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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WHITE ELECTRONIC DESIGNS CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
/ / 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.
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WHITE ELECTRONIC DESIGNS CORPORATION
3601 EAST UNIVERSITY DRIVE
PHOENIX, ARIZONA 85034
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on February 22, 2001
To the Shareholders of White Electronic Designs Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of White
Electronic Designs Corporation, an Indiana corporation ("Corporation"), will be
held at the headquarters of White Electronic Designs Corporation, 3601 East
University Drive, Phoenix, Arizona 85034, on February 22, 2001, at 11:00 A.M.,
Mountain Standard time, for the following purposes:
1. To elect six directors of the Corporation;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Corporation and its subsidiary for the fiscal year
ending September 30, 2001;
3. To amend the Corporation's 1994 Flexible Stock Plan to change the name
of the Plan and to increase the aggregate number of shares in respect
to which options may be granted under the plan from the formula
currently provided to 2,200,000;
4. To approve the White Electronic Designs Corporation 2001 Director
Stock Plan;
5. To approve the White Electronic Designs Corporation 2000 Employee
Stock Purchase Plan;
6. To amend the Corporation's Stock Option Plan for Non-Employee
Directors to change the name of the Plan and to increase the aggregate
number of shares in respect to which options may be granted under the
Plan from the formula currently provided to 281,000; and
7. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 29, 2000, as
the record date for the determination of shareholders that are entitled to
notice of and to vote at the meeting.
By order of the Board of Directors,
/s/WILLIAM J. RODES
Secretary
Phoenix, Arizona
January 22, 2001
IMPORTANT
YOU ARE URGED TO SPECIFY YOUR CHOICES, DATE AND SIGN THE ACCOMPANYING PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING.
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WHITE ELECTRONIC DESIGNS CORPORATION
3601 E. UNIVERSITY DRIVE
PHOENIX, ARIZONA 85034
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 22, 2001
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors ("Board") of White Electronic Designs Corporation, an
Indiana corporation ("the Corporation"), to be used at the Annual Meeting of
Shareholders of the Corporation, to be held at the offices of White Electronic
Designs Corporation, 3601 East University Drive, Phoenix, Arizona 85034, on
February 22, 2001, at 11:00 A.M., Mountain Standard time, and at any
adjournments thereof, pursuant to the accompanying Notice of Annual Meeting.
VOTING
You are requested to complete, date and sign the accompanying proxy and return
it promptly to the Corporation in the enclosed envelope. The proxy may be
revoked at any time before it is voted by (i) delivering written notice to the
Corporation prior to the start of the meeting, (ii) duly executing and
delivering a proxy bearing a later date or (iii) attending the meeting and
voting in person. Where no instructions are indicated, proxies will be voted in
accordance with the recommendations of the Board as specified in this Proxy
Statement. The holders of a majority of the outstanding shares of the
Corporation's Common Stock, without par value (stated value $.10 per share)
("Common Stock") present, in person or by proxy, is required for a quorum at the
meeting.
The Board has fixed the close of business on December 29, 2000, as the record
date for the determination of shareholders that are entitled to notice of and to
vote at the meeting. The transfer books of the Corporation will not be closed.
On the record date, there were 18,673,373 outstanding shares of Common Stock,
the holders of all of which are entitled to one vote per share.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
Inspector of Elections appointed for the meeting and such Inspector will
determine whether or not a quorum is present. The Inspector of Elections will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy are being first mailed to the Corporation's shareholders
on or about January 22, 2001.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors of the Corporation are to be elected to the Board at the meeting.
Each director will be elected to serve in accordance with the By-Laws of the
Corporation until the next annual meeting of shareholders and until his
successor is duly elected and qualified. Directors are elected by a plurality of
the votes cast, meaning that the six persons who receive the largest number of
the votes cast for the election of directors shall be elected directors,
assuming there is a quorum present.
NOMINEES
It is the intention of the individuals named in the enclosed form of proxy to
vote such proxy for election as directors the following persons: Norman T. Hall,
Donald F. McGuinness, Thomas M. Reahard, Hamid R. Shokrgozar, Thomas J. Toy and
Edward A. White. Each of Messrs. Hall, McGuinness, Reahard, Shokrgozar, Toy and
White have previously been elected to the Board by the shareholders. The Board
has no reason to believe that any of the nominees will not be available for
election as
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a director. However, should any of them become unwilling or unable to accept
election, it is intended that the individuals named in the enclosed proxy may
vote for the election of such other person or persons as the Board may
recommend.
Set forth below is certain information concerning the nominees for election to
the Board.
NAME AND AGE BIOGRAPHICAL INFORMATION
- ------------ ------------------------
NORMAN T. HALL Current Director and nominee for reelection. Dr. Hall is a partner in Alliant Partners, an
(46) investment banking firm specializing in mergers, acquisitions and divestitures, as well as
private debt and equity financings for growth or acquisitions. Prior to joining Alliant
Partners, he was a partner in Bentley Hall Von Gehr International (formerly Berkeley Hall &
Corporation) and worked for Berkeley International Capital Corporation and Intel
Corporation. Dr. Hall was previously on the Electronic Designs, Inc. Board from October 1995
to October 1998, and is currently on the board of directors of Atmel Corporation. Dr. Hall
received his J.D. and M.B.A. from Golden Gate University, Ph.D. and M.S. from the University
of Hawaii, and S.Sc. from the University of Alberta. He is a member of the State Bar of
California. Dr. Hall has served as a Director of the Corporation since October 1998.
DONALD F. MCGUINNESS Current Director and nominee for reelection. Mr. McGuinness was the Chairman of the Board of
(67) the Corporation from October 1998 through August 2000. Prior to the merger of Bowmar
Instrument Corporation and Electronic Designs, Inc., which created the Corporation in October
1998, Mr. McGuinness was Chairman, President and CEO of Electronic Designs, Inc. from October
1995 until the merger. Mr. McGuinness also serves on the board of directors of Cabletron
Systems, Inc., and Ibis/Technology Corporation. He has served as a Director of the
Corporation since October 1998.
THOMAS M. REAHARD Current Director and nominee for reelection. Mr. Reahard is the Chairman and CEO of Symmetry
(48) Software Corporation, a computer software development Corporation established in 1984. Mr.
Reahard has served as a Director of the Corporation since November 1995.
HAMID R. SHOKRGOZAR Current Director and nominee for reelection. Mr. Shokrgozar was elected Chairman of the
(40) Board in August 2000. Mr. Shokrgozar is also the President, Chief Executive Officer and
Director of the Corporation. He was appointed President and CEO of Bowmar Instrument
Corporation in January 1998 and Director of the Corporation in February 1998. From 1993-1998
he served as President of White Microelectronics, the largest division of Bowmar Instrument
Corporation. He also served as the Corporation's Vice President Engineering and Technology
from 1988 to 1993. Mr. Shokrgozar served as Chairman of the American Electronic Association
(AEA) Arizona Council for the fiscal year 2000. Mr. Shokrgozar holds a U.S. Patent for the
invention of "Stacked Silicon Die Carrier Assembly."
THOMAS J. TOY Current Director and nominee for reelection. Mr. Toy is Managing Director of PacRim Venture
(44) Partners, a professional venture capital firm he co-founded in 1999. PacRim Venture Partners
specializes in information technology investments. Previously he was at Technology Funding,
a professional venture capital firm, from 1987 to 1999. While at Technology Funding, Mr. Toy
was a Partner and Managing Director of Corporate Finance and Chairperson of the firm's
investment committee. Mr. Toy is also a director of UTStarcom and KOR Electronics. Mr. Toy
holds B.A. and M.M. degrees from Northwestern University. Mr. Toy has served on the Board
since October 31, 1998.
EDWARD A. WHITE Current Director and nominee for reelection. Mr. White is Vice Chairman of the Board of
(72) Directors of the Corporation and previously served as Chairman of the Board from 1983 to
1998. Mr. White founded the Corporation in 1951 and has served as President and Chief
Executive Officer. He has served as a Director of the Corporation since 1951.
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THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF ALL OF THE
ABOVE-NAMED NOMINEES AS DIRECTORS OF THE CORPORATION.
MEETINGS AND COMMITTEES OF THE BOARD
The Board met nine times during fiscal 2000. Each current director of the
Corporation attended at least 75 percent of the total number of meetings of the
Board and each committee on which each director served during fiscal 2000.
During fiscal 2000, the Board had an Audit Committee that recommended engagement
of independent auditors, reviewed the arrangement and scope of the audit, and
considered comments made by the independent auditors. During fiscal 2000, the
Audit Committee consisted of Mr. Thomas M. Reahard (chairman), Mr. Norman T.
Hall, and Mr. Thomas J. Toy and met three times. The Audit Committee has:
- reviewed and discussed the audited financial statements with
management;
- discussed with the independent auditors the matters required to be
discussed by SAS 61;
- received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1;
and
- recommended to the Board that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K for filing
with the SEC.
The members of the Audit Committee are independent as defined under Rule
4200(a)(15) of the NASD listing standards.
During fiscal 2000 the Board had a Compensation Committee, which administered
the Corporation's compensation and stock option plans. During fiscal 2000 the
Compensation Committee consisted of Mr. Norm T. Hall (Chairman) and Mr. Thomas
M. Reahard and met one time. The report of the Compensation Committee is set
forth below.
DIRECTOR COMPENSATION
Each of the directors of the Corporation, who were not also officers of the
Corporation, were paid (i) $3,000 per quarter for fiscal year 2000, (ii) $500
for each Board and committee meeting attended and (iii) reimbursements for
related expenses. As Chairman, Mr. McGuinness received $15,000 per quarter and
as Vice Chairman, Mr. White received $12,000 per quarter. In addition, under the
Corporation's Non-Qualified Stock Option Plan for Non-Employee Directors, upon
each reelection, each of the outside directors are granted options to acquire an
additional 5,000 shares of Common Stock at a price equal to 100% of the fair
market value of the Common Stock as of the close of business on the day of the
reelection. Under the Plan each award vests over three years.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services rendered in all capacities to the Corporation during the 2000, 1999 and
1998 fiscal years of those persons who were (i) the chief executive officer
during fiscal 2000 and (ii) the other most highly compensated executive officers
during fiscal 2000 whose salary and bonus exceeded $100,000 (hereinafter the
"Named Executive Officers").
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==========================================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation Awards
- --------------------------------------------------------------------------------------------------------------------------
Name and Principal Bonus Options/ Securities All Other
Position Year Salary ($) ($)(1) Underlying /SAR's (#) Compensation
- --------------------------------------------------------------------------------------------------------------------------
HAMID R. SHOKRGOZAR 2000 250,000 250,000 250,000 10,670 (2)
President, Chief 1999 200,000 50,000 150,000 11,620 (2)
Executive Officer 1998 180,000 4,500 0 3,666 (2)
- --------------------------------------------------------------------------------------------------------------------------
WILLIAM J. RODES 2000 90,370 45,000 10,000 2,711 (3)
Vice-President, Chief 1999 72,931 6,000 5,000 1,094 (3)
Accounting Officer, 1998 57,491 1,000 0 862 (3)
Secretary, Treasurer
- --------------------------------------------------------------------------------------------------------------------------
1) Bonuses were paid in accordance with the policy established by the Board
and the Compensation Committee. See "Report of the Board and the
Compensation Committee" elsewhere in this Proxy Statement.
2) The amounts consist of $1,000, $8,224 and $4,000 for supplemental medical
payments, in 1998, 1999 and 2000 respectively; $2,144, 2,874 and $5,110 for
matching contribution payments to the 401(k) Plan in 1998, 1999, and 2000
respectively, and $522, $522, and $1,560 for life insurance premiums in
1998, 1999 and 2000 respectively.
3) The amounts consist of the Corporation's matching contribution payments to
401(k) Plan.
OPTION GRANTS IN 2000
On November 10, 1999, the Named Executive Officers were granted the following
options by the Compensation Committee and Board of Directors.
============================================================================================================================
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
============================================================================================================================
Potential Realizable Value At
Assumed Annual Rates of Stock Price
Individual Grants Appreciation For Option Term
- -----------------------------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted To Exercise of
Options/SARs Employees In Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
(a) (b) (c) (d) (e) (f) (g)
- -----------------------------------------------------------------------------------------------------------------------------
Hamid R.
