ORA ELECTRONICS, INC.
---------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 14, 1998
10:00 a.m.
To Our Stockholders:
The Annual Meeting of Stockholders of ORA Electronics, Inc. (the
"Company") will be held at The Chatsworth Hotel, 9777 Topanga Canyon Boulevard,
Chatsworth, California 91311, on Monday, September 14, 1998, at 10:00 a.m.
P.D.T. for the following purposes:
1. To elect four directors each to serve a one-year term;
2. To amend the Company's 1996 Stock Plan;
3. To ratify the appointment by the Board of Directors of Richard &
Hedrick as independent accountants of the Company for the fiscal year ending
March 31, 1999; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on July 31, 1998 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK,
DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE ENCLOSED FOR THAT PURPOSE.
By Order of the Board of Directors
By /s/ Matthew F. Jodziewicz
------------------------------
Matthew F. Jodziewicz,
Secretary
Chatsworth, California
August 17, 1998
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ORA ELECTRONICS, INC.
9410 OWENSMOUTH AVENUE
CHATSWORTH, CA 91311
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of ORA Electronics, Inc. ("ORA" or the "Company"), in connection
with the Annual Meeting of Stockholders to be held at 10:00 a.m. P.D.T. on
September 14, 1998, at The Chatsworth Hotel, 9777 Topanga Canyon Boulevard,
Chatsworth, California 91311, and at any and all adjournments thereof.
This Proxy Statement and accompanying proxy will first be mailed to
stockholders on or about August 17, 1998. The costs of solicitation of proxies
will be paid by the Company. In addition to soliciting proxies by mail, the
Company's officers, directors and other regular employees, without additional
compensation, may solicit proxies personally or by other appropriate means. The
Company will reimburse brokers, banks, fiduciaries and other custodians and
nominees holding shares of the Company's common stock ("Common Stock") in their
names or in the names of their nominees for their reasonable charges and
expenses incurred in forwarding proxies and proxy materials to the beneficial
owners of such Common Stock.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record of Common Stock as of July 31, 1998 will be
entitled to vote at the Annual Meeting. On July 28, 1998, there were 6,908,940
shares of Common Stock outstanding, which constituted all of the outstanding
voting securities of the Company. Each share of Common Stock is entitled to one
vote on all matters to come before the Annual Meeting.
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast will be required for the election of directors, and the affirmative
vote of a majority of the votes cast will be required for the approval of
Proposals 2 and 3 and to act on all other matters to come before the Annual
Meeting. For purposes of determining the number of votes cast with respect to
any voting proposal, the sum of votes cast and abstentions are included.
Abstentions with respect to any proposal are counted as "shares present" and
have the effect of a vote "against" such proposal as to which they are
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specified. Broker non-votes with respect to any proposal are not considered
"shares present" and, therefore, have the effect of reducing the number of
affirmative votes required to achieve a majority of the votes cast for such
proposal.
Shares may be voted cumulatively for the election of directors. If any
stockholder gives notice before the vote is taken of intention to cumulate
votes, then all stockholders will be entitled to cumulate their votes for
election of directors. Cumulative voting allows a stockholder to cast a number
of votes equal to the number of shares held as of the record date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees as the stockholder sees
fit. If cumulative voting is declared at the meeting, votes represented by
proxies delivered pursuant to this proxy statement may be cumulated in the
discretion of the proxy holders.
REVOCABILITY OF PROXIES
Proxies must be written, signed by the stockholder and returned to the
Secretary of the Company. Any stockholder who signs and returns a proxy may
revoke it at any time before it is voted by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a date later than
the date of the proxy being revoked. Any stockholder attending the Annual
Meeting in person may withdraw such stockholder's proxy and vote such
stockholder's shares.
DIRECTORS
The Company's Bylaws authorize a Board of Directors (the "Board" or "Board
of Directors") consisting of five people to be elected by the Company's
stockholders each year. Currently the Board consists of four members, with one
vacancy. The following table sets forth certain information concerning Board
members as of July 28, 1998:
Name Principal Occupation Age
- ---- -------------------- ---
GERSHON N. COOPER Mr. Cooper founded the Company's 49
business in 1974 and has been
Chairman of the Board and
President of the Company since
its incorporation in 1979. He
became Chief Executive Officer of
ORA in December 1996.
JOHN M. BURRIS Mr. Burris, a certified public 51
accountant, joined ORA in 1987 as
its General Manager in charge of
accounting and finances. From
1990 through November 1996 he
continued to work in such
capacity, but as an independent
contractor. In December 1996,
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Mr. Burris became ORA's Vice
President and Chief Financial
Officer and an employee and
director of the Company.
Name Principal Occupation Age
- ---- -------------------- ---
MATTHEW F. JODZIEWICZ Mr. Jodziewicz, a registered 49
patent attorney, joined ORA in
March 1995 as in-house counsel.
He became Vice President of
Technology and Legal Affairs,
Secretary and a director in
December 1996. Prior to joining
ORA, Mr. Jodziewicz was in the
private practice of law and
provided legal services,
primarily in the intellectual
property area, to the Company and
other clients.
RUTH COOPER Ms. Cooper joined ORA upon its 47
formation in 1974 and has served
in many capacities. From the
Company's incorporation in 1979
to December 1996, she was an
Executive Vice President. She is
the wife of Mr. Cooper.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has not created any committees as of the date
hereof, although it may do so in the future. The Board of Directors did not hold
any regularly scheduled or special meetings during ORA's fiscal year ended March
31, 1998 ("Fiscal 1998"). The Board of Directors acted by unanimous written
consent on fourteen occasions during Fiscal 1998.
DIRECTORS' COMPENSATION
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Directors who are not employees of the
Company will receive a retainer fee of $1,000 per meeting attended. All
directors are reimbursed for reasonable expenses incurred in connection with
attendance at board or committee meetings. Eligible non-employee directors will
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participate in the Company's 1996 Non-Employee Directors Stock Option Plan (the
"Directors Plan") which provides for certain automatic grants of options to
non-employee directors. Under the Directors Plan, each eligible non-employee
director who has been elected or who is continuing to serve on the Board of
Directors will receive an option to purchase an additional 500 shares of Common
Stock on each anniversary of joining the Board. As of July 28, 1998, no options
are outstanding under the Directors Plan.
MANAGEMENT
The following table sets forth certain information concerning the
executive officers of the Company:
Name Age Position
---- --- --------
Gershon N. Cooper 49 Chairman of the Board, Chief
Executive Officer and President
John M. Burris 51 Vice President, Chief Financial
Officer and Director
Matthew F. Jodziewicz 49 Vice President of Technology and
Legal Affairs, Secretary and
Director
Background information on Messrs. Cooper, Burris and Jodziewicz is set
forth under "Directors" above.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation for each of the last three
years of the Chief Executive Officer and each of the most highly compensated
executive officers (the "Named Executive Officers") who earned over $100,000
during the fiscal year ended Fiscal 1998.
