SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
Isco, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A - FEE BY WIRE TRANSFER.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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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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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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Isco, Inc.
4700 Superior Street
Lincoln, Nebraska 68504
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held December 14, 1995
The annual meeting of shareholders of Isco, Inc. will be held at The Cornhusker
Hotel, 333 South 13th Street, Lincoln, Nebraska on December 14, 1995 at 2:00
p.m. for the purpose of:
1. The election, as Directors, of three persons listed in the
accompanying Proxy Statement dated November 7, 1995.
2. The approval of the Isco, Inc. Directors' Deferred Stock Compensation
Plan.
3. Whatever other business may properly be brought before the meeting or
any adjournment thereof.
Only those shareholders of record at the close of business on October 20, 1995
shall be entitled to notice of the meeting and to vote at the meeting.
In order to assure a quorum, all shareholders are urged to attend the meeting or
to vote by proxy. In the event you are present at the meeting you may withdraw
your proxy if you wish to do so, and vote in person.
By Order of the Board of Directors
Robert W. Allington
Chairman and
Chief Executive Officer
November 7, 1995
PROXY STATEMENT
November 7, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Isco, Inc. (the "Company") for use at the annual
meeting of shareholders to be held on December 14, 1995. Shareholders of record
at the close of business on October 20, 1995 are entitled to notice of and to
vote at the meeting and any adjournment thereof.
This Proxy Statement was first mailed to shareholders on November 14, 1995.
As of the close of business on October 20, 1995, the Company had 5,351,931
shares of outstanding Common Stock, all of which are entitled to vote at the
Annual Meeting.
Based upon the records of the Company, Robert W. Allington, 4700 Superior,
Lincoln, NE 68504, owns 2,736,334 shares or 50.85 percent of the Company's
outstanding Common stock plus presently exercisable stock options. Mr.
Allington does not hold any stock options. Dimensional Fund Advisors, Inc.
owned 400,651 shares at July 28, 1995.
Each share is entitled to one vote on each matter presented, except that in the
election of Directors each shareholder shall have the right to vote the number
of shares owned by him or her for as many persons as there are Directors to be
elected, or to cumulate such shares and give one candidate as many votes as the
number of Directors multiplied by the number of his or her shares shall equal,
or to distribute them on the same principle among as many candidates as he or
she shall determine.
Proxies which are properly signed and returned will be voted at the meeting.
Shareholders may specify their preference by marking the appropriate boxes on
the proxy and the proxy will then be voted in accordance with such
specifications. In the absence of such specifications the proxy will be voted
for the election of the three nominees for Director and in accordance with the
instructions of the Board of Directors as to any other matters. Shareholders
who attend the meeting may vote in person even though they have voted by proxy.
A proxy is revocable at any time before it is voted and a proxy is automatically
revoked upon the giving of a subsequent proxy or by voting in person at the
meeting. The Company will bear the cost of solicitation of proxies, including
the charges and expenses of brokers and others for forwarding solicitation
material to beneficial owners of stock. In addition to the use of mail, proxies
may be solicited by personal interview, telephone, facsimile or telegraph.
SHAREHOLDER PROPOSALS
In the event that any shareholder desires to submit a proposal for action at the
1996 meeting of shareholders, such proposal must be received at the Company's
office at 4700 Superior Street, Lincoln, Nebraska 68504-1398, marked to the
attention of the President or Secretary of the Company, no later than July 17,
1996. It is suggested that any shareholder desiring to submit a proposal, do so
by Certified
2
Mail, Return Receipt Requested. Shareholders should also note that, in addition
to the requirement of timely receipt by the Board of Directors of a proposal as
stated above, such proposal will not be included in the proxy solicitation
material for the 1996 annual meeting of shareholders unless it otherwise
complies with the requirements of Section 14(a) of the Securities Exchange Act
of 1934 and the rules and regulations promulgated and in effect thereunder.
1. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of Directors shall be not more
than nine, such number to be set annually by the Board of Directors. The Board
of Directors has set such number at seven for 1996 and has nominated the three
persons listed below for election as Directors to serve until December 11, 1997
or until their successors are duly elected and qualified.
The Bylaws also provide that the Directors shall be divided into classes and
that there be two classes if the number of Directors is less than nine. The
class of 1995 has a term expiring December 14, 1995 and the class of 1996 has a
term expiring December 12, 1996. The Board of Directors has nominated Robert W.
