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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )____)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
OAKHURST COMPANY, INC.
(Name of Registrant as Specified Inin Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) an(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided in 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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OAKHURST COMPANY, INC.
3513 CONCORD PIKE2751 CENTERVILLE ROAD -- SUITE 3131
WILMINGTON, DELAWARE 19803
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Oakhurst
Company, Inc., a Delaware corporation,Corporation, will be held as follows:
DATE: February 25, 1998October 16, 2001
PLACE: The Offices of Kurzman & Eisenberg
One North Broadway
White Plains, New York 10601Sterling Construction Company, Inc.
20810 Fernbush Lane
Houston, Texas 77073
TIME: 9:00 a.m., local time
PURPOSES: 1. Election of Directors:
o To elect two Class I directors to serve for a
term of one year and until their successors
are elected and qualify;
o To elect two Class II directors to serve for a
term of two years and until their successors
are elected and qualify; and
o To elect three Class III directors to serve
for a term of three years and until their
successors are elected and qualifiedqualify.
2. To approve the adoption by the Board of Directors
of an amendment to the Company's Amended and
Restated Certificate of Incorporation to elect one Class I directorchange
the name of the Company to serve for a term"Sterling Construction
Company, Inc."
3. To approve the adoption by the Board of two years and
until his successor is elected and qualified.Directors
of the 1998 Stock Incentive Plan of the Company.
4. To approve the adoption by the Board of Directors
of the 2001 Stock Incentive Plan of the Company.
5. To transact such other business as may properly
come before the meeting.
OnlyThe stockholders of record at the close of business on February 2, 1998August 20, 2001 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
Roger M. Barzun, Secretary
February 3, 1998September 15, 2001
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. THE EXECUTION OF A PROXY
WILL NOT AFFECT A RECORD HOLDER'S RIGHT TO VOTE
IN PERSON IF PRESENT AT THE MEETING.
THIS PROXY STATEMENT WAS FIRST MAILED TO STOCKHOLDERS ON OR ABOUT
SEPTEMBER 15, 2001.
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OAKHURST COMPANY, INC.
3513 CONCORD PIKE2751 CENTERVILLE ROAD -- SUITE 3131
WILMINGTON, DELAWARE 19803
(817) 416-0717
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PROXY STATEMENT
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GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Oakhurst Company, Inc., a
Delaware corporation (the("Oakhurst" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held on February 25, 1998October 16, 2001, at the offices of
Kurzman &
Eisenberg, One North Broadway, White Plains, New York.Sterling Construction Company, Inc., 20810 Fernbush Lane, Houston, Texas.
Proxies in the form enclosed will be voted at the meeting if they are properly
executed, returned to the Company prior to the meeting and not revoked prior to
the voting.
AAll proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted FOR the
matters set forth in the accompanying notice of meeting. Any proxy may be
revoked by a stockholder at any time before it is voted (i)its exercise by givingdelivering to the
Secretary of the Company a written notice of revocation, executed by submitting a subsequently
dated proxy, or by voting in person at the meeting. Attendance at the meeting
will not itself be deemed to revoke a proxy unless the stockholder of record, whichgives
affirmative notice should be received priorat the meeting that the stockholder intends to the vote being
taken on the matter or matters as to whichrevoke the
proxy is being revoked, (ii) by
delivering prior to theand vote being taken on a given matter a duly executed proxy
bearing a later date, or (iii) by the stockholder of record attending the
meeting and expressing a desire to vote the shares in person.
This Proxy
Statement andOn August 20, 2001, the accompanying proxy were first sent to the Company's
stockholders on or about February 3, 1998.
MATTERS TO BE CONSIDERED
The Annual Meeting has been calleddate for the following purposes:
1. To elect two Class II directors to serve for a termdetermination of three years and
until their successors are elected and qualified and to elect one
Class I director to serve for a term of two years and until his
successor is elected and qualified; and
2. To transact such other business as may properly come before the
meeting.
RECORD DATE AND VOTING
Only stockholders of record
at the close of business on February 2, 1998 (the
"Record Date") are entitled to notice of, and to vote at the meeting, or any
adjournment thereof. At the close of business on the Record Date, there were 3,207,053an aggregate of 4,943,018 shares of
the common stock, $0.01$.01 par value ("Common Stock") so held.
The Company has no other classper share, outstanding and entitled to vote at the
meeting. Each share of securities outstanding.
Each duly executed proxy received by the Company will be voted FOR the election
of the nominees for director described herein unlesscommon stock entitles the record holder otherwise
specifiesto one vote on
the proxy, and in the discretioneach of the proxy holders asmatters to the
transaction of any other business that may properly come beforebe voted upon at the meeting.
Other than the possible adjournmentA copy of the meetingCompany's Annual Report on Form 10-K for purposesthe year ended February
28, 2001, well as the Quarterly Report on Form 10-Q for the first fiscal
quarter ended May 31, 2001, which contains financial statements and other
information of soliciting
additional proxiesinterest to achieve a quorum,stockholders and accompanies the directors do not knowNotice of any such
other matterAnnual
Meeting and this Proxy Statement, is being mailed to stockholders on or business to be brought before the meeting.
OUTSTANDING SHARES, QUORUM AND VOTING RIGHTS AND PROCEDURESabout
September 15, 2001.
VOTES REQUIRED
The Company has one class of common stock, par value $.01 per share (the "Common
Stock"). Each share entitles the holder to one vote. The presence at the
meeting, in person or represented by proxy, of the holders of a majority of the outstandingshares of common stock is necessaryissued and outstanding
and entitled to constitutevote at the meeting constitutes a quorum for the transaction of
business at the Annual Meeting. Abstentions aremeeting. Holders of shares of common stock present in person or
represented by proxy (including holders of shares who abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether there is a quorum at the
quorum requirement is satisfied, but as not voted for
purposesmeeting.
Of the holders of determining
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the approval of any matter submitted to the stockholders for a vote. Common
stock represented by "broker non-votes" will be treated as present for purposes
of determining a quorum. A broker non- vote relates to shares of Common Stock
held in the name of a nominee as to which (i) the nominee has not received
instructions from the beneficial owner or personwho are entitled to vote and who are present or
represented by proxy at the nominee does not have discretionary voting power under applicable rules or the
instrument under which it serves as a nominee; or (ii) the record holder has
indicated on the proxy card or has executed a proxy and otherwise notified the
Company that the nominee does not have authority to vote such shares on a given
matter.
Because directors are elected by themeeting --
o The affirmative vote of the holders of a plurality of the shares voted
is required for the election of Commonthe directors;
o The affirmative vote of a majority of the issued and outstanding
shares of common stock of the Company are required to approve the
amendment of the Company's Amended and Restated Certificate of
Incorporation; and
o The affirmative vote of the holders of a majority of the shares voted
is required for the approval of each of the 1998 and the 2001 Stock
presentIncentive Plan.
Holders of shares who abstain from voting as to a particular matter, and entitledshares
held in "street" name by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in personfavor of such matter and will also not
be counted as votes cast or by proxy,shares voting on such matter. Accordingly,
abstentions and broker non-votes"broker non-votes" will not affect their election.have no effect in the voting on the
election of the directors or the approval of the stock plans and will be
equivalent to no votes with respect to the amendment of the certificate of
incorporation.
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PROXY SOLICITATION AND EXPENSES
The accompanying proxy is being solicited on behalf of the Board of Directors of
the Company. The expense of preparing, printing and mailing the form of proxy
and the solicitation material will be borne by the Company. In addition to the
use of the mails, proxies may be solicited by directors, officers and employees
of the Company, and if deemed necessary, through a third party solicitation
agent by means of personal interview, telephone, facsimile or telegram. The
Company will request banks, brokerage houses and other custodians, nominees and
fiduciaries to solicit their customers who are beneficial owners of Common Stockcommon stock
and to forward solicitation materials to such beneficial owners. The Company
will reimburse them for their reasonable out-of-pocket expenses incurred in such
solicitation.
PROPOSAL 1 --I - ELECTION OF DIRECTORS
The following section contains certain information about the nominees for
director, incumbent directors whose terms do not expire at the Annual Meeting,
and the Board of Directors.
The by-lawsBy-laws of the Company provide for such number of directors as is determined
from time to time by the Board of Directors. There are currently sixSection 2 of Article SEVENTH of the
Amended and Restated Certificate of Incorporation provides that directors shall
be divided into three classes, as nearly equal in number as reasonably possible
with each class having a full term of three years. The newBoard of Directors has
set the size of the Board at seven directors. Since the Company has not held an
Annual Meeting of stockholders for several years in order to conserve cash, the
term of all current directors expires at the Annual Meeting and when their
successors have been elected and qualify.
Accordingly, the initial term of Class I directors will expire at the 2002
Annual Meeting of Stockholders; the initial term of Class II directors will
expire at the 2003 Annual Meeting of Stockholders; and the initial term of the
Class III directors will expire at the 2004 Annual Meeting of Stockholders. At
the expiration of the initial term of each class of directors, their successors
will be electedchosen for a full term of three yearsyears. All directors hold office until
the expiration of their terms and until their successors are elected and
qualified.
NOMINATED
NOMINEES AGE CURRENT TERM EXPIRES DIRECTOR SINCE FOR CLASS
John D. Abernathy 60 1997 1994 I
Mark Auerbach 59 1997 1991 II
Bernard H. Frank 77 1997 1995 II
CURRENT
INCUMBENT DIRECTORS AGE CURRENT TERM EXPIRES DIRECTOR SINCE CLASS
Joel S. Lever 46 1998 1994 III
Anthony N. Puma 34 1998 1995 III
Robert M. Davies 47 1999 1991 I
Allqualify, except in the case of death, resignation or removal of any director.
The persons named in the enclosed proxy will vote to elect each of the nominees
have expressed their intentionnamed below unless the proxy is marked otherwise. Each of the nominees has
indicated his willingness to serve, if elected; however, if any nominee should
be unable to serve, the person acting under the proxy may vote the proxy for a
substitute nominee. The Board of Directors has no reason to believe that any of
the nominees will be unable to serve if elected. Should a
nominee become unavailable to serve when elected, theThe enclosed proxy holders may vote
each proxy (unless authority to vote has been
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withheld for such nominee) for the election in his stead of any other person the
Board of Directors may recommend. Mr. Abernathy is currently a Class II
director, but in order to more evenly balance the number in each class, he is
being nominated to serve as a Class I director to serve until nominees for that
class are due for election at the 1999 annual meeting of stockholders. The proxy
solicited by this Proxy Statement cannot be
voted for a greater number of persons than the number of nominees named in this
Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF THE NOMINEES.
Listed below is information that has been furnished by each director as to his
age, the year he was first elected a director, his principal occupation and
business experience for the past five years and directorships in other publicly
held companies held by him.
YEAR FIRST ELECTED INITIAL TERM OF
NAME AGE TO THE BOARD CLASS CLASS
- ---- --- ------------------ ----- ---------------
Patrick T. Manning 54 2001 I One year
Joseph P. Harper, Sr. 55 2001 I One year
John D. Abernathy 63 1991 II Two years
Robert W. Frickel 59 2001 II Two Years
Robert M. Davies 51 1991 III Three Years
Maarten D. Hemsley 52 1998 III Three years
Christopher H. B. Mills 49 2001 III Three years
For information relating to shares of common stock owned by each of the
nominees, see "Security Ownership of Certain Beneficial Owners and Management,"
below.
BUSINESS HISTORY OF NOMINEES
AND CONTINUING DIRECTORS
The following section sets forth for each of the nominees listed above and the
incumbent directors his business experience for at
least the last five years and his principal occupation and other directorships
held by him in public companies.
Patrick T. Manning. Mr. Manning joined Sterling Construction Company
("Sterling") in 1971 and led Sterling's move into the Houston, Texas market in
1978. He is currently Sterling's President and Chief Executive Officer.
Previously, Mr. Manning was President of Oakland Construction Company, a custom
home builder in suburban
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Detroit. Mr. Manning has served on a variety of construction industry
committees, including the Gulf Coast Trenchless Association and the Houston
Contractors' Association, where he served as a member of the Board of Directors
and as President from 1987 to 1993. He attended Michigan State University from
1969 to 1972. Mr. Manning was elected Chairman and Chief Executive Officer of
Oakhurst on July 23, 2001 in connection with the closing of the purchase by the
Company of a transaction in which the Company's ownership of Sterling increased
to 80.1%.
Joseph P. Harper, Sr. Mr. Harper is Chief Financial Officer, Treasurer and
Secretary of Sterling Construction and has been with the business since 1972. He
has performed both estimating and project manager functions as well as his
primary role as Chief Financial Officer. Prior to joining the business, Mr.
Harper worked for Price Waterhouse and received his CPA license in 1970. He
holds a Bachelor's degree from St. Joseph College. Mr. Harper was elected a
director and President of Oakhurst in July, 2001 and a director of the Company's
Steel City Products, Inc. subsidiary ("SCPI") in connection with the closing of
the purchase by the Company of a transaction in which the Company's ownership of
Sterling increased to 80.1%.
John D. Abernathy. Mr. Abernathy has been Executive Director of Patton Boggs,
L.L.P., a Washington D.C. law firm, since January 1995. From March 1991 to
February 1994 he was the Managing Director of Summit, Solomon & Feldesman, a New
York City law firm and from July 1983 until June 1990, Mr. Abernathy was
Chairman and Chief Executive Partner of BDO Seidman, a public accounting firm.
He is a director of Pharmaceutical Resources, Inc., a generic drug manufacturer
and of SCPI. Mr. Abernathy is a certified public accountant.
Robert W. Frickel. Mr. Frickel is the founder and President of R.W. Frickel
Company, P.C., a certified public accounting firm that provides audit, tax and
consulting services primarily to the construction industry. Prior to the
founding in 1974 of the R.W. Frickel Company, Mr. Frickel was employed by Ernst
& Ernst. He received his CPA license in 1968 and holds a Bachelor of Business
Administration degree from the University of Michigan.
