SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sextion 240.14a-12
Chromcraft Revington, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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CHROMCRAFT REVINGTON, INC.
1100 North Washington Street
Delphi, Indiana 46923
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 1, 2003
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To the Stockholders of Chromcraft Revington, Inc.:
The annual meeting of stockholders of Chromcraft Revington, Inc. will
be held on Thursday, May 1, 2003 at 9:00 a.m., local time, at the Canterbury
Hotel, 123 South Illinois Street, Indianapolis, Indiana, for the following
purposes:
1. To approve the Company's Amended and Restated Certificate of
Incorporation, including the following amendments contained
therein, as set forth in Appendix A to the attached proxy
statement and as described in the proxy statement (each of which
will be voted upon separately):
a. To increase the percentage of holders of common stock
of the Company necessary to call a special meeting of
stockholders from 15% to 33-1/3%;
b. To require that any action by stockholders must be
taken at a meeting of stockholders and not by written
consent in lieu of a meeting;
c. To divide the directors into three classes with
staggered terms;
d. To provide the manner in which director vacancies and
newly created directorships may be filled;
e. To provide that directors may be removed only for
cause by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of common
stock of the Company entitled to vote in the election
of directors;
f. To provide that the Board of Directors may establish
provisions regarding the term of office, filling of
vacancies, removal and other features for a director
who may be elected by the holders of any preferred
stock of the Company entitled to vote as a separate
class;
g. To provide that certain business combinations
involving the Company may require the affirmative
vote of the holders of at least two-thirds of the
outstanding shares of common stock of the Company;
h. To provide limitations on certain business
combinations with significant stockholders of the
Company; and
i. To require that the amendment or repeal of certain
provisions of the Company's Certificate of
Incorporation would require the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of common stock and to restrict any amendments
to the Company's By-Laws in contravention of certain
provisions of the Company's Certificate of
Incorporation.
2. To elect six directors, as described in the attached proxy
statement.
3. To ratify the appointment of KPMG LLP as the independent
auditors for the Company for the fiscal year ending December 31,
2003.
4. To transact such other business as may properly come before the
annual meeting of stockholders and any adjournment or
postponement thereof.
The Board of Directors has fixed the close of business on March 3, 2003
as the record date for determining stockholders entitled to notice of and to
vote at the annual meeting of stockholders.
Whether or not you plan to attend the annual meeting, you are urged to
complete, date and sign the enclosed proxy and return it promptly in the
envelope provided so that your shares are represented and voted at the annual
meeting.
By Order of the Board of Directors,
Frank T. Kane
Vice President-Finance,
Chief Financial Officer,
Secretary and Treasurer
March ___, 2003
CHROMCRAFT REVINGTON, INC.
1100 North Washington Street
Delphi, Indiana 46923
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished to the stockholders of Chromcraft
Revington, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company of proxies to be voted at the annual meeting of
stockholders of the Company to be held on Thursday, May 1, 2003 at 9:00 a.m.,
local time, at the Canterbury Hotel, 123 South Illinois Street, Indianapolis,
Indiana, and at any and all adjournments or postponements of the meeting. This
proxy statement and accompanying form of proxy were first mailed to stockholders
of the Company on or about March ___, 2003.
The cost of soliciting proxies will be borne by the Company. In
addition to use of the mail, proxies may be solicited personally or by telephone
by directors, officers and certain employees of the Company who will not be
specially compensated for such solicitation. The Company also will request
brokerage firms, nominees, custodians and fiduciaries to forward the proxy
solicitation materials relating to the annual meeting to the beneficial owners
of common stock and will reimburse such institutions for the cost of forwarding
the materials.
Any stockholder giving a proxy has the right to revoke it at any time
before the proxy is exercised. Revocation may be made by written notice
delivered to the Secretary of the Company, by executing and delivering to the
Company a proxy bearing a later date or by attending and voting in person at the
annual meeting.
The shares represented by proxies received by the Company will be voted
as instructed by the stockholders giving the proxies. In the absence of specific
instructions, proxies will be voted as follows:
o FOR the approval of the Company's Amended and Restated
Certificate of Incorporation, and each of the amendments
contained therein, as described in this proxy statement;
o FOR the election as directors of the six persons named as
nominees in this proxy statement, as described herein; and
o FOR the approval of the ratification of KPMG LLP as the
independent auditors for the Company for the fiscal year
ending December 31, 2003.
If for any reason any director nominee becomes unable or unwilling to
serve, the persons named as proxies in the accompanying form of proxy will have
authority to vote for a substitute nominee. Any other matters that may properly
come before the annual meeting will be acted upon by the persons named as
proxies in the accompanying form of proxy in accordance with their best
judgment.
The principal executive office of the Company is located at 1100 North
Washington Street, Delphi, Indiana 46923.
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VOTING SECURITIES
The Company has one class of capital stock outstanding consisting of
common stock. The close of business on March 3, 2003 has been fixed as the
record date (the "Record Date") for determining stockholders of the Company
entitled to notice of and to vote at the annual meeting and any adjournments or
postponements thereof. On the Record Date, the Company had 6,038,590 shares of
common stock outstanding and entitled to vote. There are no other outstanding
securities of the Company entitled to vote.
Each share of common stock of the Company is entitled to one vote,
exercisable in person or by proxy. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of common stock is necessary to
constitute a quorum at the annual meeting. Shares voting, abstaining or
withholding authority to vote on any matter at the annual meeting will be
counted as present for purposes of determining a quorum. In counting the votes
with respect to the approval of the Amended and Restated Certificate of
Incorporation (and the proposed amendments contained therein), the ratification
of the appointment of KPMG LLP as independent auditors for the Company and any
other matters that may properly come before the meeting, abstentions will have
the same effect as votes against the matter or as votes withheld as to the
director nominee. Broker non-votes and instructions on the accompanying proxy
card to withhold authority to vote for one or more of the director nominees will
result in those nominees receiving fewer votes. Shares that are the subject of a
broker non-vote will be deemed to be not voted and will have no effect on the
outcome of the vote.
Assuming a quorum is present at the annual meeting, action on the
approval of the Amended and Restated Certificate of Incorporation (and the
proposed amendments contained therein) must be approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of common stock.
The election of directors will be determined by a plurality of the votes cast.
The ratification of the appointment of KPMG LLP and any other matters to
properly come before the meeting must be approved by the affirmative vote of the
holders of at least a majority of the shares present in person or by proxy at
the annual meeting.
ITEM 1 - APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The first item to be acted upon at the annual meeting will be the
approval of the proposed amendments contained in the Company's Amended and
Restated Certificate of Incorporation, which is attached to this Proxy Statement
as Appendix A. The Amended and Restated Certificate of Incorporation contains
several amendments to the Company's present Certificate of Incorporation, each
of which amendments is described below. The following discussion is qualified in
its entirety by reference to the complete Amended and Restated Certificate of
Incorporation (and the proposed amendments contained therein) attached to this
proxy statement as Appendix A.
The amendments are being proposed based upon a general review by the
Board of Directors of the Company's Certificate of Incorporation and based upon
the fact that the Company no longer has a stockholder which owns a majority of
the outstanding voting shares of the Company. In 2002, the Company and its
Employee Stock Ownership Plan purchased all of the shares of common stock owned
by an affiliate of Citigroup, Inc. At the time of the stock purchases, the
Citigroup affiliate owned approximately 59% of the Company's outstanding shares
of common stock.
All of the proposed amendments are permitted by the Delaware General
Corporation Law, which is the law under which the Company was incorporated. The
Board of Directors has unanimously approved each of the proposed amendments.
Each of the proposed amendments will be voted upon separately, as
indicated on the enclosed proxy card. Only those proposed amendments that are
approved by the requisite vote of stockholders will be included in the Amended
and Restated Certificate of Incorporation to be filed with the Delaware
Secretary of State. The Amended and Restated Certificate of Incorporation will
be filed with the approved amendments, regardless of whether one or more of the
proposed amendments is not approved. The Amended and Restated Certificate of
Incorporation (including the amendments contained therein) will become
effective, following stockholder approval, upon the filing of the Amended and
Restated Certificate of Incorporation with the Delaware Secretary of State.
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The persons named on the enclosed proxy intend to vote each proxy, if
properly signed and returned, FOR the approval of each of the proposed
amendments to the Company's Certificate of Incorporation, unless indicated
otherwise on the stockholder's proxy.
The amendments are not being proposed in response to any specific
effort of which the Company is aware to accumulate the Company's outstanding
common stock or to obtain control of the Company. An overall effect of certain
of the proposed amendments may be to discourage or render more difficult to
accomplish certain mergers, tender offers, proxy contests or assumptions of
control by a holder of a large block of the Company's common stock and the
removal of directors, even if any of the foregoing may be favorable to
stockholders generally.
The Board of Directors unanimously recommends voting FOR the Amended and
Restated Certificate of Incorporation, and each of the amendments contained
therein, which are described more fully as follows:
Meetings of Stockholders, Quorum and Voting. Section 2 of Article Ten
of the Company's Certificate of Incorporation is proposed to be amended and
replaced in its entirety to read as set forth in the attached Amended and
Restated Certificate of Incorporation as Section 10.2. Currently, the
Certificate of Incorporation provides that special meetings of stockholders may
be called by the Board of Directors, the President and the holders of not less
than 15% of the outstanding shares entitled to be cast at the meeting. As
amended, new Section 10.2 would be divided into two subsections. The principal
change in the proposed amendment is that special meetings of stockholders would
be able to be called by the Board of Directors, the Chairman of the Board, the
President, the holders of at least one-third of the outstanding shares of common
stock or, if permitted, the holders of any class or series of preferred stock.
The proposed amendment would allow the Chairman of the Board to call a
special meeting of stockholders and would increase the percentage of the holders
of shares entitled to call a special meeting from 15% to 33-1/3%. On March 15,
2002, the Board of Directors elected Mr. Michael E. Thomas, who was then serving
as President of the Company, to the additional position of Chairman of the
Board. In the event that the offices of Chairman of the Board and President are
held by different persons, the Board of Directors believes it is appropriate for
either the Chairman of the Board or the President to be able to call a special
meeting of stockholders of the Company.
The Board of Directors also believes it is more appropriate that the
percentage of holders of common stock required to call a special meeting is
33-1/3% rather than 15%. Placing the percentage at 33-1/3% will avoid the
Company having to incur the significant expense and devote the substantial
management time related to a special meeting called by stockholders, unless the
holders of a significant number of shares of Company common stock (i.e., at
least 33-1/3%) believe it is necessary to convene a special meeting. The Board
of Directors believes that most matters to be voted upon by stockholders can be
addressed at the annual meeting of stockholders each year. Since the
incorporation of the Company in 1992, no stockholder has requested that a
special meeting be convened.
This higher percentage may make it more difficult for stockholders to
call a special meeting, should they deem it to be in the Company's best
interests to do so, and may render it more difficult to acquire control of the
Company.
