SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.__________)
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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
Atchison Casting Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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[LOGO]
ATCHISON CASTING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 21, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Atchison
Casting Corporation (the "Company") will be held at the offices of the Company,
400 South Fourth Street, Atchison, Kansas, on the 21st day of November 1997, at
11:00 a.m. (Central Time) for the following purposes:
1. To elect one Class I Director to serve for a term of three years.
2. To approve the Amended and Restated Atchison Casting 1993 Incentive
Stock Plan, a copy of which is attached as Exhibit A to the
accompanying Proxy Statement.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on September 15,
1997 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, WE WILL BE
GLAD TO RETURN YOUR PROXY SO THAT YOU MAY VOTE IN PERSON.
PLEASE RETURN YOUR PROXY - THANKS!
By Order of the Board of Directors,
HUGH H. AIKEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Atchison, Kansas
September 26, 1997
P.S. - I look forward to seeing you at the meeting. We will give you a tour
of the foundry when it is over. If you would like transportation from and to
the Kansas City airport, let me or Jeff Brentano know your flight information,
and we will have you picked up and taken back. It is a 40 minute ride.
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002-0188
(913) 367-2121
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 21, 1997
GENERAL INFORMATION
This proxy statement is being furnished on or about September 26, 1997, in
connection with the solicitation of proxies by the Board of Directors of
Atchison Casting Corporation, a Kansas corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held at the Company's offices, 400
South Fourth Street, Atchison, Kansas, at 11:00 a.m. (Central Time) on Friday,
November 21, 1997, for the purposes set forth in the foregoing Notice of Annual
Meeting of Stockholders. In order to provide every stockholder with an
opportunity to vote on all matters scheduled to come before the Annual Meeting
and to be able to transact business at the meeting, proxies are being solicited
by the Company's Board of Directors. Upon execution and return of the enclosed
proxy, the shares represented by it will be voted by the persons designated
therein as proxies, in accordance with the stockholder's directions. A
stockholder may vote on a matter by marking the appropriate box on the proxy or,
if no box is marked for a specific matter, the shares will be voted as
recommended by the Board of Directors on that matter.
The enclosed proxy may be revoked at any time before it is voted by (i) so
notifying the Secretary of the Company, (ii) exercising a proxy of a later date
and delivering such later proxy to the Secretary of the Company prior to the
Annual Meeting or (iii) attending the Annual Meeting and voting in person.
Unless the proxy is revoked or is received in a form that renders it invalid,
the shares represented by it will be voted in accordance with the instructions
contained therein.
The Company will bear the cost of solicitation of proxies, which will be
principally conducted by the use of the mails; however, certain officers and
employees of the Company may also solicit by telephone, telegram or personal
interview. Such expense may also include ordinary charges and expenses of
brokerage firms and others, for forwarding soliciting material to beneficial
owners.
On September 15, 1997, the record date for determining stockholders
entitled to vote at the Annual Meeting, the Company had outstanding and entitled
to vote 8,148,808 shares of common stock, par value $.01 per share (the "Common
Stock"). Each outstanding share of Common Stock entitles the record holder to
one vote.
-1-
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, elected for terms of
three years and until their successors are elected and qualified. At the
meeting one Class I director is to be elected. The proxies named in the
accompanying proxy intend to vote for the election of Hugh H. Aiken. In the
event Mr. Aiken should become unavailable for election, which is not
anticipated, the proxies will be voted for such substitute nominee as may be
nominated by the Board of Directors. The nominee for election as Class I
director who receives the greatest number of votes cast for election of the
director at the meeting, a quorum being present, shall be elected director of
the Company. Abstentions, broker nonvotes and instructions on the accompanying
proxy card to withhold authority to vote for the nominee will result in the
nominee receiving fewer votes.
INFORMATION CONCERNING NOMINEE
The following table sets forth information with respect to the nominee to
the Board of Directors.
CLASS I - TERM EXPIRING 2000
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- -----------------------------------------------------------
Hugh H. Aiken 53 Chairman of the Board, President, Chief Executive Officer
and Director since June 1991.
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
The following table sets forth information with respect to the directors
who are continuing in office for the respective periods and until their
successors are elected and qualified.
CLASS II - TERM EXPIRING 1998
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- ------------------------------------------------------
David L. Belluck 35 Director since June 1991. Since 1989, Mr. Belluck has
been a Vice President of Riverside Partners, Inc., an
investment firm located in Boston, Massachusetts.
Mr. Belluck is a member of the Compensation Committee
of the Company's Board of Directors.
John O. Whitney 69 Director since June 1994. Since 1986, Mr. Whitney has
been Professor and Director, Deming Center for Quality
Management at Columbia Business School. Mr. Whitney
has also written a
-2-
number of books and articles on management and business
strategy, and lectures on those subjects in the United
States and abroad. Mr. Whitney previously served as
President and Director of the Pathmark Division of
Supermarkets General Corporation engaged in food
distribution and retailing. Mr. Whitney currently
serves as a director of Church & Dwight Co., Inc. and
The Turner Corporation. Mr. Whitney is a member of the
Audit Committee of the Company's Board of Directors.
CLASS III - TERM EXPIRING 1999
PRINCIPAL OCCUPATION AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
- ---- --- ------------------------------------------------------
Stuart Z. Uram 63 Director since August 1997. Since January 1997, Dr.
Uram has been a Senior Consultant to Carpenter
Technology Inc., of Reading, Pennsylvania. Dr. Uram
served as the President of Certech, Inc., from 1970 to
1997, a producer of ceramic cores for the investment
casting industry as well as injection molded ceramics
for a variety of industries. Dr. Uram founded Certech,
Inc. in 1970 and sold the company to Carpenter
Technology Inc. in 1995. Dr. Uram holds a Doctor of
Science, Master of Science and Bachelor of Science
degree from Massachusetts Institute of Technology in
Metallurgy. Dr. Uram is a member of the Compensation
Committee of the Company's Board of Directors.
Ray H. Witt 69 Director since August 1993. Since 1957, Mr. Witt has
been the Chairman of the Board and majority owner of
CMI International, Inc., which operates eight foundries
in North America. Mr. Witt was President of the
American Foundryman's Society from 1992 to 1993.
Mr. Witt is a member of the Audit Committee of the
Company's Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors consist of an Audit
Committee and a Compensation Committee.
The Audit Committee consists of Messrs. Whitney and Witt. The Audit
Committee annually makes recommendations to the Board regarding the appointment
of independent auditors of the Company and reviews the scope of audits.
-3-
The Compensation Committee consists of Mr. Belluck and Dr. Uram (formerly
Mr. Paul C. Craig who resigned from the Board in August 1997). The Compensation
Committee annually reviews and makes recommendations to the Board of Directors
regarding compensation arrangements with the executive officers of the Company
and reviews and approves the procedures for administering employee benefit plans
of all types.
During the 1997 fiscal year, the Board of Directors met five times, the
Audit Committee met one time and the Compensation Committee met four times. All
Directors attended at least 75% of the meetings of the Board of Directors and
the committees on which they served.
