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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant |X|
Filed by a Party other than the Registrant _____
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12.
Hurco Companies, Inc.
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(Name of Registrant as Specified in Its Charter)
Roger J. Wolf
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11 (Set
forth the amount on which the filing fee is calculated and state how it
was determined):
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
5) Total fee paid:
.......................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-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:.....................................................................
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HURCO COMPANIES, INC.
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ONE TECHNOLOGY WAY
P.O. BOX 68180
INDIANAPOLIS, INDIANA 46268
(317) 293-5309
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 29, 1997
To Our Shareholders:
The 1997 Annual Meeting of Shareholders of Hurco Companies, Inc., will be
held at the corporate headquarters of Hurco Companies, Inc., One Technology
Way, Indianapolis, Indiana, 46268 at 11:00 a.m. EST on Thursday, May 29,
1997, for the following purposes:
1. To elect seven directors to serve until the next annual meeting
or until their successors are duly elected and qualified.
2. To approve a proposed amendment of the Company's Amended and
Restated Articles of Incorporation which would, among other
things, increase the number of authorized shares of common
stock and preferred stock.
3. To approve adoption of the Company's 1997 Stock Option and
Incentive Plan.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
If you do not expect to attend the Annual Meeting, please mark, sign and date
the enclosed proxy and return it in the enclosed return envelope which requires
no postage if mailed in the United States.
Only shareholders of record as of the close of business on March 26, 1997,
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for approval of
one or more of the above matters at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies.
By order of the Board of Directors,
Roger J. Wolf, Secretary
April 23, 1997
Indianapolis, Indiana
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting,
we urge you to mark, sign and date the
enclosed proxy and return it promptly
in the enclosed envelope.
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HURCO COMPANIES, INC.
One Technology Way
P. O. Box 68180
Indianapolis, Indiana 46268
Annual Meeting of Shareholders
May 29, 1997
______________________________________________________________________________
PROXY STATEMENT
______________________________________________________________________________
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to the holders (the "Shareholders") of
common stock of Hurco Companies, Inc.("Hurco" or the "Company") in connection
with the solicitation of proxies by the Board of Directors for the 1997
Annual Meeting of Shareholders to be held at 11:00 a.m. EST on May 29, 1997
at the corporate headquarters of Hurco Companies, Inc., One Technology Way,
Indianapolis, Indiana, and at any adjournments thereof. This Proxy
Statement and the accompanying form of proxy are being mailed to the
Shareholders on or about April 10, 1997. Proxies are being solicited
principally by mail. Directors, officers and regular employees of Hurco may
also solicit proxies personally by telephone, telegraph or otherwise. All
expenses incident to the preparation and mailing to the Shareholders of the
Notice, Proxy Statement and form of Proxy will be paid by Hurco.
Shareholders of record as of the close of business on March 26, 1997, are
entitled to notice of and vote at the Annual Meeting or any adjournments
thereof. On such record date, Hurco had 6,535,371 shares of common stock
outstanding and entitled to vote. Each share will be entitled to one vote with
respect to each matter submitted to a vote. The presence in person or by proxy
of the holders of a majority of the outstanding shares entitled to vote at
the Annual Meeting is necessary to constitute a quorum for the transaction of
business.
If the enclosed form of proxy is executed and returned, it may be revoked
at any time before it is voted by giving written notice to the Secretary of
the Company. If a shareholder executes more than one proxy, the proxy
having the latest date will revoke any earlier proxies. Shareholders who
attend the Annual Meeting may revoke their proxies and vote in person.
A proxy, if returned properly executed and not subsequently revoked,
will be voted in accordance with the instructions of the shareholder in the
proxy. If no instructions are given, the proxy will be voted for the
election of the Board of Directors' nominees named in this Proxy Statement
and for Proposals 2 and 3. Directors will be elected by a plurality of the
votes cast. Approval of Proposals 2 and 3 will require that the number of
shares voted in favor of the Proposal be greater than the number of shares
opposing it. A proxy may indicate that all or a portion of the shares
represented by such proxy are not being voted with respect to a specific
proposal. This could occur, for example, when a broker is not permitted to
vote shares held in street name on certain proposals in the absence of
instructions from the beneficial owners. Shares that are not voted with
respect to a specific proposal will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. Neither the non-voting of shares nor abstentions will affect the
election of directors or Proposals 2 and 3.
ELECTION OF DIRECTORS
The Board of Directors has nominated for election seven persons for
election as directors. All nominees are currently directors. Each director
will serve for a term of one year, which expires at the next Annual Meeting
of Shareholders of the Company when his successor has been elected. The
seven nominees are: Hendrik J. Hartong, Jr., Andrew L. Lewis IV, Brian D.
McLaughlin, E. Keith Moore, Richard T. Niner, O. Curtis Noel and Charles E.
Mitchell Rentschler. Unless authority is specifically withheld, the shares
represented by the enclosed form of proxy will be voted in favor of these
nominees.
If any of these nominees becomes unable to accept election, the persons
named in the proxy will exercise their voting power in favor of such person or
persons as the Board may recommend. All of the nominees have consented to
being named in this Proxy Statement and to serve if elected. The Board of
Directors knows of no reason why any of the nominees would be unable to accept
election.
The following information sets forth the name of each director, his age,
tenure as a director, principal occupation and business experience for the
last five years:
Served as a
Name Age Director since
Hendrik J. Hartong, Jr. (1,3,4) 58 1986
Andrew L. Lewis IV (2) 40 1988
Brian D. McLaughlin (1) 54 1987
E. Keith Moore 74 1990
Richard T. Niner (1,2,4) 57 1986
O. Curtis Noel (3,4) 61 1993
Charles E. Mitchell Rentschler (2,3) 57 1986
Hendrik J. Hartong, Jr. has been a general partner of Brynwood Management,
the general partner of Brynwood Partners Limited Partnership, an
investment partnership, since 1984. Mr. Hartong is also a general partner of
Brynwood Management II, the general partner of Brynwood Partners II
Limited Partnership, an investment partnership. Mr. Hartong has also served
as Chairman of the Board of Air Express International Corporation, a
freight forwarding and shipping services business, since 1985.
Andrew L. Lewis IV has served as Chief Executive Officer of KRR Partners, L.P.,
an investment partnership, since July 1993. Since 1990, Mr. Lewis has also
been a consultant for USPCI of Pennsylvania, Inc. (a hazardous waste
management consulting firm). Mr. Lewis is also a director of Air Express
International Corporation.
Brian D. McLaughlin has been President and Chief Executive Officer of the
Company since December 1987. From 1982 to 1987, he was employed as President
and General Manager of various divisions of Ransburg Corporation, an
international manufacturer of factory automation equipment.
E. Keith Moore has served as President of Hurco International, Inc., a
subsidiary of the Company since April 1988. Mr. Moore is also a director of
Met-Coil Systems Corporation (a manufacturer of metal fabrication machinery
and systems).
Richard T. Niner has been a general partner of Brynwood Management, the
general partner of Brynwood Partners Limited Partnership, an investment
partnership, since 1984. Mr. Niner is also a general partner of Brynwood
Management II, the general partner of Brynwood Partners II Limited Partnership,
an investment partnership. Mr.Niner is also a director of Air Express
International Corporation, a freight forwarding and shipping services
business, and Arrow International, Inc., an international manufacturer of
critical care medical devices.
O. Curtis Noel has been an independent business consultant for more than ten
years specializing in market and industry studies, competitive analysis and
corporate development programs with clients in the U.S. and abroad.
Charles E. Mitchell Rentschler has served as President and Chief Executive
Officer of The Hamilton Foundry & Machine Co., an operator of grey and ductile
iron foundries in Ohio and Indiana, since 1985.
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of Nominating Committee
The Board of Directors recommends a vote FOR each of the nominees listed above.
Board Meetings and Committees
During the last fiscal year, the Board of Directors held seven meetings. All
of the current directors attended at least 75% of the aggregate number of
meetings of the Board and the committees on which they served.
The Board has an Executive Committee which held no meetings during the last
fiscal year. The Executive Committee may exercise all of the authority of
the Board of Directors with respect to the general operations of Hurco
between meetings of the Board.
The Board has a Compensation Committee which held two meetings during the
last fiscal year. The Compensation Committee reviews and recommends to the
Board the compensation of the officers and managers of Hurco and
guidelines for the general wage structure of the entire workforce. The
Compensation Committee also oversees the administration of the Company's
employee benefit plans. The report of the Compensation Committee regarding
executive compensation is included on page 16 of this Proxy Statement.
The Board also has an Audit Committee which held five meetings during the
last fiscal year. The Audit Committee has the authority to oversee the
Company's accounting and financial reporting activities, and meets with the
Company's independent accountants and Chief Financial Officer to review the
scope, cost and results of the annual audit and to review internal accounting
controls, policies and procedures. The Board of Directors selects the
independent accountants of Hurco upon the recommendation of the Audit
Committee. See INDEPENDENT ACCOUNTANTS on page 18.
The Board of Directors has a Nominating Committee which held one meeting
during the last fiscal year. The Nominating Committee reviews the
structure and composition of the Board of Directors and considers the
qualifications of and recommends all nominees for directors. The Nominating
Committee will consider candidates whose names are submitted in writing by
shareholders. Shareholders who wish to nominate persons for election as
directors must comply with the advance notice and eligibility requirements
contained in Article II, Section 10, of the Company's By-laws, a copy of which
is available upon request. Such requests and any nominations should be
addressed to the Secretary, Hurco Companies, Inc., One Technology Way, P.O.
