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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
HUFFY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HUFFY CORPORATION
(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.
/ / $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.
(1) Title of each class of securities to which transaction
applies:____________________________________________________________
(2) Aggregate number of securities to which transaction
applies:____________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):_________________________________________________________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:______________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________________________________________
(2) Form, Schedule or Registration Statement No.:_________________________
(3) Filing Party:_________________________________________________________
(4) Date Filed:___________________________________________________________
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HUFFY
CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1996
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Huffy Corporation which will be held this year on Friday, April 26, 1996, at
10:00 a.m. Eastern Daylight Time, at Huffy Service First, Inc., 8521 Gander
Creek Drive, Miamisburg, Ohio.
Enclosed are directions to the location of the Annual Meeting and an RSVP
to indicate your present intention to attend the Meeting in person.
Formal Notice of the Meeting and Proxy Statement accompany this letter.
Please sign and return the enclosed proxy card in the envelope provided as soon
as possible so that your shares will be represented at the meeting. We hope you
will be present at the meeting.
Very truly yours,
/s/ Richard L. Molen
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Richard L. Molen
Chairman of the Board
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HUFFY
CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1996
The Annual Meeting of Shareholders of Huffy Corporation (the "Company"), an
Ohio corporation, will be held at Huffy Service First, Inc., 8521 Gander Creek
Drive, Miamisburg, Ohio, on Friday, April 26, 1996, at 10:00 a.m., Eastern
Daylight Time, for the following purposes:
1. To elect three Directors to serve for terms of three years, and one
Director to serve for a term of less than one year.
2. To approve an amendment to the Company's 1988 Stock Option Plan and
Restricted Share Plan increasing the number of shares available for the
grant of options thereunder by 650,000 shares and adding an annual
limitation to the Plan restricting the number of shares that may be
granted in any one year to an employee.
3. To ratify the appointment of KPMG Peat Marwick LLP as independent public
accountants for 1996.
4. To transact such other business as properly may be brought before the
Annual Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on March 1, 1996, are
entitled to vote at the meeting or any adjournment(s) thereof.
By Order of the Board of Directors
/s/ Nancy A. Michaud
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Nancy A. Michaud
Secretary
Dayton, Ohio
March , 1996
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER YOU
EXPECT TO ATTEND OR NOT, PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL
IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
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HUFFY CORPORATION
P.O. BOX 1204
DAYTON, OHIO 45401
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1996
MARCH , 1996
GENERAL INFORMATION
PERSONS MAKING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Huffy Corporation (the "Company") to be
used at the Annual Meeting of Shareholders to be held on April 26, 1996, and any
adjournment(s) thereof. This Proxy Statement and the accompanying proxy card
were first mailed to Shareholders on or about March , 1996. The Company will
bear the cost of soliciting proxies and will, upon request, reimburse banks,
brokerage houses and other institutions for their expenses in forwarding proxy
materials to their principals. Directors, Officers and employees of the Company
may solicit proxies personally from some Shareholders if proxies are not
received promptly. In addition, the Company has retained Morrow & Co., Inc. to
assist in the solicitation of proxies, for which the Company will pay fees
estimated to total $3,500.
VOTING SECURITIES
The authorized voting capital stock of the Company consists of 60,000,000
shares of Common Stock, $1.00 par value, of which there were
shares issued and outstanding as of March 1, 1996, which is the record date for
the determination of the holders of Common Stock entitled to receive notice of
and to vote at the Annual Meeting. Each share of Common Stock entitles the
holder thereof to one vote.
ACTIONS TO BE TAKEN BY HOLDERS OF PROXIES
Unless otherwise directed by the person giving the proxy, all properly
executed proxies will be voted: (1) for the election of Patrick W. Rooney, Jack
D. Michaels, James F. Robeson and Joseph P. Viviano as Directors of the Company;
(2) in favor of the adoption of the amendment to the 1988 Stock Option Plan and
Restricted Share Plan, described at page 18 herein; (3) in favor of ratification
of the appointment of KPMG Peat Marwick LLP as independent public accountants
for the Company for 1996; and (4) at the discretion of the holders of the
proxies, in the transaction of such other business as may properly come before
the Annual Meeting or any adjournment(s) thereof.
The holders of the proxies may, in their discretion, vote for substitute
nominee(s) designated by the Board of Directors, or take action to reduce the
number of Directors, in the event that any nominee becomes unable to serve for
any reason presently unknown.
A proxy may be revoked at any time before exercise by written notice to the
Company bearing a later date than the proxy, by submission of a later dated
proxy, or by voting in person in open meeting (although presence at the Annual
Meeting will not in and of itself constitute revocation of the proxy). Any
written notice revoking a proxy should be sent to Huffy Corporation, P.O. Box
1204, Dayton, Ohio 45401, Attention: Nancy A. Michaud, Secretary.
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ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. The Board
of Directors of the Company recommends that three Directors be elected each for
a three year term expiring in 1999 and that one Director be elected for a term
of less than one year expiring in 1997. The Board of Directors of the Company
currently has 12 Directors: four whose terms expire in 1996, five whose terms
expire in 1997, and three whose terms expire in 1998. Jack D. Michaels, Patrick
W. Rooney and James F. Robeson, whose terms expire in 1996, have each been
recommended by the Nominating and Governance Committee of the Board of Directors
and nominated by the Board of Directors for election to the Board of Directors
for a three year term expiring in 1999. Joseph P. Viviano has also been
recommended by the Nominating and Governance Committee of the Board of Directors
and nominated by the Board of Directors for election to the Board of Directors
for a term of less than one year commencing on September 1, 1996 and expiring in
1997. Because of previous commitments, Mr. Viviano has requested that his term
commence on September 1, 1996 at which time he will possess the available time
to properly fulfill his responsibilities as a Director. Thomas D. Gleason, whose
term expires in 1996, is retiring from the Board of Directors in accordance with
the Company's Director Retirement Policy.
Under Ohio law, if a Shareholder gives written notice to the President, a
Vice President or the Secretary of the Company, not less than 48 hours before
the time fixed for the Annual Meeting, that such Shareholder desires the voting
at the election of Directors to be cumulative, and if an announcement of the
giving of such notice is made upon the convening of the meeting by the chairman
or secretary of the meeting or by or on behalf of the Shareholder giving such
notice, then the Directors will be elected by cumulative voting. In such event,
each Shareholder has the right to give one candidate a number of votes equal to
the number of Directors then being elected multiplied by the number of such
Shareholder's shares, or to distribute such Shareholder's votes on the same
principle among two or more candidates. In the event that Directors are elected
by cumulative voting and cumulated votes represented by proxies solicited hereby
are insufficient to elect all the nominees, then the holders of the proxies
intend to vote such proxies cumulatively for the election of as many of such
nominees as possible and in such order as the holders may determine. Votes will
be counted by KeyCorp Shareholder Services, Inc. acting as the inspector of
elections.
Under Ohio law and the Company's Code of Regulations, the four nominees
receiving the greatest number of votes shall be elected as Directors. Shares as
to which authority to vote is withheld, abstentions and shares not voted by
brokers and other entities holding shares on behalf of beneficial owners will
not be counted and will have no effect on the outcome of the election.
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The following table sets forth certain information as to each nominee for
Director and each other person whose term of office as Director will continue
after this Annual Meeting:
SERVED AS
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR THE PAST FIVE YEARS(1) AGE SINCE
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NOMINEES FOR TERMS EXPIRING IN 1999
Jack D. Michaels, President and Chief Executive Officer of HON INDUSTRIES 58 1993
Inc. (manufacturer of metal and wood office furniture and pre-fabricated
fireplaces) since 1991(2)
James F. Robeson, Herbert E. Markley Visiting Scholar in Business at Miami 59 1994
University since 1995; prior thereto and currently consultant to various
distribution companies since 1993; prior thereto Senior Director of
Coopers & Lybrand (national accounting firm) in 1993; prior thereto Dean
of the Richard T. Farmer School of Business Administration at Miami
University(3)
Patrick W. Rooney, Chairman of the Board, President and Chief Executive 60 1995
Officer of Cooper Tire & Rubber Company (manufacturer of tires and inner
tubes for the automotive aftermarket, and engineered rubber products for
the O.E.M. automotive industry) since 1994; prior thereto President and
Chief Operating Officer of such company since 1991(4)
NOMINEE FOR TERM EXPIRING IN 1997
Joseph P. Viviano, President and Chief Operating Officer of Hershey Foods 57 -
Corporation since 1994; prior thereto President of Hershey Chocolate
U.S.A., a division of such company(5)
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Linda B. Keene, Vice President - Market Development of American Express 44 1993
Financial Advisors since 1994; prior thereto Vice President - Marketing
Services of The Pillsbury Company (multi-national food company) since
1992; prior thereto Vice President and General Manager, Desserts and
Specialty Products at such company since 1991
Geoffrey W. Smith, Vice President of LTI Ventures Leasing Corporation 50 1986
(engaged in the financing of high-tech office automation equipment) since
1993; prior thereto Director of U.S. Multinational Division of The First
National Bank of Boston since 1991
Thomas C. Sullivan, Chairman and Chief Executive Officer of RPM, Inc. 58 1995
(manufacturer of specialty chemicals and coatings) since 1971(6)
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SERVED AS
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR THE PAST FIVE YEARS(1) AGE SINCE
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DIRECTORS WHOSE TERMS EXPIRE IN 1997
William K. Hall, President and Chief Executive Officer of Eagle Industries, 52 1980(8)
Inc. (manufacturer of building, electrical and transportation products)
since 1990(7)
Stephen P. Huffman, Retired Vice President - Planning and Human Resources 56 1984
of Blue Diamond Growers (an agricultural cooperative) since 1995; prior
thereto Vice President - Planning and Human Resources of such company
since 1993; prior thereto Vice President - Administration of such company
Donald K. Miller, Chairman of Greylock Financial Inc. (engaged in the 64 1988
financing of management and leveraged buyouts) since 1992 and also
President and Chief Executive Officer of PIMCO Advisors Inc. (a
privately-held holding company for certain ownership of PIMCO Advisors
L.P. units) since 1994; prior thereto Vice Chairman of Thomson Advisory
Group L.P. (now PIMCO Advisors L.P.) since 1993; prior thereto Managing
Partner of Greylock Financial Partnership (now Greylock Financial Inc.)
since 1986 and Chairman and Chief Executive Officer of Thomson Advisory
Group L.P. since 1990(9)
Richard L. Molen, Chairman of the Board, President and Chief Executive 55 1985
Officer of the Company since 1994; prior thereto President and Chief
Executive Officer of the Company since 1993; prior thereto President and
Chief Operating Officer of the Company(10)
Fred G. Wall, Chairman of Madsen Wire Products, Inc. (manufacturer of 61 1978
fabricated wire products) since 1988; prior thereto and currently
consultant to various manufacturing companies
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<FN>
(1) Except as disclosed herein, no information is included in this Proxy
Statement for any portion of a period in which a Director did not hold
office as a Director of the Company.
(2) Mr. Michaels is a Director of HON INDUSTRIES Inc.
(3) Mr. Robeson is a Director of Roberds, Inc.
(4) Mr. Rooney is a Director of Alltrista Corporation and Cooper Tire & Rubber
Company.
(5) Mr. Viviano is a Director of Chesapeake Corporation, and Hershey Foods
Corporation.
(6) Mr. Sullivan is a Director of Pioneer-Standard Electronics, Inc., and RPM,
Inc.
(7) Mr. Hall is a Director of A.M. Castle & Co., GenCorp. Inc., Falcon
Building Products, Inc., and Great American Management and Investment,
Inc.
(8) Mr. Hall has served on the Company's Board of Directors from 1980 through
1989, and since 1991.
(9) Mr. Miller is a Director of Layne, Inc., RPM, Inc., and PIMCO Advisors
L.P.
(10) Mr. Molen is a Director of Alltrista Corporation, and The Duriron Company,
Inc.
