<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
AMRESCO, INC.
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(Name of Registrant as Specified in its Charter)
AMRESCO, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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AMRESCO, INC.
700 N. PEARL STREET, SUITE 2400
DALLAS, TEXAS 75201
April ___, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
AMRESCO, INC. to be held on the 17th floor of the Plaza of the Americas, 700 N.
Pearl Street, Dallas, Texas, on Wednesday, May 28, 1997, at 10:00 a.m., Central
time.
The attached Notice of Annual Meeting and Proxy Statement fully describe
the formal business to be transacted at the Annual Meeting, which includes (i)
the election of three (3) directors for a three year term, (ii) the amendment
of the Company's Restated Certificate of Incorporation to increase the number
of shares of Common Stock authorized for issuance from 50,000,000 to
150,000,000, (iii) the adoption of the AMRESCO, INC. 1997 Stock Option and
Award Plan pursuant to which up to 3,000,000 shares of the Company's Common
Stock would be available for issuance and (iv) the appointment of Deloitte &
Touche LLP as the Company's independent public accountants for the year 1997.
The Board of Directors believes that an increase in the number of
authorized shares of Common Stock is in the best interests of the Company and
its stockholders because it would provide greater flexibility to the Board of
Directors to issue additional equity securities, for example, to raise
additional capital or to facilitate possible future acquisitions. The Board of
Directors also believes that an increase in the number of shares available for
grant under the 1997 Stock Option and Award Plan is in the best interests of
the Company and its stockholders. The continued success of the Company depends
upon its ability to attract and retain highly qualified and competent key
employees and advisors, including officers and directors. The Board of
Directors believes that stock options and other awards enhance that ability and
provide motivation to such individuals to advance the interests of the Company
and its stockholders. The Board of Directors believes that, due to the limited
number of shares of Common Stock that currently remain available under existing
stock option and award plans of the Company, adoption of the 1997 Stock Option
and Award Plan is necessary to facilitate the Company's growth. Due to the
important role of independent auditors, the Board of Directors is also seeking
stockcholder approval of the appointment of Deloitte & Touche LLP as
independent public accountants for the year 1997.
The Company's Board of Directors believes that a favorable vote on each of
the matters to be considered at the Annual Meeting is in the best interests of
the Company and its stockholders and unanimously recommends a vote "for" each
such matter. Accordingly, we urge you to review the accompanying material
carefully and to return the enclosed proxy promptly.
Please sign, date and return the enclosed proxy without delay. If you
attend the Annual Meeting, you may vote in person even if you have previously
mailed a proxy.
Sincerely,
Robert H. Lutz, Jr.
Chairman of the Board
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
__________________
TO THE STOCKHOLDERS OF AMRESCO, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of AMRESCO, INC. (the "Company") will be held on the 17th
floor of the North Tower of the Plaza of the Americas, 700 North Pearl Street,
Dallas, Texas, on Wednesday, May 28, 1997, at 10:00 a.m., Central Time, for
considering and acting upon:
1. The election of three (3) directors for a three-year term;
2. A proposal to amend the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock
authorized for issuance from 50,000,000 to 150,000,000;
3. A proposal to adopt the AMRESCO, INC. 1997 Stock Option and
Award Plan pursuant to which up to 3,000,000 shares of the
Company's Common Stock would be available for issuance;
4. The appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the year 1997; and
5. To transact such other business as may properly come before
the Annual Meeting.
Only stockholders of record at the close of business on April 2, 1997
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. For a period of at least ten (10) days prior to the
Annual Meeting, a complete list of stockholders entitled to vote at the Annual
Meeting will be open to examination by any stockholder during ordinary business
hours at the offices of the Company, 700 North Pearl Street, Suite 2400,
Dallas, Texas 75201.
Information concerning the matters to be acted upon at the Annual
Meeting is set forth in the accompanying Proxy Statement.
A proxy card is enclosed in 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
Annual 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, 1996 is enclosed.
By Order of the Board of Directors
L. Keith Blackwell
Vice President, General Counsel and
Secretary
Dallas, Texas
April___, 1997
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY SO THAT YOUR VOTE MAY BE RECORDED
AT THE ANNUAL MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 4
AMRESCO, INC.
PROXY STATEMENT
___________
INTRODUCTION
This Proxy Statement is furnished to stockholders of AMRESCO, INC., a
Delaware corporation (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 28, 1997, on the
17th floor of the North Tower of the Plaza of the Americas, 700 North Pearl
Street, Dallas, Texas (the "Annual Meeting"), and at any adjournment(s)
thereof. The Annual Meeting is being held for the purpose of considering and
acting upon:
(1) The election of three (3) directors for a three-year term;
(2) A proposal to amend the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock
authorized for issuance from 50,000,000 to 150,000,000;
(3) A proposal to adopt the AMRESCO, INC. 1997 Stock Option and
Award Plan pursuant to which up to 3,000,000 shares of the
Company's Common Stock would be available for issuance;
(4) The appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the year 1997; and
(5) To transact such other business as may properly come before
the Annual Meeting.
The date of this Proxy Statement is April __, 1997. 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 700 North Pearl Street,
Suite 2400, 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 April
2, 1997 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting and at any adjournment(s) thereof. As of the close of business on the
Record Date, 35,993,714 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 such number
of 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.
Approval of the proposal to elect the three (3) nominees for director
listed herein requires the affirmative vote of a majority of the shares of
Common Stock present, in person or represented by proxy, at the Annual
Meeting. Votes may be cast in favor or withheld with respect to such proposal.
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 the proposals to amend the Company's Restated Certificate of
Incorporation, to adopt the AMRESCO, INC. 1997 Stock Option and Award Plan, the
appointment of Deloitte & Touche L.L.P. as the Company's independent public
accountants for the year 1997 and any other proposals that properly come before
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.
Abstentions on
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any other proposal will have the same effect as a vote against such proposal;
however, a broker non-vote with respect to any such proposal will have no
effect. 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" (i) the election of the three (3) persons named under "Election of
Directors" as the Class I directors of the Company; (ii) the proposal to amend
the Company's Restated Certificate of Incorporation to increase the number of
shares of Common Stock authorized for issuance from 50,000,000 to 150,000,000;
(iii) the proposal to adopt the AMRESCO, INC. 1997 Stock Option and Award Plan
pursuant to which up to 3,000,000 shares of the Company's Common Stock would be
available for issuance; (iv) the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for the year 1997; and (v) at the
discretion of the proxy holders with regard to any other matter that may
properly come before the Annual Meeting. The Company does not know of any
matters, other than those described in the Notice of Annual Meeting of
Stockholders, which will come before the Annual Meeting.
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 either 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., 700 North Pearl Street, Suite 2400, 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.
PROPOSAL I--ELECTION OF DIRECTORS
INFORMATION CONCERNING DIRECTORS
At the Annual Meeting, stockholders will be asked to elect three (3)
Class I 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
as Class I Directors below (Messrs. Adair, McDonough and Schnitzer) be elected
to serve as Class I directors. Each of the Class I nominees will serve as a
director for a three (3) year term ending at the annual meeting of stockholders
for 2000, or until his successor has been duly elected and qualified. The
persons named in the proxy intend to vote the proxies for the election of the
Class I nominees named below. If any nominee refuses or becomes unable to
serve as a director (which is not 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 31,
1997, concerning each nominee for election as a Class I 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.
