<PAGE>
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
AMRESCO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
Notes:
<PAGE>
AMRESCO, INC.
1845 WOODALL RODGERS FREEWAY
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
---------------------
TO THE STOCKHOLDERS OF AMRESCO, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AMRESCO,
INC. (formerly known as BEI Holdings, Ltd.) (the "Company") will be held at the
Dallas Museum of Art, 1717 North Harwood, Dallas, Texas, on Wednesday, May 10,
1995, at 10 a.m., Central Time, for the following purposes:
1. To elect three (3) directors for a three-year term;
2. To consider and vote upon a proposal to approve certain amendments to
the 1993 Key Individual Stock Option Plan;
3. To consider and vote upon a proposal to approve the 1995 Employee Stock
Purchase Plan;
4. To consider and vote upon a proposal to approve the 1995 Stock Option
and Award Plan;
5. To consider and vote upon a proposal to approve the Annual Incentive
Plan; and
6. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 15, 1995 will
be entitled to notice of and to vote at the Annual Meeting.
A proxy card is enclosed in the pocket on the front of the envelope in which
these materials were mailed to you. Please fill in, date and sign the proxy card
and return it promptly in the enclosed postage-paid return envelope. If you
attend the meeting, you may, if you wish, withdraw your proxy and vote in
person.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1994 is enclosed.
By Order of the Board of Directors
L. Keith Blackwell
GENERAL COUNSEL AND SECRETARY
Dallas, Texas
April 20, 1995
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY SO THAT YOUR VOTE MAY BE RECORDED
AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE>
AMRESCO, INC.
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is furnished to stockholders of AMRESCO, INC. (formerly
known as BEI Holdings, Ltd.) (the "Company") in connection with the solicitation
of proxies by the Company's Board of Directors for use at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Time, on May 10, 1995, at the
Dallas Museum of Art, 1717 North Harwood, Dallas, Texas (the "Annual Meeting"),
and at any adjournments thereof. The Annual Meeting is being held for the
following purposes:
(1) To elect three (3) directors for a three-year term;
(2) To consider and vote upon a proposal to approve certain amendments to
the 1993 Key Individual Stock Option Plan;
(3) To consider and vote upon a proposal to approve the 1995 Employee Stock
Purchase Plan;
(4) To consider and vote upon a proposal to approve the 1995 Stock Option
and Award Plan;
(5) To consider and vote upon a proposal to approve the Annual Incentive
Plan; and
(6) To transact such other business as may properly come before the meeting.
The date of this Proxy Statement is April 20, 1995. This Proxy Statement is
first being mailed to the Company's stockholders on or about such date.
The Company's principal offices are located at 1845 Woodall Rodgers Freeway,
Dallas, Texas 75201. Its telephone number is (214) 953-7700.
VOTING AT THE MEETING
Only holders of record of the Company's common stock, par value $.05 per
share (the "Common Stock"), outstanding at the close of business on March 15,
1995 (the "record date") are entitled to notice of and to vote at the Annual
Meeting and at any adjournment thereof. As of the close of business on the
record date, 23,816,730 shares of Common Stock were outstanding and entitled to
vote at the Annual Meeting. Unless otherwise indicated, all references herein to
percentages of outstanding shares of Common Stock are based on 23,816,730 shares
outstanding. Each share of Common Stock is entitled to one (1) vote.
The presence, in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
in determining whether a quorum is present. The affirmative vote of a plurality
of the holders of the shares of Common Stock present, in person or represented
by proxy, at the Annual Meeting will be necessary to elect the nominees for
director listed herein. The affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting will be required to approve each of the other proposals presented
at the Annual Meeting. Abstentions and broker non-votes will have no effect
(other than for quorum purposes) on the election of the nominees for director or
the approval of any of the other proposals. An automated system administered by
the Company's transfer agent will tabulate the votes cast.
All shares of Common Stock represented by properly executed and unrevoked
proxies will be voted at the Annual Meeting in accordance with the direction on
the proxies. IF NO DIRECTION IS INDICATED, THE SHARES WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES LISTED HEREIN, AND "FOR" EACH OF THE PROPOSALS TO
APPROVE THE AMENDMENTS TO THE 1993 KEY INDIVIDUAL STOCK OPTION PLAN, THE 1995
STOCK OPTION AND
1
<PAGE>
AWARD PLAN AND THE ANNUAL INCENTIVE PLAN. The Company does not know of any
matters, other than those described in the Notice of Annual Meeting, which will
come before the Annual Meeting. If any other matters are properly presented for
action at the Annual Meeting, the persons named in the proxies and acting
thereunder will have discretion to vote on such matters in accordance with their
best judgment.
Certain stockholders of the Company (Gerald E. Eickhoff, James P. Cotton,
Jr., CGW Southeast Partners I, L.P. and CGW Southeast Partners II, L.P.) are
parties to a voting agreement pursuant to which they have agreed to vote in
favor of the nominees for director named in this proxy statement. See OWNERSHIP
OF SECURITIES. As of the record date, such stockholders collectively held
approximately 45% of the Common Stock outstanding.
A stockholder of the Company who executes and returns a proxy has the power
to revoke it at any time before it is voted. A stockholder who wishes to revoke
a proxy can do so by executing a later dated proxy relating to the same shares
and by delivering it to the Secretary of the Company prior to the vote at the
Annual Meeting, by giving written notice of the revocation to the Secretary of
the Company prior to the vote at the Annual Meeting or by appearing in person at
the Annual Meeting and voting in person the shares to which the proxy relates.
All written notices of revocation and other communications relating to the
revocation of proxies should be addressed as follows: AMRESCO, INC., 1845
Woodall Rodgers Freeway, Dallas, Texas 75201, Attention: Secretary.
PROXY SOLICITATION EXPENSES
The Company will bear the cost of soliciting its proxies, including the
expenses of distributing its proxy materials. In addition to the use of the
mail, proxies may be solicited by personal interview, telephone or telegram by
directors, officers, employees and agents of the Company who will receive no
additional compensation for doing so. The Company will reimburse brokers,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in forwarding proxy materials to the beneficial owners of the
Common Stock held by them as stockholders of record.
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the Common
Stock owned on March 15, 1995 by: (i) each person who is known by management to
be the beneficial owner of more than 5% of the Common Stock as of such date;
(ii) each of the Company's directors; (iii) the individuals named in the Summary
Compensation Table; and (iv) all directors and executive officers of the Company
as a group.
Except as otherwise indicated, all shares shown in the table below are held
with sole voting and investment power. The Percent of Total Shares Owned column
represents the percentage that the named person or group would beneficially own
if such person or group, and only such person or group, exercised all currently
exercisable options held by him, her or it.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL TOTAL SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OWNED
- -------------------------------------------------------- -------------- ------------
<S> <C> <C>
CGW Southeast Partners I, L.P. (1)(2) .................. 5,860,248 24.9%
12 Piedmont Center, Suite 210
Atlanta, Georgia 30305
CGW Southeast Partners II, L.P. (1)(2) ................. 3,225,918 13.7%
12 Piedmont Center, Suite 210
Atlanta, Georgia 30305
Gerald E. Eickhoff (1) ................................. 704,350(3) 3.0%
125 Clairmont Road, Suite 500
Decatur, Georgia 30030
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL TOTAL SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OWNED
- -------------------------------------------------------- -------------- ------------
<S> <C> <C>
James P. Cotton, Jr. (1) ............................... 964,636(4) 4.10%
Two Concourse Parkway, Suite 650
Atlanta, Georgia 30328
Robert L. Adair III..................................... 490,622(5) 2.0%
Richard L. Cravey....................................... (2) --
William S. Green........................................ (2) --
Amy J. Jorgensen........................................ 0 *
Robert H. Lutz, Jr...................................... 93,572(6) *
John J. McDonough....................................... 5,000 *
Bruce W. Schnitzer...................................... 143,000(7) *
Douglas R. Urquhart..................................... 231,643(8) *
Donnie M. Skidmore...................................... 52,145(9) *
Richard D. Fairman...................................... 59,850(10) *
All executive officers and directors as a group (a total
of 17 persons)......................................... 12,045,612(11) 48.9%
<FN>
- ------------------------
* Less than 1%
(1) CGW Southeast Partners I, L.P. ("CGWI") and CGW Southeast Partners II, L.P.
("CGWII," and collectively with CGWI, "CGW") and Messrs. Eickhoff and
Cotton entered into a Voting Agreement dated December 30, 1993 pursuant to
which each of them agreed to vote for the nominees for directors designated
by CGW and by Messrs. Eickhoff and Cotton, respectively. As a result of
such agreement, each may be deemed to beneficially own all of the
10,755,152 shares subject to the agreement. The figures in the table
reflect direct ownership of shares only.
(2) Each of Messrs. Cravey and Green, as well as Edwin A. Wahlen, Jr., may also
be deemed to beneficially own the 5,860,248 shares and 3,225,918 shares
held of record by CGWI and CGWII, respectively, because they are managing
directors of the corporate general partner of each such limited partnership
and therefore share voting and investment power with respect to the shares
owned of record by it. In addition, each such limited partnership may be
deemed to beneficially own the shares owned by the other as a result of
such common control.
(3) Includes 54,064 shares allocated to Mr. Eickhoff's account in a 401(k)
plan.
(4) Includes 156,803 shares allocated to Mr. Cotton's account in the Company's
401(k) plan and 370,000 shares held in a charitable trust in which Mr.
Cotton retains a beneficial interest.
(5) Includes currently exercisable options to purchase 283,455 shares and
16,970 restricted shares with respect to which he has voting rights.
(6) Includes currently exercisable options to purchase 63,512 shares which were
granted subject to approval by the stockholders of the amendments to the
1993 Key Employee Stock Option Plan described in Item 2 herein and 30,060
restricted shares with respect to which he has voting rights.
(7) Includes currently exercisable options to purchase 110,000 shares.
(8) Includes currently exercisable options to purchase 122,700 shares and 7,000
restricted shares with respect to which he has voting rights.
(9) Currently exercisable options to purchase such shares.
(10) Includes currently exercisable options to purchase 27,775 shares and 7,000
restricted shares with respect to which he has voting rights.
(11) Includes currently exercisable options to purchase 793,978 shares and
96,970 restricted shares with respect to which they have voting rights.
</TABLE>
3
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of the Common Stock, to file with the Securities
and Exchange Commission certain reports of beneficial ownership of the Common
Stock. Based solely on copies of such reports furnished to the Company and
written representations that no other reports were required, the Company
believes that all applicable Section 16(a) filing requirements were complied
with by its directors, officers and 10% stockholders during the last fiscal
year, except that Messrs. Eickhoff and Cotton filed reports late.
ELECTION OF DIRECTORS
(ITEM 1)
INFORMATION CONCERNING DIRECTORS
At the Annual Meeting, stockholders will be asked to elect three (3) Class
II directors to serve as members of the Company's Board of Directors for terms
of three (3) years or until their successors are duly elected and qualified. The
Board of Directors recommends that the three (3) nominees named in Class II
Directors below (Messrs. Cotton and Green and Ms. Jorgensen) be elected to serve
as Class II directors. Each of the Class II nominees will serve as a director
for a three (3) year term ending at the 1998 annual meeting of stockholders, or
until his or her successor has been duly elected and qualified. The persons
named in the proxy intend to vote the proxies for the election of the Class II
nominees named below. If any nominee refuses or becomes unable to serve as a
director (which is not now anticipated), the persons named as proxies reserve
full discretion to vote for such other person as may be nominated.
The following table sets forth certain information, as of March 15, 1995,
concerning each nominee for election as a Class II director and each other
director. All positions and offices with the Company and principal positions
with the Company's subsidiaries held by each such person are also indicated.
There are no family relationships between any of the directors, nor between any
of them and any executive officers of the Company. For information concerning
the directors' ownership of Common Stock, see OWNERSHIP OF SECURITIES above.
The Class I and Class III directors are not being elected at this time.
Their terms will expire at the annual meeting of stockholders held in the year
indicated below.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR YEAR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
- -------------------------- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
CLASS II DIRECTORS
+*James P. Cotton, Jr. Chairman of the Board and Chief Executive Officer of USBA 1986 1995
(55) Holdings, Ltd., a provider of products and services to financial
institutions (since 1990); Chairman of the Board of the Company
(1986 - December 1993).
@*William S. Green Managing Director of Cravey, Green & Wahlen Incorporated, a 1993 1995
(52) private risk capital investment firm (since 1985), its
investment management affiliate, CGW Southeast Management
Company (since 1991) and its affiliates, CGW Southeast I, Inc.
(the general partner of CGW Southeast Partners I, L.P.) and CGW
Southeast II, Inc. (the general partner of CGW Southeast
Partners II, L.P.) (since 1991); Director of DENTSPLY
International, Inc. (since 1987); Director of Cameron Ashley,
Inc. (since 1994).
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR YEAR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
- -------------------------- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
+Amy J. Jorgensen President of The Jorgensen Company, a consultant for real estate 1994 1995
(41) strategy and finance (since 1992); Managing Director in the Real
Estate Department of Morgan Stanley & Co. Incorporated (1986 -
February 1992).
CLASS III DIRECTORS
@*Richard L. Cravey Chairman of the Board and Chief Executive Officer of the Company 1993 1996
(50) (December 1993 - May 1994); Chairman of the Board of AMRESCO
Holdings, Inc., which was acquired by the Company in December
1993 (1992 - December 1993); Founder and Managing Director of
Cravey, Green & Wahlen Incorporated (since 1984) and Managing
Director of its investment management affiliate, CGW Southeast
Management Company (since 1991), and its affiliates, CGW
Southeast I, Inc. (the general partner of CGW Southeast Partners
I, L.P.) and CGW Southeast II, Inc. (the general partner of CGW
Southeast Partners II, L.P.) (since 1991); Director of
Commercial Bancorp of Georgia (since 1988); Director of
Commercial Bancorp of Gwinnett (since 1990); Director of Cameron
Ashley, Inc. (since 1994).
@*Gerald E. Eickhoff Private investor (since January 1994); President and Chief 1986 1996
(48) Executive Officer of the Company (1986 - December 1993).
*Robert H. Lutz, Jr. Chairman of the Board and Chief Executive Officer of the Company 1994 1996
(45) (since May 1994); President of Allegiance Realty, a real estate
management company (November 1991 - May 1994); Executive Vice
President of Cousins Properties (February 1991 - October 1991);
President or Senior Vice President of The Landmark Group (1980 -
October 1991).
CLASS I DIRECTORS
Robert L. Adair III President and Chief Operating Officer of the Company (since 1990 1997
(51) December 1993); Executive Vice President of the Company (1989 -
December 1993).
+John J. McDonough Vice Chairman (since 1993) and Chief Executive Officer (1993 - 1993 1997
(58) February 1995) of DENTSPLY International, Inc., a manufacturer
of dental supplies, dental equipment and medical x-ray products;
Chairman of the Board (1992 - 1993), Director (1983 - 1992),
Chief Executive Officer (1983 - 1993), President (1983 - 1991)
and Treasurer (1983 - 1989) of GENDEX Corporation, a
manufacturer of dental equipment and medical x-ray products,
which merged with DENTSPLY in June 1993; Senior Vice President,
Finance (1981 - 1983) and Director (since 1992) of Newell Co., a
New York Stock Exchange-listed manufacturer of products for the
do-it-yourself hardware and housewares market.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR YEAR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
- -------------------------- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
@Bruce W. Schnitzer Vice Chairman of the Board of the Company (1986 - December 1986 1997
(50) 1993); Chairman of Wand Partners Inc., an investment advisory
company (since 1987); Director of Life Partners Group, Inc.
(since 1990); Director of Penncorp Financial Group, Inc. (since
1990).
<FN>
- ------------------------
* Member of Executive Committee
+ Member of Audit Committee
@ Member of Compensation Committee
</TABLE>
BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held five (5) meetings during fiscal 1994. All
directors attended at least 75% of the total number of meetings of the Board and
committees on which they served. The Board of Directors has an Executive
Committee, an Audit Committee and a Compensation Committee. The Company has no
standing nominating committee or other standing committee performing similar
functions. Members of these committees generally are elected annually at the
regular meeting of the Board of Directors immediately following the Annual
Meeting. The Company's Bylaws provide that the Executive Committee and the
Compensation Committee will be composed of at least two (2) directors nominated
by Messrs. Cotton and Eickhoff and at least two (2) directors nominated by CGW
Southeast Partners I, L.P. and CGW Southeast Partners, II, L.P.
The Executive Committee presently consists of Messrs. Cotton, Cravey
(Chairman), Eickhoff, Green and Lutz. Subject to certain limitations specified
by the Company's Bylaws and the Delaware General Corporation Law, the Executive
Committee is authorized to exercise the powers of the Board of Directors when
the Board is not in session. The Executive Committee held four (4) meetings
during 1994.
The Audit Committee presently consists of Messrs. Cotton and McDonough
(Chairman) and Ms. Jorgensen. The Audit Committee held two (2) meetings during
fiscal 1994. The functions of the Audit Committee include recommending to the
Board of Directors which firm of independent public accountants should be
engaged by the Company to perform the annual audit, consulting with the
Company's independent public accountants with regard to the audit plan,
reviewing the presentation of the Company's financial statements, reviewing and
considering the observations of the independent public accountants concerning
internal control and accounting matters during their annual audit, approving
certain other types of professional service rendered by the independent public
accountants and considering the possible effects of such services on the
independence of such public accountants.
The Compensation Committee presently consists of Messrs. Cravey, Eickhoff,
Green and Schnitzer (Chairman). This committee held five (5) meetings during
fiscal 1994. The functions of the Compensation Committee include making
recommendations to the Board regarding compensation for executive officers of
the Company and its subsidiaries.
