HIGH PLAINS CORPORATION
200 W. Douglas, Suite #820
Wichita, Kansas 67202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 16, 1997
The Annual Meeting of Stockholders of High Plains Corporation (the "Company")
will be held at the Hyatt Regency Wichita, 400 W. Waterman, Wichita, Kansas, in
the Grand Eagle Ballroom, on the 16th day of December, 1997 at 10:00 o'clock
a.m. Central Time for the purpose of considering and voting upon the following
matters:
1. To elect two directors to the class whose term expires in 2000.
2. To ratify the appointment of Allen, Gibbs & Houlik, L.C. as the
independent public accountants for the Company.
3. To modify the Company's 1992 Stock Option Plan.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The stock transfer books of the Company will not be closed, but only
stockholders of record at the close of business on October 31, 1997 will be
entitled to notice of and to vote at the meeting.
By order of the Board of Directors
Raymond G. Friend
President
Wichita, Kansas
October 31, 1997
You are cordially invited to come to the Annual Meeting early so that you may
meet informally with management and with Board nominees. The meeting room will
be open from 9:00 a.m. until the meeting at 10:00 a.m. Refreshments will be
served before the meeting.
IMPORTANT
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE, AND MAIL THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. IT IS IMPORTANT THAT THE PROXY BE RETURNED REGARDLESS OF
THE NUMBER OF SHARES OWNED.
<PAGE>
High Plains Corporation
200 W. Douglas, Suite #820
Wichita, Kansas 67202
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 16, 1997
GENERAL INFORMATION
The accompanying proxy is furnished by High Plains Corporation (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Stockholders to
be held at the Hyatt Regency Wichita, 400 W. Waterman, Wichita Kansas in the
Grand Eagle Ballroom on December 16, 1997 at 10:00 a.m. (CST), or any
adjournment thereof, and may be revoked by the stockholder at any time before
it is voted by giving a written notice to the Secretary of the Company, by
executing and delivering a proxy with a later date, or by personal withdrawal
of the proxy prior to or at the meeting. The expense of this solicitation is to
be borne by the Company and the Company will reimburse persons holding stock in
their name or in the names of their nominees, for their expenses in sending
proxies and proxy materials to their principals. The approximate mailing date
of this proxy statement is November 12, 1997.
The Company had outstanding 15,985,494 shares of Common Stock, par value $.10
per share as of October 31, 1997, the date the security holders of record
entitled to vote at the meeting will be determined (the "Record Date"). Each
share of Common Stock entitles the holder thereof to one vote. There is
cumulative voting in the election of directors, and each stockholder is
entitled to cast a number of votes equal to the number of voting shares held by
the stockholder at the Record Date multiplied by the number of directors to be
elected and may cast all such votes for a single nominee or may distribute them
between the nominees as the stockholder chooses. This Proxy Statement solicits
discretionary authority to vote cumulatively, and the accompanying form of
proxy grants such authority.
ITEM 1 ELECTION OF DIRECTORS
The Board recommends that the stockholders vote FOR, and unless otherwise
instructed, the persons named in the Proxy have indicated that they intend to
vote FOR the election of Raymond G. Friend and
Donald D. Schroeder, comprising the class of directors whose current terms
expire at the 1997 Annual Meeting, to serve as directors for a term of three
years, until the 2000 Annual Meeting of Stockholders and until their successors
are duly elected and qualified. In the event of the death or disability of any
of the candidates for director, the Proxy will be voted for such other person
or persons as the Board of Directors may recommend. No stockholder may vote in
person or by proxy for more than two nominees at the Annual Meeting.
<PAGE>
Certain information about the (i) nominees, (ii) the other current directors
of the Company who will continue in office after the Annual Meeting and (iii)
the executive officers of the Company is set forth below:
<TABLE>
Nominees For Reelection.
<CAPTION>
Nominated
for Term
Name Age Position Expiring
<C> <C> <C> <C>
Raymond G. Friend 45 President and Director 2000
Donald D. Schroeder 56 Treasurer and Director 2000
</TABLE>
<TABLE>
Directors Who Will Continue in Office and Executive Officers.
<CAPTION> Expiration
for Term as
Name Age Position Director
<C> <C> <C> <C>
John F. Chivers 58 Director 1999
Ronald D. Offutt 54 Director 1999
Arthur Greenberg 62 Director 1998
H.T. Ritchie 53 Secretary and Director 1998
Daniel O. Skolness 48 Chairman and Director 1998
Donald M. Wright 74 Director 1999
Christopher G. Standlee 43 Vice President
</TABLE>
The directors of the Company are divided into three classes, each holding
office for a term of three years. One class of directors is elected each year
at the Annual Meeting of Stockholders. Officers of the Company serve at the
discretion of the Board of Directors.
Set forth below are biographical summaries of the incumbent directors,
including the nominees, and the executive officers of the Company.
John F. Chivers has been a director of the Company since April 1993 and his
current term as director expires at the Annual Meeting of Stockholders in 1999.
Mr. Chivers is a realtor and developer from Detroit Lakes, Minnesota. He is a
member of the "Nominating" and "Mergers and Acquisitions" Committees of the
Board of Directors.
H.T. Ritchie has been a director and the Secretary of the Company since
October 1987 and his current term as director expires at the Annual Meeting of
Stockholders in 1998. For over seven years, Mr. Ritchie has served as President
of the Ritchie Corporation, a paving, sand and concrete production business
located in Wichita, Kansas. He is a member of the "Policy and Compensation" and
"Finance and Capital Expenditures" Committees of the Board of Directors.
Daniel O. Skolness has been a director of the Company since December 1993
and his current term as director expires at the Annual Meeting of Stockholders
in 1998. Mr. Skolness has been chief financial officer of Skolness, Inc., a
sugarbeet and grain business of Glyndon, Minnesota, for over ten years. He is a
member of the "Policy and Compensation" and "Budget and Audit" Committees of
the Board of Directors.
Donald M. Wright has been a director of the Company since October 1987 and
his current term as director expires at the Annual Meeting of Stockholders in
1999. For over seven years he has managed his personal investments. He is a
member of the "Nominating" and "Budget and Audit" Committees of the Board of
Directors.
<PAGE>
Raymond G. Friend was the Controller of the Company in June 1985 and was
elected Vice President and Chief Financial Officer in April 1990. In 1995 Mr.
Friend was elected Executive Vice President and Chief Financial Officer of the
Company. In April 1997 he was elected President, and in May 1997 was elected to
the Board of Directors of the Company. His current term as a director of the
Company expires at the Annual Meeting of Stockholders in 1997. From March 1992
until March 1993, and again from March 1995 to March 1996, Mr. Friend served as
Chairman of the Clean Fuels Development Coalition (CFDC), a national
organization formed to promote the commercial development and use of clean
alternative fuel sources. He continues to serve as a director of the CFDC. He
also serves as President of the Kansas Ethanol Association, an organization of
ethanol producers which operate plants in the state of Kansas. He is a member
of the "Finance and Capital Expenditures" and "Mergers and Acquisitions"
Committees of the Board of Directors.
Arthur Greenberg has been a director of the Company since April 1997, and
his current term as director expires at the Annual Meeting of Stockholders in
1998. Mr. Greenberg is a commercial and residential land developer from Grand
Forks, North Dakota. Mr. Greenberg has extensive experience in the
transportation industry, having previously owned and operated an ICC regulated
transportation company and a truck brokerage company. In the farming industry,
he was formerly president of World Seeds, Inc., a group of farmers and
agronomists committed to the development of varieties of disease resistant
wheat seed. He is a member of the "Finance and Capital Expenditures" and
Mergers and Acquisitions" Committees of the Board of Directors.
Ronald D. Offutt has been a director of the Company since April 1997, and
his current term as director expires at the Annual Meeting of Stockholders in
1999. Mr. Offutt is the founder and Chief Executive Officer of RDO Equipment
Company (NYSE: RDO), a public company which operates the largest network of
John Deere industrial and agricultural dealerships in the United States. He is
a resident of Fargo, North Dakota and a member of the "Policy and Compensation"
and "Mergers and Acquisitions" Committees of the Board of Directors.
Donald D. Schroeder has been a director of the Company since September
1997, and his current term as director expires at the Annual Meeting of
Stockholders in 1997. Mr. Schroeder is a food processing and packaging
executive from Minneapolis, Minnesota. He is a former officer of Hoemer
Waldorf Corporation (a New York Stock Exchange Company), and served as Vice
President of Marketing and Strategic Planning for the $1.2 billion Brown Kraft
division of Champion International Corporation. Since 1985, he has been a co-
owner of The Schroeder Group, which is a group of companies with diversified
interests in packaging, transportation and food processing. Mr. Schroeder is a
member of the "Nominations' and "Budget and Audit" Committees of the Board of
Directors.