Box 68180, Indianapolis, Indiana 46268.
The members of these Committees are identified in the table on page 2.
Compensation of Directors
Each director receives a fee of $1,000 for each meeting of the Board of
Directors attended, and, effective February 1, 1997, each such director
also receives $4,000 per quarter. Directors are also entitled to receive
reimbursement for travel and other expenses incurred in attending such
meetings. Mr. Niner received annual compensation of $72,000 and was
awarded a bonus of $25,000 for his services as Chairman of the Executive
Committee of the Board of Directors. On July 8, 1996, each outside director
was granted options to purchase 10,000 shares of common stock at $5.125 per
share, the average trading price as reported by NASDAQ on such date. The
options are exercisable on July 8, 1997 and expire on July 8, 2002.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's common stock, to file reports of ownership with the Securities and
Exchange Commission and Nasdaq. Such persons are also required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received by
it, or written representations from certain reporting persons that they were
not required to file a Form 5 to report previously unreported ownership or
changes in ownership, the Company believes that, during its fiscal year ending
October 31, 1996, its officers, directors and greater than 10% beneficial owners
complied with all filing requirements under Section 16(a) except as set forth
below. In recent years, the Company made grants of options to executive
officers pursuant to its 1990 Stock Option Plan. Although the grant of
options was exempt from liability under Section 16(b), the officers did
not report the grant of these options on Form 5. As a result, in April 1997,
Mr. McLaughlin filed six Forms 5, Mr. Wolf filed three Forms 5, Mr. Fabris
filed four Forms 5, Mr. Platts filed five Forms 5 and Mr. Blake filed two
Forms 5.
PROPOSAL 2 -- AMENDMENT TO THE ARTICLES OF INCORPORATION
OF THE COMPANY
The Board of Directors has unanimously approved amending (the "Amendment")
Articles IV, V and VI of the Company's Amended and Restated Articles of
Incorporation. The following summary of the amendment is qualified in its
entirety to the text of the Amendment which is attached as Exhibit A to this
Proxy Statement. If the proposal is approved, the Amendment will become
effective at the time the Company files Articles of Amendment with the
Indiana Secretary of State.
The Board of Directors recommends a vote FOR the Amendment.
The authorized capital stock of the Company presently consists of 7,500,000
shares of common stock, no par value, and 40,000 shares of preferred stock,
$100 par value per share. As of March 26, 1997, there were 6,535,371
shares of common stock issued and outstanding and an additional 444,434
shares of common stock reserved for issuance under the Company's stock option
plan. There are no shares of preferred stock outstanding at present.
Increase in Authorized Common Stock
The Amendment would increase the number of shares of authorized common stock
from 7,500,000 to 12,500,000. This increase will insure that shares will be
available, if needed, for issuance in connection with stock splits, stock
dividends, acquisitions and other corporate purposes. The Board of
Directors believes that the availability of the additional shares for such
purposes without delay or the need for a special shareholders' meeting would
be beneficial to the Company. The Company does not have any immediate
plans, arrangements, commitments or understandings with respect to the
issuance of any of the additional shares of common stock which would be
authorized by the amendment.
No further action or authorization by the Company's shareholders would be
necessary prior to the issuance of the additional shares of common stock unless
required by applicable law or regulatory agencies or by the rules of any
stock exchange on which the Company's securities may then be listed.
The holders of any of the additional shares of common stock issued in the
future would have the same rights and privileges as the holders of the shares
of common stock currently authorized and outstanding. Those rights do not
include preemptive rights with respect to the future issuance of any additional
shares.
Although the Company has no immediate plans, arrangements, commitments or
understandings with respect to the issuance of any additional shares of
common stock which would be authorized by the proposed amendment, the
increase in the number of authorized shares could be used to make a takeover
attempt more difficult by using the shares to make a counter-offer for the
shares of a bidder or by selling shares to dilute the voting power of a
bidder. As of this date, the Board is unaware of any specific effort to
accumulate the Company's common stock or to obtain control of the Company by
means of a merger, tender offer, solicitation in opposition of management or
otherwise.
Changes Regarding Preferred Stock
The Amendment will also make a number of changes relating to the Company's
preferred stock, including (i)increasing the number of shares of authorized
preferred stock from 40,000 to 1,000,000; (ii) changing the par value of the
preferred stock in Article IV from $100 per share to no par value; (iii)
deleting a reference in Article V to Classes A and B of preferred stock;
(iv) deleting a reference in Article VI to conditional voting rights of
preferred stock, and (v) deleting provisions in Article VI which may limit
holders of preferred stock to voting as a separate class and to one vote for
each outstanding share of preferred stock. The increase in the number of
authorized shares of preferred stock will insure that a sufficient number of
shares will be available, if needed, for issuance in connection with stock
dividends, acquisitions or other corporate purposes. These
changes would make it clear that the Board of Directors can authorize the
issuance, at any time or from time to time, of one or more series of
preferred stock without further shareholder action and with such powers,
preferences and relative rights, including voting rights, as the Board may
determine.
The authorization of preferred stock may have the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Company. Issuance of authorized preferred stock can be implemented, and has
been implemented by some companies in recent years, with voting or
conversion privileges intended to make acquisition of such companies more
difficult or more costly. Such an issuance could be used to discourage or
limit the shareholders' participation in certain types of transactions that
might be proposed (such as a tender offer), whether or not such transactions
were favored by the majority of the shareholders. As stated above, the Board
is unaware of any specific effort to accumulate the Company's shares or to
obtain control of the Company by means of a merger, tender offer, solicitation
in opposition to management or otherwise. The Company does not have any
immediate plans, arrangements, commitments or understandings with respect to
the issuance of any shares of preferred stock.
PROPOSAL 3 -- ADOPTION OF THE COMPANY'S 1997 STOCK OPTION
AND INCENTIVE PLAN
On March 6, 1997, the Board of Directors of the Company unanimously adopted
the 1997 Stock Option and Incentive Plan (the "Plan"), and directed that the
Plan be submitted to the shareholders for consideration at the Annual
Meeting. The following is a summary of the principal features of the Plan.
The summary is qualified in its entirety by reference to the complete
text of the Plan as set forth as Exhibit B to this Proxy Statement.
Shareholders are urged to read the actual text of the Plan as set forth in
Exhibit B.
The Board of Directors recommends a vote FOR adoption of the Plan.
Purpose
The purpose of the Plan is to promote the long-term interests of the Company
by providing a means of attracting and retaining officers and key employees
of the Company. The Company believes that employees who own shares of the
Company's common stock will have a closer identification with the Company and
greater motivation to work for the Company's success by reason of their
ability as shareholders to participate in the Company's growth and
earnings.
Administration of the Plan
The Plan will be administered by the Compensation Committee of the
Company's Board of Directors (the"Committee"). The members of the Committee
must qualify as "non-employee directors" under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and as "outside directors"
under section 162(m) of the Internal Revenue Code of 1986, as amended,
(the "Code"). Subject to the terms of the Plan, the Committee has the sole
discretion to determine the officers and key employees who shall be granted
awards; to designate the number of shares to be covered by each award; to
establish vesting schedules; subject to certain restrictions, to specify
all other terms of the awards, including the status of awards subsequent
to the termination of a grantee's employment with the Company; and to
construe and interpret the Plan.
Eligible Persons
Recipients of incentive awards under the Plan must be officers or key
employees of the Company or its subsidiaries as determined by the
Committee. The Company presently has approximately 50 officers and
employees who fall within the category of key employees and may be
considered for incentive awards under the Plan. No awards may be granted
under the Plan to directors who are not also employees of the Company or
its subsidiaries.
Shares Subject to the Plan
The Plan permits the granting of awards of stock options, stock
appreciation rights, restricted shares and performance shares. The total
number of shares of common stock that may be issued under the Plan is 500,000,
subject to adjustment as provided in the Plan.
The number of shares covered by an award under the Plan reduces the number of
shares available for future awards under the Plan. However, if any award
expires, terminates, or is surrendered or canceled without having been
exercised in full, or in the case of restricted shares forfeited to the
Company, the number of shares then subject to awards is added back to the
number of remaining available shares under the Plan.
The total number of shares of common stock which may be granted to any
individual during the term of the Plan may not exceed 100,000 shares.
Stock Options
With respect to the stock options under the Plan that are intended to qualify as
"incentive stock options" under section 422 of the Code, the option price
will be at least 100% (or, in the case of a holder of 10% or more of the
Company's voting stock, 110%) of the fair market value of a share of common
stock on the date of the grant of the stock option. The aggregate fair
market value (determined on the date of grant) of the shares subject to
incentive stock options that become exercisable for the first time by a
grantee in any calendar year may not exceed $100,000.
The Committee will establish the exercise price of options that do not
qualify as incentive stock options ("non-qualified stock options") at the
time the options are granted.
No incentive stock option granted under the Plan may be exercised more
than ten years (or, in the case of a holder of 10% of the Company's voting
stock, five years) or such shorter period as the Committee may determine
from the date it is granted. Non-qualified stock options may be exercised
during such period as the Committee determines at the time of grant.
Stock options granted under the Plan become exercisable in one or more
installments in the manner and at the time or times specified by the Committee
at the time of grant. Subject to the discretion of the Committee, generally
if a grantee's employment with the Company or a subsidiary is terminated for
cause or voluntarily by the grantee for any reason other than death,
disability or retirement, such grantee's options expire at the date of
termination.
