<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 20, 1999
----------------
To Our Shareholders:
The Annual Meeting of shareholders of Friedman, Billings, Ramsey Group,
Inc. (the "Company") will be held at the Monarch Hotel, 2401 M St. N.W.,
Washington, D.C. on Thursday, May 20, 1999, at 10:00 a.m., to vote on the
following:
1. The election of the five directors of the Company;
2. The approval of amendments to the 1997 Stock and Annual Incentive
Plan to place an annual limit of one million shares on the number of shares
of Common Stock that may be allocated to an award to a Plan participant and
to specify certain performance criteria for Plan awards;
3. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors for 1999; and
4. The transaction of such other business as may properly come before
the meeting.
The Record Date for the meeting, used to determine which shareholders are
entitled to vote at the meeting and receive these materials, is March 31,
1999. This notice, the attached Proxy Statement and the enclosed form of proxy
for the meeting are first being mailed on April 9, 1999. A list of
shareholders will be available at the meeting and for ten days prior to the
meeting at the Company's offices, 1001 Nineteenth Street North, 18th Floor,
Arlington, VA 22209.
By Order of the Board of Directors,
/s/ W. Russell Ramsey
W. Russell Ramsey
President and Secretary
April 9, 1999
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
----------------
PROXY STATEMENT
----------------
GENERAL
The Board of Directors of Friedman, Billings, Ramsey Group, Inc., a
Virginia corporation (the "Company") is soliciting proxies to be used at your
Annual Meeting to vote on the matters described in the Notice of Annual
Meeting. The term "FBR", as used herein, refers to the Company and its
predecessors, which were first formed in 1989.
VOTING AND OUTSTANDING SHARES
Holders of record of Class A Common Stock and holders of record of Class B
Common Stock on the Record Date may vote at the Annual Meeting. On the Record
Date, 12,460,199 shares of Class A Common Stock and 36,305,929 shares of Class
B Common Stock were outstanding and entitled to vote at the Annual Meeting. No
other voting securities of the Company were outstanding. Each shareholder is
entitled to one vote for each share of Class A Common Stock and to three votes
for each share of Class B Common Stock held on the Record Date. Holders of
Class A Common Stock and Class B Common Stock vote together without regard to
class on the matters that will come before the Annual Meeting.
The expenses of preparing, printing and assembling the materials used in
the solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, the Company may utilize the
services of certain of its officers and employees (who will receive no
compensation therefor in addition to their regular salaries) to solicit
proxies personally and by mail, telephone and telegraph from brokerage houses
and other stockholders. Also, the Company has retained D.F. King & Co., Inc.
to aid in the solicitation of proxies. D.F. King & Co., Inc. will receive a
fee and reimbursement of expenses estimated not to exceed $5,000 in the
aggregate, all of which will be paid by the Company.
If you return your executed proxy in time to permit its review and count,
your shares will be voted as you direct. You can specify whether shares
represented by the proxy are to be voted for the election of all nominees for
director or are to be withheld from some or all of them. You also can specify
approval, disapproval or abstention as to the amendments to the 1997 Stock and
Annual Incentive Plan and to the selection of independent public accountants.
If your proxy card does not specify how you want to vote your shares, they
will be voted "for" the election of all nominees for director, as set forth
under "Election of Directors" below, "for" the approval of the amendments to
the 1997 Stock and Annual Incentive Plan and "for" the selection of
independent auditors.
You may revoke your proxy at any time before it is exercised by written
notice to the Secretary, by timely submission of a properly executed later-
dated proxy or by voting in person at the Annual Meeting.
A majority of the votes entitled to be cast on a matter, represented in
person or by proxy, constitutes a quorum for action on that matter. The
election of directors requires a plurality of the votes cast by the shares
entitled to vote on the election of directors at the Annual Meeting. The
amendments to the 1997 Stock and Annual Incentive Plan and the ratification of
the selection of independent auditors each requires a majority of the votes
that could be cast by the shares that are present in person or represented by
proxy at the Annual Meeting.
<PAGE>
The total number of votes that could be cast at the Annual Meeting is the
sum of votes cast and abstentions. Abstentions are counted as "shares present"
at the Annual Meeting for purposes of determining the presence of a quorum and
have the effect of a vote "against" any matter as to which they are specified.
Proxies submitted by brokers that do not indicate a vote for either or both of
the items (so-called "broker non-votes") are not considered "shares present"
and will not affect the outcome of the vote.
The Company does not know of any other matter to be presented at the Annual
Meeting. Under the Company's By-laws, no business other than that stated in
the Notice of Annual Meeting of Shareholders may be transacted at the Annual
Meeting. If any other matter is presented at the Annual Meeting on which a
vote properly may be taken, the shares represented by proxies in the
accompanying form will be voted in accordance with the judgment of the person
or persons voting those shares.
2
<PAGE>
SECURITY OWNERSHIP
Security Ownership of Management
The information below shows, as of March 31, 1999, the number of shares of
Class A and Class B Common Stock beneficially owned by each director, by the
Chairman and Chief Executive Officer and next four highest compensated
executive officers ("Named Executive Officers"), and by the directors and
executive officers of the Company as a group.
Each share of Class B Common Stock has three votes. In the fourth quarter
of 1998 the owners of the Class B shares previously subject to a voting trust
agreement unanimously voted to terminate the agreement.
The following table shows the shares of Common Stock and shares of Class A
Common Stock underlying options exercisable within 60 days in which the Named
Executive Officers and directors have the sole economic interest and provides
the same information for all executive officers and directors as a group.
<TABLE>
<CAPTION>
Unless Otherwise
Noted, Number Percent
of Shares Percent of Acquirable of All
of Class B Class B within 60 Common
Name Common Stock Common Stock Days Stock
---- ---------------- ------------- ---------- -------
<S> <C> <C> <C> <C>
Emanuel J. Friedman.......... 10,517,100 28.97% 21.57%
Chairman and Chief Executive
Officer
Eric F. Billings............. 8,712,140 24.00% 17.87%
Vice Chairman and Chief
Operating Officer
W. Russell Ramsey............ 5,854,829 16.13% 12.01%
President and Secretary
Eric Y. Generous............. 334,650 0.92% 0.69%
Executive Vice President 152
and Chief Financial Officer (Class A)
Nicholas J. Nichols.......... 330,000 0.91% 0.68%
Executive Vice President 2,000
and Director of Compliance (Class A)
Wallace L. Timmeny........... 2,000 -- 20,000 0.05%
Director (Class A) (Class A)
Mark R. Warner............... -- -- 20,000 0.04%
Director (Class A)
All executive officers and
directors as a group
(9 persons)................. 25,748,719 70.92% 52.83%
(Class B)
14,738
(Class A)
</TABLE>
3
<PAGE>
Security Ownership of Certain Beneficial Owners
The table below is based on information available to the Company, including
shareholder filings with the Securities and Exchange Commission ("SEC"), and
shows beneficial ownership of more than 5% of the Company's Class A Common
Stock.
<TABLE>
<CAPTION>
Percent
Sole Shared Sole Percent of All
Voting Voting Investment of Common
Title of Class Beneficial Owner Power Power Power Class Stock
-------------- ---------------- --------- ------ ---------- ------- -------
<C> <S> <C> <C> <C> <C> <C>
Class A Common Stock.... PNC Investment Corp./1/ 2,426,086 2,426,086 19.5% 4.97%
222 Delaware Ave.
Wilmington, Delaware
19899
Class A Common Stock.... Dimensional Fund 690,900 690,900 5.5% 1.4%
Advisors, Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
</TABLE>
PNC Investment Corp. is a wholly-owned subsidiary of PNC Holding Corp., a
wholly-owned subsidiary of PNC Bank Corp. (PNC). As more fully described in
the Company's Annual Report on Form 10-K, the Company and PNC are parties to a
non-binding Memorandum of Understanding that establishes a strategic
relationship between the Company and PNC with respect to selected capital
markets and related activities.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership and changes in
ownership of the Company's securities with the SEC. All directors and officers
complied with these requirements in 1998.
