<PAGE> 1
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Section 240.14a-12
MCM CAPITAL GROUP, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
MCM CAPITAL GROUP, INC.
5775 ROSCOE CT.
SAN DIEGO, CALIFORNIA 92123
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 14, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MCM
Capital Group, Inc., a Delaware corporation (the "Company"), will be held at the
offices of Squire, Sanders & Dempsey L.L.P., 350 Park Avenue, 15th Floor, New
York, New York 10022, on December 14, 2000 at 10:00 a.m., local time, for the
following purposes:
1. to elect directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors are elected and
qualified;
2. to amend the 1999 Equity Participation Plan so as to increase
the number of shares subject to that plan from 250,000 to
1,300,000;
3. to amend the 1999 Equity Participation Plan so as to increase
the number of options to purchase Common Stock which may be
granted to any given employee during any fiscal year from
125,000 to 500,000;
4. to ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for fiscal 2000; and
5. to transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on October 24,
2000, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the meeting or any
postponement or adjournment thereof. Shares of Common Stock may be voted at the
meeting only if the holder is present at the meeting in person or by valid
proxy. A copy of the Company's 1999 Annual Report, which contains audited
financial statements, was mailed with this Notice and Proxy Statement to all
stockholders of record on the Record Date. A complete list of the stockholders
entitled to vote at the meeting will be open for examination by any stockholder,
for any purposes germane to the meeting, at the offices of the Company, at 5775
Roscoe Ct., San Diego, California 92123 during normal business hours commencing
November 1, 2000.
Management of the Company cordially invites you to attend the Annual
Meeting. Your attention is directed to the attached Proxy Statement for a
discussion of the foregoing proposals and the reasons why the Board of Directors
encourages you to vote for approval of such proposals.
By Order of the Board of Directors
/s/ Eric D. Kogan
----------------------------------------
Eric D. Kogan,
Chairman of the Board
San Diego, California
October 25, 2000
<PAGE> 3
IMPORTANT: IT IS IMPORTANT THAT YOUR STOCKHOLDINGS BE REPRESENTED AT THIS
MEETING. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING ENVELOP WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROXY STATEMENT...................................................................... 1
RECENT DEVELOPMENTS.................................................................. 2
PROPOSAL 1 .......................................................................... 2
ELECTION OF DIRECTORS..................................................... 2
NOMINEES FOR ELECTION AS DIRECTORS........................................ 3
PRINCIPAL STOCKHOLDERS...............................................................
OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS...................................
EXECUTIVE COMPENSATION............................................................... 6
SUMMARY COMPENSATION TABLE........................................................... 6
OPTION/SAR GRANTS IN LAST YEAR....................................................... 8
AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND YEAR-END OPTION/SAR VALUES.......... 9
EMPLOYMENT CONTRACTS AND RELATED MATTERS............................................. 12
COMPENSATION UNDER PLANS.............................................................
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION....................... 13
STOCK PERFORMANCE GRAPH.............................................................. 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................... 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE REQUIREMENTS................. 17
PROPOSAL NO. 2....................................................................... 17
APPROVAL OF AMENDMENT TO MCM CAPITAL GROUP, INC. 1999
EQUITY PARTICIPATION PLAN TO INCREASE SHARES UNDER THE PLAN............... 17
PROPOSAL NO. 3....................................................................... 20
APPROVAL OF AMENDMENT TO MCM CAPITAL GROUP, INC. 1999 EQUITY
PARTICIPATION PLAN TO INCREASE THE SHARES AVAILABLE TO BE
GRANTED TO A GIVEN EMPLOYEE DURING ANY FISCAL YEAR........................ 20
PROPOSAL NO. 4 ...................................................................... 20
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS......................... 20
STOCKHOLDER NOMINATIONS AND PROPOSALS................................................ 21
</TABLE>
<PAGE> 5
MCM CAPITAL GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 14, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of MCM Capital Group, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on December 14, 2000 at 10:00 a.m., New York time (the
"2000 Annual Meeting"), and at any adjournment or postponement thereof. Only
stockholders of record at the close of business on October 24, 2000 (the "Record
Date") will be entitled to notice of and to vote at the meeting. On the Record
Date, the Company had outstanding 7,591,131 shares of Common Stock, par value
$.01 per share ("Common Stock"). There are no other voting securities
outstanding. This Proxy Statement and the enclosed proxy are first being mailed
to stockholders on or about October 30, 2000.
Each stockholder is entitled to one vote per share for the election of
directors, the amendments of the 1999 Equity Participation Plan, the
ratification of auditors, and for all other matters that may be properly brought
before the meeting. If the accompanying proxy is properly signed, dated, and
returned, the shares represented thereby will be voted in accordance with any
directions in the proxy. If a proxy does not specify how the shares represented
thereby are to be voted in connection with the election of the director nominees
or other proposals, the shares will be voted as recommended by the Board of
Directors FOR the director nominees named herein, FOR Proposal 2, FOR Proposal
3, and FOR Proposal 4. A stockholder may revoke the proxy at any time prior to
the time it is voted by (i) giving written notice of such revocation addressed
to the Secretary of the Company; (ii) by executing and duly delivering a
subsequent proxy; or (iii) by attending the 2000 Annual Meeting and voting in
person.
The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock entitled to vote will constitute a quorum for
the transaction of business at the 2000 Annual Meeting. If a quorum is present,
a plurality of the votes cast at the 2000 Annual Meeting is required for the
election of directors. Approval of Proposal No. 2, the amendment of the 1999
Equity Participation Plan to increase the number of shares available under that
plan from 250,000 to 1,300,000, Proposal No. 3, the amendment of the 1999 Equity
Participation Plan to increase the number of options to purchase Common Stock
which may be granted to any given employee during any fiscal year from 125,000
to 500,000, and Proposal No. 4, the ratification of auditors, each requires the
affirmative vote of a majority of the aggregate number of shares present in
person or by proxy at the 2000 Annual Meeting and entitled to vote on those
matters. For purposes of the election of directors, abstentions and broker
non-votes will not be counted as votes cast and will have no effect on the
result of the vote, although they will count toward the presence of a quorum.
For purposes of the vote on Proposal No. 2, Proposal No. 3 and Proposal No. 4,
abstentions and broker non-votes, however, will not be counted as votes cast or
as votes entitled to be cast on the matter and will have no effect on the result
of the vote with respect to these proposals, although they will count toward the
presence of a quorum.
In addition to the use of the mails, proxies may be solicited by
directors, officers, or regular employees of the Company in person, by
telegraph, telecopy, telephone, or other electronic means, including e-mail. The
Company will bear the cost of the solicitation of proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation materials
to the beneficial owners of the outstanding Common Stock of the Company.
As of the date of this Proxy Statement, the Company knows of no matters
to be brought before the meeting other than those referred to in the
accompanying Notice of Annual Meeting. If, however, any
<PAGE> 6
other matters properly come before the meeting, it is intended that proxies in
the accompanying form will be voted thereon in accordance with the judgment of
the persons voting such proxies.
RECENT DEVELOPMENTS
In May 2000, Midland Acquisition Corporation, a subsidiary of the
Company, acquired certain assets of West Capital Financial Services Corp. ("West
Capital"), including three portfolios of charged-off consumer receivables, all
of West Capital's fixed assets, and various contractual and other rights of West
Capital, in exchange for 375,000 shares of Common Stock and the subsidiary's
assumption of approximately $1.75 million of certain operating liabilities of
West Capital. The Company guaranteed certain of the obligations of its
subsidiary in connection with the transaction and the Company's subsidiary,
Midland Credit Management, Inc. ("Midland Credit"), employed former employees of
West Capital. The Company also acquired certain charged-off consumer receivables
from a West Capital bankruptcy remote subsidiary trust in exchange for 25,000
shares of Common Stock and other consideration. In addition, Midland Credit was
appointed successor servicer to West Capital for a securitized pool of
charged-off consumer receivables owned by another bankruptcy remote subsidiary
of West Capital.
In conjunction with the West Capital transaction, the Company's Board
of Directors elected Carl C. Gregory, III as President and Chief Executive
Officer of the Company, effective May 23, 2000. Mr. Gregory joined West Capital
as an independent director in the fall of 1996 and served as Chairman and Chief
Executive Officer from February 1997 to July 1997 and from January 1998 through
May 22, 2000. Mr. Gregory replaced Robert E. Koe, who resigned as Chief
Executive Officer and Director of the Company on May 21, 2000. In addition,
effective May 23, 2000, West Capital's Barry R. Barkley was elected Executive
Vice President and Chief Financial Officer of the Company, and J. Brandon Black
was elected Executive Vice President. Mr. Barkley was Senior Vice President and
Chief Financial Officer for West Capital from March 1998 through May 22, 2000
and Mr. Black was Senior Vice President, Operations of West Capital from May
1998 through May 22, 2000. In addition, several other former senior officers of
West Capital joined the Company and Midland Credit effective May 23, 2000 and
continue to serve as officers of these companies.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors (the "Board") proposes that each of the nominees
described below be elected as a director of the Company to serve in such
capacity until the 2001 Annual Meeting of Stockholders or until his successor
shall have been duly elected and qualified or his resignation or removal,
whichever first occurs. All of the director nominees are currently serving as
directors of the Company.
Each of the nominees has consented to serve a one-year term. If any of
them should become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominee designated by the Board.
INFORMATION CONCERNING DIRECTORS, NOMINEES AND OFFICERS
The following sets forth information regarding the director nominees
and the executive officers of the Company, including the name, age, position and
the biographical data for at least the last five years of each such director and
officer of the company.
2
<PAGE> 7
DIRECTOR NOMINEES
CARL C. GREGORY, III. Mr. Gregory, age 56, has served since May 23,
2000 as a director and as President and Chief Executive Officer of the Company.
Prior to joining the Company, Mr. Gregory was Chairman, President and Chief
Executive Officer of West Capital Financial Services, Corp. for the period
beginning January, 1998. Prior to joining West Capital, Mr. Gregory was Managing
Partner of American Western Partners, a private investment firm, from January
1996 through January 1997. From 1993 through 1995, Mr. Gregory was Chairman,
President and Director of MIP Properties, Inc., a public real estate investment
trust. Mr. Gregory also serves as a director of Apex Mortgage Capital and
Pacific Gulf Properties. Mr. Gregory received his undergraduate degree in
Accounting from Southern Methodist University and an M.B.A. from the University
of Southern California.