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<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------- --------------------------
Other Securities
Annual Underlying All Other
Name and Compen- Options/ Compen-
Principal Fiscal Salary Bonus sation SARS sation
Positions Year ($) ($) ($) (#) ($)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gershon N. Cooper 1998 $330,000<F1> -0- $28,157<F2> -0- -0-
President and 1997 $ 95,817<F1> -0- $20,629<F3> -0- -0-
Chief Executive 1996 $ 15,000<F1>$250,000 $ 4,200<F4> -0- -0-
Officer
John M. Burris 1998 $160,386 -0- $4,200<F4> -0- $250<F6>
Vice President 1997 $109,040 -0- $1,400<F4> 30,000<F5> -0-
and Chief 1996 $ 88,800 -0- -- -0- -0-
Financial
Officer
Matthew F. 1998 $122,309 -0- -0- -0- $250<F6>
Jodziewicz 1997 $120,000 -0- -0- 15,000<F5> $250<F6>
Vice President 1996 $120,000 -0- -0- -0- $250<F6>
Technology
and Legal
Affairs and
Secretary
</TABLE>
<F1> During the fiscal year ended March 31, 1996, Mr. Cooper was paid an annual
salary of $15,000 plus an annual bonus during such fiscal year. In
December, 1996, Mr. Cooper entered into an Employment Agreement with the
Company which set his annual salary at $330,000 per year.
<F2> Of this amount, $16,157 represents a below market interest differential
on loans by the Company to Mr. Cooper and $12,000 represents an automobile
allowance.
<F3> Of this amount, $15,023 represents a below market interest
differential on loans by the Company to Mr. Cooper and $5,606 represents
an automobile allowance.
<F4> Such amount was paid by the Company to the
indicated Named Executive Officer as an automobile allowance.
<F5> These stock options were granted to Messrs. Burris and Jodziewicz pursuant
to the terms of the Company's 1996 Stock Plan, as discussed below.
<F6> Such amount was paid by the Company to the indicated Named Executive
Officer pursuant to the terms of the Company's Profit Sharing 401(k)
Savings Plan, as discussed below.
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EXECUTIVE EMPLOYMENT AND SEPARATION AGREEMENTS
Mr. Cooper entered into an employment agreement with the Company in
December 1996 pursuant to which Mr. Cooper agreed to continue to serve as the
Company's Chief Executive Officer and President. The agreement has a term of
three years and contains a non-competition provision effective through the term
of employment and for an additional three years from the end of such term.
Pursuant to the agreement with Mr. Cooper, the Company will pay to Mr. Cooper a
base salary of $330,000 per year (subject to increase but not decrease by the
Board of Directors), an auto allowance of $1,000 per month and, at the
discretion of the Board of Directors, a bonus. In addition, Mr. Cooper will also
be entitled to certain fringe benefits. Commencing on the expiration of the term
of the employment agreement, or earlier should the employment agreement be
terminated prior to the end of the term, the Company and Mr. Cooper will enter
into a three-year consulting agreement under which he will render certain
consulting services for which the Company will pay an annual consulting fee of
$250,000 per year. If Mr. Cooper is terminated other than for cause, death or
disability, the Company will continue to pay Mr. Cooper an amount equal to his
base salary then in effect for the remaining term of the agreement.
STOCK PLANS
1996 STOCK PLAN. The 1996 Stock Plan was adopted by the Board of Directors
and ratified by the Company's then-existing sole shareholder in December 1996.
The total number of shares of Common Stock subject to issuance under the 1996
Stock Plan is 2,000,000 shares, subject to adjustments as provided in the 1996
Stock Plan. The 1996 Stock Plan provides for the grant of stock options
(including incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options), stock
appreciation rights ("SARs") and other stock awards (including restricted stock
awards and stock bonuses) to employees of the Company or its affiliates or any
consultant or advisor engaged by the Company who renders bona fide services to
the Company or the Company's affiliates in connection with its business;
provided, that such services are not in connection with the offer or sale of
securities in a capital raising transaction.
The 1996 Stock Plan is administered by the Company's Board of
Directors or, when and if formed, the Compensation Committee of the Board of
Directors (the "Committee"). Stock options may be granted by the
Board of Directors or Committee on such terms, including vesting and payment
forms, as it deems appropriate in its discretion; provided, that no option may
be exercised later than ten years after its grant, and the purchase price for
incentive stock options and non-qualified stock options shall not be less than
100% and 85%, respectively, of the fair market value of the Common Stock at the
time of grant. SARs may be granted by the Board of Directors or Committee on
such terms, including payment forms, as the Board of Directors or Committee
deems appropriate; provided, that a SAR granted in connection with a stock
option shall become exercisable and lapse according to the same vesting schedule
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and lapse rules established for the stock option (which shall not exceed ten
years from the date of grant). A SAR shall not be exercisable during the first
six months of its term and only when the fair market value of the underlying
Common Stock exceeds the SAR's exercise price and is exercisable subject to any
other conditions on exercise imposed by the Board of Directors or the Committee.
In the event of a change in control of the issuer, the Board of Directors or the
Committee retains the discretion to accelerate the vesting of stock options and
SARs and to remove restrictions on transfer of restricted stock awards. Unless
terminated by the Board of Directors, the 1996 Stock Plan continues until
December 2006.
During the fiscal year ended March 31, 1998, no stock options or stock
appreciation rights were granted to, and no stock options previously granted
were exercised by, any Named Executive Officers. The following table sets forth
as of March 31, 1998, information as to the number of unexercised stock options
(none of which are in-the-monetary options) held by certain Named Executive
Officers.
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised
Stock Options at March 31, 1998
(#)
Name Exercisable/Unexercisable
------ -------------------------
John M. Burris 7,500/22,500
Matthew F. Jodziewicz 3,750/11,250
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. The Company's
1996 Non-Employee Directors Stock Option Plan (previously defined as the
"Directors Plan") was adopted by the Board of Directors and ratified by the
Company's then-existing sole shareholder in December 1996. A total of 100,000
shares are available for grant under the Directors Plan. The Directors Plan
provides for the automatic grant to each of the Company's non-employee directors
of (i) an option to purchase 5,000 shares of Common Stock on the date of such
director's initial election or appointment to the Board of Directors (the
"Initial Grant") and (ii) an option to purchase 500 shares of Common Stock on
each anniversary thereof on which the director remains on the Board of Directors
(the "Annual Grant"). The options will have an exercise price of 100% of the
fair market value of the Common Stock on the date of grant and have a ten-year
term. Initial Grants become exercisable in two equal annual installments
commencing on the first anniversary of the date of grant thereof and Annual
Grants become fully exercisable beginning on the first anniversary of the date
of grant. Both Initial and Annual Grants are subject to acceleration in the
event of certain corporate transactions. Any options which are vested at the
time the optionee ceases to be a director shall be exercisable for one year
thereafter; provided, that options which are vested on the date the optionee
ceased to be a director due to death or disability generally remain exercisable
for five years thereafter. Options which are not vested automatically terminate
in the event the optionee ceases to be a director of the Company. If the Company
is a party to a transaction involving a sale of substantially all of its assets,
a merger or consolidation, all then outstanding options under the Directors Plan
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may be canceled. However, during the 30 day period preceding the effective date
of such transaction, all partly or wholly unexercised options will be
exercisable, including those not yet exercisable pursuant to the vesting
schedule.
