SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant x
Filed
by a Party other than the Registrant o
Check
the appropriate box:
o Preliminary Proxy
Statement
o Confidential, For Use
of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Under Rule 14a-12
MILLER
INDUSTRIES, INC.
(Name of Registrant as Specified in Its
Charter)
(Name of Person(s) Filing Proxy Statement, if Other
Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No fee
required.
o 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:
o Fee paid previously with preliminary materials:
o 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:
EXPLANATORY
NOTE
The
registrant’s definitive proxy statement filed with the Securities and Exchange
Commission on May 2, 2005 is hereby amended to: (1) revise certain disclosure
regarding the total number of units that DataPath, Inc. has committed to
purchase in connection with its manufacturing arrangement with the registrant,
(2) revise the compensation paid during 2004 to William G. Miller, the
registrant’s Chairman and Co-Chief Executive Officer, as reflected in the table
under the heading “Summary Compensation Table”, (3) revise the
calculations in the column entitled “Percent Of Total Options Granted to
Employees In Fiscal Year” in the table under the heading “Option Grants and
Exercises in Last Fiscal Year”, and (4)
add Contrarian Funds, LLC as a 5% shareholder in the table under the heading
“Security Ownership of Certain Beneficial Owners and Management”.
8503
Hilltop Drive,
Ooltewah,
Tennessee 37363
(423)
238-4171
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 27, 2005
The annual
meeting of shareholders of Miller Industries, Inc. will be held at 9:00 a.m.
(Eastern Time), on Friday, May 27, 2005, at 1100 Peachtree Street, Suite 2800,
Atlanta, Georgia, for the following purposes:
1. to
elect five (5) directors to hold office for a term of one (1) year or until
their successors are duly elected and qualified;
2. to
consider and act upon a proposal to approve the 2005 Equity Incentive Plan, as
described in the accompanying proxy statement; and
3. to
transact such other business as may properly come before the meeting or any
adjournment thereof.
Only
shareholders of record at the close of business on April 22, 2005 are entitled
to notice of and to vote at the annual meeting. Your attention is directed to
the proxy statement accompanying this notice for a complete statement regarding
matters to be acted upon at the annual meeting.
By order of the Board
of Directors,
/s/ Frank
Madonia
Frank
Madonia
Secretary
Atlanta,
Georgia
May
2, 2005
|
We
urge you to attend the Annual Meeting. Whether or not you plan to attend,
please complete, date and sign the enclosed proxy card and
return
it in the enclosed postage-paid envelope. You may revoke the proxy at any
time before it is voted.
|
TABLE OF CONTENTS
Page
| GENERAL |
1 |
| VOTING PROCEDURES |
1 |
| PROPOSAL 1: ELECTION OF DIRECTORS |
2 |
| Introduction |
2 |
|
Information
Regarding Nominees |
2 |
| Independence, Board Meetings and Related Information |
3 |
| Committees of the Board of Directors |
4 |
| Director Nominations |
5 |
| Compensation of Directors |
5 |
| Certain Business Relationships and Related Transactions | |
|
| |
| PROPOSAL 2: APPROVAL OF 2005 EQUITY INCENTIVE PLAN |
7 |
| Introduction |
7 |
| Description of the 2005 Plan |
7 |
| Income Tax Consequences |
9 |
| New Plan Benefits |
11 |
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
12 |
| COMPENSATION OF EXECUTIVE OFFICERS |
13 |
| Summary Compensation Table |
13 |
| Option Grants and Exercises in Last Fiscal Year |
14 |
| Option Values as of December 31, 2004 |
14 |
| Employment Contracts, Termination of Employment and Change-in-Control Arrangements |
15 |
| Compensation Committee Interlocks and Insider Participation |
16 |
| Compensation Committee Report on Executive Compensation |
16 |
| ACCOUNTING MATTERS |
17 |
| Audit Committee Report |
17 |
| Independent Public Accountants |
18 |
| CODE OF BUSINESS CONDUCT AND ETHICS |
19 |
| EQUITY COMPENSATION PLAN INFORMATION |
19 |
| COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 |
20 |
| PERFORMANCE GRAPH |
20 |
| OTHER MATTERS |
21 |
| Deadline for Shareholder Proposals for 2006 Annual Meeting |
21 |
| Expenses of Solicitation |
21 |
MILLER
INDUSTRIES, INC.
8503
Hilltop Drive,
Ooltewah,
Tennessee 37363
(423)
238-4171
PROXY
STATEMENT FOR
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD MAY 27, 2005
This
proxy statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Miller Industries, Inc. (the “Company” or
“Miller Industries”) for use at the annual meeting of shareholders
(the “Annual Meeting”) to be held at 1100 Peachtree Street, Suite 2800,
Atlanta, Georgia, on Friday, May 27, 2005, at 9:00 a.m. (Eastern Time), and any
adjournments or postponements thereof. This proxy statement and the accompanying
proxy card were first mailed to shareholders on or about May 3,
2005.
Only
holders of the Company’s common stock, $0.01 par value per share (the “Common
Stock”), at the close of business on April 22, 2005 are entitled to vote at the
Annual Meeting. On such date, the Company had issued and outstanding 11,196,876
shares of Common Stock.
VOTING PROCEDURES
A
majority of shares entitled to vote and represented in person or by proxy at the
Annual Meeting will constitute a quorum. Abstentions and “non-votes” will be
counted for the purposes of determining a quorum. Each outstanding share of
Common Stock is entitled to one vote.
The
election of the nominees to the Board of Directors requires a plurality of the
votes cast by holders of shares of Common Stock present in person or represented
by proxy at the Annual Meeting. Therefore, those nominees receiving the greatest
number of votes at the Annual Meeting shall be deemed elected, even though such
nominees may not receive a majority of the votes cast. The approval of the 2005
Equity Incentive Plan requires affirmative votes by the holders of a majority of
the shares of Common Stock of the Company present in person or represented by
proxy at the Annual Meeting, provided that at least a majority of the
outstanding shares of Common Stock are voted for or against, or abstain from
voting on, such Plan.
Abstentions
and non-votes will not be considered in the election of the nominees to the
Board of Directors, but will be treated as votes against the approval of the
2005 Equity Incentive Plan and any other proposals presented to the
shareholders. A “non-vote” occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
The
Board of Directors has designated William G. Miller and Frank Madonia, and each
or either of them, as proxies to vote the shares of Common Stock solicited on
its behalf. A shareholder who signs and returns a proxy may revoke the proxy at
any time before it has been exercised by: (i) attending the Annual Meeting,
notifying the Secretary of the Company (or his delegate), and voting in person,
(ii) filing with the Secretary of the Company a written revocation, or
(iii) duly executing a proxy bearing a later date. Unless revoked, where a
choice is specified on the proxy, the shares represented thereby will be voted
in accordance with such direction. If no specification is made, such shares will
be voted FOR
the election of the five director nominees and the approval of the 2005 Equity
Incentive Plan, and in the discretion of the proxy holders on any other matter
that may properly come before the meeting.
The
Board of Directors knows of no matters which are to be brought to a vote at the
Annual Meeting, other than those set forth in the accompanying Notice of Annual
Meeting. However, if any other matter properly does come before
the Annual Meeting, the persons appointed in the proxy, or their substitutes,
will vote in accordance with their best judgment on such
matters.
PROPOSAL 1
ELECTION
OF DIRECTORS
Introduction
Pursuant
to the Company’s Charter and Bylaws, the Board of Directors has fixed the number
of directors at five. The members of the Board of Directors comprise a single
class, and at each annual meeting of shareholders all directors will be elected.
The directors elected at the Annual Meeting will serve until the annual meeting
of shareholders in 2006 or until their successors are duly elected and
qualified. The Board of Directors may fill directorships resulting from
vacancies, and may increase or decrease the number of directors to as many as
fifteen or as few as three. Executive officers are appointed annually and serve
at the discretion of the Board of Directors.
Upon
the recommendation of the Nominating Committee, the Board of Directors has
nominated Jeffrey I. Badgley, A. Russell Chandler, III, Paul E. Drack, William
G. Miller and Richard H. Roberts, the current members of the Board, for
re-election as directors. Each such nominee has consented to be named herein and
to serve as a director, if elected.
Unless
contrary instructions are received, shares of Common Stock represented by duly
executed proxies will be voted in favor of the election of the five nominees
named above to constitute the entire Board of Directors. The Board of Directors
has no reason to expect that the nominees will be unable to serve and,
therefore, at this time it does not have any substitute nominees under
consideration.
The
nominees for election will be elected by a plurality of the votes cast by
holders of the shares of Common Stock entitled to vote at the Annual Meeting.
Shareholders have no right to vote cumulatively for directors. Each shareholder
shall have one vote for each director for each share of Common Stock held by
such shareholder.
Information
concerning the Board of Directors’ nominees, based on data furnished by them, is
set forth below. They are all now directors of the Company. The Board of
Directors has determined that three of the five nominees are independent
directors under the listing standards of the New York Stock Exchange
(“NYSE”).
THE
BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ELECTION OF
EACH OF THE FIVE DIRECTOR NOMINEES.
Information
Regarding Nominees
|
Name
of Director |
Background
Information | |
|
Jeffrey
I. Badgley
|
Mr.
Badgley, 53, has served as Co-Chief Executive Officer of the Company with
William G. Miller since October 2003, as President of the Company since
June 1996 and as a director since January 1996. Mr. Badgley served as
Chief Executive Officer of the Company from November 1997 to October 2003.
In June 1997, he was named Co-Chief Executive Officer of the Company, a
title he shared with Mr. Miller until November 1997. Mr. Badgley served as
Vice President of the Company from 1994 to 1996, and as Chief Operating
Officer of the Company from June 1996 to June 1997. In addition, Mr.
Badgley has served as President of Miller Industries Towing Equipment Inc.
since 1996. Mr. Badgley served as Vice President—Sales of Miller
Industries Towing Equipment Inc. from 1988 to 1996. He previously served
as Vice President—Sales and Marketing of Challenger Wrecker Corporation
(“Challenger Wrecker”), from 1982 until joining Miller Industries Towing
Equipment Inc.
|
|
Name
of Director |
Background
Information | |
|
A.
Russell Chandler, III
|
Mr.
Chandler, 59, has served as a director of the Company since April 1994. He
currently serves as Chairman of Datapath, Inc., a company that builds
mobile communications trailers for military application, and is founder
and Chairman of Whitehall Group Ltd., a private investment firm based in
Atlanta, Georgia. Mr. Chandler served as the Mayor of the Olympic Village
for the Atlanta Committee for the Olympic Games from 1990 through August
1996. From 1987 to 1993, he served as Chairman of United Plastic Films,
Inc., a manufacturer and distributor of plastic bags. He founded
Qualicare, Inc., a hospital management company, in 1972 and served as
President and Chief Executive Officer until its sale in 1983.
| |
|
Paul
E. Drack
|
Mr.
Drack, 76, has served as a director of the Company since April 1994. Mr.
Drack is also a director of Euramax International, Inc. Mr. Drack retired
in December 1993 as President and Chief Operating Officer of AMAX Inc.,
positions he held since August 1991. From 1985 to 1991, Mr. Drack served
in various capacities for operating subsidiaries of AMAX Inc. including
Chairman, President and Chief Executive Officer of Alumax Inc. and
President of Kawneer Company. He was a director of AMAX Inc. from 1988 to
1993. Prior to its acquisition by Cyprus Minerals in November 1993, AMAX
Inc. was a producer of aluminum and manufactured aluminum products with
interests in domestic energy and gold production.
| |
|
William
G. Miller
|
Mr.
Miller, 58, has served as Chairman of the Board since April 1994 and
Co-Chief Executive Officer of the Company since October 2003. From January
2002 to August 2002 Mr. Miller served as the Chief Executive Officer of
Team Sports Entertainment, Inc. Mr. Miller served as Chief Executive
Officer of the Company from April 1994 until June 1997. In June 1997, he
was named Co-Chief Executive Officer, a title he shared with Jeffrey I.
Badgley until November 1997. Mr. Miller also served as President of the
Company from April 1994 to June 1996. He served as Chairman of Miller
Group, Inc., from August 1990 through May 1994, as its President from
August 1990 to March 1993, and as its Chief Executive Officer from March
1993 until May 1994. Prior to 1987, Mr. Miller served in various
management positions for Bendix Corporation, Neptune International
Corporation, Wheelabrator-Frye Inc. and The Signal Companies,
Inc.
| |
|
Richard
H. Roberts |
Mr.
Roberts, 50, has served as a director of the Company since April 1994. Mr.
Roberts served as Senior Vice President, General Counsel and Secretary of
Landair Transport, Inc. from July 1994 to November 2004, and from July
1994 until April 2003, Mr. Roberts served as Senior Vice President,
General Counsel and Secretary of Forward Air Corporation. From May 1995
until May 2002 Mr. Roberts served as a director of Forward Air
Corporation. Mr. Roberts also a held similar position with Landair
Corporation from September 1998 until February 2003. Mr. Roberts was
partner in the law firm of Baker, Worthington, Crossley & Stansberry,
counsel to the Company, from January 1991 to August 1994 and prior thereto
was an associate of the firm. |
Independence,
Board Meetings, and Related Information
Independence
The
Board of Directors has determined that a majority of the members of the Board of
Directors are “independent”, as “independent” is defined under applicable
federal securities laws and the listing standards of the NYSE. The “independent”
directors are Messrs. Chandler, Drack and Roberts.
Meetings
The
Board of Directors held five meetings during 2004. All incumbent directors
attended more than 75% of the meetings of the Board of Directors and the
respective committees of which they are members. The non-management directors
meet in executive session as a part of the meetings of the Audit Committee. The
presiding director at those sessions is selected by the non-management directors
on a meeting by meeting basis. The Company does not require its directors to
attend its annual meeting of shareholders. In 2004, all of the Company’s five
directors attended the annual meeting of shareholders.
Communication
with Directors
Interested
parties may communicate with a non-management director by mailing communication
to the attention of that director at 8503 Hilltop Road, Ooltewah, Tennessee
37363.
Committees
of the Board of Directors
The
Board of Directors has standing Audit, Compensation and Nominating Committees.
Members of these committees are generally elected annually by the Board of
Directors, but changes may be made at the Board of Directors’ discretion at any
time. These committees operate pursuant to separate written charters adopted by
the Board of Directors. These charters are available on the Company’s website at
www.millerind.com through the “Investor Relations” link, and the charter of the
Audit Committee is attached as Appendix A to this proxy statement.
Audit
Committee
The
Audit Committee is comprised of Messrs. Chandler, Drack and Roberts. The Board
of Directors has determined that each of the members of the audit committee is
“financially literate” within the meaning of the listing standards of the NYSE,
and qualifies as an “audit committee financial expert” as defined by applicable
SEC rules.
The
Audit Committee recommends the appointment of independent public accountants,
reviews the scope of audits proposed by the independent public accountants,
reviews audit reports on various aspects of corporate operations, and
periodically consults with the independent public accountants on matters
relating to internal financial controls and procedures, among other duties. The
Audit Committee held five meetings during 2004. The report of the Audit
Committee is included in this proxy statement beginning on page 17.
Compensation
Committee
The
Compensation Committee is comprised of Messrs. Chandler, Drack and Roberts. The
Compensation Committee establishes, among other things, salaries, bonuses and
other compensation for the Company’s officers, and administers the Company’s
stock option and other employee benefit plans. The Compensation Committee held
one meeting during 2004. The report of the Compensation Committee is included in
this proxy statement beginning on page 16.
Nominating
Committee
The
Nominating Committee is comprised of Messrs. Chandler, Drack and Miller. The
Nominating Committee was established to evaluate candidates for service as
directors to the Company and to conduct the Board’s annual self-assessment
process. The Nominating Committee will consider candidates recommended by
shareholders. Shareholder recommendations must comply with the procedures for
nominations set forth in Article I, Section 1.2, of the Company’s Bylaws. The
Nominating Committee held one meeting during 2004.