MEETINGS BY, AND CERTAIN COMMITTEES OF, THE COMPANY'S BOARD OF DIRECTORS
Donald K. Miller (Chairman), Stephen P. Huffman, Linda B. Keene, James F.
Robeson and Geoffrey W. Smith comprise the Audit Committee of the Board of
Directors. The Audit Committee meets with the Company's independent public
accountants, internal auditors, and financial management executives and reviews
the scope and results of audits as well as recommendations made by the Company's
auditors and executives with respect to internal accounting controls. During the
last fiscal year, the Audit Committee met two times.
Fred G. Wall (Chairman), Jack D. Michaels, Patrick W. Rooney and Thomas C.
Sullivan comprise the Compensation Committee of the Board of Directors. The
Compensa-
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tion Committee sets salary and benefits policy, and determines compensation and
benefit levels for the Company's Officers and certain other key employees.
During the last fiscal year, the Compensation Committee met four times.
The Board also had an Executive Committee in 1995 comprised of William K.
Hall (Chairman), Thomas D. Gleason, Donald K. Miller, Richard L. Molen, and Fred
G. Wall. In December, 1995, the Board approved the elimination of the Executive
Committee and the redistribution of its duties to the full Board and to the
Nominating Committee, renamed the Nominating and Governance Committee. In 1995,
the Executive Committee met four times.
Thomas D. Gleason (Chairman), Jack D. Michaels and James F. Robeson
comprised the Nominating Committee during 1995. This Committee seeks out and
reviews the qualifications of possible candidates for Board membership.
Shareholders may submit nominee recommendations, complete with qualifications,
to any member of the Committee at any time. The Committee recommends to the
Board of Directors candidates for election as Directors at annual meetings,
candidates to fill vacancies on the Board, and candidates for Committees of the
Board. The Committee also conducts the annual CEO and Board evaluations. During
1995, the Committee met three times.
During the last fiscal year, the Board of Directors met nine times. No
Director attended fewer than 75 percent of the aggregate number of meetings of
the Board of Directors and meetings of Committees thereof during the time such
person was a Director and member of any such Committee.
COMPENSATION OF DIRECTORS
The Company's non-employee Directors ("Outside Directors") receive annual
base compensation of $15,000, plus additional compensation of $900 per Board
meeting attended. Effective April 1, 1996, Directors not vested in the
Directors' Retirement Plan, which has been frozen (see page 6 herein), will
receive annual base compensation of $19,000. The Chairman of the Compensation
Committee receives additional compensation of $3,000 per year. The Chairmen of
the Audit and Nominating and Governance Committees receive additional
compensation of $1,500 per year. Each Committee member (including the Chairman
of the Committee) receives $700 for each Committee meeting attended.
Additionally, Directors receive consulting fees of $500 for each half day of
service provided outside their normal duties as Directors when such services are
provided at the request of management of the Company and $500 for Board of
Directors' visits to Company plant sites. Directors receive $2,500 for
attendance at Board of Directors' retreat meetings but such fee is in lieu of
all meeting fees for Board and Committee meetings held during such retreat. No
Director who is an employee of the Company receives any compensation for
services as a Director.
DIRECTOR PLANS
Outside Directors may elect to defer payment of their fees or take part or
all of their annual base fees in the form of stock options, pursuant to the
Company's 1987 Director Stock Option Plan (the "1987 Plan"). The 1987 Plan
provides for the automatic grant of options to purchase 5,625 shares (adjusted
for stock splits) of the Company's Common Stock every third year, commencing in
1988, on the second business day after the Annual Meeting of Shareholders.
Options are granted to Outside Directors at a purchase price equal to 100
percent of the fair market value of the Common Stock on the date of grant.
In addition to options granted automatically every three years, if an
Outside Director files an irrevocable election with the Secretary of the Company
at least six months prior to July 1 of any year and on such other dates(s) as
may be designated from time to time electing not to receive all or a portion of
his or her annual base compensation to be earned in the following 12 month
period beginning July 1 and ending June 30, then the Company shall grant options
automatically on July 1 or such other dates, if applicable, business day to such
Outside Director. The number of shares of Common Stock for which options will be
granted will be the nearest number of whole shares of Common Stock determined in
accordance with the following formula:
Portion of Annual Base
Compensation Not Received = Number of Shares
-------------------------
Fair Market
Value minus $1.00
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For the 12 month period beginning July 1, 1996, and ending June 30, 1997,
Outside Directors have elected not to receive, in the aggregate, $75,000 of
their annual base compensation and to have the Company grant options to them on
July 1, 1996, based on such elections in accordance with the 1987 Plan. The
option price per share of the Common Stock covered by such options will be
$1.00.
No options may be exercised before the second Annual Meeting of
Shareholders of the Company following the date they were granted, except upon a
change in control (as defined in the 1987 Plan), or due to retirement from the
Board of Directors because of total and permanent disability, expiration of a
Director's term of office, or otherwise in accordance with the current Board of
Directors' policy or upon the death of the option holder. A notice to exercise
an option must be accompanied by full payment of the purchase price for the
Common Stock being purchased. The 1987 Plan, which is effective for ten years,
is administered by a Committee consisting of three Officers and two key
employees of the Company not entitled to participate in the 1987 Plan.
In 1990, the Company adopted a Directors' Retirement Plan whereby each
Outside Director who has served as a member of the Board of Directors five years
or more and each former employee Director who has served as a member of the
Board of Directors five years or more after retirement or termination as an
employee of the Company will earn an annual retirement benefit of $5,000 plus
$1,000 for each year of service as an Outside Director (prorated for partial
years) in excess of five years service, not to exceed a maximum annual benefit
of $10,000. Retirement benefits will commence when specified by an eligible
Director after retirement from the Board of Directors, but not earlier than age
60 or later than age 70, and will continue for a period equal to the number of
full years of service as an Outside Director, not to exceed 12 years.
In February, 1996, the Board of Directors elected to discontinue the
Directors' Retirement Plan, freezing retirement benefits for those Board
members vested in such Plan during their current term, and in lieu of such
benefits for those Directors not vested in such Plan, effective April 1, 1996,
increasing such non-vested Directors' annual base compensation by $4,000. Those
Directors receiving an increase in base compensation have elected to receive
the maximum amount of such increase in $1.00 stock options as permitted under
the 1987 Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of the Company's Common
Stock reported to the Company as of February 1, 1996, for each Director and
nominee and for each of the Executive Officers named in the Summary Compensation
Table (the "Named Executive Officers"), and for all Directors, nominees and
Executive Officers as a group. For purposes of the table, a person is considered
to "beneficially own" any shares of Common Stock (i) over which the person
exercises sole or shared voting or investment power or (ii) of which the person
has the right to acquire beneficial ownership at any time within 60 days after
February 1, 1996.
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL BENEFICIAL
OWNER(1) OWNERSHIP(2)
- ---------------------------- ------------
Thomas A. Frederick......... 6,778(3)
Thomas D. Gleason........... 16,225(4)
William K. Hall............. 8,212(5)
Timothy G. Howard........... 29,590(6)
Stephen P. Huffman.......... 81,883(7)
Linda B. Keene.............. 700(8)
Jack D. Michaels............ 1,000
Nancy A. Michaud............ 4,925(9)
Donald K. Miller............ 54,177(10)
Richard L. Molen............ 183,309(11)
James F. Robeson............ 1,000(12)
Patrick W. Rooney........... 200
Geoffrey W. Smith........... 43,676(13)
Thomas C. Sullivan.......... 2,250
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AMOUNT AND
NATURE OF
NAME OF BENEFICIAL BENEFICIAL
OWNER(1) OWNERSHIP(2)
- ---------------------------- ------------
Joseph P. Viviano........... 500(14)
Fred G. Wall................ 16,592(15)
Pamela J. Whipps............ 3,718(16)
All Directors, Nominees and
Executive Officers as a
Group (17 persons)........ 454,535(17)
Gary E. Morin............... 18,973(18)
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(1) All shares are held with sole voting and sole investment power unless
otherwise indicated in the footnotes below.
(2) Except for Richard L. Molen whose Common Stock ownership is 1.35 percent,
no such beneficial owner owns more than one percent of the issued and
outstanding shares of Common Stock of the Company. All Directors, Nominees
and Executive Officers as a group own 3.3 percent of the issued and
outstanding shares of Common Stock of the Company as of February 1, 1996.
(3) Mr. Frederick has shared voting and shared investment power with respect to
491 shares held jointly with his wife. The total amount also includes 2,753
shares as to which Mr. Frederick holds options exercisable within 60 days.
(4) The total amount also includes 13,377 shares as to which Mr. Gleason holds
options exercisable within 60 days.
(5) Mr. Hall has shared voting and shared investment power with respect to 450
shares held jointly with his wife. The total amount also includes 6,609
shares as to which Mr. Hall holds options exercisable within 60 days.
(6) Mr. Howard has shared voting and shared investment power with respect to
5,545 shares held jointly with his wife. The total amount also includes
20,937 shares as to which Mr. Howard holds options exercisable within 60
days.
(7) Mr. Huffman has sole voting and sole investment power with respect to
63,918 shares held in trust for the benefit of himself and his family. Mr.
Huffman has shared voting and shared investment power with respect to 2,706
shares held jointly with his wife and with respect to 3,300 shares held by
his children. The total amount also includes 11,959 shares as to which Mr.
Huffman holds options exercisable within 60 days.
(8) Ms. Keene has shared voting power and shared investment power with respect
to 700 shares held jointly with her husband.
(9) Ms. Michaud has shared investment power with respect to 390 shares held by
her husband. The total amount also includes 2,437 shares as to which Ms.
Michaud holds options exercisable within 60 days.
(10) Mr. Miller has sole voting and sole investment power with respect to 46,425
shares, of which 16,000 are held by him as custodian for his children. Mr.
Miller has shared investment power with respect to 975 shares held by his
wife. The total amount also includes 7,752 shares as to which Mr. Miller
holds options exercisable within 60 days.
(11) Mr. Molen has shared investment power with respect to 33,781 shares held by
his wife and 2,338 shares held by his children. The total amount also
includes 113,409 shares as to which Mr. Molen holds options exercisable
within 60 days.
(12) Mr. Robeson has shared investment power with respect to 1,000 shares held
by his wife.
(13) Mr. Smith has sole voting and sole investment power with respect to 32,045
shares, of which 4,865 shares are held in trust for the benefit of his
children and 1,827 shares are held by him as custodian for his children.
The total amount also includes 11,631 shares as to which Mr. Smith holds
options exercisable within 60 days.
(14) Mr. Viviano has shared voting and shared investment power with respect to
500 shares held jointly with his wife.
(15) Mr. Wall has sole voting and sole investment power with respect to 2,598
shares, of which 2,000 shares are held in trust for his benefit. The total
amount also includes 13,994 shares as to which Mr. Wall holds options
exercisable within 60 days.
(16) The total amount also includes 3,063 shares as to which Ms. Whipps holds
options exercisable within 60 days.
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(17) The total amount includes 207,921 shares which are subject to options
exercisable within 60 days.
(18) Mr. Morin has shared voting and shared investment power with respect to 31
shares held jointly with his wife. The total amount also includes 18,942
shares as to which Mr. Morin holds options exercisable within 60 days.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to Shareholders
known to the Company to be beneficial owners of more than five percent of the
Company's Common Stock.
AMOUNT
AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS(4)
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David L. Babson & Co.,
Inc.(1)
One Memorial Drive
Cambridge, MA
02142-1300 1,383,350 10.30%
Sanford C. Bernstein &
Co., Inc.(2)
One State Street Plaza
New York, NY 10004 874,400 6.50%
The Parnassus Fund(3)
One Market
Steuart Tower -
Suite #1600
San Francisco, CA 94105 698,700 5.20%
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(1) This information is taken from the Schedule 13G, dated February 12, 1996,
filed by David L. Babson & Co., Inc. with the Securities and Exchange
Commission, which disclosed David L. Babson & Co., Inc. has sole voting
power with respect to 968,200 shares, shared voting power with respect to
415,150 shares, and sole investment power with respect to 1,383,350 shares.