Robert M. Davies. Mr. Davies was electedOakhurst's Chairman President and Chief Executive Officer
from May 1997 to July 2001 and was its President from May 1997 to January 1999.
Mr. Davies had previously been a member of the Company in May 1997.Oakhurst's Board of Directors from
1991 until 1994. Mr. Davies was a Vice President of Wexford Capital Corporation,
which acts as the investment manager to several private investment funds, from
1994 to March 1997. From November 1995 to March 1997 Mr. Davies also served as
Executive Vice President of Wexford Management LLC, a private investment
management company. From September 1993 to May 1994 he was a Managing Director
of Steinhardt Enterprises, Inc., an investment banking company, and from 1987 to August 1993, he was Executive Vice President of The
Hallwood Group Incorporated, a merchant banking firm.company. Mr. Davies is a
director of the Company's majority owned, publicly traded subsidiary, Steel City
Products, Inc.SCPI. Mr. Abernathy. Mr. Abernathy has been Executive DirectorDavies is a managing director of Patton Boggs,
L.L.P.Menai Capital, L.L.C.
("Menai"), a Washington DC law firm, since January 1995. From March 1991 to
February 1994 he was theprivate equity advisory company, and Managing Director of
Summit, Solomon & Feldesman,e3Convergence LLC, a New
York City law firm, and from July 1983 until June 1990,private equity investment management group.
Maarten D. Hemsley. Mr. AbernathyHemsley was Chairman and Chief Executive Partnerelected to the Board of BDO Seidman, a public accounting firm.
Mr. Abernathy isDirectors in
December 1998 having served as a director from 1991 to December 1995. He was an
employee of Barringer Technologies, Inc., a manufacturer of
high sensitivity analytical instrumentsOakhurst and SCPI for chemical sensing.many years prior to 1995. In December 1995, he
resigned his positions with the Company and SCPI, but continued to provide
consulting services to both companies through his consulting firm, Bryanston
Management, Ltd. which he established in 1993. Mr. Auerbach. Mr. Auerbach has beenHemsley was President, Chief
Operating Officer and Chief Financial Officer of the CompanyOakhurst from January 1999
until July 2001 and its publicly traded subsidiary, Steel City Products, Inc., since December 1995
and was formerly itscurrently is Oakhurst's Chief Executive Officer from December 1995 to May 1997. Mr.
Auerbach has been Senior Vice President andFinancial Officer. He is also
Chief Financial Officer since April
1993 of Central Lewmar, L.P.,SCPI. Mr. Hemsley is a fine paper merchant. From September 1992 until
April 1993, he was a partnermanaging director of MarronMenai.
Christopher H. B. Mills. Mr. Mills is Chief Investment Officer of J. O. Hambro
Capital L.P.,Management, an investment banking
company.fund based in the United Kingdom. Prior to that, hehis
founding of J. O. Hambro Capital Management in 1993, Mr. Mills was President,employed by
Montagu Investment Management and its successor company Invesco MIM as an
investment manager and director from 1975 to 1993. He is Chief Executive Officerof
North Atlantic Smaller Companies Investment Trust plc and ChairmanAmerican Opportunity
Trust plc. Mr. Mills is director and shareholder of the Board of Implant Technology, Inc.,J. O. Hambro Capital
Management and a manufacturer of artificial hip
systems, from 1990 to 1992. He is anon-executive director of Pharmaceutical Resources, Inc.,
a generic drug manufacturer. Mr. Auerbach is a certified public accountant.
Mr. Frank. Mr. Frank has been Executive Vice President and Chief Operating
Officernumber of the Company since May 1994 and is a founder of the Company's majority
owned, publicly traded subsidiary, Steel City Products, Inc., of which he has
been Chief Executive Officer since 1993, Chairman since 1994 and an executive
officer for more than the last five years.
Joel S. Lever. Mr. Lever has been associated with the law firm of Kurzman &
Eisenberg or its predecessor since 1980, and became a member of the firm in
1984. Mr. Lever specializes in transactional business matters with particular
emphasis on fine arts publishing, distribution and investment, and the sale and
acquisition of commercial real estate entities. Prior to 1980, Mr. Lever was an
Assistant District Attorney for Kings County, New York.
Anthony N. Puma. Mr. Puma is President and founder (in 1988) of Puma Products,
Inc., which was a subsidiary of the Company from October 1994 until June 1997
when Mr. Puma re-purchased it from the Company. Before that, Mr. Puma held
various positions with SDI Corporation, a distributor of accessories to the
small truck and van conversion markets.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four meetings during the Company's fiscal year ended
February 28, 1997.2001. During that period, each incumbent director attended all of
the meetings of the Board of Directors held while he was a director, as well as all
meetings of committees of the Board on which he served.
The standing committees of the Board of Directors are the Audit Committee, the
Compensation Committeean audit committee and the Stock Plans Committee.a
compensation committee.
The Audit Committee (composed of Messrs. Abernathy and Lever) reviews the Company's system of internal controls, selects
the Company's independent auditors and accountants, and periodically reviews
their services. The Audit Committee held three meetingsone meeting during the fiscal year
ended February 28, 1997.2001. The Audit Committee, which was reconstituted in July
2001, currently consists of Messrs. Abernathy (Chairman), Frickel and Mills.
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The Compensation Committee (composed of Messrs. Abernathy and Lever) reviews and determines cash compensation payable to
executive officers of the Company. The Compensation Committee held nodid not hold any
meetings in fiscal 2001. The current members of the Compensation Committee,
which was reconstituted in July 2001, are Messrs. Frickel (Chairman) and
Abernathy.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee acts under a written charter first adopted and approved in
June 2000. A copy of this charter is attached to this proxy statement as
Appendix A. All of the current members of the Audit Committee are considered to
be "independent directors" as defined by the charter and the rules of the Nasdaq
Stock Market.
The Audit Committee reviewed the Company's audited financial statements for the
fiscal year ended February 28, 2001 and discussed these financial statements
with management. Management is responsible for the Company's internal controls
and the financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the financial statements and
for issuing a report on those financial statements. The Audit Committee is
responsible for monitoring and overseeing these processes. As appropriate, the
Audit Committee reviews and evaluates and discusses with management's internal
accounting and financial personnel and the independent auditors, the following:
o the plan for, and the independent auditors' report on, each audit of
the financial statements;
o financial disclosure documents, including all financial statements and
reports filed with the Securities and Exchange Commission or sent to
shareholders;
o changes in accounting practices, principles, controls or
methodologies;
o significant developments or changes in accounting rules applicable to
the Company; and
o the adequacy of internal controls and accounting, financial and
auditing personnel.
The Audit Committee also reviewed and discussed the audited financial statements
and the matters required by Statement on Auditing Standards 61 (Communication
with Audit Committees), referred to as SAS 61, with Deloitte & Touche LLP, the
Company's independent auditors. SAS 61 requires the independent auditors to
discuss with the Audit Committee, among other things, the following:
o methods to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
o the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The independent auditors also provided the Audit Committee with the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees). Independence Standards Board
Standard No. 1 requires auditors to disclose annually in writing all
relationships that in the auditor's professional opinion may reasonably be
thought to bear on independence, confirm their perceived independence and engage
in a discussion of independence. In addition, the Audit Committee discussed with
the independent auditors their independence from the Company. The Audit
Committee also considered whether the independent auditors' provision of certain
other, non-audit related services to the Company is compatible with maintaining
such auditors' independence.
Based on its discussions with management and the independent auditors, and its
review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended February 28, 2001.
The Audit Committee*: John D. Abernathy
*Two former committee members who have resigned as directors participated in the
matters described in the report.
INDEPENDENT AUDITORS FEES AND OTHER MATTERS
Audit Fees. Deloitte & Touche billed the Company an aggregate of $88,000 in fees
for professional services rendered in connection with the audit of the financial
statements for the most recent fiscal year and the reviews of the financial
statements included in each of the Quarterly Reports on Form 10-Q during the
fiscal year ended February 28, 1997.
The Stock Plans Committee (composed of Messrs. Abernathy2001.
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Financial Information Systems Design and Lever) administersImplementation Fees. Deloitte & Touche
did not bill the Company's stock plans. The Stock Plans Committee held no meetings duringCompany or its affiliates for any professional services
rendered for the fiscal year ended February 28, 1997.2001 in connection with
financial information systems design or implementation, the operation of the
Company's information system or the management of its local area network.
All Other Fees. Deloitte & Touche billed the Company an aggregate of $51,000 in
fees for other services rendered to the Company and its affiliates for the
fiscal year ended February 28, 2001.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company (other than Mr. Davies, who
is not an employee, but who receives compensation as a consultant) receives an annual fee of
$10,000, but$12,500, and if he served as chairman of at least one committee of the Board of
Directors, an additional annual fee of $2,500. Directors receive no meeting fees
and isbut are entitled to reimbursement for
his out-of-pocket expenses incurred in
attending meetings. Non-employeeIn the past, non-employee directors also receivereceived annual
("formula") stock option grants of 3,000 shares each on May 1 each year under
the Non-Employee Director Stock Option Plan covering 3,000 shares of
Common Stock, whichPlan. These options are immediately
exercisable at an option price equal to the market valueprice on the date of grant.
-------------------------Options covering substantially all of the shares authorized for issuance under
the plan have been granted.
PROPOSAL 2
AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
On July 23, 2001, the Board of Directors adopted, subject to stockholder
approval, an amendment to Article FIRST of the Company's Amended and Restated
Certificate of Incorporation to change the name of the Company to Sterling
Construction Company, Inc. If the amendment is approved by stockholders, it will
become effective upon its filing with the Secretary of State of the State of
Delaware. Pursuant to Delaware law, the Board of Directors has declared the
amendment to be advisable.
The Board of Directors approved the name change to reflect the fact that, with
the purchase in mid-July of 2001 of additional shares of the common stock of
Sterling, bringing the Company's ownership interest to 80.1%, the majority of
the Company's operations consist of Sterling's heavy civil construction
business, which specializes in municipal and state highway contracts for paving,
bridge, water and sewer and light rail.. The name of Sterling will be
simultaneously changed to avoid any confusion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
PROPOSAL 3 & PROPOSAL 4
APPROVAL OF THE 1998 STOCK INCENTIVE PLAN AND THE 2001 STOCK INCENTIVE PLAN
The 1998 Stock Incentive Plan (the "1998 Plan") was adopted by the Board of
Directors on December 18, 1998 and the 2001 Stock Incentive Plan (the "2001
Plan") was adopted by the Board of Directors on July 23, 2001 in connection with
the acquisition by the Company of Sterling common stock. The plans are
substantially identical except for their date of adoption and the number of
shares authorized for issuance. Approval by the stockholders of the plans is
sought in order to meet the stockholder approval requirements of each of the
following: The Nasdaq Stock Market; Section 422 of the Internal Revenue Code of
1986, which requires stockholder approval of any plan under which incentive
stock options are issued; Section 162(m) of the Internal Revenue Code so that
the Company receives the tax benefits of the grant of so-called
"performance-based compensation." See "Report on Executive Compensation in the
2001 Fiscal Year-Compliance with Internal Revenue Code Section 162(m)" below.
The executive officers and directors of the Company are eligible to receive
options under the plans and therefore benefit from such approval.
The plans provide for the grant of incentive stock options intended to qualify
under Section 422 of the Internal Revenue Code, non-statutory stock options,
restricted stock awards and other stock-based awards, including the grant of
shares based upon certain conditions, the grant of securities convertible into
common stock and the grant of stock appreciation rights. These grants will be
referred to generally as awards.
Stock options may be granted at an exercise price which may be less than, equal
to or greater than the fair market value of the common stock on the date of
grant. Under present law, however, incentive stock options and options intended
to qualify as performance-based compensation under Section 162(m) of the
Internal Revenue Code may not be granted at an exercise price less than the fair
market value of the common stock on the date of grant (or less than 110% of the
fair market value in the case of incentive stock options granted to optionees
holding more than 10% of the voting power of the Company). Options granted under
the plan typically will vest over time and can be exercised no more than 10
years after the date of the grant.
-5-
8
Restricted stock awards entitle recipients to acquire shares of common stock
subject to the right of the Company to repurchase all or part of the shares from
the recipient in the event that the conditions specified in the award are not
satisfied prior to the end of the restriction period established for the award.
Under the plans, the Board of Directors has the right to grant other awards
based upon the common stock having the terms and conditions that the Board of
Directors determines, including the grant of shares based upon certain
conditions, the grant of securities convertible into common stock and the grant
of stock appreciation rights.
The Company's and its subsidiaries' officers, employees, directors, consultants
and advisors are eligible to be granted awards under the plan. The Company and
its subsidiaries currently have 500 employees, five officers and seven directors
(three of whom are also officers and employees.)
The 1998 Plan provides for the issuance pursuant to the grant of awards of a
maximum of 700,000 shares of common stock and the 2001 Plan provides for the
issuance pursuant to the grant of awards of a maximum of 500,000 shares of
common stock, subject, in each plan, to adjustment in the case of stock splits
or stock combinations. The maximum number of shares with respect to which
options may be granted to any one employee under either plan is 350,000 shares
per calendar year.
Each plan is administered by the Board of Directors, which has the authority to
adopt, amend and repeal the administrative rules, guidelines and practices
relating to the plan and to interpret its provisions. The Board of Directors has
delegated that authority to the Compensation Committee. The Board of Directors
has also delegated to the Compensation Committee the authority to grant awards
under the plan. No consideration is payable to the Company for the grant of a
stock option.
On August 20, 2001 the closing price of the common stock on the Over the Counter
Market was $1.35 per share.