Director
Nominations
The
Nominating Committee considers qualifications and characteristics that it, from
time to time, deems appropriate when it selects individuals to be nominated for
election to the Board of Directors. These qualifications and characteristics may
include, without limitation, independence, integrity, business experience,
education,
accounting
and financial expertise, age, diversity, reputation, civic and community
relationships, and industry knowledge and experience. In addition, prior to
nominating an existing director for re-election to the Board of Directors, the
Nominating Committee will consider and review an existing director’s Board and
committee attendance, performance and length of Board service.
Compensation
of Directors
The
members of the Board of Directors who are employees of the Company do not
receive additional compensation for Board or committee service. Non-employee
directors receive annual compensation comprised of a cash component and an
equity component. Under the cash component, each non-employee director receives
an annual cash payment of $25,000 as compensation for service on the Board of
Directors. Under the equity component, each director is entitled to an annual
award under the Company’s Non-Employee Director Stock Plan, to be paid in
fully-vested shares of Common Stock, equal to $25,000 divided by the closing
price of the Common Stock on the first day of such year. Each of Messrs.
Chandler, Drack and Roberts has been granted an aggregate of 11,322 shares of
Common Stock under the terms of the Company’s Non-Employee Director Stock Plan
for service in 2003 and 2004.
Certain
Business Relationships and Related Transactions
Senior
Credit Facility
The
current lenders under our senior credit facility are William G. Miller, the
Company’s Chairman of the Board and Co-Chief Executive Officer, and CIT
Group/Business Credit, Inc., with Mr. Miller’s portion of the loan being
subordinated to that of CIT. During 2004, the Company paid Mr. Miller
approximately $900,000 in interest expense related to his portion of the senior
credit facility. As of March 31, 2005 the Company’s debt under its senior credit
facility was approximately $25.6 million. The Company expects to continue to
make payments under its senior credit facility during 2005, and may engage in
such other transactions with Mr. Miller with respect thereto as may be related
to Mr. Miller’s continuing ownership of a portion of the Company’s senior debt,
including transactions that may result in a longer term or new senior credit
facility.
Conversion
of Subordinated Debt and Warrants
On
December 24, 2003, the Company entered into a Binding Restructuring Agreement
(the “Restructuring Agreement”) with Contrarian Funds, LLC (“Contrarian”) and
Harbourside Investments, LLLP (“Harbourside”) with respect to the Company’s
subordinated debt. As contemplated by the Restructuring Agreement, on January
14, 2004, the Company entered into exchange agreements, registration rights
agreements, and an amendment to the Company’s junior credit facility with
Contrarian and Harbourside.
Under
the exchange agreements, 30% of the outstanding principal of, plus all accrued
interest and fees on, the Company’s junior credit facility, plus outstanding
warrants held by Contrarian and Harbourside, were converted into shares of the
Company’s Common Stock. The junior credit facility was amended to extended the
maturity of the Company’s remaining subordinated debt, and the interest rates
thereon were altered and the financial covenants were amended to match those in
the Company’s senior credit facility. Pursuant to the exchange agreement with
Harbourside, Harbourside received 583,556 shares of Common Stock in exchange for
approximately $3.12 million in outstanding principal and accrued interest and
fees under the junior credit facility and warrants to purchase shares of Common
Stock.
As
a result of these transactions, Harbourside holds all of the principal amount of
the Company’s subordinated debt. During 2004, the Company made interest payments
to Harbourside under its junior credit facility totaling $300,000. As of March
31, 2005 the Company’s debt under its junior credit facility was approximately
$4.3 million.
Harbourside
is a limited liability limited partnership of which several of the Company’s
executive officers and directors are partners. Specifically, William G. Miller
is the general partner of, and controls, Harbourside. Mr. Miller is the
Company’s Chairman of the Board and Co-Chief Executive Officer, as well as the
holder of approximately 17.9% of the Company’s outstanding Common Stock. Mr.
Miller, Jeffrey I. Badgley, the Company’s
President
and Co-Chief Executive Officer, J. Vincent Mish, the Company’s Executive Vice
President and Chief Financial Officer, and Frank Madonia, the Company’s
Executive Vice President, Secretary and General Counsel, are all limited
partners in Harbourside. In connection with the formation of Harbourside, Mr.
Miller made loans to the other executive officers, the proceeds of which the
other executive officers then contributed to Harbourside. These loans from Mr.
Miller to the other executive officers are secured by pledges of their
respective limited partnership interests to Mr. Miller.
These
transactions were approved by a Special Committee of the Board of Directors, as
well as the full Board of Directors with Messrs. Miller and Badgley abstaining
due to their personal interest in the transactions. The transactions were
subsequently approved by the Company’s shareholders at a meeting on February 12,
2004. Other than these transactions, the Company has not engaged in any
transactions with Harbourside. Neither the Company nor Harbourside currently
intend to engage in any other transactions in the future except as may be
related to Harbourside’s continuing ownership of a portion of the Company’s
subordinated debt.
DataPath
During
the fourth quarter of 2004 the Company began to manufacture certain
telecommunications equipment for DataPath, Inc., a company in which Mr. Miller,
the Company’s Chairman, and Mr. Chandler, one of the Company’s directors, hold a
minority equity interest and on whose board of directors they serve. The Company
manufactured 25 pieces of equipment at cost plus a negotiated margin, which was
recognized in the fourth quarter of 2004. The Company has also assisted DataPath
with certain redesign services which were billed on a cost plus basis. The
Company began manufacturing an additional 145 units for DataPath in the first
quarter of 2005. On March 30, 2005, the Company entered into a new agreement
with DataPath calling for the Company to manufacture and sell to it all of its
requirements for this type of equipment during the five-year term of the
agreement. DataPath has committed to purchase at least 200 units (including
the previously disclosed units), which sales the Company estimates will
achieve gross margin levels at least as high as those achieved by the Company in
its customary business. So far, $3,179,000 has been paid to the Company by
DataPath. Future payments will depend on the number of units produced. All these
arrangements were approved by the disinterested members of the Company’s Audit
Committee.
PROPOSAL 2
APPROVAL
OF 2005 EQUITY INCENTIVE PLAN
Introduction
The
Board of Directors is proposing for approval by the Company’s shareholders
the 2005
Equity Incentive Plan (the “2005 Plan”). The Board is proposing the 2005 Plan to
replace the Company’s 1994 Stock Option Plan, which was originally adopted in
1994 and which expired in August 2004 (the “1994 Plan”).
The
objectives of the 2005 Plan are to (i) attract, motivate and retain employees,
consultants, advisors and other persons who perform services for the Company by
providing compensation opportunities that are competitive with other companies;
(ii) provide incentives to those individuals who contribute significantly to the
long-term performance and growth of the Company and its affiliates; and (iii)
align the long-term financial interests of employees and other individuals who
are eligible to participate in the 2005 Plan with those of shareholders. The
Board of Directors adopted the 2005 Plan on April 27, 2005, subject to the
shareholder approval solicited by this proxy statement.
The
total number of shares available for grant under the 2005 Plan is 1,100,000
Shares, plus the number of shares subject to outstanding grants under the 1994
Plan on the effective date of the 2005 Plan, which expire, are forfeited or
otherwise terminate without delivery of shares. However, no grants may be made
if after giving effect to the grant, the number of shares subject to outstanding
grants under the 2005 Plan and the 1994 Plan will exceed 15.0% of the aggregate
number of shares issued and outstanding, or a total of 1,800,000 shares. All of
the shares available for issuance under the 2005 Plan (but in no event more than
1,800,000 shares) may be granted as incentive stock options. The shares to be
delivered under the 2005 Plan will be made available from authorized but
unissued shares of Common Stock, from treasury shares, or from shares purchased
in the open market or otherwise.
The
affirmative vote of a majority of votes cast at the Annual Meeting is required
for approval of the 2005 Plan, provided that at least a majority of the
outstanding shares of Common Stock are voted for or against, or abstain from
voting on, the 2005 Plan.
The
following description of the material features of the 2005 Plan is a summary and
is qualified in its entirety by reference to the 2005 Equity Plan, a copy of
which is attached as Appendix B to this proxy statement.
Description
of the 2005 Plan
General
The
2005 Plan will be administered by the Compensation Committee of the Board of
Directors, or such other committee (the “Committee”) consisting of two or more
members as may be appointed by the Board of Directors to administer the 2005
Plan. If any member of the Committee does not qualify as (i) a “Non-Employee
Director” within the meaning of Rule 16b-3 of the Exchange Act and (ii) an
“outside director” within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”), a subcommittee of the Committee shall be
appointed to grant awards to the named executive officers (as defined above
under “Compensation of Executive Officers”) and to officers who are subject to
Section 16 of the Exchange Act, and each member of such subcommittee shall
satisfy the requirements of (i) and (ii) above. References to the Committee in
this summary shall include and, as appropriate, apply to any such subcommittee.
Subject to the requirement that shareholder approval be obtained for certain
amendments, the 2005 Plan may be amended by the Committee in whole or in part,
but no such action shall adversely affect any rights or obligations with respect
to any awards previously granted under the 2005 Plan, unless the participants
affected by such amendment provide their written consent.
Under
the 2005 Plan, participants may be granted stock options (qualified and
nonqualified), stock appreciation rights (“SARs”), restricted stock, restricted
stock units, and performance shares. In addition, except to the extent the
Committee determines that an award shall not comply with the performance-based
compensation provisions of Section 162(m), the maximum number of shares subject
to options and stock appreciation rights that, in the aggregate, may be granted
pursuant to awards in any one calendar year to any one participant shall be
250,000
shares,
and the maximum number of shares of restricted stock and restricted stock units,
and performance shares or units that may be granted, in the aggregate, pursuant
to awards in any one calendar year to any one participant shall be 250,000
shares.
Shares
awarded or subject to purchase under the 2005 Plan or the 1994 Plan that are not
delivered or purchased, or revert to the Company as a result of forfeiture or
termination, expiration or cancellation of an award, will be available for
issuance under the 2005 Plan.
The
Committee will determine the individuals to whom awards will be granted, the
number of shares subject to an award, and the other terms and conditions of an
award. To the extent provided by law, the Committee may delegate to one or more
persons the authority to grant awards to individuals who are not named executive
officers. As applicable, when used in this description of the 2005 Plan,
“Committee” also refers to any such individual to whom the Committee has
delegated some of its authority to grant awards. The Committee may provide in
the agreements relating to awards under the 2005 Plan for automatic accelerated
vesting and other rights upon the occurrence of a change in control or upon the
occurrence of other events as may be specified in such agreements.
Stock
Options
The
number of shares subject to a stock option, the type of stock option (i.e.,
incentive stock option or nonqualified stock option), the exercise price of a
stock option (which shall be not less than the fair market value of a share on
the date of grant) and the period of exercise (including upon termination of
employment) will be determined by the Committee and set forth in an option
agreement; provided that no option will be exercisable more than ten years after
the date of grant.
Options
granted under the 2005 Plan shall be exercisable at such times and be subject to
restrictions and conditions as the Committee shall in each instance approve,
including conditions related to the employment of or provision of services by a
participant. The Committee shall determine and set forth in the option agreement
the extent to which options are exercisable after termination of employment. The
Committee may provide for deferral of option gains related to an exercise. The
option price upon exercise shall be paid to the Company in full, either (a) in
cash, (b) cash equivalents approved by the Committee, (c) by tendering (or
attesting to the ownership of) previously acquired shares having an aggregate
fair market value at the time of exercise equal to the total exercise option
price, or (d) by a combination of (a), (b) and (c). The Committee may also allow
cashless exercises as permitted under the Federal Reserve Board’s Regulation T,
subject to applicable securities law restrictions, or by any other means which
the Committee determines to be consistent with the 2005 Plan’s purpose and
applicable law.
SARs
SARs
granted under the 2005 Plan entitle the grantee to receive an amount payable in
shares and/or cash, as determined by the Committee, equal to the excess of the
fair market value of a share on the day the SAR is exercised over the specified
purchase price, which will generally be equal to the fair market value of a
share on the grant date of the SAR. The exercise period of a SAR may not exceed
10 years. SARs may be granted in tandem with a related stock option or
independently. If a SAR is granted in tandem with a stock option, the grantee
may exercise the stock option or the SAR, but not both. The Committee shall
determine and set forth in the award agreement the extent to which SARs are
exercisable after termination of employment.
Restricted
Stock/ Restricted Stock Units
Restricted
stock awards may be made either alone, in addition to or in tandem with other
types of awards permitted under the 2005 Plan and may be current grants of
restricted stock or deferred grants. The terms of restricted stock awards,
including the restriction period, performance targets applicable to the award
and the extent to which the grantee will have the right to receive unvested
restricted stock following termination of employment or other events, will be
determined by the Committee and be set forth in the agreement relating to such
award. Unless otherwise set forth in an agreement relating to a restricted stock
award, the grantee of restricted stock shall have all of the rights of a
shareholder of the Company, including the right to vote the shares and the right
to receive dividends, provided however that the Committee may require that any
dividends on such shares of restricted stock
be
automatically deferred and reinvested in additional restricted stock or may
require that dividends on such shares be paid to the Company to be held for the
account of the grantee.
A
restricted stock unit is an unsecured promise to transfer a share at a specified
future date, such as a fixed number of years, retirement or other termination of
employment (which date may be later than the vesting date of the award at which
time the right to receive the share becomes nonforfeitable). Restricted stock
units represent the right to receive a specified number of shares at such times,
and subject to such restriction period and other conditions, as the Committee
determines. A participant to whom restricted stock units are awarded has no
rights as a shareholder with respect to the shares represented by the restricted
stock units unless and until shares are actually delivered to the participant in
settlement of the award. However, restricted stock units may have dividend
equivalent rights if provided for by the Committee.
Performance
Shares
Performance
shares are awards for a stated potential maximum number of shares, with the
actual number and value earned to be determined by reference to the satisfaction
of performance targets established by the Committee. The awards are payable in
cash or shares, or such other property as the Committee may determine. Such
awards may be granted subject to any restrictions, in addition to performance
conditions, deemed appropriate by the Committee.
Performance
Measures
If
awards granted or issued under the 2005 Plan are intended to qualify under the
performance-based compensation provisions of Section 162(m) of the Code, the
performance measure(s) to be used for purposes of such awards shall be chosen by
the Committee from among the following: earnings, earnings per share,
consolidated pre-tax earnings, net earnings, operating income, EBIT (earnings
before interest and taxes), EBITDA (earnings before interest, taxes,
depreciation and amortization), gross margin, revenues, revenue growth, market
value added, economic value added, return on equity, return on investment,
return on assets, return on net assets, return on capital employed, total
shareholder return, profit, economic profit, capitalized economic profit,
after-tax profit, pre-tax profit, cash flow measures, cash flow return, sales,
sales volume, revenue per employee, stock price, cost, and/or goals related to
acquisitions or divestitures. The Committee can establish other performance
measures for awards granted to participants that are not named executive
officers or for awards granted to named executive officers that are not intended
to qualify under the performance-based compensation provisions of Section 162(m)
of the Code.
Miscellaneous
Provisions
The
2005 Plan prohibits the Company from repricing outstanding awards without first
receiving shareholder approval of such repricing.
Federal
Income Tax Consequences
The
following is a brief summary of the current U.S. federal income tax consequences
of awards made under the 2005 Plan. This summary is general in nature and is not
intended to cover all tax consequences that may apply to participants and the
Company. Further, the provisions of the Code and the regulation and rulings
thereunder relating to these matters may change.
Stock
Options
A
participant will not recognize any income upon the grant of a stock option. A
participant will recognize income taxable as ordinary income (and subject to
income tax withholding for Company employees) upon exercise of a non-qualified
stock option equal to the excess of the fair market value of the shares
purchased over the sum of the exercise price and the amount, if any, paid for
the option on an after-tax basis, and the Company will be entitled to a
corresponding deduction. A participant will not recognize income (except for
purposes of the alternative minimum tax) upon exercise of an incentive stock
option provided that the incentive stock option is exercised either while the
participant is an employee of the Company or within 3 months (one year if the
participant is disabled
within
the meaning of Section 22(c)(3) of the Code) following the participant’s
termination of employment. If shares acquired by such exercise of an incentive
stock option are held for the longer of two years from the date the option was
granted and one year from the date it was exercised, any gain or loss arising
from a subsequent disposition of such shares will be taxed as long-term capital
gain or loss, and the Company will not be entitled to any deduction. If,
however, such shares are disposed of within the above-described period, then in
the year of such disposition the participant will recognize income taxable as
ordinary income equal to the excess of (i) the lesser of the amount realized
upon such disposition and the fair market value of such shares on the date of
exercise over (ii) the exercise price, and the Company will be entitled to a
corresponding deduction.