MANAGEMENT AND REMUNERATION
EXECUTIVE OFFICERS
Set forth below are the names and ages of all executive officers of the
Company as of March 15, 1995. All positions and offices with the Company and
principal positions with the Company's subsidiaries held by each such person are
also indicated. There are no family relationships between any such officers or
between any such officers and any directors. Officers generally are elected
annually for one (1) year terms or until their successors are elected and
qualified. All executive officers are United States citizens.
6
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS
- -------------------------- ------------------------------------------------------------
<S> <C>
Robert H. Lutz, Jr.* Chairman of the Board and Chief Executive Officer of the
(45) Company.
Robert L. Adair III* President and Chief Operating Officer of the Company.
(51)
Barry L. Edwards Executive Vice President, Treasurer and Chief Financial
(47) Officer of the Company (since November 1994); Vice President
and Treasurer of Liberty Corporation, an insurance holding
company (1979 to November 1994).
Kenneth M. Abrams Senior Vice President -- Government Services of the Company
(55) (since January 1994); Executive Vice President of AMRESCO
Holdings, Inc. (since December 1991); Executive Vice
President, NationsBank of Texas (January 1989 to December
1991).
L. Keith Blackwell General Counsel and Secretary of the Company (since January
(54) 1994); General Counsel and Secretary of AMRESCO Holdings,
Inc. (since December 1993); Investments and Consulting (May
1992 to December 1993); Executive Vice President, General
Counsel and Secretary of First Gibraltar Bank, FSB (De-
cember 1988 to May 1992).
Richard D. Fairman Senior Vice President -- Commercial Group of the Company
(46) (since January 1994); Managing Director of Private Sector
Contracts of AMRESCO Holdings, Inc. (December 1992 to
December 1993); Senior Vice President of NationsBank of
Texas (July 1983 to December 1992).
Harold E. Holliday, Jr. Chairman of the Board and Chief Executive Officer of
(47) Holliday Fenoglio, Inc. (since August 1994); President of
Holliday, Fenoglio, Dockerty & Gibson, Inc., a mortgage
banking company (for more than five (5) years prior to
August 1994).
Joseph E. Jernigan Senior Vice President -- Real Estate Group of the Company
(43) (since January 1994); Executive Vice President of BEI Real
Estate Services, Inc. (January 1989 to December 1993).
Ronald B. Kirkland Controller of the Company (since May 1994); Chief Accounting
(50) Officer of the Company (since January 1994); Senior Vice
President and Controller of AMRESCO Holdings, Inc. (since
December 1991); Senior Vice President and Controller of the
Special Asset Division of NationsBank of Texas (August 1988
to December 1991).
Michael N. Maberry President of AMRESCO Capital Corporation (since April 1994);
(51) Shareholder of the law firm of Winstead, Secrest & Minick
(April 1989 to April 1994).
Donnie M. Skidmore Vice President -- Corporate Acquisitions of the Company
(45) (since August 1994); Head of the Company's NationsBank Asset
Management Contract Department (January 1994 to August
1994); Managing Director of AMRESCO-Institutional, Inc.
(December 1992 - January 1994); Executive Vice President of
NationsBank of Texas (August 1988 to December 1992).
Douglas R. Urquhart Senior Vice President -- Business Development and Portfolio
(49) Acquisitions of the Company (since January 1994); President
of BEI Real Estate Services, Inc. and BEI Management, Inc.
(December 1992 - January 1994); President of BEI Asset
Managers, Inc. (January 1989 - January 1994).
<FN>
- ------------------------
*Messrs. Lutz and Adair are directors of the Company. For additional information
concerning those individuals, see ELECTION OF DIRECTORS (Item 1) -- Information
Concerning Directors above.
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION SUMMARY
The following table provides certain summary information concerning
compensation paid by the Company and its subsidiaries with respect to each of
the last three (3) fiscal years of the Company to or on behalf of Mr. Lutz, the
Company's current Chief Executive Officer, Mr. Cravey, the Company's Chief
Executive Officer until May 1994, and each of the four (4) other most highly
compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------- PAYOUTS
----------------------------------------- RESTRICTED SECURITIES -----------
OTHER ANNUAL STOCK UNDERLYING LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARD(S) ($) OPTIONS (#) PAYOUTS ($)
- ------------------------------ ---- ---------- --------- ---------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 1994 379,176 275,000 -0- -0- 230,000(2) -0-
Chairman of the Board and 1993 -- -- -- -- -- --
Chief Executive Officer (1) 1992 -- -- -- -- -- --
Richard L. Cravey 1994 -0- -0- -0- -0- -0- -0-
Chief Executive Officer (3) 1993 -- -- -- -- -- --
1992 -- -- -- -- -- --
Robert L. Adair III 1994 350,000 275,000 -0- -0- -0- -0-
President and Chief Operating 1993 240,000 393,799 -0- -0- 130,000 -0-
Officer 1992 240,000 493,744 -0- -0- 70,000 -0-
Douglas R. Urquhart 1994 185,000 160,000 -0- -0- -0- -0-
Senior Vice President -- 1993 165,000 167,598 -0- -0- 70,000 -0-
Business Development and 1992 150,000 190,177 -0- -0- 20,000 -0-
Portfolio Acquisitions
Donnie M. Skidmore (4) 1994 170,000 136,000 -0- -0- -0- -0-
Vice President -- 1993 -- -- -- -- -- --
Corporate Acquisitions 1992 -- -- -- -- -- --
Richard D. Fairman (4) 1994 160,000 132,000 -0- -0- -0- -0-
Senior Vice President -- 1993 -- -- -- -- -- --
Commercial Group 1992 -- -- -- -- -- --
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION ($)
- ------------------------------ ----------------
<S> <C>
Robert H. Lutz, Jr. -0-
Chairman of the Board and --
Chief Executive Officer (1) --
Richard L. Cravey -0-
Chief Executive Officer (3) --
--
Robert L. Adair III -0-
President and Chief Operating 500
Officer 500
Douglas R. Urquhart -0-
Senior Vice President -- -0-
Business Development and -0-
Portfolio Acquisitions
Donnie M. Skidmore (4) -0-
Vice President -- --
Corporate Acquisitions --
Richard D. Fairman (4) -0-
Senior Vice President -- --
Commercial Group --
<FN>
- ------------------------------
(1) Mr. Lutz became Chief Executive Officer of the Company in May 1994.
(2) The options granted to Mr. Lutz were granted subject to approval by the
stockholders of the amendments to the 1993 Key Employee Stock Option Plan
described in Item 2 herein.
(3) Mr. Cravey served as Chief Executive Officer of the Company from December
1993 until May 1994. He did not receive any direct compensation from the
Company during fiscal 1994. See COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION below for a description of certain fees paid to two
(2) partnerships controlled by Mr. Cravey.
(4) Messrs. Skidmore and Fairman were employed by AMRESCO Holdings, Inc. prior
to its merger with the Company on December 31, 1993 and therefore received
no compensation from the Company in 1993 and 1992.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally are
made by the Compensation Committee of the Board of Directors. During 1994, Bruce
W. Schnitzer (Chairman), Gerald E. Eickhoff, Richard L. Cravey and William S.
Green served on the Compensation Committee. No member of the Compensation
Committee was employed by the Company during fiscal 1994, except that Mr. Cravey
served as the Company's Chairman and Chief Executive Officer until May 31, 1994.
All decisions by the Compensation Committee relating to the compensation of the
Company's executive officers are reviewed by the full Board, except for
decisions about awards under the Company's stock option plans which are made
solely by the Compensation Committee.
8
<PAGE>
The following addresses the Company's executive officer compensation
policies for 1994. The new stock purchase, stock option and award and incentive
compensation plans included as proposals 3, 4 and 5, respectively, elsewhere
herein reflect certain modifications to the Compensation Committee's executive
compensation policies that are proposed to be implemented commencing with 1995
compensation.
GENERAL. The Company's compensation program is designed to enable the
Company to attract, motivate and retain high quality senior management by
providing a competitive total compensation opportunity based on performance. To
this end, the Company provides for competitive base salaries, annual variable
performance incentives payable in cash for the achievement of financial
performance goals reviewed by the Compensation Committee, and long-term
stock-based incentives which strengthen the mutuality of interests between
senior management and the Company's stockholders.
It is the Company's general intention that the compensation paid to its
executive officers not exceed the present one (1) million dollar maximum
deductible amount set forth in Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). To this end, the amendments to the current stock
option plan and the new stock option and award and incentive compensation plans
included as Proposals 2, 4 and 5, respectively, elsewhere herein are being
presented for the approval of stockholders in part so that certain compensation
payable thereunder will qualify as "performance based" compensation under
Section 162(m) of the Code, which compensation is not subject to the one (1)
million dollar cap. Nevertheless, not all compensation that will be received by
executive officers of the Company will qualify as "performance based"
compensation. For example, base salary is never performance based. In addition,
the grants of restricted stock made to certain executive officers of the Company
in February 1995 will not constitute "performance based" compensation because
such awards will be vested based on the passage of time rather than on any
performance measure. As a result, it is possible that the value of salary, such
restricted stock awards and other non-qualifying compensation could cause an
executive officer's compensation to exceed the one (1) million dollar cap on
deductibility in any particular year.
SALARIES. Richard L. Cravey served as the Chief Executive Officer of the
Company until May 31, 1994. He received no salary or other direct compensation
from the Company for such service. See COMPENSATION COMMITTEE INTERLOCK AND
INSIDER PARTICIPATION below for a description of certain fees paid by the
Company to two (2) partnerships controlled by Mr. Cravey for advisory and
consulting services in connection with corporate finance matters. The base
amounts of such fees ($360,000 per year) were provided for in a written
agreement negotiated and entered into between such partnerships and a subsidiary
of the Company during 1992 and 1993, when such subsidiary was a private company
that had not yet been acquired by the Company.
Robert H. Lutz, Jr. became Chairman and Chief Executive Officer of the
Company on May 31, 1994. Mr. Lutz's salary through May 1997 is provided for in
an employment agreement that was negotiated on an arms'-length basis between the
Company and him prior to his employment. The Company utilized the services of a
nationally-recognized executive recruiting firm to assist in the identification
and engagement of Mr. Lutz. The compensation package provided for in Mr. Lutz's
employment agreement reflects the advice of such recruiting firm with respect to
the compensation package required to secure the services of an individual with
the background and experience of Mr. Lutz, as well as the compensation paid to
top executives of other public companies. Mr. Adair's salary is also set
pursuant to the terms of an employment agreement. The material terms of Mr.
Lutz's and Mr. Adair's employment agreements, including the base salaries of
such officers, are described in "Employment Agreements with Executive Officers,"
below.
Salaries of other executive officers of the Company were determined based
upon the level of responsibility, time with the Company, contribution and
performance of the particular executive officer. Evaluation of these factors was
subjective, and no fixed, relative weights were assigned to the factors
considered.
BONUS COMPENSATION. Through the use of annual bonuses, the Company seeks to
effectively tie executive compensation to Company performance. The Compensation
Committee determined during 1994 that bonuses would be paid to Messrs. Lutz and
Adair, and payments in addition to those described
9
<PAGE>
in "Salaries" above would be made to the partnerships controlled by Messrs.
Cravey and Green, based on the following three (3) factors: (i) market price of
the Company's common stock reaching $10.50 at year end, (ii) the attainment of
the Company's annual earnings goals for 1994 and (iii) the discretion of the
Compensation Committee. The bonuses paid to such individuals and the additional
payments made to such partnerships were approximately 84% of the total possible
payments due to the market price goals not being achieved. The Compensation
Committee based the discretionary element of such bonuses on the financial
performance of the Company and the level of responsibility, time with the
Company, contribution and performance of the particular executive officer, or in
the case of the partnerships controlled by Messrs. Cravey and Green, of the
representatives of such partnerships that provided services to the Company,
which included Messrs. Cravey and Green. Messrs. Cravey and Green did not
participate in the deliberations of the Compensation Committee regarding
payments to the partnerships. The amounts of the bonuses actually paid to
Messrs. Lutz and Adair are reflected in the Summary Compensation Table above and
the additional payments to the partnerships totalled $295,000.
For the remainder of the Company's executive officers, annual bonuses were
determined during 1994 in accordance with the Company's 1994 Incentive Program,
which was adopted in May 1994. Pursuant to this Program, all exempt employees,
including executive officers, were eligible to participate in a bonus pool which
was funded only if the Company met certain earnings targets. Each participant's
individual bonus depended on the Company's evaluation of the individual's
performance. With executive officers, only a small portion if any of the bonus
was automatically earned. All of the executive officers listed in the Summary
Compensation Table received a bonus pursuant to this Program with respect to
services rendered during 1994.
OPTION GRANTS. The Company uses grants of stock options to its key
employees and executive officers to closely align the interests of such
employees and officers with the interests of its stockholders. The Company's
1986 Stock Option Plan, Incentive Stock Option Plan and 1993 Key Individual
Stock Option Plan (collectively, the "Stock Option Plans") are administered by
the Compensation Committee, which determines the persons eligible, the number of
shares subject to each grant, the exercise price thereof and the other terms and
conditions of the option. Only the 1993 Key Individual Stock Option Plan
currently has options available for grant.
Options granted under the Stock Option Plans generally have an exercise
price equal to at least 100% of the market price of the Common Stock on the date
that the option is granted, and the term of any option granted cannot exceed ten
(10) years. Option grants typically vest over a one (1) to five (5) year period,
subject to continued employment. Generally only key employees (including
executive officers) of the Company and its subsidiaries are eligible to receive
option grants under the Stock Option Plans. Mr. Lutz received options to acquire
230,000 shares in 1994 and 59,105 shares in February 1995, both under the 1993
Key Individual Stock Option Plan (subject to stockholder approval of the
proposed amendments to such Plan described in Item 2 below). Options granted to
the other executive officers listed in the Summary Compensation Table are
reflected in the Option Grants in Last Fiscal Year table below.
THE COMPENSATION COMMITTEE
BRUCE W. SCHNITZER, CHAIRMAN
RICHARD L. CRAVEY
GERALD E. EICKHOFF
WILLIAM S. GREEN
10
<PAGE>
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the five-year period ending
December 31, 1994, the yearly percentage change in the cumulative total
stockholder return on the Common Stock with that of (i) all U.S. companies
quoted on NASDAQ and (ii) non-financial companies quoted on NASDAQ. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF FIVE (5) YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ STOCK MARKET AND NASDAQ NON-FINANCIAL STOCKS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMRESCO, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ NON-FINANCIAL STOCKS
<S> <C> <C> <C>
12/29/89 100 100 100
12/31/90 86 85 85
12/31/91 109 136 142
12/31/92 145 159 155
12/31/93 268 181 175
12/31/94 256 177 170
</TABLE>
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Board of Directors appointed Mr. Lutz as the Chief Executive Officer of
the Company, effective May 31, 1994, pursuant to a three (3) year employment
agreement. The agreement provides that Mr. Lutz will receive an annual salary of
$650,000 and be eligible to participate in the Company's bonus plans in effect
from time to time. If the Company terminates Mr. Lutz's employment without
cause, or if he terminates his employment because of a breach by the Company, he
will be entitled to continue to receive his base salary for the remainder of the
three (3) year term of the agreement. Mr. Lutz has the right to terminate his
employment for any reason upon thirty (30) days notice to the Company. The
Company may terminate Mr. Lutz's employment for cause, as defined in the
agreement, with no further obligations. Mr. Lutz will be subject to certain
restrictions on his ability to compete with or solicit clients from the Company
for one (1) year from the date of termination of his employment by the Company
for cause or if he terminates his employment for any reason other than breach by
the Company. In connection with his employment agreement, Mr. Lutz was granted
an option to purchase 230,000 shares of Common Stock exercisable at $7.00 per
share (the per share market price as of the date of the grant) under the 1993
Key Individual Stock Option Plan (subject to stockholder approval of the
proposed amendments to such Plan described in Item 2 below).
11
<PAGE>
The Board of Directors appointed Mr. Adair as the President and Chief
Operating Officer of the Company, effective December 31, 1993, pursuant to a
three (3) year employment agreement. The agreement provides that Mr. Adair will
receive an annual salary of $350,000 and be eligible to participate in the
Company's bonus plans in effect from time to time. Pursuant to his agreement,
Mr. Adair was granted an option to purchase 130,000 shares of Common Stock,
exercisable at $3.50 per share (the per share market price on the date of grant
was $6.625), under the Company's 1993 Key Individual Stock Option Plan. If the
Company terminates Mr. Adair's employment without cause, or if he terminates his
employment because of a breach by the Company, he will be entitled to receive
severance pay equal to two (2) years base salary. Mr. Adair may terminate his
employment if he and the chief executive officer of the Company have
irreconcilable differences over fundamental management policies or philosophy,
and upon such termination, he will be entitled to continue to receive his base
salary for one (1) year. Mr. Adair may terminate his employment in order to
become the chief executive officer of an unaffiliated company. The merger
agreement between the Company and AMRESCO Holdings, Inc. provided that Mr.
Adair's position and responsibilities with the Company may be changed in the
discretion of the Company, but that his position as the executive officer of the
Company with primary responsibility for the operation of the asset management
and resolution services of the Company may not be changed until December 31,
1995, except by action of the Board of Directors. Mr. Adair is subject to
certain restrictions on his ability to compete with or solicit clients from the
Company for one (1) year from the date of termination of his employment if the
Company terminates his employment for cause or if he terminates his employment
for any reason other than because of breach by the Company or irreconcilable
differences with the Company's chief executive officer or to become the chief
executive officer of an unaffiliated company. Mr. Adair also participates in a
bonus plan adopted in 1993 pursuant to which he will receive twenty-five percent
(25%) of the total base salary (exclusive of bonuses) paid to him between
December 30, 1993 and December 30, 1996 if he is continuously employed by the
Company through December 30, 1996. Messrs. Fairman, Urquhart and Skidmore also
participate in this, or a comparable, bonus plan.