4
<PAGE>
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors recommends a vote "for" the nominees named in this
proposal.
Five directors will be elected at the Annual Meeting. All current board
members have been nominated for reelection. More information on the nominees
is provided below. This information has been given to the Company by the
nominees. Each director elected at the Annual Meeting will serve until the
next annual meeting of the stockholders or until earlier retirement,
resignation or removal.
If unforeseen circumstances (for example, death or disability) make it
necessary for the Board of Directors to substitute another person for any of
the nominees, your shares will be voted for that other person.
Emanuel J. Friedman
Mr. Friedman, age 53, is Chairman and Chief Executive Officer of the
Company. He has continuously served as Chairman and Chief Executive Officer of
FBR since co-founding FBR in 1989. He serves as a director of FBR Asset
Investment Corporation. He also manages FBR Ashton, Limited Partnership and
FBR Private Equity Fund, L.P. Mr. Friedman founded the Friedman, Billings,
Ramsey Foundation, a charitable foundation, in 1993 and currently serves as a
director. Mr. Friedman entered the securities industry in 1973 when he joined
Legg Mason Wood Walker & Co., Incorporated, and from 1985 until 1989 he was
Senior Vice President in the institutional sales group at Johnston, Lemon &
Co., Incorporated, a Washington, D.C. brokerage firm.
Eric F. Billings
Mr. Billings, age 46, is Vice Chairman and Chief Operating Officer of the
Company. He has continuously served as Vice Chairman and Chief Operating
Officer of FBR since co-founding FBR in 1989. He serves as Chief Executive
Officer and as a director of FBR Asset Investment Corporation. He also manages
FBR Weston, Limited Partnership. Mr. Billings entered the securities industry
in 1982 when he joined Legg Mason Wood Walker & Co., Inc., and from 1984 until
1989 served as Senior Vice President in the institutional sales group at
Johnston, Lemon & Co., Incorporated, a Washington, D.C. brokerage firm.
W. Russell Ramsey
Mr. Ramsey, age 39, is President and Secretary of the Company. He has
continuously served as President and Secretary of FBR since co-founding FBR in
1989. Prior to co-founding FBR, Mr. Ramsey served as Vice President in the
institutional sales group at Johnston, Lemon & Co., Incorporated, a
Washington, D.C. brokerage firm. Mr. Ramsey serves as a director of Building
One Services Corporation, a publicly-held company engaged in the consolidation
of the building management industry.
Wallace L. Timmeny
Mr. Timmeny, age 61, was named a director of the Company on December 29,
1997. Mr. Timmeny is a partner in the Washington, D.C. office of Dechert Price
& Rhoads, a law firm, which he joined in 1996. From 1984 to 1996, Mr. Timmeny
was a partner in the law firm of McGuire, Woods, Battle & Boothe, LLP in
Washington, D.C. Mr. Timmeny is currently chairman of the Executive Council of
the Securities Law Committee of the Federal Bar Association. Mr. Timmeny has
served as an adjunct professor at American University School of Law, George
Mason University School of Law and Georgetown University School of Law. From
1965 to 1979, Mr. Timmeny was an attorney with the SEC, and ultimately the
Deputy Director of the Division of Enforcement of the SEC. Mr. Timmeny and his
law firm have provided and are expected to continue to provide legal services
to the Company.
Mark R. Warner
Mr. Warner, age 44, was named a director of the Company on December 29,
1997. For more than
5
<PAGE>
five years, Mr. Warner has served as a Managing Director of Columbia Capital
Corporation, an investment company specializing in emerging technologies. As
Managing Director of Columbia Capital, Mr. Warner helped found 4 public and 10
private companies. In 1996, Mr. Warner was the Democratic candidate in the
race for U.S. Senator from Virginia. Mr. Warner was Chairman of the Democratic
Party of Virginia from 1993 to 1995. Mr. Warner currently serves on the
Executive Board of Directors of the Northern Virginia Business Roundtable, and
he was founding Chairman of the Virginia Health Care Foundation. Mr. Warner
also serves on the Boards of Directors of the Presidential Investment and
Services Policy Advisory Committee, George Washington University and Virginia
Union University.
THE BOARD OF DIRECTORS
Meetings
The Board of Directors held 7 meetings during 1998. All members of the
Board attended each of the meetings, with the exception of Mr. Warner who
attended 6 of the meetings.
Committees
The Board has three standing committees: the Executive Committee, the Audit
Committee and the Compensation Committee. The Executive Committee held 12
meetings in 1998 which were attended by all members of the Committee. The
Audit Committee held 2 meetings in 1998, which were attended by all members of
the Committee. The Compensation Committee held 2 meetings in 1998, which were
attended by all members of the Committee.
The Executive Committee's members are Mr. Friedman, Mr. Billings and Mr.
Ramsey. The Committee has authority to act on behalf of the full Board.
The Audit Committee's members are Mr. Timmeny, who serves as Chairman of
the Committee, and Mr. Warner. The Audit Committee reviews the Company's
auditing, financial reporting and internal control functions and makes
recommendations concerning the Company's independent public accountants. The
Board has concluded that the members of the Audit Committee are independent of
management and free from any relationship that would interfere with the
exercise of independent judgment as a Committee member.
The Compensation Committee's members are Mr. Warner, who serves as Chairman
of the Committee, and Mr. Timmeny. The Compensation Committee reviews the
Company's compensation plans and makes recommendations concerning those plans
and concerning executive officer compensation.
Relationships with Directors
In the ordinary course of business the Company and its subsidiaries may
have transactions with corporations or other entities in which its non-
employee directors have an interest or serve as executive officers. None of
these transactions exceeds 5% of the gross revenues of either the Company or
the other corporation or entity.
Mr. Timmeny and his law firm have, from time to time, provided legal advice
to the Company and its subsidiaries and are expected to continue to do so.
DIRECTOR AND MANAGEMENT COMPENSATION
Director Compensation
Each non-employee director receives an annual retainer of $20,000 for
service on the Company' Board and a fee of $1,000 for each in-person meeting
of the Company's Board and a fee of $500 for each telephonic meeting of the
Company's Board and for each Committee meeting. The Chairman of the Audit
Committee receives an additional annual retainer fee of $5,000. Non-employee
directors are also eligible to receive an annual
6
<PAGE>
grant of options to purchase 3,000 shares of Class A Common Stock pursuant to
the terms of the Non-Employee Director Stock Compensation Plan. No separate
compensation is paid to Directors who are officers of the Company for their
services as directors.
Report On Executive Compensation
Introduction
The following Report on Executive Compensation for fiscal year 1998 is
submitted by the Compensation Committee of the Board of Directors which is
composed of two independent non-employee directors, Mr. Warner and Mr.
Timmeny.
Subsequent to the Company becoming a public company in December 1997, the
Board of Directors formed the Compensation Committee in February 1998. In
1998, the Compensation Committee administered the Company's compensation
policy, which was created by the Board of Directors in connection with the
Company's initial public offering to reflect the restructuring of FBR into a
public company.
Compensation Paid to Executive Officers
In 1998, FBR's Executive Officers received a base salary and were eligible
to receive an annual bonus and stock and option awards under the 1997 Stock
and Annual Incentive Plan (the "Stock and Annual Incentive Plan"). Non-
director Executive Officers were also eligible to receive bonuses under the
Key Employee Incentive Plan. Base salaries were set at a level that placed a
significant amount of the total possible compensation of each Executive
Officer at risk based on FBR's overall performance, as well as the
individual's performance. The amount of each base salary was based on
competitive factors within FBR's industry and on the past contributions and
performance of each Executive Officer and did not increase from the 1996 and
1997 levels. As part of its policy of maintaining a compensation system that
is incentive driven, the Company does not provide retirement benefits, other
than a defined contribution savings plan available to all Company employees
pursuant to Section 401(k) of the Internal Revenue Code. During 1998, FBR did
not match any employee contributions made under that plan.