Shokrgozar 250,000 49.5% $2.75 11/10/09 $432,365 $1,095,698
- -----------------------------------------------------------------------------------------------------------------------------
William J. Rodes 10,000 2.0% $2.75 11/10/09 17,295 43,828
- -----------------------------------------------------------------------------------------------------------------------------
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information with respect to the options
to purchase the Corporation's Common Stock which are held by the Named Executive
Officers:
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============================================================================================================================
AGGREGATED FISCAL YEAR-END OPTION VALUE
============================================================================================================================
Shares Number of Securities Value of Unexercised In-the-
Acquired on Value Underlying Unexercised Money-Options at Fiscal
Exercise Realized Options at Fiscal Year-End Year-End
- ----------------------------------------------------------------------------------------------------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
HAMID R. SHOKRGOZAR 10,000 $153,100 176,458/338,542 $1,832,219/$3,271,576
- ----------------------------------------------------------------------------------------------------------------------------
WILLIAM J. RODES 0 N/A 3,020/12,980 $32,827/$124,893
- ----------------------------------------------------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report does not constitute soliciting material and should not be
deemed filed or incorporated by reference to any other Corporation filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent specifically incorporated.
The Compensation Committee (the "Committee") is composed entirely of
independent, non-employee members of the Board. The Committee reviews and
approves each of the elements of the executive compensation program and
periodically assesses the effectiveness and competitiveness of the program in
total. In addition, the Committee administers the key provisions of the
executive compensation program and reviews with the Board the compensation
program for the Corporation's executives. The Committee has furnished the
following report on executive compensation.
OVERVIEW AND PHILOSOPHY
Our executive compensation program is primarily comprised of base salary,
performance based bonuses and equity-based incentives in the form of stock
option grants. The Committee retained, without change in fiscal 2000, other
elements of executive compensation. These included health, life and disability
insurance, an automobile allowance and supplemental medical expense coverage.
We believe that the interests of executive officers should be directly aligned
with those of the stockholders. Our philosophy is to pay base salaries and
bonuses to executives that enable us to attract, motivate and retain highly
qualified executives and to motivate executives to achieve the Corporation's
business goals and recognize individual contributions. Stock option grants are
intended to result in no reward if the stock price does not appreciate, but may
provide substantial rewards to executives as shareholders benefit from stock
price appreciation. These grants are primarily designed to provide incentives
for superior long-term future performance. The Corporation does not use a
formula to weight the various factors it considers in connection with executive
compensation.
BASE SALARY
Each executive officer receives a base salary which, when aggregated with their
maximum incentive compensation, is intended to be competitive with similarly
situated executives in similar industry positions. In determining salaries, we
also take into account individual experience and performance and our specific
needs. The Committee applied these subjective standards in determining the Chief
Executive Officer's compensation. Mr. Shokrgozar was rewarded for his
contributions to the Corporation's significant growth in revenues and
profitability. The Board and the Committee reviewed and accepted the Chief
Executive Officer's recommendations regarding the compensation of the other
executive officer.
EXECUTIVE BONUSES
The Corporation's executive officers are eligible for an annual cash bonus. The
Committee establishes individual and corporate performance objectives at the
beginning of each year. Eligible executives are assigned target bonus levels.
The corporate performance measure for bonus payments for fiscal year 2000 was
based on the Corporation's pre-tax profitability.
Mr. Shokrgozar's bonus for fiscal 2000 was based on Mr. Shokrgozar's role in
promoting the long-term strategic growth of the
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Corporation and Corporation's profitability during the year. In fiscal 2000, the
Corporation exceeded its primary profitability goals.
EQUITY-BASED INCENTIVES
We believe that it is important for our executive officers to have an equity
stake in the Corporation. We make stock option grants to key executives from
time to time. In awarding stock option grants, we review the level of grants to
executives at other similarly situated companies, the awards granted to our
other executives and the individual officer's specific role at the Corporation.
In recognition of the significant contributions of Mr. Shokrgozar to the
performance of the Corporation and his role in continuing the growth of the
Corporation, he was awarded stock options to purchase 250,000 shares at an
exercise price equal to the fair market value of a share on the day at the close
of the date of grant.
OTHER BENEFITS
Executive officers are eligible to participate in benefit programs designed for
all full-time employees. These programs include medical, disability and life
insurance, our employee stock purchase Plan and a qualified retirement program
allowed under Section 401(k) of the Internal Revenue Code, as amended.
INTERNAL REVENUE CODE - SECTION 162(m)
In 1994, the Internal Revenue Code was amended to add a limitation on the tax
deduction a publicly-held Corporation may take on compensation aggregating more
than $1 million for selected executives in any given year. The law and related
regulations are subject to numerous qualifications and exceptions. Gains
realized on non-qualified stock options, or incentive stock options that are
subject to a "disqualifying disposition," are subject to the tax limitation
unless they meet certain requirements. To date, we have not been subject to the
deductibility limitation and our general policy is to structure our equity-based
compensation to comply with the exception to the limitation.
This report is made by Norm T. Hall (Chairman) and Thomas M. Reahard who served
on our Compensation Committee during our fiscal 2000.
Norm T. Hall
Thomas M. Reahard
EMPLOYMENT AGREEMENTS
The Corporation has entered into an employment agreement with Mr. Shokrgozar,
who is employed as the President and Chief Executive Officer of the Corporation.
Mr. Shokrgozar's current agreement provides a term ending September 30, 2000 and
renewing automatically for subsequent two-year terms unless 30 days prior to a
renewal date either the Corporation or Mr. Shokrgozar notifies the other of its
intention not to renew. The agreement provides for an annual base salary of
$250,000 and participation by Mr. Shokrgozar in the fringe benefit programs of
the Corporation generally available to its senior executives. In the event of a
termination for cause, the Corporation is required to pay Mr. Shokrgozar only
those amounts earned by or accrued for his benefit under the Corporation's Plans
to the date of termination. In the event of a termination without cause, the
Corporation is required to pay to Mr. Shokrgozar a lump sum severance payment
equal to the greater of (i) one year's base salary and incentive compensation,
or (ii) his base salary for the remainder of the term of the agreement as of the
date of such termination. The agreement also provides in such circumstance for
the continuation of his benefits for a period of at least twelve months,
provision of executive-level outplacement services and the immediate vesting of
his options, then exercisable for a period of twelve months after termination.
In the event the Corporation elects not to renew the agreement, the Corporation
is required to pay Mr. Shokrgozar a lump sum equal to his annual compensation as
well as other benefits as defined above. Mr. Shokrgozar's agreement includes
special provisions in the event of a "Change in Control" (as defined in the
agreement). Specifically, Mr. Shokrgozar's employment term would automatically
extend for a period of 18 months and during that term Mr. Shokrgozar could
terminate if his duties were materially changed, his annual compensation was
decreased, he was
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required to relocate or the Corporation's successor failed to assume the
Corporation's obligations under the agreement. In the event of such a
termination, Mr. Shokrgozar is entitled to a lump sum severance payment equal to
1.5 times his then current base salary and incentive compensation as well as the
continuing benefits provided in the event of a termination without cause by the
Corporation.
The Corporation and Mr. Shokrgozar are currently negotiating a new employment
agreement, the terms of which remain to be determined.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
CERTAIN TRANSACTIONS
None.
STOCK PERFORMANCE GRAPH
The line graph, which follows, compares five years of yearly percentage changes
in the cumulative total shareholder return on the Common Stock against the
cumulative total return of the AMEX Market Value Index and the Standard and
Poor's Technology Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG WHITE ELECTRONIC DESIGNS CORPORATION,
THE AMEX MARKET VALUE INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
[LINE GRAPH]
Cumulative Total Return
-------------------------------------------------------------------------
9/95 9/96 9/97 9/98 9/99 9/00
WHITE ELECTRONIC DESIGNS CORPORATION 100.00 61.36 95.45 40.91 95.45 528.22
AMEX MARKET VALUE 100.00 101.91 127.81 119.69 153.76 191.35
S & P TECHNOLOGY SECTOR 100.00 122.85 199.52 225.89 394.81 471.73
* $100 INVESTED ON 9/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
Graph produced by Research Data Group, Inc. 10/10/00
Note: On June 8, 2000, the Corporation began trading on the Nasdaq National
Market.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board, upon the recommendation of its Audit Committee, intends to reappoint
the firm of PricewaterhouseCoopers LLP, independent accountants, to be auditors
of the Corporation and its subsidiary for the fiscal year ending September 30,
2001. PricewaterhouseCoopers LLP served as auditors of the Corporation and its
subsidiary for the fiscal year ended September 30, 2000. Although not required
to do so, the Board is submitting the appointment of PricewaterhouseCoopers LLP
for ratification by shareholders in order to ascertain the views of the
shareholders. If such appointment is not ratified, the Board will consider, but
not necessarily select, other auditors.
Representatives of PricewaterhouseCoopers LLP will be present at the
shareholders' meeting and will be given the opportunity to make a statement if
they desire to do so. They will also be available to respond to appropriate
questions. PricewaterhouseCoopers LLP has advised the Corporation that no member
of that firm has any financial interest, either direct or indirect, in the
Corporation or its subsidiary, and it has had no connection with the Corporation
or its subsidiary in any capacity other than that of independent public
accountants.
During the fiscal year ended September 30, 2000, PricewaterhouseCoopers LLP
rendered to the Corporation, in addition to audit services, certain non-audit
professional services. The audit services rendered included the audit of the
annual financial statements, pre-issuance reviews of quarterly financial
results, and the audit of the 401(k) and pension Plans. Non-audit services
involved tax assistance.
Ratification of the Auditors requires approval by vote of a majority of the
shares of common stock that were dated with respect to Proposal 2.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE RETENTION
OF PRICEWATERHOUSECOOPERS LLP AS THE CORPORATION'S INDEPENDENT ACCOUNTANTS.
PROPOSAL 3
APPROVAL OF THE AMENDMENT TO THE 1994 FLEXIBLE STOCK PLAN
The Board of the Corporation has approved, and recommends that the shareholders
approve, the adoption of the Amendment to the 1994 Flexible Stock Plan (the
"Amendment"). The Amendment amends the Bowmar Instrument Corporation's 1994
Flexible Stock Plan (the "Flex Plan") to change the name of the Flex Plan to
White Electronic Designs Corporation's 1994 Flexible Stock Plan and to change
the number of shares of the Common Stock available for grant under the Flex Plan
from the formula described below of the Flex Plan to 2,200,000 shares and makes
certain other minor changes. The Amendment, if approved by shareholders, will
have an effective date of February 22, 2001.
The Flex Plan authorizes grants of Incentive Stock Options ("ISOs"),
Non-qualified Stock Options ("NQSOs"), Stock Appreciation Rights ("SARs"),
Restricted Stock, Performance Shares, and other Stock-Based Awards to employees,
officers, customers, suppliers, and service providers of the Corporation and any
affiliate. The Board believes that using such long-term incentives under the
Flex Plan is beneficial to the Corporation as a means to promote the success and
enhance the value of White Electronic Designs Corporation by linking the
personal interests of its employees, officers, customers, suppliers and service
providers to those of its shareholders and by providing such individuals with an
incentive for outstanding performance. These incentives also provide the
Corporation flexibility in its ability to attract and retain the services of
individuals upon whose judgement, interest, and special effort the successful
conduct of the Corporation's operation is largely dependent.
The following summary of the Flex Plan and the Amendment is qualified in its
entirety by reference to the Flex Plan as filed and the Amendment, a copy of the
Board approved amendment is included at the end of the Proxy Statement as
Appendix A.
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ADMINISTRATION
The Flex Plan will be administered by either the Board or a committee appointed
by the Board consisting of at least three (3) non-employee directors who qualify
as "disinterested persons" under Rule 16b-3 of the Securities Exchange Act of
1934 (the "Flex Plan Committee"). If the Board does not appoint a Flex Plan
Committee, any reference herein to the Flex Plan Committee shall be to the
Board.
This Flex Plan Committee will have the exclusive authority to administer the
Flex Plan, including the power to determine eligibility, the types and sizes of
awards, the price and timing of awards and the acceleration or waiver of any
vesting restrictions.