COMPENSATION OF DIRECTORS
Non-employee directors receive a fixed fee of $8,000 each year and $2,000
for each quarterly meeting of the Board of Directors attended, all or part of
which may be paid in cash or Common Stock at their election. In addition, the
Company reimburses directors for expenses incurred in connection with attendance
at meetings of the Board of Directors and committees thereof. Upon their
initial election, each non-employee director is granted an option to purchase
10,000 shares of Common Stock at an exercise price per share equal to its fair
market value on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors during
fiscal 1997 was composed of David L. Belluck and Paul C. Craig, who was replaced
by Stuart Z. Uram after Mr. Craig resigned from the Board in August 1997.
Paul C. Craig is President of Riverside Partners, Inc., and David L.
Belluck is Vice President of Riverside Partners, Inc. Riverside Partners was
paid a finder's fee of $79,500 in February 1997 in connection with the
acquisition of Jahn Foundry Corp.
During the fiscal year ended June 30, 1997, there were no interlocking
relationships between any executive officers of the Company and any entity whose
directors or executive officers serve on the Board's Compensation Committee, nor
did any current or past officers of the Company serve on the Compensation
Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
responsible for reviewing and approving policies, practices and procedures
relating to executive compensation and the establishment and administration of
employee benefit plans. The overall goal of the Compensation Committee is to
attract and retain strong management and to base incentive compensation on both
individual performance and the overall Company success. The key elements of the
Company's executive compensation
-4-
package are base salary, annual bonuses, and long-term incentives. Each of
those elements are discussed below.
The Company's executive officers are compensated with base salary and
annual bonuses, as well as incentive stock options, restricted subsidiary stock
and by the Company's normal fringe benefits.
The base salary of each executive officer, other than the chief executive
officer ("CEO"), is determined by a subjective process of negotiation and
evaluation of performance involving the officer, the CEO and the Compensation
Committee. The base salary of the CEO was originally determined by negotiation
between the CEO and the major stockholders of the Company in February 1991,
resulting in a five-year employment contract between the Company and the CEO.
At the time of the Company's initial public offering of its Common Stock
(October 1993), this employment contract was extended by two years, changing its
expiration date from June 1996 to June 1998. The CEO's employment contract
allows for annual increases.
During the second fiscal quarter of 1996, the CEO voluntarily reduced his
salary from $200,000 per year to $146,000 per year for the remainder of fiscal
year 1996 because the Company missed its internal earnings targets during the
first half of fiscal year 1996. His salary was restored to $200,000 at the
beginning of fiscal 1997 and was increased to $243,000 in July 1997 to reflect
the Company's continued growth in sales and the improvement in gross profit.
The annual bonus for executive officers for fiscal 1997 (and for the prior
two years) was based on earnings before interest, taxes and amortization of
intangibles, or "EBITA." Targets are set by the Board of Directors for the
fiscal year EBITA of each executive's subsidiary or operating group. In the
case of the CEO and the chief financial officer, the target was based on
consolidated earnings for the entire Company. The amount of bonus which was to
be earned if EBITA reached 100% of target was also set by the Board (or by
contract in the case of the CEO), and was approximately 100% of base salary for
the CEO and 25% to 331/3% of base salary for other officers. If the target is
reached, the officer receives 100% of his annual bonus. For any percentage of
actual EBITA above the target, the amount of the calculated bonus at 100% of the
target is increased by the same percentage. A minimum level of EBITA is also
set, below which no bonus is paid. At EBITA above the minimum threshold the
bonus is pro-rated based on the relation of actual EBITA to the target and the
minimum threshold. During fiscal 1997, bonuses to executive officers ranged
from 6% to 147% of the amount of their bonus set by the Board.
Incentive stock options are granted by the Company to eligible employees
under the Company's 1993 Incentive Stock Plan. The number of options granted is
determined by the Compensation Committee after considering subjective criteria
such as the employee's performance, the employee's value to the Company and the
use of options at other companies.
Restricted stock of subsidiaries of the Company for up to 10% of the
capital stock of some subsidiaries is made available to key managers of such
subsidiaries, and vests in
-5-
equal annual installments over five years from the date of awarding such stock.
To participate in this plan, a manager must purchase stock in the subsidiary.
This report has been issued over the names of each member of the
Compensation Committee, David L. Belluck and Stuart Z. Uram
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation paid to the Chief Executive Officer and the four other most highly
paid executive officers whose compensation exceeded $100,000 during the last
fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
---------------------------- UNDERLYING
OPTIONS/ ALL OTHER
NAME AND SARS(#) COMPENSATION($)
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ------- ---------------
- ------------------ ---- --------- --------
Hugh H. Aiken . . . . . 1997 $ 205,878 $ 155,778 20,000 $ 8,960(1)
Chairman of the 1996 $ 164,667 $ 200,000 20,000 $ 5,310
Board, President and 1995 $ 192,222 $ 200,000 None $ 8,331
Chief Executive
Officer
John R. Kujawa. . . . . 1997 $ 120,566 $ 33,790 2,000 $ 7,200(2)
Group Vice President 1996 $ 105,000 $ 26,250 3,000 $ 6,300
1995 $ 105,000 $ 27,129 None $ 6,228
Donald J. Marlborough 1997 $ 113,545 $ 41,827 None None
Group Vice President 1996 $ 100,000 $ 25,000 10,000 None
1995 $ 58,333 $ 14,550 10,000 None
James Stott . . . . . . 1997 $ 128,405 $ 31,250 5,000 None
Group Vice President 1996 $ 111,691 $ 82,612 None None
1995 $ 100,777(3) $ 93,599(3) 10,000 None
Edward J. Crowley . . . 1997 $ 100,000 $ 38,800 None $ 8,405(5)
Vice President 1996 $ 100,000 $ 40,091 None $ 6,502
1995 $ 130,769(4) $ 79,472(4) None $ 11,656
- -------------------
(1) Consists solely of Company contributions to the Company's 401(k)
savings plan for the benefit of Mr. Aiken.
(2) Consists solely of Company contributions to the Company's 401(k)
savings plan for the benefit of Mr. Kujawa.
-6-
(3) Mr. Stott became an executive officer of the Company subsequent to the
Company's acquisition of Kramer International, Inc. ("Kramer") in
January 1995. Accordingly, only $53,327 and $18,200 of the salary and
bonus reported above for 1995 was paid by the Company.
(4) Mr. Crowley became an executive officer of the Company subsequent to
the Company's acquisition of Empire Steel Castings, Inc. ("Empire") in
February 1995. Accordingly, only $44,231 and $15,970 of the salary
and bonus reported above for 1995 was paid by the Company.
