-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UukpIToFjYwMG5kLffTerbYZvg+qcRTfeiFA0aWY74i/sQKTQWDFkhmu2Zr6tIWW jKHbJZe2j8krUXNCWs3FtQ== 0000008137-97-000007.txt : 19970326 0000008137-97-000007.hdr.sgml : 19970326 ACCESSION NUMBER: 0000008137-97-000007 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970325 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATKINSON GUY F CO OF CALIFORNIA CENTRAL INDEX KEY: 0000008137 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 941649018 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03062 FILM NUMBER: 97562333 BUSINESS ADDRESS: STREET 1: 1001 BAYHILL DR STREET 2: P O BOX 593 CITY: SAN BRUNO STATE: CA ZIP: 94066 BUSINESS PHONE: 4158761000 MAIL ADDRESS: STREET 1: P O BO 593 STREET 2: S SAN FRANCISCO DEF 14A 1 INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Guy F. Atkinson Company of California (Name of Registrant as Specified in Its Charter) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: - ------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - ------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - ------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - ------------------------------------------------------------------------------- (5) Total fee paid: - ------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: - ------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - ------------------------------------------------------------------------------- (3) Filing Party: - ------------------------------------------------------------------------------- (4) Date Filed: - ------------------------------------------------------------------------------- GUY F. ATKINSON COMPANY OF CALIFORNIA 1001 BAYHILL DRIVE SAN BRUNO, CALIFORNIA 94066 ---------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ---------- San Bruno, California March 27, 1997 The Annual Meeting of Shareholders of Guy F. Atkinson Company of California (the "Company") will be held at the South San Francisco Conference Center, 255 South Airport Boulevard, South San Francisco, California, on Thursday, April 17, 1997, at 10:30 a.m. for the following purposes: 1. To elect directors to serve until the 1998 Annual Meeting of Shareholders and thereafter until their respective successors are elected or appointed. 2. To approve a proposal to amend and restate the 1990 Executive Stock Plan. 3. To transact such other business as may properly come before the meeting or any adjournment thereof. All of the above matters are more fully described in the accompanying Proxy Statement. Only shareholders of record on the books of the Company at the close of business on March 4, 1997 will be entitled to vote at the meeting or any postponement or adjournment thereof. To assure your representation at the meeting, it would be appreciated if you would sign and return the enclosed proxy. The giving of such proxy will not affect your right to vote in person should you decide to attend the meeting. Therese Ambrusko Secretary ATKINSON 1001 BAYHILL DRIVE SAN BRUNO, CALIFORNIA 94066 ---------------- PROXY STATEMENT ---------- Mailing date: March 27, 1997 Your proxy in the form enclosed is solicited by the Board of Directors of Guy F. Atkinson Company of California (the "Company") in connection with the Annual Meeting of Shareholders to be held on April 17, 1997 and any adjournment thereof. A proxy may be revoked at any time before it is exercised by voting in person at the meeting, by giving written notice to the Secretary of the Company or by giving a later dated proxy. The shares represented by the proxies received which have been properly dated and signed and not revoked will be voted at the Annual Meeting. Only shareholders of record on the books of the Company at the close of business on March 4, 1997 will be entitled to vote at the meeting. As of March 4, 1997, the outstanding voting securities of the Company consisted of 8,987,467 shares of Common Stock, par value $0.01 per share. Each shareholder entitled to vote at the meeting is entitled to one vote for each share held as of the record date. With respect to the election of directors, the candidates elected are those receiving the highest number of affirmative votes up to the number of directors to be elected. Any other matter submitted for shareholder approval at the Annual Meeting will require the affirmative vote of a majority of the shares of the Company's Common Stock represented and entitled to vote at the meeting, assuming that shares constituting more than 50% of the total number of shares entitled to vote are represented at the meeting. The number of abstentions and broker non-votes with respect to any matter being voted on are not counted either for or against the matter. All expenses in connection with the solicitation of proxies will be paid by the Company. In addition to solicitation by mail, officers, directors, and regular employees of the Company who will receive no extra compensation for their services may solicit proxies by telephone, facsimile or personal call. A copy of the Company's Annual Report on Form 10-K containing financial statements for the fiscal year ended December 31, 1996 accompanies this Proxy Statement. ELECTION OF DIRECTORS Eight directors are to be elected at the Annual Meeting to serve until the next Annual Meeting of Shareholders or until their respective successors are elected or appointed and qualified. All of the nominees are presently members of theBoard of Directors of the Company. Unless marked to the contrary, the proxies received will be voted FOR the election of the nominees named below. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for the balance of those named and for such other nominee as the Board may select, or the size of the Board may be reduced accordingly. - 1 - INFORMATION WITH RESPECT TO NOMINEES Listed below are the names and ages of the nominees, their principal employment for at least the past five years and the year in which each nominee became a director of the Company. PRINCIPAL EMPLOYMENT FOR AT DIRECTOR NAME AGE LEAST THE PAST FIVE YEARS SINCE Jack J. Agresti........59 Chief Executive Officer and President 1990 of the Company since April, 1994; President and Chief Operating Officer of the Company from April, 1991 to April, 1994; Executive Vice President from April, 1990 to April, 1991. Duane E. Atkinson......69 Vice President of the Company since 1980 1979 Ray N. Atkinson .......68 Vice Chairman of the Company from May, 1979 1982 to May, 1991, when he retired. William E. Burch.......72 Director of Kuhlman Industrial Corporation 1988 and Central PreMix Concrete Company; Director, President and Chief Executive Officer of Sedgwick-James from June, 1975 to January, 1981. J. Phillip Frazier.... 