PROFIT SHARING PLAN
The Company has a defined contribution Profit Sharing 401(k) Savings Plan
(the "401(k) Plan") which covers substantially all of its employees. The 401(k)
Plan became effective on January 1, 1992. Under the terms of the 401(k) Plan,
employees can elect to contribute to the Plan, by salary reduction, up to 15% of
their compensation, subject to certain Internal Revenue Service ("IRS")
limitations then in effect. Additionally, the Company can, at its discretion,
match 100% of the voluntary contributions, subject to applicable IRS
limitations. The Company has received a determination letter from the IRS
indicating that the 401(k) Plan is qualified within the terms of the applicable
provisions of the Employee Retirement Income Security Act, as amended.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
During Fiscal 1998, compensation decisions were made by the full
Board of Directors or by Mr. Cooper as Chief Executive Officer.
During Fiscal 1998, Mr. Cooper as Chief Executive Officer established
base salaries for the executive officers.
BASE SALARY. During Fiscal 1998, the annual base salaries of the Company's
Named Executive Officers, including the Chief Executive Officer, were at the
levels set forth in the Executive Compensation Summary Compensation Table. The
annual base salary levels were established by the Board based upon a subjective
judgment with respect to appropriate levels of pay in relation to the executive
officers' respective levels of responsibility and, when applicable, as required
by contract.
ANNUAL BONUS. No bonuses were paid out in Fiscal 1998.
EQUITY COMPENSATION. No equity-based compensation was awarded in
Fiscal 1998.
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CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Chief Executive Officer's
compensation for Fiscal 1998 consisted of a salary of $330,000, as determined by
the board of directors, in addition to (a) $12,000 which was paid as an
automobile allowance and (b) $16,157 which represents a below-market interest
differential on loans by the Company to Mr. Cooper. Prior to December, 1996, the
Chief Executive Officer was paid a salary of $15,000 per year with a bonus paid
in March of each year. In December, 1996, the Chief Executive Officer entered
into an Employment Agreement with the Company, and his salary was adjusted in
accordance therewith.
POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M). In 1993,
the Code was amended to add Section 162(m). Section 162(m), and the
regulations thereunder, place a limit of $1,000,000 on the amount of
compensation that may be deducted by the Company in any year with respect to
certain of the Company's most highly compensated officers. Section 162(m) does
not, however, disallow a deduction for qualified "performance-based
compensation," the material terms of which are disclosed to and approved by
stockholders. At the present time, the Company's executive officer compensation
levels do not exceed $1,000,000. The Board of Directors plans to take such
actions in the future to minimize the loss of tax deductions related to
compensation as they deem necessary and appropriate in light of specific
compensation objectives.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In December 1996, certain shares of Common Stock were issued after consummation
of the merger of North American Energy of Delaware, Inc., with and into the
Company (which merger was consummated on December 20, 1996) in complete
satisfaction of approximately $4,368,130 of indebtedness, including $1,500,000
in trade payables (the "Trade Payables") due Jack D.W. Song, who as of July 28,
1998, beneficially owned over 10% of the outstanding Common Stock.
The Trade Payables were originally incurred by the Company to Data-Spec
Taiwan, of which Mr. Song is the controlling shareholder. Subsequently, such
Trade Payables were assigned by Data-Spec Taiwan to Mr. Song. During Fiscal
1998, the Company purchased approximately $5,986,000 of products from Data-Spec
Taiwan. As of June 30, 1998, the Company had total trade payables of
approximately $843,200 with Data-Spec Taiwan.
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COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock
during the Company's last fiscal year with the cumulative total stockholder
return during the same period on (1) a broad equity market index and (2) a
published industry index or peer group. Although the chart would normally be for
a five-year period, the common stock of the Company began public trading on
December 20, 1996, as successor to North American Energy of Delaware, Inc., and,
accordingly, the following chart commences as of such date. This chart compares
the Company's Common Stock with (1) the S&P 500 Composite Index and (2) the Dow
Jones U.S. Technology Sector Index, and assumes an investment of $100 on
December 20, 1996 in the Company's Common Stock, the stocks comprising the
S&P 500 Composite Index and the stocks comprising the Dow Jones U.S. Technology
Sector Index.
PERFORMANCE GRAPH
VALUE OF $100 INVESTMENT
Dow Jones U.S.
ORA Electronics, S&P 500 Technology
Inc. Composite Index Sector Index
- --------------------------------------------------------------------------------
12/20/96 $100 $100 $100
3/31/97 $109 $101 $ 97
3/31/98 $ 39 $147 $142
COMPANY PROPOSALS
The following proposals will be submitted for stockholder consideration
and voting at the Annual Meeting:
PROPOSAL 1
ELECTION OF DIRECTORS
The following people are nominated for election as directors to hold
office for a term of one year expiring at the next succeeding Annual Meeting:
Gershon N. Cooper
John M. Burris
Matthew F. Jodziewicz
Ruth Cooper
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The nominees listed above are current members of the Board of Directors.
All proxies received by the Board of Directors will be voted for the nominees if
no directions to the contrary are given. In the event that any nominee is unable
or declines to serve, an event that is not anticipated, the proxies will be
voted for the election of a nominee designated by the Board of Directors, or if
none are so designated, will be voted according to the judgment of the person or
persons voting the proxy. The Company's Bylaws fix the number of directors at
five; accordingly, there will be one vacancy. Management is currently
considering various candidates to fill this vacancy but has not identified a
suitable candidate at this time. Proxies cannot be voted for a greater number of
persons than the number of nominees named.
VOTE REQUIRED
If applicable, the four nominees receiving the highest number of
affirmative votes of the shares entitled to be voted shall be elected as
directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but have no other legal effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
NOMINEES.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S
1996 STOCK OPTION PLAN
In accordance with the authority granted by Section 12 of the Company's
1996 Stock Plan (the "1996 Plan"), the Company's Board of Directors has adopted
an amendment to the 1996 Plan, subject to approval by the Company's
stockholders.
Proposed Amendment
The proposed amendment will amend Section 5 of the 1996 Plan. Such amendment
would increase the total number of shares of the Company's Common Stock that can
be issued to any participant under the 1996 Plan in any fiscal year from 150,000
to 300,000 shares pursuant to an option, stock appreciation right ("SAR") or
other stock award, as contemplated by the 1996 Plan. This amendment is designed
to enhance the Company's primary purpose under the 1996 Plan; namely, to attract
and retain the most qualified people as key employees, to provide such employees
with appropriate long-term incentives and to more closely align such employees'
interests with those of the Company's stockholders by providing them, over time,
the opportunity to acquire a meaningful equity interest in the Company.