(5) Consists solely of contributions to a 401(k) plan for the benefit of
Mr. Crowley.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------------- ---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR PRICE ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ------------ ---------- ----- ------
Hugh H. Aiken . . . . 20,000 59.6% $15.75 6/30/06 $198,102 $502,032
John R. Kujawa. . . . 2,000 6.0% $16.875 6/05/07 $ 21,225 $ 53,789
Donald J. Marlborough None
James Stott . . . . . 5,000 14.9% $18.625 1/05/07 $ 58,566 $148,418
Edward J. Crowley . . None
- --------------------
(1) All options are rights to buy Common Stock of the Company. The
options granted to Mr. Aiken, Mr. Kujawa and Mr. Stott are subject to
a three-year vesting schedule commencing July 1, 1996, June 6, 1997
and January 6, 1997, respectively, with one-third of the grant vesting
on each of the three anniversaries from the grant date.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- --------------------------
Hugh H. Aiken . . . . . . . . . . . . 26,667/33,333 $81,668/$50,833
John R. Kujawa. . . . . . . . . . . . 5,000/4,000 $15,500/$5,000
Donald J. Marlborough . . . . . . . . 10,000/10,000 $25,000/$31,250
James Stott . . . . . . . . . . . . . 6,667/8,333 $12,501/$6,249
Edward J. Crowley . . . . . . . . . . 0/0 0/0
-7-
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement with Mr. Aiken that
expires in June 1998. At the discretion of the Board of Directors, the minimum
annual compensation may be increased during the term of this agreement. As of
June 30, 1997, the minimum annual compensation payable to Mr. Aiken pursuant to
this agreement was $243,000. This agreement provides for a severance payment in
the amount of one year of base salary in the event of his death or disability
and up to three years of base salary in the event he is terminated other than
for cause, disability or death. This agreement also prohibits Mr. Aiken from
competing with the Company for a period of two years following the termination
of his employment with the Company. Mr. Aiken was granted a deferred
compensation plan in fiscal 1996. In May 1997, Mr. Aiken voluntarily cancelled
the deferred compensation plan, following the secondary offering of Riverside
Partners' shares.
The Company and Empire have entered into an employment agreement with
Edward J. Crowley, Vice President-Empire, that expires on January 31, 2000. The
agreement provides for a minimum annual compensation of $100,000, which may be
increased at the discretion of the board of directors of Empire.
PENSION BENEFITS
The Company maintains a qualified defined benefit pension plan, the
Salaried Employees Retirement Plan of Atchison Casting Corporation (the
"Retirement Plan"), of which Mr. Aiken and Mr. Kujawa are participants. The
estimated annual benefits payable under the Retirement Plan payable upon
retirement at various years of credited service and at different levels of
remuneration are as follows:
REMUNERATION YEARS OF CREDITED SERVICE AT RETIREMENT
------------ -----------------------------------------------
15 20 25 30 35
$ 50,000 $16,869 $17,506 $18,142 $18,778 $19,414
75,000 26,870 28,131 29,392 30,653 31,914
100,000 36,870 38,756 40,642 42,528 44,414
125,000 46,870 49,381 51,892 54,403 56,914
150,000(1) 56,870 60,006 63,142 66,278 69,414
- ----------------
(1) Section 401(a)(17) of the Internal Revenue Code of 1986, as amended,
and the Omnibus Budget Reconciliation Act of 1993 limit the amount of
compensation that can be considered in computing benefits under a
qualified defined benefit pension plan. For 1997, the maximum amount
of compensation allowed for use in calculating an individual's pension
benefits is $160,000. This limit may be raised in the future by
annual cost-of-living adjustments determined by the U.S. Secretary of
the Treasury.
-8-
The remuneration covered by the Retirement Plan is the average of the
highest five consecutive years during all years of service prior to eligibility
to receive benefits under the Retirement Plan of total cash remuneration,
including salary and bonus (both as reported in the Summary Compensation Table)
paid or accrued and payable in the year following accrual. As of the end of
fiscal 1997, Mr. Aiken and Mr. Kujawa each had eight years of service credited
under the Retirement Plan. Benefits shown are computed as life-only annuities
beginning at age 65 and are not reduced for Social Security benefits.
Empire sponsors a defined benefit pension plan for salaried employees, of
which Mr. Crowley is a participant. The plan was amended to cease further
benefit accruals effective July 15, 1991. The monthly plan benefit is equal to
35% of average monthly compensation. For a participant with less than 20 years
of benefit accrual service, the benefit is reduced by multiplying it by a
fraction, the numerator of which is the actual years of benefit accrual service
and the denominator of which is 20. Years of service and compensation earned
after July 15, 1991 are not credited for purposes of benefit accrual under the
plan. Mr. Crowley is 100% vested in his plan benefit and is credited with 6
years of benefit accrual service. Mr. Crowley's annual plan benefit at age 65
will be approximately $11,856, payable for life.
PROPOSAL TO APPROVE THE
AMENDED AND RESTATED ATCHISON CASTING
1993 INCENTIVE STOCK PLAN
The Board of Directors of Atchison Casting Corporation (the "Company")
approved amendments to the Atchison Casting 1993 Incentive Stock Plan (the
"Plan"), which, subject to approval by the Company's stockholders, amended and
restated the Plan to (i) increase by 400,000 the number of shares available for
grant under the Plan; and (ii) include technical changes to conform the Plan to
the deductibility requirements of Section 162(m) of the Internal Revenue Code,
as amended (the "Code").
Section 162(m) of the Code places a limit of $1,000,000 on the amount of
compensation that may be deducted by the Company in any tax year with respect to
the chief executive officer and the four other highest paid employees of the
Company, including compensation relating to incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock awards
and performance units (collectively, the "Benefits"). However, such
compensation is not subject to the deduction limit if certain limitations
approved by stockholders are applied to the Benefits granted to executives. In
order to maximize the deductibility of compensation relating to the Benefits
awarded to executive officers under the Plan, the Company is requesting its
stockholders approve the amendments to the Plan at the 1997 Annual Meeting.
The text of the Plan is set forth in Exhibit A to this Proxy Statement.
The following is intended to be a summary of the Plan's principal terms as
amended and does not purport to be a complete statement of its terms. The
following is subject to and qualified in its entirety by reference to Exhibit A.
-9-
SUMMARY OF THE PLAN
The purpose of the Plan is to attract and retain outstanding individuals as
executive officers and other key employees of the Company and its subsidiaries
and to furnish incentives to such persons by providing them the opportunity to
acquire shares of Common Stock or receive monetary payments based on the value
of such shares or on the financial performance of the Company, or both, on
advantageous terms. Currently, there are six executive officers and 74 key
employees participating in the Plan. The Plan is designed to permit the Company
to provide several different forms of benefits to meet competitive conditions
and address the particular circumstances of the individual who may be eligible
to receive Benefits under the Plan. To accomplish these objectives, the Plan
authorizes the grant of Benefits. No more than 20,000 shares of Common Stock
may be granted or awarded in the form of any Benefits in any one calender year
to any one person.
The aggregate number of shares of Common Stock reserved for issuance
pursuant to the Plan is equal to 700,000. In the event of an exercise of a
stock appreciation right, the number of shares reserved for issuance pursuant to
the Plan will be reduced by the number of shares covered by the option or
portion thereof which is surrendered in connection with the exercise of the
stock appreciation right related to such option. The number of shares reserved
for issuance pursuant to the Plan will also be reduced by the largest whole
number of shares obtained by dividing the monetary value of performance units
granted at the commencement of a performance period by the fair market value of
the shares of Common Stock at such time. To the extent that any Benefits under
the Plan lapse, expire, are terminated or canceled, any shares reserved for such
Benefits will again be available under the Plan.