Federal Income Tax Information. Set forth below is a general summary of the
federal income tax consequences to the Company and to recipients of awards under
the plans. The following summary is not intended to be exhaustive, does not
address certain special federal tax provisions, and does not address state,
municipal or foreign tax laws.
Tax Treatment of Non-Statutory Stock Options. Under Section 83 of the Code,
optionees realize no taxable income when a non-statutory stock option is
granted. Instead, the difference between the fair market value of the stock
and the option price paid is taxed as ordinary compensation income as of
the date of exercise if the stock is not subject at that time to a
"substantial risk of forfeiture," as defined in Section 83.
The Company receives no tax deduction on the grant of a non-statutory stock
option, but is entitled to a tax deduction when the optionee recognizes
taxable income on or after exercise of the option in the same amount as the
income recognized by the optionee.
Tax Treatment of Incentive Stock Options. Under Section 422 of the Code, an
optionee incurs no federal income tax liability on either the grant or
exercise of an incentive stock option. Provided that the stock is held for
at least one year after the date of exercise of the option and at least two
years after its date of grant, any gain realized on the subsequent sale of
the stock will be taxed as long-term capital gain. If the stock is disposed
of within a shorter period, the optionee will be taxed, with respect to the
gain realized, as if he or she had then received ordinary compensation
income in an amount equal to the difference between the fair market value
of the stock on the date of exercise of the option and its fair market
value on the date on which the option was granted. The balance of the gain
realized will be taxed as capital gain, long-term or short-term depending
on the holding period since the date of exercise.
The Company receives no tax deduction on the grant or exercise of an
incentive stock option, but is entitled to a tax deduction if the optionee
recognizes ordinary compensation income on account of a premature
disposition of an incentive stock option stock in the same amount and at
the same time as the optionee recognizes income.
Tax Treatment of Stock Awards. An employee who receives a grant of stock
generally will recognize taxable income at the time such stock is received.
An employee who receives a grant of stock subject to a restriction
generally will not recognize taxable income at the time such stock is
received, but will recognize ordinary compensation income when transfer
and/or forfeiture restrictions lapse in an amount equal to the excess of
the aggregate fair market value, as of the date the restrictions lapse,
over the amount, if any, paid by the employee for the restricted stock.
Alternatively, an employee receiving restricted stock may elect, in
accordance with Section 83(b) of the Code, to be taxed on the excess of the
fair market value of the shares of restricted stock at the time of grant
over the amount, if any, paid by the employee, notwithstanding the transfer
and forfeiture restrictions on the stock. All such taxable amounts are
deductible by the Company at the time and in the amount of the ordinary
compensation income recognized by the employee. The full amount of
dividends or other distributions of property made with respect to
restricted stock prior to the lapse of the restrictions will constitute
ordinary compensation income to the employee, and the Company will be
entitled to a deduction at the same time and in the same amount.
-6-
9
The above summary is not intended to be a complete discussion of all of the
terms of the 1998 Plan and the 2001 Plan and is qualified in its entirety
by the full text of the 1998 Plan and the 2001 Plan, which are attached to
this Proxy Statement as Appendices B and C, respectively.
NEW PLAN BENEFITS
Grants Under the 1998 Plan. At September 1, 2001, the following awards (all
of them stock options) had been made under the 1998 Plan to the persons and
groups listed below.
Number of Shares
Title/Position Subject to
Name or Group at Date of Grant Current Title/Position Option
- ----------------------------- ---------------------------- ------------------------------- ------------------
Terrance W. Allan Executive Vice President, President, SCPI 9,750
SCPI
Robert M. Davies* Chairman & Chief Executive Director 288,000
Officer
Bernard H. Frank Executive Vice President, Chairman & Chief Executive 7,750
Director Officer, SCPI
Chairman & Chief Executive
Officer, SCPI
Maarten D. Hemsley* President, Chief Operating Chief Financial Officer, 192,000
Officer & Chief Financial Director
Officer, Director
Executive Group** (3 209,500
persons)
Non-Executive Director 288,000
Group (1 person)
Non-Executive Officer 143,500
Employee Group (13 persons)
- 4----------------
* Nominee for election as a director
**Messrs. Allan and Frank are counted as executive officers of the Company for
purposes of the above table.
Grants Under the 2001 Plan. The following awards (all of them stock options)
have been made under the 2001 Plan to the persons and groups listed below as of
September 1, 2001.
Number of Shares
Subject to
Name or Group Current Title/Position Option
- ----------------------------- ------------------------------ -------------------
John D. Abernathy* Director 12,000
Robert M. Davies* Director 12,000
Robert W. Frickel* Director 12,000
Joseph P. Harper, Sr.** President, Director 3,700
Patrick T. Manning** Chairman and Chief Executive 3,700
Officer
Christopher H.B. Mills* Director 12,000
Executive Group** (2 7,400
persons)
Non-Executive Director 48,000
Group (4 persons)
Non-Executive Officer 42,000
Employee Group (25 persons)
* Nominee for election as a director
** Messrs. Harper and Manning were elected in July 2001
-7-
710
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
1998 STOCK INCENTIVE PLAN AND THE 2001 STOCK INCENTIVE PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following section sets forth certain information regarding ownership of the
Common Stock at February 2, 1998.
Except as otherwise indicated in the footnotes, the Company believes that the
beneficial owners of the Common Stockcommon stock listed in the following tables, based on
information furnished by such owners, have sole investment and voting power with
respect to the shares of Common Stockcommon stock shown as beneficially owned by them. The
numbers and percentages assume for each person or group listed the exercise of
all stock options held by such person or group that are exercisable within 60
days of February 2, 1998,September 1, 2001 in accordance with Rule 13d-3(d)(1) of the Securities
Exchange Act of 1934, but not the exercise of such stock options owned by any
other person. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following
table sets forth certain information as of September 1, 2001 with respect to the
beneficial ownership of shares of the Company's common stock by each person
known byto the Company (other than
management) to own beneficially more than 5% of the outstanding shares
of common stock of
the Company.stock.
NAME AND ADDRESS OF BENEFICIAL NUMBER OF SHARES OF
OWNER COMMON PERCENTAGESTOCK PERCENT OF OF BENEFICIAL OWNER STOCK CLASS
- ------------------------------ ------------------ ----------------
Fidelity Capital Appreciation Fund (1) 289,000 9.0%Robert M. Davies
434 North Street 733,492(1) 13.4%
Greenwich, CT 06830
Joseph P. Harper, Sr.
20810 Fernbush Lane 297,031 6.0%
Houston, TX 77073
Maarten D. Hemsley
82 DevonshirePowder Point Avenue 527,812(2) 9.8%
Duxbury, MA 02332
North American Smaller Companies
Investment Trust plc
14 Ryder Street Boston, Massachusetts 02109
Special Situations Fund, L.P. (2) 289,000 9.0%
153 East 53rd Street
New York, NY 10022
William D. Witter, Inc. 175,400 5.5%
One Citicorp Center
New York, NY 10022605,520 12.2%
Ryder Court SW1Y 6QB
London, England
Anthony N. Puma (3)
6014 Castle Creek Road 266,667 5.4%
Arlington, TX 76017
- --------------
1. Fidelity Capital Appreciation Fund is a portfolio(1) This number includes 535,992 shares issuable under outstanding stock
options that are currently exercisable at prices ranging from $0.50 to
$3.375 per share.
-8-
11
(2) This number includes 436,424 shares issuable under outstanding stock
options that are currently exercisable at prices ranging from $0.30 to
$2.75 per share.
(3) These shares were issued as part of the Fidelity Capital
Trust, an investment company registered under the Investment Company Act of
1940.
2. By agreement withpurchase by the Company dated June 25, 1990, as amended, Special
Situations Fund, L.P. (formerly Prudential-Bache Special Situations Fund,
L.P.) agreed not to increase its beneficial ownership of the Common Stock
ofPuma
Products, Inc. from Mr. Puma in fiscal 1995. In fiscal 1997, the Company
or Steel Citysold Puma Products, Inc. ("SCPI") above 8.2% of the then
outstanding shares, except in transactionsback to which the Company or SCPI, as
the case may be, is a party or under certain other circumstances.Mr. Puma.
SECURITY OWNERSHIP OF MANAGEMENTMANAGEMENT.
The following table sets forth information as of September 1, 2001 regarding
beneficial ownership of common stock by the Common Stock by each director, each individual namednominees for director; the chief
executive officer of the Company, the former chief executive officer and the
other executive officers of the Company listed in the Summary Compensation
Table, below,below; and by all directors all such named individuals, and all executive officers of the Company as a group.
PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OF COMMON STOCK CLASSNumber of Shares of
Name of Beneficial Owner Common Stock Percentage of Class
- ------------------------ ------------------- -------------------
Patrick T. Manning* 234,888 4.8%
Joseph P. Harper, Sr.* 297,031 6.0%
John D. Abernathy 41,996 (1) 1.30%
Mark Auerbach 126,996 (2) 3.81%Abernathy* 120,162(1) 2.4%
Robert W. Frickel* 3,000 ***
Robert M. Davies 109,992 (3) 3.38%
LaurenceDavies* 733,492(2) 13.4%
Maarten D. Finman 37,500 (4) 1.16%Hemsley* 527,812(3) 9.8%
Christopher H. B. Mills* 3,000 ***
Bernard H. Frank 70,034 (5) 2.14%
- 5 -
8
PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OF COMMON STOCK CLASS
Joel S. Lever 72,815 (6) 2.25%
Anthony N. Puma 266,667 8.32%Frank** 75,846(4) 1.5%
Terrance W. Allan 28,581 (7) Allan** John R. Ruda 8,500 37,144(5) ***
All directors and executive officers as
a group 10 persons 785,241 (8) 22.0%(10 persons) 2,076,508(6) 33.6%
- --------------
* An incumbent director and nominee for director.
** Messrs. Frank and Allan are employed by SCPI, a subsidiary of the Company.
*** Less than 1%
1. This number includes 26,996105,162 shares issuable under outstanding stock
options that are presently exercisable at prices ranging from $1.00$0.88 to
$3.375 per share.
2. TheseThis number includes 535,992 shares are issuable under outstanding stock
options that are presently exercisable at prices ranging from $1.00$0.50 to $3.375 per
share.
3. This number includes 26,996436,424 shares issuable under outstanding stock
options that are presently exercisable at prices ranging from $1.00$0.50 to $3.37 per
share and 17,996 shares Mr. Davies has the right to acquire through a
contractual arrangement with a former director at
$2.75 per share.
4. This number includes 17,500 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.25 to $2.00 per
share.
5. This number includes 68,327 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.25 to $2.00 per
share.
6. This number includes 26,996 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.00 to $3.375 per
share.
7. This number includes 28,08174,139 shares issuable under outstanding stock options
that are exercisable within 60 days of February 2, 1998 at prices ranging from $1.25$1.00 to $2.00 per share.
5. This number includes 39,081 shares issuable under outstanding stock options
that are exercisable at prices ranging from $1.00 to $2.00 per share. Mr.
Allan is an executive officer of the Company's subsidiary, Steel City
Products, Inc.
8.6. This number includes 355,8881,232,334 shares issuable under outstanding stock
options that are exercisable within 60 days of February 2, 1998August 1, 2001 at prices
ranging from $1.00$0.50 to $3.375 per share.
SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities ("Insiders") to file reports of ownership and
certain changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of those reports.
Based solely on a review of those reports and amendments thereto furnished to
the Company during its most recent fiscal year or written representations by
Insiders that no FormsForm 5 werewas required to be filed, the Company believes that
during the fiscal year ended February 28, 1997,2001 all Section 16(a) filing
requirements applicable to the Company's Insiders were satisfied.
---------------------------
- 6 --9-
912
EXECUTIVE COMPENSATION
The following sectionThis item contains information about compensation, stock options and awards,
employment arrangements and other information concerning certain of the executive officers
of the Company and of its largest subsidiary, Steel City Products, Inc. ("SCPI").
SUMMARY COMPENSATION TABLETABLE.
The following table sets forth all compensation for the 1997, 19962001, 2000 and 19951999
fiscal years of the Company allocated or paid on or before February 28,199728, 2001 to
(i) those who served as the Company's Chief Executive Officer during fiscal
19972001; and to(ii) the otherCompany's four most highly compensated individuals who were
serving as executive officers at the end of Fiscal 2001, other than the Chief
Executive of the Company, whose compensationtotal annual salary and bonus exceeded $100,000 in 1997 and who were serving at$100,000.
Included is the end of the 1997 fiscal
year for services rendered in all capacities to the Company and its
subsidiaries. Also included is compensation paid to an executive officer of SCPI who is not,
however, an executive officer of the Company.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ---------------------------
OTHER ALL
ANNUAL SECURITIES OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL YEAR SALARY BONUS SATION OPTIONS SATIONAnnual Compensation Long-Term Compensation
------------------------------------------------ ---------------------------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation* Options/SARs Compensation
- ------------------------------------------------------------------------------------------------------------------------------------------------- ---------- ---------- ---------- --------------- --------------- -----------------
Mark Auerbach (1) 1997 100,000Robert M. Davies(4)
Chairman & Chief Executive Officer 2001 $124,028 -- -- -- --
Chairman President & 1996 24,000 -- -- 100,000 --
Chief Executive Officer
Bernard H. Frank (2) 1997 50,243 16,000 -- 68,327 13,908 (3)
Executive Vice 1996 82,7752000 $120,000 -- -- -- 19,151--
1999 $ 70,300 -- -- 288,000 --
Maarten D. Hemsley(4)
President, Chief Operating
Officer & Chief 1995 100,100 55,779 -- 27,500 21,029
OperatingFinancial Officer John R. Ruda (4) 1997 100,385 16,000 35,827 --
Senior Vice President - 1996 151,5002001 $129,392 -- -- -- 6,847
Marketing 1995 151,525 73,632 --
15,000 9,103
Laurence D. Finman 1997 101,4402000 $125,000 -- -- -- --
1999 $ 19,823 -- -- 192,000 --
Bernard H. Frank(1)
Executive Vice President 20,0002001 $ 50,242 $25,000 -- -- $13,908(2)
2000 $110,434 $25,000 -- 7,750 $13,908(2)
1999 $110,000 $ 6,250 -- -- $13,908(2)
Terrance W. Allan (5) 1997 126,490 14,000 -- 24,333 --
Executive Vice 1996 106,160Allan(3)
President, SCPI 2001 $132,072 $60,515 -- -- 5,000 4,797
President SCPI 1995 110,855 21,746 --
6,000 6,4982000 $115,885 $15,000 -- 9,750 --
1999 $115,001 -- -- -- --
- -----------------
* Excludes perquisites and other personal benefits if the aggregate amount of
such items of compensation was less than the lesser of either $50,000 or
10% of the total annual salary and bonus of the named executive officer.