DIRECTOR COMPENSATION
During 1994, each of the directors who was not an employee of the Company
received $10,000 for each full year of service as a director, and $1,000 for
each Board meeting attended. Non-employee directors who served on a Board
committee received $1,000 for each committee meeting actually attended and $500
for each committee meeting participated in by telephone.
In January 1994, the Company engaged Mr. Eickhoff to act as a part-time
consultant to the Company for fiscal 1994, for which Mr. Eickhoff was paid a
consulting fee of $10,000 per month, received an allowance of $10,000 per month
for office and support staff expenses and was reimbursed for reasonable
out-of-pocket expenses. He also received major medical coverage under the
Company's medical plans in effect from time to time.
OPTION GRANTS
The following table sets forth certain information with respect to grants of
stock options under the Company's Stock Option Plans during the last fiscal year
to both of the persons that served as the Company's Chief Executive Officer
during 1994 and the other executive officers named in the
12
<PAGE>
Summary Compensation Table above. In addition, the hypothetical gains or "option
spreads" that would exist for the respective options, based on assumed rates of
annual compound stock appreciation of 5% and 10% from the date the options were
granted over the full option term, are also reflected:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM (1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED FISCAL 1994 ($/SH) DATE 5% ($) 10% ($)
- ---------------------------------- ------------- ----------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 230,000(2) 46% 7.00 5-30-04(3) $ 1,012,520 $ 2,565,925
Richard L. Cravey -0- -- -- -- -- --
Robert L. Adair III -0- -- -- -- -- --
Douglas R. Urquhart -0- -- -- -- -- --
Donnie M. Skidmore -0- -- -- -- -- --
Richard D. Fairman -0- -- -- -- -- --
<FN>
- ------------------------
(1) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and holdings of Common Stock are
dependent upon the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
(2) The options granted to Mr. Lutz were granted subject to approval by the
stockholders of the amendments to the 1993 Key Employee Stock Option Plan
described in Item 2 herein.
(3) The options are subject to earlier termination upon the retirement, death
or disability of the holder or the termination of the holder's employment
by the Company.
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for both of the persons that served as the
Company's Chief Executive Officer during 1994 and the other executive officers
named in the Summary Compensation Table above the number of shares covered by
both exercisable and non-exercisable stock options as of December 31, 1994, and
the values for "in-the-money" options, based on the positive spread between the
exercise price of any such existing stock options and the year-end price of the
Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, VALUE ($) OF UNEXERCISED
1994 IN-THE-MONEY OPTIONS AT
(NO. OF SHARES) DECEMBER 31, 1994 (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert H. Lutz, Jr. (2) 57,500 172,500 -0- -0-
Richard L. Cravey -0- -0- -0- -0-
Robert L. Adair III 276,667 23,333 967,483 69,993
Douglas R. Urquhart 113,334 6,666 335,002 19,998
Donnie M. Skidmore 50,145 -0- 239,739 -0-
Richard D. Fairman 25,075 -0- 81,490 -0-
<FN>
- ------------------------
(1) Aggregate market value (based on December 31, 1994 stock price of $6.75 per
share) of the shares covered by the options, less aggregate exercise price
payable by the executive officer.
(2) The options granted to Mr. Lutz were granted subject to approval by the
stockholders of the amendments to the 1993 Key Employee Stock Option Plan
described in Item 2 herein.
</TABLE>
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cravey, Eickhoff, Green and Schnitzer served on the Compensation
Committee of the Board of Directors for the past fiscal year.
The Company made loans of approximately $259,000 to Mr. Eickhoff on October
31, 1990 in connection with the termination of the BEI Wealth-Op Plan, a
deferred compensation arrangement formerly maintained by the Company for the
benefit of Mr. Eickhoff and another officer. In connection with the termination
of such arrangement, the life insurance policies maintained by the Company in
order to fund its obligations under such plan were surrendered, and the cash
value thereof was paid to the Company. Such cash amounts were then loaned by the
Company to Mr. Eickhoff for a five (5) year term at an interest rate of 8.5% per
annum. During 1991, an additional $25,000 was loaned to Mr. Eickhoff on the same
terms.
The Company assists Mr. Eickhoff in obtaining and maintaining a split dollar
life insurance policy. This policy provides aggregate death benefits of
approximately $10,000,000 to Mr. Eickhoff's beneficiaries. In addition, the
policy provides death benefits payable to the Company of approximately
$1,309,000 in the event of Mr. Eickhoff's death during 1995. The Company has
agreed to pay the entire premium for Mr. Eickhoff's policy through the premium
due for December 2007, regardless of his employment status with the Company. The
premiums during 1995 for Mr. Eickhoff's policies are $191,592. A portion of each
such premium payment is treated as compensation to Mr. Eickhoff and the
remainder is treated as a loan to the policy owner. The cash surrender values of
the policy (as of December 31, 1994, approximately $281,600) has been assigned
to the Company to secure the repayment of such loan. The outstanding principal
balance of the loan as of March 15, 1995 (after deduction of the cash surrender
value) is approximately $1,027,000. In addition, any payment of the death
benefits described above would be applied to the repayment of such loan.
Pursuant to the terms of certain agreements for consulting services between
AMRESCO Holdings, Inc., a wholly owned subsidiary of the Company, and CGW
Southeast Partners I, L.P. and CGW Southeast Partners II, L.P. (collectively,
"CGW") in effect until December 31, 1996, CGW has been engaged to render certain
advisory and consulting services to the Company in connection with corporate
finance matters. The agreements currently provide for base payments of $30,000
per month to CGW, with additional payments of up to $30,000 per month being
allowed in the discretion of the Compensation Committee. Such discretionary
payments totalled $295,000 for 1994. Directors Cravey and Green are each
Managing Directors of the corporate general partner of CGW.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain executive officers of the Company, including Mr. Adair, a director
and the President and Chief Operating Officer of the Company, invested their
personal funds along with the Company in purchases of two (2) distressed asset
portfolios in late 1992 and 1993. Mr. Adair invested a total of $116,873 and the
Company invested approximately $925,000 in such portfolios. Mr. Adair received
$60,570.57 in cash distributions from such portfolios in 1994.
Kenneth M. Abrams, the Company's Senior Vice President -- Government
Services, is indebted to the Company in the principal amount of $130,800,
arising out of his purchase of AMRESCO Holdings, Inc. common stock in December
1992. The indebtedness is evidenced by a note which bears interest at the rate
of 6% per annum and matures on the first to occur of (i) December 9, 2002 and
(ii) one (1) year after the effective date of the termination of his employment
with the Company and any parent or subsidiary of the Company. The indebtedness
is secured by shares of Common Stock.
The Company assists Mr. Cotton in obtaining and maintaining a split dollar
life insurance policy. This policy provides aggregate death benefits of
approximately $10,000,000 to Mr. Cotton's beneficiaries. In addition, the policy
provides death benefits payable to the Company of approximately $2,168,000 in
the event of Mr. Cotton's death during 1995. The Company has agreed to pay the
entire premium for Mr. Cotton's policy through the premium due for October 2006,
regardless of his
14
<PAGE>
employment status with the Company. The premiums during 1995 for Mr. Cotton's
policies are $294,766. A portion of each such premium payment is treated as
compensation to Mr. Cotton and the remainder is treated as a loan to the policy
owner. The cash surrender values of the policy (as of December 31, 1994,
approximately $568,400) has been assigned to the Company to secure the repayment
of such loan. The outstanding principal balance of the loan as of the date
hereof (after deduction of the cash surrender value) is approximately
$1,600,000. In addition, any payment of the death benefits described above would
be applied to the repayment of such loan.
PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO
THE 1993 KEY INDIVIDUAL STOCK OPTION PLAN
(ITEM 2)
The Board of Directors has adopted, subject to stockholder approval at the
Annual Meeting, certain amendments (the "Amendments") to the 1993 Key Individual
Stock Option Plan (the "1993 Option Plan"). If approved by the stockholders, the
Amendments would take effect as of May 23, 1994, the date on which the
Compensation Committee adopted the Amendments. Stockholder approval is necessary
to qualify certain grants of options pursuant to the 1993 Option Plan, as
amended, as "performance based" compensation under Section 162(m) of the Code.
CURRENT 1993 OPTION PLAN
GENERAL. The 1993 Option Plan provides for the grant of incentive stock
options ("ISOs") to key employees of the Company and its subsidiaries (which
qualify for certain favorable tax treatment, as described below) and
nonqualified stock options ("NQSOs") to key employees and members of the boards
of directors of the Company and its subsidiaries and to other non-employees,
such as consultants and service providers. A maximum of 2,300,000 shares of
Common Stock is authorized for issuance with respect to options granted under
the 1993 Option Plan. As of February 28, 1995, options to acquire 2,040,635
shares of Common Stock were outstanding pursuant to the 1993 Option Plan.
ADMINISTRATION. The 1993 Option Plan is administered by the Compensation
Committee, each member of which will be a "disinterested person" within the
meaning of Section 16 of, and Rule 16b-3 under, the Exchange Act. The
Compensation Committee has authority to determine the individuals to whom awards
will be granted, the form and amount of the awards, the dates of grant, vesting
periods, option prices and other terms of each award.
DESCRIPTION OF OPTIONS. All employees, non-employee directors and other
non-employees, such as consultants or service providers of the Company and its
subsidiaries, are eligible for consideration as participants under the 1993
Option Plan. The 1993 Option Plan provides for both ISOs, as defined in Section
422 of the Code, to key employees of the Company and its subsidiaries and NQSOs
to key employees, members of the boards of directors and other consultants or
service providers of the Company and its subsidiaries. The Company receives no
consideration upon the grant of an option. The exercise price of an option
granted under the 1993 Option Plan and the period of exercise are determined by
the Compensation Committee at the time of grant. The exercise price of an ISO
may not be less than the fair market value of the shares subject to such option
(or 110% of such fair market value in the case of an ISO granted to an
individual who is a 10% stockholder). Full payment of the option exercise price
must be made by the optionee when an option is exercised. The exercise price may
be paid in cash or in such other form as the Company may approve, including
shares of Common Stock valued at their fair market value (as defined in the 1993
Option Plan) on the date of option exercise. The proceeds received by the
Company from exercises of options under the 1993 Option Plan will be used for
general corporate purposes.
Options granted under the 1993 Option Plan will not be exercisable later
than ten (10) years after the date of grant. No option may be exercised more
than three (3) months after the optionee's retirement or termination from
employment with the Company or its subsidiaries or membership on the boards of
directors of the Company or its subsidiaries for any reason other than total and
permanent disability (as defined in the 1993 Option Plan) or death. In such
case, the exercise period
15
<PAGE>
described in the preceding sentence is expanded to one (1) year if termination
of employment or membership on the board of directors is due to total and
permanent disability, and two (2) years if termination of employment or
membership on the board of directors is due to death. Options are not
transferable by the holder other than by will or applicable laws of descent and
distribution.
The 1993 Option Plan may, from time to time, be terminated, suspended or
amended by the Board of Directors of the Company in such respects as it deems
advisable, including any amendment effected (i) so that an ISO granted under the
1993 Option Plan will be an "incentive stock option" as such term is defined in
Section 422 of the Code or (ii) to conform to any change in any law or
regulation governing the 1993 Option Plan or the options granted thereunder,
including without limitation, any amendments to conform with the reporting and
liability provisions of Section 16 of the Exchange Act. However, no such
amendment may change the following without the approval of the stockholders of
the Company within twelve (12) months following the date such amendment is
adopted:
(a) the maximum aggregate number of shares for which options may be
granted under the 1993 Option Plan, except as required under any adjustment
described above;
(b) the option exercise price, with the exception of any change in such
price required as a result of any adjustment described above, and with the
further exception of changes in determining fair market value of shares of
Common Stock to conform with any then applicable provision of the Code or
regulations promulgated thereunder;
(c) the maximum period during which options may be exercised;
(d) the termination date of the 1993 Option Plan in any manner which
would extend such date; or
(e) the requirements as to eligibility for participation in the 1993
Option Plan in any material respect.
All options granted under the 1993 Option Plan will terminate on the date of
liquidation or dissolution of the Company and its subsidiaries.
FEDERAL INCOME TAX CONSEQUENCES. The following summary of federal income
tax consequences with respect to the 1993 Option Plan is not comprehensive and
is based upon laws and regulations currently in effect. Such laws and
regulations are subject to change.
Under current tax law, a holder of an ISO under the 1993 Option Plan will
not realize taxable income upon the grant or exercise thereof. However,
depending upon the holder's income tax situation, the exercise of an ISO may
have Alternative Minimum Tax implications. The amount of gain which the optionee
must recognize is equal to the amount by which the value of Common Stock on the
date of sale exceeds the option price. If the optionee disposes of the stock
after the required holding period (that is, no earlier than a date which is two
(2) years after the date of grant of the option and one (1) year after the date
of exercise), then the gain is capital gain income. If disposition occurs prior
to expiration of the holding period, then gain is ordinary income, and the
Company is entitled to a tax deduction equal to the amount of income recognized
by the optionee.
An optionee will not realize income when a NQSO option is granted to him.
Upon exercise of such option, however, the optionee must recognize ordinary
income to the extent that the fair market value of Common Stock on the date the
option is exercised exceeds the option price. Any such gain is taxed in the same
manner as ordinary income in the year the option is exercised. Any gain
recognized upon the disposition of the shares of stock obtained by the exercise
of a NQSO will be taxed at capital gains rates if the employee holds the shares
of stock for at least one (1) year after the exercise of the nonqualified
option. The Company will not experience any tax consequences upon the grant of a
NQSO, but will be entitled to take an income tax deduction equal to the amount
which the option holder includes in income (if any) when the NQSO is exercised.
16
<PAGE>
THE AMENDMENTS
BACKGROUND. Section 162(m) of the Code now denies a tax deduction to any
publicly-held corporation for compensation paid to its chief executive officer
and its four (4) most highly compensated other officers to the extent that the
compensation of any such individual exceeds one (1) million dollars in any
taxable year. For these purposes, compensation includes most forms of
remuneration, including salary, bonus, appreciation realized upon exercise of
stock options and taxable fringe benefits. To be exempt from the cap on
deductibility imposed by Section 162(m), the portion of an executive's
compensation over one (1) million dollar must qualify as "performance based"
compensation. Certain technical adjustments to the 1993 Option Plan must be made
in order for the benefits received upon exercise of such options to be deemed
"performance based" compensation. These changes, among others, are contained in
the Amendments, which are summarized below. This summary is qualified by the
full text of the Amendments, which are attached hereto as Appendix A.
INDIVIDUAL LIMITS. Section 162(m) requires that the 1993 Option Plan state
the maximum number of shares which may be granted during a specified period to
any individual employee. The Amendments propose an individual limitation of
300,000 shares in any twelve (12) month period.
EXERCISE PRICE. The regulations promulgated by the IRS pursuant to Section
162(m) suggest that the only means of effectively disclosing a compensation
formula to stockholders for their approval in the stock option context is for
the option plan to state that exercise prices will be no lower than market value
at the time of grant, and the Amendments contain such an amendment. The 1993
Option Plan currently allows pricing of options to be made at the discretion of
the Compensation Committee, which could result in pricing above or below market
value.
LIMITED TRANSFERABILITY. The Amendments allow for limited transferability
of stock options, an issue unrelated to Section 162(m). A holder of options
granted under the 1993 Option Plan may be able to transfer the options, under
certain circumstances, to members of his or her immediate family (as defined in
the 1993 Option Plan), to one (1) or more trusts for the benefit of his or her
immediate family or to partnerships in which immediate family members are the
only partners. For such transfer rights to be available, the holder's option
agreement must expressly permit such transfer, and the holder must not receive
any consideration in any form whatsoever for the transfer. Other than the
foregoing, options granted under the 1993 Option Plan will not be transferable
by the holder other than by will or applicable laws of descent and distribution.
NAME CHANGE. To reflect the Company's name change to AMRESCO, INC. on May
23, 1994, the Board of Directors proposes to change the name of the 1993 Option
Plan to the "AMRESCO, INC. 1993 Key Individual Stock Option Plan," and to change
any reference in the 1993 Option Plan to BEI Holdings, Ltd. to a reference to
AMRESCO, INC.
The following table reflects grants of stock options that were made since
May 23, 1994 to the named persons and groups of persons pursuant to the 1993
Option Plan, all of which were made subject to approval of the Amendments by the
stockholders at the Annual Meeting. Other than as follows, it is not possible to
determine the benefits that will be received by any persons or groups of persons
under the amended 1993 Option Plan.
17
<PAGE>
NEW PLAN BENEFITS
1993 KEY INDIVIDUAL STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAME AND POSITION VALUE ($)(1) OPTIONS
- ---------------------------------------------------------------------------- --------------- -----------
<S> <C> <C>
Robert H. Lutz, Jr., Chairman of the Board and Chief
Executive Officer -0- 289,105
Richard L. Cravey, Chief Executive Officer -0- -0-
Robert L. Adair III, President and Chief Operating Officer -0- 33,940
Douglas R. Urquhart, Senior Vice President -- Business Development and
Portfolio Acquisitions -0- 13,500
Donnie M. Skidmore, Vice President -- Corporate Acquisitions -0- 10,000
Richard D. Fairman, Senior Vice President -- Commercial Group -0- 13,500
All current executive officers, as a group (1) -0- 631,925
All current directors who are not executive officers,
as a group (1) -0- -0-
All employees, including all current officers who are not executive
officers, as a group (1) -0- 782,120
<FN>
- ------------------------
(1) Dollar value based upon the closing sale price of the Common Stock as
quoted on the NASDAQ Stock Market on April 17, 1995 of $6.75 per share,
less the per share exercise price of each option, multiplied by the number
of options. If the exercise price of an option exceeds $6.75, the option is
considered to have no value for purposes of this table.