The exercise price of each option together with an amount sufficient to
satisfy any tax withholding requirement must be paid in full at the time of
exercise. The Committee may permit payment through the tender of shares of
common stock already owned by the participant, withholding of shares
issuable under the award or by any other means which the Committee determines
to be consistent with the Plan's purpose.
Restricted Shares
The Committee may grant awards of restricted shares, in which case the grantee
would be granted shares of common stock, subject to such forfeiture provisions
and transfer restrictions as the Committee determines. Pending the lapse of
such forfeiture provisions and transfer restrictions, certificates representing
restricted shares would be held by the Company, but the grantee generally
would have all of the rights of a shareholder, including the right to vote the
shares and the right to receive all dividends thereon.
While restricted shares would be subject to forfeiture provisions and
transfer restrictions for a period or periods of time, the Plan does not
set forth any minimum or maximum duration for such provisions and
restrictions. It is expected that the terms of an award of restricted shares
ordinarily will provide that the restricted shares will be terminated and
returned to the Company if the grantee ceases to be employed by the Company
prior to the lapse of the forfeiture provisions and transfer restrictions.
It is also expected that a specified percentage of the restricted shares
will become free of the forfeiture provisions and transfer restrictions
on each anniversary of the date of grant of the restricted stock award.
Performance Shares
The Committee may grant awards of performance shares, in which case the
grantee would be granted shares of common stock, subject to satisfaction of
specified performance goals established by the Committee. Performance goals
may be established on one or more of the following business criteria:
earnings per share, return on equity, return on assets, operating income,
or market value per share. The applicable performance goals and all other
terms and conditions of the award will be determined in the discretion
of the Committee. After an award of performance shares has vested (that is,
after the applicable performance goal or goals have been achieved), the
participant will be entitled to a payment of common stock, cash or a
combination thereof. If a grantee terminates employment prior to attaining
the specified goals for any reason other than death, disability or
retirement, all of rights with respect to the award of performance shares shall
be forfeited.
Stock Appreciation Rights
Stock appreciation rights ("SARs") may be granted as a separate award or
together with an option. The number of shares covered by such SAR will be
determined by the Committee. Upon exercise of an SAR, the participant will
receive a payment from the Company equal to: (1) the excess of the fair market
value of a share of common stock on the date of exercise over the base
price which, in the case of an SAR granted in connection with a stock
option, will equal the exercise price of the underlying option, times (2)
the number of shares with respect to which the SAR is exercised. SARs may be
paid in cash, shares of common stock or a combination thereof, as
determined by the Committee.
Adjustments in Awards
In the event of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure of the Company affecting shares of common
stock, the Committee shall adjust the number and class of shares which may be
delivered under the Plan, and the number and class of shares subject to
outstanding awards, in such manner as the Committee (in its sole
discretion) shall determine to be appropriate to prevent the dilution or
diminution of such awards.
Change of Control
In general, if the employment of a recipient of restricted shares is
involuntarily terminated within 12 months following a "change in control"
(as defined in the Plan) of the Company, the forfeiture provisions and
transfer restrictions applicable to such shares lapse. If the employment
of a recipient of performance shares is involuntarily terminated within
12 months following a "change in control," the performance shares may be paid
on a prorata basis. In addition, in the event of a tender offer or exchange
offer for common stock or upon the occurrence of certain other events, all
option and SAR awards granted under the Plan shall become exercisable in
full, unless otherwise provided by the Committee.
Nontransferability of Awards
Except as otherwise expressly provided by the Committee, awards granted
under the Plan may not be assigned, encumbered or transferred, other than by
will or by the applicable laws of descent and distribution.
Amendment and Termination of the Plan
Unless previously terminated by or with the approval of the Board of
Directors, the Plan will terminate March 5, 2007. The Board may at any time
terminate or amend the Plan; however, shareholder approval shall be obtained
to the extent necessary and desirable to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, Code section 422, or any
other applicable law or regulation, including requirements of any stock
exchange or quotation system on which the Company's common stock is listed or
quoted.
Awards to Employees Outside the United States
The Committee has the discretion to establish special rules applicable to
awards to grantees outside of the United States in order to comply with foreign
law or practice.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of awards under the Plan. The summary is based on current
federal income tax laws and interpretations thereof, all of which are
subject to change at any time, possibly with retroactive effect. The summary
is not intended to be exhaustive.
Limitation on Amount of Deduction. The Company generally will be entitled
to a tax deduction for awards under the Plan only to the extent that the
participants recognize ordinary income from the award. Section 162(m) of
the Code contains special rules regarding the federal income tax
deductibility of compensation paid to the Company's CEO and to each of the
other four most highly compensated executive officers of the Company. The
general rule is that annual compensation paid to any of these specified
executives will be deductible only to the extent that it does not exceed
$1,000,000 or it qualifies as "performance-based compensation" under
section 162(m). The Plan has been designed to permit the Committee to grant
awards which qualify for deductibility under section 162(m).
Non-Qualified Stock Options. An employee who is granted a non-qualified
option does not recognize taxable income upon the grant of the option, and the
Company is not entitled to a tax deduction. The employee will recognize
ordinary income upon the exercise of the option in an amount equal to the
excess of the fair market value of the option shares on the exercise date
over the option price. Such income will be treated as compensation to the
employee subject to applicable withholding requirements. The Company is
generally entitled to a tax deduction in an amount equal to the amount taxable
to the employee as ordinary income in the year the income is taxable to the
employee. Any appreciation in value after the time of exercise will be
taxable to the employee as capital gain and will not result in a deduction by
the Company.
Incentive Stock Options. An employee who receives an incentive stock option
does not recognize taxable income upon the grant or exercise of the option,
and the Company is not entitled to a tax deduction. The difference between
the option price and the fair market value of the option shares on the date of
exercise, however, will be treated as a tax preference item for purposes of
determining the alternative minimum tax liability, if any, of the employee
in the year of exercise. The Company will not be entitled to a deduction
with respect to any item of tax preference.
An employee will recognize gain or loss upon the disposition of shares
acquired from the exercise of incentive stock options. The nature of the gain
or loss depends on how long the option shares were held. If the option
shares are not disposed of pursuant to a "disqualifying disposition" (i.e.,
no disposition occurs within two years from the date the option was granted
nor one year from the date of exercise), the employee will recognize long-
term capital gain or capital loss depending on the selling price of the
shares. If option shares are sold or disposed of as part of a disqualifying
disposition, the employee must recognize ordinary income in an amount
equal to the lesser of the amount of gain recognized on the sale, or the
difference between the fair market value of the option shares on the date of
exercise and the option price. Any additional gain will be taxable to the
employee as a long-term or short-term capital gain, depending on how long
the option shares were held. The Company is generally entitled to a deduction
in computing its federal income taxes for the year of disposition in an amount
equal to any amount taxable to the employee as ordinary income.
Stock Appreciation Rights. An employee who receives SARs does not recognize
taxable income at the time of the award, nor will the Company be entitled to
a deduction at that time. Instead, the employee will recognize
additional compensation taxable as ordinary income and subject to withholding,
and the Company will be entitled to a tax deduction at the time the SARs are
exercised.
Other Stock-Based Awards. The income tax consequences of other stock-based
awards will depend on how such awards are structured. Generally, the Company
will be entitled to a tax deduction with respect to such awards only to the
extent that the employee recognizes ordinary income in connection with such
awards. It is anticipated that other stock-based awards will result in
ordinary income to the participant in some amount.
The closing sale price of the Company's common stock on March 31, 1997
as quoted on the Nasdaq National Market System, was $4.875 per share.
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth all compensation paid or accrued during each of
the last three fiscal years to the Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company based
on salaries and bonuses earned during fiscal 1996 (the "Named Executive
Officers"). No other executive officer earned more than $100,000 in salary
and bonuses during fiscal 1996.
Summary Compensation Table
Long-Term
Annual Compensation Compensation All Other
Name and Securities Compen-
Fiscal Salary Bonus Other Annual Underlying sation
Principal Position Year ($) ($)(1) Compensation ($)Options (2) ($) (3)
Brian D. McLaughlin 1996 $238,133 $80,000 -- 15,000 $3,325
President and CEO 1995 226,936 75,000 -- 10,000 3,234
1994 220,000 -- -- 70,000 (4) 2,302
Roger J. Wolf 1996 148,500 75,000 -- 3,000 2,880
Sr. VP, Secretary 1995 139,731 45,000 -- 15,000 3,063
Treasurer and CFO 1994 135,000 7,000 $16,308 (5) 7,000 1,934
James D. Fabris 1996 122,500 50,000 10,000 3,199
V. P.of the Company 1995 107,885 45,000 -- 5,000 2,210
and President Hurco 1994 98,335 -- -- 13,000 1,295
Machine Tool Products
David E. Platts 1996 93,917 20,000 -- 5,000 --
Vice President 1995 87,834 15,000 -- 10,000 --
Research&Development1994 85,000 -- -- 15,000 1,124
Richard Blake 1996 87,373 46,311 -- 15,000 3,841
V. P.of the Company 1995 61,932 39,700 -- -- 2,699
and Managing Director1994 53,784 30,444 -- 6,000 1,659
Hurco Europe Ltd.
- ---------------------------
(1) Represents cash bonuses earned and paid in the subsequent year.