Allington, James L. Linderholm and Dale L. Young for a two-year term expiring
December 11, 1997.
The proxy holders named in the proxy intend to vote "FOR" the election of the
three nominees listed above unless authority to so vote is withheld. In the
unexpected event that any nominees are unable to serve or for good cause will
not serve as Directors, the proxy holders reserve the right to vote for such
substitute nominees as are designated by the Board of Directors.
Following is a list of the names and ages of the three nominees, all are
presently serving as Directors. Also listed are the four Directors whose terms
expire in 1996. Included is the past five-year business history of each
Director and nominee, the year in which each became a Director of the Company
and the number and the percentage of outstanding shares of Common Stock of the
Company beneficially owned by each as of October 20, 1995.
3
Common Stock
Beneficially
Owned as of
October 20, 1995
----------------
Number
Name of Individual Director of
Or Number in Group Age Employment History Since Shares(1) Percent(2)
- -------------------- --- ---------------------- -------- --------- ----------
Nominees for election (term expiring December 11, 1997)
--------------------------------------------------------
Robert W. Allington 60 Chairman of the Board, 1959 2,736,334 50.85
Chief Executive Officer
since 1959; President
1959 to October 5, 1995
James L. Linderholm 57 Chairman and President 1994 1,500 .03
since 1986 and 1984,
respectively, HWS
Consulting Group, Inc.
Dale L. Young 67 Corporate Secretary 1966 48,426 .90
since 1991; Retired
Executive Vice
President and Cashier
of FirsTier Bank, N.A.,
Lincoln, NE
CLASS OF 1995 (TERM EXPIRES DECEMBER 12, 1996)
----------------------------------------------
Douglas M. Grant 49 President and Chief 1988 13,139 .24
Operating Officer since
October 6, 1995; Vice
President August 31,
1989 to October 5, 1995;
Environmental Division
General Manager since
May 26, 1987
Robert B. Harris 50 Chairman, Harris 1994 617 .01
Laboratories, Inc.,
since 1977; President,
Scientific Development
Corporation since 1979;
and Founder and Partner,
Harris Realty Partners
since 1987.
Harris Wagenseil 49 Vice President 1994 500 .01
Maintenance Operations
since 1991; Vice
President Supply &
Maintenance Operation
1991; Vice President
Supply 1991; Assistant
to the Chairman 1989;
all at Union Pacific
Railroad Co.
4
Philip M. Wittig 61 Chief Financial 1967 37,152(3) .69
Officer, Treasurer
since 1967
All Executive Officers and Directors as a group
(12) PERSONS 2,939,676 54.63
- ---------------------------------------------- --------- -----
(1) Unless otherwise noted, all shares were held with sole investment and
voting power.
(2) Percentage computed by dividing the number of shares owned including
options presently exercisable under the 1985 Incentive Stock Option Plan by
the total shares outstanding at October 20, 1995, including such number of
presently exercisable options.
(3) Includes 644 shares as to which Philip M. Wittig has shared voting and
investment power.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTOR
The Company's Board of Directors has not established a Nominating Committee.
The Audit Committee, during fiscal 1995, was comprised of Dale L. Young,
Chairman; James Linderholm, Secretary; and Harris Wagenseil. All are
independent members of the Board. The Audit Committee assists the Board in
fulfilling its fiduciary responsibilities with respect to accounting policies,
reporting practices, and the sufficiency of the Company's annual audit. The
Committee met once during fiscal year 1995.
The Compensation Committee, during fiscal 1995, was comprised of Dale L. Young,
Chairman; Robert B. Harris, Secretary; Harris Wagenseil; and Robert W. Allington
(a non-voting member). The Committee recommends to the Board the compensation
programs and salaries for the officers and also acts as the stock option
committee. The Committee met once during fiscal 1995.
The Board of Directors met 12 times in fiscal 1995. Robert Harris and Harris
Wagenseil attended less than 75 percent of the total meetings of the Board and
its committees held in fiscal 1995.
5
LIST OF CURRENT EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of the names and ages of the current executive officers
of the Company and their business history for the last five years.
