chairman of the Board of the
Company, has served as a director since 1960 and served as President and
Treasurer from 1960 until October 19, 1998.
Dr. Jacky Knopp, Jr., age 79, has served as a director since 1972. For more
than five years, he has been an account executive at the stock brokerage firm of
Moors & Cabot, Inc. and its predecessors. Dr. Knopp is also Professor Emeritus
of Canisius College, Buffalo, New York.
Mr. Lyle Wimmergren, age 70, has served as a director since 1978. He is
Professor Emeritus of Management at Worcester Polytechnic Institute, Worcester,
Massachusetts.
Dr. Robert Humphreys, age 59, has served as a director since 1997. Since
August 1995, Dr. Humphreys has been President of Antigen Express, Inc., a
biotech company focused on creating drugs for auto-immune diseases. Prior to
August 1995, he was Professor and interim Chair of the Department of
Pharmacology at the University of Massachusetts Medical School.
Mr. Salvatore J. Vinciguerra, age 63, has served as a director, Chief
Executive Officer, President and Treasurer of the Company since October 19,
1998. Prior to joining the Company, he served as Chief Executive Officer and
director of Ferrofluidics Corporation from June 1996 until June 1998 and as its
President from January 1995 until June 1996. From 1990 until 1994,
Mr. Vinciguerra served as President and Chief Executive Officer of the Weighing
and Systems Group of Staveley Industries, plc., prior to which he was President
and Chief Executive Officer of Weightronix, Inc, from 1990 until it was acquired
by Staveley Industries in 1991. He was with Instron Corporation from 1968 until
1990, in various senior capacities, including President and Chief Operating
Officer from 1985 until 1991, and with whom he spent six years in Japan as
President of Instron Japan and Director of Instron's Asia/ Pacific Operations
from 1976 until 1982. Mr. Vinciguerra is a member of the Board of Directors of
Metrisa Corporation and Photran Corporation, a member of the Board of Directors
of the Japan Society of Boston, and a Trustee of the Collaborative Laboratory
Charter School of Boston.
Mr. Kenneth E. Heyman, age 59, joined Goddard Industries, Inc. as Vice
President of Finance and Controller in May 2000. Mr. Heyman was the Corporate
Controller of MJ Research, Inc. from 1996 to 2000, a company manufacturing
equipment and supplies in the molecular biology industry. Previously he served
as controller of domestic and international manufacturing companies in
industrial and biotech environments.
Mr. Donald R. Nelson, age 66, has been Vice President of Engineering of
Goddard Valve Corporation and a senior officer of Goddard Industries, Inc. since
1972. He joined Goddard Valve in
3
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1965 as its Chief Engineer. Mr. Nelson has made many technological and safety
innovations in cryogenic valves throughout his career. He is a member of the
Compressed Gas Association, where he has served on numerous technical
committees.
Mr. Maxwell C. Chester, age 58, is the Managing Director of Mack Valves
Pty Ltd, a company which he sold to Goddard Industries, Inc. in November 2000.
For over 25 years prior to November 2000, he owned and operated his own
businesses involved in the design and erection of industrial water towers.
Mr. Chester received a Certificate of Mechanical Engineering from the University
of New South Wales (presently the New South Wales Institute of Technology), and
is a member of the Australian Institute of Company Directors, a Director of the
Xavier College Foundation, Inc, and a Director of the Advisory Council for
Children with impaired hearing.
Mr. John S. Vandore, age 49, has been President of the Goddard Cryogenics
division of Goddard Industries, Inc. since November 2001. He joined Goddard
Industries, Inc. in May 2001 as Managing Director of Goddard Industries Europe
in England. Prior to joining Goddard, Mr. Vandore has been associated with the
valve industry in many senior capacities. In 1987, he became Managing Director
of Truflo Valves ("Truflo"), a manufacturer of cryogenic ball valves for LNG,
which position involved substantial exposure to the Asia Pacific market. FC(x)
International acquired Truflo in 1991. In 1995, Mr. Vandore became Managing
Director of Bestobell Valves, an FC(x) company specializing in cryogenic valves
for air separation. From 1997 until 2000, he was Chief Executive of FC(x) North
America building a specialty valve distribution business by means of
acquisition.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held five meetings during the fiscal
year ended September 29, 2001. Each present director attended at least 75% of
the meetings of the Board of Directors and of all committees of which he was a
member.
The Board of Directors has an Audit Committee and a Compensation Committee,
both composed of Dr. Knopp and Mr. Wimmergren. The Audit Committee, which met
once formally with the Company's independent auditor's, Greenberg, Rosenblatt,
Kull & Bitsoli, P.C., is charged with recommending to the Board of Directors
retention of a firm of independent accountants and with reviewing the Company's
internal audit and accounting controls, the report of the independent
accountants and the financial statements of the Company. The Compensation
Committee, which met three times during the last fiscal year, is responsible for
recommending salary and bonus levels of officers and key employees. There is no
Nominating Committee of the Board of Directors. The Board of Directors as a
whole will consider nominees for director submitted to it in writing by any
shareholder.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual
compensation for the chief executive officer and each of the other most highly
compensated executive officers of the Company whose annual salary and bonus, if
any, exceeded $100,000 for services in all capacities to the Company during the
last fiscal year (referred to as the "named executive officers").
4
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SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL
COMPENSATION
------------------- ALL OTHER
NAME AND FISCAL YEAR SALARY BONUS COMPENSATION
PRINCIPAL POSITION ENDED ($) ($) ($)
------------------ ----------- -------- -------- ------------
Salvatore J. Vinciguerra........................... 9/29/01 $180,000 $ -- $ --
Chief Executive Officer, President & Treasurer 9/30/00 180,000 -- 15,000(1)
10/2/99 140,000 35,000 16,700(1)
Donald R. Nelson................................... 9/29/01 $108,000 $ -- $ --
Vice President of Engineering 9/30/00 103,000 5,000 7,000(2)
10/2/99 100,000 6,500 5,000(2)
</Table>
(1) Consists of payments made by the Company to Mr. Vinciguerra as a percentage
of management fees received by the Company for Mr. Vinciguerra's services
rendered pursuant to the terms of an agreement, which is no longer in
effect, between the Company and Carr Separations, Inc.
(2) Consists of cash payments used for purchase of retirement benefits.
During fiscal year 2001, no stock options or stock appreciation rights
("SARs") were granted to any of the named executive officers.
