SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
SPARTAN MOTORS, 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):
[ ]$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
(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 file fee is calculated and state how it was determined):
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
(5) Total fee paid:
___________________________________________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
___________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
(3) Filing party:
___________________________________________________________________________
(4) Date filed:
___________________________________________________________________________
[SPARTAN MOTORS INC. LOGO]
1000 Reynolds Road
Post Office Box 440
Charlotte, Michigan 48813
April 25, 1996
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of Spartan Motors, Inc. on Wednesday, June 5, 1996, at 5:30
p.m. local time. The annual meeting will be held in the Plant IV building
at Spartan Motors, Inc. Corporate Headquarters located at 1549 Mikesell
Street, Charlotte, Michigan.
On the following pages you will find the Notice of Annual Meeting of
Shareholders and the Proxy Statement. The Proxy Statement and enclosed
form of proxy are being furnished to shareholders on or about April 25,
1996. At the annual meeting, in addition to voting, you will hear a report
on Spartan Motor's activities and outlook for the future.
It is important that your shares be represented at the annual
meeting, regardless of the size of your holdings. Whether or not you plan
to attend the annual meeting, please SIGN, DATE and RETURN AS SOON AS
POSSIBLE the enclosed form of proxy. Sending a proxy will not affect your
right to vote in person in the event you attend the meeting.
Sincerely,
/s/ George W. Sztykiel
George W. Sztykiel
Chairman of the Board of Directors
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
[SPARTAN MOTORS INC. LOGO]
1000 Reynolds Road
Post Office Box 440
Charlotte, Michigan 48813
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
The Annual Meeting of Shareholders of Spartan Motors, Inc. will be
held on Wednesday, June 5, 1996, at 5:30 p.m. local time, in the Plant IV
building at Spartan Motors, Inc. Corporate Headquarters located at
1549 Mikesell Street, Charlotte, Michigan, for the following purposes:
(1) To elect two directors for three-year terms expiring in
1999.
(2) To adopt Restated Articles of Incorporation.
(3) To approve an amendment to the 1988 Nonqualified Stock
Option Plan.
(4) To approve the 1996 Stock Option and Restricted Stock Plan
for Outside Market Advisors.
(5) To transact such other business as may properly come before
the annual meeting.
Shareholders of record at the close of business on April 12, 1996,
are entitled to notice of and to vote at the annual meeting.
A copy of the Annual Report to Shareholders for the year ended
December 31, 1995, is enclosed with this Notice. The following Proxy
Statement and enclosed form of proxy are being furnished to shareholders
on and after April 25, 1996.
By Order of the Board of Directors
/s/ James R. Jenks
Charlotte, Michigan James R. Jenks
April 25, 1996 Secretary/Treasurer
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
SPARTAN MOTORS, INC.
1000 REYNOLDS ROAD
POST OFFICE BOX 440
CHARLOTTE, MICHIGAN 48813
ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1996
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are being furnished to
shareholders of Common Stock of Spartan Motors, Inc. ("Spartan" or the
"Company") on and after April 25, 1996, in connection with the solicitation
of proxies by the Board of Directors to be voted at the Annual Meeting of
Shareholders to be held on Wednesday, June 5, 1996, and at any adjournment
of that meeting. The annual meeting will be held in the Plant IV building
at Spartan Corporate Headquarters located at 1549 Mikesell Street,
Charlotte, Michigan, at 5:30 p.m. local time.
The purpose of the annual meeting is to consider and vote upon:
(i) election of two directors for three-year terms expiring in 1999;
(ii) adoption of Restated Articles of Incorporation; (iii) approval of
amendment to the 1988 Nonqualified Stock Option Plan; and (iv) approval
of the 1996 Stock Option and Restricted Stock Plan for Outside Market
Advisors. Proxies in the accompanying form, if properly executed, duly
returned to the Company and not revoked, will be voted at the annual
meeting. If a shareholder specifies a choice, the shares represented by
proxy will be voted as specified. If no choice is specified, the shares
represented by proxy will be voted for the election of all nominees for
director named in this Proxy Statement, for adoption of the Restated
Articles of Incorporation, for approval of the amendment to the Company's
1988 Nonqualified Stock Option Plan, for approval of the 1996 Stock Option
and Restricted Stock Plan for Outside Market Advisors and in accordance
with the discretion of the persons named as proxies on any other matters
that may come before the meeting or any adjournment. For purposes of
determining the presence or absence of a quorum for the transaction of
business at the annual meeting, all shares for which a proxy or vote is
received, including abstentions and shares represented by a broker vote
on any matter, will be counted as present and represented at the meeting.
Any shareholder who returns a proxy in the enclosed form may revoke
it at any time before it is exercised by written notice delivered to the
Secretary of the Company at the address set forth above or by attending and
voting at the annual meeting.
The Company has no knowledge of any matter to be presented for
consideration at the annual meeting other than the matters stated in the
Notice of Annual Meeting of Shareholders. If any other matter should
properly come before the meeting, the persons named in the proxy will
have discretionary authority to vote in accordance with their judgment.
ELECTION OF DIRECTORS
The Board of Directors proposes that the following two individuals
be elected as directors for three-year terms expiring at the 1999 annual
meeting:
George W. Sztykiel
William F. Foster
This Proxy Statement contains more information about the director
nominees. Both nominees are presently directors of the Company whose terms
will expire at the annual meeting. The persons named as proxies intend to
vote for the election of both of the named nominees. Each of the nominees
has consented to being named in this Proxy Statement and to serve if elected.
In the event that either nominee is unable to serve or is otherwise
unavailable for election, which is not contemplated, the Board of Directors
may or may not select a substitute nominee. If a substitute nominee is
selected, all proxies will be voted for the election of the substitute
nominee designated by the Board of Directors. If a substitute is not
selected, all proxies will be voted for the election of the remaining
nominee. Proxies will not be voted for a greater number of persons than
the number of nominees named above.
A plurality of the shares present in person or represented by proxy
and voting on the election of directors is required to elect directors.
For the purpose of counting votes on the election of directors,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted on the election, and the number of shares of which
a plurality is required will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
ADOPTION OF RESTATED ARTICLES OF INCORPORATION
The Board of Directors has unanimously approved, and recommends that
the Company's shareholders adopt, Restated Articles of Incorporation (the
"Restated Articles"). The Board of Directors approved the Restated Articles
to integrate the existing Articles of Incorporation with several subsequent
amendments, to amend certain provisions to reflect changes in the Michigan
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Business Corporation Act ("MBCA") which have been adopted since the original
Articles of Incorporation were prepared, to restate the Company's current
practice of a classified Board of Directors and to authorize a class of
preferred stock.
The following discussion summarizes the material changes to the
Company's existing Articles of Incorporation which would be effected by
adoption of the proposed Restated Articles. This summary is qualified in
its entirety by reference to the text of the Restated Articles, a complete
copy of which is included as Appendix A to this Proxy Statement.
The Board of Directors proposes to amend Article III of the
existing Articles of Incorporation in its entirety. Restated Article
III designates a par value of the Company's common stock. In 1992, the
Articles of Incorporation were amended to delete any reference to par value
for Spartan's common stock ("Common Stock"). This amendment was in response
to a 1989 change to the MBCA which eliminated the legal significance of par
value in the State of Michigan.
The Company does business throughout the United States. While the
legal significance of par value has been eliminated in the State of
Michigan, a number of states continue to attach meaning to the par value
concept. For example, some states assess franchise taxes on a corporation
based on the par value of the corporation's outstanding stock and the
number of shares outstanding. If a corporation does not have a par value
for its outstanding stock, some states assign a value and calculate
franchise taxes based on that imputed value. With no par value for the
Company's stock, other states' statutes could assign a predetermined, and
potentially higher, value to the Company's outstanding shares for purposes
of calculating franchise taxes or fees for qualification to do business in
such states. The Company could not control these assessments, which could
impact the amount of the Company's operating revenues or potential future
markets. Therefore, although par value does not have direct legal
significance in the State of Michigan, the Board of Directors believes that
it is advisable and in the best interests of the Company and its
shareholders to assign a low par value to its Common Stock.
The restatement would add a provision authorizing the Board of
Directors to issue up to 2,000,000 shares of preferred stock. The Board of
Directors would be authorized to issue preferred stock without additional
shareholder approval, with such relative rights and preferences as may be
established by resolution of the Board of Directors. The terms of the
securities to be authorized, including dividend or interest rates, conversion
prices, voting rights, redemption prices, maturity dates and similar matters
would be determined by the Board of Directors. No class of preferred stock
is presently authorized by the Company's Articles of Incorporation.
Under the Restated Articles, the Board of Directors would be
empowered to determine the designations and relative voting, distribution,
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dividend, liquidation and other rights, preferences and limitations of the
preferred stock, including, among other things: (i) the designation of each
class or series and the number of shares in the class or series; (ii) the
dividend rights, if any, of the class or series; (iii) the voting rights,
if any (in addition to any prescribed by law), of the holders of shares of
the class or series; (iv) the rights, if any, to convert or exchange the
shares into or for other securities; (v) the conditions or restrictions, if
any, on specified actions of the Company affecting the rights of the
shares; (vi) the redemption provisions, if any, of the shares; (vii) the
preference, if any, to which any class or series would be entitled in the
event of the liquidation or distribution of the Company's assets; and
(viii) the provisions of a sinking fund, if any, provided for the
redemption of the preferred stock.
The Board of Directors believes that the availability of preferred
stock would provide the Company with flexibility of action for possible
future financing transactions, acquisitions, employee benefit plans and
other corporate purposes. Such purposes might include meeting requirements
for working capital or capital expenditures through issuance of additional
shares. Authorization of preferred stock would permit the Board of
Directors to choose the exact terms of the class or series at the time of
issuance to promptly respond to investor preferences, developments in types
of preferred stock, market conditions and the nature of a specific
transaction.
It may be advantageous in some cases to pay investors dividends on
equity rather than interest on debt. Preferred stock would allow the
Company to offer equity that is potentially less dilutive of the relative
equity value of the holders of its Common Stock than would be the case if
additional shares of Common Stock were issued. Preferred stock typically
does not enjoy dividend growth corresponding to growth in a corporation's
earnings. In addition, preferred stock can be subject to redemption, which
could permit the Company to limit the dilutive effect on the holders of
its Common Stock.
If the Restated Articles are adopted, no further authorization for
the issuance of preferred stock by shareholder vote would be required prior
to issuance of the shares by the Board of Directors. The Board of Directors
does not presently have any plan or proposal to issue preferred stock.
Opportunities may arise, however, that require prompt action, such as
properties or businesses becoming available for acquisition or favorable
market conditions existing for the sale of a particular type of preferred
stock. The delay and expense of seeking shareholder approval at the time of
issuance could deprive the Company and its shareholders of the ability to
effectively benefit from such an opportunity.
The Board of Directors could authorize shares of preferred stock
which have voting, dividend or other preferences over shares of its Common
Stock, and the issuance of preferred shares could dilute the voting power,
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equity position or share of earnings of common shareholders. Although the
Board of Directors has no present plan or proposal to do so, preferred
stock could be used to discourage or impede an attempt to obtain control of
the Company by merger, tender offer, proxy contest or other means, and
could be used to inhibit the removal of incumbent management. At this time,
management of the Company is not aware of any attempts to obtain control of
the Company.
The Restated Articles would add an article covering selection,
replacement and removal of members of the Board of Directors. As proposed,
Article VI would provide that any vacancy in the Board of Directors caused by
resignation, removal, death, disqualification or other incapacity, and any
newly created directorships resulting from an increase in the number of
directors, would be filled by a majority vote of directors remaining in
office, whether or not a quorum is present. This language is similar to the
language in the Company's bylaws. Each director chosen to fill a vacancy will
hold office until the next election of the class for which such director was
chosen. The Restated Articles, unlike the bylaws, do not provide for a vacancy
to be filled by a shareholder vote.
Proposed Article VI, which provides for a classified Board of
Directors, restates the present and historical practice of the Company.
The Board of Directors currently is divided into classes of three, each
as nearly in number as possible, with one class being elected for a three-
year term each year.
Classified board provisions affect every election of directors and
are not triggered by the occurrence of a particular event. This system of
electing directors may make it more time consuming for shareholders to
change the majority of directors, potentially requiring two successive
annual meetings to effect the change, rather than one. The Board of
Directors believes that the longer time required to elect a majority of
a classified Board will help to assure the continuity and stability of the
Company's management and policies in the future, because a majority of the
directors at any given time will have prior experience as directors of the
Company. The Company has not experienced any significant problems to date
with the continuity and stability of the Company's management and policies.
Under the proposed Article VI, directors could be removed only for
cause, which would be determined by an affirmative vote of two-thirds of
the total number of directors. A director who is subject to a removal
determination is not entitled to vote on the issue of removal. The removal
procedure in the Restated Articles differs from the removal provision in the
Company's bylaws, which states that directors may be removed, with or
without cause, by an affirmative vote of the holders of a majority of the
Company's stock. As the provision exists in the bylaws, it is possible that
shareholders could remove all directors at the same time upon an
affirmative vote, which would in effect nullify the Company's provision
of a classified Board. Proposed Article VI's provisions relating to the removal
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of directors and the filling of vacancies on the Board of Directors could
inhibit a third party from removing incumbent directors without cause and
simultaneously gaining control of the Board by filling the vacancies created
by removal with its own nominees.