Year first
became
Executive
Name of Individual Position and Principal Occupation Officer of
Or Number in Group Age Since July 31, 1989 the Company
- ------------------ --- --------------------------------- -----------
Robert W. Allington 60 Chairman of the Board and Chief 1959
Executive Officer since 1959;
President 1959 to October 5, 1995
Vicki L. Benne 33 Controller and Chief Accounting 1991
Officer since October 21, 1989;
Tax Accountant June 6, 1988 to
October 20, 1989
Elie M. Dick 50 Vice President, Environmental 1993
Division Assistant General
Manager and Director of
Marketing, Sales, and Service
since December 16, 1993;
Environmental Division Director
of Marketing May 4, 1991 to
December 15, 1993; Director of
Business Development May 1, 1989
to May 3, 1991
Douglas M. Grant 49 President and Chief Operating 1987
Officer since October 6, 1995;
Vice President August 31, 1989
to October 5, 1995; Environmental
Division General Manager since
May 26, 1987
Martin Gurkin 63 Vice President and Separation 1989
Instruments Division Assistant
General Manager since July 18,
1991; Director of Separation
Sciences October 16, 1989; Vice
President Sales Marketing,
Universal Scientific Inc.
1987-1989
John J. Korab, Jr. 46 Vice President since 1989
December 11,1989; Program
Manager, Ohmeda Division,
BOC Group, Inc. 1983-1989
Philip M. Wittig 61 Chief Financial Officer, 1967
Treasurer since 1967
6
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid to the chief
executive officer and the four other executive officers of the Company whose
compensation exceeded $100,000 for the fiscal years ended July 30, 1993,
July 29, 1994, and July 28, 1995.
Long-term Compensation
--------------------------------
Annual Compensation Awards
-------------------------------- ---------------------
Other Restricted Payouts
Annual Stock Options/ LTIP All Other
Name and Principal Fiscal Salary Bonus Compensation Awards SARs Payouts Compensation
Position Year ($) ($)(1) ($)(2) ($) (#) ($) ($)(3)
- ------------------- ----- ------ ----- ------------ --------- ------- ------ ------------
Robert W. Allington 1995 205,076 -- 6,600 -- -- -- 5,051
Chairman and Chief 1994 205,264 -- 6,250 -- -- -- 7,058
Chief Executive 1993 196,614 -- 6,950 -- -- -- 6,178
Officer
Douglas M. Grant 1995 129,882 -- 6,250 -- -- -- 6,686
President and Chief 1994 129,882 -- 6,250 -- 40,000 -- 6,503
Operating Officer 1993 123,537 17,623 6,600 -- 11,500 -- 6,500
Philip M. Wittig 1995 107,095 -- 6,600 -- -- -- 5,721
Chief Financial Officer 1994 107,095 8,000 6,250 -- -- -- 5,847
and Treasurer 1993 104,861 5,000 6,600 -- 2,300 -- 5,105
Elie M. Dick 1995 105,075 3,778 -- -- -- -- 5,434
Vice President 1994 95,844 -- -- -- -- -- 4,655
1993 76,460 5,000 -- -- 4,140 -- 3,272
Martin Gurkin 1995 104,691 2,322 -- -- -- -- 5,392
Vice President 1994 95,223 89 -- -- -- -- 4,717
1993 92,960 14,088 -- -- 4,600 -- 4,689
(1) Bonuses represent amounts paid in the year shown for performance in the
preceding year.
7
(2) The annual director fees paid to the officers who are also directors.
(3) Profit-sharing contributions, including forfeitures and 401(k) matching
contributions including forfeitures, respectively, for fiscal 1995 were as
follows: Mr. Allington - $5,051 and $-0-; Mr. Grant - $4,608 and $2,078;
Mr. Wittig - $3,905 and $1,816; Mr. Dick - $3,697 and $1,737; and Mr.
Gurkin - $3,673 and $1,719.
The following table sets forth information with respect to exercised and
unexercised options and SARs, if any, during fiscal 1995, and exercised and
unexercised options and SARs, if any, held by the chief executive officer and
the four other most highly compensated executive officers of the Company during
fiscal 1995 and at July 28, 1995.