(2) This information is taken from the Schedule 13G, dated February 7, 1996,
filed by Sanford C. Bernstein & Co., Inc. with the Securities and Exchange
Commission, which disclosed Sanford C. Bernstein & Co., Inc. has sole voting
power with respect to 680,500 shares, shared voting power with respect to
12,400 shares, and sole investment power with respect to 874,400 shares.
(3) This information is taken from the Schedule 13G, dated February 9, 1996,
filed by The Parnassus Fund with the Securities and Exchange Commission,
which disclosed The Parnassus Fund has sole voting power with respect to
698,700 shares.
(4) Percentages listed are those disclosed in the referenced Schedules 13G and
are not verified by the Company.
REPORT OF COMPENSATION COMMITTEE
Decisions on compensation and stock options of the Company's Executive
Officers are made by the Compensation Committee of the Board of Directors (the
"Committee") which is comprised of non-employee Directors.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Company's executive compensation program is designed to tie a
significant portion of executive compensation to the Company's success in
meeting specified performance goals and to appreciation in the price of the
Company's Common Stock. This strategy is designed to attract and retain the best
possible executive talent, to motivate these executives to achieve the Company's
goals, to link executive and Shareholder interests, and to provide a
compensation package that recognizes individual contributions as well as overall
business results. In reviewing the individual performance of the named Executive
Officers whose compensation is detailed in this Proxy Statement, other than Mr.
Richard L. Molen, the Chief Executive Officer, the Committee takes into account
the views of Mr. Molen.
The Committee compares the Company's executive compensation structure
against those of other industrial manufacturers whose size is adjusted to that
of the Company. The Committee believes that industrial manufacturers generally
represent the Company's most direct competitors for executive talent. A majority
of those industrial companies are not included in the Performance Graph on page
14
8
12
herein, as the Company uses the Standard & Poor's Composite Leisure Time Index,
which is more representative of the Company's lines of business. The Committee's
policy is to establish midpoints of base salary ranges and total compensation at
the 50th percentile level of industrial midpoints for comparable positions and
to adjust such midpoints annually to maintain that level. The Company's overall
executive compensation levels are below such 50th percentile midpoints.
The key elements of the Company's 1995 executive compensation program
consist of Base Salary, the Profit Sharing Bonus Plan, the Long-Term Incentive
Plan and Stock Options, as well as the 1993 CEO Long-Term Performance Plan (the
"CEO Plan") for Mr. Molen. In addition, while the elements of compensation
described below are considered separately, the Committee takes into account the
full compensation package afforded by the Company to the individual, including
pension benefits, supplemental retirement benefits, severance plans, insurance
and other benefits, as well as the programs described below. The Committee has
reviewed Section 162(m) of the Internal Revenue Code of 1986, as amended, which
limits the deduction for certain executive compensation and, based on present
levels of compensation, does not anticipate the loss of deductibility for any
compensation paid over the next year.
BASE SALARY
Base salary ranges for Executive Officers are determined by periodic
recommendations by an independent compensation consultant who evaluates the
responsibilities of each such position, and compares the Company's salary level
for the position to comparable positions at other industrial companies
nationwide. The Company's policy is to establish midpoints of such base salary
ranges at the 50th percentile level of industrial midpoints for comparable
positions, and to adjust such midpoints annually to maintain that level. Annual
salary adjustments within such base salary ranges are determined by evaluating
both the performance of the Executive Officer and the Executive Officer's
current base salary as a percentage of his or her target base salary range
midpoint, using a matrix which reflects the Company's overall annual salary
increase budget. Generally speaking, the higher the performance level and the
lower the percentage that current base salary represents of the base salary
range midpoint, the higher the percentage of base salary increase. Performance
of an Executive Officer is evaluated based upon the employee's accomplishment of
his or her duties, objectives established by his or her supervisor (in the case
of Mr. Molen by the Board of Directors), and general management abilities.
PROFIT SHARING BONUS PLAN
Executive Officers may receive bonuses based upon corporate and individual
performance objectives established at the beginning of each year. The corporate
performance measure for bonus payments in 1995 established by the Committee was
based equally on return on average net assets ("RONA") and on earnings per share
("EPS"). For 1995, threshold level bonus would have been achieved when RONA was
8.0 percent and EPS reached $1.22. Individual performance is based on
performance of personal goals. Personal goals are both qualitative, such as
certain business strategy development and/or implementation, improved customer
satisfaction, management effectiveness and personal development, and
quantitative, such as achieving cost reduction, production and sales goals. In
1995, the Company reported a RONA of 0 percent and net loss per share was $0.78.
Based on these results, none of the Executive Officers, including Mr. Molen, was
awarded a bonus, other than Mr. Frederick who received a bonus for past services
as President of Huffy Service First, Inc.
LONG-TERM INCENTIVE PLAN
The Executive Officers participate in the Company's Long-Term Incentive
Plan which is based on the average return on equity ("ROE") achieved by the
Company over a three-year period. Under this plan, in 1995 Executive Officers
were each eligible to earn maximum awards ranging from 35 percent to 68 percent
(100 percent for Mr. Molen) of their average three-year salary midpoint over the
three-year award cycle, depending on position. In 1995, for the three-year award
cycle ended December 31, 1994, the ROE targets were 13.7 percent for the award
of 50 percent (excluding the impact of the implementation of Statement of
Financial Accounting Standards ("SFAS")
9
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No. 112, employers' accounting for post-employment benefits, and the effect of
the restructure at True Temper Hardware Company), and 13.4 percent for the other
50 percent, which represents the average ROE of the Standard & Poor's 400
Industrials over the same period. During this three-year award cycle, the
Company's average ROE was 11.4 percent (excluding the impact of the
implementation of SFAS No. 112, employers' accounting for post-employment
benefits, and the effect of the restructure at True Temper Hardware Company) and
7.3 percent, including SFAS No. 112 and such restructure. As a result, in 1995,
none of the Executive Officers, including Mr. Molen, received a payment.
STOCK OPTIONS
Under the Company's 1988 Stock Option Plan and Restricted Share Plan, stock
options may be granted by the Committee to the Company's Executive Officers and
other key managers. The Committee sets guidelines for the size and frequency of
awards of stock option grants which are based upon the employee's position and
base salary. Mr. Molen and all other Executive Officers are eligible to receive
an annual grant equal to approximately 85 percent of their base salary (subject
to eligibility for additional options as described below) divided by the closing
price of the Common Stock on the New York Stock Exchange on the date of grant.
Stock options are granted to Executive Officers with an exercise price equal to
the closing market price of the Common Stock on the date of grant and currently
become exercisable in three equal, annual installments commencing three years
from the date of grant. This approach is designed to motivate the creation of
Shareholder value over the long term since the full benefit of the compensation
package cannot be realized unless Common Stock price appreciation occurs over a
number of years. In 1995, Mr. Molen received options to purchase 41,286 shares
of the Common Stock with an exercise price of $11.125 per share. The options
become exercisable ratably over a three-year period beginning in December, 1998.
As of February 1, 1996, Mr. Molen beneficially owned 183,309 shares of Common
Stock.
In order to align the interests of Shareholders and management, the Board
of Directors approved an Executive Stock Ownership program in 1994, commencing
in 1995, which sets guidelines for stock ownership for Executive Officers and
other key personnel. Under the guidelines, in order to be awarded additional
stock options, equal to approximately 17 percent of their base salary, the Chief
Executive Officer and all other Executive Officers are required to own Common
Stock equal to 1.5 times and 1 to 0.5 times their salaries, respectively, with
measured interim ownership goals to be attained over a ten year period.
1993 CEO LONG-TERM PERFORMANCE PLAN
Under the CEO Plan, Mr. Molen may earn a cash performance award if, and
only if, the Company achieves the requisite Total Shareholder Return (as defined
in the CEO Plan to include the annual rate of growth of the Common Stock and
dividends paid on such stock) on a Beginning Share Price (as defined in the CEO
Plan) during the applicable performance period. For the performance period
beginning January 1, 1993, and ended December 31, 1995, the Beginning Share
Price was $16.25 and a Total Shareholder Return of 15 percent or greater was
required on December 31, 1995 for the receipt of a performance award by Mr.
Molen. A Total Shareholder Return of 15 percent was not achieved for this period
and, thus, no award was made.
Through the programs described above, a significant portion of the
Company's executive compensation is linked directly to individual and corporate
performance and returns to Shareholders, a policy the Committee intends to
continue.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS(1)
Jack D. Michaels, Patrick W. Rooney, Thomas C. Sullivan and Fred G. Wall
- ---------------
(1) Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, this report
and the graph set forth on page 14 shall not be incorporated by reference
into any such filings.
10
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CERTAIN RELATIONSHIPS AND OTHER RELATED TRANSACTIONS
The Company, in the ordinary course of business, selected Columbus Circle
Investors in 1991 as one of its four investment advisors for Company pension
funds. Mr. Donald K. Miller, a Director of the Company, is a Director of PIMCO
Advisors L.P., of which Columbus Circle Investors is a sub-partnership. Fees
paid to Columbus Circle for services rendered in 1995 aggregated $99,498, which
fees were generally competitive with those offered by other investment advisors
providing similar services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for 1995 were Fred G. Wall
(Chairman), Jack D. Michaels, Patrick W. Rooney and Thomas C. Sullivan, none of
whom is or was a current or former officer or employee of the Company or any of
its subsidiaries. No Executive Officer of the Company serves as a Director or as
a member of a Committee of any company of which any of the Company's Directors
are executive officers.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table shows, for the fiscal years ended December 31, 1993,
1994 and 1995, the cash compensation paid by the Company as well as certain
other compensation paid or accrued for those years, to each of the five most
highly compensated Executive Officers, including Richard L. Molen, the current
Chairman, President and Chief Executive Officer of the Company, and a former
Officer of the Company, in all capacities in which they served:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARRDS PAYOUTS
---------------------------------- ---------------------- ----------
OTHER NUMBER
ANNUAL RESTRICTED OF ALL OTHER
NAME AND COMPENSA- STOCK OPTIONS/ LTIP COMPENSA-
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) TION(2) AWARD(S) SARS(3) PAYOUTS(4) TION(5)
- -------------------------- ---- --------- -------- --------- ---------- -------- ---------- ---------
Richard L. Molen 1995 $424,996 $ 0 $2,184 $0 41,286 $ 0 $93,914
Chairman of the Board, 1994 387,762 171,800 1,550 0 25,351 0 94,507
President and Chief 1993 341,076 99,275 2,486 0 16,767 85,192 90,516
Executive Officer
Thomas A. Frederick(6) 1995 145,000 25,325 1,974 0 14,086 0 14,397
Vice President - 1994 131,117 60,000 3,286 0 10,379 0 14,145
Finance and Chief 1993 118,374 49,450 2,375 0 2,831 0 3,425
Financial Officer
Timothy G. Howard 1995 142,000 0 2,597 0 13,794 0 19,042
Vice President - 1994 133,236 36,650 913 0 8,471 0 19,297
Controller 1993 123,819 23,250 929 0 3,090 11,666 19,989
Nancy A. Michaud 1995 140,000 0 1,826 0 13,600 0 14,533
Vice President - General 1994 129,577 33,625 1,180 0 8,351 0 13,372
Counsel and Secretary 1993 102,815 19,925 1,837 0 2,589 0 5,313
Pamela J. Whipps 1995 105,000 0 511 0 10,200 0 4,252
Vice President - 1994 90,430 22,575 330 0 6,246 0 3,102
Treasurer 1993 -- -- -- -- -- -- --
Gary E. Morin 1995 225,629 0 710 0 0 0 3,079
Formerly Executive Vice 1994 238,862 86,200 1,314 0 14,376 0 9,236
President and Chief 1993 222,547 69,000 3,334 0 8,088 17,588 8,941
Operating Officer
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- ---------------
(1) "Salary" and "Bonus" include amounts that would have been payable currently,
but were deferred at an election of an Executive Officer, such as through
the Company's 401(k) Savings Plan.