</TABLE>
VOTING REQUIREMENTS. Approval of the Amendments will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENTS TO
THE 1993 OPTION PLAN, AND THE ENCLOSED PROXY WILL BE VOTED IN THAT MANNER UNLESS
THE STOCKHOLDER EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY OR
ABSTAINS FROM VOTING ON THIS PROPOSAL.
PROPOSAL TO APPROVE THE 1995 EMPLOYEE STOCK PURCHASE PLAN
(ITEM 3)
The Board of Directors has adopted, subject to stockholder approval at the
Annual Meeting, the Company's 1995 Employee Stock Purchase Plan (the "Stock
Purchase Plan"). If approved by stockholders, the Stock Purchase Plan will
become effective as of February 17, 1995.
Stockholder approval of the Stock Purchase Plan is sought to (1) qualify the
Stock Purchase Plan pursuant to Rule 16b-3 under the Exchange Act, and thereby
render certain transactions under the Stock Purchase Plan exempt from certain
provisions of Section 16 of the Exchange Act, and (2) qualify the Stock Purchase
Plan under Section 423 of the Code, the primary effect of which is to prevent
the participant from recognizing taxable compensation upon the acquisition of
Common Stock pursuant to the Stock Purchase Plan at a discount from the current
market price.
The following summary of certain features of the Stock Purchase Plan is
qualified in its entirety by reference to the full text thereof, which is set
forth in Appendix B attached hereto.
18
<PAGE>
NUMBER OF SHARES AVAILABLE. A total of 300,000 shares of Common Stock will
be made available for purchase under the Stock Purchase Plan, subject to
appropriate adjustment for stock dividends, stock splits or combination of
shares, recapitalization or other changes in the Company's capitalization.
ADMINISTRATION. The Stock Purchase Plan will be administered by an
administrator or committee appointed by the Board of Directors, which will
initially be the Company's Vice President-Human Resources (the "Administrator").
The Administrator will have full authority to interpret and administer the Stock
Purchase Plan.
GRANT AND EXERCISE OF OPTIONS. All employees of the Company and its
subsidiaries are eligible to participate in the Stock Purchase Plan. An eligible
employee may elect to become a participant in the Stock Purchase Plan by filing
with the Company a request form which (i) authorizes a regular payroll deduction
from the employee's paycheck and/or (ii) provides for the participant to make a
lump sum cash payment. A participant's payroll deduction must be in any whole
percentage from one (1) to ten (10) percent of such participant's total
compensation payable each pay period. An employee may not participate in the
Stock Purchase Plan for an Option Period (i.e., each calendar quarter beginning
January 1, April 1, July 1 and October 1 of each year) if he owns (as determined
under the Code) five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any of its subsidiaries,
including the right to purchase shares under the Stock Purchase Plan. A
participant cannot receive options to acquire shares under the Stock Purchase
Plan that, in combination with options under other plans qualified under the
same provision of the Code, would result during any calendar year in the
purchase of shares having an aggregate fair market value of more than $25,000.
On the first day of each Option Period, each participant who has properly
filed a request form is granted an option ("Option") to purchase on the last day
of such Option Period, at a price determined as described below (the "Option
Price"), the number of full shares of Common Stock which the cash credited to
his or her account at that time will purchase at the Option Price. Unless the
cash credited to a participant's account is withdrawn or distributed, his or her
Option will be deemed to have been exercised automatically on the last day of
the Option Period. The Option Price for each Option Period will be eighty five
percent (85%) of the fair market value (as defined in the Stock Purchase Plan)
of the Common Stock on the last trading day of the Option Period. No fractional
shares will be issued or purchased under the Stock Purchase Plan. Any
accumulated cash balances remaining in a participant's account will be held in
the participant's account for the next Option Period if a valid request form is
in effect for such Option Period, or otherwise distributed to the participant
without interest. If a participant dies, the cash balance in his or her account
will be distributed to the participant's beneficiary, in cash, without interest,
as soon as practicable. Since the shares will be purchased at less than market
value, employees will receive a benefit from participating in the Stock Purchase
Plan.
In the event of a participant's discontinuance of payroll deductions, the
cash balance in such participant's account will be returned to the participant,
without interest, as soon as practicable. Until the participant requests
otherwise, stock certificates for shares of Common Stock acquired upon the
exercise of the participant's Option will be held by the Company or its agent as
the nominee for the participant. This is done solely as a matter of convenience,
and the participant may withdraw certificates for his or her shares of Common
Stock at any time with a written request to the Administrator. If such a request
is not made, distributions of certificates will be made promptly after the
participant's death, disability, retirement or other termination of employment
or the discontinuance of the participant's payroll deductions.
A participant may request a change or discontinuance in the amount of any
payroll deduction for future pay periods, by filing a notice with the
Administrator. Any such notice of change will be effective no less than ninety
(90) days from the date of the filing of the notice, and any such notice of
19
<PAGE>
discontinuance will be effective thirty (30) days from the date of the filing of
the notice. A participant that files a notice of discontinuance may not resume
payroll deductions within ninety (90) days of the filing of the notice.
The Option to purchase shares of Common Stock under the Stock Purchase Plan
is exercisable only by the participant to whom the Option was granted.
AMENDMENT AND TERMINATION. The Board of Directors may amend the Stock
Purchase Plan at any time provided that no amendment will, without stockholder
approval, disqualify the Stock Option Plan under Section 423 of the Code,
increase the number of shares of Common Stock available for purchase thereunder,
or change the designation of corporations whose employees are eligible to
participate in the Stock Purchase Plan. The Stock Purchase Plan may be
terminated by the Board of Directors at any time, and in any event will
terminate when the maximum aggregate number of shares available thereunder have
been acquired pursuant to the exercise of Options thereunder.
FEDERAL INCOME TAX CONSEQUENCES. The Stock Purchase Plan is designed to
qualify as an Employee Stock Purchase Plan under Section 423 of the Code. The
following summary of federal income tax consequences with respect to the Stock
Purchase Plan is not comprehensive and is based upon laws and regulations
currently in effect. Such laws and regulations are subject to change.
Neither the grant nor the exercise of the Option granted under the Stock
Purchase Plan will have a tax impact on the participant or the Company. If a
participant disposes of the Common Stock acquired upon the exercise of his
Option after at least two (2) years from the date of grant and one (1) year from
the date of exercise, then the participant must treat as ordinary income the
amount by which the lesser of (i) the fair market value of the Common Stock at
the time of disposition or (ii) the fair market value of the Common Stock at the
date of grant, exceeds the purchase price of the Common Stock. Any gain in
addition to this amount will be treated as a long-term capital gain. If a
participant holds Common Stock at the time of the participant's death, the
holding period requirements are automatically deemed to have been satisfied and
ordinary income must be realized by the participant in the amount by which the
lesser of (i) the fair market value of the Common Stock at the time of death or
(ii) the fair market value of the Common Stock at the date of grant, exceeds the
purchase price. The Company will not be allowed a deduction if the holding
period requirements are satisfied. If a participant disposes of the Common Stock
before expiration of two (2) years from the date of grant and one (1) year from
the date of exercise, then the Participant must treat as ordinary income the
excess of the fair market value of the Common Stock on the date of exercise of
the Option over the purchase price. Any additional gain will be treated as
long-term or short-term capital gain or loss, as the case may be. The Company
will be allowed a deduction equal to the amount of ordinary income recognized by
the Participant.
VOTING REQUIREMENTS. Approval of the Stock Purchase Plan will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCK
PURCHASE PLAN, AND THE ENCLOSED PROXY WILL BE VOTED IN THAT MANNER UNLESS THE
STOCKHOLDER EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY OR ABSTAINS
FROM VOTING ON THIS PROPOSAL.
20
<PAGE>
PROPOSAL TO APPROVE
THE 1995 STOCK OPTION AND AWARD PLAN
(ITEM 4)
The Board of Directors has adopted, subject to stockholder approval at the
Annual Meeting, the Company's 1995 Stock Option and Award Plan (the "1995 Stock
Plan"). If approved by stockholders, the 1995 Stock Plan will become effective
as of February 17, 1995. No options will be granted under the 1993 Key
Individual Stock Option Plan if the 1995 Stock Option Plan is approved by the
stockholders.
Stockholder approval of the 1995 Stock Plan is sought to (1) qualify the
1995 Stock Plan pursuant to Rule 16b-3 under the Exchange Act, and thereby
render certain transactions under the 1995 Stock Plan exempt from certain
provisions of Section 16 of the Exchange Act, (2) qualify certain types of
awards under the 1995 Stock Plan as "performance based" compensation under
Section 162(m) of the Code, and thereby allow the Company to exclude such
compensation from the one (1) million dollar cap on the tax deductibility of
compensation paid to the executive officers listed in the Summary Compensation
Table hereunder ("Named Executive Officers") and (3) satisfy the Company's
obligations under its listing agreement for the Common Stock with the NASDAQ
Stock Market. Stockholder approval of the 1995 Stock Plan is necessary to make
the incentive awards contemplated by the 1995 Stock Plan.
The following summary of certain features of the 1995 Stock Plan is
qualified in its entirety by reference to the full text thereof, which is set
forth in Appendix C attached hereto.
GENERALLY. The 1995 Stock Plan is a flexible plan that will provide the
Compensation Committee broad discretion to fashion the terms of awards to
provide eligible participants with such stock-based incentives as the
Compensation Committee deems appropriate. It will permit the issuance of awards
in a variety of forms, including: (i) nonqualified stock options ("NQSOs") and
incentive stock options ("ISOs"; NQSOs and ISOs collectively, "Stock Options"),
(ii) performance shares and (iii) restricted stock awards.
ADMINISTRATION. The 1995 Stock Plan will be administered by the
Compensation Committee, each member of which will be a "disinterested person"
within the meaning of Section 16 of, and Rule 16b-3 under, the Exchange Act. The
1995 Stock Plan vests broad powers in the Compensation Committee to administer
and interpret the 1995 Stock Plan. The Compensation Committee's powers include
authority, within the limitations set forth in the 1995 Stock Plan, to (i)
select the persons to be granted awards, (ii) determine the size and type of
awards, (iii) construe and interpret the 1995 Stock Plan, (iv) establish, amend
or waive rules and regulations for the administration of the 1995 Stock Plan and
(v) determine whether an award, award agreement or payment of an award should be
amended, reduced or eliminated, to the extent the 1995 Stock Plan gives
discretion to the Compensation Committee to do so.
ELIGIBILITY. In general, any key employees of the Company or any subsidiary
of the Company, including key employees who are also directors, as well as any
other persons, including consultants, independent contractors or other service
providers, are eligible to receive awards under the 1995 Stock Plan.
Notwithstanding the foregoing, no person who is a member of the Compensation
Committee is eligible to receive awards under the 1995 Stock Plan, and only
employees of the Company are eligible to receive grants of ISOs, performance
shares and restricted stock.
NUMBER OF SHARES AVAILABLE. The 1995 Stock Plan provides for the grant of
up to 2,500,000 shares of Common Stock. Under certain circumstances, shares
subject to an award that remain unissued upon termination of the award will
become available for additional awards under the 1995 Stock Plan. In the event
of a stock dividend, stock split, recapitalization or similar event, the
Compensation Committee will equitably adjust the aggregate number of shares
subject to the 1995 Stock Plan and the number, class and price of shares subject
to awards outstanding.
21
<PAGE>
AMENDMENT AND TERMINATION. The 1995 Stock Plan may be amended, modified or
terminated by the Board of Directors, subject to stockholder approval if such an
amendment would materially modify the eligibility requirements thereunder,
increase the total number of shares allowed to be issued thereunder, extend the
term thereof, require shareholder approval under Rule 16b-3 of the Exchange Act
or, in any case, if the Board determines that stockholder approval is
appropriate. Unless earlier terminated by the Board of Directors or
stockholders, the 1995 Stock Plan will terminate on February 17, 2005.
CODE SECTION 162(M). At all times when the Compensation Committee
determines that it is desirable to satisfy the conditions of Section 162(m) of
the Code, all awards granted under the 1995 Stock Plan will comply with such
conditions. The Compensation Committee is nevertheless empowered to grant awards
that would not constitute "performance based" compensation under Section 162(m),
as was the case with certain grants of restricted stock on February 27, 1995
described below which will vest based solely on continued employment rather than
any performance based criteria. If changes are made to Section 162(m) to permit
greater flexibility with respect to any awards available under the 1995 Stock
Plan, the Compensation Committee may, subject to the restrictions set forth in
the preceding paragraph regarding amendment thereof, make any adjustments it
deems appropriate.
AWARDS UNDER THE 1995 STOCK PLAN.
STOCK OPTIONS. The Compensation Committee in its discretion will determine
the number of shares of Common Stock subject to Stock Options to be granted to
each participant, but no Named Executive Officer may be granted Stock Options to
purchase more than 300,000 shares during any one (1) plan year. The Compensation
Committee may grant NQSOs, ISOs or a combination thereof to participants. ISOs,
however, may only be granted to employees of the Company or its subsidiaries,
and may only be granted if the aggregate fair market value of the Common Stock
underlying ISOs granted under all plans of the Company that become exercisable
for the first time during any calendar year is less than $100,000. ISOs granted
under the 1995 Stock Plan will provide for the purchase of Common Stock at
prices not less than 100% of the fair market value thereof on the date the Stock
Option is granted. NQSOs granted under the 1995 Stock Plan will provide for the
purchase of Common Stock at prices determined by the Compensation Committee, but
in any event not less than 85% of the fair market value thereof on the date the
Stock Option is granted. No Stock Option granted will be exercisable later than
the tenth anniversary date of its grant.
Stock Options will be exercisable at such times and subject to such
restrictions and conditions as the Compensation Committee approves. A holder of
Stock Options may be able to transfer the Stock Options, under certain
circumstances, to members of his or her immediate family (as defined in the 1995
Stock Plan), to one (1) or more trusts for the benefit of his or her immediate
family or to partnerships in which immediate family members are the only
partners, if such holder's option agreement expressly permits such transfer and
the holder does not receive any consideration in any form whatsoever for the
transfer. Other than the foregoing, Stock Options will not be transferable by
the holder other than by will or applicable laws of descent and distribution.
The option exercise price is payable in cash or, if approved by the Compensation
Committee, in shares of Common Stock having a fair market value equal to the
exercise price or in a combination of cash and such shares. Upon termination of
a participant's employment due to death, disability or retirement, all Stock
Options outstanding will immediately vest and will be exercisable for the
shorter of their remaining term or two (2) years after termination of employment
in the case of death, one (1) year after termination of employment in the case
of disability, and three (3) months after termination of employment in the case
of retirement. Upon termination of employment of a participant other than for
any reason set forth above, all Stock Options held by the participant which are
not vested as of the effective date of termination will be forfeited. However,
the Compensation Committee, in its sole discretion, may immediately vest all or
any portion of the Stock Options of a participant not vested as of such date. In
the case of termination by the Company without cause, the participant may
exercise any vested Stock
22
<PAGE>
Options for three (3) months following the termination of employment, and in the
case of termination by the Company for cause or voluntary termination of
employment by the participant (other than due to retirement), the Stock Options
will be forfeited immediately upon the termination of employment.
PERFORMANCE SHARES. The Company may grant performance shares to employees
of the Company or its subsidiaries in such amounts, and subject to such terms
and conditions, as the Compensation Committee in its discretion determines;
provided, however, that none of the Named Executive Officers may earn more than
300,000 performance shares with respect to any performance period. Each
performance share will have a value equal to the fair market value of a share of
Common Stock on the date the performance share is earned. The Compensation
Committee in its discretion will set performance goals to be achieved over
performance periods of not less than two (2) years. The extent to which the
performance goals are met will determine the number of performance shares earned
by participants. The performance measure to be used for purposes of grants to
Named Executive Officers will be one (1) or more of the following: total
shareholder return, return on assets, return on equity, earnings per share and
ratio of operating overhead to operating revenue, unless and until the Company's
stockholders vote to change such performance measures. In the event that
applicable tax and/ or securities laws change to permit the Compensation
Committee discretion to alter the governing performance measures without
obtaining stockholder approval, the Compensation Committee will have the sole
discretion to make such changes without obtaining stockholder approval. In any
event, with respect to employees that are not Named Executive Officers, the
Compensation Committee may approve performance measures not listed above without
stockholder approval.
After the applicable performance period has ended, the Compensation
Committee will certify the extent to which the established performance goals
have been achieved, and each holder of performance shares will be entitled to
receive payout on the number of performance shares earned by the participant
over the performance period, to be determined as a function of the extent to
which the corresponding performance goals have been achieved. The grantee of a
performance share award will receive payment, within seventy-five (75) days
following the end of the applicable performance period, of performance shares
earned in cash or shares of Common Stock (or in a combination of cash and shares
of Common Stock), which have, as of the close of the applicable performance
period, an aggregate fair market value equal to the value of the earned
performance shares. If the employment of a participant is terminated by reason
of death, disability or retirement or at the request of the Company without
cause during the performance period, the participant will receive a prorated
payout with respect to the performance shares earned, which will be determined
by the Compensation Committee, in its sole discretion, and will be based upon
the length of time the participant held the performance shares during the
applicable performance period and upon achievement of the established
performance goals. Such payment will be made at the same time as payments are
made to participants who did not terminate employment during the applicable
performance period. If a participant's employment is terminated for any other
reason, all performance shares will be forfeited by the participant to the
Company. Performance shares may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.
RESTRICTED STOCK. The Compensation Committee may from time to time grant
restricted stock awards to employees of the Company or its subsidiaries. Each
grant of restricted stock will be evidenced by a written grant agreement between
the participant and the Company setting forth the terms and conditions of the
grant, as determined by the Compensation Committee, at its discretion, to be
necessary or desirable. Terms may include a requirement for payment by the
participant to the Company for the restricted stock which is granted.