Shares Value of Unexercised
Acquired Number of Unexercised In-the-Money Options/
on Value Options/SARs at Fy-end (#) SARs at Fy-end ($)
Exercise Realized Exercisable ("Ex") Exercisable ("Ex")
Name (#) ($) Unexercisable ("Un") Unexercisable ("Un")
- ------------------ -------- -------- --------------------------- ----------------------
Robert W. Allington -- -- -- --
Douglas M. Grant -- -- 2,300 shares ("Ex") --
9,200 shares ("Un") --
4,000 shares ("Ex") $ 4,000
36,000 shares ("Un") 36,000
Philip M. Wittig -- -- 767 shares ("Ex") --
1,533 shares ("Un") --
Elie M. Dick -- -- 828 shares ("Ex") --
3,312 shares ("Un") --
Martin Gurkin -- -- 1,840 shares ("Ex") --
2,760 shares ("Un") --
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee. The Compensation Committee is comprised of Directors
Dale L. Young, Chairman; Robert B. Harris, Secretary; Harris Wagenseil; and
Robert W. Allington (a non-voting member). Members Young, Harris, and Wagenseil
are non-
8
employee directors. The Committee reviews and recommends to the Board the
direct and indirect compensation and employee benefits of the Chairman of the
Board, the President, and other elected officers of the Corporation. The
Committee also acts as the stock option committee.
Compensation Principles. The philosophy of the Company with regard to executive
compensation is to design executive compensation programs in a manner intended
to enhance corporate performance and shareholder value by achieving the
following objectives:
* Provide reasonable and appropriate levels of compensation that will
attract, motivate, and retain highly qualified executives;
* Integrate compensation with the Company's business and strategic
plans;
* Reward both business and individual performance; and
* Encourage stock ownership by executives, thereby aligning executive
compensation with shareholder value.
Executive Officer Compensation Program. The Company's compensation program for
executive officers consists of annual payments of salary, bonuses, and periodic
grants of options to purchase the Company's common stock. In addition,
executives are entitled to customary benefits, including medical and retirement
benefits as well as participation in the Company's 401(k) matching contributions
plan, that are generally available to employees of the Company. Salary and
bonus payments are designed to reward current and past performance, while the
stock options are intended to provide incentives for long-term future
performance and are directly linked to the interests of the shareholders because
the value of options will increase or decrease based directly upon the future
price of the Company's common stock.
Base Salary. The base salary levels of Company executives are evaluated
periodically by the Committee in view of specific job responsibilities and
prevailing salary levels of companies of comparable size and complexity. The
Committee utilizes the Ernst & Young National Survey of Executive Compensation
and the Wyatt Data Service ECS survey as aids in determining whether executive
salaries are appropriate and competitive. The Committee's salary decisions
regarding the other officers were made in the context of past practices and the
current competitive environment. Annual increases ranged from $4,000 to
$34,480.
Annual Bonus Compensation. The Committee believes that executive compensation
should be based on comparable salaries as determined by professional surveys,
but also believes that cash incentives in the form of bonuses for the
achievement of Company goals and corporate and individual performance are
warranted. A bonus program for fiscal 1995 based on the achievement of
established sales and profit goals was committed to Douglas M. Grant, the Vice
President and General Manager for the Environmental Division. Under the program
Mr. Grant received a bonus of $21,745 which was paid in fiscal 1996. The other
executive officers received a bonus based principally on their individual job
performances during fiscal year 1995.
9
Stock Option Compensation. The Committee, acting as the stock option committee,
granted an option in July 1995 for 4,400 shares to one of the executive officers
of the Company. No other options were granted in fiscal 1995. This option was
granted under the 1985 Stock Option Plan which expired on July 25, 1995. The
Compensation Committee expects to develop another stock option or stock value
related plan for the Company's staff based on its goals to keep compensation
levels closely aligned with both individual performance and the long-range
interest of the shareholders. More than 10% of the Company's present staff hold
options under the 1985 plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. Robert W. Allington's salary was not
increased.
CHIEF OPERATING OFFICER COMPENSATION. Douglas M. Grant was elected President
and Chief Operating Officer of the company effective October 6, 1995. In
recognition of his new and added responsibilities his base salary was increased
$34,480, to $160,000 effective October 28, 1995.
Overall Review. The Committee believes that the Chief Executive Officer and
other executive officers of the Company have managed and operated the Company
through a very difficult year for the instrument industry. The Committee
further believes that the compensation for the executive officers is fair and
reasonable for both the officers and the shareholders of the Company.
Submitted by the Compensation Committee of the Company's Board of Directors,
Dale L. Young, Chairman; Robert B. Harris, Secretary;
Harris Wagenseil Robert W. Allington(non-voting member)
This report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement in any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and except to the extent the Company specifically
incorporates this information by reference, it shall not otherwise be deemed
filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Committee is a current or former executive officer or employee
of the Company except Robert W. Allington. Mr. Allington makes recommendations
but does not vote on matters involving compensation of officers. No other
relationships existed in fiscal 1995 between the Company and any member of the
Committee.