(2) The compensation listed represents the amounts reimbursed to the Named
Executive Officers for the payment of taxes. No perquisites were provided or
other personal benefits paid to a Named Executive Officer in 1995 which
exceeded the lesser of $50,000 or ten percent of the total annual salary and
bonus reported for such Named Executive Officer.
(3) These numbers represent options for shares of the Company's Common Stock
granted pursuant to the Company's 1988 Stock Option Plan and Restricted
Share Plan. See the next table labeled "Option Grants in Last Fiscal Year"
for more detailed information on such options.
(4) Long Term Incentive Pay consists of amounts paid to each of the Named
Executive Officers under the Company's Long-Term Incentive Plan discussed
later in this Proxy Statement under the table labeled "Long Term Incentive
Plans." There were no awards for the three-year award cycle ended December
31, 1994, and the Company anticipates there will be no awards for the
three-year award cycle ended December 31, 1995.
(5) "All Other Compensation" includes (i) Company contributions to the Company's
401(k) Savings Plan in the amount of $3,079 each for Richard L. Molen, Nancy
A. Michaud, and Gary E. Morin; $2,900 for Thomas A. Frederick; $2,855 for
Timothy G. Howard; and $1,700 for Pamela J. Whipps to match 1995 pre-tax
elective deferral contributions (included under "Salary" and "Bonus") made
by each Named Executive Officer to such plan; (ii) amounts distributed of
$65,000, $6,000, $11,000, and $6,300 under the Company's Capital
Accumulation Plan to Richard L. Molen, Thomas A. Frederick, Timothy G.
Howard, and Nancy A. Michaud, respectively, and accrued interest of $13,899,
$1,397, $1,614, and $1,681 (being interest earned in excess of 120 percent
of the applicable federal long term rate provided under Section 1274(d) of
the Internal Revenue Code of 1986, as amended), by Richard L. Molen, Thomas
A. Frederick, Timothy G. Howard, and Nancy A. Michaud, respectively, on the
Company's Capital Accumulation Plan (Richard L. Molen and Timothy G. Howard
deferred salary in 1985 and 1986, and Thomas A. Frederick and Nancy A.
Michaud deferred salary in 1987 pursuant to such plan); and (iii) the
principal amounts of $11,936, $4,100, $3,573, $3,473, and $2,552 credited by
the Company for Richard L. Molen, Thomas A. Frederick, Timothy G. Howard,
Nancy A. Michaud, and Pamela J. Whipps, respectively, pursuant to the
Company's Special Deferred Compensation Agreements. Refer to "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements"
later in this Proxy Statement for descriptions of such special deferred
compensation agreements.
(6) Mr. Frederick was elected Vice President - Finance and Chief Financial
Officer in December, 1994. Prior thereto, Mr. Frederick was President and
General Manager of Huffy Service First, Inc., a wholly owned subsidiary of
the Company, and received a 1995 bonus as a result of his past services at
such company.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1988 Stock Option Plan and Restricted Share Plan
("1988 Plan") to the Named Executive Officers for the year ended December 31,
1995, all of which are reflected in the Company's Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE
NUMBER TOTAL AT ASSUMED ANNUAL
OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(3)
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------------
NAME GRANTED(1) YEAR SHARE(2) DATE 5% 10%
- ----------------------- ---------- ---------- --------- ----------- ---------- ----------
Richard L. Molen....... 41,286 12.06% $11.125 12/11/05 $ 288,856 $ 732,017
Thomas A. Frederick.... 14,086 4.11% 11.125 12/11/05 98,552 249,750
Timothy G. Howard...... 13,794 4.03% 11.125 12/11/05 96,509 244,573
Nancy A. Michaud....... 13,600 3.97% 11.125 12/11/05 95,152 241,133
Pamela J. Whipps....... 10,200 2.98% 11.125 12/11/05 71,364 180,850
Gary E. Morin.......... 0 -- -- -- -- --
- ---------------
(1) The options were granted pursuant to the Company's 1988 Plan which was
approved by the Shareholders. All options granted under the 1988 Plan in
1995 are non-qualified stock options. No stock appreciation rights were
granted and no restricted shares were awarded under the 1988 Plan in 1995.
(2) The Common Stock closing market price on date of grant, December 11, 1995,
was $11.125. The exercise price may be paid in cash or in shares of Common
Stock valued at fair market value on the date of delivery or by a
combination of cash and Common Stock. The options become exercisable ratably
over a three-year period beginning in 1998. Upon a change in control (as
defined in the 1988 Plan), all options then outstanding become fully and
immediately exercisable and the then outstanding option of an employee
12
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whose employment is terminated, except for cause, within three months of
such change in control shall remain exercisable for three months from the
date of such termination, but not after the expiration of the exercise
period. Those employees who terminate employment due to disability or
retirement may exercise non-qualified stock options after such termination
of employment until the latter of (a) one year after the first exercise
date for the last shares to become exercisable under the terms of the
option grant, or (b) three years after the date of the employee's
termination of employment. Under the 1988 Plan, upon the death of an
employee or a retired or disabled former employee, all options under the
1988 Plan shall remain exercisable for six months following the date of
death. Except as set forth above, upon termination of employment, all
options terminate.
(3) Calculated on option terms of ten years beginning December 11, 1995, through
December 11, 2005, with annual compounding. The dollar amounts under these
columns are the result of calculations at the five percent and ten percent
rates set by the Securities and Exchange Commission and therefore are not
intended to forecast possible future appreciation of the Company's Common
Stock. The Company did not use an alternative formula for a grant date
valuation, as the Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or volatile
factors.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the year ended
December 31, 1995, and unexercised options held as of December 31, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF VALUE REALIZED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES (MARKET PRICE AT YEAR-END(1) AT FISCAL YEAR-END(1)(2)
ACQUIRED EXERCISE LESS ---------------------------- ----------------------------
NAME ON EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ---------------- ----------- ------------- ----------- -------------
Richard L. Molen........... 0 $ 0 113,407 99,466 $ 161,969 $ 0
Thomas A. Frederick........ 0 0 4,722 29,990 9,216 0
Timothy G. Howard.......... 0 0 20,937 28,704 18,204 0
Nancy A. Michaud........... 563 1,432 2,437 25,728 0 0
Pamela J. Whipps........... 0 0 3,063 18,196 0 0
Gary E. Morin.............. 0 0 18,942 0 0 0
- ---------------
<FN>
(1) The number of unexercised options includes options granted under the
Company's 1984 Stock Option Plan ("1984 Plan") (after December, 1987, no
further options or stock appreciation rights ("SARs") were granted under the
1984 Plan); and the 1988 Plan. No SARs were issued or outstanding as of
December 31, 1995 under the 1984 Plan or 1988 Plan.
(2) The value of "in the money" options is calculated on a per share basis as
the amount by which the fair market value of a share of the underlying
Common Stock represented by an option exceeds, as of December 31, 1995, the
per share exercise price of the option.
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LONG-TERM INCENTIVE PLANS
The following table provides information concerning awards made to the
Named Executive Officers during the last fiscal year under the Company's
Long-Term Incentive Plan ("LTIP"). No payments were made under the LTIP in the
year ended December 31, 1995.
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, PERFORMANCE OR NON-STOCK PRICE BASED PLAN(2)
UNITS OTHER PERIOD UNTIL ----------------------------------
NAME OR OTHER RIGHTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------- ----------------- ------------------------ --------- --------- --------
Richard L. Molen....... (1) 3 years ending 12/31/98 $114,978 $ 229,954 $459,908
Thomas A. Frederick.... (1) 3 years ending 12/31/98 13,808 27,460 54,918
Timothy G. Howard...... (1) 3 years ending 12/31/98 13,522 26,892 53,782
Nancy A. Michaud....... (1) 3 years ending 12/31/98 13,332 26,512 53,026
Pamela J. Whipps....... (1) 3 years ending 12/31/98 10,000 19,884 39,768
- ---------------
(1) Effective in 1995, LTIP awards were made to Executive Officers based on the
Company's actual earnings to be achieved during the period as compared to
the earnings' target established by the Company's Compensation Committee
prior to the commencement of the award period. The earnings' targets set are
designed to return the Corporation's earnings level over the three-year
period to a positive Economic Value Added (defined as earnings before
interest and taxes minus an asset usage charge using the Company's weighted
average cost of capital). Any award earned for 1996 is payable one-third in
1997; one-third in 1998; and the balance in 1999. The 1998 and 1999 payments
may be reduced to zero if the Company's actual earnings for the immediately
preceding year fall short of the then established targets.
(2) The amounts calculated assume eight percent annual base salary increases.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative total Shareholder return on its Common Stock with the
Standard & Poor's 500 Composite Stock Index ("S&P 500") and the Standard &
Poor's Composite Leisure Time Index ("Leisure Index") for the five-year period
ended December 31, 1995:
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
HUFFY CORPORATION, S&P 500 AND LEISURE INDEX*
MEASUREMENT PERIOD LEISURE IN-
(FISCAL YEAR COVERED) HUFFY S&P 500 DEX
1990 100 100 100
1991 226 134 132
1992 169 144 176
1993 196 158 193
1994 164 160 186
1995 115 218 225
* Assumes $100 invested on December 31, 1990 in Company Common Stock, the S&P
500 and the Leisure Index and the reinvestment of dividends.
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PENSION PLAN TABLE
The Company's Salaried Employees' Retirement Plan (the "Retirement Plan")
is a defined benefit pension plan which provides benefits to salaried employees
not otherwise covered under another pension plan of the Company. The following
table shows the estimated annual benefits (assuming payments made on the normal
life annuity with 12 months certain) payable upon retirement at age 65 to an
employee in specified compensation and years of service classifications.(1)
YEARS OF SERVICE
-----------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ----------- --------- --------- --------- --------- ---------
$ 100,000 $ 21,256 $ 27,508 $ 33,760 $ 40,012 $ 40,012
250,000 55,006 72,508 90,010 107,512 107,512
400,000 88,756 117,508 146,260 175,012 175,012
550,000 122,506 162,508 202,510 242,512 242,512
700,000 156,256 207,508 258,760 310,012 310,012
850,000 190,006 252,508 315,010 377,512 377,512
- ---------------
(1) The Internal Revenue Code of 1986, as amended (the "Code"), places certain
limitations on the annual pension benefits which can be paid from the
Retirement Plan. Such limitations are not reflected in the table. This table
reflects the total aggregate benefits payable annually upon retirement under
both the Retirement Plan and the Company's Supplemental/Excess Benefit Plan
("Benefit Plan"), which is discussed below. The Benefit Plan requires an
offset of one-half of the Social Security primary insurance amount ("PIA"),
and such amount has been deducted from the figures in the table. The PIA
amount used in developing the above figures is $14,976. Thus, the offset is
$7,488 for a person with 30 or more years of service.
Monthly benefits upon normal retirement (age 65) are the sum of (i) 0.9
percent of final average monthly compensation (as defined under the Retirement
Plan to include salary, incentive compensation, commissions and overtime pay and
based upon the highest three consecutive years in the last ten) up to the
monthly Social Security Covered Compensation Amount, plus 1.3 percent of the
amount by which final average monthly compensation exceeds the monthly Social
Security Covered Compensation Amount, times years of service (to a maximum of 30
years) and (ii) .075 percent of final average monthly compensation (to a maximum
of $4,166.67) times years of service (to a maximum of 20 years). Additional
provisions for early retirement are included. Mr. Molen has 27 years of credited
service, Mr. Frederick has 9 years of credited service, Mr. Howard has 22 years
of credited service, Ms. Michaud has 9 years of credited service, and Ms. Whipps
has 5 years of credited service. The 1995 compensation covered under the
Retirement Plan and Benefit Plan for each of the Named Executive Officers was as
follows: $596,796 for Mr. Molen; $205,000 for Mr. Frederick; $178,650 for Mr.
Howard; $173,625 for Ms. Michaud; and $127,575 for Ms. Whipps.
