SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 2)
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 240.14a-11(c) or 240.14a-12
CONSOLIDATED DELIVERY & LOGISTICS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Consolidated Delivery & Logistics, Inc.
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to
attend the Annual Meeting of Stockholders of Consolidated Delivery & Logistics,
Inc. (the "Company") to be held at Ramada Inn, 265 Route 3 East, Clifton, New
Jersey 07014 on Wednesday, June 17, 1998 at 10:00 a.m.
The enclosed Notice of Meeting and the accompanying Proxy Statement
describe the business to be conducted at the Meeting. Enclosed is a copy of the
Company's 1997 Annual Report and the Company's Annual Report on Form 10-K, which
contains certain information regarding the Company and its 1997 results.
It is important that your shares of Common Stock be represented and
voted at the Meeting. Accordingly, regardless of whether you plan to attend in
person, please complete, date, sign and return the enclosed proxy card in the
envelope provided, which requires no postage if mailed in the United States.
Even if you return a signed proxy card, you may still attend the Meeting and
vote your shares in person. Every stockholder's vote is important, whether you
own a few shares or many.
I look forward to seeing you at the Annual Meeting.
Sincerely,
Albert W. Van Ness, Jr.
Chairman of the Board
and Chief Executive Officer
April 30, 1998
Clifton, New Jersey
CONSOLIDATED DELIVERY & LOGISTICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 17, 1998
The Annual Meeting of Stockholders (the "Meeting") of Consolidated
Delivery & Logistics, Inc. (the "Company") will be held at Ramada Inn, 265 Route
3 East, Clifton, New Jersey 07014 on Wednesday, June 17, 1998 at 10:00 a.m., to
consider and act upon the following:
1. Ratification of By-law amendment authorizing staggered terms for
the Board of Directors.
2. The election of directors.
3. Ratification of Employee Stock Purchase Plan.
4. Ratification of amendment to the 1995 Employee Stock
Compensation Program.
5. Ratification of amendment to the 1995 Stock Option Plan for
Independent Directors.
6. Ratification of the appointment of Arthur Andersen LLP as
the Company's independent public accountants for 1998.
7. The transaction of such other business as may properly come
before the Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock, par value $.001
per share, at the close of business on April 20, 1998 will be entitled to vote
at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph G. Wojak
Secretary
April 30, 1998
Clifton, New Jersey
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO
DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
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CONSOLIDATED DELIVERY & LOGISTICS, INC.
380 Allwood Road
Clifton, New Jersey 07012
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ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1998
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Consolidated Delivery & Logistics, Inc. (the "Company") for use at the Annual
Meeting of Stockholders to be held at Ramada Inn, 265 Route 3 East, Clifton, New
Jersey 07014 on Wednesday, June 17, 1998 at 10:00 a.m., and at any adjournments
or postponements thereof (the "Meeting"). A stockholder who has voted by proxy
has the right to revoke it by giving written notice of such revocation to the
Secretary of the Company at any time before it is voted, by submitting to the
Company a duly-executed, later-dated proxy or by voting the shares subject to
such proxy by written ballot at the Meeting. The presence at the Meeting of a
stockholder who has given a proxy does not revoke such proxy unless such
stockholder files the aforementioned notice of revocation or votes by written
ballot.
The proxy statement and the enclosed form of proxy are first being
mailed to stockholders on or about April 30, 1998. All shares represented by
valid proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. If a proxy is signed but no
specification is given, the shares will be voted "FOR" Proposals 1, 2, 3, 4, 5
and 6 [(1) to ratify a By-law amendment authorizing staggered terms for the
Board of Directors, (2) to elect the Board's nominees to the Board of Directors,
(3) to ratify the Company's Employee Stock Purchase Plan, (4) to ratify an
amendment to the 1995 Employee Stock Compensation Program to provide for the
issuance an additional 500,000 shares of common stock under the Plan, (5) to
ratify the amendment of the 1995 Stock Option Plan for Independent Directors and
(6) to ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for 1998].
The entire cost of soliciting these proxies will be borne by the
Company. The solicitation of proxies may be made by directors, officers and
regular employees of the Company or any of its subsidiaries by mail, telephone,
facsimile or telegraph or in person without additional compensation payable with
respect thereto. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of stock held of record by such persons, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At April 20, 1998 (the "Record Date"), the Company had outstanding
6,666,884 shares of common stock, par value $.001 per share ("Common Stock").
Each holder of Common Stock will have the right to one vote for each share
standing in such holder's name on the books of the Company as of the close of
business on the Record Date with respect to each of the matters considered at
the Meeting. There is no right to cumulate votes in the election of directors.
Holders of the Common Stock will not have any dissenters' rights of appraisal in
connection with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares entitled to
cast a majority of the votes of all shares entitled to vote will constitute a
quorum for purposes of conducting business at the Meeting. Assuming that a
quorum is present, directors will be elected by a plurality vote and the
ratification of all other proposals will require the affirmative vote of a
majority of the votes cast with respect to such proposal. For purposes of
determining the votes cast with respect to any matter presented for
consideration at the Meeting, only those votes cast "for" or "against" are
included. Pursuant to Delaware corporate law, abstentions and broker non-votes
will be counted only for the purpose of determining whether a quorum is present.
Based upon information available to the Company, the following
stockholders beneficially owned more than 5% of the Common Stock as of April 1,
1998.
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
William T. Beaury 652,324(1) 9.8%
24-30 Skillman Avenue
Long Island City, New York 11101
Thomas LoPresti 654,607(1) 9.8%
24-30 Skillman Avenue
Long Island City, New York 11101
Vincent Brana 363,071(2) 5.4%
80 Wesley Street
South Hackensack, New Jersey 07606
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(1) Includes (i) 638,708 shares of Common Stock held by a company which is
jointly owned by Mr. Beaury and Mr. LoPresti, each of whom may be deemed to
be the beneficial owner of all of such shares, (ii) 9,092 shares of Common
Stock issuable upon the exercise of options pursuant to the Employee Stock
Compensation Program (the "Employee Stock Compensation Program") which are
exercisable within 60 days of April 1, 1998 and (iii) for Mr. Beaury -
4,524 shares of Common Stock issuable upon the conversion of $50,000 in
principal amount of the Company's 8% Subordinated Convertible Debentures
due August 2000 (the "Debentures") and for Mr. LoPresti 2,262 shares of
Common Stock issuable upon the conversion of $25,000 in principal amount of
the Company's 8% Subordinated Convertible Debentures due August 2000 and
4,545 shares of Common Stock issuable upon the conversion of $25,000 in
principal amount of the Company's 10% Subordinated Convertible Debentures
due August 2000.
(2) Includes 5,770 shares of Common Stock issuable upon the exercise of options
pursuant to the Employee Stock Compensation Program which are exercisable
within 60 days of April 1, 1998.
PROPOSAL ONE
AMENDMENT OF BY-LAWS
On November 6, 1997, the Board of Directors unanimously adopted a
resolution to amend the Company's By-laws to create staggered terms for the
Board of Directors by dividing the directors into three classes. The Company
believes that this amendment will result in more stability and continuity in the
functioning of the Board of Directors since only approximately one-third of the
Board of Directors rather than the entire Board of Directors will be subject to
election at each annual meeting of the shareholders. The adoption of Proposal 1
may have the effect of discouraging proxy contests and future takeover attempts
which are not approved by the Board of Directors but which individual
shareholders of the Company may deem to be in their best interests. However, the
Board does not intend or view the adoption of a staggered Board as an
anti-takeover measure. The Company is not aware of any proposed or contemplated
transaction of a hostile nature and this amendment to the By-laws is not being
recommended in response to any specific effort to obtain control of the Company.
If this proposal is approved, Section 3.1 of the By-laws of the
Company would be replaced in its entirety by the following:
3.1 Number and Term of Office - (a) The Board of
Directors shall consist of not less than three (3) nor more
than twenty-one (21) directors, the actual number of which is
to be fixed from time to time by the Board.
(b) The Board shall be divided into three classes, the members
of each class to serve for three years. The number of
directors in each class shall be fixed by the Board at the
time the number of directors is fixed, and the number of
directors in each class shall be as nearly equal as possible
as the then total number of directors constituting the entire
Board permits. This paragraph may only be amended by the
shareholders of the Corporation.
(c) At the annual meeting of stockholders at which the
stockholders approve the provision in the by-laws authorizing
a classified Board, directors of the first class shall be
elected to hold office for a term expiring at the next
succeeding annual meeting of stockholders, directors of the
second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting of
stockholders, and directors of the third class shall be
elected to hold office for a term expiring at the third
succeeding annual meeting. At each annual meeting thereafter,
directors shall be elected to fill the directorships of the
class of directors whose terms have expired. Those directors
shall hold office until the third successive annual meeting
after their election and until their successors have been
elected and qualified, so that the term of office of one class
of directors shall expire at each annual meeting.
Pursuant to the Company's By-laws, any vacancies which occur in the
Board of Directors during the year may be filled by the Board of Directors to
serve only until the next annual meeting of shareholders.
The affirmative vote of a majority of the votes cast at the meeting by
the shareholders entitled to vote thereat is required to adopt this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE BY-LAWS.
PROPOSAL TWO
ELECTION OF DIRECTORS
In accordance with the Company's Second Restated Certificate of
Incorporation and By-laws, the number of directors of the Company has been set
at nine. At a Board of Directors meeting held on November 6, 1997 the Board of
Directors agreed to amend the By-Laws of the Company, dividing the Board into
three classes and creating staggered three year terms for the members of each
class to serve, subject to approval by the shareholders. The first class shall
be elected to hold office for a one year term, the second class of directors
shall be elected to hold office for a two year term and the third class of
directors shall be elected to held office for a three year term. At each annual
meeting hereafter directors shall be elected to fill the directorship of the
class of directors whose terms have expired. Those directors shall hold office
until the third successive annual meeting after their election and until their
successors have been elected and qualified so that the term of office of one
class of directors shall expire at each annual meeting. It was further agreed
(subject to shareholder approval as to the terms of office) that the following
individuals be nominated to serve as directors at the next Annual Meeting of
Shareholders in the classes set forth below:
Class I (Term to expire in 1999) - Labe Leibowitz,
Albert W. Van Ness, Jr., and Kenneth W. Tunnell, Sr.
Class II (Term to expire in 2000) - Jon F. Hanson, William T. Beaury
and Michael Brooks.
Class III (Term to expire in 2001) - Marilu Marshall,
William T. Brannan and John S. Wehrle.
All persons named herein as nominees for director have consented to
serve, and it is not contemplated that any nominee will be unable to serve as a
director. However, if a nominee is unable to serve as a director, a substitute
will be selected by the Board of Directors and all proxies eligible to be voted
for the Board's nominees will be voted for such other person. Further, under an
agreement with the former shareholders of SureWay Air Traffic Corporation
("Sureway"), the Company has agreed to nominate one designee of the former
shareholders of SureWay for election as a director of the Company until November
27, 2000. Mr. Beaury is a former shareholder of Sureway.
If Proposal 1 is not adopted by the shareholders, all nominees will be
elected for a one-year term.
Mr. Robert Wyatt resigned from the Board of Directors in September
1997 and was replaced by unanimous approval of the Board with Mr. John S.
Wehrle. The current members of the Board of Directors of the Company are as
follows:
Albert W. Van Ness, Jr., William T. Beaury, William T. Brannan, Marilu
Marshall, Jon F. Hanson, Michael Brooks, Labe Leibowitz, Kenneth W. Tunnell, Sr.
and John S. Wehrle.
Set forth below for each nominee is his name, age, the year in which he
became a director of the Company, his principal occupations during the last five
years and any additional directorships in publicly-held companies. The
information is as of February 1, 1998.
Albert W. Van Ness, Jr., 55, Director since 1995. Chairman of the Board
and Chief Executive Officer of the Company since February 1997. Mr. Van Ness
remains a Managing Partner of Club Quarters, LLC, a hotel development and
management company, a position he has held since October 1992. From June 1990
until October 1992, Mr. Van Ness served as Director of Managing People
Productivity, a consulting firm. Prior thereto, from 1982 until June 1990, Mr.
Van Ness held various executive offices with Cunard Line Limited, a passenger
ship and luxury hotel company, including Executive Vice President and Chief
Operating Officer of the Cunard Leisure Division and Managing Director and
President of the Hotels and Resorts Division. Prior thereto, Mr. Van Ness served
as the President of Seatrain Intermodal Services, Inc., a cargo shipping
company.
William T. Beaury, 44, Director since 1995. Vice-Chairman of the
Company since December 1995. Prior thereto, Mr. Beaury was a co-founder, the
Chairman and a director of SureWay Air Traffic Corporation ("SureWay") and
SureWay Logistics Inc., subsidiaries of the Company, since 1984 and October
1993, respectively. In addition, since 1975, Mr. Beaury has served as President
of Assets Management Limited, an investment management company which previously
owned 74% of SureWay. Mr. Beaury has 20 years of experience in the same-day
ground and air delivery industry. Mr. Beaury also has been a member of the Air
Courier Conference of America ("ACCA") since 1980, The Advertising Production
Club since 1988, and a member of the Presidents Association-the CEO Division of
the American Management Association.
William T. Brannan, 49, Director since 1994. President and Chief
Operating Officer of the Company since November 1994. From January 1991 until
October 1994, Mr. Brannan served as President, Americas Region - US Operations,
for TNT Express Worldwide, a major European-based overnight express delivery
company. Mr. Brannan has 23 years of experience in the transportation and
logistics industry.
Michael Brooks, 43, Director since 1995. Southeast Region Manager
of the Company since August 1996 and President of Silver Star Express, Inc.
("Silver Star"), a subsidiary of the Company, since 1988. Mr. Brooks has 22
years of experience in the same-day ground and air delivery industry. In
addition, Mr. Brooks is currently a member of the Express Carriers Association,
an associate member of the National Small Shipment Traffic Conference and an
affiliate of the American Transportation Association.
Jon F. Hanson, 61, Director since 1997. Mr. Hanson has served as the
President and Chairman of Hampshire Management Company, a real estate investment
firm since December 1976. From April 1991 to the present, Mr. Hanson has served
as a director to the Prudential Insurance Company of America. In addition, Mr.
Hanson currently serves as a director with the United Water Resources and the
Orange and Rockland Utilities from April 1985 and September 1995, respectively.
Labe Leibowitz,44, Director since 1995. President of
Clayton/National Courier Systems, Inc.("National"), a subsidiary of the Company,
from July 1995 to August 1997. Since September 1997, he has acted as a
consultant to National. Leibowitz served as Executive Vice President of National
from 1980 until July 1995. Mr. Leibowitz has 15 years of experience in the
same-day delivery industry. Mr. Leibowitz currently serves on the Board of
Directors of the Association of Messenger Courier Services and is a member of
the Messenger Courier Association of the Americas.