SARs
A
participant will not recognize any income upon the grant of a SAR. A participant
will recognize income taxable as ordinary income (and, subject to income tax
withholding for Company employees) upon exercise of a SAR equal to the fair
market value of any shares delivered and the amount of cash paid by the Company
upon such exercise, and the Company will be entitled to a corresponding
deduction.
Restricted
Stock Awards
A
participant will not recognize taxable income at the time of the grant of a
restricted stock award, and the Company will not be entitled to a tax deduction
at such time, unless the participant makes an election under a special Code
provision to be taxed at the time such restricted stock award is granted. If
such election is not made, the participant will recognize taxable income at the
time the restrictions on such restricted stock award lapse in an amount equal to
the excess of the fair market value of the shares at such time over the amount,
if any, paid for such shares. The amount of ordinary income recognized by a
participant making the above-described special election or upon the lapse of the
restrictions is deductible by the Company as compensation expense, except to the
extent the limit of Section 162(m) applies. In addition, a participant receiving
dividends with respect to shares subject to a restricted stock award for which
the above-described election has not been made and prior to the time the
restrictions lapse will recognize taxable compensation (subject to income tax
withholding for Company employees), rather than dividend income, in an amount
equal to the dividends paid and the Company will be entitled to a corresponding
deduction.
Restricted
Stock Units
A
participant will not recognize taxable income at the time of the grant of a
restricted stock unit and the Company will not be entitled to a tax deduction at
such time. When the participant receives shares pursuant to a restricted stock
unit, the federal income tax consequences applicable to restricted stock awards,
described above, will apply.
Performance
Share Awards
A
participant will not recognize taxable income upon the grant of a performance
share award, and the Company will not be entitled to a tax deduction at such
time. Upon the settlement of a performance share award, the participant will
recognize compensation taxable as ordinary income (and subject to income tax
withholding for Company employees) in an amount equal to the cash paid and the
fair market value of the shares delivered to the participant, and the Company
will be entitled to a corresponding deduction.
Compliance
with Section 162(m)
Section
162(m) of the Code denies an income tax deduction to an employer for certain
compensation in excess of $1 million per year paid by a publicly traded
corporation to the Chief Executive Officer or any of the four most highly
compensated executive officers other than the Chief Executive Officer.
Compensation realized with respect to stock options awarded under the 2005 Plan,
including upon exercise of a non-qualified stock option or upon a disqualifying
disposition of an incentive stock option, as described above, will be excluded
from this deductibility limit if it satisfies certain requirements, including a
requirement that the 2005 Plan be approved by the Company’s current
shareholders. In addition, other types of awards under the 2005 Plan may be
excluded from this deduction
limit
if they are conditioned on the achievement of one or more of the performance
measures described above, as required by Section 162(m). To satisfy the
requirements that apply to “performance-based” compensation, those performance
measures must be approved by our current shareholders, and approval of the 2005
Plan will also constitute approval of those measures.
New
Plan Benefits
At
this time it is not possible to determine either the future benefits or amounts
that will be received by the Company’s executive officers, or any of its
employees, under the 2005 Plan. As of December 31, 2004, options for 706,605
shares of Common Stock were outstanding under the 1994 Plan. The number of
options granted to each of the Named Executive Officers during 2004 is set forth
below under COMPENSATION OF EXECUTIVE OFFICERS in the “Option Grants and
Exercises in Last Fiscal Year” table. The number of options granted during 2004
to all the executive officers as a group was 160,000, and the number of options
granted during 2004 to all employees (other than executive officers) as a group
was 180,000. No options were granted in 2004 to the Company’s non-employee
directors.
THE
BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE APPROVAL OF
THE 2005 EQUITY INCENTIVE PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth, as of March 31, 2005, certain information with
respect to: (a) all shareholders known to be “beneficial owners” (as that term
is defined in the rules of the Securities and Exchange Commission) of more than
5% of the Common Stock; and (b) the Common Stock “beneficially owned” (i) by
each director or nominee for director, (ii) by the executive officers named in
the Summary Compensation Table and (iii) by all executive officers and
directors of the Company as a group. Except as otherwise indicated, the
shareholders listed in the table have sole voting and investment powers with
respect to the Common Stock owned by them.
|
Name
and Address of Beneficial Owner |
Amount
and Nature of
Beneficial
Ownership(1) |
Percent
of Class(2) | ||||||
|
William
G. Miller
5025
Harrington Road
Alpharetta, GA
30022 |
1,999,713
(3)
|
17.9% | ||||||
|
Ashford
Capital Management, Inc.
P.O.
Box 4172
Wilmington, DE
19807 |
1,427,200
(4)
|
12.7% | ||||||
|
Contrarian
Funds, LLC
411
West Putnam Ave. Greenwich, CT 06830 |
734,151
|
6.6% | ||||||
|
Scopia
Management Inc.
Scopia
PX LLC
Scopia
Partners LLC
Matthew
Sirovich
Jack
Carlos Mindich
Scopia
International Limited
Meredith
Elson
The
Coast Fund LP
Scopia
Partners QP LLC |
 |
(5) |
887,631
(5)
|
7.9% | ||||
|
Jeffrey
I. Badgley |
101,315
(6) |
* | ||||||
|
Frank
Madonia |
70,565
(7) |
* | ||||||
|
J.
Vincent Mish |
46,065
(8) |
* | ||||||
|
A.
Russell Chandler, III |
124,954
(9) |
1.1% | ||||||
|
Richard
H. Roberts |
48,694
(10) |
* | ||||||
|
Paul
E. Drack |
46,294
(10) |
* | ||||||
|
All
Directors and Executive Officers as a Group (7
persons) |
2,437,600
(11) |
21.3% | ||||||
____________________
|
* |
Less
than one percent. |
|
(1) |
Includes
shares of Common Stock as to which the named person or entity has the
right to acquire beneficial ownership within 60 days of March 31, 2005,
through the exercise of any stock option or other
right. |
|
(2) |
The
percentage of beneficial ownership is based on 11,196,816 shares of Common
Stock outstanding on March 31, 2005, and represents the percentage that
the named person or entity would beneficially own if such person or
entity, and only such person or entity, exercised all options and rights
to acquire shares of Common Stock that are held by such person or entity
and that are exercisable within 60 days of March 31,
2005. |
|
(3) |
As
reported in an amendment to Schedule 13D filed with the SEC on March 21,
2005. Includes 109,288 shares held by the Miller Family Foundation, Inc.,
a Georgia non-profit corporation of which Mr. Miller is the sole director,
2,800 shares held by Mr. Miller’s minor son, and 483,556 shares held by
Harbourside Investments, LLLP (“Harbourside”), a limited liability limited
partnership that is controlled by Mr. Miller as its general partner, and
in which Mr. Miller owns a 1% general partner interest and a 21.72%
limited partner interest. Mr. Miller disclaims beneficial ownership with
respect to the shares held by Harbourside except for a number of shares
equal to 22.72% of the shares held by
Harbourside. |
|
(4) |
As
reported in an amendment to Schedule 13G filed with the SEC on February
28, 2005, by Ashford Capital Management, Inc., a registered investment
adviser. Such shares of Common Stock are held in separate individual
client accounts, two separate limited partnerships and ten commingled
funds. |
|
(5) |
As
reported in an amendment to Schedule 13G filed with the SEC on February
14, 2005, Scopia Management Inc., a registered investment adviser (“Scopia
Management”), Scopia PX LLC (“Scopia PX”), Scopia Partners LLC (“Scopia
Partners”), Matthew Sirovich (“Sirovich”), Jack Carlos Mindich
(“Mindich”), Scopia International Limited (“Scopia International”),
Meredith Elson (“Elson”), The Coast Fund LP (“Coast Fund”), and Scopia
Partners QP LLC (“Scopia QP”) are members of a group with voting and
dispositive power over the shares reported. The address for Scopia
Management, Scopia PX, Scopia Partners, Sirovich, Mindich, Elson, Coast
Fund and Scopia QP is 100 Park Avenue, New York, NY 10017. The address for
Scopia International is c/o Prime Management Limited, Mechanics Building,
12 Church Street, Hamilton HM 11, Bermuda. |
|
(6) |
Includes
78,000 shares which are issuable pursuant to options which are exercisable
within 60 days of March 31, 2005. Does not include shares held by
Harbourside, of which Mr. Badgley is a limited
partner. |
|
(7) |
Includes
46,950 shares which are issuable pursuant to options which are exercisable
within 60 days of March 31, 2005. Does not include shares held by
Harbourside, of which Mr. Madonia is a limited
partner. |
|
(8) |
Includes
30,450 shares which are issuable pursuant to options which are exercisable
within 60 days of March 31, 2005. Does not include shares held by
Harbourside, of which Mr. Mish is a limited
partner. |
|
(9) |
Includes
56,200 shares held by a limited partnership of which Mr. Chandler’s
children are limited partners, and 5,100 shares held in trust for the
benefit of Mr. Chandler’s children. Also includes 32,748 shares which are
issuable pursuant to options which are exercisable within 60 days of March
31, 2005. |
|
(10) |
Includes
32,748 shares which are issuable pursuant to options which are exercisable
within 60 days of March 31, 2005. |
|
(11) |
Includes
253,644 shares which are issuable pursuant to options which are
exercisable within 60 days of March 31,
2005. |
COMPENSATION OF EXECUTIVE OFFICERS
Summary
Compensation Table
The
following table sets forth certain information for the years ended December 31,
2004, 2003 and 2002 concerning compensation paid by the Company and its
subsidiaries to the Company’s Chief Executive Officer and to each of the
Company’s other most highly compensated executive officers as of December 31,
2004 who earned in excess of $100,000 in salary and bonus during the fiscal year
2004 (collectively, the “Named Executive Officers”).
|
Annual
Compensation (1) |
Long-Term
Compensation |
|||||||||||||||
|
Awards |
||||||||||||||||
|
Name
and Principal Position |
Year |
Salary |
Bonus
($) |
Securities
Underlying
Options
(#) |
All
Other
Compensation
($) |
|||||||||||
William
G. Miller |
2004 |
$ |
180,000 |
$ |
- |
- |
$ |
-
|
||||||||
Chairman
and Co-Chief Executive |
2003 |
180,000 |
- |
- |
-
|
|||||||||||
Officer
(2) |
2002 |
180,000 |
- |
-
|
||||||||||||
Jeffrey
I. Badgley |
2004 |
$ |
276,210 |
$ |
- |
100,000 |
$ |
2,081
|
(5) | |||||||
President
and Co-Chief Executive |
2003 |
276,210 |
- |
- |
2,035 |
(5) | ||||||||||
Officer
(3) |
2002 |
276,210 |
45,000 |
(4) |
- |
1,496 |
(5) | |||||||||
Frank
Madonia |
2004 |
$ |
196,207 |
$ |
- |
30,000 |
$ |
1,980
|
(5) | |||||||
Executive
Vice President, Secretary |
2003 |
196,207 |
- |
- |
1,980 |
(5) | ||||||||||
and
General Counsel |
2002 |
196,207 |
22,000 |
(4) |
- |
1,717 |
(5) | |||||||||
J.
Vincent Mish |
2004 |
$ |
176,206 |
$ |
- |
30,000 |
$ |
1,770
|
(5) | |||||||
Executive
Vice President and |
2003 |
176,206 |
- |
- |
1,770 |
(5) | ||||||||||
Chief
Financial Officer |
2002 |
176,206 |
22,000 |
(4) |
- |
1,628 |
(5) | |||||||||
____________________
|
(1) |
Excludes
perquisites and other personal benefits aggregating less than $50,000 or
10% of the named executive officer’s annual salary and
bonus. |
|
(2) |
Mr.
Miller became the Co-Chief Executive Officer of the Company in October
2003. |
|
(3) |
Mr.
Badgley served as President and Chief Executive Officer of the Company
until October 2003 when he became Co-Chief Executive
Officer. |
|
(4) |
Bonus
awards consist entirely of amounts earned in previous fiscal years which
are paid incrementally to the executive officer in the year noted in
accordance with the Company’s bonus plan. |
|
(5) |
Consists
of a matching contribution made to the executive’s account in the
Company’s 401(k) Plan. |
Option
Grants and Exercises in Last Fiscal Year
The
following table sets forth information with respect to stock options granted to
the named executive officers during the year 2004:
|
Individual
Grants |
Potential
Realizable Value At
Assumed
Annual Rates Of
Stock
Price Appreciation
For
Option Term (2) |
||||||||||||
|
Name |
Number
of
Shares
Underlying
Options
Granted
(1) |
Percent
Of Total
Options
Granted
to
Employees In
Fiscal
Year |
5% |
10% |
|||||||||
William
G. Miller |
-
|
- |
$ |
- |
$ |
- |
|||||||
Jeffrey
I. Badgley |
100,000
|
29.4 |
% |
522,611 |
1,324,400 |
||||||||
Frank
Madonia |
30,000
|
8.8 |
% |
156,783 |
397,320 |
||||||||
J.
Vincent Mish |
30,000 |
8.8 |
% |
156,783 |
397,320 |
||||||||
____________________
|
(1) |
Each
option is exercisable for one share of common stock. Options were granted
on March 26, 2004, and vest in equal installments over a four-year period
beginning on March 26, 2005. The exercise price of the options was $8.31
per share, the fair market value on the date of
grant. |
|
(2) |
The
“Potential Realizable Value” is disclosed for illustration only pursuant
to SEC regulations that require such disclosure. The values disclosed are
not intended to be, and should not be interpreted as, representations or
projections of the future value of Miller Industries’ common stock or of
the stock price. Amounts are calculated at a 5% and 10% rate of annual
appreciation in the value of the common stock (compounded annually over
the option term of 10 years) and are not intended to forecast actual
expected future appreciation, if any, of the common stock. The potential
value to the optionee is the difference between the exercise price (price
at the date of grant) and the appreciated value of the stock at the end of
10 years (at 5% and 10% growth rates) multiplied by the number of
options. |
Option
Values as of December 31, 2004
The
following table summarizes certain information regarding option values of the
Named Executive Officers as of December 31, 2004.
|
Number of Securities Underlying
Unexercised Options At Fiscal
Year-End (#) |
Value of Unexercised In-The-Money
Options At Fiscal Year-End ($)
(1) |
||||||||||||
|
Name |
Exercisable |
Unexercisable |
Exercisable |
Unexercisable |
|||||||||
William
G. Miller |
-
|
-
|
$ |
- |
$ | - | |||||||
Jeffrey I. Badgley |
53,000 |
102,000
|
50,652 |
315,500 | |||||||||
Frank Madonia |
39,450 |
31,250 |
31,802 |
100,013 | |||||||||
J.
Vincent Mish |
22,950 |
31,250
|
31,802 |
100,013 |
|||||||||
___________________
|
(1) |
As
required by the rules of the SEC, the value of unexercised in-the-money
options for the Common Stock is calculated based on the closing sale price
on the NYSE as of December 31, 2004, which was $11.30 per
share. |
Employment
Contracts, Termination of Employment and Change-in-Control
Arrangements
In
December 2002, the Company entered into an employment agreement with Mr. Mish.
The employment agreement provides for a rolling three-year term, extended
automatically as of each annual shareholders’ meeting such that the remaining
term of the employment agreement is three years as of that date. Notwithstanding
the foregoing, the term of the agreement ends on Mr. Mish’s 65th
birthday. The employment agreement provides for a base salary of $175,000,
subject to annual review by the Board of Directors. Additionally, Mr. Mish may
participate in any bonus plans or other benefits generally available to
executive officers of the Company. The Company may terminate Mr. Mish pursuant
to this employment agreement for any reason upon written notice. However, if
termination is for other than “just cause” (as defined in the employment
agreement), 100% of Mr. Mish’s options on Company stock granted pursuant to the
Company’s Stock Option and Incentive Plan will vest and become immediately
exercisable, and the Company must pay Mr. Mish his current base salary plus
bonuses and health and life insurance benefits for a period of three years, or
until the end of the term of the employment agreement, whichever is shorter.