Christoper G. Standlee has been General Counsel of the Company since his
employment in March 1995. In November 1996 he was also elected Vice President
of the Company. From May 1978 until March 1995 he maintained a private law
practice in Wichita, Kansas, during which time he represented the Company as
outside counsel for approximately ten years.
No family relationships exist between or among the directors or executive
officers of the Company.
Committees
The Company has standing Budget and Auditing, Policy and Compensation,
Mergers and Acquisitions, Finance and Capital Expenditures and Nominating
Committees. Each Committee has met at least twice in the past fiscal year. All
Committee members were present at each Committee meeting.
The Budget and Audit Committee, consisting of Messrs. Schroeder, Wright,
and Skolness, reviews the financial statements and budgets of the Company and
reviews the performance of and recommends selection of the Company's
independent auditors.
<PAGE>
The Policy and Compensation Committee, consisting of Messrs. Offutt,
Ritchie, and Skolness, reviews overall policies including compensation policies
of the Company, recommends modifications to general policies and to
compensation levels, and awards and grants stock options.
The Nominating Committee, consisting of Messrs. Wright, Schroeder and
Chivers, recommends the nomination of prospective directors and officers. The
Nominating Committee will consider persons brought to its attention by
stockholders. Stockholders wishing to recommend persons for consideration by
the Nominating Committee as nominees to the Company's Board of Directors can do
so by writing to the Secretary of the Company at 200 W. Douglas, Suite #820,
Wichita, Kansas 67202, giving such person's name, biographical data and
qualifications. Any such recommendation should be accompanied by a written
statement from the person recommended giving consent to be named as a nominee
and, if nominated and elected, to serve as a director.
The Finance and Capital Expenditures Committee, consisting of Messrs.
Friend, Greenberg and Ritchie, reviews and recommends action on major projects
for expansion or improvement of the Company's production facilities. The
Committee also oversees and recommends action in financing arrangements for the
Company.
The Mergers and Acquisitions Committee was formed in April of 1997. It
consists of Messrs. Chivers, Greenberg, Friend and Offutt, and was formed to
seek out and evaluate possible expansion or diversification options for the
Company in the form of mergers, acquisitions, or synergistic joint ventures.
Attendance At Board Meetings
During the fiscal year ended June 30, 1997, seven meetings were held by the
Board of Directors including two meetings held by conference call. All
incumbent directors have attended all of the Board of Directors meetings held
this fiscal year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of October 31, 1997 by (i) each director of the Company, (ii)
each Named Officer, as defined in "Executive Compensation", and (iii) all
directors and executive officers of the Company as a group. Unless otherwise
noted, each person has sole voting and investment power with respect to the
shares of voting securities beneficially owned by such person.
<TABLE>
<CAPTION>
Number Ownership
Name of Beneficial Owner of Shares Percentage (1)
<C> <C> <C>
Raymond G. Friend (2) 413,531 2.2%
John F. Chivers (3) 180,000 1.0%
Arthur Greenberg (4) 15,000 *
Stanley E. Larson (5) 64,000 *
Ronald D. Offutt (6) 15,000 *
H.T. Ritchie (7) 446,553 2.5%
Donald D. Schroeder (8) 15,000 *
Daniel O. Skolness (9) 165,751 0.9%
Donald M. Wright (10) 329,459 1.9%
All directors and executive officers as a group
(9 persons) 1,644,294 9.1%
<FN>
* Less than 1%
</TABLE>
<PAGE>
(1) Assumes exercise of options which were exercisable at June 30, 1997 to
purchase Common Stock granted to present and former officers, directors,
and employees representing 1,549,168 shares of Common Stock for total
outstanding shares of Common Stock of 17,661,612.
(2) Includes options to purchase 355,600 shares of Common Stock which are
currently exercisable. Also included are 19,975 options which are
currently exercisable and 3,025 shares acquired under the Company's
Employee Stock Purchase Plan.
(3) Consists of options to purchase 180,000 shares of Common Stock which are
currently exercisable.
(4) Consists of options to purchase 15,000 shares of Common Stock which are
exercisable currently or within 180 days.
(5) Includes options to purchase 64,000 shares of Common Stock which are
exercisable currently or within 180 days.
(6) Consists of options to purchase 15,000 shares of Common Stock which are
exercisable currently or within 180 days.
(7) Includes options to purchase 273,600 shares of Common Stock which are
currently exercisable; 8,689 shares of Common Stock as to which Mr. Ritchie
shares investment and voting power; and 2,152 shares which are held as
custodian for a minor child.
(8) Consists of options to purchase 15,000 shares of Common Stock which are
exercisable currently or within 180 days.
(9) Includes options to purchase 144,000 shares of Common Stock which are
currently exercisable and 4,988 shares held as custodian for a minor child.
(10) Includes options to purchase 273,600 shares of Common Stock which are
currently exercisable.
EXECUTIVE COMPENSATION
The following table sets forth certain individual compensation information
for the Company's Chief Executive Officer and for the Company's executive
officers whose total salary and bonus for fiscal 1997 exceeded $100,000 (the
"Named Officers"). The Company granted no restricted stock awards or stock
appreciation rights and did not make any long-term incentive plan payouts
during the fiscal years indicated.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Awards
Fiscal Annual Compensation Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#)(3) Compensation(1)(2)($)
<S> <C> <C> <C> <C>
Stanley E. Larson 1997 $101,117 $ 55,221 63,000(6) $ 43,635.00
(Chairman of the Board and 1996 128,689 277,757 338,761(4) --
President, until retirement 1995 123,600 95,103 138,667 --
in April 1997)
Raymond G. Friend 1997 $136,960 $ 63,013 84,000(7) $ 4,645.68
(Former Executive Vice 1996 128,689 277,757 150,600(5) 4,510.00
President and Chief Financial 1995 123,600 95,103 72,000 4,374.00
Officer - President since
April 1997)
</TABLE>
<PAGE>
(1) All amounts represent either employer matching contributions to the
Company's 401(k) Retirement Plan on behalf of the named individuals or in
the case of Mr. Larson, amounts paid in connection with a retirement and
consulting agreement executed in April 1997.
(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation does not exceed the lesser
of $50,000 or 10% of the total amount of annual salary and bonus for any
Named Officer.
(3) Numbers of options has been adjusted for the dilutive effect of the
February 22, 1995 stock split.
(4) 316,761 of these options were issued either to replace options previously
exercised or were issued as "re-load" options for options currently
exercised, as provided for under the 1995 stockholder approved amendments to
the "1992 Stock Option Plan." The options issued do not have additional "re-
load" rights.
(5) 129,600 of these options were issued either to replace options previously
exercised or were issued as "re-load" options for options currently
exercised, as provided for under the 1995 stockholder approved amendments to
the "1992 Stock Option Plan." These options issued do not have additional "re-
load" rights.
(6) Amounts include options issued to Mr. Larson pursuant to a retirement and
consulting agreement (more particularly described hereinafter) executed in
April 1997.
(7) 72,000 of these options were issued as "re-load" options for options
currently exercised, as provided for under the 1995 stockholder approved
amendments to the "1992 Stock Option Plan". These options do not have
additional "re-load" rights.
Option Grants in Fiscal Year Ended June 30, 1997
The following table sets forth information concerning stock options granted
to the Named Executive Officers during fiscal 1997 under the Company's 1992
Stock Option Plan and the Employees Stock Purchase Plan. The Company granted no
stock appreciation rights during fiscal 1997.
<TABLE>
<CAPTION>
% of Total Market Potential Realizable Value
Options Price on at Assumed Annual Rates
Granted to Exercise or Date of of Stock Price Appreciation
Options Employees in Base Price Grant Expiration for Option Term
Name Granted (#)(2) Fiscal Year ($/Sh) ($/Sh)(1) Date 5% ($) 10%($) 0%($)
<S> <C> <C> <C> <C> <C>
Stanley E. Larson 50,000(3) 12.7% $3.50 $3.50 04/10/01 $ 35,000 $ 70,000 $ 0
13,000(4) 3.3% $1.50 $4.125 03/04/02 $ 47,531 $ 60,937 $ 34,125
Raymond G. Friend 72,000(3) 18.3% $3.75 $3.75 12/09/03 $ 97,875 $ 195,750 $ 0
12,000(4) 3.1% $1.50 $4.125 03/04/02 $ 43,920 $ 56,280 $ 31,560
</TABLE>
<PAGE>
(1) Based upon the last reported sales price on the NASDAQ National Market
System on the date of grant.
(2) All options are exercisable currently or within 180 days.
(3) These options were granted pursuant to the "1992 Stock Option Plan",
either as original option awards, or as re-load options authorized by the
November 1995 Amendments to the Company's 1990 & 1992 Stock Option Plans.