The Restated Articles would also revise the indemnification
provision contained in the existing Articles of Incorporation. Subsequent
to the time that the existing Articles of Incorporation were prepared, the
provisions of the MBCA covering indemnification were amended. Article VII
of the Restated Articles reflects these changes and updates the
indemnification provision in the existing Articles of Incorporation.
The Restated Articles would require the Company to indemnify directors
and executive officers of the Company to the full extent permitted by law
in connection with any actual or threatened action, suit or proceeding,
whether derivative or nonderivative. The Restated Articles permit the Board
of Directors to authorize the Company to indemnify individuals who are not
directors or executive officers of the Company.
The indemnification provision in the proposed Restated Articles,
like the indemnification provision in the existing Articles of
Incorporation, applies to directors and executive officers of the Company
and, thus, directors and executive officers of the Company may be deemed to
have an interest in approval of the Restated Articles.
The affirmative vote of a majority of the outstanding shares
entitled to vote at the Annual Meeting of Shareholders is required to
approve the proposed Restated Articles. For the purpose of counting votes
on this proposal, abstentions, broker non-votes and other shares not voted
have the same effect as a vote against the proposal. Unless specific
instructions to the contrary are indicated, the shares represented by
proxies will be voted FOR approval of the Restated Articles.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE RESTATED ARTICLES OF INCORPORATION
APPROVAL OF AMENDMENT TO
1988 NONQUALIFIED STOCK OPTION PLAN
The Board of Directors believes that it is in the best interests of
the Company to amend its 1988 Nonqualified Stock Option Plan (the
"Nonqualified Stock Option Plan") to permit the Company to grant tax
benefit rights and to allow stock-based withholding. Therefore, on
February 27, 1996, the Board of Directors adopted, subject to shareholder
approval, a resolution amending the Nonqualified Stock Option Plan (the
"Amended Plan").
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The Amended Plan would continue to be used primarily to grant stock
options to selected officers, directors and other key employees. A stock
option is the right to purchase a specified number of shares of common
stock for a stated price at specified times. In addition to granting stock
options, the Amended Plan would also permit the committee of the Board of
Directors which administers the Amended Plan (the "Committee") to grant tax
benefit rights to participants of the Amended Plan. Stock options and tax
benefit rights are referred to as "Incentive Awards" in this proposal. By
combining Incentive Awards in a single plan, the Board of Directors intends
that the Amended Plan would provide greater flexibility of action to the
Committee. This flexibility would allow the Committee to tailor the
Company's specific long-term incentives to carry out the objectives of the
Amended Plan, and, in turn, further the interests of the Company's
shareholders.
The shareholders' vote is required solely to approve the Amended
Plan. If the shareholders do not approve the Amended Plan, the
Nonqualified Stock Option Plan, as in effect immediately prior to the
Annual Meeting of Shareholders, will remain in effect according to its
terms. The following information is a summary of the principal features of
the Amended Plan, which is qualified in its entirety by reference to the
terms of the Amended Plan, the complete text of which is attached as
Appendix B to this Proxy Statement.
Persons eligible to receive Incentive Awards under the Amended Plan
(with certain limitations discussed below) include corporate officers
(currently seven persons), including the individuals listed in the Summary
Compensation Table presented in this Proxy Statement, other key employees
(currently approximately 500 persons) of the Company and directors who are
not employees of the Company (currently three persons) (collectively,
"Participants"). As originally adopted, a maximum of 400,000 shares of
Common Stock (subject to certain anti-dilution adjustments) were available
for Incentive Awards under the Nonqualified Stock Option Plan. On
September 30, 1991 and June 30, 1993, the Company issued a three-for-two
stock split, increasing the aggregate number of shares available under the
Nonqualified Stock Option Plan to 900,000 shares. As of March 15, 1996,
295,925 shares of Common Stock remain available for Incentive Awards under
the Amended Plan. Shares previously issued under the Nonqualified Stock
Option Plan are, and shares to be issued under the Amended Plan would be,
authorized and unissued shares.
Directors, officers and key employees of the Company may receive
awards under the Amended Plan and, thus, they may be deemed to have an
interest in the Amended Plan. The Amended Plan will not be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and will not be subject to the Employee Retirement Income Security
Act of 1974. Stock options granted to Participants under the Amended Plan
will not be incentive stock options as defined in Section 422(b) of the
Code. Stock options may be granted at any time prior to the termination of
the Amended Plan according to its terms or by Committee action.
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Subject to adjustments provided in the Amended Plan, the Company may
not issue options for more than 16,000 shares (36,000 as adjusted through
June 5, 1996) under this Amended Plan or any other plan of the Company to
any one person in any calendar year. This limit on the total number of
options which may be issued will allow the Company's stock option plans to
qualify under Section 162(m) of the Code, so that the Company would not
lose its tax deduction under certain circumstances for compensation
realized by Participants under the Plan.
The Amended Plan will be administered by the Committee, which is
appointed by the Board of Directors. Except for certain automatic grants
of stock options to directors who are not employees of the Company
("Nonemployee Directors"), the Committee will determine, subject to the
terms of the Amended Plan, the persons to receive Incentive Awards, the
amount of Incentive Awards to be granted to each person, the terms of each
grant and any other considerations necessary or advisable for
administration of the Amended Plan.
The Committee will set forth the terms of individual stock option
grants in stock option agreements, which will contain the terms and
conditions, consistent with the provisions of the Amended Plan, as the
Committee deems appropriate. The terms and conditions may contain
restrictions, which may include vesting requirements to encourage long-term
ownership of shares. The Company will not receive cash consideration upon
the award of the stock options. Except for certain automatic grants to
Nonemployee Directors, the option price per share will be determined by the
Committee; provided, that the option price for an option will be a price
equal to or higher than 85% of the "market value" of Common Stock on the
date of grant. "Market value" is the mean of the highest and lowest sales
prices at which shares of Common Stock were exchanged on The NASDAQ Stock
Market (NASDAQ) on the date of grant, or if no shares were traded on that
date, the last preceding date on which shares were traded. On March 15,
1996, the mean of the highest and lowest sales prices of the Company's
Common Stock on NASDAQ was $7.91 per share.
When exercising all or a portion of an option, a Participant may pay
the exercise price with cash or shares of Common Stock, if the Committee
consents, or other consideration substantially equal to cash. If the
Participant uses shares of Common Stock to pay the exercise price, the
value of shares received upon exercise may be used for further exercises in
a single transaction, which would permit a Participant to fully exercise an
option with a relatively small initial cash or stock payment. Although the
term of each stock option will be determined by the Committee, no stock
option will be exercisable under the Amended Plan after 10 years from the
date it was granted.
In addition to the options which the Committee can grant in its
discretion, the Amended Plan provides that options to purchase 3,500 shares
of Common Stock will be automatically granted to each Nonemployee Director
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on June 30 and December 31 of each year in which the Plan is in effect. The
exercise price of each option awarded to a Nonemployee Director will be
100% of the "fair market value" at the date of grant.
Stock options granted under the Amended Plan generally would be
exercisable for 90 days after termination of a Participant's employment or
directorship with the Company. If an option holder dies, the holder's
successor in interest may exercise the option for one year after the
Participant's date of death.
Under current federal income tax laws, a Participant will not
realize income when an option is granted under the Amended Plan. If a
Participant exercises a stock option under the Amended Plan, the
Participant will recognize compensation income in the year of exercise
equal to the difference between the stock option price and the fair market
value of the shares on the date of exercise. The Company will receive a
corresponding deduction for federal income tax purposes and the
Participant's tax basis in the shares acquired will be increased by the
amount of compensation income recognized. Sale of the stock after exercise
will result in recognition of short- or long-term capital gain (or loss).
Unlike the Nonqualified Stock Option Plan, the Amended Plan
authorizes the Committee to grant tax benefit rights. Similar to the terms
governing stock options, the Committee is authorized to determine the
Participants who will receive tax benefit rights and the terms and
conditions of tax benefit rights.
When a Participant exercises a stock option under the Amended Plan,
the Company receives a tax deduction equal to the amount of compensation
income recognized by the Participant. A tax benefit right entitles a
Participant to receive a cash payment from the Company or a subsidiary to
encourage the Participant to exercise his or her options. The amount of
the payment may not exceed an amount calculated by multiplying the ordinary
income, if any, realized by the Participant for federal tax purposes
resulting from the exercise of a non-incentive stock option by the maximum
federal income tax rate (including any surtax or similar charge or
assessment) for corporations, plus the applicable state and local tax
imposed on the exercise of the option. Thus, the Participant can share in
an additional benefit that results from the exercise of an option.
Tax benefit rights may be granted only with respect to a stock
option issued and outstanding or to be issued under the Amended Plan or any
other existing plan approved by the shareholders. A director, officer or
key employee subject to Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), may not exercise an option to which a tax
benefit right has attached for a period of six months from the date that
the tax benefit right is granted. The Committee may amend, cancel, limit
the term of, or limit the amount payable under, a tax benefit right at any
time prior to the exercise of the corresponding stock option, unless the
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terms of the tax benefit right provide otherwise. The net amount of a tax
benefit right, subject to withholding, may be used to pay a portion of the
stock option price, unless otherwise provided by the Committee.
Tax benefit rights can encourage the exercise of options and holding
of shares to meet the objectives of the Company's option plans. A tax
benefit right permits a Participant to hold his or her shares upon exercise
by providing funds for payment of taxes. Furthermore, increased option
exercises can supplement the Company's cash flow and expand the number of
outstanding shares.
The second difference between the Nonqualified Stock Option Plan and
the Amended Plan is that the Amended Plan allows stock-based withholding.
Participants generally are subject to certain tax obligations upon the
exercise of a nonqualified stock option. The Nonqualified Stock Option Plan
permits the Company to withhold certain tax obligations from a
Participant's income but does not allow the Company to withhold these
amounts in Common Stock. The Amended Plan, however, will permit the Company
to satisfy the Participant's tax withholding obligations, unless the
Committee determines otherwise, by withholding Common Stock to be received
upon the exercise of an option or by delivering previously owned Common
Stock to the Company ("Stock-based Withholding").
Stock-based Withholding will offer the Company greater flexibility
in realizing the goals of the Nonqualified Stock Option Plan. It will
allow the Company to satisfy tax withholding requirements without requiring
a Participant to use cash or cash-based compensation to satisfy the
Participant's tax liabilities.
Because the specific Participants in the Amended Plan and the market
value of Common Stock on the grant date presently cannot be determined, the
future benefits or amounts that Participants will receive under the Amended
Plan are not determinable. In addition, the benefits payable under the
Amended Plan for options that will be granted this year had the options
been granted last year are also not determinable except for stock options
that would be granted automatically to Nonemployee Directors. The benefits
under the Amended Plan as of March 15, 1996 for the options granted last
year to the Nonemployee Directors is as follows:
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PLAN BENEFITS
NONQUALIFIED STOCK OPTION PLAN
NUMBER OF
DOLLAR VALUE AT SECURITIES
GROUP MARCH 15, 1996 UNDERLYING OPTIONS
Nonemployee Director Group
(three persons) -- 21,000
___________________________
The dollar value of a stock option is determined by calculating the
spread between the option's exercise price and the current value of
the Company's Common Stock. The dollar value is calculated for
directors serving on the date of grant (June 30 and December 31, 1995)
as the difference between the market value of Common Stock on the date
of grant and the market value as of March 15, 1996, if higher.
Includes stock options to purchase 3,500 shares of Common Stock
granted on June 30 and December 31, 1995 to three Nonemployee
Directors serving on that date.
The Board of Directors may suspend or terminate the Amended Plan at
any time as the Board of Directors deems advisable to conform to any
changes in law or to further the best interests of the Company; provided,
however, that without shareholder approval an amendment shall not
(i) increase the maximum number of shares for which options may be granted
under the Amended Plan (except for certain anti-dilution adjustments);
(ii) change the option price; (iii) change provisions regarding an option's
expiration date; or (iv) change the termination date of the Amended Plan.
The Nonqualified Stock Option Plan became effective on March 28, 1988
and will terminate on March 28, 1998. No option or tax benefit right may
be granted during any suspension or after termination of the Amended Plan.
The affirmative vote of the holders of a majority of the shares of
Common Stock voting in person or by proxy on this proposal is required to
approve the Amended Plan. For purposes of counting votes on this proposal,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted on this proposal, and the number of shares of which
a majority is required will be reduced by the number of shares not voted.
-11-
Unless specific instructions to the contrary are indicated, the shares
represented by proxies will be voted FOR approval of the Amended Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE
1988 NONQUALIFIED STOCK OPTION PLAN
APPROVAL OF 1996 STOCK OPTION AND RESTRICTED
STOCK PLAN FOR OUTSIDE MARKET ADVISORS
The Board of Directors firmly believes that the Company's long-term
interests are best advanced by aligning the interests of its shareholders
with the interests of individuals outside the Company who provide necessary
marketing, promotion and product development advice and counsel.
Therefore, to encourage these individuals to provide advice and counsel,
and in recognition of the contributions to the long-term performance and
growth of the Company made by these individuals and because no current plan
of the Company permits the Company to grant stock options or restricted
stock to persons who are not employees or directors of the Company, the
Board of Directors adopted on February 27, 1996, subject to shareholder
approval, the Stock Option and Restricted Stock Plan for Outside Market
Advisors (the "Plan").
Although the Plan primarily would be used to grant stock options, the
Plan also permits the award of restricted stock. Stock options and
restricted stock are referred to as "Incentive Awards" in this proposal.