58 President and Chief Executive Officer of 1987 Plum Street Enterprises, Inc. since Novem- ber, 1996; Operating Partner, Stonebridge Partners from September, 1994 to March, 1996; Chairman and Chief Executive Officer of Hyster-Yale Materials Handling, Inc. from June, 1989 to September, 1992 Donald R. Kayser...... 66 Principal, Kayser Partners, Ltd. since 1992 June, 1988; Interim Chairman and Chief Executive Officer of Louisiana Pacific Corporation from August, 1995 to January, 1996; Executive Vice President and Chief Financial Officer of Morrison-Knudsen Corp. from September, 1988 to February, 1990; Senior Vice President and Chief Financial Officer of Allied Signal Corporation from April, 1984 to June, 1988. - 2 - PRINCIPAL EMPLOYMENT FOR AT DIRECTOR NAME AGE LEAST THE PAST FIVE YEARS SINCE Ross J. Turner........ 66 Chairman of Genstar Investment Corporation 1988 since 1986; Director of Rio Algom Limited, Great West Life & Annuity Insurance Co., and Blue Shield of California. John F. Whitsett...... 56 Chairman of the Board of Directors of the 1979 Directors of the Company since February, 1995; President of Standard Brass Foundry for more than the past five years. John F. Whitsett is the first cousin of Duane E. Atkinson and Ray N. Atkinson, who are brothers. - 3 - STOCK OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information as of January 31, 1997 as to shares of Common Stock of the Company beneficially owned by each of the present directors and nominees for election as directors, and by each of the executive officers named in the Summary Compensation Table beginning on page _ and all directors and executive officers of the Company as a group. Except as otherwise indicated and subject to applicable community property laws, each person has sole investment and voting power with respect to the shares shown. NUMBER OF SHARES OF COMMON STOCK AND NATURE OF BENEFICIAL FOOTNOTE PERCENT NAME OWNERSHIP (1) NUMBER OF CLASS ---- ------------- ------ -------- Jack J. Agresti 159,843 1.78 Duane E. Atkinson 76,325 (2) * Ray N. Atkinson 104,858 (2) (3) (6) 1.17 William E. Burch 10,000 * William J. Carlson 68,443 * J. Phillip Frazier 1,000 * John F. Huguet 37,372 * Donald R. Kayser 3,500 * Herbert D. Montgomery 13,151 * Ross J. Turner 3,000 * Thomas J. Walsh, III 23,760 * John F. Whitsett 115,845 (4) (5) 1.29 All directors and executive officers as a group (14 persons including those named above) 617,097 (7) 6.87 * Less than 1% (1) Includes shares allocated under the Company's Retirement Stock and Investment Plan, as follows: Jack J. Agresti, 35,111 shares; Duane E. Atkinson, 18,873 shares; Ray N. Atkinson, 15,106 shares; William J. Carlson, 17,392 shares; Herbert D. Montgomery, 739 shares; Thomas J. Walsh, III, 9,409 shares; and all directors and executive officers as a group, 113,648 shares. Also includes options that are currently exercisable as follows: Jack J. Agresti, 115,902 shares; William J. Carlson, 50,871 shares; John F. Huguet, 37,272 shares; Herbert D. Montgomery, 11,412 shares; Thomas J. Walsh, III, 14,351 shares; and all directors and executive officers as a group, 251,264 shares. (2) Does not include 641,910 shares held by the Atkinson Foundation of which Duane E. Atkinson and Ray N. Atkinson are directors. The directors have no beneficial interest in such shares. (3) Includes 1,125 shares held in custodial accounts for three grandchildren of Ray N. Atkinson, as to which he has sole voting and investment power and as to which he disclaims beneficial ownership. Does not include 3,000 shares held by Mr. Atkinson's wife, as to which he has neither voting nor investment power and as to which Mr. Atkinson disclaims beneficial ownership. (4) Does not include 861,620 shares held by the Myrtle L. Atkinson Foundation, of which John F. Whitsett is a director. Mr. Whitsett has no beneficial interest in such shares. (5) Includes 20,610 shares held in trust or in custodial accounts of which Mr. Whitsett is the sole trustee or custodian and as to which he has sole investment and voting power. Does not include 4,723 shares held by Mr. Whitsett's wife, as to which Mr. Whitsett disclaims beneficial ownership. (6) Does not include 583,517 shares held by Willamette University. Ray N. Atkinson is one of eight members of a committee of the Board of Trustees of Willamette University which has voting power with respect to such shares. Mr. Atkinson disclaims beneficial ownership thereof. (7) Excludes shares excluded in notes (2), (3), (4), (5), and (6) above. Includes shares included in notes (3) and (5) above. - 4 - COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS EXECUTIVE OFFICERS' COMPENSATION The following table sets forth the compensation earned during the three fiscal years ended December 31, 1996 by the Company's Chief Executive Officer and the other four most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE LONG-TERM COMPENSATION ------------------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS -------------------------------- ------------------------- ------- (A) (B) (C) (D) (E)(1) (F) (G) (H) (I)(2) Other Annual Restricted LTIP All Other Name and Salary Bonus Compensation Stock Options/SARs* Payouts Compensation Principal Position Year ($) ($) ($) Award(s) (#) ($) ($) - ------------------- ---- ------ -------- ------------ ---------- ------------- ------- ------------ J. J. Agresti 1996 $415,000 $120,000 0 65,000 $20,166 President and Chief 1995 $375,000 $187,500 0 65,000 $14,544 Executive Officer 1994 $358,271 $50,000 0 51,613 $13,048 W. J. Carlson 1996 $280,000 $80,000 0 30,000 $9,924 Senior Vice President 1995 $250,000 $65,000 0 30,000 $9,563 of the Company, 1994 $250,000 $0 0 18,065 $9,517 President, Atkinson Construction Company J. F. Huguet** 1996 $196,498 $0 0 27,000 $27,732 Senior Vice President 1995 $174,456 $100,000 0 30,000 $20,228 of the Company,Presi- 1994 $141,218 $21,951 0 12,903 $14,527 dent, Commonwealth Construction Company H. D. Montgomery*** 1996 $192,500 $50,000 0 26,000 $9,039 Senior Vice President, 1995 $175,000 $70,000 0 25,000 $5,676 Chief Financial Offi- cer and Treasurer 1994 $88,513 $25,000 0 10,323 $598 and Treasurer T. J. Walsh, III 1996 $180,000 $30,000 0 20,000 $8,842 Vice President of the 1995 $170,000 $40,000 0 25,000 $8,747 Company, President, 1994 $150,000 $0 0 6,452 $8,497 Walsh Construction Company