ERIC D. KOGAN. Mr. Kogan, age 37, has served since March 1998 as
Executive Vice President, Corporate Development of Triarc Companies, Inc., a
leading premium beverage company, restaurant franchisor and soft drink
concentrates producer ("Triarc"), and as a manager and Executive Vice President
- Corporate Development of Triarc Consumer Products Group, LLC, a wholly-owned
subsidiary of Triarc, since January 1999. Prior thereto, Mr. Kogan was Senior
Vice President, Corporate Development of Triarc from March 1995 to March 1998
and Vice President Corporate Development from April 1993. Mr. Kogan received his
undergraduate degree from the Wharton School of the University of Pennsylvania
and an MBA from the University of Chicago. Mr. Kogan has served as Chairman of
the Board of the Company since February 1998.
PETER W. MAY. Mr. May, age 57, has served since April 1993 as director
and President and Chief Operating Officer of Triarc. He has served as a director
and Vice Chairman of Snapple Beverage Group, Inc. and manager and President and
Chief Operating Officer of Triarc Consumer Products Group, LLC, both
subsidiaries of Triarc, since April 1997 and January 1999, respectively. Prior
to 1993, Mr. May was President and Chief Operating Officer of Triangle
Industries, Inc. from 1983 until December 1988. Mr. May has also served as a
director of Ascent Entertainment Group, Inc. from June 1999 to April 2000 and as
a director of On-Command Corporation from February 2000 to April 2000. Mr. May
holds BA and MBA degrees from the University of Chicago and is a Certified
Public Accountant. Mr. May has served as a director of the Company since
February 1998.
JAMES D. PACKER. Mr. Packer, age 33, has served since 1998 as the
Managing Director of Consolidated Press Holding Limited ("CPH"), the private
holding company of the Packer family of Australia. In May 1998, Mr. Packer
became Executive Chairman of Publishing and Broadcasting Limited, having
previously served as its Chief Executive Officer since 1996. Prior to that time,
Mr. Packer held numerous positions at affiliates of CPH and Publishing and
Broadcasting Limited. Mr. Packer is also a director of Consolidated Press
International Limited, the Huntsman Petrochemical Corporation and numerous other
companies. Mr. Packer holds a Higher School certificate from Cranbrook. Mr.
Packer has served as a director of the Company since May 1998.
NELSON PELTZ. Mr. Peltz, age 58, has served since April 1993 as a
director and Chairman and Chief Executive Officer of Triarc. He has served as a
director and Chairman of Snapple Beverage Group, Inc. and manager and Chairman
and Chief Executive Officer of Triarc Consumer Products Group, LLC, both
subsidiaries of Triarc, since April 1997 and January 1999, respectively. Prior
to 1993, Mr. Peltz was Chairman and Chief Executive Officer of Triangle
Industries, Inc. from 1983 until December 1988. Mr. Peltz attended the
University of Pennsylvania, Wharton School. Mr. Peltz has served as a director
of the Company since February 1998.
ROBERT M. WHYTE. Mr. Whyte, age 56, has served since 1986 as an
investment banker with Audant Investment Pty. Limited, most recently in the
capacity of Executive Chairman. Since 1997, Mr.
3
<PAGE> 8
Whyte has been a director of Publishing and Broadcasting Limited, and also
serves on the Board of Directors of various other companies. From 1992 to 1997,
Mr. Whyte held non-executive directorships of Advance Bank Australia Limited and
The Ten Group Limited. Mr. Whyte holds a Bachelor's degree from the University
of Sydney. Mr. Whyte has served as a director of the Company since February
1998.
VOTE REQUIRED. The directors receiving a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors will be approved. For purposes of the election
of directors, abstentions and broker non-votes will not be counted as votes cast
and will have no effect on the result of the vote, although they will count
toward the presence of a quorum
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR EACH OF THE DIRECTOR NOMINEES
EXECUTIVE OFFICERS
In addition to Carl C. Gregory, III, who is serving as the President
and Chief Executive Officer of the Company and whose biography is set forth
above, the following is a list of the other executive officers of the Company.
BARRY R. BARKLEY. Mr. Barkley, age 57, joined the Company in May 2000
and serves as Executive Vice President and Chief Financial Officer. From March
1998 until joining the Company, Mr. Barkley was the Chief Financial Officer of
West Capital Financial Services Corporation. Mr. Barkley received a bachelor's
degree from Purdue University in 1961 and received his M.B.A. from Indiana
University in 1968. From August 1990 to September 1995, Mr. Barkley was with
Banc One Corporation, first as Chief Financial Officer and member of the Board
of Directors of Bank One, Texas, N.A. and from January 1994, serving as
Executive Director, Corporate ReEngineering. In October 1995, Mr. Barkley joined
Great Western Financial Corporation as the Corporate Controller reporting to the
Vice Chairman. Mr. Barkley is currently on sabbatical from the company, and Ms.
Biskis is serving as Acting Chief Financial Officer in his absence.
J. BRANDON BLACK. Mr. Black, age 32, joined the Company in May 2000 and
serves as Executive Vice President, Operations. From March 1998 until joining
the Company, Mr. Black was the Senior Vice President of Operations for West
Capital Financial Services Corporation. Prior to joining West Capital, Mr. Black
worked for First Data Resources during the period of September 1997 through
April 1998 and for Capital One Financial corporation from June 1989 until August
1997. Mr. Black received a bachelor's degree from William and Mary in 1989 and a
Masters of Business Administration from the University of Richmond in 1996.
GREGORY G. MEREDITH. Mr. Meredith, age 39, is Senior Vice President and
General Counsel. Mr. Meredith was named Senior Vice President in November 1998.
He joined the Company in 1995 as Vice President and General Counsel. Prior to
joining the Company, Mr. Meredith was in private general practice with the law
firm of Reynolds, Forker, Berkeley, Suter, Rose and Dower in Hutchinson, Kansas
from September 1993 through early 1995, and from 1988 to September 1993, with
another firm. Mr. Meredith graduated from Pittsburg State University in 1983 and
received his Juris Doctorate Degree with Honors from Washburn University in
1986.
JOHN TREIMAN. Mr. Treiman, age 39, joined the Company in May 2000 and
serves as Senior Vice President and Chief Information Officer. From August 1998
until joining the Company, Mr. Treiman was a Vice President and the Chief
Information Officer for West Capital Financial Services Corporation. From
January 1996 through July 1998 Mr. Treiman served as Vice President and Chief
Information Officer for Frederick's of Hollywood. Additionally, Mr. Treiman
served as Vice President
4
<PAGE> 9
and Chief Information Officer for The Welk Group and spent several years in
consulting with KPMG Peat Marwick. Mr. Treiman received a bachelor's degree from
UCLA in 1983 and received his M.B.A. from the University of Southern California
in 1986.
JEROME MILLER. Mr. Miller, age 50, joined the Company in May 2000 and
serves as Senior Vice President of Human Resources. From May 1998 until joining
the Company, Mr. Miller was the Vice President of Human Resources for West
Capital Financial Services Corporation. From December 1994 to May 1998, Mr.
Miller was Director, Employment & Employee Relations for SunAmerica, Inc., a
Fortune 500 financial services company. Mr. Miller received a bachelor's degree
from the University of Scranton in 1971.
LYNETTE BISKIS. Ms. Biskis, age 40, joined the Company in May 2000 and
serves as Vice President and Assistant Chief Financial Officer. She is currently
also serving as Acting Chief Financial Officer during Mr. Barkley's sabbatical.
From February 1999 until May 2000, Ms. Biskis was with RHI Management Resources
as a financial consultant to West Capital Financial Services Corp. Ms. Biskis
also served as a Director of Lease Administration for Pyxis Corporation from
December 1996 to November 1998. From November 1993 until December 1996, Ms.
Basis worked for BA Credit Corporation under several capacities including Vice
President, Manager of Contract Administration, Manager of Lease Syndication,
Program Director and Credit Risk Officer. Ms. Biskis received an MBA from
University of Rochester in 1987 and a bachelor's degree from University of
Michigan in 1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board met in person or acted by written consent nine (9)
times during the year ended December 31, 1999. The Board maintains a standing
Audit Committee, Nominating Committee and Compensation Committee.
The Audit Committee is responsible for recommending to the full Board
the appointment of the Company's independent accountants and for reviewing and
evaluating the Company's accounting principles and system of internal accounting
controls. The Audit Committee met in person or acted by written consent two (2)
times during 1999 and consisted of Messrs. Kogan and Whyte.
The Nominating Committee is responsible for evaluating all proposed
candidates for the Board, recommending nominees to fill vacancies to the full
Board and recommending to the full Board, prior to the Annual Meeting of
Stockholders, a slate of nominees for election to the Board by the stockholders
of the Company at the Annual Meeting. The Nominating Committee will consider
nominees recommended by stockholders if such recommendations are submitted in
writing, 90 to 120 days prior to the next Annual Meeting of Stockholders and
includes (a) the name and address of the stockholder making the nomination; (b)
the name and address of the person nominated to serve as Director; (c) a
representation that the stockholder is a holder of record of Common Stock of the
Company and intends to vote in person or by proxy in favor of the nominee; (d) a
description of arrangements or understandings between the nominee and the
stockholders; and (e) the consent of the nominee to serve as Director; and (f)
such other information regarding each nominee as would have to be included in a
proxy statement pursuant to the proxy rules of the Securities and Exchange
Commission in the event the nominee is nominated. Such recommendations should be
addressed to the Secretary of the Company and to the Nominating Committee at
5775 Roscoe Ct., San Diego, California 92123. The Nominating Committee met in
person or acted by written consent one (1) time during 1999 and consisted of
Messrs. Peltz and Packer.
The Compensation Committee acts on matters relating to the compensation
of directors, senior management, and key employees, including the granting of
stock options. The Compensation Committee
5
<PAGE> 10
met in person or acted by written consent three (3) times during 1999, and
consisted of Messrs. Kogan and May.