10
PERFORMANCE GRAPH.
The following performance graph compares the performance of the Company's common
stock to the Standard and Poor's 500 Stock Index and the NASDAQ peer group. The
industry peer group, selected by the Company, is comprised of the 74 companies
whose stock is traded on NASDAQ and are included in the Standard Industrial Code
Classification No. 382 entitled "Measuring and Controlling Devices". The graph
assumes that $100 was invested on July 31, 1990 in the Company's stock and the
indices. It is also assumed that dividends were reinvested when paid. Fiscal
year ending July 31.
[GRAPH]
RETIREMENT PLAN
The Company's defined contribution retirement plan includes a 401(k) provision
that covers all employees meeting age and service requirements. Significant
provisions of the plan include the following: (i) an employee may reduce his or
her salary by up to 12 percent, and the Company will match the reduction, up to
10 percent, with a 20 percent matching contribution; (ii) the Company's
contribution to the plan is equal to approximately 7 percent of its net earnings
before income taxes; (iii) the Company's aggregate contribution to the plan is
limited to 15 percent of the aggregate compensation of the plan
11
participants; (iv) participants vest 20 percent of employer profit sharing and
employer 401(k) matching contributions after three years and 20 percent per year
thereafter until 100 percent vested. Management and administrative costs of the
plan are borne by the Company. For fiscal year 1995, amounts contributed to the
plan for the chief executive officer and the four other most highly compensated
executive officers of the Company are set forth as part of the Summary
Compensation Table above.
COMPENSATION OF DIRECTORS FOR FISCAL 1995
All directors were paid an annual fee of $2,400 per year plus $350 per meeting
attended. Dale L. Young, the secretary of the Company, receives an additional
$2,500 per year for his services as secretary. Outside Directors who serve on
Board Committees are, additionally, paid $350 per meeting attended. Director
compensation paid to the three executive officers who are directors is included
in the Summary Compensation Table above.
2. PROPOSAL TO APPROVE THE ISCO, INC. DIRECTORS' DEFERRED STOCK COMPENSATION
PLAN.
Effective January 1, 1996, the Board of Directors of the Company adopted the
"Isco, Inc. Directors' Deferred Stock Compensation Plan" (the "Plan") in the
form attached as Exhibit 1 to this Proxy Statement. The Plan allows directors
of the Company to elect to defer receipt of the cash fees paid for regular or
special meetings of the Board of Directors, for committee meetings, for the
annual retainer and for services serving as corporate secretary. Directors
electing such deferral will be credited with Deferred Stock Units which will be
translated into and delivered in shares of common stock of the Company at the
time the director is no longer serving as a member of the Board of Directors.
A total of 50,000 shares of common stock is set aside for payments of Deferred
Stock Units under the Plan. The Company may use authorized, but unissued,
shares or Treasury shares to honor such payments. The amount of Deferred Stock
Units to be issued to directors participating in the Plan is established by the
Plan. Participating directors will receive 35 Deferred Stock Units for each
regular or special directors meeting or committee meeting attended, 240 Units
for annual Board retainer, and 250 Units annually for the person serving as the
corporate secretary. Each Deferred Stock Unit represents one share of common
stock. Cash dividends regularly paid with respect to common stock shall be
credited to Deferred Stock Units on the basis of $10.00 per share and will
ultimately be paid out in shares of common stock. Participants will have no
rights to vote, sell, or otherwise dispose of the Deferred Stock Units. Because
there are no discretionary matters to be handled with respect to the Plan, the
Plan will be administered, not by a committee of the Board of Directors, but by
the Controller of the Company. The duties of the Controller will largely be
ministerial to receive and keep track of written elections of the participating
Directors and the bookkeeping and distributions with respect to the Plan.
12
To be approved, the Plan must receive the affirmative vote from the holders of a
majority of the outstanding common stock of the Company. Any deferral elections
made prior to the vote of the shareholders will be void if the requisite
shareholder vote is not received to approve the Plan.
The Board of Directors believes that the Plan will help to attract and retain
the services of competent and dedicated directors by permitting them to defer
the receipt of their compensation until cessation of service on the Board.
Under this plan the directors have a greater stake in the long-term growth and
profitability of the Company, which should positively influence the market value
of the Isco stock.