(4) These options were granted pursuant to the Company's Employee Stock
Purchase Plan.
Aggregated Option Exercises in Fiscal Year Ended June 30, 1997
and Fiscal Year-End Option Values
The following table sets forth information concerning stock options exercised
during, and held at the close of, fiscal 1997 by the Named Employee Officers.
The Named Officers did not exercise during, or hold at the close of, such
fiscal year any stock appreciation rights.
<TABLE> Value of
<CAPTION> Number of Unexercised
Unexercised in-the-Money
Shares Options at Fiscal Options at
Acquired on Value Year-End(#) Fiscal Year-
Name Exercise(#) Realized($) Exercisable/Unexercisable End($)
<S> <C> <C> <C>
Stanley E. Larson 35,000 38,000 0 / 50,000 $ 0
Raymond G. Friend 75,025 35,471 75,644 / 0 $ 74,670
</TABLE>
Director Compensation
Until July 1, 1993 the Company traditionally did not pay cash compensation
for serving on the Board of Directors or on a committee of the Board of
Directors. As compensation for serving as a director and serving on committees
of the Board of Directors for fiscal years 1994, 1995 and 1996, on December 10,
1993, the Company adopted a shareholder approved three year plan to grant to
each of the six incumbent directors options to purchase 25,000 shares of Common
Stock at an exercise price equal to $9.63 per share, the market closing price
of the Company's Common Stock on such date. Such options expire 10 years from
the date of grant if not previously exercised. Due to antidilutive features of
the Company's stock options, the quantity of options granted to each optionee,
for each of those three years, have increased to 72,000. As a result of stock
splits which have occurred through 1997 the exercise price of all options which
were issued prior to any stock splits have been reduced proportionately by the
dilutive effect of the splits. Two of the Company's directors have retired and
four new directors have been elected during or subsequent to the 1997 fiscal
year. Stanley E. Larson retired as President, Chairman of the Board, and as a
director on April 11, 1997, and Roger D. Skaer retired as a director on
September 26, 1997. On September 25, 1997 the Board approved and Mr. Skaer was
granted an option to purchase an additional 25,000 shares of the Company's
Common Stock at an exercise price of $3.8125 per share. Three of the four
newly elected directors (excluding only Raymond Friend, the only employee
director) were granted options to purchase 15,000 shares of the Company's
Common Stock on the date of their election to the Board, at an exercise price
equal to the market closing price on the date of such grant. Mr. Greenberg and
Mr. Offutt were each granted their options on May 6, 1997 at an exercise price
of $3.19 per share. Mr. Schroeder's options were granted on September 26, 1997
at an exercise price of $3.875 per share.
<PAGE>
Since July 1, 1993 the Company has paid directors who are not employees of
the Company (i) $1,000 for each meeting of the Board of Directors attended in
person and (ii) $500 for each meeting of a committee of the Board of Directors
attended, provided that such meeting is not held coincidentally with a full
board meeting. Mr. Friend, the only current employee director, is not eligible
to receive cash compensation for serving as a director or for serving on any
committees of the Board of Directors.
The Company also reimburses directors for reasonable expenses incurred in
connection with their attendance at meetings, including committee meetings, of
the Board of Directors.
Employment Contracts, Termination of Employment and Change-in-Control
Agreements
On April 1, 1993, the Company entered into employment agreements (the
"Employment Agreements") with Messrs. Stanley E. Larson, the then President of
the Company and Raymond G. Friend (the "Employees"). (Unless otherwise
indicated, the provisions of the Employment Agreements are substantially
similar.) Each of the Employment Agreements was for a four-year term. On April
1, 1995, these employment agreements were extended for a period of five years
from that date, to coincide with the terms of additional employment agreements
entered into by the Company with other key management employees.
The Employment Agreements provide, with certain exceptions, that the
Employees will not compete with the Company for the two-year period following
termination of their employment. If the Employee is terminated for cause or if
the Employee voluntarily resigns, the Company is not obligated to continue base
salary or bonus payments beyond payments which were incurred prior to such
termination. Upon termination due to death or permanent disability, each
Employment Agreement provides for a one time payment of 100% of the Employee's
base salary at the time of termination, plus 50% of the Employee's most recent
bonus. In the event the Company terminates the Employee without cause, the
Company must continue to pay, for the remainder of the term of the Agreement,
the Employee's full base salary at the time of termination plus (i) a bonus
amount equal to the Employee's most recently received annual bonus, and (ii)
the costs for the Employee's continued participation in all Company benefit
plans. In the event of a termination of the Employee following a Change of
Control (as defined in the Employment Agreements), the terminated Employee will
continue to receive his base salary and bonus payments for the remainder of the
term of the Agreement, and any unvested stock options of such Employee shall
vest and become immediately exercisable.
Compensation under Mr. Friend's Employment Agreement consists of (i) a
current minimum base salary of $136,960 for Mr. Friend which is to be increased
by 3% per year as a cost of living adjustment and which may be increased by the
Board of Directors of the Company based on merit, (ii) participation in an
executive officer and key employee bonus pool equal to an aggregate of 5 1/2%
of the Company's net income, from which Mr. Friend receives approximately 2% of
the Company's net income, and (iii) stock options to be granted under the
Company's 1992 Stock Option Plan.
On April 11, 1997, the Company entered into an agreement with Stanley E.
Larson, the retiring President and Chairman of the Board of Directors, to
provide a retirement benefit package and consulting agreement for future
services. As part of the retirement package, the Company agreed to grant Mr.
Larson (on August 1, 1997) non-qualified options to purchase 14,000 shares of
the Company's Common Stock at an exercise price of $1.60 per share. In
consideration for future consulting services to be provided by Mr. Larson, the
Company agreed to continue payments equal to amounts required under his former
employment contract, which would have expired on July 1, 2000. At June 30,
1997, Mr. Larson's annual compensation was $136,960, to be increased by 3% per
year as a cost of living adjustment, plus annual bonuses of approximately 2% of
net income before taxes. In return for the surrender by Mr. Larson of 388,761
outstanding options the Company also agreed to grant Mr. Larson non-qualified
options to purchase 50,000 shares of the Company's Common Stock each year for 3
years, exercisable on April 11, 1997, 1998 and 1999, respectively, at the fair
market value of the Company's Common Stock at the time of exercise. The
exercise price for these options on April 11, 1997 was $3.50 per share.
<PAGE>
Report of the Compensation Committee with Respect to Executive Compensation
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations
of customers, stockholders and employees. Prior to and including fiscal 1997,
the ultimate responsibility for administering the Company's compensation
philosophy and overseeing the evaluation process as it relates to salary and
bonus determinations has been the responsibility of the Board of Directors as a
group, with the responsibility of the "Committee" being to study compensation
issues and make recommendations to the Board of Directors.
Executive Compensation Philosophy. The goals of the Company's executive
compensation program are to align compensation with business objectives and
performance, and to enable the Company to attract, retain and reward executive
officers who contribute to the long-term success of the Company. The Company's
compensation program for executives is based on the following principles:
* The Company attempts to compensate competitively.
The Company is committed to providing a compensation program aimed at
attracting and retaining the best people in the industry. To ensure that
compensation is competitive, the Company periodically compares its
compensation practices with those of comparable companies and sets its
compensation parameters based on this review.
* The Company compensates sustained performance.
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing
the extent to which strategic and business plan goals are met, including
such factors as operating profit and performance relative to competitors.
Individual performance is evaluated by reviewing organizational and management
development progress against set objectives.
* The Company strives for fairness in the administration of compensation.
The Company attempts to apply its compensation philosophy uniformly. The
Company strives to achieve a balance of the compensation paid to a
particular individual and the compensation paid to other executives both
inside the Company and at comparable companies.
The Board of Directors, partially on the basis of information obtained from
the underwriter of the Company's 1993 stock offering, determined the
compensation levels and contract terms for the Employment Agreements.
Commencing with fiscal 1994, the Company's process of assessing executive
performance has been as follows:
1. At the beginning of the annual performance cycle, the Chief Executive
Officer and the Committee set objectives and key goals for the Company's
officers.
2. The Chief Executive Officer and the Committee give each officer ongoing
feedback on performance.
3. At the end of the annual performance cycle, the Chief Executive Officer
and the Committee evaluate the officer's accomplishment of objectives and
attainment of key goals.
<PAGE>
4. The accomplishment of objectives and attainment of key goals affect the
Chief Executive Officer's and the Committee's recommendations to the
Board of Directors on salary increases and, if applicable, stock
options.