During 1999, each Board member attended 75% or more of the aggregate of
the meetings of the Board and of the committees on which he served.
DIRECTOR COMPENSATION
Directors currently receive no annual retainer fees or fees for
attendance at Board or committee meetings. Directors are, however, reimbursed
for their out-of-pocket expenses incurred in attending Board or committee
meetings. The Company has also entered into Indemnification Agreements with each
of its directors under which it has agreed to indemnify them to the fullest
extent authorized by law against certain expenses and losses arising out of
certain claims related to the fact that such person is or was a director of the
Company or served the Company in certain other capacities.
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended December 31,
1999, 1998 and 1997, respectively, the compensation awarded to or paid by the
Company and its subsidiaries to each person who served as the Company's Chief
Executive Officer during 1999, its other four most highly compensated executive
officers at December 31, 1999 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAY-OUTS
------------------- ------ --------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDER- OTHER
COMPEN- STOCK LYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) SARS ($) ($) (1)
-------- ---- ------ ------ -------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert E. Koe, former 1999 99,517 75,000 0 0 100,000 0 41,108(2)
Director, former 1998 0 0 0 0 0 0 0
Chief Executive 1997 0 0 0 0 0 0 0
Officer(3)
Frank Chandler, 1999 220,833 65,000 0 0 0 0 2,560
Vice Chairman of the 1998 190,417 25,000 0 0 0 0 2,555
Board and former 1997 120,000 15,000 0 0 0 0 2,550
President and Chief
Executive Officer(3)
R. Brooks Sherman, Jr., 1999 57,692 0 0 0 50,000 0 88,064(2)
Executive Vice 1998 0 0 0 0 0 0 0
President and Chief 1997 0 0 0 0 0 0 0
Financial Officer (3)
</TABLE>
6
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<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAY-OUTS
------------------- ------ --------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDER- OTHER
COMPEN- STOCK LYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) SARS ($) ($) (1)
-------- ---- ------ ------ -------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bradley E. Hochstein, 1999 131,186 0 0 0 0 0 6,658(2)
former Senior Vice 1998 116,458 20,000 0 0 0 0 346
President, Recovery (4) 1997 75,000 10,000 0 0 0 0 325
Gary D. Patton, 1999 118,803 0 0 0 0 0 6,526(2)
former Senior Vice 1998 84,167 10,000 0 0 0 0 489
President, 1997 70,000 10,000 0 0 0 0 450
Information Systems (5)
Ronald W. Bretches, 1999 118,333 0 0 0 0 0 702
former Vice President 1998 64,167 10,000 0 0 0 0 30
and Controller (6) 1997 0 0 0 0 0 0 0
</TABLE>
-----------------------
(1) Includes 401(k) plan matching contributions and term life insurance premiums
paid by the Company in the following amounts for each of the following Named
Executive Officers: (i) in 1999, Robert E. Koe, life insurance ($14); R. Brooks
Sherman, Jr., life insurance ($14); Frank Chandler, 401(k) ($2,500), life
insurance ($60); Bradley E. Hochstein, 401(k) ($365), life insurance ($93); Gary
D. Patton, 401(k) ($533), life insurance ($35); and Ronald W. Bretches, 401(k)
($642), life insurance ($60) (ii) in 1998, Frank Chandler, 401(k) ($2,500), life
insurance ($55); Bradley E. Hochstein, 401(k) ($291), life insurance ($55); Gary
D. Patton, 401(k) ($454), life insurance ($35); and Ronald W. Bretches, life
insurance ($30) and (iii) in 1997, Frank Chandler, 401(k) ($2,500), life
insurance ($50); Gary D. Patton, 401(k) ($420), life insurance ($30); Brad
Hochstein, 401(k) ($240), life insurance ($85).
(2) Includes expenses paid or reimbursed by the Company for relocation to
Phoenix in the following amounts for each of the following Named Executive
Officers: Robert E. Koe ($41,094); R. Brooks Sherman, Jr. ($88,050); Bradley E.
Hochstein ($6,200); and Gary D. Patton ($5,958).
(3) Mr. Koe became the President and Chief Executive Officer of the Company on
July 22, 1999. Mr. Koe succeeded Mr. Frank Chandler as President and Chief
Executive Officer. Mr. Koe resigned effective May 21, 2000 and Mr. Carl C.
Gregory, III became the President and Chief Executive Officer of the Company
effective May 21, 2000. All of the options granted to Mr. Koe in 1999 terminated
upon his resignation. Mr. Sherman resigned his position as Chief Financial
Officer effective May 23, 2000, and Mr. Barry Barkley became the Chief Financial
Officer and Executive Vice President. Mr. Sherman is resigning from all
remaining positions held as an officer or employee of the Company or its
subsidiaries effective October 31, 2000. Of the options granted to Mr. Sherman,
16,667 have vested, however all unexercised options will terminate upon the
effectiveness of his resignation.
(4) Mr. Hochstein resigned his position as Senior Vice President, Recovery
effective September 15, 2000.
(5) Mr. Patton resigned his position as Senior Vice President, Information
Systems effective November 15, 1999 but remained as a Consultant to the Company
through April 30, 2000
(6) Mr. Bretches position as Vice President and Controller was terminated by the
Company effective June 14, 2000.
7
<PAGE> 12
OPTION/SAR GRANTS IN LAST YEAR
The following table sets forth information concerning grants of stock
options to the Named Executive Officers of the Company during the year ended
December 31, 1999:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL ASSUMED ANNUAL RATE OF STOCK
SECURITIES OPTIONS/SARS APPRECIATION FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR (PER SHARE) DATE 5% 10%
---- ------------ ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Koe(1) 100,000 57.0% $ 7.875 07/21/09 $ 495,255 $1,255,072
R. Brooks Sherman, Jr.(2) 25,000 14.3% $ 8.125 7/20/09 $ 127,744 $ 323,729
25,000 14.3% $ 10.000 7/14/09 $ 157,224 $ 398,436
Frank I. Chandler 0 -- -- -- -- --
Bradley E. Hochstein (3) 0 -- -- -- -- --
Gary D. Patton (4) 0 -- -- -- -- --
Ronald W. Bretches (5) 0 -- -- -- -- --
</TABLE>
--------------------------
(1) Mr. Koe received his individual grant on July 19, 1999. Mr. Koe resigned on
May 21, 2000. All of the options listed above terminated at that time.
(2) Mr. Sherman received his individual grant on June 9, 1999. Mr. Sherman is
resigning from all positions held as an officer or employee of the Company or
its subsidiaries effective October 31, 2000. Approximately 16,667 of his options
have vested, however all unexercised options will terminate upon the
effectiveness of his resignation.
(3) Mr. Hochstein resigned his position as Senior Vice President, Recovery
effective September 15, 2000.
(4) Mr. Patton resigned his position as Senior Vice President, Information
Systems effective November 15, 1999 but remained on as a Consultant to the
Company through April 30, 2000.
(5) Mr. Bretches position as Vice President and Controller was terminated by the
Company effective June 14, 2000.
8
<PAGE> 13
AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning option
exercises by the Named Executive Officers of the Company during the year ended
December 31, 1999 and the value of such officers' unexercised options at
December 31, 1999. There were no outstanding SARs as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
ACQUIRED OPTIONS/SARS AT SARS AT FISCAL YEAR-END ($)
ON VALUE FISCAL YEAR-END
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Koe (1) 0 0 0 100,000 0 0
R. Brooks Sherman, Jr.(2) 0 0 0 50,000 0 0
Frank I. Chandler 0 0 0 0 0 0
Bradley E. Hochstein 0 0 0 0 0 0
Gary D. Patton 0 0 0 0 0 0
Ronald W. Bretches (3) 0 0 32,941 65,882 0 0
</TABLE>
---------------
(1) Mr. Koe received his individual grant on July 19, 1999. Mr. Koe resigned on
May 21, 2000. All of the options listed above terminated at that time.
(2) Mr. Sherman received his individual grant on June 9, 1999. Mr. Sherman is
resigning from all positions held as an officer or employee of the Company or
its subsidiaries effective October 31, 2000. Approximately 16,667 of his options
have vested, however all unexercised options will terminate upon the
effectiveness of his resignation.
(3) Mr. Bretches received his individual grant on May 18, 1998. All of the
options listed above have terminated.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of September 30, 2000 by:
(i) each director of the Company, (ii) the Named Executive Officers, (iii) each
person who is known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding Common Stock, and (iv) all executive officers
and directors as a group.
Unless otherwise indicated, each of the stockholders listed below has
sole voting and investment power with respect to the shares beneficially owned
by them respectively, and the address of each of the
9
<PAGE> 14
listed stockholders is 5775 Roscoe Ct., San Diego, California 92123. The
percentages in the table are based upon 7,591,131 shares of the Company's Common
Stock outstanding as of September 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED
------------------------------------ -------------- --------------
<S> <C> <C>
Consolidated Press International Holdings Limited(2) 2,049,396 27.0%
54-58 Park Street, Sydney
NSW 2001, Australia
Triarc Companies, Inc.(3) 703,787 9.3%
280 Park Avenue
New York, NY 10017
Neale M. Albert(4) 871,964 11.5%
c/o Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
ING (U.S.) Capital LLC (5) 428,571 5.6%
55 East 52nd Street
New York, New York 10015
West Capital Financial Services Corp. (6) 400,000 5.3%
5775 Roscoe Court
San Diego, California 92123
Robert E. Koe *
Ronald W. Bretches *
Gary D. Patton *
Bradley E. Hochstein *
R. Brooks Sherman, Jr. 16,667 *
Frank I. Chandler 1,000,579 13.2%
Eric D. Kogan 98,823 1.3%
Peter W. May (7) 994,441 13.1%
James D. Packer *
Nelson Peltz (8) 1,285,097 16.9%
Robert M. Whyte 80,000 1.1%
All executive officers and directors as a group 2,845,937 37.5%
(11 Persons) (9)
</TABLE>
--------------
10
<PAGE> 15
* Less than one percent.