The following table shows information concerning the exercise of stock
options during fiscal 2001 and the fiscal year-end value of unexercised options
and stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT 9/29/01 AT 9/29/01
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)
- ---- ----------- -------- ------------------------- -------------------------
Salvatore J. Vinciguerra........ -- -- 165,000/125,000 $--/$--
Donald R. Nelson................ 10,000 $5,000 28,750/41,250 $--/$--
</Table>
In connection with the hiring of Mr. Vinciguerra as Chief Executive Officer,
President and Treasurer, the Company entered into an Employment Agreement with
him dated October 19, 1998. Under the Employment Agreement, Mr. Vinciguerra is
entitled to an initial base salary of $140,000 per year, plus a bonus of up to
25% of his base salary at the discretion of the Board of Directors. In addition,
he was granted stock options as follows: (i) ten year incentive stock options to
acquire 200,000 shares of Common Stock on October 19, 1998, which options vest
25% at the end of each of the first four years of employment, with acceleration
of vesting upon the happening of certain events; (ii) ten year incentive stock
options to acquire 50,000 shares of Common Stock on October 22, 1999, which
options vest 25% immediately and 25% on each of the first three anniversaries of
the grant of the stock options; and (iii) ten year incentive stock options to
acquire 40,000 shares of Common Stock granted on May 16, 2000, which options
vest 25% on each of the first four anniversaries of the grant of the stock
options. Mr. Vinciguerra is entitled to six months of severance compensation
upon termination of his employment by the Company other than for cause.
In addition, the Company has entered into a Management Services Deed with
Maxwell Chester and Maxwell Industrial Sales Pty Ltd ("Maxwell Industries"), an
entity controlled by Mr. Chester, dated November 1, 2000. The term of this
agreement is three years with an option to extend the term for a period of one
year, and for additional periods of one year. Under the agreement, the Company
is to
5
<Page>
pay Maxwell Industries a yearly consultancy fee of AUD $150,000 (approximately
$77,000 at fiscal year end exchange rate). The agreement provides that neither
Mr. Chester nor Maxwell Industries can compete with the Company in various
jurisdictions and for varying time periods.
The Company has also entered into an agreement with Mr. Heyman, its Vice
President of Finance and Controller, under which Mr. Heyman is entitled to six
months of severance compensation upon termination of his employment by the
Company other than for cause.
COMPENSATION OF DIRECTORS
Each director who is not also an officer or employee of the Company receives
a base fee of $2,400 per year. Each director who is not also an officer or
employee of the Company and who lives in the Greater Worcester area receives
$500 for each Board of Directors meeting he attends. Each director who is not
also an officer or employee of the Company and who lives outside the Greater
Worcester area receives $750 for each such meeting, plus travel expenses to and
from Worcester. No extra compensation is paid for attendance at meetings of
committees. All non-employee directors as a group were paid $23,350 for services
rendered during fiscal year 2001.
The Board of Directors has a Severance Compensation Plan for certain
officers and all directors in the event that there is a "change in control" of
the Company not approved by the Board of Directors resulting in the termination
of employment or reduction in the duties and responsibilities of the President,
Vice-Presidents and Treasurer (as determined by the Board of Directors) and/or a
termination of service as director of the Company. The plan provides that such
President, Vice-Presidents and Treasurer will continue to receive the
compensation being paid to them at the time of the termination or change in the
nature of employment, for a period of five years following such termination or
change, and the non-employee directors will continue to receive directors' fees
of $500 or $750 per fiscal quarter, depending on whether or not the director
lives in the Greater Worcester area, for such five year period. At the current
rate of compensation this would entail an aggregate payment of $1,415,000 to the
executive officers as a group and a payment of $50,000 to the non-employee
directors as a group.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
currently comprised of two of the Company's directors: Dr. Knopp and
Mr. Wimmergren. Both members of the Company's Audit Committee are "independent"
as such term is defined under the listing standards of the National Association
of Securities Dealers, Inc. The Audit Committee does not currently operate
pursuant to a written charter, but is charged with recommending to the Board of
Directors retention of a firm of independent accountants and with reviewing the
Company's internal audit and accounting controls, the report of the independent
accountants and the financial statements of the Company. The Audit Committee met
once with the Company's independent auditors, Greenberg, Rosenblatt, Kull &
Bitsoli, P.C., during fiscal year 2001.
The Audit Committee has reviewed and discussed with management the Company's
audited consolidated financial statements for the fiscal year ended
September 29, 2001. The Audit Committee has also discussed with Greenberg,
Rosenblatt, Kull & Bitsoli, P.C. the matters required to be discussed by the
Auditing Standards Board Statement on Auditing Standards No. 61, as amended. As
required by Independence Standards Board Standard No. 1, as amended,
"Independence Discussion with Audit Committees," the Audit Committee has
received and reviewed the required written disclosures and a confirming letter
from Greenberg, Rosenblatt, Kull & Bitsoli, P.C. regarding their independence,
and has discussed the matter with the auditors.
Based on its review and discussions of the foregoing, the Audit Committee
has recommended to the Board of Directors that the Company's audited
consolidated financial statements for the fiscal year
6
<Page>
2001 be included in the Company's Annual Report on Form 10-KSB and
Form 10-KSB/A for the fiscal year ended September 29, 2001. Further, the Audit
Committee recommends that the Board of Directors engage Greenberg, Rosenblatt,
Kull & Bitsoli, P.C. as the Company's independent auditors for the fiscal year
ending September 28, 2002.
This Audit Committee Report shall not be deemed to be incorporated by
reference in any document previously or subsequently filed with the Securities
and Exchange Commission that incorporated by reference all or any portion of
this Proxy Statement, except to the extent that the Company specifically
requests that this report be specifically incorporated by reference.
Audit Committee:
Dr. Jacky Knopp, Jr.
Lyle E. Wimmergren
7
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PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE 1998 EQUITY INCENTIVE PLAN
On March 12, 1999, the stockholders of the Company adopted the Company's
1998 Equity Incentive Plan (the "1998 Plan"). The purposes of the 1998 Plan are
to attract and retain key employees, directors, and consultants, to provide an
incentive for them to assist the Company to achieve long-range performance goals
and to enable them to participate in the long-term growth of the Company. The
1998 Plan as presently in effect is summarized below. Following that is a
summary of the proposed amendments to the 1998 Plan which are being submitted to
the stockholders of the Company for their approval. The full text of the 1998
Plan with proposed additions indicated by underlined text and deletions
indicated by lines through the text, is attached hereto as APPENDIX A.
SUMMARY DESCRIPTION OF THE PRESENT 1998 PLAN
Under the 1998 Plan, the Company may grant (i) incentive stock options to
purchase Common Stock intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) options to purchase Common
Stock that are not qualified as incentive stock options ("nonqualified stock
options"), (iii) stock appreciation rights either in tandem with an option or
alone and unrelated to an option ("SARs"), (iv) shares of Common Stock awarded
based on achieving certain performance goals ("performance shares"), (v) awards
of Common Stock, including shares of Common Stock awarded without payment
therefor ("award shares"), (vi) Common Stock and other rights granted as units
that are valued in whole or in part by reference to the value of the Common
Stock ("stock awards") and (vii) restricted shares of Common Stock ("restricted
stock"). To date, the Company has only granted incentive stock options and
non-qualified stock options under the 1998 Plan.