(2) Represents options granted under the stock option plan related to
the prior year's performance, other than specified below. The
Company has not granted any Stock Appreciation Rights (SARs).
(3) Represents the Company's contribution to defined contribution plans.
(4) Represents options granted under the stock option plan to replace
options that had expired during the fiscal year.
(5) Represents amounts reimbursed during the fiscal year for the
payment of taxes related to relocation expenses.
Stock Options
The following table sets forth information related to options granted to the
Named Executive Officers during the 1996 fiscal year. The Company has not
granted any Stock Appreciation Rights (SARs).
Option Grants During 1996 Fiscal Year
Individual Grants Potential
% of Total Realizable Value at
Number of Options Assumed Annual
Securities Granted to Rates of Stock Price
Underlying Employees Exercise Appreciation for
Options in Fiscal Price Expiration Option Term (1)
Name Granted Year ($/SH)Date 5% ($) 10%($)
Brian D. McLaughlin 10,000 (2) 9.5% $5.125 7/08/06 $32,231 $81,679
Roger J. Wolf 3,000 (2) 2.9% $5.125 7/08/06 $ 9,669 $24,504
James D. Fabris 10,000 (3) 9.5% $5.125 7/08/06 $32,231 $81,679
David E. Platts 5,000 (3) 4.8% $5.125 7/08/06 $16,116 $40,839
Richard Blake 10,000 (3) 9.5% $5.063 12/15/05 $31,840 $80,690
5,000 (3) 4.8% $5.125 7/08/06 $16,116 $40,839
- ----------------------------
(1) The potential realizable value illustrates value that might be
realized upon the exercise of the options immediately prior to the
expiration of their terms, assuming the specified compounded
rates of appreciation on the Company's common stock from the date
of grant through the term of the options. These numbers do not
take into account provisions that may result in termination of
the options
following termination of employment or the vesting periods of three
years.
(2) Options may be exercised in three equal annual installments, or parts
thereof, commencing on the first anniversary date of the grant.
(3) Options may be exercised in five equal annual installments, or parts
thereof, commencing on the first anniversary date of the grant.
The following table sets forth information related to options exercised
during the 1996 fiscal year and options held at fiscal year-end by the Named
Executive Officers. The Company does not have any outstanding SARs.
Aggregated Option Exercises in Fiscal 1996 and Year-End Option Values
Value of
Number of Unexercised
Shares Securities Underlying In-the-Money
Acquired Unexercised Options Options
on Value at FY-End (#) at FY-End ($) (1)
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($) cisable cisable cisable cisable
Brian D. McLaughlin -- -- 81,999 43,001 $101,665 $54,585
Roger J. Wolf -- -- 24,667 25,333 $ 13,667 $12,458
James D. Fabris -- -- 14,900 25,100 $ 35,050 $30,075
David E. Platts -- -- 16,000 14,000 $ 36,500 $ 8,500
Richard Blake -- -- 2,400 18,600 $ 5,850 $ 8,775
- -----------------------------------------
(1) Value is calculated based on the closing market price of the common
stock on October 31, 1996 ($4.625) less the option exercise price.
Compensation Committee Interlocks and Insider Participation
During fiscal 1996, the members of the Compensation Committee were Hendrik J.
Hartong, Jr., O. Curtis Noel and Charles E. Mitchell Rentschler. None of the
Committee members is a current or former officer or employee of the Company
or any of its subsidiaries. Mr. Hartong is a director of Air Express
International Corporation (AEI). Mr. Hartong is also a general partner of
Brynwood Management, which is the general partner of Brynwood Partners
Limited Partnership, which has substantial ownership interest in AEI.
AEI provides freight forwarding and shipping services for the Company.
The cost of these freight services are negotiated on an arms-length basis and
amounted to $1,773,000 for the fiscal year ended October 31, 1996. None of the
Committee members are involved in any other relationships requiring disclosure
as an interlocking officer / director.
Employment Contracts
Brian D. McLaughlin entered into an employment contract on December
14, 1987. The contract term is month-to-month. Mr. McLaughlin's salary
and bonus arrangements are set annually by the Board of Directors. Other
compensation, such as stock option grants, is awarded periodically at the
discretion of the Board of Directors. As part of that contract, Mr.
McLaughlin is entitled to 12 months' salary if his employment is
terminated for any reason other than gross misconduct.
Roger J. Wolf entered into an employment contract on January 8, 1993.
The contract term is unspecified. Mr. Wolf's salary and bonus arrangements
are set annually by the Board of Directors. Other compensation, such as
stock option grants, is awarded periodically at the discretion of the
Board of Directors. As part of that contract, Mr. Wolf is entitled to 12
months' salary if his employment is terminated without just cause.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 26, 1997, regarding
beneficial ownership of the Company's common stock by each director and Named
Executive Officer, by all directors and executive officers as a group,
and by certain other beneficial owners of more than 5% of the common stock.
Each such person has sole voting and investment power with respect to such
securities, except as otherwise noted.
Shares Beneficially Owned
Name and Address Number Percent
Other Beneficial Owners
Brynwood Partners Limited Partnership 1,390,001 21.3%
Two Soundview Avenue
Greenwich, Connecticut 06830
Wellington Management Co. 630,500 (1) 9.7%
75 State Street
Boston, Massachusetts 02109
The TCW Group, Inc. 508,200 7.8%
865 South Figueroa Street
Los Angeles, California 90017
Directors and Executive Officers
Hendrik J. Hartong, Jr. 1,685,492 (2,3) 25.8%
Andrew L. Lewis IV 14,000 (3) 0.2%
Brian D. McLaughlin 124,808 (4,5) 1.9%
E. Keith Moore 38,010 (6) 0.6%
Richard T. Niner 1,697,362 (2,3) 26.0%
O. Curtis Noel 5,000 (3) 0.1%
Charles E. Mitchell Rentschler 30,000 (3,7) 0.5%
Roger J. Wolf 40,059 (8) 0.6%
James D. Fabris 20,200 (9) 0.3%
David E. Platts 20,700 (10) 0.3%
Richard Blake 5,400 (11) 0.1%
Executive officers and directors 2,013,029 (2,12) 30.8%
as a group (12 persons)
(1) Wellington Management Co. (WMC), a registered investment advisor, is
deemed to have beneficial ownership of 630,500 shares of the Company's
common stock, which is owned by various advisory clients of WMC.
WMC has no voting power for 70,000 shares, shared voting power for
353,100 shares and sole voting power for 207,400 shares. WMC has
shared investment power for all shares.
(2) Includes 1,390,001 shares owned by Brynwood Partners Limited
Partnership and 278,001 shares owned by Brynwood Partners II, L.P.
Brynwood Management is the general partner of each entity and Mr.
Hartong and Mr. Niner are general partners of Brynwood Management
and, accordingly, may be deemed to have beneficial ownership of
these shares.
(3) Includes 5,000 shares subject to options that are exercisable within
60 days.
(4) Includes 88,332 shares subject to options held by Mr. McLaughlin that
are exercisable within 60 days.
(5) Includes 10,876 shares owned by Mr. McLaughlin's wife and children,
as to which he may be deemed to have beneficial ownership.
(6) Includes 11,000 shares subject to options held by Mr. Moore that are
exercisable within 60 days.
(7) Includes 6,000 shares owned by Mr. Rentschler's wife, as to which he
may be deemed to have beneficial ownership.
(8) Includes 34,667 shares subject to options that are exercisable within
60 days.
(9) Includes 19,700 shares subject to options that are exercisable within
60 days.
(10) Includes 19,000 shares subject to options that are exercisable within
60 days.
(11) Includes 5,400 shares subject to options that are exercisable within
60 days.
(12) Includes 203,099 shares subject to options that are exercisable within
60 days.
Certain Relationships and Related Transactions
The Company and Air Express International Corporation (AEI) are related
parties because Brynwood Partners Limited Partnership holds a substantial
ownership interest in both companies. Two of the Company's directors, Hendrik
J. Hartong, Jr. and Richard T. Niner, are general partners of Brynwood
Management, which is the general partner of Brynwood Partners Limited
Partnership. AEI provides freight forwarding and shipping services for the
Company. The cost of these freight services are negotiated on an arms
length basis and amounted to $1,773,000 the year ended October 31, 1996.
There are no family relationships between any of the directors or executive
officers of the Company.
BOARD OF DIRECTORS' COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes
policies relating to the compensation arrangements of the Chief Executive
Officer and all other executive officers and oversees the administration of
the Company's employee benefit plans. All decisions of the Compensation
Committee relating to the compensation of the Company's executive officers are
reviewed by the full Board.
Compensation Policy
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation
of shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policy
integrates annual base compensation with incentive compensation plans based
upon corporate performance and individual initiatives and performance.
Measurement of corporate performance is primarily based on Company goals
and industry performance levels. Accordingly, in years in which performance
goals and industry levels are achieved or exceeded, executive
compensation tends to be higher than in years in which performance is
below expectations. Annual cash compensation, together with stock option
incentives, are designed to attract and retain qualified executives and
to ensure that such executives have a continuing stake in the long-term success
of the Company.
Stock options are granted from time to time to key employees, based
primarily on such person's potential contribution to the Company's growth
and profitability. The Compensation Committee feels that stock options are
an effective incentive for managers to create value for shareholders since
the value of an option bears a direct relationship to the Company's stock price.
The Compensation Committee believes that linking compensation for the Chief
Executive Officer and all other executive officers to corporate performance
results in a better alignment of compensation with corporate goals and
shareholder interest. As performance goals are met or exceeded, resulting
in increased value to shareholders, executives are rewarded commensurately.