Executive Compensation Vehicles. The Company utilizes a compensation program
to attract and retain key executives, enabling it to improve products, motivate
technological innovation, foster teamwork and adequately reward executives, all
with the goal of enhancing stockholder values. The annual cash-based
compensation for executives consists of a base salary subject to increases at
the discretion of the Company. Salaries are reviewed on an annual basis and may
be changed at that time based on (i) information derived from the evaluation
procedures described above, (ii) a determination that an individual's
contributions to the Company have increased (or decreased), and (iii) changes
in competitive compensation levels. The Company also makes available to
executives incentive bonuses described above under "Employment Agreements"
based on overall Company performance.
The Company also has a Long-Term Savings and Deferred Profit Sharing Plan
(the "401(k) Plan"), adopted in 1991 to allow participants to defer
compensation pursuant to 401(k) of the Internal Revenue Code. All employees of
the Company, including executives, are eligible to participate in the 401(k)
Plan provided certain qualifications are met. In addition to amounts which
participants may elect to contribute to the 401(k) Plan, the Company makes
"matching" contributions to the 401(k) Plan allocated to all participants.
Payments of benefits accrued for 401(k) Plan participants will be made upon
retirement or upon termination of employment prior to retirement provided
certain conditions have been met by the employee prior to termination.
Long-term incentives are intended to be provided through stock options
specified in the Employment Agreements and through the possible grant of
additional stock options under the 1992 Stock Option Plan or future stock
option plans. The objective of aligning executives' long range interests with
those of the stockholders may be met by providing the executives with the
opportunity to build meaningful stake in the Company.
Chief Executive Officer and Other Officer Compensation. The compensation
levels paid to Stanley E. Larson as President and Chief Executive Officer of
the Company until his retirement in April 1997, and to Raymond G. Friend as the
current President and Chief Executive Officer, were established pursuant to an
Employment Agreement and other related agreements, effective April 1, 1993 and
renewed April 1, 1995. (see "Employment Agreements" above). These Agreements
were approved by the entire Board of Directors after careful consideration.
Compensation to executive officers is provided by base salary, incentive
bonuses, and stock option awards.
Base Salary. An executive's base salary is determined by an assessment of his
or her sustained performance, advancement potential, experience,
responsibility, scope and complexity of the position, current salary in
relation to the range designated for the job and salary levels for comparable
positions at peer companies.
Bonuses. Payments under the Company's bonus incentive plan are tied to the
Company's level of achievement of annual earnings. This creates a direct link
between the Company's profitability and executive officer pay.
Long-Term Incentives. The Company's overall long-term compensation philosophy
is that long-term incentives should be directly related to the creation of
stockholder value, thus providing a strong link between management and
stockholders. In support of this philosophy, the Company has awarded to its
executive officers stock options.
Stock Option Awards. Stock options encourage and reward executive officers
<PAGE>
for creating stockholder value as measured by stock price appreciation. Stock
options under the 1992 Stock Option Plan are currently awarded at an exercise
price equal to the fair market value of the stock on the date of grant, and,
therefore, only have value for the executive officers if the price of the
Company's stock appreciates in value from the date the stock options are
granted. The Company has also adopted an Employee Stock Purchase Plan for key
management employees. This 3 year plan was approved by majority vote of
shareholders at the Company's Annual Meeting of Shareholders on November 17,
1995 and the last option to purchase shares of stock under this plan occurs in
fiscal year 1998. Mr. Friend is are eligible to participate in this plan. Under
the plan, employees of the Company are entitled to purchase a certain number of
shares of stock (based primarily on years of service to the Company) at a
discounted value. Stockholders also benefit from such stock price appreciation.
Stock options are awarded periodically with the Company's objective to
provide (i) a long-term equity interest in the Company, and (ii) an opportunity
for a greater financial reward if long-term performance is sustained. The base
number of options granted to each executive officer falls within a pre-
determined range, set and approved by the Board of Directors when implementing
the Company's Stock Option Plans. Individual grants which are awarded in
addition to the base options are dependent upon the Company's future business
plans and the executive officer's ability to positively impact those plans, the
executive officer's position and level of responsibility within the Company,
and an evaluation of the executive officer's performance.
Section 16(a) Beneficial Ownership Reporting Compliance.
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's securities are required to report to the Securities and Exchange
Commission and to the NASDAQ National Market System by a specified date his or
her ownership of or transactions in the Company's securities. To the Company's
knowledge, based solely on information filed with the Company, all of these
requirements have been satisfied, except that Ronald D. Offutt and Arthur
Greenberg each failed to timely file one Form 3 and one Form 4 reflecting a
total of one transaction each in the month of May 1997. These transactions
were the initial options granted upon election as a director, and the
appropriate Securities and Exchange Commission Forms reflecting these
transactions was timely filed in October, 1997.
Compensation Committee Interlocks and Insider Participation.
For fiscal 1997, Messrs. H.T. Ritchie (Committee Chairman), Ronald D. Offutt
and Daniel O. Skolness comprised the Policy and Compensation Committee of the
Board of Directors. Mr. Ritchie is currently the Secretary of the Company.
As members of the Policy and Compensation Committee of the Board of Directors
of the Company, Messrs. Ritchie, Offutt and Skolness make recommendations to
the entire Board of Directors regarding the compensation for the executive
officers and directors of the Company, including those compensation
arrangements described in the "Executive Compensation" portion of this proxy.
Policy and Compensation Committee
H.T. Ritchie, Chairman
Daniel O. Skolness
Ronald D. Offutt
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below compares the yearly percentage change
in the cumulative total stockholder return on the Company's Common Stock
against the total cumulative return of the S&P 500 Stock Index and the Peer
Group for the Company (Midwest Grain Products, Archer-Daniels
and Methenex Corp.) for the fiscal years 1992, 1993, 1994, 1995, 1996 and 1997
ending June 30. All calculations assume reinvestment of dividends.
<TABLE>
TOTAL RETURN TO STOCKHOLDERS
(assumes $100 invested on June 30, 1991)
<CAPTION>
TOTAL RETURN ANALYSIS
<S> <C> <C> <C> <C> <C> <C>
06/30/92 06/30/93 06/30/94 06/30/95 06/30/96 06/30/97
High Plains Corporation $ 100 $ 146 $ 173 $ 189 $ 128 $ 136
Peer Group $ 100 $ 106 $ 120 $ 131 $ 141 $ 184
S&P 500 $ 100 $ 114 $ 115 $ 145 $ 183 $ 246
</TABLE>
<PAGE>
ITEM 2 SELECTION OF AUDITORS
Proxies solicited by the Board of Directors will be voted for ratification of
the appointment of Allen, Gibbs & Houlik, L.C. as the Company's independent
auditors for the 1998 fiscal year in the absence of instructions to the
contrary.
The audit of the Company for the year ended June 30, 1997, was conducted by
Allen, Gibbs & Houlik, L.C. Representatives of such firm are expected to be
present at the Annual Meeting of Stockholders to make a statement if they
desire to do so and to answer appropriate questions. The Board of Directors
recommends that the stockholders vote FOR ratification of its appointment of
Allen, Gibbs & Houlik, L.C.
ITEM 3 MODIFICATION OF THE 1992 STOCK OPTION PLAN
Proposed Amendment
In absence of instructions to the contrary, proxies solicited by the Board of
Directors will be voted for the ratification of amendments to the 1992 Stock
Option Plan that will increase the number of shares authorized for options
under the plans, and provide for scheduled grants to non-employee directors.
(See text of proposed amendments below.) As of October 31, 1997 there were
seven (7) non-employee directors on the Company's Board of Directors.
Following is a Summary of the 1992 Stock Option Plan:
The 1992 Stock Option Plan provides for the grant of both non-qualified stock
options and options that qualify as incentive stock options under Section 422
of the Internal Revenue Code, as amended (the "Code"), and is administered by a
committee of the members of the Board of Directors (the "Committee"). Officers
and directors of the Company or any subsidiary receive options pursuant to a
schedule set forth in the 1992 Stock Option Plan (the "Schedule") or pursuant
to the determination of the Committee in the event the Committee is composed of
disinterested directors as required by Rule 16b-3 promulgated under the Act,
subject in all cases to the provisions of the 1992 Stock Option Plan.
The 1992 Stock Option Plan as amended by shareholder vote in November of
1994, provides that a total of 3,000,000 shares of Common Stock of the Company
may be made subject to options under such plan. This number is reflective of
any stock splits that have occurred since the inception of the plan. The 1992
Stock Option Plan further provides that the option price shall be fixed as set
forth on the schedule or by the Committee in the event the Committee is
composed of disinterested directors under Rule 16b-3. The option exercise
prices of incentive stock options may not be less than 100% (110% in the case
of an incentive stock option granted to a stockholder owning more than 10% of
the voting power of all classes of stock of the Company or any subsidiary) of
the fair market value of the Common Stock as of the date the option is granted.
The option exercise price of nonqualified stock options may be established by
the Committee without regard to the fair market value of the common stock.
During any calendar year, the aggregated fair market value, determined at the
date of grant, of Common Stock with respect to which incentive stock options
are exercisable for the first time by an Optionee must not exceed $100,000.