(1) Includes shares, if any, held by spouse; held in joint tenancy with spouse;
held by or for the benefit of the listed individual (or group member) or one or
more members of his immediate family with respect to which the listed individual
(or group member) has or shares voting or investment powers; subject to stock
options that were exercisable on September 30, 2000 or within 60 days
thereafter, or in which the listed individual (or group member) otherwise has a
beneficial interest.
(2) Pursuant to a Schedule 13D, filed February 22, 2000, by Consolidated Press
International Holdings Limited ("CPIHL") and its subsidiary C.P. International
Investments Limited ("CPII"), CPII is the direct beneficial owner of these
shares and CPIHL is the indirect beneficial owner of these shares and each such
company has shared voting and dispositive power with respect to all of the
shares. The shares reported include 345,879 shares owned by CPII as nominee of
Peter Stewart Nigel Frazer. Mr. Frazer granted voting and investment power over
his shares to CPII to be exercised in the same manner and to the same
proportionate extent as applies to shares owned by CPII. Kerry F.B. Packer and
his family directly or indirectly beneficially own CPIHL. Mr. James D. Packer, a
director of the Company, is the son of Mr. Kerry F.B. Packer. Mr. James D.
Packer has no voting or investment power over the shares. Mr. Frazer is the
father-in-law of Mr. Robert M. Whyte, a director of the Company. Mr. Whyte does
not have voting or investment power over the shares.
(3) Pursuant to a Schedule 13G filed on February 14, 2000 (the "Madison West
13G") by Madison West Associates Corp. ("Madison"), Triarc Companies, Inc.
("Triarc"), Nelson Peltz, Peter May, Neale M. Albert, and DWG Acquisition Group,
L.P. ("DWG"), Triarc holds warrants to purchase up to 100,000 shares of the
Company's Common Stock and has sole voting and investment power over the shares
to be issued upon the exercise of the warrants. In addition, Madison, a
wholly-owned subsidiary of Triarc, is the direct beneficial owner, and Triarc is
the indirect beneficial owner of 603,787 shares of the Company's Common Stock,
and each such company has shared voting and investment power over the shares. As
the direct beneficial owner of approximately 30.2% of the outstanding voting
common stock of Triarc, DWG shares voting and dispositive power over the 703,787
shares of the Company's Common Stock beneficially owned by Triarc. DWG disclaims
beneficial ownership of such shares beneficially owned by Triarc.
(4) Pursuant to the Madison West 13G, Mr. Albert, as a co-trustee of each of the
Nelson Peltz Children's Trust, the Jonathan P. May 1998 Trust and the Leslie A.
May 1998 Trust, shares voting and dispositive power over the 581,310 shares of
Common Stock directly owned by the Nelson Peltz Children's Trust, the 145,327
shares directly owned by the Jonathan P. May 1998 Trust and the 145,327 shares
directly owned by the Leslie A. May 1998 Trust. Mr. Albert disclaims beneficial
ownership of such shares. See footnotes (5) and (6) below.
(5) On January 13, 2000, the Company closed a financing transaction with ING
(U.S.) Capital LLC, in which MCM issued $10 million of its senior unsecured
notes to ING. In connection with issuance of the notes the Company issued a
warrant to ING to acquire up to 428,571 shares of the Company's common stock
(subject to adjustment) at a price of $0.01 per share. This warrant was not
initially exercisable until April 12, 2000. From April 12, 2000 to October 9,
2000, the warrant was exercisable for up to 50,000. Beginning on October 10,
2000 through January 12, 2005, warrant is exercisable for 100,000 shares of
common stock.
(6) On May 22, 2000, the Company issued 375,000 shares of Common Stock to West
Capital Financial Services Corp., a California corporation ("West Capital") as
consideration for the acquisition of certain of the operating assets of West
Capital. In a separate but related transaction, the Company issued 25,0000
shares of Common Stock to WCFSC Consumer Receivables Recovery Trust 1995-1 (the
"Trust"), a trust formed by WCFSC Special Purpose Corporation, a California
corporation and wholly owned subsidiary of West Capital ("WCFSC SPC") as
consideration for a securitized portfolio of charged-off consumer receivables.
The address provided is the last known address of West Capital known by the
Company.
(7) Pursuant to the Madison West 13G, Mr. May is a co-trustee of the Jonathan P.
May 1998 Trust and the Leslie A. May 1998 Trust, and in such capacity shares
voting and dispositive power over 145,327 shares of Common Stock directly owned
by the Jonathan P. May 1998 Trust and 145,327 shares directly owned by the
Leslie A. May 1998 Trust. In addition, as the indirect beneficial owner of
approximately 33.5% of the outstanding voting common stock of Triarc, Mr. May
shares voting and dispositive power over the 703,787 shares of Common Stock
beneficially owned by Triarc. Mr. May disclaims beneficial ownership of such
shares. See footnote (3) above.
(8) Pursuant to the Madison West 13G, Mr. Peltz is a co-trustee of the Nelson
Peltz Children's Trust and shares voting and dispositive power over the 581,310
shares of Common Stock directly owned by the trust. In addition, as the indirect
beneficial owner of approximately 34.9% of the outstanding voting common stock
of Triarc, Mr. Peltz shares voting and dispositive power over the 703,787 shares
of Common Stock beneficially owned by Triarc. Mr. Peltz disclaims beneficial
ownership of such shares. See footnote (3) above.
(9) Excludes 703,787 shares of Common Stock held by Triarc.
11
<PAGE> 16
EMPLOYMENT CONTRACTS AND RELATED MATTERS
On July 19, 1999, the Company hired Robert E. Koe as its President and
Chief Executive Officer. Mr. Koe worked under an employment agreement that was
to expire July 19, 2002. Under the agreement, Mr. Koe was entitled to a base
salary of $225,000 per year. Mr. Koe was also eligible for annual incentive cash
bonuses based on the Company's and Mr. Koe's performance assessed each year
relative to objectives agreed to in advance between Mr. Koe and the Board. The
agreement contained confidentiality and noncompete covenants. In connection with
his employment, Mr. Koe was granted options to purchase 100,000 shares of Common
Stock at an exercise price of $7.875 per share. Mr. Koe resigned effective May
21, 2000, and will receive a severance package of one year's salary payable
bi-weekly commencing in June of 2000 and a prorated bonus for 2000 equal to
5/12ths of his annual salary payable at such time as active senior executives
receive their annual bonuses. Mr. Koe's options terminated upon his resignation.
On October 4, 1999, the Company hired John F. Craven as its Executive
Vice President and Chief Operating Officer. Mr. Craven worked under an
employment agreement that was to expire October 4, 2000. Under the agreement,
Mr. Craven was entitled to a base salary of $150,000 per year. Mr. Craven was
also eligible for annual incentive cash bonuses based on the Company's and Mr.
Craven's performance assessed each year relative to objectives agreed to in
advance between Mr. Craven and the Board. The agreement contained
confidentiality and noncompete covenants. In connection with his employment, Mr.
Craven was granted options to purchase 25,000 shares of Common Stock at an
exercise price of $4.125 per share. Mr. Craven resigned effective June 28, 2000,
and has received a severance package of one year's salary payable bi-weekly
which commenced in July of 2000. No bonus for the year 2000 was paid. Mr.
Craven's options terminated upon his resignation.
On June 9, 1999, the Company hired R. Brooks Sherman, Jr. as its
Executive Vice President and Chief Financial Officer. Mr. Sherman works under an
employment agreement that expires June 9, 2001. The term of the agreement will
be automatically extended for additional one-year terms unless otherwise
terminated by the Company or Mr. Sherman. Under the agreement, Mr. Sherman is
entitled to a base salary of $125,000 per year and a $25,000 starting bonus. Mr.
Sherman is also eligible for annual incentive cash bonuses based on the
Company's and Mr. Sherman's performance assessed each year relative to
objectives agreed to in advance between Mr. Sherman and the Board. The agreement
contains confidentiality and noncompete covenants. If Mr. Sherman's employment
is terminated for any reason other than for cause or in the event of his death,
disability or resignation, or if the Company gives notice that it does not wish
to extend the term of Mr. Sherman's employment agreement for any additional
period, he would receive a severance package that would include 18 months'
salary and a pro rata portion of his annual bonus. Mr. Sherman would receive the
same payments if, within 12 months following a change in control of the Company
(as defined in his employment agreement), there is a material alteration of Mr.
Sherman's duties, authority, title or compensation or he is relocated outside of
Phoenix, Arizona without his consent. In connection with his employment, Mr.
Sherman was granted options to purchase up to 50,000 shares of Common Stock at
an exercise price of $10.00 per share for the first 25,000 shares and $8.125 per
share for the remaining 25,000 shares. Mr. Sherman has submitted his resignation
effective October 31, 2000, and will receive a severance package of 18 month's
salary payable bi-weekly commencing in November of 2000 and a prorated bonus for
2000 equal to 10/12ths of one-half of his annual salary payable at such time as
active senior executives receive their annual bonuses. Of the 50,000 options
granted to Mr. Sherman during his employment, approximately 16,667 options will
vest prior to his resignation. However all unexercised options will terminate
upon the effectiveness of his resignation.
Ronald W. Bretches, the Company's former Vice President and Controller,
worked under an employment agreement that expired May 18, 2000. Under the
agreement, Mr. Bretches was entitled to a base salary of $120,000 per year. Mr.
Bretches was also eligible for an annual cash incentive bonus based
12
<PAGE> 17
on the Company and Mr. Bretches' performance assessed each year relative to
objectives agreed to in advance between Mr. Bretches and the Board. The
agreement contained confidentiality and noncompete covenants. On June 14, 2000
the Company terminated Mr. Bretches' at-will employment. In connection with his
employment, Mr. Bretches was granted options to purchase up to 98,823 shares of
Common Stock at an exercise price of $3.04 per share. All unexercised vested
options expired 90 days following the date of his termination.
Gary D. Patton, the Company's former Senior Vice President, Information
Systems, worked under an employment agreement that expired February 13, 2000.
Under the agreement, Mr. Patton was entitled to a base salary of $115,000 per
year. Mr. Patton was also eligible for an incentive bonus based on an annual
cash incentive program. The agreement contained confidentiality and noncompete
covenants. Mr. Patton resigned as of November 15, 1999 and under an agreement
dated November 4, 1999, Mr. Patton continued to act as a consultant to the
Company through April 30, 2000 at the same base salary he would otherwise have
been entitled to under his employment agreement.