Summary of 1996 Plan Provisions
The full text of the 1996 Plan, as it would be amended by the proposed
amendment (subject to stockholder approval), is set forth as Exhibit A to this
Proxy Statement, and this summary is qualified in its entirety by reference to
Exhibit A.
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As discussed earlier in this Proxy Statement, the 1996 Plan was adopted by
the Company's Board of Directors and ratified by the then existing sole
stockholder in December 1996. The total number of shares of Common Stock subject
to issuance under the 1996 Plan is 2,000,000, subject to adjustments as provided
therein. The 1996 Plan provides for the grant of stock options (including
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "IRC"), and non-qualified stock options ("NQSOs")),
SARs and other stock awards (including restricted stock awards and stock
bonuses) to employees of the Company or its affiliates, or to any consultant or
advisor engaged by the Company who renders bona fide services to the Company or
the Company's affiliates in connection with its business; provided, that such
services are not in connection with the offer or sale of securities in a capital
raising transaction. No options, SARs or other stock awards were granted under
the 1996 Plan during Fiscal 1998. As of July 28, 1998, the fair market value of
the Common Stock underlying the 1996 Plan was $2.375 per share.
The 1996 Plan is administered by the Company's Board of Directors or, when
and if formed, the Compensation Committee of the Board of Directors (the
"Committee"). The Board of Directors may, from time to time, amend, suspend or
terminate the 1996 Plan in whole or in part and, if terminated, may reinstate
any or all of the provisions of the 1996 Plan, except that no such action may
be taken which would impair the rights of a participant under a stock award
previously granted, without such participant's consent. The Board of
Directors must obtain stockholder approval of any amendment to the 1996 Plan
which is necessary to allow the 1996 Plan to continue to meet the conditions of
Rule 16b-3 or Sections 162(m) or 422 of the IRC. Stock options may be granted by
the Board of Directors or Committee on such terms, including vesting and payment
forms, as it deems appropriate in its discretion; provided, that (a) no option
may be exercised later than ten years after its grant, (b) the purchase price
for incentive stock options and NQSOs shall not be less than 100% and 85%,
respectively, of the fair market value of the Common Stock at the time of grant
and (c) the exercise price for incentive stock options and NQSOs shall be paid
in full upon such exercise in cash or stock, or such other form of consideration
as the Committee may determine. SARs may be granted by the Board of Directors or
Committee on such terms, including payment forms, as the Board of Directors or
Committee deems appropriate; provided, that a SAR granted in connection with a
stock option shall become exercisable and lapse according to the same vesting
schedule and lapse rules established for the stock option (which shall not
exceed ten years from the date of grant). A SAR shall not be exercisable during
the first six months of its term and only when the fair market value of the
underlying Common Stock exceeds the SAR's exercise price and is exercisable
subject to any other conditions on exercise imposed by the Board of Directors
or the Committee. In the event of a change in control of the Company, the Board
of Directors or the Committee retains the discretion to accelerate the vesting
of stock options and SARs and to remove restrictions on transfer of restricted
stock awards. Unless terminated by the Board of Directors, the 1996 Plan
continues until December 2006.
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Under the present provisions of the IRC, the Federal income tax
consequences of options issued under the 1996 Plan are summarized as
follows:
1. NQSOs. The granting of an NQSO to a participant will not
result in taxable income to a participant or a deduction in computing
the income tax of the Company. Upon exercise of an NQSO, the excess of the
fair market value of the shares acquired over the exercise price is (a)
taxable to the participant as ordinary income and (b) deductible in
computing the Company's income tax, subject to satisfying applicable
withholding requirements and general rules relating to reasonableness of
compensation.
2. Incentive Stock Options. A participant will not be deemed to
receive any income at the time an incentive stock option is granted nor when
the incentive stock option is exercised. (However, the exercise may give rise
to alternative minimum tax liability for the participant.)
The participant must remain an employee of the Company from the time the
option is granted until three months before the option is exercised. Once the
option has been exercised and stock purchased, upon a subsequent sale of the
Company stock, any gain (i.e., the excess of the sale price over the
exercise price) will result in long-term capital gain and any loss will be
long-term capital loss. However, long-term capital gain treatment is only
available if, once the option is exercised, the stock is not sold within (1)
two years from the date the option was granted or (2) one year from the date
the option was exercised and the stock purchased, whichever is later.
If the participant disposes of the shares within the two-year or
one-year period referred to above, the disposition is a "disqualifying
disposition," and the participant will generally realize ordinary income
taxable as compensation in the year of the disqualifying disposition to the
extent of the excess of the fair market value of the shares on the date of
purchase over the option exercise price. For purposes of determining gain or
loss upon the sale of the shares, an amount equal to this compensation income
will be added to the purchase price at which the shares were acquired (the
exercise price), and the total will be the adjusted cost of the stock.
The difference between the net proceeds of the sale and the adjusted cost of
the shares will be long term or short term capital gain or loss depending,
generally, on whether the shares were held more than one year after the
incentive stock option was exercised. To the extent the participant recognizes
compensation income with respect to a disqualifying disposition, the Company
will be entitled to a corresponding deduction, subject to general rules
relating to reasonableness of compensation.
The foregoing is only a summary of the federal income rules applicable
to options granted under the 1996 Plan and is not intended to be complete. In
addition, this summary does not discuss the effect of the income or other tax
laws of any state or other jurisdiction in which a participant may reside.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 2
PROPOSAL 3
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has selected Richard & Hedrick ("R&H") as
the Company's independent accountants for the fiscal year ending March 31, 1999.
Although the appointment of R&H is not required to be submitted to a vote of the
stockholders, the Board of Directors believes it appropriate as a matter of
policy to request that the stockholders ratify the appointment for the current
fiscal year. In the event a majority of the votes cast at the meeting are not
voted in favor of the appointment, the Board of Directors will reconsider its
selection. Proxies solicited by the Board will be voted in favor of the
appointment unless stockholders specify otherwise in such proxies.
The Company's financial statements for the fiscal years ended March 31,
1998 and 1997 were audited by R&H.
A representative of R&H is expected to be present at the Annual Meeting
and will have an opportunity to make a statement if he or she so desires. The
representative will also be available to respond to appropriate questions from
the stockholders.
VOTE REQUIRED
The affirmative vote of the majority of the shares of Common Stock voting
at the Annual Meeting is required to ratify the selection of Richard & Hedrick
as independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL 3.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth information as of July 28, 1998, with
respect to Common Stock of the Company owned by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock, (ii) each director of the Company, (iii) each Named Executive Officer,
and (iv) all directors and executive officers of the Company as a group. Except
as noted below, and subject to applicable community property and similar laws,
each stockholder has sole voting and investment powers with respect to the
shares shown.