* The number of options granted in 1994 has been adjusted to account for the extraordinary dividend declared in February, 1995. ** Compensation figures converted from Canadian dollars. *** Mr. Montgomery joined the Company in June, 1994. His salary on an annualized basis in 1994 was $160,000. (1) No named executive officer received perquisites or personal benefits, the aggregate value of which exceeded the lesser of $50,000 or 10% of salary and bonus. No other value was received that required reporting in this column. (2) The amounts disclosed in this column include: (a) Company contributions made in fiscal year 1996 to the Atkinson Retirement Stock and Investment Plan on behalf of the named executive officers as follows: J. J. Agresti, $7,500; W. J. Carlson, $7,500; H. D. Montgomery, $7,500; T. J. Walsh, III, $7,500. (b) Company contributions made in fiscal year 1996 to the Guy F. Atkinson Holdings Ltd. Employees' Money Purchase Pension Plan on behalf of John F. Huguet in the amount of $26,369. Guy F. Atkinson Holdings Ltd. is a Canadian subsidiary of Guy F. Atkinson Company. (c) Payment by the Company in fiscal year 1996 of premiums for term life insurance on behalf of the named executive officers as follows: J. J. Agresti, $12,665 W. J. Carlson, $2,424; J. F. Huguet, $1,362; H. D. Montgomery, $1,539; T. J. Walsh, III, $1,341. -5 - DIRECTORS' COMPENSATION During 1996 directors who were not employees were entitled to receive an annual director's fee of $16,000, plus $1,500 for each Board meeting attended. Directors who were not employees of the Company further were entitled to receive, if serving as chairman of any committee of the Board, an annual fee of $3,000, plus $1,000 for each committee meeting attended or, if serving as a member of such committee, an annual fee of $2,000, plus $1,000 for each committee meeting attended. Mr. Whitsett receives a fee of $5,000 per month to serve as the Chairman of the Board of Directors. This is in addition to the other fees he receives as a director. OPTION/SAR GRANTS IN LAST FISCAL YEAR The following table sets forth the option grants made to the executive officers named in the Summary Compensation Table above during the 1996 fiscal year. No stock appreciation rights were granted in the 1996 fiscal year.
Grant Individual Grants Value Date - ----------------------------------------------------------------------------------- ---------- (a) (b) (c) (d) (e) (f) Options % of Total Options Exercise or Grant Date Name Granted Granted to Base Price Expiration Present (# Shares)(1) Employees ($/Share) Date Value ($)(2) in Fiscal Year - ------------------- ------------- ------------------ ----------- ---------- ------------ J. J. Agresti 65,000 20.8% 10.00 2/15/06 $439,335 W. J. Carlson 30,000 9.6% 10.00 2/15/06 $202,770 H. D. Montgomery 26,000 8.3% 10.00 2/15/06 $175,734 J. F. Huguet 27,000 8.6% 10.00 2/15/06 $182,493 T. J. Walsh, III 20,000 6.4% 10.00 2/15/06 $135,180
(1) Options were granted on February 15, 1996. The options are exercisable with respect to 25% of the shares on the four anniversary dates following the date of grant. Each option is exercisable over a period of up to ten years from the date of grant, subject to continued employment. Payment of the option purchase price may be made in cash, or shares of the Company's Common Stock owned by the optionee for a period of six (6) months, or in any combination of cash and shares of the Company's Common Stock. (2) Present value was calculated using the Black-Scholes pricing model which involves an extrapolation of future pricing levels based solely on past performance. Use of this model should not be viewed in any way as a forecast of the future performance of the Company's stock which will be determined by future events and unknown factors. - 6 - The inputs used in deriving present value were as follows: o Option price Current market price at date of award o Option fair market value Current market price at date of award o Expected option term 10 years o Stock price volatility 50.20% o Expected dividend yield 0.00% o Risk-free rate of return 5.81% Stock price volatility is equal to the standard deviation of Atkinson daily closing stock prices over the period commencing January 1, 1987 and ending December 31, 1996. The risk-free rate of return is determined using the U.S. Treasury constant maturity 10 year yield on the date of grant.
AGGREGATED OPTION EXERCISES IN 1996 AND FISCAL YEAR-END OPTION VALUES* Exercises During Year Fiscal Year End -------------------------------- ----------------------------------------------- (A) (B) (C) (D) (E) Value of Number of Securities Unexercised Underlying Unexercised In-The-Money Options (#) Options ($)** Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized ($) Unexercisable Unexercisable ---- ----------------- ------------ ------------- ------------- J. J. Agresti None None 115,902/147,356 $334,296/$291,077 W. J. Carlson None None 50,871/66,082 $151,457/$126,079 H. D. Montgomery None None 11,412/49,911 $29,201/$75,823 J. F. Huguet None None 37,272/58,551 $106,842/$108,008 T. J. Walsh, III None None 14,351/43,601 $45,496/$78,493
* Option Terms: Option price is market at grant; term is ten years, subject to continued employment. Right to exercise vests for 25% of each award's shares per year; full vesting occurs in four years. Optionees may purchase optioned shares with payment in cash or shares of the Company's common stock. ** Based upon stock closing price of $10.50 on December 31, 1996 - 7 - PENSION PLANS The following table sets forth the estimated annual benefits payable upon retirement to Company employees under the Atkinson 1987 Pension Plan and the Company's Excess-Benefit Plan ("the Pension Plans").