The Board recommends a vote FOR Item No. 2.
ADDITIONAL INFORMATION.
Compliance with Section 16(a) of the Securities Exchange Act of 1934. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and persons who beneficially own more than 10 percent of
the Company's stock, to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors, and greater than 10 percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Independent Public Accountants. Deloitte & Touche LLP, certified public
accountants, are the independent public accountants for the Company.
Representatives of Deloitte & Touche LLP are expected to be present at the
shareholders' meeting and will be given the opportunity to make any statement
they might desire and will also be available to respond to appropriate questions
from shareholders. Deloitte & Touche LLP has been selected as independent
public accountants for the Company for fiscal year 1996.
Other Matters. The Board of Directors does not know of any other matters to be
presented at the annual meeting. In the event that other business is properly
brought before the meeting, it is the intention of the proxy holders named in
the proxy to vote the proxies in accordance with the recommendation of the Board
of Directors.
Robert W. Allington
Chairman and
Chief Executive Officer
13
EXHIBIT 1
ISCO, INC.
DIRECTORS' DEFERRED STOCK COMPENSATION PLAN
1. PURPOSE. The purpose of the Directors' Deferred Stock Compensation
Plan (the "Plan") of Isco, Inc. (the "Company") is to attract and retain the
services of competent, dedicated directors by permitting them to defer receipt
of certain cash fees, to receive such fees in the form of Stock of the Company
after termination of their service as directors, and to acquire thereby a
greater stake in the long-term growth and earnings of the Company.
2. DEFINITIONS. Whenever used in this Plan, the following capitalized
terms shall mean the following:
"Act" shall mean the Securities Act of 1933, as amended.
"Beneficiary" shall mean the person(s) to receive the Stock following
a Participant's death, as most recently designated by the Participant in a
written instrument delivered to the Controller of the Company or, absent such
designation, the Participant's estate. If more than one person is named as
Beneficiary, distributions shall be made pro rata to such persons, except when
otherwise indicated by the Participant.
"Deferred Stock Unit" shall mean an unsecured, unfunded right to
receive from the Company one share of Stock, subject to the conditions contained
in the Plan.
"Director's Fees" shall mean for any period the sum of the amounts
payable to an Eligible Director as a retainer for serving as a director in that
period, as fees for attendance at regular or special meetings of the Board of
Directors or any committee of the Board for that period, and for services
performed as corporate secretary. For this purpose, the amount payable for the
annual retainer and for corporate secretary's services shall be deemed earned in
equal monthly increments.
"Distribution Date" shall mean the first business day on or after the
date upon which the Participant ceases to be a director of the Company.
"Eligible Director" shall mean any member of the Board of Directors of
the Company, whether or not a full-time, salaried employee of the Company or any
of its affiliates or subsidiaries.
"Participant" shall mean any Eligible Director who has elected, in
accordance with paragraph 4 below, to participate in this Plan.
"Plan Year" shall mean the fiscal year of the Company, except that the
initial Plan Year shall commence January 1, 1996, and end July 26, 1996.
14
"Stock" shall mean the Common Stock, par value $0.10 per share, of the
Company.
3. ADMINISTRATION. The Plan shall be administered by the Controller of
the Company. The interpretation and construction by the Controller shall be
final. The Controller shall not be liable for any action or determination made
in good faith with respect to the Plan.
4. PARTICIPATION. To participate in the Plan for any Plan Year, an
Eligible Director must elect to do so by completing the election form attached
as EXHIBIT "A" and delivering it to the Controller prior to the beginning of
that Plan Year. An Eligible Director who assumes office during a Plan Year may
elect to participate in the Plan for the remaining fiscal quarter(s) of that
Plan Year by filing a completed election form with the Controller prior to the
first day of the next full fiscal quarter. Once made, an election to
participate in the Plan shall continue to be effective for each successive Plan
Year until terminated as provided herein. The Participant shall have no right
to receive any Director's Fees for any Plan Year for which his election to
participate in the Plan is in effect, regardless of any subsequent termination
of his participation in the Plan, except as distributions provided for under the
Plan. A Participant may elect to terminate his participation by written notice
to the Controller, effective for the first Plan Year beginning following receipt
of the notice by the Controller. A Participant who terminates his participation
effective for any Plan Year may participate in the Plan for later Plan Year(s)
by making the above-described election.