1. Mr. Auerbach became Chief Executive Officer of the Company in December 1995
and served in that capacity as a consultant to the Company until May 1997,
when Mr. Davies was elected Chief Executive Officer as his successor.
- 7 -
10
2. Mr. Frank, who is also Chairman and Chief Executive Officer of SCPI, is
compensated only by SCPI, except with respect to stock options and stock
awards.
Of the 68,327 shares shown as underlying options, 48,327 shares
relate to options granted in previous years, but which, under Securities
and Exchange Commission rules, are deemed granted on the date of their
re-pricing in May 1996. See "Ten-Year Option Re-Pricing," below. In fiscal
1997, in light of SCPI's financial performance, Mr. Frank voluntarily
reduced his annual salary by 50%.
3.2. This amount consists of $6,504, $5,508 and $1,896 that Mr. Frank received
under three substantially identical agreements amended in 1987 in
consideration of the waiver by Mr. Frank of his bankruptcy claims for
annuity rights in SCPI's predecessor's bankruptcy.
4. Mr. Ruda ceased to be an executive officer and employee of the Company on
February 28, 1997. The 35,827 shares shown as underlying options relate to
options granted in previous years, but which, under Securities and Exchange
Commission rules, are deemed granted on the date of their re-pricing in May
1996. See "Ten-Year Option Re-Pricing," below.
5.3. Mr. Allan is compensated only by SCPI, except with respect to stock options
and stock awards.
Of4. Employment agreements for Messrs. Davies and Hemsley include the 24,331 shares shownvoluntary
deferral of 10% of their salary until such time as underlying options, 14,331
relatethe Board of Directors
determines the Company has sufficient cash flow to permit the payment. In
fiscal 1999, the amount deferred for Mr. Davies was $2,500 and for Mr.
Hemsley was $3,600. In each of fiscal years 2000 and 2001 deferred amounts
were $6,000 and $8,500 for Mr. Davies and Mr. Hemsley, respectively. These
amounts were included in four-year promissory notes paying 12% interest
issued by the Company to Messrs. Davies and Hemsley.
OPTION GRANTS IN THE LAST FISCAL YEAR.
There were no stock options granted to the individuals named in previous years, butthe Summary
Compensation Table, above, during the fiscal year ended February 28, 2001.
-10-
13
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES.
The following table sets forth certain information based upon the fair market
value per share of the common stock at February 28, 2001 ($0.75) or the day
closest to the Company's February 28, 2001 fiscal year end on which under Securitiestrades were
made, with respect to stock options held at that date by each of the individuals
named in the Summary Compensation Table, above. The "value" of unexercised
in-the-money options is the difference between the market value of the common
stock subject to the options at February 28, 2001 and Exchange Commission rules, are deemed granted on the dateexercise price of their
repricing in May 1996. See "Ten-Year Option Re-Pricing," below.
COMPENSATION AGREEMENTSthe
option shares. During fiscal 2001, there were no option exercises by any of
these individuals.
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Fiscal Year End Options at Fiscal Year End
-------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Robert M. Davies 532,992 -- $72,000 --
Maarten D. Hemsley 436,424 -- $48,000 --
Bernard H. Frank 72,202 3,875 -- --
Terrance W. Allan 34,207 4,874 -- --
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Auerbach. In December 1995 the Company entered into a one-year consulting
agreement withDavies. Mr. Auerbach in connection with his appointment asDavies was elected Chairman, President and Chief Executive
Officer of the Company. The agreement provided forCompany in May 1997. He had previously been a director of the
payment to Mr. AuerbachCompany from 1991 until 1994. He was compensated at the rate of $10,000$5,000 per month
inunder a one-year consulting fees plusagreement until June 1998, when he entered into an
employment agreement at the same rate. Mr. Davies also received reimbursement of
expenses incurred by him in carrying out his duties and responsibilities. TheIn
October 1998, Mr. Davies voluntarily took a 10% salary reduction, and the amount
of the reduction was converted in July 2001 into a four-year Company note paying
12% interest. In December 1998, Mr. Davies also entered into a two-year
employment agreement alsowith the Company's Oakhurst Technology, Inc. subsidiary
("OTI") that provided for a base salary of $60,000, plus a car allowance. Both
the grant to him of a stock
option to purchase 100,000 shares of Common Stock pursuant to the Company's 1994
Omnibus Stock Plan.Oakhurst and OTI employment agreements expired on February 28, 2001. The
option is exercisable in two equal installments at $1.25
and $2.50 per share, respectively, on the grant date and the first anniversary
of the grant date. In October 1996 theOakhurst employment agreement was amended to provide thatthen continued on a month-to-month basis
through July 18, 2001, when it would continue through June 30, 1997 and thatterminated upon Mr. Auerbach's compensation for
the period from January 1, 1997 through June 30, 1997 would be $2,500 per month.
On May 27, 1997 Mr. Auerbach resignedDavies's resignation as
PresidentChairman and Chief Executive Officer but remainedof Oakhurst.
Mr. Hemsley. Mr. Hemsley was a director and officer of Oakhurst and SCPI for
several years prior to 1995. In 1995, he resigned his positions with the Company
and SCPI and entered into a consulting agreement with Oakhurst through his
consulting firm, Bryanston Management, Ltd. In December 1998, Mr. Hemsley was
elected as a director of the Company as well as President, Chief Operating
Officer and Chief Financial Officer of the Company at his then currentpursuant to an employment
agreement that provided for a salary of $85,000 per year, the same annual rate
of compensation that was formerly paid to Bryanston Management, Ltd. Mr. Hemsley
voluntarily deferred 10% of his salary, and in July 2001 the amount deferred was
converted into a four-year Company note paying 12% interest. In December 1998,
Mr. DaviesHemsley also entered into a two-year employment agreement with OTI that
provided for an annual base salary of $40,000, plus a car allowance. Both the
Oakhurst and OTI employment agreements expired on February 28, 2001. The
Oakhurst employment agreement continued on a month-to-month basis until it was
elected Chairmanrenewed in July 2001 for a one-year term at an annual salary of $76,500, plus a
car allowance.
Mr. Harper. Mr. Harper is President of the Company. He entered into a three-year
employment agreement with the Company on July 18, 2001, which agreement
acknowledges that Mr. Harper's compensation is paid by Sterling for his services
as Chief Financial Officer of Sterling. Pursuant to the three-year employment
agreement that Mr. Harper entered into with Sterling on July 18, 2001, he is
entitled to receive a base salary of $200,000 in each of the first two years of
the agreement and $170,000 in the third year of the agreement. In addition, Mr.
Harper is entitled to receive incentive compensation in the amount of (I) a
bonus of $100,000 ("First Bonus") if certain financial goals are met and (ii) an
additional bonus ("Second Bonus") from 10% to 100% of his base salary if certain
additional financial goals are met; provided that the aggregate Second Bonus
paid to Mr. Harper, Mr. Patrick T. Manning and a third executive officer of
Sterling pursuant to each of their respective employment agreements will not
exceed 30% of the amount by which adjusted EBITDA for the fiscal year in
question exceeds the budgeted amount of such EBITDA. Each of the employment
agreements with the Company and Sterling limit the ability of Mr. Harper to
compete for a period of two years against the respective entity after he ceases
to be an employee of such because he terminated his employment without good
reason or the respective entity terminated his employment for good cause, and
for a period of one year after he ceases to be an employee because he terminated
his employment for good reason or the respective entity terminated his
employment without good cause; provided that these noncompetition
-11-
14
obligations may be avoided by Mr. Harper if the respective entity terminates the
employment agreement other than for good cause.
Mr. Patrick T. Manning. Mr. Manning is Chief Executive Officer of the Company.
Effective July 1, 1997, Mr. Auerbach received only normal
directors fees from the Company.
Mr. Frank and Mr. Allan. SCPI hasHe entered into a three-year employment agreementsagreement with each of
Messrs. Frankthe Company on July 18,
2001, which agreement acknowledges that Mr. Manning's compensation is paid by
Sterling for his services and Allan (sometimes hereinafter referred to as the "executive")
commencing September 1, 1993 that provide for base salaries of $100,000 (Mr.
Frank) and $96,200 increasing to $115,050 (Mr. Allan). The agreements provide
for the payment of annual management bonuses based upon the defined profits of
SCPI's operating division, with Mr. Frank entitled to a minimum bonus of fifteen
percent of base salary. The aggregate amount of such management bonuses payable
each year to the executives and to all other SCPI executives is not to exceed 8%
of such defined profits and the allocation thereof is made by the Compensation
Committee of SCPI based on recommendations of Mr. Frank as Chief Executive Officer of SCPI. Mr. Allan is also entitled to an executive bonus calculated as
a percentage of defined annual profits of SCPI that exceed $2,000,000. The
Agreements were extended in September 1996.
In the event of non-renewal of the agreements, the executive is entitled to an
aliquot portion of the bonuses he would have earned during the year of
non-renewal, since the contract year does not coincide with the fiscal year of
SCPI. The agreements also provide that if the executive's employment terminates
by reason of his death or disability, he is entitledSterling. Pursuant to
the greater of two
years' salary (one year forthree-year employment agreement that Mr. Allan) or the salary for the balance of the term
of the agreement and the minimum bonus for such period in the case of Mr. Frank
and the management bonus that would otherwise have been paid in the case of Mr.
Allan. If the executive's employment is otherwise terminated without cause,
- 8 -
11
he is entitled to his salary and bonuses for the greater of one year or the
balance of the term of the agreement.
The agreements provide for car allowances, and the executives are eligible to
participate in all defined contribution plans, survivor and supplemental
benefits, short and long-term disability benefits, and all other benefit plans
and perquisites available now or in the future to the senior executives of SCPI.
The agreements also provide for certain termination rights in the event of a
change in control of SCPI. Change in control is defined to include certain
changes in the make-up of the SCPI board of directors or a sale of SCPI's assets
or business. Each executive has the right to terminate his employment within a
defined period (ranging up to one year) following a change in control and (i) to
be paid his base salary for a period of up to 24 months following such
termination; (ii) to continue to receive for a like period the benefits thatManning entered into with Sterling
on July 18, 2001, he is entitled to receive under his agreement and (iii) to be paid 25% ofa base salary in lieu of all bonus entitlement. The agreements also provide for
substantially the same payments and benefits$200,000 per year.
In addition, Mr. Manning is entitled to receive incentive compensation in the
eventamount of the executive'sFirst Bonus and Second Bonus, as described above. Each of the
employment is terminated by SCPI without cause as a resultagreements with the Company and Sterling limit the ability of a change in
control. In the event of any termination other than for cause, or voluntary
resignation in the absence of a change in control, the executive's options
become fully exercisableMr.
Manning to compete for a period of seven months following termination. Iftwo years against the respective entity after
he ceases to be an employee of such because he terminated his employment without
good reason or the respective entity terminated his employment for good cause,
and for a change in control had occurred on June 1, 1997, andperiod of one year after he ceases to be an employee because he
terminated his employment for good reason or the respective entity terminated
his employment without good cause; provided that these noncompetition
obligations may be avoided by Mr. Manning if each of Messrs.the respective entity terminates
the employment agreement other than for good cause. Mr. Frank and Allan had exercised his rights of termination, payments. Mr. Frank is
primarily compensated by SCPI would have
been approximately $525,000 in the aggregate.SCPI. In fiscal 1997, in light of SCPI's financial
performance, Mr. Frank voluntarily reduced his annual salary by 50%. In February 1998,
Mr. Frank.Frank's annual base salary was set by agreement at $50,000 and he was
granted participation in a deferred compensation program commencing March 1,
1998 that provided for the payment to him of $5,000 per month for twenty-four
months to compensate him for his prior voluntarily salary reduction. Also
commencing March 1, 1998, Mr. Frank was made eligible to participate in a bonus
program pursuant to which the Compensation Committee of the Board of Directors
of the Company in its discretion and after reviewing the Company's performance
and cash position was authorized to grant him on a quarterly basis a bonus not
to exceed $25,000 in the aggregate in any one fiscal year. Pursuant to this
arrangement, Mr. Frank was paid a $25,000 bonus in fiscal 2001.
Mr. Frank also receives compensation of $13,908 per year, in the aggregate,
under three substantially identical agreements amended in 1987 in consideration
of the waiver by Mr. Frank of his bankruptcy claims for annuity rights in SCPI's
predecessor's bankruptcy. The amended agreements provide for payments to be made
for a period of fifteen years subsequent to January 1988 of $6,504, $5,508 and
$1,896 per year for the three agreements, respectively.