ELIGIBILITY
Persons eligible to participate in the Flex Plan include (1) employees of the
Corporation or an affiliate; (2) employees and owners of entities (other than
affiliates) which are directly or indirectly linked with the ownership interests
of the Corporation or an affiliate; (3) customers, suppliers and service
providers of the Corporation or an affiliate; and (4) individuals who, and
employees and owners of entities which, have ownership or business affiliations
with the individuals or entities described above.
As of December 1, 2000 there were approximately 11 officers and key employees of
the Corporation and its affiliates.
LIMITATION ON AWARDS AND SHARES AVAILABLE
The total number of shares of the Common Stock initially available under the
Flex Plan was 200,000. In addition, the number of shares available under the
Flex Plan has continued to increase annually, effective as of the first day of
each fiscal year of the Corporation, by a number equal to 1% of the number of
outstanding shares of Common Stock as of the first day of the Corporation's
fiscal year. The proposed Amendment would amend the Flex Plan to change the
number of shares of the Common Stock available for grant under the Flex Plan to
2,200,000 shares. As of December 1, 2000, the closing price of the Common Stock
on Nasdaq was $8.00 per share.
DESCRIPTION OF THE AVAILABLE AWARDS
Incentive Stock Options
An ISO is a stock option that satisfies the requirements specified in Section
422 of the Internal Revenue Code (the "Code"). Under the Code, ISOs may only be
granted to employees. In order for an option to qualify as an ISO, the price
payable to exercise the option must equal or exceed the fair market value of the
stock at the date of the grant, the option must lapse no later than 10 years
from the date of the grant, and the stock subject to ISOs that are first
exercisable by an employee in any calendar year must not have a value of more
than $100,000 as of the date of grant. Certain other requirements must also be
met.
An optionee will not be treated as receiving taxable income upon either the
grant of an ISO or upon the exercise of an ISO. However, when exercised, the
difference between the exercise price and the fair market value of the Common
Stock will be an item of tax preference in determining alternative minimum tax
liability, assuming that the Common Stock is either transferable or subject to a
substantial risk of forfeiture under Section 83 of the Code.
If Common Stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date such Common Stock is transferred to the optionee, any
gain or loss resulting from its disposition will be treated as long-term capital
gain or loss. If such Common Stock is disposed of before the expiration of the
above-mentioned holding periods, a "disqualifying disposition" will occur. If a
disqualifying disposition occurs, the optionee will realize ordinary income in
the year of the disposition in an amount equal to the difference between the
fair market value of the Common Stock on the date of exercise and the exercise
price, or the selling price of the Common Stock and the exercise price,
whichever is less. The balance of the optionee's gain on a disqualifying
disposition, if any, will be taxed as capital gain.
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In the event an optionee exercises an ISO using Common Stock acquired by a
previous exercise of an ISO, unless the stock exchange occurs after the required
holding periods, such exchange shall be deemed a disqualifying disposition of
the stock exchanged.
The Corporation will not be entitled to any tax deduction as a result of the
grant or exercise of an ISO, or on a later disposition of the Common Stock
received, except that in the event of a disqualifying disposition, the
Corporation will be entitled to a deduction equal to the amount of ordinary
income realized by the optionee.
Non-Qualified Stock Options
An NQSO is any stock option other than an Incentive Stock Option. Such options
are referred to as "non-qualified" because they do not meet the requirements of,
and are not eligible for, the favorable tax treatment provided by Section 422 of
the Code.
No taxable income will be realized by an optionee upon the grant of an NQSO, nor
is the Corporation entitled to a tax deduction by reason of such grant. Upon the
exercise of an NQSO, the optionee will realize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price and the Corporation will be entitled to a
corresponding tax deduction.
Upon a subsequent sale or other disposition of Common Stock acquired through
exercise of an NQSO, the optionee will realize capital gain or loss to the
extent of any intervening appreciation or depreciation. Such a resale by the
optionee will have no tax consequence to the Corporation.
Stock Appreciation Rights
An SAR is the right granted to an employee to receive the appreciation in the
value of a share of Common Stock over a certain period of time. Under the Flex
Plan, the Corporation may pay that amount in cash, in Common Stock, or in a
combination of both.
A recipient who receives an SAR award is not subject to tax at the time of the
grant and the Corporation is not entitled to a tax deduction by reason of such
grant. At the time such award is paid, the recipient must in include in income
the appreciation inherent in the SARs (i.e., the difference between the fair
market value of the Common Stock on the date of grant and the fair market value
of the Common Stock on the date the SAR is paid). The Corporation is entitled to
a corresponding tax deduction in the amount equal to the income includible by
the recipient in the year in which the recipient recognizes taxable income with
respect to the SAR, provided that it withholds taxes from the recipient in the
amount recognized upon payment of the SARs.
Performance Shares
Under the Flex Plan, the Committee may grant Performance Shares to eligible
individuals. Typically, each Performance Share will be deemed to be the
equivalent of one share of Stock. Under the Flex Plan, the Corporation may pay
the amount owed to a participant in cash, in Common Stock, or in a combination
of both.
A recipient of Performance Shares will not realize taxable income at the time of
grant, and the Corporation will not be entitled to a deduction by reason of such
grant. Instead, a recipient of Performance Shares will recognize ordinary income
equal to the fair market value of the Shares at the time the performance goals
related to the Performance Shares are attained and paid to the recipient. The
Corporation is entitled to a tax deduction equal to the amount of income
recognized by the recipient in the year in which the performance goals are
achieved.
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Restricted Stock Awards
Under the Restricted Stock feature of the Flex Plan, an eligible individual may
be granted a specified number of shares of Common Stock. However, vested rights
to such stock are subject to certain restrictions or are conditioned on the
attainment of certain performance goals. If the recipient violates with any of
the restrictions during the period specified by the Committee or the performance
standards fail to be satisfied, the Stock is forfeited.
A recipient of a Restricted Stock Award will recognize ordinary income equal to
the fair market value of the Stock at the time the restrictions lapse. The
Corporation is entitled to a tax deduction equal to the amount of income
recognized by the recipient in the year in which the restrictions lapse.
Instead of postponing the income tax consequences of a Restricted Stock Award,
the recipient may elect to include the fair market value of the Common Stock in
income in the year the award is granted. This election is made under Section
83(b) of the Code. This Section 83(b) election is made by filing a written
notice with the Internal Revenue Service office with which the recipient files
his or her Federal income tax return. The notice must be filed within 30 days of
the date of grant and must meet certain technical requirements.
The tax treatment of the subsequent disposition of Restricted Stock will depend
upon whether the recipient has made a Section 83(b) election to include the
value of the Common Stock in income when awarded. If the recipient makes a
Section 83(b) election, any disposition thereafter will result in a capital gain
or loss equal to the difference between the selling price of the Common Stock
and the fair market value of the Common Stock on the date of grant. If no
Section 83(b) election is made, any disposition thereafter will result in a
capital gain or loss equal to the difference between the selling price of the
Common Stock and the fair market value of the Common Stock on the date the
restrictions lapsed.
Other Stock-Based Awards and Other Benefits
The Committee may grant other Stock-Based Awards, including, but not limited to,
shares of Common Stock granted on certain conditions, payment of cash based on
the performance of the Corporation's Common Stock, and securities that are
convertible into shares of Common Stock. In addition, the Committee may grant
any other types of benefits in addition to those summarized above, if the
Committee believes that such benefits are desirable.
AMENDMENT AND TERMINATION
The Flex Board may terminate, amend, or modify the Flex Plan at any time;
provided, however, that shareholder approval is required for any amendment to
the extent necessary or desirable to comply with any applicable law, regulation,
or stock exchange rule.
CHANGE OF CONTROL
In the event of a change of control of the Corporation the Committee may, in its
sole discretion, accelerate the date on which the awards may be exercised or
realized in full, purchase or adjust the awards, cause the outstanding awards to
be assumed by the surviving corporation, or take any other such action as the
Committee deems necessary or desirable.
Under the Flex Plan, a change in control occurs upon any of the following
events: (1) during any two-year period, the persons who are on the Board at the
beginning of such period, and any new person elected by two-thirds of such
directors, cease to constitute at least fifty percent (50%) of the persons
serving on the Board; (2) any person (other than the Corporation, any Subsidiary
(as defined in the Flex Plan) or any employee benefit Plan maintained by the
Corporation or a Subsidiary) becomes the beneficial owner of 20% or of the
Corporation's Common Stock without the approval of the Board; (3) the
liquidation or dissolution of the Corporation following a sale or other
disposition of all or substantially all of the Corporation's assets; or (4) the
merger or consolidation of the Corporation with another corporation in which the
Corporation is not the surviving entity.
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===========================================================================================================================
PLAN BENEFITS 1994 FLEXIBLE STOCK PLAN
===========================================================================================================================
Executive Officer Number Of Shares Subject To Weighted Average Exercise Price Per
Name and Position Options Granted (#) Share ($/Sh)
- ---------------------------------------------------------------------------------------------------------------------------
Hamid R. Shokrgozar 389,000 $1.88
President & Chief Executive Officer
- ---------------------------------------------------------------------------------------------------------------------------
William J. Rodes 16,000 $2.14
Vice President, Chief Accounting Officer
- ---------------------------------------------------------------------------------------------------------------------------
Executive Officer Group 405,000 $1.89
- ---------------------------------------------------------------------------------------------------------------------------
Employee Group 925,900 $2.67
- ---------------------------------------------------------------------------------------------------------------------------
VOTE REQUIRED
Adoption of the Amendment to the Flex Plan requires approval by vote of a
majority of the shares of Common Stock that vote on Proposal 3 at the Annual
Meeting of Shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
PROPOSAL 4
APPROVAL OF THE WHITE ELECTRONIC DESIGNS CORPORATION 2001 DIRECTOR STOCK PLAN
The Board has approved, and recommends that the shareholders approve, the
adoption of the White Electronic Designs Corporation 2001 Director Stock Plan
(the "Director Plan"), for non-employee directors of the Corporation. The
Director Plan authorizes a committee appointed by the Board to make initial
grants of nonqualified stock options ("Initial Options") to new non-employee
directors of the Corporation, to make automatic annual grants of nonqualified
stock options ("Annual Options") to all non-employee directors of the
Corporation, and to make discretionary grants of nonqualified stock options
("Discretionary Options") (Initial Options, Annual Options and Discretionary
Options, are collectively referred to as "Options") to such non-employee
directors as the Committee selects in its discretion.
The Board believes that the adoption of the Director Plan will promote the
success and enhance the value of the Corporation by (1) strengthening the
Corporation's ability to attract and retain the services of experienced and
knowledgeable persons as non-employee directors, and (2) linking the personal
interest of non-employee directors to those of the Corporation's shareholders.
The Director Plan, if approved by shareholders, has an effective date of
February 22, 2001. The following summary of the Director Plan is qualified in
its entirety by reference to the Director Plan, a copy of which is included at
the end of this proxy statement as Appendix B.
ELIGIBILITY
All non-employee directors are eligible to participate in the Director Plan. As
of December 1, 2000, there were 5 non-employee directors.
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LIMITATION ON OPTIONS AND SHARES AVAILABLE
The total number of shares of Common Stock available for Options under the
Director Plan is 500,000. The closing price for the Common Stock on December 1,
2000, as reported on Nasdaq was $8.00 per share.
GRANT OF OPTIONS
Under the Plan, an individual who becomes a non-employee director on or after
February 22, 2001 is entitled to an Initial Option to purchase 30,000 shares of
the Common Stock. In addition, individuals who are non-employee directors on
February 22, 2001, and each subsequent anniversary, will receive an Annual
Option to purchase 15,000 shares of the Common Stock. Both the Initial Option
and the Annual Option will vest over a three-year period. One-third of the
shares subject to an Initial Option or Annual Option will vest after the first
anniversary of the date of grant. The remaining shares will vest monthly on a
pro rata basis over the remaining two-year period. The exercise price will be
equal to the fair market value of the per share price of the Common Stock on the
date of the grant.
If a non-employee director granted an Initial Option and/or an Annual Option(s)
under the Director Plan ceases to be a director for any reason, the director
will forfeit his or her unvested options. The vested but unexercised Initial
Option and/or Annual Option will be exercisable for one year after ceasing to be
a director unless the term of the option expires prior to the end of the
one-year period.