The remaining portions of the amendment pertaining to quorum and voting
requirements are substantially similar to the current provision in the
Certificate of Incorporation. The current provision regarding confidentiality of
votes at a meeting of stockholders will not be included in the Amended and
Restated Certificate of Incorporation and will instead be included in the
By-Laws of the Company.
Consent of stockholders in lieu of a meeting. Section 3 of Article Ten
of the Company's Certificate of Incorporation is proposed to be amended and
replaced in its entirety to read as set forth in the attached Amended and
Restated Certificate of Incorporation as Section 10.3. The Certificate of
Incorporation currently provides that any action required or permitted to be
taken by stockholders may be taken without a meeting, without prior notice and
without a vote if a written consent, setting forth the action so taken, is
signed by stockholders having not less than the minimum number of votes that
would be necessary to take such action at a meeting. The proposed amendment
would provide that any stockholder action must be taken at a meeting of
stockholders and could not be taken by written consent in lieu of a meeting.
3
The current provision of the Certificate of Incorporation allowing
stockholder action by written consent in lieu of a meeting may have been
appropriate when the Citigroup affiliate owned in excess of a majority of the
outstanding shares of the Company's common stock. With no stockholder of the
Company now owning at least a majority of the outstanding shares, the proposed
amendment would give all of the Company's stockholders the opportunity to
participate in any stockholder action at a meeting and would preclude
stockholder action from being taken without the Board of Directors being aware
of the action in advance.
Eliminating this written consent procedure would prevent unexpected
sudden stockholder action where not all stockholders would have the opportunity
for input and a vote in the action, such as removing any or all of the directors
of the Company. The proposed amendment would, however, prohibit stockholder
action by written consent even if the holders of the requisite number of voting
shares desired to take action which they believed to be in the Company's best
interests without a meeting.
Classified board of directors with staggered terms. Section 4(a) of
Article Ten of the Company's Certificate of Incorporation is proposed to be
amended and replaced in its entirety to read as set forth in the attached
Amended and Restated Certificate of Incorporation as Section 10.4(a). At
present, directors of the Company are not divided into classes, and the term of
each director expires at the annual meeting of stockholders following his
election. Stockholders do not have cumulative voting rights in the election of
directors.
The proposed amendment provides that the number of directors will be
fixed from time to time by the By-Laws of the Company and that the directors
will be divided into three classes, as nearly equal in number as possible, with
the term of office of one class expiring each year. The three classes of
directors would be filled such that the directors of the first class (designated
as Class I) would be elected to hold office for a term expiring at the annual
meeting of stockholders in 2004; the directors of the second class (designated
as Class II) would be elected to hold office for a term expiring at the annual
meeting of stockholders in 2005; and the directors of the third class
(designated as Class III) would be elected to hold office for a term expiring at
the annual meeting of stockholders in 2006. In each case, the director would
serve until his successor is duly elected and qualified. Commencing with the
annual meeting of stockholders in 2004 and at each annual meeting of
stockholders thereafter, the directors of the class of directors whose term
would then expire would be elected to serve for a three-year term and until
their respective successors are duly elected and qualified.
Because only one-third of the directors would be elected at each annual
meeting of stockholders, the Board of Directors believes that the staggered
terms of directors would tend to promote continuity and stability in the
Company's strategies and policies. In addition, by providing for staggered
terms, the Company would be assured that two-thirds of its directors would have
at least one year of experience on the Board of Directors and that new directors
would have an opportunity to become familiar with the business and affairs of
the Company and to benefit from the experience of the other directors. This, in
turn, would help assure that the Board of Directors consists of individuals with
experience and knowledge of the Company's management, strategies and policies.
The Board of Directors also believes that staggered terms for directors may
enhance the Company's ability to attract and retain well-qualified individuals
who are willing to commit the time and resources to understand the Company and
its business, affairs and operations since they would be serving three-year
terms.
The amendment would prevent a stockholder from electing all directors
at a single annual meeting of stockholders and simultaneously gaining control of
the Board of Directors of the Company. With the staggered terms of directors set
forth in the proposed amendment, it would take at least two elections of
directors at annual meetings of stockholders for any party to gain control of
the Board of Directors.
An overall effect of the amendment would be to render more difficult
the accomplishment of undesired mergers, tender offers or proxy contests or the
assumption of control of the Board of Directors at a single annual meeting of
stockholders. Another effect of the proposed amendment would be to encourage
parties seeking to acquire control of the Company to initiate such an
acquisition through arm's-length negotiations with the Board of Directors,
rather than through a hostile takeover bid.
If the proposed amendment is approved by stockholders, the directors
will be divided into three classes and will serve terms as set forth in Item 2
below. If the proposed amendment is not approved by stockholders, all six
4
directors elected at the 2003 annual meeting will serve for a term expiring at
the 2004 annual meeting of stockholders and until their respective successors
are elected and qualified.
Vacancies and newly created directorships. Section 4(b) of Article Ten
of the Company's Certificate of Incorporation is proposed to be amended and
replaced in its entirety to read as set forth in the attached Amended and
Restated Certificate of Incorporation as Section 10.4(b). The current
Certificate of Incorporation states that vacancies on the Board of Directors
will be filled in accordance with the By-Laws of the Company. The By-Laws
provide that vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director.
The proposed amendment would continue the present authority of a
majority of the directors then in office, though less than a quorum, or a sole
remaining director, to fill vacancies and newly created directorships, but makes
it clear that vacancies caused by removal, resignation, retirement,
disqualification or death as well as any newly created directorships resulting
from an increase in the number of directors may be filled by the directors. The
proposed amendment also would provide that a director chosen to fill any vacancy
or any newly created directorship will hold office until the next election of
the class for which such director was chosen and until such director's successor
is duly elected and qualified. The directors who fill the newly created
directorship would have the discretion to select the class to which the new
director would be assigned so long as the classes of directors are divided as
nearly equal in number as possible. The proposed amendment further provides that
no decrease in the number of directors would shorten the term of any existing
director.
The proposed amendment, while substantially similar to the existing
provision in the By-Laws, encompasses more than filling vacancies and newly
created directorships resulting from an increase in the number of directors and
would now include filling vacancies caused by removal, resignation, retirement,
disqualification or death. Similar to the existing provisions in the Certificate
of Incorporation, director vacancies and newly created directorships may be
filled only by the Board of Directors, and not stockholders. Further, the
amendment would place the substantive provisions regarding the filling of
vacancies and newly created directorships in the Certificate of Incorporation in
addition to the By-Laws.
Removal of directors. Section 4 of Article Ten of the Company's
Certificate of Incorporation is proposed to be amended by adding a new Section
to read as set forth in the attached Amended and Restated Certificate of
Incorporation as Section 10.4(c). The Certificate of Incorporation currently
does not address the removal of directors. The Company's By-Laws provide that
any director or the entire Board of Directors may be removed at any time, with
or without cause, by the holders of the shares representing a majority of the
voting power of the Company then entitled to vote at an election of directors.
The proposed new section sets forth the requirements for removal of any of the
Company's directors and places director removal requirements in the Amended and
Restated Certificate of Incorporation. This section provides that any or all of
the directors may be removed only for cause by the vote of not less than
two-thirds of the outstanding shares of common stock of the Company then
entitled to vote at an election of directors. "Cause" is not defined by the
Delaware General Corporation Law.
When a corporation divides its directors into classes having staggered
terms (as proposed by the amendment to Section 4(a) of Article Ten of the
Certificate of Incorporation discussed above), a higher standard for removal of
directors is frequently added in order to achieve the intended effects of the
classified board. One effect of a classified board is to prevent a party from
gaining control of all or a majority of the directors at one time at a single
annual meeting of stockholders.
Limiting the right of stockholders to remove directors only for cause,
and then only by the vote of the holders of not less than two-thirds of the
outstanding shares of common stock, furthers this effect because control of the
Company's Board of Directors cannot be gained unless, with respect to at least a
majority of the directors, there exist circumstances that constitute "cause" for
removal and stockholders holding not less than two-thirds of the outstanding
shares of common stock vote for such removal. If a higher removal standard were
not imposed, stockholders holding a majority of the outstanding shares of common
stock could remove all of the directors without cause, elect new directors and
thereby obtain control of the Board of Directors.
5
A disadvantage of the higher removal standard is that it may be more
difficult for stockholders to remove directors, should they deem it to be in the
best interests of the Company to do so, because more than a simple majority of
the holders of outstanding shares of common stock must vote for removal, and
circumstances constituting "cause" must exist. The proposed amendment also may
render it more difficult, and may discourage an attempt, to acquire control of
the Company without the approval of the Board of Directors. In addition, the
proposed amendment would make it impossible for stockholders who own a majority
(but less than two-thirds) of the outstanding shares of common stock to remove
directors immediately and would instead require such stockholders to replace
directors at an annual meeting of stockholders as their respective terms expire
over a period of up to three years.
The proposed amendment would also make it more difficult for
stockholders to remove directors in circumstances that do not involve a takeover
attempt and where business reasons for such removal may exist. Further, the
proposed amendment may have the effect of delaying an ultimate change in
existing management that might be desired by the holders of a majority (but less
than two-thirds) of the outstanding shares.
In addition, the Chromcraft Revington Employee Stock Ownership Plan
Trust presently owns approximately one-third of the outstanding shares of common
stock of the Company and, as such, would have the ability to block the removal
of any director, even if cause for removal exists. When voting the shares of
Company common stock held by the Trust, the trustee of the Trust will consider
the directions of the participants of the Chromcraft Revington Employee Stock
Ownership Plan (the "ESOP") as to the allocated shares and the directions of the
ESOP Benefits Committee as to the unallocated shares. The Company's Board of
Directors has the power to appoint and remove all members of the ESOP Benefits
Committee. Accordingly, the Board of Directors and the employees of the
Company's subsidiaries control the voting of the shares of common stock held by
the Trust, subject to the fiduciary duties of the trustee of the Trust, and will
have substantial influence over the removal of any directors.
Holders of preferred stock. Section 4 of Article Ten of the Company's
Certificate of Incorporation is proposed to be amended by adding a new Section
to read as set forth in the attached Amended and Restated Certificate of
Incorporation as Section 10.4(d). This new section would provide that, whenever
the holders of any class or series of preferred stock of the Company has the
right, voting separately by class or series, to elect any director(s), then the
election, term of office, filling of vacancies, removal and other features of
such directorship(s) would be governed by applicable law, by the Amended and
Restated Certificate of Incorporation, by the By-Laws and by the resolutions of
the Board of Directors creating such class or series, to the extent applicable.
This section also states that such directors would not be divided into classes
unless expressly provided in any resolutions of the Board of Directors.
Although the Amended and Restated Certificate of Incorporation
authorizes the issuance of preferred stock, no shares of preferred stock are
presently outstanding. If, however, the Company were to issue any shares of
preferred stock granting the right to the holders thereof, voting separately as
a class, to elect any director(s), then the election, term of office, filling of
vacancies, removal and other features of that directorship may be different from
what is in effect for directors elected by the holders of common stock.