Mr. Ruda. In December 1995, the Company entered into a one-yearAllan. Mr. Allan is employed by SCPI pursuant to an employment agreement
with
Mr. Ruda in connection with his appointment as Senior Vice President --
Marketingthat commenced May 1, 2000. The initial term of the Company commencing March 1, 1996.agreement expires on
September 30, 2003, but the agreement continues in effect on a year-to-year
basis until terminated by either SCPI or Mr. Allan. The agreement providedprovides for
the payment to Mr. RudaAllan of a base salary of $8,333 per month and participation
in all benefits plans made available$133,000 with annual increases
rising to employees and for the use of a Company
car.$145,000 annually commencing September 1, 2002. The agreement also
providedprovides for athe payment to Mr. Allan of an annual management bonus based on revenues achieved byupon
the Company's subsidiary, Steel City Products, Inc. ("SCPI"), as follows: one
percentdefined profits of SCPI's operating division. The aggregate amount of the
management bonus payable each year to the executive and to all other executives
of SCPI may not exceed 8% of the defined net revenuesprofits of SCPI, and the allocation of
that exceed seventeen million
dollars upamount is made by the Compensation Committee of SCPI based on
recommendations of Mr. Frank as Chief Executive Officer. Mr. Allan is also
entitled to and including $21 million; plus one-half of one percentan executive bonus calculated as a percentage of the defined net revenuesannual
profits of the Company that exceed $2,000,000. The agreement also provides that
if after a change in control of SCPI that exceed $21 million up toeither Mr. Allan's employment is terminated
without cause and including $23
million; plus one-quarterother than by reason of one percenthis death or permanent disability, or
Mr. Allan resigns his employment by written notice given within 180 days of the
defined net revenues of SCPI
that exceed $23 million; plus one percenteffective date of the defined net revenues ofchange in control, SCPI derived from the sale of pet supplies; plus one-half of one percent of the
defined net revenues derived from new product categories. If Mr. Ruda's
employment were terminated by the Company without cause, the Company was obligedis obligated to pay himMr. Allan in a
lump sum his salary for the balance of the term of the agreement
together with any portion of his bonus earned to the date of termination.
Otherwise, the Company was obliged to give Mr. Ruda 60 days notice of
termination unless termination was for cause, in which event his employment
would terminate on the giving of such notice. If Mr. Ruda elected to resign from
the Company, he was obliged to give 60 days notice. On February 28, 1997 the
agreement expired by its terms and Mr. Ruda's employment by the Company ceased.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information with respect to stock options
granted to the individuals named in the Summary Compensation Table, above,
during the fiscal year ended February 28, 1997. For purposes of this table,
under Securities and Exchange Commission regulations, options re-priced on May
1, 1996 are considered to have been re-granted on that date. Accordingly, the
information under the columns entitled "Number of Securities Underlying
Options," "Percent of Total Options Granted to Employees in FY 1997," and
"Potential Realizable Value at Assumed Annual Rates
- 9 -
12
of Stock Price Appreciation for Option Term" are all computed on that basis. The
expiration dates of the re-priced options were not affected by the re-pricing.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (3)
--------------------------------------------------- ------------------------
PERCENT OF
TOTAL OPTIONS
NUMBER OF GRANTED TO
SECURITIES EMPLOYEES IN EXERCISE EXPI-
UNDERLYING FISCAL YEAR PRICE RATION 5% 10%
NAME OPTIONS (%) ($)(2) DATE ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
Mark Auerbach 3,000 (1) 1.69 1.219 05/01/06 2,299 5,828
Bernard H. Frank 20,000 (1) 11.27 1.25 02/27/07 15,722 39,843
20,827*(1) 11.74 2.00 08/29/01 -- 24,180
27,500*(1) 15.50 2.00 04/29/04 -- 31,928
John R. Ruda 20,827*(1) 11.74 2.00 08/29/01 -- 24,180
15,000*(4) 8.46 2.00 04/29/04 -- 17,415
Laurence D. Finman 10,000* 5.64 2.00 02/01/05 -- 11,610
Terrance W. Allan 10,000 (1) 5.64 1.25 02/27/07 7,861 19,921
8,331*(1) 4.70 2.00 08/29/01 -- 9,672
5,000*(4) 2.82 2.00 04/29/04 -- 5,805
1,000*(5) 0.56 2.00 06/19/04 -- 1,161
- --------------
* These options were granted in prior years, but were re-priced in May 1996.
See footnote 2, below.
1. This option became exercisable at the date of grant.
2. The original exercise price per share of each option was equal to the
market value on the date of grant. Effective May 1, 1996, the exercise
price per share was reducedtermination of his employment an amount equal to $2.00, in excesstwo
year's base salary less the amount of base salary, if any, paid to him for the
closing price per
share of the Common Stock on the Nasdaq Smallcap Market on that date
($1.219). See "Ten-Year Option Re-Pricings," below.
3. The "potential realizable value" is calculated based on the term of the
option (ten years) at its date of grant. It is calculated by assuming that
the stock price onperiod during which he remained an employee after the date of grant appreciates at the indicated annual
rate compounded annuallychange of
control, and all of Mr. Allan's stock options vest in full and shall remain
exercisable for a period of one (1) year after the entire termdate of the option. However, the
optionee will not actually be able to realize any benefit from the option
unless the market valuetermination of
the Common Stock in fact increases over the
option price.
4. This option becomes exercisable in three installments of one-third of the
shares, each, from and after the grant date and the following two
anniversaries of the grant date.
5. This option becomes exercisable in four installments of one-fourth of the
shares, each, from and after the grant date and the following three
anniversaries of the grant date.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information based upon the fair market
value per share of the Common Stock at February 27, 1997 ($1.25), the day
closest to the Company's February 28, 1997 fiscal year end on which trades were
made, with respect to stock options held at that date by each of the individuals
named in the Summary Compensation Table, above. The "value" of unexercised
in-the-money options is the difference between the market value of the Common
Stock subject to the options at February 28, 1997 and the exercise (purchase)
price of the option shares. At that date none
- 10 -
13
of the options listed were in-the-money. During fiscal 1997, there were no
option exercises by any of these individuals.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL YEAR
YEAR END END ($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Mark Auerbach 123,996 -- 3,000 --
Bernard H. Frank 68,327 -- -- --
John R. Ruda 35,827 -- -- --
Laurence D. Finman 12,500 7,500 -- --
Terrance W. Allan 26,581 2,750 -- --
TEN-YEAR OPTION RE-PRICINGS
The following table sets forth the only re-pricing of options that has occurred
since April 1991 when the Company became a reporting company pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. The new exercise price,
$2.00 per share, was in excess of the $1.219 market price of the underlying
securities at the time of the re-pricing.
LENGTH OF
NUMBER OF MARKET PRICE ORIGINAL OPTION
SECURITIES OF UNDERLYING TERM REMAINING
UNDERLYING SECURITIES AT EXERCISE PRICE AT DATE OF RE-
OPTIONS RE- TIME OF RE- AT TIME OF RE- PRICING
DATE OF RE- PRICED PRICING PRICING (IN YEARS)
NAME AND POSITION PRICING (#) ($) ($) (#)
Terrance W. Allan 05/01/96 8,331 1.219 2.750 5.3
05/01/96 5,000 1.219 2.750 8.0
05/01/96 1,000 1.219 3.375 8.1
Roger M. Barzun 05/01/96 8,000 1.219 3.375 8.1
05/01/96 8,000 1.219 3.125 8.8
Laurence D. Finman 05/01/96 10,000 1.219 3.125 8.8
Bernard H. Frank 05/01/96 20,827 1.219 2.75 5.3
05/01/96 27,500 1.219 2.75 8.0
John R. Ruda 05/01/96 20,827 1.219 2.75 5.3
05/01/96 15,000 1.219 2.75 8.0
The option re-pricing of May 1, 1996 was implemented because the market price of
the Company's common stock had been severely depressed notwithstanding the
dedication and hard work of certain of the Company's key employees, including
certain executive officers, and because those employees had voluntarily agreed
to take salary cuts.
Stock Plans Committee: John D. Abernathy; Joel S. Leverhis employment.
REPORT ON EXECUTIVE COMPENSATION IN THE 19972001 FISCAL YEARYEAR.
This report has been prepared by the Compensation Committee and the Stock Plans Committee of the Board of
Directors and addresses the Company's compensation policies with respect to the
Chief Executive Officer and executive officers of the Company in general for the
fiscal year ended February 28, 1997.2001. All members of the CommitteesCommittee are
non-employee directors. TheDuring fiscal 2001 the Company hashad no operating business
of its own, but iswas a holding company of operating businesses. The Company has
- 11 -
14
elected to include in the Summary Compensation Table above, certain information
concerning an executive officer of the Company's largestits subsidiary, Steel City Products, Inc.,("SCPI") who is not, however, an executive officer of the Company and
accordingly, a discussion of his compensation is included here. Reference is
made generally to the information under the heading "Compensation Agreements,"
above."Employment Contracts and
Termination of Employment and Change-in-Control Arrangements".
-12-
15
Compensation Policy. The overall intent in respect offor executive officers is to establish
for them levels of compensation that provide appropriate incentives in order to
command high levels of individual performance and thereby increase the value of
the Company to its stockholders and that are sufficiently competitive to attract
and retain the skills required for the success and profitability of the Company.
The principal components of executive compensation are salary, bonus and stock
options.
Chief Executive Officer's Compensation. The compensation of the Chief Executive
Officer's consulting
fee and stock option grant are the result of a written consulting agreement that
was negotiated between Mr. Auerbach and the Company and that is described above
under the heading "Compensation Agreements." His compensation, consisting of
both cash and stock options,Officer was determined to be appropriate by the members of the CommitteesCompensation
Committee serving at the time based on the non-full-time nature of the position; the expertise
and responsibility that the position requires; the Chief Executive Officer's
prior financial and accounting experience in former employments;employment positions; and
the subjective judgement of the members ofregarding a reasonable level of
compensation.
Other Executive Officers. Until July 2001 Mr. Frank iswas an Executive Officer of
the Company, but receivesreceived all of his compensation from SCPI in his capacity ofas
Chairman and Chief Executive Officer of SCPI. Mr. Allan is included in the
Company's proxy disclosures relating to compensation because of his importance to the
success of the Company on a consolidated basis. Prior to December 1995, Mr. Ruda was an executive
officer of SCPI. Each of these and the other executive officers of the Company
is compensated under atheir written employment
agreement thatagreements was reviewed and approved by the Company's Compensation Committee and
in the case of Mr. Allan, by the SCPI Compensation Committee.
Salary. ThreeSince all of the executive officers named in the Summary Compensation
Table are long-term employees of the Company and/or SCPI and its
predecessor, and one of them is a
founder of the original business. Accordingly,
the salary of each such executive wasbusiness, their salaries in fiscal 2001 were based on
the level of histheir prior salary. As
to thosesalaries and the other executive officers of the Company, salary levels are also
based on the subjective judgement of the members of
the respectiveCompany's and SCPI's Compensation Committees, as applicable, as to the value
of the executive's past contribution and potential future contribution to the
business.
Bonuses. Bonuses payable to Messrs. Frank and Allan under their employment
agreements consist of an Annual Management Bonus and in the case of Mr. Allan,
an additional Annual Executive Bonus. The Annual Management Bonus is paid from a
pool of funds equal to 8% of SCPI's consolidated net income before interest,
taxes, depreciation, any LIFO adjustments and amortization, prepared in
accordance with generally accepted accounting principles consistently applied.
The amountallocation of the bonus pool allocation is based on Mr. Frank's recommendations to
SCPI's Compensation Committee. Mr. Frank's recommendations, in turn, are based
on his subjective judgement, formed by over fifty yearsyears' experience within the
business, of the performance of each officer during the preceding year. Mr.
Frank is entitled to a minimum Annual Management Bonus of 15% of his salary
provided that SCPI has earnings for the fiscal year in question. Bonuses paid in
fiscal 19972001 related to earnings in the prior fiscal year.
The Annual Executive Bonus for Mr. Allan is equal to 1% of the amount by which
SCPI's consolidated net income (defined in the same manner as for the Annual
Management Bonus) exceeds $2,000,000. SCPI's defined net income did not exceed
the $2,000,000 threshold in fiscal 19972000 and 2001 and accordingly no Annual
Executive Bonuses were paid.
The bonus percentages and amounts contained in the executive's employment
agreements are based on the executive's years of service, his perceived
importance to the profitability of SCPI and the subjective judgement of members
of the SCPI Compensation Committee as to the best balance between - 12 -
15
salary and
bonus and what is fair and reasonable. No bonuses were paid to any other
executive officers of the Company during fiscal 1997.2001.
Stock Options. The Committees believeCommittee believes that stock ownership by executive officers
is important in aligning management's and stockholders' interests in the
enhancement of stockholder value over the long term. The exercise price of all
outstanding stock option grants to date is equal to the market price of the Common Stockcommon stock
on the date of grant. The stock option grants made to executive officers (other than to
the Chief Executive Officer) in fiscal 1997 were made in recognition of the
executives' services to the Company during the year and prior years and were in
amounts deemed in the subjective judgement of the Stock Plans Committee to be
appropriate.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code, (enactedenacted in 1993)1993, generally disallows a tax deduction to
public companies for compensation over $1 million paid to its chief executive
officer and its four other most highly compensated executives. The Company's
compensation payable to any one executive officer (including potential income
from outstanding stock options) is currently and for the foreseeable future
unlikely to reach that threshold. In addition, because of the significant net
operating loss carryforwards of SCPI, the deductibility of compensation payments
is not currently an issue. However, should circumstances change, the
Compensation Committee will study the matter and make recommendations to the
Board.
The Compensation Committee The Stock Plans Committee:
Joel S. LeverBoard of Directors.
The Compensation Committee*: John D. Abernathy
Robert M. Davies**
*Two former committee members who have resigned as directors participated in the
matters described in the report.
**Not currently a member of the Compensation Committee
-13-
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
During the fiscal year ended February 28, 2001, Messrs. Davies and Hemsley
served on the Board of Directors of the Company and served as executive officers
of the Company. Mr. Davies was elected to the Board of Directors of Sterling in
January 1999, which establishes the compensation of senior executives of
Sterling, but during fiscal 2001, no director or executive officer of Sterling
was an executive officer or director of the Company.