A non-employee director will also be eligible to receive Discretionary Options
as the Director Plan Committee may from time to time determine. The Director
Plan Committee will determine the amount, exercise price, and other terms and
conditions of the Discretionary Option.
The grant of an Option to a non-employee director under the Director Plan will
not produce any taxable income to the director, and the Corporation will not be
entitled to a deduction at that time. On the date the Option is exercised, the
director will recognize ordinary income equal to the difference between the fair
market value of the Common Stock on the date of exercise and the exercise price.
The Corporation is entitled to a corresponding deduction in the same amount and
in the same year in which the director recognizes income.
AMENDMENT AND TERMINATION
The Board may terminate, amend or modify the Director Plan at any time.
CHANGE OF CONTROL
In the event of a change of control of the Corporation, the Board, in its
discretion: (1) may cause all outstanding Options to become fully exercisable or
(2) may cause every outstanding Option to terminate at a specific time in the
future and give each non-employee director the right to exercise any Options
granted to him or her during a period of time specified by the Board.
Under the Director Plan, a change in control occurs upon any of the following
events: (1) during any two-year period, the persons who are on the Board at the
beginning of such period, and any new person elected by two-thirds of such
directors, cease to constitute a majority of the persons serving on the Board,
(2) any person (other than all affiliates of the Corporation as of February 22,
2001, a current shareholder, and any employee benefit Plan) becomes the
beneficial owner of 20% or more of the combined voting power of the
Corporation's then outstanding securities; (3) the Corporation's shareholders
approve a Plan of complete liquidation or dissolution of the Corporation; (4)
the Corporation's shareholders approve a merger or consolidation of the
Corporation with another corporation where the Corporation is not the surviving
entity, other than a merger in which the Corporation's shareholders before the
merger have the same proportionate ownership after the merger; or (5)
substantially all of the assets of the Corporation are sold or otherwise
transferred to parties that are not considered a member of the Corporation's
controlled group of corporations.
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VOTE REQUIRED
Adoption of the Director Plan requires approval by vote of a majority of the
shares of Common Stock that vote on Proposal 4 at the Annual Meeting of
Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4
PROPOSAL 5
APPROVAL OF WHITE ELECTRONIC DESIGNS CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
This summary of the White Electronic Designs Corporation 2000 Employee Stock
Purchase Plan (the "ESP Plan") is intended to only summarize the ESP Plan's most
important features and should be read with the full proposed text of the ESP
Plan, a copy of which is included at the end of this Proxy Statement as Appendix
C.
THE ESP PLAN
Under the ESP Plan, the Corporation's employees or its subsidiaries who
participate in the ESP Plan can buy shares of Common Stock directly from the
Corporation. The Corporation sells shares to participants at a price equal to
the lesser of 85% of the fair market value of Common Stock at the beginning of a
6-month offering period or 85% of the fair market value of Common Stock at the
end of an offering period. The ESP Plan has two 6-month offering periods each
year, beginning on January 1 and July 1. Shares of Common Stock are purchased on
a prescribed purchase date. Promptly after the purchase, all shares of Common
Stock purchased for a participant will be credited to the participant's separate
account. Cash remaining in a participant's account after the purchase of shares
in an offering period is returned to the participant. No interest is credited on
payroll contributions pending investment in Common Stock. A participant does not
have voting rights or any other interest in shares of Common Stock until such
shares have been purchased and credited to his or her separate account.
Participants' rights under the ESP Plan are not transferable except by will, the
laws of descent and distribution, a "qualified domestic relations order" or
designation of a beneficiary.
ESP PLAN ADMINISTRATION
The ESP Plan is administered by the Board, although the Board may delegate some
or all of its administrative duties to a committee appointed by the Board. The
Board or committee has authority to administer, interpret and apply the ESP
Plan, and make final determinations under the ESP Plan, which are binding on all
the participants. Only the Board has authority to amend the ESP Plan.
PARTICIPATION IN THE ESP PLAN
Any employee of the Corporation or a subsidiary of the Corporation is eligible
to participate in the ESP Plan after he or she has been employed for at least
one year, except those employees who work less than 20 hours per week or less
than 5 months per year, and any other employee who owns 5% or more of the total
combined voting power or value of all outstanding shares of all classes of
securities of the Corporation or any subsidiary. Approximately 275 employees are
currently eligible to participate in the ESP Plan.
ENROLLMENT IN THE ESP PLAN
An eligible employee may enroll for any 6-month offering period by filing an
enrollment form with the Corporation before the offering period begins. After
initial enrollment in the ESP Plan, the employee is automatically reenrolled in
the ESP Plan for subsequent offering periods unless he or she files a notice of
termination of enrollment, terminates employment, or otherwise become ineligible
to participate.
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Upon enrollment in the ESP Plan, the employee must elect a rate at which he or
she will make payroll contributions to purchase Common Stock. An employee
generally may elect to make contributions in an amount not less than 1% nor more
than 12% of such employee's earnings (or such higher or lower rates as the Board
may specify), although an employee's contributions will be adjusted downward or
refunded to the extent necessary to ensure that he or she will not purchase
during any offering period Common Stock that has a fair market value, as of the
beginning of the offering period, in excess of $12,500 (representing an annual
limit of $25,000). All employee contributions are made by means of direct
payroll deduction. The contribution rate elected by a participant will continue
in effect until modified by the participant. An employee's contributions are
credited to the employee's separate account maintained by the Corporation, and
the Corporation provides each participant with an annual account statement.
TERMINATION OF ENROLLMENT IN THE ESP PLAN
A participant's enrollment in the ESP Plan may be terminated at any time by
giving written notice. Enrollment will also terminate when a participant's
employment terminates. Upon termination of enrollment, cash amounts resulting
from previous payroll contributions are repaid to the participant. The
participant's stock account will be maintained until the participant directs the
Common Stock to be sold, or withdraws or transfers the Common Stock, or one year
after the participant is no longer employed by the Corporation, whichever
happens first. If a participant withdraws his or her payroll deductions from his
or her account or terminates contributions for a payroll period, payroll
deductions will not resume at the next offering period unless the participant
files a new enrollment form with the Corporation before the offering period
begins.
ESP PLAN AMENDMENT OR TERMINATION
With certain exceptions, the Board may amend or terminate the ESP Plan without
further shareholder approval, except shareholder approval must be obtained
within one year after the effectiveness of such action if required by law or
regulation or under the rules of any automated quotation system (such as the
Nasdaq) or securities exchange on which the Common Stock is then quoted or
listed, or if shareholder approval is necessary for the ESP Plan to continue to
meet the requirements of Section 423 of the Code. In addition, the Board must
obtain prior shareholder approval to amend the ESP Plan if the amendment would
materially increase benefits due participants under the ESP Plan, increase the
number of shares of Stock available to be issued under the ESP Plan, or
materially modify eligibility requirements for the ESP Plan. The ESP Plan will
continue for 10 years from July 1, 2000, unless it is terminated sooner by
action of the Board, although as noted above the number of shares authorized
under the ESP Plan is limited.
SHARES OF COMMON STOCK RESERVED UNDER THE ESP PLAN
The maximum number of shares of Common Stock that may be purchased under the ESP
Plan is 300,000, subject to appropriate adjustment in the case of any
extraordinary dividend or other distribution, recapitalization, forward or
reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange or other similar corporate transaction or event
affecting the Common Stock. On December 1, 2000, the last reported sale price of
the Common Stock on the Nasdaq Stock Market was $8.00 per share.
FEDERAL INCOME TAX CONSEQUENCES
The ESP Plan is not a qualified ESP Plan under Section 401(a) of the Code. The
ESP Plan is intended to qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Code. The general tax consequences of the ESP Plan
to participants and the Corporation are:
At Time of Grant and Exercise of Purchase Right
No taxable income results to a participant upon the grant of a right to purchase
or upon the purchase of shares for his or her account under the ESP Plan
(although the amount of a participant's payroll contributions under the ESP Plan
will be taxable as ordinary income to the participant.)
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Upon Sale of Shares Acquired under the ESP Plan
1. If shares are sold after the expiration of two years from the first
day of an offering period in which such shares were purchased under the ESP
Plan, the participant will recognize as ordinary income on the sale the lesser
of:
(a) 15% of the fair market value of the stock at the date of grant
(the beginning of the offering period); or
(b) the actual gain realized.
All additional gain will be taxed as long-term capital gain. If the shares are
sold and the price is less than the purchase price, there will be no ordinary
income. Instead, the participant will have a long-term capital loss for the
difference between the sale price and the purchase price.
2. If shares are sold before the two-year holding period expires, the
participant will recognize ordinary income at the time of the sale equal to the
difference between the fair market value of the stock on the date of purchase
and the purchase price paid by the participant. This excess will be ordinary
income even if no gain is realized on the sale. The difference, if any, between
the proceeds of the sale and the fair market value of the stock at the date of
purchase is taxed as a capital gain or loss (long-term if the shares are held
for more than the applicable holding period).
3. If shares are sold before the two-year holding period expires, the
Corporation is entitled to a tax deduction for the difference between the price
paid by the participant and the market value of the shares at the date of
purchase. If shares are not sold during the two-year holding period, the
Corporation is not entitled to a deduction.
Upon Disposition Other than Sale
If a participant makes a gift or otherwise disposes of his or her shares within
two years of the first day of the offering period, the discount (the difference
between the price paid by the employee and the market value of the shares at the
date of purchase) is taxed as ordinary income in the year of disposition. A
disposition after two years may also result in tax, but the amount of the
discount taxed as ordinary income is limited to the extent that the market value
at the time of disposition exceeds the purchase price.
Upon the Death of a Participant
Upon the death of a participant prior to disposing of shares purchased under the
ESP Plan, the tax return for the year of death must include the discount on the
purchase as ordinary income (but not more than the amount by which the market
value at death exceeds the purchase price).
State Taxation
In addition to the federal tax considerations, a participant's sale or other
disposition of the shares acquired under the ESP Plan will in most cases be
subject to state income taxation.
Tax Consultation
This is a brief summary of the tax consequences of the ESP Plan. However, the
tax implications of the ESP Plan can be very complicated. IT IS SUGGESTED THAT
YOU CONTACT YOUR TAX ACCOUNTANT OR ADVISOR WITH QUESTIONS SPECIFIC TO YOUR
SITUATION.
VOTE REQUIRED
Adoption of the Employee Stock Purchase Plan requires approval by vote of a
majority of the outstanding shares of Common Stock that vote on Proposal 5 at
the Annual Meeting of Shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 5.
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PROPOSAL 6
APPROVAL OF THE AMENDMENT TO THE
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors of the Corporation has approved, and recommends that the
shareholders approve, the adoption of the Amendment to the Stock Option Plan for
Non-Employee Directors (the "Director Option Plan Amendment").
Bowmar Instrument Corporation ("Bowmar") previously adopted the Stock Option
Plan for Non-Employee Directors (the "Director Option Plan") to attract, retain,
motivate and individuals to serve as non-employee directors of Bowmar and to
promote and further the best interests of Bowmar. The Director Option Plan
authorizes grants of Non-qualified Stock Options ("NQSOs") to non-employee
directors of the Corporation. Bowmar merged with Electronic Designs, Inc. on
October 26, 1998 and changed its name to White Electronic Designs Corporation
(the "Corporation").
The Director Option Plan Amendment amends the Director Option Plan to recognize
the Corporation's name change, to recognize the Director Option Plan's name
change and to increase the number of shares of Common Stock available for grant
under the Director Option Plan from 200,000 to 281,000 shares. The Director
Option Plan Amendment, if approved by shareholders, will be effective as of the
date adopted by the Board of Directors. No further grants of NQSOs can be made
under the Director Option Plan after February 22, 2001.
The following summary of the Director Option Plan and the Director Option Plan
Amendment is qualified in its entirety by reference to the Director Option Plan
and the Director Option Plan Amendment, a copy of the Board approved amendment
is included at the end of this Proxy Statement as Appendix D.
ADMINISTRATION
The Director Option Plan is administered by a committee appointed by the Board
consisting of at least two (2) executives of the Corporation. If the Board has
not appointed a Committee, any reference herein to the Committee shall be to the
Board.
This Committee has the exclusive authority to administer the Director Option
Plan, to interpret the Director Option Plan and to adopt, amend and rescind
rules with respect to the Director Option Plan.