5. DEFERRED STOCK UNITS. Deferred Stock Units shall be credited to the
account of each Participant automatically as of the last day of each fiscal
quarter of the Plan Year, except that (i) for the initial Plan Year, the date
shall be the last day of the second fiscal quarter, and (ii) if the Participant
ceases to be a director of the Company, the date of cessation shall be the
Distribution Date. The number of Deferred Stock Units credited shall be
determined, as to each Participant as follows: 35 Deferred Stock Units for each
Board and committee meeting actually attended (in person or through electronic
communication); 240 Deferred Stock Units for the annual Board retainer; and 250
Deferred Stock Units annually for serving as the corporate secretary of the
Board. No additional contributions to any Participant's account may be made,
but the account may be adjusted as provided in paragraphs 7 and 8 below. The
Controller shall prepare and send to each Participant a statement of his account
as of the end of each Plan Year, as soon as practicable after that date.
6. PAYMENT OF DEFERRED STOCK UNITS. No Participant shall have any right
to receive a distribution until the Distribution Date. The distribution shall
be made solely in shares of Stock and shall consist of one share of Stock for
each Deferred Stock Unit (rounded up to the next whole number for any fractional
Deferred Stock Unit) in the Participant's account. Distribution of the shares
of Stock shall be to the Participant, if living then; otherwise, the shares
shall be distributed to the Beneficiary.
15
7. CASH DIVIDENDS. In the event of any cash dividends paid by the
Company on the Stock, each Participant's account shall be adjusted as of the
payment date for the dividend by adding to his account the number of Deferred
Stock Units (whole or fractional) equal to the quotient of (i) of the dividend
that would have been payable on the Stock that would have been distributed, if
the account had been distributed immediately prior to the record date of the
dividend, divided by (ii) $10.00 per share.
8. CHANGES IN STOCK. In the event of a stock dividend, split-up or
combination of shares, recapitalization, or merger in which the Company is the
surviving corporation or other similar capital change (other than a transaction
in which the stockholders of the Company exchange their shares of stock in the
Company), an appropriate and proportionate adjustment shall be made in the
maximum number and kind of shares as to which Deferred Stock Units may be
credited under the Plan. A corresponding adjustment shall likewise be made
changing the number or kind of shares distributable upon Deferred Stock Units
credited to accounts, but upon which no shares of Stock have been distributed
prior to such change. In the event of a consolidation, merger, or other
reorganization in which the Company is not the surviving corporation, or any
other such transaction in which the stockholders of the Company exchange their
shares of stock in the Company, or in the event of complete liquidation of the
Company, or in the case of a tender offer recommended by the Board of Directors,
each participant shall be entitled to receive the consideration he would have
been entitled to had his account been distributed immediately prior to the
effective date of any such event.
9. EFFECTIVE DATE. The Plan shall be effective beginning January 1,
1996, subject to approval before December 31, 1995, by the holders of a majority
of the Company's outstanding common stock. The Plan shall be submitted for
approval at the 1995 annual meeting of stockholders. Until the Plan is approved
by the Company's stockholders as required above, all Deferred Stock Units shall
be credited subject to such approval and no distribution of Stock shall be made
on any Participant's account. If not approved as required above, the Plan shall
be void and all Directors' Fees deferred shall be promptly disbursed in cash to
each Participant or his Beneficiary.
10. SHARES SUBJECT TO PLAN. The maximum aggregate number of shares of
Stock available pursuant to the Plan, subject to adjustment as provided in
paragraph 8 above, shall be 50,000 shares of Stock. Shares distributed pursuant
to the Plan may be authorized and unissued shares or treasury shares, or both.
11. COMPLIANCE WITH SECURITIES LAWS. The Company shall cause to be filed
and maintained an effective Registration Statement on Form S-8, or a comparable
successor form, to register the shares issuable pursuant to this Plan under the
Act for so long as the Company is eligible to do so, and it shall do all acts
required under applicable state securities laws to permit the issuance of the
shares in compliance with those laws; PROVIDED, that the Company shall not be
required to register or maintain any registration of the shares under the Act or
state securities laws if the expense of doing so becomes substantially greater
than would be required for similar actions as of the date hereof and provided
further
16
that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to general service of process in any jurisdiction where it is not so
subject. If the Stock is listed upon any stock exchange when shares of Stock
are issued pursuant of this Plan, the Company shall take all action necessary to
comply with the requirements of such exchange relating to the issuance of those
shares. Shares of Stock may be issued with respect to any Deferred Stock Units
credited under the Plan only if the issuance and delivery of those shares shall
comply with all relevant provisions of state and federal law including, without
limitation, the Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. Each recipient shall consent to the imposition of a legend
on the certificate representing the shares of Stock distributed, restricting
their transferability as required by law or by this Plan.