The 1998 annual bonus eligibility of the Executive Officer Directors
(Messrs. Friedman, Billings, and Ramsey), who have responsibility for the
over-all revenue-producing activities of FBR, was determined by the Stock and
Annual Incentive Plan which uses a formula based on adjusted net income before
taxes. Under this plan, all Executive Officers, together with certain other
senior officers and managing directors of the Company, were eligible to
participate in an Annual Incentive Award bonus pool equal to up to 30% of the
Company's adjusted pre-tax income (before Annual Incentive Award bonuses). The
Compensation Committee, in consultation with the Executive Officer Directors,
determined that it was not appropriate to pay bonuses for 1998 under the Stock
and Annual Incentive Plan.
During the first eight months of 1998 the Executive Officer Directors
received draws amounting to a total of $2 million each, representing a
percentage of the expected level of bonuses under the Stock and Annual
Incentive Plan. In light of market volatility in late August, the Compensation
Committee, in consultation with the Executive Officer Directors determined to
commute the amount of the draw, with accrued interest, into a loan with
principal and interest at an annual rate of 5.4% due December 31, 1999, and
to modify the bonus policy for 1999 and 2000 as discussed below.
Annual bonuses paid to those Executive Officers whose duties primarily
involve non-revenue producing activities, such as finance, accounting, legal
and compliance, were based on the individual contributions and performance of
each Executive Officer within his respective area of responsibility. Stock
options were granted to certain of these Executive Officers under the Stock
and Annual Incentive Plan in order to tie a portion of the value of their
compensation to the performance of the Company's stock and to further align
their interests with those of shareholders. Stock options were not granted to
the Executive Officer Directors due to the fact that they already own
significant amounts of the Company's common stock.
7
<PAGE>
1999 Bonus Policy
The Compensation Committee has determined that during 1999 the Executive
Officer Directors will be eligible for bonuses under the Key Employee
Incentive Plan that will be based on two components. The first component will
be a bonus pool equal to up to 20% (as opposed to the 30% pool provided by the
Stock and Annual Incentive Plan) of the Company's pre-tax income (before
payment of the bonuses) adjusted for certain extraordinary items related to
measures which the Compensation Committee believes should be excluded due to
their benefit to the long-term revenue producing ability of the Company or to
the fact that they are not related to the performance of the Company's
operations in the current year. The 20% bonus pool will be subject to a cap
related to the ratio of compensation expense (also adjusted to exclude certain
extraordinary items) to total revenue. The second component will be a bonus
pool of $6 million. Eligibility for this $6 million pool will be based on a
formula tied to the performance of the trading operations of the Company's
principal broker-dealer subsidiary, Friedman, Billings, Ramsey & Co., Inc.,
without reference to the overall profitability of the Company. If a bonus is
paid under the $6 million pool and the Company, as a whole, is not profitable
for 1999, the bonus pool for 2000 will be reduced to 20% of adjusted pre-tax
income. During 1999, the Stock and Annual Incentive Plan will not be used to
determine cash bonus compensation for Executive Officers.
1998 Compensation Paid to the Chief Executive Officer
The Company believes that a significant part of its success is based on the
team management approach of the Executive Officer Directors who are also the
founders of FBR. FBR's success is due in large part to their ability to work
closely together to implement the strategies that have made FBR successful.
Accordingly, the compensation plans for Mr. Friedman, Mr. Billings and Mr.
Ramsey in 1998 were the same.
In setting the Chief Executive's salary, the Compensation Committee
considered his historic contributions to the founding of FBR, his central role
in the strategic plans that have formed the basis for FBR's success and his
leadership role within FBR. The Chief Executive's salary did not increase from
1997 to 1998. The Compensation Committee anticipates that it will reconsider
the level of the base salary of the Chief Executive and the other Executive
Officers in late 1999.
The Chief Executive Officer did not receive an annual bonus for 1998 for
the reasons described above with regard to the annual bonus for the Executive
Officer Directors.
Tax Considerations
Section 162(m) of the Internal Revenue Code (the "Code"), generally denies
a tax deduction to any publicly-held company for compensation paid to one of
the company's five most highly compensated executive officers which exceeds $1
million. Section 162(m) of the Code provides exemptions to this limitation on
deductions for compensation which meets certain "performance based" criteria
or which is paid pursuant to a plan which was in effect prior to company's
initial public offering. To date, all compensation paid to the Company's five
highest paid Executive Officers has been paid pursuant to plans that were
established prior to FBR's initial public offering. The Company believes that
the primary purpose of executive compensation should be to motivate executives
to implement the Company's strategic plans in order to increase shareholder
value. To the extent that achieving that purpose is consistent with making
executive compensation tax deductible pursuant to Section 162 (m) of the Code,
it is the Company's intention to grant executive compensation that qualifies
for tax deductions.
Respectfully submitted,
Mark R. Warner Wallace L. Timmeny
8
<PAGE>
Summary Compensation Table
The following table shows the compensation for FBR's Chief Executive
Officer and four other Executive Officers who were the highest paid in the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------- ------------
Other Securities
Annual Underlying
Name and Principal Compensation Options
Position Year Salary ($) Bonus ($) ($) Granted (#)
------------------ ---- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Emanuel J. Friedman..... 1998 600,000 -- 652,510(/1/) --
Chairman, Chief 1997 600,000 14,074,579 6,479 --
Executive Officer 1996 600,000 2,809,122 1,825,154(/2/) --
and Director
Eric F. Billings........ 1998 600,000 -- 658,714(/1/) --
Vice Chairman, Chief 1997 600,000 14,074,579 39,898 --
Operating 1996 600,000 2,809,122 1,527,927(/2/) --
Officer and Director
W. Russell Ramsey....... 1998 600,000 -- 626,339(/1/) --
President, Secretary 1997 600,000 14,024,579 10,515 --
and Director 1996 600,000 2,809,122 1,457,927(/2/) --
Eric Y. Generous........ 1998 240,000 -- 231,786(/1/) --
Executive Vice 1997 240,000 736,071 17,159 7,500
President and 1996 240,000 475,000 229,501(/2/) --
Chief Financial Officer
Nicholas J. Nichols..... 1998 240,000 120,000 181(/1/) 25,000
Executive Vice 1997 240,000 120,000 38 7,500
President and 1996 240,000 120,000 114,550(/2/) --
Director of Compliance
</TABLE>
- --------
(1) Represents compensation earned in 1997 pursuant to compensation programs
existing prior to the Company becoming a public company in 1997, but paid
in 1998.
(2) Represents pro rata compensation paid by the Company to permit these
individuals to pay income taxes resulting from the Company's subchapter
"S" status.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Number of Annual Rates of
Securities Stock Price
Underlying % of Total Appreciation for
Options Options Granted Exercise or Option Term/2/
Granted to Employees in Base Price Expiration ----------------
Name (#)/1/ Fiscal Year Per Share Date 5% ($) 10% ($)
---- ---------- --------------- ----------- ------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Emanuel J. Friedman..... -- -- -- -- -- --
Eric F. Billings........ -- -- -- -- -- --
W. Russell Ramsey....... -- -- -- -- -- --
Eric Y. Generous........ -- -- -- -- -- --
Nicholas J. Nichols..... 25,000 1.2% $5.875 Dec. 18, 2008 $92,369 $234,081
</TABLE>
- --------
(1) Granted pursuant to the Company's 1997 Stock and Annual Incentive Plan.
The options will become exercisable ratably over three years.
(2) This disclosure is mandated by the Securities and Exchange Commission. The
values indicated do not represent a prediction by the Company of future
prices of the Company's stock.