Finally, the employment agreement also provides for non-competition and
confidentiality during employment and for a period ending two years from
termination or expiration of the employment agreement (or one year if
termination occurs pursuant to a change in control).
In
September 1998, the Company entered into employment agreements with Messrs.
Badgley and Madonia. Each employment agreement provides for a rolling three-year
term, extended automatically each day for an additional day such that the
remaining term of each employment agreement is three years. However, on each
individual’s 62nd
birthday, the employment agreement ceases to extend automatically, and instead
terminates three years from that date. The employment agreements provide for
base salaries of $200,000 to Mr. Badgley, and $165,000 to Mr. Madonia, each
subject to annual review by the Board of Directors. Additionally, each
individual may participate in any bonus plans or other benefits generally
available to executive officers of the Company. The Company may terminate
Messrs. Badgley or Madonia pursuant to their respective employment agreements
for any reason upon written notice. However, if termination is for other than
“just cause” (as defined in the employment agreements), 100% of the terminated
individual’s options on Company stock granted pursuant to the Company’s Stock
Option and Incentive Plan will vest and become immediately exercisable, and the
Company must pay the terminated individual his current base salary plus bonuses
and health and life insurance benefits for a period of three years, or until the
end of the term of the employment agreement, whichever is shorter. Finally, each
employment agreement also provides for non-competition and confidentiality
during employment and for a period ending two years from termination or
expiration of the employment agreement (or one year if termination occurs
pursuant to a change in control as defined in each individual’s change in
control agreement described below).
In
September 1998, the Company entered into change in control agreements with
Messrs. Badgley and Madonia. Each change in control agreement provides for a
rolling three-year term, extended automatically each day for an additional day
such that the remaining term of each employment agreement is three years.
However, on each individual’s 62nd
birthday, the employment agreement ceases to extend automatically, and instead
terminates three years from that date. Upon termination within 6 months prior to
or 2 years after a change in control (as defined in each respective change in
control agreement), Messrs. Badgley and Madonia are entitled to payment of then
current salary, plus bonuses and incentives, and health and life insurance
coverage for a period of three years following termination.
In
July 1997, the Company entered into an employment agreement with Mr. Miller
which provides for a base salary as agreed to by the Company and Mr. Miller from
time to time, but which shall in any event be substantially the same as the base
salary of the Chief Executive Officer of the Company unless Mr. Miller agrees to
accept a lower salary. Mr. Miller also receives certain insurance and other
benefits as are generally provided by the Company to its executive employees.
Mr. Miller's employment agreement is for an indeterminate term and allows Mr.
Miller to pursue other business related interests as long as they do not
interfere with his duties for the Company. Employment may be terminated by
either party upon three years written notice or for “cause,” as defined in the
employment agreement. The agreement also provides for non-competition by Mr.
Miller for a period ending three years from termination of the agreement if the
agreement is terminated by breach of Mr. Miller.
Compensation
Committee Interlocks and Insider Participation
During
2004, the Compensation Committee was comprised of Messrs. Chandler, Drack and
Roberts, all of whom were non-employee, independent directors.
Compensation
Committee Report on Executive Compensation
Overview.
The objectives of the Company’s executive compensation program are to enhance
the profitability of the Company, and thus shareholder value, by aligning
executive compensation with the Company’s business goals and performance and by
attracting, retaining and rewarding executive officers who contribute to the
long-term success of the Company. The Company’s general policies on executive
officer compensation are administered by the Compensation Committee of the Board
of Directors (the “Compensation Committee”); however, the Compensation Committee
submits its determinations to the full Board of Directors for its comments and
concurrence. It is the responsibility of the Compensation Committee to determine
whether the Company’s executive compensation policies are reasonable and
appropriate, meet the Company’s stated objectives on executive compensation and
effectively serve the best interests of the Company and its
shareholders.
In
determining the compensation to be paid to the executive officers of the
Company, the Compensation Committee considers the Company’s financial
performance, its annual budget, its position within its industry sectors its
knowledge of compensation paid to executives of companies of comparable size and
complexity, and the compensation policies of similar companies in its business
sectors. In addition, the Compensation Committee considers the level of
experience and the responsibilities of each executive as well as the personal
contributions a particular individual may make to the success of the corporate
enterprise. Such qualitative factors as leadership skills, analytical skills,
organization development, public affairs and civic involvement have been and
will continue to be deemed to be important qualitative factors to take into
account in considering levels of compensation.
Historically,
the three components of executive officer compensation have been base salary,
annual cash bonus and stock options. In addition to the Compensation Committee’s
determinations on base salaries and bonuses, the Compensation Committee has
administered the Company’s stock option plan, and made recommendations to the
Board of Directors regarding the options to be granted to executive
officers.
The
following report sets forth the Company’s compensation policies for its Named
Executive Officers in 2004 and describes the basis on which 2004 compensation
determinations were made with respect to the Named Executive
Officers.
Option
Grants.
Although in recent years options have not been granted to the Company’s
executive officers, the Company historically has used grants of options to
better align the interests of the Company’s officers and employees with the
long-term interests of the Company and its shareholders. All options for the
purchase of 500 or more shares generally vest in four equal annual installments,
and all options for the purchase of fewer than 500 shares vest in two equal
annual installments. All options are exercisable until the tenth anniversary of
the grant date unless otherwise earlier terminated pursuant to the terms of the
individual option agreement. In general, the Compensation Committee believes it
is important for the non-executive officer employees of the Company to have a
long-term equity interest in the Company. During 2004, the Company granted
options on an aggregate of 160,000 shares of Common Stock to its executive
officers, and options on an aggregate of 180,000 shares of Common Stock to its
other employees, under the Company’s 1994 Stock Option Plan.
Salaries.
During 2004, the Compensation Committee reviewed the salaries of all executive
officers and the established levels of participation of those officers in the
Company’s benefit plans. In its review, the Compensation Committee discussed the
performance of the executive officers with the Chief Executive Officer and
further considered the compensation packages, employment agreements (as
applicable) and existing stock options (as applicable) of each officer and of
the Chief Executive Officer. The Committee’s review of executive officer
compensation included consideration of individual performance and contribution
to the Company, a comparison to compensation paid to executive officers in
companies of similar size in related industries, the financial performance of
the Company, and other factors the Committee believed were relevant in making
its determination.
Employment
Agreements.
Each of Messrs. Badgley, Miller, Madonia and Mish is a party to an employment
agreement with the Company or a subsidiary of the Company, which is described
above under the heading “Employment Contracts, Termination of Employment,
Severance and Change in Control Arrangements”.
Federal
Income Tax Deductibility Limitation on Executive Compensation.
Section 162(m) of the Internal Revenue Code was enacted as part of the 1993
Omnibus Budget Reconciliation Act (“OBRA”) and generally disallows a corporate
deduction for compensation over $1,000,000 paid to the Company’s Chief Executive
Officer or any other of the four highest compensated officers. The Compensation
Committee continues to analyze the potential impact of this limitation. Under
the regulations and the transition rules, in 2004 executive compensation
pursuant to the 1994 Stock Option Plan should be qualifying “performance based”
compensation and therefore be excluded from the $1,000,000 limit. Other forms of
compensation provided by the Company, however, including base salary and cash
bonuses, are not excluded from the limit. The Compensation Committee currently
anticipates that substantially all compensation to be paid in future years will
be deductible under Section 162(m) because of the spread between present levels
of executive officer compensation and the limit under the regulation. In any
event, the Compensation Committee believes that performance based compensation
is desirable and can be structured in a manner to constitute qualifying as
performance based compensation under Section 162(m).
Re-Evaluation
of Compensation Policies.
As a result of the Company’s financial performance in recent fiscal years, the
Company’s Named Executive Officers did not receive increases in base salary in
2002, 2003 or 2004, did not receive grants of options in 2002 and 2003, and did
not receive an annual cash bonus in 2003 or 2004. In connection with its
evaluation of the Company’s executive compensation for 2004, the Board of
Directors authorized the Compensation Committee to re-evaluate, and if
advisable, recommend changes to, the Company’s current executive compensation
policies and components in light of, among other things, the Company’s recently
improved financial performance and the static nature of the Company’s executive
compensation in recent years.
Paul
E. Drack — A. Russell Chandler, III — Richard H. Roberts
ACCOUNTING MATTERS
Audit
Committee Report
The
Company’s Audit Committee is comprised of three independent members, as required
by applicable listing standards of the NYSE. The Audit Committee acts pursuant
to a written charter, which was amended and restated by the Board of Directors
in February 2004. The Company’s management is responsible for its internal
accounting controls and the financial reporting process. The Company’s
independent accountants, Joseph Decosimo and Company, PLLC, are responsible for
performing an audit of the Company’s consolidated financial statements in
accordance with auditing standards generally accepted in the United States and
for expressing an opinion as to their conformity with generally accepted
accounting principles. The Audit Committee’s responsibility is to monitor and
oversee these processes.
In
keeping with that responsibility, the Audit Committee has reviewed and discussed
the Company’s audited consolidated financial statements with management and the
independent accountants. In addition, the Audit Committee has discussed with the
Company’s independent accountants the matters required to be discussed by
Statement on Auditing Standards No. 61, “Communications with Audit Committee,”
as currently in effect. In addition, the Audit Committee has received the
written disclosures from the independent accountants required by Independence
Standards Board Standard No. 1, “Independence Discussions with Audit
Committees,” and has discussed with the independent accountants their
independence. The Audit Committee has also considered whether the provision of
non-audit services by the independent accountants is compatible with maintaining
such accountants’ independence.
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent accountants.
Accordingly, the Audit Committee’s oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control and procedures
designed to assure compliance with accounting
standards
and applicable laws and regulations. Furthermore, the Audit Committee’s
considerations and discussions referred to above do not assure that the audit of
the Company’s financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the Company’s auditors are in fact “independent”.
Based
on the reports and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Committee referred to above
and in the Audit Committee Charter, the Audit Committee recommended to the Board
of Directors that the audited consolidated financial statements of the Company
be included in the Annual Report on Form 10-K for the year ended December 31,
2004 for filing with the SEC.
This
report is respectfully submitted by the Audit Committee of the Board of
Directors.
Paul
E. Drack — A. Russell Chandler, III — Richard H. Roberts
Independent
Public Accountants
General
Joseph
Decosimo and Company PLLC were the Company’s independent public accountants for
2004, and the Company anticipates that Joseph Decosimo and Company, PLLC will be
retained as the Company’s independent public accountants for 2005.
Representatives of Joseph Decosimo and Company, PLLC are expected to be present
at the Annual Meeting, and will have the opportunity to make statements and to
respond to appropriate questions.
On
October 3, 2003, PriceWaterhouseCoopers LLP resigned as the Company’s principal
accountants, and on October 9, 2003 the Company engaged Joseph Decosimo and
Company, PLLC to be its principal accountants. As a result,
PricewaterhouseCoopers LLP did not audit or report on the Company’s financial
statements for 2003 or 2004. The decision to engage Joseph Decosimo and Company,
PLLC was made upon the recommendation of the Company’s Audit Committee and the
approval of the Board of Directors. During 2003 and 2004, the Company has not
consulted with Joseph Decosimo and Company, PLLC regarding any matter requiring
disclosure under Regulation S-K, Item 304(a)(2)(i) and (ii).
Audit
Fees
Joseph
Decosimo and Company, PLLC billed fees of $253,355, and expects to bill up to an
additional $90,000 in fees, for 2004, and billed $185,000 for 2003, for
professional services rendered for the audit of the Company’s financial
statements and the review of the Company’s Form 10-K and interim consolidated
financial statements included within Forms 10-Q during such periods. Audit fees
billed, or to be billed, by Joseph Decosimo and Company, PLLC for 2004 also
include fees for the audit of management’s assessment of internal controls over
financial reporting and the re-audit of the Company’s 2002 financial statements.
PricewaterhouseCoopers LLP billed aggregate fees of $582,101 for professional
services rendered for the re-audit of the Company’s financial statements for the
fiscal years 2001 and 2000 that were performed during 2003, and the reviews of
financial statements included in Forms 10-Q filed during 2003.
Audit-Related
Fees
Joseph
Decosimo and Company, PLLC did not perform any, or bill the Company for,
assurance and related services related to the performance of the audit and
review of financial statements for 2004 or 2003. PricewaterhouseCoopers LLP did
not perform any, or bill the Company for, assurance and related services related
to the performance of the audit and review of financial statements for
2003.
Tax
Fees
Joseph
Decosimo and Company, PLLC billed the Company $30,000 for tax services during
2004 for foreign and state tax reviews. Joseph Decosimo and Company, PLLC did
not perform or bill the Company for any tax services in 2003.
PricewaterhouseCoopers LLP did not perform or bill the Company for any tax
services in 2003.
All
Other Fees
Joseph
Decosimo and Company, PLLC did not perform or bill the Company for any other
services during 2004 or 2003. PricewaterhouseCoopers LLP billed the Company fees
of $10,860 for additional services provided to the Company in 2003 related to
cash flow modeling and successor auditor work paper reviews.
Approval
of Audit and Non-Audit Services
The
Audit Committee of the Board of Directors pre-approves all audit and non-audit
services performed by the Company’s independent auditor. The Audit Committee
specifically approves the annual audit services engagement. Certain non-audit
services that are permitted under the federal securities laws may be approved
from time to time by the Audit Committee.
CODE OF BUSINESS CONDUCT AND ETHICS
The
Company has adopted a Code of Business Conduct and Ethics that applies to its
directors, officers, and employees. A copy of the Code is available on the
Company’s website at www.millerind.com through the “Investor Relations” link. A
copy of the Code can also be obtained upon request from the Company’s Corporate
Secretary.
EQUITY COMPENSATION PLAN
INFORMATION
The
following table sets forth aggregate information as of December 31, 2004 about
all of the Company’s compensation plans, including individual compensation
arrangements, under which the Company’s equity securities are authorized for
issuance.
|
Plan
category |
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights |
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights |
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans | |||
|
Equity
compensation plans approved
by
security holders |
706,605 (1) |
$16.90
(1) |
See Note (2) | |||
|
Equity
compensation plans not approved
by
security holders |
98,244 (3) |
5.08 (3) |
See Note (4) |
____________________
|
(1) |
Includes
only options outstanding under the Company’s 1994 Stock Option Plan. Does
not include shares of common stock issued to non-employee directors under
the Company’s Non-Employee Director Stock Plan, which shares are fully
vested and exercisable upon issuance. |
|
(2) |
The
1994 Stock Option Plan expired in August 2004, therefore no securities are
available for future issuance under this plan. Grants are made annually to
non-employee directors under the Non-Employee Director Stock Plan, and the
number of shares of common stock to be granted to each non-employee
director for a particular year is determined by dividing $25,000 by the
closing price of a share of the Company common stock on the first trading
day of such year. Therefore, the number of securities remaining available
for future issuance under the Non-Employee Director Stock Plan is not
presently determinable. |
|
(3) |
Includes
only options outstanding under the Company’s Non-Employee Director Stock
Option Plan. |
|
(4) |
The
Company’s Non-Employee Director Stock Option Plan was superseded by the
Company’s Non-Employee Director Stock Plan, which was approved by the
Company’s shareholders at the Company’s 2004 annual meeting. Therefore, no
securities are available for future issuance under this
plan. |
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934 and the disclosure requirements of
Item 405 of Regulation S-K require the directors and executive officers of the
Company, and any persons holding more than 10% of any class of equity securities
of the Company, to report their ownership of such equity securities and any
subsequent changes in that ownership to the Securities and Exchange Commission,
the NYSE and the Company. Based solely on a review of the written statements and
copies of such reports furnished to the Company by its executive officers and
directors, the Company believes that, during 2004, each of Messrs. Badgley, Mish
and Madonia filed one late report on Form 4 reflecting the receipt of stock
options, and the Company is not aware of any other filing
delinquencies.