ELIGIBILITY
Each member of the Board of Directors of the Corporation who is not an employee
of the Corporation or any of its subsidiaries is eligible to participate in the
Director Option Plan. As of December 1, 2000, there were 5 non-employee
directors.
LIMITATION ON AWARDS AND SHARES AVAILABLE
The total number of shares of Common Stock initially available under the
Director Option Plan was 100,000. The Director Option Plan was previously
amended to increase the number of shares of Common Stock available under the
Director Option Plan to 200,000. The proposed Director Option Plan Amendment
would amend the Director Option Plan to increase the number of shares of Common
Stock available for grant under the Director Option Plan to 281,000 shares. As
of December 1, 2000, the closing price of the Corporation's Common Stock on
Nasdaq was $8.00 per share.
GRANT OF NQSOs
Under the Director Option Plan, an individual who becomes a non-employee
director of the Corporation is entitled to a NQSO to purchase a certain amount
shares of the Corporation's Common Stock. Initially, each new non-employee
director was granted a NQSO to purchase 10,000 shares of Common Stock. The
Director Option Plan was amended on several occasions to change the number of
shares of Common Stock that would be subject to future NQSOs granted under the
Director Option Plan.
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Currently, each individual who becomes a non-employee director of the
Corporation is granted a NQSO to purchase 5,000 shares of Common Stock. The NQSO
vests over a three-year period. One-third of the shares subject to the NQSO
vests after the first anniversary of the date of grant. The remaining shares
vest monthly on a pro rata basis over the remaining two-year period. The
exercise price is equal to the fair market value of the per share price of the
Corporation's Common Stock on the date of the grant.
The grant of a NQSO to a non-employee director under the Director Option Plan
does not produce any taxable income to the director, and the Corporation is not
entitled to a deduction at that time. On the date the NQSO is exercised, the
director recognizes ordinary income equal to the difference between the fair
market value of the Common Stock on the date of exercise and the exercise price.
The Corporation is entitled to a corresponding deduction in the same amount and
in the same year in which the director recognizes income.
NQSOS GRANTED
- ----------------------------------------------------------------------------------------------------------------------
Number of Shares Subject to
Name and Position Options Granted in 2000 Exercise Price Per Share
- ----------------------------------------------------------------------------------------------------------------------
Norman T. Hall 5,000 7.1875
- ----------------------------------------------------------------------------------------------------------------------
Donald F. McGuinness 5,000 7.1875
- ----------------------------------------------------------------------------------------------------------------------
Thomas T. Toy 5,000 7.1875
- ----------------------------------------------------------------------------------------------------------------------
Edward A. White 5,000 7.1875
- ----------------------------------------------------------------------------------------------------------------------
Thomas M. Reahard 5,000 7.1875
- ----------------------------------------------------------------------------------------------------------------------
AMENDMENT AND TERMINATION
The Board may terminate, amend, or modify the Director Option Plan at any time
and the Committee may amend the Director Option Plan at any time; provided,
however, that shareholder approval is required for any amendment to the extent
necessary or desirable to comply with any applicable law, regulation, or stock
exchange rule.
VOTE REQUIRED
Adoption of the Amendment to the Director Option Plan requires approval by a
majority of the shares of Common Stock to vote on Proposal 6 at the Annual
Meeting of Shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 6.
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PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock for (i)
each of the Corporation's current directors; (ii) each of the Corporation's
Named Executive Officers; (iii) the names of all of the beneficial owners of
more than five percent of the Common Stock; and (iv) all directors and executive
officers of the Corporation as a group. All such information reflects beneficial
ownership as of December 29, 2000, as known by the Corporation.
Number of Shares
Beneficially
Name Owned (1) Percent of Class(2)
- --------------------------------------------------------------------------------------
Norman T. Hall 75,586 (3) *
Donald F. McGuinness 539,165 (4) 2.89%
Thomas M. Reahard 35,000 (5) *
Hamid R. Shokrgozar 522,500 (6) 2.80%
Thomas J. Toy 10,000 (7) *
Edward A. White 1,396,366 (8) 7.48%
William J. Rodes 16,000 (9) *
New York Life Insurance Company 2,272,126 12.17%
Directors and executive officers
as a group (7 persons) 2,594,617(10) 13.89%
* Represents less than 1% of the class.
(1) Unless otherwise noted the Corporation believes that all persons named in
the table has sole voting and investment power with respect to all shares
of the Common Stock that are beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such
person within 60 days upon the exercise of options or other such rights.
(2) Each owner's percentage ownership is determined by assuming that options
held by such person (but not those held by any other person), which are
exercisable within 60 days, have been exercised.
(3) Includes options to purchase 50,086 shares of Common Stock originally
granted under the Corporation's Non-Qualified Stock Option Plan for
Non-Employee Directors.
(4) Includes options to purchase 10,000 shares of Common Stock originally
granted under the under the Corporation's Non-Qualified Stock Option Plan
for Non-Employee Directors, and 526,870 shares of common stock granted
under the Corporate Flexible Stock Plans.
(5) Includes options to purchase 32,000 shares of Common Stock granted under
the Corporation's Non-Qualified Stock Option Plan for Non-Employee
Directors.
(6) Includes options to purchase 1,000 shares of Common Stock granted under the
Corporation's 1986 Stock Option Plan and options to purchase 514,000 shares
of Common Stock granted under the Corporation's 1994 Flexible Stock Plan.
(7) Includes options to purchase 10,000 shares of Common Stock granted under
the Corporation's Non-Qualified Stock Option Plan for Non-Employee
Directors.
(8) Includes options to purchase 14,000 shares of Common Stock granted under
the Corporation's Non-Qualified Stock Option Plan for Directors. Mr. White
has advised the Corporation that 1,382,366 shares of Common Stock
beneficially owned by him have been transferred to the Edward A. White
Family Limited Partnership, of which Mr. White is the sole general partner
and of which he and his wife are sole limited partners.
(9) Includes options to purchase 16,000 shares of Common Stock granted under
the Corporation's 1994 Flexible Stock Plan.
(10) Includes 631,086 options as indicated in footnotes 3-9, above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
directors and officers, and persons who own more than ten percent of a
registered class of the Corporation's equity securities, to file with the
Securities and Exchange Commission initial reports of beneficial ownership and
reports of changes in beneficial ownership of any equity securities of the
Corporation.
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To the Corporation's knowledge (based solely on review of the copies of such
reports furnished to the Corporation), all officers, directors and beneficial
owners of greater than ten percent of the Corporation's equity securities made
all required filings under Section 16(a), except Donald F. McGuinness whose Form
4 filing was not made timely but filed a Form 5 per Securities and Exchange
Commission requirements on October 31, 2000.
OTHER MATTERS
The Board does not know of any other matters which are likely to be brought
before the meeting. In the event that any other matters properly come before the
meeting, the persons named in the enclosed proxy will vote said proxy in
accordance with their judgment on such matters.
The cost of preparing, assembling and mailing this Proxy Statement, the Notice
of Annual Meeting and the enclosed proxy will be borne by White Electronic
Designs Corporation. In addition to the solicitation of proxies by use of the
mails, the Corporation will utilize its stock transfer agent, American Stock
Transfer and Trust Corporation, to assist in the solicitation at no additional
cost beyond the annual retainer. The Corporation also may utilize the services
of some of its officers and regular employees (who will receive no compensation
therefore in addition to their regular salaries) to solicit proxies personally
and by telephone. The Corporation will request banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies, and will
reimburse such persons for their expenses in so doing.
A copy of the White Electronic Designs Corporation's Annual Report to
Shareholders for the fiscal year ended September 30, 2000, accompanies this
Proxy Statement. The Annual Report includes the Corporation's Annual Report on
Form 10-K for such fiscal year, without exhibits, substantially as filed with
the Securities and Exchange Commission. Copies of the omitted exhibit list are
available to any shareholder free of charge. Copies of the omitted exhibits are
available for a fee equal to the Corporation's reasonable expenses in furnishing
such exhibits.
Shareholders desiring copies of either should address a written request to Mr.
William J. Rodes, Secretary, White Electronic Designs Corporation, 3601 E.
University Drive, Phoenix, Arizona 85034, and are asked to mark "2000 10-K
Request" on the outside of the envelope containing the request.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2002 Annual
Shareholders' Meeting pursuant to Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, must be received at White Electronic Designs Corporation's
offices at 3601 E. University Drive, Phoenix, Arizona 85034, prior to September
18, 2001, for inclusion, if appropriate, in the 2002 Proxy Statement. A
shareholder proposal submitted other than pursuant to Rule 14a-8 will be timely
for purposes of Rule 14a-4(c)(1) if submitted to the Corporation on or before
December 1, 2001. If a proposal is not timely submitted pursuant to Rule
14a-4(c)(1), the proxies named in the Corporation's proxy statement for the 2002
Annual Meeting will have discretionary authority to vote with respect to any
such proposal subsequently raised at that meeting.
By order of the Board of Directors,
/s/WILLIAM J. RODES
Secretary
January 22, 2001
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APPENDIX A
AMENDMENT TO THE
BOWMAR INSTRUMENT CORPORATION
1994 FLEXIBLE STOCK PLAN
Bowmar Instrument Corporation ("Bowmar") previously adopted the 1994 Flexible
Stock Plan (the "Plan") to attract, retain, motivate and reward key persons
associated with Bowmar, to encourage ownership of Bowmar common stock by such
persons and to promote and further the best interests of Bowmar. Bowmar merged
with Electronic Designs, Inc. on October 26, 1998 and changed its name to White
Electronic Designs Corporation (the "Corporation"). By this instrument, the
Corporation desires to amend the Plan (1) to recognize the Corporation's, and
the Plan's, name change and (2) change the number of shares of the Corporation's
stock available for grant under the Plan to 2,200,000.
1. The provisions of this Amendment shall be effective as of date
adopted by the Board of Directors.
2. The name of the Plan, as set forth in Sections 1.1 and 2.1(u) of the
Plan, and each other reference within the Plan is hereby changed to the
"White Electronic Designs Corporation 1994 Flexible Stock Plan."
3. The name of the Corporation, as set forth in Section 2.1(f) of the
Plan, and each other reference within the Plan is hereby changed to
"White Electronic Designs Corporation."
4. Section 3.1 of the Plan is hereby amended and restated in its
entirety to read as follows:
3.1 Number of Shares. Subject to adjustment as provided in
Section 3.3 below, the maximum aggregate number of Shares that
may be issued or sold or for which Options, SARs, Restricted
Shares or Performance Shares may be granted under the Plan is
2,200,000. The Shares may be authorized, but unissued, or
reacquired Shares.
5. This Amendment shall amend only the provisions of the Plan as set
forth herein. Those provisions of the Plan not expressly amended hereby
shall be considered in full force and effect.
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APPENDIX B
WHITE ELECTRONIC DESIGNS CORPORATION
2001 DIRECTOR STOCK PLAN
ARTICLE 1
ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. White Electronic Designs Corporation
hereby establishes the White Electronic Designs Corporation 2001 Director Stock
Plan (the "Plan") for the benefit of its Nonemployee Directors. The Plan sets
forth the terms of grants of Nonqualified Stock Options to Nonemployee
Directors. All such grants are subject to the terms and provisions set forth in
this Plan.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to encourage
ownership in the Company by Nonemployee Directors, to strengthen the ability of
the Company to attract and retain the services of experienced and knowledgeable
individuals as Nonemployee Directors of the Company, and to provide Nonemployee
Directors with a further incentive to work for the best interests of the Company
and its shareholders.
1.3 EFFECTIVE DATE. The Plan is effective as of February 22, 2001 (the
"Effective Date").