The Company has established the Benefit Plan which provides additional
benefits to participants in the Retirement Plan whose benefits are reduced by
limitations imposed under Sections 415 and 401(a)(17) of the Code and Section
2004 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Under the Benefit Plan, Executive Officers and certain key employees
will receive at the same time and in the same form as benefits paid under the
Retirement Plan, additional benefits in a monthly amount which, when added to
the benefits paid to the participant under the Retirement Plan, will equal the
benefit amount such participant would have earned but for the limitations
imposed by the Code and ERISA to the extent such limitations apply, and the
amount by which the sum of 45 percent of final average monthly compensation (as
defined under the Benefit Plan to include salary and bonus and based upon the
highest three years in the last ten) less 50 percent of the monthly PIA payable
under Social Security, with the difference prorated for less than 30 years of
service, plus $2,500 per year, exceeds benefits payable only under the
Retirement Plan. The Benefit Plan also provides that Executive Officers and
certain key employees will be provided benefits beginning at age 58, in an
amount equal to such participants' then ac-
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crued benefits without actuarial reduction for early commencement in the event
of (i) a "change-in-control" of the Company, as defined in the Benefit Plan, and
(ii) subsequent termination of employment. Except as noted in the preceding
sentence, benefits under the Benefit Plan will be reduced to an actuarial
equivalent to reflect early distribution in the same manner as benefits under
the Retirement Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment contracts between the Company and any Executive
Officers of the Company.
The Named Executive Officers and certain other key employees of the Company
each have a Special Deferred Compensation Agreement pursuant to which on each
January 1 the Company credits to an account for such employee an amount equal to
two percent of the aggregate of the base salary paid in the preceding calendar
year and bonus paid or credited to such employee under the Profit Sharing Bonus
Plan for preceding calendar year results. The aggregate amount in such account
is to be paid to the employee, subject to certain forfeitures, following
termination of employment. Such amounts for calendar year 1995 have been
included in the Summary Compensation Table.
Named Executive Officers, except for Pamela J. Whipps, have deferred
compensation and receive benefits under the Company's Capital Accumulation Plan
(the "Capital Accumulation Plan") adopted in 1985. No current compensation is
being deferred by Executive Officers under the Capital Accumulation Plan at the
present time. Based upon the amount of such compensation deferred in 1985, 1986,
and 1987, the Company has agreed to pay certain annual amounts (a) on the first
day of each of the eighth through eleventh years following the deferral to each
such participant and (b) generally beginning at age 65 or upon retirement,
whichever occurs later, to each such participant or to designated beneficiaries
upon such participant's death after retirement, until such participant reaches
(or would have reached) age 80. These annual amortized amounts will be
calculated on the basis of attributing from 19 to 24 percent per annum interest
to the deferrals, with each payment under clause (a) above equaling the amount
of the original deferral. A lump sum benefit equal to any remaining balance of
deferred amounts, with annual interest at the rate noted below, will be paid in
lieu of any annual benefits if (i) a participant terminates employment with the
Company other than by death or disability prior to retirement (10 percent
interest) or the Company terminates the participant's employment for certain
reasons other than cause or competing with the Company (20 percent interest);
(ii) a participant dies prior to retirement (20 percent interest); or (iii) the
Capital Accumulation Plan is terminated by the Company because a change in
federal or state laws, or judicial or administrative interpretation thereof, has
materially affected its cost to the Company (20 percent interest). The Company
will make supplemental pension payments to persons participating in the Capital
Accumulation Plan to the extent pension benefits are reduced due to
participation in such plan. Distributions made and interest accrued in excess of
120 percent of the applicable federal long term interest rate provided under
Section 1274(d) of the Code for the benefit of the Named Executive Officers have
been included in the Summary Compensation Table.
Richard L. Molen, Thomas A. Frederick and Nancy A. Michaud have each
entered into a severance agreement with the Company pursuant to which the
Company has agreed to provide an irrevocable letter of credit from a commercial
bank (or to fund an escrow account if such letter of credit cannot be promptly
issued) in the event a change-in-control (as defined in the agreements) of the
Company is threatened. The letter of credit is to be for an amount equal to
three times the sum of each such person's current annual salary, bonus award for
the most recently completed fiscal year, and Long-Term Incentive Compensation
Plan award for the most recently completed period, plus two times the Company's
cost of current benefits for three years (unless the Company agrees to provide
the same) and a gross up amount for applicable excise taxes, if any. If the
employment of said person terminates, for any reason other than disability,
retirement or death, within two years after a
16
20
change-in-control of the Company occurs, the person or the person's
beneficiaries shall be entitled to the above described amount in a lump sum
payment. If proper demand for such payment is not made within two years from the
date of the change-in-control event, the Company may terminate the letter of
credit or withdraw the funds in the escrow account. If such person's employment
is terminated prior to the occurrence of a change in control of the Company,
payment under the severance agreement is forfeited.
Timothy G. Howard and Pamela J. Whipps have each entered into a severance
agreement with the Company which would require the Company to immediately fund
an escrow account for each of them in the event a change-in-control (as defined
in the agreement) of the Company is threatened. In such event, the Company must
deposit into such account for the benefit of such employee an amount equal to
two times the sum of his or her current annual salary, bonus award for the most
recently completed year, and the Long-Term Incentive Compensation Plan payment
awarded, or to be awarded, determined by whichever date is nearest to the date
of the occurrence requiring the escrow deposit. If such employee's employment
terminates, for any reason other than disability, retirement, or death, within
two years after a change-in-control of the Company occurs, then such employee
shall be entitled to benefit payments from such escrow in the aggregate amount
described above. Payment of such escrow fund amount shall be made in 24 monthly
installments. The escrow account shall terminate and all funds therein shall be
returned to the Company two years following deposit of said funds in the escrow
account if proper demand for said funds is not made by such employee under the
terms of the severance agreement. If such employee's employment is terminated
prior to the occurrence of a change-in-control of the Company, escrow payments
are forfeited.
Mr. Molen receives benefits under a Restricted Stock Unit Program (the "COO
Program") dated January 1, 1987, whereby he received grants of 11,250 restricted
units (adjusted to reflect subsequent stock splits) on January 1, 1987, 1988,
1989, 1990, and 1991. When earned, a restricted unit is equivalent to a share of
the Company's Common Stock valued at fair market value (as defined in the COO
Program). The restricted units will fully vest on January 1, 1997, 1998, 1999,
2000, and 2001, respectively, subject to (i) earlier vesting due to, among other
things, a change-in-control of the Company (as described in the COO Program),
and (ii) forfeiture due to, among other things, termination for cause. Upon
grant, the restricted units accumulate additional restricted units equal to
dividends paid on the Company's Common Stock. Once vested, the then actual value
of each restricted unit will be paid in cash. The COO Program requires Mr. Molen
not to compete with the Company for a period of five years following termination
of his employment.
Mr. Molen also may receive benefits under the 1993 CEO Long-Term
Performance Plan ("CEO Plan"), effective January 1, 1993. Under the CEO Plan,
Mr. Molen may earn a performance award in the form of a cash payment if, and
only if, the Company achieves the requisite Total Shareholder Return (as defined
in the CEO Plan to include the annual rate of growth of the Common Stock and the
dividends paid on such stock) on a Beginning Share Price (as defined in the CEO
Plan) during the applicable performance period. Five performance periods were
established, three of which began January 1, 1993, and end December 31, 1995,
1996, and 1997, respectively. The fourth and fifth performance periods began
January 1, 1994, and 1995, respectively, and end December 31, 1998, and 1999,
respectively. For the performance period beginning January 1, 1993 and ended
December 31, 1995, the Beginning Share Price was $16.25 and a Total Shareholder
Return of 15 percent or greater was required at the end of the performance
period for the receipt of a performance award by Mr. Molen. A Total Shareholder
Return of 15 percent was not achieved for this period, and, thus, no award was
made. The Compensation Committee of the Board of Directors administers the CEO
Plan. In the event Mr. Molen ceases to be employed by the Company for any reason
other than death, permanent disability or change of control (as defined in the
CEO Plan) prior to completion of a performance period, the performance award
will be forfeited, and no payment with respect thereto shall be made to Mr.
Molen unless determined otherwise by the Compensation
17
21
Committee. In the event of (a) death or permanent disability, or (b) a change of
control, subsequent to which Mr. Molen's employment is terminated, Mr. Molen, or
his estate, as the case may be, will be entitled to receive payment with respect
to the performance award(s) for the performance period(s) ending the last day of
the calendar year in which the death, disability or change of control occurs.
Generally, a "change-of-control" or "change-in-control", with respect to
the above-referenced plans and agreements, is the acquisition by another person
or persons other than directly from the Company of more than 20 percent of the
Company's outstanding shares of Common Stock; a merger, consolidation or other
combination of the Company with one or more corporations as a result of which
more than 49 percent of the voting stock of the merged, consolidated or combined
corporation is held by former shareholders of the corporations other than the
Company; a tender offer for, or a request for invitations for the tender of,
shares of Common Stock of the Company by any person; or the election to the
Board of Directors of the Company by the shareholders of two or more persons not
nominated as candidates for the Board of Directors in proxy statements furnished
during such period on behalf of the Board of Directors of the Company.
PROPOSAL TO AMEND THE HUFFY CORPORATION 1988 STOCK OPTION PLAN
AND RESTRICTED SHARE PLAN
The Board of Directors of the Company, at its meeting on December 11, 1995,
approved an amendment to the Company's 1988 Stock Option Plan and Restricted
Share Plan (the "1988 Plan") which was originally approved by the Shareholders
on April 15, 1988 and amended by the Shareholders on April 24, 1992. The
amendment increases the number of shares subject to the 1988 Plan which expires
in 1998. The purpose of the 1988 Plan is to provide an additional incentive to
employees of the Company and its subsidiaries to increase Shareholder value and
to remain in the employ of the Company or its subsidiaries.
The 1988 Plan allows the grant of incentive or non-qualified options to
acquire shares of the Company's Common Stock, alone or with stock appreciation
rights ("SARs"), and an opportunity to subscribe for shares of Common Stock
subject to restrictions set forth in the 1988 Plan ("Restricted Shares"). No
incentive options, SARs or Restricted Shares have been granted under the 1988
Plan and there is no present intention to do so. Only non-qualified options have
been granted. See "Executive Compensation", "Stock Options", and "Option
Exercises and Holdings" for information about options granted in 1995.
The 1988 Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee") consisting of non-employee Directors who are not
eligible to participate in the 1988 Plan or any similar plan. The Committee
selects employee participants and determines the terms and conditions and types
of options and SARs, including number of shares, exercisability, and price. The
1988 Plan contains no predetermined performance measures or other criteria for
determining the number of options to be granted to participants. The Committee
also fixes the terms and restrictions on the offer and sale of Restricted
Shares.
Options granted under the 1988 Plan may be "incentive options" or
"non-qualified options" for federal tax purposes. Incentive options must meet
the provisions of Section 422A of the Internal Revenue Code of 1986, as amended.
No taxable income for federal income tax purposes results to the optionee from
the exercise of an incentive option at the time of exercise. Any gain recognized
on the sale of stock acquired on exercise of an incentive option is considered
as long-term capital gain for federal income tax purposes if the stock has been
held at least one year after it was acquired on exercise of the option and if at
least two years have expired after the grant of the option. Except as hereafter
indicated, the Company is not entitled to any deduction with respect to the
grant or exercise of any incentive option. The option price for incentive
options must be at least 100 percent of the fair market value of the stock on
the date of grant, unless the optionee owns over 10 percent of the Com-
18
22
pany's voting stock in which case it must be at least 110 percent. Incentive
options must expire within five years from grant.
Non-qualified options possess no tax benefit and upon exercise result in
taxable gain as ordinary income equal to the difference between the market price
on the date of exercise and the option price. This amount is generally treated
as a tax deductible expense to the Company at the time of exercise. The option
price for a non-qualified option may not be less than $1.00 per share.