Certain business combinations. The Company's Certificate of
Incorporation is proposed to be amended by adding a new Article Twelve to read
as set forth in the attached Amended and Restated Certificate of Incorporation.
This new Article would provide that if at least two-thirds of the Board of
Directors approves certain business combinations, then only a majority of the
outstanding shares of common stock would be required to approve the transaction.
If, however, less than two-thirds of the directors were to approve the business
combination, then the holders of at least two-thirds of the outstanding shares
of common stock must approve the transaction. Article Twelve defines business
combinations generally as any merger, consolidation or similar transaction;
share exchange; sale, lease or other disposition of all or substantially all of
the assets of the Company; or voluntary dissolution or liquidation of the
Company.
This proposed amendment would provide for a lower stockholder vote
requirement for those business combinations that receive approval by at least
two-thirds of the directors, whereas those business combinations that receive
approval from fewer directors (but at least a majority) would require a higher
stockholder vote requirement.
6
The amendment encourages parties seeking to complete a business
combination with the Company to enter into negotiations with the full Board of
Directors.
The proposed amendment may tend to discourage or render it more
difficult for a person to acquire control of the Company through a business
combination, even if such a transaction might be favorable to stockholders. This
amendment also may tend to perpetuate the Board of Directors in that, if a
certain number of directors do not approve a business combination, it may make
it more difficult to obtain the higher stockholder vote requirement and complete
the transaction. In addition, the amendment may give directors of the Company
veto power over business combinations desired by, or potentially beneficial to,
a majority of the Company's stockholders. Further, holders of a minority (but
more than one-third) of the total outstanding shares of common stock of the
Company would be able to veto a business combination that the Board of Directors
or a majority of the stockholders may believe is desirable or in their best
interests.
In addition, the Chromcraft Revington Employee Stock Ownership Plan
Trust presently owns approximately one-third of the outstanding shares of common
stock of the Company and, as such, would have the ability to block a business
combination requiring the vote of the holders of at least two-thirds of the
outstanding shares of common stock. When voting the shares of Company common
stock held by the Trust, the trustee of the Trust will consider the directions
of the participants of the ESOP as to the allocated shares and the directions of
the ESOP Benefits Committee as to the unallocated shares. The Company's Board of
Directors has the power to appoint and remove all members of the ESOP Benefits
Committee. Accordingly, the Board of Directors and the employees of the
Company's subsidiaries control the voting of the shares of common stock held by
the Trust, subject to the fiduciary duties of the trustee of the Trust, and will
have substantial influence over any business combination requiring the vote of
the holders of at least two-thirds of the outstanding shares of common stock of
the Company.
As of the Record Date, the executive officers of the Company
beneficially owned approximately 8.9%, and the non-employee directors
beneficially owned approximately 1.0%, of the outstanding shares of common stock
of the Company. See "STOCK OWNERSHIP INFORMATION -- Stock Ownership of Directors
and Executive Officers." As of the Record Date, certain principal stockholders
of the Company beneficially owned approximately 77.1% of the outstanding shares
of common stock of the Company. See "STOCK OWNERSHIP INFORMATION -- Owners of
More than Five Percent of Company Stock."
Statutory business combinations with interested stockholders. Section 1
of Article Ten of the Company's Certificate of Incorporation is proposed to be
amended and replaced in its entirety to read as set forth in the attached
Amended and Restated Certificate of Incorporation as Section 10.1. The current
Certificate of Incorporation states that Section 203 of the Delaware General
Corporation Law will not apply to the Company. The proposed amendment would
provide that Section 203 of the Delaware General Corporation Law will apply to
the Company.
Section 203 generally prohibits a Delaware corporation from engaging in
certain statutorily-defined business combinations with an "interested
stockholder" (one who owns 15% or more of a corporation's outstanding voting
stock) for a period of three years following the date that the stockholder
became an interested stockholder, unless:
(i) Prior to such date, the board of directors of the
corporation approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
(ii) Upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced; or
(iii) On or subsequent to such date, the business combination
is approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of at least 66-2/3% of the outstanding voting stock that is not
owned by the interested stockholder.
These prohibitions will not apply, however, to any business combination
between a Delaware corporation and a party who became an interested stockholder
prior to the time that Section 203 becomes applicable to the corporation.
7
Accordingly, neither the Company's Employee Stock Ownership Plan Trust nor T.
Rowe Price Associates, Inc. will be deemed interested stockholders under Section
203 of the Delaware General Corporation Law.
The Board of Directors of the Company believes it is in the best
interests of all stockholders to take advantage of this statutory anti-takeover
provision of Delaware law. The proposed amendment would tend to discourage
undesired mergers, tender offers and proxy contests and would encourage parties
seeking to complete a business combination with the Company to enter into
negotiations with the Board of Directors. A disadvantage of the amendment is
that it may tend to discourage or render it more difficult for parties to
acquire control of the Company through a business combination, even if such a
transaction might be favorable to stockholders.
Certain amendments to certificate of incorporation and by-laws. The
Company's Certificate of Incorporation is proposed to be amended by adding a new
Article Thirteen to read as set forth in the attached Amended and Restated
Certificate of Incorporation. This new Article would provide that the
affirmative vote of the holders of not less than two-thirds of the outstanding
shares of common stock, voting together as a single class, is required to alter,
amend or repeal the sections or articles of the Amended and Restated Certificate
of Incorporation being considered by stockholders at this annual meeting (i.e.,
Sections 10.1, 10.2, 10.3, 10.4(a), 10.4(b), 10.4(c) and 10.4(d) of Article Ten;
Article Twelve; and Article Thirteen itself), or any other provision of the
Amended and Restated Certificate of Incorporation or the By-Laws in
contravention of such sections and articles.
Delaware law allows the holders of a majority of the outstanding shares
of common stock to approve any amendment to the Certificate of Incorporation of
the Company. The proposed new section increases the stockholder approval
requirement for such amendments and may render it more difficult for
stockholders to amend certain provisions of the Amended and Restated Certificate
of Incorporation of the Company.
Existing anti-takeover measures. The Company's existing Certificate of
Incorporation authorizes the issuance of up to 100,000 shares of preferred stock
and up to 20,000,000 shares of common stock. As of the Record Date, the Company
had no shares of preferred stock outstanding and 6,038,590 shares of common
stock outstanding. The Board of Directors is permitted to authorize the
Company's issuance of shares of preferred stock and additional shares of common
stock, up to the maximum amount authorized by the Certificate of Incorporation,
without further stockholder action. The shares of preferred stock could be
issued on such terms and with such relative rights and preferences as the Board
of Directors may determine, subject to any limitations set forth in the Amended
and Restated Certificate of Incorporation. The authorized but unissued shares of
preferred or common stock could be issued in acquisition transactions, in
connection with stock option plans and for other corporate purposes. The Company
has no present plans to issue shares of its preferred or common stock other than
common stock in connection with its stock option plans previously approved by
stockholders.
The holders of common stock have no preemptive rights to acquire
additional shares of common stock or other securities which might, from time to
time, be issued by the Company. The lack of such rights could cause a reduction
in the ownership percentage or voting power of a stockholder in the event of a
subsequent issuance of preferred or common stock.
ITEM 2 - ELECTION OF DIRECTORS
The second item to be acted upon at the annual meeting will be the
election of six directors to be divided into the classes and for the terms of
office indicated below. Assuming the Amended and Restated Certificate of
Incorporation is approved, those nominees designated as Class I directors will
be elected to serve for a term expiring at the annual meeting of stockholders in
2004; those nominees designated as Class II directors will be elected to serve
for a term expiring at the annual meeting of stockholders in 2005; and those
nominees designated as Class III directors will be elected to serve for a term
expiring at the annual meeting of stockholders in 2006. In each case, the
director will serve until his successor is duly elected and qualified.
Commencing with the annual meeting of stockholders in 2004 and at each annual
meeting of stockholders thereafter, the directors of the class whose term will
then expire will be elected for a three year term and until their respective
successors are duly elected and qualified.
8
If the classified board of directors set forth in the Amended and
Restated Certificate of Incorporation is not approved, then each director
elected at the 2003 annual meeting of stockholders will be elected to hold
office until the 2004 annual meeting and until his or her successor is duly
elected and qualified.
The Company expects each nominee for election as a director named in
this proxy statement to be able to serve if elected. If any nominee is not able
to serve, proxies will be voted in favor of the remainder of those nominated and
may be voted for substitute nominees, unless the Board of Directors chooses to
reduce the number of directors serving on the Board. The persons named on the
enclosed proxy intend to vote each proxy, if properly signed and returned, FOR
the election of each of the six director nominees identified in this proxy
statement, unless indicated on the proxy that the stockholder's vote should be
withheld from any or all of the nominees.
The Board of Directors unanimously recommends voting FOR each of the nominees
named below to the classes and for the terms indicated.
Set forth below are the name and age of each nominee, his principal
occupation and his directorships with other public companies.
Nominees for Directors in Class I
---------------------------------
Stephen D. Healy, age 56, has served as the President of Cochrane
Furniture Company, Inc. (a subsidiary of the Company) since October, 1997. He
served as President of Korn Industries, Incorporated (a subsidiary of the
Company) from December, 2000 to July, 2002. From November, 1996 to September,
1997, Mr. Healy served as Executive Vice President of Cochrane Furniture
Company, Inc. Previously, Mr. Healy served as the Vice President-Finance of
Chromcraft Corporation (a subsidiary of the Company). Mr. Healy was first
elected as a director of the Company in 2002.
Theodore L. Mullett, age 60, has been a management consultant since
1998. From 1965 until his retirement in 1998, Mr. Mullett was a certified public
accountant with KPMG LLP and was a partner with that firm from 1973 until 1998.
Mr. Mullett was first elected as a director of the Company in 2002.
Nominees for Directors in Class II
----------------------------------
Larry P. Kunz, age 68, served as the President and Chief Operating
Officer of Payless Cashways, Inc., a retailer of building materials and home
improvement products, from 1986 until his retirement in 1993. Mr. Kunz was first
elected as a director of the Company in 1992.
Michael E. Thomas, age 60, is the Chairman, President and Chief
Executive Officer of the Company. He has served as the President and Chief
Executive Officer of the Company since its organization in 1992 and the Chairman
of the Board of Directors since March 15, 2002. Mr. Thomas was first elected as
a director of the Company in 1992.
Nominees for Directors in Class III
-----------------------------------
David L. Kolb, age 64, has served as the Chairman of the Board of
Directors of Mohawk Industries, Inc., a flooring manufacturer, since 2001. From
1988 until 2000, Mr. Kolb served as the Chairman and Chief Executive Officer of
Mohawk Industries, Inc. From 1980 until 1988, Mr. Kolb served as the President
of Mohawk Carpet Corporation. Mr. Kolb serves as a director of Paxar Corp., a
manufacturer of tags and labels for retailers and apparel manufacturers. Mr.
Kolb was first elected as a director of the Company in 1992.