During the fiscal year ended February 28, 2001, Messrs. John D. Abernathy, Joel
S. Lever,
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, no member of the Compensation Committee or Stock Plans
Committee was an employee of the Company or any or its subsidiaries. Mr. Frank
servesRobert M. Davies and Ross Pirasteh served on the Compensation
Committee of SCPI and is a directorthe Board of SCPI and of
the Company.
In connection with the acquisition of Puma Products, Inc. in October 1994, Puma
Products entered into a lease agreement with a partnership controlled by its
founder, Anthony N. Puma, a director of the Company. The lease covers the 25,000
square foot facility used by Puma Products and runs for six years, with an
option to extend for an additional four years. Rent under the lease is $3.25 per
square foot and is subject to increases as a result of increases in real estate
taxes and the Consumer Price Index. In May 1997 the Company sold the capital
stock of Puma Products back to Mr. Puma.Directors. During that year, Mr. Davies was elected Chairman, President and Chief Executive Officeran
executive officer of the Company, in May 1997 to succeed Mr. Auerbach. He is compensated at the rate of
$5,000 per month under a one-year consulting agreement and receives
reimbursement of expenses incurred by him in carrying out his duties and
responsibilities. Pursuant to the agreement, the Company has granted to Mr.
Davies ten-year stock options at the market price on the datebut none of the grant to
purchase 100,000 sharesCompany's executive officers
served as a director or member of Common Stock, in the aggregate, undercompensation committee (or other committee
serving an equivalent function) of any other entity, whose executive officers
served as a director or member of the Company's 1994 Omnibus stock Plan. The options become exercisable in full in May 1998.
Subsequent toCompensation Committee. Messrs.
Lever and Pirasteh resigned from the 1997 fiscal year end, theCompany's Board of Directors granted ten-year
stock options at the market price on the date of grant (January 13, 1998) to
certain non-employee directors under the Company's 1994 Omnibus Stock Plan: Mr.
Abernathy 65,000 shares, Mr. Davies 100,000 shares; Mr. Lever 65,000 shares. The
vesting of these options is dependent upon the Company achieving certain
financial objectives, but in any event, they vest on the ninth anniversary of
the grant date.July 18 and
July 3, 2001, respectively.
The Board of Directors intends that any transactions with officers, directors
and affiliates will be entered into on terms no less favorable to the Company
than could be obtained from unrelated third parties and that they will be
approved by a majority of the directors of the Company who are independent and
disinterested with respect to the proposed transaction.
No such transactions
occurredIn October 1999, certain shareholders of Sterling exercised their right to sell
a second tranche of equity securities to the Company's subsidiary, Oakhurst
Technology, Inc. ("OTI") thereby increasing the Company's consolidated equity
ownership of Sterling from 7% to 12%. The equity purchase was financed through
the issuance of two notes. One of these notes in fiscal 1997.
-----------------------
- 13 -the amount of $539,000 was
issued to Mr. Davies (the "First Note") in which Mr. Hemsley had a participation
of $116,000. The second note in the amount of $800,000 (the "Manning Note") was
issued to James D. Manning, the brother of Patrick Manning and one of the
Sterling shareholders who sold Sterling equity securities to OTI> The First Note
provided for interest at the rate of 14% per annum payable quarterly and was due
in October 2000, but in fact, no interest payments were made and the First Note
was not repaid in October 2000. In connection with the purchase by the Company
of additional shares of Sterling that raised the Company's holdings to 80.1% of
Sterling's common stock in July 2001 (the "Sterling Transaction"), accrued
unpaid interest on the First Note of $134,000 was added to the principal of the
First Note, the maturity date of the First Notes was extended to July 2005, and
the interest rate was reduced to 12%. In connection with the Sterling
Transaction, the Company also issued an additional four-year 12% promissory note
to each of Messrs. Hemsley ($136,421) and Davies ($250,623) (the "Second Notes")
to repay certain amounts due to them by the Company or OTI, including deferred
compensation, the fee (and related interest) owed to Menai in connection with
the acquisition of the second tranche of Sterling equity in October 1999, the
fee due in July 2001 to Menai in connection with the Sterling Transaction and a
fee for the extension of the First Notes.
In connection with the Sterling Transaction, the maturity date of the Manning
Note also was extended to July 2005 and the interest rate was reduced to 12%. In
consideration for the extension of the maturity date and interest rate
reduction, Mr. James D. Manning received a zero coupon promissory note payable
July 2005 with principal and interest payable at maturity in the aggregate
amount of $187,000. Interest and principal on the Note, the Second Note and the
Manning Note are payable prior to maturity only to the extent of cash available
to OCI for these payments and as permitted by lenders to OCI or its
subsidiaries.
After the Sterling Transaction, Mr. Harper purchased $300,000 of the Manning
Note from Mr. James D. Manning. As a result, Mr. Harper now holds a separate
note of OTI in the principal amount of $300,000 and Mr. James D. Manning holds a
note of OTI in the principal amount of $400,000, in each case, on the same terms
and conditions as the Manning Note.
Mr. James D. Manning is an Executive Vice President of Sterling, which entered
into a three-year employment agreement with him in January 1999 pursuant to
which Mr. Manning receives an annual salary of $75,000 plus $75.00 per hour for
each hour worked in excess of 1,000 hours during any calendar year. In addition,
Mr. Manning is entitled to receive incentive compensation in the amount of
$50,000 if certain financial goals are met. The employment agreement limits the
ability of Mr. Manning to compete for a period of two years after he ceases to
be en employee of Sterling because he terminated his employment without good
cause or Sterling terminated his employment for good cause, and for a period of
one year after he ceases to be an employee because he terminated his employment
for good reason or Sterling terminated his employment without good cause;
provided that these noncompetition obligations may be avoided by Mr. Manning if
Sterling terminates the employment agreement other than for good cause.
In 1996, Mr. Patrick Manning, Mr. Harper and Mr. James D. Manning loaned
$864,000 to Sterling pursuant to notes bearing interest at the prime rate plus
2%. The final principal installments on these loans are due in September 2001 to
(i) to Mr. James D. Manning in the amount of $240,000 plus accrued interest and
(ii) to each of Mr. Patrick Manning and Mr. Harper in the amount of $24,000 plus
accrued interest.
-14-
16
[CHART]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Oakhurst Company, Inc. 100.00 72.73 90.91 122.73 43.16 40.91
DJ Global US 100.00 111.11 119.86 101.29 144.18 197.70
Dow Jones Retailers - Other 100.00 120.29 117.14 105.39 102.71 148.40
17
NASCIT lent $1,500,000 to Sterling in connection with the Sterling Transaction
pursuant to a short-term promissory note bearing interest at 12%. The note is
payable in full on December 31, 2001. Mr. Mills is Chief Executive of NASCIT.
Since March 2001 Mr. Hemsley has provided consulting services to J. O. Hambro
Capital Management in respect of its Leisure and Media Venture Capital Trust, a
fund that was not an investor in Sterling, nor is an investor in Oakhurst.
Mr. Mills was elected a director of Sterling in January 1999, representing funds
managed by J. O. Hambro Capital Management that invested in Sterling.
See also "Compensation of Directors" and "Employment Contracts and Termination
of Employment and Change-in-Control Arrangements."
----------------------
The following Performance Graph and the foregoing Report of the Compensation
Committee on Executive Compensation are not and shall not be deemed incorporated
by reference into any filings of the Company with the Securities and Exchange
Commission by implication or by any reference in any such filings to this Proxy
Statement.
PERFORMANCE GRAPHGRAPH.
The following graph compares the percentage change in the Company's cumulative
total stockholder return on Common Stockcommon stock for the last five years with (i) the
Dow Jones Global US Market Index (a broad market index), and (ii) the Dow Jones
Retailers - Other Specialty Index, a group of companies whose marketing strategy
is focused on a limited product line, such as automotive parts, over the same
period. Both indices are published in the Wall Street Journal.
OAKHURST COMPANY, INC.
[PERFORMANCE GRAPH]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Dow Jones Specialty Index 100 119 162 228 257 205
Dow Jones Total Return Index 100 124 166 192 229 201
Oakhurst Company, Inc. 100 95 95 131 103 63
-15-
18
OTHER MATTERS
OTHER BUSINESS. The returns are calculated assumingBoard of Directors knows of no other business that will be
presented for consideration at the valuemeeting other than the proposals described in
this Proxy Statement. However, if any other business should come before the
meeting, it is the intention of an investmentthe persons named in the Company's
stock and each index of $100enclosed proxy to vote
or otherwise act in accordance with their best judgment on February 28, 1992 and that all dividends were
reinvested; however, the Company paid no dividends during the periods shown. The
graph lines merely connect the beginning and end of the measuring periods and do
not reflect fluctuations between those dates. The historical stock performance
shown on the graph is not intended to, and may not be indicative of, future
stock performance.
- 14 -
18
AUDITORS
The firm of Deloitte & Touche LLP, certified public accountants, served as the
Company's independent auditors and accountants for the fiscal year ended
February 28, 1997 and has been selected by the Audit Committee as the Company's
independent auditors and accountants for the fiscal year ending February 28,
1998.such matters.
A representative of Deloitte & Touche LLPL.L.P., the Company's independent public
accountants retained for fiscal 2001 is expected to be available at the Annual Meetingmeeting
and will have an opportunity to make a statement if he wishesor she desires to do so
and will also be available to respond to appropriate questions.questions from
stockholders.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal that a stockholder who wishesintends to present a proposal for action at the 1998 annual
meeting2002 Annual Meeting of
stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company,Stockholders must deliver such proposalbe submitted to the Secretary of the Company at its principal executive offices no later than
MayApril 1, 19982002 in such form as is required under regulations promulgated by
the Securities and Exchange Commission.order to be considered timely received.
By Order of the Board of Directors
Roger M. Barzun, Secretary
February-16-
19
Appendix A: Audit Committee Charter
Appendix B: 1998 Stock Incentive Plan
Appendix C: 2001 Stock Incentive Plan
-17-
20
Appendix A
OAKHURST COMPANY, INC.
AUDIT COMMITTEE CHARTER
This charter shall be reviewed, updated and approved annually by the
Board of Directors.
ROLE AND INDEPENDENCE
The Audit Committee of the Board of Directors assists the Board in
fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and reporting practices of the
Corporation and other such duties as the Board may direct. The
membership of the Committee shall consist of at least three directors
who are generally knowledgeable in financial and auditing matters,
including at least one member with accounting or related financial
management expertise. Each member shall be free of any relationship
that, in the opinion of the Board, would interfere with his or her
individual exercise of independent judgment, and shall meet the
director independence requirements for serving on Audit Committees as
set forth in the corporate governance standards of the NASDAQ, American
Stock Exchange. The Committee is expected to maintain free and open
communication (including private executive sessions at least annually)
with the independent accountants, the internal auditors and the
management of the Corporation. In discharging this oversight role, the
Committee is empowered to investigate any matter brought to its
attention, with full power to retain outside counsel or other experts
for this purpose.
The Board of Directors shall appoint one member of the Audit Committee
as chairperson. He or she shall be responsible for leadership of the
Committee, including preparing the agenda, presiding over the meetings,
making Committee assignments and reporting to the Board of Directors.
The chairperson will also maintain regular liaison with the Chief
Executive Officer, Chief Financial Officer, the lead independent audit
partner and the director of internal audit.
RESPONSIBILITIES
The Audit Committee's primary responsibilities include:
o Recommending to the Board the independent accountant to be
selected or retained to audit the financial statements of the
Corporation. In so doing, the Committee will request from the
auditor a written affirmation that the auditor is in fact
independent, discuss with the auditor any relationships that may
impact the auditor's independence, and recommend to the Board any
actions necessary to oversee the auditor's independence.
o Overseeing the independent auditor relationship by discussing
with the auditor the nature and rigor of the audit process,
receiving and reviewing audit reports, and providing the auditor
full access to the Committee (and the Board) to report on any and
all appropriate matters.
Audit Committee Charter Rev. June 2000 Page 1 of 2
21
o Providing guidance and oversight to the internal audit activities
of the Corporation including reviewing the organization, plans
and results of such activity.
o Reviewing the audited financial statements and discussing them
with management and the independent auditor. These discussions
shall include consideration of the quality of the Corporation's
accounting principles as applied in its financial reporting,
including review of estimates, reserves and accruals, review of
judgmental areas, review of audit adjustments whether or not
recorded and such other inquiries as may be appropriate. Based on
the review, the Committee shall make its recommendation to the
Board as to the inclusion of the Corporation's audited financial
statements in the Corporation's annual report on Form 10-K.
o Reviewing with management and the independent auditor the
quarterly financial information prior to the Corporation's filing
of Form 10-Q. This review may be performed by the Committee or
its chairperson.
o Discussing with management, the internal auditors and the
external auditors the quality and adequacy of the Corporation's
internal controls.
o Discussing with management the status of pending litigation,
taxation matters and other areas of oversight to the legal and
compliance area as may be appropriate.
o Reporting Audit Committee activities to the full Board and
issuing annually a report to be included in the proxy statement
(including appropriate oversight conclusions) for submission to
the shareholders.
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Appendix B
OAKHURST COMPANY, INC.
1998 STOCK INCENTIVE PLAN
1. 1998 STOCK INCENTIVE PLAN PURPOSE. The purpose of this 1998 Stock Incentive
Plan (the "Plan") of Oakhurst Company, Inc., a Delaware corporation (the
"Company") is to advance the interests of the Company's shareholders by
enhancing the Company's ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing those persons with opportunities for equity ownership and
performance-based incentives and thereby to better align the interests of
those persons with those of the Company's shareholders. Except where the
context otherwise requires, the term "Company" shall include any of
Oakhurst Company, Inc.'s present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (the "Code.")