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<PAGE>
Number of Shares Percent of Shares
Name of Common Stock Of Common Stock
---- ----------------- -----------------
The Cooper Family Trust<F1> <F2> 5,000,000 72.4%
Gershon N. Cooper<F1> <F3> 5,000,000 72.4%
John M. Burris<F1> 0 0
Matthew F. Jodziewicz<F1> 0 0
Ruth Cooper<F1> <F3> 5,000,000 72.4%
Jack D.W. Song<F4> 1,173,626 17.0%
All directors and 5,000,000 72.4%
executive officers
as a group (4 persons)
- --------------------
<F1> The mailing address of such person is c/o ORA Electronics, Inc., 9410
Owensmouth Ave., Chatsworth, California 91311.
<F2> The shares held by the Cooper Family Trust are deemed beneficially owned
by Gershon N. Cooper and Ruth Cooper, who have shared voting and
investment power.
<F3> All shares held by this person are held of record by the Cooper Family
Trust.
<F4> The mailing address of such person is 6F #219 Chingshan South Section 2,
Taipei, Taiwan, ROC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers, directors and persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock of the Company. To the Company's knowledge and except as
previously disclosed, based solely on its review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, the Company believes that all of its officers and directors and
greater than ten percent beneficial owners complied with all Section 16(a)
filing requirements applicable to them with respect to transactions during
Fiscal 1998.
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<PAGE>
STOCKHOLDER PROPOSALS AND NOMINATIONS
Pursuant to the Company's Bylaws, no business proposal will be considered
properly brought before the next annual meeting by a stockholder and no
nomination for the election of directors will be considered properly made at the
next annual meeting by a stockholder, unless notice thereof, which contains
certain information required by the Bylaws, is provided to the Company no later
than 60 days nor more than 90 days prior to the next annual meeting, provided,
however, that, in the event that less than 60 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made.
Any stockholder intending to submit to the Company a proposal for
inclusion in the Company's Proxy Statement and proxy for the 1999 Annual Meeting
must submit such proposal so that it is received by the Company no later than
March 30, 1999. Stockholder proposals should be submitted to the Secretary of
the Company. No stockholder proposals were received for inclusion in this proxy
statement.
OTHER MATTERS
While the Notice of Annual Meeting of Stockholders calls for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented for action
by the stockholders other than as set forth above. The enclosed proxy gives
discretionary authority to the Board of Directors, however, to consider any
additional matters that may be presented.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report for Fiscal 1998 is being mailed to
stockholders together with this Proxy Statement.
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<PAGE>
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/S/ Matthew F. Jodziewicz
-----------------------------------
Matthew F. Jodziewicz,
SECRETARY
Chatsworth, California
August 17, 1998
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<PAGE>
EXHIBIT A
ORA ELECTRONICS, INC.
AMENDED AND RESTATED 1996 STOCK PLAN
1. Purpose. The purposes of the ORA Electronics, Inc. 1996 Stock Plan
("Plan") are to encourage key personnel of ORA Electronics, Inc. (the "Company")
and its subsidiaries to increase their interest in the Company's long-term
success, to enhance the profitability and value of the Company for the benefit
of its shareholders and to assist the Company and its subsidiaries in
attracting, retaining and motivating key personnel by giving suitable
recognition for services which contribute materially to the Company's success.
2. Definitions. The following definitions shall be applicable throughout
the Plan:
"Act" means the Securities Act of 1933, as amended from time to time.
"Affiliate" means any parent or subsidiary (as defined in Section
424(e) and (f) of the Code) of the Company.
"Award" means an Option, Stock Appreciation Right or Other Stock
Award.
"Board" means the Board of Directors of the Company.
"Change of Control" means, unless the Board otherwise directs by
resolution adopted prior thereto, (i) the acquisition by any entity, person
or group (other than the Company or its Affiliates or an employee benefit
plan maintained by the Company or one of its Affiliates) of beneficial
ownership of 20% or more of the outstanding voting stock of the Company; or
(ii) the occurrence of a transaction requiring shareholder approval for the
acquisition of the Company by the purchase of stock or assets, or by
merger, or otherwise; or (iii) the election during any period of 24 months
or less of 50% or more of the members of the Board without the approval of
the nomination of such members by a majority of the Board consisting of
members who were serving at the beginning of such period.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means the Committee of the Board consisting of two or more
directors, each of whom (i) is a "Non-Employee Director" within the meaning
of Rule 16b-3, and (ii) is an "outside director" within the meaning of
Section 162(m) of the Code, or successor rule or regulation.
"Company" means ORA Electronics, Inc., a Delaware corporation.
"Consultant" means any consultant or advisor engaged by the Company
who renders bona fide services to the Company or an Affiliate in connection
with business, provided that such services must not be in connection with
the offer or sale of securities in a capital-raising transaction.
"Disability" means permanent and total disability as defined in
Section 22(e)(3) of the Code.
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<PAGE>
"Employee" means any person who is employed by the Company or an
Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means for any given day (i) the closing sales
price on such date of a share of Stock as reported on the principal securi-
ties exchange on which such shares of Stock are then listed or admitted to
trading, or as reported on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") National Market System, or (ii) if not so
reported, the average of the bid and ask prices on such date as reported on
the Nasdaq System published in The Wall Street Journal, or (iii) if no such
quotations are available, as determined by the Committee in good faith in
their absolute discretion.
"Grant Limit" means the total number of shares of Stock that can be
issued to any Participant in any fiscal year pursuant to an Award granted
hereunder.
"Incentive Stock Option" means an Option granted by the Committee to
an Employee Participant under the Plan which is designated by the Committee
as an Incentive Stock Option pursuant to Section 422 of the Code.
"Non-Qualified Stock Option" means an Option granted by the Committee
to a Participant under the Plan which is not designated by the Committee as
an Incentive Stock Option.
"Option" means an Award granted under Section 6 of the Plan.
"Other Stock Awards" means an Award granted under Section 8 of the
Plan.
"Participant" means any individual designated by the Committee to
participate in the Plan.
"Performance-Based Compensation" means (i) an Option granted at less
than 100% of the Fair Market Value of the Stock at the time of grant, (ii)
a Restricted Stock Award or (iii) a Stock Bonus, in each case which has
been granted with the intention that such award will be deductible under
Section 162(m) of the Code, or successor provision.
"Plan" means this ORA Electronics, Inc. 1996 Stock Plan.
"Restricted Stock Award" means an Award granted under Section 8(a) of
the Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule or regulation.
"Stock" means the common stock of the Company, $.001 par value.
"Stock Appreciation Right" means an Award granted under Section 7 of
the Plan.
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<PAGE>
"Stock Bonus" means an Award granted under Section 8(b) of the Plan.
"Termination Date" means the date an optionee ceases to be employed or
engaged by the Company.