Options shall not be exercisable for six (6) months from the date of the grant
thereof; however, the six (6) month holding period shall not apply in the event
of any exercise of an option by an Optionee's estate or by any other person who
acquired an option by reason of an Optionee's death. The term of each option
may not exceed ten (10) years from the date the option is granted, or five (5)
years in the case of incentive stock options granted to stockholders owning
more than 10% of the voting power of all classes of stock of the Company or any
subsidiary. Optionee's who exercise their original option(s) granted under the
1992 Stock Option Plan and remit the exercise payment required, are granted a
one-time option to purchase the like quantity of Common Shares as those options
exercised, in order to replace their option (the "Reload Option). The per
share price at which the Reload Option is exercisable shall be equal to the
closing sales price of the Company's Common Stock (appropriately adjusted for
any stock split, stock dividend, combination or exchange) as reported in the
NASDAQ National Market System on the day in which the original options are
exercised. The exercise period of the Reload Option shall expire, and the
<PAGE>
Reload Option shall be no longer exercisable, on the later to occur of (i) the
expiration date of the originally exercised option or (ii) one year from the
date of grant of the Reload Option.
Options granted under the 1992 Stock Option Plan are not transferable, except
by will or the laws of descent or distribution. Any incentive stock options
granted under the 1992 Stock Option Plan are exercisable only while the
Optionee is an employee of the Company or any subsidiary or, to the extent
otherwise exercisable on the date of cessation of employment, (i) within the
three (3) month period after termination of employment for any reason other
than death or disability, (ii) within the twelve (12) month period after
termination of employment due to disability, as defined in Section 22(e)(3) of
the Code, or (iii) within the twelve (12) month period after the death of an
Optionee either while the Optionee is employed by the Company or any subsidiary
or during the period after termination of employment during which an option is
exercisable under (i) or (ii). Nonqualified options will carry such
restrictions upon exercise as the committee may determine. The Committee may,
in its discretion, impose other conditions of employment or dispense with one
or more conditions; however, any action that results in (i) a material increase
of benefits, (ii) a material increase in the number of options, or (iii) a
material modification in the requirements as to eligibility for participation
in the 1992 Stock Option Plan must be approved by the stockholders of the
Company. Shares of Common Stock subject to canceled or lapsed options shall be
available for subsequently granted options.
The quantity of stock options and the respective exercise prices resulting
from this plan are subject to adjustment from antidilutive provisions which are
contained in the plan, and are necessary to implement due to stock splits.
<TABLE>
Benefits Under Proposed Amendments to Plan
<CAPTION>
Number of Scheduled
Name and Position Year Options to be Received*
<S> <C> <C>
Stanley E. Larson 1997 0
Retired President & CEO 1998 0
1999 0
Raymond G. Friend 1997 0
President & CEO 1998 0
1999 0
Donald D. Schroeder 1997 0
Director Nominee 1998 15,000
1999 15,000
Executive Officer Group 1997 0
1998 0
1999 0
Non-Executive Director Group 1997 60,000
1998 105,000
1999 105,000
Associates of any Directors,
Executive Officers or Nominees 1997 0
1998 0
1999 0
<PAGE>
Other persons who receive or
will receive five percent of
such options 1997 0
1998 0
1999 0
Non-Executive Officer
Employee Group 1997 0
1998 0
1999 0
<FN>
* Options will be granted at market value on date of grant. The closing price
per share of the Company's Common Stock as reported on NASDAQ on October 31,
1997 was $3.75.
</TABLE>
Federal Tax Aspects
Under the 1992 Stock Option Plan, the Committee may grant options which
qualify as "incentive stock options" ("ISO") as defined in Section 422 of the
Code. Under Code Section 422, the receipt of an ISO will not realize taxable
income by reason of the grant or the exercise of an ISO. If an Optionee
exercises an ISO and retains the acquired shares for at least one year after
the date of transfer and for at least two years after the date of grant, any
gain realized upon disposition will be taxable to the grantee as mid-term
capital gain (or, if held more than eighteen months after the exercise date, as
long-term capital gain), and the Company will not be entitled to any tax
deduction. However, if the Optionee does not satisfy the applicable holding
periods, the difference between the option price and the lesser of the fair
market value of the shares on the date of exercise or the price received upon
disposition of the shares generally will be treated as compensation taxable to
the grantee as ordinary income. Any additional gain upon such disposition will
be taxed as short-term capital gain. The Company then will be entitled to a
deduction in the amount constituting ordinary income to the Optionee. At the
time of exercise, the difference between the price paid and the market value of
the stock ( the "bargain element"), is treated as an "adjustment" in the
calculation of "alternative minimum taxable income" and may result in the
imposition of the "alternative minimum tax."
The recipient of a non-qualified stock option will not realize income until
the option is exercised. At the time of exercise, the Optionee will realize
ordinary income, subject to withholding, and the Company will become entitled
to a corresponding deduction in the amount by which the market value of the
purchased shares at the time of exercise exceeds the exercise price for such
shares. If an Optionee thereafter sells such shares, the gain or loss, if any,
realized upon such disposition will constitute short-term, mid-term or long-
term capital gain or loss to the Optionee, depending upon the length of time
such shares are held after exercise of the options associated with such shares.
The Proposed Amendments to the 1992 Stock Option Plan are as follows:
(a) Grant. In addition to other options provided for under the terms of the
1992 Option Plan, each non-employee director shall be granted a
non-qualified option to purchase 15,000 shares of the Company's
Common Stock each year for 3 consecutive years. The options will
be annually granted on December 16 of 1997, 1998 and 1999.
However, no options pursuant to this amendment will be granted in
1997 to Directors Greenberg, Offutt and Schroeder, as they each
received a similar option grant upon accepting their directorship
with the Company in 1997.
(b) Option Exercise Price. The per share price at which these options shall
be exercisable shall be equal to the closing sales price of the
Company's Common Stock (appropriately adjusted for any stock split,
stock dividend, combination or exchange) as reported in the NASDAQ
National Market System on the date of grant.
<PAGE>
(c) Increase in Authorized Options. The number of shares of the Company's
Common Stock authorized for options under the 1992 Stock Option
Plan will be increased by 1,000,000 shares, to a total of to
4,000,000 shares. 540,000 of these shares will be allocated to the
scheduled option grants (and potential re-load options authorized
under the Plan) described in (a) above. The remaining options will
be available for grant under the terms of the Plan.
Principle Reason for Amendment
The purposes and intended effects of the proposed amendment to the Company's
1992 Stock Option Plan are (i) to provide the Company with a compensation plan
to attract and retain qualified persons as members of its Board of Directors;
(ii) to relate such compensation plan to the performance of the Company's
Common Stock, providing incentive to the Optionee to maximize the value of the
Company's Common Stock; and (iii) to allow the Optionees to assist the Company
in obtaining cash flow which could become necessary from time to time by the
Company's receipt of the Optionee's exercise price without the Company
undertaking the expense to have an underwritten stock offering or private
placement, both of which would require cash expenditures.
The closing price per share of the Company's Common Stock as reported on
NASDAQ on October 31, 1997 was $3.75.
If the proposed amendments are not approved, the 1992 Stock Option Plan will
continue in accordance with its current terms.
If the proposed amendments to the 1992 Stock Option Plan are approved, the
Company plans to register the additional shares authorized for issuance under
the Plan on Form S-8 as soon a practicable after approval.
The resolution constituting Item 3 to approve the amendments to the 1992
Stock Option Plan is as follows:
"RESOLVED, that, as conditionally adopted by the Board of Directors, the
amendments to the High Plains Corporation 1992 Stock Option Plan
described in the proxy statement accompanying the notice of this Annual
Meeting, be and hereby are approved effective as of December 16, 1997."
Vote Required for Amendment
Approval of this amendment will require the affirmative vote of a majority of
the shares of the Common Stock outstanding as of the Record Date. The Board of
Directors has approved the proposed amendment and recommends that the
stockholders vote FOR the proposed amendment.
<PAGE>
OTHER INFORMATION
Neither the Board of Directors nor management knows of any other matters to
be presented at the Annual Meeting of Stockholders. However, if any other
matter properly comes before the meeting, the persons named in the enclosed
Proxy will vote in accordance with their judgement upon such matters.
Stockholders who do not expect to attend in person are urged to execute and
promptly return the enclosed form of Proxy.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders to be presented at the Company's 1998 Annual
Meeting of Stockholders must be received at the Company's executive offices no
later than July 21, 1998 for inclusion in the 1998 Proxy Statement.
By Order of the Board of Directors
Raymond G. Friend
President
Wichita, Kansas
November 12, 1997
<PAGE>
PROXY HIGH PLAINS CORPORATION
200 W. Douglas, Suite #820, Wichita, KS 67202
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS.