9
<PAGE>
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised In-the-Money
Options at Options at
December 31, December 31,
1998 1998
Unexercisable Unexercisable
Name ------------- -------------
----
<S> <C> <C> <C>
Emanuel J. Friedman.......................... -- --
Eric F. Billings............................. -- --
W. Russell Ramsey............................ -- --
Eric Y. Generous............................. 7,500 --
Nicholas J. Nichols.......................... 32,500 $15,625
</TABLE>
Stock Performance Graph
The following graph compares the change in the cumulative total shareholder
return for the Company's Class A Common Stock with the comparable cumulative
return of two indexes: the Standard & Poors ("S&P") 500 Stock Index and the
FSA Mid-Cap Index published by Financial Service Analytics, Inc.
The Company's Class A Common Stock first began trading publicly on December
23, 1997, on the New York Stock Exchange. The graph, therefore, assumes $100
invested on December 23, 1997, in the Company's Class A Common Stock and $100
invested at the same time in each of the above mentioned indexes. The
comparison assumes that all dividends are reinvested.
Comparison of Cumulative Total Shareholder
Return for the Company, S&P 500 Stock Index
and FSA Mid-Cap Index
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period FBG FSA S&P 500
(Fiscal Year Covered) Indexed Mid-Cap Reinv
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/23/1997 $100 $100 $100
Dec-97 $ 88 $ 98 $103
Jan-98 $ 73 $ 86 $105
Feb-98 $ 73 $ 92 $112
Mar-98 $ 82 $100 $118
Apr-98 $ 92 $104 $119
May-98 $ 77 $100 $117
Jun-98 $ 70 $101 $122
Jul-98 $ 65 $ 97 $120
Aug-98 $ 31 $ 65 $103
Sep-98 $ 26 $ 69 $110
Oct-98 $ 25 $ 70 $119
Nov-98 $ 29 $ 84 $129
Dec-98 $ 32 $ 80 $133
</TABLE>
10
<PAGE>
ITEM 2.
APPROVAL OF AMENDMENTS TO THE 1997 STOCK AND ANNUAL INCENTIVE PLAN TO LIMIT
THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ALLOCATED TO AN AWARD TO A
PLAN PARTICIPANT IN ANY ONE YEAR TO ONE MILLION SHARES AND TO SPECIFY CERTAIN
PERFORMANCE CRITERIA FOR AWARDS UNDER THE PLAN.
The Board of Directors recommends a vote FOR the amendments to the 1997
Stock and Annual Incentive Plan.
The 1997 Stock and Annual Incentive Plan (the "Plan") provides that awards
under the Plan may include stock, stock appreciation rights, restricted stock
and stock options. The Plan does not contain an annual limit on the number of
shares of Common Stock underlying such awards that may be allocated to a Plan
participant. The proposed amendment would amend Section 4 of the Plan to
establish an annual limit of one million (1,000,000) shares that may be
allocated to a grant made to a Plan participant. The effect of the amendment
on the Plan will be to limit the number of shares of Common Stock underlying
an award that may be granted to any one individual in a given year to one
million shares.
The Plan provides that the performance goals for awards of restricted stock
and performance units awarded under the Plan are to be established by the
committee that administers the Plan. The proposed amendment would amend the
definition of "Performance Goals" in subparagraph p of Section 1 of the Plan
to allow the committee to establish performance goals based on the following
areas of performance of the Company or any of its affiliates: asset growth;
combined net worth; debt to equity ratio; earnings per share; revenues;
operating income; operating cash flow; net income, before or after taxes;
return on total capital, equity, revenue or assets; total shareholder return;
or changes in the market price of the Company's Common Stock. The effect of
the amendment on the Plan will be to specify the type of performance criteria
that may be considered under the Plan.
In addition to the amendments proposed above, the Board of Directors has
renamed the Plan the "FBR Stock and Annual Incentive Plan." A copy of the full
text of the FBR Stock and Annual Incentive Plan, including the proposed
amendments, is attached to this proxy statement as Exhibit A. The above
description of the proposed amendments is qualified in its entirety by
reference to Exhibit A.
ITEM 3.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors recommends a vote FOR ratification of the
appointment of Arthur Anderson LLP.
The Board of Directors has selected the firm of Arthur Anderson LLP to
audit the Company's consolidated financial statements for 1999, and recommends
to the shareholders ratification of the appointment of Arthur Anderson LLP as
independent auditors for 1999. If this resolution is defeated, the Board of
Directors will reconsider its selection. A representative of Arthur Anderson
LLP will be present at the Annual Meeting, will have the opportunity to make a
statement and will be available to respond to appropriate questions.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any matters that will be brought
before the meeting other than those specifically set forth in the notice
thereof. If any other matter properly comes before the meeting, it is intended
that the persons named in and acting under the enclosed form of proxy or their
substitutes will vote thereon in accordance with their best judgement.
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ANNUAL REPORT TO SHAREHOLDERS
The Company's 1998 Annual Report to Shareholders is enclosed with this
Proxy Statement.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals intended to be presented at the May 18, 2000 Annual
Meeting of Shareholders must be received by the Company on or before November
12, 1999, regardless of whether or not the shareholder seeks to have the
proposal included in the proxy statement and form of proxy relating thereto
pursuant to SEC Rule 14a-8. If a shareholder who is not seeking to include the
proposal in the Company's proxy statement and form of proxy does not comply
with the requirements of SEC Rule 14a-4, the Company may exercise
discretionary voting authority under proxies it solicits to vote in accordance
with its best judgement on such proposal. The Company's By-Laws contain
provisions which impose certain additional requirements upon shareholder
proposals. The submission of a shareholder proposal does not guarantee that it
will be included in the Company's proxy statement.
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EXHIBIT A
FBR STOCK AND ANNUAL INCENTIVE PLAN
SECTION 1. Purpose; Definitions
The purpose of the Plan is to give Friedman, Billings, Ramsey Group, Inc.
(the "Company") a competitive advantage in attracting, retaining and motivating
officers and employees and to provide the Company and its Subsidiaries and
Affiliated Companies with an incentive compensation plan providing incentives
directly linked to the profitability of the Company's businesses and/or
increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "Affiliated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or controls, directly
or indirectly, 10% or more, but less than 50% of the outstanding shares of
stock normally entitled to vote for the election of directors (or comparable
equity participation and voting power).
b. "Award" means a Stock Appreciation Right, Stock Option, Restricted
Stock, unrestricted share of Common Stock, dividend equivalent, interest
equivalent, Bonus Award or other award granted under this Plan.
c. "Board" means the Board of Directors of the Company.
d. "Bonus Award" means an annual cash bonus award under Section 10 of this
Plan.
e. "Cause" means (except as otherwise provided by the Committee in the
agreement relating to any Award) (1) conviction of a participant for committing
a felony under federal law or the law of the state in which such action
occurred, (2) dishonesty in the course of fulfilling a participant's employment
duties or (3) willful and deliberate failure on the part of a participant to
perform his employment duties in any material respect. Notwithstanding the
foregoing, if a participant is a party to an employment agreement with the
Corporation or any Subsidiary or Affiliated Company that contains a definition
of "Cause," such definition shall apply to such participant for purposes of the
Plan except to the extent otherwise provided by the Committee in the agreement
relating to any Award.
f. "Change in Control" and "Change in Control Price" have the meanings set
forth in Sections 11(b) and (c), respectively.
g. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
h. "Committee" means a committee of two or more non-employee directors
selected by the Board provided, however, that with respect to any grants or
other determinations to be made in connection with Bonus Awards (including
without limitation the allocation of the Bonus Pool under Section 10(b)),
"Committee" shall mean the Board or the Executive Committee of the Board
(unless the Board specifically designates another committee of directors to
grant and administer Bonus Awards).
i. "Common Stock" means the Class A common stock, par value $0.01 per
share, of the Company.
j. "Company" means Friedman, Billings, Ramsey Group, Inc., a Virginia
corporation.
k. "Disability" means permanent and total disability as determined by the
Committee for purposes of the Plan.