The Plan will be administered by a committee (the "Committee") of at least
two persons, which shall be either the Compensation Committee of the Board of
Directors or such other committee comprised entirely of persons who qualify as
"non-employee directors" (as defined in Rule 16b-3 of the Securities and
Exchange Commission) and "outside directors" (as defined in Treasury regulations
promulgated under Section 162(m) of the Code) as the Board of Directors may from
time to time designate. The Committee has authority to establish specific terms
relative to awards granted pursuant to the Plan, including but not limited to,
vesting requirements, period of exercise after termination of employment, and
limitations on exercise.
The exercise price for any incentive stock options will be at least one
hundred percent (100%) of the fair market value of the shares of Common Stock at
the time the option is granted. The exercise price for any non-qualified stock
options will be at least eighty-five percent (85%) of the fair market value of
the shares of Common Stock at the time the option is granted. The Committee may
provide for payment of the exercise price in installment purchases, by delivery
of other shares of Common Stock having a market value equal to the exercise
price, or by any other method permitted by the Committee, including an exercise
notice accompanied by a copy of irrevocable instructions of a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the exercise
price. The period of any option will be determined by the Committee, but the
term of options may not be any longer than ten years from the date of grant.
-10-
A stock appreciation right, if granted, may permit the holder of an option
to elect to surrender the option or any portion thereof which is exercisable and
receive in exchange therefor, cash equal to the excess of the fair market value
on the date of such election over the exercise price of the shares covered by
the option which is surrendered in whole or in part. The Committee may, in its
discretion, satisfy a participant's right to receive such cash, in whole or in
part, by the right to receive shares of Common Stock valued as of the date of
the participant's election. Stock appreciation rights may be granted to the
holder of any stock option granted pursuant to the Plan as a separate right. It
is not currently expected that stock appreciation rights will be granted under
the Plan.
Restricted stock awards consist of shares of Common Stock awarded to
participants without any payment for such awards, as additional compensation for
their services to the Company or one of its subsidiaries. Restricted stock
awards will be subject to such terms and conditions as the Committee deems
appropriate, including restrictions on the sale or other disposition of the
shares and rights of the Company to reacquire such shares upon termination of a
participant's employment within periods specified in the agreement relating to
such an award.
The Plan also permits the grant of performance units having monetary value
which may be earned in whole or in part, over a period of not more than five
years, if the Company achieves certain performance goals established by the
Committee. Payment of an award earned may be in cash, shares of Common Stock or
a combination of both, and may be made when earned, or vested and deferred.
The closing price per share of the Company's Common Stock as reported on
the NYSE on September 15, 1997 was $20.25.
The Plan provides that, upon a Change in Control (as defined in the Plan),
all Benefits will be deemed to have been fully vested or earned.
The Plan is not a qualified plan under Section 401(a) of the Code and is
not subject to the provisions of the Employee Retirement Income Security Act of
1974.
- --------------------------------------------------------------------------------
Benefits Under the Plan to Date
-------------------------------
Name and Position Incentive Stock
----------------- Options Received
----------------
Hugh H. Aiken, CEO.................................... 80,000
John R. Kujawa, Group Vice President.................. 9,000
Donald J. Marlborough, Group Vice President........... 20,000
James Scott, Group Vice President..................... 15,000
Edward J. Crowley, Vice President..................... 0
Executive Officers as a group......................... 136,000
Employees as a group (excluding Executive Officers)... 109,166
- --------------------------------------------------------------------------------
-11-
FEDERAL TAX ASPECTS
Under the Plan, the Committee may grant options which qualify as "incentive
stock options" ("ISO") as defined in Section 422 of the Code. Under Code
Section 422, the grantee of an ISO will not realize taxable income by reason of
the grant or the exercise of an ISO. If an optionee exercises an ISO and
retains the acquired shares for at least one year after the date of transfer and
for at least two years after the date of grant, any gain realized upon
disposition will be taxable to the grantee as mid-term capital gain (or, if held
more than eighteen months after the exercise date, as long-term capital gain),
and the Company will not be entitled to any tax deduction. However, if the
grantee does not satisfy the applicable holding periods, the difference between
the option price and the lesser of the fair market value of the shares on the
date of exercise or the price received upon disposition of the shares generally
will be treated as compensation taxable to the grantee as ordinary income. Any
additional gain upon such disposition will be taxed as short-term capital gain.
The Company then will be entitled to a deduction in the amount constituting
ordinary income to the grantee. At the time of exercise, the difference between
the price paid and the market value of the stock (the "bargain element"), is
treated as an "adjustment" in the calculation of "alternative minimum taxable
income" and may result in the imposition of the "alternative minimum tax."
The grantee of a non-qualified stock option will not realize income until
the option is exercised. At the time of exercise, the grantee will realize
ordinary income, subject to withholding, and the Company will become entitled to
a corresponding deduction in the amount by which the market value of the
purchased shares at the time of exercise exceeds the exercise price for such
shares. If an optionee thereafter sells such shares, the gain or loss, if any,
realized upon such disposition will constitute short-term, mid-term or long-term
capital gain or loss to the optionee, depending upon the length of time such
shares are held after exercise of the options associated with such shares.
The exercise of stock appreciation rights or the receipt of cash or shares
of Common Stock in payment of performance units gives rise to ordinary income in
the nature of compensation in the year of exercise or payment, subject to
withholding, equal to the fair market value of the shares of Common Stock
received on the date of exercise or payment and any cash received.
Under Code Section 83, no income is realized when an award of restricted
stock is made if the stock is subject to forfeiture upon the termination of
employment before certain periods of time expire. As these restrictions lapse,
ordinary income is realized by the grantee based on the fair market value of the
award shares on the date such shares are released from the restrictions. If the
market value of the restricted stock increases between the time of the award and
the time of vesting, a larger amount will be taken into income at the time of
vesting than would have been taken into income at the time of the award. Code
Section 83(b) permits the grantee of the restricted stock to elect within 30
days following the grant to include in income at that time the fair market value
of the restricted stock (the "Section 83(b) Election"). No further taxation
occurs until the stock is sold, at which time gain or loss is measured by the
difference between the amount realized on the sale and the amount included
previously in income pursuant to the Section 83(b) Election. Such gain is
treated as short-term, mid-term
-12-
or long-term capital gain, depending upon the holding period of the shares from
the date of the grant of the restricted shares.
A Section 83(b) Election prevents any increase in the fair market value of
the restricted stock from the grant date from being taxable as compensation
income when the restricted stock award vests. However, if the market value has
decreased when the restricted stock vests, there is no provision for reducing
the amount already taken into income. Further, if the restricted stock is
forfeited after the Section 83(b) Election is made, no deduction is allowed for
the forfeited stock. Consequently, while the Section 83(b) Election fixes the
ordinary income portion of the restricted stock award, the making of such an
election carries with it certain risks in the event the market price of the
shares of Common Stock decreases or any part or all of the award is forfeited.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of the shares of Common
Stock cast at the Company's Annual Meeting is required to approve the Plan as
amended and restated. Unless marked to the contrary, proxies received will be
voted FOR approval of the Plan as amended and restated.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
PLAN.