1.4 DURATION OF THE PLAN. The Plan will remain in effect until the
earlier of February 21, 2011, or the date the Plan is terminated by the Board of
Directors pursuant to Article 8.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. For purposes of the Plan, the following terms will
have the meanings set forth below:
(a) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(b) "Change of Control" means and includes each of the
following:
(1) When the individuals who, at the beginning of any
period of two years or less, constituted the Board of
Directors of the Company cease, for any reason, to constitute
at least a majority of the Board, unless the election or
nomination for election of each new director was approved by
the vote of at least two-thirds of the directors who were
directors at the beginning of such period;
(2) A change of control of the Company through a
transaction or series of transactions, such that any person
(as that term is used in Section 13 and 14(d)(2) of the
Exchange Act), excluding affiliates of the Company as of the
Effective Date, is or becomes the beneficial owner (as that
term is used in Section 13(d) of the Exchange Act) directly or
indirectly of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities;
(3) Any consolidation or liquidation of the Company
in which the Company is not the continuing or surviving
corporation or pursuant to which Stock would be converted into
cash, securities or other property, other than a merger of the
Company in which the holders of the shares of Stock
immediately before the merger have the same proportionate
ownership of common stock of the surviving corporation
immediately after the merger;
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(4) The stockholders of the Company approve any plan
or proposal for the liquidation or dissolution of the Company;
or
(5) Substantially all of the assets of the Company
are sold or otherwise transferred to parties that are not
within a "controlled group of corporations" (as defined in
Section 1563 of the Code) of which the Company is a member.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" means the committee appointed by the Board to
administer the Plan.
(e) "Company" means White Electronic Designs Corporation, or
any successor as provided in Section 9.3.
(f) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor provision.
(g) "Fair Market Value" means, as of any given date, the fair
market value of Stock on a particular date determined by such methods or
procedures as may be established from time to time by the Committee. Unless
otherwise determined by the Committee, the Fair Market Value of Stock will be
the closing price of the Stock on the NASDAQ or such other exchange on which the
Stock is traded on the relevant date. If the Stock is not traded on the relevant
date, the Fair Market Value on the next preceding day shall be used.
(h) "Nonemployee Director" means any individual who is a
member of the Board of Directors of the Company and who is not also an employee
of the Company or a Subsidiary.
(i) "Nonqualified Stock Option" means an option to purchase
Stock, granted under Article 6, that is not intended to be an incentive stock
option qualifying under Section 422 of the Code.
(j) "Option" means a Nonqualified Stock Option granted under
the Plan.
(k) "Option Agreement" means any written instrument, contract,
or other instrument or document evidencing an Option.
(l) "Participant" means a Nonemployee Director of the Company
who has been granted an Option under the Plan.
(m) "Stock" means the shares of the Company's Common Stock.
(n) "Subsidiary" means any entity or association of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned by the Company.
2.2 GENDER AND NUMBER. Except as indicated by the context, any
masculine term also includes the feminine, the plural includes the singular, and
the singular includes the plural.
2.3 SEVERABILITY OF PROVISIONS. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board
fails to so comply, it will be deemed null and void, to the extent permitted by
law and deemed advisable by the Board, and the remaining provisions of the Plan
or actions by Board will be construed and enforced as if the invalid provision
or action had not been included or undertaken.
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ARTICLE 3
ADMINISTRATION
3.1 ADMINISTRATION BY THE COMMITTEE. The Committee has the full power,
discretion, and authority to interpret and administer the Plan in a manner that
is consistent with the Plan's provisions.
3.2 AUTHORITY OF THE COMMITTEE. Except with respect to Options granted
under Section 6.1, and subject to any specific designation in the Plan, the
Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Options;
(b) Determine the number of Options to be granted and the number of
shares of Stock to which an Option will relate;
(c) Determine the terms and conditions of any Option granted under the
Plan including but not limited to, the exercise price, grant price, or purchase
price, any restrictions or limitations on the Option, any schedule for lapse of
forfeiture restrictions or restrictions on the exercisability of an Option, and
accelerations or waivers thereof, based in each case on such considerations as
the Committee in its sole discretion determines;
(d) Amend, modify, or terminate any outstanding Option, with the
Participant's consent, unless the Committee has the authority to amend, modify,
or terminate an Option without the Participant's consent under any other
provision of the Plan or the relevant Option Agreement.
(e) Determine whether, to what extent, and under what circumstances an
Option may be settled in, or the exercise price of an Option may be paid in,
cash, Stock, or other property, or an Option may be canceled, forfeited, or
surrendered;
(f) Prescribe the form of each Option Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection with
an Option;
(h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising under, the Plan or
any Option Agreement; and
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to administer
the Plan.
3.3 DECISIONS BINDING. The Committee's determinations and decisions
under the Plan, and all related orders or resolutions of the Board will be
final, conclusive, and binding on all persons, including the Company, its
shareholders, employees, Participants, and their estates and beneficiaries.
ARTICLE 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. The total number of shares of Stock available for
grant under the Plan may not exceed 500,000, subject to adjustment as provided
in Section 4.3. The shares issued under the Plan may be authorized and unissued
Stock, treasury stock or Stock reacquired by the Company, including shares
purchased on the open market.
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4.2 LAPSED AWARDS. If any Award granted under the Plan terminates,
expires, or lapses for any reason, any shares subject to purchase pursuant to
such Award again will be available for grant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event a stock split or
stock dividend is declared upon the Stock: (a) the shares of Stock available for
grant under the Plan, will be adjusted proportionately and (b) the shares of
Stock subject to each Option that has been awarded under Article 7 will be
adjusted proportionately, without any change in the aggregate purchase price
therefor. In the event the Stock is changed into or exchanged for a different
number or class of shares of Stock or of shares of another corporation, whether
through reorganization, recapitalization, stock split-up or combination of
shares: (a) there will be substituted for each such share of Stock available for
grant under the Plan, the number and class of shares of Stock into which each
outstanding share of Stock is changed into or exchanged and (b) there will be
substituted for each such share of Stock then subject to each outstanding Option
the number and class of shares of Stock into which each outstanding share of
Stock is changed into or exchanged, all without any change in the aggregate
purchase price for the shares then subject to each Option.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Eligibility to participate in the Plan is limited to
Nonemployee Directors.
5.2 ACTUAL PARTICIPATION. All eligible Nonemployee Directors will
receive Option grants pursuant to Section 6.1. Subject to the provisions of the
Plan, the Committee may, from time to time, select from among all eligible
Nonemployee Directors, those to whom Options will be granted pursuant to Section
6.2 and will determine the nature and amount of each Award. No individual will
have any right to be granted an Option under Section 6.2 of this Plan.
ARTICLE 6
GRANT OF STOCK
6.1 AUTOMATIC OPTION GRANTS.
(a) INITIAL OPTION GRANT. Each individual who, on or after the
Effective Date first becomes a Nonemployee Director, shall receive an Option to
purchase 30,000 shares of Stock.
(b) ANNUAL OPTION GRANT. Beginning on the Effective Date and
for each anniversary of the Effective Date, each individual who is a Nonemployee
Director on such relevant date, shall receive an Option to purchase 15,000
shares of Stock.
(c) TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS.
(1) EXERCISE PRICE. The exercise price under an Option
granted pursuant to Section 6.1 shall be the Fair Market Value
on the date of grant.
(2) VESTING. Any Option granted under Section 6.1 shall
vest over a three-year period, with one-third of the shares
subject to the Option vesting after the first anniversary of
the date of grant and the remaining two-thirds of the shares
subject to the Option vesting monthly on a pro rata basis over
the remaining two-year period.
(3) EXERCISE ON TERMINATION OF SERVICE. Upon a Nonemployee
Director's termination of service with the Company, (A) the
unvested portion of any Option granted under Section 6.1 shall
expire, and (B) the vested portion of any Option granted under
Section 6.1 shall remain exercisable until the earlier of 12
months after the Nonemployee Director terminates service, or
the Option's original expiration date.
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(4) DURATION OF AUTOMATIC OPTIONS. Each Option
granted under Section 6.1 shall expire on the tenth
anniversary of the date of grant, unless the Option is earlier
terminated, forfeited or surrendered pursuant to this Section
6.1.
6.2 DISCRETIONARY OPTION GRANTS. Subject to the limitation on the
number of shares that may be awarded under this Plan, the Committee may, from
time to time, select from among all eligible Nonemployee Directors, those to
whom discretionary Option grants are given and will determine the amount,
exercise price and other terms and conditions of such grant. No individual will
have any right to an Option grant.
6.3 PROVISIONS APPLICABLE TO ALL OPTIONS.
(a) EVIDENCE OF GRANT. All Options will be evidenced by a
written Option Agreement between the Company and the Participant that will not
include any terms or conditions that are inconsistent with the terms and
conditions of this Plan.
(b) PAYMENT. The Committee will determine the methods by which
the exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
broker-assisted arrangements), and the methods by which shares of Stock will be
delivered or deemed to be delivered to Participants.
(c) NO SHAREHOLDERS RIGHTS. The Participant does not have any
of the rights of a shareholder of the Company until shares of Stock are issued
to the Participant in connection with such Option.
(d) LIMITATIONS ON THE TRANSFERABILITY OF OPTIONS. Except as
otherwise provided herein, no Option granted under this Article 7 may be sold,
transferred, pledged, assigned, or otherwise alienated, other than by will, the
laws of descent and distribution, or under any other circumstances allowed by
the Committee. A Nonemployee Director shall be permitted to transfer, or
otherwise make a disposition of, Option granted under the Plan to a trust,
corporation, or other entity controlled by the Nonemployee Director or members
of such Directors immediate family.
ARTICLE 7
CHANGE OF CONTROL
Upon a Change of Control, the Board in its discretion, may provide that
all outstanding Options shall become fully exercisable. Upon, or in anticipation
of, such an event, the Board may cause every Option outstanding to terminate at
a specific time in the future and shall give each Participant the right to
exercise Options during a period of time as the Board determines.
ARTICLE 8
AMENDMENT, MODIFICATION, AND TERMINATION
8.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 8.2,
the Board may terminate, amend, or modify the Plan at any time.
8.2 AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan will in any manner adversely affect any
Award previously granted under the Plan without the written consent of the
Participant holding the Award.
ARTICLE 9
MISCELLANEOUS
9.1 INDEMNIFICATION. Each individual who is or was a member of the
Board or the Committee will be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or
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proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under this Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she gives the Company an opportunity, at its own expense, to assume and
defend the same before he or she undertakes to defend it on his or her own
behalf. The foregoing right of indemnification will not be exclusive of any
other rights of indemnification to which such individuals may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
9.2 BENEFICIARY DESIGNATION. Each Participant under the Plan may name
any beneficiary or beneficiaries to whom any benefit under the Plan is to be
paid in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, will be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death will be paid
to the Participant's estate.
9.3 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, will be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
9.4 REQUIREMENTS OF LAW. The granting of Options, the exercise of
Options, and the amendment or termination of the Plan will be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
9.5 FRACTIONAL SHARES. No fractional shares of stock will be issued and
the Board will determine, in its discretion, whether cash will be given in lieu
of fractional shares or whether such fractional shares will be eliminated by
rounding up or down, as the case may be.
9.6 NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or in any
instrument executed pursuant to the Plan will confer upon any Participant any
right to continue to serve as a Nonemployee Director of the Company, nor will it
affect the right of the Company and its shareholders to terminate the services
of any Participant as a Nonemployee Director as provided in the Company's Bylaws
or otherwise.
9.7 EXPENSES. The expenses of administering the Plan will be borne by
the Company.
9.8 GOVERNING LAW. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, will be construed in accordance with and
governed by the laws of the State of Arizona.
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APPENDIX C
WHITE ELECTRONIC DESIGNS CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of this White Electronic Designs Corporation
2000 Employee Stock Purchase Plan (the "Plan") is to encourage stock ownership
by eligible employees of White Electronic Designs Corporation (the "Company")
and its Subsidiaries and thereby provide employees with an incentive to
contribute to the profitability and success of the Company. The Plan is intended
to qualify as an "employee stock purchase plan" under Section 423 of the Code
and will be maintained for the exclusive benefit of eligible employees of the
Company and its Subsidiaries.
2. DEFINITIONS. For purposes of the Plan, in addition to the terms
defined in Section 1, the following terms are defined:
(a) "Board" means the Board of Directors of the Company.
(b) "Cash Account" means the account maintained on behalf of a
Participant by the Company for the purpose of holding cash contributions
withheld from payroll pending investment in Stock.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Custodian" means Charles Schwab & Co. or any successor or
replacement appointed by the Board or its delagatee under Section 3(a).
(e) "Earnings" means a Participant's salary or wages, excluding
bonuses, for services performed for the Company and its Subsidiaries and
received by a Participant for services rendered during an Offering Period.