The undersigned hereby appoints H. T. Ritchie and Daniel O.
Skolness as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below,
all shares of common stock of High Plains Corporation as held of record by the
undersigned on October 31, 1997, at the Annual Meeting of Stockholders to be
held December 16, 1997, or any adjournment thereof. This proxy revokes all
prior proxies given by the undersigned.
1. ELECTION OF DIRECTORS
[ ] FOR THE NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE
CONTRARY BELOW).
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW.
RAYMOND G. FRIEND STANDS FOR ELECTION TO A THREE YEAR TERM.
DONALD D. SCHROEDER STANDS FOR ELECTION TO A THREE YEAR TERM.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
2. TO RATIFY THE APPOINTMENT OF ALLEN, GIBBS & HOULIK, L.C. AS
THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
(Continued from reverse side)
3. TO MODIFY THE COMPANY'S 1992 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
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 PROPOSALS 1,2,3, AND 4.
Please sign exactly as name appears below. When shares are held by
join tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: , 1997
Signature of Shareholder
Signature of Shareholder
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY, USING THE ENVELOPE
PROVIDED
Exhibit 10.1
Amendment to the High Plains Corporation
1992 Stock Option Plan (the "Plan")
November 18, 1994
The 1992 Plan is hereby amended to reflect the following changes:
Article III, Section 8.
The number of options available under the Plan is three million (3,000,000).
Such number reflects stock splits that have occurred since the inception
of the Plan through November 18, 1994.
Article II, Section 3; Article III, Section 10 and 11.
In addition to the other methods for granting options as specified in the
Plan, any person holding unexercised options granted under the Plan shall,
upon exercise of each of those options and payment of the exercise price,
be granted an option to purchase the like quantity of Common Shares as those
exercised in order to replace their options. This provision shall only
apply to the Plan options that were issued other than under this Amendment
(the "Original Options").
Article III, Section 15.
The option price of any options granted under this Amendment shall be equal
to the closing sales price of Company Common Stock (appropriately adjusted
for any stock split, stock dividend, combination or exchange) as reported
in the NASDAQ National Market System on the day the Original Options granted
under the Plan are exercised.
Article III, Section 15.
The exercise period for options granted pursuant to this Amendment shall
expire, and any such options granted shall be no longer exercisable, on the
later to occur of (i) the expiration date of the originally surrendered
option or (ii) one year from the date of grant of such option.
Other Matters
Any option granted pursuant to this Amendment shall vest immediately.
The formula Plan provision as set out in this Amendment may not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code, ERISA, or the rules thereunder. Each such amendment
requires stockholder approval.
<PAGE>
HIGH PLAINS CORPORATION
1992 STOCK OPTION PLAN
ARTICLE I
PURPOSE
SECTION 1: Statement of Purpose. The purpose of this Plan is to establish
and continue as close an identity as is feasible between the interests of the
Corporation and any Parent or Subsidiary, and those of its or their respective
employees. The Plan will serve to reward employees for past services, to
retain those employees in the service of the Corporation, any Parent or any
Subsidiary, and to induce new executives and other key employees to become
associated with the Corporation, a Parent or a Subsidiary. It is for the
accomplishment of these several objectives that this Plan is formulated and
adopted.
SECTION 2: Definitions. When used in this Plan, unless the context otherwise
requires:
A. Board of Directors. "Board of Directors" and "Directors" shall mean
respectively the Board of Directors of the Corporation as constituted from
time to time and the members thereof.
B. Code. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
C. Committee. "Committee" shall mean the Stock Option Committee as described
in Article II, Section 3 below.
D. Common Stock. "Common Stock" and "Stock" shall each mean the common stock
of the Corporation of the par value of $.10 per share.
E. Corporation. "Corporation" shall mean High Plains Corporation, a Kansas
corporation.
F. Fair Market Value. "Fair Market Value" of the Stock per share shall mean:
(1) In the case of Stock of a class traded on a national securities exchange,
the closing price per share of Stock on the date in question, or if there is
no trading of Stock on such date, the closing price per share of Stock on the
next preceding date on which Stock was traded;
(2) In the case of Stock traded in the NASDAQ National Market System, the
closing price per share of Stock on the date in question, or if there is no
trading of Stock on such date, the closing price per share of Stock on the
next preceding date on which Stock was traded;
(3) In the case of Stock of a class reported on the NASDAQ automated
reporting system, the mean between the closing bid and asked prices per
share of Stock for the date in question, or if there is no trading of Stock
on such date, the mean between the closing bid and asked prices per share of
Stock on the next preceding date on which Stock was traded; or
(4) In the case of Stock of a class which is neither traded on a national
securities exchange or in the NASDAQ National Market System nor reported on
NASDAQ, the value per share determined by the Committee. In determining
the Fair Market Value of the Stock, the Committee shall make a good faith
attempt to accurately value the Stock. The determination of Fair Market
Value of the Stock by the Committee shall be final, binding and conclusive.
G. Incentive Stock Option. "Incentive Stock Option" shall mean any option
granted hereunder and designated by the Committee as an Incentive Stock
Option that satisfies the particular requirements hereunder applicable
only to Incentive Stock Options and which is intended to be an Incentive
Stock Option for purposes of Section 422 of the Code.
H. Nonqualified Stock Option. "Nonqualified Stock Option" shall mean any
option granted hereunder and not designated by the Committee as an Incentive
Stock Option.
I. Option Agreement. "Option Agreement" shall mean the agreement between the
Corporation and the optionee as described in Article III, Section 12 below.
J. Optionees. "Optionees" shall mean those persons who receive Options under
the Plan.
K. Options. "Options" shall mean options granted under the Plan, whether
designated as Incentive Stock Options or Nonqualified Stock Options.
L. Parent. "Parent" shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation if, at the
time in question, each of the corporations other than the Corporation owns
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
M. Plan. "Plan" shall mean the High Plan Corporation 1992 Stock option Plan,
as adopted by the Board of Directors and stockholders of the Corporation and
as such Plan may be amended from time to time.
<PAGE>
N. Subsidiary. "Subsidiary" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation if, at the time in question, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
ARTICLE II
ADMINISTRATION
SECTION 3: Stock Option Committee. The Plan shall be administered by a Stock
Option Committee which shall consist of such number (not less than two) of the
members of the Board of Directors as the Board of Directors shall determine.
The administration of the Plan shall comply with the requirements of
Rule 16b-3 (c) (2) promulgated under Section 16 of the Securities Exchange
Act of 1934, as amended (the "Securities Exchange Act"). The Committee
shall have plenary authority in its discretion, but subject to the express
provisions of the Plan, (a) to determine the employees to whom and the time
or times at which Options shall be granted, the form of payment of each option,
the number of shares to be covered by each Option, and such other terms and
conditions applicable to each Option as the Committee shall determine; (b) to
designate whether each option granted hereunder is an Incentive Stock option,
a Nonqualified Stock Option, or a combination of both; (c) to interpret the
Plan and to prescribe, amend and rescind the rules and regulations relating
to it; (d) to determine the terms and provisions of the respective option
Agreements (which need not be identical), including, without limitation, such
terms and provisions as may be necessary in the judgment of the Committee
(i) to cause the Options and Stock issued pursuant to the Plan to be registered
on Form S-8 promulgated pursuant to the Securities Act of 1933, as amended, and
the applicable rules and regulations thereunder, or any other appropriate form,
(ii) to provide for the reimbursement of the Corporation for taxes paid or
advanced in respect of the issuance to employees of options or Stock under the
Plan and (iii) to set forth the form of restrictive legends to be placed on
certificates representing shares of Stock to be issued pursuant to the
exercise of Options relating to obligations of the holder under the federal
and state securities laws and under the Code; and (e) to make all other
determinations deemed necessary or advisable for the administration of the
Plan. No member of the Board of Directors or the Committee shall be liable
for any action or determination made in good faith by the Board of Directors
or the Committee with respect to the Plan or any transaction arising pursuant
to the Plan.
<PAGE>
SECTION 4: Vacancies. If a member of the Committee for any reason shall
cease to serve, the vacancy shall be filled by the Board of Directors.
SECTION 5: Removal. Any member of the Committee may be removed at any time,
with or without cause, by the Board of Directors.
SECTION 6: Chairman. The Committee may select one of its members as its
Chairman.
SECTION 7: Meetings. The Committee shall hold its meetings at such times
and places as it shall deem advisable. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made
by a majority of its members; provided, however, that any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it had been made by the
affirmative vote of a majority of its members at a meeting duly called
and held. The Committee may appoint a Secretary, shall make such rules
and regulations for the conduct of its business as it shall deem advisable,
and may, but shall not be required to, keep minutes of its meetings.