Each grant of restricted stock will be subject to restrictions, determined
by the Compensation Committee in its discretion, for a period of at least one
(1) year (the "Restricted Period"). Such restrictions may include only the
requirement of continued employment or may include other financial performance
based criteria established by the Compensation Committee. For the initial grants
under the 1995 Stock Plan, the Restricted Period will expire with respect to
twenty percent (20%) of
23
<PAGE>
the total grant on each of the first five (5) anniversaries of the grant. The
restricted stock will be forfeitable (and all rights of the participant in the
Common Stock will terminate) unless the participant has remained a full-time
employee of the Company or of any of its subsidiaries until the expiration of
the Restricted Period and any other conditions prescribed by the Compensation
Committee are met. However, the Committee may, after a grant, in its discretion,
shorten the Restricted Period or waive any condition to the lapse of the
restrictions. The grant agreement may, at the discretion of the Committee and
subject to any prescribed terms and conditions, also provide for the lapse of
restrictions upon the occurrence of such specified events as a change in control
of the Company or the termination of the participant's employment by reason of
the participant's death, disability, retirement or discharge without cause.
During the Restricted Period the participant will have all the rights of a
Company stockholder, including the right to receive dividends and vote the
shares of restricted stock, except as follows. Cash dividends will be paid
either in cash or in restricted stock, as the Compensation Committee determines.
In addition, the restricted stock may not be transferred, assigned or encumbered
unless and until all restrictions have lapsed. The restricted stock will be
forfeited to the Company if all conditions to the lapse of the restrictions have
not been met or waived at or prior to the expiration of the Restricted Period.
CHANGES IN CONTROL. Upon the occurrence of certain change in control
events, (i) all Stock Options outstanding will become immediately exercisable;
(ii) the target payout obtainable under all performance shares and annual
incentive awards will be deemed to have been fully earned for the entire
performance period and, within thirty (30) days of the change in control, each
participant will be paid in cash a pro rata portion of such target payout based
on the elapsed portion of the applicable performance period, provided that there
will not be an accelerated payout with respect to performance shares granted
less than six (6) months prior to the effective date of the change in control,
(iii) all restrictions on restricted stock will lapse and (iv) the Compensation
Committee may, in its discretion, make any other modifications to any awards as
determined by the Compensation Committee to be deemed appropriate before the
effective date of such change in control.
FEDERAL TAX CONSEQUENCES.
The following summary of federal income tax consequences with respect to the
1995 Stock Plan is not comprehensive and is based upon laws and regulations
currently in effect. Such laws and regulations are subject to change.
STOCK OPTIONS. There are generally no federal tax consequences either to
the employee receiving Stock Options (the "Optionee") or to the Company upon the
grant of a Stock Option. On exercise of an ISO, the Optionee will not recognize
any income and the Company will not be entitled to a deduction for tax purposes,
although such exercise may give rise to a liability for the Optionee under the
Alterative Minimum Tax provisions of the Code. Generally, if the Optionee
disposes of shares acquired upon exercise of an ISO within two (2) years of the
date of grant or one (1) year of the date of exercise, the Optionee will
recognize compensation income and the Company will be entitled to a deduction
for tax purposes in the taxable year in which such disposition occurred in the
amount of the excess of the fair market value of the shares of Common Stock on
the date of exercise over the option exercise price (or the gain on sale, if
less). Otherwise, the Company will not be entitled to any deduction for tax
purposes upon disposition of such shares, and the entire gain for the Optionee
will be treated as a capital gain. On exercise of a NQSO, the amount by which
the fair market value of the Common Stock on the date of exercise exceeds the
option exercise price will generally be taxable to the Optionee as compensation
income and will generally be deductible for tax purposes by the Company. The
dispositions of shares of Common Stock acquired upon exercise of a NQSO will
generally result in a capital gain or loss for the Optionee, but will have no
tax consequences for the Company.
24
<PAGE>
PERFORMANCE SHARES. The grant of a performance share award will not result
in income for the grantee or in a tax deduction for the Company. Upon the
settlement of such a right or award, the grantee will recognize ordinary income
equal to the fair market value of any shares of Common Stock and/or any cash
received and the Company will be entitled to a tax deduction in the same amount.
RESTRICTED STOCK. The Company is of the opinion that the participant will
realize compensation income in an amount equal to the fair market value of the
restricted stock (whether received as a grant or as a dividend), less any amount
paid for such restricted stock, at the time when the participant's rights with
respect to such restricted stock are no longer subject to a substantial risk of
forfeiture, unless the participant elected, pursuant to a special election
provided in the Code, to be taxed on the restricted stock at the time it was
granted or received as a dividend, as the case may be. Dividends paid to the
participant during the Restricted Period will be taxable as compensation income,
rather than as dividend income, unless the election referred to above was made.
The Company is also of the opinion that it will be entitled to a deduction under
the Code in the amount and at the time that compensation income is realized by
the participant.
The amount of income realized by each participant and the amount of the
deduction available to the Company will be affected by any change in the market
price of the Common Stock during the limitation period.
RESTRICTED STOCK GRANTS.
The following table reflects certain awards of restricted stock made by the
Compensation Committee on February 27, 1995, subject to approval by the
stockholders of the 1995 Stock Plan. Other than as follows, it is not possible
to determine either the benefits or amounts that will be received by any persons
or groups of persons under the 1995 Stock Plan or that would have been received
had it been in effect during the last fiscal year.
NEW PLAN BENEFITS
1995 STOCK OPTION AND AWARD PLAN
<TABLE>
<CAPTION>
DOLLAR
VALUE NUMBER OF
NAME AND POSITION ($)(1) UNITS
- ---------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Robert H. Lutz, Jr., Chairman of the Board and Chief
Executive Officer 202,905 30,060
Richard L. Cravey, Chief Executive Officer -0- -0-
Robert L. Adair III, President and Chief Operating Officer 114,547 16,970
Douglas R. Urquhart, Senior Vice President -- Business Development and
Portfolio Acquisitions 47,250 7,000
Donnie M. Skidmore, Vice President -- Corporate Acquisitions -0- -0-
Richard D. Fairman, Senior Vice President -- Commercial Group 47,250 7,000
All current executive officers, as a group 654,547 96,970
All current directors who are not executive officers, as a group -0- -0-
All employees, including all current officers who are not executive
officers, as a group 684,011 101,335
<FN>
- ------------------------
(1) Dollar value is based upon the April 17, 1995 stock price of $6.75 per
share multiplied by the number of shares.
</TABLE>
VOTING REQUIREMENTS. Approval of the 1995 Stock Plan will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995 STOCK
PLAN, AND THE ENCLOSED PROXY WILL BE VOTED IN THAT MANNER UNLESS THE STOCKHOLDER
EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY OR ABSTAINS FROM VOTING
ON THIS PROPOSAL.
PROPOSAL TO APPROVE THE ANNUAL INCENTIVE PLAN
(ITEM 5)
The Board of Directors has adopted, subject to stockholder approval at the
Annual Meeting, the Company's Annual Incentive Plan (the "Incentive Plan"). If
approved by stockholders, the Incentive Plan will become effective as of
February 17, 1995. Stockholder approval of the Incentive Plan is sought to
qualify payments under the Annual Incentive Plan as "performance based"
compensation under Section 162(m) of the Code, and thereby allow the Company to
exclude such compensation from the one (1) million dollar cap on the tax
deductibility of compensation paid by the Company to the Named Executive
Officers. Stockholder approval of the Incentive Plan is necessary to pay the
incentive awards contemplated by the Incentive Plan.
The following summary of certain features of the Incentive Plan is qualified
in its entirety by reference to the full text thereof, which is set forth in
Appendix D attached hereto.
GENERAL. The Incentive Plan provides for all regular full- and part-time
employees of the Company and its divisions and subsidiaries to be granted annual
incentive awards consistent with the objectives and limitations of the Incentive
Plan. If approved by stockholders, it is anticipated that the first awards under
the Incentive Plan will be paid in 1996.
ADMINISTRATION. The Incentive Plan will be administered by the Compensation
Committee, each member of which will be a "disinterested person" within the
meaning of Section 16 of, and Rule 16b-3 under, the Exchange Act. The
Compensation Committee is vested with broad powers to administer and interpret
the Incentive Plan. The Compensation Committee's powers include authority,
within the limitations set forth in the Incentive Plan, to (i) select the
persons to be granted awards, (ii) determine the objectives and conditions for
earning awards, (iii) certify whether such objectives and conditions have been
met, and (iv) aprove the amount of an award.
ELIGIBILITY TO RECEIVE AWARDS. Full- and part-time employees of the Company
and its subsidiaries may, at the discretion of the Compensation Committee, be
granted annual incentive awards under the Incentive Plan. Because the number of
employees may change over time and because the selection of participants is
discretionary, it is impossible to determine the number of persons who will be
eligible for awards under the Incentive Plan during its term.
ANNUAL INCENTIVE AWARDS. Prior to March 30 of each year (or upon becoming
an executive officer whose compensation is required to be disclosed in the
Summary Compensation Table of the Company's annual proxy statement, if later),
certain employees will be granted an incentive award for that year based on a
specified level of pretax earnings for the Company. The annual incentive awards
granted under the Incentive Plan become payable in cash upon the achievement by
the Company of such level of pretax earnings.
NEGATIVE DISCRETION. Notwithstanding attainment of a target established for
an award under the Incentive Plan, the Compensation Committee has the discretion
to reduce some or all of an award that would otherwise be paid to an employee.
AWARD MAXIMUM. The Compensation Committee will set a maximum individual
target award level for each employee, expressed as a percentage of the Company's
pretax net income. The maximum individual target award level that may be
established under the Incentive Plan is four percent (4%) of the Company's
pretax net income. The establishment of a target award level will not guarantee
any employee payment of an award under the Incentive Plan.
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AMENDMENT AND TERMINATION. The Compensation Committee may amend or
terminate the Incentive Plan at any time, provided that unless the stockholders
have first approved thereof, no such amendment may increase the maximum
individual target award under the Incentive Plan, modify the requirements as to
eligibility for participation therein, base the award fund on any measure other
than pretax net income or modify any other material term thereof.
No awards may be made under the Incentive Plan after December 31, 2005.
FEDERAL TAX CONSEQUENCES. The following summary of federal income tax
consequences with respect to the Incentive Plan is not comprehensive and is
based upon laws and regulations currently in effect. Such laws and regulations
are subject to change.
Under the Code as presently in effect, a grant of an award under the
Incentive Plan would have no federal income tax consequences. The payment of the
award is taxable to a participant as ordinary income. It is presently
contemplated that amounts taxable to employees under the Incentive Plan will be
deductible by the Company as compensation.
VOTING REQUIREMENTS. Approval of the Incentive Plan will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE INCENTIVE
PLAN, AND THE ENCLOSED PROXY WILL BE VOTED IN THAT MANNER UNLESS THE STOCKHOLDER
EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY OR ABSTAINS FROM VOTING
ON THIS PROPOSAL.
DATE FOR RECEIPT OF STOCKHOLDER'S PROPOSAL
Any proposal which a stockholder may wish to have included in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held in 1996, in
accordance with Rule 14a-8 of the proxy rules of the Securities and Exchange
Commission, must be received by the Company by December 22, 1995.
OTHER BUSINESS
Management does not presently know of any matters which may be presented for
action at the Annual Meeting other than those set forth herein. However, if any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the proxies solicited by management to exercise their
discretionary authority to vote the shares represented by all effective proxies
on such matters in accordance with their best judgment.
If you do not expect to be personally present at this meeting, please fill
in, date and sign the enclosed proxy card and return it promptly in the enclosed
return envelope which requires no additional postage if mailed in the United
States.
By Order of the Board of Directors
L. KEITH BLACKWELL
GENERAL COUNSEL AND SECRETARY
April 20, 1995
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APPENDIX A
AMENDMENT NO. 1
TO
AMRESCO, INC. (FORMERLY KNOWN AS BEI HOLDINGS, LTD.)
1993 KEY INDIVIDUAL STOCK OPTION PLAN
WHEREAS, on November 16, 1993 the BEI Holdings, Ltd. 1993 Key Individual
Stock Option Plan (the "Plan") was adopted by the Board of Directors of BEI
Holdings, Ltd., a Delaware corporation (the "Company"), and on December 31, 1993
the Plan was approved by the shareholders of the Company; and
WHEREAS, the Company changed its name to AMRESCO, INC. on May 23, 1994, and
the Board now desires to amend the Plan in order to reflect such name change as
well as certain other changes to the Plan;
NOW, THEREFORE, the following amendments to the Plan are hereby adopted:
1. NAME CHANGE. The name of the Plan shall be the "AMRESCO, INC. 1993 Key
Individual Stock Option Plan" and any reference in the Plan to BEI Holdings,
Ltd. shall be changed to a reference to AMRESCO, INC.
2. ELIGIBLE EMPLOYEES. The following shall be added as a new sentence at
the end of Section 1.5:
Any employee of the Company must be a salaried employee in order to be
eligible to receive grants of Options hereunder.
3. INDIVIDUAL LIMITS; EXERCISE PRICE. The following shall be added as new
subparagraphs immediately following subparagraph (h) at the end of Section 2.2
of the Plan:
"(i) No Option or Options with respect to more than 300,000 shares of
Common Stock shall be granted to any individual within any twelve month
period during the term of the Plan.
(j) The option price per share of Common Stock shall not be less than
the Fair Market Value of a share of Common Stock."
4. LIMITED TRANSFERABILITY. Subsection 2.2(f) is hereby deleted in its
entirety and the following is inserted in lieu thereof:
(f) A Grantee may transfer an Option granted hereunder to members of his
or her Immediate Family, to one or more trusts for the benefit of such
Immediate Family members, or to one or more partnerships where such
Immediate Family members are the only partners, if (i) the Option Agreement
evidencing such Option expressly provides that the Option may be
transferred, and (ii) the Grantee does not receive any consideration in any
form whatsoever for said transfer. Any Option so transferred shall continue
to be subject to the same terms and conditions in the hands of the
transferee as were applicable to said Option immediately prior to the
transfer thereof. Option Agreements evidencing options granted prior to May
23, 1994 may be amended to provide for their transferability, subject to the
foregoing conditions. For purposes hereof, "Immediate Family" shall mean the
Grantee and the Grantee's spouse, and their respective ancestors and
descendants.
Any Option that is (i) granted pursuant to any agreement that does not
expressly allow the transfer of said Option or (ii) not amended to expressly
permit its transfer, shall not be transferable by the Grantee otherwise than
by will or by the laws of descent and distribution and such Option thus
shall be exercisable during the Grantee's lifetime only by the Grantee.
Notwithstanding anything herein to the contrary, any Option granted
hereunder may, if the Grantee is disabled and the Option remains
exercisable, be exercised by his or her duly appointed guardian or other
legal representation, and upon a Grantee's death, to the extent that an
Option is
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otherwise exercisable hereunder, such Option may be exercised by the
Grantee's legal representative or by a person who receives the right to
exercise such Option under the Grantee's will or by the applicable laws of
descent and distribution.
5. NO OTHER MODIFICATION. Other than as expressly provided in this
Amendment No. 1, the Plan shall not be modified or superseded.
6. EFFECTIVENESS. This Amendment No. 1 to the Plan has been recommended by
the Compensation Committee and approved by the Board of Directors of the Company
on May 23, 1994 and will be effective as of such date subject to the approval of
such Amendment by shareholders of the Company holding a majority of the votes
cast (with abstentions not counting as being cast) at the next annual meeting of
shareholders of the Company.
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APPENDIX B
AMRESCO, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT AND DURATION OF PLAN
AMRESCO, INC. ("AMRESCO") hereby establishes the 1995 Employee Stock
Purchase Plan (the "Plan"), under which employees of AMRESCO and its
subsidiaries have the right pursuant to options granted under the Plan to
purchase shares of the common stock, par value $.05 per share, of AMRESCO (the
"Common Stock") through payroll deductions or by direct payment to the
Administrator or its designee as provided herein. It is intended that the Plan
shall qualify under the provisions of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). The Plan shall be effective as of the date it
is approved by the Board of Directors of AMRESCO (the "Effective Date"), subject
to any registration requirements under the Securities Act of 1933, as amended
(the "Act"), and the approval of stockholders of AMRESCO under Section 423 of
the Code, and shall continue until terminated in accordance with Section 9.
2. ADMINISTRATION
The Plan shall be administered by an Administrator (the "Administrator") who
shall be appointed by the Board of Directors of AMRESCO (the "Board"). The Board
may appoint as the Administrator an individual or a committee (which may be an
existing or a newly formed committee of the Board). Subject to the provisions
hereof, the Administrator shall have plenary authority in its discretion to
interpret and administer the Plan, including the right to adjust the number of
shares of Common Stock for which an Option is exercised if the limit on the
number of shares which may be purchased under Section 5(a) would be exceeded in
the absence of such adjustment and the right to define the employees of AMRESCO
entitled to participate herein. Except as to matters which are herein expressly
reserved for determination by the Board, the Administrator's decisions and
determinations in the administration hereof shall be final, conclusive and
binding upon all persons, including, but not limited to, AMRESCO and its
subsidiaries, their stockholders and directors and any persons having any
interests in any options which are granted hereunder.
3. PARTICIPATION
(a) GRANT OF OPTIONS. Except as otherwise provided herein, each employee
of AMRESCO or of any corporation, partnership or other legal entity at least 50%
of the voting securities of which are owned directly or indirectly by AMRESCO (a
"Subsidiary"), including, but not limited to, any corporation which becomes a
Subsidiary of AMRESCO on or after the adoption hereof, shall automatically on
the later of the Effective Date or such employee's employment commencement date,
be granted an option (an "Option") hereunder to purchase shares of Common Stock
(employees to whom Options are granted are hereinafter sometimes referred to as
"Participants"), which Option shall continue through such calendar quarter and
shall be granted anew on the first day of each succeeding calendar quarter. Each
such quarterly period, or position thereof with respect to the initial period,
is referred to herein as an "Option Period".