Fiscal 1996 Executive Compensation
For fiscal 1996, the Company's compensation program for the Chief
Executive Officer and all other executive officers consisted of (i) base
salary; (ii) a bonus pool based upon the performance measurements described
above; and (iii) stock option awards. During fiscal year 1996, the annual
compensation of the Chief Executive Officer included base salary, which was
increased from fiscal 1995 for a cost-of-living adjustment, and a bonus based
on the performance of the Company for the fiscal year. Additional stock
options were also granted to him as an incentive to continue building
shareholder value. The Committee believes that compensation levels for the
Chief Executive Officer and all other executive officers and key employees
during fiscal 1996 adequately reflect the Company's compensation goals and
policies.
Hendrik J. Hartong, Jr.
O. Curtis Noel
Charles E. Mitchell Rentschler
PERFORMANCE GRAPH
The following graph illustrates the cumulative total shareholder return on
Hurco Common Stock for the five-year period ended October 31, 1996, as
compared to the NASDAQ stock market index for U.S. companies and to a peer
group consisting of NASDAQ traded securities for U.S. companies in the same
Standard Industrial Code (SIC) group as Hurco (Industrial and Commercial
Machining and Computer Equipment). The comparisons in this table are
required by the Securities and Exchange Commission and are not intended to
forecast or be indicative of possible future performance of Hurco common stock.
(graph to be submitted with Definitive Proxy Statement)
INCORPORATION BY REFERENCE
The following information has been incorporated by reference into this proxy
statement: The audited financial statements of the Company and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's 1996 Annual Report to Shareholders, which is
being mailed concurrently herewith. You are encouraged to review the financial
information contained in the Annual Report before voting on the proposal to
amend the Company's Amended and Restated Articles of Incorporation.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as the independent accountants to audit the
financial statements of Hurco for the fiscal year ended October 31, 1996.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions from shareholders.
The Board of Directors expects to reappoint Arthur Andersen LLP as
independent accountants to serve for the fiscal year ended October 31, 1997.
SHAREHOLDER PROPOSALS
Any proper proposal which a shareholder wishes to submit for consideration by
the Shareholders at the 1998 Annual Meeting must be received by the Company
by December 11, 1997. In order to be considered at the 1998 Annual
Meeting, shareholder proposals must comply with the advance notice and
eligibility requirements contained in Article II, Section 9 of the Company's
By-laws, a copy of which is available upon request. Such requests and any
shareholder proposals should be sent to Roger J. Wolf, Secretary, Hurco
Companies, Inc., One Technology Way, P.O. Box 68180, Indianapolis, Indiana
46268.
ANNUAL REPORT ON FORM 10-K
The Company filed its Annual Report on Form 10-K for the fiscal year ended
October 31, 1996 with the Securities and Exchange Commission. A copy of the
Form 10-K without exhibits, is included in the Company's Annual Report to
Shareholders. Shareholders may obtain a copy of the complete exhibits to
the Form 10-K by writing to Roger J. Wolf, Senior Vice-President and Chief
Financial Officer, Hurco Companies, Inc., One Technology Way, P. O. Box
68180, Indianapolis, Indiana 46268.
OTHER BUSINESS
The Board of Directors knows of no other matters which may be presented
at the Annual Meeting. If any other matters should properly come before the
Annual Meeting, the persons named in the enclosed form of proxy will vote
in accordance with their business judgment on such matters.
By order of the Board of Directors
Roger J. Wolf, Secretary
April 23, 1997
EXHIBIT A
PROPOSED AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION
OF
HURCO COMPANIES, INC.
ARTICLE IV
Number of Shares
The total number of shares which the Corporation shall have
authority to issue is 13,500,000 consisting of 12,500,000 shares of Common
Stock, no par value (the "Common Stock"), and 1,000,000 shares of Preferred.
Stock, no par value (the "Preferred Stock").
ARTICLE V
Terms of Authorized Shares
Section 1. Designation. The authorized shares of the Corporation
shall be divided into two (2) classes, as follows:
(i) 12,500,000 shares of Common Stock. The shares of
Common Stock shall be identical with each other in
all respects.
(ii) 1,000,000 shares of Preferred Stock, which shares
may hereafter be issued in one or more series as
provided in Section 2.
Section 2. Rights, Privileges, Limitations and Restrictions of
Preferred Stock. Except as otherwise provided in these Articles, the
Board of Directors is vested with authority to determine and state the
designation and the relative preferences, limitations, voting rights, if any,
and other rights of each series of Preferred Stock by the adoption and filing
in accordance with the Corporation Law, before the issuance of any shares
of such series of Preferred Stock, of an amendment or amendments to these
Articles of Incorporation, as the same may, from time to time, be amended,
determining the terms of such series of Preferred Stock. All shares of
Preferred Stock of the same series shall be identical with each other in all
respects. Without limiting the generality of the foregoing, the Board of
Directors shall have the authority to determine the following:
(i) The designation of such series, the number of shares which shall
initially constitute such series and the stated value thereof if different
from the par value thereof;
(ii) Whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be special, conditional or limited
or no voting rights except as required by law;
(iii) The rate or rates and the time or times at which dividends and
other distributions on the shares of such series shall be paid, the
relationship or priority of such dividends to those payable on Common
Stock or to other series of Preferred Stock, and whether or not any
such dividends shall be cumulative;
(iv) The amount payable on the shares of such series in the event of the
voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, and the relative priorities, if any,
to be accorded such payments in liquidation;
(v) The terms and conditions upon which either the Corporation may
exercise a right to redeem shares of such series or upon which the
holder of such shares may exercise a right to require redemption
of such shareholder's Preferred Stock, including any premiums or
penalties applicable to exercise of such rights;
(vi) Whether or not a sinking fund shall be created for the redemption
of the shares of such series, and the terms and conditions of any such
fund;
(vii) Rights, if any, to convert any shares of such series, either into
shares of Common Stock or into other series of Preferred Stock and
the prices, premiums or penalties, ratios and other terms applicable
to any such conversion;
(viii) Restrictions on acquisition, rights of first refusal or other
limitations on transfer as may be applicable to such series,
including any series intended tobe offered to a special class or
group; and
(ix) Any other relative rights, preferences, limitations,
qualifications or restrictions on such series of Preferred Stock,
including rights and remedies in the event of default in connection
with dividends, other distributions or redemptions.
Section 3. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of the shares of Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the Corporation
and any preferential amounts to be distributed to holders of the Preferred
Stock and any other class or series of stock then outstanding having a
priority over the Common Stock, in the event of voluntary or involuntary
liquidation, dissolution or winding up, to share ratably in the remaining net
assets of the Corporation.
Section 4. Issuance of Shares. The Board of Directors has
authority to authorize and direct the issuance by the Corporation of shares
of Preferred Stock and Common Stock at such times, in such amounts, to such
persons, for such considerations and upon such terms and conditions as it may,
from time to time, determine upon, subject only to the restrictions,
limitations, conditions and requirements imposed by the Corporation Law, other
applicable law and these Articles of Incorporation, as the same may, from time
to time, be amended.
Section 5. Distributions Upon Shares. The Board of Directors has
authority to authorize and direct the payment of dividends and the making
of other distributions by the Corporation in respect of the issued and
outstanding shares of Preferred Stock and Common Stock (i) at such times,
in such amount and forms, from such sources and upon such terms and conditions
as it may, from time to time, determine upon, subject only to the
restrictions, limitations, conditions and requirements imposed by the
Corporation Law, other applicable law and these Articles of Incorporation,
as the same may, from time to time, be amended; and (ii) in shares of the same
class or series or in shares of any other class or series without obtaining
the affirmative vote or the written consent of the holders of the shares of
the class or series in which the payment or distribution is to be made.
Section 6. Acquisition of Shares. The Board of Directors has
authority to authorize and direct the acquisition by the Corporation of the
issued and outstanding shares of Preferred Stock and Common Stock at such
times, in such amounts, from such persons, for such consideration, from
such sources, and upon such terms and conditions as it may, from time to
time, determine upon, subject only to the restrictions, limitations,
conditions and requirements imposed by the Corporation Law, other
applicable law and these Articles of Incorporation, as the same may, from
time to time, be amended.
Section 7. No Pre-emptive Rights. The holders of the Common Stock
and the holders of any series of the Preferred Stock shall have no
pre-emptive rights to subscribe to or purchase any shares of Common Stock,
Preferred Stock, or other securities of the Corporation.
Section 8. Record Ownership of Shares or Rights. The Corporation,
to the extent permitted by law, shall be entitled to treat the person in
whose name any share or right of the
Corporation is registered on the books of the Corporation as the
owner thereof for all purposes, and shall not be bound to recognize any
equitable or any other claim to, or interest in, such share or right on the
part of any other person, whether or not the Corporation shall have notice
thereof.
ARTICLE VI
Voting Rights of Shares
The shares of the Corporation shall have the following voting rights.
Section 1. Common Stock. Except as otherwise provided by the
Corporation Law or by these Articles, the record holder of each authorized,
issued and outstanding share of Common Stock shall be entitled to one (1) vote
for each such share on all matters submitted to shareholders for a vote.
Section 2. Preferred Stock. Except as specifically provided in
the Corporation Law, holders of outstanding shares of Preferred Stock of
any series shall have such voting rights, if any, as provided in the
amendment or amendments to these Articles of Incorporation determining
the terms of such series of Preferred Stock.