ARTICLE III
OPTIONS
SECTION 8: Shares Available. The Committee may, but shall not be required to,
grant in accordance with the terms of the Plan Options to purchase not more
than, in the aggregate, 750,000 shares of Stock. Such shares may be
authorized and unissued shares or issued shares held in the Corporation's
treasury. The number of shares of Stock available under this Plan, as
set forth above, shall be computed prior to any adjustment resulting from
stock dividends, stock splits, reorganizations, or other substitutions of
securities for the present Stock of the Corporation. Stock covered by Options
which have terminated in accordance with the provisions of the Plan
may be treated by the Committee as Stock which is eligible for other and
further granting of options in accordance with the terms of the Plan.
SECTION 9: Time for Issuance of Options. Options may be granted by the
Committee pursuant to the Plan from time to time for a period beginning
on the date the Plan is approved by the stockholders of the Corporation
(as set forth in Section 30 below) and ending ten years from the date the
Plan is adopted by the Board of Directors. Nothing herein shall be construed
to prohibit the issuance of Options at different times to the same persons.
<PAGE>
SECTION 10: Persons Eligible. Persons eligible to receive Options shall be
such Directors and key employees (which term as used herein includes
officers) of the Corporation, a Parent or a subsidiary, as the Committee,
in its sole discretion, may select; provided, however, notwithstanding any
other provision of the Plan, Directors and officers (as such terms are used
in Rule 16b-3 (c) (2) under Section 16 of the Securities Exchange Act) of
the Corporation, a Parent or a Subsidiary shall receive options only in
accordance with the Schedule attached hereto as Exhibit A. Also, Directors
of the Corporation, a Parent or a Subsidiary who are not also employees of
the Corporation, a Parent or a Subsidiary shall not be eligible to receive
Incentive Stock Options. Any employee of the Corporation, a Parent or a
Subsidiary who, at the time an Incentive Stock Option is to be granted to
him, owns (within the meaning of Section 424(d) of the Code) stock
representing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation, any Parent or any Subsidiary
shall be ineligible to receive such Incentive Stock Option, except in strict
compliance with the provisions of sections 13 and 15 of the Plan.
SECTION 11: Number of Shares to be Optioned. The total number of shares
subject to Options to be granted to any eligible person shall be determined
by the Committee in its sole discretion; provided, however, that the aggregate
Fair Market Value (determined at the time an Incentive Stock Option is
granted) of Stock with respect to which Incentive Stock options are
exercisable for the first time by an optionee during any calendar year (under
all plans of theCorporation, its Parents and its Subsidiaries) shall not
exceed $100,000.
SECTION 12: Option Agreement. An Option Agreement signed by the Chairman
of the Board, the President or a Vice President of the Corporation, and
attested by the Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary of the Corporation, shall be issued to each person to whom an
option is granted. The form and provisions of each Option Agreement shall
be determined by the Committee in accordance with the terms of the Plan.
SECTION 13: Duration of Options. No Option shall be exercisable with
respect to any of the shares subject thereto earlier than the date which
is six (6) months from the date of the grant of such option nor later than
the date which is ten (10) years after the date of grant. However,
the initial six (6) month holding period requirement shall not apply if
an Optionee dies while employed by the Corporation, a Parent or a Subsidiary.
Notwithstanding the foregoing, in the case of an Incentive Stock Option to
be granted to an eligible person who, at the time such Incentive Stock
<PAGE>
Option is to be granted, owns (within the meaning of Section 424 (d) of the
Code) stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation, any Parent or any
Subsidiary, such Incentive Stock Option shall not be exercisable with
respect to any of the shares subject thereto later than five (5) years after
the date of grant. To the extent not expressly prohibited by the provisions
of the Plan, each Option shall be exercisable at such time or times and shall
be subject to such conditions as the Committee, in its sole discretion, may
determine at or prior to the time the option is granted.
SECTION 14: Options Not Transferable. No Option shall be transferable
otherwise than by will or by the laws of descent and distribution, and during
the lifetime of the Optionee, the Option shall be exercisable only by such
Optionee. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of, or to subject to execution, attachment or similar process, any
option, or any right thereunder, contrary to the provisions hereof, shall
be void and ineffective, shall give no right to the purported transferee,
and may, at the sole discretion of the Committee, result in forfeiture of
the Option involved in such attempt.
SECTION 15: Option Exercise Price. In general, the option exercise price per
share of Stock subject to any Option shall be determined by the Committee, in
its sole discretion; provided, however, that the option exercise price per
share of Stock subject to any Incentive Stock Option shall not be less than
the Fair Market Value per share of Stock on the date such Option is granted;
and provided further that in the case of an Incentive Stock Option to be
granted to an eligible person who, at the time such Option is to be granted
to him, owns (within the meaning of Section 424(d) of the Code) stock
representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation, any Parent or any
Subsidiary, the option exercise price shall not be less than one hundred
ten percent (110%) of the Fair Market Value per share of Stock on the date
such Option is granted.
ARTICLE IV
EXERCISE OF OPTIONS
SECTION 16: Terms of Exercise. Each option shall be exercisable in whole
or in part as set forth in the Plan and the option Agreement; provided,
however, that no Option shall be exercised for less than one hundred (100)
shares at any one time, unless the balance of shares subject to the Option
at such time is less than one hundred (100) shares, in which case the entire
unexercised portion of the Option shall be exercised at one time. The
<PAGE>
Committee may, in its sole discretion, set forth in any Option Agreement
a vesting schedule pursuant to which the option evidenced thereby shall
become exercisable in part from time to time until fully exercisable.
SECTION 17: Employment Conditions.
A. Incentive Stock Options granted pursuant to this Plan shall be
exercisable only while the Optionee is an employee of the Corporation,
any Parent or any Subsidiary, and, to the extent otherwise exercisable
on the date of termination of employment, as follows:
(1) In the event of the termination of the optionee's employment for any
reason other than disability (as defined in Section 22(e)(3) of the Code)
or death, for a period of three (3) months following such termination,
but not after the expiration of the period set forth in Section 13 above;
(2) In the event of the termination of the optionee's employment because
of the disability (as defined in Section 22 (e) (3) of the Code) of the
Optionee, for a period of twelve (12) months following such termination,
but not after the expiration of the period set forth in Section 13 above; and
(3) In the event of the death of the Optionee while employed by the
Corporation, any Parent or any Subsidiary, or within the period after a
termination of employment in which the Option is exercisable under (1) or
(2) above, by the estate of the optionee or by any person who shall have
acquired the right to exercise the option by bequest or inheritance or by
reason of the death of the optionee, for a period of twelve (12) months
following such death, but not after the expiration of the period set forth
in Section 13 above.
B. For purposes of this section, an optionee's employment shall be considered
to have terminated at the close of the business day preceding the first day on
which the Optionee is no longer for any reason whatsoever employed by the
Corporation, any Parent or any Subsidiary.
C. For purposes of this Section, the initial six (6) month holding period
requirement described in Section 13 shall not apply in determining whether
an option is exercisable on the date of termination of the Optionee's
employment.
D. The Committee may, in its sole discretion, require that each employee
receiving an option agree that he will remain in the employ of the Corporation,
a Parent or a subsidiary for a period determined by the Committee. Such
<PAGE>
employment, however, shall be at the pleasure of the Corporation, Parent or
Subsidiary and on such terms and compensation as the Corporation, Parent
or Subsidiary may from time to time determine.
E. Nothing in this Section 17 shall prevent the Committee from providing
such other conditions of employment as the Committee, in its sole discretion,
shall determine; provided, however, any such action that results in a
material increase in benefits under the Plan or materially modifies the
requirements as to eligibility for participation in the Plan shall be approved
by the stockholders of the Corporation, as provided in Section 26 hereof.
Notwithstanding the foregoing provisions, in no event may an option be
exercised after the expiration of its term.
SECTION 18: Manner of Exercise. An Option shall be exercisable by delivery
of a duly signed notice in writing to such effect and the full option exercise
price of the Stock purchased pursuant to the exercise of the Option to the
Treasurer of the Corporation or to any other officer of the Corporation
appointed by the Committee for the purpose of receiving the same; provided,
however, that no Option issued pursuant to this Plan may be exercised at
any time when the Option or the granting or the exercise thereof violates
any law or governmental order or regulation. The payment of the option
exercise price shall be either in cash or, if the Committee, in its sole
discretion, so specifies in the Option Agreement, through delivery to the
Corporation of shares of Stock, or by any combination of cash and shares;
provided, however, that an optionee shall not be entitled to pay the exercise
price of an option through delivery of shares of Stock acquired through the
exercise of an option granted under this Plan unless the optionee has held
such shares for at least six (6) months from the date he or she acquired
such shares. The value of shares delivered as payment, in whole or in part,
of the option exercise price shall be determined as provided in Section 2(F).