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l. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
m. "Fair Market Value" means, as of any given date, the closing price of
the Common Stock reported in the Wall Street Journal for the day prior to such
date, or if the Common Stock was not traded on the New York Stock Exchange on
such day, then for the last preceding day on which the Common Stock was
traded. If there is no regular public trading market for the Common Stock,
Fair Market Value shall be determined by such other source as the Committee
may select.
n. "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.
o. "NonQualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
p. "Performance Goals" means the performance goals established by the
Committee in connection with the grant of Restricted Stock or Performance
Units. Performance Goals may be established based on any of the following
areas of performance of the Company, or any Affiliated Company: asset growth;
combined net worth; debt to equity ratio; earnings per share; revenues;
operating income; operating cash flow; net income, before or after taxes;
return on total capital, equity, revenue or assets; total shareholder return;
or changes in the market price of the Common Stock.
q. "Performance Units" means an Award granted under Section 8.
r. "Plan" means the FBR Stock and Annual Incentive Plan, as set forth
herein and as hereinafter amended from time to time.
s. "Restricted Stock" means an Award granted under Section 7.
t. "Retirement" means retirement from employment with the Company, a
Subsidiary or an Affiliated Company as determined by the Committee for
purposes of an Award under the Plan.
u. "Stock Appreciation Right" means an Award granted under Section 6.
v. "Stock Option" means an Award granted under Section 5.
w. "Subsidiary" means: (i) for the purpose of an Incentive Stock Option,
any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Incentive
Stock Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain;
and (ii) for the purposes of any other Award, any corporation (or partnership,
joint venture, or other enterprise) of which the Company owns or controls,
directly or indirectly, 50% or more of the outstanding shares of stock
normally entitled to vote for the election of directors (or comparable equity
participation and voting power).
x. "Termination of Employment" means the termination of the participant's
employment with the Company and any Subsidiary or Affiliated Company. A
participant employed by a Subsidiary or an Affiliated Company shall also be
deemed to incur a Termination of Employment if the Subsidiary or Affiliated
Company ceases to be such a Subsidiary or Affiliated Company, as the case may
be, and the participant does not immediately thereafter become an employee of
the Company or another Subsidiary or Affiliated Company. Temporary absences
from employment because of illness, vacation or leave of absence and transfers
among the Company and its Subsidiaries, or, if the Committee so determines,
among the group consisting of the Company, its Subsidiaries and Affiliated
Companies, shall not be considered Terminations of Employment.
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In addition, certain other terms used in the Plan have definitions provided
to them in the first place in which they are used herein.
SECTION 2. Administration
The Plan shall be administered by the Committee; provided, that any
authority granted to the Committee under the Plan may also be exercised by the
full Board.
The Committee shall have plenary authority to grant Awards pursuant to the
terms of the Plan or, in the Committee's discretion, in connection with awards
under other bonus plans or programs of the Company, to officers and employees
of the Company and its Subsidiaries and Affiliated Companies.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan:
(a) To select the officers and employees to whom Awards may from time to
time be granted;
(b) To determine whether and to what extent Awards are to be granted
hereunder;
(c) To determine the number of shares of Common Stock to be covered by
each Stock Option granted hereunder;
(d) To determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)),
any vesting condition, restriction or limitation (which may be related to the
performance of the participant, the Company or any Subsidiary or Affiliated
Company) and any vesting acceleration or forfeiture or waiver regarding any
Award and the shares of Common Stock relating thereto, based on such factors
as the Committee shall determine; and
(e) To determine under what circumstances an Award may be settled in
cash or Common Stock under Section 5(g) or Section 6(d)(ii).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any award certificate relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may delegate all or a portion of the
administration of the Plan to one or more senior managers of the Company.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee or any
appropriate delegate pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. Common Stock Subject to Plan
Subject to adjustment as described below, the total number of shares of
Common Stock reserved and available for grant pursuant to Awards under the
Plan shall not exceed 9,900,000 shares. Shares subject to Awards under the
Plan may be authorized and unissued shares or may be treasury shares, or both.
If any shares of Restricted Stock are forfeited, or if any Stock Option or
Stock Appreciation Right terminates without being exercised, or if any Stock
Appreciation Right (whether granted alone or in conjunction with a Stock
Option) is exercised for cash, shares subject to such Awards shall again be
available for distribution in connection with Awards under the Plan.
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In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property
(without regard to the payment of any cash dividends by the Company in the
ordinary course) of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Company, the Committee or
Board may make such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under the Plan, in the number, kind and
option price, as applicable, of shares subject to outstanding Stock Options,
and in the number and kind of shares subject to other outstanding Awards
granted under the Plan, and/or such other equitable substitution or
adjustments as it may determine to be appropriate in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number. Such adjusted option price shall also be used to determine
the amount payable by the Company upon the exercise of any Stock Appreciation
Right associated with any Stock Option.
SECTION 4. Eligibility
Officers and employees of the Company, a Subsidiary or an Affiliated
Company who are responsible for or contribute to the growth and profitability
of the business of the Company, a Subsidiary or an Affiliated Company are
eligible to be granted Awards under the Plan. No more than one million
(1,000,000) shares of Common Stock may be allocated to the Awards, including
the maximum amounts payable under or with respect to any Stock Option, Stock
Appreciation Right, unrestricted Common Stock, Restricted Stock, or
Performance Unit, that are granted to any participant during any single
taxable year of the Company.
SECTION 5. Stock Options
Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and
NonQualified Stock Options. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, NonQualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its Subsidiaries. To the
extent that any Stock Option is not designated as an Incentive Stock Option
or, even if so designated, does not qualify as an Incentive Stock Option, it
shall constitute a NonQualified Stock Option.
Stock Options shall be evidenced by option award certificates, the terms
and provisions of which may differ. An option award certificate shall indicate
on its face whether it is intended to be an award certificate for an Incentive
Stock Option or a NonQualified Stock Option. The grant of a Stock Option shall
occur on the date the Committee by resolution selects an individual to be a
participant in any grant of a Stock Option, determines the number of shares of
Common Stock to be subject to such Stock Option to be granted to such
individual and specifies the terms and provisions of the Stock Option, or on
such later date as is specified by the Committee.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and, unless
otherwise determined by the Committee, shall not be less than the Fair Market
Value of the Common Stock subject to the Stock Option on the date of grant.
The option price per share shall not be decreased thereafter except pursuant
to Section 3 of this Plan.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than 10 years after
the date the Stock Option is granted.
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(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. Unless otherwise
determined by the Committee, Stock Options shall become exercisable ratably on
each of the first five anniversaries of the date of grant. In addition, the
Committee may at any time accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise, or notice in accordance with
such other procedures as may be established from time to time, to the Company
or its designated agent specifying the number of shares of Common Stock
subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price
in cash or by certified or cashier's check or such other instrument as the
Company may accept. If approved by the Committee, payment, in full or in part,
may also be made in the form of unrestricted Common Stock already owned by the
optionee of the same class as the Common Stock subject to the Stock Option
(based on the Fair Market Value of the Common Stock on the date the Stock
Option is exercised); provided, however, that such already owned shares have
been held by the optionee for at least six months at the time of exercise
unless otherwise determined by the Committee; provided, further, that, in the
case of an Incentive Stock Option, the right to make a payment in the form of
already owned shares of Common Stock of the same class as the Common Stock
subject to the Stock Option may be authorized only at the time the Stock
Option is granted.
In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise
notice to the Company, together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price, and, if requested, by the amount of any
federal, state, local or foreign withholding taxes. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures
with one or more brokerage firms.
In addition, in the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by instructing the Company or its
designated agent to withhold a number of such shares having a Fair Market
Value on the date of exercise equal to the aggregate exercise price of such
Stock Option.
No shares of Common Stock shall be issued until full payment therefor has
been made. An optionee shall have all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the optionee has given written notice of
exercise, has paid in full for such shares and, if requested, has given the
representation described in Section 3(a).
(e) Transferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of descent
and distribution, or, in the Committee's discretion, pursuant to a written
beneficiary designation, (ii) pursuant to a qualified domestic relations
order, as defined in the Code or (iii) in the Committee's discretion, pursuant
to a gift to such optionee's "immediate family" members directly, or
indirectly or by means of a trust, partnership or limited liability company.