All employees and, in the case of awards other than incentive stock options,
directors and consultants of the Company or any affiliate (as that term is
defined in the 1998 Plan) capable of contributing significantly to the
successful performance of the Company, other than a person who has irrevocably
elected not to be eligible, are eligible to participate in the 1998 Plan. As of
December 31, 2001, there were approximately 36 persons eligible to participate
in the 1998 Plan.
The 1998 Plan is to be administered by a committee of not less than two
non-employee directors appointed by the Board of Directors of the Company (the
"Committee"). The Committee serves at the pleasure of the Board of Directors
which can, at its sole discretion, discharge any member of the Committee,
appoint additional new members in substitution for those previously appointed
and/or fill vacancies regardless of how they are caused. The Board of Directors
of the Company has the authority to adopt, alter and repeal administrative
rules, guidelines and practices governing the operation of the 1998 Plan and to
interpret provisions of the 1998 Plan. The Board of Directors may delegate, to
the extent permitted by applicable law, to the Committee the power to make
awards to participants and all determinations under the 1998 Plan with respect
thereto.
As originally adopted, the 1998 Plan provided that a maximum of 300,000
shares of Common Stock would be available for issuance under the 1998 Plan. On
March 17, 2000, the stockholders of the Company adopted an amendment to the 1998
Plan which increased the maximum number of shares of Common Stock which are
available for issuance under the 1998 Plan from 300,000 to 600,000. As discussed
below, the Board of Directors has approved, and is submitting to stockholders
for their approval, a further increase to 1,000,000 shares.
The shares of Common Stock available for issuance under the 1998 Plan are
subject to adjustment for any stock dividend, recapitalization, stock split,
stock combination or certain other corporate reorganizations. Shares issued may
consist in whole or in part of authorized but unissued shares or treasury
shares. Shares subject to an award that expires or is terminated unexercised or
is forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded
8
<Page>
will again be available for award under the 1998 Plan. The closing bid price of
the Company's Common Stock on January 17, 2002 was $0.95.
STOCK OPTIONS
Subject to the provisions of the 1998 Plan, the Board may award incentive
stock options and nonqualified stock options and determine the number of shares
to be covered by each option, the option exercise price and the conditions and
limitations applicable to the exercise of the option. Each option will be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable award. The Board may provide for the automatic
award of an option upon the delivery of shares to the Company in payment of an
option for up to the number of shares so delivered.
The terms and conditions of incentive stock options shall be subject to and
comply with Section 422 of the Code and any regulations thereunder. No incentive
stock option granted under the 1998 Plan may be granted more than ten years
after the effective date of the 1998 Plan and no such option may be exercisable
more than ten years from the date of grant (five years after the date of grant
for incentive stock options granted to holders of more than ten percent of the
Common Stock). Incentive stock options may be granted only to employees of the
Company and are transferable by the optionee only by the laws of descent and
distribution, and are exercisable only by the employee during his or her
lifetime.
Nonqualified stock options may be granted at an exercise price equal to,
greater than or lesser than the fair market value of the Common Stock on the
date of grant, in the discretion of the Board. Incentive stock options, however,
may not be granted at less than the fair market value of the Common Stock and
may be granted to holders of more than ten percent of the Common Stock only at
an exercise price of at least 110% of the fair market value of the Common Stock
on the date of the grant.
STOCK APPRECIATION RIGHTS
Subject to the provisions of the 1998 Plan, the Board of Directors may award
SARs in tandem with an option (at or after the award of the option) or alone and
unrelated to an option. An SAR entitles the holder to receive from the Company
an amount equal to the excess, if any, of the fair market value of the Common
Stock over the exercise price. SARs granted in tandem with an option will
terminate to the extent that the related option is exercised, and the related
option will terminate to the extent that the tandem SARs are exercised.
PERFORMANCE SHARES
The 1998 Plan authorizes the Board of Directors to grant performance shares
to participants in the form of grants of shares of Common Stock. Performance
shares are earned over a period of time (a performance cycle) selected by the
Board from time to time. There may be more than one performance cycle in
existence at any one time and the duration of the performance cycles may differ
from each other. Unless otherwise determined by the Board of Directors, the
payment value of the performance shares will be equal to the fair market value
of the Common Stock on the date the performance shares are earned or on the date
the Board determines that the performance shares have been earned. The Board
will establish performance goals for each cycle for the purpose of determining
the extent to which performance shares awarded for that cycle are earned. As
soon as practicable after the end of a performance cycle, the Board must
determine the number of performance shares which have been earned on the basis
of performance in relation to the established performance goals. Payment values
of earned performance shares are distributed to the participant or, if the
participant has died, to the beneficiary designated by the participant.
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RESTRICTED STOCK
Subject to provisions of the 1998 Plan, the Board of Directors may grant
shares of restricted stock to participants, with such restricted periods and
other conditions as the Board may determine and for no cash consideration or
such minimum consideration as may be required by applicable law. During the
restricted period, shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the Board.
Shares of restricted stock will be evidenced in such manner as the Board may
determine. At the expiration of the restricted period, the Company will deliver
the stock certificates to the participant or, if the participant has died, to
the beneficiary designed by the participant.
STOCK AWARDS
Subject to the provisions of the 1998 Plan, the Board of Directors may award
stock awards, which may be designated as award shares by the Board, subject to
such terms, restrictions, conditions, performance criteria, vesting requirements
and payment needs, if any, as the Board shall determine. Shares of Common Stock
awarded in connection with a stock award shall be issued for no cash
consideration or such minimum consideration as may be required by law.
GENERAL PROVISIONS
Each award shall be evidenced by a written document delivered to the
participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the 1998 Plan
as the Board considers necessary or advisable. Each type of award may be made
alone, in addition to, or in relation to any other type of award. The terms of
each type of award need not be identical and the Board need not treat
participants uniformly. The Board may amend, modify or terminate any outstanding
award, including substituting therefor another award, changing the date of
exercise or realization and converting an incentive stock option to a
nonqualified stock option, provided that the participant's consent to such
action shall be required unless the Board determines that the action would not
materially and adversely affect the participant.
The Board of Directors will determine whether awards granted pursuant to the
1998 Plan are settled in whole or in part in cash, Common Stock, other
securities of the Company or other property. The Board may permit a participant
to defer all or any portion of a payment under the 1998 Plan. In the Board's
discretion, tax obligations required to be withheld in respect of an award may
be paid in whole or in part in shares of Common Stock, including shares retained
from such award. The Board will determine the effect on an award of the death,
disability, retirement or other termination of employment of a participant and
the extent to which and period during which the participant's legal
representative, guardian or designated beneficiary may receive payment of an
award or exercise rights thereunder.
The Board in its discretion may take certain actions in order to preserve a
participant's rights under an award in the event of a change in control of the
Company, including providing for the acceleration of any time period relating to
the exercise or realization of the award, providing for the cash purchase of the
award or adjusting the terms of the award in order to reflect the change in
control.
The Board of Directors of the Company may amend, suspend or terminate the
1998 Plan or any portion thereof at any time; provided that no amendment shall
be made without shareholder approval if such approval is necessary to comply
with any applicable law, rules or regulations.