(b) 5% SHAREHOLDERS. Notwithstanding the foregoing, an employee cannot be
granted an Option if such employee, immediately after the Option was granted,
would own stock possessing 5% or more of the total combined voting power or
value of all classes of stock of AMRESCO. For this purpose, an employee shall be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors and
lineal descendants, and stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries. In
addition, an employee is considered for this purpose as also owning stock which
he or she may
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purchase under any outstanding stock options (including an Option). No Option
shall be exercisable for shares of Common Stock except to the extent of that
number of shares which would not cause the Participant to whom such Option is
granted to be a 5% or more shareholder as described above.
(c) RIGHTS AND PRIVILEGES. All employees of AMRESCO or any of its
Subsidiaries shall have the same rights and privileges hereunder, except that
the amount of Common Stock which may be purchased by any employee under an
Option will bear a uniform relationship to the total compensation of employees
in accordance with the maximum authorized payroll deduction or other limitations
as set forth in Section 4(b).
4. TERMS AND CONDITIONS OF OPTIONS
Options are intended to qualify under Section 423 of the Code for favorable
tax treatment. Each Option shall be evidenced by such written document as may be
prescribed by the Administrator or its designee. Options and their exercise
shall be subject to the following requirements:
(a) OPTION PRICE. The price to be paid for Common Stock upon exercise of
an Option through payroll deductions is 85% of the Fair Market Value of the
Common Stock on the last day of each Option Period, and, unless and until the
Administrator provides otherwise, is 100% of such Fair Market Value for exercise
of an Option by other than payroll deductions. "Fair Market Value" shall be
determined as follows:
(i) If, on the relevant date, the Common Stock is traded on a national
or regional securities exchange or on The Nasdaq Stock Market ("Nasdaq") and
closing sale prices are customarily quoted, on the basis of the closing sale
price on the principal such securities exchange on which the Common Stock
may then be traded or, if there is no such sale on the relevant date, then
on the immediately preceding day on which a sale was reported;
(ii) If, on the relevant date, the Common Stock is not listed on any
securities exchange or traded on Nasdaq, but nevertheless is publicly traded
and reported on Nasdaq without closing sale prices being customarily quoted,
on the basis of the mean between the closing bid and asked quotations in
such other over-the-counter market as reported by Nasdaq; but, if there are
no bid and asked quotations in the over-the-counter market as reported by
Nasdaq on that date, then the mean between the closing bid and asked
quotations in the over-the-counter market as reported by Nasdaq on the
immediately preceding day such bid and asked prices were quoted; and
(iii) If, on the relevant date, the Common Stock is not publicly traded
as described in (i) or (ii), on the basis of the good faith determination of
the Administrator.
(b) MANNER OF EXERCISE AND PAYMENT.
(i) In order to exercise an Option, a Participant must authorize payroll
deductions in advance for future pay periods, which, if allowed by the
Administrator or its designee, do not necessarily have to be taken for each
consecutive pay period. In addition, the Administrator may allow, in its
sole discretion and subject to such terms and procedural requirements as it
may establish, for Options to be exercised by delivery of payments by
Participants directly to the Administrator or its designee. Such payroll
deductions or total payments to the Administrator may not exceed, in the
aggregate for any calendar year, ten percent (10%) of the total annual
salary, wages and bonuses paid such Participant for the respective calendar
year. The Administrator or its designee may, in its sole discretion,
establish a minimum amount of any such payroll deduction or direct payment
to the Administrator or its designee, and/or may require that any payroll
deduction must be made in whole percentages (i.e., 1%, 2%, 3%, etc.) and not
in any fraction of a percentage. Such payroll deduction authorizations shall
be made by filing with the Administrator or its designee a completed form
prescribed or approved by the Administrator or its designee.
(ii) In addition to the limitations in Section 4(b)(i), dividends paid
on shares of Common Stock purchased by a Participant upon exercise of an
Option, the certificates for which are held by
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AMRESCO or its designee as nominee for such Participant, shall be added to
the payroll deduction taken on or next following the respective dividend
payment date, and for purposes of an exercise of an Option and the purchase
of Common Stock pursuant thereto, shall be deemed a portion of the
respective payroll deduction. If a Participant exercises an Option by direct
payment to the Administrator or its designee, dividends paid on the Common
Stock purchased upon exercise shall be held by the Administrator or its
designee and invested in additional shares of Common Stock on behalf of the
Participant at such time as the amount held is sufficient to purchase a full
share.
(iii) An Option shall be deemed to be exercised automatically on the last
day of each Option Period during which a payroll deduction is taken or the
option price is paid directly to the Administrator or its designee. Such
Option shall be exercised each such time to the extent of the number of full
shares of Common Stock which may be purchased with the amount then deducted
from the respective Participant's pay or the amount delivered to the
Administrator. Any amount remaining because such remaining amount was not
sufficient to purchase a full share may be retained by AMRESCO for the
Participant's account and applied to the purchase price of shares of Common
Stock pursuant to subsequent exercises of such Option.
(iv) A Participant may prospectively change the amount authorized as
payroll deductions or discontinue payroll deductions, effective as of the
time specified, by filing a notice to such effect with the Administrator or
its designee on a form prescribed by the Administrator or its designee;
provided, however, that no such change in the amount of payroll deductions
shall be effective prior to the expiration of ninety (90) days after the
filing of such notice; and, further provided, that a discontinuance of
payroll deductions shall be effective upon the expiration of thirty (30)
days after the filing of a notice to discontinue payroll deductions and such
Participant may not resume payroll deductions until the expiration of ninety
(90) days from the date of discontinuance. Such change or discontinuance
shall be effective thereafter until another election, authorizing a payroll
deduction, is filed with the Administrator or its designee in the manner
described above. Options may only be exercised by paying the Option price
through a payroll deduction (including dividend payments) or by direct
payment to the Administrator as provided above.
(c) TERM OF OPTION. No Option may be exercised after the expiration of
five (5) years from and after the date such Option is initially granted, and
thus each Option shall expire five (5) years after the date of its initial
grant. Upon expiration of an Option, the Administrator, in its sole discretion,
may, on the date immediately following the date of expiration of such Option or
thereafter, grant a new Option to the employee whose Option so expired.
Notwithstanding the foregoing, all Options will expire at such time as the
maximum aggregate number of shares of Common Stock available hereunder, as set
forth in the Section 5(a), has been acquired pursuant to the exercise of
Options, and an Option will expire upon the effective date of termination of the
employment of the Participant to whom such Option has been granted or on the
date of his or her death.
(d) OPTIONS NON-ASSIGNABLE. An Option shall be exercisable only by the
Participant to whom such Option has been granted, and no Option shall be
assignable by any Participant.
(e) VOTING AND OTHER RIGHTS AS A STOCKHOLDER. Each Participant shall have
full stockholder rights with respect to all shares of Common Stock purchased
upon exercise of an Option, including, but not limited to, voting, dividend and
liquidation rights. Shares for which an Option has been exercised but which are
held in the name of AMRESCO or its agent for a Participant's account will be
covered by proxies provided to such Participant by AMRESCO. A Participant shall
have no rights as a stockholder with respect to shares subject to an Option for
which such Option has not then been exercised.
(f) ANNUAL $25,000 LIMIT. No employee may be granted an Option which
permits his or her rights to purchase Common Stock hereunder and under any other
plans qualifying under Section 423 of the Code of AMRESCO and its Subsidiaries,
taken in the aggregate, to accrue at a rate which exceeds $25,000 of fair market
value of such stock (determined at the time the Option is granted) for
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each calendar year in which such Option is outstanding at any time. For purposes
hereof (i) the right to purchase Common Stock under an Option accrues when the
Option (or any portion thereof) first becomes exercisable during the calendar
year; (ii) the right to purchase Common Stock under an Option accrues at the
rate provided in the Option, but in no case may such rate exceed $25,000 of fair
market value of Common Stock (determined at the time such Option is granted) for
any one calendar year; and (iii) a right to purchase Common Stock which has
accrued under one Option may not be carried over to any other Option. Subject to
the other limitations herein, if a Participant does not purchase the maximum
amount of Common Stock in a given calendar year, the excess of $25,000 over the
amount of Common Stock purchased may be carried over to a subsequent year for a
later purchase. Thus, a Participant may purchase $25,000 of Common Stock for the
year of purchase and, in addition, that amount for each of the preceding years
during which the Option was outstanding to the extent that the $25,000 ceiling
was not purchased in the preceding year. However, a Participant may not purchase
Common Stock in anticipation that the limit will not be used in future years.
5. SHARES SUBJECT TO OPTION
(a) No more than an aggregate of three hundred thousand (300,000) shares of
Common Stock may be purchased or issued pursuant to the exercise of Options,
provided, however, such number of shares shall automatically be adjusted from
and after the Effective Date to reflect appropriately any of the following
events: (i) any stock split in the form of a stock dividend payable in shares of
Common Stock; (ii) any recapitalization, reclassification, split-up,
consolidation of, or other change in, the Common Stock; or (iii) an exchange of
the then outstanding shares of Common Stock, in connection with a merger,
consolidation, share exchange or other reorganization of AMRESCO.
(b) AMRESCO will, in accordance with and to the extent of the exercise of
each Option, apply all payroll deductions and amounts received by the
Administrator on behalf of Participants to the purchase of full shares of Common
Stock for the account of the respective Participant. Such shares may be made
available from either authorized but theretofore unissued shares of Common
Stock, Common Stock held in treasury or shares of Common Stock reacquired by
AMRESCO, or may be purchased in the public market, from a market maker, or by
other negotiated transactions, including purchases from Participants who are
receiving Common Stock pursuant to the exercise of Options or from persons who
are entitled to receive or who have received Common Stock from any benefit
program maintained by AMRESCO upon retirement, other termination of employment
or any other event. Such purchases may be subject to such terms with respect to
price, delivery and other terms and conditions as to which AMRESCO may agree.
AMRESCO may appoint an independent agent to purchase the Common Stock, with the
independent agent determining the amount of such purchases, the price to be paid
and the broker or dealer, if any, through or from whom the purchases are to be
made. For the purpose of making purchases, AMRESCO may commingle each
Participant's funds with those of all other Participants. The manner and timing
of the issuance or purchases of Common Stock hereunder shall be in accordance
with all applicable federal securities laws.
6. DISTRIBUTION OF STOCK CERTIFICATES
Until distribution is requested by a Participant, stock certificates
evidencing Participants' shares of Common Stock acquired upon the exercise of an
Option shall be held by AMRESCO or its designee as the nominee for such
Participants. Certificates shall be held by AMRESCO or its designee as nominee
for Participants solely as a matter of convenience. The Participant shall have
all ownership rights to such shares, and AMRESCO shall have no ownership or
other rights of any kind with respect to any such certificates or the shares
represented thereby. A Participant may withdraw certificates for his or her
shares of Common Stock credited to his or her account at any time by a written
request for such withdrawal delivered to the Administrator or its designee, and
upon any such request, AMRESCO will promptly distribute such certificates to the
requesting Participant. Distributions of stock certificates will be made
promptly after the death, disability, retirement or other termination of
employment of a Participant or discontinuance by a Participant of payroll
deductions hereunder. In the event of a Participant's death, such stock
certificates will be distributed to the Participant's
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beneficiary most recently designated by such Participant on a form prescribed by
the Administrator or its designee. If such Participant makes no such
designation, or if all of the designated beneficiaries predecease such
Participant, distribution will be made to such Participant's estate.
7. SECURITIES REGULATION
AMRESCO shall not be required to issue any certificate or certificates for
shares of Common Stock hereunder prior to (i) obtaining any approval from any
governmental agency which AMRESCO shall, in its discretion, determine to be
necessary or advisable, (ii) the admission of such shares to listing on any
national securities exchange or Nasdaq on which the shares of Common Stock may
be listed and (iii) the completion of any registration or other qualification of
such shares under any state or federal law or ruling or regulations of any
governmental body which AMRESCO shall, in its sole discretion, determine to be
necessary or advisable.
8. AMENDMENT
The Plan may, from time to time, be amended or modified by the Board in such
respects as it shall deem advisable, including, without limitation, amendments
to ensure that the Options qualify under Section 423 of the Code, or amendments
to conform to any change in any law or regulation governing same; provided,
however, that no such amendment or modification shall (i) disqualify the Plan
under Section 423 of the Code, (ii) increase the aggregate number of shares of
Common Stock which may be purchased or issued pursuant to the exercise of
Options (other than an increase merely reflecting a change in capitalization
such as a stock dividend or stock split-up) or (iii) change the designation of
corporations whose employees may be offered Options. Any amendment which would
have the effect of (ii) or (iii) above must be approved by AMRESCO's
stockholders in accordance with Section 423 of the Code and any securities law
requirements.
9. TERMINATION OF PLAN
The Plan shall continue until the first to occur of (i) the maximum
aggregate number of shares of Common Stock available hereunder, as set forth in
Section 5(a) hereof, has been acquired pursuant to the exercise of Options or
(ii) termination of the Plan by the Board. The Board may, at any time in its
absolute discretion, terminate the Plan and, unless disallowed by applicable
law, terminate any then outstanding Options so that such terminated Options may
not be exercised after the effective date of such termination.
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APPENDIX C
AMRESCO, INC.
1995 STOCK OPTION AND AWARD PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. AMRESCO, INC., a Delaware corporation
(hereinafter referred to as "AMRESCO"), hereby establishes a stock option and
award plan to be known as the "AMRESCO, INC. 1995 Stock Option and Award Plan"
(the "Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Performance Shares and
Restricted Stock.
Subject to approval by AMRESCO's stockholders at their 1995 Annual Meeting,
the Plan shall become effective as of February 17, 1995 (the "Effective Date")
and shall remain in effect as provided in Section 1.3.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to secure for AMRESCO
and its stockholders the benefits of the incentive inherent in stock ownership
in AMRESCO by key employees, directors and other persons who are largely
responsible for its future growth and continued success. The Plan promotes the
success and enhances the value of AMRESCO by linking the personal interests of
Participants to those of AMRESCO's stockholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to AMRESCO in its
ability to motivate, attract and retain the services of Participants upon whose
judgment, interest and special effort the successful conduct of its operation
largely depends.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date
and shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 13, until the day
prior to the tenth (10th) anniversary of the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used herein, the following terms shall have the meanings set forth
below and, when the meaning is intended, the initial letter of the word is
capitalized:
(a) "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Performance
Shares or Restricted Stock.
(b) "AWARD AGREEMENT" means an agreement entered into by each
Participant and AMRESCO, setting forth the terms and provisions applicable
to Awards granted to Participants hereunder.
(c) "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
(d) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
AMRESCO.
(e) "CAUSE" means: (i) willful misconduct on the part of a Participant
that is materially detrimental to AMRESCO; or (ii) the indictment of a
Participant for the commission of a felony. The existence of "Cause" under
either (i) or (ii) shall be determined by the Committee. Notwithstanding the
foregoing, if the Participant has entered into an employment agreement that
is binding as of the date of employment termination, and if such employment
agreement defines "Cause" and/or provides a means of determining whether
"Cause" exists, such definition of "Cause" and the means of determining its
existence shall apply to the Participant for purposes hereof.
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(f) "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) An acquisition by any Person of Beneficial Ownership of the
Shares then outstanding ("AMRESCO Common Stock Outstanding") or the
voting securities of AMRESCO then outstanding entitled to vote generally
in the election of directors ("AMRESCO Voting Securities Outstanding");
provided such acquisition of Beneficial Ownership would result in the
Person's beneficially owning (within the meaning of Rule 13d-3
promulgated under the Exchange Act) twenty-five percent (25%) or more of
AMRESCO Common Stock Outstanding or twenty-five percent (25%) or more of
the combined voting power of AMRESCO Voting Securities Outstanding; and
provided further, that immediately prior to such acquisition such Person
was not a direct or indirect Beneficial Owner of twenty-five percent
(25%) or more of AMRESCO Common Stock Outstanding or twenty-five percent
(25%) or more of the combined voting power of AMRESCO Voting Securities
Outstanding, as the case may be; or
(ii) The approval of the stockholders of AMRESCO of a reorganization,
merger, consolidation, complete liquidation or dissolution of AMRESCO,
the sale or disposition of all or substantially all of the assets of
AMRESCO or similar corporate transaction (in each case referred to in
this Section 2(f) as a "Corporate Transaction") or, if consummation of
such Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency,
the obtaining of such consent (either explicitly or implicitly); or
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, for purposes of this Section 2(f), that any individual who
becomes a member of the Board subsequent to the Effective Date whose
election, or nomination for election by AMRESCO's stockholders, was
approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act, including any successor to such Rule) or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of this
Section 2(f), the following shall not constitute a Change in Control for
purposes hereof: (1) any acquisition of shares of common stock of AMRESCO by, or
consummation of a Corporate Transaction with, any Subsidiary or an employee
benefit plan (or related trust) sponsored or maintained by AMRESCO or an
affiliate; or (2) any acquisition of shares of common stock of AMRESCO, or
consummation of a Corporate Transaction, following which more than fifty percent
(50%) of the shares of common stock then outstanding of the corporation
resulting from such acquisition or Corporate Transaction and more than fifty
percent (50%) of the combined voting power of the voting securities then
outstanding of such corporation entitled to vote generally in the election of
directors, is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were Beneficial Owners of
AMRESCO Common Stock Outstanding and AMRESCO Voting Securities Outstanding,
respectively, immediately prior to such acquisition or Corporate Transaction in
substantially the same proportions as their ownership, immediately prior to such
acquisition or Corporate Transaction, of AMRESCO Common Stock Outstanding and
AMRESCO Voting Securities Outstanding, as the case may be.