SARs may be granted together with an option under the 1988 Plan which gives
an optionee the right to request that he or she be allowed to surrender the
option and receive in exchange therefor cash or shares, or any combination,
equal to the excess of the fair market value, on the date of the request, of one
share of Common Stock over the per share option exercise price multiplied by the
number of shares covered by the option so surrendered. All amounts received upon
the exercise of a SAR are taxable as ordinary income to the recipient and are
generally treated as a tax deductible expense to the Company.
Restricted Shares with all the pertinent terms of sale set by the Committee
may be offered for sale under the 1988 Plan. At purchase, a subscription
agreement is executed containing the applicable restrictions, terms of grant and
providing that the purchase price must be paid in full within ten years from the
date. Payment can be in various forms but all cash dividends on the shares must
be credited to and applied against the unpaid balance. Although subscribers have
the status of Shareholders, no stock certificates are issued until the shares
are fully paid and the shares may not be pledged, sold, margined or otherwise
encumbered until the restrictions end. There are no tax advantages for the
subscriber of Restricted Shares.
The 1988 Plan, as amended, presently provides for 1,125,000 shares of
Common Stock to be available. At December 31, 1995, approximately 81,000 shares
remained available. Management estimates that option grants to employees over
the next one to two years will amount to approximately 700,000 shares, based on
current option grant policies which are expected to continue. Accordingly, the
Board of Directors has approved an amendment to the 1988 Plan which, if approved
by the Shareholders, would increase the number of shares available under the
1988 Plan by 650,000 additional shares, to a new total of 1,775,000. The
proposed amendment is contained in the resolution attached hereto as Annex 1.
The proposal adds an annual limitation to the 1988 Plan restricting the
number of shares that may be granted in any one year to an employee. This
restriction will allow the Company to treat any gain realized either from the
exercise of a non-qualified stock option by an employee or from a disqualifying
sale of incentive stock option stock by an employee as performance-based
compensation. In such circumstances the Company will be able to deduct such
gain.
The affirmative vote of the holders of a majority of the Company's Common
Stock present in person or by proxy at the Annual Meeting and entitled to vote
is required to adopt the resolution. Proxies will be voted in favor of the
resolution unless otherwise instructed by the Shareholders. Abstentions and
shares not voted by brokers and other entities holding shares on behalf of
beneficial owners will have the same effect as votes cast against the
resolution, provided such shares are properly present at the meeting in person
or by proxy. The Board of Directors recommends a vote for the adoption of the
resolution.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed the firm of KPMG Peat Marwick LLP as independent public accountants
for the Company for calendar year 1996, subject to ratification by the
Shareholders and any future contingencies that may require reconsideration.
The firm of KPMG Peat Marwick LLP has served as independent public
accountants for the Company since 1962. The Board of Directors recommends
ratification of this appointment although it is not required by law. One or
more members of KPMG Peat Marwick LLP will attend the Annual Meeting with an
opportunity to make a state-
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23
ment if they desire to do so and to respond to such appropriate questions as may
be asked by Shareholders.
The proposal to ratify the appointment of KPMG Peat Marwick LLP requires
the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the meeting. Abstentions and shares
not voted by brokers and other entities holding shares on behalf of beneficial
owners will have the same effect as votes cast against the resolution, provided
such shares are properly present at the meeting in person or by proxy. The Board
of Directors recommends a vote for this proposal.
SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company by November , 1996,
for inclusion in the Company's Proxy Statement and proxy relating to the 1997
Annual Meeting of Shareholders.
OTHER MATTERS
The Board of Directors does not intend to present to the meeting any
matters other than those hereinbefore mentioned. It does not know of anything
that will be presented by other parties. However, if any other matters shall
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote thereon according to their discretion and
best judgment.
By order of the Board of Directors
/s/ Nancy A. Michaud
-----------------------------------
Nancy A. Michaud
Secretary
Dayton, Ohio
March , 1996
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24
ANNEX 1
PROPOSED AMENDMENT TO THE 1988 PLAN
RESOLVED, THAT the Huffy Corporation 1988 Stock Option Plan and Restricted Share
Plan be amended as follows:
Section 5(a) of the Plan is hereby amended in its entirety to read as set forth
below:
"5. SHARES SUBJECT TO THE PLAN
(a) The total number of shares of Common Stock which may be issued under the
Plan shall not exceed 1,775,000 shares, subject, however, to adjustments
required under the provisions of Section 5(d) hereof. The number of shares of
Common Stock that may be made subject to options granted to an employee under
the Plan during any calendar year shall not exceed fifteen percent (15%) of the
total number of shares of Common Stock which may be issued under the Plan."
1
25
FIRST AMENDMENT TO HUFFY CORPORATION 1988 STOCK OPTION PLAN
AND RESTRICTED SHARE PLAN
-------------------------
WHEREAS, the Huffy Corporation 1988 Stock Option Plan and Restricted Share Plan
(the "Plan") was approved and adopted on April 15, 1988 by the shareholders of
Huffy Corporation (the "Company").
WHEREAS, the Company desires to amend the Plan and such amendment was approved
and adopted by the shareholders of the Company on April 24, 1992;
NOW, THEREFORE, the Plan shall be amended as follows:
1. DEFINITIONS. All capitalized terms herein, unless otherwise specifically
defined in this Amendment, shall have the meanings given to them in the Plan.
2. AMENDMENT. Section 15 of the Plan is hereby amended in its entirety to read
as set forth below.
"15. EXERCISE AFTER TERMINATION OF EMPLOYMENT
(a) Options or stock appreciation rights may be exercised only while
the option holder is an employee during the period of continuous
employment with the Company or a subsidiary from the date of
grant and may not be exercised at any time after termination of
his employment for any cause, whether upon retirement or
otherwise, except as hereinafter provided:
(i) Upon the termination of the employment of an employee for
disability or upon his retirement under any pension plan for
salaried employees, he shall have the right to purchase all
or any part of the Common Stock with respect to which he held
non-qualified options immediately prior to the date of such
termination or retirement, until the latter of (A) one year
after the first exercise date for the last shares to become
exercisable under the terms of the option grant, or (B) three
years after the date of the employee's termination of
employment. The employee shall also have the right, within
the period of three (3) months next following the date of
such termination or retirement, to purchase all or any part
of the Common Stock with respect to which he is entitled to
exercise Incentive Stock Options immediately prior to the
date of such termination or retirement or to exercise any
equivalent stock appreciation right which he was entitled to
exercise immediately prior to the date of such termination or
retirement; and
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(ii) Upon the death of any employee while in the active service
of the Company or of a subsidiary or upon the death of
any such retired employee or of any such employee whose
services have been terminated on account of disability within
the exercise periods described in (i) above, his executor or
administrator or the person or persons to whom his rights
under the option or under the stock appreciation rights are
transferred by will or the laws of descent and distribution
shall have the right, within the period of six (6) months
next following the date of his death, to purchase all or any
part of the Common Stock with respect to which he was
entitled to exercise such option immediately prior to his
death or to exercise any equivalent stock appreciation right
which he was entitled to exercise immediately prior to his
death.
(b) The Committee shall have the power to define the extent to which
absences due to illness, service in the armed forces, or leaves
of absence shall not be considered to break "continuance
employment"."
3. EFFECTIVE DATE AND AFFIRMATION. This Amendment shall be effective as of
April 24, 1992. Except as amended hereby, the Plan remains unchanged and in
full force and effect.
IN WITNESS WHEREOF, this Amendment has been executed as of April 24, 1992.
HUFFY CORPORATION
By /s/ Robert R. Wieland
-----------------------------
27
HUFFY CORPORATION
1988 STOCK OPTION PLAN
AND
RESTRICTED SHARE PLAN
PART I GENERAL
1. PURPOSE
The Huffy Corporation 1988 Stock Option Plan and Restricted Share
Plan (the "Plan") is intended for the purpose of providing an
additional incentive to employees of Huffy Corporation (the
"Company") and its subsidiaries, including officers and directors
who are employees, to increase shareholder value and to remain in
the employ of the Company or its subsidiaries. The Plan provides
a means for employees to receive options to acquire shares of the
Company's Common Stock, $1.00 par value ("Common Stock"), and
stock appreciation rights, and an opportunity to subscribe for
shares of Common Stock subject to the restrictions set forth in Section 25
of this Plan ("Restricted Shares"). The Plan will benefit the Company by
giving employees an increasing personal interest in its continued success
and progress.
2. DEFINITIONS
(a) A "Change in Control" shall mean the date of occurrence of any of the
following events:
(i) Shares of Common Stock of the Company have been acquired other
than directly from the Company in exchange for cash or property
by any person who thereby becomes the owner of more than twenty
percent (20%) of the Company's outstanding shares of Common
Stock;
(ii) Any person has made a tender offer for, or a request for
invitations for the tender of, shares of Common Stock of the
Company; or
(iii) Any person forwards or causes to be forwarded to shareholders
of the Company a proxy statement or statements in any period of
twenty-four (24) consecutive months soliciting proxies to
elect to the Board of Directors of the Company two (2) or more
persons who were not nominated as candidates for the Board of
Directors of the Company in proxy statements forwarded to
shareholders during such period on behalf of the Board of
Directors of the Company.
(b) The term "subsidiary" where used in this Plan means any corporation
more than 50% of whose voting stock is owned directly or indirectly
by the Company.
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3. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors (hereinafter called the "Committee") which shall at
all times consist of not less than three (3) members of the Board of
Directors of the Company who are not entitled to participate in the
Plan or in any other similar plan which may be provided by the Company
or its subsidiaries, to be appointed by, and to serve during the
pleasure of, the Board of Directors of the Company.
(b) The Committee shall have full power and authority to construe the
provisions and to supervise the administration of the Plan, including
the establishment of such rules and regulations as it may deem
appropriate, and all decisions and designations made by the Committee
pursuant to the provisions of the Plan shall be final. Any action
taken by a majority of the Committee shall be the action of the
Committee.
4. EMPLOYEES WHO MAY PARTICIPATE IN THE PLAN
Any full-time salaried employee of the Company or of a subsidiary, who may
or may not be an officer or member of the Board of Directors, and who is in
a position to make a contribution to the profits of the Company or a
subsidiary shall be eligible to participate in the Plan. The employees to
whom options and/or stock appreciation rights are granted or to whom
Restricted Shares are offered shall be designated from time to time by the
Committee.
5. SHARES SUBJECT TO THE PLAN
(a) The total number of shares of Common Stock which may be issued under
the Plan shall not exceed 500,000 shares, subject, however, to
adjustments required under the provisions of Section 5(d) hereof.
(b) Common Stock subject to the Plan may be, at the discretion of the
Board of Directors, either authorized and unissued shares or treasury
shares.
(c) If an option is surrendered for any reason (other than the election to
receive stock appreciation right benefits) or for any other reason
ceases to be exercisable in whole or in part, or if Restricted Shares
subscribed for under the Plan are later forfeited pursuant to the
Plan, the Common Stock which is subject to such option but as to which
the option has not been exercised, or such Restricted Shares, shall
again become available for offering under the Plan. If an option is
surrendered in connection with the exercise of a stock appreciation
right, the number of shares of Common Stock
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covered by such option or portion thereof which is so surrendered less
the number of shares of Common Stock issued in connection with the
exercise of the stock appreciation right shall again become available
for offering under the Plan.
(d) In the event of any changes in the Common Stock subject to the Plan or
to any option or stock appreciation right granted hereunder by reason
of a merger, consolidation, reorganization, recapitalization, stock
dividend, stock split-up, combination or exchange of shares, or other
change in the corporate structure, the aggregate number of shares
which may be issued under this Plan and the number and class of shares
subject to each outstanding option or stock appreciation right and
Restricted Shares still subject to restrictions, and the price per
share, shall be appropriately adjusted by the Committee.
6. DURATION AND TERMINATION OF THE PLAN
The Plan shall become effective upon its approval by the shareholders and
shall terminate on the tenth anniversary of the date of such approval
unless terminated at an earlier date by action of the Board of Directors;
provided, however, that any termination of this Plan after shareholder
approval shall not affect options or stock appreciation rights granted, or
Restricted Shares subscribed for, prior thereto.