By combining these incentives in a single plan, the Board of Directors
believes that the Plan would provide significant flexibility to the Stock
Option Plan Committee of the Board of Directors (the "Committee"), or such
other committee as the Board of Directors may designate to administer the
Plan. This flexibility would allow the Committee to tailor Incentive
Awards to best promote the objectives of the Plan, and in turn promote the
interests of the Company's shareholders.
The principal features of the Plan are described in the following
summary, which is qualified in its entirety by reference to the terms of
the Plan, the complete text of which is attached as Appendix C to this
Proxy Statement.
Outside Market Advisors of the Company are eligible to receive
Incentive Awards under the Plan. An Outside Market Advisor is an
individual who, by reason of his or her position or past or future dealings
or knowledge of the Company, is in a position to provide marketing,
promotion and product development advice and counsel, but who is not an
employee or director of the Company. The Board of Directors will determine
the persons who are considered Outside Market Advisors or the method used
-12-
to ascertain the persons considered to be Outside Market Advisors. The
Board of Directors estimates that the group of Outside Market Advisors will
consist of approximately 30 persons. The number of persons who are Outside
Market Advisors, however, may change as the Company's business develops and
evolves. After the Board of Directors determines the persons eligible to
be Outside Market Advisors, the Committee will select the Outside Market
Advisors who may participate in the Plan ("Outside Market Participants").
A maximum of 200,000 shares of Common Stock (subject to certain
anti-dilution adjustments) will be available for Incentive Awards under the
Plan, with a maximum of 30,000 shares available for issuance in any one
year. Shares to be issued under the Plan will be authorized and unissued
shares. The Plan will not be qualified under Section 401(a) of the Code
and will not be subject to the Employee Retirement Income Security Act of
1974.
The Plan will be administered by the Committee, which is comprised of
two or more directors who are not employees of the Company and who are
deemed "disinterested persons" under the Securities Act of 1933 (the
"Securities Act"). The Committee will determine, subject to the terms of
the Plan, the persons to receive Incentive Awards, the amount of Incentive
Awards to be granted to each person, the terms of each grant and all other
considerations necessary or advisable for administration of the Plan. The
Committee may amend the terms of Incentive Awards in a manner consistent
with the Plan; provided, however, that an amendment which relates to a
particular Incentive Award will not be effective without the consent of the
relevant Outside Market Participant, except to the extent the amendment
operates solely to the benefit of the Outside Market Participant.
Under the Plan, Outside Market Participants may be granted stock
options, which will not be incentive stock options as defined in Section
422(b) of the Code. Stock options may be granted at any time prior to the
termination of the Plan according to the Plan's terms or by action of the
Committee.
The Committee will set forth the terms and conditions of individual
option grants in stock option agreements, which will contain the terms and
conditions, consistent with the provisions of the Plan, as the Committee
determines to be appropriate. The stock options may contain restrictions,
which can include vesting requirements to encourage long-term ownership of
the Company's Common Stock. The Company will receive no cash consideration
upon the award of options. The option price per share will be determined
by the Committee; provided, however, that the option price will be a price
equal to or higher than the "market value" of Common Stock on the date of
grant. "Market value" is the mean between the highest and lowest reported
transaction price of shares of Common Stock as reported on NASDAQ on the
date of grant, or if no shares were traded on that date, the final
transaction price on the last preceding date on which shares were traded.
On March 15, 1996, the mean transaction price of the Company's Common Stock
on NASDAQ was $7.91 per share.
-13-
When exercising all or a portion of an option, an Outside Market
Participant may pay the exercise price with cash or, with the consent of
the Committee, shares of Common Stock. If an Outside Market Participant
uses shares of Common Stock to pay the exercise price, the value of shares
received upon exercise may be used for further exercises in a single
transaction, which would permit an Outside Market Participant to fully
exercise an option with a relatively small initial cash or stock payment.
The Committee may also authorize payment of all or a portion of the option
price in the form of a promissory note or installments on terms as the
Committee may approve. The Board of Directors may restrict or suspend the
power of the Committee to permit such loans and may require that the
Outside Market Participant provide adequate security.
Although the Committee will determine the term of each stock option,
an Outside Market Participant may not exercise an option under the Plan
after 10 years from the date the option was granted. Options generally
will be exercisable for limited periods of time if an option holder ceases
to be an Outside Market Advisor due to death or disability. If an option
holder ceases to be an Outside Market Advisor for any other reason or if
the Committee determines that the Outside Market Participant has entered
into "competition" with the Company (as defined in the Plan), the option
shall no longer be exercisable and the option holder will forfeit all
rights to exercise any outstanding options. Options granted to Outside
Market Participants under the Plan may not be transferred except by will or
by the laws of descent and distribution.
Because the specific Outside Market Participants and the market value
of Common Stock on the grant date cannot presently be determined, the
benefits or amounts that Outside Market Participants will receive under the
Plan in the future are not determinable. Similarly, the benefits or
amounts that would have been received by Outside Market Participants had
the Plan been in effect during the last completed fiscal year are not
determinable.
Under current federal income tax laws, an Outside Market Participant
will not recognize income when an option is granted. If an Outside Market
Participant exercises stock options, the Outside Market Participant will
recognize compensation income in the year of exercise equal to the
difference between the stock option price and the fair market value of the
shares on the date of exercise. The Company will receive a corresponding
deduction for federal income tax purposes and the Outside Market
Participant's tax basis in the shares acquired will be increased by the
amount of compensation income recognized. Sale of the stock after exercise
will result in recognition of short- or long-term capital gain (or loss).
In addition to the authority to grant stock options under the Plan,
the Plan authorizes the Committee to award restricted stock. Restricted
stock will be subject to such terms and conditions, consistent with the
provisions of the Plan, as the Committee may determine. As with stock
-14-
option grants, the Committee will set forth the terms of individual awards
of restricted stock in restricted stock agreements. If the Committee
determines that the Outside Market Participant has entered into competition
with the Company or if the Outside Market Participant ceases to be an
Outside Market Advisor for any reason other than death or disability, any
shares of restricted stock still subject to restrictions will be forfeited.
Unless the Committee provides otherwise in a restricted stock agreement, if
an Outside Market Participant ceases to be an Outside Market Advisor during
the restricted period by reason of death or disability, the restrictions on
the Outside Market Participant's shares will terminate automatically as of
the date of death or disability.
Unless authorized by the Committee, an Outside Market Participant may
not sell, exchange, transfer, pledge, assign or otherwise dispose of
restricted stock other than to the Company or by will or the laws of
descent or distribution. In addition, the Committee may impose other
restrictions on shares of restricted stock. Holders of restricted stock,
however, will enjoy all other rights of shareholders with respect to
restricted stock, including the right to vote restricted shares at
shareholders' meetings and the right to receive all dividends paid with
respect to restricted stock. Any securities received by a holder of
restricted stock pursuant to a stock dividend, stock split,
recapitalization or reorganization will be subject to the same terms,
conditions and restrictions that are applicable to the restricted stock for
which the shares are received.
Generally, an Outside Market Participant will not recognize income
upon the award of restricted stock. An Outside Market Participant will
recognize compensation income, however, on the value of restricted stock at
the time the restricted stock vests (when the restrictions lapse), at which
time the Company will be entitled to a corresponding deduction for federal
income tax purposes. If restricted stock is forfeited by an Outside Market
Participant, the Outside Market Participant will not recognize income, and
the Company will not receive a deduction. Prior to the lapse of the
restrictions, dividends paid on restricted stock will be reported as
compensation income to the Outside Market Participant, and the Company will
receive a corresponding deduction.
An Outside Market Participant may, within 30 days after the date of an
award of restricted stock, elect under Section 83(b) of the Code to report
compensation income for the tax year in which the award of restricted stock
occurred. If the Outside Market Participant makes this election, the
amount of compensation income will be the value of the restricted stock at
the time of the award. Any later appreciation in the value of the
restricted stock will be treated as capital gain and realized only upon the
sale of the restricted stock. Dividends received after the election will
be taxable as dividends and will not be treated as additional compensation
income. If, however, restricted stock is forfeited after the Outside
Market Participant makes an election as described above, the Outside Market
-15-
Participant will not be allowed any deduction for the amount earlier
recognized as income. Upon the sale of restricted stock, an Outside Market
Participant will realize capital gain (or loss) in the amount of the
difference between the sale price and the value of the stock previously
reported by the Outside Market Participant as compensation income.
The Board of Directors may terminate the Plan at any time, and may
amend the Plan as it deems proper and in the best interests of the Company,
provided that without shareholder approval an amendment may not materially
increase the number of shares that may be issued under the Plan, materially
modify the eligibility requirements, reduce the option price (except for
adjustments as permitted in the Plan) or impair any outstanding Incentive
Award without the consent of the Outside Market Participant, except
according to the terms of the Incentive Award. Subject to shareholder
approval, the Plan will take effect on February 27, 1996 and, unless
previously terminated by the Board of Directors, the Plan will terminate on
February 26, 2006.
The Company intends to register shares covered by the Plan under the
Securities Act before granting or issuing any related Incentive Award.
The affirmative vote of the holders of a majority of the shares of
Common Stock voting in person or by proxy on this proposal is required to
approve the Plan. For purposes of counting votes on this proposal,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted on this proposal, and the number of shares of which
a majority is required will be reduced by the number of shares not voted.
Unless specific instructions to the contrary are indicated, the shares
represented by proxies received will be voted FOR approval of the Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE 1996 STOCK OPTION AND
RESTRICTED STOCK PLAN FOR OUTSIDE MARKET ADVISORS
VOTING SECURITIES
Holders of record of Common Stock, at the close of business on April
12, 1996, are entitled to notice of and to vote at the Annual Meeting of
Shareholders and any adjournment of the meeting. As of April 12, 1996,
there were 12,533,572 shares of Common Stock outstanding, each having one
vote on each matter presented for shareholder action. Shares cannot be
voted unless the shareholder is present at the meeting or represented by
proxy.
-16-
OWNERSHIP OF COMMON STOCK
The following table sets forth information as to each person known to
the Company to have been the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock as of March 15, 1996:
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
SOLE VOTING SHARED VOTING
AND OR
NAME AND ADDRESS OF DISPOSITIVE DISPOSITIVE PERCENT OF
BENEFICIAL OWNER POWER POWER CLASS
George W. Sztykiel 669,974 610,831 9.8%
1000 Reynolds Road
Charlotte, Michigan 48813
William F. Foster 983,067 -- 7.5
1000 Reynolds Road
Charlotte, Michigan 48813
__________________________
Based on information provided by each individual listed.
These numbers include shares subject to options that are exercisable
within 60 days after March 15, 1996, granted under the Company's 1984
and 1994 Incentive Stock Options Plans and the 1988 Nonqualified Stock
Option Plan.
These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses, children or other relatives over whom the listed person
may have substantial influence by reason of relationship.
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 15, 1996 by each of Spartan's directors and
nominees for director, each of the named executive officers and all
directors and executive officers as a group:
-17-
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
SOLE VOTING SHARED VOTING
AND OR TOTAL
NAME OF DISPOSITIVE DISPOSITIVE BENEFICIAL PERCENT OF
BENEFICIAL OWNER POWER POWER OWNERSHIP CLASS
George W. Sztykiel 669,974 610,831 1,280,805 9.8%
John E. Sztykiel 99,908 92,000 191,908 1.5
Anthony G. Sommer 67,500 -- 67,500
William F. Foster 983,067 -- 983,067 7.5
Roger B. Burrows 19,000 -- 19,000
James R. Jenks 26,000 -- 26,000
George Tesseris 43,000 1,000 44,000
Charles E. Nihart 28,750 -- 28,750
Max A. Coon 22,750 -- 22,750
All directors and executive
officers as a group 1,998,949 703,831 2,663,780 21.1
_____________________
Less than 1%.
The number of shares stated is based on information provided by each
person listed and includes shares personally owned of record by the
person and shares which, under applicable regulations, are considered
to be otherwise beneficially owned by the person.
These numbers include shares held directly and shares subject to
options which are exercisable within 60 days after March 15, 1996,
that were awarded under the Company's 1984 and 1994 Incentive Stock
Option Plans and the 1988 Nonqualified Stock Option Plan. The number
of shares subject to stock options for each listed person is shown
below:
-18-
George W. Sztykiel 59,145
John E. Sztykiel 64,560
Anthony G. Sommer 55,000
William F. Foster 68,250
Roger B. Burrows 19,000
James R. Jenks 25,000
George Tesseris 34,000
Charles E. Nihart 25,000
Max A. Coon 22,750
All directors and officers
as a group 410,205
These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses, children or other relatives over whom the listed person
may have substantial influence by reason of relationship.
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of seven
directors, two of whom are standing for reelection. The Board of Directors
is divided into three classes, with each class to be as nearly equal in
number as possible. Each class of directors serves a term of office of
three years, with the term of one class expiring at the Annual Meeting of
Shareholders in each successive year.
Biographical information is presented below for each person who either
is nominated for election as a director at the annual meeting or is
continuing as an incumbent director.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1999
GEORGE W. SZTYKIEL (age 66) has been a director since 1975. Mr.
Sztykiel is founder of the Company and has served as Chairman of the Board
and Chief Executive Officer of the Company since December 1992. Mr.
Sztykiel served as President of the Company from September 1975 to December
1992.
WILLIAM F. FOSTER (age 54) has been a director since 1978. Mr.
Foster, a firefighter for over 34 years, is a founder of the Company and
has served as Staff Engineer and Vice-President since 1976.
-19-
INCUMBENT DIRECTORS TERMS EXPIRING IN 1997
JOHN E. SZTYKIEL (age 39) has been a director since 1988. Mr.