(g) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
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(h) "COMMITTEE" means the committee appointed by the Board to
administer the Plan with respect to grants of Awards, as specified in
Article 3.
(i) "DIRECTOR" means any individual who is a member of the Board of
Directors.
(j) "DISABILITY" shall have the meaning ascribed to such term in the
AMRESCO long- term disability plan covering the Participant, or in the
absence of such plan, a meaning consistent with Section 22(e)(3) of the
Code.
(k) "EMPLOYEE" means any full-time, salaried employee of AMRESCO, or
AMRESCO's Subsidiaries.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(m) "FAIR MARKET VALUE" shall be determined as follows:
(i) If, on the relevant date, the Shares are traded on a national or
regional securities exchange or on The Nasdaq Stock Market ("Nasdaq") and
closing sale prices for the Shares are customarily quoted, on the basis
of the closing sale price on the principal such securities exchange on
which the Shares may then be traded or, if there is no such sale on the
relevant date, then on the immediately preceding day on which a sale was
reported;
(ii) If, on the relevant date, the Shares are not listed on any
securities exchange or traded on Nasdaq, but nevertheless are publicly
traded and reported on Nasdaq without closing sale prices for the Shares
being customarily quoted, on the basis of the mean between the closing
bid and asked quotations in such other over-the-counter market as
reported by Nasdaq; but, if there are no bid and asked quotations in the
over-the-counter market as reported by Nasdaq on that date, then the mean
between the closing bid and asked quotations in the over-the-counter
market as reported by Nasdaq on the immediately preceding day such bid
and asked prices were quoted; and
(iii) If, on the relevant date, the Shares are not publicly traded as
described in (i) or (ii), on the basis of the good faith determination of
the Committee.
(n) "FINAL AWARD" means the actual award earned during a performance
period by a Participant, as determined by the Committee at the end of the
performance period pursuant to Article 7.
(o) "INCENTIVE PAYMENT DATE" means the seventy-fifth (75th) day
following the last day of the performance period during which the Final
Award under Article 7 was earned, or such earlier date upon which Final
Awards are paid to Participants.
(p) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares, granted under Article 6 which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
(q) "INSIDER" shall mean a Person who is, on the relevant date, a
director, officer or ten percent (10%) beneficial owner of any class of
AMRESCO's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
(r) "NAMED EXECUTIVE OFFICER" means a Participant who, as of the date
of vesting and/or payout of an Award is one of the group of "covered
employees," as defined in the regulations promulgated under Code Section
162(m), or any successor statute.
(s) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 which is not intended to meet the
requirements of Code Section 422.
(t) "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.
(u) "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option, as determined by the Committee.
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(v) "PARTICIPANT" means an Employee, director or other person who has
been granted an Award which is outstanding.
(w) "PERFORMANCE SHARE" means an Award granted to an Employee, as
described in Article 7.
(x) "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
(y) "PLAN YEAR" shall mean, for purposes of Article 7, AMRESCO's
fiscal year which coincides with each calendar year during the term hereof.
(z) "RETIREMENT" shall have the meaning ascribed to such term in the
AMRESCO, INC. Retirement Savings and Profit Sharing Plan and Trust.
(aa) "RESTRICTED STOCK" means an Award of restricted Shares granted in
accordance with the terms of Article 8 and the other provisions hereof.
(ab) "SHARES" means the shares of common stock of AMRESCO, par value
$0.05 per share.
(ac) "SUBSIDIARY" means any corporation, partnership, joint venture or
other entity in which AMRESCO has a fifty percent (50%) or greater voting
interest.
(ad) "WINDOW PERIOD" means the period beginning on the third (3rd)
business day following the date of public release of AMRESCO's quarterly
sales and earnings information, and ending on the twelfth (12th) business
day following such date.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board
consisting of not less than two (2) Directors who meet the "disinterested
administration" requirements of Rule 16b-3 or any successor thereto under the
Exchange Act. The members of the Committee shall be appointed from time to time
by, and shall serve at the discretion of, the Board of Directors.
The Committee shall be comprised solely of Directors who are eligible to
administer the Plan pursuant to Rule 16b-3(c)(2) or any successor thereto under
the Exchange Act. However, if for any reason the Committee does not qualify to
administer the Plan, as contemplated by Rule 16b-3(c)(2) of the Exchange Act,
the Board of Directors may appoint a new Committee member who complies with Rule
16b-3(c)(2).
3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions hereof, the
Committee shall have full power to select the Employees and other Persons who
are responsible for the future growth and success of AMRESCO, who may include,
without limitation, consultants, independent contractors or other providers of
services to AMRESCO, who shall participate herein (who may change from year to
year); determine the size and types of Awards; determine the terms and
conditions of Awards in a manner consistent herewith (including vesting
provisions and the duration of the Awards); construe and interpret the Plan and
any agreement or instrument entered into hereunder; establish, amend or waive
rules and regulations for the Plan's administration; and (subject to the
provisions of Article 13) amend the terms and conditions of any outstanding
Award to the extent such terms and conditions are within the discretion of the
Committee as provided herein, including to establish different terms and
conditions relating to the effect of the termination of employment or other
service to AMRESCO. Further, the Committee shall make all other determinations
which may be necessary or advisable for the administration hereof. As permitted
by law, the Committee may delegate its authority hereunder.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions hereof and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including AMRESCO, the stockholders, Employees, Participants and their estates
and beneficiaries.
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ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant of Awards shall be an aggregate
of two million five hundred thousand (2,500,000). These Shares may, in the
discretion of AMRESCO, be either authorized but unissued Shares or Shares held
as treasury shares, including Shares purchased by AMRESCO.
The following rules shall apply for purposes of the determination of the
number of Shares available for grant hereunder;
(a) The grant of an Option or Restricted Stock shall reduce the Shares
available for grant hereunder by the number of Shares subject to such Award.
(b) The Committee shall in each case determine the appropriate number of
Shares to deduct from the authorized pool in connection with the grant of
Performance Shares.
(c) While an Option, Restricted Stock or Performance Share is
outstanding, it shall be counted against the authorized pool of Shares,
regardless of its vested status.
(d) In the event an Award is paid in the form of Shares or derivatives
of Shares, the authorized pool shall be reduced by the number of Shares or
Share derivatives paid to the Participant, as determined by the Committee.
(e) To the extent that an Award is settled in cash rather than in
Shares, the authorized Share pool shall be credited with the appropriate
number of Shares represented by the cash settlement of the Award, as
determined at the sole discretion of the Committee (subject to the
limitation set forth in Section 4.2).
4.2 LAPSED AWARDS. If any Award is canceled, terminates, expires or lapses
for any reason, any Shares subject to such Award shall again be available for
the grant of an Award. However, in the event that prior to the Award's
cancellation, termination, expiration or lapse, the holder of the Award at any
time received one (1) or more "benefits of ownership" pursuant to such Award (as
defined by the Securities and Exchange Commission, pursuant to any rule or
interpretation promulgated under Section 16 of the Exchange Act), the Shares
subject to such Award shall not be made available for regrant hereunder.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of AMRESCO, any reorganization (whether or not
such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of AMRESCO, such adjustment shall be
made in the number and class of Shares which may be delivered hereunder, and in
the number and class of and/or price of Shares subject to outstanding Awards, as
may be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of Shares subject to any Award shall always be a whole number
and the Committee shall make such adjustments as are necessary to insure Awards
of whole Shares.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Any key Employee of AMRESCO, or of any Subsidiary, including any such
Employee who is also a director of AMRESCO, or of any Subsidiary, or any other
Person, including consultants, independent contractors or other service
providers, whose judgment, initiative and efforts contribute or may be expected
to contribute materially to the successful performance of AMRESCO or any
Subsidiary shall be eligible to receive an Award. In determining the Employees
and other Persons to whom an Award shall be granted and the number of Shares
which may be granted pursuant to that Award, the Committee shall take into
account the duties of the respective Person, their present and potential
contributions to the success of AMRESCO or any Subsidiary, and such other
factors as the Committee shall deem relevant in connection with accomplishing
the purpose hereof.
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No person who is a member of the Committee shall be eligible to be granted
any Award hereunder while so serving.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions hereof, Options
may be granted to Employees or other Persons at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant;
provided, however, that in the case of any ISO, only an Employee may receive
such grant and the aggregate Fair Market Value (determined at the time such
Option is granted) of the Shares to which ISOs are exercisable for the first
time by the Optionee during any calendar year (hereunder and under all other
Incentive Stock Option Plans of AMRESCO and any Subsidiary) shall not exceed
$100,000. The Committee may grant a Participant ISOs, NQSOs or a combination
thereof, and may vary such Awards among Participants.
The maximum number of Options that a Named Executive Officer can be granted
hereunder during any twelve month period is 300,000.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains and such other provisions as the
Committee shall determine. The Award Agreement shall further specify whether the
Award is intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified to be treated as an
ISO (even if designated as an ISO) shall be a NQSO.
6.3 OPTION PRICE. The Option Price for each grant of an ISO shall be not
less than one hundred percent (100%) of the Fair Market Value of a Share on the
date the ISO is granted. In no event, however, shall any Participant, who at the
time he would otherwise be granted an Option owns (within the meaning of Section
424(d) of the Code) stock of AMRESCO possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of AMRESCO be eligible
to receive an ISO at an Option Price less than one hundred ten percent (110%) of
the Fair Market Value of a Share on the date the ISO is granted. The price at
which each Share covered by each NQSO shall be purchased by an Optionee shall be
established by the Committee, but in no event shall such price be less than
eighty-five percent (85%) of the Fair Market Value (or such lower percentage of
Fair Market Value as may be established by Internal Revenue Service rules or
regulations as the limit for granting discounted stock options without causing
immediate tax consequences to the Participant) of a Share on the date the Option
is granted.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
AMRESCO possessing more than ten percent (10%) of the total combined voting
power of all classes of stock in AMRESCO, shall be exercisable not later than
the fifth (5th) anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each grant or for each
Participant. Each Option shall be exercisable for such number of Shares and at
such time or times, including periodic installments, as may be determined by the
Committee at the time of the grant. Except as otherwise provided in the Award
Agreement and Article 12, the right to purchase Shares that are exercisable in
periodic installments shall be cumulative so that when the right to purchase any
Shares has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option.
6.6 PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to AMRESCO, setting forth the number of Shares with respect
to which the Option is to be exercised, accompanied by full payment for the
Shares. The Option Price upon exercise of any Option shall be
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payable to AMRESCO in full either: (a) in cash, or (b) if approved by the
Committee, by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Option Price), or (c)
by a combination of (a) and (b). The Committee also may allow cashless exercises
as permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, AMRESCO shall deliver to the Participant, in the Participant's
name, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).
6.7 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR
RETIREMENT. Unless otherwise provided by the Committee in an Award Agreement,
the following rules shall apply in the event of the Participant's termination of
employment due to death, Disability, or Retirement. With respect to a
Participant that is a non-employee director of AMRESCO or is otherwise not an
Employee, the following references to employment shall be deemed to be
references to service as a director or in such other capacity as is determined
by the Committee:
(a) TERMINATION BY DEATH. In the event the Participant dies while
actively employed, all outstanding Options granted to that Participant shall
immediately vest and shall remain exercisable at any time prior to their
expiration date, or for two (2) years after the date of death, whichever
period is shorter, by (i) such person(s) as shall have been named as the
Participant's beneficiary, (ii) such person(s) that have acquired the
Participant's rights under such Options by will or by the laws of descent
and distribution, (iii) the Participant's estate or representative of the
Participant's estate or (iv) by a transferee of the Option who has acquired
the Option in a transaction that is permitted by Section 6.9.
(b) TERMINATION BY DISABILITY. In the event the employment of a
Participant is terminated by reason of Disability, all outstanding Options
granted to that Participant shall immediately vest as of the date the
Committee determines the definition of Disability to have been satisfied and
shall remain exercisable at any time prior to their expiration date, or for
one (1) year after the date that the Committee determines the definition of
Disability to have been satisfied, whichever period is shorter, by the
Participant's duly appointed guardian or other legal representative.
(c) TERMINATION BY RETIREMENT. In the event the employment of a
Participant is terminated by reason of Retirement, all outstanding Options
granted to that Participant shall immediately vest and shall remain
exercisable at any time prior to their expiration date, or for three (3)
months after the effective date of Retirement, whichever period is shorter.
(d) EMPLOYMENT TERMINATION FOLLOWED BY DEATH. In the event that a
Participant's employment terminates by reason of Disability or Retirement,
and within the exercise period following such termination the Participant
dies, then the remaining exercise period for outstanding Options shall be
one (1) year following death. Such Options shall be exercisable by the
persons specified in subsection (a) above.
6.8 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of a
Participant shall terminate for any reason other than the reasons set forth in
Section 6.7, all Options held by the Participant which are not vested as of the
effective date of employment termination immediately shall be forfeited to
AMRESCO (and shall once again become available for grant hereunder). However,
the Committee, in its sole discretion, shall have the right to immediately vest
all or any portion of such Options, subject to such terms as the Committee, in
its sole discretion, deems appropriate.
In the event an Employee's employment is terminated by AMRESCO for Cause, or
an Employee voluntarily terminates his employment (other than upon retirement),
the rights under any then vested outstanding Options shall terminate immediately
upon such termination of employment. If the
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Employee's employment is terminated by AMRESCO without Cause, any options vested
as of the date of termination shall remain exercisable at any time prior to
their expiration date or for three (3) months after his date of termination of
employment, whichever period is shorter.
6.9 LIMITED TRANSFERABILITY. A Participant may transfer an Option to
members of his or her Immediate Family, to one or more trusts for the benefit of
such Immediate Family members, or to one or more partnerships where such
Immediate Family members are the only partners, if (i) the Award Agreement
evidencing such Option expressly provides that the Option may be transferred and
(ii) the Participant does not receive any consideration in any form whatsoever
for said transfer. Any Option so transferred shall continue to be subject to the
same terms and conditions in the hands of the transferee as were applicable to
said Option immediately prior to the transfer thereof. Any reference in any such
Award Agreement to the employment by or performance of services for AMRESCO by
the Participant shall continue to refer to the employment of or performance by
the transferring Participant. For purposes hereof, "Immediate Family" shall mean
the Participant and the Participant's spouse, and their respective ancestors and
descendants. Any Option that is granted pursuant to any Award Agreement that did
not initially expressly allow the transfer of said Option and that has not been
amended to expressly permit such transfer, shall not be transferable by the
Participant otherwise than by will or by the laws of descent and distribution
and such Option thus shall be exercisable during the Participant's lifetime only
by the Participant.
ARTICLE 7. PERFORMANCE SHARES
7.1 GRANT OF PERFORMANCE SHARES. Subject to the terms hereof, Performance
Shares may be granted to eligible Employees at any time and from time to time
for no consideration, as shall be determined by the Committee. The Committee
shall have complete discretion in determining the number of Performance Shares
granted to each Participant; provided, however, that unless and until AMRESCO's
stockholders vote to change the maximum number of Performance Shares that may be
earned by any one Named Executive Officer (subject to the terms of Article 13),
none of the Named Executive Officers may earn more than three hundred thousand
(300,000) Performance Shares with respect to any performance period.
7.2 VALUE OF PERFORMANCE SHARES. Each Performance Share shall have a value
equal to the Fair Market Value of a Share on the date the Performance Share is
earned. The Committee shall set performance goals in its discretion which,
depending on the extent to which they are met, will determine the number of
Performance Shares that will be earned by the Participants. The time period
during which the performance goals must be met shall be called a "performance
period." Performance periods shall, in all cases, equal or exceed two (2) years
in length. The performance goals shall be established at the beginning of the
performance period (or within such time period as is permitted by Code Section
162(m)).
Unless and until AMRESCO's stockholders vote to change the general
performance measures (subject to the terms of Article 13), the attainment of
which shall determine the number of Performance Shares earned hereunder, the
Committee will use one or more of the following performance measures for
purposes of grants to Named Executive Officers: total shareholder return, return
on assets, return on equity, earnings per share and ratio of operating overhead
to operating revenue. Each Plan Year, the Committee, in its sole discretion, may
select among the performance measures specified in this Section 7.2 and set the
relative weights to be given to such performance measures. However, in the case
of Participants who are not Named Executive Officers, the Committee may approve
performance measures that are not specified in this Section 7.2 without
obtaining stockholder approval of such measures.
In the event that applicable tax and/or securities laws (including, but not
limited to, Code Section 162(m) and Section 16 of the Exchange Act) change to
permit Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval.
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7.3 EARNING OF PERFORMANCE SHARES. After the applicable performance period
has ended, the Committee shall certify the extent to which the established
performance goals have been achieved. Subsequently, each holder of Performance
Shares shall be entitled to receive payout on the number of Performance Shares
earned by the Participant over the performance period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved. The Committee may, in its sole discretion, decrease the amount of a
Final Award otherwise payable to a Participant under this Article 7. The
Committee shall have no discretion, however, to increase the amount of a Final
Award otherwise payable to a Named Executive Officer under this Article 7.
7.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE SHARES. Payment of earned
Performance Shares shall be made, in a single lump sum, promptly but in no event
later than the Incentive Payment Date. The Committee, in its sole discretion,
may pay earned Performance Shares in the form of cash or in Shares (or in a
combination thereof) which have, as of the close of the applicable performance
period, an aggregate Fair Market Value equal to the value of the earned
Performance Shares.