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The Class II 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>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
CLASS I DIRECTORS
<S> <C> <C> <C> <C>
Robert L. Adair III Mr. Adair serves as a director, President and 1993 1997
(53) Chief Operating Officer of the Company. Mr.
Adair previously served as Executive Vice
President and director of BEI Holdings, Ltd.
(1989 to December 1993).
John J. McDonough Mr. McDonough serves as a director of the 1994 1997 (3) (4)
(60) Company. Mr. McDonough also serves or has
served in the following positions: President
and Chief Executive Officer of McDonough
Capital Company LLC, a company through which
Mr. McDonough conducts personal and family
investments (since February 1995); Chairman of
the Board of SoftNet Systems, Inc., a company
that develops, markets, installs and services
information and document management systems
(since June 1995); Vice Chairman and Chief
Executive Officer (1993 to February 1995) of
DENTSPLY International, Inc., a manufacturer of
dental supplies, dental equipment and medical
x-ray products; Chairman of the Board (1992 to
1993), Director (1983 to 1992), and Chief
Executive Officer (1983 to 1993) of GENDEX
Corporation, a manufacturer of dental equipment
and medical x-ray products, which merged with
DENTSPLY in June 1993; Director (since 1992) of
Newell Co., a New York Stock Exchange-listed
manufacturer of products for the do-it-yourself
hardware and housewares market; and Director of
AmNet Systems, Inc., a company that develops,
markets and installs electronic information and
document management for the healthcare industry
(since 1995).
Bruce W. Schnitzer Mr. Schnitzer serves as a director of the 1993 1997 (2) (4)
(52) Company. Mr. Schnitzer previously served as
Vice Chairman of the Board of BEI Holdings,
Ltd. (1986 to December 1993). Mr. Schnitzer
also serves as Chairman of Wand Partners Inc.,
an investment advisory company (since 1987);
Director of Penncorp Financial Group, Inc.
(since 1990); Director of Chartwell Re
Corporation (since 1992); Director of Nestor,
Inc. (since 1994); and Chairman of New London
Capital PLC (since 1993).
</TABLE>
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<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
CLASS II DIRECTORS
<S> <C> <C> <C> <C>
James P. Cotton, Jr. Mr. Cotton serves as a director of the Company. 1993 1998 (1) (2)
(58) Mr. Cotton previously served as Chairman of the
Board of BEI Holdings, Ltd. (1986 to December
1993). Mr. Cotton also serves as Chairman of
the Board and Chief Executive Officer of USBA
Holdings, Ltd., a provider of products and
services to financial institutions (since
1990).
Edwin A. Wahlen, Jr. Mr. Wahlen serves as a director of the Company. 1996 1998 (1) (3)
(48) Mr. Wahlen also holds the following positions:
Founder and Managing Director of Cravey, Green
& Wahlen Incorporated, a 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); and Director
of Cameron Ashley Building Products, Inc., a
national distributor of home building products
(since 1996).
Amy J. Jorgensen Ms. Jorgensen serves as a director of the 1995 1998 (2)
(43) Company. Ms. Jorgensen also serves as Managing
Director of Greenbriar Associates LLC, which
provides advice and executes transactions
relating to real estate assets and companies
(since 1995); Ms. Jorgensen previously served
as President of the Jorgensen Company, a
consultant for real estate strategy and finance
(April 1992 to September 1995).
</TABLE>
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<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
CLASS III DIRECTORS
<S> <C> <C> <C> <C>
Richard L. Cravey Mr. Cravey serves as a director of the Company. 1993 1999 (1) (3)
(52) Mr. Cravey previously served in the following
positions: Chairman of the Board and Chief
Executive Officer of the Company (December 1993
to May 1994) and Chairman of the Board of
AMRESCO Holdings, Inc. (1992 to December 1993).
Mr. Cravey also holds the following positions:
Founder and Managing Director of Cravey, Green
& Wahlen Incorporated, a 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); and Director
of Cameron Ashley Building Products, Inc., a
national distributor of home building products
(since 1994).
Gerald E. Eickhoff Mr. Eickhoff serves as a director of the 1993 1999 (1) (3)
(50) Company. Mr. Eickhoff also is a private
investor (since December 1993). He previously
served as President, Chief Executive Officer
and director of BEI Holdings, Ltd.(1986 to
December 1993).
Robert H. Lutz, Jr. Mr. Lutz serves as Chairman of the Board and 1994 1999 (1)
(47) Chief Executive Officer of the Company. Mr.
Lutz previously served as President of
Allegiance Realty, a real estate management
company (November 1991 to May 1994). Mr. Lutz
is also a director of Bristol Hotel Company
(since 1995).
</TABLE>
_________________
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of the Stock Option and Bonus Committee
BOARD OF DIRECTORS AND STANDING COMMITTEES
The business of the Company is managed under the direction of the
Board of Directors. The Board of Directors meets on a regularly scheduled
basis during its fiscal year to review significant developments affecting the
Company and to act upon matters requiring Board approval. It holds special
meetings when an important matter requires Board action
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between scheduled meetings. The Board of Directors held four (4) meetings
during 1996. All directors attended at least 75% of the total number of
meetings of the Board and committees on which they served, except that James P.
Cotton was unable to attend two (2) meetings of the Board.
The Board of Directors has an Executive Committee, an Audit Committee,
a Compensation Committee and a Stock Option and Bonus Committee. Members of
these committees generally are elected annually at the regular meeting of the
Board of Directors immediately following the Annual Meeting.
The Executive Committee consists of Messrs. Cotton, Cravey
(Chairman), Eickhoff, Lutz and Wahlen. 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 1996.
The Audit Committee consists of Ms. Jorgensen and Messrs. Cotton and
Schnitzer (Chairman). The Audit Committee held two (2) meetings during 1996.
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 services rendered by the independent public accountants and
considering the possible effects of such services on the independence of such
public accountants.
The Compensation Committee consists of Messrs. Cravey, Eickhoff,
McDonough (Chairman) and Wahlen. This committee held two (2) meetings during
1996. The functions of the Compensation Committee include making
recommendations to the Board regarding compensation for executive officers of
the Company and its subsidiaries.
The Stock Option and Bonus Committee consists of Messrs. McDonough
(Chairman) and Schnitzer. This committee held one (1) meetings during 1996.
The function of the Stock Option and Bonus Committee is to determine, subject
to the restrictions set forth in the stock option and award plans, the
individuals to whom awards and options will be granted and the terms of such
awards and options.
The Company does not have a nominating or other standing committee.
The functions customarily attributable to a nominating committee are performed
by the Board of Directors as a whole.
PROPOSAL II --INCREASE IN AUTHORIZED COMMON STOCK
The Board of Directors has unanimously approved, subject to the
consideration and approval of the stockholders of the Company, a proposed
amendment to the Company's Restated Certificate of Incorporation increasing the
number of shares of Common Stock authorized for issuance from 50,000,000 to
150,000,000.