Marilu Marshall, 52. Director since 1997. Senior Vice-President
and General Counsel, Cunard Line Limited since November 1987. Prior thereto,
from July 1984 to September 1987 Ms. Marshall served as the Vice-President and
General Counsel of GNOC, Corp., t/a Golden Nugget Hotel & Casino.
Kenneth W. Tunnell, Sr., 68, Director since 1995. Managing Partner of
Tanglewood Associates, a management consulting firm, since January 1995. Prior
thereto, until December 1994, Mr. Tunnell was the Chairman of K.W. Tunnell
Company, Inc., a management consulting firm founded by Mr. Tunnell in 1962. In
addition, from August 1993 to August 1996, Mr. Tunnell served as a director of
ASECO Corporation.
John S. Wehrle, 45, Director since 1997. President and CEO of
Heartland Capital Partners,L.P., since August 1997. Prior thereto, Mr. Wehrle
served as Vice President and Head of Mergers & Acquisitions for A.G. Edwards &
Sons, Inc. from July 1994 to July 1997. From 1989 to 1994 Mr. Wehrle served as
Vice President-Financial Planning for The Dyson-Kissner-Moran Corporation where
he was a key participant in acquisitions and corporate development. He also
served as Managing Director of Chase Manhattan Bank, N.A. for three years from
August 1986 to October 1989 where he was engaged in the execution of Leveraged
Acquisitions. From 1976 to 1986 Mr. Wehrle held various positions with both
Price Waterhouse and Touche Ross & Co. in both New York and London.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
DESCRIBED ABOVE.
PROPOSAL THREE
ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN
On February 25, 1998, the Board of Directors approved, (subject to
shareholder approval at the annual meeting) the Company's Employee Stock
Purchase Plan (the "ESPP") covering 500,000 shares of Common Stock. The
following is a summary of certain terms of the ESPP, the full text of which is
set forth in Exhibit A annexed to this Proxy Statement.
Purpose
The purpose of the ESPP is to provide employees of the Company with an
incentive to continue devoting their best efforts to the success of the Company,
and to afford the employees the opportunity to obtain a proprietary interest in
the continued growth and prosperity of the Company by purchasing shares of
Common Stock through payroll deductions.
Purchase Periods; Investment Limitations
Employee purchases will be made during a purchase period determined by
a committee appointed by the Board of Directors (the "Committee"), not exceeding
twelve months (the "Purchase Period"). Each Purchase Period will commence on a
date specified by the Committee (the "Date of Offering"). Employees who
participate in the ESPP will authorize the Company to withhold from each
paycheck a specific percentage of their "Annual Compensation" (as defined in the
ESPP), subject to the following limitations: (i) no more than 10% of Annual
Compensation may be withheld; and (ii) no more than $25,000 of fair market value
of Common Stock (determined as of the date the offer was made) may be purchased
by any participant in any calendar year under all employee stock purchase plans
of the Company. The Committee may also establish a minimum number of shares of
Common Stock that a participant may elect to purchase in any offering, provided
that such restriction shall be applicable to all Eligible Employees (as defined
below) in a uniform manner. In the event that investments made during a Purchase
Period would result in the purchase of more than the aggregate number of shares
of Common Stock specified by the Committee for that offering, the Committee
shall issue shares of Common Stock on a pro rata basis so that the aggregate
number of shares subject to purchase under that offering does not exceed such
specified number of shares.
Eligibility
In order to be eligible to participate in the ESPP, an employee (i)
must have been employed by the Company (including directors who are employed by
the Company) for at least 6 months on a Date of Offering, (ii) must customarily
be employed for more than 20 hours per week, (iii) must customarily be employed
for at least five months in any calendar year, and (iv) immediately after the
grant of rights under the ESPP must not own Common Stock (including stock which
such employee may purchase under the ESPP) possessing five percent or more of
the total combined voting power or value of all classes of the capital stock of
the Company (an "Eligible Employee").
Purchase Price; Payment
For any Purchase Period, shares of Common Stock will be purchased under
the ESPP at a price determined by the Committee on the Date of Offering, not
less than 85% of the per share "Market Price" (as defined in the ESPP) at the
close of business on the day prior to the Date of Offering. As of March 31,
1998, the closing sale price ("Market Price") of the Common Stock on the Nasdaq
National Market was $4.44.
The aggregate purchase price for those shares of Common Stock which
each Eligible Employee has elected to purchase pursuant to an offering will be
deducted from such employee's Annual Compensation during the Purchase Period
through payroll deductions from each regular pay check, in substantially equal
installments. A participant may not make separate cash payments for shares
purchased. The amount of an Eligible Employee's payroll deductions made during a
Purchase Period will be applied toward the purchase of the shares at the end of
the Purchase Period. Fractional shares will not be purchased. Instead, payments
which would have been utilized to purchase fractional shares will be refunded to
the participant in cash, without interest, within 30 days after the end of the
applicable Purchase Period.
Method of Participation
The Committee will give notice of an offering to Eligible Employees at
least 15 days prior to a Date of Offering specifying the terms and conditions of
the offering. An Eligible Employee who desires to purchase shares pursuant to
the offering must elect to do so in the form and manner prescribed by the
Committee and authorize the Company to make payroll deductions to cover the
purchase price for the shares such employee has agreed to purchase. An Eligible
Employee may not change the amount of payroll deductions during a particular
Purchase Period, nor withdraw payroll deductions credited to such employee's
account, except in certain limited withdrawal or termination of employment
circumstances as set forth in the ESPP. If an Eligible Employee elects not to
purchase shares under an offering, such election will be irrevocable for such
offering.
The following officers subscribed for shares of the Company's stock
under the ESPP, which is subject to shareholder approval.
Name Dollar value ($) Number of units
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William T. Brannan $10,398 2,758
Michael Brooks 2,598 689
Randy Catlin 2,130 565
All executive officers and directors as a 15,126 4,012
group
Leave of Absence; Withdrawal; Termination of Employment
In the event that a participant's payroll deductions are temporarily
discontinued because of leave of absence, lay-off, temporary disability or other
similar reasons, the number of shares subject to purchase by such participant
will automatically be reduced to the number of whole shares of Common Stock
which such participant's actual aggregate payroll deductions during the Purchase
Period are sufficient to purchase. The balance of such payroll deductions, if
any, will be refunded to the participant in cash, without interest, within 30
days after the end of the applicable Purchase Period. In the event that a
participant resumes employment subsequent to a temporary discontinuance of
payroll deductions prior to the end of the applicable Purchase Period, such
participant may elect to resume payroll deductions on the same basis as such
payroll deductions were made prior to the discontinuance. Any leave of absence
which exceeds 90 days will be deemed a termination of employment under the ESPP.
A participant who has elected to purchase shares in an offering may, at
any time prior to such participant's last payroll deduction thereunder, direct
the Company to cease payroll deductions with respect to such purchase. Any sums
deducted prior to such notification will be retained by the Company until the
end of the Purchase Period, at which time they will be used to purchase the
number of whole shares which such sums are sufficient to purchase, and the
balance will be refunded to the participant in cash, without interest, within 30
days after the end of the Purchase Period. Withdrawal by a participant with
respect to an offering will not have any effect upon a participant's eligibility
to participate in a succeeding offering under the ESPP.
In the event the employment of a participant who has agreed to purchase
shares under an offering is terminated prior to such participant's final payroll
deduction because of death, total and permanent disability, or retirement at or
after age 65, the participant or legal representative of the participant may
either (i) cancel the purchase, in which event the participant's deductions will
be refunded in cash, without interest within 30 days of cancellation or (ii)
elect to receive the appropriate number of whole shares and any balance in cash
at the end of the applicable Purchase Period in accordance with the ESPP. Such
election must be made no later than the earlier of three months after the event
causing the termination or the last day of the Purchase Period. In the event the
employment of a participant who has agreed to purchase shares under an offering
is terminated for any reason other than those specified above, the Company will
refund in cash, without interest, within 30 days of the date of termination the
amount of such participant's payroll deductions under such offering.
Shares Covered by the ESPP
A total of 500,000 shares of Common Stock may be purchased pursuant to
the ESPP. Such shares may be treasury shares (including shares reacquired by the
Company through open market purchases or otherwise), newly issued shares, or any
combination thereof.
Administration
The ESPP will be administered by the Committee. The Committee is
authorized to make such uniform rules as may be necessary to carry out the
provisions of the ESPP. The Committee will determine any questions arising in
the administration, interpretation and application of the ESPP, and all such
determinations will be conclusive and binding on all parties.
Amendment or Termination
The Board of Directors may amend the ESPP at any time in any respect,
except that, without the approval of the holders of a majority of the shares of
Common Stock then issued and outstanding and entitled to vote, no amendment will
be made (a) increasing the number of shares to be reserved under the ESPP, (b)
decreasing the purchase price per share, (c) withdrawing administration of the
ESSP from the Committee, or (d) changing the definition of "Company" with
respect to those corporations eligible to participate in the ESPP. The ESPP will
terminate on the earliest of the following: (x) the conclusion of the last
Purchase Period authorized in the ESPP, (y) the day that Eligible Employees
participating in offerings under the ESPP become entitled to purchase a number
of shares of Common Stock equal to or greater than the number of shares
remaining available for purchase, or (z) any other date specified by the Board
of Directors in its discretion. No amendment or termination shall deprive any
participant of any rights which have accrued under the ESPP.
Merger, Consolidation, Reorganization, Liquidation and Dissolution
In the event of a merger, consolidation or sale of substantially all of
the Company's assets, or other reorganization in which the Company is not the
surviving or acquiring corporation or in which the Company becomes a
wholly-owned subsidiary of another company, the Board of Directors will in good
faith, in its sole discretion seek to have the surviving or acquiring
corporation adopt the ESPP or, to the extent that rights granted under the ESPP
are not deemed to be granted until the last day of the applicable Purchase
Period, to settle the participating employees' rights by payment of cash or
other consideration. If neither can be arranged or if the Company is liquidated
or dissolved (other than pursuant to a sale of assets or other reorganization),
each participant may elect to (a) have the funds previously credited to his
account through payroll deductions applied in whole or in part toward the
purchase of a whole number of shares of Common Stock, or (b) have the funds
previously credited to his account through payroll deductions refunded to him in
cash, without interest.
Federal Income Tax Consequences
The ESPP is not subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended, but is intended to qualify as an
"employee stock purchase plan," as defined in Section 423 of the Internal
Revenue Code of 1986, as amended. Under such a plan, when the employee purchases
shares of Common Stock, the employee does not recognize taxable income and the
Company is not entitled to any tax deduction with respect to the purchased
shares.
The tax consequences upon disposition of acquired shares depend upon
whether the employee holds the shares purchased under the ESPP for a period (the
"Holding Period") ending the later of (i) two years from the Date of Offering,
or (ii) one year from the transfer (i.e., the date the shares are issued).
If shares of stock purchased under the ESPP are disposed of by an
employee after the Holding Period (or the employee dies while owning the
shares), the employee must report as ordinary compensation income in the year of
disposition (or at the employee's death) an amount equal to the lesser of (a)
the excess (if any) of the fair market value of the shares at the time of
disposition (or death) over the exercise price, or (b) the excess (if any) of
the fair market value of the shares at the time the offer was made over the
Offering Price (as defined in the ESPP). The Company would not be entitled to a
tax deduction for the amount of such ordinary compensation income. To the extent
that the fair market value of the shares at the time an employee disposes of the
shares after the Holding Period exceeds the sum of the Offering Price plus the
amount included as ordinary compensation income as a result of the disposition,
such excess is taxable at the capital gain rate. If the sales price is less than
the Offering Price, the employee would have a capital loss for the difference.
If an employee disposes of the shares before expiration of the Holding
Period, the employee recognizes at the time of disposition ordinary compensation
income to the extent of the excess of the fair market value of the shares on the
exercise date over the exercise price, irrespective of the amount received by
the employee when disposing of the shares. The Company would be entitled to a
tax deduction at that time for the amount of ordinary compensation income
recognized by the employee upon such sale. In addition, the employee recognizes
as capital gain an amount equal to the excess (if any) of (i) the fair market
value of the shares at disposition, over (ii) the fair market value of the
shares on the exercise date. The capital gains tax rate will be dependent on the
employee's holding period of the shares when sold (e.g., for more than 12 or 18
months) and the employee's individual tax bracket. If the value of the Common
Stock declines after the option is exercised, the employee would recognize a
capital loss on the sale of the Common Stock equal to the excess of (A) the fair
market value of the shares on the exercise date, over (B) the sales price.
In addition to the Federal income tax consequences described herein, an
employee may also be subject to state and/or local income tax consequences in
the jurisdiction in which he works and/or resides.
The foregoing represents the Company's current position with respect to
its compliance with the various complex federal tax rules that relate to the
ESPP, and is not intended as legal or tax advice or advice regarding state or
local tax rules. Employees are cautioned to contact their legal and tax advisors
regarding their own personal tax liability attributable to any purchase or sale
of shares by them. Each employee is responsible for determining and satisfying
his or her own income tax obligations, regardless of whether the Company
withholds or reports any amounts with respect to shares acquired under the ESPP.
Administrative Matters
The amounts received by the Company upon the purchase of shares of its
Common Stock pursuant to the ESPP will be used for general corporate purposes.
No directors or officers who are not employees will receive any benefit as a
result of the adoption of the ESPP. The benefits that will be received as a
result of the adoption of the ESPP by all Eligible Employees are not currently
determinable.
The affirmative vote of a majority of the votes cast at the meeting by
the shareholders entitled to vote thereat is required to adopt this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ADOPTION OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL FOUR
AMENDMENT TO EMPLOYEE STOCK COMPENSATION PROGRAM TO INCREASE
AUTHORIZED SHARES BY 500,000
The Company's Employee Stock Compensation Program (the "Plan")
was designed to encourage key employees to acquire a proprietary interest in the
Company, to continue their employment with the Company and to render superior
performance during such employment. The Plan enables the Company, on or before
September, 2005, to grant incentive stock options, non-qualified stock options,
stock appreciation rights, performance shares and grant stock bonuses to key
employees of the Company and its subsidiaries. In the event that an option or
award granted under the Plan expires, is terminated or forfeited prior to
exercise or vesting, then the number of shares of Common Stock covered thereby
will again become eligible for grant under the Plan. The Company receives no
consideration for grants of options or awards under the Plan.
In April, 1998, the Company's Board of Directors approved an
increase in the number of shares of the Company's Common Stock issuable pursuant
to the Plan from 1,400,000 shares to 1,900,000 shares. The additional shares
authorized under the Plan will be shares of the Company's existing Common Stock.