PENSION PLAN TABLE YEARS OF SERVICE -------------------------------------------------------------------------------------- REMUNERATION 15 20 25 30 35 40 45 - ------------ ------- ------- ------- ------- ------- ------- ------- $200,000 45,858 59,347 72,836 86,325 99,814 113,303 126,792 $250,000 57,758 74,747 91,736 108,725 125,714 142,703 159,692 $300,000 69,658 90,147 110,636 131,125 151,614 172,103 192,592 $350,000 81,558 105,547 129,536 153,525 177,514 201,503 225,492 $400,000 93,458 120,947 148,436 175,925 203,414 230,903 258,392 $450,000 105,358 136,347 167,336 198,325 229,314 260,303 291,292 $500,000 117,258 151,747 186,236 220,725 255,214 289,703 324,192 $550,000 129,158 167,147 205,136 243,125 281,114 319,103 357,092 $600,000 141,058 182,547 224,036 265,525 307,014 348,503 389,992
The compensation covered for purposes of the Pension Plans includes salary and bonus. In 1996, the named executive officers received covered compensation as follows: J. J. Agresti, $535,000; W. J. Carlson, $360,000; J. F. Huguet, not applicable; H. D. Montgomery, $242,500; T. J. Walsh, III, $210,000. Mr. Huguet is a resident Canadian and does not participate in the Pension Plan. The estimated credited years of service for the named executive officers are as follows: J. J. Agresti, 37; W. J. Carlson, 25; J. F. Huguet, not applicable; H. D. Montgomery, 2; T. J. Walsh, III, 16. The calculations are straight-life annuity amounts based upon current plan formulae and are not subject to Social Security offsets. EMPLOYMENT AGREEMENTS In 1994, the Company entered into an employment agreement with J. J. Agresti, under which Mr. Agresti's employment will continue for a period of three years from April 21, 1994 and will renew automatically for additional periods of one year each, unless either party gives three months' written notice of intent to terminate, up until Mr. Agresti's 65th birthday. The agreement also provides that if Mr. Agresti voluntarily resigns or the Company terminates his employment for any reason other than cause following a change in control of the Company, he will be entitled to receive his salary and benefits for three years after the termination. In March, 1997, the Agreement was amended to provide that the Company will purchase an annuity to fund Mr. Agresti's earned Supplemental Executive Retirement Plan (SERP) benefits following his retirement. - 8 - REPORT ON EXECUTIVE COMPENSATION The purpose of this report is to describe the executive compensation policies applied by the Executive Compensation Committee of the Company's Board of Directors with regard to the executive officers of the Company, and the basis for compensation awarded to the President and Chief Executive Officer during fiscal year 1996. The Executive Compensation Committee (hereafter "Committee") is appointed annually to advise the Board of Directors on matters of executive compensation. The Committee makes compensation recommendations to the Board for the Chief Executive Officer position as well as the Chief Operating Officer position, if occupied, proposes to the Board the terms of the programs and plans for managing executive pay, and administers the 1990 Executive Stock Plan. The Committee's members are William E. Burch (Chairman), Donald R. Kayser, and Ross J. Turner. Each is an independent, outside Director; none is a former employee of the Company. In 1996, no one on the Committee participated in the compensation described here for executives. The Committee retains its own consulting firm to advise it from time to time. In evaluating and voting on the Company's executive compensation awards, the Board and the Committee seek to achieve the following objectives: o To attract, motivate and retain outstanding executives by providing compensation opportunities consistent with those in the industry for similar positions. o To offer incentive for business success by putting a significant portion of each executive's total pay at risk, based on Company performance (assessing in the short term desirable operating results and, in the long term, stock price growth and total shareholder return). o To encourage career service by providing retirement income for executive service consistent with industry practice. The Committee recommended to the Board the compensation for Jack J. Agresti as President and Chief Executive Officer. Mr. Agresti, who is also a member of the Board of Directors, did not participate in any Board discussions regarding his own pay nor did he vote on his own compensation. BASE SALARY The Committee annually reviews salary levels for the named executive officers in relation to information available about salary levels for comparable positions in the industry, as well as annual rates of executive salary movement within the industry. It is the Committee's general policy to position the base salary of executive officers, including the Chief Executive Officer, approximately at mid-range (50th percentile) of salaries for comparable industry positions. Survey data for this analysis is provided by an independent, outside consulting firm retained by the Committee. In December 1995, the Board, acting on the Committee's recommendation, approved increasing Mr. Agresti's annual base salary from $375,000 to $415,000, effective January 1, 1996. This was the first increase in base salary Mr. Agresti received since his promotion to President & CEO on April 21, 1994. Available survey data confirmed that this action met the Board's objective to maintain salaries at a competitive level. When the Company appointed Mr. Agresti President and Chief Executive Officer on April 21, 1994, the Company entered into an employment agreement with Mr. Agresti. In March 1997, the Board, acting - 9 - upon a recommendation of the Committee, amended Mr. Agresti's employment agreement relative to future funding of Mr. Agresti's earned Supplemental Executive Retirement Plan (SERP) benefits. Terms of the employment agreement and the amendment are described on Page 8 of this Proxy Statement. The Chief Executive Officer recommends to the Executive Compensation Committee salary adjustments for the other executive officer positions. The Committee reviews these recommendations based on the same criteria used to evaluate the competitive base salary of the Chief Executive Officer position. In 1996, the four other named executive officers were awarded base salary increases as recommended by the Chief Executive Officer. The Committee concurred with these recommendations on the basis of data presented on salary levels for comparable positions within the industry. ANNUAL INCENTIVE AWARDS The Board encourages executives to achieve desirable annual operating results by offering such executives opportunities to earn annual incentive awards. These incentive opportunities are designed to put a significant portion of an executive's total pay "at risk," subject to the achievement of financial and operating goals at levels designed to be consistent with industry practice. The Chief Executive Officer and the Chief Operating Officer (when the position is occupied), participate in individual incentive opportunities funded on the basis of attainment of specific corporate financial goals for net income, return on equity, new bookings, and margins on new bookings. These goals are set by the Board. The other named executive officers also participate in annual incentive compensation plans which fund when pre-established corporate financial goals related to their positions are achieved and/or pre-established goals related to the operating plans of the businesses for which they are responsible are achieved. Target awards for the five named executive officers were set from 35% to 50% of base salary, with maximum awards not to exceed 2.2 times these targets. As shown on the Summary Compensation Table, four of the five named executive officers