2. ELIGIBILITY. All of the Company's employees, officers, directors,
consultants and advisors are eligible to be granted options, restricted
stock, or other stock-based awards (each, an "Award") under the Plan. Any
person who has been granted an Award under the Plan shall be deemed a
"Participant."
3. ADMINISTRATION & DELEGATION.
3.1 Administration by the Board of Directors. The Plan will be
administered by the Board of Directors of the Company (the "Board.")
The Board shall have authority to grant Awards and to adopt, amend and
repeal such administrative rules, guidelines and practices relating to
the Plan as it shall deem advisable. The Board may correct any defect,
supply any omission, or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry
the Plan into effect and it shall be the sole and final judge of such
expediency. No member of the Board shall be liable for any action or
determination relating to the Plan, and no director or person acting
pursuant to the authority delegated by the Board shall be liable for
any action or determination under the Plan made in good faith. All
decisions by the Board shall be made in the Board's sole discretion
and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award.
3.2 Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one
or more committees or subcommittees of the Board (each a "Committee.")
So long as the Company's common stock (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange
Act,") the Board shall appoint one such Committee of not less than two
members, each member of which shall be a "non-employee director" as
defined in Rule 16b-3 promulgated under the Exchange Act. All
references in the Plan to the "Board" shall mean the Board or a
Committee to the extent that the Board's powers or authority under the
Plan have been delegated to a Committee.
4. STOCK AVAILABLE FOR AWARDS.
4.1 Number of Shares. Subject to adjustment under Section 4.3, Awards may
be made under the Plan for up to 700,000 shares of Common Stock. If
any Award (a) expires; (b) is terminated, surrendered or canceled
without having been fully exercised; or (c) is forfeited in whole or
in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options (as hereinafter defined) to any limitation
required under the Code. Shares issued under the Plan may consist in
whole or in part of authorized but un-issued shares or treasury
shares.
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4.2 Per-Participant Limit. Subject to adjustment under Section 4.3, the
maximum number of shares with respect to which an Award may be granted
to any participant under the Plan shall be 350,000 per calendar year.
The per-participant limit described in this Section 4.2 shall be
construed and applied consistently with Section 162(m) of the Code.
4.3 Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to
holders of Common Stock other than a normal cash dividend, (a) the
number and class of securities available under this Plan; (b) the
number and class of security and exercise price per share subject to
each outstanding Option (as hereinafter defined); (c) the repurchase
price per security subject to each outstanding Restricted Stock Award
(as hereinafter defined); and (d) the terms of each other outstanding
stock-based Award shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board
shall determine, in good faith, that such an adjustment (or
substitution) is necessary and appropriate. In the event of a conflict
between the provisions of this Section 4.3 and any action taken by the
Board pursuant to Section 9.2, the action taken by the Board pursuant
to Section 9.2 shall take precedence.
5. STOCK OPTIONS.
5.1 General. The Board may grant options to purchase Common Stock (each,
an "Option") and may determine (a) the number of shares of Common
Stock to be covered by each Option; (b) the exercise price of each
Option; and (c) the terms, conditions and limitations applicable to
the exercise of each Option, including such conditions relating to
applicable federal or state securities laws as it considers necessary,
appropriate or advisable. An Option that is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a
"Non-Statutory Stock Option."
5.2 Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the
Company and shall be subject to, and shall be construed consistently
with, the requirements of Section 422 of the Code. The Company shall
have no liability to a Participant or any other party if an Option (or
any part thereof) that is intended to be an Incentive Stock Option is
for any reason not an Incentive Stock Option.
5.3 Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and shall specify it in the applicable
option agreement.
5.4 Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in
the applicable option agreement.
5.5 Exercise of Options. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the Participant or
other person authorized to do so on behalf of the Participant together
with payment in full for the number of shares being purchased in the
manner set forth in Section 5.6.
5.6 Payment Upon Exercise. The purchase price of Common Stock purchased
pursuant to the exercise of an Option shall be paid in cash or by
check payable to the order of the Company except to the extent that
any other method of payment is permitted by the terms of a particular
option agreement or generally as to all Options by the Board. If the
Common Stock is registered under the Exchange Act, payment of the
purchase price may also be made by delivery of an irrevocable and
unconditional undertaking by a credit worthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or
delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a credit
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24
worthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.
6. RESTRICTED STOCK.
6.1 Grants. The Board may grant Awards entitling the recipients to
acquire shares of Common Stock subject to the right of the
Company to repurchase all or some of such shares at their issue
price or other stated or formula price (or to require forfeiture
of such shares if issued at no cost to the recipient) from the
recipient in the event that conditions specified by the Board in
the applicable Award are not satisfied prior to the end of the
applicable restriction period or periods established by the Board
for such Award (each a "Restricted Stock Award.")
6.2 Terms and Conditions. The Board shall determine the terms and
conditions of any Restricted Stock Award including the conditions
for repurchase or forfeiture and the issue price, if any. Any one
or more stock certificates issued to cover a Restricted Stock
Award shall be registered in the name of the Participant. Unless
otherwise determined by the Board, the Participant shall deposit
such certificates together with a stock power endorsed in blank
by the Participant with the Company or its designee. At the
expiration of a restriction period, the Company (or such
designee) shall deliver to the Participant the certificate
representing shares that are no longer subject to restrictions.
If the Participant has died, the certificate shall be delivered
to the beneficiary designated by the Participant to receive
amounts due to, or to exercise the rights of, the Participant in
the event of his or her death (the "Designated Beneficiary.") The
manner of such designation shall be determined by the Board. In
the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS. The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the
Board may determine, including the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the
grant of stock appreciation rights.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS.
8.1 Transferability of Awards. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except
(a) by will or the laws of descent and distribution; or (b) to
immediate family members to the extent permitted by applicable laws,
provided that the transferee delivers to the Company a written
instrument agreeing to be bound by all of the terms of the Award as if
the transferee were the person to whom it was granted. "Immediate
family members" shall consist only of a person's spouse, parent, issue
or any spouse of any such parent or issue (including issue by
adoption), or a trust established for the benefit of a person's
spouse, parent, issue or any spouse of any such parent or issue
(including issue by adoption.) During the lifetime of the Participant,
Awards shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include
references to authorized transferees; provided however, irrespective
of any such transfer or assignment of an option, the Company shall
only be obliged to send notices with respect to such option to the
original grantee thereof, or in the event of the Participant's death
or disability, to his or her personal representative.
8.2 Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each
Award may contain terms and conditions in addition to those set forth
in the Plan.
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8.3 Board Discretion. Except as otherwise provided by the Plan, each type
of Award may be made alone, or in addition or in relation to any other
type of Award. The terms of each type of Award need not be identical,
and the Board need not treat Participants uniformly.
8.4 Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of
absence or other change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant or the Participant's legal representative, conservator,
guardian or Designated Beneficiary may exercise rights under the
Award.
8.5 Assumption of Options Upon Certain Events. The Board may grant Awards
under the Plan in substitution for stock and stock-based awards held
by employees of another entity who become employees of the Company as
a result of a merger or consolidation of the employing entity with the
Company or the acquisition by the Company of property or stock of the
employing entity. Each substitute Award shall be granted on such terms
and conditions as the Board considers appropriate in the
circumstances.
8.6 Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of any taxes required
by law to be withheld in connection with Awards to such Participant no
later than the date of the event creating the tax liability. The Board
may allow Participants to satisfy such tax obligations in whole or in
part in shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their fair market value
as determined by the Board in good faith. The Company may, to the
extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to such Participant.
8.7 Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including by (a) substituting therefor another
Award of the same or a different type; (b) changing the date of
exercise or realization; and/or (c) by converting an Incentive Stock
Option to a Non-Statutory Stock Option, provided that the
Participant's consent to such action shall be required unless the
Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
8.8 Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (a)
all conditions of the Award have been met or removed to the
satisfaction of the Company; (b) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market
rules and regulations; and (c) the Participant has executed and
delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
8.9 Acceleration. The Board may at any time provide that (a) any Option
shall become immediately exercisable in full or in part; (b) any
Restricted Stock Award shall be free of some or all restrictions; or
(c) any other stock-based Award may become exercisable in full or in
part or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.
9. CHANGE IN CONTROL.
9.1 A "Change in Control of the Company" shall occur or be deemed to have
occurred only if one of the following events occurs:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than (i) the Company; (ii) any trustee or
other fiduciary holding securities under an
Oakhurst Company, Inc. 1998 - 15 -Stock Incentive Plan Rev. December 18, 1998
Page 4 of 6
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employee benefit plan of the Company; or (iii) any corporation
owned directly or indirectly by the stockholders of the Company
in substantially the same proportion as their ownership of stock
of the Company), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding
securities;
(b) during any period of two consecutive years ending during the term
of the Plan (not including any period prior to the adoption of
the Plan,) individuals who at the beginning of such period
constituted the Board of Directors of the Company together with
any new director (other than a new director designated by a
person who has entered into an agreement with the Company to
effect any transaction described in Section 9.1 (a), (c) or (d))
whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who
were either directors at the beginning of the period or whose
election or whose nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board of Directors;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (ii) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as defined
in Section 9.1(a),above) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
9.2 Consequences of a Change in Control of the Company. Upon the occurrence of
a Change in Control of the Company or the execution by the Company of any
agreement which results in a Change in Control of the Company, the Board
shall take one or more of the following actions with respect to then
outstanding Awards:
(a) Provide that such Awards shall be assumed, or equivalent Awards shall
be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof;) provided however, that any stock options
substituted for Incentive Stock Options shall to the extent that it is
reasonably practical to do so, be made to satisfy (in the
determination of the Board) the requirements of Section 424(a) of the
Code, but if a substituted option shall fail for any reason to satisfy
such requirements, such Option shall become a non-statutory stock
option;
(b) In the event of a transaction resulting in a Change in Control of the
Company under the terms of which holders of Common Stock will receive
upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such transaction (the "Acquisition
Price,") provide that all outstanding Options shall terminate upon
consummation of such transaction and that Participants shall receive,
in exchange therefor, a cash payment equal to the amount (if any) by
which (1) the Acquisition Price multiplied by the number of shares of
Common Stock subject to
Oakhurst Company, Inc. 1998 Stock Incentive Plan Rev. December 18, 1998
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27
such outstanding Options (whether or not then exercisable), exceeds
(2) the aggregate exercise price of such Options; and/or
(c) Accelerate in full the vesting of such Awards.
10. MISCELLANEOUS.
10.1 No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment
or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under
the Plan, except as otherwise expressly provided in the such
Participant's Award.
10.2 No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be
distributed with respect to an Award until becoming the record holder
of such shares.
10.3 Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board. No Awards shall be
granted under the Plan after the earlier of the tenth anniversary of
(a) the date on which the Plan was adopted by the Board; and (b) the
date the Plan was approved by the Company's shareholders, but Awards
granted within such period may extend beyond such tenth anniversary.
10.4 Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall
be made without stockholder approval if such approval is necessary to
comply with any applicable tax or regulatory requirements. Amendments
requiring stockholder approval shall become effective when adopted by
the Board.
10.5 Governing Law. The provisions of the Plan and all Awards made under
the Plan shall be governed by and interpreted in accordance with the
laws of the State of Delaware, without regard to any of its applicable
conflicts of law provisions.
--------------------------
Adopted by the Board of Directors on December 18, 1998
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Appendix C
OAKHURST COMPANY, INC.
2001 STOCK INCENTIVE PLAN
1. 2001 STOCK INCENTIVE PLAN PURPOSE. The purpose of this 2001 Stock Incentive
Plan (the "Plan") of Oakhurst Company, Inc., a Delaware corporation (the
"Company") is to advance the interests of the Company's shareholders by
enhancing the Company's ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing those persons with opportunities for equity ownership and
performance-based incentives and thereby to better align the interests of
those persons with those of the Company's shareholders. Except where the
context otherwise requires, the term "Company" shall include any of
Oakhurst Company, Inc.'s present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (the "Code.")
2. ELIGIBILITY. All of the Company's employees, officers, directors,
consultants and advisors are eligible to be granted options, restricted
stock, or other stock-based awards (each, an "Award") under the Plan. Any
person who has been granted an Award under the Plan shall be deemed a
"Participant."
3. ADMINISTRATION & DELEGATION.
3.1 Administration by the Board of Directors. The Plan will be
administered by the Board of Directors of the Company (the "Board.")
The Board shall have authority to grant Awards and to adopt, amend and
repeal such administrative rules, guidelines and practices relating to
the Plan as it shall deem advisable. The Board may correct any defect,
supply any omission, or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry
the Plan into effect and it shall be the sole and final judge of such
expediency. No member of the Board shall be liable for any action or
determination relating to the Plan, and no director or person acting
pursuant to the authority delegated by the Board shall be liable for
any action or determination under the Plan made in good faith. All
decisions by the Board shall be made in the Board's sole discretion
and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award.
3.2 Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one
or more committees or subcommittees of the Board (each a "Committee.")
So long as the Company's common stock (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange
Act,") the Board shall appoint one such Committee of not less than two
members, each member of which shall be a "non-employee director" as
defined in Rule 16b-3 promulgated under the Exchange Act. All
references in the Plan to the "Board" shall mean the Board or a
Committee to the extent that the Board's powers or authority under the
Plan have been delegated to a Committee.
4. STOCK AVAILABLE FOR AWARDS.
4.1 Number of Shares. Subject to adjustment under Section 4.3, Awards may
be made under the Plan for up to 500,000 shares of Common Stock. If
any Award (a) expires; (b) is terminated, surrendered or canceled
without having been fully exercised; or (c) is forfeited in whole or
in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options (as hereinafter defined) to any limitation
required under the Code. Shares issued under the Plan may consist in
whole or in part of authorized but un-issued shares or treasury
shares.
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4.2 Per-Participant Limit. Subject to adjustment under Section 4.3, the
maximum number of shares with respect to which an Award may be granted
to any participant under the Plan shall be 350,000 per calendar year.