PERFORMANCE GRAPH
The
following line graph compares the percentage change in the cumulative
shareholder return of the Common Stock with The New York Stock Exchange
Composite Index and the Standard & Poor’s Composite Index over the period of
time from April 30, 1999 through December 31, 2004. The respective returns
assume reinvestment of dividends paid.
|
4/30/99 |
4/28/00 |
4/30/01 |
12/31/01 |
12/31/02 |
12/31/03 |
12/31/04 | |||||||
|
Miller
Industries, Inc. |
100 |
68 |
15 |
13 |
13 |
16 |
45 | ||||||
|
NYSE
Composite Index(1) |
100 |
102 |
100 |
93 |
75 |
96 |
108 | ||||||
|
S&P
Construction Index(2) |
100 |
76 |
73 |
93 |
79 |
134 |
162 |
____________________
|
(1) |
The
New York Stock Exchange revised the NYSE Composite Index as of December
31, 2002. The change recalibrated the base year as
December 31, 2002. |
|
(2) |
For
the year ended December 31, 2002, Standard & Poors transferred the
Heavy Duty Trucks and Parts index, the index previously used by the
Company, to the S&P 500 - Construction and Farm Machinery and Heavy
Trucks Index. As a result, the Company has elected to use the S&P 500
- Construction and Farm Machinery and Heavy Trucks index in the above
comparison. |
OTHER MATTERS
Deadline
for Shareholder Proposals for 2006 Annual Meeting
Any
proposal intended to be presented for action at the 2006 Annual Meeting of
Shareholders by any shareholder of the Company must be received by the Secretary
of the Company not later than December 31, 2005 in order for such proposal to be
considered for inclusion in the Company’s proxy statement and proxy relating to
that meeting. In addition, any proposal intended to be presented for action at
the 2006 annual meeting of shareholders by any shareholder of the Company must
be received by the Secretary of the Company no later than 60 days prior to that
annual meeting (which deadline currently is expected to be March 15, 2006),
otherwise proxies may be voted on such proposal at the discretion of the person
or persons holding these proxies, whether or not the matter is included in the
proxy statement. Nothing in this paragraph shall be deemed to require the
Company to include any shareholder proposal which does not meet all the
requirements for such inclusion established by the Securities and Exchange
Commission at the time in effect.
Expenses
of Solicitation
The
cost of solicitation of proxies will be borne by the Company, including expenses
in connection with preparing, assembling and mailing this proxy statement. The
Company’s executive officers or employees, who will not receive compensation for
their services other than their regular salaries, may solicit proxies personally
or by telephone. The Company does not anticipate paying any other compensation
to any other party for solicitation of proxies, but may reimburse brokerage
firms and others for their reasonable expenses in forwarding solicitation
material to beneficial owners.
A
COPY OF THE COMPANY’S ANNUAL REPORT TO SHAREHOLDERS FOR 2004 IS ENCLOSED WITH
THIS PROXY STATEMENT. COPIES OF EXHIBITS FILED WITH THE COMPANY’S ANNUAL REPORT
FORM 10-K AND OTHER REPORTS OF THE COMPANY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ARE AVAILABLE UPON WRITTEN REQUEST AT NO COST TO THE
REQUESTING SHAREHOLDER. REQUESTS SHOULD BE MADE IN WRITING TO FRANK MADONIA,
EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL, MILLER INDUSTRIES,
INC., 8503 HILLTOP DRIVE, OOLTEWAH, TENNESSEE 37363.
MILLER
INDUSTRIES, INC.
This
Proxy is Solicited by the Board of Directors for the
Annual
Meeting of Shareholders to be Held on May 27, 2005
PROXY
The
undersigned shareholder of Miller Industries, Inc. hereby constitutes and
appoints William G. Miller and Frank Madonia, or either of them, the true and
lawful attorneys and proxies of the undersigned with full power of substitution
and appointment, for and in the name, place and stead of the undersigned, to
vote all of the undersigned's shares of Common Stock of Miller Industries, Inc.,
at the Annual Meeting of the Shareholders to be held at 1100 Peachtree Street,
Suite 2800, Atlanta, Georgia 30309, on Friday, the 27th
day
of May, 2005, at 9:00 a.m., and at any and all adjournments thereof as
follows:
|
1. |
Election
of Directors: |
NOMINEES: Jeffrey
I. Badgley, A. Russell Chandler, III, Paul E. Drack, William G. Miller and
Richard H. Roberts
o FOR
all
of the nominees listed above
o FOR
all
of the nominees listed above other than the following individual
nominees
Instruction: To
withhold authority to vote for any individual nominee, write that nominee's name
in the space provided below.
_____________________________________________
_____________________________________________
_____________________________________________
o WITHHOLD
AUTHORITY
to vote for all of the nominees listed above.
THE
BOARD OF DIRECTORS FAVORS A VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE AND
UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THE
PROXY WILL BE SO VOTED.
|
2. |
Approval
of 2005 Equity Incentive Plan: |
o FOR
approval
of the 2005 Equity Incentive Plan
o AGAINST
approval
of the 2005 Equity Incentive Plan
o ABSTAIN
THE
BOARD OF DIRECTORS FAVORS A VOTE “FOR” APPROVAL OF THE 2005 EQUITY INCENTIVE
PLAN AND UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE
PROVIDED, THE PROXY WILL BE SO VOTED.
|
3. |
Other
Business: |
For
the transaction of such other business as may lawfully come before the meeting,
hereby revoking any proxies as to said shares heretofore given by the
undersigned and ratifying and confirming all that said attorneys and proxies may
lawfully do by virtue hereof.
It
is understood that this proxy confers discretionary authority in respect to
matters not known or determined at the time of the mailing of the notice of the
meeting to the undersigned.
The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated May 2, 2005 and the Proxy Statement furnished
therewith.
| Dated and signed _____________________,
2005.
_____________________________________
_____________________________________ (Signature
should agree with the name(s) hereon. Executors,
administrators,
trustees,
guardians and attorneys should so indicate when signing. For
joint
accounts
each owner should sign. Corporations should sign their full
corporate
name by a duly authorized officer.) |
This
proxy is revocable at or at any time prior to the meeting. Please sign and
return this proxy to SunTrust Bank, Atlanta, P.O. Box 105649, Atlanta, Georgia
30348-9923, in the accompanying prepaid envelope.
APPENDIX
A
AUDIT
COMMITTEE OF
THE
BOARD OF DIRECTORS
AMENDED
AND RESTATED CHARTER
DATED
FEBRUARY 12, 2004
________________________________________________________________________
|
I. |
PURPOSE |
The
primary function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities for (1) the integrity of the Company’s
financial reports and other financial information provided to any governmental
body or the public; (2) the Company’s internal control over financial reporting
and disclosure controls and procedures; (3) legal and regulatory compliance and
ethics; and (4) the auditing process, including the performance of the
independent accountants and internal auditors and the independence and
qualifications of the independent accountants. Consistent with this function,
the Audit Committee should encourage continuous improvement of, and should
foster adherence to, the Company’s policies, procedures and practices at all
levels.
The
Committee has the authority to access internal and external resources as the
Committee may require, including the authority to retain independent legal,
accounting and other advisors as it determines necessary or appropriate to carry
out its duties. The Company shall provide for funding, as determined by the
Committee, for payment of compensation to any advisors retained by the
Committee.
|
II. |
COMPOSITION |
The
Audit Committee will consist of three or more directors as determined and
elected by the board. Each of these directors shall be independent as determined
by the board in accordance with New York Stock Exchange listing standards and
any independence standards or principles adopted by the board from time to time.
All Committee members must be financially literate, and at least one Committee
member must have accounting or related financial expertise as required by New
York Stock Exchange listing standards. Audit Committee members shall not
simultaneously serve on the audit committees of more than two other public
companies, unless the board determines that such simultaneous service would not
impair the ability of such member to serve effectively on the Audit
Committee.
|
III. |
MEETINGS |
The
Committee will meet at least four times annually, or more frequently as
circumstances dictate. To foster open communication, the Committee will meet
with management, the officer of the Company with primary responsibility for the
internal audit function and the independent accountants in separate sessions to
discuss any matters that should be discussed privately. The Committee will
report its activities and findings to the board on a regular basis.
The
Board may appoint a Chair of the Committee. The Chair will preside, when
present, at all meetings of the Committee. One-third of the members, but not
less than two, will constitute a quorum. A majority of the members present at
any meeting at which a quorum is present may act on behalf of the Committee. The
Committee may meet by telephone or video conference and may take action by
written consent.
|
IV. |
RESPONSIBILITIES
AND DUTIES |
The
Audit Committee, to the extent it deems necessary or appropriate,
shall:
Documents/Reports
Review
| 1. |
Review
and update this Charter, at least annually or as conditions
dictate. |
| 2. |
Review
the audited financial statements, the Management’s Discussion and Analysis
section and other material financial content of the Company’s annual
report to shareholders and annual report on Form 10-K with management and
the independent accountants prior to publication of the annual report to
shareholders and the filing of the Company’s Form 10-K. |
| 3. |
Review
the unaudited financial statements, the Management’s Discussion and
Analysis section and other material financial content of each quarterly
report on Form 10-Q with management and the independent accountants prior
to filing the Form 10-Q. To the extent permissible under New York Stock
Exchange listing standards, the Committee may delegate this review to the
Chair or another member. |
| 4. |
Review
earnings press releases and financial information and earnings guidance
provided to analysts and rating agencies prior to the release or
dissemination of such information. In lieu of reviewing each such
disclosure prior to release or dissemination, the Committee may discuss
generally with management the types of information to be disclosed and the
types of presentations to be made, and establish policies or guidelines
for such disclosures. To the extent permissible under New York Stock
Exchange listing standards, the Committee may delegate this review to the
Chair or another member. |
| 5. |
As
circumstances dictate and as deemed necessary from time to time, review
periodic internal reports to management prepared by the internal auditors
or the independent accountants and management’s response along with the
status of prior outstanding recommendations. |
| 6. |
As
circumstances dictate and as deemed necessary from time to time, review
and approve on an annual basis the Report of the Audit Committee for
inclusion in the Company’s annual proxy
statement. |
Independent
Accountants and Internal Auditors
| 1. |
Appoint
and oversee the activities of the independent accountants, who shall
report directly to the Committee. The Committee shall have sole authority
to determine the compensation to be paid to the independent accountants
for any service. The Committee shall pre-approve all audit and permitted
non-audit services provided to the Company by the independent accountants.
The Committee may establish pre-approval policies and procedures to
approve audit and permitted non-audit services, including by delegating
authority to the Chair or another member, to the extent permitted by
applicable law. The Committee shall be informed of any approvals granted
pursuant to pre-approval policies and procedures at its next meeting
following such approval. |
| 2. |
Obtain
and review at least annually a report by the independent accountants
describing the independent accountants’ internal quality-control
procedures; and any material issues raised by the most recent internal
quality-control review, or peer review, of the independent accountants, or
by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by such firm, and any steps taken to deal
with any such issues. |
| 3. |
Monitor
the independence of the independent accountants, and oversee compliance
with the prohibitions of applicable law on the provision by the
independent accountants of particular non-audit services. The Committee
shall obtain and review at least annually a formal written statement from
the independent accountants (required under Independence Standards Board
Standard No. 1) delineating all relationships between the independent
accountants and the Company. The Committee shall actively engage in a
dialogue with the independent accountants with respect to any disclosed
relationships or services that may |
|
impact
the objectivity and independence of the independent accountants and take
appropriate action in response to the independent accountants’ statement
to satisfy itself of the accountants’ independence. | |
| 4. |
Develop
the Company’s policies with respect to hiring employees or former
employees of the independent accountants. |
| 5. |
Review
the performance of the independent accountants at least annually, and
discharge and replace the independent accountants when circumstances
warrant. |
| 6. |
Review
objectives, activities, organizational structure, qualifications, staffing
and budget of the internal audit function. |
| 7. |
Ratify
the appointment, replacement, reassignment or dismissal of the officer of
the Company with primary responsibility for the internal audit
function. |
Financial
Reporting and Auditing
| 1. |
Consider
reviewing with the independent accountants, the internal auditors and
management the adequacy and effectiveness of the Company’s internal
control over financial reporting, disclosure controls and procedures and
the fullness and accuracy of the Company’s financial statements. The
Committee may consider the quality of presentation of, among other
matters, critical accounting policies, off-balance sheet transactions and
financial measures presented on a basis other than in accordance with
generally accepted accounting principles. |
| 2. |
Consider
the independent accountants’ judgments about the quality and
appropriateness of the Company’s accounting principles and underlying
estimates as applied in its financial statements. |
| 3. |
In
consultation with the independent accountants, management and the internal
auditors, review any major changes or improvements to the Company’s
financial and accounting principles and practices, internal control over
financial reporting and disclosure controls and
procedures. |
| 4. |
Establish
regular and separate systems of reporting to the Committee by the
independent accountants and the internal auditors regarding any
significant judgments made in management’s preparation of the financial
statements and the view of each as to the appropriateness of any such
judgments. |
| 5. |
Discuss
with management policies with respect to risk assessment and risk
management, including the Company’s major financial risk exposures and the
steps management has taken to monitor and control such
exposures. |
| 6. |
Discuss,
either as a Committee or through its Chair (or designee), with the
independent accountants, the internal auditors and management the results
of the independent accountants’ review of the interim financial
information prior to the Company filing its quarterly Form 10-Q with the
SEC, to the extent required by generally accepted auditing
standards. |
| 7. |
Discuss
with the independent accountants and management the scope, planning and
staffing of the annual audit prior to the commencement of the
audit. |
| 8. |
Review as
appropriate with the independent accountants all critical accounting
policies and practices to be used in the financial statements; all
alternative treatments within generally accepted accounting principles for
policies and practices related to material items that have been discussed
with management, including the ramifications of the use of such
alternative disclosures and treatments and the treatment preferred by the
independent accountants; and any other material communications between the
independent accountants and management, such as any management letter or
schedule of unadjusted
differences. |
| 8. |
After
the annual audit, review with the independent accountants and the internal
auditors the matters required under Statement of Auditing Standards Nos.
61 and 90, any significant difficulties encountered during the course of
the audit, including any restrictions on the scope of work or access to
required information, and any significant disagreements with management.