The section of the Plan being amended is annexed as Exhibit B to this Proxy
Statement.
At December 31, 1997, absent such amendment, there were
501,877 shares available for the grant of new options under the Plan. The Board
approved the increase in the number of shares covered by the Plan because the
Board believes that a stock compensation program is an important factor in
attracting, retaining and motivating key employees who will dedicate their
maximum productive efforts toward the advancement of the Company. The Board
believes that the amendment increasing the number of authorized shares under the
Plan furthers these objectives by assuring continuing availability of stock
options in appropriate circumstances.
The principal aspects of the Plan are summarized below:
Administration
The Plan is administered by the Compensation Committee
of the Board of Directors (the "Committee"), which is presently composed of Ms.
Marshall, Mr. Hanson and Mr. Tunnell. The Committee has the power to grant
options under the Plan and is charged with general supervision of the Plan.
Eligibility
All employees of the Company (approximately 2,900 persons as
of December 31, 1997) are eligible to receive options under the Plan. As
discretion for the grant of options or awards is vested in the Committee, the
Company is unable, at the present time, to determine the identity or number of
officers and other employees who may be granted options or awards under the Plan
in the future, except that, as noted in the "Report of Compensation Committee on
Executive Compensation" below, it is anticipated that the compensation of Mr.
Van Ness for 1998 will principally consist of stock options. No member of the
Committee or non-employee director may be granted an option under the Plan.
Types of Options or Grants
The Committee may designate any option granted as either an
incentive stock option or a non-qualified stock option, or the Committee may
designate a portion of the option as an incentive stock option and the remaining
portion as a non-qualified stock option. Any portion of an option that is not
designated as an incentive stock option will be a non-qualified stock option.
The Committee may also grant stock appreciation rights, performance shares or
stock bonuses to employees, but no such awards have been made to date.
Exercise Period
Subject to modification by the Committee, options and awards
generally vest in 25% installments beginning one year after the date of grant
and continuing for each of the four years thereafter.
Unless previously terminated by the Board of Directors, the
Plan will terminate in 2005. Such termination will have no impact upon options
granted prior to the termination date. The maximum term of all options granted
under the Plan is 10 years, provided, however, that any incentive stock option
granted to a person who is the beneficial owner of more than 10% of the
Company's capital stock shall cease to be exercisable five years after the date
such option is granted. The Company has generally granted options with ten year
terms. The Administrator may accelerate the vesting of any option or award
granted under the Plan, including upon the occurrence of a "Change in Control
Event" (as defined in the Plan).
Exercise Price
Options and awards, granted under the Plan have an exercise or
payment price as established by the Committee, provided that the exercise price
of all incentive stock options granted under the Plan must be at least equal to
the fair market value of the shares underlying the options on the date of grant.
If incentive stock options are granted to a person who is the beneficial owner
of more than 10% of the Company's capital stock, such options may be granted
only at a price of not less than 110% of the fair market value of shares covered
by the option. On March 31, 1998, the closing sale price of a share of the
Company's Common Stock on the Nasdaq National Market was $4.44.
Payment
The purchase price for shares acquired pursuant to the
exercise of any option under the Plan is payable in full at the time of
exercise. Payment of the exercise price may be made by delivering a certified or
bank cashier's check and/or transfer to the Company of shares of capital stock
of the Company having a fair market value (as determined by the Board of
Directors) on the date of exercise equal to the excess of (i) the purchase price
for the shares purchased over (ii) the amount of the certified or bank cashier's
check delivered in payment. Payment of the purchase price with shares of the
Company's capital stock may result in significant tax advantages for optionees
and may enable optionees to limit or avoid out-of-pocket expenditures. The
proceeds of the sale of Common Stock under the Plan will constitute general
funds of the Company.
Transferability and Termination
Options and awards granted under the Plan will be
nontransferable, except by will or by the laws of descent and distribution.
During the lifetime of a participant, an option may be exercised only by the
participant. In the event that a participant's employment terminates as a result
of death, all vested awards will be paid to the participant's estate by the
Company and the participant's estate will have the right to exercise vested
options for a period ending on the earlier of the expiration dates of such
options or one year from the date of death. If the participant's employment
terminates as a result of retirement or a "disability" (as set forth in the
Plan), all vested awards will be paid to the participant by the Company and the
participant will have the right to exercise vested termination. If the
participant's employment terminates for cause, all options and awards will
automatically expire upon termination. If the participant's employment
terminates other than as a result of death, disability, retirement or
termination for cause, the participant will have the right to collect on vested
awards immediately and to exercise vested options for a period ending on the
earlier of the expiration dates of such options or awards or thirty days from
the date of termination, subject to extension at the discretion of the
Committee. In all cases, any unvested options or awards will terminate as of the
date of termination of employment.
Amendment and Termination
The Board of Directors has the right, at any time, to
terminate or amend the Plan; however, no such termination or amendment shall
deprive any optionee of any right to exercise any option or award granted under
the Plan once such option or award has become exercisable or vested or deprive
any optionee of any right then accrued by reason of the exercise of an option.
In addition, without the approval of the Company's shareholders, no amendment
may materially increase the cost of the Plan to the Company.
Shares Subject to the Plan
Excluding the impact of the proposed amendment to the Plan, a
total of 1,400,000 shares of Common Stock (subject to adjustment as described
below) may be issued upon the exercise of options or the grant of awards under
the Plan. Shares subject to options which lapse may be utilized for subsequently
granted options. As of December 31, 1997, no shares of Common Stock had been
issued upon the exercise of stock options under the Plan, options covering an
additional 898,123 shares (net of lapsed shares) of Common Stock had been
granted and were outstanding, leaving 501,877 shares of Common Stock available
(excluding the effect of the amendment described herein) for future grants under
the Plan. If the amendment to the Plan is approved by shareholders, an aggregate
of 1,001,877 shares will be available for future grants under the Plan.
Adjustments
The number of shares available for option grants and the
shares covered by options shall be adjusted equitably for stock splits, stock
dividends, recapitalizations, mergers and other changes in the Company's capital
stock. Comparable changes shall be made to the exercise price of outstanding
options. If any option should terminate for any reason without having been
exercised in full, the unpurchased shares will again become available for option
grants.
Additional Limitation
No participant may receive incentive stock options that first
become exercisable in any calendar year in an amount exceeding $100,000.
Federal Income Tax Consequences
BECAUSE OF THE COMPLEXITY OF THE FEDERAL INCOME TAX LAWS AND
THE APPLICATION OF VARIOUS STATE INCOME TAX LAWS, THE FOLLOWING DISCUSSION OF
TAX CONSEQUENCES IS GENERAL IN NATURE AND RELATES SOLELY TO FEDERAL INCOME TAX
MATTERS. OPTIONEES ARE ADVISED TO CONSULT THEIR PERSONAL TAX ADVISORS BEFORE
EXERCISING AN OPTION OR DISPOSING OF ANY STOCK RECEIVED PURSUANT TO THE EXERCISE
OF ANY SUCH OPTION. IN ADDITION, THE FOLLOWING SUMMARY IS BASED UPON AN ANALYSIS
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AS CURRENTLY IN EFFECT,
EXISTING LAWS, JUDICIAL DECISIONS, ADMINISTRATIVE RULINGS, REGULATIONS AND
PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE.
Subject to certain exceptions not discussed herein, neither the Company
nor the participant will recognize taxable income or loss upon the grant of
non-qualified supplementary options, stock appreciation rights or performance
shares, or upon the issuance of any stock bonuses under the Plan. In general,
the participant will recognize ordinary income upon exercise of a non-qualified
supplementary option or stock appreciation right, payment of performance shares,
or lapse of forfeiture restrictions on any stock bonus. The amount of income
recognized generally will equal the difference between (i) the fair market value
of the underlying shares of Common Stock on the date of the exercise or payment
plus the amount of cash and other consideration, if any, received by the
participant and (ii) the exercise or payment price, if any. The Company
generally will receive a corresponding tax deduction equal to the amount
includable in the participant's income.
In addition, neither the Company nor the participant will
recognize taxable income or loss upon the grant or exercise of incentive stock
options, although there may be alternative minimum tax consequences to the
participant upon exercise. Upon subsequent disposition of the shares of Common
Stock covered by incentive stock options, the participant generally will
recognize either capital gain or loss or ordinary income, depending on whether
certain holding period requirements are satisfied. The Company generally will be
entitled to a tax deduction if the participant recognizes ordinary income.
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to approve the adoption of the amendment to the
Employee Stock Compensation Program.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S EMPLOYEE STOCK COMPENSATION PROGRAM.
PROPOSAL FIVE
AMENDMENT TO 1995 STOCK OPTION PLAN FOR INDEPENDENT DIRECTORS
The Board of Directors amended the Company's 1995 Stock Option Plan for
Independent Directors (the "Director Plan") on August 6, 1997, with such
amendment effective October 1, 1997, subject to shareholder approval at the
annual meeting. If shareholder approval is not timely obtained, all options
granted under the amendment to the Director Plan on or after October 1, 1997
will be void. The Director Plan was amended to change, among other things, the
options to be granted to each independent director to an option to purchase
1,250 shares of Common Stock on each "Quarter Date" (as defined below). Prior to
the October 1997 amendment the Director Plan provided for each independent
director to receive an option to purchase 1,500 shares of Common Stock on the
date of election as a director, an option to purchase 1,000 shares of Common
Stock on the first anniversary of such director's election and an option to
purchase 500 shares on each anniversary thereafter. The following is a summary
of certain terms of the Director Plan, the full text of which is set forth in
Exhibit C annexed to this Proxy Statement.
Purpose
The purpose of the Director Plan is to help the Company attract and
retain the most qualified available individuals to serve as independent
directors of the Company and to encourage the highest level of participation by
those persons in the Company's achievement of its strategic goals. The Director
Plan is intended to further these objectives by providing long-term incentives
and rewards to non-employee directors and by associating more closely the
interests of such directors with those of the Company's shareholders.
Options
Under the Director Plan, as amended, an Independent Director (as
defined below) is granted an option (an "Option") to purchase 1,250 shares of
Common Stock on each Quarter Date, meaning the first day on which the Common
Stock is traded on the Nasdaq National Market (or the Company's principal
securities exchange or over-the-counter if the Common Stock is no longer traded
on the Nasdaq National Market) in January, April, July and October of each year.
Option Price
The purchase price per share of Common Stock covered by each Option is
the Fair Market Value (as defined in the Director Plan) of a share of Common
Stock on the date the Option is granted.
Exercise of Options; Term
An Option granted to an Independent Director under the Director Plan
becomes fully exercisable as to 100% of the shares of Common Stock covered
thereby one year after the date of grant, and may be exercised as to any or all
full shares of Common Stock as to which such Option is then exercisable. The
purchase price of shares of Common Stock as to which an Option is exercised is
payable in full at the time of exercise in cash or in securities of the Company
having a Fair Market Value on the date of exercise equal to the portion of the
purchase price being paid. In addition, the Independent Director exercising the
option is required to pay promptly any amount necessary to satisfy applicable
Federal, state or local tax and/or withholding requirements.
The term of each Option is ten years from the date of grant, subject in
certain circumstances to early termination or acceleration.
Shares Covered by the Director Plan
An aggregate of 100,000 shares of Common Stock may be granted under the
Director Plan. Such shares of Common Stock may be authorized but unissued shares
or shares which have been reacquired by the Company.
Eligibility
In order to be eligible to participate in the plan on any Quarter Date,
a director must not be an employee of the Company as of such Quarter Date. A
non-employee director of the Company is referred to herein as an "Independent
Director". This eligibility requirement has been amended; the former requirement
was that the director not have been an employee for a period of twelve months
prior to the date of grant of the option.
At April 1, 1998 outside directors eligible for grants are: Kenneth W.
Tunnell, Marilu Marshall, Jon F. Hanson, Labe Leibowitz and John Wehrle. Options
outstanding under the Plan in favor of these individuals as of April 1, 1998
(subject to shareholder approval) are as follows: Kenneth W. Tunnell-1,250,
1,250 and 1,250 options at $2.81, $2.69 and $4.38 per share; Marilu
Marshall-1,250, 1,250 and 1,250 options at $2.81, $2.69 and $4.38 per share; Jon
Hanson-1,250, 1,250 and 1,250 options at $2.81, $2.69 and 4.38 per share; Labe
Leibowitz-1,250, 1,250 and 1,250 options at $2.81, $2.69 and $4.38 per share and
John Wehrle-1,250 and 1,250 options at $2.69 and $4.38 per share.
Transfer; Death or Disability of Holder; Termination of Service on the Board
Options granted under the Director Plan are nontransferable, except by
will or by the laws of descent and distribution. In the event that a
participating director's relationship with the Company terminates as a result of
death, the participating director's estate will have the right to exercise
vested options for a period ending on the earlier of the expiration dates of
such options or two years from the date of death. If the participating
director's relationship with the Company terminates as a result of retirement or
disability, the participating director will have the right to exercise vested
options for a period ending on the earlier of the expiration dates of such
options or one year from the date of termination. If the participating
director's relationship with the Company terminates for cause, all options will
automatically expire upon termination. If the participating director's
relationship with the Company terminates other than as a result of death,
disability, or removal for cause, the participating director will have the right
to exercise vested options for a period ending on the earlier of the expiration
dates of such options or awards or three months from the date of termination.
Upon the occurrence of a "Change in Control Event" (as defined in the Plan), the
Committee may, in its sole discretion, accelerate the exercisability of all
outstanding options or cancel such options in exchange of a cash payment equal
to the difference between the fair market value of the shares of Common Stock on
the date of the Change in Control Event and the exercise price of the related
options.
Administration
The Director Plan is administered by a committee appointed by the Board
of Directors (the "Plan Committee"); no Independent Director (as defined below)
may be a member of the Plan Committee. The Plan Committee is authorized to
interpret the Director Plan, to prescribe, amend and rescind rules and
regulations relating to the Director Plan and to make all other determinations
it may deem necessary or advisable for the administration of the Director Plan.
Termination, Amendment and Modification
The Board of Directors of the Company may, at any time prior to the
termination of the Director Plan, suspend, terminate, modify or amend the
Director Plan; provided that any increase in the aggregate number of shares of
Common Stock reserved for issue upon the exercise of Options, any increase in
the maximum number of shares of Common Stock for which Options may be granted to
any director, any reduction in the purchase price of Common Stock covered by any
Option, any extension of the period during which Options may be granted or
exercised, or any material modification in the requirements as to eligibility
for participation in the Director Plan, shall be subject to the approval of
stockholders, except that any such increase, reduction or change that may result
from anti-dilution adjustments shall not require such approval. Notwithstanding
the foregoing, the Director Plan may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code of 1986,
as amended, the Employee Retirement Income Security Act of 1974, as amended, or
the rules promulgated thereunder. No suspension, termination, modification or
amendment the Director Plan may, without the express written consent of the
director to whom an Option shall theretofore have been granted, adversely affect
the rights of such director under such Option.
