SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /X//x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ //x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X// / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EMCOR GROUP, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in itsIn Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)./x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set(set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[LOGO]
EMCOR GROUP, INC.
101 MERRITT SEVEN CORPORATE PARK
NORWALK, CONNECTICUT 06851
------------------------
NOTICE OF ANNUAL MEETING
------------------------
To the Stockholders of
EMCOR Group, Inc.
The Annual Meeting of Stockholders of EMCOR Group, Inc. (the 'Company')
will be held in the James Madison Room 405, Princeton Club, 15 West 43 Street, New York, New York,
on June 20, 1997,19, 1998, at 10:00 A.M. (local time) for the following purposes:
1. To elect seven directors to serve until the next annual meeting and
until their successors are duly elected and qualify.
2. To approve an amendment to the Company's 1994 Management Stock
Option Plan increasing the aggregate number of shares of Common
Stock for which options may be granted under the Plan from
1,000,000 to 2,000,000.
3. To approve the adoption of the Company's 1997 Non-Employee
Directors' Non-Qualified Stock Option Plan.
4. To approve the adoption of the Company's 1997 Stock Plan for
Directors.
5. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for 1997.
3.1998.
6. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 23, 199729, 1998 as
the record date for determination of stockholders entitled to receive notice of,
and to vote at, the Annual Meeting and any adjournment thereof.
YOUR ATTENTION IS RESPECTFULLY DIRECTED TO THE ACCOMPANYING PROXY
STATEMENT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH W. BARNETTSHELDON I. CAMMAKER
Secretary
Norwalk, Connecticut
April 29, 1997, 1998
EMCOR GROUP, INC.
------------------------
PROXY STATEMENT
19971998 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 20, 199719, 1998
------------------------
The enclosed proxy is solicited by the Board of Directors of EMCOR Group,
Inc., a Delaware corporation (the 'Company'), for use at the Annual Meeting of
Stockholders to be held at 1010:00 A.M. (local time) on Friday, June 20, 199719, 1998 in
the
James Madison Room 405, Princeton Club, 15 West 43 Street, New York, New York and at any
adjournment or postponement of such meeting. The enclosed proxy may be revoked
at any time before it is exercised by delivering a written notice to the
Secretary of the Company stating that the proxy is revoked, by executing a duly
exercised proxy bearing a later date and presenting it to the Secretary of the
Company, or by attending the Annual Meeting and voting in person. Unless
otherwise specified, the proxies from holders of Common Stock will be voted in
favor of each proposal set forth in the Notice of Annual Meeting.
As of April 23, 1996,29, 1998, the Company had outstanding 9,386,685 shares of
Common Stock, par value $.01 per share (the 'Common Stock'). Only stockholders
of record of Common Stock at the close of business on April 23, 199729, 1998 (the
'Record Date') are entitled to notice of, and to vote at, the Annual Meeting.
The mailing address of the principal executive offices of the Company is 101
Merritt Seven Corporate Park, Norwalk, Connecticut 06851, and the approximate
date on which this Proxy Statement and the accompanying proxy are being first
sent or given to stockholders is April 29, 1997., 1998. The Company's Annual Report to
Stockholders for the fiscal year ended December 31, 19961997 accompanies this Proxy
Statement.
The Common Stock was the only voting security of the Company outstanding
and entitled to vote on the Record Date. The holders of record of a majority of
the outstanding shares of Common Stock entitled to vote will constitute a quorum
for the transaction of business at the Annual Meeting. Holders of Common Stock
are entitled to one vote per share on each matter to be voted upon at the Annual
Meeting. Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of the holders of a plurality of the votes cast by the holders
of shares of Common Stock present in person or represented by proxy and entitled
to vote at the Annual Meeting is necessary for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for (i) approval of (x) the amendment to the 1994 Management
Stock Option Plan, (y) adoption of the 1997 Non-Employee Directors'
Non-Qualified Stock Option Plan, and (z) adoption of the 1997 Stock Plan for
Directors and (ii) ratification of the appointment of independent public
accountants to audit the accounts of the Company and its subsidiaries. With
respect to an abstention from voting on any matter, the shares will be
considered present and entitled to vote at the Annual Meeting. Abstentions will
have the effect of a vote against proposals brought before the meeting, but will
not have an effect on the election of the directors. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matterproposal (a broker non-vote), those shares will not be
treated as present and entitled to vote on that particular matterproposal and, therefore, will be
disregarded and will have no effect on the outcome of the vote on such matter.the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 23, 199710, 1998 certain information
regarding beneficial ownership of the Company's Common Stock by each person or
group known by the Company to be a beneficial owner of more than five percent of
the outstanding shares of Common Stock. Except as otherwise noted, to the
Company's
knowledge, each person or group listed below has sole voting and investment
power with respect to the shares listed next to its name.
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- ------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ------------------ -------
FMR Corp. ........................................................ 1,067,295(1)(2) 11.3%
82 Devonshire Street F7C
Boston, Massachusetts 02109Jeffrey L. Gendell...................................................................... 1,251,122(1) 11.8%
200 Park Avenue, Suite 3900
New York, New York 10016
OCM Principal Opportunities Fund, L.P. .......................... 1,073,645(3) 11.4%LLP................................................... 943,645(2) 8.9%
550 South Hope Street
Los Angeles, California 90071
Cumberland Associates ............................................ 722,703(4) 7.7%
1114Associates................................................................... 910,600(3) 8.6%
114 Avenue of the Americas
New York, New York New York 10036
Steven A. Van Dyke...................................................................... 814,200(4) 7.7%
777 South Harbour Island Boulevard
Tampa, Florida 33602
- - ------------------
(1) As reported in aAmendment No. 2 dated April 3, 1998 to Schedule 13D dated July 26, 199613G filed
with the Securities and Exchange Commission (the 'SEC') by FMR Corp. ('FMR')Jeffrey L.
Gendell, Tontine Partners, L.P., FMR, through its
wholly-owned subsidiary FidelityTontine Management, & Research Company ('Fidelity'),
asL.L.C. and Tontine
Overseas Associates, L.L.C. (as investment advisormanager to funds (the 'Fidelity Funds'Tontine Overseas Fund,
Ltd.), includes: 391,822 shares beneficially owns
25,000 shares. In addition, FMR, through another wholly-owned subsidiary
Fidelityowned by Tontine Partners, L.P.
and Tontine Management, Trust Company ('FMTC') which is a bank as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, as amended,L.L.C. (which have shared voting power and
which serves as trustee or managing agent for various private investment
accountsdispositive power with respect to such 391,822 shares) and as investment advisor855,300 shares
beneficially owned by Tontine Overseas Associates, L.L.C. (which has shared
voting power and dispositive power with respect to certain other funds (the 'Accounts'),
beneficially owns 1,042,295 shares. Thesuch 855,300 shares). Of
these shares, are owned directly by one of
the Fidelity Funds and one of the Accounts. The Schedule 13D states that the
1,042,29521,000 shares include 28,272 shares and 28,272 shares issuablemay be acquired upon exercise of a like number of the Company's Series X
Warrants of the Company. In addition, Mr. Gendell has shared voting and
Series Y
Warrants, respectively. Edward C. Johnson, III and members of his family may
be deemed to form a controlling groupdispositive power with respect to FMR. FMR, through its
control of FMTC, investment advisorsuch 1,247,122 shares and sole power to
the Accounts,vote and the Accounts each
has sole power to dispose of and sole power to vote or direct the voting of
the 1,042,295an additional 4,000 shares.
The power to vote or direct the voting of the 25,000
shares owned directly by the Fidelity Funds resides with the Fidelity Funds'
Boards of Directors.
(2) There is a reserve of 140,618 shares of Common Stock for disputed claims
against the Company to be issued to holders of prepetition unsecured allowed
claims against the Company in its Chapter 11 proceeding concluded in
December 1994, which holders include FMR. To the extent such disputed claims
are disallowed, the number of shares beneficially owned by FMR will increase
in a presently undeterminable amount.
(3) As reported in Amendment No. 12 dated April 22,December 9, 1997 to Schedule 13D filed
with the SEC by OCM Principal Opportunities Fund, L.P. ('Fund'(the 'Fund') and
Oaktree Capital Management, LLC, General Partner of the Fund.
Includes 107,645
shares held by TCW Special Credit Fund V--The Principal Fund managed by
Oaktree Capital Management, LLC.
(4)(3) As statedreported in Amendment No. 3Schedule 13G dated February 4, 1997 to its Schedule 13DApril 6, 1998 filed with the SEC,
Cumberland Associates has sole voting power and sole power to dispose or to
direct the disposition of 587,427724,003 of these shares and shared voting power
and shared power to dispose, or to direct the disposition, of 135,276186,597 of
these shares.
(4) As reported in Schedule 13G dated February 6, 1998, filed with the SEC by
Steven A. Van Dyke, Bay Harbour Management, L.C. ('Bay Harbour') and Tower
Investment Group, Inc. ('Tower'). Bay Harbour is an investment adviser, of
which Tower is a majority stockholder. Mr. Van Dyke is the sole shareholder
and President of Tower. Accordingly, such Schedule 13G states that Bay
Harbour may be deemed to be the beneficial owner of 807,000 shares, Tower
may be deemed to be the beneficial owner of the 807,000 shares deemed to be
beneficially owned by Bay Harbour and Mr. Van Dyke may be deemed to be the
beneficial owner of 814,200 shares consisting of the 807,000 shares deemed
to be beneficially owned by Bay Harbour and 7,200 shares beneficially owned
by Mr. Van Dyke. According to such Schedule 13G, Bay Harbour and Tower each
has sole power to vote and dispose of 807,000 of these shares, and Mr. Van
Dyke has sole power to vote and dispose of 814,200 of such shares.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected by the holders of
Common Stock to serve until the next Annual Meeting of Stockholders and until
their successors have been duly elected and qualify. To be elected as a
director, each nominee must receive the favorable vote of a plurality of the
shares present in person or represented by proxy and entitled to vote at the
meeting. Certain information concerning the nominees for
2
election at the Annual Meeting each of whomis set forth below. Each nominee is presently a
director of the Company other than Messrs. Georges L. de Buffevent and Richard
F. Hamm, Jr. Mr. Malcolm T. Hopkins is set forth below.not standing for re-election to the Board
of Directors. While the Board of Directors has no reason to believe that any of
those named as a nominee for election to the Board of Directors will not be
available as a candidate, should such a situation arise, the proxy may be voted
for the election of other nominees in the discretion of the persons acting
pursuant to the proxy.
2
FRANKFrank T. MACINNIS,MacInnis, Age 50;51. Mr. MacInnis has been Chairman of the Board and
Chief Executive Officer of the Company since April 18, 1994 and President of the
Company from April 18, 1994 to April 4, 1997. From April 1990 to April 1994, Mr.
MacInnis served as President and Chief Executive Officer, and from August 1990
to April 1994 as Chairman of the Board, of Comstock Group Inc., a nationwide
electrical contracting company. In addition, fromFrom 1986 to April 1994 Mr. MacInnis was also
President of Spie Group Inc., which owns or owned Comstock Group Inc., Spie
Construction Inc., a Canadian pipeline construction company, and Spie Horizontal
Drilling Inc., a U.S.United States company engaged in underwaterunderground drilling for
pipelines and communications cable. Mr. MacInnis is also a director of MAPCO Inc. and Portec,
Inc.
STEPHENStephen W. BERSHAD,Bershad, Age 55;56. Mr. Bershad has been Chairman of the Board and
Chief Executive Officer for more than the past five years of Axsys Technologies,
Inc. (formerly named Vernitron Corporation), a manufacturer of electronic
components and controls. Director of the Company since December 15, 1994.
DAVIDDavid A.B. BROWN,Brown, Age 53;54. Mr. Brown has been President of The Windsor
Group, a management consulting firm of which he is a co-founder, for more than
the past five years. Mr. Brown is also a director of BTU International, Inc. and
Marine Drilling Companies, Inc. Director of the Company since December 15, 1994.
THOMAS D. CUNNINGHAM,Georges L. de Buffevent, Age 48;60. Mr. de Buffevent has been Chairman of the
Finance Committee of Swiss
Army Brands, Inc., an importer and distributor of Swiss Army knives and watches
and Sabatier and Forschner cutlery, since November 1996; from March 1994 to
November 1996 Executive Vice PresidentBoard and Chief FinancialExecutive Officer of Swiss Army
Brands, Inc.SAGED, a French company specializing in
road construction, land development and waste management, since January 1996.
For more than fiveapproximately four years prior thereto, Mr. Cunninghamhe was a Managing Director of J.P. Morgan & Co. Incorporated, an international bank.
Directorbusiness consultant. From
July 1982 to February 1992, Mr. de Buffevent was Chairman of the Company since January 17, 1995.
ALBERT FRIED, JR.Board of
Directors and Chief Executive Officer of Spie-Batignolles S.A., a leading French
electrical engineering and construction company with world-wide operations.
Albert Fried, Jr., Age 67;68. Mr. Fried has been Managing Member of Albert
Fried & Company, LLC, a broker/dealer and member of the New York Stock Exchange,
since 1955 and Managing Member of Buttonwood Specialists, LLC, a New York Stock
Exchange specialist firm, since 1992. Mr. Fried is also Chairman of the Board of
Directors of Portec, Inc., a manufacturer of engineered products for the
construction equipment, material handling and railroad industries.industry. Director of the Company since December 15, 1994.
MALCOLM T. HOPKINS,Richard F. Hamm, Jr., Age 69; Private investor38. Mr. Hamm has been Senior Vice President,
Legal and Business Development of Tropicana Products, Inc. ('Tropicana'), a
manufacturer of fruit juices, since 1984. RetiredJanuary 1997 and Vice ChairmanPresident and Chief Financial OfficerGeneral
Counsel of Tropicana from June 1993 to January 1997. Prior thereto, he was
associated with the former St. Regis Corporation, a
forest products, oil, gaslaw firm of Simpson Thacher & Bartlett.
Kevin C. Toner, Age 34. Mr. Toner has been Principal of Aristeia Capital
LLC, an investment manager, since June 1997 and insurance company. Mr. Hopkins is also a director
of The Columbia Gas System, Inc., MAPCO Inc., Metropolitan Series Fund Inc.,
Phar-Mor, Inc., U.S. Home Corporation, and various mutual funds of State Street
Research and Management Company. Director of the Company since December 15,
1994.
KEVIN C. TONER, Age 33; President of the Isdell 86
Foundation, a not-for-profit organization, since December 1994 and1994. He was a private
investor sincefrom March 1995.1995 to June 1997 and a Managing Director from December 1991
to February 1995 of UBS Securities Inc., a broker/dealer and member of the New
York Stock Exchange, engaged in corporate finance, underwriting and distribution
of high grade U.S. corporate issues and Eurobonds. From March 1991 to December 1991, Mr. Toner was
a Vice President of UBS Securities, Inc. Director of the Company since
December 15, 1994.