As of December 31, 2001, options to purchase 586,500 shares of Common Stock
had been granted under the 1998 Plan, including options for the indicated number
of shares to the following persons and groups: (1) Mr. Vinciguerra--290,000
options; (2) Dr. Jacky Knopp, Jr.--10,000 options;
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(3) Mr. Donald Nelson--55,000 options; (4) all current executive officers as a
group--470,000 options; and (5) all directors who are not executive officers as
a group--40,000 options.
PROPOSED AMENDMENTS TO THE 1998 PLAN
On December 7, 2001, the Board of Directors of the Company voted to adopt
certain amendments to the 1998 Plan and to submit these amendments to the
stockholders for their approval. The amendments to the 1998 Plan would:
(a) increase the number of shares of Common Stock available and reserved for
issuance under the 1998 Plan from 600,000 to 1,000,000 shares; (b) provide for
indemnification of the members of the corporation's Board, any committee
authorized by the Board, the members of either, and the employees of the
corporation, in connection with their responsibilities with respect to the 1998
Plan; (c) establish that the number of shares of Common Stock that may be the
subject of awards under the 1998 Plan to any employee shall not exceed 300,000
shares during any one fiscal year; and (d) make additional changes to the 1998
Plan in order to eliminate redundancies in the 1998 Plan.
The Board of Directors has approved, and recommended to stockholders for
their approval, that Section 5(a) of the 1998 Plan be amended to increase the
number of shares of Common Stock available and reserved for issuance under the
1998 Plan from 600,000 to 1,000,000 and make the other changes described herein.
This increase has been proposed so that the Company can continue to: (1) reward
officers and key employees having substantial management responsibilities with
the opportunity to acquire a proprietary interest in the Company as an
additional incentive to promote its success; and (2) encourage such employees to
remain with the Company. As of December 31, 2001, options have been granted for
an aggregate of 586,500 shares. Consequently, there are only 13,500 shares of
Common Stock which remain available and reserved for issuance under the 1998
Plan and the Board believes that additional shares of Common Stock need to be
available for issuance so that the Company can continue to provide incentives to
its employees in the future.
Current litigation trends in the United States suggests that persons who
administer option plans may be exposed to liability. The Board of Directors
believes that members of the Board, members of any committee authorized by the
Board, and employees who have responsibilities under the 1998 Plan would be
reluctant to administer the 1998 Plan unless the Company agrees to indemnify
them for actions taken by them in good faith in connection with the 1998 Plan.
Consequently, it has recommended the addition of Section 14(d) to the 1998 Plan.
Under Section 162(m) of the Code as in effect on the date hereof, the
deductibility of compensation in excess $1 million paid to a public
corporation's executive officers is limited unless certain performance-based
exemptions are satisfied. In order to preserve the deductibility of compensation
amounts related to stock option exercises by certain executive officers, the
Board has approved amending Section 5(a) of the 1998 Plan so that no employee
receives more than 300,000 shares of Common Stock under the 1998 Plan in any one
fiscal year.
Finally, the Board has approved further changes be made to the 1998 Plan to
eliminate redundancies. The Board has determined that Sections 6(c) and 6(d) of
the 1998 Plan are duplicative of provisions contained in Section 11, and
therefore, has deleted them.
The affirmative vote of a majority of the votes of holders of the Common
Stock present in person or by proxy at the Meeting is required to approve the
amendments to the 1998 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
PROPOSAL NO. 2.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the Federal income tax consequences of the
issuance of shares granted under the 1998 Plan, and of the issuance and exercise
of options granted under the 1998 Plan, is based
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upon the provisions of the Code as in effect on the date of this Proxy, current
regulations adopted and proposed thereunder, and existing administrative rulings
and pronouncements of the Internal Revenue Service (all of which are subject to
change, possibly with retroactive effect). It is not intended to be a complete
discussion of all of the Federal income tax consequences of the 1998 Plan or of
all of the requirements that must be met in order to qualify for the described
tax treatment. In addition, because tax consequences vary, and certain
exceptions to the general rules described below may be applicable, depending
upon the personal circumstances of individual holders, each holder of stock,
SARs, or options should consider his or her personal situation and consult with
his or her tax advisor with respect to the specific tax consequences applicable
to him or her. No information is provided as to estate or gift taxes or foreign,
state, or local tax laws.
The general tax treatment of each kind of award under the 1998 Plan is as
follows:
INCENTIVE STOCK OPTIONS. An option holder generally will not recognize
taxable income upon either the grant or the exercise of an incentive stock
option. Under certain circumstances, however, there may be alternative minimum
tax or other tax consequences, as discussed below. An option holder will
recognize taxable income upon the disposition of the shares of common stock
received upon exercise of an incentive stock option. Any gain recognized upon a
disposition that is not a "disqualifying disposition" (as defined below) will be
taxable as long-term capital gain. Long-term capital gains generally are taxed
at a maximum rate of 20 percent, or 18 percent for assets acquired after the
year 2000 and held for more than five years.
A "disqualifying disposition" means any disposition of shares of common
stock acquired on the exercise of an incentive stock option where such
disposition occurs within two years of the date the stock option was granted or
within one year of the date the shares were transferred to the option holder.
The use of the shares acquired pursuant to the exercise of an incentive stock
option to pay the option exercise price under another incentive stock option is
treated as a disposition for this purpose. In general, if an option holder makes
a disqualifying disposition, an amount equal to the excess of (i) the lesser of
(a) the fair market value of the shares on the date of exercise or (b) the
amount realized on the disposition of the shares over (ii) the option exercise
price will be taxable as ordinary income and the balance of the gain recognized,
if any, will be taxable as either long-term or short-term capital gain,
depending on the option holder's holding period for the shares. The holding
period for the shares generally would begin on the date the shares were acquired
and would not include the period of time during which the option was held. In
the case of a gift or certain other transfers, the amount of ordinary income
taxable to the option holder is not limited to the amount of gain that would be
recognized in the case of a sale. Instead, it is equal to the excess of the fair
market value of the shares on the date of exercise over the option exercise
price.
In general, in the year of exercise of an incentive stock option, an option
holder must compute the excess of the shares' fair market value on the date of
exercise over the exercise price and include this amount in the calculation of
his or her alternative minimum taxable income. Because of the many adjustments
that apply to the computation of the alternative minimum tax, it is not possible
to predict the application of the tax to any particular option holder. However,
an option holder may owe alternative minimum tax even though he or she has not
disposed of the shares or otherwise received any cash with which to pay the tax.
The alternative minimum tax rate is now higher than the rate applicable to
long-term capital gains.
The Company will not be entitled to any deduction with respect to the grant
or exercise of an incentive stock option provided the option holder does not
make a disqualifying disposition. If the option holder does make a disqualifying
disposition, the Company will generally be entitled to a deduction for Federal
income tax purposes in an amount equal to the taxable income recognized by the
option holder, provided that the Company reports the income on a timely provided
and filed Form W-2 or 1099, whichever is applicable.