Federal Income Tax Consequences
Treatment of Options
Options granted under the Director Plan will be treated as
Non-Qualified Stock Options under the Code. No income will be recognized to the
optionee at the time of the grant of the Options under the Director Plan, nor
will the Company be entitled to a tax deduction at that time.
Generally, upon exercise of a Non-Qualified Stock Option, an optionee
will be subject to ordinary income tax on the excess of the fair market value of
the stock on the exercise date over the option price. The Company will be
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the optionee in the fiscal year which includes the end of the optionee's
taxable year. The Company will be required to satisfy applicable withholding
requirements in order to be entitled to a tax deduction. In general, if an
optionee, in exercising a Non-Qualified Stock Option, tenders shares of Common
Stock in partial or full payment of the Option price, no gain or loss will be
recognized on the tender.
Persons Subject to Liability Under Section 16(b) of the Exchange Act
Special rules apply under the Code which may delay the timing and alter
the amount of income recognized with respect to awards granted to persons
subject to liability under Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Such persons include directors, "officers" for
purposes of Section 16 of the Exchange Act and holders of more than 10% of the
outstanding Common Stock.
Tax Withholding
The Company, as and when appropriate, shall have the right to require
each optionee purchasing shares of Common Stock to pay any federal, state or
local taxes required by law to be withheld.
Other
The Director Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and is not
qualified under Section 401 of the Code.
The affirmative vote of a majority of the votes cast at the meeting by
the shareholders entitled to vote thereat is required to adopt this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE 1995 STOCK OPTION PLAN FOR INDEPENDENT DIRECTORS.
BOARD ORGANIZATION AND MEETINGS
During the year ended December 31, 1997, the Board of Directors held
eight meetings. During 1997, each member of the Board of Directors attended at
least 75% of all meetings of the Board of Directors and committees of the Board
of Directors of which such director was a member. During 1997, there were five
standing committees of the Board of Directors. Each of the Committees is
described below.
Audit Committee. During 1997, the Audit Committee met six
times. The Audit Committee originally consisted of Messrs. Van Ness (Chairman),
Kearns and Tunnell. Mr. Van Ness resigned from the Audit Committee in February
1997 upon his appointment as Chairman of the Board and Chief Executive Officer
of the Company. Mr. Kearns resigned from the Audit Committee in March 1997. The
current members of the Audit Committee are Mr. Tunnell, Chairman, Ms. Marshall
and Mr. Hanson. The Audit Committee makes recommendations to the Board of
Directors with respect to the selection of the independent auditors of the
Company's financial statements, reviews the scope of the annual audit and meets
periodically with the Company's independent auditors to review their findings
and recommendations, reviews quarterly financial information and earnings
releases prior to public dissemination, and periodically reviews the Company's
adequacy of internal accounting controls.
Compensation Committee. During 1997, the Compensation Committee
met six times and acted once by unanimous consent. The Compensation Committee
originally consisted of Messrs. Kearns (Chairman), Tunnell and Van Ness. Mr. Van
Ness resigned from the Compensation Committee in February 1997 upon his
appointment as Chairman of the Board and Chief Executive Officer of the Company.
Mr. Kearns resigned from the Compensation Committee in March 1997. The current
members are Ms. Marshall, Chairperson, Mr. Tunnell and Mr. Hanson. The
Compensation Committee periodically reviews and determines the amount and form
of compensation and benefits payable to the Company's principal executive
officers and certain other management personnel. The Compensation Committee also
administers the Company's stock option plans and certain of the Company's other
employee benefit plans.
Executive Committee. During 1997 the Executive Committee did
not meet. The Executive Committee consists of Messrs. Van Ness (Chairman as of
April 1996), Beaury and Brannan, with Mr. Wojak invited to attend all meetings.
The Executive Committee exercises such authority as is delegated to it from time
to time by the full Board of Directors.
Nominating Committee. The Nominating Committee was formed in February
1997 and consists of Messrs. Van Ness, Chairman, Beaury, Brannan and Tunnell.
The Nominating Committee recommends nominations for outside directors, considers
candidates for director vacancies and other such management matters presented to
it by the Board of Directors. The Nominating Committee will consider appropriate
persons recommended by stockholders for election to the Board of Directors.
Stockholders wishing to submit such recommendations may do so by sending a
written notice to the Secretary of the Company together with supporting
information a reasonable period of time prior to the mailing of the Company's
Proxy Statement for the related Annual Meeting.
Strategic Planning Committee. During 1997 the Strategic Planning
Committee, a committee of officers and directors, met three times. The Strategic
Planning Committee consists of Messrs. Van Ness (Chairman), Brannan, Randy
Catlin, Michael Brooks, Andrew Kronick, Joseph Wojak and Robert Wyatt. The
Strategic Planning Committee reviews the Company's strategic planning process
and periodically updates the strategic plan.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Effective in 1997, each director who is
not an employee of the Company received an annual retainer of $16,000. ($18,500
for any committee chairperson). The total directors fees paid to non-employee
directors in 1997 was $48,555. On September 1, 1997 Mr. Labe Leibowitz's
employment with a subsidiary of the Company was terminated and at that time the
Company entered into a three year Consulting Agreement with Mr. Leibowitz
pursuant to which Mr. Leibowitz is paid fixed fees of $4,166.66 per month.
Directors of the Company are reimbursed for out-of-pocket expenses incurred in
their capacity as directors of the Company.
The Company, subject to shareholder approval, amended the 1995 Stock
Option Plan for Independent Directors (the "Director Plan"), under which each
non-employee director will automatically receive options covering 1,250 shares
of Common Stock on the first day of each fiscal quarter. The Company has
reserved 100,000 shares of Common Stock for issuance in connection with the
Director Plan. Options granted under the Director Plan have an exercise price
per share equal to fair market value of the underlying shares on the date of
grant. Upon exercise of an option under the Director Plan, the participating
director will be required to provide the exercise price in full, in cash or in
shares of the Company's securities valued at fair market value on the date of
the exercise of the option. No option will be exercisable within one year of the
date of grant and no option will be exercisable more than ten years from the
date of grant.
Options outstanding under the Plan in favor of these individuals as of
April 1, 1998 (subject to shareholder approval) are as follows: Kenneth W.
Tunnell-1,250, 1,250 and 1,250 options at $2.81, $2.69 and $4.38 per share;
Marilu Marshall-1,250, 1,250 and 1,250 options at $2.81, $2.69 and $4.38 per
share; Jon Hanson-1,250, 1,250 and 1,250 options at $2.81, $2.69 and 4.38 per
share; Labe Leibowitz-1,250, 1,250 and 1,250 options at $2.81, $2.69 and $4.38
per share and John Wehrle-1,250 and 1,250 options at $2.69 and $4.38 per share.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of April 1, 1998 with
respect to beneficial ownership of the Common Stock by (i) each director, (ii)
each executive named in the Summary Compensation Table (the "Named Executives")
and (iii) all executive officers and directors as a group. Unless otherwise
indicated, the address of each such person is c/o Consolidated Delivery &
Logistics, Inc., 380 Allwood Road, Clifton, New Jersey 07012. All persons listed
have sole voting and investment power with respect to their shares unless
otherwise indicated.
Amount of Beneficial Ownership (1)
Shares Issuable Shares Issuable
Upon Conversion Upon Exercise
of Debentures of Stock Total
Name Shares Options(1) Shares Percentage Owned
Albert W. Van Ness, Jr. 25,000 9,090 310,585 344,675 4.9%
William T. Brannan 73,647 9,090 34,584 117,321 1.8
Joseph G. Wojak 147,377 9,090 24,584 181,051 2.7
William T. Beaury 638,708(2) 4,524 9,092 652,324(2) 9.8
Michael Brooks 236,693 9,090 8,731 254,514 3.8
Jon F. Hanson 10,000(3) - 28,181 *
18,181
Labe Leibowitz 141,628 14,964 - 156,592 2.3
Marilu Marshall - - - - -
Kenneth W. Tunnell 7,500 4,545 2,500 14,545 *
John S. Wehrle - - - - -
Randy Catlin 110,617 9,090 13,392 133,099 2.0
Robert Wyatt 50,000(4) 3,030 5,128 58,158 *
All executive officers
and directors as a
group (14
persons) 1,441,370 92,956 414,558 1,948,884
- ---------
* Less than 1%
(1) Includes options granted pursuant to the Employee Stock Compensation
Program and the Director Plan, which are exercisable within 60 days of
April 1, 1998. Options granted pursuant to the Employee Stock Compensation
Program and Director Plan in November 1995 and were granted at $13.00 per
share.
(2) Includes 638,708 shares of Common Stock held by a company which is jointly
owned by Mr. Beaury and Mr. LoPresti, each of Includes whom may be deemed
to be the beneficial owner of all of such shares.
(3) Represents 10,000 shares held by Ledgewood Employees Retirement Plan of
which Jon F. Hanson is a beneficiary.
(4) Includes 1,000 shares held by Mr. Wyatt's wife.
EXECUTIVE COMPENSATION
The Company was incorporated in June 1994 and did not commence
operations prior to November 1995. The following table summarizes certain
information relating to the compensation paid or accrued by the Company for
services rendered during the years ended December 31, 1995, 1996 and 1997 to
each person serving as the Chief Executive Officer of the Company and each of
the Company's four other most highly paid executive officers whose compensation
exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation (1) Awards (2)
------------------------------------------------------------ -----------------
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options/SARs Compensation
Principal Position Year ($) ($) ($)(7) ($)(3) ($)
- ---------------------------- -------- -------------- -------- ----------------- ----------------- ---------------
*Exercisable
**Unexercisable
Albert W. Van Ness, Jr. 1997 - - - *310,585 2,500(11)
Chairman and Chief 1996 - - - ** - 16,400(11)
Executive Officer (4) 1995 - - - -
John Mattei 1997 9,615 - - *7,692 -
Chairman and Chief 1996 200,000 - - ** -
Executive Officer (5) 1995 69,692(6) - -
William T. Brannan 1997 200,000 15,005 - *34,584 -
President and Chief 1996 200,000 - - **36,582
Operating Officer 1995 81,231(6) - -
Joseph G. Wojak 1997 200,000 - - *24,584 -
Executive Vice 1996 200,000 - - **24,582
President and Chief 1995 81,231(6) - -
Financial Officer
William T. Beaury 1997 192,350 - - *9,092 -
Director and Member 1996 200,000 - - **7,692
of Executive Committee 1995 210,320(8) - -
Michael Brooks 1997 174,200 39,480 - *6,731 -
Southeast Region 1996 175,000 - - **16,730
Manager 1995 153,750(9) - -
Randy Catlin 1997 188,455 - - *13,392 -
Air Division Manager 1996 200,020 - - **12,692
1995 146,020(10) - -
- -------------------
(1) The Company did not commence operations until November 1995.
(2) The Company did not grant any stock appreciation rights, restricted stock
awards or make any long-term incentive plan payout during the years ended
December 31, 1995, 1996 and 1997.
(3) Comprised solely of incentive or non-qualified stock options. See
"Stock Option Plans - Employee Stock Compensation Program."
(4) Commencing February 1997 Mr. Van Ness served as Chairman of the Board and
Chief Executive Officer.
(5) Mr. Mattei resigned as Chairman of the Board and Chief Executive
Officer of the Company in January 1997.
(6) Excludes consulting fees paid by C.T.A. Group, LLC and success fees paid by
the Company to each of Messrs. Mattei, Brannan and Wojak in connection with the
formation of the Company and the acquisition of the Company's various
subsidiaries (the "Combination").
(7) Excludes certain personal benefits, the total value of which was less than
the lesser of either $50,000 or 10% of the total annual salary and bonus for
each of the executives.
(8) Includes amounts paid to Mr. Beaury by Sureway Air prior to the
Combination.
(9) Includes amounts paid to Mr. Brooks by Silver Star Express, Inc. prior to
the Combination.
(10) Includes amounts paid to Mr. Catlin by Sureway Air prior to the
Combination.
(11) Represents amounts paid to Mr. Van Ness as Director's fees by the Company.
Employment Agreements; Covenants-Not-To-Compete
At the time of his appointment as Chairman of the Board and Chief
Executive Officer, Mr. Van Ness entered into a one-year employment agreement
with the Company effective February 5, 1997. In lieu of a salary, Mr. Van Ness
was given two stock option grants to purchase 100,000 shares of Common Stock of
the Company. Options to purchase 50,000 shares were granted at $4.875 per share
and options to purchase another 50,000 shares were granted at $7.875 per share.
All options vested immediately. At the recommendation of the Compensation
Committee of the Board of Directors, Mr. Van Ness' 1997 employment agreement was
amended later in 1997 granting Mr. Van Ness immediately vested options to
purchase 208,085 additional shares of Common Stock. The Committee approved
options to purchase 50,000 shares at $3.50, 50,000 shares at $6 and 108,085
shares at $2.313. All of Mr. Van Ness' options terminate in the year 2007. Mr.
Van Ness' agreement is subject to certain non-competition, non-solicitation and
anti-raiding provisions.
In connection with the Company's initial public offering and
simultaneous acquisition of 11 separate businesses (the "Combination") in
November of 1995, Messrs. Brannan, Beaury, Wojak, Catlin, Wyatt and Brooks each
entered into an employment agreement with the Company which commenced on
November 27, 1995 for a term of five years. Pursuant to such agreements, Messrs.
Brannan, Beaury and Wojak receive an annual base salary of $200,000 for the term
of the employment agreement, subject to periodic increases at the discretion of
the Board of Directors. Messrs. Brooks, Catlin and Wyatt receive an annual base
salary of $165,000, $185,000 and $154,000 shares respectively, subject to
periodic increases at the discretion of the Board of Directors. Messrs. Brannan
and Wojak also received in 1996 options to purchase 33,782 shares at an exercise
price of $4 7/8 per share which vest over the terms of their contracts. Each of
the executives will be entitled to participate in all compensation and employee
benefit plans, including such bonuses as may be authorized by the Board of
Directors from time to time.
In connection with the Combination, officers of the Company and certain
senior officers/shareholders of the acquired companies ("Subsidiaries")
(including Messrs. Brannan, Beaury, Wojak, Catlin, Wyatt and Brooks) also
entered into employment agreements which commenced on November 27, 1995 for a
five year term. Pursuant to such agreements, each person receives an annual base
salary ranging from $90,000 to $200,000 per year, subject to periodic increases
at the discretion of the Board of Directors. Except as otherwise specified in
each person's employment agreement, each of such persons is entitled to
participate in all compensation and employee benefit plans, and to receive such
bonuses as may be authorized by the Board of Directors from time to time. Under
the terms of the employment agreements, each of such persons received options in
1995 to purchase a number of shares of Common Stock equal to such person's base
salary pursuant to his employment agreement (or based upon such base salary)
with the Company divided by the initial public offering (the "Offering") price
per share of the Common Stock in the Offering ($13 per share).