The Board of Directors believes that this amendment is in the best
interest of the Company and its stockholders because it would provide greater
flexibility to the Board of Directors to issue additional equity securities,
for example, to raise additional capital or to facilitate possible future
acquisitions. Although the Company actively considers mergers, acquisitions
and other transactions that may involve the issuance of additional shares of
Common Stock (any one or more of which may be under consideration or acted upon
at any given time), the Company does not have any agreements, commitments or
understandings that would involve the issuance of additional shares of Common
Stock in amounts that would exceed the number of currently authorized but
unissued shares.
As of March 31, 1997, after giving effect to (i) an aggregate of
________ shares of Common Stock reserved for issuance upon exercise of options
or awards granted or which may be granted under stock option and award plans,
the Company had approximately _________ shares of Common Stock available for
issuance. The availability of an
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adequate supply of authorized and unissued shares of Common Stock provides the
Company flexibility by allowing shares to be issued, for example, in connection
with the possible future financings or acquisitions, without the expense and
delay of a stockholders meeting, unless stockholder approval is otherwise
required.
The Board of Directors has unanimously approved an increase in the
number of shares of authorized Common Stock to 150,000,000 and is seeking
approval of such an increase by the stockholders. If the increase is approved,
generally, no stockholder approval will be solicited for the issuance of all or
any portion of such additional shares of Common Stock unless required by law or
any rules or regulations to which the Company is subject, including the rules
of the National Association of Securities Dealers, Inc. ("NASD"). Any issuance
that does not require stockholder approval may be authorized by the Board of
Directors. The rules of the NASD currently require stockholder approval prior
to the taking of certain actions involving or pertaining to the issuance of
Common Stock, including, the establishment of certain stock option or purchase
plans or other arrangements pursuant to which Common Stock may be acquired by
officers or directors, the issuance of Common Stock that would result in a
change of control of the Company, the issuance of Common Stock in connection
with certain acquisitions and the issuance of Common Stock under certain other
circumstances.
Voting Requirements. Approval of the proposal to amend the Company's
Restated Certificate of Incorporation 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.
PROPOSAL III--THE 1997 STOCK OPTION AND AWARD PLAN
The Board of Directors is seeking stockholder approval at the Annual
Meeting of the AMRESCO, INC. 1997 Stock Option and Award Plan (the "1997 Stock
Plan"). If approved by stockholders, the 1997 Stock Plan will become effective
immediately.
Stockholder approval of the 1997 Stock Plan is sought to qualify
certain types of awards under the 1997 Stock Plan as "performance based"
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), and thereby allow the Company to exclude such
compensation from the cap on the tax deductibility of compensation paid to the
executive officers listed in the Summary Compensation Table hereunder ("Named
Executive Officers").
The Board of Directors believes that the continued success of the
Company depends upon its ability to attract and retain highly qualified and
competent key employees and advisors, including officers and directors, and
that stock options and other awards enhance that ability, provide motivation to
key employees and advisors to advance the interest of the Company and its
stockholders. The Company expects to issue options and awards under the 1997
Stock Plan in the ordinary course of business and in connection with possible
future acquisitions, to attract, retain and motivate key employees and advisors
in a competitive environment as it deems such issuance is appropriate. The
Board of Directors believes that the shares authorized for issuance under the
1997 Stock Plan is necessary to facilitate the Company's growth. As of March
31, 1997, only ________ shares of Common Stock remained available for grant
under the existing stock option and award plans of the Company.
The following summary of certain features of the 1997 Stock Plan is
qualified in its entirety by reference to the full text thereof, which is set
forth in Appendix A attached hereto.
Generally. The 1997 Stock Plan is a flexible plan that will provide
the Stock Option and Bonus Committee broad discretion to fashion the terms of
awards to provide eligible participants with such stock-based incentives as the
Stock Option and Bonus Committee deems appropriate. It will permit the
issuance of awards in a variety of forms, including: (i) nonqualified stock
options ("NQSO's") and incentive stock options ("ISOs"; NQSO's and ISOs
collectively, "Stock Options"), (ii) performance shares and (iii) restricted
stock awards.
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Administration. The 1997 Stock Plan will be administered by the Stock
Option and Bonus Committee (or such other committee as may be authorized by the
Board of Directors), 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 1997 Stock Plan vests broad powers in the Stock Option and Bonus Committee
to administer and interpret the 1997 Stock Plan. The Stock Option and Bonus
Committee's powers include authority, within the limitations set forth in the
1997 Stock Plan, to (i) select the persons to be granted awards, (ii) determine
the size and type of awards, (iii) construe and interpret the 1997 Stock Plan,
(iv) establish, amend or waive rules and regulations for the administration of
the 1997 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
1997 Stock Plan gives discretion to the Stock Option and Bonus Committee to do
so.
Eligibility. In general, any key employees of the Company or any
subsidiary of the Company, directors of the Company, as well as any other
persons, including consultants, independent contractors or other service
providers, are eligible to receive awards under the 1997 Stock Plan.
Notwithstanding the foregoing, only employees of the Company are eligible to
receive grants of ISOs, performance shares and restricted stock.
Number of Shares Available. The 1997 Stock Plan provides for the
grant of up to 3,000,000 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 1997 Stock Plan. In the
event of a stock dividend, stock split, recapitalization or similar event, the
Stock Option and Bonus Committee will equitably adjust the aggregate number of
shares subject to the 1997 Stock Plan and the number, class and price of shares
subject to awards outstanding.
Amendment and Termination. The 1997 Stock Plan may be amended,
modified or terminated by the Board of Directors. Unless earlier terminated by
the Board of Directors or stockholders, the 1997 Stock Plan will terminate on
May 28, 2007.
Code Section 162(m). At all times when the Stock Option and Bonus
Committee determines that it is desirable to satisfy the conditions of Section
162(m) of the Code, all awards granted under the 1997 Stock Plan will comply
with such conditions. The Stock Option and Bonus Committee is nevertheless
empowered to grant awards that would not constitute "performance based"
compensation under Section 162(m). If changes are made to Section 162(m) to
permit grater flexibility with respect to any awards available under the 1997
Stock Plan, the Stock Option and Bonus Committee may make any adjustments it
deems appropriate.
AWARDS UNDER THE 1997 STOCK PLAN
Stock Options. The Stock Option and Bonus 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 Stock Option and Bonus Committee may grant NQSO's, 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 1997 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. NQSO's
granted under the 1997 Stock Plan will provide for the purchase of Common Stock
at prices determined by the Stock Option and Bonus Committee, but in any event
not less then 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 Stock Option and Bonus 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 1997 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
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<PAGE> 12
cash or, if approved by the Stock Option and Bonus 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 or disability, 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, and
one (1) year after termination of employment in the case of disability. 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 Stock Option and
Bonus 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 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, 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 Stock Option and Bonus 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 Stock Option and Bonus 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 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 Stock Option and Bonus Committee discretion to alter
the governing performance measures without obtaining stockholder approval, the
Stock Option and Bonus 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 Stock Option and Bonus
Committee may approve performance measures not listed above without stockholder
approval.