PERFORMANCE OF THE COMPANY'S COMMON STOCK
The graph set forth below compares the percentage change in cumulative
stockholder return of the Company's Common Stock, from October 4, 1993 (the date
the Company commenced its initial public offering of Common Stock), to June 30,
1997 (the Company's fiscal year end), against certain other indexes.
For the prior three years, the Company has used the cumulative return of
the Index for the Nasdaq Stock Market (U.S. Companies only) (the "Nasdaq
Index"), and an index prepared by the Center for Research in Security Prices at
The University of Chicago Graduate School of Business consisting of stocks of
U.S. companies traded on Nasdaq that transact business in primary metal
industries (S.I.C. 3300-3399) (the "Nasdaq Metals Industry Index") covering the
same time period.
As a result of the change in trading of the Company's Common Stock from the
Nasdaq Stock Market to the New York Stock Exchange in December 1996, the Company
has decided to change from the indexes identified above to the cumulative return
of the Index for the New York Stock Exchange (U.S. Companies only) (the "NYSE
Index") and an index prepared by the Center for Research in Security Prices at
the University of Chicago Graduate School of Business consisting of stocks of
U.S. companies traded on the New York Stock Exchange
that transact business in primary metals industries (S.I.C. 3300-3399) (the
"NYSE Metals Industry Index") covering the same period. In accordance with SEC
regulations, both the former and current indexes are presented in the following
graph this year.
-13-
The Company undertakes to provide any stockholder upon written request,
without charge, a list of the component issues in any of the indexes. The graph
is based on $100 invested on October 4, 1993, in the Company's Common Stock and
each of the indexes, each assuming dividend reinvestment. The historical stock
price performance shown on this graph is not necessarily indicative of future
performance.
-14-
$200
-----------------------------------------------------------------------------
() $197.60
$190 [] $193.60
-----------------------------------------------------------------------------
$180
-----------------------------------------------------------------------------
* $178.70
$170
-----------------------------------------------------------------------------
$160
-----------------------------------------------------------------------------
[] $159.20
// $155.40
$150 ()$150.90
-----------------------------------------------------------------------------
$140
-----------------------------------------------------------------------------
* $133.60
$130 //$132.20
-----------------------------------------------------------------------------
* $126.20 - $126.70
[] $124.00
$120 // $120.00 - $120.00
-----------------------------------------------------------------------------
() $119.80
$110 * $111.00
-----------------------------------------------------------------------------
- $109.50
- $106.70
$100 - $100.00
// $100.80
-----------------------------------------------------------------------------
() $97.50
$ 90 [] $92.90
-----------------------------------------------------------------------------
10/4/93 6/30/94 6/30/95 6/30/96 6/30/97
- --------------------------------------------------------------------------------------------
Atchison Casting NASDAQ Index Nasdaq Metals Industry Index
--- - --- --- [] --- --- // ---
NYSE Index NYSE Metals Industry Index
--- () --- --- * ---
- --------------------------------------------------------------------------------------------
-15-
CERTAIN TRANSACTIONS
Richard J. Sitarz, Vice President-Prospect, is a party to an Employee
Incentive Stock Agreement, pursuant to which Mr. Sitarz was awarded 20,000
shares of Prospect's Class B common stock, which vest annually over five years
or upon an earlier date if certain events occur. ACC holds an irrevocable proxy
in its favor with respect to all such shares that are not vested. This
agreement also provides, among other things, that ACC has the right to purchase
such shares under certain circumstances, the obligation to purchase such shares
under other circumstances, and the right to cause such shares to be sold if ACC
sells more than one-half of its capital stock in a single transaction or a
series of related transactions. Such shares may be exchanged for the Company's
Common Stock after five years from the date of issue based on relative book
values of the shares at the time of such exchange.
As part of the agreement to purchase Kramer International from Jim Stott
and another owner, ACC agreed to pay Mr. Stott, Group Vice President, $750,000
if by January 3, 1997 he causes net sales at ACC and any of its subsidiaries
(other than Kramer) to increase in the aggregate by $7.5 million in regularly
recurring annual sales while he is an employee of Kramer provided that net sales
volume at Kramer does not fall below Kramer's fiscal 1994 net sales volume at
the same time. This agreement may be extended. In addition, on December 30,
1996, Mr. Stott and another individual sold a manufacturing facility to Kramer
for which Mr. Stott received $175,000 of the purchase price.
The Company has entered into a stock option agreement with Mr. Crowley
which provides the Company an option to purchase the 26,895 shares of Common
Stock issued to Mr. Crowley in connection with the Company's acquisition of
Empire if Mr. Crowley ceases to be employed by the Company before January 31,
2000. The purchase option does not arise, however, if Mr. Crowley's employment
is terminated without cause or as a result of Mr. Crowley's disability. The
option price is $250,000 if Mr. Crowley's employment ceases before January 31,
1998, and increases annually in $100,000 increments up to $450,000.
As part of the employment agreement between Mr. Charles T. Carroll (a Vice
President of the Company) and The G & C Foundry Company, Mr. Carroll was paid
$200,000 in June 1997 in change of control benefits resulting from the
acquisition of G & C by the Company.
For a discussion of certain other transactions, see "Election of Directors
- -- Compensation Committee Interlocks and Insider Participation," "Compensation
Committee Report on Executive Compensation" and "Executive Compensation --
Employment Contracts."
CERTAIN BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth information as of September 15, 1997,
concerning the shares of Common Stock beneficially owned by (i) each person
known by the Company
-16-
to be the beneficial owner of 5% or more of the Company's outstanding Common
Stock, (ii) each of the directors of the Company, (iii) each of the executive
officers of the Company named in the Summary Compensation Table and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
indicated, the named beneficial owner has sole voting and investment power over
the shares listed.
NUMBER OF SHARES PERCENTAGE OF
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY OWNED COMMON STOCK OWNED
--------------------------- ------------------ ------------------
Wanger Asset Management, Ltd. (1) . 559,900 6.9%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Hugh H. Aiken (2) . . . . . . . . . 304,119 3.7
David L. Belluck (3). . . . . . . . 23,150 *
Ray H. Witt (4) . . . . . . . . . . 197,577 2.4
John O. Whitney (3)(5). . . . . . . 13,626 *
Stuart Z. Uram. . . . . . . . . . . 0
John R. Kujawa (6). . . . . . . . . 31,183 *
Donald J. Marlborough (7) . . . . . 10,072 *
James Stott (8) . . . . . . . . . . 8,167 *
Edward J. Crowley . . . . . . . . . 27,129 *
All directors and executive officers
as a group (12 persons) (9). . . 651,306 8.0
- -------------------
* Less than 1% of Common Stock outstanding.