Sztykiel has been President and Chief Operating Officer of the Company
since December 1992. Mr. Sztykiel served as the Executive Vice-President
of the Company from 1990 to 1992 and, from 1989 to 1990, as Vice-President
of Sales. From 1985 to 1989, Mr. Sztykiel was the Director of Marketing -
Diversified Products Group of the Company. Mr. Sztykiel is the son of
George W. Sztykiel, Chairman of the Board, Chief Executive Officer and a
director of the Company.
CHARLES E. NIHART (age 59) has been a director since 1984. Mr.
Nihart, a C.P.A. consultant, established the certified public accounting
firm of Nihart and Nihart, P.C., in 1972. The Lansing offices of Nihart
and Nihart merged with Maner, Costerison and Ellis, P.C., C.P.A. on January
1, 1989. Mr. Nihart is currently affiliated with the firm on a consulting
basis. Mr. Nihart is also the owner and President of AARO Rentals, Inc., a
rental company of heavy duty equipment in Lansing, Michigan.
MAX A. COON (age 61) has been a director since 1990. Mr. Coon has
been the President, Chairman of the Board and Chief Executive Officer of
Maxco, Inc., a holding company of several businesses, including a paint
distributor and a construction company, since 1971. Mr. Coon also currently
serves as a director of Medar, Inc. and Finish Master, which are
principally owned by Maxco, Inc., and Midwest Bridge Corporation.
INCUMBENT DIRECTORS TERMS EXPIRING IN 1998
ANTHONY G. SOMMER (age 37) has been a director since 1988. Mr. Sommer
has been the Executive Vice-President and Chief Financial Officer of the
Company since December 1992. Mr. Sommer previously served as Corporate
Secretary/Treasurer from 1987 to 1992 and, from 1982 to 1987, as Controller
of the Company.
GEORGE TESSERIS (age 64) has been a director since 1984. Mr. Tesseris
has been a practicing partner with the law firm of Tesseris and Crown,
P.C., since 1981. From 1972 to 1981, Mr. Tesseris was a partner in the law
firm of Church, Wyble, Kritselis and Tesseris.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors, which is responsible for overall
management of the business and affairs of the Company, held seven meetings
during 1995. All directors attended 75% or more of the aggregate of the
total number of Board of Directors meetings and committee meetings of which
they were members. The Board of Directors has two standing Committees: the
Audit Committee and the Compensation Committee. The Board of Directors does
not have a nominating committee. The members of each committee are appointed
by the Board of Directors.
-20-
AUDIT COMMITTEE. The Audit Committee is responsible for
(i) recommending to the Board of Directors the selection of independent
auditors; (ii) reviewing and approving the scope of the yearly audit plan
and proposed budget for audit fees; (iii) reviewing the results of the
annual audit with the independent auditors; (iv) reviewing the Company's
internal controls with the independent auditors; (v) reviewing non-audit
services and special engagements to be performed by independent auditors;
and (vi) reporting to the Board of Directors on the Audit Committee's
activities and findings and making recommendations to the Board of
Directors on these findings. Messrs. Coon (Chairman), Nihart and Tesseris
presently are members of the Audit Committee. The Audit Committee met
twice during 1995.
COMPENSATION COMMITTEE. The responsibilities of the Compensation
Committee include (i) recommending the cash and other incentive
compensation, if any, to be paid to the Company's executive officers;
(ii) reviewing and making recommendations to the Board of Directors
regarding stock options awarded under the 1994 Incentive Stock Option Plan
and the 1988 Nonqualified Stock Option Plan; and (iii) reviewing all
material proposed option plan changes. The Compensation Committee
determines the key employees to whom options will be granted, the number of
shares covered by each option, the exercise price of each option and other
matters associated with option awards. Messrs. Tesseris (Chairman), Coon
and Nihart are presently members of the Compensation Committee. The
Compensation Committee met twice during 1995.
COMPENSATION OF DIRECTORS
Directors receive a $1,000 quarterly retainer fee plus an expense
reimbursement of $100 for each meeting of the Board of Directors.
EXECUTIVE OFFICERS
The business experience of George Sztykiel, John Sztykiel, Anthony
Sommer and William Foster is set forth on pages 16 and 17 of this
Notice. Executive officers of the Company are appointed annually by the
Board of Directors and serve at the pleasure of the Board of Directors.
Information concerning the executive officers of the Company who are not
also directors or nominees for election to the Board of Directors of the
Company is given below.
ROGER B. BURROWS (age 48) has been Vice-President of Sales and
Marketing since January 1995, and previously served as Director of
Marketing, Sales and Service from August 1993 to 1995. Mr. Burrows served
as National Accounts Sales Manager at General Motors for 23 years prior to
joining the Company. He has also been with the Michigan Army National
Guard since 1969 and currently holds the position of Colonel.
-21-
WILLIAM W. COURTNEY (age 49) was promoted to Vice President of
Production Operations in October 1994, and previously served as Director of
Manufacturing from 1991 to 1994. Mr. Courtney joined the Company as Plant
Manager in 1986 and in 1989 was promoted to Director of Production
Operations.
JAMES R. JENKS (age 36), a Certified Public Accountant, has been the
Secretary/Treasurer of the Company since December 1992. From 1988 to 1992,
Mr. Jenks served as Controller for the Company. Mr. Jenks practiced public
accounting with Touche Ross & Co. from 1986 to 1988.
EXECUTIVE COMPENSATION
The following table shows certain information concerning the
compensation earned during each of the last three fiscal years in the
period ended December 31, 1995, of the Chief Executive Officer and each
named executive officer:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
ALL
NUMBER OF OTHER
SECURITIES COMPEN-
NAME AND SALARY BONUS UNDERLYING SATION
PRINCIPAL POSITION YEAR OPTIONS
George W. Sztykiel 1995 $ 90,890 $ 10,357 15,000 $1,832
Chairman of the Board, 1994 74,502 72,165 12,500 2,710
Chief Executive Officer 1993 76,378 85,715 12,500 2,955
and Director
John E. Sztykiel 1995 108,399 11,448 17,500 2,142
President, Chief 1994 86,636 103,787 15,000 3,257
Operating Officer and 1993 79,189 116,850 15,000 3,020
Director
Anthony G. Sommer 1995 87,518 10,167 15,000 1,768
Executive Vice President, 1994 65,711 85,513 12,500 2,431
Chief Financial Officer 1993 60,662 94,358 12,500 2,282
and Director
James R. Jenks 1995 66,219 8,951 10,000 1,360
Secretary/Treasurer 1994 54,138 60,560 7,500 2,119
1993 49,493 59,436 7,500 1,977
-22-
Roger B. Burrows 1995 62,507 8,716 7,500 1,289
Vice-President 1994 55,123 51,758 7,500 2,191
Sales and Marketing 1993 22,638 16,690 4,000 --
_____________________
Includes director fees of $1,000 per quarter.
Includes payments under the Company's 10% Quarterly Bonus in which all
employees of the Company participate.
Consists solely of the Company's contribution to its profit-sharing
plans for the individuals listed.
OPTION GRANTS IN LAST FISCAL YEAR
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options will be granted, the
number of shares to be subject to each option and the form of consideration
that may be paid upon the exercise of an option.
The following table sets forth information regarding stock options
granted to the Chief Executive Officer and the named executive officers
during the fiscal year ended December 31, 1995:
INDIVIDUAL GRANTS
PERCENT OF
TOTAL
OPTIONS
NUMBER OF GRANTED POTENTIAL REALIZABLE
SECURITIES TO VALUE AT ASSUMED
UNDERLYING EMPLOYEES EXERCISE ANNUAL RATES OF STOCK
OPTIONS IN FISCAL PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED YEAR PER SHARE DATE OPTION TERM
0% 5% 10%
George W. Sztykiel 15,000 3.5% $8.80 June 30, 2005 $0 $83,014 $210,374
John E. Sztykiel 17,500 4.1 8.80 June 30, 2005 0 96,850 245,436
Anthony G. Sommer 15,000 3.5 8.80 June 30, 2005 0 83,014 210,374
James R. Jenks 10,000 2.3 8.80 June 30, 2005 0 55,343 140,249
Roger B. Burrows 7,500 1.7 8.80 June 30, 2005 0 41,507 105,187
-23-
__________________
On June 30, 1995, the Company granted certain of its executive
officers options to purchase shares of the Company's Common Stock over
a 10-year period, pursuant to the 1988 Nonqualified Stock Option Plan.
Executive officers of the Company are entitled to exercise their
options at a price determined by the Compensation Committee, which was
at least 85% of the fair market value of Common Stock on June 30,
1995. Options terminate, subject to certain limited exercise
provisions, in the event of death or termination of employment or
directorship.
The Company granted options representing 430,500 shares to employees
during 1995.
The following table summarizes the total number of options held by the
Chief Executive Officer and the named executive officers as of December 31,
1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR-END
FISCAL YEAR-END
EXER- UNEXER- EXER- UNEXER-
NAME CISABLE CISABLE CISABLE CISABLE
George W. Sztykiel 55,550 3,595 $33,000 --
John E. Sztykiel 57,015 8,880 38,500 --
Anthony G. Sommer 51,405 3,595 33,000 --
James R. Jenks 25,000 -- 22,000 --
Roger B. Burrows 19,000 -- 16,500 --
-24-
_____________________
None of the named individuals exercised any stock options during 1995.
On December 29, 1995, the closing market price of the Company's Common
Stock on NASDAQ was $11.00. The numbers shown reflect the value of
options at December 29, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
develops and recommends to the Board of Directors the executive
compensation policies of the Company. The Committee also administers the
Company's executive compensation program and recommends for approval to the
Board of Directors the compensation to be paid to the Chief Executive
Officer and other named executive officers. The Committee consists of
three Nonemployee Directors.
COMPENSATION PHILOSOPHY
The Committee's executive compensation philosophy is to provide
competitive levels of compensation as well as incentives to achieve
superior financial performance. The Committee's policies are designed to
achieve five primary objectives: (i) integrate management's compensation
with the achievement of the Company's annual and long-term performance
goals; (ii) reward above-average corporate performance; (iii) recognize
individual initiative and achievement; (iv) assist the Company in
attracting and retaining qualified management; and (v) align the interests
of management with those of shareholders to encourage achievement of
continuing increases in shareholder value. The Committee sets management
compensation at levels which the Committee believes are consistent with
other companies in the Company's industry.
In 1994, the Company engaged Management Resource Center, Inc., a
compensation consulting firm, to review its compensation policies and
competitive compensation levels. The Committee has and intends to continue
to consider the recommendations of Management Resource Center, Inc. in
developing the Company's executive compensation program and making specific
compensation decisions.
Executive compensation at Spartan consists of both cash and equity,
and includes: (i) a base salary; (ii) a profit-sharing incentive bonus; and
(iii) a long-term incentive through participation in stock option plans.
In addition, the Company provides various benefits to its employees,
including the Company's executive officers.
-25-
In 1993, Congress amended the Code to add Section 162(m) which
provides that publicly held corporations may not deduct compensation paid
to certain executive officers in excess of $1 million annually, with
certain exemptions. The Company has examined its executive compensation
policies in light of Section 162(m) and the regulations adopted by the
Internal Revenue Service to implement this section. It is not expected
that any portion of the Company's deduction for employee remuneration will
be disallowed in 1996 or in future years by reason of awards granted in
1996.
BASE SALARY
To attract and retain well-qualified executives, it is the Committee's
policy to establish base salaries at levels and provide benefit packages
that are considered to be competitive. Base salaries for executive
officers are determined initially by evaluating the responsibilities of the
position and the experience of the individual, and by reference to the
competitive marketplace for management talent, including a comparison of
base salaries for comparable positions at similar companies within the
custom chassis industry. Some of the companies used for this comparison
are included in the indices used in the Stock Price Performance Graph
presented in this Proxy Statement.
The Committee believes that base salaries should approximate the mid-point
of the range of salaries paid for similar positions by companies in
similar industries. The Committee may recommend adjustments on a periodic
basis to maintain the desired levels of base salaries for the Company's
executives.
The Committee determines annual salary adjustments by evaluating the
competitive marketplace, the performance of the Company and the executive
officer, as well as any increased responsibilities assumed by the executive
officer. Salary adjustments are determined and implemented generally on a
12-month cycle.
ANNUAL INCENTIVE BONUS
The Committee selects members of management to participate in the
Company's incentive bonus program. The Committee considers several factors
in determining the annual incentive bonus, if any, paid to management,
including achievement of the Company's strategic and operating goals and an
individual's achievement of personal goals. In addition, the Company
considers factors such as net earnings per share, revenues, return on
assets and return on equity.
STOCK OPTION PLANS
The Company currently grants stock options under the 1988 Nonqualified
Stock Option Plan and the 1994 Incentive Stock Option Plan. The stock
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option plans allow officers and key employees to purchase stock of the
Company at a price established on the date of grant. Options granted under
the 1988 Nonqualified Stock Option Plan must have an exercise price equal to
at least 85% of the fair market value of the Company's Common Stock.
Incentive stock options granted under the 1994 Incentive Stock Option
Plan must have an exercise price equal to at least 100% of the fair market
value. The Committee administers all aspects of the plans and reviews,
modifies (to the extent appropriate) and approves management's
recommendations for awards.
Absent unusual circumstances, the Committee has historically granted
stock options on an annual basis to officers, key employees and inside
directors and on a biannual basis to outside directors. The Company's
stock option plans are designed to encourage long-term investment in the
Company by participating executives and key employees, more closely align
executive and shareholder interests and reward executive officers and
other key employees for building shareholder value. The Committee
believes stock ownership by management and other key employees is
beneficial.