COMMITTEES OF THE BOARD
The Company has standing Audit, Compensation and Personnel, and Corporate
Governance Committees of the Board of Directors.
The Audit Committee, comprised of Messrs. Bershad, Brown Cunningham and Hopkins,
serves as the focal point for communication between the Board of Directors and
the Company's independent public accountants, chief
3
internal auditor and management, to the extent that their duties relate to
financial or accounting reporting and controls. The Audit Committee is
responsible for engaging and discharging the independent public accountants for
the Company, reviewing their fees, reviewing the scope and audit procedures of
the independent public accountants, reviewing annual financial statements,
reviewing quarterly and annual financial results prior to their release, and
meeting with the Company's internal auditors and independent public accountants
on matters relating to, among other things, the adequacy of the Company's
internal audit controls and accounting and auditing personnel. During 1996,1997, the
Audit Committee held threefour meetings.
3
The Compensation and Personnel Committee, comprised of Messrs. Cunningham,
Fried,
Hopkins and Hopkins,Toner, reviews and advises the Board of Directors with respect to
the qualifications of individuals identified as candidates for positions as the
Company's Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and General Counsel and for the position of Chief Executive Officer of
each subsidiary of the Company whose proposed annual compensation is $200,000 or
more. It also reviews and recommends to the Board of Directors for its approval
any employment, severance or similar contracts, or modifications thereof, for
the Chairman of the Board and Chief Executive Officer of the Company and is
charged with fixing on an annual basis his compensation, subject to the approval
of the Board.Board of Directors. The Compensation and Personnel Committee also is
responsible for fixing, based on proposals made by the Chief Executive Officer,
compensation for the Chief Operating Officer, Chief Financial Officer and
General Counsel of the Company as well as the compensation of other officers and
employees of the Company and each subsidiary whose annual compensation is
$200,000 or more and for approving any employment, severance or similar
contracts for such officers and employees, or modifications thereof. The
Compensation and Personnel Committee also recommends to the Board of Directors
for its approval any incentive, benefit, award or bonus plans and programs for
employees, administers the 1994 Management Stock Option Plan and reviews
executive development plans. During 1996,1997, the Compensation and Personnel
Committee held threefour meetings.
The Corporate Governance Committee, comprised of Messrs. Bershad, Brown,
Fried and Toner, is responsible to the Board of Directors for the review and
recommendation of director candidates; recommendations regarding directors'
retirement age and removal; review of all committees of the Board of Directors
and recommendations regarding their number, function and membership;
recommendations with respect to compensation of and other benefits for
non-employee directors; and review of and recommendation with respect to
directors' and officers' liability insurance and indemnification agreements
between the Company and its officers and directors. The Corporate Governance
Committee will consider nominees recommended by stockholders. The Corporate
Governance Committee has not adopted formal procedures for the submission of
such recommendations. Such recommendations should be sent to the Secretary,
EMCOR Group, Inc., 101 Merritt Seven Corporate Park, Norwalk, Connecticut 06851.
The Company's by-laws specify certain time limitations, notice requirements and
other procedures applicable to the submission of nominations to be brought
before an Annual or Special Meeting of Stockholders of the Company. During 1996,1997,
the Corporate Governance Committee held two meetings.
MEETINGS OF THE BOARD
There were fiveten meetings of the Board of Directors during 1996.1997.
4
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 23, 199710, 1998 certain information
regarding the beneficial ownership of the Company's Common Stock by each of the
Company's directors, its chief executive officer, each of the four most highly
compensated executive officers of the Company for its fiscal year ended December 31, 1996,
and all its directors and
executive officers as a group.group for the fiscal year ended December 31, 1997.
Except as otherwise noted, to the Company's knowledge, each of the persons
listed below has sole voting power and investment power with respect to the
shares listed next to his name.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT
- ----------------------------------------------------------------- ------------------------------ ----------------------- -------
Frank T. MacInnis............................................... 136,333(2) *MacInnis............. 203,000(2) 1.9%
Stephen W. Bershad.............................................. 23,500(3)Bershad............ 26,500(3) *
David A.B. Brown................................................ 7,000(3)A. B. Brown............. 10,000(3) *
Albert Fried, Jr.............. 13,007(3)(4) *
Malcolm T. Hopkins............ 26,500(3) *
Kevin C. Toner................ 11,000(3) *
Jeffrey M. Levy............... 51,000(2) *
Sheldon I. Cammaker........... 50,000(2) *
Leicle E. Chesser............. 50,000(2) *
Thomas D. Cunningham............................................ 13,500(3) *
Albert Fried, Jr................................................ 127,377(3)(4) 1.4%
Malcolm T. Hopkins.............................................. 23,500(3) *
Kevin C. Toner.................................................. 8,000(3) *
Sheldon I. Cammaker............................................. 33,333(2) *
Leicle E. Chesser............................................... 33,333(2) *
Jeffrey M. Levy................................................. 34,333(2) *
R. Kevin Matz................................................... 2,000(2)Cunningham.......... 16,500(2) *
All directors and executive
officers as a group................. 448,875(5) 4.6%group......... 464,007(5) 4.2%
(Footnotes on next page)
4
(Footnotes from previous page)- - ------------------
* Represents less than 1%.
(1) The information contained in the table reflects 'beneficial ownership' as
defined in Rule 13d-3 of the Securities Exchange Act of 1934.1934, as amended.
All percentages set forth in this table have been rounded.
(2) Includes in the case of Mr. MacInnis 133,333200,000 shares of Common Stock, in the
case of each of Messrs. Cammaker, Chesser and Levy, 33,33350,000 shares of Common
Stock, and in the case of Mr. Matz, 2,000Cunningham, 16,500 shares of Common Stock,
that may be acquired upon the exercise of presently exercisable options or
options exercisable within 60 days granted pursuant to the Company's 1994 Management
Stock Option Plan.stock
option plans.
(3) Includes in the case of Mr. Bershad 13,50016,500 shares of Common Stock, in the
case of Mr. Brown, 6,0009,000 shares in the case of Mr. Cunningham, 13,500 shares,Common Stock, in the case of Mr. Fried,
3,000 shares of Common Stock, in the case of Mr. Hopkins 13,50016,500 shares of
Common Stock, and in the case of Mr. Toner, 3,0006,000 shares of Common Stock,
that may be acquired upon the exercise of presently exercisable options granted
to each non-employee Directordirector pursuant to the Company's 1995 Non-Employee
Directors' Non-Qualified Stock Option Plan.Plan; does not include shares of
Common Stock that may be acquired upon exercise of stock options granted
pursuant to the 1997 Non-Employee Directors' Non-Qualified Stock Option Plan
('1997 Directors' Stock Option Plan') or shares of Common Stock that may be
issued in respect of Deferred Stock Units granted pursuant to the 1997 Stock
Plan for Directors, which plans are being submitted for approval by
stockholders at the Annual Meeting.
(4) Amount includesIncludes beneficial ownership of 124,37710,007 shares of Common Stock by Albert
Fried & Company, LLC ('AF&C'), of which Mr. Fried is the Managing Member.
AF&C was a holder of prepetition unsecured claims against the Company in its
Chapter 11 proceeding concluded in December 1994. There is a reserve of
140,618131,610 shares of Common Stock for disputed claims against the Company to be
issued to the holders of prepetition general unsecured allowed claims,
including AF&C. To the extent such disputed claims are disallowed, the
number of shares beneficially owned by AF&C will increase inby a presently
undeterminable amount.
(5) Includes 294,498424,000 shares of Common Stock that may be acquired upon the
exercise of presently exercisable options or options exercisable within 60
days granted pursuant to the Company's 1994 Managementstock options plans; does not include
shares of Common Stock that may be issued pursuant to the 1997 Directors'
Stock Option Plan and 1995 Non-Employee Directors' Non-Qualifiedthe 1997 Stock Option Plan.
5
Plan for Directors.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table sets forth the compensation
awarded to, earned by or paid to each of the Chief Executive Officer and the
other four most highly compensated executive officers of the Company
(collectively, the 'named executive officers') during the fiscal years ended
December 31, 1997, 1996 1995 and 19941995 for services rendered in all capacities to the
Company and its subsidiaries. For information regarding employment agreements of
the named executive officers, see 'Employment Contracts and Termination of
Employment and Change of Control Arrangements' below.
5
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM COMPENSATION COMPENSATION AWARDS(5)
------------------- ----------------------------AWARDS(3)
-------------------------------------------------------------
ANNUAL NUMBER OF
COMPENSATION OTHER ANNUAL RESTRICTED SECURITIES
OTHER ANNUAL-------------------------- COMPENSATION STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION(4)(2) AWARD OPTIONS/SARS(6) COMPENSATION(7)SARS(4) COMPENSATION(5)
NAME AND PRINICPALPRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- -------------------------------------- ------------------------------------ ---- -------- -------- --------------------------- ---------- --------------- ---------------
Frank T. MacInnis(1)(2) .............MacInnis................... 1997 650,000 23,003 None 200,000 8,400
Chairman of the Board and 1996 614,400 625,000 10,563 None None 6,300
Chairman of the Board, PresidentChief Executive Officer 1995 614,400 480,000 17,732 None 200,000 6,300
Jeffrey M. Levy..................... 1997 325,000 10,462 None None 8,400
President and Chief Executive Officer 1994 426,923 500,000(3) 5,0561996 309,000 300,000 6,627 None None 6,300
Chief Operating Officer 1995 300,000 225,000 9,631 None 50,000 6,300
Sheldon I. Cammaker .................Cammaker................. 1997 430,340 None None None 8,400
Executive Vice President and 1996 406,000 150,000 None None None 6,300
Executive Vice President andGeneral Counsel 1995 383,000 100,000 None None 50,000 6,300
General Counsel 1994 361,322 50,000Leicle E. Chesser................... 1997 325,000 19,867 None None None 176,700(8)
Leicle E. Chesser(1) ................8,400
Executive Vice President and 1996 309,000 300,000 4,885 None None 6,300
Executive Vice President andChief Financial Officer 1995 300,000 225,000 14,578 None 50,000 6,300
Chief Financial Officer 1994 168,269 150,000Thomas D. Cunningham(1)............. 1997 126,923 15,920 None None None None
Jeffrey M. Levy(2) .................. 1996 309,000 300,000 6,627 None None 6,30053,000 45,827
Executive Vice President and 1995 300,000 225,000 9,631 None 50,000 6,300
Chief Operating Officer 1994 247,500 175,000 None None None 6,300
R. Kevin Matz(1) .................... 1996 135,000 90,000 None None None 6,300
Vice President and Treasurer 1995 -- -- -- -- -- --
19941995 -- -- -- -- -- --
- - ------------------
(1) As Mr. MacInnisCunningham was a director of the Company until July 15, 1997. Mr.
Cunningham joined the Company on April 18, 1994 and Mr. Chesser joined
the Company on May 2, 1994, amounts shown for each of them for 1994 reflect
less than a full year of compensation. Mr. Matz became aas Executive Vice President on July 15, 1997,
and,
Treasurer in April 1996, accordingly, no compensation information is reported for him in respect
of 1994 and 1995 and the compensation information for
Mr. Matz in respect of 1996 includes all compensation paid to him in 1996 by
the Company.1996.
(2) Mr. Levy was elected President of the Company on April 4, 1997. Mr. MacInnis
continues to serve as Chairman of the Board and Chief Executive Officer.
(3) Amount includes a signing bonus of $250,000 paid to Mr. MacInnis upon his
joining the Company on April 18, 1994.
(4) The personal benefits provided to the named executive officers did not
exceed the disclosure threshold established by the SEC pursuant to
applicable rules. Figures represent amounts reimbursed for the payment of
taxes upon certain fringe benefits.
(5)(3) The column specified by Item 402(b)402 (b) of Regulation S-K to report Long-Term
Incentive Plan Payouts has been excluded because the Company has no
long-term incentive compensation plans and has not had any such plan during
any portion of fiscal years 1997, 1996 1995 and 1994.
(6)1995.
(4) The awards set forth in this column are of stock options only. The Company
did not award stock appreciation rights. (Footnotes continued on next page)
6
(Footnotes continued from previous page)
(7)The grant to Mr. MacInnis of an
option to purchase 200,000 shares of Common Stock is subject to the approval
by stockholders at the Annual Meeting of the amendment to the Company's 1994
Management Stock Option Plan (the '1994 Stock Option Plan'). The grant of
options to Mr. Cunningham consists of an option to purchase 50,000 shares of
Common Stock pursuant to the 1994 Stock Option Plan and an option to
purchase 3,000 shares of Common Stock pursuant to the 1995 Non-Employee
Directors' Non-Qualified Stock Option Plan.
(5) The amounts reported in this column include matching contributions of $1,800$3,600
made by the Company under itsthe 401(k) Plan during 1996 for the account of
eachpart of the named executive officers. The amounts reported for 1996 also
include contributions of $4,500 to be paidCompany's Retirement and
Savings Plan, a defined contribution profit sharing plan, during 1997 in respect of 1996 by
the Company for
the account of each of the named executive officers, other than Mr.
Cunningham who was not eligible to participate in such plan. The amounts
reported for 1997 also include contributions of $4,800 to be paid during
1998 in respect of 1997 by the Company pursuant to the retirement account
part of the Company's Money PurchaseRetirement and Savings Plan a defined contribution pensionfor the account of each of
the named executive officers, other than Mr. Cunningham who was not eligible
to participate in such plan. (8) Amounts include a stay bonus of $170,400The amount reported in this column for Mr.
Cunningham represents consulting and directors' fees paid to Mr. Cammaker pursuanthim in respect
of the period January 1, 1997 through July 14, 1997 prior to his becoming an
employee of the EMCOR Group, Inc. Employees' Severance Pay/Stay Bonus on September 30,
1994.Company.
6
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
DuringThe following table sets forth certain information concerning certain
grants to the named executive officers of stock options during the last fiscal
year noyear. As indicated under the Summary Compensation Table above, the Company did
not grant stock appreciation rights ('SARs') of any kind.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
GRANTED FISCAL YEAR ($/SH)(1) DATE VALUE($)(4)
---------- ------------ ----------- ----------------- -----------
Frank T. MacInnis(2)........................ 200,000 55% $ 19.75 November 20, 2007 $ 2,948,000
Thomas D. Cunningham(3)..................... 3,000 1% $ 16.28 June 19, 2007 $ 36,660
50,000 14% $ 19.75 November 20, 2007 $ 737,000
- - ------------------
(1) The stock option exercise price for a share of Common Stock was the fair
market value of a share of Common Stock on the date of grant. No SARs,
performance units or other instruments were granted in tandem with the stock
options or SARs werereported herein.