Bradley E. Hochstein, the Company's former Senior Vice President,
Recovery, worked under an employment agreement that expired on February 13,
2000. Under the agreement, Mr. Hochstein was entitled to a base salary of
$130,000 per year. Mr. Hochstein was also eligible for an incentive bonus based
on the Company's annual cash incentive program. The agreement contained
confidentiality and noncompete covenants. Mr. Hochstein resigned from his
employment with the Company on September 15, 2000.
Frank Chandler, the Company's Vice Chairman, works under an employment
agreement that expires on February 13, 2001. Mr. Chandler is entitled to a base
salary of $200,000 per year, subject to increase if specific operating revenue
targets are met. Mr. Chandler is eligible for an annual cash incentive bonus
based on the Company's annual cash incentive program. The agreement provides
that Mr. Chandler is entitled to the continued use of a company automobile and
certain other benefits. The agreement also contains confidentiality and
noncompete covenants. If the Company were to terminate Mr. Chandler's employment
without cause, he would be entitled to receive a severance package that would
include one year's salary and a pro rata portion of his annual bonus.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board. The members of the Compensation Committee
are not employees of the Company. The Compensation Committee determines the
compensation of the Company's executive officers and administers the Company's
stock option plans.
EXECUTIVE COMPENSATION POLICIES
Overview. Incentive compensation arrangements are the cornerstone of
the Compensation Committee's executive compensation policies. These incentive
compensation arrangements reward those executive officers who achieve individual
and Company objectives that increase stockholder value.
The Company's executive compensation package consists of three
components: base salary and related benefits; annual cash bonus incentives; and
stock-based compensation incentives. The Compensation Committee reviews each of
these components and develops an incentive compensation package for each of the
Company's executive officers based, in part, upon the recommendations of senior
management and, in part, upon the Compensation Committee's assessment of each
executive officer's contribution to the Company. In addition, from time to time,
the Compensation Committee reviews competitive information. The Compensation
Committee strives to develop individual compensation
13
<PAGE> 18
packages for the Company's executive officers that will encourage superior
individual and Company-wide performance, serve to retain those executive
officers that perform well, and lead to increased stockholder value. Each
component of the Company's executive compensation package is discussed below.
Base Salary and Benefits. The first component of the Company's
executive compensation package is base salary and related benefits. Each
executive officer receives a base salary and benefits based on his or her
responsibilities and experience. The Compensation Committee reviews each
executive officer's base salary and benefits from time to time.
Annual Incentive Bonus. The second component of the Company's executive
compensation package is an annual incentive bonus. Officer bonuses under the
Company's annual cash incentive plan are computed using a sliding scale based
upon the Company achieving targeted operating measures as defined under the
plan. For example, if the Company had achieved 100% of its targeted operating
measures during the 1999 fiscal year, bonuses of approximately $600,000 would
have been paid; with the maximum aggregate bonus payout being approximately $1.2
million. Bonuses totaling $115,000 are to be paid under the annual cash
incentive plan in 1999 and not later than March 31, 2001. In addition, when
appropriate the Company may pay discretionary bonuses to certain executives.
Stock-Based Compensation Incentives. The third component of the
Company's executive compensation package is stock-based compensation incentives,
traditionally stock options. This compensation component is an important
incentive tool designed to more closely align the interests of the executive
officers of the Company with the long-term interests of the Company's
stockholders and to encourage its executive officers to remain with the Company.
The Compensation Committee considers grants of options to the Company's
executive officers and key employees on an annual basis. In selecting recipients
and the size of option grants during 1999, the Compensation Committee considered
the other components of the recipients' compensation packages, the recipients'
responsibilities and performance, the Company's performance during the preceding
fiscal year, and prior option grants.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In 1999, Robert E. Koe, the Company's Chief Executive Officer from July
22, 1999 to May 21, 2000, was compensated pursuant to an employment agreement.
Under the agreement, Mr. Koe was entitled to a base salary of $225,000 per year.
The Compensation Committee determined Mr. Koe's salary through negotiations with
Mr. Koe. Mr. Koe received an incentive bonus of $75,000 for 1999 based on the
terms of Mr. Koe's employment agreement.
Consistent with the Compensation Committee's determination to provide
incentives to maximize stockholder value, the Compensation Committee approved
the option grants to Mr. Koe described in "Options/SAR Grants In Last Year"
Table.
In 1999, Frank Chandler, the Company's Chief Executive Officer through
July 21, 1999, was compensated pursuant to an employment agreement. Under the
agreement, Mr. Chandler was entitled to a base salary of $200,000 per year,
subject to increases for meeting agreed upon targets. For 1999, Mr. Chandler's
salary was determined by the employment agreement, which was negotiated between
the Company and Mr. Chandler. Mr. Chandler did not receive an incentive bonus
for 1999.
14
<PAGE> 19
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code, adopted as part of the Revenue
Reconciliation Act of 1993, generally limits to $1 million the deduction that
can be claimed by any publicly held corporation for compensation paid to any
"covered employee" in any taxable year. The term "covered employee" for this
purpose is defined generally as the chief executive officer and the four other
highest paid employees of the corporation. Performance-based compensation is
outside the scope of the $1 million limitation and, hence, generally can be
deducted by a publicly held corporation without regard to amount; provided that,
among other requirements, such compensation is approved by stockholders.
It is the general policy of the Company to make a reasonable effort to
satisfy the requirements of Section 162(m) in order to secure the maximum
possible deductions. At the same time, the Company recognizes that it must
appropriately compensate its key executives in order to enhance stockholder
value. On occasion, certain considerations may necessitate the implementation of
a compensation program pursuant to which some or all of the compensation paid
will not be deductible.
COMPENSATION COMMITTEE
ERIC D. KOGAN*
PETER W. MAY*
*See section entitled "Certain Relationships and Related Transactions."
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative stockholder return on
the Company's Common Stock for the period July 9, 1999 (the date of the
Company's IPO) through December 31, 1999 with the cumulative total return of (a)
the Nasdaq Index and (b) and NCO Group, a company similar. The comparison
assumes that $100 was invested on July 9, 1999 in the Company's Common Stock and
in each of the comparison indices.
15
<PAGE> 20
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
M C M CAPITAL GROUP, INC.
[LINE GRAPH]
Produced on 10/18/2000 including data to 12/31/1999
LEGEND
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 07/1999 12/1999
<S> <C> <C> <C>
___________ [ ] M C M CAPITAL GROUP, INC. 100.0 41.5
___ ___ * Nasdaq Stock Market (US Companies) 100.0 145.4
- - - - - - & Self-Determined Peer Group 100.0 75.5
Companies in the Self-Determined Peer Group
N C O GROUP INC
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 07/09/1999.
Prepared by CRSP (www.crsp.uchicago.edu), Center for Research in Security
Prices, Graduate School of Business, The University of Chicago. Used with
permission. All rights reserved.
9984 (c) Copyright 2000
16
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 13, 2000, the Company closed a financing transaction in
which the Company issued $10 million of its senior unsecured notes (the "Debt")
to a major financial institution (the "Investor"). The principal amount of the
Debt is guaranteed by Triarc Companies, Inc. ("Triarc"), subject to reduction
under certain circumstances. However, no demand or claim may be made on the
guaranty prior to July 12, 2001. Triarc indirectly owns approximately 9.3% of
the outstanding Common Stock. In addition, Nelson Peltz, Peter W. May and Eric
D. Kogan, each of whom are directors of the Company and are officers and/or
directors of Triarc, directly or indirectly own, in the aggregate, approximately
22.1% of the outstanding Common Stock. In consideration for the guaranty, the
Company paid Triarc a fee of $200,000 and issued a warrant to Triarc for the
purchase of up to 100,000 shares of Common Stock (subject to adjustment) at
$0.01 per share at any time on or before January 12, 2005.
The Company has entered into a facility with Bank of America, N.A.,
formerly NationsBank, N.A., for a revolving line of credit of up to $15 million
that matures April 15, 2001. Some of the Company's directors, stockholders and
affiliates have guaranteed this facility, including Messrs. May, Chandler, Peltz
and Kogan, directors of the Company, the Chandler Family Limited Partnership,
Triarc, Consolidated Press Holdings Limited, and Peter Stewart Nigel Frazer.
Triarc also purchased a $15 million certificate of deposit from the Bank of
America, N.A., which under the guaranties of the revolving credit borrowings is
subject to set off under certain circumstances if the parties to these
guaranties of the revolving credit borrowings and related agreements fail to
perform their obligations thereunder.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities Exchange Commission (the
"SEC"). Based solely on its review of the copies of such forms received by it,
the Company believes that during fiscal year 1999 its directors, officers, and
greater than 10% beneficial owners complied with all applicable filing
requirements.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO MCM CAPITAL GROUP, INC.
1999 EQUITY PARTICIPATION PLAN TO INCREASE SHARES
AVAILABLE UNDER THE PLAN
INTRODUCTION
In 1999, as a part of the Company's ongoing program to provide senior
management with incentives linked to corporate performance, the Board approved
the 1999 Equity Participation Plan. The Plan is designed to provide senior
management and key employees with stock based incentives which are intended to
provide competitive long-term incentive opportunities and tie executive
long-term financial gain to increases in the Company's stock price.
In keeping with the Company's goals to attract and retain top
management, and to provide an incentive to management to enhance stockholder
value, the Board believes it is appropriate to amend the Plan, subject to
approval of the Company's stockholders, to increase the number of shares of
Common Stock available for grant under the Plan from 250,000 to 1,300,000. This
increased amount would represent a total of approximately 14.6% of the
outstanding shares of Common Stock assuming all of the additional shares
approved under the plan were issued.
17
<PAGE> 22
BRIEF DESCRIPTION OF THE PLAN
The following brief description of the original Plan does not purport
to be complete, and is subject to and qualified in its entirety to the text of
the Plan, which is attached hereto as Appendix A.