Each of the employment agreements provides that, in the event of a
termination of employment by the Company without cause, or a termination of
employment by the employee as a result of a constructive discharge, such
employee will be entitled to receive from the Company a lump-sum payment equal
to the employee's then-current base salary for the lesser of (i) the remaining
term of the agreement or (ii) three years (subject to certain limitations). In
the event of a change in control of the Company, if the employee has not
received sufficient prior notice that such employee's employment will be
continued following the change in control, such change in control will be deemed
to be a termination without cause with the effects specified above. In the event
of any change in control, the employee may also elect to treat the change in
control as a termination without cause by giving appropriate notice to the
Company. Each employment agreement also contains certain non-competition
covenants which will continue for a period of two years following termination of
employment. In addition, each employment agreement contains certain
anti-solicitation and anti-raiding provisions. However, in the event of a
termination without cause as described above, such covenants and provisions will
not be applicable.
STOCK OPTION PLANS
Employee Stock Compensation Program
In September 1995, the Board of Directors adopted, and the stockholders
of the Company approved, the Employee Stock Compensation Program in order to
attract and retain qualified directors, officers and employees of the Company,
to facilitate performance-based compensation for key employees and to provide
incentives for the participants in the Employee Stock Compensation Program to
enhance the value of the Common Stock. The Employee Stock Compensation Program
is administered by the Compensation Committee and authorizes the granting of
incentive stock options, non-qualified supplementary options, stock appreciation
rights, performance shares and stock bonus awards to key employees of the
Company (approximately 150 in total) including those employees serving as
officers or directors of the Company. The Company has reserved 1,400,000 shares
of Common Stock for issuance in connection with the Employee Stock Compensation
Program (subject to increase to 1,900,000 shares--see Proposal 4). Options
granted under the Employee Stock Compensation Program have an exercise price
equal to the fair market value of the underlying Common Stock at the date of
grant and vest over a four-year period unless otherwise agreed by the
Compensation Committee of the Board of Directors at the time of grant.
The following table summarizes certain information relating to the
grant of stock options to purchase Common Stock to each of the executives named
in the Summary Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
Individual Grants
---------------------------------------------------------------------------------
Percent of
Number of Total Grant
Securities Options /SARs Date
Underlying Granted to Exercise or Present
Options/SARs Employees in Base Price Expiration Value
Name Granted (#) (2) Fiscal Year (3) ($/sh) Date $(5)
------------------- ------------------- ----------------- ------------- ------------------ --------------
Albert W. Van January 5,
Ness, Jr. 50,000 (2) 11% 4.88 2007 $130,235
Albert W. Van January 5,
Ness, Jr. 50,000 (2) 11% 7.88 2007 $98,915
Albert W. Van November 11,
Ness, Jr. 50,000 (2) 11% 3.50 2007 $64,600
Albert W. Van November 11,
Ness, Jr. 50,000 (2) 11% 6.00 2007 $45,030
Albert W. Van
Ness, Jr. 108,085 (2) 25% 2.31 December 11,
2007 $133,528
December 2,
William T. Brannan 10,000 (2) 2% 2.56 2007 $13,690
December 12,
William T. Brannan 12,000 (4) 3% 2.31 2007 $17,625
December 2,
William T. Beaury 1,400 (2) -% 3.50 2007 $1,617
December 12,
Michael Brooks 10,000 (4) 2% 2.31 2007 $14,688
December 2,
Randy Catlin 5,700 (2) 1% 3.50 2007 $6,585
December 12,
Randy Catlin 5,000 (4) 1% 2.31 2007 $7,344
- ------------------------
(1) The Company did not grant any stock appreciation rights in 1997.
(2) Options vest upon date of grant.
(3) Options covering a total of 439,328 shares of Common Stock were
granted under the Employee Stock Compensation Program in 1997.
(4) These options are exercisable over a four year period. 25% of these options
become exercisable one year from the date of grant, an additional 25%
become exercisable two years from the date of grant, an additional 25%
become exercisable three years from the date of grant, and an additional
25% become exercisable four years from the date of grant.
(5) The present value of the options granted was determined using the
Black-Scholes pricing model and based on the following assumptions: the
risk free interest was 5.6%, the expected term of the option was 5 years,
the volatility factor was 55% and the dividend yield was 0.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)
Number of Securities Value of
Underlying Unexercised Unexercised
In-The-Money
Shares Options/SARs Options/SARs
Acquired Value at FY-End (#) at FY-End ($)(3)
----------------------- -----------------------
On Exercise Realized Exercisable/ Exercisable/
Name (#) (2) ($) (2) Unexercisable Unexercisable
- -------------------------- ---------------- ---------------- ----------------------- -----------------------
Albert W. Van Ness, Jr. -- -- 310,585 / - $20,536 / -
William T. Brannan -- -- 34,584 / 36,582 - / $2,280
William T. Beaury -- -- 9,092 / 7,692 - / -
Joseph G. Wojak -- -- 24,584 / 24,582 - / -
Michael Brooks -- -- 6,731 / 16,730 - / $1,900
Randy Catlin -- -- 13,392 / 12,692 - / $950
- -------------------------
(1) No stock appreciation rights have been granted by the Company.
(2) No options were exercised in 1997.
(3)As of December 31, 1997, the fair market value of a share of Common Stock
(presumed to equal the closing sale price as reported on the Nasdaq
National Market) was $2.50.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons holding more than 10% of a registered class of the
Company's equity securities to file with the Securities and Exchange Commission
and to provide the Company with initial reports of ownership, reports of changes
in ownership and annual reports of ownership of Common Stock and other equity
securities of the Company. Based solely upon a review of such reports furnished
to the Company by its directors and executive officers, the Company believes
that all such Section 16(a) reporting requirements were timely fulfilled during
1997, except for the following late Form 3 filings for the following persons:
John Wehrle, Director - the event which required the filing was his appointment
to the Board of Directors on November 11, 1997, and Mark Carlesimo, General
Counsel - the event requiring the filing was his appointment to the position of
General Counsel in September 1997. In addition, late Form 5 filings were made
for the following persons as a result of their receipt of incentive stock
options in March 1998 covering the 1997 fiscal year: William Brannan, Mark
Carlesimo, Robert Wyatt, Randy Catlin, Michael Brooks and Joseph Leonhard. All
of such deficiencies have been corrected.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Overview
The Company did not conduct any operations prior to November 1995 when
it acquired 11 companies (the "Subsidiaries") in the same-day and air delivery
and logistics services business (the "Combination"). As part of the Combination,
the Company entered into employment agreements with certain senior officers of
the Subsidiaries. In addition, the Company had previously entered into
employment agreements with John Mattei, Joseph G. Wojak and William T. Brannan
(the "Parent Executives") prior to the Combination. The employment agreements
for the Parent Executives were the product of arms-length negotiation between
those executives and a committee of senior officers of the Subsidiaries. For a
description of those employment agreements, see "Executive Compensation -
Employment Agreements; Covenants Not-to-Compete."
Accordingly, when the Compensation Committee was formed upon the
consummation of the Company's initial public offering in November 1995, all
executive officers were subject to long-term (generally five year) employment
agreements which fixed the salaries and benefits (including stock options) to be
initially granted.
During 1996, the Compensation Committee met several times to consider
the existing compensation structure and to review the compensation of the
Company's senior executives and to consider the possibility of instituting
additional programs to alter the compensation packages for all executives so
that they are appropriate to motivate and retain talented executives and to
recognize superior performance. In 1997 the Compensation Committee met seven
times to review certain compensation and stock options recommendations made by
senior management for various management individuals in the Company. To this end
the Compensation Committee approved the amendment of Mr. Van Ness' employment
agreement and, in addition, approved the issuance of certain bonuses and
incentive stock options to key management employees as well as new management
hires. The Compensation Committee also approved the establishment of an Employee
Stock Purchase Plan to be made available to all employees during the 1998 fiscal
year.
Base Salary
During 1997 many senior executives employed by the Company's
Subsidiaries agreed to waive rights under their Employment Agreements and accept
reduced base salaries so that base pay more closely reflected each individual's
role in the Company. Base salaries for the five highest paid executive officers
of the Company for 1997 ranged from $154,000 to $200,000. The general range of
annual salaries for senior officers is from $90,000 to $200,000. Prior to the
Combination, the directors of the Company attempted to standardize terms of
employment for the executive officers of the Subsidiaries to facilitate the
Combination among the officers yet provide appropriate variations in base salary
based on the size of the companies acquired. The compensation for the three
highest paid Parent Executives was equal to the highest salary paid to the
executive officers of the Subsidiaries ($200,000).
Pursuant to the contracts they signed prior to the Offering, Messrs.
Brannan and Wojak were to receive an increase in compensation from $200,000 to
$250,000 as of November 1996. However, having considered, among other things,
the recommendation of the consultant retained by the Compensation Committee, it
was determined that it would be preferable for Messrs. Brannan and Wojak to have
incentive stock options in lieu of additional cash compensation.
Annual Incentive Plan
The incentive plan is designed to provide current compensation to
selected key employees who contribute in a substantial degree to the success of
the Company. Pursuant to the plan Executives selected by the Compensation
Committee (with the advice of the Chief Executive Officer) are entitled to cash
bonuses in the event that the Company achieves certain performance targets based
upon sales volume, levels of responsibility and goals. Cash bonuses under the
plan totaling approximately $500,000 were paid in 1997.
Long-Term Incentive Plan
A shareholder approved long-term incentive plan consisting of the grant
of stock options to key employees under the Company's 1995 Employee Stock
Compensation Program (the "Program") is designed to focus executive efforts on
the long-term goals of the Company and to maximize total returns to
stockholders. Stock options align the interest of employees and stockholders by
providing value to the executive through stock price appreciation only.
During 1997, the Company granted a total of 439,928 stock options to
key employees under the Program. The stock options granted during 1997 were
granted at fair market value as of the date of grants which varied from $2.31
per share to $3.50 per share except that certain options granted to Mr. Van Ness
were above fair market value.
It is anticipated that future stock option awards will be made
periodically at the discretion of the Committee (with the advice of the Chief
Executive Officer). Stock option grant sizes will be evaluated by regularly
assessing competitive market practices and the overall performance of the
Company.
1997 Chief Executive Officer Pay
On February 5, 1997 Mr. Albert W. Van Ness, Jr. assumed the
responsibilities of Chief Executive Officer of the Company pursuant to a one
year employment agreement. The Compensation Committee amended the terms of the
employment agreement in December 1997. Pursuant to the terms of the employment
agreement, as amended, Mr. Van Ness was granted stock options covering 308,085
shares which vested in full in 1997. 108,085 options have an exercise price of
$2.31 per share; 50,000 options have an exercise price of $3.50; 50,000 options
have an exercise price of $4.87 per share; 50,000 options have an exercise price
of $6.00 per share and 50,000 shares have an exercise price of $7.87 per share.
All of Mr. Van Ness' options are immediately exercisable and have a ten (10)
year term in accordance with the Company's 1995 Employee Stock Compensation
Program. Mr. Van Ness does not receive any cash compensation from the Company
under the terms of the employment agreement. Accordingly, Mr. Van Ness'
compensation for 1997 is solely dependent on the stock price of the Company's
securities. Mr. Van Ness and the Compensation Committee are negotiating to
extend Mr. Van Ness' Employment Agreement to December 31, 1998. Terms have not
yet been set, but it is anticipated that his compensation will again principally
consist of stock options, aligning his interests with those of the shareholders
of the Company.
This report shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference to any filing
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended, and shall not be deemed filed under either of such acts
except to the extent that the Company specifically incorporates this information
by reference.
This report is furnished by the Compensation Committee of the Board of
Directors.
Marilu Marshall, Chair
Jon F. Hanson Kenneth W. Tunnell, Sr.
PERFORMANCE GRAPH
The following chart compares the cumulative total shareholder return on
the Company's Common Stock to the cumulative total return of the Standard &
Poor's 500 Stock Index and the Standard & Poor's Transportation Index for the
portion of 1995 that the Company's Common Stock was registered pursuant to
Section 12 of the Exchange Act, assuming the investment of $100 on November 20,
1995 and the reinvestment of all dividends since that date to December 31, 1997.
(GRAPHIC OMITTED)
The performance of the Company's Common Stock reflected above is not
necessarily indicative of the future performance of the Common Stock. The total
return on investment (change in the year-end stock price plus reinvested
dividends) for the period shown for the Company, the S&P 500 Index and the S&P
Transportation Index is based on the stock price or composite index at November
20, 1995.
The performance chart which appears above shall not be deemed to be
incorporated by reference by any general statement incorporating this Proxy
Statement by reference into any filing under the Securities Act of 1933, as
amended, or under the Exchange Act, and shall not be deemed filed under either
of such Acts except to the extent that the Company specifically incorporates
this information by reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is currently comprised of
Ms. Marilu Marshall, Chairman, Mr. Tunnell and Mr. Jon Hanson. None of the
Committee's members have been an officer or employee of the Company. At present,
no executive officer of the Company and no member of its Compensation Committee
is a director or compensation committee member of any other business entity
which has an executive officer that sits on the Company's Board of Directors or
Compensation Committee.
CERTAIN TRANSACTIONS
Real Estate Transactions
Mr. Brooks and members of his immediate family own various real estate
partnerships which lease properties to Silver Star, a Subsidiary of the Company
for use as terminals in Miami, Florida, Atlanta and Valdosta, Georgia and
Dayton, Ohio. In 1997, Silver Star paid $157,570 in rent for these properties.
As of January 1, 1998, the Company is obligated to pay rentals of $150,000 for
these properties, which the Company believes to be the fair market rental value
of the properties.
Other Transactions
Mr. Labe Leibowitz has an interest in Lee B. Leasing, a limited
partnership which purchases automobiles and equipment and leases them to
National, a Subsidiary of the Company. In 1997 National agreed to lease vehicles
and other equipment from Lee B. Leasing, which, in the aggregate, totaled
$67,897 in annual lease payments. The Company believes these lease payments to
be no less favorable to the Company than could be obtained from unaffiliated
third parties.
Company Policy
In the future, transactions with officers, directors and affiliates of
the Company are anticipated to be minimal and will be approved by a majority of
the Board of Directors, including a majority of the disinterested members of the
Board of Directors, and will be made on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
PROPOSAL SIX
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as the
Company's independent public accountants for the year ending December 31, 1998.