7. AMENDMENT OF THE PLAN
The Board of Directors may alter or amend the Plan from time to time prior
to its termination, but without the approval of the shareholders, no such
amendment shall (a) increase the aggregate number of shares of Common Stock
which may be issued under the Plan; (b) reduce the option prices
permissible hereunder at which Incentive Stock Options (as defined in
Section 10(b) of this Plan) or stock appreciation rights relating thereto
may be exercised; (c) extend the time within which options or stock
appreciation rights may be granted, or Restricted Shares may be offered,
hereunder; (d) extend the time within which options or stock appreciation
rights may be exercised; (e) permit any person while a member of the
Committee to be eligible to participate in this Plan; (f) without the
consent of the optionee, alter or affect to the detriment of the optionee
any option or stock appreciation right previously granted under the Plan; or
(g) without the consent of the subscriber, alter or affect to the detriment
of the subscriber any subscription for Restricted Shares entered into
pursuant to this Plan.
8. INDEMNIFICATION
Each person who is or shall have been a member of the Committee or of the
Board of Directors shall be indemnified and held harmless by the Company
against and from any loss,
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Page 4
cost, liability, or expense that may be imposed upon or reasonably incurred
by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by
reason of any action taken or failure to act upon the Plan and against and
from any and all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of judgment in any such
action, suit, or proceeding against him; provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such person may be entitled under the Company's
Articles of Incorporation or Code of Regulations, as a matter of law, or
otherwise, or any power that the Company may have to indemnify him or hold
him harmless.
9. NOTICES
Each notice relating to this Plan shall be in writing and delivered in
person or by first class or certified mail to the proper address. Each
notice shall be deemed to have been given on the date it is received. Each
notice to the Committee shall be addressed as follows:
Huffy Corporation
7701 Byers Road
Maimisburg, OH 45342
Attention: Secretary of Compensation Committee
Each notice to the holder of options, stock appreciation rights or
Restricted Shares (or other person then entitled to exercise an option
and/or stock appreciation right) shall be addressed to the holder, (or such
other person or persons), at the holder's address set forth in the Company's
current personnel records. Anyone to whom a notice may be given under this
Plan may designate, in writing, a new address by notice to that effect.
PART II OPTIONS AND STOCK APPRECIATION RIGHTS
10. GRANT OF OPTIONS OR STOCK APPRECIATION RIGHTS
(a) To the extent not inconsistent with the provisions of this Plan, the
Committee shall fix the terms and provisions and restrictions of
options and stock appreciation rights, including the number of shares
of Common Stock to be subject to each option, the dates on which
options may be fully or partially exercised, the minimum period
(if any) during which the same must be held until exercisable and the
expiration dates thereof. The Committee may require an agreement,
commitment, or statement on the part of any grantee of options and/or
stock appreciation rights prior to the effectiveness of any such grant
as it shall determine is in the best interest of the Company.
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Page 5
(b) It is intended that certain options issued pursuant to this Plan shall
constitute incentive stock options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended ("Incentive Stock
Options"). Nonqualified stock options may also be issued under this
Plan in accordance with the Plan's terms and conditions. An eligible
employee may hold more than the one option, whether they are Incentive
Stock Options, non-qualified stock options or both, but only on the
terms and subject to the restrictions set forth in this Plan.
(c) Notwithstanding anything in this Plan to the contrary, no person
shall be eligible to receive an Incentive Stock Option, if at the time
of grant, such person owns of record and beneficially more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company then outstanding and entitled to vote; provided,
however, that the foregoing limitation shall not apply if the option
price at the time the option is granted is at least one hundred ten
percent (110%) of the fair market value (as defined in Section 10(e)
of this Plan) of the Common Stock subject to the option and the option
term is not more than five (5) years. Further, the aggregate fair
market value (determined at the time the option is granted) of the
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by the optionee during any calendar
year (under all such plans of the Company and its subsidiaries) shall
not exceed One Hundred Thousand Dollars ($100,000).
(d) Subject to the exception set forth in Section 10(c) of this Plan, the
purchase price of the Common Stock covered by each Incentive Stock
Option shall not be less than one hundred percent (100%) of the fair
market value of such Common Stock on the date of grant of such option.
The purchase price of the Common Stock covered by any other option
issued under this Plan shall be as determined by the Committee;
provided, however, that in no event shall the purchase price be less
than one dollar ($1.00) per share.
(e) The fair market value of shares of Common Stock on a particular date
shall be the closing sale price for the Company's Common Stock as
shown in the New York Stock Exchange-Composite Transactions for that
date or, if no such sale occurred on that date, then for the next
preceding date on which a sale was made. Subject to the foregoing, the
Committee, in fixing the purchase price, shall have full authority and
discretion and be fully protected in doing so.
11. NOTICE OF GRANT OF OPTION OR STOCK APPRECIATION RIGHT
Upon the granting of any option or stock appreciation right to an employee,
the Committee shall promptly cause such
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Page 6
employee to be notified of the fact of such grant. The date on which an
option or stock appreciation right shall be granted shall be the date of
the Committee's authorization of such grant or such later date as may be
determined by the Committee at the time such grant is authorized, subject
to satisfaction of any conditions the Committee may place on the
effectiveness of the grant.
12. STOCK APPRECIATION RIGHTS
Subject to any other provisions of this Plan, the Committee, in its sole
discretion, may grant with any option granted under the Plan, in addition
to the holder's option to acquire shares of Common Stock, a stock
appreciation right, whereby the option holder may receive from the Company,
upon his written request ("Request") which is consented to by the
Committee, in exchange for the surrender of any option or any portion
thereof which, under the terms and conditions of the Plan is exercisable on
the date of the Request, shares of Common Stock, cash or any combination
thereof as specified in the Request, having an aggregate value equal to the
excess of the fair market value on the date of the Request of one share of
Common Stock over the purchase price specified in such option multiplied by
the number of shares of Common Stock covered by such option or portion
thereof which is so surrendered. A stock appreciation right granted in
connection with an option under the Plan may only be granted at the time of
such option, and is exercisable only when the fair market value of the
Common Stock on the date of the Request exceeds the purchase price
specified in such option.
For the purpose of this Section 12, the fair market value of a share of
Common Stock on any date shall mean the average of the closing price
thereof on each of the ten (10) trading days immediately preceding such day
as shown in the New York Stock Exchange-Composite Transactions.
Any election by an option holder to surrender his option and to receive a
stock appreciation right settlement, whether for cash, for stock or for any
combination of stock and cash, shall be made by a Request only during any
period beginning on the third business day following the date of release
for publication by the Company of quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such
date. Within thirty (30) days of the receipt by the Company of a Request,
the Committee shall, in its sole discretion, either consent to or
disapprove in whole or in part any election by an option holder as to the
form of stock appreciation right payment. No stock appreciation right or
related stock option shall be exercisable, however, during the first six
(6) months of its term, except that this limitation shall not apply in the
event death or disability of the optionee occurs prior to the expiration of
the six-month period. Any stock appreciation right shall be exercisable
upon such
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Page 7
additional terms and conditions as may from time to time be prescribed by
the Committee. Upon surrender of an option or a portion thereof in exercise
of stock appreciation rights, such option or portion thereof shall expires.
No fractional shares of Common Stock shall be issued upon the exercise of
any stock appreciation right.
In the event the Committee disapproves in whole or in part any Request by
an option holder to exercise his stock appreciation right, or the form
of payment thereof, such disapproval shall not affect the optionee's right
to exercise his stock appreciation right at a later date to the extent that
such right is otherwise exercisable or to elect the form of payment at a
later date, provided that such later exercise and the form of payment also
shall be subject to the Committee's approval. Additionally, such disapproval
shall not affect the option holder's right alternatively to exercise any
option or options granted to him under the Plan.
13. ADDITIONAL PROVISIONS
Any option agreements authorized under the Plan shall contain such
other provisions, including provisions with respect to stock appreciation
rights, as the Committee and the Board of Directors of the Company shall
deem advisable which are not inconsistent with the terms herein stated. All
Incentive Stock Option agreements shall contain such limitations and
restrictions upon the exercise of the option governed thereby as shall be
necessary in order that such option will be an "incentive stock option" as
defined in Section 422A of the Internal Revenue Code of 1986, as amended,
or to conform to any change in the applicable law, rulings or regulations.
14. EXERCISE OF OPTIONS
An option may be exercised by notice given to the Committee in such
form as the Committee shall require. No fractions of a share may be
purchased by an option holder upon exercising his option, and to the extent
that the use of fractional or percentage computations would otherwise give
rise to the right of the option holder to purchase a fraction of a share,
the total shares subject to exercise shall be adjusted to the nearest whole
number with any half share balance being adjusted to one whole share.
15. EXERCISE AFTER TERMINATION OF EMPLOYMENT
(a) Options or stock appreciation rights may be exercised only while the
option holder is an employee during a period of continuous employment
with the Company or a
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subsidiary from the date of grant and may not be exercised at any time
after termination of his employment for any cause, whether upon
retirement or otherwise, except as hereinafter provided:
(i) Upon the termination of the employment of an employee for
disability or upon his retirement under any pension plan for
salaried employees, he shall have the right, within the period of
three (3) months next following the date of such termination or
retirement, to purchase all or any part of the Common Stock with
respect to which he was entitled to exercise such option
immediately prior to the date of such termination or retirement
or to exercise any equivalent stock appreciation right which he
was entitled to exercise immediately prior to the date of such
termination or retirement; and
(ii) Upon the death of any employee while in the active service of the
Company or of a subsidiary or upon the death within such
three-month period of any such retired employee or of any such
employee whose services have been terminated on account of
disability, his executor or administrator or the person or
persons to whom his rights under the option or under the stock
appreciation rights are transferred by will or the laws of
descent and distribution shall have the right, within the period
of six (6) months next following the date of his death, to
purchase all or any part of the Common Stock with respect to
which he was entitled to exercise such option immediately prior
to his death or to exercise any equivalent stock appreciation
right which he was entitled to exercise immediately prior to his
death.
(b) The Committee shall have power to define the extent to which absences
due to illness, service in the armed forces, or leaves of absence
shall not be considered to break "continuous employment".
16. CHANGE IN CONTROL
In the event of a Change in Control of the Company (as defined in Section
2(a) of the Plan), then notwithstanding anything to the contrary in this
Plan or any notice or option agreement issued pursuant to this Plan, (a)
all options then outstanding shall become immediately and fully
exercisable and (b) the then outstanding option of an optionee whose
employment is terminated, except by the Company for cause, upon or within
three (3) months after a Change in Control, shall remain exercisable for a
period of three (3) months from the date of such termination of
employment, but in no event after the expiration of the exercise period
provided in Section 18 of this Plan.
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Page 9
17. PAYMENT FOR SHARES
Shares of Common stock which are subject to an option shall be transferred
only upon exercise of the option in whole or in part and upon full payment
of the purchase price for the Common Stock as to which the option is
exercised. The option price shall be payable upon exercise of the option
either (a) in United States dollars in cash (including check, bank draft or
money order) or (b) by delivery of shares of Common Stock of the Company
already owned by the optionee or (c) by delivery of a combination of shares
of Common Stock and cash. Any shares of Common Stock delivered to the
Company in payment of the option price shall be valued at their fair market
value (as defined in Section 10(e) of this Plan) on the date of delivery.
An employee to whom an option or stock appreciation right has been granted
shall have none of the rights of a shareholder with respect to the shares
to be acquired until such shares are transferred to him.
18. TERMINATION OF OPTION OR STOCK APPRECIATION RIGHT
Each option and stock appreciation right shall terminate in any event no
later than ten (10) years from the date of grant. In the case of any option
or stock appreciation right providing for exercise in installments, unless
the option or stock appreciation right has been cancelled, on termination
of employment by reason of death prior to the next succeeding maturity date
of an installment, the option or stock appreciation right shall be
exercisable with respect to a proportionate part of such installment based
upon the number of days of employment during the period of such installment
in relation to the total number of days in such period.