ELIGIBILITY
The following persons are eligible to be granted options to purchase
Common Stock under the Plan ("Optionee" or "Optionees"): (a) officers,
directors, and employees of the Company and its subsidiaries and affiliates; and
(b) key consultants to the Company and its subsidiaries and affiliates.
ADMINISTRATION
The Board (the "Board") administers the Plan. No member of the Board is
liable for any action or determination made in good faith with respect to the
Plan or any option granted under the Plan. The Company pays all of the expenses
of administering the Plan.
AVAILABLE SECURITIES
If Proposal 2 is approved, the aggregate number of shares available
under the Plan will increase from 250,00 to 1,300,000 shares of Common Stock
available under the Plan. The Company will not grant any employee options that
relate to more than 125,000 shares of stock during any fiscal year of the
Company. Stock subject to an option that terminates or expires without being
exercised will again be available for grant under the Plan.
EXERCISE PRICE OF OPTIONS
The exercise price of any options granted under the Plan is determined
by the Board, but may not be less than 50% of the fair market value of one share
on the date of grant. As of October 23, 2000, the closing bid price on the
Common Stock was $0.5625 as reported on the OTC Bulletin Board.
TERMINATION OF OPTIONS
Except as otherwise determined by the Board, an option will
automatically terminate without notice at the earliest to occur of the
following: (a) 10 years after the date of the grant, (b) any earlier lapse date
or event occurrence as stated in the option agreement, and (c) termination of
employment by, or services to, the Company and its subsidiaries if such
termination is for cause or a result of the Optionee's breach of the employment
or consulting agreement with the Company or any of its subsidiaries, as
determined by the Board. Such determination by the Board will be final and
conclusive. Except as otherwise determined by the Board, persons who receive
options through will or descent may exercise their options no later than one
year after the Optionee's date of death.
TAX IMPLICATIONS
For federal taxation purposes, there is no recognition of taxable
income upon the grant of an option. Upon exercise of an option, the Optionee
realizes ordinary income in an amount equal to the excess of the fair market
value of the stock on the date of exercise over the exercise price, and the
Company is entitled to take a deduction for the same amount. Upon disposition of
shares, the stockholder realizes capital gain income if the amount realized on
the sale exceeds the stockholder's basis in the
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<PAGE> 23
shares. A capital loss is realized if the basis in the shares exceeds the amount
realized. Basis is equal to the exercise price plus any income included as a
result of exercising the option. There is no tax impact on the Company upon a
stockholder's disposition of shares.
When exercising an option, the Optionee must remit to the Company an
amount sufficient to satisfy federal, state, and local taxes required by law to
be withheld with respect to any taxable event arising as a result of the Equity
Participation Plan. The Board may allow the tax withholding requirement to be
satisfied by accepting from the Optionee unrestricted shares of the Company
having a fair market value equivalent to the amount to be withheld or by
withholding shares of stock from the shares issuable on exercise of the option.
The Plan is not subject to the Employment Retirement Income Security
Act of 1974 and is not qualified under Section 401(a) of the Internal Revenue
Code.
ASSIGNMENT OF OPTION RIGHTS
If provided in the option agreement, option rights may be transferred:
(a) pursuant to a domestic relations order; (b) to the Optionee's immediate
family or a trust solely for the immediate family's benefit; (c) to a
partnership or limited liability company, the partners or members of which are
limited to the Optionee or his or her immediate family; or (d) any other person
or entity authorized by the Board (collectively, "Permitted Transferees").
Otherwise, option rights may only by assigned or transferred by will or descent.
Optionees must give the Board advance written notice describing the
terms and conditions of a proposed transfer and must receive written notice from
the Board that the transfer complies with the Equity Participation Plan.
Optionees remain liable for any required withholding taxes when the Permitted
Transferee exercises the option.
MODIFICATION OR TERMINATION OF THE EQUITY PARTICIPATION PLAN
The Board must obtain stockholder approval prior to modifying or
terminating the Plan if such approval is required to comply with any tax or
regulatory requirement. No modification or termination will adversely affect in
any material way any option previously granted under the Plan, without the
Optionee's written consent.
USE OF FUNDS
Funds received from the exercise of options are added to the Company's
general funds and used for working capital purposes.
REQUIRED VOTE
Approval of Proposal 2 requires the affirmative vote of a majority of
the voting power present (in person or by proxy) and entitled to vote at the
meeting. If Proposal 2 is approved, the amendment will become effective as of
the date of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE UNDER THE PLAN FROM 250,000 TO 1,300,000.
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PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO MCM CAPITAL GROUP, INC.
1999 EQUITY PARTICIPATION PLAN TO INCREASE THE NUMBER OF OPTIONS TO
PURCHASE COMMON STOCK WHICH MAY BE GRANTED TO ANY GIVEN EMPLOYEE
DURING ANY FISCAL YEAR FROM 125,000 TO 500,000.
GENERAL
At the Annual Meeting of Stockholders, the Company will seek
stockholder approval of an amendment to the Company's Plan to increase the
number of options to purchase Common Stock that may be granted to any given
employee during any fiscal year from 125,000 to 500,000. The Company's Board has
approved the amendment to the Plan and has directed that the amendment be
submitted as a proposal for stockholder approval at the Annual Meeting.
In keeping with the Company's goals to attract and retain top
management, and to provide an incentive to management to enhance stockholder
value, the Board believes it is appropriate to amend the Plan, subject to
approval of the Company's stockholders, to increase the number of options to
purchase Common Stock which may be granted to any given employee during any
fiscal year from 125,000 to 500,000.
For a brief description of the plan, see Proposal No. 2. For a complete
description of the plan, please refer to Appendix A.
REQUIRED VOTE
Approval of Proposal 3 requires the affirmative vote of a majority of
the voting power present (in person or by proxy) and entitled to vote at the
meeting. If Proposal 3 is approved, the amendment will become effective as of
the date of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE PLAN TO INCREASE THE NUMBER OF OPTIONS TO
PURCHASE COMMON STOCK WHICH MAY BE GRANTED TO ANY GIVEN EMPLOYEE
DURING ANY FISCAL YEAR FROM 125,000 TO 500,000.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of its Audit Committee, has selected
Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 2000, and has further directed that management submit the
selection of independent auditors for ratification by stockholders at the annual
meeting. Ernst & Young LLP began auditing the Company's financial statements
with the fiscal year ended 1996.
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Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the election, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such an appointment would be in the best interests of the
Company and its stockholders.
If less than a majority of the votes are voted in favor of ratification
of the selection of Ernst & Young LLP as the company's independent auditors for
2000, the Board will reconsider its selection.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR 2000.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Company's By-Laws require that there be furnished to the Company
written notice with respect to the nomination of a person for election as a
director (other than a person nominated at the direction of the Board), as well
as the submission of a proposal (other than a proposal submitted at the
direction of the Board), at a meeting of stockholders. In order for any such
nomination or submission to be proper, the notice must contain certain
information concerning the nominating or proposing stockholder, and the nominee
or the proposal, as the case may be, and must be furnished to the Company:
- in the case of the nomination of a director, not less than 90
nor more than 120 days prior to the anniversary date of the
preceding year's annual meeting, if relating to an annual
meeting, or 7 days after notice of the meeting is mailed to
stockholders, if relating to a special meeting; and
- in the case of a proposal for the transaction of other
business, not less than 90 nor more than 120 days prior to the
anniversary date of the preceding year's annual meeting, or if
the annual meeting is called for a date that is not within 30
days of such anniversary date, not later than the close of
business on the 10th day following the day on which notice of
the date of the annual meeting is mailed or public disclosure
made, whichever first occurs.
To properly bring a director nomination or other matter before the 2001
Annual Meeting of Stockholders, the nomination or proposal must be received by
August 16, 2001. A copy of the applicable By-Law provision may be obtained,
without charge, upon written request to the Secretary of the Company at its
principal executive offices in San Diego, California.
In addition to the foregoing, in accordance with the rules of the SEC,
any proposal that a stockholder intends to present at the 2001 Annual Meeting of
Stockholders must be received by the Company by August 16, 2001 to be eligible
for inclusion in the proxy statement and proxy form relating to such meeting.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed
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Proxy.
1999 ANNUAL REPORT ON FORM 10-K
The Company files annual reports on Form 10-K with the SEC. A copy of
the annual report for the fiscal year ended December 31, 1999 (except for
certain exhibits thereto) will be mailed with the Notice and Proxy Statement for
Annual Meeting of Stockholders and may be obtained, free of charge, upon written
request by any stockholder to MCM Capital Group, Inc., 5775 Roscoe Ct. San
Diego, California, 92123, Attention: Stockholder Relations. Copies of all
exhibits to the annual report are available upon a similar request, subject to
payment of a charge to reimburse the Company for its expenses in supplying any
exhibit.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eric D. Kogan
-----------------------------------
Eric D. Kogan
Chairman of the Board
Dated: October 25, 2000
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Appendix A
MCM CAPITAL GROUP, INC.
1999 EQUITY PARTICIPATION PLAN
AMENDED
1. PURPOSE
The purpose of the 1999 Equity Participation Plan (the "Plan") of MCM
Capital Group, Inc. (the "Company") is to promote the interests of the Company
and its stockholders by (i) securing for the Company and its stockholders the
benefits of the additional incentive inherent in owning stock of the Company by
selected officers, directors, and employees of, and key consultants to, the
Company and its subsidiaries and affiliates, as defined in Section 4 ("Eligible
Participants"), and who are important to the success and growth of the business
of the Company and its subsidiaries, and (ii) assisting the Company to secure
and retain the services of such persons. The Plan provides for granting such
persons options ("Options") for the purchase of shares of the Company's common
stock, par value $0.01 per share (the "Shares").
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
("Board") or a committee or subcommittee of the Board as may be designated by
the Board, upon the affirmative vote of at least two-thirds of the directors
then in office, to administer the Plan (the "Committee"). If the Board appoints
a Committee, the Committee will consist of at least two individuals, each of
whom qualifies as (i) a "non-employee director" under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and (ii) an "outside
director" under Code Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Code") and the regulations issued thereunder to the extent Rule 16b-3
and Code Section 162(m apply to the Company and the Plan; however, the fact that
a Committee member shall fail to qualify under either of the foregoing
requirements shall not invalidate any award that is otherwise validly made under
the Plan. Reference to the Committee will refer to the Board if the Board does
not appoint a Committee.