Arthur Andersen LLP has served as the Company's independent public accountants
since its formation in 1995. Although the appointment of independent public
accountants is not required to be approved by the stockholders, the Board of
Directors believes stockholders should participate in the selection of the
Company's independent public accountants. Accordingly, the stockholders will be
asked at the Meeting to ratify the Board's appointment of Arthur Andersen LLP as
the Company's independent public accountants for the year ending December 31,
1998.
Representatives of Arthur Andersen LLP will be present at the Meeting.
They will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL SIX DESCRIBED ABOVE.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at the 1999
Annual Meeting of Stockholders must be received by the Company at the address
specified below no later than the close of business on December 31, 1998 to be
considered for inclusion in the Proxy Statement for the 1999 Annual Meeting. Any
proposal should be addressed to Joseph G. Wojak, Secretary, Consolidated
Delivery & Logistics, Inc., 380 Allwood Road, Clifton, New Jersey 07012 and
should be sent by certified mail, return receipt requested.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice for the Meeting, to be presented at the
meeting for action by the stockholders. However, if any other matters are
properly brought before the meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant to the proxies,
in accordance with the best judgment of the person acting under the proxies.
By Order of the Board of Directors
Joseph G. Wojak
Secretary
April 30, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31,
1997, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K ACCOMPANIES THIS PROXY
STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL
NOR AS A COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
EXHIBIT A
CONSOLIDATED DELIVERY & LOGISTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purposes
The purposes of this Consolidated Delivery & Logistics, Inc.
Employee Stock Purchase Plan (the "Plan") are to provide an incentive for
Eligible Employees to continue devoting their best efforts to the success of the
Company, and to afford such employees an opportunity to obtain a proprietary
interest in the continued growth and prosperity of the Company through ownership
of its Common Stock acquired in a convenient fashion. The Plan is intended to be
an "employee stock purchase plan" and to comply with section 423 of the Code.
2. Definitions
As used herein, the following terms shall have the following
respective meanings:
2.1. "Annual Compensation" means the basic annual
rate of earnings in effect for an Eligible Employee. Annual Compensation shall
not include overtime pay, bonuses or other incentive compensation, or other
special payments.
2.2. "Board of Directors" means the Board of Directors of
CDL.
2.3. "CDL" means Consolidated Delivery & Logistics, Inc.,
a Delaware corporation.
2.4. "Code" means the Internal Revenue Code of 1986, as
amended.
2.5. "Common Stock" means the Common Stock, par value
$.001 per share, of CDL.
2.6. "Committee" means Plan Committee described in Section
13.1 below.
2.7. "Company" means CDL and its subsidiaries (corporations in
respect of which CDL owns, directly or indirectly, at least fifty-one percent
(51%) of the total issued and outstanding voting capital stock), as may be
designated from time to time by the Board of Directors.
2.8. "Date of Offering" means the day specified by the
Committee for the commencement of any Purchase Period under this Plan.
2.9. "Eligible Employee" means any person who has been
employed by the Company (including directors of the Company who are employees)
for six (6) months on a Date of Offering during the term of this Plan, except
for (a) an employee whose customary employment is for twenty (20) hours per week
or less; or, (b) an employee whose customary employment is for not more than
five (5) months in any calendar year. Any employee who, immediately after the
grant of the rights hereunder, would own (within the meaning of section 424(d)
of the Code) Common Stock (including stock which such employee may purchase
pursuant to this Plan) possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company, shall be ineligible to participate in this Plan.
2.10. "Market Price" means the fair market value of Common
Stock as determined by the Committee in accordance with Section 423 of the Code
and the regulations thereunder, and the determination by the Committee shall be
final and binding on all participating Eligible Employees' provided, however,
that unless otherwise determined by the Committee, Market Price shall be the
closing sales price of the Common Stock on the Nasdaq National Market on the
trading day prior to a Date of Offering.
2.11. "Offering Price" means the price per share of Common
Stock determined by the Committee on a Date of Offering; provided, however, that
such price per share may not be less than eighty-five percent (85%) of the per
share Market Price.
2.12. "Purchase Period" means the fixed term of any
offering, as described in Section 4 below.
3. Scope of the Plan
Offers to purchase shares of Common Stock pursuant to this
Plan may be made by the Company to Eligible Employees, as hereinafter provided,
but not more than 500,000 shares of Common Stock shall be sold pursuant to this
Plan. All offers made pursuant to this Plan shall be subject to the same rights
and privileges. The shares of Common Stock delivered by the Company pursuant to
this Plan may be treasury shares (including shares reacquired by the Company
through open market purchases or otherwise), newly issued shares, or any
combination thereof.
4. Offerings
Subject to the terms and conditions of this Plan, the
Committee shall make offerings to Eligible Employees to purchase Common Stock
under this Plan from time to time on the date or dates designated by the
Committee. The Committee shall specify the terms and conditions for each such
offering including the Date of Offering, the Offering Price, the amount of
Common Stock that may be purchased thereunder, and the Purchase Period. The
Purchase Period shall be a maximum of twelve (12) months from the Date of
Offering, during which term payroll deductions shall be made from the Annual
Compensation of Eligible Employees who agree to purchase shares of Common Stock
pursuant to an offering hereunder.
5. Amount of Common Stock Each Eligible Employee May
Purchase
5.1. Subject to the provisions of this Plan, and as to any
offering made hereunder, an offer shall be made to each Eligible Employee to
purchase up to that number of whole shares of Common Stock which has on the Date
of Offering an aggregate purchase price (determined on the basis of the Offering
Price) equal to ten percent (10%) of his or her Annual Compensation for the
calendar year immediately preceding the Date of Offering. In the event ten
percent (10%) would involve the purchase of a fractional share, the number of
shares which may be purchased shall be decreased to the next lower whole number.
5.2. An Eligible Employee may authorize payroll deductions in
respect of all offerings hereunder in which he or she has elected to participate
simultaneously in an aggregate amount up to but not greater than ten percent
(10%) of his or her Annual Compensation as computed on the Date of Offering for
the latest offering made hereunder.
5.3. If Eligible Employees elect, in any one offering, to
purchase Common Stock to an extent which would result in the purchase of more
than the aggregate number of shares of Common Stock specified by the Committee
for that offering, the Committee shall issue shares of Common Stock on a pro
rata basis so that the aggregate number of shares subject to purchase under that
offering does not exceed such specified number of shares.
5.4. No Eligible Employee may be made an offer to purchase
shares of Common Stock which would permit his or her total rights to purchase
shares of stock under all employee stock purchase plans of the Company to accrue
at a rate which exceeds $25,000 of fair market value of such stock (determined
at of the date the offer was made) for each calendar year during which any such
offer made to such individual is outstanding at any time, all in accordance with
the provisions of Section 423(b)(8) of the Code and the regulations promulgated
thereunder.
5.5. The Committee may establish a minimum dollar
participation or a minimum number of shares of Common Stock which an Eligible
Employee may elect to purchase in any offering hereunder; provided, however,
that any such restriction shall be applicable to all Eligible Employees in a
uniform manner.
6. Method of Participation
6.1. The Committee shall give notice to Eligible Employees at
least 15 days prior to a Date of Offering of each offering to purchase shares of
Common Stock pursuant to this Plan and the terms and conditions of each
offering. Such notice shall specify the determination of the number of shares of
Common Stock to be offered to each Eligible Employee, the Offering Price, the
Purchase Period, and such other information as the Committee may determine.
6.2. Each Eligible Employee who desires to purchase shares of
Common Stock under an offering shall signify his or her election to do so in the
form and manner prescribed by the Committee. Each such Eligible Employee shall
also authorize the Company, in the form and manner prescribed by the Committee,
to make payroll deductions to cover the aggregate purchase price of those shares
of Common Stock in respect of which he or she has agreed to purchase. Such
election and authorization shall continue in effect unless and until such
Eligible Employee withdraws from this Plan or terminates his or her employment
with the Company, as hereinafter provided, and no Eligible Employee shall be
entitled to change the amount of payroll deductions authorized or withdraw
payroll deductions credited to his or her account while participating in the
Plan.
6.3. The Company shall thereafter provide each Eligible
Employee purchasing Common Stock under each offering a notice indicating the
number of shares offered for purchase, the Offering Price, and the pro rata
reduction, if any, in accordance with Section 5.3.
7. Payroll Deductions
7.1. The aggregate purchase price for those shares of Common
Stock which each Eligible Employee has elected to purchase pursuant to an
offering shall be deducted from his or her Annual Compensation during the
Purchase Period specified in the offering through payroll deductions from each
regular pay check, in substantially equal installments. Such payroll deductions
shall commence with the payroll period in which the applicable Date of Offering
occurs, and shall continue through the payroll period for the last day of the
Purchase Period. An Eligible Employee may not make any separate cash payment for
shares purchased.
7.2. In the event the payroll deductions of an Eligible
Employee participating in this Plan are temporarily discontinued because of
leave of absence, lay-off, temporary disability or other similar reasons, then
the number of shares of Common Stock subject to purchase shall be automatically
reduced. At the conclusion of each applicable Purchase Period, the Eligible
Employee shall receive that number of whole shares of Common Stock which his or
her aggregate payroll deductions actually made within the Purchase Period is
sufficient to purchase. The balance of such payroll deductions, if any, shall be
refunded to the Eligible Employee in cash, without interest, within thirty (30)
days after the end of the applicable Purchase Period. Any leave of absence that
exceeds 90 days shall be deemed a termination of employment and be governed by
Section 9.
In the event that an employee resumes his or her employment
with the Company subsequent to a temporary discontinuance of payroll deductions
for any of the reasons hereinabove set forth and prior to the end of the
applicable Purchase Period(s), and said employee is an Eligible Employee, said
Eligible Employee may elect to resume payroll deductions on the same basis as
such payroll deductions were made during each applicable Purchase Period prior
to the temporary discontinuance thereof and shall receive, in addition to the
number of shares of Common Stock purchased with payroll deductions made prior to
the temporary discontinuance, that number of whole shares of Common Stock which
the aggregate payroll deductions actually made subsequent to the resumption of
employment and within the applicable Purchase Period(s) is sufficient to
purchase. The balance of such payroll deductions, if any, shall be refunded to
the Eligible Employee in cash, without interest, within thirty (30) days after
the end of the applicable Purchase Period.
Notification of an Eligible Employee's election to resume
payroll deductions subsequent to the temporary discontinuance thereof as
hereinabove provided shall be made by the filing of an appropriate notice to
such effect with the Committee.
8. Right to Withdraw
An Eligible Employee who has agreed to purchase shares of
Common Stock may, at any time prior to his or her last regular payroll deduction
thereunder, direct the Company to make no further deductions from his or her
Annual Compensation with respect to such purchase. Upon such action, all payroll
deductions with respect to such purchase shall cease. If the employee has
directed that payroll deductions be discontinued, any sums deducted in respect
of the offering prior to discontinuance shall be retained by the Company until
the end of the Purchase Period, at which time there shall be issued to the
employee the number of whole shares which can be purchased with the sum deducted
and any balance of the sum shall be paid to him or her in cash, without
interest, within thirty (30) days after the end of the Purchase Period.
Notification of an Eligible Employee's election to terminate
deductions shall be made by the filing of an appropriate notice to such effect
with the Committee. Withdrawal by an Eligible Employee as herein provided will
not have any effect upon an employee's eligibility to participate in a
succeeding offering under this Plan or in any similar plan adopted by the
Company.
9. Termination of Employment
9.1. In the event the employment of an Eligible Employee who
has agreed to purchase shares of Common Stock is terminated prior to his or her
final payroll deduction hereunder because of death, total and permanent
disability, or retirement at or after age 65, or on any earlier date that may be
approved by the Committee in its sole discretion, with the consent of the
Company, the Eligible Employee or his or her legal representative, as
applicable, may either:
(a) cancel his or her purchase, in which event the
Company shall refund in cash, without interest and within
thirty (30) days after the date of cancellation, all amounts
credited to his or her account under all offerings in which he
is participating under this Plan; or
(b) elect to receive, at the conclusion of each
applicable Purchase Period, that number of whole shares of
Common Stock which his or her payroll deductions actually made
are sufficient to purchase, plus the balance of such payroll
deductions, if any, in cash, without interest, which balance,
if any, shall be refunded within thirty (30) days after the
end of each applicable Purchase Period.
9.2. The election of an Eligible Employee or his or her legal
representative, as applicable, pursuant to Section 9.1 above shall be made no
later than the earlier of (a) the date three (3) months after the date of the
event causing the termination of employment or (b) the last day of the Purchase
Period, and shall be irrevocable when made. Notification of the election shall
be filed with the Committee and, in the event no notification has been filed
within the prescribed period, the Company shall act in accordance with Section
9.1(a) above. For purposes of Section 9.1(a), the date of cancellation shall be
deemed to be the date upon which the notification of the election of
cancellation is filed with the Committee, and, in the event that no such notice
is filed, the date of cancellation shall be deemed to be last day of the three
(3) month period following the date of the event causing the termination of
employment or the last day of the Purchase Period, whichever occurs first.
9.3. In the event the employment of an Eligible Employee who
has agreed to purchase shares of Common Stock is terminated for any reason other
than one of those specified in Section 9.1, the Company shall refund in cash,
without interest, all amounts credited to his or her account under all offerings
in which he is participating under this Plan within thirty (30) days after the
date of termination of employment.
10. Purchase of Shares
10.1. Each Eligible Employee who has accepted an offer shall
be deemed to have an irrevocable obligation to purchase Common Stock on the last
day of the applicable Purchase Period in accordance with the provisions of this
Plan. The number of whole shares of Common Stock so purchased by each such
Eligible Employee shall be determined by dividing the amount accumulated in his
or her account through payroll deductions during the Purchase Period by the
Offering Price, rounded down to a whole number of shares. The amount which the
Eligible Employee shall pay for the shares purchased shall be determined by
multiplying the number of shares of Common Stock so purchased by the Offering
Price. The amount of the Eligible Employee's payroll deductions actually made
shall be applied toward the purchase of the shares, and the balance of such
payroll deductions which were not used for the purchase of shares, if any, shall
be refunded to the Eligible Employee in cash, without interest, within thirty
(30) days after the end of the applicable Purchase Period.
10.2. Stock certificates evidencing the number of whole shares
of Common Stock purchased by any Eligible Employee under this Plan shall be
delivered to him within sixty (60) days after the end of the applicable Purchase
Period.
11. Rights as a Shareholder
An Eligible Employee who has agreed to purchase shares of
Common Stock under this Plan shall not be entitled to any of the rights or
privileges of a shareholder of the Company, including the right to receive any
dividends which may be declared by the Company, until such time as he has
actually paid the purchase price for such shares and certificates have been
issued to him or her in accordance with Section 10 hereof.