3. Administration. The Plan shall be administered by the Committee. The
Committee shall have full power, discretion and authority to interpret, construe
and administer the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to provide for conditions and assurances deemed necessary
or advisable to protect the interests of the Company and to make all other
determinations necessary or advisable for the administration of the Plan, to the
extent not contrary to the explicit provisions of the Plan. Determinations,
interpretations and other actions by the Committee pursuant to the Plan shall be
final, conclusive and binding on all persons for all purposes.
The Committee shall have full power, discretion and authority to
establish applicable performance measures for Awards intended to be
Performance-Based Compensation, which performance measures shall include one or
more of the following: improvements in revenues, earnings per share, profit
before taxes, net income or operating income; return on shareholder equity;
return on net assets; and stock price performance. Further, the Committee shall
determine the specific targets related to each such performance measure and the
performance period for each such Award. The Committee shall establish in writing
such performance measures, specific targets and performance periods as provided
in Section 162(m) of the Code and the regulations promulgated thereunder, or
successor provision or regulation. The Committee's decisions and determinations
under the Plan need not be uniform and may be made selectively among
Participants whether or not such Participants are similarly situated. The
Committee may, in its discretion, delegate to others responsibilities to assist
in administering the Plan.
In the event that the Board has not designated a Committee, the Plan
shall be administered by the Board, and shall exercise all authority granted to
the Committee pursuant to the terms of this Plan.
4. Eligibility. Any Employee selected by the Committee, except a member
of the Committee or a director whose principal employment is not with the
Company or an Affiliate, and any Consultant selected by the Committee shall be
eligible for Awards contemplated under the Plan except that Consultants shall
not be eligible for Incentive Stock Option grants.
5. Stock Subject to Plan and Grant Limits. The total number of shares
of Stock subject to issuance under the Plan may not exceed 2,000,000, subject
to adjustments as provided in the Plan. Shares to be delivered under the Plan
may consist, in whole or in part, of authorized but unissued shares or shares
purchased by the Company on the open market or by private purchase. The Grant
Limit shall equal 300,000 shares, subject to adjustment as provided in Section
10 hereof.
Except as otherwise provided in the Plan, shares of Stock that are
subject to an Option or Stock Appreciation Right which, for any reason, expires
or is terminated unexercised as to such shares, and shares of Stock subject to a
Restricted Stock Award made under the Plan which are reacquired by the Company
pursuant to the Plan, shall again become available for issuance under the Plan.
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<PAGE>
6. Stock Options. The Committee may grant stock Options alone or in
addition to any other Awards granted under the Plan. Options granted under the
Plan may be of two types: (i) Incentive Stock Options; and (ii) Non-Qualified
Stock Options. Subject to the limitations contained herein with respect to
Incentive Stock Options, the Committee may grant Incentive Stock Options,
Non-Qualified Stock Options, or both types of Options to a Participant and the
Committee shall have complete discretion in determining the number of Options
granted to each Participant, subject to the Grant Limit. To the extent that any
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option. The provisions of Options need not be the
same with respect to each Participant granted an Option.
Each Option shall be set forth in a written agreement, shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions not inconsistent with the terms of the Plan as the
Committee deems appropriate:
(a) The exercise price of shares subject to any Incentive Stock
Option shall not be less than the Fair Market Value of the Stock at the
time the Incentive Stock Option is granted; the exercise price of shares
subject to any Non-Qualified Stock Option shall be such price as the
Committee shall determine on the date on which such Non-Qualified Stock
Option is granted, provided that such exercise price may not be less than
85% of the Fair Market Value of the Stock at the time the Non-Qualified
Stock Option is granted;
(b) If the exercise price of a Non-Qualified Stock Option is less
than 100% of the Fair Market Value of the Stock at the time the Non-
Qualified Stock Option is granted, the Committee may designate such award
as Performance-Based Compensation in which event the Committee shall
establish performance measures for such award, the specific targets
applicable to such measures and the performance period for such award;
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<PAGE>
(c) The exercise price of any shares exercised under any Option must
be paid in full upon such exercise in cash or stock, or such other form of
consideration as the Committee may determine;
(d) The term of each Option shall be fixed by the Committee but no
Option may be exercised after the expiration of 10 years from the date such
Option is granted;
(e) In the event that an optionee shall cease to be employed or
engaged by the Company or an Affiliate, the vesting of such optionee's
Options shall immediately and automatically terminate on the Termination
Date and if the cessation of employment or engagement is:
(1) due to any reason other than due to retirement, Disability
or death, such optionee's Options exercisable on the Termination Date
shall remain exercisable for 30 days after the Termination Date;
(2) due to retirement, such optionee's Options exercisable on the
Termination Date shall remain exercisable for three months after the
Termination Date;
(3) due to a Disability, such optionee's Options exercisable on
the Termination Date shall remain exercisable for one year after the
Termination Date, or;
(4) due to death while employed or engaged by the Company or its
Affiliate, or during the three month period following retirement or
during the one year period following cessation of employment due to a
Disability, the optionee's Options exercisable at the time of death
shall remain exercisable for one year after the date of the optionee's
death;
provided, however, that notwithstanding anything herein to the contrary, if
any Option would otherwise expire on an earlier date than described above,
such Option shall remain exercisable only until the earlier expiration
date;
(f) Options shall become exercisable at such time or times and
subject to such terms and conditions (including, without limitation,
installment exercise provisions) as shall be determined by the Committee
and if the Committee provides that any Option is exercisable only in
installments, the Committee may waive such installment exercise provisions
at any time in whole or in part based on any factors as the Committee may
determine;
(g) Incentive Stock Options may be granted only to Employees;
(h) In the case of an Incentive Stock Option, the aggregate Fair
Market Value (determined as of the time the Option is granted) of the Stock
with respect to which Options are exercisable for the first time by any
Employee during any calendar year (under all such plans of the Company and
its Affiliates) shall not exceed $100,000;
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<PAGE>
(i) No Incentive Stock Option shall be granted to a Participant who,
at the time the Incentive Stock Option is granted, owns (within the meaning
of Section 422 of the Code) Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
Affiliate unless the exercise price per share of Stock is at least 110% of
the Fair Market Value of the Stock at the time the Incentive Stock Option
is granted and the Incentive Stock Option by its terms is not exercisable
after the expiration of five years from the date of grant;
(j) No Option shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated otherwise than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code; and
(k) All Options shall be exercisable during the optionee's lifetime
only by the optionee or by a transferee permitted pursuant to Section 6(j)
above.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participants affected, to disqualify any
Incentive Stock Option under Section 422.
7. Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights alone or in conjunction with all or part of any Option granted under the
Plan, subject to the Grant Limit. In the case of a Non-Qualified Stock Option,
such Stock Appreciation Rights may be granted either at or after the time of the
grant of such Non-Qualified Stock Option. In the case of an Incentive Stock
Option, such Stock Appreciation Rights may be granted only at the time of the
grant of the Incentive Stock Option.