were granted annual incentive awards for 1996, based on the level of attainment of pre-established financial goals and individual achievement factors. The specific 1996 corporate financial goals set by the Board for the Chief Executive Officer were attained at approximately 58% of the target level. Because of that achievement, and the Board's evaluation of Mr. Agresti's individual accomplishments during the year, the Board awarded Mr. Agresti 58% of his target award amount. For the other named executives, attainment in 1996 of pre-established financial goals and individual achievement factors ranged from 0% to 82% of their target award amounts. LONG-TERM INCENTIVE AWARDS The Company offers incentive to management for contributions to stock price growth and total shareholder return through participation in the 1990 Executive Stock Plan. The Plan, which was amended and restated by shareholders in April 1995, provides for awards of non-qualified and incentive stock options, restricted stock, and stock appreciation rights to officers and other key employees, and represents additional "at risk" compensation. In 1996, awards were made by the Executive Compensation Committee, whose members were not participants in the Plan. All named executive officers were participants in the Plan and all named officers received stock option awards in 1996, which are shown in the Summary - 10 - Compensation Table and the Option/SAR Grants Table. Most of the options granted to date have achieved some gain, but the realization of meaningful compensation values from them depends on future stock price growth. No awards of restricted stock were made in 1996. Previous awards of restricted stock were made in 1992, and the unqualified ownership of these awarded shares of restricted stock were dependent upon attaining specific earnings per share goals for each of the three years following the grants; short of achieving each year's goal, a percentage of the awarded restricted shares were forfeited back to the Company. Earnings per share goals were not met in any of the three years (1993-1995), and all remaining shares previously awarded were forfeited on March 5, 1996. The Board believes the amended and restated 1996 Executive Stock Plan is well designed to encourage management's effort in the shareholders' interests. Little value will be realized from the Plan unless those interests are well served. The Company has not adopted a policy regarding how it will address Section 162(m) of the Internal Revenue Code regarding the deductibility of certain compensation, because no officer of the Company will earn compensation that approaches the million-dollar limitation. The Board of Directors: Jack J. Agresti Duane E. Atkinson Ray N. Atkinson William E. Burch J. Phillip Frazier Donald R. Kayser Ross J. Turner John F. Whitsett - 11 - PERFORMANCE GRAPH* Note: The stock performance shown on the graph below is not necessarily indicative of future price performance. The following graph compares the percentage change in the cumulative total shareholder return of the Common Stock of Guy F. Atkinson Company of California ("Atkinson") over the last five fiscal years with the performance of the NASDAQ Stock Market - US Index and a Peer Group over the same period. The returns were calculated assuming the investment in Atkinson Common Stock, the NASDAQ Stock Market - US Index and the Peer Group on December 31, 1991, and reinvestment of all dividends. [TABLE FOR PERFORMANCE GRAPH IN EDGAR FORMAT] COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG GUY F. ATKINSON COMPANY, THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
MEASUREMENT PERIOD NASDAQ STOCK (FISCAL YEAR COVERED) ATKINSON MARKET-US INDEX PEER GROUP - -------------------- -------- --------------- ---------- Measurement Pt -- 12/31/91 $100.00 $100.00 $100.00 FYE 12/31/92 144.00 116.00 93.00 FYE 12/31/93 127.00 134.00 87.00 FYE 12/31/94 154.00 131.00 61.00 FYE 12/31/95 194.00 185.00 67.00 FYE 12/31/96 227.00 227.00 95.00
* The Peer Group includes the following companies: Granite Construction Incorporated, Michael Baker Corporation, Morrison Knudsen Corporation, Perini Corporation, and The Turner Corporation. These are the same companies which have made up the Peer Group since 1993, except that Blount, Inc. was deleted in 1994 because it ceased operating as a construction company, and Kasler Holding Company, which has been in the peer group since 1993, changed its name to Washington Construction Group, Inc. in April 1996. In September, 1996, Washington Construction Group, Inc. merged with Morrison Knudsen Corporation. The data included in this proxy statement for Morrison Knudsen Corporation includes data from Washington Construction Group, Inc. and Kasler Holding Company. - 12 - CERTAIN TRANSACTIONS In 1991, William J. Carlson, then President of Walsh Construction Company division, was relocated by the Company from Trumbull, Connecticut to its headquarters in South San Francisco, California. In connection with his relocation, Mr. Carlson received a loan which is guaranteed by Guy F. Atkinson Company, a Nevada corporation. The loan is in the amount of $156,000 and is secured by a deed of trust on Mr. Carlson's residence. The entire principal amount of the loan is due on December 31, 2001 and annual interest payments are required on the outstanding principal at the rate of 6.00 percent per annum. COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS The Company has standing audit, executive compensation and corporate governance committees of the Board of Directors. The Audit Committee consists of three directors appointed by the Board. The current members of the Audit Committee are William E. Burch, J. Phillip Frazier, and Donald R. Kayser. The Audit Committee recommends to the Board the appointment of an independent accounting firm, reviews the financial statements of the Company with such accounting firm, inquires into the effectiveness of the Company's internal auditing methods and procedures, and reports to the Board. The Audit Committee held four meetings during 1996. The Executive Compensation Committee consists of three directors appointed by the Board, none of whom may be the Chairman or the President of the Company. The current members of the Compensation Committee are William E. Burch, Donald R. Kayser, and Ross J. Turner. The Compensation Committee held eight meetings in 1996. The Corporate Governance Committee, previously called the Nominating Committee, consists of three directors appointed by the Board. The current members of the Committee are Duane E. Atkinson, Ray N. Atkinson, and Ross J. Turner. In December, 1996, the Board reconstituted the Committee to increase its focus on matters of corporate governance. The Committee also recommends to the Board nominations of directors. The Committee held one meeting during 1996. The Committee will consider nominations recommended by shareholders, which should be directed to the Secretary of the Company. Six meetings of the Board of Directors were held in 1996. Each of the directors attended no less than seventy-five percent of the meetings of the Board and the standing committees on which such director serves. - 13 - CERTAIN BENEFICIAL OWNERS OF SECURITIES The persons listed below are known to the Company to be beneficial owners as of January 31, 1997 of more than 5% of the Company's Capital Stock(1). Such persons have sole voting and investment power with respect to the shares set forth opposite their names below. AMOUNT AND NATURE PERCENT NAME AND ADDRESS OF OF BENEFICIAL OF BENEFICIAL OWNER OWNERSHIP CLASS - ----------------------------- ------------- ------- Myrtle L. Atkinson Foundation 861,620 9.6 5828 Naylor Avenue Livermore, CA 94550 Atkinson Foundation 641,910 7.1 1100 Grundy Lane San Bruno, CA 94066 Willamette University 583,517 6.5 Salem, OR 97301 David