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NONQUALIFIED STOCK OPTIONS. The recipient of a nonqualified stock option
generally will not recognize any taxable income at the time the stock option is
granted. Upon exercise, the option holder generally will recognize ordinary
taxable income in an amount equal to the excess of the fair market value of the
shares of common stock received on the date of exercise over the option exercise
price. Upon a subsequent sale of the shares, capital gain (or loss) generally
will be recognized equal to the amount by which the amount realized exceeds (or
is exceeded by) the fair market value of the shares on the date of exercise. Any
such capital gain or loss would be long term if the holding period for the
shares were more than twelve months. Long-term capital gains generally are taxed
at a maximum rate of 20 percent, or 18 percent for assets acquired after the
year 2000 and held for more than five years. The holding period for the shares
generally would begin on the date the shares were acquired and would not include
the period of time during which the option was held.
The application of the tax rules to an option holder who receives shares
that are subject to a substantial risk of forfeiture (for example, if the shares
must be returned to the Company if the recipient does not work for the Company
for a period of time, if any, specified in the award) are more complex. In that
case, the recipient generally will not recognize income until the date that the
shares are no longer subject to the substantial risk of forfeiture, unless a
Section 83(b) election (described below) is made.
Certain option holders are subject to Section 16(b) of the Securities
Exchange Act of 1934 upon their sale of shares of common stock. If an option
holder is subject to Section 16(b), the date on which the fair market value of
the shares is determined may similarly be postponed. The IRS regulations have
not yet been amended to conform with the most recent revision to Section 16(b).
However, it is generally anticipated that the date on which the fair market
value of the shares is determined will be postponed to the earlier of (i) the
date six months after the date the stock option was granted, or (ii) the first
day on which the sale of the shares would not subject the individual to
liability under Section 16(b). It is possible that the six month period will
instead run from the option holder's most recent grant or purchase of common
stock prior to his or her exercise of the stock option. On the determination
date, the option holder generally will recognize ordinary taxable income in an
amount equal to the excess of the fair market value of the shares of common
stock at that time over the option exercise price.
Despite the general rule, in the case of a substantial risk of forfeiture,
or in the case of recipients subject to Section 16(b) (if the determination date
is after the date of exercise), the option holder may make an election pursuant
to Section 83(b) of the Code, in which case the option holder will recognize
ordinary taxable income at the time the stock option is exercised and not on the
later date. In order to be effective, the Section 83(b) election must be made
and filed with the IRS within 30 days after exercise.
The Company generally will be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to the taxable income recognized
by the option holder, provided that the Company reports the income on a timely
provided and filed Form W-2 or 1099, whichever is applicable.
In the case of a nonqualified stock option, an option holder who pays the
option exercise price, in whole or in part, by delivering shares of common stock
already owned by him or her generally will recognize no gain or loss for Federal
income tax purposes on the shares surrendered, but otherwise will be taxed
according to the rules described above. However, if shares received on the
exercise of an incentive stock option are used to exercise a nonqualified stock
option, within the time periods that apply to a disqualifying disposition, then
the rules for disqualifying dispositions, described above, will apply. To the
extent the shares acquired upon exercise are equal in number to the shares
surrendered, the basis of the shares received will be equal to the basis of the
shares surrendered. The basis of the shares received in excess of the shares
surrendered upon exercise will be equal to the fair market value
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of the shares on the date of exercise, and the holding period for the shares
received will commence on that date.
STOCK AWARDS. A holder who receives fully vested shares generally will
recognize ordinary income upon receipt of such shares in an amount equal to
their fair market value at that time. In the case of shares that are subject to
a substantial risk of forfeiture, because the Company will require that the
holder return the shares to the Company if he or she does not work for the
Company for a period of time specified in the grant, the holder generally will
not recognize income at the time that shares subject to such risks are issued,
unless he or she makes a section 83(b) election (described below).
Absent a section 83(b) election, the holder will recognize income at the
time the restrictions are removed from the shares. In such event, the holder
will recognize ordinary compensation income on the date the restrictions are
removed in an amount equal to the excess of the then fair market value of such
shares over the purchase price that he or she paid for such shares. A holder's
tax basis in the shares with respect to which restrictions are removed will be
equal to the sum of the amount he or she paid for such shares plus the amount of
ordinary compensation income recognized by him or her. A holder's holding period
for such shares for purposes of determining whether any capital gain or loss is
short term or long term will begin just after the restrictions are removed.
A holder generally will recognize capital gain (or loss) on a sale or
exchange of the shares equal to the amount by which the amount realized exceeds
(or is exceeded by) his or her adjusted tax basis in the shares. The gain or
loss recognized by the holder on a sale or exchange of the shares will be
long-term capital gain or loss if he or she held the shares for more than one
year. Long-term gains generally are taxed at a maximum rate of 20 percent, or
18 percent for assets acquired after the year 2000 and held for more than five
years. The deductibility of capital losses is subject to limitation.
If a holder makes a section 83(b) election with respect to the shares, he or
she will recognize ordinary compensation income at the time the shares are
issued to him or her and not when the restrictions are removed from such shares.
In such event, the holder's tax basis in the shares would equal their fair
market value on the date issued, and the holder's holding period for the shares
would begin just after such date. However, if the holder makes a section 83(b)
election and any shares are forfeited, the holder will not be entitled to
recover any of the taxes paid in connection with the 83(b) election described
above, nor will he or she get any capital loss.
The advisability of making a section 83(b) election will depend on various
factors and a holder's individual circumstances. Each holder is urged to consult
with his or her own tax advisor regarding whether, where, and how to make a
section 83(b) election. If a holder decides to do so, he or she must make a
section 83(b) election no later than the thirtieth day following the issuance of
the shares and, once made, such election generally would be irrevocable by the
holder.
Any distributions that the Company makes in respect of the shares will be
treated as a dividend, taxable to the holder as ordinary income, to the extent
it is paid out of the Company's current or accumulated earnings and profits. If
the distribution exceeds the Company's current or accumulated earnings and
profits, such excess will be treated first as a tax-free return of the holder's
investment, up to his or her basis in the shares. Any remaining excess will be
treated as capital gain.
The Company generally will be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to, and at the same time as, the
ordinary compensation income recognized by the holder. The Company will report
the income on a Form W-2 or 1099, whichever is applicable, and will recognize a
deduction in such amount.
STOCK APPRECIATION RIGHTS. A recipient of Stock Appreciation Rights
generally will not be considered to recognize any income at the time a Stock
Appreciation Right is granted, nor will the Company be entitled to a deduction
at that time. Upon the exercise of a Stock Appreciation Right, the holder
generally will recognize ordinary income equal to the sum of the amount of cash
and the fair market value of any other property received upon the exercise. At
that time, the Company will be entitled to a tax deduction equal to the amount
of ordinary income realized by the holder.
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OTHER MATTERS
CERTAIN TRANSACTIONS
On July 2, 1999, after several months of negotiations between a special
committee of directors of the Company and Michael E. Reck, the son of Saul I.