In determining the number of options to be awarded to an officer or
key employee, the Committee takes into consideration the levels of
responsibility and compensation. The Committee also considers the
recommendations of management (except for awards to the Chief Executive
Officer), the individual performance of the officer or employee and the
number of shares or other compensation awarded to the officer or employee
at other companies. Generally, both the number of shares granted and their
proportion relative to the total number of shares granted increase
corresponding to the level of a participant's responsibility. Although the
Committee may also consider the number of options already held by an
officer or employee, this factor is not considered to be particularly
important by the Committee in determining the amounts of awards.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is based upon the policies
and objectives outlined above for all executive officers. Mr. George
Sztykiel's base salary in 1995 was 22% above his 1994 salary. Mr.
Sztykiel's annual incentive bonus award for 1995 was $5,000 and his four
quarterly bonuses totaled $5,357. During 1995, Mr. Sztykiel was awarded
options to purchase 15,000 shares of the Company's Common Stock.
All recommendations of the Committee attributable to 1995 compensation
were unanimous and were approved and adopted by the Board of Directors
without modification.
The Committee welcomes written comment from the Company's shareholders
concerning its compensation programs. Comments should be marked "personal
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and confidential" and addressed to the Compensation Committee of the Board
of Directors, Spartan Motors, Inc., 1000 Reynolds Road, Post Office Box
440, Charlotte, Michigan 48813.
Respectfully submitted,
George Tesseris, Chairman
Charles E. Nihart
Max A. Coon
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on Spartan's Common Stock to the CRSP Total Return Index for The NASDAQ
Stock Market ("CRSP NASDAQ") and the CRSP Total Return Index for NASDAQ
Trucking and Transportation Stocks ("CRSP T&T"), over a five-year period
ended December 31, 1995, using 1990 as a base period. The CRSP NASDAQ is a
broad-based equity market index developed by the Center for Research in
Security Prices at the University of Chicago. The CRSP T&T is comprised of
companies with a market capitalization similar to that of the Company and
is also developed by the Center for Research in Security Prices. The CRSP
NASDAQ index and CRSP T&T index both assume dividend reinvestment.
Cumulative total shareholder return is measured by dividing (i) the sum of:
(a) the cumulative amount of dividends for the measurement period, assuming
dividend reinvestment; and (b) the difference between the share price at
the end and the beginning of the measurement period, by (ii) the share
price at the beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN
[STOCK PRICE PERFORMANCE GRAPH]
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The dollar values for total shareholder return plotted in the graph
above are shown in the table below:
FISCAL
YEAR-END SPARTAN CRSP NASDAQ CRSP T&T
1990 $ 100 $ 100 $ 100
1991 738 161 145
1992 955 187 178
1993 996 215 216
1994 786 210 196
1995 650 296 223
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Exchange Act requires Spartan's directors and
officers and persons who beneficially own more than 10% of the outstanding
shares of Common Stock to file reports of ownership and changes in
ownership of shares of Common Stock with the Securities and Exchange
Commission. Directors, officers and greater than 10% beneficial owners are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file. Based on its
review of the copies of such reports received by it, or written
representations from certain reporting persons that no reports on Form 5
were required for those persons for the 1995 fiscal year, the Company
believes that its directors and officers complied with all applicable
filing requirements during the Company's last fiscal year.
INDEPENDENT AUDITORS
Deloitte & Touche LLP has served as independent auditors of the
Company for the last 12 years. The Board of Directors believes that the
experience Deloitte & Touche LLP has acquired remains valuable to the
Company and has again selected Deloitte & Touche LLP as independent
auditors for the Company for its 1996 fiscal year. Each year the Board of
Directors reviews and approves in advance the estimated audit fees, the
scope of the annual audit and other recurring services. Any actual
expenses equal to or greater than the estimated fees are reviewed by the
Board of Directors on an individual basis. Representatives of Deloitte &
Touche LLP are expected to be present at the annual meeting, will have the
opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
-29-
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company no later than
December 26, 1996, to be considered for inclusion in the proxy statement
and form of proxy relating to that meeting. Proposals of shareholders
should be made in accordance with Rule 14a-8 issued under the Exchange Act
and should be addressed to Secretary of Spartan Motors, Inc., 1000 Reynolds
Road, Post Office Box 440, Charlotte, Michigan 48813.
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company and its subsidiaries may
solicit proxies by telephone or facsimile or in person without additional
compensation. Proxies may be solicited by nominees and other fiduciaries
who may mail materials to or otherwise communicate with the beneficial
owners of shares held by them. The Company will bear all costs of the
preparation and solicitation of proxies, including the charges and expenses
of brokerage firms, banks, trustees or other nominees for forwarding proxy
material to beneficial owners. The Company has engaged Corporate Investor
Communications, Inc. at an estimated cost of $3,500, plus expenses and
disbursements, to assist in the solicitation of proxies.
By Order of the Board of Directors
Charlotte, Michigan James R. Jenks
April 25, 1996 Secretary and Treasurer
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APPENDIX A
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
DATE RECEIVED (FOR BUREAU USE ONLY)
NAME
ADDRESS
CITY STATE ZIP CODE
EFFECTIVE DATE:
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE.
RESTATED ARTICLES OF INCORPORATION
OF
SPARTAN MOTORS, INC.
1. These Restated Articles of Incorporation are executed
pursuant to the provisions of Sections 641-643, Act 284, Public Acts
of 1972, as amended.
2. The corporation identification number (CID) assigned by the
Bureau is 162-372.
3. The present name of the corporation is:
SPARTAN MOTORS, INC.
4. The corporation has had no former names.
5. The date of filing the original Articles of Incorporation
was August 27, 1975.
6. The following Restated Articles of Incorporation supersede
the original Articles of Incorporation as amended and shall be the
Articles of Incorporation of the corporation:
ARTICLE I
The name of the corporation is:
SPARTAN MOTORS, INC.
ARTICLE II
The purpose or purposes for which the corporation is
organized is to engage in any activity within the purposes for which
corporations may be organized under the Michigan Business Corporation
Act.
To conduct and be engaged in the business of manufacturing,
producing, and sale, at wholesale and retail, of specialized motor
vehicles and motor vehicle equipment and parts and all other related
items.
To make, perform, and carry out contracts of every kind and
description pertaining to the purpose of this corporation and for any
lawful purposes necessary and expedient thereto with any person, firm,
association, or corporation.
To acquire, own, hold, buy, sell and in every other manner
deal in the shares of stock of other corporations, and to exchange
shares of its own capital stock for any of the things, rights, and
properties which it might otherwise lawfully acquire and hold.
To make contracts with any of the officers, directors,
shareholders, or employees of this corporation, individually or
otherwise, and without limitation, restriction, or prejudice, which
contracts shall be considered and construed on the same basis as
contracts with third persons, all in furtherance of the management,
operation, objects, and purposes of the corporation.
To borrow and to issue bonds, debentures, notes, and other
evidences of indebtedness and obligations from time to time for any
lawful corporate purpose and to mortgage, pledge, and otherwise charge
any or all of its properties, rights, privileges, and assets to secure
the payment thereof.
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ARTICLE III
The total number of shares of which the corporation shall
have the authority to issue is twenty-five million, nine hundred
thousand (25,900,000) divided into two classes, as follows:
(1) Twenty-three million, nine hundred thousand
(23,900,000) shares of common stock of the par value of One Cent
($.01), which shall be called "Common Stock."
(2) Two million (2,000,000) shares of preferred stock,
having no par value, which shall be called "Preferred Stock."
The following provisions shall apply to the authorized stock
of the corporation:
A. PROVISIONS APPLICABLE TO COMMON STOCK.
1. NO PREFERENCE. None of the shares of the Common Stock
shall be entitled to any preferences, and each share of Common Stock
shall be equal to every other share of said Common Stock in every
respect.
2. DIVIDENDS. After payment or declaration of full
dividends on all shares having a priority over the Common Stock as to
dividends, and after making all required sinking or retirement fund
payments, if any, on all classes of preferred shares and on any other
stock of the corporation ranking as to dividends or assets prior to
the Common Stock, dividends on the shares of Common Stock may be
declared and paid, but only when and as determined by the Board of
Directors.
3. RIGHTS ON LIQUIDATION. On any liquidation,
dissolution, or winding up of the affairs of the corporation, after
there shall have been paid to or set aside for the holders of all
shares having priority over the Common Stock the full preferential
amounts to which they are respectively entitled, the holders of the
Common Stock shall be entitled to receive pro rata all the remaining
assets of the corporation available for distribution to its
shareholders.
4. VOTING. At all meetings of shareholders of the
corporation, the holders of the Common Stock shall be entitled to one
vote for each share of Common Stock held by them respectively.
B. PROVISIONS APPLICABLE TO PREFERRED STOCK.
1. ISSUANCE IN SERIES. The authorized shares of Preferred
Stock may be issued from time to time in one or more series, each of
A-3
such series to have such designations, powers, preferences, and
relative, participating, optional, or other rights, and such
qualifications, limitations, or restrictions, as may be stated in a
resolution or resolutions providing for the issue of such series
adopted by the Board of Directors. Authority is hereby expressly
granted to the Board of Directors, subject to the provision of this
Article, to authorize the issuance of any authorized and unissued
shares of Preferred Stock (whether or not previously designated as
shares of a particular series, and including shares of any series
issued and thereafter acquired by the corporation) as shares of one or
more series of Preferred Stock, and with respect to each series to
determine and designate by resolution or resolutions providing for the
issuance of such series:
(a) The number of shares to constitute the series and
the title thereof;
(b) Whether the holders shall be entitled to cumulative or
noncumulative dividends, and, with respect to shares entitled to
cumulative dividends, the date or dates from which such dividends
shall be cumulative, the rate of the annual dividends thereon
(which may be fixed or variable and may be made dependent upon
facts ascertainable outside of the Restated Articles of
Incorporation), the dates of payment thereof, and any other terms
and conditions relating to such dividends;
(c) Whether the shares of such series shall be redeemable,
and, if redeemable, whether redeemable for cash, property, or
rights, including securities of any other corporation, and
whether redeemable at the option of the holder or the corporation
or upon the happening of a specified event, the limitations and
restrictions with respect to such redemption, the time or times
when, the price or prices or rate or rates at which, the
adjustments with which, and the manner in which such shares shall
be redeemable, including the manner of selecting shares of such
series for redemption if less than all shares are to be redeemed,
and the terms and amount of a sinking fund, if any, provided for
the purchase or redemption of such shares;
(d) Whether the shares of such series shall be
participating or nonparticipating, and, with respect to
participating shares, the date or dates from which the dividends
shall be participating, the rate of the dividends thereon (which
may be fixed or variable and may be made dependent upon facts
ascertainable outside of the Restated Articles of Incorporation),
the dates of payment thereof, and any other terms and conditions
relating to such additional dividends;
A-4
(e) The amount per share payable to holders upon any
voluntary or involuntary liquidation, dissolution, or winding up
of the affairs of the corporation;
(f) The conversion or exchange rights, if any, of such
series, including, without limitation, the price or prices, rate
or rates, and provisions for the adjustment thereof (including
provisions for protection against the dilution or impairment of
such rights), and all other terms and conditions upon which
shares constituting such series may be converted into, or
exchanged for, shares of any other class or classes or series;
(g) The voting rights per share, if any, of each such
series, provided that in no event shall any shares of any series
be entitled to more than one vote per share; and
(h) All other rights, privileges, terms, and conditions
that are permitted by law and are not inconsistent with this
Article.
All shares of Preferred Stock shall rank equally and be
identical in all respects except as to the matters specified in this
Article or any amendment thereto, or the matters permitted to be fixed
by the Board of Directors, and all shares of any one series thereof
shall be identical in every particular except as to the date, if any,
from which dividends on such shares shall accumulate.
2. DIVIDENDS. The holders of shares of each series of
Preferred Stock shall be entitled to receive, when, as, and if
declared by the Board of Directors, dividends at, but not exceeding,
the dividend rate fixed for such series by the Board of Directors
pursuant to the provisions of this Article.
3. LIQUIDATION PREFERENCE. Upon the liquidation,
dissolution, or winding up of the affairs of the corporation, whether
voluntary or involuntary, the holders of each series of Preferred
Stock shall be entitled to receive in full out of the assets of the
corporation available for distribution to shareholders (including its
capital) before any amount shall be paid to, or distributed among, the
holders of Common Stock, an amount or amounts fixed by the Board of
Directors pursuant to the provisions of this Article. If the assets of
the corporation legally available for payment or distribution to
holders of the Preferred Stock upon the voluntary or involuntary
liquidation, dissolution, or winding up of the affairs of the
corporation are insufficient to permit the payment of the full
preferential amount to which all outstanding shares of the Preferred
Stock are entitled, then such assets shall be distributed ratably upon
outstanding shares of the Preferred Stock in proportion to the full
preferential amount to which each such share shall be entitled. After
A-5
payment to holders of the Preferred Stock of the full preferential
amount, holders of the Preferred Stock as such shall have no right or
claim to any of the remaining assets of the corporation. The merger
or consolidation of the corporation into or with any other
corporation, or the merger of any other corporation into the
corporation, or the sale, lease, or conveyance of all or substantially
all of the property or business of the corporation, shall not be
deemed to be a dissolution, liquidation, or winding up for purposes of
this Section 3.
ARTICLE IV
The address of the current registered office of the
corporation is 1000 Reynolds Road, Charlotte, Michigan 48813. The
mailing address of the corporation is Post Office Box 440, Charlotte,
Michigan 48813.