(1) Based on a Schedule 13G Amendment No. 1 dated February 14, 1997,
Wanger Asset Management, L.P. ("WAM") is an investment adviser, which
shares voting and dispositive powers with Wanger Asset Management
Ltd., its general partner, and Mr. Ralph Wanger, the principal
stockholder of its general partner. WAM also shares voting and
dispositive powers with certain of its clients who do not beneficially
own 5% of more of the outstanding shares of Common Stock.
(2) Includes 40,000 shares subject to exercisable options, 500 shares
owned by Mr. Aiken's wife and 500 shares owned by each of Mr. Aiken's
three children.
(3) Includes 10,000 shares subject to exercisable options held by each of
Messrs. Belluck and Whitney, which they received pursuant to the
Atchison Casting Non-Employee Director Option Plan.
(4) Mr. Witt is Chairman of the Board of CMI International, Inc., which
received 175,583 shares of Common Stock of the Company in connection
with the Company's acquisition of the operating assets of CMI-Quaker
Alloy, Inc. Includes 10,000 shares subject to an exercisable option
received by Mr. Witt in June 1996.
(5) Includes 800 shares owned by Mr. Whitney's wife.
(6) Includes 6,000 shares subject to exercisable options.
(7) Includes 10,000 shares subject to exercisable options.
(8) Includes 6,667 shares subject to exercisable options.
(9) Includes 111,333 shares subject to exercisable options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all Section 16(a) filing requirements
applicable to its directors, executive officers and ten percent holders were
satisfied during the fiscal year ended June 30, 1997.
-17-
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
selected the firm of Deloitte & Touche LLP as independent auditors to examine
the financial statements of the Company and its subsidiaries for the fiscal year
1998. Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this proxy statement, management knows of no other
matters to be presented at the Annual Meeting. However, if any other matters
shall properly come before the meeting, it is the intention of the persons named
in the enclosed proxy to vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders intended to be presented at the next annual
meeting, scheduled for November 20, 1998, must be received by the Company no
later than May 29, 1998, in order to be considered for inclusion in the proxy
statement relating to that meeting.
ATCHISON CASTING CORPORATION
HUGH H. AIKEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Dated: September 26, 1997
Atchison, Kansas
-18-
EXHIBIT A
AMENDED AND RESTATED
ATCHISON CASTING 1993 INCENTIVE STOCK PLAN
1. PURPOSE.
The purpose of the Atchison Casting 1993 Incentive Stock Plan (the
"Plan") is to attract and retain outstanding individuals as officers and other
employees of Atchison Casting Corporation (the "Company") and its subsidiaries,
and to furnish incentives to such persons by providing such persons
opportunities to acquire common shares of the Company, or monetary payments
based on the value of such shares or the financial performance of the Company,
or both, on advantageous terms as herein provided (the "Benefit" or "Benefits").
2. ADMINISTRATION.
The Plan will be administered by a committee (the "Committee") of at
least two persons which shall be either the Compensation Committee of the Board
of Directors of the Company or such other committee comprised entirely of
persons who qualify as "non-employee directors" (as defined in Rule 16b-3 of the
Securities and Exchange Commission) and "outside directors" (as defined in
Treasury regulations promulgated under Section 162(m) of the Internal Revenue
Code, as amended) as the Board of Directors may from time to time designate.
The Committee shall interpret the Plan, prescribe, amend and rescind rules and
regulations relating thereto, and make all other determinations necessary or
advisable for the administration of the Plan. A majority of the members of the
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of the Committee
pursuant to the Plan may be made without notice of meeting of the Committee by a
writing signed by all of the Committee members, or such lesser portion thereof
as may be allowed by law.
3. PARTICIPANTS.
Participants in the Plan will consist of such officers and other
employees of the Company and its subsidiaries as the Committee in its sole
discretion may designate from time to time to receive Benefits. The Committee's
designation of a participant in any year shall not require the Committee to
designate such person to receive a Benefit in any other year. The Committee
shall consider such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective Benefits, including
without limitation (i) the financial condition of the Company; (ii) anticipated
profits for the current or future years; (iii) contributions of participants to
the profitability and development of the Company; and (iv) other compensation
provided to participants.
4. TYPES OF BENEFITS.
Benefits of the Plan may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Non-qualified Stock Options; (c) Stock Appreciation
Rights; (d) Restricted Stock Awards; and (e) Performance Units, all as described
below. Any Benefits awarded pursuant to the Plan shall be evidenced by a
written agreement containing such terms and conditions as the Committee may
determine, including but not limited to vesting of Benefits. Notwithstanding
any other provision herein to the contrary, no more than 20,000 shares of Common
Stock may be granted or awarded in the form of any Benefits in any one calender
year to any one person.
5. SHARES RESERVED UNDER THE PLAN.
There is hereby reserved for issuance pursuant to the Plan, subject to
the adjustments under paragraph 16, 700,000 shares of Common Stock, par value
$0.01 per share, of the Company (the "Common Shares"), which shares may be newly
issued or treasury shares.
If there is a lapse, expiration, termination or cancellation of any
Benefit granted without the issuance of Common Shares or payment of cash, the
shares subject to or reserved for such Benefit may again be used for new
options, rights or awards of any sort authorized pursuant to this Plan;
provided, however, that in no event may the number of Common Shares issued
exceed the total number of shares reserved for issuance pursuant to this Plan.
6. INCENTIVE STOCK OPTION PLAN.
Incentive Stock Options will consist of options to purchase Common
Shares at purchase prices not less than one hundred percent (100%) of the Fair
Market Value (as defined in paragraph 16 below) of such Common Shares on the
date of grant. Incentive Stock Options will be exercisable over not more than
ten (10) years after the date of grant. Unless otherwise provided for in a
written agreement governing the grant of an Incentive Stock Option, (a) in the
event of termination of employment for any reason other than retirement,
disability or death, the right of the optionee to exercise an Incentive Stock
Option shall terminate upon the earlier of the end of the original term of the
option or three (3) months after the optionee's last day of work for the Company
and its subsidiaries; (b) if the optionee should die within three (3) months
after termination of employment for any reason other than retirement or
disability, the right of his or her successor-in- interest to exercise an
Incentive Stock Option shall terminate upon the earlier of the end of the
original term of the option or three (3) months after the date of such death;
(c) in the event of termination of employment due to retirement or disability,
or if the optionee should die while employed, the right of the optionee or his
or her successor-in-interest to exercise an Incentive Stock Option shall
terminate upon the earlier of the end of the original term of the option or
twelve (12) months after the date of such retirement, disability or death; and
(d) if the optionee should die within twelve (12) months after termination of
employment due to retirement or disability, the right of his or her
successor-in- interest to exercise an Incentive Stock Option shall terminate
upon the later of twelve (12) months after the date of such retirement or
disability
-2-
or three (3) months after the date of such death, but not later than the end of
the original term of the option. The aggregate Fair Market Value (determined as
of the time the option is granted) of the Common shares with respect to which
Incentive Stock Options are exercisable for the first time by any individual
during any calendar year (pursuant to all option plans of the Company and its
subsidiaries) shall not exceed $100,000. An Incentive Stock Option granted to a
participant who is subject to Section 16 of the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), may be exercised only after six (6)
months from its grant date (unless otherwise permitted pursuant to Rule 16b-3 of
the Securities and Exchange Commission).