All Stock Options shall be exercisable, subject to the terms of this Plan,
only by the optionee, guardian, legal representative or beneficiary of the
optionee or permitted transferee, it being understood that the terms "holder"
and "optionee" include any such guardian, legal representative or beneficiary
or transferee. For purposes of this Section 5(e), "immediate family" shall
mean, except as otherwise defined by the Committee, the optionee's spouse,
children, siblings, stepchildren, grandchildren, parents, stepparents,
grandparents, in-laws and persons related by legal adoption. Such transferees
may transfer a Stock Option only by will or by the laws of descent and
distribution.
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(f) Termination by Death or Disability. Unless otherwise determined by the
Committee, if an optionee's Termination Employment is by reason of death or
Disability, any Stock Option held by such optionee may thereafter be
exercised, to the extent exercisable at the time of such termination, for a
period of twelve (12) months (or such other period as the Committee may
specify in the option agreement) from the date of such termination or until
the expiration of the stated term of such Stock Option, whichever period is
the shorter.
(g) Termination by Reason of Retirement. Unless otherwise determined by
the Committee, if an optionee's Termination of Employment is by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
by the optionee, to the extent it was exercisable at the time of such
Retirement, or on such accelerated basis as the Committee may determine, for a
period of five (5) years (or such other period as the Committee may specify in
the option agreement) from the date of such Termination of Employment or until
the expiration of the stated term of such Stock Option, whichever period is
the shorter; provided, however, that if the optionee dies within such period
any unexercised Stock Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which
it was exercisable at the time of death for a period of twelve (12) months
from the date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
(h) Other Termination. Unless otherwise determined by the Committee, if
an optionee's Termination of Employment is for any reason other than death,
Disability or Retirement, any Stock Option held by such optionee, to the
extent then exercisable, or on such accelerated basis as the Committee may
determine, may be exercised for the lesser of three (3) months from the date
of such Termination of Employment or the balance of such Stock Option's term;
provided, however, that if the optionee dies within such three (3) month
period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three (3) month period, continue to be
exercisable to the extent to which it was exercisable at the time of death for
a period of twelve (12) months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(i) Cashing Out of Stock Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the portion of
the shares of Common Stock for which a Stock Option is being exercised by
paying the optionee an amount, in cash or Common Stock, equal to the excess of
the Fair Market Value of the Common Stock over the option price times the
number of shares of Common Stock for which the Option is being exercised on
the effective date of such cash-out.
(j) Change in Control Cash-out. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not the Stock Option is
fully exercisable and in lieu of the payment of the exercise price for the
shares of Common Stock being purchased under the Stock Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all
or part of the Stock Option to the Company and to receive cash, within 30 days
of such notice, in an amount equal to the amount by which the Change in
Control Price per share of Common Stock on the date of such election shall
exceed the exercise price per share of Common Stock under the Stock Option
(the "Spread") multiplied by the number of shares of Common Stock granted
under the Stock Option as to which the right granted under this Section 5(j)
shall have been exercised. Notwithstanding the foregoing, if any right granted
pursuant to this Section 5(j) would make a Change in Control transaction
ineligible for pooling-of-interests accounting under APB No. 16 that but for
the nature of such grant would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute for the cash
payable pursuant to such right Common Stock with a Fair Market Value equal to
the cash that would otherwise be payable hereunder.
(k) Deferral of Option Shares. The Committee may from time to time
establish procedures pursuant to which an optionee may elect to defer, until a
time or times later than the exercise of an Option, receipt of all or a
portion of the shares subject to such Option and/or to receive cash at such
later time or times in lieu of such deferred shares, all on such terms and
conditions as the Committee shall determine. If any such deferrals are
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permitted, then notwithstanding Section 5(d) above, an optionee who elects
such deferral shall not have any rights as a stockholder with respect to such
deferred shares unless and until certificates representing such shares are
actually delivered to the optionee with respect thereto, except to the extent
otherwise determined by the Committee.
SECTION 6. Stock Appreciation Rights
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a NonQualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such
Stock Option. In addition, Stock Appreciation Rights may be granted without
relationship to a Stock Option to employees residing in foreign jurisdictions,
where the grant of a Stock Option is impossible or impracticable because of
securities or tax laws or other governmental regulations.
(b) Freestanding Stock Appreciation Rights. A Stock Appreciation Right
granted without relationship to a Stock Option, pursuant to Section 6(a),
shall be exercisable as determined by the Committee, but in no event after ten
years from the date of grant. The base price of a Stock Appreciation Right
granted without relationship to a Stock Option shall be the Fair Market Value
of a share of Common Stock on the date of grant. A Stock Appreciation Right
granted without relationship to a Stock Option shall entitle the holder, upon
receipt of such right, to a cash payment determined by multiplying (i) the
difference between the base price of the Stock Appreciation Right and the Fair
Market Value of a share of Common Stock on the date of exercise of the Stock
Appreciation Right, by (ii) the number of shares of Common Stock as to which
such Stock Appreciation Right shall have been exercised. A freestanding Stock
Appreciation Right may be exercised by giving written notice of exercise to
the Company or its designated agent specifying the number of shares of Common
Stock as to which such Stock Appreciation Right is being exercised.
(c) Tandem Stock Appreciation Rights. A Stock Appreciation Right granted
in conjunction with a Stock Option may be exercised by an optionee in
accordance with Section 6(d) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee. Upon such exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in Section 6(d). Stock
Options which have been so surrendered shall no longer be exercisable to the
extent the related Stock Appreciation Rights have been exercised. A Stock
Appreciation Right shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option.
(d) Tandem Stock Appreciation Right Terms and Conditions. Stock
Appreciation Rights granted in conjunction with a Stock Option shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section
6.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash, equal to the excess of the
Fair Market Value of one share of Common Stock over the option price per
share specified in the related Stock Option multiplied by the number of
shares in respect of which the Stock Appreciation Right shall have been
exercised.
(iii) Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with
Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 3 on the number of shares of Common Stock to be issued
under the Plan,
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but only to the extent of the number of shares covered by the Stock
Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
SECTION 7. Bonus Shares and Restricted Stock
(a) Administration. Awards of shares of Common Stock or Restricted Stock
may be made either alone or in addition to other Awards granted under the
Plan. In addition, a participant may receive unrestricted shares of Common
Stock or Restricted Stock in lieu of certain cash payments awarded under other
plans or programs of the Company. The Committee shall determine the officers
and employees to whom and the time or times at which grants of unrestricted
shares of Common Stock and Restricted Stock will be awarded, the number of
shares to be awarded to any participant, the conditions for vesting, the time
or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards, in addition to those contained in Section
7(c).
(b) Awards and Certificates. Awards of unrestricted shares of Common
Stock and Restricted Stock shall be evidenced in such manner as the Committee
may deem appropriate, including book-entry registration or delivery of one or
more stock certificates to the participant, or, in the case of Restricted
Stock, a custodian or escrow agent. Any stock certificate issued in respect of
unrestricted shares or shares of Restricted Stock shall be registered in the
name of such participant. The Committee may require that the stock
certificates evidencing shares of Restricted Stock be held in custody or
escrow by the Company or its designated agent until the restrictions thereon
shall have lapsed and that, as a condition of any Award of Restricted Stock,
the participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:
(i) The Committee may, prior to or at the time of grant, condition
the grant or vesting, as applicable, of an award of Restricted Stock upon
the attainment of Performance Goals. The Committee may also condition the
grant or vesting of Restricted Stock upon the continued service of the
participant. The conditions for grant or vesting and the other provisions
of Restricted Stock Awards (including without limitation any applicable
Performance Goals) need not be the same with respect to each recipient. The
Committee may at any time, in its sole discretion, accelerate or waive, in
whole or in part, any of the foregoing restrictions.