12. Rights Not Transferable
An Eligible Employee's rights under this Plan are exercisable,
during his or her lifetime, only by him and such rights (including payroll
deductions credited to an Eligible Employee's account and any rights to receive
shares under the Plan) may not be sold, pledged, assigned, or transferred in any
manner other than by will or the laws of descent and distribution. Any attempt
to sell, pledge, assign, or transfer such rights shall be void.
13. Administration of the Plan
13.1. This Plan shall be administered by the Committee, which
shall be comprised of from two (2) to four (4) members of the Board of Directors
as the Board of Directors shall determine. The Committee is authorized to make
such uniform rules as may be necessary to carry out its provisions. The
Committee shall determine any questions arising in the administration,
interpretation, and application of this Plan, and all such determinations shall
be conclusive and binding on all parties. Nothing contained in this Section
shall be deemed to authorize the Committee to administer the provisions of the
Plan in a manner inconsistent with the provisions of Section 423 of the Code or
the regulations promulgated thereunder.
13.2. If any offer to purchase shares of Common Stock made
pursuant to this Plan shall lapse, terminate or be revoked, the number of shares
of Common Stock as to which such offer shall have lapsed, terminated or been
revoked shall become available for sale under this Plan.
14. Adjustment Upon Changes in Capitalization
In the event of any change in the Common Stock of the Company
by reason of stock dividends, split-ups, corporate separations,
recapitalizations, mergers, consolidations, combinations, exchanges of shares,
or the like, the aggregate number and class of shares available under this Plan
and the number, class, and purchase price of shares offered for purchase but not
yet issued under this Plan shall be adjusted appropriately. Nothing herein
contained shall be construed to require an adjustment in the aggregate number or
class of shares available under the Plan or in the number, class, or purchase
price of shares offered for purchase but not yet issued if a merger,
consolidation, combination, or similar transaction involves the issuance of
securities of the Company and the number or class of shares held by holders of
Common Stock of the Company prior to the consummation of the merger,
consolidation, combination, or similar transaction is not affected by any such
transaction. No adjustment shall be made pursuant to this section of the Plan
which would result in the purchase of a fractional share and any fractional
share resulting from such adjustment shall be adjusted down to the nearest full
share. Further, no adjustment shall be made pursuant to this section of the Plan
which would result in a modification of the rights granted hereunder in a manner
which would disqualify this Plan as an "employee stock purchase plan" under the
provisions of Section 423 of the Code.
15. Merger, Consolidation, Reorganization, Liquidation
and Dissolution.
15.1. In the event of a merger, consolidation, or sale of all
or substantially all of the Company's assets or other reorganization in which
the Company is not the surviving or acquiring corporation, or in which the
Company is or becomes a wholly owned subsidiary of another corporation after a
reorganization, the Board of Directors shall, in good faith, but in its sole and
absolute discretion, seek to arrange any such merger, consolidation, sale of
assets, or other reorganization to specifically provide for the corporation
surviving the merger, consolidation, or other reorganization or acquiring the
assets either (a) to adopt this Plan so that the securities of such corporation
are offered in lieu of Common Stock, or (b) to the extent that rights granted
hereunder are not deemed to be exercised until the last day of the applicable
Purchase Period, to settle the participating Eligible Employees' rights by
payment of cash or other consideration for such rights on a basis approved by
the Board of Directors. In the event that the corporation surviving the merger,
consolidation, or other reorganization or acquiring the assets is to adopt this
Plan, such arrangements shall include the adjustment of outstanding offers to
provide that the securities of the corporation surviving the merger,
consolidation, or other reorganization or acquiring the assets shall become
subject to such offers in lieu of Common Stock on the basis approved by the
Board of Directors.
15.2. If provisions for the adoption of this Plan by the
corporation surviving the merger, consolidation, or other reorganization or
acquiring the assets or the settlement of rights cannot be arranged, as
described in Section 15.1 hereof, or if the Company is liquidated or dissolved
(except a liquidation or dissolution relating to a sale of assets or other
reorganization of the Company referred to in Section 15.1 hereof), then, in any
of those events, outstanding offers shall terminate on the date of mailing the
notice referred to in Section 15.3 hereof, the provisions of Sections 15.3 and
15.4 hereof shall apply, and each participating Eligible Employee may elect to:
(a) have the funds credited to his or her account
through payroll deductions applied in whole or in part toward
the purchase of a whole number of shares of Common Stock; or
(b) have the funds credited to his or her
account through payroll deductions refunded to him or her in cash, without
interest.
15.3. If Section 15.2 hereof is applicable, the Committee
shall give written notice of any of the events specified in Section 15.2 to each
participating Eligible Employee, and said participating Eligible Employee shall
have thirty (30) days from the date such notice was mailed to file a
notification of his or her election pursuant to Section 15.2. In the event that
no such notification has been filed with the Committee within the prescribed
period, the Company shall act in accordance with subsection (b) of Section 15.2.
Upon the mailing of the aforesaid notice by the Committee, which mailing shall
be undertaken in sufficient advance time to allow the Eligible Employee to
participate in the merger, consolidation, reorganization, liquidation, or
dissolution of the Company, as the case may be, payroll deductions shall cease
and the applicable Purchase Period shall be deemed concluded.
15.4. In the event that a participating Eligible Employee has
elected to have the funds credited to his or her account through payroll
deductions applied in whole or in part toward the purchase of a whole number of
shares of Common Stock pursuant to subsection (a) of Section 15.2 above, he or
she shall be deemed to have accepted, in whole or in part depending upon his or
her election, his or her outstanding offer as of the date the notice referred to
in Section 15.3 hereof is mailed and shall have an irrevocable obligation to
purchase Common Stock in accordance with the provisions of this Plan. The
provisions of Section 10 hereof shall govern the purchase by the participating
Eligible Employee; provided, however, that (a) all Purchase Periods shall be
deemed to have been concluded and all offers to purchase shall terminate in
accordance with Section 15 of this Plan; (b) any reductions in the number of
shares which may be purchased hereunder pursuant to Section 10.2 hereof shall be
determined on a pro-rata basis; and (c) any funds credited to the Eligible
Employee's account through payroll deductions not used to purchase shares shall
be refunded to him in cash, without interest, and within sixty (60) days after
the date the notice referred to in Section 15.3 hereof was mailed.
In the event that a participating Eligible Employee has
elected to have the funds credited to his or her account through payroll
deductions refunded to him pursuant to subsection (b) of Section 15.2 above,
such funds shall be returned to him or her in cash, without interest, and within
sixty (60) days after the date the notice referred to in Section 15.3 of this
Plan was mailed.
16. Registration of Certificates
Stock certificates may be registered in the name of the
Eligible Employee or, if he or she so designates, in his or her name jointly
with his or her spouse, with right of survivorship.
17. Amendment of Plan
The Board of Directors may at any time amend this Plan in any
respect, except that, without the approval of the holders of a majority of the
shares of Common Stock then issued and outstanding and entitled to vote, no
amendment shall be made (a) increasing the number of shares to be reserved under
this Plan (other than as provided in Section 14), (b) decreasing the purchase
price per share (other than as provided in Section 14), or (c) changing the
definition of "Company" with respect to those corporations eligible to
participate in the Plan.
18. Termination of the Plan
This Plan and all rights of Eligible Employees in any offering
hereunder shall terminate on the earliest of the following dates:
(a) the conclusion of the last Purchase Period
authorized herein;
(b) the day that Eligible Employees participating in
offerings under this Plan become entitled to purchase a number
of shares of Common Stock equal to or greater than the number
of shares remaining available for purchase; or
(c) any other date specified by the Board of
Directors in its discretion.
Upon termination of this Plan, shares of Common Stock shall be
issued to Eligible Employees and cash, if any, remaining in the accounts of the
Eligible Employees shall be refunded to them, as if the Plan were terminated at
the end of a Purchase Period. Any termination of this Plan must be effected so
that the then existing rights of all participating Eligible Employees shall not
be adversely affected thereby.
19. Compliance with Securities Laws
No offers may be made, nor may Common Stock be purchased,
under this Plan until the Company has taken all actions then required to comply
with the Securities Act of 1933, as amended, any other applicable state
securities laws, and the rules of any exchange on which Common Stock may be
listed.
20. Miscellaneous
(a) This Plan shall become effective
February 25, 1998, subject to approval, in the manner prescribed by law, by the
shareholders of the Company within 12 months after this Plan is adopted by the
Board of Directors.
(b) This Plan shall not be deemed to constitute
a contract of employment between the Company and any Eligible Employee, nor
shall it interfere with the right of the Company to terminate any Eligible
Employee and treat him or her without regard to the effect which such treatment
might have upon him under this Plan.
(c) Any and all funds held by the Company
under this Plan may be used for any corporate purpose.
(d) This Plan and any agreement entered into in
connection therewith shall be construed, and its provisions enforced and
administered, in accordance with the laws of the State of Delaware.
(e) All disputes which may arise under the Plan
or any agreement entered into in connection therewith which involve judicial
adjudication shall be resolved in a court of competent jurisdiction of the State
of New Jersey or the United States District Court for the District of New
Jersey. Any Eligible Employee who participates in the Plan consents and agrees
to submit to the personal jurisdiction of the aforesaid courts, agrees to notify
the Company of any change of his or her address within sixty (60) days after the
date of such change, and consents to service of any papers, notices, or process
necessary or proper for any legal action in any manner permitted by the New
Jersey Court rules, including, without limitation, service by registered or
certified mail, return receipt requested, or, in the event the Eligible Employee
refuses to accept or claim registered or certified mail, ordinary mail to his or
her last known address. In the event that a participating Eligible Employee
fails to notify the Company of a change of address and service by registered or
certified mail as aforesaid is not accepted or claimed, such failure shall be
deemed a refusal to accept or claim service of process by registered or
certified mail. Any Eligible Employee of the Company who participates in the
Plan acknowledges the sufficiency of service as aforesaid and waives any right
that he or she may have to challenge the sufficiency of such service or to
challenge in any manner the convenience of the location or the venue of any
legal action brought involving the Plan or any agreement entered into in
connection therewith.
EXHIBIT B
CONSOLIDATED DELIVERY & LOGISTICS INC.
EMPLOYEE STOCK COMPENSATION PROGRAM
3. Maximum Number of Shares Subject to the Program
The maximum aggregate number of shares of Common Stock available
pursuant to the Program, subject to adjustment as provided in Article 6 hereof,
shall be [1,400,000] 1,900,000 shares of Common Stock. All such shares may be
issued under any Plan which is part of the Program. If any of the options or
stock appreciation rights granted under the Program expire or terminate for any
reason before they have been exercised in full, the unissued shares subject to
those expired or terminated options and/or stock appreciation rights shall again
be available for the purposes of the Program. If the performance objectives
associated with the grant of any performance shares are not achieved within the
specified performance objective period or if the performance share grant
terminates for any reason before the performance objective date arrives, the
shares of Common Stock associated with such performance shares shall again be
available for the purposes of the Program. If any stock provided to a recipient
as a stock bonus is forfeited, the shares of Common Stock so forfeited shall
again be available for purposes of the Program.
EXHIBIT C
CONSOLIDATED DELIVERY & LOGISTICS, INC.
1995 STOCK OPTION PLAN
FOR INDEPENDENT DIRECTORS
(as amended on August 6, 1997)
1. Purpose of the 1995 Stock Option Plan for Independent Directors.
Consolidated Delivery & Logistics, Inc. (the "Company")
desires to attract and retain the most qualified available individuals to serve
as independent directors of the Company and to encourage the highest level of
participation by those persons in the Company's achievement of its strategic
goals. The 1995 Stock Option Plan for Independent Directors (the "Director
Plan") is intended to contribute significantly to the attainment of these
objectives, by (i) providing long-term incentives and rewards to all
non-employee directors of the Company, (ii) assisting the Company in attracting
and retaining independent directors with experience and ability and (iii)
associating more closely the interests of such directors with those of the
Company's stockholders.
Transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Securities
Exchange Act of 1934 (the "1934 Act"). To the extent any provision of the
Director Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.
2. Definitions.
As used herein, the following definitions shall apply.
(a) "Anniversary Date" shall mean, for each Independent
Director, the date on which such Independent Director is first elected to serve
on the Board and each annual anniversary of such date on which such person
continues to serve on the Board as an Independent Director.
(b) "Board" shall mean the Board of Directors of the Company.
(c) A "Change in Control Event" shall be deemed to have
occurred if:
(i) Any person, firm or corporation acquires
directly or indirectly the Beneficial Ownership (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended) of any voting security of the
Company and immediately after such acquisition, the acquirer has Beneficial
Ownership of voting securities representing 50% or more of the total voting
power of all the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the date
of closing of the Combination described in the Company's original registration
statement constitute the Board (the "Original Directors") or (B) who thereafter
are elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least 2/3 of the Original Directors then
still in office (such Directors being called "Additional Original Directors") or
(C) who are elected to the Board and whose election or nomination for election
to the Board was approved by a vote of at least 2/3 of the Original Directors
and Additional Original Directors then still in office, cease for any reason to
constitute a majority of the members of the Board;
(iii) The stockholders of the Company shall
approve a merger, consolidation, recapitalization or reorganization of the
Company or consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result in at
least 75% of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
Beneficially Owned by holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each such
continuing holder relative to such other continuing holders being not altered
substantially in the transaction; or
(iv) The stockholders of the Company shall
approve a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion of the
Company's assets (i.e. 50% or more in value of the total assets of the Company).
(d) "Code" shall mean the Internal Revenue code of 1986, as
amended.
(e) "Committee" shall mean the stock option committee
appointed by the Board in accordance with paragraph 4(a) of the Director Plan.
(f) "Common Stock" shall mean the common stock, par value
$.001 per share, of the Company.
(g) "Employee" shall mean any person employed on a full-time
basis by the Company or any present or future Subsidiary of the Company.
(h) "Fair Market Value" of a share of Common Stock shall be
determined as set forth in Section 7(b) of the Director Plan.
(i) "Independent Director" shall mean any member of the Board,
who, on any Quarter Date, is not an Employee.
(j) "Option" shall mean the right, granted pursuant to Section
6 of the Director Plan, to purchase one or more shares of Common Stock.
(k) "Optionee" shall mean any person who receives an Option
under the Director Plan.
(l) "Quarter Date" shall mean the first day on which the
Common Stock is traded on the Nasdaq National Market (or the Company's principal
securities exchange or over-the-counter if the Common Stock is no longer traded
on the Nasdaq National Market) in January, April, July and October of each year.
(l) "Subsidiary" shall mean any present or future corporation
which would be a "subsidiary corporation" as defined in Subsections 424(f) and
(g) of the Code.