(f) "Fair Market Value" means the closing price of the Stock on the
relevant date as reported on NASDAQ (or any national securities exchange or
quotation system on which the Stock is then listed), or if there were no sales
on that date the closing price on the next preceding date for which a closing
price was reported.
(g) "Offering Period" means the six-month period beginning on January 1
and July 1 of each year, with the first Offering Period to begin on the
Effective Date.
(h) "Participant" means an employee of the Company or a Subsidiary who
is participating in the Plan.
(i) "Purchase Right" means a Participant's option to purchase Stock
that is deemed to be outstanding during an Offering Period. A Purchase Right
represents an "option" under Section 423 of the Code.
(j) "Stock" means the common stock of the Company.
(k) "Stock Account" means the account maintained on behalf of the
Participant by the Custodian for the purpose of holding Stock acquired under the
Plan.
(l) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain as set forth in Code Section
424(f).
3. ADMINISTRATION.
(a) Board Administration. The Plan will be administered by the
Board. The Board may delegate its administrative duties and authority (other
than its authority to amend the Plan) to any Board committee or to any officers
or employees or committee thereof as the Board may designate (in which case
references to the Board will
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be deemed to refer to the administrator to which such duties and authority have
been delegated). The Board will have full authority to adopt, amend, suspend,
waive, and rescind rules and regulations and appoint agents as it deems
necessary or advisable to administer the Plan, to correct any defect or supply
any omission or reconcile any inconsistency in the Plan and to construe and
interpret the Plan and rules and regulations thereunder, to furnish to the
Custodian such information as the Custodian may require, and to make all other
decisions and determinations under the Plan (including determinations relating
to eligibility). No person acting in connection with the administration of the
Plan will, in that capacity, participate in deciding any matter relating to his
or her participation in the Plan.
(b) The Custodian. The Custodian will act as custodian under the
Plan and will perform duties under the Plan and in any agreement between the
Company and the Custodian. In addition to other duties, the Custodian will
establish and maintain Participants' Stock Accounts and any subaccounts as may
be necessary or desirable to administer the Plan.
(c) Waivers. The Board may waive or modify any requirement that a
notice or election be made or filed under the Plan a specified period in advance
on an individual case or by adopting a rule or regulation under the Plan,
without amending the Plan.
(d) Other Administrative Provisions. The Company will furnish
information from its records as directed by the Board, and such records,
including a Participant's Earnings, will be conclusive on all persons unless
determined by the Board to be incorrect. Each Participant and other person
claiming benefits under the Plan must furnish to the Company in writing an
up-to-date mailing address and any other information as the Board or Custodian
may reasonably request. Any communication, statement, or notice mailed with
postage prepaid to any such Participant or other person at the last mailing
address filed with the Company will be deemed sufficiently given when mailed and
will be binding upon the named recipient. The Plan will be administered on a
reasonable and nondiscriminatory basis and uniform rules will apply to all
persons similarly situated. All Participants will have equal rights and
privileges (subject to the terms of the Plan) with respect to Purchase Right
outstanding during any given Offering Period in accordance with Code Section
423(b)(5) or any successor provision.
4. STOCK SUBJECT TO PLAN. Subject to adjustment as provided below, the
total number of shares of Stock reserved and available for issuance or which may
be otherwise acquired upon exercise of Purchase Rights under the Plan will be
300,000. If, at the end of any Offering Period, the number of shares of Stock
with respect to which Purchase Rights are to be exercised exceeds the number of
shares of Stock then available under the Plan, the Board shall make a pro rata
allocation of the shares of Stock remaining available for purchase in as uniform
a manner as shall be practicable and as it shall determine to be equitable. Any
shares of Stock delivered by the Company under the Plan may consist, in whole or
in part, of authorized and unissued shares or treasury shares or shares of Stock
purchased on the open market. The number and kind of such shares of Stock
subject to the Plan will be proportionately adjusted, as determined by the
Board, in the event of any extraordinary dividend or other distribution,
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event affecting the Stock.
5. ENROLLMENT AND CONTRIBUTIONS.
(a) Eligibility. An employee of the Company or any Subsidiary
designated by the Board may be enrolled in the Plan for any Offering Period if
such employee is employed by the Company or a Subsidiary authorized to
participate in the Plan on the first day of the Offering Period, unless one of
the following applies to the employee:
(i) such person has been employed by the Company or a
Subsidiary less than one year; or
(ii) such person is customarily employed by the Company or
a Subsidiary for 20 hours or less a week; or
(iii) such person is customarily employed by the Company or
a Subsidiary for not more than five months in any
calendar year;
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(iv) such person would, immediately upon enrollment, be
deemed to own, for purposes of Section 423(b)(3) of
the Code, an aggregate of five percent or more of the
total combined voting power or value of all
outstanding shares of all classes of the Stock of the
Company or any Subsidiary.
The Company will notify an employee of the date as of which he
or she is eligible to enroll in the Plan, and will make available to each
eligible employee the necessary enrollment forms. Notwithstanding the above, any
individual who is employed by the Company or a Subsidiary designated by the
Board and who is working outside of the United States shall not be eligible to
participate in the Plan if the laws of the country in which the employee is
working makes the offer of the Purchase Right or the delivery of Stock under the
Plan impractical. Additionally, the offer of the Purchase Right and the delivery
of Stock under the Plan shall be effective for any individual who is employed by
the Company or a Subsidiary and who is working outside of the United States only
after the Company has complied with the applicable laws of the country in which
the employee is working.
(b) Initial Enrollment. An employee who is eligible under Section
5(a) (or who will become eligible on or before a given Offering Period) may,
after receiving current information about the Plan, initially enroll in the Plan
by executing and filing with the Company a properly completed enrollment form,
including the employee's election as to the rate of payroll contributions for
the Offering Period. To be effective for any Offering Period, such enrollment
form must be filed at least two weeks (or such other period determined by the
Board) preceding such Offering Period.
(c) Automatic Re-enrollment for Subsequent Offering Periods. A
Participant whose enrollment in, and payroll contributions under, the Plan
continues throughout an Offering Period will automatically be re-enrolled in the
Plan for the next Offering Period unless (i) the Participant terminates
enrollment before the next Offering Period in accordance with Section 7(a), or
(ii) the Participant is ineligible to participate under Section 5(a). The
initial rate of payroll contributions for a Participant who is automatically
re-enrolled for an Offering Period will be the same as the rate of payroll
contribution in effect at the end of the preceding Offering Period, unless the
Participant files a new enrollment form designating a different rate of payroll
contributions and such new enrollment form is received no later than two weeks
(or such other period determined by the Board) prior to the beginning of the
next Offering Period.
(d) Payroll Contributions. A Participant will make contributions
under the Plan by means of payroll deductions from each payroll period which
ends during the Offering Period, at the rate elected by the Participant in his
or her enrollment form in effect for that Offering Period (except that such rate
may be changed during the Offering Period to the extent permitted below). The
rate of payroll contributions elected by a Participant may not be less than one
percent (1%) nor more than twelve percent (12%) of the Participant's Earnings
for each payroll period, and only whole percentages may be elected; provided,
however, that the Board may specify a lower minimum rate and higher maximum
rate, subject to Section 8(c). Notwithstanding the above, a Participant's
payroll contributions will be adjusted downward by the Company as necessary to
ensure that the limit on the amount of Stock purchased for an Offering Period
set forth in Section 6(a)(iii) is not exceeded. A Participant may elect to
increase, decrease, or discontinue payroll contributions for a future Offering
Period by filing a new enrollment form designating a different rate of payroll
contributions, which form must be received at least two weeks (or such other
period determined by the Board) prior to the beginning of an Offering Period to
be effective for that Offering Period. In addition, a Participant may elect to
discontinue payroll contributions during an Offering Period by filing a new
enrollment form, such change to be effective for the next payroll after the
Participant's new enrollment form is received.
(e) Crediting Payroll Contributions to Cash Accounts. All payroll
contributions by a Participant under the Plan will be credited to a Cash Account
maintained by the Company on behalf of the Participant. The Company will credit
payroll contributions to each Participant's Cash Account as soon as practicable
after the contributions are withheld from the Participant's Earnings.
(f) No Interest on Cash Accounts. No interest will be credited or
paid on cash balances in Participant's Cash Accounts pending investment in
Stock.
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6. PURCHASES OF STOCK
(a) Purchase Rights. Enrollment in the Plan for any Offering
Period by a Participant will constitute a grant by the Company of a Purchase
Right to such Participant for such Offering Period. Each Purchase Right will be
subject to the following terms:
(i) The purchase price of each share of Stock
purchased for each Offering Period will
equal 85% of the lesser of the Fair Market
Value of a share of Stock on the first day
of an Offering Period, or the Fair Market
Value of a share of Stock on the last day of
an Offering Period.
(ii) Except as limited in (iii) below, the number
of shares of Stock that may be purchased
upon exercise of the Purchase Right for an
Offering Period will equal the number of
shares (including fractional shares) that
can be purchased at the purchase price
specified in Section 6(a)(i) with the
aggregate amount credited to the
Participant's Cash Account as of the last
day of an Offering Period.
(iii) The number of shares of Stock subject to a
Participant's Purchase Right for any
Offering Period will not exceed the number
derived by dividing $12,500 by 100% of the
Fair Market Value of one share of Stock on
the first day of the Offering Period for the
Offering Period.
(iv) The Purchase Right will be automatically
exercised on the last day of the Offering
Period.
(v) Payments by a Participant for Stock
purchased under a Purchase Right will be
made only through payroll deduction in
accordance with Section 5(d) and (e).
(vi) The Purchase Right will expire on the
earlier of the last day of the Offering
Period or the date on which the
Participant's enrollment in the Plan
terminates.
(b) Purchase of Stock. At or as promptly as practicable after the
last day of an Offering Period, amounts credited to each Participant's Cash
Account will be applied by the Company to purchase Stock, in accordance with the
terms of the Plan. Shares of Stock will be purchased from the Company or in the
open market, as the Board determines. The Company will aggregate the amounts in
all Cash Accounts when purchasing Stock, and shares purchased will be allocated
to each Participant's Stock Account in proportion to the cash amounts withdrawn
from such Participant's Cash Account. After completing purchases for each
Offering Period (which will be completed in not more than 15 calendar days after
the last day of an Offering Period), all shares of Stock so purchased for a
Participant will be credited to the Participant's Stock Account.
(c) Dividend Reinvestment; Other Distributions. Cash dividends on
any Stock credited to a Participant's Stock Account will be automatically
reinvested in additional shares of Stock; such amounts will not be available in
the form of cash to Participants. The Company will aggregate all purchases of
Stock in connection with dividend reinvestment for a given dividend payment
date. Purchases of Stock for purposes of dividend reinvestment will be made as
promptly as practicable (but not more than 15 calendar days) after a dividend
payment date. The purchases will be made directly from the Company at 100% of
the Fair Market Value of a share of Stock on the dividend payment date or on the
open market. Any shares of Stock distributed as a dividend or distribution in
respect of shares of Stock or in connection with a split of the Stock credited
to a Participant's Stock Account will be credited to such Account.
(d) Withdrawals and Transfers. Shares of Stock may be withdrawn
from a Participant's Stock Account, in which case one or more certificates for
whole shares may be issued in the name of, and delivered to, the Participant,
with such Participant receiving cash in lieu of fractional shares based on the
Fair Market Value of a share of Stock on the day preceding the date of
withdrawal. Alternatively, whole shares of Stock may be withdrawn from a
Participant's Stock Account by means of a transfer to a broker-dealer or
financial institution that maintains an account for the Participant, together
with the transfer of cash in lieu of fractional shares based on the Fair Market
Value of a share of Stock on the day preceding the date of withdrawal.
Participants may not designate any other
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person to receive shares of Stock withdrawn or transferred under the Plan. A
Participant seeking to withdraw or transfer shares of Stock must give
instructions to the Custodian in such manner and form as may be prescribed by
the Custodian, which instructions will be acted upon as promptly as practicable.
Withdrawals and transfers will be subject to any fees imposed in accordance with
Section 8(a).
(e) Excess Account Balances. If any amounts remain in a Cash
Account following the date on which the Company purchases Stock for an Offering
Period as a result of the limitation set forth in Section 6(a)(iii) or for any
other reason, such amounts will be returned to the Participant as promptly as
practicable.