After the applicable performance period has ended, the Stock Option
and Bonus 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 or disability 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 Stock Option and Bonus 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 Stock Option and Bonus 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 Stock Option and Bonus
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.
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<PAGE> 13
Each grant of restricted stock will be subject to restrictions,
determined by the Stock Option and Bonus 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 Stock Option and Bonus
Committee. 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 Stock Option and Bonus Committee are met. However, the Stock
Option and Bonus 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 Stock Option and Bonus 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 Stock Option and Bonus 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
Stock Option and Bonus Committee may, in its discretion, make any other
modifications to any awards as determined by the Stock Option and Bonus
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 1997 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.
Performance Shares. The grant of a performance share award will not
results 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.
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<PAGE> 14
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.
No awards have been made under the 1997 Stock Plan as of the date of
this Proxy Statement. It is not possible to determine the benefits or amounts
that will be received by any persons or groups of persons under the 1997 Stock
Plan or that would have been received had it been in effect during the last
fiscal year.
Voting Requirements. Approval of the 1997 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.
OWNERSHIP OF SECURITIES
The following table sets forth certain information as of March 31,
1997, regarding the Common Stock owned on the Record Date 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
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers for fiscal 1996; 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.
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<PAGE> 15
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Total
Beneficial Shares
Name of Beneficial Owner Ownership Owned
------------------------ --------- ----------
<S> <C> <C>
Nicholas Applegate Capital Management 2,486,661 6.9
600 West Broadway, 29th Floor
San Diego, CA 92101
Robert L. Adair III 463,298 (1) 1.3
James P. Cotton, Jr. 328,833 (2) *
Richard L. Cravey 739,584 (3) 2.1
Gerald E. Eickhoff 15,000 (4) *
Amy J. Jorgensen 7,000 (5) *
Robert H. Lutz, Jr. 398,150 (6) 1.1
John J. McDonough 21,000 (7) *
Bruce W. Schnitzer 123,000 (8) *
Edwin A. Wahlen, Jr. 739,584 (9) 2.1
Barry L. Edwards 173,152(10) *
Harold E. Holliday, Jr. 64,554(11) *
Scott J. Reading 75,215(12) *
All executive officers and directors as a group
(a total of 14 persons) 2,644,114(13) 7.4
</TABLE>
_________
* Less than 1%
(1) Includes options which were exercisable within sixty (60) days to
purchase 58,364 shares and 41,865 restricted shares with respect to which
he has voting rights.
(2) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares and 156,803 shares held in Mr. Cotton's IRA.
(3) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares and an aggregate of 705,756 shares owned by CGW
Southeast I, Inc. and CGW Southeast II, Inc. as to which Mr. Cravey
serves as an officer. Mr. Cravey disclaims ownership of 470,503 of the
shares owned by such corporations.
(4) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares and excludes 16,000 shares held by a charitable
foundation of which Mr. Eickhoff is an officer.
(5) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares.
(6) Includes options which were exercisable within sixty (60) days to
purchase 325,463 shares and 69,620 restricted shares with respect to
which he has voting rights.
(7) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares.
(8) Includes options which were exercisable within sixty (60) days to
purchase 113,000 shares.
(9) Includes options which were exercisable within sixty (60) days to
purchase 3,000 shares and an aggregate of 705,756 shares owned by CGW
Southeast I, Inc., and CGW Southeast II, Inc. as to which Mr. Wahlen
serves as an officer. Mr Wahlen disclaims ownership of 470,503 of the
shares owned by such corporations.
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(10) Includes options which were exercisable within sixty (60) days to
purchase 131,213 shares and 28,150 restricted shares with respect to
which he has voting rights.
(11) Includes options which were exercisable within sixty (60) days to
purchase 25,000 shares and 7,055 restricted shares with respect to which
he has voting rights.
(12) Includes options which were exercisable within sixty (60) days to
purchase 33,220 shares and 25,936 restricted shares with respect to which
he has voting rights.
(13) Includes options which were exercisable within sixty (60) days to
purchase 872,825 shares and 204,561 restricted shares with respect to
which they have voting rights.
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<PAGE> 17
MANAGEMENT AND REMUNERATION
EXECUTIVE OFFICERS
Set forth below are the names and ages of all executive officers of the
Company as of March 31, 1997. 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.
<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 Company.
(47)
Robert L. Adair III* President and Chief Operating Officer of the Company.
(53)
Barry L. Edwards Mr. Edwards serves as Executive Vice President and Chief Financial Officer of
(49) the Company (since November 1994). Mr. Edwards previously served as Vice President
and Treasurer of Liberty Corporation, an insurance holding company (1979 to November
1994).
L. Keith Blackwell Mr. Blackwell serves as Vice President (since February 1996), General Counsel
(56) and Secretary (since January 1994) of the Company and previously served as General
Counsel and Secretary of AMRESCO Holdings, Inc. (December 1993). Mr. Blackwell was
previously an investor and consultant (May 1992 to December 1993) and served as
Executive Vice President, General Counsel and Secretary of First Gibraltar Bank, FSB,
a Federal savings bank (December 1988 to May 1993).
Harold E. Holliday, Jr. Mr. Holliday serves as President - Commercial Mortgage Banking of the
(49) Company (since February 1996). He previously served as Chairman of the Board and
Chief Executive Officer of Holliday Fenoglio, Inc. (since August 1994). Mr. Holliday
previously served as President of Holliday, Fenoglio, Dockerty & Gibson, Inc., a
mortgage banking company (for more than three (3) years prior to August 1994).
Michael N. Maberry Mr. Maberry serves as President of AMRESCO Capital Corporation (since
(53) April 1994). Mr. Maberry previously was a shareholder of the law firm of Winstead,
Sechrest & Minick P.C. (April 1989 to April 1994).
Scott J. Reading Mr. Reading serves as President of AMRESCO Residential Credit Corporation
(53) (since August 1995). Mr. Reading previously served as Managing Director of Household
Financial Services, Inc., a division of Household International, Inc., a diversified
financial services company (June 1991 to August 1995).
</TABLE>
_____________
* Messrs. Lutz and Adair are directors of the Company. For additional
information concerning those individuals, see ELECTION OF DIRECTORS -
Information Concerning Directors.