L. Babson & Co. 551,600 6.1 One Memorial Drive Suite 1100 Cambridge, MA 02142 Quest Advisory Corp. 527,400 5.9 1414 Avenue of the Americas New York, NY 10019 - --------- (1) As of January 31, 1997, the trustee of the Atkinson Retirement Stock and Investment Plan was the owner of 1,373,397 shares of the Common Stock of the Company, constituting 15.3% of the Common Stock, held for the benefit of participants in the Plan. The trustee votes such shares only in accordance with instructions from such participants and disclaims beneficial ownership thereof. APPROVAL OF AMENDMENT AND RESTATEMENT OF THE 1990 EXECUTIVE STOCK PLAN OF GUY F. ATKINSON COMPANY OF CALIFORNIA On March 17, 1997, the Board of Directors amended and restated the Guy F. Atkinson Company of California 1990 Executive Stock Plan (the "Plan"), subject to the approval of the stockholders of the Company. The purpose of the Plan is to encourage stock ownership by directors and key employees of the Company, thereby providing an incentive for them to promote stock price growth and the overall financial success of the Company. PRINCIPAL FEATURES OF THE PLAN, AS AMENDED (a) The Plan provides for the award of (i) nonqualified stock options ("NSOs") and incentive stock options ("ISOs") to purchase the Company's Common Stock, (ii) shares of Common Stock for such - 14 - consideration and subject to such restrictions as the Executive Compensation Committee determines and (iii) rights or other units, the value of which is based on the value of Common Stock, as the Executive Compensation Committee deems appropriate. (b) Key employees of the Company, as determined by the Executive Compensation Committee, are eligible to receive awards under the Plan. The options, benefits or amounts which would have been received by or allocated to the named executive officers and executive officers as a group for the 1996 fiscal year if the Plan, as amended, had been in effect are not determinable. Under a feature added to the Plan in March of 1997, non-employee directors are eligible to participate in the Plan. (c) As part of the amendment and restatement of the Plan, the number of shares available for issuance under the Plan was increased by 700,000 shares. As a result, up to 2,000,000 shares of Common Stock, $0.01 par value, are reserved for issuance under the Plan. As of the date of this Proxy statement, no shares remained available for issuance. (d) The Board has the authority to amend the Plan at any time; provided, however, that any amendment which increases the maximum number of shares available or changes the class of persons eligible to receive awards must be approved by the stockholders. (e) The Plan remains in effect until termination by the Board or, if earlier, March 17, 2007. No awards may be granted after termination of the Plan. (f) Stock options may not be granted with a term of more than 10 years. ISOs must bear an exercise price equal to the full fair market value of Common Stock. NSOs may be granted at below fair market value. No person may receive more than 200,000 options per calendar year. (g) Options may be subject to vesting and other restrictions, as the Executive Compensation Committee determines at the time of grant. Shares of Common Stock may be awarded subject to such restrictions that the Executive Compensation Committee deems appropriate, including attainment of performance objectives or completed years of service. (h) The Plan permits the grant of stock appreciation rights ("SARs") or units based on the value of Common Stock, payable in cash or stock and subject to performance requirements, as the Executive Compensation Committee determines. No person may receive more than 200,000 SARs per calendar year. (i) Options may be exercised with cash or shares of Common Stock. The Plan contains "cashless exercise" provisions and permits the withholding of shares from exercise to cover applicable withholding taxes. (j) Any options granted to non-employee directors vest and become exercisable with respect to 33.33% of the options granted on each of the first three annual anniversary dates of the grant, unless otherwise specified at the time of the grant. The exercise price is equal to 100% of the fair market value of Common Stock on the date of grant. A non-employee director's options have a term of 7 years, regardless of whether or not the individual remains a Director during the full term. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Neither the optionee nor the Company will incur any federal tax consequences as a result of the grant of an option or SAR under the Plan. The optionee will have no taxable income upon exercising an ISO - 15 - (although the alternative minimum tax may apply), and the Company will receive no deduction when an ISO is exercised. Upon exercising an NSO or SAR, the optionee generally must recognize ordinary income equal to the "spread" between the exercise price and the fair market value of Common Stock on the date of exercise. The Company will be entitled to a deduction for the same amount. The tax treatment of a disposition of option shares acquired under the Plan depends on how long the shares have been held and on whether such shares were acquired by exercising an ISO or by exercising an NSO or SAR. The Company will not be entitled to a deduction in connection with a disposition of option shares, except in the case of a disposition of shares acquired under an ISO before the applicable ISO holding periods have been satisfied. The Committee may permit a Plan participant to satisfy his or her withholding tax obligations by surrendering a portion of his or her previously issued shares to the Company, or by having the Company withhold a portion of any shares that otherwise would be issued to him or her. The above description of tax consequences is based on present federal tax laws and regulations and does not purport to be a complete description of the federal income tax aspects of the Plan. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE PLAN. A vote of a majority of the shares represented and entitled to vote at the Annual Meeting is required for approval. An abstention or shares represented by proxies which are marked "abstain" will have the same effect as a vote against the proposal. The failure of a broker or other nominee to vote shares for a beneficial owner will have no effect on the proposal. CERTIFIED PUBLIC ACCOUNTANTS The firm of Coopers & Lybrand L.L.P., Certified Public Accountants, has been the auditor for the Company for many years. A representative of that firm is expected to be present at the Annual Meeting. He or she will be available to respond to appropriate questions and will have an opportunity to make a statement if he or she desires to do so. SHAREHOLDER PROPOSALS To be considered for presentation to the Annual Meeting of Shareholders to be held in 1998 a shareholder proposal must be received at the offices of the Company, 1001 Bayhill Drive, San Bruno, California 94066, not later than November 28, 1997. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Under the securities laws of the United States, the Company's Directors, certain executive officers, and any persons holding more than 10 percent of the Common Stock are required to report their initial ownership of the Common Stock and any subsequent changes in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established and the Company is required to identify in this Proxy Statement those persons who failed to file these reports when due. All of the filing requirements were satisfied in 1996. In making this disclosure, the Company has relied solely on copies of the reports that have been filed with the Securities and Exchange Commission and written representations of its Directors and executive officers. - 16 - OTHER MATTERS The Board of Directors does not know of any other business that will be presented for consideration at the Annual Meeting. If any other business properly comes before the Annual Meeting or any adjournment thereof, the proxy holders will vote in regard thereto according to their best judgment. Therese Ambrusko Secretary - 17 - Appendix A - Form of Proxy PROXY GUY F. ATKINSON COMPANY OF CALIFORNIA PROXY SOLICITED ON BEHALF OF THE DIRECTORS For Annual Meeting of Shareholders April 17, 1997 Jack J. Agresti, Duane E. Atkinson and John F. Whitsett, and each of them, each with full power of substitution, are hereby authorized to represent and to vote any and all shares of Common Stock of GUY F. ATKINSON COMPANY OF CALIFORNIA which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on April 17, 1997, or any adjournment or postponement thereof, as specified on the reverse side and with all of the powers which the undersigned would possess if personally present. (Please Sign and Date the Proxy on the Reverse Side) THIS PROXY WILL BE VOTED AS YOU SPECIFY HEREON, UNLESS Please mark OTHERWISE MARKED, THIS PROXY WILL BE VOTED FOR THE your votes as / / ELECTION OF THE DIRECTORS AND FOR THE PROPOSAL indicated in this example 1. Election of directors to serve for the ensuing year: FOR all WITHHOLD Jack J. Agresti, Duane E. Atkinson, nominees AUTHORITY Ray N. Atkinson, William E. Burch, listed to the right to vote for J. Phillip Frazier, Donald R. all nominees Kayser, Ross J. Turner, John F. listed to the Whitsett right / / / / (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) ------------------------------------ 2. Proposal to amend and restate the 3. In their discretion, the Proxies 1990 Executive Stock Plan, as are authorized to vote upon any described in the Proxy Statement. other matter that may properly come before the meeting or any FOR AGAINST ABSTAIN adjournment or postponement / / / / / / thereof. Please sign exactly as name appears hereon. Give your full title if signing in other than individual capacity. All joint owners should sign. Dated:______________________________________, 1997 __________________________________________________ (Signature) __________________________________________________ (Signature) Appendix B - Amended and Restated 1990 Executive Stock Plan GUY F. ATKINSON COMPANY OF CALIFORNIA 1990 EXECUTIVE STOCK PLAN AS AMENDED AND RESTATED 1. Establishment and Purpose. (a) Guy F. Atkinson Company of California (the "Company") previously adopted the Guy F. Atkinson Company of California 1990 Executive Stock Plan (the "Plan"). The Company hereby amends and restates the Plan to read as set forth herein, effective as of March 17, 1997 (the "Effective Date"), but contingent upon approval by the shareholders of the Company within 12 months after the Effective Date. The Plan provides a means whereby: (1) key employees of the Company and its Subsidiaries may be given an opportunity to purchase shares of the common stock of the Company (the "Stock") pursuant to options which may qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") (referred to as "incentive stock options"); (2) Non-Employee Directors of the Company and key employees of the Company and its Subsidiaries may be given an opportunity to purchase shares of Stock pursuant to options which do not qualify as incentive stock options (referred to as "nonqualified stock options"); (3) Non-Employee Directors of the Company and key employees of the Company and its Subsidiaries may acquire Stock for such consideration (if any) and subject to such restrictions (if any) as the Committee determines appropriate; and (4) Non-Employee Directors of the Company and key employees of the Company and its Subsidiaries may be granted rights or units the value of which is based on the value of the Stock. (b) The purpose of the Plan is to promote the long-term success of the Company by encouraging key employees and Non-Employee Directors to focus on long-range objectives, by attracting and retaining key employees and Non-Employee Directors, and by aligning the finan cial interests of key employees and Non-Employee Directors with the interests of shareholders. 2. Definitions. (a) "Awards" refers collectively to Stock grants, Stock sales, options to purchase Stock, stock appreciation rights, and units issued pursuant to this Plan. -1- (b) "Non-Employee Director" refers to a member of the Board who is not a common-law employee of the Company or a Subsidiary. (c) "Participant" refers to a recipient of an Award. (d) "Subsidiaries" refers to subsidiary corporations, as defined in Section 424(f) of the Code (but substituting "the Company" for "employer corporation"), including entities which become Subsidiaries after adoption of the Plan. 3. Administration of the Plan. (a) The Plan shall be administered by the Executive Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board"). (b) The Committee shall consist of not less than two members, who shall be members of the Board. The composition of the Committee shall satisfy: (1) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Securities Exchange Act of 1934; and (2) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under section 162(m)(4)(C) of the Code. (c) The Committee shall meet at such times and places and upon such notice as the chairperson determines. A majority of the Committee, but not less than two persons, shall constitute a quorum. Any acts of the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all the members of the Committee shall be valid acts of the Committee. (d) The Committee shall determine which key employees and Non-Employee Directors of the Company or its Subsidiaries shall be granted Awards under the Plan, the timing of such Awards, the terms thereof, and the number of shares of Stock subject to each Award. (e) The Committee shall have the sole authority, in its absolute discretion, to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan, to construe and interpret the Plan, the rules and regulations and the instruments evidencing Awards granted under the -2- Plan, and to make all other determinations deemed necessary or advisable for the administration of the Plan. All decisions, determinations, and interpreta tions of the Committee shall be binding on all Participants. (f) The Plan is intended to meet the requirements of Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934 and the requirements of Section 162(m)(4)(C) of the Code and shall be administered and construed accordingly. 4. Stock Subject to the Plan; Limitations on Award. (a) Awards may be granted under the Plan to eligible persons for an aggregate of not more than two million (2,000,000) shares of Stock. If an option is surrendered for cash or other consideration, or for any other reason ceases to be exercisable in whole or in part, the shares which were subject to such option but as to which the option had not been exercised shall continue to be available under the Plan. If Stock is granted or sold subject to restrictions and is subsequently forfeited, the forfeited shares shall again be available for Awards under this Plan. If stock appreciation rights are granted and subsequently lapse or are forfeited, the shares to which the rights relate shall again be available for Awards under the Plan. (b) If there is any change in the Stock subject to the Plan or the Stock subject to any Award granted under the Plan, through merger, consolidation, reorganization, spin-off, recapitalization, reincorporation, stock split, stock dividend (in excess of two percent), extra ordinary cash dividend or other change in the corporate structure of the Company, appropriate adjustments may be made by the Committee in order to preserve but not to increase the benefits to the Participants, including adjustments in the aggregate number of shares subject to the Plan, the number of shares and the price per share subject to outstanding Awards, and the limitations in subparagraph (c) below. (c) The Company shall not grant, issue or sell to any employee in any calendar year: (1) options pursuant to paragraph 7 to purchase more than two hundred thousand (200,000) shares of Stock; or (2) stock appreciation rights with respect to more than two hundred thousand (200,000) shares of Stock, pursuant to paragraph 8. -3- 5. Eligibility. Persons who shall be eligible to have Awards granted to them shall be such key employees of the Company or its Subsidi aries as the Committee, in its discretion, shall designate from time to time and the Non-Employee Directors of the Company. 