9
Warren G. Wintrub, age 69, was a partner in the accounting firm of
Coopers & Lybrand from 1962 until his retirement in 1992. While at Coopers &
Lybrand, Mr. Wintrub served as a member of the Executive Committee from 1976
through 1988 and as the Chairman of the Retirement Committee from 1979 through
1992. Mr. Wintrub serves as a director of Getty Realty Corp., a real estate
company specializing in the ownership, leasing and management of gasoline
station/convenience store properties, Mr. Wintrub also serves as a director of
Corporate Property Associates #14, Corporate Property Associates #15 and Carey
Institutional Properties, each of which is a real estate investment trust. Mr.
Wintrub was first elected as a director of the Company in 1992.
ITEM 3 - RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS INDEPENDENT AUDITORS
The third item of business to be acted upon at the annual meeting will
be the ratification of the appointment of KPMG LLP as the independent auditors
for the Company for the fiscal year ending December 31, 2003. Although
ratification by stockholders is not required, the Board of Directors has
determined that it is desirable to ask stockholders to ratify its appointment of
KPMG LLP as the Company's independent auditors. In the event that the
appointment of KPMG LLP is not ratified by the stockholders, the Board of
Directors will consider the appointment of other independent auditors for the
fiscal year ending December 31, 2003. The persons named on the enclosed proxy
intend to vote each proxy, if properly signed and returned, FOR the ratification
of KPMG LLP as the independent auditors for the Company for the year ending
December 31, 2003, unless indicated otherwise on the stockholder's proxy.
The Board of Directors unanimously recommends voting FOR the ratification of
the appointment of KPMG LLP as the independent auditors for the Company.
EXECUTIVE OFFICERS OF THE COMPANY
Mr. Thomas and Mr. Kane are executive officers of the Company, and each
serves a term of office of one year and until his successor is duly elected and
qualified. Mr. Healy is not an officer of the Company but serves as President of
one of the Company's subsidiaries and is a director of the Company. Although Mr.
Healy is not an officer of the Company, he may be deemed to be an executive
officer under certain rules and regulations of the Securities and Exchange
Commission. Mr. Healy's term of office as President of Cochrane Furniture
Company, Inc. is one year and until his successor is duly elected and qualified.
Michael E. Thomas, age 60, has served as the Chairman of the Board
since March 15, 2002 and as the President and Chief Executive Officer of the
Company since its organization in 1992.
Frank T. Kane, age 49, has served as the Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer of the Company since its organization
in 1992.
Stephen D. Healy, age 56, has served as the President of Cochrane
Furniture Company, Inc. (a subsidiary of the Company) since October, 1997. He
served as President of Korn Industries, Incorporated (a subsidiary of the
Company) from December, 2000 until July, 2002. From November, 1996 to September,
1997, Mr. Healy served as Executive Vice President of Cochrane Furniture
Company, Inc. Previously, Mr. Healy served as the Vice President-Finance of
Chromcraft Corporation (a subsidiary of the Company).
STOCK OWNERSHIP INFORMATION
Stock Ownership of Directors and Executive Officers
The following table shows the number of shares of common stock of the
Company beneficially owned on March 3, 2003 by each director and executive
officer of the Company, as well as the number of shares beneficially owned by
all directors, executive officers and director nominees as a group.
10
Number of Shares Percent of
Name of Person Beneficially Owned(1) Common Stock
-------------- --------------------- ------------
Stephen D. Healy 73,976 1.2%
Frank T. Kane 88,176 (2) 1.4%
David L. Kolb 21,000 *
Larry P. Kunz 9,000 *
Theodore L. Mullett 10,200 *
Michael E. Thomas 400,231 (3) 6.3%
Warren G. Wintrub 23,000 *
Directors and Executive
Officers as a Group 625,583 9.9%
(7 Persons)
----------------------------
*Represents less than 1% of the outstanding common stock.
(1) Includes 454,357 shares which directors and officers have the
right to acquire pursuant to stock options exercisable within
sixty days of the date of this proxy statement as follows:
Stephen D. Healy, 72,476; Frank T. Kane, 86,652; David L.
Kolb, 5,000; Larry P. Kunz, 5,000; Theodore L. Mullett,
10,000; Michael E. Thomas, 270,229; and Warren G. Wintrub,
5,000.
(2) Includes 1,324 shares held for the benefit of Mr. Kane under
the Chromcraft Revington Savings Plan.
(3) Includes 30,252 shares held for the benefit of Mr. Thomas
under the Chromcraft Revington Savings Plan.
Owners of More than Five Percent of Company Stock
The stockholders listed in the following table are known by management
to own beneficially more than 5% of the outstanding shares of the Company's
common stock as of March 3, 2003.
Name and Address Number of Shares Percent of
of Beneficial Owner Beneficially Owned Common Stock
------------------- ------------------ ------------
Chromcraft Revington Employee 2,000,000 33.1%
Stock Ownership Plan Trust (1)
1100 North Washington Street
Delphi, Indiana 46923
T. Rowe Price Associates, Inc. (2) 1,000,000 16.6%
100 East Pratt Street
Baltimore, Maryland 21202
FMR Corp. (3) 604,000 10.0%
82 Devonshire Street
Boston, Massachusetts 02109
Michael E. Thomas (4) 400,231 6.3%
1100 North Washington Street
Delphi, Indiana 46923
11
Dimensional Fund Advisors, Inc. (5) 365,000 6.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Royce & Associates, LLC (6) 309,900 5.1%
1414 Avenue of the Americas
New York, New York 10019
(1) The ESOP provides that the ESOP Trustee will vote the shares held by
the ESOP in accordance with its fiduciary duties. In voting such
shares, the ESOP Trustee will consider the directions of the ESOP
participants as to allocated shares and the directions of the ESOP
Benefits Committee as to unallocated shares. The ESOP Benefits
Committee consists of Michael E. Thomas, Chairman, President and Chief
Executive Officer of the Company, and Frank T. Kane, Vice
President-Finance, Chief Financial Officer, Secretary and Treasurer of
the Company. The members of the ESOP Benefits Committee are appointed
by the Board of Directors.
(2) Based solely on information provided by T. Rowe Price Associates, Inc.
("Price Associates"). These securities are owned by T. Rowe Price Small
Cap Value Fund, Inc., which owns 1,000,000 shares, representing 16.6%
of the outstanding shares of common stock, and which Price Associates
serves as investment advisor with power to direct investments and/or
sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates
is deemed to be a beneficial owner of such securities. However, Price
Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(3) Based solely on information provided by FMR Corp. in a Schedule 13G
filed with the Securities and Exchange Commission on February 14, 2003.
Included as reporting persons in the filing are Fidelity Management &
Research Company, Fidelity Low Priced Stock Fund, Edward C. Johnson,
3d, Chairman of FMR Corp., and Abigail P. Johnson, a director of FMR
Corp. The reporting persons have sole power to dispose of 604,000
shares.
(4) Includes 270,229 shares which Mr. Thomas has the right to acquire
pursuant to stock options and 30,252 shares held for the benefit of Mr.
Thomas under the Chromcraft Revington Savings Plan. Of the total shares
reported, Mr. Thomas has sole voting power over all of the shares
listed and no dispositive power over the 30,252 shares held for his
benefit under the Chromcraft Revington Savings Plan.
(5) Based solely on information provided by Dimensional Fund Advisors, Inc.
("Dimensional") in a Schedule 13G filed with the Securities and
Exchange Commission on February 10, 2003. These securities are owned by
a group of investment companies, trusts and accounts for which
Dimensional serves as investment advisor with power to direct
investments and sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934,
Dimensional is deemed to be the beneficial owner of such securities.
However, Dimensional expressly disclaims that it is, in fact, the
beneficial owner of such securities.
(6) Based solely on information provided by Royce & Associates, LLC in a
Schedule 13G filed with the Securities and Exchange Commission on
February 3, 2003. Royce & Associates, LLC is the only reporting person
identified in the Schedule 13G and it has sole power to dispose of
309,900 shares.
12
Change in Control
In 2002, Court Square Capital Limited ("Court Square"), a Delaware
corporation and an affiliate of Citigroup Inc., completed its sale of 5,695,418
shares of Company common stock, comprising approximately 59% of the Company's
issued and outstanding shares of common stock on that date, to the Company and
the Chromcraft Revington Employee Stock Ownership Plan Trust (the "ESOP Trust"),
which forms a part of the ESOP. With respect to the 5,695,418 shares of the
Company's common stock sold by Court Square, 3,695,418 shares were repurchased
by the Company (the "Company Stock Transaction") and 2,000,000 shares were
purchased by the ESOP Trust (the "ESOP Stock Transaction" and together with the
Company Stock Transaction, the "Transaction"). The Company and the ESOP Trust
each paid $10 per share for the shares acquired from Court Square for a purchase
price of $56,954,180. In addition, the Company paid Court Square and its
designee an aggregate transaction fee of $2,800,000. Court Square's designee was
Mr. M. Saleem Muqaddam, who received $1,000,000 of the aggregate transaction
fee. Mr. Muqaddam is a former officer of Court Square and a former director of
the Company. He resigned as a director of the Company concurrently with the
consummation of the Company Stock Transaction.
The funds required to pay the total consideration and certain related
expenses of the Transaction were obtained using available cash and bank
borrowings of approximately $45,000,000. Under a term loan and security
agreement (the "ESOP Loan Agreement"), the Company loaned $20,000,000 to the
ESOP Trust to finance the ESOP Stock Transaction. Under the ESOP Loan Agreement,
the ESOP Trust will repay such loan to the Company over a 30-year term at a
fixed rate of interest of 5.489% per annum.
Under the ESOP Loan Agreement, the ESOP Trust pledged the 2,000,000
shares of the Company's common stock owned by it (the "Pledged Shares") to the
Company as security for repayment of its obligations thereunder. Under a Pledge
and Security Agreement between the Company and National City Bank, as agent for
a syndicate of banks, the Company pledged the Pledged Shares to the banks.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, the Company's directors and
executive officers, and any persons beneficially owning more than 10% of the
Company's common stock, are required to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established by the Securities and Exchange Commission, and the Company is
required to disclose in this proxy statement any failure to file timely the
required reports by directors, executive officers and 10% stockholders of the
Company. During 2002, no director or executive officer was delinquent in filing
the required reports with the Securities and Exchange Commission. In making this
disclosure, the Company has relied solely upon written representations of
directors and executive officers of the Company and copies of reports that those
persons have filed with the Securities and Exchange Commission and provided to
the Company.
MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held nine meetings during 2002.
Each director attended at least 75% of the aggregate of all meetings of the
Board of Directors and all meetings of committees of the Board of Directors of
which he is a member.
The Company has a Compensation Committee and an Audit Committee as
standing committees of the Board of Directors. There is no nominating committee.
The entire Board of Directors reviews the qualifications of persons to serve on
the Board of Directors and selects the Company's nominees.