The Committee shall also review any other significant problems or
difficulties among the independent accountants, the internal auditors and
management related to financial reporting. |
| 9. |
Review
and evaluate the Committee’s own performance at least
annually. |
Ethical
and Legal Compliance
|
1. |
Oversee
the development and maintenance of an appropriate ethics and compliance
program, including a code or codes of ethics and business conduct, and
periodically review the effectiveness of the Company’s
program. |
| 2. |
Review
requests for and determine whether to grant or deny waivers of the
Company’s code of ethics applicable to senior financial officers. The
Committee shall also monitor the Company’s activities to enforce
compliance with the code or codes or ethics and business
conduct. |
| 3. |
Review
and approve all transactions to which the Company is a party and in which
any Company director and executive officer has a direct or indirect
material interest, apart from in their capacity as director or executive
officer. |
| 4. |
Establish
procedures for the receipt, retention and treatment of complaints received
regarding accounting, internal controls or audit matters; and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters. |
| 5. |
Perform
any other activities or investigations consistent with this Charter, the
Company’s Charter, the Company’s Bylaws and governing law or as the
Committee or the board determines necessary or
appropriate. |
APPENDIX
B
2005
EQUITY INCENTIVE PLAN
________________________________________________________________________
|
ARTICLE
1 - GENERAL PROVISIONS |
1 | ||
|
1.1 |
Establishment
and Purposes of Plan |
1 | |
|
1.2 |
Types
of Awards |
1 | |
|
1.3 |
Effective
Date |
1 | |
|
ARTICLE
2 - DEFINITIONS |
1 | ||
|
ARTICLE
3 - ADMINISTRATION |
4 | ||
|
3.1 |
General |
4 | |
|
3.2 |
|
Authority
of the Committee |
4 |
|
3.3 |
Delegation
of Authority |
5 | |
|
3.4 |
Award
Agreements |
5 | |
|
|
|||
|
ARTICLE
4 - SHARES SUBJECT TO THE PLAN |
5 | ||
|
4.1 |
Number
of Shares |
5 | |
|
4.2 |
Individual
Limits |
6 | |
|
4.3 |
Adjustment
of Shares |
6 | |
|
ARTICLE
5 - STOCK OPTIONS |
7 | ||
|
5.1 |
Grant
of Options |
7 | |
|
5.2 |
|
Agreement |
7 |
|
5.3 |
Option
Price |
7 | |
|
5.4 |
Duration
of Options |
7 | |
|
5.5 |
Exercise
of Options |
7 | |
|
5.6 |
Payment |
7 | |
|
5.7 |
Nontransferability
of Options |
7 | |
|
5.8 |
Special
Rules for ISOs |
8 | |
|
|
|||
|
ARTICLE
6 - STOCK APPRECIATION RIGHTS |
8 | ||
|
|
|||
|
6.1 |
Grant
of SARs |
8 | |
|
6.2 |
Tandem
SARs |
8 | |
|
6.3 |
Payment |
8 | |
|
6.4 |
Exercise
of SARs |
8 | |
|
ARTICLE
7 - RESTRICTED STOCK AND RESTRICTED STOCK UNITS |
9 | ||
|
7.1 |
Grant
of Restricted Stock |
9 | |
|
7.2 |
Restricted
Stock Agreement |
9 | |
|
7.3 |
Nontransferability |
9 | |
|
7.4 |
|
Certificates |
9 |
|
7.5 |
Dividends
and Other Distributions |
9 | |
|
7.6 |
Restricted
Stock Units (or RSUs) |
9 | |
| ARTICLE 8 - PERFORMANCE SHARES |
10 | ||
|
8.1 |
Grant
of Performance Shares |
10 | |
|
8.2 |
Value
of Performance Shares |
10 | |
|
8.3 |
Earning
of Performance Shares |
10 | |
|
8.4 |
Form
and Timing of Payment of Performance Shares |
10 | |
|
8.5 |
Nontransferability |
10 | |
i
|
ARTICLE
9 - PERFORMANCE MEASURES |
10 | ||
|
ARTICLE
10 - BENEFICIARY DESIGNATION |
11 | ||
|
ARTICLE
11 - DEFERRALS |
11 | ||
|
ARTICLE
12 - WITHHOLDING |
11 | ||
|
12.1 |
Tax
Withholding |
11 | |
|
12.2 |
Share
Withholding |
11 | |
|
ARTICLE
13 - FOREIGN EMPLOYEES |
12 | ||
|
ARTICLE
14 - AMENDMENT AND TERMINATION |
12 | ||
|
14.1 |
Amendment
of Plan |
12 | |
|
14.2 |
Amendment
of Award Agreement |
12 | |
|
14.3 |
Termination
of Plan |
12 | |
|
14.4 |
Cancellation
of Awards |
12 | |
|
14.5 |
Assumption
or Cancellation of Awards Upon a Transaction |
13 | |
|
ARTICLE
15 - MISCELLANEOUS PROVISIONS |
13 | ||
|
15.1 |
Restrictions
on Shares |
13 | |
|
15.2 |
Rights
of a Shareholder |
13 | |
|
15.3 |
No
Implied Rights |
13 | |
|
15.4 |
Compliance
with Laws\ |
14 | |
|
15.5 |
Successors |
14 | |
|
15.6 |
Tax
Elections |
14 | |
|
15.7 |
Legal
Construction |
14 | |
MILLER
INDUSTRIES, INC.
2005
EQUITY INCENTIVE PLAN
ARTICLE
1 - GENERAL PROVISIONS
1.1 Establishment
and Purposes of Plan.
Miller Industries, Inc., a Tennessee corporation (the “Company”), hereby
establishes an equity incentive plan to be known as the “Miller Industries, Inc.
2005 Equity Incentive Plan” (the “Plan”), as set forth in this document. The
objectives of the Plan are (i) to provide incentives to those individuals who
contribute significantly to the long-term performance and growth of the Company
and its affiliates; (ii) to attract, motivate and retain employees, consultants,
advisors and other persons who perform services for the Company by providing
compensation opportunities that are competitive with other companies; and (iii)
to align the long-term financial interests of employees’ and other Eligible
Participants with those of the Company’s shareholders.
1.2 Types
of Awards.
Awards under the Plan may be made to Eligible Participants in the form of (i)
Incentive Stock Options, (ii) Nonqualified Stock Options, (iii) Stock
Appreciation Rights, (iv) Restricted Stock, (v) Restricted Stock Units; (vi)
Performance Shares, or any combination of the foregoing; provided, however, that
only Eligible Participants who are Employees may receive grants of Incentive
Stock Options.
1.3 Effective
Date.
The Plan shall be effective upon approval by the Company’s Board of Directors
(the date of such approval being referred to herein as the “Effective
Date”).
ARTICLE
2 - DEFINITIONS
Except
where the context otherwise indicates, the following definitions
apply:
2.1 “Agreement”
means the written agreement evidencing an Award granted to the Participant under
the Plan.
2.2 “Award”
means an award granted to a Participant under the Plan that is an Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share,
or combination of these.
2.3 “Board”
means the Board of Directors of the Company.
2.4 “Cause”
means, unless provided otherwise in the Agreement, any of the following reasons:
(a) an act or acts by the Participant which have been found in an applicable
court of law to constitute a felony (other than traffic-related offenses) or the
failure of a Participant to contest prosecution for a felony; (b) an act or acts
by Participant which are in the good faith judgment of the Board to be in
violation of law or of policies of the Employer and which result in demonstrably
material injury to the Company or any affiliate; (c) a Participant’s gross
negligence, willful misconduct or dishonesty, any of which is directly or
materially harmful to the business or reputation of the Company or any affiliate
of the Company. For purposes of this Agreement, no act or failure to act by the
Participant shall be deemed to be “willful” unless done or omitted to be done by
the Participant not in good faith and without reasonable belief that the
Participant’s action or omission was in the best interests of the Employer.
“Cause” shall be determined by the Committee. Notwithstanding the foregoing, if
the Participant has entered into an employment agreement with the Employer that
is binding as of the date of employment termination, and if such employment
agreement defines “Cause,” then the definition of “Cause” in such agreement, in
lieu of the definition provided above, shall apply to the Participant for
purposes of the Plan.
2.5 “Change
in Control”
means any of the following events:
(a) A
change in control of a nature that would be required to be reported in response
to any form or report of the Securities and Exchange Commission or any stock
exchange on which the Company’s shares are listed which requires the reporting
of a change in control of the Company;
(b) When
any “person,” as such term is used in Section 13(d) and 14(d) of the Exchange
Act (other than the Company or a subsidiary or any Company or subsidiary
employee benefit plan (including any trustee of such plan acting as trustee) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing forty
percent (40%) or more of the combined voting power of the Company’s then
outstanding securities;
(c) When,
during any period of two consecutive years during the existence of the Plan, the
individuals who, at the beginning of such period, constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof, provided, however, that a director who was not a director at the
beginning of such period shall be deemed to have satisfied the two-year
requirement if such director was elected by, or on the recommendation of or with
the approval of, at least three-quarters of the directors who were directors at
the beginning of such period (either actually or by prior operation of this
Section 2.5(c).
(d) A
complete liquidation or dissolution of the Company or an agreement for the sale
or other disposition of all or substantially all of the assets of the Company;
or
The
occurrence of any other event or circumstance which is not covered by (a)
through (d) above which the Committee determines affects control of the Company
and constitutes a Change in Control for purposes of the Plan.
2.6 “Code”
means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended. All citations to sections of the Code are to such sections as they may
from time to time be amended or renumbered.
2.7 “Committee”
means the Compensation Committee of the Board or such other committee consisting
of two or more members as may be appointed by the Board to administer this Plan
pursuant to Article 3. All members shall be independent directors within the
meaning of the Listing Standards and any other standards as the Board or the
Committee may prescribe from time to time; provided, however, that, (a) if the
Committee is comprised of at least three directors, and (b) the Listing
Standards permit one member of the Committee not to be independent within the
meaning of the Listing Standards, then the Board may appoint a member who is not
so independent, provided, further, that such appointment otherwise complies with
the Listing Standards. If any member of the Committee does not qualify as (i) a
“Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act,
and (ii) an “outside director” within the meaning of Section 162(m) of the Code,
a subcommittee of the Committee shall be appointed to grant Awards to Named
Executive Officers and to officers who are subject to Section 16 of the Act, and
each member of such subcommittee shall satisfy the requirements of (i) and (ii)
above. References to the Committee in the Plan shall include and, as
appropriate, apply to any such subcommittee.
2.8 “Company”
means Miller Industries, Inc., a Tennessee corporation, and its successors and
assigns.
2.9 “Disability”
means, (i) with respect to a Participant who is eligible to participate in the
Employer’s program of long-term disability insurance, if any, a condition with
respect to which the Participant is entitled to commence benefits under such
program, and (ii) with respect to any Participant (including a Participant who
is eligible to participate in the Employer’s program of long-term disability
insurance, if any), the inability of the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
six (6) months or more. The determination of Disability shall be made by the
Committee.
2.10 “Effective
Date”
shall have the meaning ascribed to such term in Section 1.3 hereof.
2.11 “Eligible
Participant”
means an employee of the Employer (including an officer) as well as any other
person, including a consultant or advisor who provides bona fide services to the
Employer, as shall be determined by the Committee.
2.12 “Employer”
means the Company and any entity during any period that it is a “parent
corporation” or a “subsidiary corporation” with respect to the Company within
the meaning of Sections 424(e) and 424(f) of the
Code.
With respect to all purposes of the Plan, including but not limited to, the
establishment, amendment, termination, operation and administration of the Plan,
the Company shall be authorized to act on behalf of all other entities included
within the definition of “Employer.”
2.13 “Exchange
Act”
means the Securities Exchange Act of 1934, as now in effect or as hereafter
amended. All citations to sections of the Exchange Act or rules thereunder are
to such sections or rules as they may from time to time be amended or
renumbered.
2.14 “Fair
Market Value”
means the fair market value of a Share, as determined in good faith by the
Committee as follows:
(a) if
the Shares are listed on a national securities exchange, Fair Market Value on
any date shall be the last sale price reported for the Shares on such exchange
on such date or, if no sale was reported on such date, on the last date
preceding such date on which a sale was reported;
(b) if
the Shares are quoted on the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”) or other comparable quotation system and
have been designated as a National Market System (“NMS”) security, Fair Market
Value on any date shall be the last sale price reported for the Shares on such
system on such date or on the last day preceding such date on which a sale was
reported;
(c) If
the Shares are quoted on the NASDAQ and have not been designated a NMS Security,
Fair Market Value on any date shall be the average of the highest bid and lowest
asked prices of the Shares on such system on such date; or
(d) if
(a), (b) and (c) do not apply, on the basis of the good faith determination of
the Committee.
For
purposes of subsection (a) above, if Shares are traded on more than one
securities exchange then the following exchange shall be referenced to determine
Fair Market Value: (i) the New York Stock Exchange (“NYSE”), or (ii) if shares
are not traded on the NYSE, the NASDAQ, or (iii) if shares are not traded on the
NYSE or NASDAQ, the largest regional exchange on which Shares are
traded.
2.15 “Incentive
Stock Option”
or “ISO”
means an Option granted to an Eligible Participant under Article 5 of the Plan
which is intended to meet the requirements of Section 422 of the
Code.
2.16 “Insider”
shall mean an individual who is, on the relevant date, subject to the reporting
requirements of Section
16(a) of the Act.
2.17 “Listing
Standards”
means the listing standards of any exchange or self-regulatory organization
which lists or quotes the securities of the Company.
2.18 “Named
Executive Officer”
means a Participant who is one of the group of “covered employees” as defined in
the regulations promulgated or other guidance issued under Section 162(m) of the
Code, as determined by the Committee.
2.19 “Nonqualified
Stock Option”
or “NQSO”
means an Option granted to an Eligible Participant under Article 5 of the Plan
which is not intended to meet the requirements of Section 422 of the
Code.
2.20 “Option”
means an Incentive Stock Option or a Nonqualified Stock Option.
2.21 “Option
Price”
means the price at which a Share may be purchased by a Participant pursuant to
an Option.
2.22 “Participant”
means an Eligible Participant to whom an Award has been
granted.
2.23 “Performance
Measures”
means the performance measures set forth in Article 9 which are used for
performance based Awards to Named Executive Officers.
2.24 “Performance
Share”
means an Award under Article 8 of the Plan that is valued by reference to a
Share, which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including without limitation, cash or Shares,
or any combination thereof, upon achievement of such performance objectives
during the relevant performance period as the Committee shall establish at the
time of such Award or thereafter, but not later than the time permitted by
Section 162(m) of the Code in the case of a Named Executive Officer, unless the
Committee determines not to comply with Section 162(m) of the Code.
2.25 “Permitted
Transferee”
means any members of the immediate family of the Participant (i.e., spouse,
children, and grandchildren), any trusts for the benefit of such family members
or any partnerships whose only partners are such family members.
2.26 “Plan”
means the Miller Industries, Inc. 2005 Equity Incentive Plan, as set forth
herein and as it may be amended from time to time.
2.27 “Restricted
Stock”
means an Award of Shares under Article 7 of the Plan, which Shares are issued
with such restriction(s) as the Committee, in its sole discretion, may impose,
including without limitation, any restriction on the right to retain such
Shares, to sell, transfer, pledge or assign such Shares, to vote such Shares,
and/or to receive any cash dividends with respect to such Shares, which
restrictions may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.
2.28 “Restricted
Stock Units”
or “RSUs”
means a right granted under Article 7 of the Plan to receive a number of Shares
or a cash payment for each such Share equal to the Fair Market Value of a Share
on a specified date.
2.29 “Restriction
Period”
means the period commencing on the date an Award of Restricted Stock or
Restricted Stock Units is granted and ending on such date as the Committee shall
determine.
2.30 “Retirement”
means termination of employment other than for Cause after a Participant has (i)
attained age 65; or (ii) reached the age of 55 years and has completed at least
10 years of service.
2.31 “Share”
means one share of common stock of the Company, and as such Share may be
adjusted pursuant to the provisions of Section 4.3 of the Plan.
2.32 “Stock
Appreciation Right”
or “SAR”
means an Award granted under Article 6 which provides for an amount payable in
Shares and/or cash, as determined by the Committee, equal to the excess of the
Fair Market Value of a Share on the day the Stock Appreciation Right is
exercised over the specified purchase or exercise price.
ARTICLE
3 - ADMINISTRATION
3.1 General.
This Plan shall be administered by the Committee. The Committee, in its
discretion, may delegate to one or more of its members, or to officers of the
Company, such of its powers as it deems appropriate.
3.2 Authority
of the Committee.
(a) The
Committee shall have the exclusive right to interpret, construe and administer
the Plan, to select the Eligible Participants who are eligible to receive an
Award, and to act in all matters pertaining to the granting of an Award and the
contents of the Agreement evidencing the Award, including without limitation,
the determination of the number of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, or Performance Shares subject to an
Award and the form, terms, conditions and duration of each Award, and any
amendment thereof consistent with the provisions of the Plan. The
Committee
may adopt such rules, regulations and procedures of general application for the
administration of this Plan, as it deems appropriate.
(b) The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Agreement in the manner and to the extent it
shall deem desirable to carry it into effect.
(c) In
the event the Company shall assume outstanding employee benefit awards or the
right or obligation to make future such awards in connection with the
acquisition of another corporation or business entity, the Committee may, in its
discretion, make such adjustments in the terms of Awards under the Plan as it
shall deem appropriate.
(d) All
acts, determinations and decisions of the Committee made or taken pursuant to
grants of authority under the Plan or with respect to any questions arising in
connection with the administration and interpretation of the Plan, including the
severability of any and all of the provisions thereof, shall be conclusive,
final and binding upon all parties, including the Company, its shareholders,
Participants, Eligible Participants and their estates, beneficiaries and
successors.
3.3 Delegation
of Authority.