The name of the current resident agent is Mr. Anthony G.
Sommer.
ARTICLE V
When a compromise or arrangement or a plan of reorganization
of this corporation is proposed between this corporation and its
creditors or any class of them or between this corporation and its
shareholders or any class of them, a court of equity jurisdiction
within the state, on application of this corporation or of a creditor
or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of
creditors or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or reorganization,
to be summoned in such manner as the court directs. If a majority in
number representing 3/4 in value of the creditors or class of
creditors, or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or a
reorganization, agree to a compromise or arrangement or a
reorganization of this corporation as a consequence of the compromise
or arrangement, the compromise or arrangement and the reorganization,
if sanctioned by the court to which the application has been made,
shall be binding on all of the creditors or class of creditors, or on
all of the shareholders or class of shareholders and also on this
corporation.
ARTICLE VI
Members of the Board of Directors of the corporation shall
be selected, replaced, and removed as follows:
A-6
(1) NUMBER OF DIRECTORS. The number of the directors
of the corporation shall be fixed from time to time by
resolution adopted by a majority vote of the Board of
Directors but shall not be less than three.
(2) CLASSIFICATION. The Board of Directors shall be
divided into three classes as nearly equal in number as
possible, with the term of office of one class expiring each
year. At each annual meeting of the shareholders, the
successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term
expiring at the annual meeting of shareholders held in the
third year following the year of their election.
(3) VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any
vacancy occurring in the Board of Directors caused by
resignation, removal, death, disqualification, or other
incapacity, and any newly created directorships resulting
from an increase in the number of directors, shall be filled
by a majority vote of directors then in office, whether or
not a quorum. Each director chosen to fill a vacancy or a
newly created directorship shall hold office until the next
election of the class for which such director shall have
been chosen. When the number of directors is changed, any
newly created or eliminated directorships shall be so
apportioned by the Board of Directors among the classes as
to make all classes as nearly equal in number as possible.
No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent
director.
(4) REMOVAL. Any director may be removed from office
at any time, but only for cause, and only if removal is
approved as set forth below.
Except as may be provided otherwise by law, cause
for removal shall be construed to exist only if: (i) the
director whose removal is proposed has been convicted of a
felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal; (ii) such
director has been adjudicated by a court of competent
jurisdiction to be liable for negligence or misconduct in
the performance of his duty to the corporation in a matter
of substantial importance to the corporation and such
adjudication is no longer subject to direct appeal;
(iii) such director has become mentally incompetent, whether
or not so adjudicated, which mental incompetency directly
affects his ability as a director of the corporation; or
A-7
(iv) such director's actions or failure to act are deemed by
the Board of Directors to be in derogation of the director's
duties.
Whether cause for removal exists shall be determined by the
affirmative vote of two-thirds (2/3) of the total number of directors.
Any action to remove a director pursuant to (i) or (ii) above shall be
taken within one year of such conviction or adjudication. For purposes
of this paragraph, the total number of directors will not include the
director who is the subject of the removal determination, nor will
such director be entitled to vote thereon.
ARTICLE VII
The corporation shall indemnify directors and executive
officers of the corporation as of right to the fullest extent now or
hereafter permitted by law in connection with any actual or threatened
civil, criminal, administrative, or investigative action, suit, or
proceeding (whether brought by or in the name of the corporation, a
subsidiary, or otherwise) arising out of their service to the
corporation, a subsidiary, or to another organization at the request
of the corporation or a subsidiary. The corporation may indemnify
persons who are not directors or executive officers of the corporation
to the extent authorized by bylaw, resolution of the Board of
Directors, or contractual agreement authorized by the Board of
Directors. The corporation may purchase and maintain insurance to
protect itself and any such director, officer, or other person against
any liability asserted against him or her and incurred by him or her
in respect of such service whether or not the corporation would have
the power to indemnify him or her against such liability by law or
under the provisions of this paragraph. The provisions of this
paragraph shall apply to actions, suits, or proceedings, whether
arising from acts or omissions occurring before or after the adoption
of this Article VII, and to directors, officers, and other persons who
have ceased to render such service, and shall inure to the benefit of
the heirs, executors, and administrators of the directors, officers,
and other persons referred to in this paragraph.
ARTICLE VIII
A director of the corporation shall not be personally liable
to the corporation or its shareholders for monetary damages for breach
of the director's fiduciary duty. However, this Article VIII shall
not eliminate or limit the liability of a director for any of the
following:
(1) A breach of the director's duty of loyalty to the
corporation or its shareholders.
A-8
(2) Acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law.
(3) A violation of Section 551(1) of the Michigan Business
Corporation Act.
(4) A transaction from which the director derived an
improper personal benefit.
(5) An act or omission occurring before the effective date
of this Article VIII.
Any repeal or modification of this Article VIII by the
shareholders of the corporation shall not adversely affect any right
or protection of any director of the corporation existing at the time
of, or with respect to, any acts or omissions occurring before such
repeal or modification.
I, the President of Spartan Motors, Inc., sign my name this
___ day of ___________, 1996.
SPARTAN MOTORS, INC.
_________________________________
John E. Sztykiel
President
A-9
APPENDIX B
SPARTAN MOTORS, INC.
1988 NONQUALIFIED STOCK OPTION PLAN
(As Amended February 27, 1996)
1. PURPOSE. The 1988 Nonqualified Stock Option Plan (the
"Plan") is intended to advance the interest of Spartan Motors, Inc.
(the "Company"), its shareholders, and its subsidiaries by encouraging
and enabling selected officers, directors and other key employees upon
whose judgment, initiative and effort the Company is largely dependent
for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock.
Options granted under the Plan are intended to be options which do not
meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code").
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the
Company.
(b) "Committee" means the body administering the Plan.
(c) "Common Stock" means the company's no par value
Common Stock.
(d) "Date of Grant" means the date on which an option
is granted under the Plan.
(e) "Option" means an option granted under the Plan.
(f) "Optionee" means a person to whom an option, which
has not expired, has been granted under the Plan.
(g) "Subsidiary" or "Subsidiaries" means a subsidiary
corporation or corporations of the Company as defined in
Section 425 of the Code.
(h) "Successor" means the legal representative of the
estate of a deceased optionee or the person or persons who
acquire the right to exercise an option by bequest or
inheritance or by reason of the death of any optionee.
(i) "Tax Benefit Right" means any right granted to a
Participant under Paragraph 8 of the Plan;
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee appointed by the Board (the "Committee"). The
Committee shall report all action taken by it to the Board. Options
to directors who are not employees of the Company may be granted only
pursuant to subparagraph (a) of paragraph 6 of the Plan. The
Committee shall have full and final authority in its discretion,
subject to the provisions of the Plan and in particular to the
provisions of subparagraph (a) of paragraph 6, to determine the
employees to whom and the time or times at which options shall be
granted and the number of shares and purchase price of Common Stock
covered by each option; to construe and interpret the Plan; to
determine the terms and provisions of the respective option
agreements, which need not be identical, including, but without
limitation, terms covering the payment of the option price; and to
make all other determinations and take all other actions deemed
necessary or advisable for the proper administration of the Plan. All
such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. COMMON STOCK SUBJECT TO OPTIONS. The aggregate number of
shares of the Company's Common Stock which may be issued upon the
exercise of options granted under the Plan shall not exceed 400,000
(900,000 as adjusted through June 5, 1996), subject to adjustment
under the provisions of paragraph 7. The shares of Common Stock to be
issued upon the exercise of options may be authorized but unissued
shares, shares issued and reacquired by the Company, or shares bought
on the market for the purposes of the Plan. In the event any option
shall, for any reason, terminate or expire or be surrendered without
having been exercised in full, the shares subject to such option but
not purchased thereunder shall again be available for options to be
granted under the Plan. Subject to adjustments under paragraph 7,
options for no more than 16,000 shares (36,000 as adjusted through
June 5, 1996), may be granted under this or any other Plan of the
Company to any one person in any calendar year.
5. PARTICIPANTS. Options and tax benefit rights may be granted
under the Plan to: (a) any person who is an officer or employee
(including officers and employees who are directors) of the Company or
any of its subsidiaries; and (b) directors of the Company who are not
employees of the Company only as provided in subparagraph (a) of
paragraph 6 of the Plan.
6. TERMS AND CONDITIONS OF OPTIONS. Any option granted under
the Plan shall be evidenced by an agreement executed by the Company
and the applicable director, officer, or employee and shall contain
B-2
such terms and be in such form as the Committee may from time to time
approve, consistent with the terms of the Plan and specifically
subject to the following limitations and conditions.
(a) NON-EMPLOYEE DIRECTOR OPTIONS. Subject to
adjustment as provided in paragraph 7, an option to purchase
3,500 shares of Common stock shall be granted automatically
on June 30 and December 31, of each year, to each director
of the Company who is not an employee of the Company or any
of its subsidiaries. Stock options awarded under this
paragraph shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The per
share price of each option awarded pursuant to this
paragraph shall be 100 percent of: (i) if Common Stock is
not then listed and traded on a recognized securities
exchange, the mean of the bid and asked quotations for
Common Stock on the Date of Grant (as reported by a
recognized stock quotation service) or, if there is no bid
or asked quotation on the Date of Grant, the mean of the bid
and asked quotations on the date nearest preceding the Date
of Grant; or (ii) if Common Stock is then listed and traded
on a recognized securities exchange, the mean of the highest
and lowest sales prices at which shares of Common Stock were
traded on that exchange on the Date of Grant or, if Common
Stock was not traded on the Date of Grant, the mean of such
prices on the date nearest preceding the Date of Grant. The
exercise price for each share purchased pursuant to an
option granted under the Plan shall be payable in cash or in
shares of Common Stock (including Common Stock to be
received upon a simultaneous exercise) or other
consideration substantially equivalent to cash. When
appropriate arrangements are made with a broker or other
institution, payment may be made by a properly executed
exercise notice directing delivery of shares to a broker,
together with irrevocable instructions to the broker to
deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. Except as provided in
this subparagraph, no director who is not an employee of the
Company or any other person shall have any claim to be
granted any option under the Plan. Nothing in the Plan
shall prevent the Company from adopting or continuing in
effect other or additional compensation arrangements. The
grant of an option under the Plan shall not be considered to
give a director the right to be retained as a director of
the Company or to continue as a director of the Company.
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(b) OPTION PRICE. Other than for awards to directors
who are not employees of the Company or any of its
subsidiaries, the per share price of each option awarded
pursuant to the Plan shall be determined by the Committee
but shall not be less than 85 percent of the fair market
value of a share of Common Stock on the Date of Grant. For
purposes of this subparagraph, fair market value shall be as
determined by the Committee and that determination shall be
binding on the Company and the Optionee. The Committee may
base that determination on: (i) if Common Stock is not then
listed and traded on a recognized securities exchange, the
mean of the bid and asked quotations for Common Stock on the
Date of Grant (as reported by a recognized stock quotation
service) or, if there is no bid or asked quotation on the
Date of Grant, the mean of the bid and asked quotations on
the date nearest preceding the Date of Grant; (ii) if Common
Stock is then listed and traded on a recognized securities
exchange, the mean of the highest and lowest sales prices at
which shares of Common Stock were traded on that exchange on
the Date of Grant or, if Common Stock was not traded on the
Date of Grant, the mean of such prices on the date nearest
preceding the Date of Grant, and (iii) any other factors
that the Committee deems appropriate.
(c) OPTION PERIOD. The expiration date of each option
shall be fixed by the Committee, but, notwithstanding any
provision of the Plan to the contrary, such expiration date
shall be more than ten (10) years from the Date of Grant.
(d) VESTING OF SHAREHOLDER RIGHTS. Neither an
Optionee nor his successor shall have any of the rights of a
shareholder of the Company until the certificates evidencing
the shares purchased are properly delivered to such Optionee
or his successor.
(e) EXERCISE OF OPTION. Each option shall be
exercisable from time to time over a period beginning on the
Date of Grant and ending upon the expiration or termination
of the option; provided that the Committee may, by the
provisions of any option agreement, limit the number of
shares that may be purchased pursuant to an option in any
period or periods of time during which the option is
exercisable. An option shall not be exercisable in whole or
in part prior to the date of shareholder approval of the
Plan.
(f) NONTRANSFERABILITY OF OPTION. No option shall be
transferable or assignable by an Optionee, other than by
will or the laws of descent and distribution, and each
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option shall be exercisable during the Optionee's lifetime
only by him. No option shall be pledged or hypothecated in
any way and no option shall be subject to execution,
attachment, or similar process except with the express
consent of the Committee.
(g) TERMINATION OF EMPLOYMENT OR DIRECTORSHIP. Upon
termination of an Optionee's employment with the Company or
any of its subsidiaries or termination of service as a
director of the Company, an Optionee may only purchase those
Shares for which options were exercisable at the date of his
termination and all such options shall expire unless
exercised within 90 days after the date of his termination.
The award of an option to any participant shall not alter in
any way the Company's or the relevant subsidiary's rights to
terminate the Optionee's employment or directorship at any
time for any reason, nor shall it confer upon an Optionee
any rights or privileges except as specifically provided in
the Plan.
(h) DEATH OF OPTIONEE. If an Optionee dies while in
the employ of the Company or any of its subsidiaries or
while serving as a director of the Company, the Optionee's
successor in interest may purchase only those for which
options were exercisable at the date of death and such
options shall expire unless exercised by the successor
within one year of the date of death.