The Compensation Committee members are Larry P. Kunz, Chairman, David
L. Kolb, Theodore L. Mullett and Warren G. Wintrub, all of whom are outside
directors. The Compensation Committee reviews the Company's compensation
philosophy and programs and determines the compensation to be paid to the
executive officers of the Company. The Compensation Committee also reviews and
makes recommendations concerning outside director compensation and administers
the Directors' Stock Option Plan, the 1992 Stock Option Plan for key employees
13
and the executive incentive compensation plans. There were twelve meetings of
the Compensation Committee during 2002.
The Audit Committee members are Warren G. Wintrub, Chairman, David L.
Kolb, Larry P. Kunz and Theodore L. Mullett, all of whom are outside directors
and are independent. Information regarding the functions performed by the Audit
Committee is set forth below under the caption "Report of the Audit Committee."
The Audit Committee is governed by a written charter adopted by the Board of
Directors. The Audit Committee held two meetings during 2002.
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid an annual
retainer of $20,000, plus a fee of $1,500 for each Board of Directors meeting
attended and a fee of $750 for each telephonic meeting in which he participates.
For committee meetings not held on the same day as a Board of Directors meeting,
a director receives a fee of $1,500 for each meeting attended and $750 for each
telephonic meeting in which he participates. Directors serving as committee
chairs receive an additional $3,000 annual retainer. Directors who are employees
of the Company do not receive director or committee fees for their service on
the Board of Directors.
Directors who are not employees of the Company are eligible to
participate in the Directors' Stock Option Plan of the Company. Under this plan,
each director who is not an employee of the Company receives an option to
purchase 2,500 shares of common stock on the day following each annual meeting
of stockholders. Any new director who is elected or appointed for the first time
to the Board of Directors receives an option to purchase 10,000 shares of common
stock. In addition, those persons serving as directors at the time the Company
consummated the Company Stock Transaction each received an option to purchase
2,500 shares. All stock options vest immediately at the time of the grant, have
an exercise price equal to the fair market value of the underlying shares on the
date of the grant and are exercisable for ten years after each grant.
In 2002, Larry P. Kunz, David L. Kolb and Warren G. Wintrub each
received an option to purchase 5,000 shares of common stock and Theodore L.
Mullett received an option to purchase 10,000 shares of common stock under the
Directors' Stock Option Plan.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is responsible for
providing independent, objective oversight of the Company's accounting functions
and internal controls. Management has the primary responsibility for the
financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed the Company's consolidated financial statements
for the year ended December 31, 2002 with management, including a discussion of
the quality of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of the audited financial
statements with generally accepted accounting principles, their judgments as to
the quality of the Company's accounting principles and such other matters as are
required to be discussed with the Committee under generally accepted auditing
standards, including the matters discussed in the Statement on Auditing
Standards No. 61. Additionally, the Committee discussed with the independent
auditors the auditors' independence from management and the Company, including
the matters in the written disclosures and the letter provided by the
independent auditors required by the Independence Standards Board Standard No.
1, and considered the compatibility of non-audit services with auditor
independence.
The Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Committee completed its annual review and reassessment of the adequacy of its
written charter.
14
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited consolidated financial statements of the Company be included in
the Annual Report on Form 10-K for the year ended December 31, 2002 filed with
the Securities and Exchange Commission.
Members of the Audit Committee
Warren G. Wintrub, Chairman
David L. Kolb
Larry P. Kunz
Theodore L. Mullett
EXECUTIVE COMPENSATION
The following table summarizes the annual and long term compensation
paid by the Company to the executive officers of the Company for the years ended
December 31, 2002, 2001 and 2000.
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Other Shares
Name and Annual Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Stock Options Award (1) Compensation
----------------------------------------------------------------------------------------------------------------------
Michael E. Thomas 2002 $ 387,500 $456,435 $55,590 (2) 175,000 $471,254 $60,028 (3)
Chairman, President 2001 322,833 -0- 52,749 (2) -0- 72,926 95,067 (3)
and Chief Executive 2000 310,500 122,312 54,991 (2) 15,987 93,381 87,791 (3)
Officer of the Company
Frank T. Kane 2002 $202,000 $158,623 -0- 100,000 $131,018 $ 505 (4)
Vice President 2001 185,000 -0- -0- -0- 22,288 8,258 (4)
Finance, Chief 2001 173,333 45,519 -0- 4,668 27,802 6,948 (4)
Financial Officer,
Secretary and
Treasurer of the
Company
Stephen D. Healy (5) 2002 $207,500 $20,483 -0- 100,000 -0- $ 4,000 (6)
President of Cochrane
Furniture Company,
Inc. (a wholly-owned
subsidiary of the
Company)
---------------
(1) For 2002, the award under the Chromcraft Revington Long Term Executive
Incentive Plan (the "Long Term Plan") was paid in two components: 50%
in a single lump sum cash amount and 50% in options to acquire shares
of the Company's common stock. The stock option component of the award
for 2002 was granted in 2003. For 2001 and 2000, awards under the Long
Term Plan were paid in cash.
(2) Includes amounts reimbursed to Mr. Thomas for taxes incurred on Company
contributions to the Thomas SERP (as defined below) of $43,406, $46,426
and $47,346 for 2002, 2001 and 2000, respectively.
(3) Includes Company contributions to tax qualified retirement plans of
$500, $425 and $11,900 for 2002, 2001 and 2000, respectively, and
Company contributions pursuant to the Thomas SERP (as defined below)
15
and a supplemental executive retirement plan of the Company
discontinued in 2002 of $59,528, $94,642 and $75,891 for 2002, 2001 and
2000, respectively.
(4) Represents Company contributions to tax qualified retirement plans of
$505, $425 and $3,858 for 2002, 2001 and 2000, respectively, and
Company contributions to a supplemental executive retirement plan of
the Company discontinued in 2002 of $7,883 and $3,090 for 2001 and
2000, respectively.
(5) Compensation information is provided only for the year that Mr. Healy
was deemed to be an executive officer of the Company.
(6) Represents Company contributions to a tax qualified retirement plan.
Stock Options
The following table summarizes stock options granted in 2002 to the
persons named in the Summary Compensation Table, and the value of the options
held by such persons at December 31, 2002.
Option Grants in 2002
Percent of
Number of Total
Shares Options Market Potential
Underlying Granted to Price on Realizable Value at Assumed Annual
Options Employees Exercise Date of Expiration Rates of Stock Price Appreciation
Name Granted in 2002 Price Grant Date for Option Term (1)
-------------------
0% 5% 10%
--------------------------------------------------------------------------------------------------------------------------
Michael E. Thomas 175,000 42.7% $ 10.49 $ 12.50 03/15/12 $ 351,750 $ 1,727,447 $ 3,838,056
Frank T. Kane 100,000 24.4% $ 10.49 $ 12.50 03/15/12 $ 201,000 $ 987,113 $ 2,193,175
Stephen D. Healy 100,000 24.4% $ 10.49 $ 12.50 03/15/12 $ 201,000 $ 987,113 $ 2,193,175
(1) The dollar amounts in the 0% column represent the value of the
option on the grant date. The dollar amounts in the 5% and 10%
columns, respectively, represent a hypothetical increase in
the price of the common stock, less the exercise price, from
the date of option grant until the expiration date of the
option at the rate of 5% and 10% per annum compounded. The
actual value, if any, of stock options is dependent on the
future performance of the Company's common stock and overall
stock market conditions. There can be no assurance that the
amounts assumed in this table will be achieved.
The following table summarizes certain information concerning stock
options exercised in 2002 by the persons named in the Summary Compensation
Table, and the value of the options held by such persons at December 31, 2002.
Aggregated Option Exercises in 2002 and Year End Option Values
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Share December 31, 2002 December 31, 2002 (1)
Acquired on Value ----------------- ---------------------
Name Exercise Realized Exercisable Unexercisable Exerciseable
----------------------------------------------------------------------------------------------------------------------
Michael E. Thomas 48,200 $ 357,644 214,829 175,000 $ 340,461 $ 448,000
Frank T. Kane -0- -0- 66,906 100,000 $ 89,946 $ 256,000
Stephen D. Healy 7,800 $ 46,321 52,476 100,000 $ 75,937 $ 256,000
16
(1) Value per share is calculated by subtracting the exercise price from
the closing price of the Company's common stock of $13.05 per share on
December 31, 2002, as reported on the New York Stock Exchange.
Supplemental Executive Retirement Plan
Michael E. Thomas. Effective as of March 31, 1992, the Company
established a supplemental executive retirement plan for the purpose of
providing supplemental retirement benefits to Mr. Thomas upon his retirement
from the Company (the "Thomas SERP"). The Thomas SERP is designed to provide Mr.
Thomas with retirement income of approximately 60% of his projected average
salary, bonus and pre-tax deferrals of his final three years of employment with
the Company prior to his retirement at age 65. The Thomas SERP is reduced by the
amount of benefits payable under various other plans. The Thomas SERP is
implemented pursuant to a whole life insurance policy which provides that the
Company will pay up to 15 annual premium payments; provided, however, such
premium payments will cease upon the termination of Mr. Thomas' employment.
Based upon Mr. Thomas' actual salary and bonuses paid during the last three
fiscal years, but not including any applicable reductions, the estimated annual
benefit payable under the Thomas SERP to Mr. Thomas upon retirement at age 65 is
$320,000.
Employment Agreements
Michael E. Thomas. The Company has entered into an employment agreement
with Michael E. Thomas which provides, among other items, for the employment by
the Company of Mr. Thomas through April 23, 2004 as the Company's Chairman of
the Board, President and Chief Executive Officer. The employment agreement
provides for automatic extensions for successive one-year periods upon
expiration of the initial term, or any renewal term, unless the Company or Mr.
Thomas gives notice of termination at least 180 days before the termination
date. The Company may terminate the employment of Mr. Thomas with or without
cause (as defined in the employment agreement) or in the event of the disability
of Mr. Thomas. If the Company terminates Mr. Thomas with cause, then he is
entitled to receive his monthly base salary for a three-month period following
his termination. If the Company terminates the employment of Mr. Thomas without
cause, then the Company will be required to pay him an amount equal to twice his
then-current annual base salary and twice the higher bonus paid to him during
the two preceding years. In the event of termination due to disability, Mr.
Thomas will continue to receive his then-current annual base salary, less any
payments equivalent to those provided by the Company's benefit plans, for a
24-month period following the termination.
If Mr. Thomas terminates his employment following a change in control
of the Company (as defined in the employment agreement) and a reduction in his
duties, diminution in salary or benefits or relocation, the Company will be
required to pay him, as severance pay, a lump sum amount equal to twice his
then-current annual base salary plus twice the higher bonus paid to him during
the two preceding years.
Under his employment agreement, Mr. Thomas receives a base salary of
not less than $400,000 during each year that the employment agreement is in
effect and will be entitled to participate in the incentive compensation plans
and programs generally available to executives of the Company.
Under his employment agreement, Mr. Thomas may not compete against the
Company during his employment by the Company and during the two-year period
following termination of his employment. The Company maintains life insurance
for the benefit of Mr. Thomas in the amount of $1,500,000.