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EXECUTIVE COMPENSATION SUMMARY
The following table provides certain summary information concerning
compensation paid by the Company and its subsidiaries during each of the last
three (3) fiscal years of the Company to or on behalf of Mr. Lutz, the
Company's Chief Executive Officer, and each of the four (4) other most highly
compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Restricted Securities
Name and Principal ------------------------ Stock Underlying All Other
Position Year Salary Bonus Award(s)(1) Options (#) Compensation
- ----------------------- ---- --------- ---------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 1996 $650,016 $1,000,000 $ -0- -0- $110,173 (3)
Chairman of the Board 1995 650,016 700,000 403,849 119,105 81,730 (3)
and Chief Executive 1994 379,176 275,000 -0- 230,000 ---
Officer (2)
Robert L. Adair III 1996 412,000 837,376 (4) -0- -0- 68,668 (5)
President and Chief 1995 387,505 450,000 238,041 68,940 54,769 (5)
Operating Officer 1994 350,000 275,000 -0- -0- 12,389 (5)
Barry L. Edwards 1996 265,233 500,000 -0- -0- 43,921 (7)
Executive Vice 1995 255,642 300,000 161,471 99,245 26,750 (7)
President and Chief 1994 41,688 3,300 -0- 100,000 ---
Financial Officer (6)
Scott J. Reading 1996 257,372 647,589 285,226(9) 28,701 (9) 27,925 (10)
President - AMRESCO 1995 94,714 50,000 56,875 50,000 ---
Residential Credit 1994 --- --- --- ---- ---
Corp. (8)
Harold E. Holliday, Jr. 1996 271,870 206,250 -0- -0- 24,631 (12)
President - 1995 250,000 -0- -0- -0- 19,309 (12)
Commerical 1994 274,857 -0- -0- -0- ---
Mortgage Banking (11)
</TABLE>
(1) Amounts shown in the table represent the fair market value of the
restricted stock on the date of grant. At December 31, 1996, Messrs.
Lutz, Adair, Edwards and Reading had 47,395, 27,640, 18,990 and
19,351(including 14,351 earned in 1996 but granted in February 1997)
shares of restricted stock, respectively, and, based upon the then
stock price of $26.75 per share, such shares of restricted stock had a
value of $1,267,816, $739,370, $507,982, $507,982 and $517,639,
respectively. Except for the restricted stock granted to Mr. Reading
in respect of the 1996 fiscal year (see footnote 9 below), all such
shares of restricted stock were granted during 1995. For all
restricted stock granted as of the date of this Proxy Statement,
twenty percent (20%) of such shares vest, provided such individuals
are then employed by the Company, on the first, second, third, fourth
and fifth anniversary of the date of grant. In the event that
dividends are paid on the Common Stock, such dividends would be
payable on such shares of restricted stock.
(2) Mr. Lutz became Chief Executive Officer of the Company in May 1994.
(3) For 1996, consists of $4,507 paid by the Company in connection with
the employees purchase of shares of Common Stock under the AMRESCO,
INC. Employee Stock Purchase Plan (the "Stock Purchase Plan") and
$105, 666 contributed by the Company to the employees 401(k) and
retirement savings programs under the AMRESCO, INC. Retirement
Savings and Profit Sharing Plan and Trust (the "Retirement Savings
Plan"). For 1995, consists of $3,154 under the Stock Purchase Plan
and $78,576 under the Retirement Savings Plan.
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<PAGE> 19
(4) Includes a $287,376 one-time payment received by Mr. Adair pursuant to
the Retention Bonus Plan adopted in connection with the merger of
AMRESCO Holdings, Inc. and the Company which was effective December
31, 1993, to secure the continued performance of certain executives
through December 31, 1996.
(5) For 1996, consists of $2,181 under the Stock Purchase Plan and $66,487
under the Retirement Savings Plan. For 1995, consists of $1,412 under
the Stock Purchase Plan and $53,357 under the Retirement Savings Plan.
For 1994, consists of amounts contributed or paid under the Retirement
Savings Plan.
(6) Mr. Edwards became Executive Vice President and Chief Financial
Officer of the Company in November 1994.
(7) For 1996, consists of $1,077 under the Stock Purchase Plan and $42,844
under the Retirement Savings Plan. For 1995, consists of $697 under
the Stock Purchase Plan and $26,053 under the Retirement Savings Plan.
(8) Mr. Reading became President of AMRESCO Residential Credit Corporation
in August 1995.
(9) Mr. Reading was awarded options for 28,701 shares of Common Stock at
an exercise price of $19.875 per share and 14,351 restricted shares
pursuant to the ARCC Incentive Compensation Program. These stock
options and restricted shares relate to the 1996 fiscal year but were
granted in February 1997.
(10) Consists of $2,271 under the Stock Purchase Plan and $25,654 under the
Retirement Savings Plan.
(11) Mr. Holliday became President of Commercial Mortgage Banking in
February 1996.
(12) Consists of amounts contributed or paid under the Retirement Savings
Plan for the years 1996 and 1995, respectively.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's Chief Executive Officer
and the other executive officers named in the Summary Compensation Table the
number of shares acquired upon the exercise of options during 1996, the amount
realized upon such exercise, the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1996 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>
Shares
Acquired
on Number of Securities Value of Unexercised In-the-
Exercise Underlying Unexercised Money Options at December 31,
of Value Options at December 31, 1996 1996 (2)
Realized -------------------------------- -----------------------------
Name Options (1) Exercisable Unexercisable Exercisable Unexercisable
---------------- ----------- ------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Robert H. Lutz,
Jr. -0- $ -0- 277,642 71,463 $5,381,384 $1,258,327
Robert L. Adair
III 245,576 4,459,447 27,576 41,364 485,079 727,610
Barry L. Edwards -0- -0- 106,364 92,881 1,853,985 1,581,008
Scott J. Reading -0- -0- 20,000 30,000 307,500 461,250
Harold E.
Holliday, Jr. -0- -0- -0- -0- -0- -0-
</TABLE>
_________________
(1) Represents the difference between the aggregate exercise price and the
aggregate value, based upon the stock price on the date of exercise.
(2) Aggregate market value (based on December 31, 1996 stock price of
$26.75 per share) of the shares covered by the options, less aggregate
exercise price.
Page 16
<PAGE> 20
EMPLOYMENT AGREEMENT WITH CHIEF 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 at least $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 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' 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
a 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).
AMRESCO DEFERRED COMPENSATION PROGRAM
The AMRESCO Deferred Compensation Program (the "Deferred Compensation
Program") is for the benefit of eligible management and highly compensated
employees of the Company. The purpose of the Deferred Compensation Program is
to permit eligible employees to defer receipt of a portion of their salary,
bonus and/or commissions to a future year and have such deferrals earn a rate
of return reflecting the Company's return on certain of its investments. Each
year the Company determines the employees who are eligible to participate in
the Deferred Compensation Program for the following plan year. Eligibility is
determined by establishing a minimum compensation level for participation or by
the use of such other criteria, including ownership of stock or rights to
acquire stock of the Company, as the Company deems appropriate from time to
time. Each participant may elect to defer any whole percentage or dollar
amount of his compensation; provided, that the Company is permitted to
establish a maximum or minimum percentage (or dollar amount) of compensation
that may be deferred in a year. For the year ended, December 31, 1996, the
minimum deferral was $10,000 per participant. Each participant has a deferral
account (a "Deferral Account") which is credited with the amounts of
compensation deferred by the participant under the Deferred Compensation
Program for the year. The participant's Deferral Account is credited with
earnings determined on an annual basis assuming the amounts credited to his
Deferral Account during the plan year were invested in an investment fund or
funds designated by the Plan Administrator (as defined below) as applying to
the plan year. A participant's interest in the value of his Deferral Account
is at all times 100% vested and nonforfeitable. Under the Deferred
Compensation Program, a participant's Deferral Account will be distributed in
cash in a lump sum in the plan year commencing two (2) years after the plan
year during which the amounts were deferred to the Deferral Account and will
thereafter be distributed on a quarterly basis. In the event of a
participant's termination of employment during a plan year, the compensation
deferred for such plan year will be paid to the participant as soon as
practical after termination. Other distributions shall not be affected by
termination of employment.