The per-participant limit described in this Section 4.2 shall be
construed and applied consistently with Section 162(m) of the Code.
4.3 Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to
holders of Common Stock other than a normal cash dividend, (a) the
number and class of securities available under this Plan; (b) the
number and class of security and exercise price per share subject to
each outstanding Option (as hereinafter defined); (c) the repurchase
price per security subject to each outstanding Restricted Stock Award
(as hereinafter defined); and (d) the terms of each other outstanding
stock-based Award shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board
shall determine, in good faith, that such an adjustment (or
substitution) is necessary and appropriate. In the event of a conflict
between the provisions of this Section 4.3 and any action taken by the
Board pursuant to Section 9.2, the action taken by the Board pursuant
to Section 9.2 shall take precedence.
5. STOCK OPTIONS.
5.1 General. The Board may grant options to purchase Common Stock (each,
an "Option") and may determine (a) the number of shares of Common
Stock to be covered by each Option; (b) the exercise price of each
Option; and (c) the terms, conditions and limitations applicable to
the exercise of each Option, including such conditions relating to
applicable federal or state securities laws as it considers necessary,
appropriate or advisable. An Option that is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a
"Non-Statutory Stock Option."
5.2 Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the
Company and shall be subject to, and shall be construed consistently
with, the requirements of Section 422 of the Code. The Company shall
have no liability to a Participant or any other party if an Option (or
any part thereof) that is intended to be an Incentive Stock Option is
for any reason not an Incentive Stock Option.
5.3 Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and shall specify it in the applicable
option agreement.
5.4 Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in
the applicable option agreement.
5.5 Exercise of Options. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the Participant or
other person authorized to do so on behalf of the Participant together
with payment in full for the number of shares being purchased in the
manner set forth in Section 5.6.
5.6 Payment Upon Exercise. The purchase price of Common Stock purchased
pursuant to the exercise of an Option shall be paid in cash or by
check payable to the order of the Company except to the extent that
any other method of payment is permitted by the terms of a particular
option agreement or generally as to all Options by the Board. If the
Common Stock is registered under the Exchange Act, payment of the
purchase price may also be made by delivery of an irrevocable and
unconditional undertaking by a credit worthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or
delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a credit
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worthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.
6. RESTRICTED STOCK.
6.1 Grants. The Board may grant Awards entitling the recipients to acquire
shares of Common Stock subject to the right of the Company to
repurchase all or some of such shares at their issue price or other
stated or formula price (or to require forfeiture of such shares if
issued at no cost to the recipient) from the recipient in the event
that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or
periods established by the Board for such Award (each a "Restricted
Stock Award.")
6.2 Terms and Conditions. The Board shall determine the terms and
conditions of any Restricted Stock Award including the conditions for
repurchase or forfeiture and the issue price, if any. Any one or more
stock certificates issued to cover a Restricted Stock Award shall be
registered in the name of the Participant. Unless otherwise determined
by the Board, the Participant shall deposit such certificates together
with a stock power endorsed in blank by the Participant with the
Company or its designee. At the expiration of a restriction period,
the Company (or such designee) shall deliver to the Participant the
certificate representing shares that are no longer subject to
restrictions. If the Participant has died, the certificate shall be
delivered to the beneficiary designated by the Participant to receive
amounts due to, or to exercise the rights of, the Participant in the
event of his or her death (the "Designated Beneficiary.") The manner
of such designation shall be determined by the Board. In the absence
of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS. The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the
Board may determine, including the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the
grant of stock appreciation rights.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS.
8.1 Transferability of Awards. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except
(a) by will or the laws of descent and distribution; or (b) to
immediate family members to the extent permitted by applicable laws,
provided that the transferee delivers to the Company a written
instrument agreeing to be bound by all of the terms of the Award as if
the transferee were the person to whom it was granted. "Immediate
family members" shall consist only of a person's spouse, parent, issue
or any spouse of any such parent or issue (including issue by
adoption), or a trust established for the benefit of a person's
spouse, parent, issue or any spouse of any such parent or issue
(including issue by adoption.) During the lifetime of the Participant,
Awards shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include
references to authorized transferees; provided however, irrespective
of any such transfer or assignment of an option, the Company shall
only be obliged to send notices with respect to such option to the
original grantee thereof, or in the event of the Participant's death
or disability, to his or her personal representative.
8.2 Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each
Award may contain terms and conditions in addition to those set forth
in the Plan.
Oakhurst Company, Inc. 2001 Stock Incentive Plan Rev July 23, 2001
Page 3 of 6
31
8.3 Board Discretion. Except as otherwise provided by the Plan, each type
of Award may be made alone, or in addition or in relation to any other
type of Award. The terms of each type of Award need not be identical,
and the Board need not treat Participants uniformly.
8.4 Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of
absence or other change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant or the Participant's legal representative, conservator,
guardian or Designated Beneficiary may exercise rights under the
Award.
8.5 Assumption of Options Upon Certain Events. The Board may grant Awards
under the Plan in substitution for stock and stock-based awards held
by employees of another entity who become employees of the Company as
a result of a merger or consolidation of the employing entity with the
Company or the acquisition by the Company of property or stock of the
employing entity. Each substitute Award shall be granted on such terms
and conditions as the Board considers appropriate in the
circumstances.
8.6 Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of any taxes required
by law to be withheld in connection with Awards to such Participant no
later than the date of the event creating the tax liability. The Board
may allow Participants to satisfy such tax obligations in whole or in
part in shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their fair market value
as determined by the Board in good faith. The Company may, to the
extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to such Participant.
8.7 Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including by (a) substituting therefor another
Award of the same or a different type; (b) changing the date of
exercise or realization; and/or (c) by converting an Incentive Stock
Option to a Non-Statutory Stock Option, provided that the
Participant's consent to such action shall be required unless the
Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
8.8 Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (a)
all conditions of the Award have been met or removed to the
satisfaction of the Company; (b) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market
rules and regulations; and (c) the Participant has executed and
delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
8.9 Acceleration. The Board may at any time provide that (a) any Option
shall become immediately exercisable in full or in part; (b) any
Restricted Stock Award shall be free of some or all restrictions; or
(c) any other stock-based Award may become exercisable in full or in
part or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.
9. CHANGE IN CONTROL.
9.1 A "Change in Control of the Company" shall occur or be deemed to have
occurred only if one of the following events occurs:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (i) the Company; (ii) any trustee or other
fiduciary holding securities under an
Oakhurst Company, Inc. 2001 Stock Incentive Plan Rev July 23, 2001
Page 4 of 6
32
employee benefit plan of the Company; or (iii) any corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the
Company), becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of two consecutive years ending during the term of
the Plan (not including any period prior to the adoption of the Plan,)
individuals who at the beginning of such period constituted the Board
of Directors of the Company together with any new director (other than
a new director designated by a person who has entered into an
agreement with the Company to effect any transaction described in
Section 9.1 (a), (c) or (d)) whose election by the Board of Directors
or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who were either directors at the beginning of the period or whose
election or whose nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board of
Directors;
(c) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as defined in Section 9.1(a),above) acquires more than 50%
of the combined voting power of the Company's then outstanding
securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
9.2 Consequences of a Change in Control of the Company. Upon the occurrence of
a Change in Control of the Company or the execution by the Company of any
agreement which results in a Change in Control of the Company, the Board
shall take one or more of the following actions with respect to then
outstanding Awards:
(a) Provide that such Awards shall be assumed, or equivalent Awards shall
be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof;) provided however, that any stock options
substituted for Incentive Stock Options shall to the extent that it is
reasonably practical to do so, be made to satisfy (in the
determination of the Board) the requirements of Section 424(a) of the
Code, but if a substituted option shall fail for any reason to satisfy
such requirements, such Option shall become a non-statutory stock
option;
(b) In the event of a transaction resulting in a Change in Control of the
Company under the terms of which holders of Common Stock will receive
upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such transaction (the "Acquisition
Price,") provide that all outstanding Options shall terminate upon
consummation of such transaction and that Participants shall receive,
in exchange therefor, a cash payment equal to the amount (if any) by
which (1) the Acquisition Price multiplied by the number of shares of
Common Stock subject to
Oakhurst Company, Inc. 2001 Stock Incentive Plan Rev July 23, 2001
Page 5 of 6
33
such outstanding Options (whether or not then exercisable), exceeds
(2) the aggregate exercise price of such Options; and/or
(c) Accelerate in full the vesting of such Awards.
10. MISCELLANEOUS.
10.1 No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment
or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under
the Plan, except as otherwise expressly provided in the such
Participant's Award.
10.2 No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be
distributed with respect to an Award until becoming the record holder
of such shares.
10.3 Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board. No Awards shall be
granted under the Plan after the earlier of the tenth anniversary of
(a) the date on which the Plan was adopted by the Board; and (b) the
date the Plan was approved by the Company's shareholders, but Awards
granted within such period may extend beyond such tenth anniversary.
10.4 Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall
be made without stockholder approval if such approval is necessary to
comply with any applicable tax or regulatory requirements. Amendments
requiring stockholder approval shall become effective when adopted by
the Board.
10.5 Governing Law. The provisions of the Plan and all Awards made under
the Plan shall be governed by and interpreted in accordance with the
laws of the State of Delaware, without regard to any of its applicable
conflicts of law provisions.
----------------
Adopted by the Board of Directors on July 23, 2001
Oakhurst Company, Inc. 2001 Stock Incentive Plan Rev July 23, 2001
Page 6 of 6
34
OAKHURST COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 25, 1998OCTOBER 16, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby (i) revokes previous proxies given with respect to the
shareshaving received a Notice of the common stockAnnual Meeting of Stockholders
of Oakhurst Company, Inc. (the "Company") noted on
the reverse side hereof and registered in the name of the undersigned (the
"Shares"); (ii) acknowledges receipt of the Notice and Proxy Statement dated
February 3, 1998 in connection with the Annual Meeting of Stockholders of the
Company to be held on February 25, 1998October 16, 2001 at 9:00
a.m. local time at the offices of Kurzman &
Eisenberg, One North Broadway, White Plains, New YorkSterling Construction Company, 20810 Fernbush
Lane, Houston, Texas 77073 or at any adjournment thereof;thereof (the "Annual Meeting")
and (iii) appoints Robert M. Davies, Joel S. Leverthe Board of Directors' Proxy Statement therefor, and revoking all prior
proxies, hereby appoint(s) Patrick T. Manning, Maarten D. Hemsley and Roger M.
Barzun, or any oneand each of them each with(with full power to act alone, the attorneys andof substitution,) as proxies of the
undersigned with power of substitution to each,attend the Annual Meeting and any adjourned sessions thereof, and
there to vote and act upon the following matters in respect of all shares of
common stock of the Shares
thatCompany which the undersigned iswould be entitled to vote at the aforesaid Annual Meeting of
Stockholders of the Company, and at any adjournment thereof,or
act upon, with all the powers the undersigned would have hadpossess if personally present at said meeting. Without
limiting the generalitypresent.
Attendance of the authorization hereby given, said proxies are, and
eachundersigned at the Annual Meeting or at any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of them is instructedthe undersigned to vote said
shares in person. If the undersigned holds any shares in a fiduciary, custodial
or actjoint capacity or capacities, this proxy is signed by the undersigned in
every such capacity as follows onwell as individually.
[X] Please mark your votes as in this example.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal specified below, this proxy will be voted FOR such election to office
or proposal. None of the matters to be voted upon set forth in said Proxy Statement:on is conditioned on, or related
to, the approval of any other matter. All matters are proposed by the Company.
1. Election of threeseven directors (or if the nominee is not available for
election, such substitute as the Board of Directors may designate).
NOMINEES: Class II: Mark Auerbach and Bernard H. Frank. Class I: John D.
Abernathy.
NOMINEES CLASS TERM
Patrick T. Manning I One year
Joseph P. Harper, Sr. I One year
John D. Abernathy II Two years
Robert W. Frickel II Two years
Robert M. Davies III Three years
Maarten D. Hemsley III Three years
Christopher H. B. Mills III Three years
FOR ALL NOMINEES [ ]
WITHHOLD FROM ALL NOMINEES [ ]
[ ] ------------------------------------------------------------------------
INSTRUCTION: To withhold authority for any individual nominee, write the
nominee's name in the space provided above.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS, YOU NEED ONLY SIGN AND DATE THIS PROXY ON THE REVERSE SIDE -- YOU
NEED NOT MARK ANY BOXES.
CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE
[SEE REVERSE SIDE]
[OAKHURST COMPANY PROXY CARD]
20
[X] Please mark
votes35
2. To approve the adoption of an amendment to the Amended and Restated
Certificate of Incorporation of the Company in order to change the name of
the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the adoption by the Board of Directors of the 1998 Stock
Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve the adoption by the Board of Directors of the 2001 Stock
Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the named Proxies are authorized to vote upon such other
matters as in
this examplemay properly come before the Annual Meeting, or any adjournment
thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED INIS SOLICITED ON BEHALF OF THE MANNER DIRECTED HEREIN BYBOARD OF DIRECTORS OF THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES AND "FOR" PROPOSALS 2 AND 3.
1. Election of FOR THE WITHHOLD 2. In their discretion, the Proxies are authorized to
Directors NOMINEES vote upon such other business as may properly
come before the meeting or any adjournment
thereof.
(see reverse side) [ ] [ ]
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
- ---------------------------------------------------
To withhold authority to vote for a nominee, write
his name on the line above.
Mark here [ ]
for address
change and
note the change
at left.COMPANY.
Please sign exactly as your name appears hereon. Joint owners should both sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature: Date:
--------------- ------------------------------------------------- ----------------------
Signature: Date:
--------------- ------------------------------------------------- ----------------------
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THIS PROXY CARD USING
THE ENCLOSED ENVELOPE.
[OAKHURST COMPANY PROXY CARD]