Reck and brother of Joel M. Reck, the Company sold the stock of Webstone
Company, Inc., a subsidiary of the Company, to Michael E. Reck for a purchase
price of $1,789,000. In connection with that transaction, the Company leased
approximately 15,000 square feet of its building located at 705 Plantation
Street, Worcester, Massachusetts to Webstone Company, Inc. for an aggregate
rental of $78,000 during fiscal years 2000 and 2001. The parties terminated this
lease on November 5, 2001.
In addition, pursuant to a Sale of Business Agreement dated November 1, 2000
under which the Company acquired Mack Valves Pty Ltd, Maxwell Chester, the
current Managing Director of Mack Valves Pty Ltd., is eligible to receive
approximately AUD $800,000 ($396,000) in cash and AUD $422,500 ($209,000) in
options to purchase up to 150,000 shares of Common Stock in the event that
certain earnout targets contained in the Sale of Business Agreement are met.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Greenberg,
Rosenblatt, Kull & Bitsoli, P.C. ("GRKB") as independent auditors for the
Company for the current fiscal year. That firm and its predecessors have served
in such capacity since fiscal year 1982.
It is anticipated that a representative of GRKB will be present at the
Meeting. The representative will be afforded the opportunity to make a statement
and is expected to be available to respond to appropriate questions.
INDEPENDENT AUDITOR FEES
AUDIT FEES. GRKB billed the Company an aggregate of $79,000 for
professional services rendered by GRKB in connection with its audit of the
Company's financial statements for the fiscal year ended September 29, 2001 and
its review of the Company's quarterly reports on Form 10-QSB during fiscal 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. GRKB did not
render any services to the Company for financial information systems design and
implementation during fiscal 2001.
ALL OTHER FEES. GRKB billed the Company an aggregate of approximately
$9,000 in connection with the Company's acquisition of Mack Valves Pty Ltd on
November 1, 2000. GRKB's services consisted of auditing Mack Valves Pty Ltd.'s
financial statements.
The Audit Committee has considered whether GRKB's provision of services,
other than services rendered in connection with the audit of the Company's
annual financial statements, is compatible with maintaining GRKB's independence.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the Company's Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% stockholders are required to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified
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fiscal years, the Company believes that all of its executive officers, directors
and greater than 10% stockholders complied with all Section 16(a) filing
requirements applicable to them during the Company's fiscal year ended
September 29, 2001, except that in January 2002, Mr. Maxwell C. Chester filed a
Form 5 reflecting that he became an executive officer of the Company in fiscal
2001.
OTHER MATTERS TO BE ACTED UPON
The Board of Directors has no knowledge of any other matters which may come
before the Meeting and does not itself intend to present any such matters.
However, if any other matters shall properly come before the Meeting, the
persons named as proxies will have discretionary authority to vote the shares
represented by the accompanying proxy in accordance with their own judgment.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Annual Meeting in 2003
and included in the Company's proxy materials pursuant to Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended, must be received by the
Company on or before September 24, 2002 and should be addressed to Salvatore J.
Vinciguerra, President, Goddard Industries, Inc., 705 Plantation Street,
Worcester, Massachusetts 01605. Notice of Shareholder proposals intended to be
presented at the Company's 2003 Annual Meeting which are submitted outside of
the processes of Rule 14a-8 will be considered untimely if received by the
Company after December 11, 2002. The proxy solicited by the Company's Board of
Directors with respect to that meeting may grant discretionary authority to vote
on matters submitted in an untimely proposal.
ANNUAL REPORT AND FORM 10-KSB/A
ADDITIONAL COPIES OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR
ENDED SEPTEMBER 29, 2001 AND COPIES OF THE ANNUAL REPORT OF THE COMPANY TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-KSB/A FOR THAT FISCAL YEAR ARE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO LUCY
J. RYBACKI AT THE COMPANY AT 705 PLANTATION STREET, WORCESTER, MASSACHUSETTS
01605.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
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APPENDIX A
GODDARD INDUSTRIES, INC.
1998 EQUITY INCENTIVE PLAN
Section 1. PURPOSE
The purpose of the Goddard Industries, Inc. 1998 Equity Incentive Plan (the
"Plan") is to attract and retain key employees, directors and consultants to
provide an incentive for them to assist the Company to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company.
Section 2. DEFINITIONS
(a) "Affiliate" means any business entity in which the Company owns directly
or indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Performance or Award
Share, or Restricted Stock awarded under the Plan.
(c) "Award Share" means a share of Common Stock awarded to an employee
without payment therefor.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee of not less than two non-employee
directors appointed by the Board to administer the Plan or,
alternatively, if the Board so determines, the whole Board of Directors.
(g) "Common Stock" or "Stock" means the Common Stock, par value $.01 per
share, of the Company.
(h) "Company" means Goddard Industries, Inc., a Massachusetts corporation.
(i) "Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Board, to receive amounts due
or exercise rights of the Participant in the event of the Participant's
death. In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.
(j) "Fair Market Value" means the fair market value as determined in
accordance with Section 13.
(k) "Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
(l) "Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to
be an Incentive Stock Option.
(m) "Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
(n) "Participant" means a person selected by the Board to receive an Award
under the Plan.
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(o) "Performance Cycle" or "Cycle" means the period of time selected by the
Board during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
(p) "Performance Shares" mean shares of Common Stock which may be earned by
the achievement of performance goals awarded to a Participant under
Section 8.
(q) "Restricted Period" means the period of time selected by the Board
during which an award of Restricted Stock may be forfeited to the
Company.
(r) "Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
(s) "Stock Appreciation Right" or "SAR" means a right to receive any excess
in value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
(t) "Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of
Common Stock, awarded to a Participant under Section 10.
Section 3. ADMINISTRATION
(a) The Plan shall be administered by the Committee. The Committee shall
serve at the pleasure of the Board, which may from time to time appoint
additional members of the Committee, remove members and appoint new
members in substitution for those previously appointed, and fill
vacancies however caused. Except where the Plan is administered by the
entire Board of Directors, a majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any meeting
at which a quorum is present shall be deemed the action of the Committee,
except that where grants are being made to one or more members of the
Committee, a member who is the subject of a grant being presented to that
meeting shall count toward the quorum but may not vote on any grant at
that meeting, and a majority of the members eligible to vote shall be
sufficient for any action. The Committee may act by unanimous written
consent in lieu of a meeting.
(b) Subject to the express provisions of this Plan and provided that all
actions taken shall be consistent with the purposes of the Plan, the
Committee shall have full and complete authority and the sole discretion
to: (i) determine those persons eligible under Section 4; (ii) select
those persons to whom Awards shall be granted under the Plan;
(iii) determine the number of shares covered by and the form of the
Awards to be granted; (iv) determine the time or times when Awards shall
be granted; (v) establish the terms and conditions upon which Options may
be exercised or Awards vested, including exercise in conjunction with
other awards made or compensation paid; (vi) alter any restrictions or
conditions upon any Awards; and (vii) adopt rules and regulations,
establish, define and/or interpret any other terms and conditions, and
make all other determinations (which may be on a case-by-case basis)
deemed necessary or desirable for the administration of the Plan.