(2) This option was granted subject to anyapproval of the named executive officers.
OPTIONSamendment to the 1994
Stock Option Plan by stockholders at the Annual Meeting. The option has a
ten-year term and vests in full on November 21, 2006; provided that with
respect to successive groups of 50,000 shares of Common Stock, the option
shall vest earlier if and when the fair market value of a share of Common
Stock first equals or exceeds $25, $30, $35 and $40, respectively. Mr.
MacInnis may exercise the option only while employed by the Company or a
subsidiary or within three months after termination of his employment unless
his employment is terminated by the Company other than for Cause (as that
term is defined in his employment agreement) or he terminates his employment
with the Company for Good Reason (as that term is defined in his employment
agreement) in which case the option becomes exercisable in full and remains
exercisable for the balance of its ten-year term.
(3) Mr. Cunningham was a director of the Company until July 15, 1997. The grant
to him of an option to purchase 3,000 shares of Common Stock was pursuant to
the Company's 1995 Non-Employee Directors' Non-Qualified Stock Option Plan,
and the option is exercisable at any time until its expiration on the tenth
anniversary of the date of grant. The grant to him of an option to purchase
50,000 shares of Common Stock was made pursuant to the 1994 Stock Option
Plan, has a ten year term, and becomes exercisable at the rate of one-third
of the 50,000 shares on each anniversary of the option grant date. The
option is only exercisable while Mr. Cunningham is an employee of the
Company or its subsidiaries or within three months after termination of his
employment. This option is transferable solely by will or by the laws of
descent or distribution.
(4) Present value was calculated using the Black-Scholes option-pricing model
which involves an extrapolation of future price levels based solely on past
performance. The present value as of the date of grant, calculated using the
Black-Scholes method, is based on assumptions about future interests rates,
dividend yield and stock price volatility. In calculating the present value
as of the date of grant of the options reported in the table, the Company
assumed an interest rate of 6% per annum, an annual dividend yield of zero
and volatility of 80%. There is no assurance that these assumptions will
prove to be true in the future. The actual value, if any, that may be
realized by each individual will depend on the future market price of the
Common Stock and cannot be forecasted accurately by application of an option
pricing model.
7
OPTION EXERCISES AND HOLDINGS
The following tablestable sets forth certain information concerning unexercised
options to purchase Common Stock of the Company held at the end of fiscal year
19961997 by the named executive officers. None of the named executive officers
exercised any options during fiscal year 1996.1997. No named executive officer hasholds
any SARs.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-ENDFISCAL YEAR-END OPTION VALUE
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED FY-END(#) FY-END($)(1)(2)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLEUNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE
- ---------------------------------------- -------------------------------------------- ----------- -------- ----------------------------------------------------- -------------------------
Frank T. MacInnis......................MacInnis........................... None -- 66,667/133,333 $550,003/133,333/266,667 $2,099,995/$1,099,2971,200,005
Jeffrey M. Levy............................. None -- 33,333/16,667 $512,382/$256,172
Sheldon I. Cammaker....................Cammaker......................... None -- 16,667/33,333 33,333/16,667 $512,382/$ 131,169/$262,331256,172
Leicle E. Chesser......................Chesser........................... None -- 16,667/33,333 33,333/16,667 $512,382/$ 131,169/$262,331
Jeffrey M. Levy........................256,172
Thomas D. Cunningham........................ None -- 16,667/33,333 16,500/50,000 $171,473/$ 131,169/$262,331
R. Kevin Matz.......................... None -- 1,000/2,000 $ 7,870/$15,74037,500
- - ------------------
(1) Includes an option to purchase 200,000 shares of the Common Stock granted to
Mr. MacInnis on November 20, 1997, which is subject to stockholder approval
at the Annual Meeting of the amendment to the 1994 Stock Option Plan.
(2) For purposes of this column, value is calculated based on the aggregate
amount of the excess of $13.00$20.50 (the closing price of the Common Stock of the
Company as
reported on the Nasdaq Stock Market on December 31, 1996)1997) over the relevant
exercise price for the sharesa share of Common Stock with respect to the options.
8
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
The Company has entered into an Employment Agreement datedemployment agreements effective as of April 18,
1994 (the 'Agreement'),January
1, 1998 with Frank T. MacInnis providing for his employment as Chief Executive
Officer of the Company during thefor a period April 18, 1994 throughof three years expiring December 31, 1997. The Agreement2000
and with Jeffrey M. Levy providing for his employment as President and Chief
Operating Officer of the Company for a period of three years expiring December
31, 2000. Each such employment agreement provides that the term of employment
will automatically be extended for successive one-year periods unless the
Company or Mr. MacInnisthe officer gives written notice not to extend at least six months
prior to the end of the initial term or any extended term of the Agreement. Theemployment
agreement. However, following a Change of Control (as defined in Mr. Levy's
employment agreement) the term of Mr. Levy's employment shall in no event be
less than three years. Under Mr. MacInnis' employment agreement, the Company is
also to use its best efforts to ensure hisMr. MacInnis' election as Chairman of the
Board of Directors of the Company.
Pursuant to the Agreement, in 1996terms of their respective employment agreements, Mr.
MacInnis receivedis to receive an annual base salary of $614,400 which$700,000 and Mr. Levy is to
receive an annual base salary isof $450,000. Such salaries are to increase on the
first day of each calendar year during histheir respective employment periods by at least
the percentage increase in the consumer price index for the priorpreceding year for
the area in awhich the principal office of the Company is located or an amount
specified consumer price index.by the Board of Directors, whichever is greater. In addition, Mr.
MacInnis isand Mr. Levy are each entitled to receive an annual bonus payable in
cash ('Target Bonus'), which is to be determined by a formula agreed upon
annually by Mr. MacInnisthe respective officer and the Compensation and Personnel Committee
of the Board of Directors of the Company.(the 'Compensation Committee'); provided that Mr.
MacInnis' annual Target Bonus may not be less than $600,000 and Mr. Levy's
annual Target Bonus may not be less than $400,000. Pursuant to the terms of
the Agreement, upon joiningtheir respective employment agreements, the Company is to recommend to the
Compensation Committee that Mr. MacInnis and Mr. Levy receive annually an option
under the Company's 1994 Stock Option Plan to purchase not less than 25,000 and
15,000 shares of Common Stock, respectively, at a per share exercise price equal
to the fair market value of a share of the Common Stock on the grant date. Each
option is to have a ten year term and is to be exercisable on the first
anniversary of the grant date.
In addition, pursuant to his employment agreement, Mr. MacInnis was paid a one-time cash paymentgranted
on November 21, 1997, subject to stockholder approval at the Annual Meeting of
$250,000 and was
entitledthe amendment to the 1994 Stock Option Plan, an option
7
(the 'Option') to purchase 200,000
shares of Common Stock. In accordance with
the Agreement, the Option was issuedStock at an exercise price of $4.75a per share whichexercise price was equal to the fair market
price forvalue of a share of the Common Stock on April 5, 1995.the grant date. This option has a
ten-year term and will vest in full on November 21, 2006, provided that with
respect to successive groups of 50,000 shares of the Common Stock, the option
shall vest earlier if and when the fair market value of a share of the Common
Stock first equals or exceeds $25, $30, $35 and $40, respectively.
Under the terms of the Agreement,their employment agreements, Mr. MacInnis and Mr. Levy
each has been provided with certain benefits customarily accorded to the
Company's senior executive officers
as well as supplementalofficers. These benefits such that he will receive the benefits that
would have been received if he were fully vestedinclude, in the Company's Money Purchase
Plan and 401(k) Plan. In addition, Mr. MacInnis is entitled to $600MacInnis' case,
$700 per month for the leasing of an automobile; in Mr. Levy's case, $800 per
month for the leasing of an automobile (plusand the cost of the lease capital
reduction payment; maintenance and insurance thereon);on their respective automobiles;
and reimbursement for all initiation fees and monthly dues for membership in a club
suitable for entertaining clients of the Company;Company, all legal expenses incurred by
him in
connection with the Agreement;their employment agreements, and the cost of any increased tax
liability to himthem caused by the receipt of these fringe benefits.
If, during the term of his employment agreement, Mr. MacInnis' employment
is terminated during the term of the Agreement by the Company other than for Cause (as defined in the Agreement)his employment
agreement) or he terminates his employment for Good Reason (as defined in the Agreement)his
employment agreement), Mr.
MacInnishe will be entitled to receive a cash payment equal to
the sum of:of (i) the greater of (A) his base salary at the highest annual rate in
effect during his term of employment for the period from the date of termination
through December 31, 19972000 or (B) two times his base salary at its then current
annual rate and (ii) an amount equal
to the productgreater of (A) his Target Bonus for the highest bonus paid to him during his employment (butcalendar year
in no
event less than $150,000) times (A)which the termination takes place multiplied by the number of full or partial
calendar years remaining from the date of termination through December 31, 19972000
or (B) two whichever is greater;times his Target Bonus for the calendar year in which the termination
takes place; however, in the event of a termination for Good Reason
following a Change inof
Control (as defined in the Agreement)his employment agreement), the factor of two in clauseclauses
(i)(B) and (ii)(B) above will be increased to three. If, during the term of
9
his employment agreement, Mr. Levy's employment is terminated by the Company
other than for Cause (as defined in his employment agreement) or he terminates
his employment for Good Cause (as defined in his employment agreement) he will
be entitled to a cash payment equal to the sum of (i) two times his base salary
at its then current annual rate and (ii) two times his Target Bonus for the
calendar year in which the termination occurs; however, in the event of a
termination following a Change of Control (as defined in his employment
agreement) the factor of two in clauses (i) and (ii) above will be increased to
three. In addition, Mr.Messrs. MacInnis and Levy each will be entitled to receive
all unpaid amounts in respect of anyhis bonus for any calendar year ending before
the date of termination.termination and an amount equal to his Target Bonus for the calendar
year in which the termination takes place multiplied by a fraction the numerator
of which is the number of days in such calendar year that he was an employee of
the Company and the denominator of which is 365.
The Company has an employment contractagreement with Sheldon I. Cammaker expiring
January 31, 1999, pursuant to which Mr. Cammaker serves as a senioran executive officer
of the Company. Mr. Cammaker received an annual base salary of $406,000$430,340 in 1996,1997,
which salary increases on the first day of each calendar year during his
employment by at least 6%. In addition, pursuant to the terms of his employment
contract,agreement, Mr. Cammaker is eligible to receive annual bonuses, has
beenis provided with
certain benefits customarily accorded the Company's senior executive officers and is
provided with the use of a Company automobile.
If, during the term of his employment agreement, Mr. Cammaker's employment
contract provides that,is terminated by the Company other than for Cause (as defined in his employment
agreement) or he terminates his employment for Good Reason (as defined in his
employment agreement) he will be entitled to receive a cash payment equal to the
sum of (i) two times his base salary at its then current annual rate and (ii)
two times the highest bonus paid to him during his employment by the Company;
however, in the event of a Change inof Control (as defined in his employment
agreement) the contract)factor of two in clauses (i) and (ii) above will be increased to
three. In addition, he will be entitled to receive all unpaid amounts in respect
of his bonus for any calendar year ending before the date of termination and an
amount equal to his bonus for the calendar year in which the termination takes
place multiplied by a fraction the numerator of which is the number of days in
such calendar year that he was an employee of the Company and within two years
thereafter Mr. Cammakerthe denominator of
which is terminated or elects to terminate his employment, Mr.
Cammaker would be entitled to be paid an amount equal to the sum of (i)
$470,000, (ii) $320,000 multiplied by each full calendar year remaining under
his employment agreement, and (iii) $320,000 less, with respect to clause (iii),
the base salary already paid to him for the year of termination.365.
The Company has entered into employment agreements datedeffective as of January
1, 19961998 with Leicle E. Chesser providing for his employment as Executive Vice
President and Chief Financial Officer of the Company during thefor a period January
1, 1996 toof three years
expiring December 31, 1997,2000 and with Jeffrey M. LevyThomas D. Cunningham providing for his
employment as Executive Vice President and Chief Operating Officer during the
period January 1, 1996 to December 31, 1997; on April 4, 1997 Mr. Levy was
elected President of the Company and continues to serve as Chief Operating
Officer.for a period of three
years expiring December 31, 2000. Each of those agreementssuch employment agreement provides that
the term of employment will automatically be extended for successive one-year
periods unless the Company or the executiveofficer gives written notice not to extend at
least six months prior to the end of the inital term or any extended term of the
employment agreement. However, following a Change of Control (as defined in
their employment agreements) their respective terms of employment shall in no
event be less than three years.
Pursuant to the terms of their respective employment agreements, in 1996 Messrs.Mr.
Chesser and Levy each receivedis to receive an annual base salary of $309,000, which$350,000 and Mr. Cunningham is to
receive an annual base salary isof $275,000. Such salaries are to increase on the
first day of each calendar year during their respective employment periods by
the percentage increase in the consumer price index for the preceding year for
the area in which the principal office of the Company is located or an amount
determinedspecified by the Compensation
and Personnel Committee of the Board of Directors, of the Company.whichever is greater. In addition, each is
entitled to receive an annual cash bonus determined by the Compensation
Committee, and Personnel Committee.under the term of their respective employment agreements, the
Company is to recommend to the Compensation Committee that Messrs. Chesser and
Mr. Cunningham receive annually an option under the Company's 1994 Stock Option
Plan to purchase not less than 10,000 and 5,000 shares of Common Stock,
respectively, at a per share exercise price equal to the fair market value of a
share of the Common Stock on the grant date. Each option is to have a ten year
term and is to be exercisable on the first anniversary of the date of grant.
Under the terms of thetheir employment agreements, Messrs. Chesser and
Levy each
hasCunningham have been provided with certain benefits customarily accorded to the
Company's senior executive officers. In addition, Mr. Chesser is entitled to $700 per
month, and Mr. Levy is entitled to $655officers, including $800 per month for leasing of an
automobile (plus maintenance and insurance thereon) plusand the cost of athe lease
capital reduction payment; and reimbursement for all initiation fees and monthly
dues for membership in a club suitable for entertaining clients of the Company;Company,
all legal expenses incurred by him in connection with his respective agreement;their employment agreements, and
the cost of any increased tax liability to himthem caused by the receipt of these
fringe benefits.