The members of the Committee may be changed at any time and from time
to time in the discretion of the Board. Subject to the limitations and
conditions hereinafter set forth, the Committee shall have authority to grant
Options hereunder, to determine the number of Shares for which each Option shall
be granted and the Option price or prices and to determine any conditions
pertaining to the exercise or to the vesting of each Option. The Committee shall
have full power to construe and interpret the Plan and any Plan agreement
executed pursuant to the Plan to establish and amend rules for its
administration, and to establish in its discretion terms and conditions
applicable to the exercise of Options. The determination of the Committee on all
matters relating to the Plan or any Plan agreement shall be conclusive. No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any award hereunder.
3. SHARES SUBJECT TO THE PLAN
The Shares to be transferred or sold pursuant to the exercise of
Options granted under the plan shall be authorized Shares, and may be issued
Shares reacquired by the Company and held in its treasury or may be authorized
but unissued Shares. Subject to the provisions of Section 11 hereof (relating to
adjustments in the number and classes or series of Shares to be delivered
pursuant to the Plan), the maximum aggregate number of Shares to be delivered on
the exercise of Options shall be 1,300,000.
<PAGE> 28
Notwithstanding any provision in the Plan to the contrary, and subject to the
adjustment in Section 11, the maximum number of Shares with respect to one or
more Options that may be granted to any employee under the Plan during any
fiscal year of the Company is 500,000.
If an Option expires or terminates for any reason during the term of
the Plan and prior to the exercise in full of such Option, the number of Shares
previously subject to but not delivered under such Option shall be available for
the grant of Options thereafter.
4. ELIGIBILITY
Options may be granted from time to time to selected Eligible
Participants of the Company or any subsidiary or affiliate, as defined in this
Section 4. From time to time, the Committee shall designate those Eligible
Participants who will be granted Options and in connection therewith, the number
of Shares to be covered by each grant of Options. Persons granted Options are
referred to hereinafter as "optionees." Nothing in the Plan or in any grant of
Options pursuant to the Plan, shall confer on any person any right to continue
in the employ of the Company or any of its subsidiaries or affiliates, nor in
any way interfere with the right of the Company or any of its subsidiaries or
affiliates to terminate the person's employment at any time.
The term "subsidiary" shall mean, at the time of reference, any
corporation organized or acquired (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of reference, each of
the corporations (including the Company) 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.
The term "affiliate" shall mean any person or entity which, at the time of
reference, directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the Company.
PROVISIONS RELATING TO OPTIONS
5. CHARACTER OF OPTIONS
Options granted hereunder shall not be incentive stock Options as such
term is defined in Section 422 of the Code. Options granted hereunder shall be
"non-qualified" stock options subject to the provisions of Section 83 of the
Code.
If an Option granted under the Plan is exercised by an optionee, then,
at the discretion of the Committee, the optionee may receive a replacement or
reload Option hereunder to purchase a number of Shares equal to the number of
Shares utilized to pay the exercise price and/or withholding taxes in the Option
exercise, with an exercise price equal to the "fair market value" (as defined in
Section 7 of the Plan) of a Share on the date such replacement or reload Option
is granted, and, unless the Committee determines otherwise, with all other terms
and conditions (including the date or dates of which the Option shall become
exercisable and the term of the Option) identical to the terms and conditions of
the Option with respect to which the reload Option is granted.
6. STOCK OPTION AGREEMENT
Each Option granted under the Plan shall be evidenced by a written
stock option agreement, which shall be executed by the Company and by the person
whom the Option is granted. The agreement shall contain such terms and
provisions, not inconsistent with the Plan, as shall be determined by the
Committee.
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7. OPTION EXERCISE PRICE
The price per Share to be paid by the optionee on the date an Option is
exercised as determined by the Committee shall not be less than 50 percent of
the fair market value of one Share on the date the Option is granted.
For purposes of this Plan, the "fair market value" as of any date in
respect of any Shares shall mean the closing price per Share on such date. The
closing price for such day shall be (a) as reported on the composite
transactions tape for the principal exchange on which the Shares are listed or
admitted to trading (the "Composite Tape"), or if the Shares are not reported on
the Composite Tape or if the Composite Tape is not in use, the last reported
sales price regular way on the principal national securities exchange on which
such Shares shall be listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of such Shares have been traded
during the 30 consecutive trading days commencing 45 trading days before such
date), or, in either case, if there is no transaction on any such day, the
average of the bid and asked prices regular way of such day, or (b) if such
Shares are not listed on any national securities exchange, the closing price, if
reported, or, if the closing price is not reported, the average of the closing
bid and asked prices, as reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). If on any such date the Shares
are not quoted by any such exchange or NASDAQ, the fair market value of the
Shares on such date shall be determined by the Committee based upon the advice
of the Company's independent auditors or other independent/disinterested third
party appraiser selected by the Committee in its sole discretion, which
determination by the Committee shall be binding and conclusive. In no event
shall the fair market value of any share be less than its par value.
8. OPTION TERM
The period after which Options granted under the Plan may not be
exercised shall be determined by the Committee with respect to each Option
granted, but may not exceed ten years from the date on which the Option is
granted, subject to the third paragraph of Section 9 hereof.
9. EXERCISE OF OPTIONS
The time or times at which or during which Options granted under the
Plan may be exercised, and any conditions pertaining to such exercise or to the
vesting in the optionee of the right to exercise Options, shall be determined by
the Committee in its sole discretion. Subsequent to the grant of an Option which
is not immediately exercisable in full, the Committee, at any time before
complete termination of such Option, may accelerate or extend the time or times
at which such Option may be exercised in whole or in part.
Except as otherwise provided in this paragraph, no Option granted under
the Plan shall be assignable or otherwise transferable by the optionee, either
voluntarily or involuntarily, except by will or the laws of descent and
distribution and an Option shall be exercisable during the optionee's lifetime
only by the optionee. The Committee may in the applicable Option agreement or at
any time thereafter in an amendment to an Option agreement provide that Options
granted hereunder may be transferred with or without consideration by the
optionee, subject to such rules as the Committee may adopt to preserve the
purposes of the Plan, (i) pursuant to a domestic relations order, or (ii) to one
or more of:
(x) the optionee's spouse, children, or grandchildren (including
adopted children, stepchildren, and grandchildren)
(collectively, the "Immediate Family");
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<PAGE> 30
(y) a trust solely for the benefit of the optionee and/or his or
her Immediate Family;
(z) a partnership or limited liability company, the partners or
members of which are limited to the optionee and his or her
Immediate Family, or
(zz) any other person or entity authorized by the Committee.
(each transferee is hereafter referred to as a "Permitted Transferee");
provided, however, that the optionee gives the Committee advance
written notice describing the terms and conditions of the proposed
transfer and the Committee notifies the optionee in writing that such a
transfer would comply with the requirements of the Plan, any applicable
Option agreement and any amendments thereto.
The terms and conditions of any Option transferred in accordance with the
immediately preceding sentence shall apply to the Permitted Transferee and any
reference in the Plan or in an Option agreement or any amendment thereto an
optionee or grantee shall be deemed to refer to the Permitted Transferee, except
that (a) Permitted Transferees shall not be entitled to transfer any Options,
other than by will or the laws of descent and distribution; (b) Permitted
Transferees shall not be entitled to exercise any transferred Options unless
there shall be in effect a registration statement on an appropriate form
covering the shares to be acquired pursuant to the exercise of such Option if
the Committee determines that such a registration statement is necessary or
appropriate; (c) the Committee or the Company shall not be required to provide
any notice to a Permitted Transferee, whether or not such notice is or would
otherwise have been required to be given to the optionee under the Plan or
otherwise; and (d) the events of termination of employment by, or services to,
the Company under clause (b) of the third paragraph of Section 9 hereof shall
continue to be applied with respect to the original optionee, following which
the Options shall be exercisable by the Permitted Transferee only to the extent,
and for the periods, specified in Section 9.
Except as otherwise determined by the Committee at the time of grant or
thereafter, the unexercised portion of any Option granted under the Plan shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of the following:
(a) the expiration of the period of time determined by the
Committee upon the grant of such Option; provided that in no
event shall such period exceed ten years from the date on
which such Option was granted;
(b) the termination of the Optionee's employment by, or services
to, the Company and its subsidiaries if such termination
constitutes or is attributable to a breach by the optionee of
an employment or consulting agreement with the Company or any
of its subsidiaries, or if the optionee is discharged or if
his or her services are terminated for cause; or
(c) the expiration of such period of time or the occurrence of
such event or events as the Committee in its discretion may
provide upon the granting thereof.
The Committee shall have the right to determine what constitutes cause
for discharge or termination of services, whether the optionee has been
discharged or his or her services terminated for cause and the date of such
discharge or termination of services, and such determination of the Committee
shall be final and conclusive.
Except as otherwise provided by the Committee at the time of grant or
thereafter, in the event of the death of an optionee, Options exercisable by the
optionee at the time of his or her death may be exercised within one year
thereafter by the person or persons to whom the optionee's rights under the
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<PAGE> 31
Options shall pass by will or by the applicable law of descent and distribution.
However, in no event may any Option be exercised by anyone after the earlier of
(a) the final date upon which the optionee could have exercised it had the
optionee continued in the employment of the Company or its subsidiaries to such
date, or (b) one year after the optionee's death.
An Option may be exercised only by a notice in writing complying in all
respects with the applicable stock option agreement. Such notice may instruct
the Company to deliver Shares due upon the exercise of the Option to any
registered broker or dealer approved by the Company (an "approved broker") in
lieu of delivery to the optionee. Such instructions shall designate the account
into which the Shares are to be deposited. The optionee may tender such notice,
properly executed by the optionee, together with the aforementioned delivery
instructions, to an approved broker. The purchase price of the Shares as to
which an Option is exercised shall be paid in cash or by check, except that the
Committee may, in its discretion, allow such payment to be made by surrender of
unrestricted Shares that have been held by the Optionee for at least six months
(at their fair market value on the date of exercise), or by a combination of
cash, check and unrestricted Shares.