SECTION 19: Issuance of Shares. Subject to the limitations of Section 25,
the Corporation shall cause to be delivered to the purchaser a certificate
for the shares of Stock purchased pursuant to the exercise of the Option
as soon as practicable after the exercise of the Option.
SECTION 20: Stockholder Rights of Optionees. No person entitled to exercise
an option shall have any rights or privileges as a stockholder of the
Corporation with respect to any shares issuable upon exercise of such
option until certificates representing such shares shall have been
issued and delivered to such person.
<PAGE>
ARTICLE V
NOT AN EMPLOYMENT CONTRACT
SECTION 21: Not an Employment Contract. Nothing in the Plan or in any
Option Agreement pertaining to an Option shall confer on an individual any
right to continue in the employ of the Corporation, a Parent or a Subsidiary
or, subject to the provisions of any written employment agreement between
such individual and the corporation, a Parent or a Subsidiary, to interfere
in any way with the right of the Corporation, a Parent or a Subsidiary at
any time to terminate or modify the terms or conditions of the employment
of the optionee.
ARTICLE VI
CHANGES IN COMMON STOCK
SECTION 22: Certain Changes in Common Stock.
A. Appropriate and equitable adjustment shall be made in the number of
shares of Common Stock then available for issuance pursuant to the Plan and
to the number of shares of Common Stock subject to each outstanding Option or
the option exercise price thereof or both, in the event of any change
subsequent to the adoption of the Plan in the outstanding Common Stock by
reason of a stock dividend, stock split, recapitalization, reorganization,
merger or consolidation, it being the purpose of this provision to insure
that, in the event of such occurrence, an option shall be adjusted to give
the optionee, upon exercise of the option, rights equivalent to the rights
of a person who held shares of Common Stock in the amount subject to the
option at the time of such corporate transaction.
B. In the event of a reorganization, merger or consolidation, as a result
of which the corporation is not the surviving or acquiring corporation, all
Options outstanding and unexercised hereunder shall become exercisable in
full at any time after the approval of the transaction by the Board of
Directors, without regard to any vesting schedule which may be set forth
in the Option Agreements evidencing such options. In the event of a
reorganization, merger or consolidation,as a result of which the corporation
is not the surviving or acquiring corporation, the Board of Directors may,
in its sole discretion, provide as a part of such reorganization, merger or
consolidation for a substitution of options of such surviving or acquiring
corporation for options outstanding and unexercised hereunder.
C. In the event of a change in the Common Stock of the corporation as
presently constituted, which is limited to a change of the par value status
<PAGE>
of any or all of its authorized shares, the shares resulting from any such
change shall be deemed to be Common Stock or Stock within the meaning of
the Plan.
D. To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination shall be final, binding and conclusive.
SECTION 23: Dissolution or Liquidation. A dissolution or liquidation
of the Corporation shall cause each outstanding Option to terminate.
SECTION 24: Rights of Optionees and the Corporation.
A. Except as hereinbefore expressly provided in this Article VI, an
optionee shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or
by reason of any dissolution, liquidation, merger or consolidation or spin-off
of assets or stock of the Corporation or any other corporation; and any issue
by the Corporation of shares of stock of any class or securities convertible
into shares of stock of any class shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or option exercise price of
shares of Common Stock subject to outstanding Options.
B. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
SECTION 25: Compliance with Securities Act. Notwithstanding anything
contained herein to the contrary, no Option shall be exercised, and the
Corporation may postpone the issuance and delivery of shares upon any
purported exercise of an option, until (a) the completion of such registration
or other qualification of such shares under any state or federal law, rule or
regulation as the Corporation shall determine to be necessary or advisable,
or (b) either counsel to the Corporation shall have advised or the Securities
and Exchange Commission shall have ruled that the issuance of such shares does
not require registration under any Federal securities act, and insofar as
any local Blue Sky law might affect the issuance of such shares, either the
local Blue Sky Commission shall have ruled or counsel to the Corporation shall
have advised that the issue is not subject to such local law or that such
shares shall have been duly qualified under such law. Any person exercising
<PAGE>
an Option shall make such representations and furnish such information
as may, in the opinion of counsel for the Corporation, be necessary or
appropriate to permit the Corporation, in the light of the then existence
or non-existence of an effective registration statement under the Securities
Act of 1933, as from time to time amended, with respect to such
shares, to issue the shares in compliance with the provisions of that or
any comparable law. The Corporation shall not have any liability with
respect to any Option the exercise of which is prevented by the provisions
of this Section 25.
ARTICLE VII
AMENDMENT, TERMINATION AND INTERPRETATION
SECTION 26: Amendment and Termination. The Plan shall terminate ten years
from the effective date hereof; provided, however, that the Board of Directors
may at any time prior to that date terminate or from time to time amend the
Plan and the terms and conditions hereof as to Stock which is not then the
subject of options granted or issued pursuant to the terms of the
Plan; and the Board of Directors, with the written consent of the affected
Optionees, may at any time terminate or from time to time amend the Plan
and the terms and conditions of the Plan as it relates to options held by
such consenting Optionees. Notwithstanding the foregoing, however,
(a) the provisions of the Schedule attached hereto as Exhibit A shall not
be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder; and (b) any amendment to the Plan shall be
approved by the stockholders of the Corporation if such amendment would (i)
materially increase the benefits accruing to participants under the Plan,
(ii) materially increase the number of shares of Stock which may be subject
to Options granted under the Plan, or (iii) materially modify the requirements
as to eligibility for participation in the Plan.
SECTION 27: Interpretation. A determination of the Committee as to any
question that may arise with respect to the interpretation of the provisions
of the Plan and of any option or option Agreement shall be final.
SECTION 28: Rules and Regulations. The Committee may authorize and
establish such rules, regulations and revisions thereof not inconsistent
with the provisions of the Plan as it may deem advisable to make the Plan
and the options effective and provide for their administration, and may
take such other actions with regard to the Plan and the Options as it
shall deem desirable to effectuate their purposes.
<PAGE>
SECTION 29: Evidence of Each Option. The Committee may include, by reference,
the text of the Plan in each Option Agreement or other document issued to an
Optionee pursuant to the Plan; and in such event, the entire terms of the Plan
as it may exist and as it may be amended from time to time shall be deemed
included in such Agreement or document with the same force and effect as though
the Plan were set forth in its entirety in such Agreement or document.
ARTICLE VIII
EFFECTIVENESS
SECTION 30: Effectiveness of Plan. The effective date of the Plan shall
be the date the Plan is adopted by the Board of Directors, subject to
approval by a majority of the stockholders of the Corporation present and
voting at its next meeting subsequent to such date.
ARTICLE IX
MISCELLANEOUS
SECTION 31: Other Options. Nothing contained in the Plan shall be construed
to limit the authority of the Corporation to exercise its corporate rights
and powers, including, but not by way of limitation, the right of the
Corporation to grant or issue options for proper corporate purposes other
than under the Plan with respect to any employee or other person, firm,
corporation or association.
<PAGE>
EXHIBIT A
SCHEDULE OF OPTIONS AVAILABLE
TO OFFICERS AND DIRECTORS
1. In addition to the other Options described in this Schedule, on
December 10, 1992, the following grants of Options in replacement of options
previously granted at an identical price:
<TABLE>
<CAPTION>
Amount Option Exercise
Name of Grant Price Per Share
<S> <C> <C>
Stanley E. Larson 30,000 $1.75 per share
David J. VanderGriend 30,000 $1.75 per share
Raymond G. Friend 30,000 $1.75 per share
Greg Heuer 15,000 $1.75 per share
</TABLE>
Such grants of Options shall vest and become exercisable in equal rateable
amounts as of June 10, 1993; December 10, 1993; and December 10, 1994.
2. In addition to the other grants of Options described in this Schedule,
on December 10, 1992, the following persons shall receive grants of Options
to purchase the number of shares of Common Stock set forth below at the
Fair Market Value on December 10, 1992.
<TABLE>
<CAPTION>
Amount
Name of Grant
<S> <C>
Arthur L. Skolness 75,000 shares
Roger D. Skaer 75,000 shares
Donald M. Wright 75,000 shares
H. T. Ritchie, II 75,000 shares
Stanley E. Larson 75,000 shares
David J. VanderGriend 75,000 shares
Raymond G. Friend 75,000 shares
</TABLE>
Such grants of Options shall vest and become exercisable in equal rateable
amounts as of June 10, 1993; December 10, 1993; and December 10, 1994.
3. In addition to the other Options described in this Schedule, Directors
and officers shall be eligible to receive any other Option granted by the
Committee, provided that, at the time of the grant of the Option, each
member of the Committee is a disinterested person (as such term is used in
Rule 16b-3 (c) (2) (i) under the Securities Exchange Act of 1934).