810
If Mr. Chesser's or Mr. Levy'sCunningham's employment is terminated during the
term of his respective employment agreement by the Company other than for Cause
(as defined in thehis employment agreement) or he terminates his employment for
Good Reason (as defined in thehis employment agreement), he will be entitled to
receive a cash payment equal to the sum of:of (i) the greater of (A) his base salary at the highest annual rate
in effect during his employment from the date of termination through December
31, 1997 or (B) onetwo times his base salary at its
then current annual rate and (ii) an amount equal to the product oftwo times the highest bonus paid to him during
his employment times (A)by the number of full or partial years remaining from the date
of termination through December 31, 1997 or (B) one, whichever is greater;Company; however, in the event of a termination for Good Reason following
a Change inof Control (as defined in thehis employment agreement), the factor of onetwo
in clauseclauses (i)(B) and (ii)(B) above will be increased to 1.5.three. In addition, Messrs.
Chesser and Cunningham each executive will be entitled to receive all unpaid amounts in
respect of anyhis bonus for any calendar year ending before the date of termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During 1996,termination
and an amount equal to his bonus for the calendar year in which the termination
takes place multiplied by a fraction the numerator of which is the number of
days in such calendar year that he was an employee of the Company and the
denominator of which is 365.
If all or any portion of the payments or benefits referred to in the
preceding paragraphs either alone or together with other payments and benefits
which Messrs. MacInnis, Levy, Cammaker, Chesser or Cunningham receives or is
then entitled to receive from the Company, would constitute a 'parachute
payment' within the meaning of Section 280G of the Code, then such officer shall
be entitled to such additional payments as may be necessary to ensure that the
net after tax benefit of all such payments shall be equal to his respective net
after tax benefit as if no excise tax had been imposed under Section 4999 of the
Code.
APPROVAL OF THE AMENDMENT TO THE 1994 MANAGEMENT STOCK OPTION PLAN
On December 17, 1997, the Board of Directors adopted an amendment to the
Company's 1994 Management Stock Option Plan, as amended (the '1994 Stock Option
Plan') to increase the aggregate number of shares of Common Stock that may be
issued pursuant to options granted under the 1994 Stock Option Plan from
1,000,000 to 2,000,000, subject to approval by stockholders of the Company at
the Annual Meeting.
As of April 10, 1998 only 72,002 shares remain available for the grant of
stock options under the 1994 Stock Option Plan, exclusive of the 200,000 shares
that may be acquired by Mr. Frank T. MacInnis, Chairman of the Board and Chief
Executive Officer of the Company, pursuant to the option granted to him on
November 20, 1997 in accordance with the terms of his employment agreement
described above. The amendment to the 1994 Stock Option Plan will make available
the 200,000 shares required for the grant of the option to Mr. MacInnis and
additional shares required for future grants of options to executive officers
pursuant to the employment agreements described above and to key employees of
the Company and its subsidiaries.
The Board of Directors has determined that it would be in the Company's
best interests to be able to encourage key employees of the Company and its
subsidiaries to contribute to the success of the Company by granting such
employees incentive stock options ('ISO') and/or non-qualified stock options.
ISOs are a type of employee stock option under which favorable tax treatment is
afforded to the option holder where certain conditions are met. The approximate
number of eligible employees is 350.
The 1994 Stock Option Plan is administered by the Compensation and
Personnel Committee of the Board of Directors (the 'Compensation Committee'),
which is comprised of three or more directors of the Company, was responsible for matters concerning executive
compensation. Mr. MacInnis has served as Chairmaneach of whom is
disinterested within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934 (the 'Exchange Act') and considered an outside director within the
meaning of Section 162(m) of the Internal Revenue of 1986, as amended (the
'Code') and the regulations promulgated thereunder. Such key employees as may be
determined by the Compensation Committee from time to time will be eligible to
participate in the 1994 Stock Option Plan.
The maximum number of shares, which may be the subject of options granted
to an individual in any calendar year, may not exceed 500,000 shares.
The exercise price of an ISO and a non-qualified stock option must be at
least equal to the fair market value of the Common Stock as of the grant date.
Options may not be exercised more than ten years after the grant date. Options
will be exercisable at such rate and times as may be fixed by the Compensation
Committee on the date of grant; however, unless the Compensation Committee
otherwise determines, the rate at which an option first becomes exercisable may
not be greater than one-third on or after each of the first, second and third
anniversaries of the date of grant. The aggregate fair market value (determined
at the time the option is granted) of the Common Stock underlying ISOs which are
exercisable by an option holder during any calendar year (under all stock option
plans of the Company and its subsidiaries) may not exceed $100,000; to the
extent that this
11
limitation is exceeded, such excess options shall be treated as nonqualified
stock options for purposes of the 1994 Stock Option Plan and the Code.
At the time an option is granted, the Compensation Committee may, in its
sole discretion, designate whether the option is to be considered an ISO or
non-qualified stock option. Options with no such designation shall be deemed an
ISO, to the extent of the $100,000 limit described in the preceding paragraph.
Payment of the purchase price for shares acquired upon the exercise of
options may be made by any one or more of the following methods: in cash, by
check, by delivery to the Company of shares of Common Stock already owned by the
holder, by a 'cashless' exercise method with a designated broker, or by such
other method as the Compensation Committee may permit from time to time. A
holder, however, may not use previously owned shares of Common Stock that were
acquired pursuant to the 1994 Stock Option Plan, or any other stock plan that
may be maintained by the Company or its subsidiaries, to pay the purchase price
under an option, unless the holder has been the beneficial owner of such shares
for at least six months.
Options become immediately exercisable in full upon the retirement of the
holder after reaching the age of 65, upon the disability or death of the holder
while in the employ of the Company, or upon the occurrence of such special
circumstances as in the opinion of the Compensation Committee merit special
consideration. However, no options may be exercised earlier than six months
following the date of grant (except that the estate of a deceased holder of an
option may exercise it prior to the expiration of such six-month period).
Unless otherwise determined by the Compensation Committee at the time of
grant of an option, options shall terminate three months after the holder's
termination of employment with the Company; such three-month period is extended
to six months in the event of the death of the holder, in which case the option
is exercisable by the holder's estate.
Each option contains anti-dilution provisions which will automatically
adjust the number of shares subject to options in the event of a stock dividend,
split-up, conversion, exchange, reclassification or substitution. In addition,
upon the dissolution or liquidation of the Company, or the occurrence of a
merger or consolidation in which the Company is not the surviving corporation,
or in which the Company becomes a subsidiary of another corporation or in which
the voting securities of the Company which are outstanding immediately prior
thereto do not continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the combined voting securities of the Company or such surviving entity
immediately after such merger or consolidation, or upon the sale of all or
substantially all of the assets of the Company, the 1994 Stock Option Plan and
the options granted thereunder shall terminate unless provision is made by the
Company in connection with such transaction for the assumption of options
theretofore granted, or the substitution for such options of new options of the
successor corporation or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and the per share exercise
prices. If options terminate as a result of any such transaction, the holder
will be entitled to the excess of (i) the fair market value (determined on the
basis of the amount received by stockholders in connection with such
transaction) of the shares subject to the portion of the option not theretofore
exercised (whether or not the option is then exercisable pursuant to its terms
or otherwise), over (ii) the aggregate purchase price that would be payable for
such shares upon the exercise of the option. In the event of any other change in
the corporate structure or outstanding shares of Common Stock, the Compensation
Committee may make such equitable adjustments to the number of shares and the
class of shares available under the 1994 Stock Option Plan or to any outstanding
options issued under such Plan as it shall deem appropriate to prevent dilution
or enlargement of rights.
The Company is to obtain such consideration for granting options under the
1994 Stock Option Plan as the Compensation Committee in its discretion may
request.
Each option may be subject to provisions to assure that any exercise or
disposition of Common Stock will not violate any applicable securities laws.
No options may be granted under the 1994 Stock Option Plan after ten years
following the date of its adoption.
The Board of Directors or the Compensation Committee may at any time
withdraw or amend the 1994 Stock Option Plan and may, with the consent of the
affected holder of an outstanding option, at any time withdraw or amend the
terms and conditions of an outstanding option. Any amendment which would
increase the number of shares issuable pursuant to options or to any individual
employee, or change the class of employees to whom options may be granted shall
be subject to the approval of the stockholders of the Company within one year of
such amendment.
12
The Federal income tax consequences to an employee who receives ISOs
generally will, under current law, be as follows:
An employee will not realize any income upon the grant or exercise of an
ISO. However, if the employee disposes of the shares of Common Stock acquired
upon the exercise of an ISO at least two years after the date the option is
granted and at least one year after the Common Stock is transferred to him or
her, the employee will realize long-term capital gain in an amount equal to the
excess, if any, of his or her selling price for the shares over the option
exercise price. In such case, the Company will not be entitled to any tax
deduction resulting from the issuance or sale of the shares. If the employee
disposes of the shares of Common Stock acquired upon the exercise of an ISO
prior to the expiration of two years from the date the option is granted, or one
year from the date the Common Stock is transferred to him or her, any gain
realized will be taxable at such time (a) as ordinary income to the extent of
the difference between the option exercise price and the lesser of the fair
market value of the shares on the date the option is exercised or the amount
realized from such disposition, and (b) as capital gain to the extent of any
excess, which gain shall be treated as short-term or long-term capital gain
depending upon the holding period of the Common Stock. In such case, the Company
may claim an income tax deduction (as compensation) for the amount taxable to
the employee as ordinary income.
In general, the difference between the fair market value of the Common
Stock at the time the ISO is exercised and the option exercise price will
constitute an item of adjustment, for purposes of determining alternative
minimum taxable income, and under certain circumstances may be subject, in the
year in which the option is exercised, to the alternative minimum tax.
If an employee uses shares of Common Stock which he or she owns to pay, in
whole or in part, the exercise price for shares acquired pursuant to an ISO, (a)
the holding period for the newly issued shares of Common Stock equal in value to
the old shares which are surrendered upon the exercise will include the period
during which the old shares were held, (b) the employee's basis in such newly
issued shares will be the same as his or her basis in the old shares surrendered
and (c) no gain or loss will be recognized by the employee on the old shares
surrendered. However, if any employee uses shares previously acquired pursuant
to the exercise of an ISO to pay all or part of the exercise price under an ISO,
such tender will constitute a disposition of such previously acquired shares for
purposes of the one-year (or two-year) holding period requirement applicable to
such ISO and such tender may be treated as a taxable exchange.
The Federal income tax consequences to an employee who receives
non-qualified stock options generally will, under current law, be as follows:
An employee who receives non-qualified stock options will not realize any
income at the time the option is granted. Generally, an employee will realize
ordinary income, at the time the option is exercised in an amount equal to the
excess of the then fair market value of the Common Stock acquired over the
exercise price. However, Section 83 of the Code provides that, if a director,
officer or principal stockholder (i.e., an owner of more than 10 percent of the
outstanding shares of Common Stock) receives shares pursuant to the exercise of
a non-qualified stock option, he or she is not required to recognize any income
until the date on which such shares can be sold at a profit without liability
under Section 16(b) of the Exchange Act. At such time, the director, officer or
principal stockholder will realize income equal to the amount by which the then
fair market value of the shares acquired pursuant to the exercise of such option
exceeds the price paid for such shares. Alternatively, a director, officer or
principal stockholder who would not otherwise be taxed at the time the shares
are transferred may file a written election within 30 days of the transfer date
with the Internal Revenue Service to be taxed as of the date of transfer on the
difference between the then fair market value of the shares and the price paid
for such shares.
All income realized upon the exercise of a non-qualified stock option will
be taxed as ordinary income. The Company will be entitled to a tax deduction (as
compensation) for the amount taxable to an employee (including a director,
officer and principal stockholder) upon the exercise of a non-qualified stock
option, as described above, in the same year, as those amounts are taxable to
the employee.
Shares of Common Stock issued pursuant to the exercise of a non-qualified
stock option generally will constitute a capital asset in the hands of an
employee (including a director, officer or principal stockholder) and will be
eligible for capital gain or loss treatment upon any subsequent disposition. The
holding period applicable to options held by an employee (including a director,
officer or principal stockholder) will commence upon the date he or she
recognizes income with respect to the issuance of such shares, as described
above. The employee's basis in the shares will be equal to the greater of their
fair market value as of that date or the amount paid for such shares. If,
however, an employee uses shares of Common Stock which he or she owns to pay, in
whole or in part,
13
the exercise price for shares acquired pursuant to the exercise of a
non-qualified stock option, (a) the holding period for the newly issued shares
of Common Stock equal in value to the old shares which were surrendered upon the
exercise shall include the period during which the old shares were held, (b) the
employee's basis in such newly issued shares will be the same as his or her
basis in the surrendered shares, (c) no gain or loss will be realized by the
employee on the old shares surrendered, and (d) the employee will realize
ordinary income in an amount equal to the fair market value of the additional
number of shares received over and above the number of old shares surrendered
(the 'Additional Shares') and the employee's basis in the Additional Shares will
be equal to such fair market value.
In addition to the Federal income tax consequences discussed above, Section
280G of the Code provides that if an officer, stockholder or highly compensated
individual receives a payment which is in the nature of compensation and which
is contingent upon a change in control of the employer, and such payment equals
or exceeds three times his or her 'base salary' (as hereinafter defined), then
any amount received in excess of base salary shall be considered an 'excess
parachute payment.' An individual's 'base salary' is equal to his or her average
annual compensation over the five-year period (or period of employment, if
shorter) ending with the close of the individual's taxable year immediately
preceding the taxable year in which the change in control occurs. If the
taxpayer establishes, by clear and convincing evidence, that an amount received
is reasonable compensation for past or future services, all or a portion of such
amount may be deemed not to be an excess parachute payment. If any payments made
under the 1994 Stock Option Plan in connection with a change in control of the
Company constitute excess parachute payments with respect to any employee, then
in addition to any income tax which would otherwise be owed on such payment, the
individual will be subject to an excise tax equal to 20% of such excess
parachute payment and the Company will not be entitled to any tax deduction to
which it otherwise would have been entitled with respect to such excess
parachute payment.
Section 280G of the Code provides that payments made pursuant to a contract
entered into within one year of the change in control are presumed to be
parachute payments unless the individual establishes, by clear and convincing
evidence, that such contract was not entered into in contemplation of a change
in control. In addition, the General Explanation of the Tax Reform Act of 1984
prepared by the Staff of the Joint Committee on Taxation indicates that the
grant of an option within one year of the change in control or the acceleration
of an option because of a change in control may be considered a parachute
payment in an amount equal to the value of the option or the value of the
accelerated portion of the option, as the case may be. Pursuant to proposed
regulations issued by the Treasury Department under Section 280G, the
acceleration of a non-qualified stock option because of a change in control is
considered a parachute payment in an amount equal to the value of the
accelerated portion of the option. Even if the grant of an option within one
year of the change in control or the acceleration of an option is not a
parachute payment for purposes of Section 280G, the exercise of an option within
one year of the change in control or the exercise of the accelerated portion of
an option may result in a parachute payment, in an amount equal to the excess of
the fair-market value of the shares received upon exercise of the option over
the exercise price. Payments received for the cancellation of an option because
of a change in control may also result in parachute payments.