Each Stock Appreciation Right shall be set forth in a written
agreement, shall be subject to the following terms and conditions and shall
contain such additional terms and conditions not inconsistent with the terms of
the Plan as the Committee deems appropriate:
(a) Subject to subparagraphs (b) and (c) below, a Stock Appreciation
Right granted in connection with an Option shall become exercisable and
shall lapse according to the same vesting schedule and lapse rules that are
established for the Option; a Stock Appreciation Right granted
independently of an Option shall become exercisable and shall lapse in
accordance with the vesting schedule and lapse rules established by the
Committee;
(b) A Stock Appreciation Right and any related Option shall not be
exercisable during the first six months of their terms by any Participant;
(c) A Stock Appreciation Right shall be exercisable only when the
Fair Market Value of the Stock relating to the Stock Appreciation Right
exceeds the exercise price thereof;
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<PAGE>
(d) If the exercise price of a Stock Appreciation Right is less than
100% of the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, such award may be designated by the
Committee to be Performance-Based Compensation in which event the Committee
shall establish performance measures for such award, the specific targets
applicable to such measures and the performance period for such award;
(e) Upon the exercise of a Stock Appreciation Right with respect to
any number of shares of Stock, the holder shall be entitled to receive
payment of an amount (subject to subparagraph (f), below) determined by
multiplying (i) the difference between the Fair Market Value per share of
Stock on the date of exercise and the exercise price of the related Option
(or in the case of an Stock Appreciation Right granted independent of an
Option, the exercise price of the Stock Appreciation Right as established
by the Committee) by (ii) the number of shares in respect of which the
Stock Appreciation Right is exercised. At the discretion of the Committee,
payment for Stock Appreciation Rights may be made in cash or stock, or in a
combination thereof. If payment is made in Stock, the value of such Stock
shall be the Fair Market Value determined as of the date of exercise;
(f) At the time of grant, the Committee may establish, in its sole
discretion, a maximum amount per share which will be payable upon exercise
of a Stock Appreciation Right;
(g) Notwithstanding any other provisions of the Plan, the Committee
may impose such conditions on exercise of a Stock Appreciation Right
(including, without limitation, the right of the Committee to limit the
time of exercise to specified periods) as may be required to satisfy the
requirements of Rule 16b-3;
(h) The Committee may provide that upon exercise of a Stock
Appreciation Right granted in conjunction with an Option, the number of
shares of Stock for which the related Option shall be exercisable shall
reduce by the number of shares of Stock for which the Stock Appreciation
Right shall have been exercised and the number of shares of Stock for which
a Stock Appreciation Right shall be exercisable shall be reduced upon any
exercise of a related Option by the number of shares of Stock for which
such Option shall have been exercised;
(i) The term of a Stock Appreciation Right granted under the Plan
shall not exceed ten years;
(j) No Stock Appreciation Right granted under the Plan may be sold,
transferred, pledged, signed or otherwise alienated or hypothecated
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code,
and all Stock Appreciation Rights shall be exercisable during the
Participant's lifetime only by the Participant or by a transferee
permitted pursuant to Section 7(j) above;
(k) The Committee may provide, at the time of grant, that such Stock
Appreciation Right can be exercised only in the event of a Change of
Control, subject to terms and conditions as the Committee may specify at
grant.
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<PAGE>
8. Other Stock Awards. In addition to Options and Stock Appreciation
Rights, the Committee may grant Other Stock Awards payable in Stock upon such
terms and conditions as the Committee may determine, subject to the provisions
of the Plan. Other Stock Awards may include, but are not limited to, the
following types of Awards:
(a) Restricted Stock Awards. The Committee may grant Restricted
Stock Awards, each of which consists of a grant of shares of Stock subject
to restrictions, terms and conditions not inconsistent with the terms of
the Plan, including the Grant Limit, as the Committee deems appropriate,
which such restrictions, terms and conditions shall be set forth in written
agreements. The Committee may designate a Restricted Stock Award as
Performance-Based Compensation in which event the Committee shall establish
performance measures for such award, the specific targets applicable to
such measures and the performance period for such award. Stock certificates
evidencing a Restricted Stock Award shall be issued by the Company in the
name of the Participant, and such Participant shall be entitled to all
voting rights, rights to dividends and other rights of holders of Stock,
subject to the provisions of the Plan. The certificates representing a
Restricted Stock Award issued under the Plan and any dividends paid
thereon, shall remain in the physical custody of the Company or an escrow
holder or be placed in trust until the restrictions imposed under the Plan
have lapsed. The Committee may also require that a legend or legends be
placed on any certificates representing a Restricted Stock Award to
reference the various restrictions imposed on such Stock. If a Restricted
Stock Award is granted which requires the payment of an exercise price by
the Participant, then such Award must be accepted within a period of 60
days (or such shorter periods as the Committee may specify at grant) after
the date of grant. The shares of Stock granted under a Restricted Stock
Award may not be sold, transferred, assigned, or otherwise alienated or
hypothecated until the lapse or release of restrictions in accordance with
the terms of the Restricted Stock Award agreement and the Plan. Prior to
the lapse or release of restrictions, all shares of Stock are subject to
forfeiture in accordance with conditions as may be determined by the
Committee. The provisions of a Restricted Stock Award need not be the same
with respect to each recipient.
(b) Stock Bonuses. The Committee may grant Stock Bonuses in such
amounts as it shall determine from time to time, subject to the Grant
Limit. A Stock Bonus shall be paid at such time and be subject to such
conditions as the Committee shall determine at the time of the grant of
such Stock Bonus. The Committee may designate a Stock Bonus as
Performance-Based Compensation in which event the Committee shall establish
performance measures for such award, the specific targets applicable to
such measures and the performance period for such award. Certificates for
shares of Stock granted as a Stock Bonus shall be issued in the name of the
Participant to whom such grant was made and delivered to such Participant
as soon as practicable after the date on which such Stock Bonus is required
to be paid.
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<PAGE>
9. General Provisions. The grant of any Award under the Plan
may also be subject to such other provisions (whether or not applicable to any
Award granted to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in financing
the purchase of Stock through the exercise of Options, provisions for
restrictions on resale or other disposition of shares acquired under any Award,
provisions giving the Company the right to repurchase Stock acquired under any
Award in the event the Participant elects to dispose of such Stock, provisions
to comply with compensation expense deductibility under the Code and provisions
to comply with federal and state securities laws and federal and state income
tax withholding requirements.
The obligation of the Company to make payment of Awards in Stock or
otherwise shall be subject to applicable laws, rules and regulations, and to
such approvals by governmental agencies as may be required. The Company shall be
under no obligation to register under the Act any of the shares of Stock
delivered under the Plan. All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each Participant
acquiring shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that the Participant is acquiring the Stock without
a view to distribution thereof.