(ii) Subject to the provisions of the Plan and the terms of the
Restricted Stock Award, during the period, if any, set by the Committee,
commencing with the date of such Award for which such participant's
continued service is required (the "Restriction Period"), and until the
later of (A) the expiration of the Restriction Period and (B) the date the
applicable Performance Goals (if any) are satisfied, the participant shall
not be permitted to sell, assign, transfer, pledge or otherwise encumber
shares of Restricted Stock; provided that the foregoing shall not prevent a
participant from pledging Restricted Stock as security for a loan, the sole
purpose of which is to provide funds to pay the option price for Stock
Options.
(iii) Except as provided in this paragraph (iii) and Sections
7(c)(i) and 7(c)(ii) or the terms of the Restricted Stock Award, the
participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a shareholder of the Company holding the class or series
of Common Stock that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to receive any cash
dividends. If so determined by the Committee under the applicable terms of
the Restricted Stock Award and subject to Section 15(e) of the Plan, (A)
cash dividends on the class or series of Common Stock that is the subject
of the Restricted Stock Award shall be automatically deferred and
reinvested in additional Restricted Stock, held subject to the vesting of
the underlying Restricted Stock, or held subject to meeting Performance
Goals applicable only to dividends, (B) dividends payable in Common Stock
shall be paid in the form of Restricted Stock of the same class as the
Common Stock with which such dividend was paid, held subject to the vesting
of the underlying Restricted Stock, or held subject to meeting Performance
Goals applicable only to dividends and (C) dividends paid in other property
shall be held subject to the vesting of the underlying Restricted Stock.
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<PAGE>
(iv) Except to the extent otherwise provided under the applicable
terms of the Restricted Stock Award and Sections 7(c)(i), 7(c)(ii), 7(c)(v)
and 11(a)(ii), upon a participant's Termination of Employment for any
reason during the Restriction Period or before the applicable Performance
Goals are satisfied, all shares still subject to restriction shall be
forfeited by the participant.
(v) Except to the extent otherwise provided in Section 11(a)(ii), in
the event of a participant's Termination of Employment by reason of
Retirement, the Committee shall have the discretion to waive, in whole or
in part, any or all remaining restrictions (other than, in the case of
Restricted Stock with respect to which a participant is a Covered Employee,
satisfaction of the applicable Performance Goals unless the participant's
employment is terminated by reason of death or Disability) with respect to
any or all of such participant's shares of Restricted Stock.
(vi) If and when any applicable Performance Goals are satisfied and
the Restriction Period expires without a prior forfeiture of the Restricted
Stock, unlegended certificates for such shares shall be delivered to the
participant upon surrender of the legended certificates, or the
restrictions on such shares shall be removed from the book-entry
registration.
SECTION 8. Performance Units
(a) Administration. Performance Units may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine
the officers and employees to whom, and the time or times at which,
Performance Units shall be awarded, the number of Performance Units to be
awarded to any participant, the duration of the Award cycle and any other
terms and conditions of the Award, in addition to those contained in Section
8(b).
(b) Terms and Conditions. Performance Units Awards shall be subject to
the following terms and conditions.
(i) The Committee may, prior to or at the time of the grant,
designate Performance Units, in which event it shall condition the
settlement thereof upon the attainment of Performance Goals. The Committee
may also condition the settlement thereof upon the continued service of the
participant. The provisions of such Awards (including without limitation
any applicable Performance Goals) need not be the same with respect to each
recipient. Subject to the provisions of the Plan and the Performance Units
Agreement referred to in Section 8(b)(vi), Performance Units may not be
sold, assigned, transferred, pledged or otherwise encumbered during the
Award cycle.
(ii) Except to the extent otherwise provided in the applicable
Performance Unit Agreement and Sections 8(b)(ii) and 11(a)(iii), upon a
participant's Termination of Employment for any reason during the Award
cycle or before any applicable Performance Goals are satisfied, all rights
to receive cash or stock in settlement of the Performance Units shall be
forfeited by the participant.
(iii) Except to the extent otherwise provided in Section
11(a)(iii), in the event that a participant's employment is terminated
(other than for Cause), or in the event of a participant's Retirement, the
Committee shall have the discretion to waive, in whole or in part, any or
all remaining payment limitations with respect to any or all of such
participant's Performance Units.
(iv) A participant may elect to further defer receipt of cash or
shares in settlement of Performance Units for a specified period or until a
specified event, subject in each case to the Committee's approval and to
such terms as are determined by the Committee (the "Elective Deferral
Period"). Subject to any exceptions adopted by the Committee, such election
must generally be made prior to commencement of the Award cycle for the
Performance Units in question.
(v) At the expiration of the Award cycle, the Committee shall
evaluate the Company's performance in light of any Performance Goals for
such Award, and shall determine the number of Performance Units granted to
the participant which have been earned, and the Committee shall then cause
to be delivered (A)
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<PAGE>
a number of shares of Common Stock equal to the number of Performance Units
determined by the Committee to have been earned, or (B) cash equal to the
Fair Market Value of such number of shares of Common Stock to the
participant as determined by the Committee in its discretion (subject to
any deferral pursuant to Section 8(b)(iv)).
(vi) Each Award shall be confirmed by, and be subject to, the terms
of a Performance Unit Agreement.
SECTION 9. Dividend Equivalents and Interest Equivalents
(a) The Committee may provide that a participant to whom a Stock Option
has been awarded, which is exercisable in whole or in part at a future time
for shares of Common Stock (such shares, the "Option Shares") shall be
entitled to receive an amount per Option Share, equal in value to the cash
dividends, if any, paid per share of Common Stock on issued and outstanding
shares, as of the dividend record dates occurring during the period between
the date of the Award and the time each such Option Share is delivered
pursuant to the exercise of such Stock Option. Such amounts (herein called
"dividend equivalents") may, in the discretion of the Committee, be:
(i) paid in cash or shares of Common Stock from time to time prior to
or at the time of the delivery of such shares of Common Stock or upon
expiration of the Stock Option if it shall not have been fully exercised
(except that payment of the dividend equivalents on an Incentive Stock
Option may not be made prior to exercise); or
(ii) converted into contingently credited shares of Common Stock
(with respect to which dividend equivalents shall accrue) in such manner,
at such value, and deliverable at such time or times, as may be determined
by the Committee.
Such shares of Common Stock (whether delivered or contingently credited)
shall be charged against the limitations set forth in Section 3.
(b) The Committee, in its discretion, may authorize payment of interest
equivalents on any portion of any Award payable at a future time in cash, and
interest equivalents on dividend equivalents which are payable in cash at a
future time.
SECTION 10. Annual Cash Bonus Awards
(a) Bonus Pool. For each fiscal year of the Company, a bonus pool (the
"Bonus Pool") equal to up to 30% of the Company's adjusted pre-tax net income
for such fiscal year (prior to taking into account any payments under this
Section 10 for such fiscal year) will be established by the Committee.
Notwithstanding the foregoing, if the Company's aggregate compensation and
benefits expenses with respect to the fiscal year (including payments under
this Section 10) would otherwise exceed 55% of the Company's revenues for such
fiscal year (the "Maximum Expense"), the Committee shall reduce the Bonus Pool
to the greatest amount which would cause compensation and benefits expense for
such fiscal year not to exceed the Maximum Expense.
(b) Allocation of Bonus Pool. The Committee shall determine the
allocation of the Bonus Pool for each fiscal year. Such allocation may be made
at any time prior to payment of Bonus Awards. In the event the Bonus Pool is
reduced pursuant to paragraph (a) above, the Committee shall determine the
required reductions in Bonus Awards. Such reduction need not be on a pro rata
basis among the participants.
(c) Payment of Awards. Bonus Awards under the Plan shall be paid in cash
as soon as practicable following the end of the applicable fiscal year, but in
any event within 90 days following the end of such fiscal year.