6. Non-Employee Directors. Any other provision of the Plan notwithstanding, the partici pation of Non-Employee Directors in the Plan shall be subject to the following restrictions: (a) All nonqualified options granted to a Non-Employee Director under this paragraph 6 shall vest and become exercisable with respect to 33.33% of the options granted on each of the first three annual anniversary dates of grant, unless otherwise specified at the time of grant. (b) The exercise price under all nonqualified options granted to a Non-Employee Director under this para graph 6 shall be equal to one hundred percent (100%) of the fair market value of Stock on the date of grant, payable in any form permitted under paragraph 14. (c) All nonqualified options granted to a Non-Employee Director under this paragraph 6 shall terminate on the seventh (7th) anniversary of the date of the grant, regardless of whether or not the individual remains a member of the Board of Directors during the full period. 7. Terms and Conditions of Options. (a) The exercise price of the Stock covered by each incen tive stock option shall not be less than the per share fair market value of such Stock on the date the option is granted. Notwithstanding the foregoing, in the case of an incentive stock option granted to a person possessing more than ten percent (10%) of the combined voting power of the Company or any Subsidiary, the exercise price shall not be less than one hundred ten percent (110%) of the fair market value of the Stock on the date the option is granted. Nonqualified stock options may be granted with an exercise price less than fair market value. The exercise price of an outstanding stock option shall be subject to adjustment to the extent provided in paragraph 4. (b) Each option granted pursuant to the Plan shall be evidenced by a written stock option agreement executed by the Company and the person to whom such option is granted. -4- (c) The Committee shall determine the term of each option granted under the Plan, but the term of each option shall be for no more than ten (10) years; provided, however, that in the case of an incentive stock option granted to a person possessing more than ten percent (10%) of the combined voting power of the Company or any Subsidiary, the term shall be for no more than five (5) years. (d) The stock option agreement may contain such other terms, provisions and conditions as may be determined by the Committee (not inconsistent with this Plan), including, without limitation, stock appreciation rights with respect to options granted under this Plan. If an option, or any part thereof, is intended to qualify as an incentive stock option, the stock option agreement shall contain those terms and conditions which are necessary to so qualify it. 8. Stock Appreciation Rights. The Committee may, under such terms and conditions as it deems appropriate, authorize the surrender by an optionee of all or part of an unexercised option and authorize a payment in consideration therefor in an amount equal to the differ ence obtained by subtracting the option price of the shares then subject to exercise under such option from the fair market value of the Stock represented by such shares on the date of surrender, provided that the Committee determines that such settlement is consistent with the purpose of the Plan. Such payment may be made in shares of Stock valued at their fair market value on the date of surrender of such option or in cash, or partly in shares and partly in cash. Acceptance of surrender and the manner of payment shall be in the discretion of the Committee. Any payments of cash under this paragraph shall be from the general assets of the Company. 9. Stock Awards. The Committee may, in its discretion, issue Stock to eligible persons as compensation for services rendered to the Company or its Subsidiaries, on whatever basis and subject to such performance requirements, terms and conditions as the Committee determines. The terms and conditions of such an Award shall be evidenced by a written agreement executed by the Company and the Participant. 10. Unit Awards. The Committee may, in its discretion, issue units to eligible persons as compensation for services rendered to the Company or its Subsidiaries, the value of such units to be based on the value of the Stock. Unit Awards shall be subject to whatever performance requirements, terms and conditions the Committee determines appropriate. The terms of a Unit Award -5- shall be evidenced by a written agreement executed by the Company and the Participant. 11. Restrictions on Transfer of Stock. Stock acquired under the Plan shall be subject to such restrictions and agreements regarding performance, vesting, sale, assignment, encumbrance, or other transfer as the Committee deems appropriate at the time of making an Award. 12. Use of Proceeds. Any cash proceeds realized from the sale of Stock pursuant to the Plan or from the exercise of options granted under the Plan shall constitute general funds of the Company. 13. Amendment, Suspension or Termination of the Plan. (a) The Board may at any time amend, suspend or terminate the Plan as it deems advisable; provided, however, except as provided in paragraph 4, the Board shall not amend the Plan in the following respects without the consent of shareholders then sufficient to approve the Plan in the first instance: (1) to increase the maximum number of shares subject to the Plan; or (2) to change the designation or class of persons eligible to receive Awards under the Plan. (b) No Award may be granted during any suspension or after the termination of the Plan, and no amendment, suspen sion or termination of the Plan shall, without the Participant's consent, alter or impair any rights or obligations under any Award previously made under the Plan. (c) This Plan shall terminate 10 years from the date of the most recent amendment approved by the Company's share holders, unless previously terminated by the Board pursuant to this paragraph. (d) Upon a termination of the Plan, the Committee may authorize the surrender by an optionee of all or part of an unexercised option and authorize a payment in consid eration therefor in the same manner as if the Partici pant had surrendered an option under paragraph 8 regarding stock appreciation rights. 14. Consideration. Payment of the exercise price of an option or payment of any consideration required for a Stock Award granted under this Plan shall be made in cash; provided, however, that the Committee, in its sole discretion, may establish procedures -6- which permit a Participant to pay the exercise or purchase price in whole or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker approved by the Committee to sell shares and deliver all or a portion of the proceeds to the Company in payment for the Stock. The Committee may also establish procedures for the sale of shares of Stock to cover withholding taxes or the withholding of shares of Stock issuable upon exercise of an option to satisfy applicable withholding taxes to the extent permitted by applicable law. Date Amended and Restated By Company: March 17, 1997. Date Approved By Shareholders: ________, 1997. -7- -----END PRIVACY-ENHANCED MESSAGE-----