Under Section 162(m) of the Code, publicly held companies may not deduct
compensation for certain employees to the extent that such compensation exceeds
$1 million per employee for the taxable year. The $1 million limitation applies
to the Company's Chief Executive Officer since April 18, 1994; he also servedand four most highly compensated
executive officers other than the Chief Executive Officer. Compensation which is
performance based (as defined in the Code and rules and regulations thereunder),
however, is not subject to the deductibility limitation of Section 162(m) of the
Code. Income pursuant to options under the 1994 Stock Option Plan is intended to
be fully deductible by the Company by qualifying such income as
Presidentperformance-based compensation and, therefore, exempt from the limitations of
Section 162(m) of the Code.
The foregoing summary with respect to Federal income taxation does not
purport to be complete and reference is made to the applicable provisions of the
Code.
The affirmative vote of a majority of the shares of Common Stock of the
Company from April 18, 1994 to April 4, 1997.
Messrs. Cunningham, Fried and Hopkins, all of whom are non-employee
directors, constitutevoting at the Compensation and Personnel Committeemeeting in person or by proxy is required for approval of
the Company's
Board of Directors. Mr. Fried is Managing Member of Albert Fried & Company, LLC,
which agreed in December 1994 to loanamendment to the Company and certain of its
subsidiaries up to $7.0 million as one of several lenders under revolving credit
agreements (the 'Credit Agreement') providing a working capital facility of up
to an aggregate of $45.0 million. The loans bore interest on the principal
amount thereof at the rate of 15% per annum. The Credit Agreement terminated,
and the loans outstanding thereunder were repaid, on June 19, 1996.
Mr. Fried is Chairman of1994 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 1994 STOCK OPTION PLAN.
14
APPROVAL OF 1997 NON-EMPLOYEE DIRECTORS'
NON-QUALIFIED STOCK OPTION PLAN
On December 17, 1997, the Board of Directors adopted the 1997 Non-Employee
Directors' Non-Qualified Stock Option Plan (the '1997 Directors' Stock Option
Plan'), subject to approval by stockholders of Portec, Inc.the Company at the Annual
Meeting.
The 1997 Directors' Stock Option Plan provides, generally, that each
non-employee director (a 'Director') may elect prior to the first day of each
calendar year, commencing with the 1998 calendar year, to receive one-third or
two-thirds (each, a 'Portion') or all of his annual retainer in the form of
options to purchase shares of the Company's Common Stock. However, an
individual, who is not a Director as of the first day of a calendar year but who
becomes a Director during the course of such calendar year ('New Director'), may
elect, on or before the date of his election to the Board of Directors, to
receive all or a Portion of the annual retainer to be payable to him for such
calendar year in options to purchase shares of Common Stock. The number of
options to be issued in respect of a Director's annual retainer for a calendar
year shall be determined by dividing the amount of the annual cash retainer to
be converted into options by the value on the Issue Date (as hereafter defined)
of an option to purchase one share. The option is to be valued using the Black
Scholes methodology with reasonable assumptions as to volatility and taking into
account any other factors required or reasonably desirable for the valuation of
an option. If a Director elects to receive options in lieu of all or a Portion
of his annual cash retainer for a calendar year, the Company shall also issue to
that Director like options for an additional number of shares equal to the
product of .5 times the amount of options otherwise issued to him as a result of
such election.
The per share exercise price of an option granted under the 1997 Directors'
Stock Option Plan in respect of a calendar year is equal to the fair market
value of a share of Common Stock (a) on the first business day of such calendar
year with respect to options issued to individuals who are serving as Directors
on such date and (b) on the date of a New Director's election to the Board of
Directors with respect to options issued to him (each such date, an 'Issue
Date'). No option may be exercised prior to approval by stockholders of the 1997
Directors' Stock Option Plan nor more than five years after the date of
issuance. During the calendar year in respect of which options are issued,
subject to the provisions referred to in the immediately preceding sentence,
generally, one-fourth of the shares subject to such options may be purchased on
or after the Issue Date, one-fourth of such shares may be purchased on or after
the April 1 following the Issue Date, one-fourth of the shares may be purchased
on or after the July 1 following the Issue Date and the balance may be purchased
on or after the October 1 following the Issue Date. Notwithstanding the
foregoing, following a Change of Control (as defined in the Plan) options shall
be exercisable in full.
Except as provided above, a Director may exercise options issued pursuant
to the 1997 Directors' Stock Option Plan at any time, or from time to time,
prior to expiration of the five year term of such options regardless of his
termination of service as a director except that, generally, if the Director's
service terminates during a calendar year in respect of which options have been
issued to him, twenty-five percent of such options shall be forfeited for each
calendar quarter in such calendar year which is subsequent to the calendar
quarter in which his Board service terminates.
The percentage of the shares subject to a New Director's options that may
be purchased on and after the date of his election to the Board of Directors and
on and after the first day of each subsequent calendar quarter during the
calendar year of his election and the number of options that would be forfeited
by him in the event of his termination as a Director during that calendar year
shall be determined by the Board of Directors taking into account the number of
calendar quarters remaining in the calendar year following the date of his
election.
Payment for the purchase price for shares acquired upon the exercise of
options may be made by any one or more of the following methods: in cash, by
check, by delivery to the Company of shares of Common Stock already owned by the
option holder, or by a 'cashless' exercise method with a designated broker.
However, a holder may not use previously owned shares of Common Stock that were
acquired pursuant to the 1997 Directors' Stock Option Plan, or any other stock
plan maintained by the Company or its subsidiaries, to pay the purchase price
under an option, unless the holder has beneficially owned such shares for at
least six months.
The aggregate number of shares of Common Stock that may be issued pursuant
to options under the 1997 Directors' Option Plan may not exceed 300,000. The
number of eligible directors is six.
15
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, reorganization, merger, consolidation,
spin-off, combination or exchange of shares or other corporate exchange, or any
distribution to stockholders of shares other than regular cash dividends, the
Board of Directors in its sole discretion and without liability to any person
may make such substitution or adjustment, if any, as it deems to be equitable,
as to (i) the number or kind of shares or other securities issued or reserved
for issuance pursuant to the Plan or pursuant to outstanding options and/or (ii)
the option price and/or (iii) any other affected terms of such options.
The Board of Directors may at any time withdraw or amend the 1997
Directors' Stock Option Plan and may, with the consent of the affected holder of
outstanding options under such Plan, at any time withdraw or amend the terms and
conditions of an outstanding option; provided, however, that any amendment by
the Board of Directors which would increase the number of shares issuable under
the Plan, change the class of persons eligible to participate in the Plan or
materially increase the benefits to participants in the Plan shall be subject to
approval of the stockholders of the Company.
The Federal income tax consequences for options granted under the 1997
Director's Stock Option Plan are the same as those described in the preceding
section for non-qualified stock options awarded under the 1994 Stock Option
Plan.
The following table shows the aggregate number of options granted under the
1997 Director's Stock Option Plan to the five Directors, as a group, who elected
to receive options in lieu of all or a Portion of their annual cash retainer for
the 1998 calendar year subject to approval of the 1997 Directors' Stock Option
Plan by stockholders at the Annual Meeting:
NEW PLAN BENEFITS
1997 NON-EMPLOYEE DIRECTORS' NON-QUALIFIED
STOCK OPTION PLAN OF EMCOR GROUP, INC.
GROUP DOLLAR VALUE OPTIONS GRANTS
- - ------------------------------------------------------------------- ------------ --------------
Non-Executive Director Group....................................... $225,000(1) 30,365
- - ------------------
(1) Dollar value is based upon the fair value of an option on January 2, 1998 as
determined pursuant to the terms of the 1997 Directors' Stock Option Plan
multiplied by the number of stock options granted under such Plan.
The closing price of a share of Common Stock on the Nasdaq Stock Market on
April 23, 1996, Mr. MacInnis9, 1998 was $21.50.
The affirmative vote of a majority of the shares of Common Stock of the
Company voting at the meeting in person or by proxy is required for approval of
the 1997 Directors' Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1997 DIRECTORS' STOCK OPTION PLAN.
16
APPROVAL OF THE 1997 STOCK PLAN FOR DIRECTORS
On December 17, 1997, the Board of Directors adopted the 1997 Stock Plan
for Directors (the '1997 Directors' Stock Plan'), subject to approval by
stockholders of the Company at the Annual Meeting.
The 1997 Directors' Stock Plan provides, generally, that each non-employee
director (a 'Director') may elect prior to the first day of each calendar year,
commencing with 1998, to receive one-third or two-thirds (each, a 'Portion') or
all of his annual retainer in the form of Deferred Stock Units in respect of
which shares of the Company's Common Stock will be issued. The number of
Deferred Stock Units to be issued in respect of a Director's annual retainer for
a calendar year, generally, is to be determined by dividing the amount of the
annual cash retainer to be converted into Deferred Stock Units, by the fair
market value of a share of Common Stock as of the close of business on the first
business day of the applicable calendar year. However, an individual, who is not
a Director as of the first day of a calendar year but who becomes a Director
during the course of such calendar year ('New Director'), may elect, on or
before the date of his election to the Board of Directors, to receive all or a
Portion of the annual retainer to be payable to him for such calendar year in
Deferred Stock Units. In such case, the number of Deferred Stock Units to be
received by such New Director shall be determined by dividing the amount of the
annual cash retainer otherwise to be paid to such New Director by the fair
market value of a share of the Common Stock as of the close of business on the
date of his election to the Board of Directors. In addition, if a Director
elects to receive Deferred Stock Units in lieu of all or a Portion of his annual
cash retainer for a calendar year the Company shall also issue to that Director
additional Deferred Stock Units equal to the product of .2 times the amount of
the Deferred Stock Units otherwise issued to him as a result of such election.
If a Director's service terminates prior to a Change of Control (as defined
in the Plan) during a calendar year in respect of which Deferred Stock Units
were issued, generally, twenty-five percent of such Deferred Stock Units shall
be forfeited for each calendar quarter in such calendar year which is subsequent
to the calendar quarter in which his Board service terminates. The number of
Deferred Stock Units that would be forfeited by a New Director prior to a Change
of Control in the event of his termination as a Director during the calendar
year in respect of which Deferred Stock Units were issued to him shall be
determined by the Board of Directors taking into account the number of calendar
quarters remaining in the calendar year following the date of his election.
Promptly following a Change of Control, the Company shall issue to a Director
holding Deferred Stock Units, shares of Common Stock equal to 100% of the
Deferred Stock Units.
Within thirty days following termination of service as a Director, a
Director holding unforfeited Deferred Stock Units shall be issued shares of
Common Stock equal in number to 100% of the Deferred Stock Units which the
Director holds. However, at the time of a Director's election to receive
Deferred Stock Units, a Director may elect to receive the shares of Common Stock
with respect thereto on the tenth day of the calendar year following his
termination of service as a Director (the 'Alternate Date') or in three equal
annual installments commencing on either (x) the thirtieth day after such
termination or (y) the Alternate Date.
The aggregate number of shares of Common Stock that may be issued pursuant
to the Directors' Stock Plan may not exceed 150,000 shares.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other corporate
exchange, or any distribution to stockholders of shares other than regular cash
dividends, the Board of Directors in its sole discretion and without liability
to any person may make such substitution or adjustment, if any, as it deems to
be equitable, as to (i) the number or kind of shares or other securities issued
or reserved for issuance pursuant to the Plan or pursuant to outstanding
Deferred Stock Units and/or (ii) any other affected terms of such Deferred Stock
Units.
The Board of Directors may at any time withdraw or amend the 1997
Directors' Stock Plan and may, with the consent of the affected holder of
outstanding Deferred Stock Units under such Plan, at any time withdraw or amend
the terms and conditions of any outstanding Deferred Stock Units; provided,
however, that any amendment by the Board of Directors which would increase the
number of shares issuable under the Plan, change the class of persons eligible
to participate in the Plan or materially increase the benefits to participants
in the Plan shall be subject to approval of the stockholders of the Company.
The following table shows the aggregate number of Deferred Stock Units
issued under the 1997 Directors' Stock Plan to the one Director who elected to
receive Deferred Stock Units in lieu of all or a directorPortion of Portec, Inc.his annual
17
cash retainer for the 1998 calendar year subject to approval of the 1997
Directors' Stock Plan by stockholders at the Annual Meeting.
NEW PLAN BENEFITS
1997 STOCK PLAN FOR DIRECTORS OF EMCOR GROUP, INC.
GROUP DOLLAR VALUE DEFERRED STOCK UNIT AWARDS
- - --------------------------------------------------------- ------------ --------------------------
Non-Employee Director.................................... $ 36,000(1) 1,800
- - ------------------
(1) Dollar value is based upon the fair market value of a share of Common Stock
on January 2, 1998 multiplied by the number of Deferred Stock Units granted
under the 1997 Directors' Stock Plan.
The closing price of a share of Common Stock on the Nasdaq Stock Market on
April 9, 1998 was $21.50.
The affirmative vote of a majority of the shares of Common Stock of the
Company voting at the meeting in person or by proxy is required for approval of
the 1997 Directors' Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1997 DIRECTORS' STOCK PLAN.
DIRECTOR COMPENSATION
Each director who is not an officer of the Company ('non-employee
director') receivesis entitled to receive an annual cash retainer of $30,000 and $1,000
for each meeting of the Board of Directors he attends, other than telephonic
meetings of the Board in which case each non-employee director who participates
receives $500. Each non-employee director also receives $500 for each meeting of
a committee of the Board of Directors attended by the director, and each
non-employee director who chairs a committee of the Board of Directors receives
an additional $2,000 per annum. In addition, pursuant to the 1995 Non-Employee
Directors' Non-Qualified Stock Option Plan, each non-employee director on June
17, 199620, 1997 was granted an option on that date, to purchase 3,000 shares of Common Stock at an
exercise price of $17.125$16.28 per share. Each person who is hereafter elected or re-elected to
serve as a non-employee director (including current non-employee directors) will
be granted an option, promptly following his election, to purchase 3,000 shares
of Common Stock at ana per share exercise price equal to the fair market value of
the sharesa share of Common Stock on the date on which the option is granted. Non-employee
directors' options are fully exercisable as of the date of grant.grant and have a term
of ten years. Directors who also serve as officers of the Company do not receive
compensation for services rendered as directors.