The Deferred Compensation Program provides that the plan administrator
(the "Plan Administrator") shall be a committee or an individual appointed by
the Company to serve at its pleasure. The Company serves as the Plan
Administrator. The Plan Administrator is authorized to administer and manage
the Deferred Compensation Program and has all powers necessary to accomplish
that purpose, including the discretionary authority to construe and to
interpret the plan, to decide all questions of eligibility for benefits and to
determine the amount and manner of payment of such benefits. The Plan
Administrator serves without bond and without compensation for services
provided in connection with the Deferred Compensation Program. The Company has
the right in its sole discretion to amend the Deferred Compensation Program in
whole or in part at any time; provided, that no such amendment shall reduce the
amounts credited at that time to any participant's Deferral Account or change
the earnings rate credited at that time to Deferral Accounts or change the
manner of distribution in respect of any Deferral Account. The Company
reserves the right to discontinue and terminate the Deferred Compensation
Program at any time, in whole or in part, for any reason, including a change,
or impending change, in the tax laws of the United States or any state.
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INCENTIVE COMPENSATION PROGRAM
Effective August 15, 1996, the Company adopted an Incentive
Compensation Program (the "ARCC Incentive Compensation Program") for certain
employees of AMRESCO Residential Credit Corporation ("ARCC"). The ARCC
Incentive Compensation Program creates an annual bonus pool equal to twenty
percent (20%) of ARCC's pre-tax profit after allocation for corporate overhead
and a charge for capital (the "ARCC Bonus Pool"). Persons eligible for the
ARCC Bonus Pool include key executives of ARCC ("ARCC Executives") as well as
certain other persons ("Staff Participants"). A Staff Participant's
participation in the program, if any, will depend upon job grade, level of
responsibility and performance/contribution. Cash bonuses for Staff
Participants are anticipated to range from 0% to 20% of such person's base
salary. ARCC Executives will be entitled to participate in all or a part of
the ARCC Bonus Pool remaining after payments to Staff Participants and their
respective level of participation will depend upon the job performance of each
person, as assessed by such person's manager. Scott J. Reading will be
entitled to participate in up to 39% of the remaining portion of the ARCC Bonus
Pool. Cash payments to any participant under the ARCC Incentive Compensation
Program may not in any event exceed 250% of such participant's base salary. In
the event any participant's participation in the ARCC Bonus Pool would exceed
the limitation on cash bonus payments, 50% of such excess will be delivered in
restricted stock and 50% will be delivered in NQSO's. The amount of restricted
stock will be determined by dividing 50% of the dollar amount of the total
non-cash bonus award by the stock price of the Common Stock on the date of
grant. The number of shares subject to any NQSO will be determined by dividing
50% of the dollar amount of the total non-cash bonus award by the lesser of (i)
$20.00, or (ii) 50% of the then market value of a share of Common Stock. Any
Stock Options granted pursuant to the ARCC Incentive Compensation Program will
have a term of ten (10) years from the date of grant and will have an exercise
price equal to the market price of a share of Company Common Stock on the date
of grant. Shares of restricted stock and NQSO's will vest 20% on the date of
grant and 20% on each anniversary date of the date of grant thereafter;
provided that vesting will be accelerated if employment is terminated for any
reason other than cause. In the event that ARCC undertakes an initial public
offering of its Common Stock, five percent (5%) of the value of ARCC will be
allocated to the ARCC Executives; provided that such five percent (5%) value
cannot exceed 20% of the value of the proceeds to the Company from the initial
public offering. Such allocation of five percent (5%) of the value of ARCC
would be delivered in NQSO's, with each NQSO having an exercise price equal to
the initial public offering price.
SPECIAL BONUS PROGRAM
In September 1996, the Company approved a special bonus program (the
"Special Bonus Program") pursuant to which specified senior officers will be
entitled to receive restricted stock in an amount equal to 200% of their 1996
base salary if the Company earns $2.00 per share from continuing operations for
fiscal 1998. For purposes of the Special Bonus Program, earnings per share
will not take into account extraordinary items of earnings or loss and will not
take into account earnings resulting directly from acquisitions closed after
August 31, 1996 in excess of $.05 per share for a single acquisition or an
aggregate of $.15 per share for all acquisitions. Robert H. Lutz, Jr., Robert
L. Adair III and Barry L. Edwards do not participate in the Special Bonus
Program.
CHANGE OF CONTROL ARRANGEMENTS
On May 29, 1996, the Company entered into agreements with Robert H.
Lutz, Jr., Robert L. Adair III, Barry L. Edwards and certain other officers of
the Company (each such agreement being sometimes referred to herein as a
"Severance Compensation Agreement"), which agreements provide for compensation
arrangements relating to the occurrence of a change of control of the Company.
The term of each Severance Compensation Agreement expires April 30, 2001,
subject to automatic extension from year to year unless (i) there has been no
change of control and (ii) no fewer than thirty (30) days prior to April 30,
2001 or the appropriate April 30 thereafter, the Company has given a notice
that it does not wish to extend the Severance Compensation Agreement. The
Severance Compensation Agreement requires the Company to pay to the officer, if
his employment is terminated within a two (2) year period following a change of
control (other than by reason of disability, retirement, voluntary resignation
or by the Company for cause), a sum equal to three (3) times the officer's
annual compensation for the calendar year immediately preceding the calendar
year in which the termination of employment occurs, or such officer's total
compensation for the three (3) calendar years ended immediately preceding the
calendar year in which
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<PAGE> 22
the termination occurs, whichever is greater. The Severance Compensation
Agreement also provides that (i) all stock options then held by the officer
will immediately become exercisable and the officer will become 100% vested in
all shares of restricted stock held by or for benefit of the officer
notwithstanding any provision to the contrary in any stock option agreement or
restricted stock agreement, (ii) the officer's right to exercise any previously
unexercised options under any stock option agreement will not terminate until
the latest date on which the option granted under such agreement would expire
under the terms of such agreement but for the officer's termination of
employment and (iii) the Company will continue to provide the officer with
medical/dental and related benefits and long-term disability benefits equal to
the benefits in effect for the officer at the time of the change of control, at
the same cost to the officer as the cost, if any, charged to the officer for
those benefits prior to the termination of employment. The Company is required
to provide such medical/dental and related benefits for the period from the
officer's termination of employment until the earlier of three (3) years from
the date of termination of employment or the date the officer obtains
employment which provides him with comparable medical/dental and related
benefits and/or long term disability benefits. By its terms, the Severance
Compensation Agreement is binding upon any successor to the Company and the
Company is obligated to require any successor to enter into an agreement
providing for the successor Company to assume and perform the Severance
Compensation Agreement.