7. ADJUSTMENTS.
(a) In the event that the outstanding shares of Common
Stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation, by reason of a recapitalization,
reclassification, stock split-up, combination of shares, or
dividend or other distribution payable in capital stock,
appropriate adjustment shall be made by the Committee in the
number and kind of shares for the purchase of which options
may be granted under the Plan. In addition, the Committee
shall make appropriate adjustment in the number and kind of
shares as to which outstanding options, or portions thereof
then unexercised, shall be exercisable, to the end that the
proportionate interest of the holder of the option shall, to
the extent practicable, be maintained as before the
occurrence of such event. Such adjustment in outstanding
options shall be made without change in the total price
applicable to the unexercised portion of the option but with
a corresponding adjustment in the option price per share.
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(b) In the event of the dissolution or liquidation of
the Company, any option granted under the Plan shall
terminate as of a date to be fixed by the Committee,
provided that not less than 30 days' written notice of the
date so fixed shall be given to each optionee and each such
optionee shall have the right during such period to exercise
his option as to all or any part of the shares covered
thereby including shares as to which such option would not
otherwise be exercisable by reason of an insufficient lapse
of time.
(c) In the event of a Reorganization (as hereinafter
defined) in which the company is not the surviving or
acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the
effective date of the Reorganization, then the committee
shall adjust the shares under such outstanding and
unexercised stock options (and shall adjust the shares
remaining under the Plan which are then available to the
Option under the Plan) in a manner not inconsistent with the
provisions of the Reorganization Agreement for the
adjustment, change, conversion, or exchange of such stock
and such options.
The term "Reorganization" as used in this
subparagraph (c) of this paragraph 7 shall mean any
statutory merger, statutory consolidation, sale of all or
substantially all of the assets of the Company, or sale,
pursuant to an agreement with the Company, or securities of
the Company pursuant to which the Company is or becomes a
wholly-owned subsidiary of another company after the
effective date of the Reorganization.
(d) Adjustments and determinations under this
paragraph 7 shall be made by the Committee, whose decisions
as to what adjustments or determinations shall be made, and
the extent thereof, shall be final, binding, and conclusive.
8. TAX BENEFIT RIGHTS. A Participant may be granted Tax
Benefit Rights under the Plan to encourage a Participant to exercise
Options and provide certain tax benefits to the Company.
(a) GRANT. A Tax Benefit Right entitles a Participant
to receive from the Company or a Subsidiary a cash payment
not to exceed the amount calculated by multiplying the
ordinary income, if any, realized by the Participant for
federal tax purposes as a result of the exercise of a
nonqualified stock option by the maximum federal income tax
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rate (including any surtax or similar charge or assessment)
for corporations, plus the applicable state and local tax
imposed on the exercise of the Option.
(b) RESTRICTIONS. A Tax Benefit Right may be granted
only with respect to a stock option issued and outstanding
or to be issued under the Plan or any other plan of the
Company or its Subsidiaries that has been approved by the
shareholders as of the date of the Plan and may be granted
concurrently with or after the grant of the stock option.
Such rights with respect to outstanding incentive stock
options under Section 422 of the Code shall be issued only
with the consent of the Participant if the effect would
change the date of grant or the exercise price, or otherwise
impair the Participant's existing stock options. A stock
option to which a Tax Benefit Right has been attached shall
not be exercisable by an officer or employee subject to
Section 16 of the Securities Exchange Act of 1934 for a
period of six months from the date of the grant of the
option.
(c) TERMS AND CONDITIONS. The Committee shall
determine the terms and conditions of any Tax Benefit Rights
granted and the Participants to whom such rights will be
granted with respect to stock options under the Plan or any
other plan of the Company. The Committee may amend, cancel,
limit the term of, or limit the amount payable under a Tax
Benefit Right at any time prior to the exercise of the
related stock option, unless otherwise provided under the
terms of the Tax Benefit Right. The net amount of a Tax
Benefit Right, subject to withholding, may be used to pay a
portion of the stock option price, unless otherwise provided
by the Committee. The provisions of Section 9 with respect
to stock-based tax withholding shall also apply to any tax
benefit rights granted under the Plan.
9. RESTRICTIONS ON ISSUING SHARES.
(a) WITHHOLDING. The Company or a subsidiary shall be
entitled to (a) withhold and deduct from future wages of a
Participant (or from other amounts that may be due and owing
to a Participant from the Company or the subsidiary), or
make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all federal,
state and local withholding and employment-related tax
requirements attributable to an Option including, without
limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Option; or (b) require a
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Participant promptly to remit the amount of such withholding
to the Company before taking any action with respect to an
Option. Unless the Committee determines otherwise,
withholding may be satisfied by withholding Common Stock to
be received upon exercise or by delivery to the Company of
previously owned Common Stock. The Company may establish
such rules and procedures concerning timing of any
withholding election as it deems appropriate to comply with
Rule 16b-3 under the Act.
(b) COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF
SHARES. All Options granted under the Plan (and all
issuances of Common Stock or other securities under the
Plan) shall be subject to applicable laws, rules and
regulations, and to the requirement that if at any time the
Committee determines, in its sole discretion, that the
listing, registration or qualification of the shares covered
thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Option or
the issue or purchase of shares thereunder, such Option may
not be exercised in whole or in part, or the restrictions on
such Option shall not lapse, unless and until such listing,
registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not
acceptable to the Committee.
10. USE OF PROCEEDS. The proceeds received by the Company from
the sale of Common Stock pursuant to the exercise of options granted
under the Plan shall be added to the Company's general funds and used
for general corporate purposes.
11. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board
may at any time suspend or terminate the Plan. The Board may amend
the Plan from time to time in such respects as the Board may deem
advisable for the options granted under the Plan to conform to any
changes in law or any other respect which the Board may deem to be in
the best interests of the Company; provided, that: (a) the provisions
of subparagraph (a) of paragraph 6 may not be amended more than once
every six months, other than to conform to changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules issued under either of
such statutes; and (b) without approval of the shareholders of the
Company representing a majority of the voting power, no such amendment
shall (i) except as specified in paragraph 7, increase the maximum
number of shares for which options may be granted under the Plan, (ii)
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change the provisions of subparagraph (b) of paragraph 6 relating to
the establishment of the option price, (iii) change the provisions of
subparagraph (c) of paragraph 6 relating to the expiration date of
each option, or (iv) change the provisions of the third sentence of
this paragraph 11 relating to the term of the Plan. Unless the Plan
is terminated earlier by the Board or as provided in paragraph 12, the
Plan shall terminate ten years after the effective date of the Plan.
No option may be granted during any suspension or after the
termination of the Plan. Except as provided in paragraph 12, no
amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations
under any option previously granted to that Optionee under the Plan.
12. EFFECTIVE DATE OF PLAN AND SHAREHOLDER APPROVAL. The
effective date of the Plan is March 28, 1988, the date of its approval
by the Board; provided, however, if the Plan is not approved by such
shareholders before December 31, 1988, the Plan shall terminate and
any options granted thereunder shall be void and have no force or
effect.
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APPENDIX C
SPARTAN MOTORS, INC.
1996 STOCK OPTION AND RESTRICTED STOCK PLAN
FOR OUTSIDE MARKET ADVISORS
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 ESTABLISHMENT OF PLAN. Spartan Motors, Inc. hereby
establishes the 1996 Stock Option and Restricted Stock Plan for
Outside Market Advisors (the "Plan"). The Plan permits the grant or
award of Options and Restricted Stock.
1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide
those individuals who provide marketing, promotion and product
development advice and counsel to the Company or its subsidiaries with
the right to receive or purchase the Common Stock of the Company so as
to join the interests of these persons with the interests of Spartan
Motors, Inc. and its shareholders through the increased opportunity
for stock ownership.
SECTION 2
DEFINITIONS
The following words have the following meanings unless a
different meaning is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Stock Option Plan Committee of the
Board or such other committee as the Board shall designate
to administer the Plan. The Committee shall consist of at
least two members of the Board appointed by the Board all of
whom shall be "disinterested persons" as defined in Rule
16b-3 under the Act.
2.5 "Common Stock" means the common stock, no par value, of the
Company.
2.6 "Company" means Spartan Motors, Inc., a Michigan
corporation.
2.7 "Competition" means participation, directly or indirectly,
in the ownership, management, financing or control of any
business that is the same as or similar to the present or
future businesses of the Company or its parent or any
Subsidiary. Such participation could be by way of
employment, consulting services, directorship or
officership. Ownership of less than five percent (5%) of
the shares of any corporation whose shares are traded
publicly on any national or regional stock exchange or over
the counter shall not be deemed Competition.
2.8 "Incentive Award" means the award or grant of an Option or
Restricted Stock to a Participant under the Plan.
2.9 "Market Value" of any security on any given date means: (a)
if the security is listed for trading on one or more
national securities exchanges (including The NASDAQ National
Market System), the mean of the highest and lowest sales
prices on the principal such exchange on the date in
question, or if such security shall not have been traded on
such principal exchange on such date, the last reported
sales price on such principal exchange on the first day
prior thereto on which such security was so traded; or (b)
if the security is not listed for trading on a national
securities exchange (including The NASDAQ National Market
System) but is traded in the over-the-counter market, the
mean of highest and lowest bid prices for such security on
the date in question, or if there are no such bid prices for
such security on such date, the mean of the highest and
lowest bid prices on the first day prior thereto on which
such prices existed; or (c) if neither (a) nor (b) is
applicable, the value as determined by any means deemed fair
and reasonable by the Committee, which determination shall
be final and binding on all parties.
2.10 "Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes
of the Plan, an Option may not be an incentive stock option
within the meaning of Section 422(b) of the Code.
2.11 "Outside Market Advisor" means an individual who by reason
of his or her position or past or future dealings or
knowledge of the Company or any of its subsidiaries is in a
position to provide marketing, promotion and product
development advice and counsel. The Board of Directors
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shall determine the persons deemed to be Outside Market
Advisors or the standard or method used to determine the
persons to be considered Outside Market Advisors.
2.12 "Participant" means an Outside Market Advisor who the
Committee determines is eligible to participate in the Plan
and who is designated to be granted an Incentive Award under
the Plan.
2.13 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to
restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with
respect to shares of Common Stock covered by the same
Incentive Award.
2.14 "Restricted Stock" means Common Stock awarded to a
Participant under Section 6 of the Plan.
2.15 "Subsidiary" means any corporation of which a majority of
the outstanding voting stock is directly or indirectly owned
or controlled by the Company, or by one or more
Subsidiaries.
SECTION 3
ADMINISTRATION
3.1 POWER AND AUTHORITY. The Committee shall administer the
Plan, shall have full power and authority to interpret the provisions
of the Plan, and shall have full power and authority to supervise the
administration of the Plan. All determinations, interpretations and
selections made by the Committee regarding the Plan shall be final and
conclusive. The Committee shall hold its meetings at such times and
places as it deems advisable. Action may be taken by a written
instrument signed by all of the members of the Committee, and any
action so taken shall be fully as effective as if it had been taken at
a meeting duly called and held. The Committee shall make such rules
and regulations for the conduct of its business as it deems advisable.
The members of the Committee shall receive reasonable fees for their
services.
3.2 GRANTS OR AWARDS TO PARTICIPANTS. In accordance with and
subject to the provisions of the Plan, the Committee shall have the
authority to: determine whether and when Incentive Awards will be
granted, the persons or entities to be granted Incentive Awards, the
amount of Incentive Awards to be granted to each person and the terms
of the Incentive Awards to be granted; vary and amend vesting
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schedules, if any; and waive any restrictions or conditions applicable
to any Incentive Award. Incentive Awards shall be granted or awarded
by the Committee, and Incentive Awards may be amended by the Committee
consistent with the Plan, provided that no such amendment may become
effective without the consent of the Participant, except to the extent
that the amendment operates solely to the benefit of the Participant.
3.3 INDEMNIFICATION OF COMMITTEE MEMBERS. Each person who is or
shall have been a member of the Committee shall be indemnified and
held harmless by the Company from and against any cost, liability or
expense imposed or incurred in connection with such person's or the
Committee's taking or failing to take any action under the Plan. Each
such person shall be justified in relying upon information furnished
in connection with the Plan's administration by any appropriate person
or persons.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in
subsection 4.2 of the Plan, a maximum of 200,000 shares of Common
Stock shall be available for Incentive Awards under the Plan, with a
maximum of 30,000 shares available for issuance in any one year. Such
shares shall be authorized and unissued shares.
4.2 ADJUSTMENTS. If the number of shares of Common Stock
outstanding changes by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of
shares or any other change in the corporate structure or shares of the
Company, the aggregate number and class of shares available for grants
or awards under the Plan, together with the Option prices, shall be
appropriately adjusted. No fractional shares shall be issued pursuant
to the Plan, and any fractional shares resulting from adjustments
shall be eliminated from the respective Incentive Award, with an
appropriate cash adjustment for the value of any Incentive Awards
eliminated. If an Incentive Award is canceled, surrendered, modified,
expired or terminated during the term of the Plan but prior to the
exercise or vesting of the Incentive Award in full, the shares subject
to but not delivered under such Incentive Award shall be available for
other Incentive Awards.
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SECTION 5
OPTIONS
5.1 GRANT. A Participant may be granted one or more Options
under the Plan. Options shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall
be determined by the Committee in its sole discretion. The Committee
may vary, among Participants and among Options granted to the same
Participant, any and all of the terms and conditions of the Options
granted under the Plan. The Committee shall have complete discretion
in determining the number of Options granted to each Participant.