Frank T. Kane. The Company also has entered into an employment
agreement with Frank T. Kane which provides, among other items, for the
employment by the Company of Mr. Kane through March 15, 2004 as the Company's
Vice President-Finance, Chief Financial Officer, Secretary and Treasurer. The
employment agreement provides for automatic extensions for successive one-year
periods upon expiration of the initial term, or any renewal term, unless the
Company or Mr. Kane gives notice of termination at least 180 days before the
termination date. The Company may terminate the employment of Mr. Kane with or
without cause (as defined in the employment
17
agreement) or in the event of the disability of Mr. Kane. Mr. Kane may terminate
his employment with or without good reason (as defined in the employment
agreement). If the Company terminates Mr. Kane's employment with cause or if Mr.
Kane terminates his employment without good reason, then the Company is required
to pay him, in a lump sum, his monthly base salary for a three-month period
following his termination. If the Company terminates Mr. Kane's employment
without cause or if Mr. Kane terminates his employment with good reason, then
the Company is required to pay him in 24 equal monthly installments an amount
equal to twice his then-current annual base salary and twice the higher cash
bonus under the Short Term Plan (up to the target award rate) paid to him during
the two preceding years. In the event of termination due to disability, Mr. Kane
will receive his then-current annual base salary earned through the date of
termination.
If Mr. Kane terminates his employment following a change in control of
the Company (as defined in the employment agreement) and a reduction in his
duties, diminution in salary or benefits or relocation, the Company will be
required to pay him, as severance pay, a lump sum amount equal to twice his
then-current annual base salary and twice the higher cash bonus under the Short
Term Plan (up to the target award rate) paid to him during the two preceding
years.
Under his employment agreement, Mr. Kane receives a base salary of not
less than $205,000 during each year that the employment agreement is in effect
and will be entitled to participate in the incentive compensation plans and
programs generally available to executives of the Company.
Under his employment agreement, Mr. Kane may not compete against the
Company during his employment by the Company and during the two-year period
following termination of his employment. However, if the Company elects not to
extend the term of Mr. Kane's employment agreement, then Mr. Kane may not
compete against the Company for a one-year period following termination of his
employment.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised
entirely of outside directors and is responsible for developing and making
recommendations to the Board with respect to the Company's executive
compensation philosophy and policies. The Compensation Committee determines on
an annual basis the compensation to be paid to the executive officers of the
Company and administers the Company's 1992 Stock Option Plan for key employees,
the Company's Directors' Stock Option Plan, the Chromcraft Revington Short Term
Executive Incentive Plan (the "Short Term Plan") and the Long Term Plan. The
following report of the Compensation Committee discusses the Committee's
objectives in determining executive compensation.
The overall objective of the Compensation Committee is to help assure
that executive compensation bears a reasonable relationship to corporate
performance, business strategy and increases in stockholder value. The
Compensation Committee uses its discretion to set executive compensation at
levels warranted in its judgment by external and internal factors and individual
performance. The following objectives currently serve as guidelines for
compensation recommendations and decisions of the Compensation Committee:
o Reward executives through appropriate incentive compensation
and ownership in the Company for achievement of short term and
long term business goals and strategy.
o Align executive officer compensation with the success of the
Company such that compensation is based, in part, upon
performance in order to create a performance-oriented
environment that rewards performance.
o Provide a total comprehensive executive compensation package
that enables the Company to attract and retain appropriate
executives.
o Integrate compensation programs with both annual and long term
business objectives.
18
Regularly, the Compensation Committee reviews comparable company
information in order to establish the general guidelines for executive officer
compensation. In addition, the Compensation Committee has retained an
independent compensation consultant to review the competitiveness of the
executive compensation program in relation to other comparable companies,
including those in the peer group set forth in the "Stock Performance Graph."
The principal elements of the compensation program for executive
officers, including Mr. Thomas, the Chief Executive Officer of the Company, are
summarized below.
Base Salary
Base salary levels are set to reflect competitive market conditions.
The Compensation Committee, in determining the 2002 base salary increases for
Mr. Thomas and the other executives, considered many factors, including the
executive's responsibilities, duties, performance and experience. Accordingly,
Mr. Thomas received a 20% salary increase for 2002. While the Compensation
Committee reviewed all of these factors in determining Mr. Thomas' salary, no
specific weights were placed on any of these factors, and the salary increase
process was not tied to specific performance goals.
Short Term Plan
The Company maintains the Short Term Plan to focus the efforts of its
executive officers on continued improvement in the profitability of the Company.
Each year, the Compensation Committee may set award rates, performance factors
(including the relative weight allocated to each factor) and performance
standards that must be satisfied for an award to be made under the Short Term
Plan. Awards under the Short Term Plan are payable in cash. For 2002,
performance factors for Mr. Thomas were based on (i) cash flow, (ii) sales, and
(iii) reduction of bank debt.
Mr. Thomas was awarded a cash bonus of $456,435 for 2002 under the
Short Term Plan. The Short Term Plan award represented 117.8% of Mr. Thomas'
2002 base salary.
Long Term Plan
The Company maintains the Long Term Plan to focus the efforts of its
executive officers on continued long term improvement in the financial
performance of the Company. Each year, the Compensation Committee may set award
rates, performance factors (including the relative weight allocated to each
factor) and performance standards that must be satisfied for an award to be made
under the Long Term Plan. For 2002, performance factors for Mr. Thomas were
based on (i) cash flow, (ii) sales, (iii) reduction of bank debt, and (iv) the
Company's return on equity compared to the average return on equity for the
Company's peer group. Awards under the Long Term Plan for the performance period
ended December 31, 2002 were paid 50% in a single lump sum cash and 50% in
options to acquire shares of the Company's common stock and were based upon the
financial performance of the Company for the year ended December 31, 2002.
Awards under the Long Term Plan for the three year performance periods ended
December 31, 2001 and 2000 were paid in cash. Stock options awarded under the
Long Term Plan are subject to the provisions of the 1992 Stock Option Plan and
will be valued using the Black-Scholes option pricing method.
In February, 2003, Mr. Thomas earned a 2002 Long Term Plan award of
$471,254, with 50% of the award paid in a cash sum of $235,627 and 50% paid in
the form of a stock option grant of 46,567 shares valued at $235,627 under the
Black-Scholes option pricing method. The Long Term Plan award represented 121.6%
of Mr. Thomas' 2002 base salary.
Members of the Compensation Committee
Larry P. Kunz, Chairman
David L. Kolb
Theodore L. Mullett
Warren G. Wintrub
19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee is comprised of four
non-employee directors: Messrs. Kolb, Kunz, Mullet and Wintrub. No member of the
Compensation Committee is or was formerly an officer or employee of the Company.
No executive officer of the Company serves as a member of the board of directors
or compensation committee of any entity that has one or more executive officers
of that entity serving as a member of the Company's Board of Directors.
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder
return on the Company's common stock with the cumulative total stockholder
return of (i) the NYSE Market Value Index, and (ii) an industry peer group index
compiled by the Company that consists of several companies. The graph assumes
$100 was invested on December 31, 1997 in the Company's common stock, the NYSE
Market Value Index and the peer group index and assumes the reinvestment of
dividends, if any.
[PERFORMANCE GRAPH APPEARS HERE]
12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002
Chromcraft Revington, Inc. $100.00 $103.52 $65.63 $62.50 $67.38 $81.56
Peer Group Index $100.00 $104.15 $97.28 $86.30 $105.83 $112.16
NYSE MArket Index $100.00 $118.99 $130.30 $133.40 $121.52 $99.27
--------------
The peer group includes the following companies: Bassett Furniture Industries,
Inc., Bush Industries, Inc., Flexsteel Industries, Inc., Kimball International,
Inc., La-Z-Boy Incorporated, Rowe Furniture Corporation and Stanley Furniture
Company, Inc. Calculations for this graph were prepared by Media General
Services of Richmond, Virginia.
20
INDEPENDENT AUDITORS
General
KPMG LLP audited the financial statements of the Company for the year
ended December 31, 2002 and has been appointed by the Board of Directors to
audit the financial statements of the Company for the year ending December 31,
2003. A representative of KPMG LLP will be present at the annual meeting, will
have an opportunity to make a statement, if he desires, and will be available to
respond to appropriate questions.
Audit Fees
The aggregate fees billed for professional services rendered by KPMG
LLP for the audit of the Company's annual financial statements for the fiscal
year ended December 31, 2002 and the reviews of the financial statements
included in the Company's Quarterly Reports on Form 10-Q for that fiscal year
were approximately $187,000.
Financial Information Systems Design and Implementation Fees
No professional services were rendered by KPMG LLP to the Company in
connection with system design and implementation.
All Other Fees
The aggregate fees billed for services rendered by KPMG LLP for all
services other than those services covered in the section captioned "Independent
Auditors -- Audit Fees" for the Company's year ended December 31, 2002 were
approximately $16,000.
The Audit Committee considered whether the rendering of the non-audit
services by KPMG LLP listed above is compatible with maintaining the
independence of KPMG LLP.
ANNUAL REPORT AND PROXY STATEMENT
A copy of the Company's 2002 annual report to stockholders, including
audited consolidated financial statements as of and for the year ended December
31, 2002, is enclosed with this proxy statement. The 2002 annual report to
stockholders does not constitute proxy soliciting material.
In an effort to reduce printing costs and postage fees, the Company has
adopted a practice whereby stockholders who have the same address and last name
and who do not participate in electronic delivery of proxy materials will
receive only one copy of this proxy statement and the 2002 annual report unless
one or more of these stockholders notifies the Company that they wish to receive
individual copies of these materials. The Company will deliver promptly upon
written or oral request a separate copy of this proxy statement and its 2002
annual report to any stockholder at a shared address to which a single copy of
those materials was sent.
If you share an address with another stockholder and received only one
proxy statement and annual report but would like to receive a separate copy of
these materials in the future, or if you received multiple copies of this proxy
statement and the 2002 annual report but would like to receive a single copy of
the Company's proxy statement and annual report in the future, please contact
the Company.
You may contact the Company by mail at 1100 North Washington Street,
Delphi, Indiana 46923 or by telephone at (765) 564-3500. In either case, you
should direct your communication to Mr. Frank T. Kane, Vice President-Finance of
the Company.
STOCKHOLDER PROPOSALS; DISCRETIONARY VOTING;
AND DIRECTOR NOMINATIONS
In addition to the notice requirements described below, stockholder
proposals desired to be considered for inclusion in the Company's proxy
statement relating to the 2004 annual meeting of stockholders must be received
21
by the Company at its principal executive office no later than November ___,
2003 and must be submitted in accordance with all rules and regulations under
the Securities Exchange Act of 1934.
The persons named in the form of proxy relating to the Company's 2004
annual meeting of stockholders will have discretionary authority to vote
pursuant to the proxy at such annual meeting in accordance with their best
judgment on all matters desired to be brought before such annual meeting with
respect to which the Company does not receive written notice at its executive
office by _______________, 2004.