7.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT OR AT
THE REQUEST OF AMRESCO WITHOUT CAUSE. In the event the employment of a
Participant is terminated by reason of death, Disability or Retirement or by
AMRESCO without Cause during a performance period, the Participant shall receive
a prorated payout with respect to the Performance Shares. The prorated payout
shall be determined by the Committee, in its sole discretion, and shall be based
upon the length of time that the Participant held the Performance Shares during
the performance period, and shall further be adjusted based on the achievement
of the established performance goals at the time of his termination.
Payment of earned Performance Shares shall be made at the same time payments
are made to Participants who did not terminate employment during the applicable
performance period.
7.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 7.5, all Performance Shares shall be forfeited by the
Participant to AMRESCO.
7.7 NONTRANSFERABILITY. Unless the Committee provides otherwise in the
Award Agreement, Performance Shares may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will, by the laws
of descent and distribution. Further, a Participant's Performance Share rights
hereunder shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANTS. The Committee may from time to time in its discretion grant
Restricted Stock to Employees and may determine the number of Shares of
Restricted Stock to be granted and the terms and conditions of, and the amount
of payment, if any, to be made by the Employee for, such Restricted Stock. A
grant of Restricted Stock may require the Employee to pay for such Shares of
Restricted Stock, but the Committee may establish a price below Fair Market
Value at which the Employee can purchase the Shares of Restricted Stock. Each
grant of Restricted Stock will be evidenced by an Award Agreement containing
terms and conditions not inconsistent herewith as the Committee shall determine
to be appropriate in its sole discretion. Such Restricted Stock shall be granted
subject to the restrictions prescribed pursuant hereto and the Award Agreement.
8.2 RESTRICTED PERIOD; LAPSE OF RESTRICTIONS. At the time a grant of
Restricted Stock is made, the Committee shall establish a period or periods of
time (the "Restricted Period") applicable to such grant which, unless the
Committee otherwise provides, shall not be less than one (1) year. Subject to
the other provisions of this Article 8, at the end of the Restricted Period all
restrictions shall lapse and the Restricted Stock shall vest in the Participant.
At the time a grant is made, the Committee may, in its discretion, prescribe
conditions for the incremental lapse of restrictions during the Restricted
Period and for the lapse or termination of restrictions upon the occurrence of
other conditions in addition to or other than the expiration of the Restricted
Period with respect to all or any portion of
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the Restricted Stock. Such conditions may, but need not, include without
limitation, (a) the death, Disability or Retirement of the Employee to whom
Restricted Stock is granted or (b) the occurrence of a Change in Control. The
Committee may also, in its discretion, shorten or terminate the Restricted
Period, or waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any time after the
date the grant is made.
8.3 RIGHTS OF HOLDER; LIMITATIONS THEREON. Upon a grant of Restricted
Stock, a stock certificate (or certificates) representing the number of Shares
of Restricted Stock granted to the Employee shall be registered in the
Employee's name and shall be held in custody by AMRESCO or a bank selected by
AMRESCO for the Employee's account. Following such registration, the Employee
shall have the rights and privileges of a stockholder as to such Restricted
Stock, including the right to receive dividends and to vote such Restricted
Stock, except that, the right to receive cash dividends shall be the right to
receive such dividends either in cash currently or by payment in Restricted
Stock, as the Committee shall determine, and except further that, the following
restrictions shall apply:
(a) The Employee shall not be entitled to delivery of a certificate
until the expiration or termination of the Restricted Period for the Shares
represented by such certificate and the satisfaction of any and all other
conditions prescribed by the Committee;
(b) None of the Shares of Restricted Stock may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during the
Restricted Period and until the satisfaction of any and all other conditions
prescribed by the Committee; and
(c) All of the Shares of Restricted Stock that have not vested shall be
forfeited and all rights of the Employee to such Restricted Stock shall
terminate without further obligation on the part of AMRESCO unless the
Employee has remained a full-time employee of AMRESCO or any of its
Subsidiaries until the expiration or termination of the Restricted Period
and the satisfaction of any and all other conditions prescribed by the
Committee applicable to such Restricted Stock. Upon the forfeiture of any
Shares of Restricted Stock, such forfeited Shares shall be transferred to
AMRESCO without further action by the Employee, and shall, in accordance
with Section 4.2, again be available for grant hereunder.
With respect to any Shares received as a result of adjustments under Section
4.3 and any Shares received with respect to cash dividends declared on
Restricted Stock, the Participant shall have the same rights and privileges, and
be subject to the same restrictions, as are set forth in this Article 8.
8.4 DELIVERY OF UNRESTRICTED SHARES. Upon the expiration or termination of
the Restricted Period for any Shares of Restricted Stock and the satisfaction of
any and all other conditions prescribed by the Committee, the restrictions
applicable to such Restricted Stock shall lapse and a stock certificate for the
number of Shares of Restricted Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions except any that may be
imposed by law, to the holder of the Restricted Stock. AMRESCO shall not be
required to deliver any fractional Share but will pay, in lieu thereof, the Fair
Market Value (determined as of the date the restrictions lapse) of such
fractional share to the holder thereof. Prior to or concurrently with the
delivery of a certificate for Restricted Stock, the holder shall be required to
pay an amount necessary to satisfy any applicable federal, state and local tax
requirements as set out in Article 14.
8.5 NONASSIGNABILITY OF RESTRICTED STOCK. Unless the Committee provides
otherwise in the Award Agreement, no grant of, nor any right or interest of a
Participant in or to any Restricted Stock, or in any instrument evidencing any
grant hereunder, may be assigned, encumbered or transferred except, in the event
of the death of a Participant, by will or the laws of descent and distribution.
ARTICLE 9. BENEFICIARY DESIGNATION
Each Participant hereunder may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit hereunder is to be paid in case of his or her death before he or she
receives any or all of such benefit. Each such designation shall revoke all
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prior designations by the same Participant, shall be in a form prescribed by
AMRESCO and shall be effective only when filed by the Participant, in writing,
with AMRESCO during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
The spouse of a married Participant domiciled in a community property
jurisdiction shall join in any designation of beneficiary or beneficiaries other
than the spouse.
ARTICLE 10. DEFERRALS
The Committee may permit a Participant to defer to another plan or program
such Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option, the satisfaction of any requirements or goals with respect to
Performance Shares or the vesting of Restricted Stock. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.
ARTICLE 11. RIGHTS OF EMPLOYEES
11.1 EMPLOYMENT. Nothing herein shall interfere with or limit in any way
the right of AMRESCO or a Subsidiary to terminate any Participant's employment
or engagement by AMRESCO at any time, nor confer upon any Participant any right
to continue in the employ or service of AMRESCO or a Subsidiary. For purpose
hereof, transfer of employment of a Participant between AMRESCO and any one of
its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of
employment.
11.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award, or, having been so selected, to be selected to receive a
future Award.
ARTICLE 12. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, except as provided in the Award
Agreement or unless otherwise specifically prohibited by the terms of Article
17:
(a) Any and all Options granted hereunder shall become fully vested and
immediately exercisable;
(b) The target payout opportunity attainable under all outstanding
Performance Shares shall be deemed to have been fully earned for the entire
performance period(s) as of the effective date of the Change in Control, and
all earned Performance Shares shall be paid out in accordance with Section
7.4 to Participants within thirty (30) days following the effective date of
the Change in Control; provided, however, that there shall not be an
accelerated payout with respect to Performance Shares which were granted
less than six (6) months prior to the effective date of the Change in
Control;
(c) All restrictions on a grant of Restricted Stock shall lapse and such
Restricted Stock shall be delivered to the Participant in accordance with
Section 8.4; provided, however, that there shall not be an accelerated
delivery with respect to Restricted Stock which was granted less than six
(6) months prior to the effective date of the Change in Control; and
(d) Subject to Article 13, the Committee shall have the authority to
make any modifications to the Awards as determined by the Committee to be
appropriate before the effective date of the Change in Control.
ARTICLE 13. AMENDMENT, MODIFICATION AND TERMINATION
13.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may, at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of AMRESCO represented and voted at a meeting at which a
quorum is present, no amendment shall be made hereto if such amendment would (a)
materially modify the eligibility requirements provided in Article 5; (b)
increase the total number
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of Shares (except as provided in Section 4.3) which may be granted hereunder, as
provided in Section 4.1; (c) extend the term hereof; or (d) amend the Plan in
any manner which the Board, in its discretion, determines should become
effective only if approved by the stockholders even though such stockholder
approval is not expressly required hereby or by law. No amendment which requires
stockholder approval in order for the Plan to continue to comply with Rule 16b-3
under the Exchange Act, including any successor to such Rule, shall be effective
unless such amendment shall be approved by the requisite vote of stockholders.
13.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification
hereof shall adversely affect in any material way any Award previously granted
hereunder, without the written consent of the Participant holding such Award.
The Committee with the written consent of the Participant holding such Award,
shall have the authority to cancel Awards outstanding and grant replacement
Awards therefor.
13.3 COMPLIANCE WITH CODE SECTION 162(M). At all times when the Committee
determines that compliance with Code Section 162(m) is desired, all Awards shall
comply with the requirements of Code Section 162(m). In addition, in the event
that changes are made to Code Section 162(m) to permit greater flexibility with
respect to any Award or Awards, the Committee may, subject to this Article 13,
make any adjustments it deem appropriate.
ARTICLE 14. WITHHOLDING
14.1 TAX WITHHOLDING. AMRESCO shall have the power and the right to deduct
or withhold, or require a Participant to remit to AMRESCO, an amount sufficient
to satisfy federal, state and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any taxable event
arising in connection with an Award.
14.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Awards granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having AMRESCO withhold Shares
having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the transaction. All
elections shall be irrevocable, made in writing, signed by the Participant, and
elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.
ARTICLE 15. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or the
Board, shall be indemnified and held harmless by AMRESCO against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by him or her in connection with or resulting from any claim, action, suit or
proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act hereunder and against
and from any and all amounts paid by him or her in settlement thereof, with
AMRESCO's approval, or paid by him in satisfaction of any judgment in any such
action, suit or proceeding against him, provided he shall give AMRESCO an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall be in addition to any other rights of indemnification to
which such persons may be entitled under AMRESCO's Certificate of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that AMRESCO may have
to indemnify them or hold them harmless.
ARTICLE 16. SUCCESSORS
All obligations of AMRESCO hereunder, with respect to Awards, shall be
binding on any successor to AMRESCO, whether the existence of such successor is
the result of a direct or indirect purchase, merger, consolidation or otherwise,
of all or substantially all of the business and/or assets of AMRESCO.
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ARTICLE 17. LEGAL CONSTRUCTION
17.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
17.2 SEVERABILITY. In the event any provision hereof shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts hereof, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
17.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
17.4 REGULATORY APPROVALS AND LISTING. AMRESCO shall not be required to
issue any certificate or certificates for Shares hereunder prior to (i)
obtaining any approval from any governmental agency which AMRESCO shall, in its
discretion, determine to be necessary or advisable, (ii) the admission of such
Shares to listing on any national securities exchange or Nasdaq on which
AMRESCO's Shares may be listed and (iii) the completion of any registration or
other qualification of such Shares under any state or federal law or ruling or
regulations of any governmental body which AMRESCO shall, in its sole
discretion, determine to be necessary or advisable.
Notwithstanding any other provision set forth herein, if required by the
then-current Section 16 of the Exchange Act, any "derivative security" or
"equity security" offered pursuant hereto to any insider may not be sold or
transferred for at least six (6) months after the date of grant of such Award.
The terms "equity security" and "derivative security" shall have the meanings
ascribed to them in the then-current Rule 16(a) under the Exchange Act.
17.5 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
hereunder are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Exchange Act. To the extent any provisions hereof or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
17.6 GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.
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APPENDIX D
AMRESCO, INC.
ANNUAL INCENTIVE PLAN
I. PURPOSE
The Annual Incentive Plan (the "Plan") is designed to recognize, motivate
and reward exceptional accomplishment toward annual corporation objectives; to
attract and retain quality employees; and to be market competitive.
II. ELIGIBILITY
All regular full-time and part-time employees ("Employees") of AMRESCO, INC.
(the "Company") and participating subsidiaries are eligible to receive awards
under the Plan.
III. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"), which shall have the sole discretion
to interpret the Plan; approve a pre-established objective performance measure
annually, certify the level to which the performance measure was attained prior
to any payment under the Plan, approve the amount of awards made under the Plan,
and determine who shall receive any payment under the Plan. The Committee may
delegate authority to officers of the Company to approve the amount of awards
made under the Plan to Employees who are not individuals whose compensation is
disclosed in the Company's proxy statement. All decisions and determinations of
the Committee on all matters relating to the Plan shall be conclusive. Members
of the Committee shall not be liable for any action taken or decision made in
good faith relating to the Plan or any award thereunder. Only the Committee
shall determine who shall receive an award under the Plan and make decisions
concerning the timing, pricing and amount of any award granted under the Plan.
IV. AWARDS
(a) TYPES OF AWARDS. Executive officers of the Company whose compensation
is disclosed in the Company's proxy statement shall be granted annual incentive
awards under the Plan prior to March 30 of each year, provided, however, that if
an individual becomes an executive officer whose compensation is disclosed in
the Company's proxy statement during a year, that individual shall be granted an
incentive award for that year upon his or her becoming an executive officer. The
Committee may, in its discretion, grant annual incentive awards to non-executive
officers prior to March 30 of each year.
(b) PERFORMANCE TARGETS. The Committee has established pretax earnings as
the performance measure which must be met in order for an award to be earned
under this Plan. Each Employee's targets will be established by the Committee in
conjunction with the annual incentive award grant.
(c) PAYMENT OF AWARDS. Awards will be payable in cash each year upon
certification by the Committee that the Company achieved the specified
performance target for the preceding year. No payment will be made if the
minimum pretax earnings target is not met.
(d) NEGATIVE DISCRETION. Notwithstanding the attainment by the Company of
the specified earnings targets, the Committee has the discretion to reduce some
or all of an award that would be otherwise paid to any Employee.
(e) MAXIMUM AWARDS. No Employee may receive more than a maximum of four
percent (4%) of the total pretax earnings of the Company under the Plan in any
calendar year.
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V. UNFUNDED NATURE OF PLAN
This Plan shall constitute an unfunded mechanism for the Company to pay
incentive compensation to Employees from its general assets. No fund or trust is
created with respect to the Plan, and no Employee shall have any security or
other interest in the assets of the Company.
VI. PROHIBITION AGAINST ASSIGNMENT OR ENCUMBRANCE
No right, title, interest or benefit hereunder shall ever be liable for or
charged with any of the torts or obligations of any Employee, or be subject to
seizure by any creditor or any Employee or any person claiming under an
Employee. No Employee nor any person claiming under an Employee shall have the
power to sell, transfer, pledge, anticipate or dispose of any right, title,
interest or benefit hereunder in any manner until the same shall have been
actually distributed free and clear of the terms of the Plan.
VII. PLAN NOT AN EMPLOYMENT CONTRACT
The Plan does not give any Employee the right to be continued in employment,
and all Employees remain subject to change of salary, transfer, change of job,
discipline, layoff, discharge or any other change of employment status.
VIII. SEVERABILITY
In the event any provision of the Plan shall be held invalid or illegal for
any reason, any illegality or invalidity shall not affect the remaining parts of
the Plan, but the Plan shall have the privilege and opportunity to correct and
remedy such questions of illegality or invalidity by amendment as provided in
the Plan.
IX. WITHHOLDING OF TAXES
The Company shall have the right to deduct from any payment made under the
Plan any federal, state or local taxes required by law to be withheld with
respect to such awards.
X. APPLICABLE LAW
The Plan shall be governed and construed in accordance with the laws of the
State of Texas, except to the extent such laws are preempted by an applicable
federal law.
XI. EFFECTIVE DATE OF PLAN
Upon approval by the stockholders of the Company at the 1995 Annual Meeting,
the Plan shall be considered effective as of February 17, 1995.
XII. AMENDMENT AND TERMINATION OF THE PLAN
The Committee may modify or terminate the Plan at any time without prior
notice or consent of Employees; provided that without the approval of the
stockholders of the Company, no such amendment shall be made that would change
the class of Employees eligible to receive awards under the Plan, base awards on
a performance measure other than pretax net earnings, increase the maximum
individual target award level under the Plan, or modify any other material terms
of the Plan. No awards shall be made under the Plan after December 31, 2005.
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COMMON STOCK
AMRESCO, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE 1995 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Richard L. Cravey and Gerald E. Eickhoff or
either of them with power of substitution to each, the proxies of the
undersigned to vote the Common Stock of the undersigned at the Annual Meeting of
Stockholders of AMRESCO, INC. to be held on May 10, 1995 and any adjournment
thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE FOLLOWING PROPOSALS AND
NOMINEES FOR DIRECTOR.
<TABLE>
<S> <C> <C>
1. / / FOR all nominees for directors listed below / / WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY) to vote for all nominees listed below.
</TABLE>
JAMES P. COTTON, JR., WILLIAM S. GREEN and AMY J. JORGENSEN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
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2. Approval of the proposal to make certain amendments to the 1993 Key Individual Stock Option Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
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3. Approval of the proposal to adopt the 1995 Employee Stock Purchase Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
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4. Approval of the proposal to adopt the 1995 Stock Option and Award Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
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5. Approval of the proposal to adopt the Annual Incentive Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
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6. In accordance with their best judgment with respect to any other matters that may properly come before
the meeting.
</TABLE>
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION OF THE PERSONS AND
APPROVAL OF THE PROPOSALS DESCRIBED IN THE PROXY STATEMENT AND, UNLESS
INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS PROXY
WILL BE SO VOTED.
Please date and sign this Proxy
exactly as name appears.
_____________________________________
_____________________________________
NOTE: When signing as an attorney,
trustee, administrator or guardian,
please give your title as such. In
the case of joint tenants, each joint
owner must sign.
Dated: ______________________________