On March 20, 1997, the Company entered into letter agreements with
Harold E. Holliday, Jr. and Scott J. Reading in which it agreed that in the
event it becomes imminent that there will be a change of control of the
Company, such persons would be granted a three (3) year employment agreement
providing for a base salary equal to such person's then base salary, employee
benefits comparable to those being provided to other senior management, a
yearly bonus determined in accordance with the formula and guidelines then
applicable to such person and participation in then existing stock option and
restricted stock plans then being provided for other senior management.
Further, such letter agreement provides that in the event such person's
employment is terminated after a change of control of the Company, such person
will receive a lump sum payment equal to the sum of the base salary payable
through the remaining term of the agreement and the aggregate amount of yearly
cash bonuses payable through the remaining term of the agreement, assuming the
yearly cash bonus would be equal to the most recent yearly cash bonus paid to
such person.
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 1996, John J. McDonough, Richard L. Cravey, Gerald E. Eickhoff and Edwin
A. Wahlen, Jr. (since May, 1996) served on the Compensation Committee. No
member of the Compensation Committee was employed by the Company during 1996.
All decisions by the Compensation Committee relating to the compensation of the
Company's executive officers are reviewed by the full Board of Directors,
except for decisions about awards under the Company's stock option and award
plans which are made solely by the Stock Option and Bonus Committee.
The following addresses the Company's executive officer compensation
policies for 1996.
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 and long-term stock-based incentives which
strengthen the mutuality of interests between senior management and the
Company's stockholders.
The Company's stock option and award and incentive compensation plans
are intended to qualify as "performance based' compensation under Section
162(m) of the Code, which compensation is not subject to the $1,000,000 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. 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
$1,000,000 cap on deductibility in any particular year.
Salaries. 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
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<PAGE> 23
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. The material
terms of Mr. Lutz's employment agreement is described above under the caption
"Employment Agreement with Chief Executive Officer."
Mr. Adair's salary was also set pursuant to the terms of the
employment agreement effective December 31, 1993. The term of this employment
agreement ended on December 31, 1996 by its terms. It is anticipated that in
the future Mr. Adair's compensation will be determined in the same manner as
other executives as described 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 1996 that bonuses would be paid to
Messrs. Robert H. Lutz, Jr., Robert L. Adair, III and Barry L. Edwards, based
on the following three (3) factors: (i) the market price of the Common Stock at
year end; (ii) the attainment of the Company's annual earnings goals for 1996;
and (iii) the discretion of the Compensation Committee, provided that any such
bonus could not exceed four percent (4%) of the Company's pre-tax net income.
The Compensation Committee based the discretionary element of such bonuses on
the financial performance of the Company and the level of responsibility,
contribution and performance of the particular executive officer. The amounts
of the bonuses actually paid to Messrs. Lutz, Adair and Edwards are reflected
in the Summary Compensation Table.
The compensation payable to Scott J. Reading and other officers and
employees of ARCC was supplemented by the ARCC Incentive Compensation Program.
The material terms of the ARCC Incentive Compensation Program are described
above under caption "Incentive Compensation Program."
For the remainder of the Company's executive officers, annual bonuses
were determined during 1996 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. All of the executive officers listed in the Summary
Compensation Table received a bonus pursuant to this program with respect to
services rendered during 1996.
Option and Restricted Stock Grants. The Company uses grants of stock
options and restricted stock 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 stock option and award plans are
administered by the Stock Option and Bonus Committee, which determines the
persons eligible, the number of shares subject to each grant, the exercise
price of options thereof and the other terms and conditions of the option or
restricted stock.
Options granted under the stock option and award plans generally have
an exercise price equal to 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 five (5) year
period, subject to continued employment. Beginning in 1997, it was determined
that eligible persons would be considered for option grants and restricted
stock awards every third year and that, subject to the discretion of the Stock
Option and Bonus Committee, such and restricted stock grants would generally be
sufficient to provide appropriate incentives to the recipient for a three (3)
year period. Restricted stock which has been granted vests over a period of
five (5) years, provided the grantee is an employee on the date of vesting.
Generally only key employees (including executive officers) of the Company and
its subsidiaries are eligible to receive grants of option or restricted stock
under the stock option award plans. Except for NQSO's covering 28,701 shares
of Common Stock granted to Scott J. Reading pursuant to the ARCC Incentive
Compensation Program, no options were granted to the executive officers listed
in the Summary Compensation Table during 1996. Except for 14,351 restricted
shares awarded to Scott J. Reading pursuant to the ARCC Incentive Compensation
Program, no restricted stock was granted to such executive officers listed in
the Summary Compensation Table during 1996.
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THE COMPENSATION COMMITTEE
John M. McDonough, Chairman
Richard L. Cravey
Gerald E. Eickhoff
Edwin A. Wahlen, Jr.
DIRECTOR COMPENSATION
During 1996, each of the directors who was not an employee of the
Company or affiliated with Cravey, Green & Wahlen, Incorporated ("CGW")
received $10,000 for each full year of service as a director and $1,000 for
each Board meeting attended. Such 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Compensation Committee consisted of Richard L.
Cravey, Gerald E. Eickhoff, John J. McDonough, Edwin A. Wahlen, Jr. (from May
1996) and William S. Green (until May 1996). Mr. Cravey served as Chairman of
the Board and Chief Executive Officer of the Company from December 1993 to May
1994. Mr. Eickhoff served as President and Chief Executive Officer of BEI
Holdings, Ltd., a predecessor to the Company.
The Company loaned 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.
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 1996 for Mr. Eickhoff's policy
were $191,628. A portion of each such premium payment is treated as
compensation to Mr. Eickhoff and the remainder is treated as a loan. The cash
surrender value of the policy (as of December 31, 1996, approximately $773,641)
has been assigned to the Company to secure the repayment of such loan. The
outstanding principal balance of the loan as of March 31, 1997 (after deduction
of the cash surrender value) was approximately $284,312. 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 the Company and CGW, CGW was engaged to render certain advisory and
consulting services to the Company in connection with corporate finance matters
through December 31, 1996. The agreements provided 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 totaled $318,688 for 1996. Messrs. Cravey and Green
are each Managing Directors of the corporate general partner of CGW. These
agreements were terminated on November 19, 1996.
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the five (5)-year
period ending December 31, 1996, 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, (ii) financial companies quoted on NASDAQ and (iii)
the Standard and Poors Financial Miscellaneous. The stock price performance
shown on the graph below is not necessarily indicative of future price
performance.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[GRAPH APPEARS HERE]
AMONG AMRESCO, INC., THE NASDAQ STOCK MARKET-US INDEX AND THE NASDAQ
FINANCIAL INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C> <C>
AMRESCO, INC. AMMB 100 133 248 237 455 955
NASDAQ STOCK MARKET--US INAS 100 116 134 131 185 227
NASDAQ FINANCIAL INFN 100 143 166 167 243 311
</TABLE>
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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. The Company has
agreed to pay the entire premium for Mr. Cotton's policy through the premium
due for October 2006, regardless of his employment status with the Company.