If the 1997 Directors' Stock Option Plan and the 1997 Directors' Stock
Plan, as described above, are approved by stockholders at the Annual Meeting, in
lieu of all or part of his annual cash retainer, each non-employee director may
elect to receive in accordance with such plans (a) options to purchase shares of
Common Stock and/or (b) Deferred Stock Units in respect of which shares of
Common Stock will be issued following the non-employee director's termination of
service as a director of the Company.
COMPENSATION COMMITTEE REPORT
TheINTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
During 1997, the Compensation and Personnel Committee of the Board of
Directors of the Company (the 'Compensation Committee') was responsible for
matters concerning executive compensation.
Messrs. Fried and Hopkins, both of whom are non-employee directors, served
as members of the Compensation Committee of the Board of Directors during 1997.
Mr. Toner, a non-employee director of the Company, was elected to the
Compensation Committee in June 1997. Mr. Thomas D. Cunningham was a director
during the period January 1, 1997 to July 15, 1997 when he resigned as director
to become an Executive Vice President of the Company. During that period he was
a member of the Compensation Committee and during the period June 11, 1997 to
July 15, 1997 Mr. Cunningham was a consultant to the Company for which he was
paid $24,327.
Mr. Fried is Chairman of the Board of Directors of Portec, Inc., and Mr.
MacInnis is a director of Portec, Inc. Mr. MacInnis has served as Chairman of
the Board and Chief Executive Officer of the Company since April 18, 1994 and as
President of the Company from April 18, 1994 through April 4, 1997.
18
COMPENSATION COMMITTEE REPORT
The Compensation Committee reviews and determines, based on proposals made
by the Chief Executive Officer, the compensation of the Company's Chief
Operating Officer, Chief Financial Officer and General Counsel as well as the
compensation of other officers and employees of the Company and each subsidiary
whose annual compensation is $200,000 or more. It also reviews and approves any
employment, severance or similar agreements for thosewith such individuals. The
Compensation Committee is charged with fixing on an annual basis, the
compensation of the Chairman of the Board and the Chief Executive Officer of the
Company, subject to the approval of the Board of Directors, and reviewing and
recommending to the Board 9
of Directors any employment, severance or similar
agreement for him. The Compensation Committee also administers the Company's
1994 Management Stock Option Plan and is charged with recommending to the Board
for its approvalof Directors any incentive, benefit, award or bonus plans or programs. The
entire Board of Directors determines the amount, if any, of the Company's
contributions pursuant to its 401(k)Retirement and Savings Plan. While other
compensation decisions generally are not submitted to the Board of Directors,
the Board of Directors has the ultimate power and authority with respect to
compensation matters.
The members of the Compensation Committee reviewed salaries paid to the
named executive officers for 1996 and1997, approved their employment agreements,
approved salary increases for 19971998 to the
named executive officers of the Companythem as well as bonuses payable in 1997paid to them in
1998 in respect of 1996.1997 and approved the grant during 1997 of stock options to
Mr. Frank T. MacInnis, Chairman of the Board and Chief Executive Officer, and
Mr. Thomas D. Cunningham, Executive Vice President.
The Compensation Committee seeks to compensate executive officers at levels
competitive with other companies comparable in size in the same industry and comparable in size to
the Company and to provide short-term rewards and long-term incentives for
superior individual and corporate performance. In making compensation decisions,
the Compensation Committee periodically reviews information about the
compensation paid or payable to officers of comparably sized public companies
(there being no public companies of comparable size to the Company that are in businesses
similar to those of the Company), the compensation recommendations of Mr.
MacInnis, the
Chairman of the Board and Chief Executive Officer of the Company, and reports from outside consultants. The Compensation Committee does
not have target amounts of stock ownership for its executive officers.
The key components of executive officer compensation are base salary,
bonuses and stock options. The Compensation Committee attempts to combine these
components in such a way as to attract, motivate and retain key executives
critical to the long-term success of the Company. A discussion of the various
components of the executives' compensation for 19961997 follows.
Base Salary. Each executive officer received a base salary and has the
potential for annual salary increases largely determined by reference to the
salaries of executive officers holding comparable positions in companies of
comparable size.
Bonuses. Each executive officer was eligible for an annual bonus based
upon both his individual performance and the Company's performance. Bonuses were
awarded to executive officers in respect of 19961997 which took into account their
performance and contractual obligations.
Stock Options. The Company's 1994 Management Stock Option Plan is intended to provide
executives with the promise of longer termlong-term rewards which appreciate in value with
the favorable futurepositive performance of the Company. As indicated above, the Compensation
Committee during 1997 granted stock options to Mr. MacInnis in connection with a
new three year employment agreement between him and the Company and granted
stock options to Mr. Cunningham in connection with his appointment to the
position of Executive Vice President of the Company.
Other Compensation. The executive officers also participate in the
Money
Purchase PlanRetirement and the 401(k)Savings Plan as well as the medical, life and disability
insurance plans available to all employees of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The minimum compensation of Mr. MacInnis Chairman of the Board and Chief
Executive Officer of the Company, is provided for in his employment
agreement described above. Proposals for additional compensation to him are
based on the policies described above. As part of its evaluation, the
Compensation Committee considered a report by Mr. MacInnis on his activities,
the Company's performance, the accomplishment of goals for the Company set by
the Board of Directors at the beginning of 1996,1997, and the compensation earned by
other chief executive officers of companies of comparable size during the
previous year.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code provides that the deduction by a publicly-held
corporation for compensation paid in a taxable year to the Chief Executive
Officer and any of the other four most highly compensated executive officers
whose compensation is required to be reported in the Summary Compensation Table
is limited to $1 million per officer, subject to certain exceptions. The
Compensation Committee has taken, and intends to continue to take, such actions
as are necessary to reduce, if not eliminate, the Company's non-deductible
19
compensation expense, while maintaining, to the extent possible, the flexibility
which the Compensation Committee believes to be an important element of the
Company's executive compensation program.
By theBy: Compensation and Personnel
Committee:
Malcolm T. Hopkins, Chairperson,
Thomas D. Cunningham and Albert Fried, Jr.
10
Kevin C. Toner
PERFORMANCE GRAPH
Proxy disclosure rules promulgated by the Securities and Exchange
Commission require inclusion of a graph presentation comparing cumulative
five-year stockholder returns on an indexed basis with the S&P 500 Index and
either a nationally recognized industry standard or an index of peer companies
selected by the Company. Since the common stock of the Company outstanding prior
to its reorganization was extinguished pursuant to its Plan of Reorganization
and the Common Stock of the Company as reorganized has been traded only since
the effective date of its Plan of Reorganization, such five-year presentation is
not possible. Under such circumstances, the Company is required instead to
present such information for the period since such shares were issued. The
following performance graph compares the Company's total stockholder return on
its Common Stock since January 6, 1995 as compared to the S&P 500 Index and a
peer group index consisting of The Turner Corporation, and Perini Corporation since January 6,
1995.and
MYR Group, Inc. for that period. Prior to that date, prices for the Company's
Common Stock were not readily available. The Company has added to its peer group
MYR Group, Inc., an electrical and mechanical contracting company, whose
operations have recently become more similar to those of the Company.
Other than MYR Group, to the Company's knowledge, none of the other
companies that may be regarded as peers in its mechanical and electrical
contracting and its facilities services business have been publicly traded for
more than a year. Accordingly, the Company selected MYR Group and two general
contractors that serve similar marketplaces and are impacted by similar market
conditions to the Company. The following performance graph assumes $100 was
invested on January 6, 1995 in Common Stock of the Company and in each of the
indices and assumes reinvestment of all dividends.
None of the Company's peers in its mechanical and electrical contracting
and its facilities services business is publicly traded. Accordingly, the
Company selected two general contractors that serve similar marketplaces and are
impacted by similar market conditions to the Company.
COMPARATIVE TWENTY-SEVEN MONTH TOTAL RETURNS
[PERFORMANCE GRAPH]
EmcorEMCOR S&P 500 Peer
Group
----- ------- ----------
Jan 6, 1995 100 100 100100.00 100.00 100.00
Mar 31, 1995 112.5112.50 109.02 101.15
Jun103.42
June 30, 1995 175175.00 118.61 115.27
Sep114.30
Sept 30, 1995 186.11 127.25 126.61129.41
Dec 31, 1995 213.89 134.11 94.76103.29
Mar 31, 1996 269.44 140.55 103.61
Jun108.36
June 30, 1996 336.11 146.02 133.7
Sep147.09
Sept 30, 1996 336.11 171.43 115.42120.68
Dec 31, 1996 305.56 161.29 103.79107.30
Mar 31, 1997 327.78 164.85 110.06
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Albert Fried, Jr. and Kevin C. Toner are directors of the Company and both
had a material interest in revolving credit agreements, dated December 14, 1994,
which provided the Company and certain of its subsidiaries with working capital
facilities of up to an aggregate of $45.0 million which revolving credit
agreements terminated107.73
June 19, 1996. Albert Fried, Jr. is Managing Member of
Albert Fried & Company, LLC, which had agreed to loan up to $7.0 million as one
of the lenders under the revolving credit agreements. Kevin C. Toner had agreed
to loan up to $1.0 million as one of the lenders under the revolving credit
agreements. In addition, UBS Mortgage Finance Inc., an affiliate of UBS
Securities Inc., Mr. Toner's former employer, had agreed to loan up to $2.0
million as one of the lenders under the revolving credit agreements. All the
loans bore interest on the principal amount thereof at the rate of 15% per
annum.
1130, 1997 352.78 192.73 125.49
Sept 30, 1997 444.44 206.26 152.37
Dec 31, 1997 455.56 211.30 210.85
Mar 31, 1998 477.78 238.52 216.41
20
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed Arthur Andersen
LLP, certified public accountants, as independent public accountants to audit
the accounts of the Company and its subsidiaries for 1997. Arthur Andersen LLP
acted as the Company's independent public
accountants for 19961998. Arthur Andersen LLP acted as independent public
accountants of the Company for 1997 and 19951996 pursuant to appointment by the
Audit Committee. Arthur Andersen LLP was first appointed the Company's independent public
accountants for 1995of the Company by the Audit Committee on September 19, 1995 succeeding Deloitte & Touche LLP which acted as the Company's
independent public accountants for 1994.1995.
Representatives of Arthur Andersen LLP will be present at the annual
meetingAnnual
Meeting to respond to appropriate questions and will have an opportunity to make
a statement if they desire to do so.
The report of the Company's independent public accountants on the Company's
financial statements for its two most recent fiscal years ended December 31,
19961997 did not contain an adverse opinion, disclaimer of opinion or qualification
as to uncertainty, audit scope, or accounting principles.
During the Company's two most recent fiscal years ended December 31, 1996,1997,
there were no disagreements with Arthur Andersen LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused that firm to make reference to the
subject matter of such disagreements in connection with its reports.
During the Company's two most recent fiscal years ended December 31, 1996,
there were no reportable events of the type described in paragraphs (A) through
(D) of Item 304(a)(1)(v) of Regulation S-K under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended.
The affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the meeting and entitled to vote thereon is
required for approval of the appointment of the independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1997.1998.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals must be received by the Company at its headquarters
in Norwalk, Connecticut on or before February 20, 1998January , 1999 in order to be considered
for inclusion in next year's Proxy Statement.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file initial
reports of ownership and reports of change in ownership of Common Stock and
other equity securities of the Company with the Securities and Exchange
Commission and to furnish copies of such statements to the Company.
To the Company's knowledge, during the fiscal year 1997 all such reports
relating to share ownership were timely filed, except that Mr. Pompa, Vice
President and Controller of the Company, inadvertently filed late one such
report on Form 4 relating to one transaction.
OTHER INFORMATION
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies primarily by mail. Proxies also may be solicited
personally and by telephone by certain officers and regular employees of the
Company. Morrow & Co., Inc. has been retained for solicitation of all brokers
and nominees for a fee of $3,000$4,500 plus customary out-of-pocket expenses. The
Company may reimburse brokers and other nominees for their expenses in
communicating with the persons for whom they hold Common Stock of the Company.
21
The Board of Directors is aware of no other matters that are to be
presented to the stockholders for formal action at the Annual Meeting. If,
however, any other matters properly come before the meeting or any adjournments
thereof, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their judgment in such matters.
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER OF RECORD ON APRIL 23, 1997,29, 1998, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 19961997 (EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE SUPPLIED WITHOUT CHARGE. REQUESTS SHOULD BE DIRECTED TO
JOSEPH W. BARNETT,SHELDON I. CAMMAKER, SECRETARY, EMCOR GROUP, INC., 101 MERRITT SEVEN CORPORATE
PARK, NORWALK, CONNECTICUT 06851.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH W. BARNETTSHELDON I. CAMMAKER
Secretary
April 29, 1997
12, 1998
22
EMCOR GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 199719, 1998
The undersigned hereby appoints Frank T. MacInnis, Sheldon I. Cammaker
and Leicle E. Chesser, and each of them, with full power to act without the
other and with full power of substitution,substitutiion, as proxies to represent and to vote,
as directed herein, all shares the undersigned is entitled to vote at the
annual meeting of the stockholders of EMCOR Group, Inc. to be held in the James Madison
Room
405, Princeton Club, 15 West 43 Street, New York, New York on Friday, June 20, 199719,
1998 at 10:00 a.m.A.M. (local time), and all adjournments thereof, as follows:
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
Unless otherwise marked, the proxies are appointed with authority to
vote "FOR" all nominees for election, "FOR" approval of the Amendment to the
1994 Management Stock Option Plan, "FOR" approval of adoption of the 1997
Non-Employee Directors' Non-Qualified Stock Option Plan, "FOR" approval of
adoption of the 1997 Stock Plan for Directors, and "FOR" the appointment of
independent public accountants.Independent Public Accountants.
(Continued and to be signed on the reverse side.)
EMCOR GROUP, INC.
P.O. BOX 11079
NEW YORK, N.Y.NY 10203-0079
The Board of Directors recommends a vote "FOR" all nominees in Item 1
and "FOR" Item 2.Items 2,3,4 and 5
1. Election of Directors
FOR all nominees listed below
WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below.
*EXCEPTIONSbelow
Nominees: F. MacInnis, S. Bershad, D. Brown, T. Cunningham,G. de Buffevent, A. Fried, M.
Hopkins,R. Hamm,
K. Toner
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________*Exceptions_____________________________________________________________________
2. Approval of Amendment to the 1994 Management Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. Approval of Adoption of the 1997 Non-Employee Directors' Non-qualified Stock
Option Plan
FOR / / AGAINST / / ABSTAIN / /
4. Approval of Adoption of the 1997 Stock Plan for Directors.
FOR / / AGAINST / / ABSTAIN / /
5. Appointment of Independent Public Accountants.
FOR / / AGAINST / / ABSTAIN / /
Change of Address and/or Comments Mark Here [INDICIA]/ /
In their discretion to vote upon other matters
that may properly come before the meetingmeeting.