(d) Termination of Employment. A participant shall not be entitled to
receive payment of a Bonus Award, unless the Committee determines otherwise,
if at any time prior to the end of the fiscal year the participant's
Termination of Employment occurs or, if at any time, following the end of the
fiscal year the participant's employment is terminated for Cause. In the event
that a participant's Termination of Employment (other than for Cause) occurs
following the end of the applicable fiscal year, such participant shall be
entitled to receive payment of his or her Bonus Award for such fiscal year.
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<PAGE>
SECTION 11. Change in Control Provisions
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control:
(i) Any Stock Options outstanding as of the date such Change in
Control is determined to have occurred, and which are not then exercisable
and vested, shall become fully exercisable and vested to the full extent of
the original grant.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become free
of all restrictions and become fully vested and transferable to the full
extent of the original grant.
(iii) All Performance Units shall be considered to be earned and
payable in full, and any other deferred or other restrictions shall lapse
and such Performance Units shall be settled in cash or Common Stock (as
determined by the Committee) as promptly as is practicable.
(iv) Unless the Board determines to continue the Bonus Pool for the
remainder of the fiscal year, Bonus Awards for the fiscal year in which the
Change of Control occurs shall be paid out based upon calculations of
adjusted pre-tax net income and Maximum Expense under Section 10 through
the Change in Control as if the fiscal year had ended on the Change in
Control date.
(b) For purposes of the Plan, a "Change in Control" shall mean the
happening of any of the following events:
(i) acquisition by any individual, entity or group (with the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that, for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2) any acquisition
by the Company, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, (4) any acquisition by any corporation pursuant
to a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 11(b) or (5) any acquisition of beneficial ownership
by Emanual Friedman, Eric Billings, or W. Russell Ramsey (the "Founders"),
or any entity that is controlled by one or more of the Founders (the
"Founder Affiliates"); or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company or the acquisition of
assets or stock of another corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
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<PAGE>
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business Combination
or the Founders or Founder Affiliates) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price, regular way,
of a share of Common Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which such shares are
listed or on NASDAQ during the 60-day period prior to and including the date
of a Change in Control or (ii) if the Change in Control is the result of a
tender or exchange offer or a Corporate Transaction, the highest price per
share of Common Stock paid in such tender or exchange offer or Corporate
Transaction; provided, however, that in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, the Change
in Control Price shall be in all cases the Fair Market Value of the Common
Stock on the date such right under Section 5(j) is exercised. To the extent
that the consideration paid in any such transaction described above consists
all or in part of securities or other non-cash consideration, the value of
such securities or other non-cash consideration shall be determined in the
sole discretion of the Board.
SECTION 12. Tax Offset Bonuses
At the time an Award is made hereunder or at any time thereafter, the
Committee may grant to the participant receiving such Award the right to
receive a cash payment in an amount specified by the Committee, to be paid at
such time or times (if ever) as the Award results in compensation income to
the participant, for the purpose of assisting the participant to pay the
resulting taxes, all as determined by the Committee and on such other terms
and conditions as the Committee shall determine.
SECTION 13. Amendment and Termination
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of
participants under any Award theretofore granted without the participants'
consent. In addition, no such amendment shall be made without the approval of
the Company's shareholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment
shall impair the rights of any holder without the holder's consent.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
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<PAGE>
SECTION 14. Unfunded Status of Plan
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation
of trusts or other arrangements to meet the obligations created under the Plan
to deliver Common Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 15. General Provisions
(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend, or, in the
case of book-entry registration any notation, which the Committee deems
appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or certificates made
pursuant thereto, the Company shall not be required to issue or deliver any
stock certificate or certificates for shares of Common Stock, or account for
such shares by book-entry registration, under the Plan prior to fulfillment of
all of the following conditions:
(1) Listing or approval for listing upon notice of issuance, of such
shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be the principal market for the Common Stock;
(2) Any registration or other qualification of such shares of the
Company under any state, federal or foreign law or regulation, or the
maintaining in effect of any such registration or other qualification which
the Committee shall, in its absolute discretion upon the advice of counsel,
deem necessary or advisable; and
(3) Obtaining any other consent, approval, or permit from any state
or federal governmental agency or foreign governmental body which the
Committee shall, in its absolute discretion after receiving the advice of
counsel, determine to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Company or any
Subsidiary or Affiliated Company from adopting other or additional
compensation arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right to
continued employment, nor shall it interfere in any way with the right of the
Company or a Subsidiary or an Affiliated Company to terminate the employment
of any employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for federal income tax
purposes with respect to any Award under the Plan, the participant shall pay
to the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company and its
Subsidiaries or Affiliated Companies shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment otherwise due to the
participant. The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock at the time
of any dividend payment shall only be permissible if sufficient shares of
Common Stock are available under Section 3 for such reinvestment (taking into
account then outstanding Stock Options and other Awards).
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<PAGE>
(f) The Committee, in its sole discretion, may establish such procedures
as it deems appropriate for a participant to designate a beneficiary to whom
any amounts payable in the event of the participant's death are to be paid or
by whom any rights of the participant, after the participant's death, may be
exercised.
(g) In the case of a grant of an Award to any employee of a Subsidiary
or Affiliated Company, the Company may, if the Committee so directs, issue or
transfer the shares of Common Stock, if any, covered by the Award to the
Subsidiary or Affiliated Company, for such lawful consideration as the
Committee may specify, upon the condition or understanding that the Subsidiary
or Affiliated Company will transfer the shares of Common Stock to the employee
in accordance with the terms of the Award specified by the Committee pursuant
to the provisions of the Plan.
(h) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Virginia, without reference to principles of conflict of laws.
SECTION 16. Effective Date of Plan
The Plan (other than Section 10, which shall be effective from and after
January 1, 1998 so long as the initial public offering of the Common Stock has
become effective by such date) shall be effective immediately prior to the
date on which the registration statement filed by the Company under the
Securities Act of 1933, as amended, registering the initial public offering of
the Common Stock is declared effective.
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<PAGE>
j
__
[X] Please mark your |
votes as in this |
example.
FOR
WITHHOLD all nominees listed
AUTHORITY (except as marked
FOR to vote for all nominees to the contrary below)
1. DIRECTORS: [_] [_] [_]
Nominees: Emanuel J. Friedman, Eric F. Billings, W. Russell Ramsey,
Wallace L. Timmeny and Mark R., Warner
- ----------------------------------------------------------------------
2. Proposal to approve amendments to the 1997 FOR AGAINST ABSTAIN
Stock and Annual Incentive Plan to place an
annual limit of one million shares on the [_] [_] [_]
number of shares of Com-mon Stock that may be
allocated to an award to a Plan participant
and to spec-ify certain performance criteria
for Plan awards.
3. Proposal to ratify the selection of Arthur [_] [_] [_]
Andersen LLP to serve as the Company's
independent auditors for fiscal 1999.
4. In their discretion, upon such other business [_] [_] [_]
as may properly come before the Annual Meeting
or any postponement or adjournment thereof.
Signature: _______________________________________ Date: _______________
NOTE: Please sign exactly as name or names appear on stock certificate (as
indicated hereon). When signing as attorney, executor, administra-tor, trustee
or guardian, please give full title as such. If the sig-nature is by a
corporation, sign the full company name by a duly autho-rized officer
<PAGE>
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
PROXY FOR ANNUAL MEETING
OF SHAREHOLDERS ON MAY 20, 1999
The undersigned hereby appoints Eric Y. Generous, Kurt R. Harrington and Mary A.
Sheehan as Proxies, with full power to act without the others and each with
power of substitution, and hereby authorizes them to represent and to vote, as
designated on this card, all shares of Common Stock of FRIEDMAN, BILLINGS,
RAMSEY GROUP, INC. (the "Company") held of record by the undersigned on March
31, 1999 at the Annual Meeting of Shareholders to be held on May 20, 1999 or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
FIVE NOMINEES FOR ELECTION, AND FOR PROPOSAL 2 AND 3. STOCKHOLDERS ARE URGED TO
MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