The Company shall have the right to deduct from all Awards, to the
extent paid in cash, all federal state or local taxes as required by law to be
withheld with respect to such Awards and, in the case of Awards paid in Stock,
the Participant or other person receiving such Stock may be required to pay to
the Company prior to delivery of such Stock, the amount of any such tax which
the Company is required to withhold, if any, with respect to such Stock. At the
discretion of the Committee, the Company may accept shares of Stock, or withhold
shares of Stock otherwise issuable upon exercise of an Award, of equivalent Fair
Market Value in payment of such withholding tax obligations or provide
alternative methods of complying with such withholding tax obligations.
No Employee or other person shall have any claim or right to be
granted an Award under the Plan nor, having been selected for the grant of an
Award, to be selected for a grant of any other Award. Neither this Plan nor any
action taken hereunder shall be construed as giving any Participant any right to
be retained in the employ of the Company or its Affiliates.
Each Participant may file with the Committee a written designation of
one or more persons as the beneficiary who shall be entitled to receive the
amounts payable with respect to the benefits of an Award, if any, due under the
Plan upon such Participant's death. A Participant may, from time to time, revoke
or change the beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The last designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation therein shall be effective unless received
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<PAGE>
by the Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
Except as otherwise specifically provided in the Plan, no Participant
shall be entitled to the privileges of stock ownership in respect of Stock which
is subject to an Option, Stock Appreciation Right or Other Stock Award until
such Stock has been issued to that Participant upon exercise of an Option or
Stock Appreciation Right according to its terms or upon sale or grant of Stock
in accordance with an Other Stock Award.
No Participant or other person shall have any right with respect to
this Plan, shares reserved under this Plan, or in any Award, contingent or
otherwise, until written evidence of the Award shall have been delivered to the
Participant and all the terms, conditions and provisions of the Plan applicable
to such Participant have been met.
10. Changes in Capital Structure. In the event of changes in the
outstanding Stock or in the capital structure of the Company by reason of any
stock dividend, stock split, exchange of shares, recapitalization,
reorganization, subdivision or consolidation of shares, or other similar
transaction, the aggregate number of shares available under the Plan, the number
of shares subject to each outstanding Award and the price per share of any
Award, shall all be proportionately adjusted. In the event the Company shall be
a party to a transaction involving a sale of substantially all of its assets, a
merger or a consolidation, the Board shall make such adjustment as shall be
necessary or appropriate which may include assumption of Awards by the surviving
Company, for their continuation, for the acceleration of vesting and expiration,
or for settlement in cash. In the case of dissolution of the Company (other than
a dissolution following the sale of substantially all of the Company's assets),
the Awards outstanding hereunder shall terminate; provided, however, that each
Participant shall have 30 days' prior written notice of such event, during which
time the Participant shall have the right to exercise in full any partly or
wholly unexercised Award, including the portion not yet exercisable pursuant to
the vesting schedule set forth in any Award agreement. In the event of any
change in applicable laws or any change in circumstances which results in or
would result in any substantial dilution or enlargement of the rights granted to
or available for Participants in the Plan, or which otherwise warrants equitable
adjustment because it interferes with the intended operation of the Plan, the
Committee may make such adjustments or substitutions to Awards or agreements
evidencing Awards as the Committee determines appropriate in its sole
discretion. Any adjustment in Incentive Stock Options under this Section 10
shall be made only to the extent not constituting a "modification" within the
meaning of Section 424(h)(3) of the Code. The Company shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustments
shall be conclusive and binding for all purposes.
11. Change of Control. Upon the occurrence of an event constituting a
Change of Control, the following transactions, in the sole discretion of the
Committee, may be triggered: (i) all Options and Stock Appreciation Rights shall
become immediately exercisable in full for the remainder of their terms; and
(ii) restrictions on alienation or hypothecation of Stock granted pursuant to a
Restricted Stock Award shall lapse and in such case the Participant shall be
issued Stock certificates free of any such restrictions.
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<PAGE>
12. Amendments and Termination. The Board may, from time to time, amend,
suspend or terminate the Plan in whole or in part and, if terminated, may
reinstate any or all of the provisions of the Plan, except that no amendment,
suspension or termination shall be made which would impair the rights of a
Participant under an Award theretofore granted, without such Participant's
consent. The Board shall obtain stockholder approval of any amendment to this
Plan which would be necessary to allow this Plan to continue to meet the
conditions of Rule 16b-3 or Sections 162(m) or 422 of the Code.
13. Effective Date and Term. The Plan shall become effective as of
December 20, 1996, the date of its adoption by the Board, subject to
ratification by the stockholders of the Company within twelve months of the
adoption date. Unless sooner terminated by the Committee, the Plan shall
continue until December 20, 2006, the tenth anniversary of the Plan's effective
date, when it shall terminate and no Award shall be granted under the Plan
thereafter. The Plan shall continue in effect, however, insofar as is necessary
to complete all the Company's obligations under outstanding Awards and to
conclude the administration of the Plan.
14. Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and be governed by the laws of the State of
Delaware.
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<PAGE>
ATTACHMENT A
ORA ELECTRONICS, INC.
Annual Meeting of Shareholders - September 14, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of ORA Electronics, Inc. (the "Company") hereby
appoints Gershon N. Cooper as the nominee of the undersigned to amend and to act
for and on behalf of the undersigned at the annual meeting of shareholders of
the Company to be held on September 14, 1998 at 10:00 a.m. Pacific Daylight Time
(for holders of shares as of July 31, 1998), and at any adjournment or
adjournments thereof, to the same extent and with the same power as if the
undersigned were personally present at said meeting or such adjournment or
adjournments thereof and, without limiting the generality of the power hereby
conferred, the nominees named above are specifically directed to vote as
indicated below.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
vote for each nominee
listed below
Gershon N. Cooper, John M. Burris, Matthew F. Jodziewicz, Ruth Cooper
(INSTRUCTION: To withhold authority to vote for any nominee write names
of such nominee(s) below).
- --------------------------------------------------------------------------------
2. PROPOSAL BY ORA ELECTRONICS, INC. TO AMEND THE COMPANY'S 1996 STOCK PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
3. PROPOSAL BY ORA ELECTRONICS, INC. TO RATIFY THE APPOINTMENT OF
RICHARD & HEDRICK AS THE COMPANY'S INDEPENDENT CERTIFYING ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
(PLEASE SIGN AND DATE ON REVERSE SIDE)
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<PAGE>
This proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE
VOTED FOR THE NOMINEES AND PROPOSALS LISTED ABOVE. The undersigned hereby
appoints the proxyholders to vote as designated on this proxy, and in their
discretion, to vote upon such other business as may properly come before the
meeting or any adjournment thereof.
Dated: _____________, 1998
----------------------------
Signature
----------------------------
Signature if held jointly
Please sign and date exactly as
name(s) appear(s) hereon. When
shares are held by joint
tenants, both should sign. When
signing as attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign as partnership name
by authorized person.
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