5.2 OPTION AGREEMENTS. Each Option shall be evidenced by an
Option agreement containing such terms and conditions, consistent with
the provisions of the Plan, as the Committee from time to time
determines. Option Agreements may be amended by the Committee
consistent with the Plan, but no such amendment shall be effective as
to a Participant without the Participant's consent unless the
amendment operates solely to the benefit of the Participant.
5.3 OPTION PRICE. The per share Option price shall not be less
than the Market Value on the date of grant. The date of grant of an
Option shall be the date the Option is authorized by the Committee or
such future date specified by the Committee as the date for issuing
the Option.
5.4 MEDIUM AND TIME OF PAYMENT. The exercise price for each
share purchased pursuant to an Option granted under the Plan shall be
payable in cash or, if the Committee consents, in shares of Common
Stock (including Common Stock to be received upon a simultaneous
exercise). The time and terms of payment may be amended with the
consent of the Participant before or after exercise of the Option, but
such amendment shall not reduce the Option price. The Committee may
from time to time authorize payment of all or a portion of the Option
price in the form of a promissory note or installments according to
such terms as the Committee may approve. The Board may restrict or
suspend the power of the Committee to permit such loans and may
require that adequate security be provided.
5.5 LIMITS ON EXERCISABILITY. Options shall be exercisable for
such periods as may be fixed by the Committee, not to exceed ten years
from the grant date. At the time of the exercise of an Option, the
holder of the Option, if requested by the Committee, must represent to
the Company that the shares are being acquired for investment and not
with a view to the distribution thereof. The Committee may also vary,
among Participants and among Options granted to the same Participant,
any and all of the terms and conditions of Options granted under the
Plan.
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5.6 TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents
or unless the terms of the Option agreement provide
otherwise, no Option granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent
and distribution if the participant is a natural person. In
addition, all Options granted to a Participant during the
Participant's lifetime shall be exercisable during the
Participant's lifetime only by such Participant, his
guardian, or legal representative.
(b) OTHER RESTRICTIONS. The Committee may impose such
restrictions on any shares of Common Stock acquired pursuant
to the exercise of an Option under the Plan as it deems
advisable, including, without limitation, restrictions under
applicable federal or state securities laws.
5.7 RESTRICTIONS ON EXERCISE.
(a) GENERAL. The Committee may impose such restrictions as
it deems appropriate on the Participant's right to exercise any
options granted. Such restrictions shall be specified in the
Option Agreement entered into with the participant under Section
5.2.
(b) SPECIFIC RESTRICTIONS. Notwithstanding the Committee's
right to impose additional restrictions under Section 5.7(a), the
following restrictions shall also apply:
(i) If the Participant ceases to be an Outside Market
Advisor for any reason other than death or disability, the
Option issued to such Participant shall no longer be
exercisable. If a Participant dies or becomes disabled, the
Option shall be exercisable by the Participant or personal
representative for a period of three months after the date
the Participant ceases to be an Outside Market Advisor, but
only to the extent that the Participant was entitled to
exercise the option on the date Participant ceases to be an
Outside Market Advisor, unless the Option Agreement provides
otherwise or the Committee otherwise consents;
(ii) If the Committee determines that the Participant
has entered into Competition with the Company or any of its
subsidiaries, the Participant's right to exercise any
outstanding options shall terminate as of that date of entry
into Competition. The Committee shall have sole discretion
in making such determination.
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SECTION 6
RESTRICTED STOCK
6.1 GRANT. A Participant may be granted Restricted Stock under
the Plan. Restricted Stock shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall
be determined by the Committee in its sole discretion. Restricted
Stock shall be awarded on the condition that the Participant continues
to perform certain services or meets certain requirements as provided
by the Committee in the Restricted Stock Agreement.
6.2 RESTRICTED STOCK AGREEMENTS. Each award of Restricted Stock
shall be evidenced by a Restricted Stock Agreement containing such
terms and conditions, consistent with the provisions of the Plan, as
the Committee from time to time determines. Restricted Stock
Agreements may be amended by the Committee consistent with the Plan,
but no such amendment shall be effective as to a Participant without
the Participant's consent unless the amendment operated solely for the
benefit of the Participant.
6.3 TERMINATION OF OUTSIDE MARKET ADVISOR STATUS. In addition
to any restrictions that the Committee may impose on the award of
Restricted Stock the following restrictions shall apply:
(a) COMPETITION. If the Committee determines that the
Participant has entered into Competition with the Company or any
of its subsidiaries or ceases to be an Outside Market Advisor
other than by reason of death or disability, then any shares of
Restricted Stock still subject to restrictions on the date of
such determination shall automatically be forfeited and returned
to the Company.
(b) DEATH OR DISABILITY. Unless the terms of the
Restricted Stock agreement or grant provide otherwise, in the
event a Participant is no longer an Outside Market Advisor
because of death or disability during the Restricted Period, the
Participant's right to all of the Participant's Restricted Stock
shall vest as of the date of death or disability, and the
Participant's Restricted Stock may be transferred free of any
restrictions under the Plan, except any restrictions as the
Company may reasonably specify to ensure compliance with federal
and state securities laws.
6.4 RESTRICTIONS ON TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents
or unless the terms of the Restricted Stock agreement
provide otherwise, shares of Restricted Stock shall not be
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sold, exchanged, transferred, pledged or otherwise disposed
of by a Participant during the Restricted Period other than
to the Company pursuant to subsection 6.3 or 6.4(b) or by
will or the laws of descent and distribution.
(b) SURRENDER TO THE COMPANY. If any sale, exchange,
transfer, pledge or other disposition, voluntary or
involuntary, of Restricted Stock that has not vested shall
be made or attempted during the Restricted Period, except as
provided above in subsections 6.3 and 6.4(b), the
Participant's right to the Restricted Stock shall
immediately cease and terminate, and the Participant shall
promptly surrender to the Company all such Restricted Stock
in the Participant's possession.
(c) OTHER RESTRICTIONS. The Committee may impose
other restrictions on any shares of Common Stock acquired
pursuant to an award of Restricted Stock as the Committee
deems advisable, including, without limitation, restrictions
under applicable federal or state securities laws.
6.5 RIGHTS AS A SHAREHOLDER. During the Restricted Period, a
Participant shall have all rights of a shareholder with respect to his
Restricted Stock, including (a) the right to vote any shares at
shareholders' meetings; (b) the right to receive, without restriction,
all cash dividends paid with respect to such Restricted Stock; and (c)
the right to participate with respect to such Restricted Stock in any
stock dividend, stock split, recapitalization or other adjustment in
the Common Stock of the Company or any merger, consolidation or other
reorganization involving an increase or decrease or adjustment in the
Common Stock of the Company. Any new, additional or different shares
or other security received by the Participant pursuant to any such
stock dividend, stock split, recapitalization or reorganization shall
be subject to the same terms, conditions and restrictions as those
relating to the Restricted Stock for which such shares were received.
6.6 DEPOSIT OF CERTIFICATES; LEGENDING OF RESTRICTED STOCK.
(a) DEPOSIT OF CERTIFICATES. Any certificates
evidencing shares of Restricted Stock awarded pursuant to
the Plan shall be registered in the name of the relevant
Participant and deposited, together with a stock power
endorsed in blank, with the Company. In the discretion of
the Committee, any such certificates may be deposited in a
bank designated by the Committee or delivered to the
Participant. Certificates for shares of Restricted Stock
that have vested shall be delivered to the Participant upon
request within a reasonable period of time. The Participant
shall sign all documents necessary or appropriate to
facilitate such delivery.
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(b) LEGEND. Any certificates evidencing shares of
Restricted Stock awarded pursuant to the Plan shall bear the
following legend:
The shares represented by this certificate were
issued subject to certain restrictions under the
Spartan Motors, Inc. 1996 Stock Option and
Restricted Stock Plan for Outside Market Advisors
(the "Plan"). A copy of the Plan is on file in
the office of the Secretary of Spartan Motors,
Inc. This certificate is held subject to the
terms and conditions contained in a restricted
stock agreement that includes a prohibition
against the sale or transfer of the stock
represented by this certificate except in
compliance with that agreement, and that provides
for forfeiture upon certain events.
6.7 REPRESENTATIONS AND WARRANTIES. A Participant who is
awarded Restricted Stock shall represent and warrant that the
Participant is acquiring the Restricted Stock for the Participant's
own account and investment and without any intention to resell or
redistribute the Restricted Stock. The Participant shall agree not to
resell or redistribute such Restricted Stock after the Restricted
Period except upon such conditions as the Company may reasonably
specify to ensure compliance with federal and state securities laws.
SECTION 7
GENERAL PROVISIONS
7.1 NO RIGHTS TO AWARDS. No Participant or other person shall
have any claim to be granted any Incentive Award, and there is no
obligation of uniformity of treatment of Participants or holders or
beneficiaries of Incentive Awards. The terms and conditions of the
Incentive Awards of the same type and the determination of the
Committee to grant a waiver or modification of any Incentive Award and
the terms and conditions thereof need not be the same with respect to
each Participant.
7.2 COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF SHARES.
All Incentive Awards granted under the Plan (and all issuances of
Common Stock or other securities under the Plan) shall be subject to
applicable laws, rules and regulations, and to the requirement that if
at any time the Committee determines, in its sole discretion, that the
listing, registration or qualification of the shares covered thereby
upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary
C-9
or desirable as a condition of, or in connection with, the granting of
such Incentive Award or the issue or purchase of shares thereunder,
such Incentive Award may not be exercised in whole or in part, or the
restrictions on such Incentive Award shall not lapse, unless and until
such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable
to the Committee.
7.3 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing
contained in the Plan shall prevent the Company or any Subsidiary from
adopting or continuing in effect other or additional compensation
arrangements, including the grant of options and other stock-based
awards, and such arrangements may be either generally applicable or
applicable only in specific cases.
7.4 GOVERNING LAW. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Michigan and
applicable federal law.
7.5 SEVERABILITY. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
SECTION 8
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect February 27, 1996, subject to
approval by the shareholders at the 1996 Annual Meeting of
Shareholders, or any adjournment thereof or at a special meeting of
shareholders. Unless earlier terminated by the Board of Directors,
the Plan shall terminate on February 26, 2006. No Incentive Award
shall be granted under this Plan after such date.
SECTION 9
TERMINATION AND AMENDMENT
The Board may terminate the Plan at any time, or may from time to
time amend the Plan as it deems proper and in the best interests of
the Company, provided that without shareholder approval no such
amendment may (a) materially increase either the benefits to
Participants under the Plan or the number of shares that may be issued
C-10
under the Plan; (b) materially modify the eligibility requirements;
(c) reduce the Option price (except pursuant to adjustments under
subsection 4.2); or (d) impair any outstanding Incentive Award without
the consent of the Participant, except according to the terms of the
Incentive Award. No termination, amendment, or modification of the
Plan shall become effective with respect to any Incentive Award
previously granted under the Plan without the prior written consent of
the Participant holding such Incentive Award unless such amendment or
modification operates solely to the benefit of the Participant.
C-11
[FRONT]
PROXY PROXY
SPARTAN MOTORS, INC.
1000 REYNOLDS ROAD
POST OFFICE BOX 440
CHARLOTTE, MICHIGAN 48813
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints ANTHONY G. SOMMER,
GEORGE TESSERIS and CHARLES E. NIHART, and each of them, each with
full power of substitution, proxies to represent the shareholder
listed on the reverse side of this Proxy and to vote all shares of
Common Stock of Spartan Motors, Inc. that the shareholder would be
entitled to vote on all matters which come before the Annual Meeting
of Shareholders to be held in the Plant IV building at Spartan Motors,
Inc., 1549 Mikesell Street, Charlotte, Michigan, on Wednesday, June 5,
1996, at 5:30 p.m., and any adjournment of that meeting.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES NAMED ON THIS PROXY AS DIRECTORS AND FOR APPROVAL OF EACH
PROPOSAL IDENTIFIED ON THIS PROXY. THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY COME BEFORE THE MEETING.
PLEASE SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
[BACK]
SPARTAN MOTORS, INC.
PLEASE MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. ELECTION OF DIRECTORS FOR ALL
Nominees: George W. Sztykiel and FOR WITHHELD EXCEPT
William F. Foster
(INSTRUCTION: TO WITHHOLD AUTHORITY [ ] [ ] [ ]
TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE THROUGH THAT NOMINEE'S NAME
IN THE LIST ABOVE.)
Your Board of Directors Recommends
that You Vote
FOR ALL NOMINEES
2. Proposal to adopt Restated Articles FOR ALL
of Incorporation. FOR WITHHELD EXCEPT
Your Board of Directors Recommends that
You Vote FOR this Proposal [ ] [ ] [ ]
3. Proposal to approve amendment to FOR ALL
1988 Nonqualified Stock Option Plan. FOR WITHHELD EXCEPT
Your Board of Directors Recommends that
You Vote FOR this Proposal [ ] [ ] [ ]
4. Proposal to approve 1996 Stock Option FOR ALL
and Restricted Plan for Outside Market FOR WITHHELD EXCEPT
Advisors.
Your Board of Directors Recommends that [ ] [ ] [ ]
You Vote FOR this Proposal
Dated: ______________, 1996
___________________________
___________________________
Signature of Shareholder(s)
IMPORTANT -- Please sign
exactly as your name(s)
appears on this Proxy.
When signing on behalf of a
corporation, partnership,
estate or trust, indicate
title or capacity of person
signing. IF SHARES ARE
HELD JOINTLY, EACH HOLDER
SHOULD SIGN.