7. NON-QUALIFIED STOCK OPTION PLAN.
Non-qualified Stock Options will consist of options to purchase Common
Shares at purchase prices not less than eighty-five percent (85%) of the Fair
Market Value of such Common Shares on the date of grant. Non-qualified Stock
Options will be exercisable over not more than ten (10) years after the date of
grant. Unless otherwise provided for in a written agreement governing the grant
of a Non-Qualified Stock Option, (a) in the event of termination of employment
for any reason other than retirement, disability or death, the right of the
optionee to exercise a Non-qualified Stock Option shall terminate upon the
earlier of the end of the original term of the option or three (3) months after
the optionee's last day of work for the Company and its subsidiaries; (b) if the
optionee should die within three (3) months after termination of employment for
any reason other than retirement or disability, the right of his or her
successor-in-interest to exercise a Non-qualified Stock Option shall terminate
upon the earlier of the end of the original term of the option or three (3)
months after the date of such death; (c) in the event of termination of
employment due to retirement or disability, or if the optionee should die while
employed, the right of the optionee or his or her successor-in-interest to
exercise a Non-qualified Stock Option shall terminate upon the earlier of the
end of the original term of the option or twelve (12) months after the date of
such retirement, disability or death; and (d) if the optionee should die within
twelve (12) months after termination of employment due to retirement or
disability, the right of his or her successor-in-interest to exercise a
Non-qualified Stock Option shall terminate upon the later of twelve (12) months
after the date of such retirement or disability or three (3) months after the
date of such death, but not later than the end of the original term of the
option. A Non-qualified Stock Option granted to a participant who is subject to
Section 16 of the Securities Exchange Act may be exercised only after six (6)
months from its grant date (unless otherwise permitted pursuant to Rule 16b-3 of
the Securities and Exchange Commission).
8. STOCK APPRECIATION RIGHTS PLAN.
The Committee may, in its discretion, grant a Stock Appreciation Right
to the holder of any Stock Option granted pursuant hereto. Such Stock
Appreciation Rights shall be subject to such terms and conditions consistent
with the Plan as the Committee shall impose from time to time, including the
following:
-3-
(a) A Stock Appreciation Right may be granted with respect to a
Stock Option at the time of its grant or at any time thereafter.
(b) Subject to paragraph 8(d) below, Stock Appreciation Rights will
permit the holder to surrender any related Stock Option or portion thereof which
is then exercisable and to elect to receive in exchange therefor cash in an
amount equal to:
(i) The excess of the Fair Market Value on the date of such
election of one Common Share over the option price multiplied by
(ii) The number of shares covered by such option or portion
thereof which is so surrendered.
(c) A Stock Appreciation Right granted to a participant who is
subject to Section 16 of the Securities Exchange Act may be exercised only after
six (6) months from its grant date (unless otherwise permitted pursuant to Rule
16b-3 of the Securities and Exchange Commission).
(d) The Committee shall have the discretion to satisfy a
participant's right to receive the amount of cash determined pursuant to
subparagraph (b) hereof, in whole or in part, by the delivery of Common Shares
valued as of the date of the participant's election.
(e) In the event of the exercise of a Stock Appreciation Right, the
number of shares reserved for issuance pursuant to this Plan shall be reduced by
the number of shares covered by the Stock Option or portion thereof surrendered.
9. RESTRICTED STOCK AWARDS PLAN.
Restricted Stock Awards will consist of Common Shares transferred to
participants without other payment therefor as additional compensation for their
services to the Company or one of its subsidiaries. Restricted Stock Awards
shall be subject to such terms and conditions as the Committee determines
appropriate including, without limitation, restrictions on the sale or other
disposition of such shares and rights of the Company to reacquire such shares
upon termination of the participant's employment within specified periods.
Subject to such other restrictions as are imposed by the Committee, the Common
Shares covered by a Restricted Stock Award granted to a participant who is
subject to Section 16 of the Securities Exchange Act may be sold or otherwise
disposed of only after six (6) months from the grant date of the award (unless
otherwise permitted pursuant to Rule 16b-3 of the Securities and Exchange
Commission).
10. PERFORMANCE UNITS PLAN.
Performance Units will consist of monetary units granted to
participants which may be earned in whole or in part if the Company achieves
certain goals established by the Committee
-4-
over a designated period of time, but not in any event more than five (5) years.
The goals established by the Committee may include earnings per share, return on
stockholder equity, return on average total capital employed, and/or such other
goals as may be established by the Committee in its discretion. In the event
the minimum corporate goal established by the Committee is not achieved at the
conclusion of a period, no amount shall be paid to or vested in the participant.
In the event the maximum corporate goal is achieved, one hundred percent (100%)
of the monetary value of the Performance Units shall be paid to or vested in the
participants. Partial achievement of the maximum goal may result in a payment
or vesting corresponding to the degree of achievement. Payment of an award
earned may be in cash or in Common Shares (valued as of the date on which
certificates for such Common Shares are issued to the participant) or in a
combination of both, and may be made when earned, or vested and deferred, as the
Committee in its sole discretion determines. Deferred awards shall earn
interest on the terms and at a rate determined by the Committee. The number of
shares reserved for issuance pursuant hereto shall be reduced by the largest
whole number obtained by dividing the monetary value of the units at the
commencement of the performance period by the Fair Market Value of a Common
Share at such time, provided that such number of shares may again become
available for issuance pursuant to this Plan as is provided in paragraph 5
hereof.
11. NONTRANSFERABILITY.
Each Stock Option and Stock Appreciation Right granted pursuant to
this Plan shall not be transferable other than by will or the laws of descent
and distribution, and shall be exercisable, during the participant's lifetime,
only by the participant. A participant's interest in a Performance Unit shall
not be transferable until payment or delivery of the award is made.
12. OTHER PROVISIONS.
The award of any Benefit may also be subject to other provisions
(whether or not applicable to the Benefit awarded to any other participant) as
the Committee determines appropriate including, without limitation, provisions
for installment purchases of Common Shares granted pursuant to Stock Options,
provisions for the payment of the purchase price of shares granted pursuant to
Stock Options by delivery of other Common Shares of the Company which have been
owned for at least six months and have a then Fair Market Value equal to the
purchase price of such shares, restrictions on resale or other disposition, such
provisions as may be appropriate to comply with federal or state securities laws
and stock exchange or market requirements, and understandings or conditions as
to the participant's employment.