EXHIBIT B
HURCO COMPANIES, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote
the long-term interests of the Company and its shareholders by providing a
means for attracting and retaining officers and key employees of the
Company and its Affiliates.
2. Definitions. The following definitions are
applicable to the Plan:
"Affiliate"-- means any "parent corporation" or
"subsidiary corporation" of the Company as such terms are defined in Code
sections 424(e) and (f), respectively.
"Affiliated SAR" -- means a SAR that is granted in connection
with a related Option, and which automatically will be deemed to be
exercised at the same time that the related Option is exercised. The deemed
exercise of an Affiliated SAR shall not necessitate a reduction in the
number of Shares subject to the related Option.
"Award" -- means the grant by the Committee of Incentive
Stock Options, Non-Qualified Stock Options, SARs, Restricted Shares,
Performance Shares or any combination thereof, as provided in the Plan.
"Award Agreement" -- means the written agreement setting
forth the terms and provisions pplicable to each Award granted under the
Plan.
"Base Price" -- means the amount over which the
appreciation in value of a Share will be measured upon exercise of an SAR.
"Board" -- means the Board of Directors of the Company.
"Change in Control" -- means each of the events specified
in the following clauses (i) through (iii): (i) any third person,
including a "group" as defined in Section 13(d)(3) of the Exchange Act after
the date of the adoption of the Plan by the Board, first becomes the
beneficial owner of shares of the Company with respect to which 25% or more
of the total number of votes for the election of the Board of Directors
of the Company may be cast, (ii) as a result of, or in connection with, any
cash tender offer, exchange offer, merger or other business combination,
sale of assets or contested election, or combination of the foregoing, the
persons who were directors of the Company shall cease to constitute a
majority of the Board of Directors of the Company or (iii) the shareholders
of the Company shall approve an agreement providing either for a transaction
in which the Company will cease to be an independent publicly owned entity
or for a sale or other disposition of all or substantially all the assets of
the Company; provided, however, that the occurrence of any of such events
shall not be deemed a Change in Control if, prior to such occurrence, a
resolution specifically approving such occurrence shall have been adopted by.
at least a majority of the Board of Directors of the Company.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee appointed by the Board pursuant to Section 3
of the Plan.
"Company" -- means Hurco Companies, Inc., an Indiana
corporation.
"Continuous Service" -- means the absence of any
interruption or termination of service as an Employee of the
Company or an Affiliate. Service shall not be considered
interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company
or in the case of any transfer between the Company and an
Affiliate or any successor to the Company.
"Director" -- means any individual who is a member of the
Board.
"Disability" -- means total and permanent disability as
determined by the Committee pursuant to Code section 22(e)
(3).
"Employee" -- means any person, including an officer or
Director, who is employed by the Company or any Affiliate.
"Exchange Act" -- means the Securities Exchange Act of 1934,
as amended.
"Exercise Price" -- means the price per Share at which the
Shares subject to an Option may be purchased upon exercise
of the Option.
"Freestanding SAR" -- means a SAR that is granted
independently of any Option.
"Incentive Stock Option" -- means an option to purchase
Shares granted by the Committee pursuant to the terms of
the Plan which is intended to qualify under Code section 422.
"Market Value" -- means the last reported sale price on
the date in question (or, if there is no reported sale on
such date, on the last preceding date on which any
reported sale occurred) of one Share on the principal
exchange on which the Shares are listed for trading, or if
the Shares are not listed for trading on any exchange, the
average trading price of one share on the date in question
as reported on the Nasdaq National Market or any similar
system then in use, or, if the Shares are not listed on the
Nasdaq National Market, the mean between the closing
high bid and low asked quotations of one Share on the date
in question as reported by Nasdaq or any similar system then
in use, or, if no such quotations are available, the fair
market value on such date of one Share as the Committee shall
determine.
"Non-Qualified Stock Option" -- means an option to purchase
Shares granted by the Committee pursuant to the terms of
the Plan, which option is not intended to qualify under Code
section 422. "Option" -- means an Incentive Stock Option or
a Non-Qualified Stock Option.
"Participant" -- means any Employee of the Company or any
Affiliate who is selected by the Committee to receive an
Award.
"Performance Cycle" -- means the period of time, designated
by the Committee, over which Performance Shares may be
earned.
"Performance Shares" -- means Shares awarded pursuant to
Section 12 of the Plan.
"Plan" -- means the Hurco Companies, Inc., 1997 Stock Option
and Incentive Plan.
"Reorganization" -- means the liquidation or dissolution
of the Company or any merger, consolidation or
combination of the Company (other than a merger,
consolidation or combination in which the Company is the
continuing entity and which does not result in the
outstanding Shares being converted into or exchanged for
different securities, cash or other property or any
combination thereof).
"Restricted Period" -- means the period of time selected
by the Committee for the purpose of determining when
restrictions are in effect under Section 10 of the Plan with
respect to Restricted Shares.
"Restricted Shares" -- means Shares which have been
contingently awarded to a Participant by the Committee
subject to the restrictions referred to in Section 10 of the
Plan, so long as such restrictions are in effect.
"Retirement" -- means a Participant's cessation of
Continuous Service on or after age 65 or such other age as
set forth in the Company's retirement policy as in effect
from time to time.
"Stock Appreciation Right" or "SAR" -- means an Award,
granted alone or in connection with a related Option,
pursuant to Section 11 of the Plan.
"Securities Act" -- means the Securities Act of 1933, as
amended.
"Shares" -- means the shares of common stock, no par value,
of the Company.
"Tandem SAR" -- means a SAR that is granted in connection
with a related Option, the exercise of which shall require
forfeiture of the right to purchase an equal number of
Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the
same extent).
3. Administration. The Plan shall be administered by
the Committee, which shall consist of two or more members
of the Board, each of whom shall be a "non-employee
director" as provided under Rule 16b-3 of the Exchange Act,
and an "outside director" as provided under Code section
162(m). The members of the Committee shall be appointed
by the Board. Except as limited by the express
provisions of the Plan, the Committee shall have sole and
complete authority and discretion to (a) select Participants
and grant Awards; (b) determine the number of Shares to
be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (c) determine
the terms and conditions upon which Awards shall be granted
under the Plan; (d) prescribe the form and terms of
Award Agreements; (e) establish procedures and
regulations for the administration of the Plan; (f)
interpret the Plan; and (g) make all determinations deemed
necessary or advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in
writing by all members of the Committee without a meeting,
shall be acts of the Committee. All determinations and
decisions made by the Committee pursuant to the provisions
of the Plan shall be final, conclusive, and binding on all
persons, and shall be given the maximum deference permitted
by law.
4. Participants. The Committee may select from time
to time Participants in the Plan from those officers and
key Employees of the Company or its Affiliates who, in the
opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful
performance of the Company or its Affiliates.
5. Shares Subject to Plan, Limitations on Grants
and Exercise Price. Subject to adjustment by the
operation of Section 13 hereof:
(a) The maximum number of Shares which may
be issued with respect to Awards made under the Plan is
500,000 Shares. The Shares with respect to which Awards
may be made under the Plan may either be authorized
and unissued shares or unissued shares heretofore or
hereafter reacquired and held as treasury shares. Any
Award which expires, terminates or is surrendered for
cancellation or with respect to Restricted Shares which is
forfeited (so long as any cash dividends paid on such
Shares are also forfeited), may be subject to new Awards
under the Plan with respect to the number of Shares as to
which a termination or forfeiture has occurred.
(b) The number of Shares which may be granted
under the Plan to any Participant during the term of the
Plan under all forms of Awards shall not exceed 100,000
Shares.
(c) Notwithstanding any other provision under
the Plan, the Exercise Price for any Incentive Stock
Option and the Base Price for any Tandem or Affiliated SAR.
granted in connection with an Incentive Stock Option
awarded under the Plan may not be less than the Market Value
of the Shares on the date of grant.
6. General Terms and Conditions of Options. The
Committee shall have full and complete authority and
discretion, except as expressly limited by the Plan, to
grant Options and to prescribe the terms and conditions
(which need not be identical among Participants) of the
Options. Each Option shall be evidenced by an Award Agreement
that shall specify: (a) the Exercise Price, (b) the
number of Shares subject to the Option, (c) the expiration
date of the Option, (d) the manner, time and rate
(cumulative or otherwise) of exercise of the Option, (e)
the restrictions, if any, to be placed upon the Option or
upon Shares which may be issued upon exercise of the Option,
(f) the conditions, if any, under which a Participant may
transfer or assign Options, and (g) any other terms and
conditions as the Committee, in its sole discretion, shall
determine. The Committee may, as a condition of granting
any Option, require that a Participant agree to
surrender for cancellation one or more Options previously
granted to such Participant.
7. Exercise of Options.
(a) Except as provided in Section 16, an
Option granted under the Plan shall be exercisable during
the lifetime of the Participant to whom such Option was
granted only by such Participant, and except as provided in
Section 8 of the Plan, no Option may be exercised
unless at the time the Participant exercises the Option, the
Participant has maintained Continuous Service since the date
of the grant of the Option.