12. UNITS NOT TRANSFERABLE. Deferred Stock Units credited pursuant to
this Plan may not be sold, pledged, assigned, or transferred in any manner other
than by will or the laws of descent and distribution, and no rights under this
Plan may be exercised during an Eligible Director's lifetime except by him or
his guardian or legal representative.
13. NO STOCKHOLDER RIGHTS; NO TRUST. No Participant shall have any rights
as a stockholder with respect to Deferred Stock Units credited to his account.
Nothing in this Plan shall be deemed to create a trust of any kind or create any
fiduciary relationship. To the extent that any person acquires a right to
receive Stock from the Company under this Plan, that right shall be no greater
than the right of any unsecured general creditor of the Company.
14. TERMINATION AND AMENDMENT OF PLAN. The Plan shall continue until
terminated by the Board of Directors. No Deferred Stock Units shall be credited
under the Plan after the Plan is terminated (except for adjustments as provided
in paragraph 7 and 8 above), but Stock may be distributed after that date as
provided in paragraph 6 above. The Plan may, at six-month intervals only,
unless necessary to comply with Internal Revenue Code requirements, be
terminated, modified, or amended by the Board of Directors except that without
stockholder approval the Board may not modify or amend the Plan so as to: (a)
increase the maximum aggregate number of shares available under this Plan,
except as permitted under paragraph 8 above; (b) increase the payments
receivable in respect of Deferred Stock Units credited under the Plan except as
permitted under paragraph 8 above; or (c) change the designation of the persons
eligible to receive shares under the Plan. The amendment, suspension, or
termination of the Plan shall not alter or impair any Participant's rights under
the Plan prior to such amendment, suspension, or termination, without the
consent of the Participant.
15. NOTICES. Any notice under the Plan shall be in writing and shall be
effective when received. Notices to the Participants, and the certificates for
shares issued under the Plan, shall be sent to the applicable address indicated
on the most recently filed election to participate in the Plan, or on the most
recent written notice by the
17
Participant subsequently delivered to the Controller. Notices shall be sent to
the Controller of the Company, Isco, Inc., 4700 Superior Street, Lincoln, NE
68504-1398.
16. MISCELLANEOUS. Nothing in the Plan shall confer upon any Eligible
Director any right to be retained as a director. As used in the Plan, words in
the singular include the plural, and the masculine includes the feminine gender,
as appropriate.
IN WITNESS WHEREOF, this Directors' Deferred Stock Compensation Plan is
executed on behalf of the Company as of January 1, 1996.
ISCO, INC.
By:
---------------------------
Douglas M. Grant, President
ATTEST:
- ---------------------------
Dale L. Young, Secretary
18
ISCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS DECEMBER 14, 1995
The undersigned hereby constitutes and appoints ROBERT W. ALLINGTON and
PHILLIP M. WITTIG, or either of them, with full power to act alone, or any
substitute appointed by either of them as the undersigned's agents, attorneys
and proxies to vote the number of shares the undersigned would be entitled to
vote if personally present at the Annual Meeting of the Shareholders of Isco,
Inc., to be held at The Cornhusker Hotel, 333 South 13th Street, Lincoln,
Nebraska, on the 14th day of December 1995, at 2:00 p.m., or any adjournments
thereof, as indicated below.
1. ELECTION OF DIRECTORS
/ / FOR all three nominees (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all three nominees listed below
Robert W. Allington, James L. Linderholm, Dale L. Young
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Isco, Inc. Directors' Deferred Stock Compensation Plan
/ / Vote to approve the Plan
/ / Vote to disapprove the Plan
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE DIRECTORS'
DEFERRED STOCK COMPENSATION PLAN, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER
MATTERS.
Dated: ,1995
--------------------------- ------------------------------
Signature of Shareholder
------------------------------
Signature of Shareholder
Please sign exactly as your name
appears at the left. When
signing as attorney, executor,
administrator, trustee, guardian
or conservator, give full title.
All joint tenants must sign.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.