Please sign exactly as your name appears to the
left.
When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title. If shares are held jointly,
each holder should sign.
Dated: ____________________________, 1997
___________________________________________________________________, 1998
______________________________________
Signature
_______________________________________________________________________________
Signature
VotersVotes must be indicated (x) in Black or Blue
ink. Xink / /
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
1997 NON-EMPLOYEE DIRECTORS' NON-QUALIFIED
STOCK OPTION PLAN
OF
EMCOR GROUP, INC.
1. Purpose. The purpose of this Plan is to enhance the Corporation's ability to
attract and retain talented individuals to serve as members of the Board and to
promote a greater alignment of interests between members of the Board and the
stockholders of the Corporation.
2. Definitions. When used in this Plan, unless the context otherwise requires:
(a) "Board " means the Board of Directors of the Corporation.
(b) "Change of Control" means any of the following events:
(i) any person or person acting in concert (excluding
Corporation benefit plans) becomes the beneficial owner of
securities of the Corporation having at least 25% of the
voting power of the Corporation's then outstanding securities
(unless the event causing the 25% threshold to be crossed is
an acquisition of voting common securities directly from the
Corporation, other than upon the conversion of convertible
debt securities or other securities and/or the exercise of
options or warrants); or
(ii) the stockholders of the Corporation shall approve any
merger or other business combination of the Corporation, sale
or lease of the Corporation's assets or combination of the
foregoing transactions (the "Transactions") other than a
Transaction immediately following which the stockholders of
the Corporation and any trustee or fiduciary of any
Corporation employee benefit plan immediately prior to the
Transaction own at least 65% of the voting power, directly or
indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser or
lessee of the Corporation's assets; or (C) both the surviving
corporation and the purchaser or lessee in the event of any
combination of Transactions; or
(iii) within any 24-month period, the persons who were
directors immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other than
death) to constitute at least a majority of the Board or the
board of directors of a successor to the Corporation. For this
purpose, any director who was not a director at the beginning
of such period shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds
of the directors who then qualified as Incumbent Directors (so
long as such director was not nominated by a person who has
expressed an intent to effect a Change of Control or engage in
a proxy or other control contest).
(c) "Corporation" means EMCOR Group, Inc., a Delaware corporation.
1
(d) "Director" means any member of the Board not employed by the
Corporation or any Subsidiary thereof.
(e) "Election Date" means the date of election to the Board of a New
Director.
(f) "Effective Date" means the effective date of the Plan as set
forth in Section 15.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" on a specified date shall mean the closing
price at which a Share is traded on the stock exchange, if any,
on which the Shares are primarily traded or, if the Shares are
not then traded on a stock exchange, the closing price of a Share
as reported on the NASDAQ National Market System or, if the
Shares are not then traded on the NASDAQ National Market System,
the average of the closing bid and ask prices at which a Share is
traded on the over-the-counter market, but if no Shares were
traded on such date, then on the last previous date on which a
Share was so traded, or, if none of the above are applicable, the
value of a Share as determined by an unaffiliated investment.
banking firm selected by the Board.
(i) "Issue Date" means the first business day of a calendar year
except that when used with reference to an Option issued to a New
Director means the Election Date of such New Director.
(j) "New Director" means a Director who was not serving as a Director
on the first day of a calendar year but was elected during such
calendar year to the Board subsequent to the first day of such
calendar year.
(k) "Option" means a stock option issued pursuant to the Plan.
(l) "Plan" means this 1997 Non-Employee Directors' Non-Qualified
Stock Option Plan of EMCOR Group, Inc., as such Plan from time to
time may be amended.
(m) "Portion" means one-third or two-thirds of the annual cash
retainer payable to a Director, as selected by the Director.
(n) "Share" means a share of common stock of the Corporation.
(o) "Subsidiary" means any corporation 50% or more of whose stock
having general voting power is owned directly or indirectly by
the Corporation.
3. Participants. The class of persons who are potential recipients of Options
issued under the Plan consists of Directors. The Directors to whom Options are
issued under the Plan, and the number of Shares subject to each such Option,
shall be determined in accordance with the terms and conditions of the Plan.
4. Shares. Subject to the provisions of Section 11, the aggregate number
of Shares which may be the subject of Options issued under the Plan is 300,000
Shares, all of which Shares may be either Shares held in treasury or authorized
but unissued Shares. If the
2
Shares that would be issued or transferred pursuant to any Option are not issued
or transferred and cease to be issuable or transferable for any reason, the
number of Shares subject to such Option will no longer be charged against the
limitation provided for herein and may again be made subject to Options.
5. Issuance of Options; Number of Options; Purchase Price. Each Director who is
serving or is to serve as a Director as of the first day of a calendar year may
elect prior to the first day of such calendar year, commencing with the 1998
calendar year, to receive all or a Portion of his annual retainer for such
calendar year in the form of an Option to purchase the number of Shares
hereafter provided; such election shall be made in writing and delivered to the
Secretary of the Corporation or his designee, no sooner than sixty days and no
later than the last day of the calendar year immediately preceding the calendar
year in respect of which the election is made. However, each New Director may
elect on or prior to his Election Date to receive all or a Portion of the annual
cash retainer otherwise payable to him for such calendar year in the form of an
Option to purchase the number of Shares hereafter provided; such election shall
be made in writing and delivered to the Secretary of the Corporation or his
designee on or before the Election Date of such New Director. The per share
purchase price of Shares to be purchased pursuant to the exercise of Options
issued pursuant hereto shall be the Fair Market Value of a Share as of the
applicable Issue Date. Options issued in lieu of the annual cash retainer for a
calendar year payable to a Director shall be for a number of Shares equal to
that determined by dividing the amount of the annual cash retainer otherwise
payable to such Director and to be converted into Options by the value, on the
applicable Issue Date, of an Option to purchase one Share. Options shall be
valued using the Black Scholes' methodology with reasonable assumptions as to
volatility and taking into account any other factors required or reasonably
desirable for the valuation of the Options. In valuing the Options the Board
shall utilize the services of an investment banking firm of national repute and
such other experts or consultants as it deems advisable. If a Director elects to
receive an Option in lieu of all or a Portion of the annual cash retainer for a
calendar year otherwise payable to him, then the Board also shall issue to that
Director a like Option for an additional number of Shares equal to the product
of .5 times the number of Shares for which the Option is otherwise to be issued
to him as a result of his election.
A certificate of option in the form attached hereto as Exhibit A,
signed by the Chairman of the Board or the President or a Vice President of the
Corporation, attested by the Treasurer or an Assistant Treasurer, or Secretary
or an Assistant Secretary of the Corporation and bearing the seal of the
Corporation affixed thereto, shall be issued to each person to whom an Option is
issued pursuant hereto.
Payments of the annual retainer which remain to be paid to a Director
in cash will be distributed on a quarterly basis. Nothing herein contained shall
affect fees otherwise payable to a Director for (a) attending Board or Committee
meetings and/or (b) serving as a Chairman of a Committee of the Board.
7. Duration of Options. The duration of any Option issued under this Plan shall
be for a period of five years from the date upon which the Option is issued.
8. Exercise of Options. No Option may be exercised prior to the approval of the
Plan by a majority vote of the stockholders of the Corporation as provided in
Section 15 hereof. During the calendar year in respect of which Options are
issued in lieu of all or a Portion of the annual cash retainer, subject to the
provisions of the immediately preceding sentence, one-fourth of
3
the Shares subject to the Option may be purchased on or after the Issue Date,
one-fourth of the Shares subject to the Option may be purchased on or after the
following April 1, one-fourth of the Shares subject to the Option may be
purchased on or after the following July 1 and the balance may be purchased on
or after the following October 1, except that in the case of an Option in
respect of a calendar year issued to a New Director, the number of Shares
subject to such Option that may be purchased on and after the Issue Date of such
Options and on and after the first day of each succeeding calendar quarter
during the calendar year in which such Issue Date occurs shall be determined by
the Board on the applicable Issue Date, taking into account the number of
calendar quarters remaining in such calendar year subsequent to such Issue Date.
Notwithstanding the foregoing, subsequent to approval of the Plan by
stockholders as hereinabove provided and during the duration of an Option, such
Option shall be exercisable at any time or from time to time following a Change
of Control.
An Option shall be exercised by the delivery of a written notice duly
signed by the holder thereof to such effect ("Exercise Notice"), together with
the option certificate and the full purchase price of the Shares purchased
pursuant to the exercise of the Option, to the Chairman of the Board or an
officer of the Corporation appointed by the Chairman of the Board for the
purpose of receiving the same. Payment of the full purchase price shall be made
as follows: in cash or by check payable to the order of the Corporation; by
delivery to the Corporation of Shares which shall be valued at their Fair Market
Value on the date of exercise of the Option (provided, that a holder may not use
any Shares acquired pursuant to this Plan or any other plan maintained by the
Corporation or a Subsidiary unless the holder has beneficially owned such Shares
for at least six months) or by providing with the Exercise Notice an order to a
designated broker to sell part or all of the Shares and to deliver sufficient
proceeds to the Corporation, in cash or by check payable to the order of the
Corporation, to pay the full purchase price of the Shares.
Within a reasonable time after the exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto, a
certificate for the Shares purchased pursuant to the exercise of the Option. If
the Option shall have been exercised with respect to less than all of the Shares
subject to the Option, the Corporation shall also cause to be delivered to the
person entitled thereto a new option certificate in replacement of the
certificate surrendered at the time of the exercise of the Option, indicating
the number of Shares with respect to which the Option remains available for
exercise, or the original option certificate shall be endorsed to give effect to
the partial exercise thereof.
Notwithstanding any other provision of the Plan or of any Option, no
Option granted pursuant to the Plan may be exercised at any time when the Option
or the granting or exercise thereof violates any law or governmental order or
regulation.
9. Non-transferability of Options. Unless otherwise so provided by the Board,
Options and all other rights thereunder and hereunder may not be assigned or
transferred by a Director otherwise than by will or the laws of descent and
distribution, and Options may be exercised or surrendered during the holder's
lifetime only by the holder thereof or his guardian or legal representative.
10. Effect Upon Termination of Service. Subject to the provisions of Section 8,
a Director may exercise an Option at any time or from time to time prior to the
expiration of the term of such Option regardless of the Director's cessation or
termination of service as a director of the Corporation for any reason;
provided, that if, before a Change of Control, the Director's service
4
shall terminate during the calendar year in respect of which an Option was
issued, twenty-five percent of the Shares with respect to which such Option was
issued shall be forfeited for each calendar quarter subsequent to the calendar
quarter in which such Director's Board service terminates. However, if, before a
Change of Control, a New Director's service shall terminate during the calendar
year in respect of which an Option was issued, the percent of the Shares with
respect to which such Option was issued that shall be forfeited for each
calendar quarter subsequent to the calendar quarter in which such New Director's
Board service terminates shall be determined by the Board on the applicable
Issue Date taking into account the number of calendar quarters remaining in such
calendar year subsequent to such Issue Date. In the event of a Director's death
at any time prior to the expiration of the term of an Option and before it is
exercised, the executors, administrators, legatees or distributees of the
Director's estate shall have the privilege of exercising any Option that the
Director could have exercised at the time of his death until the expiration of
the term of such Option.
11. Adjustment Upon Certain Events. Notwithstanding any provision in the Plan to
the contrary, in the event of any change in the outstanding Shares by reason of
any Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to stockholders of Shares other than regular cash
dividends, the Board in its sole discretion and without liability to any person
may make such substitution or adjustment, if any, as it deems to be equitable,
as to (i) the number or kind of Shares or other securities issued or reserved
for issuance pursuant to the Plan or pursuant to outstanding Options, (ii) the
option price and/or (iii) any other affected terms of the Options.
12. Issuance of Shares and Compliance with Securities Act. The Corporation may
postpone the issuance and delivery of Shares pursuant to the exercise of any
Option until the completion of such registration or other qualification of such
Shares under any State or Federal law, rule or regulation as the Corporation
shall determine to be necessary or advisable. Any holder of an Option shall make
such representations and furnish such information as may, in the opinion of
counsel for the Corporation, be appropriate to permit the Corporation, in the
light of the then existence or non-existence with respect to such Shares of an
effective Registration Statement under the Securities Act of 1933, as from time
to time amended (the "Securities Act"), to issue the Shares in compliance with
the provisions of the Securities Act or any comparable act. The Corporation
shall have the right, in its sole discretion, to legend any Shares which may be
issued pursuant to the exercise of any Option, or may issue stop transfer orders
in respect thereof.
13. Administration and Amendment of the Plan. Except as hereinafter provided,
the Board may at any time terminate or from time to time amend the Plan as it
relates to, and the terms and conditions of, any Option not theretofore issued,
and the Board, with the consent of the affected holder of an Option, may at any
time withdraw or from time to time amend the Plan as it relates to, and the
terms and conditions of, any outstanding Option; provided, however, that any
amendment by the Board which would increase the number of Shares issuable under
the Plan, change the class of persons eligible to participate in the Plan or
materially increase the benefits to participants in the Plan shall be subject to
the approval of the stockholders of the Corporation.
The Plan is intended to comply with Rule 16b-3 under the Exchange Act.
Any provision inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
5
14. No Right of Service. Nothing contained herein or in an Option shall be
construed to confer on any Director any right to continue to serve as a Director
of the Corporation.
15. Effective Date of the Plan. The Plan is conditioned upon its approval at the
next annual meeting of the stockholders of the Corporation on or before December
31, 1999 by the vote of the holders of a majority of the Shares of the
Corporation voting at such meeting in person or by proxy; except that the Plan
is adopted and approved by the Board effective December 17, 1997 to permit the
issuance of Options prior to the approval of the Plan by the stockholders of the
Corporation as aforesaid. In the event that the Plan is not approved by the
stockholders of the Corporation as aforesaid, the Plan and any Options issued
hereunder shall be void and of no force or effect.
16. Governing Law. The validity, construction, and effect of the Plan and any
actions taken or relating to the Plan shall be governed by the substantive laws,
but not the choice of law rules, of the State of Connecticut.
6
EXHIBIT A
OPTION CERTIFICATE
NON-QUALIFIED STOCK OPTION
To Purchase Common Stock of
EMCOR GROUP, INC.
Issued Pursuant to the 1997
Non-Employee Directors' Non-Qualified
Stock Option Plan of EMCOR Group, Inc.