Section 4. ELIGIBILITY
All employees and, in the case of Awards other than Incentive Stock Options,
directors and consultants of the Company or any Affiliate capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan.
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Section 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b), Awards may be made under the
Plan to acquire not in excess of 1,000,000 shares of Company Common
Stock. Subject to adjustment, the maximum aggregate number of shares of
Company Common Stock that may be the subject of Awards under this Plan to
any employee shall not exceed 300,000 shares during any one fiscal year.
If any Award in respect of shares of Common Stock expires or is
terminated unexercised or is forfeited for any reason or settled in a
manner that results in fewer shares outstanding than were initially
awarded, including without limitation the surrender of shares in payment
for the Award or any tax obligation thereon, the shares subject to such
Award or so surrendered, as the case may be, to the extent of such
expiration, termination, forfeiture or decrease, shall again be available
for award under the Plan, subject, however, in the case of Incentive
Stock Options, to any limitation required under the Code. Common Stock
issued through the assumption or substitution of outstanding grants from
an acquired company shall not reduce the shares available for Awards
under the Plan. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
(b) In the event that the Board determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, offering of rights to purchase
Common Stock at a price substantially below fair market value, or other
similar transaction affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits intended
to be made available under the Plan, then the Board, subject, in the case
of Incentive Stock Options, to any limitation required under the Code,
shall equitably adjust any or all of (i) the number and kind of shares in
respect of which Awards may be made under the Plan, (ii) the number and
kind of shares subject to outstanding Awards, and (iii) the award,
exercise or conversion price with respect to any of the foregoing,
provided that the number of shares subject to any Award shall always be a
whole number. In addition, if considered appropriate, the Board may make
provision for a cash payment with respect to an outstanding Award.
Section 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Board may award Incentive
Stock Options and Nonstatutory Stock Options and determine the number of
shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
terms and conditions of Incentive Stock Options shall be subject to and
comply with Section 422 of the Code, or any successor provision, and any
regulations thereunder.
(b) The Board shall establish the option price at the time each Option is
awarded, which price shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of award with respect to Incentive Stock
Options.
(c) The Board may provide for the automatic award of an Option upon the
delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.
(d) In the case of Incentive Stock Options the following additional
conditions shall apply:
(i) Such options shall be granted only to employees of the Company, and
shall not be granted to any person who owns stock that possesses more
than ten percent of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation (as
those terms are defined in section 422(b) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder),
unless, at the time of such grant, the exercise
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price of such option is at least 110% of the fair market value of the
stock that is subject to such option and the option shall not be
exercisable more than five years after the date of grant;
(ii) Such options shall not be granted more than ten years from the date
hereof and shall not be exercisable more than ten years from the date
of grant;
(iii) Such options shall, by their terms, be transferable by the optionee
only by will or the laws of descent and distribution, and shall be
exercisable only by such employee during his lifetime.
Section 7. STOCK APPRECIATION RIGHTS
Subject to the provisions of the Plan, the Board may award SARs in tandem
with an Option (at or after the award of the Option), or alone and unrelated to
an Option. SARs in tandem with an Option shall terminate to the extent that the
related Option is exercised, and the related Option shall terminate to the
extent that the tandem SARs are exercised.
Section 8. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Board may award Performance
Shares and determine the number of such shares for each Performance Cycle
and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of
Performance Shares shall be equal to the Fair Market Value of the Common
Stock on the date the Performance Shares are earned or, in the discretion
of the Board, on the date the Board determines that the Performance
Shares have been earned.
(b) The Board shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish
such objectives as the Board may from time to time select. During any
Cycle, the Board may adjust the performance goals for such Cycle as it
deems equitable in recognition of unusual or non-recurring events
affecting the Company, changes in applicable tax laws or accounting
principles, or such other factors as the Board may determine.
(c) As soon as practicable after the end of a Performance Cycle, the Board
shall determine the number of Performance Shares which have been earned
on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be
distributed to the Participant or, if the Participant has died, to the
Participant's Designated Beneficiary, as soon as practicable thereafter.
The Board shall determine, at or after the time of award, whether payment
values will be settled in whole or in part in cash or other property,
including Common Stock or Awards.
Section 9. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Board may award shares of
Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited
to the Company and the other terms and conditions of such Awards. Shares
of Restricted Stock may be issued for no cash consideration or such
minimum consideration as may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Board, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in
such manner as the Board may determine. Any certificates issued in
respect of shares of Restricted Stock shall be registered in the name of
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the Participant and unless otherwise determined by the Board, deposited
by the Participant, together with a stock power endorsed in blank, with
the Company. At the expiration of the Restricted Period, the Company
shall deliver such certificates to the Participant or if the Participant
has died, to the Participant's Designated Beneficiary.
Section 10. STOCK UNITS
(a) Subject to the provisions of the Plan, the Board may award Stock Units
subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration
as may be required by applicable law. Such shares of Common Stock may be
designated as Award Shares by the Board.
Section 11. EXERCISE OF OPTIONS; PAYMENT
(a) Options may be exercised in whole or in part at such time and in such
manner as the Committee may determine and as shall be prescribed in the
written agreement with each holder.
(b) The purchase price of shares of Stock upon exercise of an Option shall
be paid by the Option holder in full upon exercise and may be paid as the
Committee may determine in its sole discretion in any combination of:
(i) cash or check payable to the order of the Company; (ii) property
valued at Fair Market Value; (iii) delivery of a promissory note;
(iv) delivery of shares of Common Stock (valued at Fair Market Value at
the date of purchase of the Common Stock subject to the Option); or
(v) such other means as the Committee may permit.
(c) With the consent of the Committee, payment of the exercise price may
also be made by delivery of a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to
pay the exercise price. To facilitate such arrangements, the Company may
enter into agreements for coordinating procedures with one or more
securities brokerage firms. The date of delivery of such exercise notices
shall be deemed the date of exercise.
(d) The Committee may impose such conditions with respect to the exercise of
Options, including conditions relating to applicable federal or state
securities laws, as it considers necessary or advisable, including making
the Common Stock issued upon exercise subject to restrictions on vesting
or transferability, or to risk of forfeiture, upon the happening of such
events as the Committee may determine, any of which may be accelerated or
waived in the Committee's sole discretion.
(e) No shares of Common Stock shall be issued upon exercise of any Option
under this Plan until full payment in the form approved by the Committee
has been made and all other legal requirements applicable to the issuance
or transfer of such shares and such other requirements as are consistent
with the Plan have been complied with to the satisfaction of the
Committee.
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Section 12. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) DOCUMENTATION. Each Award under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and
regulatory laws and accounting principles.