The persons named in the enclosed proxy will have discretionary
authority to vote such proxy at the 2003 annual meeting of stockholders in
accordance with their best judgment on all matters with respect to which the
Company did not receive written notice at its executive office by
________________, 2003.
The Board of Directors intends to amend the Company's By-Laws following
the 2003 annual meeting of stockholders to provide a notice procedure for any
director nominations and any business or matter to be presented at any annual or
special meeting of stockholders by any stockholder of the Company. Assuming the
Board adopts this amendment, the notice procedure described below will apply to
all annual and special meetings of stockholders following the effective date of
the amendment and will apply to the 2004 annual meeting of stockholders.
Nominations for the election of directors and proposals for any
business or matter to be presented at any annual or special meeting of
stockholders may be made by any stockholder of record of the Company entitled to
vote in the election of directors or on the business or matter to be presented,
as the case may be, or by the Board of Directors of the Company. In order for a
stockholder to make any such nomination or proposal, the stockholder must give
notice thereof in writing by certified first class United States mail, return
receipt requested, or by receipted overnight delivery to the Secretary of the
Company. Such notice must be received by the Company not later than the
following date: (i) with respect to any annual meeting of stockholders, not less
than 120 days or more than 180 days prior to the first anniversary of the date
of the notice for the previous year's annual meeting of stockholders, or (ii)
with respect to any special meeting of stockholders, not more than 15 days
following the date of the notice for such special meeting. No notice of any kind
under this procedure is required for any nominations for the election of
directors or any proposals for any business or matter made by the Board of
Directors of the Company.
Each such notice given by a stockholder with respect to nominations for
the election of directors must set forth as to each nominee: (i) the name, age,
address and telephone number of the nominee, (ii) the principal occupation or
employment of the nominee, (iii) the number of shares of stock of the Company
beneficially owned by the nominee, and (iv) any arrangement pursuant to which
the nomination is made or the nominee will serve or may be elected. The
stockholder making such nominations must also promptly provide any other
information relating to his nominees as may be reasonably requested by the
Company.
Each such notice given by a stockholder with respect to proposals for
business or other matters to be presented at any meeting of stockholders must
set forth as to each matter: (i) a brief description of the business or matter
desired to be presented at the meeting and the reasons for conducting such
business at the meeting, (ii) the name and address, as they appear on the
Company's list of stockholders for the meeting, of the stockholder making such
proposal, (iii) the class and number of shares of stock of the Company
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such proposal. The stockholder making such proposal must also
promptly provide any other information relating to his proposal as may be
reasonably requested by the Company.
If any nomination or proposal is not made in accordance with the
requirements of this notice procedure, the chairman of the annual or special
meeting of stockholders at which such nomination or proposal is sought to be
presented may determine that the nomination or proposal was not made in
accordance with the notice procedure and, in such event, he may declare to the
meeting that the defective nomination or proposal is out of order and will be
disregarded and not presented for a vote of the stockholders. This notice
procedure does not require the Company to hold any meeting of stockholders for
the purpose of considering any nomination or proposal of any stockholder.
22
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of
no other matters to come before the annual meeting of stockholders. If other
matters properly come before the annual meeting, the persons named in the
enclosed proxy will have discretionary authority to vote such proxy at the
annual meeting in accordance with their best judgment on such matters.
By Order of the Board of Directors,
Frank T. Kane
Vice President-Finance,
Chief Financial Officer,
Secretary and Treasurer
March ___, 2003
23
APPENDIX A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
chromcraft revington, inc
ARTICLE ONE
The name of the Corporation is Chromcraft Revington, Inc.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is CT Corporation System, 1209 Orange Street, Wilmington, Delaware
19801, County of New Castle. The name of its registered agent at such address is
CT Corporation System
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
AUTHORIZED SHARES
-----------------
Section 4.1. Total Number of Shares of Stock. Upon the filing and
effectiveness of this Certificate of Incorporation and subject to the provisions
of this ARTICLE FOUR and ARTICLE NINE, the total number of shares of capital
stock which the Corporation has authority to issue is 20,100,000 shares. The
authorized capital stock is divided into 100,000 shares of Preferred Stock of
the par value of $1.00 (hereinafter the "Preferred Stock") and 20,000,000 shares
of the Common Stock of the par value of $.01 (hereinafter the "Common Stock").
Section 4.2. Preferred Stock. (a) Subject to the limitations on voting
rights, convertibility and liquidations value set forth in paragraph (b) below,
the shares of Preferred Stock of the Corporation may be issued from time to time
in one or more series, the shares of each series to have such voting powers,
full or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as are stated and expressed herein or in
the resolution or resolutions providing for the issue of such series, adopted by
the Board of Directors as hereinafter provided.
(b) Authority is hereby expressly granted to the Board of Directors of
the Corporation, subject to the provisions of this ARTICLE FOUR and to the
limitations prescribed by the General Corporation Law of Delaware to authorize
the issue of one or more series of Preferred Stock and with respect to each such
series to fix by resolution or resolutions providing for the issue of such
series the voting powers, full or limited, if any, of the shares of such series
and the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each series shall include,
but not be limited to, the determination of fixing of the following:
(i) The designation of such series;
(ii) The dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes of stock or any other series of any class of stock of the
Corporation, and whether such dividends shall be cumulative or
non-cumulative;
(iii) Whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to such redemption,
the times, prices and other terms and conditions of such redemption;
24
(iv) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;
(v) Whether or not the shares of such series shall be convertible
into or exchangeable for shares of any other class or classes of any
stock or any other series of any class of stock of the Corporation,
and, if provision is made for conversion or exchange, the times,
prices, rates, adjustments and other terms and conditions of such
conversion or exchange; provided that if the Preferred Stock is
convertible into Common Stock, the Company may issue shares of
Preferred Stock only if the aggregate Market Value (as hereinafter
defined) of (a) the shares of Common Stock issuable upon conversion of
the shares of Preferred Stock to be issued (such Market Value
calculated on the date of issuance of the Preferred Stock) plus (b) the
shares of Common Stock issuable upon conversion of all outstanding
shares of Preferred Stock (such Market Value calculated as of the date
of issuance of such outstanding Preferred Stock), does not exceed
$10,000,000;
(vi) The extent, if any, to which the holders of shares of such
series shall be entitled to vote with respect to the election of
directors or otherwise; provided, however, that such series, if a
voting series, shall be entitled to no more than one vote per share and
shall not be entitled to vote as a class on any matter except as
specifically required by law;
(vii) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock; and
(viii) The rights of the holders of the shares of such series upon
the dissolution of, or upon the distribution of assets of, the
Corporation; provided, however, that the aggregate liquidation value of
all shares of Preferred Stock outstanding shall not exceed $10,000,000.
(c) As used in this Section 4.2, "Market Value" of shares of Common
Stock on any date shall be the average of the daily closing prices for a share
of Common Stock on the 20 consecutive trading days immediately preceding the
date of calculation. The closing price for each day shall be the last such
reported sales price regular way or, in the case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case on the principal national securities exchange or in
the NASDAQ National Market System to which the shares of Common Stock are listed
or admitted to trading, or, if not listed or admitted to trading, the average of
the closing bid and asked prices of the Common Stock in the over-the-counter
market as reported by NASDAQ or any comparable system, or if the Common Stock is
not listed on NASDAQ or a comparable system the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Board of Directors of
the Company acting in good faith. In the absence of one or more such quotations,
the Board of Directors of the Company acting in good faith shall determine the
Market Value.
Section 4.3. Common Stock. (a) The shares of Common Stock of the
Corporation shall be of one and the same class. Subject to all of the rights of
the Preferred Stock provided for by resolution or resolutions of the Board of
Directors pursuant to this ARTICLE FOUR or by the General Corporation Law of
Delaware, the holders of Common Stock shall have full voting powers on all
matters requiring stockholder action, each share of such Common Stock being
entitled to one vote and having equal rights of participation in the dividends
and assets of the Corporation.
(b) Except as otherwise provided in this Certificate of Incorporation
or as otherwise required by applicable law, all shares of Common Stock will be
identical in all respects and will entitle the holders thereof to the same
rights and privileges.
(i) Except as otherwise required by law, on all matters to be
voted on by the Corporation's stockholders the Common Stock will be
entitled to one vote per share.
(ii) The Common Stock will, except as expressly provided in
this Certificate of Incorporation or as expressly required under the
General Corporation Law of the State of Delaware, vote as a single
class, together with any other Voting Shares, on all matters to be
voted on by the Corporation's stockholders.
Section 4.4. Dividends. When and as dividends are declared thereon,
whether payable in cash, property or securities of the Corporation, each holder
or Common Stock will be entitled to participate in such dividends ratably on a
per share basis.
25
Section 4.5. Liquidation. The holders of the Common Stock will be
entitled to share ratably on a per share basis in all distributions to the
holders of the Common Stock in any liquidation, dissolution or winding up of the
Corporation.
Section 4.6. Registration of Transfer. The Corporation or its transfer
agent will keep at its principal office (or such other place as the Corporation
reasonably designates) a register for the registration and transfer of shares of
Common Stock. Upon the surrender of any certificate representing shares of
Common Stock at such place, the Corporation will, at the request of the
registered holder of such certificate, execute and deliver a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares represented by the surrendered certificate, and the Corporation forthwith
will cancel such surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of shares as is requested
by the holder of the surrendered certificate and will be substantially identical
in form to the surrendered certificate. The issuance of new certificates will be
made without charge to the holders of the surrendered certificates for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance.
Section 4.7. Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Common Stock, and in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation, or, in the case of any such mutilation upon
surrender of such certificate, the Corporation will (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the number of shares represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 4.8. Notices. All notices referred to in this Certificate of
Incorporation shall be in writing, shall be delivered personally or by first
class mail, postage prepaid, and shall be deemed to have been given when
received by the Corporation at its principal executive offices and to any
stockholder at such holder's address as it appears in the stock records of the
Corporation (unless otherwise specified in a written notice to the Corporation
by such holder).
Section 4.9. Amendment and Waiver. No amendment or waiver of any
provision of this ARTICLE FOUR will be effective without prior approval of the
holders of a majority of the then outstanding Common Stock voting as a single
class.
ARTICLE FIVE
The name and address of the sole incorporator of the corporation is as
follows:
James C. Kellogg
Townley & Updike
405 Lexington Avenue
New York, New York 10174
ARTICLE SIX
The Corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter or repeal the by-laws of the Corporation.
26
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation and this Certificate of
Incorporation may provide. The books of the Corporation may be kept outside the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the by-laws of the Corporation. Election of
directors need not be by written ballot unless the by-laws of the Corporation so
provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE TEN
CERTAIN RIGHTS OF THE CORPORATON'S STOCKHOLDERS
-----------------------------------------------
Section 10.1. Section 203 Applicable. Section 203 of the General
Corporation Law of the State of Delaware shall apply to the Corporation.