(b) To exercise an Option under the Plan, the
Participant must give written notice to the Company
specifying the number of Shares with respect to which the
Participant elects to exercise the Option together with
full payment of the Exercise Price. The date of exercise
shall be the date on which the notice is received by the
Company. Payment may be made either (i) in cash
(including check, bank draft or money order),(ii) by
tendering Shares already owned by the Participant and having
a Market Value on the date of exercise equal to the Exercise
Price, (iii) by requesting that the Company withhold Shares
issuable upon exercise of the Option having a Market
Value equal to the Exercise Price, or (iv) by any other
means determined by the Committee in its sole discretion.
8. Termination of Options. Unless otherwise
specifically provided by the Committee in the Award
Agreement or any amendment thereto, Options shall terminate
as provided in this Section.
(a) Unless sooner terminated under the
provisions of this Section, Options shall expire on the
earlier of the date specified in the Award Agreement or the
expiration of ten (10) years from the date of grant.
(b) If the Continuous Service of a Participant
is terminated for cause, or voluntarily by the Participant
for any reason other than death, Disability or Retirement,
all rights under any Options granted to the
Participant shall terminate immediately upon the
Participant's cessation of Continuous Service.
(c) If the Continuous Service of a Participant
is terminated by reason of Retirement or terminated by
the Company without cause, the Participant may exercise
outstanding Options to the extent that the
Participant was entitled to exercise the Options at the
date of cessation of Continuous Service, but only within the
period of three (3) months immediately succeeding the
Participant's cessation of Continuous Service, and in no
event after the applicable expiration dates of the Options.
(d) In the event of the Participant's death
or Disability, the Participant or the Participant's
beneficiary, as the case may be, may exercise outstanding
Options to the extent that the Participant was entitled
to exercise the Options at the date of cessation of Continuous
Service, but only within the one-year period immediately
succeeding the Participant's cessation of Continuous Service
by reason of death or Disability, and in no event after
the applicable expiration date of the Options.
9. Incentive Stock Options. Incentive Stock Options
may be granted only to Participants who are Employees. Any provisions of the
Plan to the contrary notwithstanding, (a) no Incentive Stock Option
shall be granted more than ten years from the earlier of the date the Plan is
adopted by the Board of Directors of the Company or approved by the Company's
Shareholders, (b) no Incentive Stock Option shall be exercisable more
than ten years from the date the Incentive Stock Option is granted, (c) the
Exercise Price of any Incentive Stock Option shall not be less than the Market
Value per Share on the date such Incentive Stock Option is granted, (d)
any Incentive Stock Option shall not be transferable by the Participant to
whom such Incentive Stock Option is granted other than by will or the laws
of descent and distribution and shall be exercisable during such
Participant's lifetime only by such Participant, (e) no Incentive Stock
Option shall be granted which would permit a Participant to acquire, through
the exercise of Incentive Stock Options in any calendar year, under all
plans of the Company and its Affiliate, Shares having an aggregate Market
Value (determined as of the time any Incentive Stock Option is granted) in
excess of $100,000 (determined by assuming that the Participant will
exercise each Incentive Stock Option on the date that such Option first
becomes exercisable), and (f) no Incentive Stock Option may be exercised
more than three (3) months after the Participant's cessation of
Continuous Service (one (1) year in the case of Disability) for any reason
other than death. Notwithstanding the foregoing, in the case of any
Participant who, at the date of grant, owns shares possessing more than 10%
of the total combined voting power of all classes of capital stock of the
Company or any Affiliate, the Exercise Price of any Incentive Stock Option
shall not be less than 110% of the Market Value per Share on the date
such Incentive Stock Option is granted and such Incentive Stock Option shall
not be exercisable more than five years from the date such Incentive Stock
Option is granted.
10. Terms and Conditions of Restricted Shares. The
Committee shall have full and complete authority, subject to the limitations
of the Plan, to grant Awards of Restricted Shares and to prescribe the
terms and conditions (which need not be identical among Participants)
in respect of the Awards. Unless the Committee otherwise specifically
provides in the Award Agreement, an Award of Restricted Shares shall be subject
to the following provisions:
(a) At the time of an Award of Restricted
Shares, the Committee shall establish for each Participant
a Restricted Period during which, or at the expiration of
which, the Restricted Shares shall vest. Subject to
paragraph (e) of this Section, the Participant shall have
all the rights of a shareholder with respect to the
Restricted Shares, including but not limited to, the right
to receive all dividends paid on the Restricted Shares and
the right to vote the Restricted Shares. The Committee
shall have the authority, in its discretion, to
accelerate the time at which any or all of the
restrictions shall lapse with respect to any Restricted
Shares prior to the expiration of the Restricted Period,
or to remove any or all restrictions, whenever it may
determine that such action is appropriate by reason of
changes in applicable tax or other laws or other changes
in circumstances occurring after the commencement of the
Restricted Period.
(b) If a Participant ceases Continuous
Service for any reason, including death, before the
Restricted Shares have vested, a Participant's
rights with respect to the unvested portion of the
Restricted Shares shall terminate and be returned to the .
Company.
(c) Each certificate issued in respect to
Restricted Shares shall be registered in the name of the
Participant and deposited by the Participant, together
with a stock power endorsed in blank, with the Company
and shall bear the following (or a similar) legend:
"The transferability of this certificate and the
shares represented hereby are subject to the terms and
conditions (including forfeiture)contained in the 1997
Stock Option and Incentive Plan of Hurco Companies,
Inc., and an Award Agreement entered into between the
registered owner and Hurco Companies, Inc. Copies of the
Plan and Award Agreement are on file in the office of the
Secretary of the Company."
(d) At the time of an Award of
Restricted Shares, the Participant shall enter into an
Award Agreement with the Company in a form specified by
the Committee agreeing to the terms and conditions of the
Award.
(e) At the time of an Award of Restricted
Shares, the Committee may, in its discretion, determine
that the payment to the Participant of dividends declared
or paid on the Restricted Shares by the Company, or a
specified portion thereof, shall be deferred until the
earlier to occur of (i) the lapsing of the restrictions
imposed with respect to the Restricted Shares, or (ii) the
forfeiture of such Restricted Shares under paragraph (b)
of this Section, and shall be held by the Company for the
account of the Participant until such time. In the event of
deferral, there shall be credited at the end of each year
(or portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of
deferred dividends, together with accrued interest, shall be
made upon the earlier to occur of the events specified in
(i) and (ii) of this paragraph.
(f) At the expiration of the restrictions
imposed by this Section, the Company shall redeliver to the
Participant the certificate(s) and stock power deposited with
the Company pursuant to paragraph (c) of this Section and
the Shares represented by the certificate(s) shall be free
of all restrictions.
(g) No Award of Restricted Shares may be
assigned, transferred or encumbered.
11. Grant of SARs. Subject to the terms and
conditions of the Plan, a SAR Award may be made to
Participants at any time and from time to time as shall be
determined by the Committee, in its sole discretion. The
Committee may grant Affiliated SARs, Freestanding SARs,
Tandem SARs, or any combination thereof as follows:
(a) The Committee, subject to the limitations
of the Plan, shall have complete discretion to determine the
Exercise Price and other terms and conditions of SARs
granted under the Plan. Each SAR Award shall be evidenced
by an Award Agreement specifying the terms and
conditions of the Award, including its term, the Base Price
and the conditions of exercise.
(b) The Base Price of Shares with respect
to a Tandem or Affiliated SAR Award shall equal the
Exercise Price of the Shares under the related Option.
(c) Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of
the related Option. A Tandem SAR may be exercised only
with respect to the Shares for which its related Option is
then exercisable. With respect to a Tandem SAR granted in
connection with an Incentive Stock Option: (i) the Tandem
SAR shall expire no later than the expiration of the
underlying Incentive Stock Option; (ii) the value of the
payout with respectto the Tandem SAR shall be for no more than
one hundred percent (100%) of the difference between the
Exercise Price of the underlying Incentive Stock Option
and the Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is
exercised; and (iii) the Tandem SAR shall be exercisable
only when the Market Value of the Shares subject to the
Incentive Stock Option exceeds the Exercise Price of the
Incentive Stock Option.
(d) Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an
amount determined by multiplying:
(i) The difference between the Market
Value of a Share on the date of exercise over the Base Price;
times
(ii) The number of Shares with respect to
which the SAR Award is exercised.
At the discretion of the Committee, payment for a
SAR may be in cash, Shares or a combination thereof.
12. Performance Shares. The Committee, in its sole
discretion, may from time to time authorize the grant of Performance
Shares upon the achievement of performance goals (which may be cumulative
and/or alternative) as may be established, in writing, by the Committee
based on any one or any combination of the following business criteria: (a)
earnings per Share; (b) return on equity; (c) return on assets; (d)
operating income; or (e) Market Value per Share. At the time as it is
certified, in writing, by the Committee that the performance goals
established by the Committee have been attained or otherwise satisfied
within the Performance Cycle, the Committee shall authorize the payment
of cash in lieu of Performance Shares or the issuance of Performance Shares
registered in the name of the Participant, or a combination of cash and Shares.
The grant of an Award of Performance Shares shall be evidenced by an Award
Agreement containing the terms and conditions of the Award as determined by
the Committee. To the extent required under Code Section 162(m), the
business criteria under which performance goals are determined by the
Committee shall be resubmitted to shareholders for reapproval no later
than the first shareholder meeting that occurs in the fifth year following
the year in which shareholders previously approved the Plan.
If the Participant ceases Continuous Service before the
end of a Performance Cycle for any reason other than Retirement, Disability,
or death, the Participant shall forfeit all rights with respect to any
Performance Shares that were being earned during the Performance Cycle. The
Committee, in its sole discretion, may establish guidelines providing that
if a Participant ceases Continuous Service before the end of a
Performance Cycle by reason of Retirement, Disability, or death, the
Participant shall be entitled to a prorated payment with respect to any
Performance Shares that were being earned during the Performance Cycle.