3. Scope and Duration of the Director Plan.
Under the Director Plan Options to purchase Common Stock of
the Company shall be granted. An aggregate of 100,000 shares of Common Stock may
be granted under the Director Plan. Upon exercise of Options granted under the
Director Plan, Optionees may receive authorized but unissued shares of Common
Stock or shares of Common Stock which shall have been or which may be reacquired
by the Company, as the Board of Directors of the Company shall from time to time
determine. Such aggregate numbers shall be subject to adjustment as provided in
Paragraph 13. If an Option shall expire or terminate for any reason without
having been exercised in full, the shares of Common Stock represented by the
portion thereof not so exercised or surrendered shall (unless the Director Plan
shall have been terminated) become available for other options under the
Director Plan. No Option shall be granted under the Director Plan more than ten
years after the adoption of the Director Plan by the Board. The grant of an
Option is sometimes referred to as an Award thereof.
4. Administration of the Director Plan.
The Board shall appoint a committee of the Board (the
"Committee") to administer the Director Plan. The Committee shall consist of not
less than three Directors, one of whom shall be appointed Chairperson, and none
of whom shall be Independent Directors.
The Committee shall have authority in its discretion, subject
to and not inconsistent with the express provisions of the Director Plan, to
interpret the Director Plan; to prescribe, amend and rescind rules and
regulations relating to the Director Plan, including, without limitation, such
rules and regulations as it shall deem advisable so that transactions involving
Options qualify, to the maximum extent possible, for exemptions under such rules
and regulations as the Securities and Exchange Commission may promulgate from
time to time exempting transactions from Section 16(b) of the Securities
Exchange Act of 1934, as amended; and to make all other determinations it may
deem necessary or advisable for the administration of the Director Plan. No
member of the Committee shall be liable for any action or determination taken or
made in good faith with respect to the Director Plan or any Option granted under
it.
5. Eligibility.
(a) The only persons eligible to receive Options under the
Plan shall be persons who, on a Quarter Date, constitute Independent Directors.
(b) No member of the Committee shall be eligible to receive
Options under the Plan while serving on the Committee.
6. Automatic Grant.
The Company shall grant to each Independent Director an Option
to purchase 1,250 shares of Common Stock (subject to adjustment pursuant to
Section 13 hereof) on each Quarter Date.
7. Option Price.
(a) The purchase price per share of the Common Stock covered
by each Option shall be the Fair Market Value of a share of the Common Stock on
the date the Option is granted.
(b) If, at the time an Option is granted, the Common Stock is
publicly traded, such fair market value shall be the closing price (or the mean
of the closing or last bid and asked prices) of a share of Common Stock on such
date as reported in the Wall Street Journal (or a publication or qualifying
service deemed equivalent to the Wall Street Journal for such purpose by the
Committee) for the over-the-counter market or for any national securities
exchange or other securities market which at the time is included in the stock
price quotations of such publication. In the event that the Committee shall
determine such stock price quotation is not representative of fair market value
by reason of the lack of a significant number of recent transactions or
otherwise, the Committee may determine fair market value in such a manner as it
shall deem appropriate under the circumstances. If, at the time an Option is
granted, the Common Stock is not publicly traded, the Committee shall make a
good faith attempt to determine such fair market value, which determination
shall be final and binding for all purposes hereunder.
8. Term of Options.
Subject to earlier termination as provided in Paragraphs 11
and 12 and subject to acceleration as provided in Paragraph 13, the term of each
Option shall be ten years from the date of grant.
9. Exercise of Options.
(a) An Option granted to an Independent Director under the
Director Plan shall become fully exercisable as to 100% of the shares of Common
Stock covered thereby one year after the date of grant.
(b) An Option may be exercised as to any or all full
shares of Common Stock as to which the option is then exercisable.
(c) The purchase price of the shares of Common Stock as to
which an Option is exercised shall be paid in full in cash at the time of
exercise, provided that the purchase price may be paid, in whole or in part, by
surrender or delivery to the Company of securities of the Company having a Fair
Market Value on the date of the exercise equal to the portion of the purchase
price being so paid. In addition, the holder shall, upon notification of the
amount due and prior to or concurrently with delivery to the holder of a
certificate representing such shares of Common Stock, pay promptly any amount
necessary to satisfy applicable Federal, state or local tax and/or withholding
requirements.
(d) Except as provided in Paragraphs 11 and 12, no
Option may be exercised unless the holder thereof is then a director of the
Company.
(e) The Option holder shall have the rights of a stockholder
with respect to shares of Common Stock covered by an Option only upon becoming
the holder of record of such shares of Common Stock.
10. Nontransferability of Options.
No Options granted under the Director Plan shall be
transferable other than by will or by the laws of descent and distribution.
Options may be exercised, during the lifetime of the holder, only by the holder.
11. Termination of Relationship to the Company.
(a) In the event that any holder shall cease to be a director,
except as set forth in Paragraph 12 or upon removal for cause, such Option
(subject to the provisions of the Director Plan) may be exercised (to the extent
that the holder was entitled to exercise at the termination of his service as a
director) at any time within three months after such termination, but not more
than ten years after the date on which such Option was granted.
(b) Other than as provided in Paragraph 11(a), Options granted
under the Director Plan shall not be affected by any change of duties or
position so long as the holder continues to be a director of the Company.
(c) Nothing in the Director Plan or in any Option granted
pursuant to the Director Plan shall confer upon any individual any right to
continue as a director of the Company, or affect the right of the Company or its
shareholders to terminate his directorship at any time.
(d) Upon removal for cause, an Option shall terminate
immediately.
12. Death or Disability of Holder.
If a person to whom an Option has been granted under the
Director Plan shall:
(a) die (i) while serving as a director of the Company or (ii)
within three months after the termination of such position (other than
termination for cause or, voluntarily on his part and without the consent of the
Company, he terminates his director position with the Company, which consent
shall be presumed in the case of retirement), or
(b) become permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code while serving as a director,then if the
Option was otherwise exercisable at the time of the happening of such event,
such Option may be exercised as set forth herein by the holder or, in the event
of death, by the person or persons to whom the holder's rights under the Option
pass by will or applicable law, or if no such person has such right, by his
executors or administrators, the period for exercise to the extent provided in
Paragraph 11 shall be extended to one year in the case of the permanent and
total disability or two years in the case of the death of the holder, but not
more than 10 years after the date such Option was granted.
13. Adjustments upon Changes in Capitalization.
Notwithstanding any other provision of the Director Plan, each
agreement setting forth the grant of an Option hereunder may contain such
provisions as the Committee shall determine to be appropriate for the adjustment
of the number and class of shares of Common Stock covered by such Option, the
Option prices and the number of shares of Common Stock as to which Options shall
be exercisable at any time, in the event of changes in the outstanding Common
Stock of the Company by reason of stock dividends, split-ups, split-downs,
reverse splits, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, spinoffs, reorganizations, liquidations and the like. In
the event of any such change in the outstanding Common Stock of the Company, the
aggregate number of shares of Common Stock as to which Options may be granted
under the Director Plan to any director shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. In the event of the
dissolution, liquidation, merger or consolidation of the Company or a sale of
all or substantially all of the assets of the Company, or upon any other Change
in Control Event, then the Committee shall determine, in its sole discretion,
either (i) to provide for the immediate exercisability of all outstanding
Options (immediately prior to or upon the consummation of the Change in Control
Event) or (ii) to pay the Optionees on the date of the consummation of such
Change in Control Event, in consideration for the cancellation of the Options,
cash equal to the aggregate difference between the Fair Market Value of the
shares of Common Stock subject to the outstanding Options on the date such
Change in Control Event occurs and the exercise price of the outstanding
Options.
14. Effectiveness of the Director Plan.
The Director Plan as amended by the Board on August 6, 1997
shall become effective as of October 1, 1997 subject to approval by the
shareholders within one year of the date of approval by the Board. If any
options are granted under the Director Plan as amended and shareholder approval
is not timely obtained, all options granted hereunder from and after the date of
amendment shall be void. The exercise of the Options under the Director Plan
shall be subject to the condition that at the time of exercise a registration
statement under the Securities Act of 1933 with respect to such shares of Common
Stock shall be effective, or other provision satisfactory to the Committee shall
have been made so that shares of Common Stock may be issued without violation of
such Act. If the shares of Common Stock issuable upon exercise of an Option are
not registered under such Act, and if the Committee shall deem it advisable, the
Optionee may be required to represent and agree in writing (i) that any shares
of Common Stock acquired pursuant to the Director Plan will not be sold except
pursuant to an effective registration statement under such Act or an exemption
from the registration provisions of the Act and (ii) that such Optionee will be
acquiring such shares of Common Stock for his own account and not with a view to
the distribution thereof.
15. Termination and Amendment of the Director Plan.
The Board of Directors of the Company may, at any time prior
to the termination of the Director Plan, suspend, terminate, modify or amend the
Director Plan; provided that any increase in the aggregate number of shares of
Common Stock reserved for issue upon the exercise of Options, any increase in
the maximum number of shares of Common Stock reserved for issue upon the
exercise of Options, any increase in the maximum number of shares of Common
Stock for which Options may be granted to any director, any reduction in the
purchase price of Common Stock covered by any Option, any extension of the
period during which Options may be granted or exercised, or any material
modification in the requirements as to eligibility for participation in the
Director Plan, shall be subject to the approval of stockholders, except that any
such increase, reduction or change that may result from adjustments authorized
by Paragraph 13 shall not require such approval. Notwithstanding the foregoing,
the Director Plan may not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules promulgated thereunder. No suspension,
termination, modification or amendment the Director Plan may, without the
express written consent of the director to whom an Option shall theretofore have
been granted, adversely affect the rights of such director under such Option.
16. Financing for Investment in Stock of the Company.
The Committee may cause the Company or any Subsidiary to give
or arrange for financing, including direct loans, secured or unsecured, or
guaranties of loans by banks which loans may be secured in whole or in part by
assets of the Company or any Subsidiary or shares of Common Stock, to any
director under the Director Plan who shall have so served for a period of at
least one year at the end of the fiscal year ended immediately prior to
arranging such financing; but the Committee may, in any specific case, authorize
financing for a director who shall not have served for such a period. Such
financing shall be for the purpose of providing funds for the purchase by the
director of shares of Common Stock pursuant to the exercise of an Option and/or
for payment of taxes incurred in connection with such exercise, and/or for the
purpose of otherwise purchasing or carrying a stock investment in the Company.
The maximum amount of liability incurred by the Company and its subsidiaries in
connection with all such financing outstanding shall be determined from time to
time in the discretion of the Board. Each loan shall bear interest at a rate not
less than that provided by the Code and other applicable laws, rules, and
regulations in order to avoid the imputation of interest at a higher rate. Each
recipient of such financing shall be personally liable for the full amount of
all financing extended to him. Such financing shall be based upon the judgment
of the Board that such financing may reasonably be expected to benefit the
Company, and that such financing as may be granted shall be consistent with the
Certificate of Incorporation and By-Laws of the Company or such Subsidiary, and
applicable laws.
17. Severability.
In the event that any one or more provisions of the Director
Plan or any agreement pursuant to which an Option is granted, or any action
taken pursuant to the Director Plan or such agreement, should, for any reason,
be unenforceable or invalid in any respect under the laws of the United States,
any state of the United States or any other government, such unenforceability or
invalidity shall not affect any other provision of the Director Plan or of such
or any other agreement but in such particular jurisdiction and instance the
Director Plan and the affected agreement shall be construed as if such
unenforceable or invalid provision had not been contained therein or if the
action in question had not been taken thereunder.
18. Conditions Upon Issuance of Shares.
Shares of Common Stock shall not be issued with respect to any
Option granted under the Plan unless the issuance and delivery of such shares
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities law and the requirements of any
stock exchange upon which the shares may then be listed or any national
securities association maintaining a market in which the shares are then
included.
The inability of the Company to obtain any approval or consent
from any regulatory body or authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares of Common Stock
hereunder shall relieve the Company of any liability in respect of the
non-issuance or sale of such shares.
As a condition to the exercise of any Option, the Company may
require the person exercising the Option to make such representations and
warranties, and to agree to any restrictions with respect to the sale of the
shares of Common Stock issuable upon the exercise, as may be necessary to assure
the availability of an exemption from the registration requirements of federal
or state securities law.
19. Sunday or Holiday.
In the event that the time for the performance of any action
or the giving of any notice is called for under the Plan within a period of time
which ends or falls on a Sunday or legal holiday, such period shall be deemed to
end or fall on the next day following such Sunday or legal holiday which is not
a Sunday or legal holiday.
20. Governing Law.
The Plan shall be governed by and construed in accordance with
the laws of the State of Delaware.
CONSOLIDATED DELIVERY & LOGISTICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, JUNE 17, 1998
The undersigned hereby appoints Albert W. Van Ness, Jr., William T.
Brannan, and Joseph G. Wojak, and each of them, attorneys and proxies with power
of substitution, to vote for and on behalf of the undersigned at the
Consolidated Delivery & Logistics, Inc. Annual Meeting of Stockholders to be
held on June 17, 1998 and at any adjournments or postponements thereof (the
"Meeting"), upon the following matters and upon any other business that may
properly come before the Meeting, as set forth in the related Notice of Meeting
and Proxy Statement, both of which have been received by the undersigned.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned stockholder. If this proxy is executed but no
direction is made, this proxy will be voted FOR the By-law amendment authorizing
staggered terms for directors, FOR the board's nominees for director, FOR the
adoption of the Employee Stock Purchase Plan, FOR the amendment to the 1995
Stock Option Plan for Independent Directors and FOR the ratification of the
Company's Independent accountants.
PLEASE INDICATE YOUR VOTE ON THE OTHER SIDE.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3, 4, 5 AND 6
FOR AGAINST ABSTAIN
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1. Ratification of By-law amendment authorizing staggered terms for the Board of Directors.
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Against all nominees
For all *(except as marked to
nominees the contrary below) Nominees:
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2. Election of 9 Directors
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* To withhold authority for any individual nominees, print nominee's name on the
line below.
Class I
Albert W. Van Ness, Jr.
___________________________________________________________________________ Labe Leibowitz
Kenneth W. Tunnell
Class II
William T. Beaury
Michael Brooks
Jon F. Hanson
Class III
William T. Brannan
Marilu Marshall
John S. Wehrle
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FOR AGAINST ABSTAIN
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3. Ratification of Employee Stock Purchase Plan.
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4. Ratification of amendment to the Employee Stock Compensation Program.
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5. Ratification of amendment to the 1995 Stock Option Plan for Independent Directors.
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6. Ratification of Arthur Andersen LLP as independent public accountants for 1998.
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