Except with respect to Named Executive Officers and Insiders, the Committee may,
at any time and from time to time, delegate to one or more persons any or all of
its authority under Section 3.2, to the full extent permitted by
law.
3.4 Award
Agreements.
Each Award granted under the Plan shall be evidenced by a written Agreement.
Each Agreement shall be subject to and incorporate, by reference or otherwise,
the applicable terms and conditions of the Plan, and any other terms and
conditions, not inconsistent with the Plan, as may be imposed by the Committee,
including without limitation, provisions related to the consequences of
termination of employment. A copy of such document shall be provided to the
Participant, and the Committee may, but need not, require that the Participant
sign a copy of the Agreement.
ARTICLE
4 - SHARES SUBJECT TO THE PLAN
4.1 Number
of Shares.
(a) Subject
to adjustment as provided in (b) below and in Section 4.3, the aggregate number
of Shares which are available for issuance pursuant to Awards under the Plan is
one million one hundred thousand (1,100,000) Shares, plus the number of Shares
subject to outstanding grants on the Effective Date under the Company’s 1994
Stock Option and Incentive Plan, which expire, are forfeited or otherwise
terminate without delivery of Shares; provided, however, at no time may the
Committee make grants hereunder if after giving effect to the grant, the number
of Shares subject to outstanding grants under the Plan and the Company’s 1994
Stock Option and Incentive Plan will exceed 15.0% of the aggregate number of
Shares issued and outstanding, or a total of one million eight hundred thousand
(1,800,000) Shares. All of the Shares available for issuance under the Plan (but
in no event more than one million eight hundred thousand (1,800,000) Shares may
be issued pursuant to Incentive Stock Options. If Options, Restricted Stock or
Restricted Stock Units are issued in respect of options, restricted stock, or
restricted stock units of an entity acquired, by merger or otherwise, by the
Company (or any subsidiary of the Company or any Employer), to the extent such
issuance shall not be inconsistent with the terms, limitations and conditions of
Code Section 422 or Exchange Act Rule 16b-3, the aggregate number of Shares for
which Awards may be made hereunder shall automatically be increased by the
number of Shares subject to Awards so issued. Such Shares shall be made
available from Shares currently authorized but unissued or Shares currently held
(or subsequently acquired) by the Company as treasury shares, including Shares
purchased in the open market or in private transactions.
(b) The
following rules shall apply for purposes of the determination of the number of
Shares available for grant under the Plan:
(i) If,
for any reason, any Shares awarded or subject to purchase under the Plan or the
Company’s 1994 Stock Option and Incentive Plan are not delivered or purchased,
or are reacquired by the Company, for reasons, including, but not limited to, a
forfeiture of Restricted Stock, an exercise of a Stock Appreciation Right with
delivery of fewer Shares than are subject to the Stock Appreciation Right, or
the termination, expiration
or cancellation of an Option, Stock Appreciation Right, Restricted Stock Unit,
Performance Share (“Returned Shares”), such Returned Shares shall not be charged
against the aggregate number of Shares available for issuance pursuant to Awards
under the Plan and shall again be available for issuance pursuant to an Award
under the Plan. If the exercise price and/or tax withholding obligation under an
Award is satisfied by tendering Shares to the Company (either by actual delivery
or attestation) or by reducing the number of Shares to be delivered to the
Participant, only the number of Shares issued net of the Shares so tendered or
withheld shall be deemed delivered for purposes of determining the maximum
number of Shares available for issuance under the Plan.
(ii) Each
Performance Share awarded that may be settled in Shares shall be counted as one
Share subject to an Award. Performance Shares that may not be settled in Shares
(or that may be settled in Shares but are not) shall not result in a charge
against the aggregate number of Shares available for issuance pursuant to Awards
under this Plan.
(iii) Each
Stock Appreciation Right or Restricted Stock Unit that may be settled in Shares
shall be counted as one Share subject to an award. Stock Appreciation Rights or
Restricted Stock Units that may not be settled in Shares (or that may be settled
in Shares but are not) shall not result in a charge against the aggregate number
of Shares available for issuance pursuant to Awards under this Plan. In
addition, if a Stock Appreciation Right is granted in connection with an Option
and the exercise of the Stock Appreciation Right
results in the loss of the Option right, the Shares that otherwise would have
been issued upon the exercise of such related Option shall not result in a
charge against the aggregate number of Shares available for issuance pursuant to
Awards under this Plan. Upon exercise of a Stock Appreciation Right, only the
actual number of Shares delivered shall be charged against the aggregate number
of Shares available, and any additional Shares that were the subject of the
Stock Appreciation Right shall again be available for grant of
Awards.
4.2
Individual
Limits.
Except to the extent the Committee determines that an Award to a Named Executive
Officer shall not comply with the performance-based compensation provisions of
Section 162(m) of the Code, the following rules shall apply to Awards under the
Plan:
(a) Options
and SARs. The maximum number of Options and Stock Appreciation Rights that, in
the aggregate, may be granted in any one calendar year to any one Participant
shall be two hundred-fifty thousand (250,000).
(b) Restricted
Stock, Restricted Stock Units and Performance Shares. The maximum aggregate
number of Shares of Restricted Stock, number of Restricted Stock Units or
Performance Shares that may be granted in any one calendar year to any one
Participant shall be one hundred thousand (100,000) Shares.
4.3 Adjustment
of Shares.
If any change in corporate capitalization, such as a stock split, reverse stock
split, stock dividend, or any corporate transaction such as a reorganization,
reclassification, merger or consolidation or separation, including a spin-off,
of the Company or sale or other disposition by the Company of all or a portion
of its assets, any other change in the Company’s corporate structure, or any
distribution to shareholders (other than a cash dividend) results in the
outstanding Shares, or any securities exchanged therefor or received in their
place, being exchanged for a different number or class of shares or other
securities of the Company, or for shares of stock or other securities of any
other corporation; or new, different or additional shares or other securities of
the Company or of any other corporation being received by the holders of
outstanding Shares; then equitable adjustments shall be made by the Committee,
as it determines are necessary and appropriate, in:
(a) the
limitations on the aggregate number of Shares that may be awarded as set forth
in Section 4.1, including, without limitation, with respect to Incentive Stock
Options;
(b) the
limitations on the aggregate number of Shares that may be awarded to any one
single Participant as set forth in Section 4.2;
(c) the
number and class of Shares that may be subject to an Award, and which have not
been issued or transferred under an outstanding Award;
(d) the
Option Price under outstanding Options and the number of Shares to be
transferred in settlement of outstanding Stock Appreciation Rights;
and
(e) the
terms, conditions or restrictions of any Award and Agreement, including the
price payable for the acquisition of Shares; provided, however, that all such
adjustments made in respect of each ISO shall be accomplished so that such
Option shall continue to be an incentive stock option within the meaning of
Section 422 of the Code.
ARTICLE
5 - STOCK OPTIONS
5.1 Grant
of Options.
Subject to the terms and provisions of the Plan, Options may be granted to
Eligible Participants at any time and from time to time as shall be determined
by the Committee. The Committee shall have sole discretion in determining the
number of Shares subject to Options granted to each Participant. The Committee
may grant a Participant ISOs, NQSOs or a combination thereof, and may vary such
Awards among Participants; provided that only an employee of the Employer may be
granted ISOs.
5.2 Agreement.
Each Option shall be evidenced by an Agreement that shall specify the Option
Price, the duration of the Option, the number of Shares to which the Option
pertains and such other provisions as the Committee shall determine. The Option
Agreement shall further specify whether the Award is intended to be an ISO or an
NQSO. Any portion of an Option that is not designated in the Agreement as an ISO
or otherwise fails or is not qualified as an ISO (even if designated as an ISO)
shall be an NQSO.
5.3 Option
Price.
The Option Price for each grant of an Option shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option is
granted.
5.4 Duration
of Options.
Each Option shall expire at such time as the Committee shall determine at the
time of grant; provided, however, that no Option shall be exercisable later than
the tenth (10th) anniversary of its grant date.
5.5 Exercise
of Options.
Options granted under the Plan shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance
approve, including conditions related to the employment of or provision of
services by the Participant with the Company or any Employer, which need not be
the same for each grant or for each Participant. The Committee may provide in
the Agreement for automatic accelerated vesting and other rights upon the
occurrence of a Change in Control or upon the occurrence of other events as
specified in the Agreement.
5.6 Payment.
Options shall be exercised by the delivery of a written notice of exercise to
the Company, setting forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares. The Option Price
upon exercise of any Option shall be payable to the Company in full, either: (a)
in cash, (b) cash equivalent approved by the Committee, (c) unless not permitted
by the Committee, by tendering previously acquired Shares (or delivering a
certification or attestation of ownership of such Shares) having an aggregate
Fair Market Value at the time of exercise equal to the total Option Price
(provided that the tendered Shares must have been held by the Participant for
any period required by the Committee), or (d) by a combination of (a), (b) and
(c). The Committee also may allow cashless exercises as permitted under Federal
Reserve Board’s Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan’s purpose and applicable law.
5.7 Nontransferability
of Options.
(a) Incentive
Stock Options. No ISO may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant shall be exercisable
during his or her lifetime only by such Participant.
(b) Nonqualified
Stock Options. Except as otherwise provided in a Participant’s Agreement with
respect to transfers to Permitted Transferees (any such transfers being subject
to applicable laws, rules and regulations), no NQSO may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
in a Participant’s Agreement, all NQSOs granted to a Participant shall be
exercisable during his or her lifetime only by such Participant. In the event of
a transfer permitted by the Agreement, appropriate evidence of any transfer to
the Permitted Transferees shall be delivered to the Company at its principal
executive office. If all or part of an Option is transferred to a Permitted
Transferee, the Permitted Transferee’s rights thereunder shall be subject to the
same restrictions and limitations with respect to the Option as the
Participant.
5.8 Special
Rules for ISOs.
Notwithstanding the above, in no event shall any Participant who owns (within
the meaning of Section 424(d) of the Code) shares of the Company possessing more
than ten percent (10%) of the total combined voting power of all classes of
shares of the Company be eligible to receive an ISO at an Option Price less than
one hundred ten percent (110%) of the Fair Market Value of a Share on the date
the ISO is granted or be eligible to receive an ISO that is exercisable later
than the fifth (5th) anniversary date of its grant. No Participant may be
granted ISOs (and/or incentive stock options under any other incentive stock
option plans of the Employer) which are first exercisable in any calendar year
for Shares having an aggregate Fair Market Value (determined as of the date an
Option is granted) that exceeds One Hundred Thousand Dollars
($100,000).
ARTICLE
6 - STOCK APPRECIATION RIGHTS
6.1 Grant
of SARs.
A Stock Appreciation Right may be granted to an Eligible Participant in
connection with an Option granted under Article 5 of this Plan or may be granted
independently of any Option. A Stock Appreciation Right shall entitle the
holder, within the specified period (which may not exceed 10 years), to exercise
the SAR and receive in exchange therefor a payment having an aggregate value
equal to the amount by which the Fair Market Value on the exercise date exceeds
the specified purchase price (which, unless provided otherwise, shall be the
Fair Market Value on the grant date), times the number of Shares with respect to
which the SAR is exercised. The Committee may provide in the Agreement for
automatic accelerated vesting and other rights upon the occurrence of a Change
in Control or upon the occurrence of other events specified in the Agreement. A
SAR granted in connection with an Option (a “Tandem SAR”) shall entitle the
holder of the related Option, within the period specified for the exercise of
the Option, to surrender the unexercised Option, or a portion thereof, and to
receive in exchange therefore a payment having an aggregate value equal to the
amount by which the Fair Market Value on the exercise date exceeds the Option
Price , times the number of Shares under the Option, or portion thereof, which
is surrendered. SARs shall be subject to the same transferability restrictions
as Nonqualified Stock Options.
6.2 Tandem
SARs.
Each Tandem SAR shall be subject to the same terms and conditions as the related
Option, including limitations on transferability, and shall be exercisable only
to the extent such Option is exercisable and shall terminate or lapse and cease
to be exercisable when the related Option terminates or lapses. The grant of
Stock Appreciation Rights related to ISOs must be concurrent with the grant of
the ISOs. With respect to NQSOs, the grant either may be concurrent with the
grant of the NQSOs, or in connection with NQSOs previously granted under Article
5, which are unexercised and have not terminated or lapsed.
6.3 Payment.
The Committee shall have sole discretion to determine in each Agreement whether
the payment with respect to the exercise of an SAR will be in the form of all
cash, all Shares, or any combination thereof. If payment is to be made in
Shares, the number of Shares shall be determined based on the Fair Market Value
on the date of exercise. If the Committee elects to make full payment in Shares,
no fractional Shares shall be issued and cash payments shall be made in lieu of
fractional shares. The Committee shall have sole discretion as to the timing of
any payment made in cash or Shares, or a combination thereof, upon exercise of
SARs. Payment may
be
made in a lump sum, in annual installments or may be otherwise deferred; and the
Committee shall have sole discretion to determine whether any deferred payments
may bear amounts equivalent to interest or cash dividends.
6.4 Exercise
of SARs.
Upon exercise of a Tandem SAR, the number of Shares subject to exercise under
any related Option shall automatically be reduced by the number of Shares
represented by the Option or portion thereof which is surrendered.
ARTICLE
7 - RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1 Grant
of Restricted Stock.
Awards of Restricted Stock may be made either alone or in addition to or in
tandem with other Awards and may be current grants of Restricted Stock or
deferred grants of Restricted Stock.
7.2 Restricted
Stock Agreement.
The Restricted Stock Agreement shall set forth the terms of the Award, as
determined by the Committee, including, without limitation, the purchase price,
if any, to be paid for such Restricted Stock, which may be more than, equal to,
or less than Fair Market Value and may be zero, subject to such minimum
consideration as may be required by applicable law; any restrictions applicable
to the Restricted Stock such as continued service or achievement of Performance
Measures, the length of the Restriction Period and whether any circumstances,
such as death, Disability, or a Change in Control, will shorten or terminate the
Restriction Period; and rights of the Participant to vote or receive dividends
with respect to the Shares during the Restriction Period.
7.3 Nontransferability.
Except as otherwise provided in this Article 7, no shares of Restricted Stock
nor any Restricted Stock Units received by a Participant shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of during
the Restriction Period.
7.4 Certificates.
Upon an Award of Restricted Stock to a Participant, Shares of Restricted Stock
shall be registered in the Participant’s name (or an appropriate book entry
shall be made). Certificates, if issued, may (a) either be held in custody by
the Company until the Restriction Period expires or until restrictions thereon
otherwise lapse (b) and/or be issued to and registered in the name of the
Participant, bearing an appropriate restrictive legend and remaining subject to
appropriate stop-transfer orders. If required by the Committee, the Participant
shall deliver to the Company one or more stock powers endorsed in blank relating
to the Restricted Stock. If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction Period,
unrestricted certificates for such shares shall be delivered to the Participant;
provided, however, that the Committee may cause such legend or legends to be
placed on any such certificates as it may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission and
any applicable federal or state law.
7.5 Dividends
and Other Distributions.
Except as provided in this Article 7 or in the Award Agreement, a Participant
receiving Restricted Stock shall have, with respect to such Restricted Stock,
all of the rights of a shareholder of the Company, including the right to vote
the Shares to the extent, if any, such Shares possess voting rights and the
right to receive any dividends; provided, however, the Committee may require
that any dividends on such Shares of Restricted Stock shall be automatically
deferred and reinvested in additional Restricted Stock subject to the same
restrictions as the underlying Award, or may require that dividends and other
distributions on Restricted Stock shall be paid to the Company for the account
of the Participant. The Committee shall determine whether interest shall be paid
on such amounts, the rate of any such interest, and the other terms applicable
to such amounts. In addition, with respect to Named Executive Officers, the
Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to Restricted Stock such that the dividends
and/or Restricted Stock maintain eligibility for the performance-based
compensation exception under Section 162(m) of the Code.
7.6 Restricted
Stock Units (or RSUs).