___________Shares
THIS CERTIFIES that on __________19_, _________________________
(the "Holder") was issued an option ("Option"), to purchase at the Option price
of $ _ per share all or any part of ____________ fully paid and non-assessable
shares ("Shares") of the Common Stock (par value $0.01 per share) of EMCOR
Group, Inc. ("Corporation"), a Delaware corporation, upon and subject to the
following terms and conditions:
Subject to the terms of the 1997 Non-Employee Directors' Non-Qualified
Stock Option Plan, one-fourth of the Shares subject to this Option may be
purchased on or after the date hereof, an additional one-fourth of the Shares
subject to this Option may be purchased on or after the following April 1, an
additional one-fourth of the Shares subject to this Option may be purchased on
or after the following July 1, and an additional one-fourth of the Shares
subject to this Option may be purchased on or after the following October 1.
This Option shall expire on ______________
7
The Option and this option certificate are issued pursuant to and are
subject to all of the terms and conditions of the Corporation's 1997
Non-Employee Directors' Non-Qualified Stock Option Plan, the terms and
conditions of which are hereby incorporated as though set forth at length, and
the receipt of a copy of which the Holder hereby acknowledges by his receipt of
this certificate.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Dated: 19-.
(SEAL) EMCOR GROUP, INC.
By:
ATTEST:
By:
1997 STOCK PLAN FOR DIRECTORS
of
EMCOR Group, Inc.
1. Purpose. The purpose of this Plan is to enhance the Corporation's
ability to attract and retain talented individuals to serve as members
of the Board and to promote a greater alignment of interests between
members of the Board and the stockholders of the Corporation.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "Board" means the Board of Directors of the Corporation
(b) "Change of Control" means any of the following events:
(i) any person or person acting in concert (excluding
Corporation benefit plans) becomes the beneficial owner of
securities of the Corporation having at least 25% of the
voting power of the Corporation's then outstanding
securities (unless the event causing the 25% threshold to be
crossed is an acquisition of voting common securities
directly from the Corporation, other than upon the
conversion of convertible debt securities or other
securities and/or the exercise of options or warrants); or
(ii) the stockholders of the Corporation shall approve any
merger or other business combination of the Corporation,
sale or lease of the Corporation's assets or combination of
the foregoing transactions (the "Transactions") other than a
Transaction immediately following which the stockholders of
the Corporation and any trustee or fiduciary of any
Corporation employee benefit plan immediately prior to the
Transaction own at least 65% of the voting power, directly
or indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser or
lessee of the Corporation's assets; or (C) both the
surviving corporation and the purchaser or lessee in the
event of any combination of Transactions; or
(iii) within any 24-month period, the persons who were
directors immediately before the beginning of such period
(the "Incumbent Directors") shall cease (for any reason
other than death) to constitute at least a majority of the
Board or the board of directors of a successor to the
Corporation. For this purpose, any director who was not a
director at the beginning of such period shall be deemed to
be an Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified
as Incumbent Directors (so long as such director was not
nominated by a person who has expressed an intent to effect
a Change of Control or engage in a proxy or other control
contest).
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(c) "Corporation" means EMCOR Group, Inc., a Delaware
corporation.
(d) "Deferred Stock Units" means the aggregate of the Elected
Deferred Stock Units, the Matched Deferred Stock Units
awarded to a Director in respect of such Elected Deferred
Stock Units, and additional deferred stock units in respect
of such Deferred Stock Unit credited pursuant to Section 6.
(e) "Director" means any member of the Board not employed by the
Corporation or any subsidiary thereof.
(f) "Effective Date" means the effective date of the Plan as set
forth in Section 18.
(g) "Election Date" means the date of election to the Board of a
New Director.
(h) "Elected Deferred Stock Unit" means a bookkeeping entry,
equivalent in value to a Share credited pursuant to Section
5.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" on a specified date means the closing
price at which a Share is traded on the stock exchange, if
any, on which the Shares are primarily traded or, if the
Shares are not then traded on a stock exchange, the closing
price of a Share as reported on the NASDAQ National Market
System or, if the Shares are not then traded on the NASDAQ
National Market System, the average of the closing bid and
ask prices at which a Share is traded on the
over-the-counter market, but if no Shares were traded on
such date, then on the last previous date on which a Share
was so traded, or, if none of the above are applicable, the
value of a Share as determined by an unaffiliated investment
banking firm selected by the Board.
(k) "Issue Date" means the first business day of each calendar
year commencing with the 1998 calendar year, except in the
case of a New Director, in which case "Issue Date" means
with respect to such New Director, the date of his election
to the Board.
(l) "Matched Deferred Stock Unit" means an additional Deferred
Stock Unit awarded in respect of an Elected Deferred Stock
Unit credited to a Director pursuant to Section 5.
(m) "New Director" means a Director who was not serving as a
Director on the first day of a calendar year but elected
during such calendar year to the Board subsequent to the
first day of such calendar year.
(n) "Plan" means this 1997 Stock Plan for Directors, as such
Plan from time to time may be amended.
(o) "Portion" means one-third or two-thirds of the annual cash
retainer payable to a Director, as selected by the Director.
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(p) "Share" means a share of common stock of the Corporation.
(q) "Subsidiary" means any corporation 50% or more of whose
stock having general voting power is owned directly or
indirectly by the Corporation.
3. Participants. The class of persons who are potential recipients of
Deferred Stock Units issued under the Plan consists of Directors. The Directors
to whom Deferred Stock Units are issued under the Plan and the number of
Deferred Stock Units shall be determined in accordance with the terms and
conditions of the Plan.
4. Shares. Subject to the provisions of Section 10, the aggregate
number of Shares in respect of Deferred Stock Units that may be issued under
the Plan is 150,000 Shares, all of which Shares may be either Shares held in
treasury or authorized but unissued Shares. If the Shares that would be issued
or transferred pursuant to any Deferred Stock Units are not issued or
transferred and cease to be issuable or transferable for any reason, the number
of Shares in respect of such Deferred Stock Units will no longer be charged
against the limitation provided for herein and may again be subject to Deferred
Stock Units.
5. Deferral of Annual Retainer. Each Director who is serving or is to
serve as a Director as of the first day of a calendar year may elect prior to
the first day of such calendar year, commencing with the 1998 calendar year, to
receive all or a Portion of his annual retainer in the form of Elected Deferred
Stock Units as hereafter provided; such election shall be made in writing and
delivered to the Secretary of the Corporation or his designee no sooner than
sixty days and no later than the last day of the calendar year immediately
preceding the calendar year in respect of which the election is made. However,
each New Director may elect on or prior to his Issue Date to receive all or a
Portion of the annual cash retainer otherwise payable to him for such calendar
year in the form of Elected Deferred Stock Units as hereafter provided; such
election shall be made in writing and delivered to the Secretary of the
Corporation or his designee on or before the Election Date of such New Director.
Such Elected Deferred Stock Units, together with the Matched Deferred Stock
Units in respect thereof, shall be credited to an account maintained for the
Director on the books of the Corporation, as of the applicable Issue Date. The
number of Elected Deferred Stock Units (including fractional Elected Deferred
Stock Units) to be credited shall be determined by dividing the amount of annual
cash retainer otherwise payable to a Director and to be converted into Elected
Deferred Stock Units by the Fair Market Value of a Share as of the close of
business on the applicable Issue Date. If a Director elects to receive Elected
Deferred Stock Units in lieu of all or a Portion of the annual cash retainer for
a calendar year otherwise payable to him, then the Board shall also award to
that Director additional Matched Deferred Stock Units for such calendar year
equal to the product of .2 times the number of Elected Deferred Stock Units
otherwise credited to such Director as a result of such election.
6. Dividend Equivalents. Each Director to whom Deferred Stock Units
have been credited shall also be credited, from time to time, with additional
Deferred Stock Units equal to the aggregate dividends paid on the Shares
represented by the Deferred Stock Units credited to each Director on the record
date of such dividend, divided by the Fair Market Value of a Share on the date
each dividend is paid.
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7. Other Fees. Payments of the annual retainer which remain to be paid
to a Director in cash will be distributed on a quarterly basis. Nothing herein
contained shall affect fees otherwise payable to a Director for (a) attending
Board or Committee Meetings and/or (b) serving as a Chairman of a Committee of
the Board.
8. Designation of Beneficiary. A Director may designate a beneficiary
or beneficiaries who, in the event of the Director's death prior to receipt of
all the Shares due under the Plan, shall receive such Shares, subject to the
terms of Section 9. The Director may at any time, change or revoke such
designation. A beneficiary designation, or revocation of a prior beneficiary
designation, will be effective only if it is made in writing on a form provided
by the Corporation, signed by the Director and received by the Secretary of the
Corporation (or the Secretary's designee). If the Director does not designate a
beneficiary or the beneficiary dies prior to the Director, the Shares shall be
paid to the Director's estate. If the beneficiary dies after the Director, any
Shares to be paid to the beneficiary shall be paid to the beneficiary's estate.
9. Termination of Board Service; Forfeiture of Deferred Stock Units;
Receipt of Shares. Thirty days following the termination of Board service by a
Director, the Director shall receive Shares equal in number to 100% of the
Deferred Stock Units credited to the Director's account; provided that upon
termination of such Director's Board service prior to a Change of Control
twenty-five percent of the Deferred Stock Units that the Director received in
respect of the calendar year in which his Board service terminated, together
with the additional Deferred Stock Units credited in respect of dividends on
such Deferred Stock Units, shall be forfeited for each calendar quarter
subsequent to the calendar quarter in which his Board service terminates and the
Director shall have no right to receive the Shares in respect of the forfeited
Deferred Stock Units. Notwithstanding the foregoing, in the event of termination
of Board service of a New Director the percent of Deferred Stock Units that the
New Director received as of his Issue Date that may be forfeited (together with
the additional Deferred Stock Units credited in respect of dividends on such
Deferred Units) shall be determined by the Board as of the Issue Date taking
into account the number of calendar quarters remaining in the calendar year in
which the Issue Date occurred.
The Director may elect to receive all or a portion of the Shares to
which he is entitled pursuant hereto on the tenth day of the calendar year
following the Director's termination of Board service (the "Alternate Date") or,
in the alternative, may elect to receive such Shares in three equal annual
installments beginning either (a) thirty days following the Director's
termination of Board service or (b) on the Alternate Date. Any such election
with respect to particular Shares shall be made in writing and delivered to the
Secretary of the Corporation or his designee at the time the Director elects to
receive the applicable Deferred Stock Units in respect of which Shares are to be
issued. Any fractional shares remaining after all the Shares in respect of the
Deferred Stock Units are received by the Director shall be paid in cash based on
the Fair Market Value of a Share on the date the last of the Shares are to be
paid to the Director pursuant hereto.
10. Adjustment Upon Certain Events. Notwithstanding any provision in
the Plan to the contrary, in the event of any change in the outstanding Shares
by reason of any Share dividend or split, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other
corporate exchange, or any distribution to stockholders of Shares other than
regular cash dividends, the Board in its sole discretion and without liability
to
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any person may make such substitution or adjustment, if any, as it deems to be
equitable, as to (i) the number or kind of Shares or other securities issued or
reserved for issuance pursuant to the Plan or pursuant to outstanding Deferred
Stock Units and/or (ii) any other affected terms of such Deferred Stock Units.
11. Change of Control. Notwithstanding anything contained herein to the
contrary, promptly following a Change of Control, the Corporation shall issue to
a Director holding Deferred Stock Units, Shares equal to 100% of the Deferred
Stock Units.
12. Issuance of Shares and Compliance with Securities Act. The
Corporation may postpone the issuance and delivery of Shares to be issued in
respect of any Deferred Stock Units until the completion of such registration or
other qualification of such Shares under any State or Federal law, rule or
regulation as the Corporation shall determine to be necessary or advisable. Any
holder of Deferred Stock Units shall make such representations and furnish such
information as may, in the opinion of counsel for the Corporation, be
appropriate to permit the Corporation, in the light of the then existence or
non-existence with respect to such Shares of an effective Registration Statement
under the Securities Act of 1933, as from time to time amended (the "Securities
Act"), to issue the Shares in compliance with the provisions of the Securities
Act or any comparable act. The Corporation shall have the right, in its sole
discretion, to legend any Shares, which may be issued in respect of Deferred
Stock Units, or may issue stop transfer orders in respect thereof.
13. Transferability. Unless otherwise so provided by the Board,
Deferred Stock Units and all other rights thereunder and hereunder may not be
assigned or transferred by a Director, except as provided in Section 8 hereof,
and any attempted assignment or transfer shall be null and void and shall
extinguish, in the Corporation's sole discretion, the Corporation's obligation
under the Plan with respect to the Director.
14. No Right to Service. Nothing contained herein or in any Deferred
Stock Unit shall be construed to confer on any Director any right to continue to
serve as a director of the Corporation.
15. Unfunded Plan. Unless otherwise determined by the Board, the Plan
shall be unfunded. To the extent any individual holds any rights by virtue of
Deferred Stock Units awarded under the Plan, such rights (unless otherwise
determined by the Board) shall be no greater than the rights of an unsecured
general creditor of the Corporation.
16. Successors and Assigns. The Plan shall be binding on all successors
and assigns of the Corporation and a Director, including without limitation, the
estate of such Director and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
Director's creditors.
17. Administration and Amendment of the Plan. Except as hereinafter
provided, the Board may at any time terminate or from time to time amend the
Plan as it relates to, and the terms and conditions of, any Deferred Stock Unit
not theretofore issued, and the Board, with the consent of the affected holder
of Deferred Stock Units, may at any time withdraw or from time to time amend the
Plan as it relates to, and the terms and conditions of, any outstanding Deferred
Stock Unit; provided, however, that any amendment by the Board which would
increase the number of Shares issuable under the Plan, change the class of
persons
5
eligible to participate in the Plan or materially increase the benefits to
participants in the Plan shall be subject to the approval of the stockholders of
the Corporation.
The Plan is intended to comply with Rule 16b-3 under the Exchange Act.
Any provision inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
18. Effective Date of the Plan. The Plan is conditioned upon its
approval at the next annual meeting of the stockholders of the Corporation on or
before December 31, 1999 by the vote of the holders of a majority of the Shares
of the Corporation voting at such meeting in person or by proxy; except that the
Plan is adopted and approved by the Board effective December 17, 1997 to permit
the issuance of Deferred Stock Units prior to the approval of the Plan by the
stockholders of the Corporation as aforesaid; provided, however, in no event
shall Shares be issued in respect of Deferred Stock Units prior to stockholder
approval. In the event that this Plan is not approved by the stockholders as
aforesaid, the Plan and any Deferred Stock Units issued hereunder shall be void
and of no force and effect.
19. Governing Law. The validity, construction and effect of the Plan
and any actions taken or relating to the Plan shall be governed by the
substantive laws, but not the choice of law rules, of the State of Connecticut.