Section 10.2. Meetings of Stockholders; Quorum; Voting.
(a) Special Meetings of Stockholders. Special meetings of stockholders
of the Corporation may be called by the Board of Directors, by the Chairman of
the Board, by the President, by the holders of at least one-third of the
outstanding shares of Common Stock of the Corporation or, if permitted, by the
holders of any class or series of Preferred Stock.
(b) Quorum and Voting at Annual and Special Meetings of Stockholders.
At any meeting of stockholders, a majority of the outstanding shares of capital
stock of the Corporation entitled to vote on the matter presented at such
meeting, present in person or represented by proxy, shall constitute a quorum,
except as provided otherwise by applicable law or this Certificate of
Incorporation. When a quorum of stockholders is present at any meeting of
stockholders, then in all matters other than the election of directors, the
affirmative vote of a majority of the shares present in person or represented by
proxy at such meeting and entitled to vote on the matter presented at such
meeting shall be the act of the stockholders, except as provided otherwise by
applicable law or this Certificate of Incorporation. Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy and entitled to vote in the election of directors at a meeting of
stockholders at which directors are elected and a quorum is present. All
outstanding shares of capital stock of the Corporation shall be entitled to one
vote per share on each matter submitted to a vote of the stockholders, except as
provided otherwise by applicable law, this Certificate of Incorporation or the
resolutions of the Board of Directors creating a class or series of Preferred
Stock of the Corporation.
Section 10.3. Consent of Stockholders in Lieu of a Meeting. Any action
required to be taken or which may be taken at any annual or special meeting of
stockholders of the Corporation shall be taken solely at a duly called annual or
special meeting of stockholders and may not be taken by any consent in writing
of the stockholders.
Section 10.4. Election of The Board of Directors.
(a) Term of Office. The number of directors of the Corporation shall be
fixed from time to time by the By-Laws of the Corporation and may be increased
or decreased as provided therein. The Board of Directors of the Corporation
shall be divided into three classes, as nearly equal in number as possible, with
the term of office of one class expiring each year. The three classes of
directors shall be filled such that the directors of the first class (designated
as Class I) shall be elected to hold office for a term expiring at the annual
meeting of stockholders in 2004, the directors of the second class (designated
as Class II) shall be elected to hold office for a term expiring at
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the annual meeting of stockholders in 2005, and the directors of the third class
(designated as Class III) shall be elected to hold office for a term expiring at
the annual meeting of stockholders in 2006. Commencing with the annual meeting
of stockholders in 2004 and at each annual meeting of stockholders thereafter,
the directors of the class whose term shall then expire shall be elected for a
three-year term and until their respective successors are duly elected and
qualified.
(b) Vacancies and Newly Created Directorships. Any vacancies occurring
on the Board of Directors, whether caused by removal, resignation, retirement,
disqualification or death, and any newly created directorships resulting from an
increase in the number of directors, may be filled by the affirmative vote of
not less than a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. A director chosen to fill any such
vacancy or any such newly created directorship shall hold office until the next
election of the class for which such director was chosen and until such
director's successor is duly elected and qualified. No decrease in the number of
directors shall shorten the term of any existing director.
(c) Removal of Directors. Any or all directors of the Corporation may
be removed only for cause by the affirmative vote of the holders of not less
than two-thirds of the outstanding shares of Common Stock of the Corporation
then entitled to vote at an election of directors.
(d) Holders of Preferred Stock. Notwithstanding the foregoing
provisions of Section 10.4 of this ARTICLE TEN, whenever the holders of any
class or series of Preferred Stock shall have the right, voting separately by
class or series, to elect any director, then the election, term of office,
filling of vacancies, removal and other features of such directorship shall be
governed by applicable law, by this Certificate of Incorporation, by the By-Laws
of the Corporation and by the resolutions of the Board of Directors creating
such class or series, to the extent applicable thereto, and such directors shall
not be divided into classes pursuant to this Section 10.4 unless expressly
provided in such resolutions of the Board of Directors.
Section 10.5. Classes of Stock. Except as provided in Section 4.2, the
designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, in respect of any class or classes of
stock and any series of any class of stock of the Corporation shall be set forth
in an amendment to this Certificate of Incorporation of the Corporation.
Section 10.6. Reservation of Shares. The Corporation will at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, the number of such shares which are sufficient for issuance upon exercise
of any then outstanding warrant, option or similar right to receive or acquire
any class of Common Stock.
ARTICLE ELEVEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE TWELVE
Any Business Combination (as hereinafter defined) which is approved and
recommended by the affirmative vote of less than two-thirds of the entire Board
of Directors of the Corporation then in office shall require the affirmative
vote of the holders of at least two-thirds of the then outstanding shares of
capital stock of the Corporation entitled to vote thereon in order for such
Business Combination to be approved. Any Business Combination which is approved
and recommended by the affirmative vote of at least two-thirds of the entire
Board of Directors of the Corporation then in office shall require only the
affirmative vote of the holders of a majority of the then outstanding shares of
capital stock of the Corporation entitled to vote thereon in order for such
Business Combination to be approved.
As used in this ARTICLE TWELVE, a "Business Combination" shall mean any
of the following or an agreement or arrangement to do any of the following:
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(a) Any merger (except for a merger which, pursuant to ss.251(f) of the
General Corporation Law of the State of Delaware, no vote of the stockholders of
the Corporation is required), consolidation or similar transaction of the
Corporation with or into any other person, corporation or entity; or
(b) Any share exchange or similar transaction involving the Corporation
and any other person, corporation or entity, other than (i) a share exchange or
similar transaction pursuant to which the Corporation shall acquire any other
person, corporation or entity as a majority-owned subsidiary of the Corporation,
or (ii) a share exchange or similar transaction involving any of the
Corporation's subsidiaries; or
(c) Any sale, lease or other disposition of all or substantially all of
the assets of the Corporation to any other person, corporation or entity; or
(d) Any voluntary dissolution or liquidation of the Corporation or any
adoption of any plan with respect thereto.
ARTICLE THIRTEEN
Notwithstanding any other provision of this Certificate of
Incorporation, any provision of the By-Laws of the Corporation or any provision
of applicable law that might permit a lesser vote or no vote, the affirmative
vote of the holders of not less than two-thirds of the then outstanding shares
of Common Stock of the Corporation, voting together as a single class, shall be
required to alter, amend or repeal any provision of Section 10.1, 10.2, 10.3 or
10.4 of ARTICLE TEN; of ARTICLE TWELVE; or of ARTICLE THIRTEEN of this
Certificate of Incorporation or any provision of this Certificate of
Incorporation or the By-Laws of the Corporation in a manner in contravention of
any of such Sections or Articles.
* * *
29
PROXY CHROMCRAFT REVINGTON, INC. PROXY
This Proxy is Solicited on Behalf of the Board of Directors
For use at the 2003 Annual Meeting of Stockholders
The undersigned hereby appoints MICHAEL E. THOMAS and FRANK T. KANE, and each of
them singly, as proxies, each having the power to appoint his substitute, to
represent and vote all shares of common stock of Chromcraft Revington, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on May 1, 2003, and at any adjournment or postponement
thereof, with all of the powers the undersigned would possess if personally
present, as follows:
1. Amended and Restated Certificate of Incorporation. Approval of the
Amended and Restated Certificate of Incorporation of the Company, including each
of the amendments listed below.
(a) Article Ten, Section 10.2. To increase the percentage of
holders of common stock of the Company necessary to call a
special meeting of stockholders from 15% to 33-1/3%.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) Article Ten, Section 10.3. To require that any action by
stockholders must be taken at a meeting of stockholders and
not by written consent in lieu of a meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) Article Ten, Section 10.4(a). To divide the directors into
three classes with staggered terms.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) Article Ten, Section 10.4(b). To provide the manner in which
director vacancies and newly created directorships may be
filled.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) Article Ten, Section 10.4(c). To provide that directors may be
removed only for cause by the affirmative vote of the holders
of at least two-thirds of the outstanding shares of common
stock of the Company entitled to vote in the election of
directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) Article Ten, Section 10.4(d). To provide that the Board of
Directors may establish provisions regarding the term of
office, filling of vacancies, removal and other features for a
director who may be elected by the holders of any preferred
stock of the Company entitled to vote as a separate class.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) Article Twelve. To provide that certain business combinations
involving the Company may require the affirmative vote of the
holders of at least two-thirds of the outstanding shares of
common stock of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(h) Article Ten, Section 10.1. To provide limitations on certain
business combinations with significant stockholders of the
Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(i) Article Thirteen. To require that the amendment or repeal of
certain provisions of the Company's Certificate of
Incorporation would require the affirmative vote of the
holders of at least two-thirds of the outstanding shares of
common stock and to restrict any amendments to the Company's
By-Laws in contravention of certain provisions of the
Company's Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Election of Directors. To elect as directors all nominees named
herein to the classes specified below, but if the proposed amendment to the
Company's Certificate of Incorporation providing for a classified board of
directors with staggered terms is not approved by stockholders, then the
nominees named herein will be elected for one-year terms and until their
respective successors are elected and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
except as marked to the contrary. for all nominees listed below.
Class I Class II Class III
(Term to expire in 2004) (Term to expire in 2005) (Term to expire in 2006)
------------------------ ------------------------ ------------------------
Stephen D. Healy Larry P. Kunz David L. Kolb
Theodore L. Mullett Michael E. Thomas Warren G. Wintrub
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
the FOR box above and write that name of the nominee(s) in the space provided
below.
----------------------------------------------------------
3. Ratification of Appointment of KPMG LLP. Ratification of the
appointment of KPMG LLP as the independent auditors for the Company for the year
ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Other Matters. In their discretion, on such other matters as may
properly come before the annual meeting of stockholders and any adjournment or
postponement thereof.
This proxy will be voted as directed, but if no direction is indicated, this
proxy will be voted FOR the approval of the Amended and Restated Certificate of
Incorporation (and each of the amendments contained therein); FOR the election
as directors of all nominees named herein as set forth in Item 2 above; and FOR
the ratification of the appointment of KPMG LLP as the independent auditors for
the Company for the year ending December 31, 2003. With respect to any other
matters that may properly come before the annual meeting, the proxies designated
herein intend to vote in accordance with their best judgment on such matters.
2
Please sign exactly as your name appears hereon and return this proxy promptly.
-----------------------------------------
(Signature)
-----------------------------------------
(Signature, if held jointly)
-----------------------------------------
(Printed name)
-----------------------------------------
(Title or Capacity, if applicable)
Dated: ___________________, 2003
Note: If there are two or more owners, all should sign this proxy. When signing
as attorney, executor, administrator, trustee, guardian or other representative
capacity, please provide capacity of person signing. If owner is a corporation,
please indicate full corporate name, sign by an authorized person and provide
title of person signing. If owner is a partnership or limited liability company,
please indicate full partnership or limited liability company name, sign by an
authorized person and provide title of person signing.
Please date, sign and return this
proxy card as soon as possible
3