The premiums during 1996 for Mr. Cotton's policy were $294,884. A portion of
each such premium payment is treated as compensation to Mr. Cotton and the
remainder is treated as a loan. The cash surrender value of the policy (as of
December 31, 1996, approximately $1,349,700) has been assigned to the Company
to secure the repayment of such loan. The outstanding principal balance of the
loan as of December 31, 1996 (after deduction of the cash surrender value) was
approximately $240,941. In addition, any payment of the death benefits
described above would be applied to the repayment of such loan.
The Company retained Greenbriar Associates, LLC to assist identifying
potential growth opportunities pursuant to a letter agreement dated May 14,
1996. Ms. Jorgensen, a director of the Company, serves as Managing Director of
Greenbriar Associates. In exchange for such consulting services, the Company
has agreed to pay Greenbriar Associates a retainer of $10,000 per month, plus
an additional fee in the event Greenbriar Associates assists the Company in
consummating an acquisition, investment or other significant corporate
development during the term of the engagement or within six months thereafter.
The amount of such additional fee would depend upon the transaction value,
value of the interest purchased or other appropriate measure of value.
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the
"SEC"). Such persons are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
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<PAGE> 26
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1996, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons owning more than 10% of the Company's equity
securities have been complied with, except that ___________, a _____________,
filed ______________.
PROPOSAL IV--APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the appointment of Deloitte & Touche LLP, as independent auditors for
the year ending December 31, 1997. Deloitte & Touche LLP has served as the
Company's independent auditors since March 15, 1994. Approval of the
appointment by the stockholders will require the affirmative vote of a majority
of shares present in person or by proxy at the Annual Meeting.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. Such representative will be given the opportunity to make a
statement if he or she so desires, and will be available to respond to
appropriate questions.
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 the Annual 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.
DATE FOR RECEIPT OF STOCKHOLDERS 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 1998, in
accordance with Rule 14a-8 of the proxy rules of the Securities and Exchange
Commission, must be received by the Company by December 23, 1997.
A COPY OF THE COMPANY'S ANNUAL REPORT, INCLUDING, FINANCIAL STATEMENTS AND
SCHEDULES, BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH
PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN OR ORAL
REQUEST OF SUCH PERSON ADDRESSED TO AMRESCO, INC., ATTN: TOM ANDRUS, VICE
PRESIDENT, 700 NORTH PEARL STREET, SUITE 2400, DALLAS, TEXAS 75201 (TELEPHONE:
(214) 953-7700).
By Order of the Board of Directors
L. Keith Blackwell
Vice President, General Counsel and
Secretary
April __, 1997
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<PAGE> 27
APPENDIX A
AMRESCO, INC,
1997 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. 1997 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.
The effective date of the Plan is _________, 1997 (the "Effective Date")
and the Plan 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
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<PAGE> 28
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, the definition of "Cause" and the means of determining whether
"Cause" exists provided for in the employment agreement shall apply to the
Participant for purposes hereof.
(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
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<PAGE> 29
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.
(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.
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(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, or does not 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.
(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 Section 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 AMRESCO common stock, 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.
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ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Stock
Option and Bonus Committee of the Board, or by any other Committee appointed by
the Board consisting of not less than two (2) Directors who are "non-employee
directors" under 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 non-employee directors who
are eligible to administer the Plan pursuant to Rule 16b-3(b)(3) or any
successor thereto under the Exchange Act. However, if for any reason any
member of the Committee does not qualify to administer the Plan, as
contemplated by Rule 16b-3(b)(3) of the Exchange Act, the Board of Directors
may appoint a new Committee member who complies with Rule 16b-3(b)(3).
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.
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 three million (3,000,000). 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.
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(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 or Director 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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ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options.
(a) Eligible Persons other than Outside Directors. 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.
(b) Outside Directors. Subject to the terms and provisions hereof,
Options shall be granted to Outside Directors as follows:
(i) Each Outside Director serving as such on February 25, 1997
shall be granted an NQSO to purchase 15,000 Shares;
(ii) Each Outside Director elected or appointed to the Board
for the first time after February 25, 1997 shall be granted an NQSO to
purchase 15,000 Shares on the date of such election or appointment; and
(iii) Each Outside Director upon his or her re-election at the
first meeting of the stockholders to elect Directors following the
expiration of the Triennial Period shall be granted an NQSO to purchase
15,000 Shares.
Each such Option shall have an Option Price equal to one hundred percent (100%)
of the Fair Market Value of a Share on the date of grant, shall have a term of
ten (10) years and shall vest twenty percent (20%) on the date of grant and
(20%) on each anniversary thereof. For purposes of this Section 6.1(b), the
term "Outside Director" shall mean any Director that is not an employee of the
Company or any Subsidiary. Further, the term "Triennial Period" shall mean, in
respect of any Outside Director, the three year period beginning on the date of
the last grant of Options to such Outside Director under Section 6.1(b), and
ending three calendar years thereafter.
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
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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 the Committee shall in each
instance approve, which need not be the same for each grant or 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 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, 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 or Disability. 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 or Disability. 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
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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) Employment Termination Followed by Death. In the event
that a Participant's employment terminates by reason of Disability, 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, the rights under
any then vested outstanding Options shall terminate immediately upon such
termination of employment. If the 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 thereof. 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 purpose
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.
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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.
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.
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7.5 Termination of Employment Due to Death, Disability or at the
Request of AMRESCO Without Cause. In the event the employment of a Participant
is terminated by reason of death, Disability 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 or by the
laws of descent and distribution. Further, a Participant's Performance Shares
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 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.
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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 right 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.
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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
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 deem 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;
(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; and
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(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.
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 deems 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 as a result of Awards
granted hereunder which are to be paid in the form of Shares, a Participant 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
Shares 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 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.
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<PAGE> 41
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.
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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AMRESCO, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints Robert H. Lutz, Jr., Robert L. Adair III,
and L. Keith Blackwell as proxies, each with power to act without the other and
with the power of substitution, and hereby authorizes them to represent and
vote, as designated on the other side, all shares of stock of AMRESCO, INC.
standing in the name of the undersigned with all power which the undersigned
would possess if present at the Annual Meeting of Stockholders of AMRESCO, INC.
to be held May 28, 1997 or any adjournment thereof.
<PAGE> 43
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE PROPOSALS DESCRIBED HEREIN.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY TO VOTE [ ] NOMINEES: Robert L. Adair, III, John J.
FOR ALL NOMINEES LISTED McDonough, and Bruce W. Schnitzer
(INSTRUCTIONS: To withhhold authority for any individual nominee,
write that nominees name in the space below)
</TABLE>
2. Amendment of Restated Certificate of Incorporation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Adoption of 1997 Stock Option and Award Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Appointment of Deloitte & Touche, LLP as auditors
5. In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjounment or
postponement thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as your name appears.
When shares are held by joint tenants,
both should sign; When signing as attorney,
executor, administrator, trustee or guardian,
please give full title.
Date: ________________________________, 1997
____________________________________________
(Signature)
____________________________________________
(Signature)
Please mark boxes in blue or black ink
with an X.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