7. TERMINATION AND DISTRIBUTIONS.
(a) Termination of Enrollment. A Participant's enrollment in the
Plan will terminate upon (i) the beginning of any payroll period or Offering
Period that begins after he or she files a written notice of termination of
enrollment with the Company, (ii) such time as the Participant becomes
ineligible to participate under Section 5(a) of the Plan, or (iii) the
termination of the Participant's employment by the Company and its Subsidiaries.
An employee whose enrollment in the Plan terminates may again enroll in the Plan
as of any subsequent Offering Period that begins at least 180 days after such
termination of enrollment if he or she satisfies the eligibility requirements of
Section 5(a) as of such Offering Period. A Participant's election to discontinue
payroll contributions will not constitute a termination of enrollment.
(b) Distribution. As soon as practicable after a Participant's
enrollment in the Plan terminates, amounts in the Participant's Cash Account
which resulted from payroll contributions will be repaid to the Participant. The
Custodian will continue to maintain the Participant's Stock Account for the
Participant until the earlier of such time as the Participant directs the sale
of all Stock in the Account, withdraws, or transfers all Stock in the Account,
or one year after the Participant ceases to be employed by the Company and its
Subsidiaries. If a Participant's termination of enrollment results from his or
her death, all amounts payable will be paid to his or her estate.
8. GENERAL.
(a) Costs. Costs and expenses incurred in the administration of
the Plan and maintenance of Accounts will be paid by the Company, to the extent
provided in this Section 8(a). Any brokerage fees and commissions for the
purchase of Stock under the Plan (including Stock purchased upon reinvestment of
dividends and distributions) will be paid by the Company, but any brokerage fees
and commissions for the sale of Stock under the Plan by a Participant will be
borne by such Participant. The rate at which such fees and commissions will be
charged to Participants will be determined by the Custodian or any broker-dealer
used by the Custodian (including an affiliate of the Custodian), and
communicated from time to time to Participants. In addition, the Custodian may
impose or pass through a reasonable fee for the withdrawal of Stock in the form
of stock certificates (as permitted under Section 6(d)), and reasonable fees for
other services unrelated to the purchase of Stock under the Plan, to the extent
approved in writing by the Company and communicated to Participants.
(b) Statements to Participants. The Participant's statement will
reflect payroll contributions, purchases, sales, and withdrawals and transfers
of shares of Stock and other Plan transactions by appropriate adjustments to the
Participant's Accounts. The Custodian will, not less frequently than
semi-annually, provide or cause to be provided a written statement to the
Participant showing the transactions in his or her Stock Account and the date
thereof, the number of shares of Stock credited or sold, the aggregate purchase
price paid or sales price received, the purchase or sales price per share, the
brokerage fees and commissions paid (if any), the total shares held for the
Participant's Stock Account (computed to at least three decimal places), and
such other information as agreed to by the Custodian and the Company.
(c) Compliance with Section 423. It is the intent of the Company
that this Plan comply in all respects with applicable requirements of Section
423 of the Code and regulations thereunder. Accordingly, if any provision of
this Plan does not comply with such requirements, such provision will be
construed or deemed amended to the extent necessary to conform to such
requirements.
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9. GENERAL PROVISIONS.
(a) Compliance With Legal and Other Requirements. The Plan, the
granting and exercising of Purchase Rights hereunder, and the other obligations
of the Company and the Custodian under the Plan will be subject to all
applicable federal and state laws, rules, and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company may, in
its discretion, postpone the issuance or delivery of Stock upon exercise of
Purchase Rights until completion of such registration or qualification of such
Stock or other required action under any federal or state law, rule, or
regulation, or the laws of any country in which employees of the Company and a
Subsidiary who are nonresident aliens and who are eligible to participate
reside, or other required action with respect to any automated quotation system
or stock exchange upon which the Stock or other Company securities are
designated or listed, or compliance with any other contractual obligation of the
Company, as the Company may consider appropriate. In addition, the Company may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Stock in compliance with applicable laws, rules, and regulations,
designation or listing requirements, or other contractual obligations.
(b) Limits on Encumbering Rights. No right or interest of a
Participant under the Plan, including any Purchase Right, may be pledged,
encumbered, or hypothecated to or in favor of any party, subject to any lien,
obligation, or liability of such Participant, or otherwise assigned,
transferred, or disposed of except pursuant to the laws of descent or
distribution, and any right of a Participant under the Plan will be exercisable
during the Participant's lifetime only by the Participant.
(c) No Right to Continued Employment. Neither the Plan nor any
action taken hereunder, including the grant of a Purchase Right, will be
construed as giving any employee the right to be retained in the employ of the
Company or any of its Subsidiaries, nor will it interfere in any way with the
right of the Company or any of its Subsidiaries to terminate any employee's
employment at any time.
(d) Taxes. The Company or any Subsidiary is authorized to withhold
from any payment to be made to a Participant, including any payroll and other
payments not related to the Plan, amounts of withholding and other taxes due in
connection with any transaction under the Plan, and a Participant's enrollment
in the Plan will be deemed to constitute his or her consent to such withholding.
In addition, Participants may be required to advise the Company of sales and
other dispositions of Stock acquired under the plan in order to permit the
Company to comply with tax laws and to claim any tax deductions to which the
Company may be entitled with respect to the Plan. This provision and other Plan
provisions do not set forth an explanation of the tax consequences to
Participants under the Plan. A brief summary of the tax consequences will be
included in disclosure documents to be separately furnished to Participants.
(e) Changes to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders within one year after such Board action if such
shareholder approval is required by any federal or state law or regulation or
the rules of any automated quotation system or stock exchange on which the Stock
may then be quoted or listed, or if such shareholder approval is necessary in
order for the Plan to continue to meet the requirements of Section 423 of the
Code, and the Board may otherwise, in its discretion, determine to submit other
such actions to shareholders for approval. However, without the consent of an
affected Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
Participant with respect to outstanding Purchase Rights relating to any Offering
Period that has been completed prior to such Board action. The foregoing
notwithstanding, upon termination of the Plan the Board may (i) elect to
terminate all outstanding Purchase Rights at such time as the Board may
designate, and all amounts contributed to the Plan which remain in a
Participant's Cash Account will be returned to the Participant (without
interest) as promptly as practicable, or (ii) shorten the Offering Period to
such period determined by the Board and use amounts credited to a Participant
Cash Account to purchase Stock.
(f) No Rights to Participate; No Shareholder Rights. No
Participant or employee will have any claim to participate in the Plan with
respect to Offering Periods that have not commenced, and the Company will have
no obligation to continue the Plan. No Purchase Right will confer on any
Participant any of the rights of a shareholder of the Company unless and until
Stock is duly issued or transferred and delivered to the Participant (or
credited to the Participant's Stock Account).
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(g) Fractional Shares. Unless otherwise determined by the Board,
purchases of Stock under the Plan executed by the Custodian may result in the
crediting of fractional shares of Stock to the Participant's Stock Account. Such
fractional shares will be computed to at least three decimal places. Fractional
shares will not, however, be issued by the Company, and certificates
representing fractional shares will not be delivered to Participants under any
circumstances.
(h) Plan Year. The Plan will operate on a plan year that begins on
January 1 and ends December 31 in each year.
(i) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan will be determined in
accordance with the laws of the State of Arizona, without giving effect to
principles of conflicts of laws, and applicable federal law.
(j) Effective Date. The Plan will become effective on July 1,
2000, subject to the Plan being approved by shareholders of the Company, at a
meeting by a vote sufficient to meet the requirements of Section 423(b)(2) of
the Code. If the Plan is not approved in accordance with Section 423(b)(2) of
the Code, each Participant's Purchase Right shall be void and amounts credited
to the Participant's Cash Account shall be promptly returned to the Participant.
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APPENDIX D
AMENDMENT TO THE
BOWMAR INSTRUMENT CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Bowmar Instrument Corporation ("Bowmar") previously adopted the Stock
Option Plan for Non-Employee Directors (the "Director Option Plan") to attract,
retain, motivate and individuals to serve as non-employee directors of Bowmar
and to promote and further the best interests of Bowmar. Bowmar merged with
Electronic Designs, Inc. on October 26, 1998 and changed its name to White
Electronic Designs Corporation (the "Corporation"). By this instrument, the
Corporation desires to amend the Director Option Plan (1) to recognize the
Corporation's, and the Director Option Plan's, name change and (2) to increase
the number of shares of the Corporation's stock available for grant under the
Director Option Plan to 281,000.
1. The provisions of this Amendment shall be effective as of date
adopted by the Board of Directors.
2. The name of the Director Option Plan, as set forth in Section 1 of
the Director Option Plan, and each other reference within the Director Option
Plan is hereby changed to the "White Electronic Designs Corporation Stock Option
Plan for Non-Employee Directors."
3. The name of the Corporation, as set forth in Section 1 of the
Director Option Plan, and each other reference within the Director Option Plan
is hereby changed to "White Electronic Designs Corporation."
4. Section 4 of the Director Option Plan is hereby amended and restated
in its entirety to read as follows:
4. Awards Under the Plan. The number of shares of Common Stock
available for grants under the Plan shall not exceed 281,000 shares
subject to adjustment as provided in Section 5.
5. This Amendment shall amend only the provisions of the Director
Option Plan as set forth herein. Those provisions of the Director Option Plan
not expressly amended hereby shall be considered in full force and effect.
D1
38
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON
AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
WHITE ELECTRONIC DESIGNS CORPORATION
FEBRUARY 22, 2001
Please Detach and Mail in the Envelope Provided
A [x] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD AUTHORITY
listed at right to vote for all
(except as marked nominees listed
to the contrary) to the right.
1. To elect six
directors of [ ] [ ] NOMINEES:
the Corporation Norman T. Hall
Donald F. McGuinness
Thomas M. Reahard
Hamid R. Shokrgozar
Thomas J. Toy
Edward A. White
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED:
____________________________________________________________________________
The Board of Directors recommends a vote FOR the following proposals and ALL
SHARES REPRESENTED BY THIS PROXY WILL BE SO VOTED UNLESS OTHERWISE INDICATED.
2. To ratify the appointment of PricewaterhouseCoopers LLP as FOR AGAINST ABSTAIN
independent accountants of the Corporation and its subsidiary [ ] [ ] [ ]
for the fiscal year ending September 30, 2001;
3. To amend the Corporation's 1994 Flexible Stock Plan to change [ ] [ ] [ ]
the name of the Plan and to increase the aggregate number of
shares in respect to which options may be granted under the
plan from the formula currently provided to 2,200,000;
4. To approve the White Electronic Designs Corporation 2001 [ ] [ ] [ ]
Director Stock Plan;
5. To approve the White Electronic Designs Corporation 2000 [ ] [ ] [ ]
Employee Stock Purchase Plan;
6. To amend the Corporation's Stock Option Plan for Non-Employee [ ] [ ] [ ]
Directors to change the name of the Plan and to increase the
aggregate number of shares in respect to which options may be
granted under the Plan from the formula currently provided to
281,000; and
7. To transact such other business as may properly come before
the meeting or any adjournments thereof
Signature_______________________________________ Signature_______________________________________ Dated:_________________, 2001
IF HELD JOINTLY
Note: Shareholders should sign only as name(s) appear(s) above. Joint owners
should each sign personally. Trustees and other fiduciaries should
indicate their capacity, and where more than one name appears, a
majority must sign. An officer signing for a corporation should state
their title.
39
WHITE ELECTRONIC DESIGNS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 22, 2001
The undersigned hereby names, constitutes and appoints HAMID R. SHOKRGOZAR, AND
WILLIAM J. RODES, as proxies of the undersigned, with full power of
substitution, to vote all shares of Common Stock of White Electronic Designs
Corporation (the "Company") held of record by the undersigned as of the close of
business on December 29, 2000 on behalf of the undersigned at the Annual Meeting
of Shareholders to be held at the Company's office at 3601 E. University Drive,
Phoenix, Arizona 85034, on February 22, 2001 at 11:00 a.m. Mountain Standard
Time. This proxy shall also be valid for any adjournments thereof. This proxy
authorizes Mr. Shokrgozar, Chairman, and Mr. Rodes, to vote on the matters set
forth on the reverse side and more fully described in the accompanying Proxy
Statement. This proxy hereby revokes any proxy previously given by the
undersigned as to these matters.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)