Payment in accordance with this Section 9 may be deemed to be
satisfied, if and to the extent provided in the applicable option agreement, by
delivery to the Company of an assignment of a sufficient amount of the proceeds
from the sale of Shares acquired upon exercise to pay for all of the Shares
acquired upon exercise and an authorization to the broker or selling agent to
pay that amount to the Company, which sale shall be made at the optionee's
direction at the time of exercise, provided that the Committee may require the
optionee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16 of the 1934 Act, and does not require the consent,
clearance or approval of any governmental or regulatory body (including any
securities exchange or similar self-regulatory organization).
Wherever in this Plan or any option agreement an optionee is permitted
to pay the exercise price of an Option or taxes relating to the exercise of an
Option by delivering Shares, the optionee may, subject to procedures
satisfactory to the Committee, satisfy such delivery requirement by presenting
proof of beneficial ownership of such Shares, in which case the Company shall
treat the Option as exercised without further payment and shall withhold such
number of Shares from the Shares acquired by the exercise of the Option (or if
the Option is paid in cash, cash in an amount equal to the fair market value of
such shares on the date of exercise).
The obligation of the Company to deliver Shares upon such exercise
shall be subject to all applicable laws, rules and regulations, and to such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including, among others, such steps as counsel for the Company shall
deem necessary or appropriate to comply with requirements of relevant securities
laws. Such obligation shall also be subject to the condition that the Shares
reserved for issuance upon the exercise of Options granted under the Plan shall
have been duly listed on any national securities exchange which then constitutes
the principal trading market for the Shares.
GENERAL PROVISIONS
10. STOCKHOLDER RIGHTS
No optionee shall have any of the rights of a stockholder with respect
to any Shares unless and until he or she has exercised his or her Option with
respect to such Shares and has paid the full purchase price therefor.
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<PAGE> 32
11. CHANGES IN SHARES
In the event of (i) any split, reverse split, combination of shares,
reclassification, recapitalization or similar event which involves, affects or
is made with regard to any class or series of Shares which may be delivered
pursuant to the Plan ("Plan Shares"), (ii) any dividend or distribution on Plan
Shares payable in Shares, or (iii) a merger, consolidation or other
reorganization as a result of which Plan Shares shall be increased, reduced or
otherwise changed or affected, then in each such event the Committee shall, to
the extent it deems it to be consistent with such event and necessary or
equitable to carry out the purposes of the Plan, appropriately adjust (a) the
maximum number of Shares and the classes of series of such Shares which may be
delivered pursuant to the Plan, (b) the number of Shares and the classes or
series of Shares subject to outstanding Options, (c) the Option price per Share
subject to outstanding Options, and (d) any other provisions of the Plan,
provided, however, that (i) any adjustments made in accordance with clauses (b)
and (c) shall make any such outstanding Option as nearly as practicable,
equivalent to such Option immediately prior to such change and (ii) no such
adjustment shall give any optionee additional benefits under any outstanding
Option.
12. REORGANIZATION
In the event that the Company is merged or consolidated with another
corporation, or in the event that all or substantially all of the assets of the
Company are acquired by another corporation, or in the event of a reorganization
or liquidation of the Company (each such event being hereinafter referred to as
a "Reorganization Event") or in the event that the Board shall propose that the
Company enter into a Reorganization Event, then the Committee may in its
discretion take any or all of the following actions: (i) by written notice to
each optionee, provide that his or her Options will be terminated unless
exercised within thirty days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice (without
acceleration of the exercisability of such Options); and (ii) advance the date
or dates upon which any or all outstanding Options shall be exercisable.
Whenever deemed appropriate by the Committee, any action referred to in
subparagraph (i) above may be made conditional upon the consummation of the
applicable Reorganization Event. The provisions of this Section 12 shall apply
notwithstanding any other provision of the Plan.
13. WITHHOLDING TAXES
Whenever Shares are to be delivered under the Plan pursuant to an
award, the Committee may require as a condition of delivery that the optionee or
grantee remit an amount sufficient to satisfy all federal, state and other
governmental holding tax requirements related thereto. Whenever cash is to be
paid under the Plan, the Company may, as a condition of its payment, deduct
therefrom, or from any salary or other payments due to the optionee, an amount
sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto or to the delivery of any Shares under the Plan.
Notwithstanding any provision of this Plan to the contrary, in connection with
the transfer of an Option to a Permitted Transferee pursuant to Section 9 of the
Plan, the optionee shall remain liable for any withholding taxes required to be
withheld upon the exercise of such Option by the Permitted Transferee.
Without limiting the generality of the foregoing, (i) the Committee may
permit an optionee to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted Shares owned by the optionee for at
least six months (or such other period as the Committee may determine) having a
fair market value (determined as of the date of such delivery by the optionee)
equal to all or part of the amount to be so withheld, provided that the
Committee may require, as a condition of accepting any such delivery, the
optionee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the optionee incurring any
liability under Section 16(b) of the 1934 Act; and
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(ii) the Committee may permit any such delivery to be made by withholding Shares
from the Shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed the
date such award was exercised); provided that such withholding shall be based on
the minimum statutory withholding rates for federal and state purposes,
including payroll taxes, that are applicable to such supplemental taxable
income.
14. AMENDMENT AND DISCONTINUANCE
The Board may amend, alter, suspend, discontinue, or terminate the Plan
or any portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation, or termination shall be made without stockholder
approval if such approval is necessary to comply with any tax or regulatory
requirement applicable to the Plan; and provided further that any such
amendment, alteration, suspension, discontinuance, or termination that would
impair the rights of any optionee or any holder or beneficiary of any Option
theretofore granted shall not to that extent be effective without the consent of
the affected optionee, holder, or beneficiary.
15. APPLICABLE LAWS
The obligation of the Company to deliver Shares shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be deemed appropriate by the Committee, including, among others,
such steps as counsel for the Company shall deem necessary or appropriate to
comply with requirements of relevant securities laws. Such obligation shall also
be subject to the condition that the Shares reserved for issuance upon the
exercise of Options granted under the Plan shall have been duly listed on any
national securities exchange which then constitutes the principal trading market
for the Shares.
16. GOVERNING LAWS
The Plan shall be applied and construed in accordance with and governed
by the law of the State of Delaware, to the extent such law is not superseded by
or inconsistent with Federal law.
17. EFFECTIVE DATE AND DURATION OF PLAN
The Plan has been approved by the stockholders of the Company as of
June 21, 1999, and shall become effective upon the closing (the "Closing") of
the initial public offering of the Company's Shares pursuant to Registration
Statement No. 333-77483 filed with the Securities and Exchange Commission. The
term during which Options may be granted under the Plan shall expire on the
tenth anniversary of the Closing.
18. AMENDMENTS TO AGREEMENTS
Notwithstanding any other provision of the Plan, the Committee may
amend the terms of any agreement entered into in connection with any award
granted pursuant to the Plan, provided that the terms of such amendment are not
inconsistent with the terms of the Plan.
7
<PAGE> 34
MCM CAPITAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MCM CAPITAL GROUP, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder(s) of MCM CAPITAL GROUP, INC., a
Delaware corporation (the "Company"), hereby acknowledges receipt of
the Notice and Proxy Statement for the Annual Meeting of Stockholders
dated October 30, 2000, and hereby appoint(s) Carl C. Gregory III or J.
Brandon Black, and each of them, proxies and attorneys-in-fact, each
with full power of substitution, on behalf and in the name of the
undersigned at the Annual Meeting of Stockholders of the Company, to be
held at the offices of Squire, Sanders & Dempsey L.L.P., 350 Park
Avenue, New York, New York 10022, on December 14, 2000 at 10:00 a.m.,
local time, and at any and all adjournments or postponements thereof,
and to vote all shares of Common Stock held by the undersigned, with
all powers that the undersigned would possess if personally present, on
each of the matters referred to below.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
This proxy revokes any and all other proxies heretofore given by the
undersigned.
1. PROPOSAL NO. 1: Election of Directors
Nominees:
Carl C. Gregory, III Eric D. Kogan Peter W. May
James D. Packer Nelson Peltz Robert M. Whyte
[__] FOR [__] WITHHELD
[__]____________________________________________
For all nominees except as noted above
2. PROPOSAL NO. 2: To adopt the Amendment to the 1999 Equity Participation
Plan to increase the number of shares of Common Stock available for
grant under the plan from 250,000 to 1,300,000.
[__] FOR [__] AGAINST [__] ABSTAIN
3. PROPOSAL NO. 3: To adopt the Amendment to the 1999 Equity Participation
Plan to increase the number of options to purchase common stock which
may be granted to any given employee during any fiscal year from
125,000 to 500,000.
[__] FOR [__] AGAINST [__] ABSTAIN
<PAGE> 35
4. PROPOSAL NO. 4: To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending December
31, 2000.
[__] FOR [__] AGAINST [__] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTLY BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR
DIRECTOR NAMED IN PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3 AND FOR
PROPOSAL 4. IT WILL ALSO BE VOTED IN THE DISCRETION OF THE PROXYHOLDERS
ON ANY OTHER MATTER OF BUSINESS PROPERLY COMING BEFORE THE MEETING. IN
THE EVENT THAT ANY NOMINEE FOR DIRECTOR IS UNABLE OR DECLINES TO SERVE
AS A DIRECTOR, THIS PROXY WILL BE VOTED FOR ANY NOMINEE WHO SHALL BE
DESIGNATED BY THE BOARD OF DIRECTORS.
Dated: _________ ___, 2000 Stockholder Name:_______________________
Please print or type your name in the
space above as it appears on your stock
certificate. When shares are held in
common or in joint tenancy, both should
sign. When signing as an attorney,
executor, administrator, trustee,
guardian or in a fiduciary capacity,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized person. If a partnership,
please sign in partnership name by an
authorized person.
Signatures:
________________________________________
________________________________________
________________________________________
Please return by promptly marking, signing, dating and returning proxy
to the corporate offices of
MCM CAPITAL GROUP, INC.
5775 Roscoe Ct.
San Diego, California 92123
Or by faxing the same to: (858) 309-6961; Attention: Secretary
I will _______ Will not __________ attend the Meeting.
2