(b) BOARD DISCRETION. Each type of Award may be made alone, in addition to
or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Board need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular
Award, any determination with respect to an Award may be made by the
Board at the time of award or at any time thereafter.
(c) SETTLEMENT. The Board shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Board may permit a Participant to defer all
or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents
on amounts denominated in Common Stock.
(d) DIVIDENDS AND CASH AWARDS. In the discretion of the Board, any Award
under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and
(ii) cash payments in lieu of or in addition to an Award.
(e) TERMINATION OF EMPLOYMENT. The Board shall determine the effect on an
Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period
during which, the Participant's legal representative, guardian or
Designated Beneficiary may receive payment of an Award or exercise rights
thereunder.
(f) CHANGE IN CONTROL. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company, the Board in
its discretion may, at the time an Award is made or at any time
thereafter, take one or more of the following actions: (i) provide for
the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award upon
the Participant's request for an amount of cash or other property that
could have been received upon the exercise or realization of the Award
had the Award been currently exercisable or payable, (iii) adjust the
terms of the Award in a manner determined by the Board to reflect the
change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision
as the Board may consider equitable and in the best interests of the
Company.
(g) WITHHOLDING. The Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Board's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation,
valued at their Fair Market Value on the date of delivery. The Company
and its Affiliates may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the
Participant.
(h) FOREIGN NATIONALS. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Board
considers necessary or advisable to achieve the purposes of the Plan or
comply with applicable laws.
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(i) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization
and converting an Incentive Stock Option to a Nonstatutory Stock Option,
provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the
Participant.
Section 13. FAIR MARKET VALUE
(a) If the Common Stock is then traded on any national securities exchange
or automated quotation system which has sale price reporting, the Fair
Market Value of the Common Stock shall be the mean between the high and
low sales prices, if any, on such exchange or system on the date as of
which Fair Market Value is being determined or, if none, shall be
determined by taking a weighted average of the means between the highest
and lowest sales prices on the nearest date before and the nearest date
after that date in accordance with applicable regulations under the Code.
(b) If the Common Stock is then traded on an exchange or system which does
not have sale price reporting, the Fair Market Value of the Common Stock
shall be the mean between the average of the "Bid" and the average of the
"Ask" prices, if any, as reported for such the date as of which Fair
Market Value is being determined, or, if none, shall be determined by
taking a weighted average of the means between the highest and lowest
sales prices on the nearest date before and the nearest date after such
date in accordance with applicable regulations under the Code.
(c) With respect to Common Stock if it is not publicly traded and with
respect to any other property, the Fair Market Value of such property
shall be determined in good faith by the Committee or in the manner
otherwise provided by the Committee from time to time.
Section 14. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company
expressly reserves the right at any time to dismiss a Participant free
from any liability or claim under the Plan, except as expressly provided
in the applicable Award.
(b) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as
a shareholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof. A
Participant to whom Common Stock is awarded shall be considered the
holder of the Stock at the time of the Award except as otherwise provided
in the applicable Award.
(c) GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts.
(d) INDEMNITY. Neither the Board nor the Committee, nor any members of
either, nor any employees of the Company or any parent, subsidiary, or
other affiliate, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with their
responsibilities with respect to this Plan, and the Company hereby agrees
to indemnify the members of the Board, the members of the Committee, and
the employees of the Company and its parent or subsidiaries in respect of
any claim, loss, damage, or expense (including reasonable counsel fees)
arising from any such act, omission, interpretation, construction or
determination to the full extent permitted by law.
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(e) EFFECTIVE DATE OF PLAN. The effective date of this Plan shall be the
date of adoption by the Board of Directors. If the Plan is subject to the
approval of the stockholders under subsection (f) below, upon such
approval it shall be effective as of the date of adoption by the Board of
Directors. If prior to such approval the Committee grants Awards under
the Plan of a type that require stockholder approval, upon such approval
such Awards shall be effective as of the date of grant.
(f) STOCKHOLDER APPROVAL. The adoption of this Plan, or any amendment
hereto, shall be subject to approval by stockholders only to the extent
required by (i) the Code, (ii) the rules under Section 16 of the
Securities Exchange Act of 1934, (iii) rules of any stock exchange or
over-the-counter stock market, or (iv) as otherwise required by law. Any
such approval shall be obtained within the time required by such law or
rule. Any stockholder approval of this Plan or any amendment so required
shall mean the affirmative vote of at least a majority of the shares of
capital stock present and entitled to vote at a duly held meeting of
stockholders, unless a greater vote is required by state law, or the law
or rule requiring stockholder approval, in which case such greater
requirement shall apply. Stockholder approval may be obtained by written
consent in lieu of meeting to the extent permitted by applicable state
law.
(g) AMENDMENT OF PLAN. The Board of Directors of the Company may at any
time, and from time to time, amend, suspend or terminate this Plan in
whole or in part; provided, however, that the Board of Directors may not
modify the Plan in a manner requiring the approval of stockholders under
subsection (f) above unless such approval is obtained to the extent
required.
(h) TERM OF PLAN. This Plan shall terminate ten years from the date of
adoption by the Board of Directors, and no Award shall be granted under
this Plan thereafter, but such termination shall not affect the validity
of Awards granted prior to the date of termination.
Dates of Approval by Board of Directors: September 14, 1998, October 22,
1999 and December 7, 2001.
Dates of Approval by Stockholders: March 12, 1999, March 17, 2000 and
, 2002.
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PROXY GODDARD INDUSTRIES, INC. PROXY
The undersigned hereby appoints Mr. Saul I. Reck and Dr. Robert E.
Humphreys, and each of them, with full power of substitution, attorneys and
proxies to represent the undersigned at the Annual Meeting of Stockholders of
Goddard Industries, Inc. to be held on March 8, 2002 and at any adjournment or
adjournments thereof, with all power which the undersigned may be entitled to
vote at said meeting upon the following proposals more fully described in the
notice of and proxy statement for the meeting in accordance with the following
instructions and with discretionary authority upon such other matters as may
come before the meeting. All previous proxies are hereby revoked.
<Table>
1. Election of Directors
To elect to serve as director until the year 2005: Salvatore J. Vinciguerra and Dr. Jacky Knopp, Jr.
/ / FOR the nominees
/ / WITHHOLD AUTHORITY on the following nominees: ___________________________________________________
2. Amendments to the Company's 1998 Equity Incentive Plan
/ / FOR the amendments / / AGAINST the amendments / / ABSTAIN
</Table>
(PLEASE FILL IN, DATE AND SIGN ON THE REVERSE SIDE AND RETURN IN THE ENCLOSED
ENVELOPE.)
<Page>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
IN FAVOR OF THE PROPOSAL.
<Table>
Dated: _____________________________________ , 2002
---------------------------------------------------
Signature(s)
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(SIGNATURES SHOULD BE THE SAME AS THE NAME PRINTED
HEREON. EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS, ATTORNEYS AND OFFICERS OF CORPORATIONS
SHOULD ADD THEIR TITLES WHEN SIGNING.)
</Table>