The Committee may, in its discretion, permit payment of the purchase
price of shares granted pursuant to Stock Options by delivery of a properly
executed exercise notice 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 purchase price. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
-5-
The Committee may, in its discretion and subject to such rules as it
may adopt, permit a participant to pay all or a portion of the federal, state
and local taxes, including FICA withholding tax, arising in connection with the
following transactions: (a) the exercise of a Non-qualified Stock Option, (b)
the lapse of restrictions on Common Shares received as a Restricted Stock Award,
or (c) the receipt or exercise of any other Benefit, by paying cash for such
amount or by electing (i) to have the Company withhold Common Shares, (ii) to
tender back Common Shares received in connection with such Benefit or (iii) to
deliver other previously acquired Common Shares of the Company, and, in each
case, having a Fair Market Value approximately equal to the amount to be
withheld.
13. TERM OF PLAN AND AMENDMENT, MODIFICATION, CANCELLATION OR ACCELERATION
OF BENEFITS.
No Benefit shall be granted more than ten (10) years after the date of
the approval of this Plan by the stockholders; provided, however, that the terms
and conditions applicable to any Benefits granted prior to such date may at any
time be amended, modified or cancelled by mutual agreement between the Committee
and the participant or such other persons as may then have an interest therein,
so long as any amendment or modification does not increase the number of Common
Shares issuable pursuant to this Plan; and provided further, that the Committee
may, at any time and in its sole discretion, declare any or all Stock Options
and Stock Appreciation Rights then outstanding pursuant to this Plan to be
exercisable, any or all then outstanding Restricted Stock Awards to be vested,
and any or all then outstanding Performance Units to have been earned, whether
or not such options, rights, awards or units are then otherwise exercisable,
vested or earned.
14. TAXES.
The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable pursuant to this Plan
after giving the person entitled to receive such amount or shares notice as far
in advance as practicable, and the Company may defer making payment or delivery
if any such tax may be pending unless and until indemnified to its satisfaction.
15. DEFINITIONS.
FAIR MARKET VALUE. The term "Fair Market Value" of the Company's
Common Shares at any time shall be determined in such manner as the Committee
may deem equitable or required by applicable laws or regulations.
SUBSIDIARY. The term "subsidiary," for all purposes other than the
Incentive Stock Option Plan described in paragraph 6, shall mean any
corporation, partnership, joint venture or business trust, fifty percent (50%)
or more of the control of which is owned, directly or indirectly, by the
Company. For Incentive Stock Option Plan purposes, the term "subsidiary"
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shall be defined as provided in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code").
CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred if:
(a) any "person" as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the
"beneficial owner" as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the Company's then
outstanding securities. For purposes of this clause (a), the term
"beneficial owner" does not include any employee benefit plan maintained by
the Company that invests in the Company's voting securities; or
(b) during any period of two (2) consecutive years (not including any
period prior to the date on which the Plan was approved by the Company's
Board of Directors) there shall cease to be a majority of the Board
comprised as follows: individuals who at the beginning of such period
constitute the Board or new directors whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all the
Company's assets; provided, however, that no Change in Control will be
deemed to have occurred if such merger, consolidation, sale or disposition
of assets, or liquidation is not subsequently consummated.
STOCK OPTIONS. The term "Stock Options" shall mean Incentive Stock
Options and Non-qualified Stock Options pursuant to the Plan.
DISABILITY. The term "disability" for all purposes of this Plan shall
be determined by the Committee in such manner as the Committee deems equitable
or required by the applicable laws or regulations.
RETIREMENT. The term "retirement" for all purposes of the Plan shall
be determined by the Committee in such manner as the Committee may deem
equitable or required by law.
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16. ADJUSTMENT PROVISIONS
If the Company shall at any time change the number of issued Common
Shares without new consideration to the Company (such as by stock dividends or
stock splits), the total number of shares reserved for issuance pursuant to this
Plan and the number of shares covered by each outstanding Benefit shall be
adjusted so that the aggregate consideration payable to the Company, and the
value of each such Benefit shall not be changed. The Committee shall also have
the right to provide for the continuation of Benefits or for other equitable
adjustments after changes in the Common Shares resulting from reorganization,
sale, merger, consolidation or similar occurrence.
Notwithstanding any other provision of this Plan, and without
affecting the number of shares otherwise reserved or available pursuant hereto,
the Committee may authorize the issuance or assumption of Benefits in connection
with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate.
Subject to the six-month holding requirements of paragraphs 6, 7, 8(c)
and 9 but notwithstanding any other provision of this Plan, upon the occurrence
of a Change in Control:
(a) All Stock Options then outstanding pursuant to this Plan shall
become fully exercisable as of the date of the Change in Control, whether
or not then otherwise exercisable;
(b) All Stock Appreciation Rights then outstanding shall become fully
exercisable as of the date of the date of the Change in Control, whether or
not then otherwise exercisable;
(c) All terms and conditions of all Restricted Stock Awards then
outstanding shall be deemed satisfied as of the date of the Change in
Control; and
(d) All Performance Units then outstanding shall be deemed to have
been fully earned as determined by the Committee and to be immediately
payable, in cash, as of the date of the Change in Control and shall be paid
within thirty (30) days thereafter.
17. AMENDMENT AND TERMINATION OF PLAN.
The Committee may amend this Plan from time to time or terminate this
Plan at any time, but no such action shall reduce the then existing amount of
any participant's Benefit or adversely change the terms and conditions thereof
without the participant's consent. No amendment of this Plan shall result in
any Committee member's losing his or her status as a "disinterested person" as
defined in Rule 16b-3 of the Securities and Exchange Commission with respect to
any employee benefit plan of the Company or result in the program's losing its
status as a protected plan under said Rule 16b-3.
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18. STOCKHOLDER APPROVAL.
This Plan was adopted by the Board of Directors of the Company on
August 10, 1993. This Plan and any Benefit granted pursuant thereto shall be
null and void if stockholder approval is not obtained within twelve (12) months
of the adoption of the Plan by the Board of Directors.
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PROXY PROXY
ATCHISON CASTING CORPORATION
400 South Fourth Street
Atchison, Kansas 66002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Kevin T. McDermed, as Proxy, with the power
to appoint his substitute, and hereby authorizes him to represent and to vote,
as designated below, all the shares of Common Stock of Atchison Casting
Corporation the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on November 21, 1997, or any adjournment or postponement
thereof. This proxy revokes all prior proxies given by the undersigned.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
(Continued and to be signed on the reverse side)
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ATCHISON CASTING CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTOR --
FOR WITHHOLD
NOMINEE: Hugh H. Aiken // //
FOR AGAINST ABSTAIN
2. TO APPROVE THE AMENDED AND RESTATED // // //
ATCHISON CASTING 1993 INCENTIVE STOCK
PLAN
3. IN HIS DISCRETION, THE PROXY IS THIS PROXY, WHEN PROPERLY EXECUTED,
AUTHORIZED TO VOTE UPON SUCH OTHER WILL BE VOTED IN THE MANNER
BUSINESS AS MAY PROPERLY COME BEFORE DIRECTED HEREIN BY THE UNDERSIGNED
THE MEETING AND ALL MATTERS INCIDENT STOCKHOLDER. IF NO DIRECTION IS
TO THE CONDUCT OF THE MEETING. MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
Dated:________________, 1997
Signature(s)_______________________
___________________________________
Please sign exactly as name appears
at left. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by an authorized
person.
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