19. ASSIGNABILITY
An option or stock appreciation right granted under the Plan may not be
transferred except by will or the laws of descent and distribution and,
during the lifetime of the employee to whom granted, may be exercised only
by him, his guardian or legal representative.
20. LAWS AND REGULATIONS
(a) The Plan and all options and stock appreciation rights granted
pursuant to it are subject to all laws and regulations of any
governmental authority which may be applicable thereto, and
notwithstanding any provisions of this Plan or the options or stock
appreciation rights granted, the holder of an option or a stock
appreciation right shall not be entitled to exercise such option or
stock appreciation right, nor shall the Company be obligated to issue
any shares or pay any cash under the Plan to the holder, if such
exercise,
36
Page 10
issuance or payment shall constitute a violation by the option holder
or the Company of any provisions of any such law or regulation.
(b) The Company, in its discretion, may postpone the issuance and delivery
of Common Stock upon any exercise of an option or stock appreciation
right until completion of any stock exchange listing or registration or
other qualification of such shares under any state or federal law,
rule or regulation as the Company may consider appropriate; and may
require any person exercising an option or stock appreciation right
to make such representations and furnish such information as it may
consider appropriate in connection with the issuance of the shares in
compliance with applicable law. Under such circumstances, the Company
shall proceed with reasonable promptness to complete any such listing,
registration or other qualification.
(c) Common Stock issued and delivered upon exercise of an option or stock
appreciation right shall be subject to such restrictions on trading,
including appropriate legending of certificates to that effect, as
the Company, in its discretion, shall determine are necessary to
satisfy applicable legal requirements and obligations.
PART III RESTRICTED SHARES
21. OFFER OF RESTRICTED SHARES
(a) To the extent not inconsistent with the provisions of this Plan,
the Committee shall fix the terms and provisions and restrictions
on the offer and sale of Restricted Shares, including the number
of shares of Common Stock offered, the purchase price, the portion
of future bonuses to be set off against such purchase price (as
provided in Section 21(c) of this Plan), and the Restricted Period
(as defined in Section 25(a) of this Plan. The Company shall offer
to sell to eligible employees selected by the Committee the number
of shares of Common Stock fixed by the Committee, and each
employee to whom such offer is made may elect to purchase up to
that number of shares.
(b) The purchase price of the Restricted Shares offered under
Section 21(a) of this Plan shall be as determined by the Committee;
provided, however, that in no event shall the purchase price be
less than one dollar ($1.00) per share. Subject to the foregoing,
the Committee in fixing the purchase price, shall have full
authority and discretion and be fully protected in doing so.
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Page 11
(c) Each employee who elects to purchase Restricted Shares pursuant to
this Section 21 shall execute and deliver to the Company a
subscription agreement for such Restricted Shares, containing such
provisions as the Committee and the Board of Directors of the Company
shall deem advisable which are not inconsistent with the terms herein
stated, agreeing to the terms and conditions of the purchase including
the restrictions set forth in Section 25 of this Plan. Each
subscription agreement shall set forth the aggregate purchase price of
the Restricted Shares which are the subject of such subscription and
shall provide that such purchase price shall be paid in full by the
subscriber on or before ten (10) years from the date of such
subscription (a) by setting off against such purchase price one
hundred percent (100%) of the cash dividends payable with respect to
the Restricted Shares which are the subject of such subscription plus
such portion (as the Committee in its sole discretion shall provide in
the subscription agreement) of all profit sharing or other bonuses to
which the subscriber becomes entitled after the date of such
subscription and (b) in cash in United States Dollars (including
check, bank draft or money order). The Company shall have the right to
retain and apply against the purchase price the cash dividends payable
with respect to the Restricted Shares and the portion of any profit
sharing bonus or other bonus to be set off against such purchase price
as aforesaid. The subscriber shall have the right to prepay all or any
part of the purchase price by cash payments to the Company at any
time. The Board of Directors may not call for payment of any unpaid
portion of the purchase price prior to ten (10) years from the date of
the subscription. No interest will be charged to the subscriber on the
unpaid balance of the purchase price.
(d) Upon termination of employment of a subscriber for any reason
whatsoever, including retirement or death, the subscriber or his legal
representative may elect, within three (3) months after the happening
of such event, to pay the entire balance due upon the purchase price
of any portion of the Restricted Shares which are freed of
restrictions and not forfeited pursuant to Section 25(b) of the Plan
and thereupon receive delivery of the stock certificate. If such
payment shall not be made within such period, the Company will treat
the failure to pay as a default in payment of the purchase price
subject to the provisions of Section 24 of this Plan.
(e) The obligations of the Company to issue Restricted Shares pursuant to
the Plan shall be subject to (i) compliance with all laws and
regulations of any governmental authority which may be applicable
thereto and (ii) the completion of any stock exchange listing or
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Page 12
registration or other qualification of such shares under any state or
federal law, rule or regulation as the Company may consider
appropriate. The subscription agreement may contain such
representations as the Company considers appropriate in connection
with the issuance of the Restricted Shares in compliance with
applicable law. The Company shall proceed with reasonable promptness
to complete any such listing, registration or other qualification.
22. RIGHTS AS SHAREHOLDER
The subscriber will become a shareholder of record as of the date of
subscription agreement and will thereupon have, subject to the provisions of
this Plan and the subscription agreement, all of the rights of a shareholder
of the shares so subscribed including, without limitation, the right to vote
the Restricted Shares at any meeting of the shareholders, to receive
dividends declared and paid thereon, if any, and to receive all
communications furnished by the Company to its shareholders. In accordance
with the subscription agreements, all cash dividends payable with respect to
the Restricted Shares will be credited to and applied against the unpaid
balance of the purchase price. Any dividends other than cash paid or
distributed with respect to such shares will be distributed to the
subscriber.
23. ISSUANCE OF CERTIFICATES
No certificates for Restricted Shares sold pursuant to Section 21 hereof
will be executed and delivered until such shares are fully paid. Any
certificate issued hereunder shall bear appropriate legends as the Company,
in its discretion, shall determine are necessary to reflect the restrictions
on such shares existing under this Plan or arising under applicable state or
federal securities laws. Each installment of the purchase price paid
pursuant to a subscription agreement shall be credited pro rata among the
Restricted Shares which are the subject of such subscription, and no portion
of the Restricted Shares shall be deemed fully paid until the purchase price
of all of the Restricted Shares which are the subject of such subscription
is paid in full.
24. DEFAULT IN PAYMENT
In case of default in the payment of the purchase price, the Company shall,
subject to compliance with Section 1701.35 of the Ohio Revised Code, after
thirty (30) days' notice setting forth such default has been given to the
subscriber by registered mail, release the shares from subscription and
treat as retired the shares subject to the subscription which have not been
fully paid. In such event, the
39
Page 13
subscriber shall no longer be liable for the unpaid portion of the
purchase price and shall receive a refund of any portion of the
purchase price paid pursuant to the subscription agreement prior
to such default, without interest
25. RESTRICTIONS
(a) At the time of each sale of Common Stock pursuant to Section 21 of
this Plan, the Committee shall establish for each subscriber a
"Restricted Period" with respect to the Restricted Shares purchased,
which period shall not be longer than ten (10) years. Restricted
Shares sold pursuant to this Plan may not be sold, margined, assigned,
transferred, pledged or otherwise encumbered during the Restricted
Period notwithstanding that such shares may be fully paid prior to
the expiration of the Restricted Period.
(b) If a subscriber ceases to be an employee of the Company or a
subsidiary during the Restricted Period for any cause other than
(i) death, (ii) disability, (iii) retirement under any pension
plan for salaried employees, or (iv) within three (3) months following
a Change in Control of the Company (as defined in Section 2(a) of the
Plan), all Restricted Shares which are still subject to the foregoing
restrictions shall, upon such termination of employment, be forfeited
and returned to the Company; provided, however, that in the event his
employment is terminated at the request of the Company or by action of
the Company, the Committee may, but need not, determine that some or
all of his Restricted Shares shall be free of restrictions and shall
not be forfeited. If a subscriber ceases to be an employee of the
Company or a subsidiary during the Restricted Period by reason of
death, disability, retirement under any pension plan for salaried
employees, or within three (3) months following a Change in Control of
the Company, the restrictions in Section 25(a) shall terminate. The
Committee may at any time in its sole discretion accelerate or waive
all or any portion of the restrictions remaining in respect of the
Restricted Shares.
(c) If any Restricted Shares are forfeited pursuant to Section 25(a)
hereof, the subscriber shall no longer be liable for any unpaid
portion of the purchase price and shall receive a refund of any
portion of the purchase price paid pursuant to the subscription
agreement prior to such forfeiture, without interest.
40
HUFFY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 26, 1996
P The undersigned hereby appoints Richard L. Molen, Geoffrey W. Smith
R and Thomas C. Sullivan, and each of them, his or her proxies, with
O power of substitution, to vote all shares of Common Stock of HUFFY
X CORPORATION, an Ohio corporation, which he or she may be entitled
Y to vote at the Annual Meeting of Shareholders of said Corporation
to be held April 26, 1996, and at any adjournment(s) thereof, on
the following matters, all of which are described in the Proxy
Statement, receipt of which is hereby acknowledged:
Election of Directors, Nominees:
(For a term of three years)
Jack D. Michaels,
James F. Robeson,
Patrick W. Rooney,
(For a term expiring in 1997)
Joseph P. Viviano
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF ANY
SPECIFICATIONS TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF ALL LISTED NOMINEES AND FOR ALL THE OTHER MATTERS LISTED
ON THE REVERSE SIDE OF THIS CARD. EXCEPT FOR THE MATTERS LISTED ON
THE REVERSE SIDE OF THIS CARD, THE BOARD OF DIRECTORS AT PRESENT
KNOWS OF NO BUSINESS OTHER THAN OF A ROUTINE NATURE TO BE BROUGHT
BEFORE THE MEETING. IF ANY OTHER BUSINESS IS BROUGHT BEFORE THE
MEETING, THIS PROXY WILL BE VOTED ACCORDING TO THE APPOINTED
PROXIES' DISCRETION AND BEST JUDGMENT. IF CUMULATIVE VOTING IS
ELECTED FOR THE ELECTION OF DIRECTORS, VOTES CAST PURSUANT TO THIS
PROXY WILL BE DISTRIBUTED AMONG THE ABOVE NOMINEES AT THE DISCRETION
OF SAID PROXIES.
/ SEE REVERSE /
/ SIDE /
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DETACH CARD
DIRECTIONS TO HUFFY SERVICE FIRST, INC.
[MAP]
41
/ X / PLEASE MARK YOUR |
VOTES AS IN THIS |
EXAMPLE. |____
WITH AB- AB-
FOR HELD FOR AGAINST STAIN FOR AGAINST STAIN
1. Election of / / / / 2. Proposal to / / / / / / 3. Ratification of / / / / / /
Directors* Amend the Stock Appointment of KPMG
(see reverse) Option Plan Peat Marwick LLP as
*(Instruction to withhold authority Independent Public
to vote for any individual nominee, Accountants for
write that nominee's name in the Calendar Year 1996
space below)
- ------------------------------------ The undersigned ratifies all that said proxies, or
any of them, or their substitute or substitutes, may
lawfully do by virture hereof, and revokes any
proxies heretofore given by the undersigned to
vote at said Annual Meeting or adjournment(s)
thereof.
Change / /
of (indicate change of address
Address in the space below and
mark the box to the left.)
Will / /
Attend
Annual
Meeting
SIGNATURE(S) ____________________________________________________ DATE __________ ______________________________________
SIGNATURE(S) ____________________________________________________ DATE _________ ______________________________________
NOTE: Please sign exactly as name appears opposite. If signing in fiduciary or
representative capacity, please give full title as such. If shares are
registered in more than one name, all holders must sign. If signature is
for a corporation, the handwritten signature and title of an authorized
officer is required, together with the full corporate name.
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DETACH CARD