Awards of Restricted Stock Units may be made to Eligible Participants in
accordance with the following terms and conditions:
(a) The
Committee, in its discretion, shall determine the number of RSUs to grant to a
Participant, the Restriction Period and other terms and conditions of the Award,
including whether the Award will be paid in cash, Shares or a combination of the
two and the time when the Award will be payable (i.e., at vesting, termination
of employment or another date).
(b) Unless
the Agreement provides otherwise, RSUs shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise
hypothecated.
(c) Restrictions
upon RSUs awarded hereunder shall lapse at such time or times and on such terms
and conditions
as the Committee may provide in the Agreement. Unless the Agreement provides
otherwise, in the event of a Change in Control, all restrictions upon any RSUs
shall lapse immediately and all such RSUs shall become fully vested in the
Participant.
(d) The
Agreement shall set forth the terms and conditions that shall apply upon the
termination of the Participant’s employment with the Employer (including a
forfeiture of RSUs for which the restrictions have not lapsed upon Participant’s
ceasing to be employed) as the Committee may, in its discretion, determine at
the time the Award is granted.
ARTICLE
8 - PERFORMANCE SHARES
8.1 Grant
of Performance Shares.
Performance Shares may be granted to Participants in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.
8.2 Value
of Performance Shares.
Each Performance Share shall have an initial value equal to the Fair Market
Value on the date of grant. The Committee shall set the Performance Measures in
its discretion which, depending on the extent to which they are met, will
determine the number of Performance Shares that will be paid out to the
Participant. For purposes of this Article 8, the time period during which the
Performance Measures must be met shall be called a “Performance Period”.
8.3 Earning
of Performance Shares.
Subject to the terms of this Plan, after the applicable Performance Period has
ended, the holder of Performance Shares shall be entitled to receive a payout of
the number of Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
Performance Measures have been achieved. The Committee may provide in the
Agreement for automatic accelerated vesting and other rights upon the occurrence
of a Change in Control or upon the occurrence of other events specified in the
Agreement.
8.4 Form
and Timing of Payment of Performance Shares.
Subject to the terms of this Plan, the Committee, in its sole discretion, may
pay earned Performance Shares in the form of cash or in Shares (or in a
combination thereof) which has an aggregate Fair Market Value equal to the value
of the earned Performance Shares at the close of the applicable Performance
Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee. The determination of the Committee with respect to
the form and timing of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant
of the Award.
Except
as otherwise provided in the Participant’s Award Agreement, a Participant shall
be entitled to receive any dividends declared with respect to Shares earned in
connection with Performance Shares, that have not yet been distributed to the
Participant (such dividends shall be subject to the same accrual, forfeiture,
and payout restrictions as apply to dividends earned with respect to Restricted
Stock, as set forth in Section 7.5 herein). In addition, unless otherwise
provided in the Participant’s Award Agreement, a Participant shall be entitled
to exercise full voting rights with respect to such earned Shares.
8.5 Nontransferability.
Except as otherwise provided in a Participant’s Award Agreement, Performance
Shares may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in a Participant’s Award
Agreement, a Participant’s rights under the Plan shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s legal
representative.
ARTICLE
9 - PERFORMANCE MEASURES
Until
the Committee proposes for shareholder vote and shareholders approve a change in
the general Performance Measures set forth in this Article 9, the attainment of
which may determine the degree of payout and/or vesting with respect to Named
Executive Officers’ Awards that are intended to qualify under the
performance-based compensation provisions of Section 162(m) of the Code, the
Performance Measure(s) to be used for purposes of such Awards shall be chosen
from among the following (which may relate to the Company or a business unit,
division or subsidiary): earnings, earnings per share, consolidated pre-tax
earnings, net earnings, operating income, EBIT (earnings before interest and
taxes), EBITDA (earnings before interest, taxes, depreciation and amortization),
gross margin, revenues, revenue growth, market value added, economic value
added, return on equity, return on investment, return on assets, return on net
assets, return on capital employed, total shareholder return, profit, economic
profit, capitalized economic profit, after-tax profit, pre-tax profit, cash flow
measures, cash flow return, sales, sales volume, revenues per employee, stock
price, cost, or goals related to acquisitions or divestitures. The Committee can
establish other Performance Measures for performance Awards granted to Eligible
Participants that are not Named Executive Officers.
The
Committee shall be authorized to make adjustments in performance based criteria
or in the terms and conditions of other Awards in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or changes
in applicable laws, regulations or accounting principles. The Committee shall
also have the discretion to adjust the determinations of the degree of
attainment of the pre-established Performance Measures; provided, however, that
Awards which are designed to qualify for the performance-based compensation
exception from the deductibility limitations of Section 162(m) of the Code, and
which are held by Named Executive Officers, may not be adjusted upward (except
as a result of adjustments permitted by this paragraph), but the Committee shall
retain the discretion to adjust such Awards downward.
If
applicable tax and/or securities laws change to permit Committee discretion to
alter the governing Performance Measures without obtaining shareholder approval
of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the event that the
Committee determines that it is advisable to grant Awards which shall not
qualify for the performance-based compensation exception from the deductibility
limitations of Section 162(m) of the Code, the Committee may make such grants
without satisfying the requirements of Section 162(m) of the Code.
ARTICLE
10 - BENEFICIARY DESIGNATION
Each
Participant may, from time to time, name any beneficiary or beneficiaries (who
may be named contingently or successively) to whom any benefit under the Plan is
to be paid in case of his or her death before he or she receives any or all of
such benefit. Each such designation shall revoke all prior designations by the
same Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during the Participant’s lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s estate.
ARTICLE
11 - DEFERRALS
The
Committee may permit a Participant to defer under this Plan or to a separate
deferred compensation arrangement of the Company such Participant’s receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock or Restricted Stock
Units, or the satisfaction of any requirements or goals with respect to
Performance Shares. If any such deferral election is permitted, the Committee
shall, in its sole discretion, establish rules and procedures for such payment
deferrals, which shall be intended to comply with Code Section
409A.
ARTICLE
12 - WITHHOLDING
12.1 Tax
Withholding.
The Company shall have the power and the right to deduct or withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy Federal,
state, and local taxes,
domestic
or foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of any Award.
12.2 Share
Withholding.
With respect to withholding required upon the exercise of Options or SARs, upon
the lapse of restrictions on Restricted Stock, or upon any other taxable event
arising as a result of any Awards, Participants shall, unless other arrangements
are made with the consent of the Committee, satisfy the withholding requirement
by having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to not more than the minimum amount of tax
required to be withheld with respect to the transaction. All such elections
shall be subject to any restrictions or limitations that the Committee, in its
sole discretion, deems appropriate.
ARTICLE
13 - FOREIGN EMPLOYEES
In
order to facilitate the making of any grant of Awards under this Plan, the
Committee may provide for such special terms for Awards to Participants who are
foreign nationals or who are employed by the Company or any Employer outside of
the United States of America as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom, which
special terms may be contained in an Appendix attached hereto. Moreover, the
Committee may approve such supplements to or amendments, restatements or
alternative versions of this Plan as it may consider necessary or appropriate
for such purposes, without thereby affecting the terms of this Plan as in effect
for any other purpose, and the Secretary or other appropriate officer of the
Company may certify any such document as having been approved and adopted in the
same manner as this Plan. No such special terms, supplements, amendments or
restatements, however, shall include any provisions that are inconsistent with
the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
shareholders of the Company.
ARTICLE
14 - AMENDMENT AND TERMINATION
14.1 Amendment
of Plan.
The Committee may at any time terminate or from time to time amend the Plan in
whole or in part, but no such action shall adversely affect any rights or
obligations with respect to any Awards previously granted under the Plan, unless
the affected Participants consent in writing. To the extent required by Section
162(m) or 422 of the Code, other applicable law, and/or any Listing Standards,
no amendment shall be effective unless approved by the shareholders of the
Company.
14.2 Amendment
of Award Agreement.
The Committee may, at any time, amend outstanding Agreements in a manner not
inconsistent with the terms of the Plan; provided, however, except as provided
in Section 14.4, if such amendment is adverse to the Participant, as determined
by the Committee, the amendment shall not be effective unless and until the
Participant consents, in writing, to such amendment. To the extent not
inconsistent with the terms of the Plan, the Committee may, at any time, amend
an outstanding Agreement in a manner that is not unfavorable to the Participant
without the consent of such Participant. Notwithstanding the above provision,
the Committee shall not have the authority to decrease the Option Price of any
outstanding Option, except in accordance with Section 4.3 or unless such an
amendment is approved by the shareholders of the Company.
14.3 Termination
of Plan.
No Awards shall be granted under the Plan on or after the 10th anniversary of
the Effective Date of the Plan.
14.4 Cancellation
of Awards.
The Committee may provide in the Award Agreement that if a Participant engages
in any “Detrimental Activity” (as defined below), the Committee may,
notwithstanding any other provision in this Plan to the contrary, cancel,
rescind, suspend, withhold or otherwise restrict or limit any unexpired,
unexercised, unpaid or deferred Award as of the first date the Participant
engages in the Detrimental
Activity, unless sooner terminated by operation of another term of this Plan or
any other agreement. Without limiting the generality of the foregoing, the
Agreement may also provide that if the Participant exercises an Option or SAR,
receives a Performance Share or Restricted Stock Unit payout, or receives Shares
under an Award at any time during the period beginning six months prior to the
date the Participant first engages in Detrimental Activity and ending six months
after the date the Participant ceases to engage in any Detrimental Activity, the
Participant shall be required to pay to the Company the excess of the then fair
market value of the Shares subject to the Award over the total price paid by the
Participant for such Shares.
For
purposes of this Section, “Detrimental Activity” means any of the following
activities as may be further defined by the Committee in the Award Agreement and
as determined by the Committee in good faith: (i) the violation of any agreement
between the Company and the Participant relating to the disclosure of
confidential information or trade secrets, the solicitation of employees,
customers, suppliers, licensees, licensors or contractors, or the performance of
competitive services; (ii) conduct that constitutes Cause (as defined in Section
2.4 above), whether or not the Participant’s employment is terminated for Cause;
or (iii) other activities that adversely impact the Company or its business in a
material way; provided, that the Committee may provide in the Agreement that
only certain of the restrictions provided above apply for purposes of the Award
Agreement.
14.5 Assumption
or Cancellation of Awards Upon a Transaction.
In the event of a proposed sale of all or substantially all of the assets or
stock of the Company, the merger of the Company with or into another corporation
such that shareholders of the Company immediately prior to the merger exchange
their Shares of stock in the Company for cash and/or shares of another entity or
any other Change in Control or corporate transaction to which the Committee
deems this provision applicable (any such event is referred to as a
“Transaction”), the Committee may, in its discretion, cause each Award to be
assumed or for an equivalent Award to be substituted by the successor
corporation or a parent or subsidiary of such successor corporation (and
adjusted as appropriate).
In
addition or in the alternative, the Committee, in its discretion, may determine
that all or certain types of Awards will be cancelled at or immediately prior to
the time of the Transaction; provided, however, that at least 30 days prior to
the Transaction (or, if not feasible to provide 30 days notice, within a
reasonable period prior to the Transaction), the Committee notifies the
Participant that, subject to rescission if the Transaction is not successfully
completed within a certain period, the Award will be terminated and provides the
Participant, either, at the election of the Committee, (i) a payment (in cash or
Shares) equal to value of the Award, as determined below, or (ii) the right to
exercise the Option or other Award as to all Shares, including Shares as to
which the Option or other Award would not otherwise be exercisable (or with
respect to Restricted Stock, RSUs, Performance Shares or Performance Units,
provide that all restrictions shall lapse) prior to the Transaction. For
purposes of this provision, the value of the Award shall be measured as of the
date of the Transaction and shall equal the amount of cash or Shares that would
be payable to the Participant upon exercise or vesting of the Award, less the
amount of any payment required to be tendered by the Participant upon such
exercise. For example, the amount payable to the Participant upon the
Committee’s decision to cancel outstanding Options would equal the difference
between the Fair Market Value of the Options and the Exercise Price for such
Options, computed as of the date of the Transaction.
ARTICLE
15 - MISCELLANEOUS PROVISIONS
15.1 Restrictions
on Shares.
All certificates for Shares delivered under the Plan shall be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any Listing Standards, and any applicable federal or state
laws, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. In making such
determination, the Committee may rely upon an opinion of counsel for the
Company.
Notwithstanding
any other provision of the Plan, the Company shall have no liability to deliver
any Shares under the Plan or make any other distribution of the benefits under
the Plan unless such delivery or distribution would comply with all applicable
laws (including, without limitation, the requirements of the Securities Act of
1933), and the applicable requirements of any securities exchange or similar
entity.
15.2 Rights
of a Shareholder.
Except as otherwise provided in Article 7 of the Plan and in the Restricted
Stock Agreement, each Participant who receives an Award of Restricted Stock
shall have all of the rights of a shareholder with respect to such Shares,
including the right to vote the Shares to the extent, if any, such Shares
possess voting rights and receive dividends and other distributions. Except as
provided otherwise in the Plan or in an Agreement, no Participant awarded an
Option, Stock Appreciation Right, Restricted Stock Unit or Performance Share
shall have any right as a shareholder with respect to any Shares covered by such
Award prior to the date of issuance to him or her of a certificate or
certificates for such Shares.
15.3 No
Implied Rights.
Nothing in the Plan or any Award shall confer upon any Participant any right to
continue in the service of the Employer, or interfere in any way with the right
of the Employer to terminate the
Participant’s
employment or other service relationship for any reason at any time. Unless
otherwise determined by the Committee, no Award shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan, severance program, or other arrangement of the Employer for the benefit of
its employees. No Participant shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires a right
to receive payments from the Company under the Plan, such right shall, except as
otherwise provided by the Committee, be no greater than the right of an
unsecured general creditor of the Company.
15.4 Compliance
with Laws.
(a) At
all times when the Committee determines that compliance with Section 162(m) of
the Code is required or desirable, all Awards to Named Executive Officers shall
comply with the requirements of Section 162(m) of the Code. In addition, in the
event that changes are made to Section 162(m) of the Code to permit greater
flexibility with respect to any Awards, the Committee may, subject to the
requirements of Article 14, make any adjustments it deems
appropriate.
(b) The
Plan and the grant of Awards shall be subject to all applicable federal and
state laws, rules, and regulations and to such approvals by any United States
government or regulatory agency as may be required. Any provision herein
relating to compliance with Rule 16b-3 under the Exchange Act shall not be
applicable with respect to participation in the Plan by Participants who are not
Insiders.
15.5 Successors.
The terms of the Plan shall be binding upon the Company, and its successors and
assigns (whether by purchase, merger, consolidation or otherwise).
15.6 Tax
Elections.
Each Participant agrees to give the Committee prompt written notice of any
election made by such Participant under Section 83(b) of the Code or any similar
provision thereof.
15.7 Legal
Construction.
(a) Severability.
If any provision of this Plan or an Agreement is or becomes or is deemed
invalid, illegal or unenforceable in any jurisdiction, or would disqualify the
Plan or any Agreement under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws or
if it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Agreement, it shall
be stricken and the remainder of the Plan or the Agreement shall remain in full
force and effect.
(b) Gender
and Number.
Where the context admits, words in any gender shall include the other gender,
words in the singular shall include the plural and words in the plural shall
include the singular.
(c) Governing
Law.
To the extent not preempted by federal law, the Plan and all Agreements
hereunder, shall be construed in accordance with and governed by the laws of the
State of Tennessee.
(d) Compliance
with Code Section 409A.
The Plan is intended to satisfy the requirements of Code Section 409A and any
regulations or guidance that may be adopted thereunder from time to time,
including any transition relief available under applicable guidance related to
Code Section 409A. The Plan may be amended or interpreted by the Committee as it
determines necessary or appropriate in accordance with Code Section 409A and to
avoid a plan failure under Code Section 409A(a)(1).
IN
WITNESS WHEREOF,
this Plan is executed as of the 27th day of April, 2005.
| MILLER INDUSTRIES, INC | ||
| |
|
|
| By: | /s/ J. Vincent Mish | |
| J. Vincent Mish | ||
| Executive Vice President and Chief Financial Officer | ||
ATTEST:
/s/
Frank
Madonia
Secretary