13. Adjustments Upon Changes in Capitalization. In
the event of any change in the outstanding Shares subsequent to the
effective date of the Plan by reason of any reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation or any change in the corporate structure or
Shares of the Company, the maximum aggregate number and class of shares as
to which Awards may be granted under the Plan and the number and class of
shares with respect to which Awards theretofore have been granted under
the Plan shall be appropriately adjusted by the Committee to prevent the
dilution or diminution of Awards. The Committee's determination with
respect to any adjustments shall be conclusive. Any shares or other
securities received, as a result of any of the foregoing, by a Participant
with respect to Restricted Shares shall be subject to the same
restrictions and the certificate(s) or other instruments representing or
evidencing the shares or other securities shall be legended and deposited
with the Company in the manner provided in Section 10 of this Agreement.
14. Effect of Reorganization. Unless otherwise
provided by the Committee in the Award Agreement, Awards will be affected by
a Reorganization as follows:
(a) If the Reorganization is a dissolution or
liquidation of the Company then (i) the restrictions on
Restricted Shares shall lapse and (ii) each outstanding
Option or SAR Award shall terminate, but each
Participant to whom the Option or SAR was granted shall
have the right, immediately prior to the dissolution or
liquidation to exercise the Option or SAR in full,
notwithstanding the provisions of Section 9, and the
Company shall notify each Participant of such right within a
reasonable period of time prior to any dissolution or
liquidation.
(b) If the Reorganization is a merger or
consolidation, other than a Change in Control subject to
Section 15 of this Plan, upon the effective date of the
Reorganization (i) each Participant shall be entitled,
upon exercise of an Option in accordance with all of the
terms and conditions of the Plan, to receive in lieu of
Shares, shares or other securities or consideration as the
holders of Shares shall be entitled to receive pursuant
to the terms of the Reorganization; and (ii) each holder of
Restricted Shares shall receive shares or other securities
as the holders of Shares received which shall be subject to
the restrictions set forth in Section 10 unless the
Committee accelerates the lapse of such restrictions and the
certificate(s) or other instruments representing or
evidencing the shares or other securities shall be legended
and deposited with the Company in the manner provided in
Section 10 of this Plan.
The adjustments contained in this Section and the manner
of application of such provisions shall be determined
solely by the Committee.
15. Effect of Change of Control. If the Continuous
Service of any Participant of the Company or any Affiliate is involuntarily
terminated, for whatever reason, at any time within twelve months after a
Change in Control, unless the Committee shall have otherwise provided
in the Award Agreement, (a) any Restricted Period with respect to an Award of
Restricted Shares shall lapse upon the Participant's termination of
Continuous Service and all Shares of Restricted Shares shall become fully
vested in the Participant to whom the award was made; and (b) with respect
to Performance Shares, the Participant shall be entitled to receive a
prorata payment of Shares to the same extent as if the Participant ceases
Continuous Service by reason of Retirement under Section 12 of the Plan.
If a tender offer or exchange offer for Shares (other than such an offer
by the Company) is commenced, or if the event specified in clause (iii) of
the definition of a Change in Control contained in Section 2 shall occur,
unless the Committee shall have otherwise provided in the Award Agreement,
all Option and SAR Awards theretofore granted and not fully exercisable shall
become exercisable in full upon the happening of such event and shall remain
exercisable in accordance with their terms; provided, however, that no
Option or SAR shall be exercisable by a director or officer of the Company
within six months of the date of grant of the Option or SAR and no Option or
SAR which has previously been exercised or otherwise terminated shall
become exercisable.
16. Assignments and Transfers. Except as otherwise
expressly authorized by the Committee in the Award Agreement or any amendment
thereto during the lifetime of a Participant no Award nor any right or interest
of a Participant in any Award under the Plan may be assigned, encumbered or
transferred otherwise than by will or the laws of descent and distribution.
17. Employee Rights Under the Plan. No officer,
Employee or other person shall have a right to be selected as a Participant
nor, having been so selected, to be selected again as a Participant and no
officer, Employee or other person shall have any claim or right to be
granted an Award under the Plan or under any other incentive or similar plan
of the Company or any Affiliate. Neither the Plan nor any action taken under
the Plan shall be construed as giving any Employee any right to be retained
in the employ of the Company or any Affiliate.
18. Delivery and Registration of Shares. The Company's
obligation to deliver Shares with respect to an Award shall, if the Committee
requests, be conditioned upon the receipt of a representation as to the
investment intention of the Participant to whom such Shares are to be
delivered, in such form as the Committee shall determine to be necessary or
advisable to comply with the provisions of the Securities Act or any other
applicable federal or state securities laws. It may be provided that any
representation requirement shall become inoperative upon a registration
of the Shares or other action eliminating the necessity of the
representation under the Securities Act or other state securities laws.
The Company shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such Shares to listing on any stock exchange or
system on which Shares may then be listed, and (ii) the completion of any
registration or other qualification of the Shares under any state or federal
law, rule or regulation, as the Company shall determine to be necessary or
advisable.
19. Withholding Tax. Prior to the delivery of any Shares
or cash pursuant to an Award, the Company shall have the right and power to
deduct or withhold, or require the Participant to remit to the Company,
an amount sufficient to satisfy all applicable tax withholding
requirements. The Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit or require a
Participant to satisfy all or part of the tax withholding obligations in
connection with an Award by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company Shares already owned
having a Market Value equal to the amount required to be withheld. The
amount of the withholding requirement shall be deemed to include any amount
which the Committee determines, not to exceed the amount determined by
using the maximum federal, state or local marginal income tax rates applicable
to the Participant with respect to the Award on the date that the amount of tax
to be withheld is to be determined for these purposes. For these purposes,
the value of the Shares to be withheld or delivered shall be equal to the
Market Value as of the date that the taxes are required to be withheld.
20. Termination, Amendment and Modification of Plan.
The Board may at any time terminate, and may at any time and from time to time
and in any respect amend or modify, the Plan; provided however, that to the
extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or Code section 422 (or any other applicable law or regulation, including
requirements of any stock exchange or quotation system on which the Company's
common stock is listed or quoted) shareholder approval of any Plan amendment
shall be obtained in the manner and to the degree as is required by the
applicable law or regulation; and provided further, that no termination,
amendment or modification of the Plan shall in any manner affect any Award
theretofore granted pursuant to the Plan without the consent of the
Participant to whom the Award was granted or transferee of the Award.
21. Effective Date and Term of Plan. The Plan shall
become effective upon its adoption by the Board of Directors, subject to
ratification by the shareholders of the Company at the next annual meeting,
and shall continue in effect for a term of ten years from the date of adoption
by the Board of Directors unless sooner terminated under Section 20 of the
Plan.
22. Governing Law. The Plan and Award Agreements shall
be construed in accordance with and governed by the laws of the State of
Indiana.
23. Awards to Foreign Nationals and Employees Outside
the United States. To the extent the Committee deems it necessary,
appropriate or desirable to comply with foreign law or practice and to further
the purpose of this Plan, the Committee may, without amending this Plan, (a)
establish special rules applicable to Awards granted to Participants who are
foreign nationals, are employed outside the United States, or both,
including rules that differ from those set forth in this Plan, and (b)
grant Awards to such Participants in accordance with those rules.
Adopted by the Board of Directors of
Hurco Companies, Inc.
as of March 6, 1997
Adopted by the Shareholders of
Hurco Companies, Inc.
as of May __, 1997
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SIZE MUST BE 4" X 81/2"
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HURCO COMPANIES, INC.
One Technology Way, Indianapolis, IN 46268
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 29, 1997
Solicited on behalf of the Board of Directors
The undersigned hereby appoints as proxies Brian D. McLaughlin and
Richard T. Niner, or either of them with full power of substitutions, to vote
all shares of common stock which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Hurco Companies, Inc., to be held at
Hurco's Corporate Office, One Technology Way, Indianapolis, Indiana, at
11:00 a.m. EST, on May 29, 1997 and any adjournments thereof, upon the following
matters:
Authority to Vote
1. Election of Hendrik J. Hartong, Jr., Andrew L. Lewis IV, Brian D.
McLaughlin, E. Keith FOR WITHHELD
(except as shown on the line)(as to all nominees)
Moore, Richard T. Niner, O. Curtis Noel and Charles E. Mitchell Rentschler
as Directors.To withhold authority to vote any individual nominee, write
his name on this line:
_______________________________________________________________________
2. Approve a proposed amendment of the Company's Amended and Restated Articles
of Incorporation which would, among other things, increase the number of
shares of authorized shares of common stock and preferred stock.
FOR WITHHELD
3. Approve the adoption of the Company's 1997 Stock Option Plan.
FOR WITHHELD
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
(Continued and to be signed on reverse side)
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- --------------------------------------------------------------------------------
The shares represented by the Proxy, unless otherwise specified, shall be
voted FOR each nominee and proposals 2 and 3 listed on the reverse side.
I plan to attend the Annual Meeting. Please sign below exactly as your name
appears as shown at the left. When
signing as attorney, corporate officer
or fiduciary, please give full title as
such.
Signature (s)
_____________________________________
_____________________________________
Dated
________________________________, 1997
PLEASE DATE, SIGN, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE