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ALICO, INC.
Post Office Box 338
La Belle, Florida 33975
PROXY STATEMENT
SOLICITATION
November 9, 1998
La Belle, Florida
The Board of Directors of ALICO, INC. (the "Company") hereby solicits
proxies to be used at the Annual Meeting of Stockholders of the Company to
be held on December 1, 1998, and at any and all adjournments thereof, and
this proxy statement is furnished in connection therewith. Every proxy may
be revoked at any time prior to the exercise thereof by any stockholder
giving such proxy, by giving written notice of revocation to the secretary
of the Company at or before the annual meeting by duly executing a
subsequent proxy relating to the same shares or by attending the annual
meeting. In addition to the use of the mails, directors, officers and
regular employees of the Company may, without additional compensation,
solicit proxies in person or by telephone, mail or telegraph. All costs of
solicitation will be borne by the Company. Brokerage houses, bankers and
others holding stock in their names or names of nominees or otherwise will
be reimbursed for reasonable out-of-pocket expenses incurred by them in
sending proxies and proxy material to the beneficial owners of such stock.
It is anticipated that this proxy statement and accompanying notice, form of
proxy card and the Company's Annual Report will be first sent to the
stockholders of the Company on or about November 9, 1998.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its Common
Stock, $1 par value per share of which 7,027,827 were outstanding as of
October 19, 1998. Each share entitles the holder thereof to one vote. Only
stockholders of record at the close of business on October 19, 1998 will be
entitled to vote at the meeting or at any and all adjournments thereof.
Security ownership of certain beneficial owners and management as of
October 19, 1998:
(a) Beneficial Ownership of more than 5 percent of Voting Securities:
The following table sets forth certain information as of October 19, 1998,
relating to the beneficial ownership of shares of Common Stock of the
Company by any person known to the Company to be the beneficial owner of
more than five percent (5%) of the Common Stock of the Company. To the best
knowledge of the Company, there are no other persons who own beneficially
more than five percent (5%) of the Company's Common Stock.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
Ben Hill Griffin, III 3,536,577 (1) 50.32
P.O. Box 127
Frostproof, FL 33843
(1) Includes 3,493,777 shares held through Ben Hill Griffin Investments,
Inc. (5851 West Charleston Blvd., Suite 1000, Las Vegas, NV 89102), a wholly
owned subsidiary of Ben Hill Griffin, Inc., of which Mr. Griffin, III may
be considered to be the indirect beneficial owner by virtue of his power to
direct the voting and disposition of such shares of the Company's Common
Stock.
(b) Security Ownership of Management:
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
Directors or Nominees 3,557,947 (1) 50.63
(See "Nominees for Election
as Directors" for individual
shareholdings.)
All Directors and Executive 3,557,947 (1) 50.63
Officers as a group (9 persons)
(1) Includes 3,493,777 shares held through Ben Hill Griffin Investments,
Inc. (5851 West Charleston Blvd., Suite 1000, Las Vegas, NV 89102), a wholly
owned subsidiary of Ben Hill Griffin, Inc., of which Mr. Griffin, III may be
considered to be the indirect beneficial owner by virtue of his power to
direct the voting and disposition of such shares of the Company's Common
Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission in fiscal 1998 were
timely filed.
NOMINEES FOR ELECTION AS DIRECTORS
At the Annual Meeting nine Directors will be elected to hold office for the
ensuing year or until their respective successors are duly elected and
qualified. Unless authority is withheld on the attached form of proxy card,
such proxy will be voted FOR the election of the nominees set forth below to
serve as such Directors. All nominees are currently members of the Board of
Directors and have consented to being named in this proxy statement and have
notified management that they will serve, if elected. If any of the nominees
should be unable to serve as a Director, the persons designated as proxies
reserve full discretion to cast their votes for another person in his place.
A plurality of the votes received will elect each director.
The Board of Directors recommends that the stockholders vote FOR the
proposal to elect the nine nominees listed below as Directors of the
Company.
The information set forth below as to age, shareholdings, and business
experience for the past five years, including principal occupation or
employment (other than with the Company), has been furnished by each
nominee.
Shares of Company
Position with Common Stock
Company, if any, Beneficially Owned
and Principal as of Percent
Nominee Age Occupation October 19, 1998 of Class
Ben Hill Griffin, III 56 Chairman of the Board 3,536,577 (1) 50.3225
Frostproof, Florida (2) and Chief Executive
Officer. Chairman,
President and Chief
Executive Officer of
Ben Hill Griffin, Inc.
(citrus production and
packing, fertilizer
manufacturing and
ranching company).
Chairman of the Board
and Chief Executive Officer
of Orange-co, Inc. Director
since 1973.
Richard C. Ackert 56 President and Chief Executive 300 .0043
Fort Myers, Florida Officer of SouthTrust Bank,
N.A./Southwest FL.
Director since October 7, 1998.
Jefferson C. Barrow, Jr. 69 Administrative Assistant 200 .0028
Lake Wales, Florida President and Treasurer
of Ben Hill Griffin, Inc.
Director since 1985.
William L. Barton 59 Vice President, Alliance 10,400 .1480
Naples, Florida Financial Group of Southwest
Florida (since January 1998).
Various positions with Wilson,
Miller, Barton & Peek, Inc. (an
engineering/planning firm),
February 1969 to January 1998.
Retired as Chairman and CEO,
December 31, 1997. Director
since October 6, 1998.
Walker E. Blount, Jr. 78 Business Advisor to Wright, 2,000 .0285
Bartow, Florida Walker & Company, P.A.
Director since 1973.
Ben Hill Griffin, IV 30 Vice President, Ben Hill 3,800 .0541
Frostproof, Florida (2) Griffin, Inc. (since 8/25/94).
Fresh Fruit Division Manager,
Ben Hill Griffin, Inc.
(8/92 to 8/94).
Director since 1994.
K. E. Hartsaw 72 Retired Partner of KPMG 1,000 .0142
Orlando, Florida Peat Marwick LLP. Partner
through 6/30/86. Consultant
with KPMG Peat Marwick LLP
7/1/86 through 6/30/91.
Director since 1991.
W. Bernard Lester 59 President and Chief 3,620 .0515
La Belle, Florida (3) Operating Officer.
Director since 1987.
Thomas E. Oakley 56 President, Oakley Transport, 50 .0007
Winter Haven, Florida Inc. (international food
transportation company).
Director since 1992.
(1) Includes 3,493,777 shares held through Ben Hill Griffin Investments,
Inc. (5851 West Charleston Blvd., Suite 1000, Las Vegas, NV 89102), a wholly
owned subsidiary of Ben Hill Griffin, Inc., of which Mr. Griffin, III may be
considered to be the indirect beneficial owner by virtue of his power to
direct the voting and disposition of such shares of the Company's Common
Stock.
(2) Mr. Griffin, III is father of Mr. Griffin, IV. No other nominees are
related.
(3) Dr. W. Bernard Lester is a director of Orange-co, Inc.
APPROVAL OF THE 1998 INCENTIVE EQUITY PLAN
The following is a summary of the terms of the Incentive Equity Plan, a copy
of which is attached as Appendix A to this Proxy Statement.
Approval of the 1998 Incentive Equity Plan
General. On November 3, 1998, the Board of Directors adopted the ALICO, INC.
1998 Incentive Equity Plan (the "Incentive Plan") subject to stockholder
approval. The Incentive Plan is intended to provide participants with an
opportunity to increase their stock ownership in the Company and to give
them an additional incentive to achieve the Company's objectives. Officers,
Board members and other key employees of the Company and its subsidiaries
and affiliates who are responsible for the management, growth and/or
profitability of the business of the Company and/or its subsidiaries and
affiliates are eligible to receive stock option grants, stock appreciation
rights ("SARs") and/or restricted stock awards under the Incentive Plan.
650,000 shares of the Company's Common Stock are reserved for awards under
the Incentive Plan. No grants have been made to date under the Incentive
Plan. The following is a summary of the terms of the Incentive Plan, which
is qualified in its entirety by reference to the Incentive Plan, a copy of
which is attached as Appendix A to this Proxy Statement.
Administration. The Incentive Plan will be administered by the Board of
Directors of the Company. The Board has full power to select, from among the
officers, Board members and other key employees eligible for awards, the
individuals to whom awards will be granted, to make any combination of
awards to any participants and to determine the specific terms of each award,
subject to the provisions of the plan. The Board of Directors has the right
at any time to terminate or amend the Incentive Plan, but no such action may
terminate awards already granted or otherwise affect the rights of any
participant under an outstanding award without the participant's consent.
Without stockholder approval, the Board may not amend the Incentive Plan to
(i) increase the total number of shares of stock subject to the plan, or
(ii) change or modify the class of eligible participants. The Board is
authorized to make appropriate adjustments in connection with outstanding
awards under the Incentive Plan to reflect stock dividends, stock splits,
recapitalizations and similar events. In the event of a merger, liquidation
or similar event, the Board in its discretion may provide for substitution
of or an adjustment in, or may accelerate or adjust, such awards.
Stock Options. The Incentive Plan provides that options may be granted only
to those individuals, Board members and employees whose participation the
Board determines is in the best interest of the Company. The Company
receives no consideration upon the granting of an option. The options may be
granted either as incentive stock options (which qualify for certain
favorable tax consequences for the offering, as discussed below), or as
non-qualified stock options, but no options may be granted ten (10) years
after the date the Incentive Plan was adopted by the Board.
The Board also determines the number of shares, the exercise price, the
term, any conditions on exercise, the consequences of any termination of
employment, and other terms of each option. In the case of an option
intended to be an incentive stock option, the term of the option may not
exceed ten years from the date of grant and the option price may not be less
than 100% of the fair market value per share of the Common Stock on the date
of grant. With respect to non-qualified stock options, there is no limit on
the term of the option, and the option price may be as low as 50% of fair
market value per share on the date of grant. The option price is payable in
full upon exercise, and payment may be made in cash, by delivery of shares
of Common Stock (valued at their fair market value at the time of exercise),
or by a combination of cash and stock.
In the discretion of the Board, options under the Incentive Plan may include
a "reload option." A reload option, if included in the original option,
would be triggered when an optionee pays the exercise price of all or a
portion of the original option by delivering shares of Common Stock. In that
event, the optionee would automatically be granted an additional option to
acquire the same number of shares as had been delivered to pay such exercise
price. The reload option would be subject to all of the terms and conditions
of the original option, except that the option price per share would be
equal to the fair market value of the Common Stock on the date the original
option was exercised, and except that the Board could specify additional
conditions or contingencies, such as continued employment by the Company or
holding of the shares acquired upon exercise of the original option for a
specified period of time.
Options granted under the Incentive Plan may not be transferred by an
optionee other than by will or by the laws of descent and distribution.
Stock Appreciation Rights. The Board may also grant non-transferable SARs
in conjunction with options, entitling the holder upon exercise to receive
an amount in cash and/or Common Stock (as determined by the Board) equal
in value to the increase since the date of grant in the fair market value
of the Common Stock covered by such right. Each SAR will terminate upon
the termination or exercise of the related option.
Restricted Stock. The Board may also award restricted stock subject to
certain conditions set forth in the Incentive Plan and such other conditions
and restrictions as the Board may determine which may include the attainment
of performance goals and the payment of a purchase price which may be equal
to or less than par value (and may be zero).
Prior to the lapse of restrictions on shares of restricted stock, the
participant will have all rights of a stockholder with respect to such
shares, including voting and dividend rights, subject to the conditions
and restrictions generally applicable to restricted stock (and the dividends
on such shares) or specifically set forth in the participant's restricted
stock award agreement.
A recipient of restricted stock must enter into a restricted stock award
agreement with the Company, setting forth the restrictions to which such
shares are subject and the date or dates on which the restrictions will
lapse. The Board may permit such restrictions to lapse in installments
within the restricted period or may accelerate or waive such restrictions
at any time.
Shares of restricted stock are non-transferable and the Board will have the
right to provide, in the event that a participant who holds shares of
restricted stock terminates employment for any reason (including death)
prior to the lapse or waiver of the restrictions, for the forfeiture of such
restricted stock in exchange for the amount, if any, which the participant
paid for them.
Certain Federal Income Tax Consequences
The following discussion is intended only as a brief summary of the federal
income tax rules relevant to options or shares issued under the Incentive
Plan, as based upon the Internal Revenue Code of 1986, as amended (the
"Code"), as currently in effect. These rules are highly technical and
subject to change in the future. Because federal income tax consequences
will vary as a result of individual circumstances, grantees should consult
their personal tax advisors with respect to the tax consequences associated
with stock options. Moreover, the following summary relates only to
grantees' federal income tax treatment, and the state, local and foreign tax
consequences may be substantially different.
Non-Qualified Options. A grantee does not recognize any taxable income, and
the Company is not entitled to a deduction, upon the grant of a
non-qualified option. Upon the exercise of a non-qualified option, the
grantee recognizes ordinary income (subject to wage and employment tax
withholding) equal to the excess of the fair market value of the Common
Stock acquired over the option exercise price. However, in the case of a
person subject to the short swing trading restrictions of Section 16(b) of
the Securities Exchange Act of 1934, as amended, whose grant is exempted
from matching thereunder pursuant to the six-month holding provision of Rule
16b-3(d)(3) (a "16b-3(d)(3) Person"), income is recognized, and such excess
is determined by using the fair market value on the later of the date of
exercise and the date six months after the option grant date unless such
grantee elects to be taxed based on the fair market value of the Common
Stock on the date of exercise by filing an election with the Internal
Revenue Service within 30 days after the exercise date to recognize income
on the exercise date (a "Section 83(b) Election"). A grantee's basis in the
stock received is equal to such stock's fair market value on the date of
exercise (or on the date six months after the option grant date, if later,
in the case of a grantee who is a 16b-3(d)(3) Person and who makes no such
Section 83(b) Election). The Company is entitled to a deduction equal to the
compensation taxable to the grantee.
If a grantee sells Common Stock acquired pursuant to the exercise of a
non-qualified option, such grantee will recognize capital gain or loss equal
to the difference between the selling price of the stock and the grantee's
basis in the stock. Capital gains are currently taxed at a maximum rate of
20% in the case of stock held for more than 12 months, and 39.6% in the case
of stock held for not more than 12 months. The capital gain holding period
will begin on the exercise date (in the case of a grantee who is a
16b-3(d)(3) Person and who does not make a Section 83(b) Election, or the
later of the exercise date or the date six months after the option grant
date). The Company is not entitled to any deduction with respect to any
capital gain recognized by the grantee.
Capital losses on the sale of such stock may be used to offset capital
gains. If capital losses exceed capital gains, then up to $3,000 of the
excess losses may be deducted from ordinary income. Remaining capital losses
may be carried forward to future tax years.
Incentive Options. An optionee does not recognize taxable income on the
grant or exercise of an incentive option. However, the excess of the stock's
fair market value on the exercise date (the fair market value on the
exercise date or six months after the option grant date, whichever is later,
is likely to govern in the case of a 16b-3(d)(3) Person) over the option
exercise price will be included in the grantee's alternative minimum taxable
income and thereby may subject the grantee to an alternative minimum tax.
Such alternative minimum tax may be payable even though the grantee receives
no cash upon the exercise of his or her incentive option with which to pay
such tax. Upon the disposition of shares of Common Stock acquired pursuant
to the exercise of an incentive option (i) more than one year after the date
of exercise, and (ii) more than two years after the grant date (the
"Required Holding Periods"), the grantee recognizes capital gain or loss, as
the case may be, measured by the difference between the stock's selling
price and the exercise price. The Company is not entitled to any tax
deduction by reason of the grant or exercise of an incentive option, or a
disposition of stock received upon the exercise of an incentive option after
the Required Holding Periods have been satisfied.
If a grantee disposes of the shares of Common Stock acquired pursuant to the
exercise of an incentive option before the expiration of the Required
Holding Periods (a "Disqualifying Disposition"), the difference between the
exercise price of such shares and the lesser of (i) the fair market value of
such shares upon the date of exercise (the fair market value on the exercise
date or six months after the option grant date, whichever is later, is
likely to govern in the case of a 16b-3(d)(3) Person) or (ii) the selling
price, will constitute compensation taxable to the grantee as ordinary
income. The Company is allowed a corresponding tax deduction equal to the
amount of compensation taxable to the grantee. If the selling price of the
stock exceeds the fair market value on the exercise date (or six months
after the option grant date, if later, in the case of a 16b-3(d)(3) Person),
the excess will be taxable to the grantee as either a short- or long-term
capital gain. The Company is not allowed a deduction with respect to any
such capital gain recognized by the grantee.
Use of Shares to Pay Option Price. If a grantee delivers previously acquired
shares of Common Stock, however acquired, in payment of all or any part of
the exercise price of a non-qualified option, the grantee will not, as a
result of such delivery, be required to recognize as taxable income or loss
any appreciation or depreciation in the value of the previously acquired
shares after their acquisition date. The grantee's tax basis in, and holding
period for, the previously acquired shares surrendered carries over to an
equal number of the option shares received on a share-for-share basis. The
fair market value of the shares received in excess of the shares surrendered
constitutes compensation taxable to the grantee as ordinary income (reduced
by any portion of the option price paid other than by delivering previously
acquired shares). Such income is recognized and such fair market value is
determined on the date of exercise, except in the case of 16b-3(d)(3)
Persons as discussed above. The tax basis for such shares is equal to their
fair market value as so determined, and such shares' holding period begins
on the date on which the fair market value of such shares is determined.
The Company is entitled to a tax deduction equal to the compensation
recognized by the grantee.
If a grantee delivers previously acquired Common Stock (other than stock
acquired upon exercise of an incentive option and not held for the Required
Holding Periods) in payment of all or part of the option price of an
incentive option, the grantee will not be required to recognize as taxable
income or loss any appreciation or depreciation in the value of the
previously acquired Common Stock after its acquisition date. The grantee's
tax basis in, and holding period (for capital gain, but not Disqualifying
Disposition, purposes) for the previously acquired stock surrendered carries
over to an equal number of the option shares received on a share-for-share
basis. Shares received in excess of the shares surrendered have a tax basis
equal to the amount paid (if any) in excess of the previously acquired
shares used to pay the exercise price, and such shares' holding period will
begin on the date of exercise (with the possible exception of 16b-3(d)(3)
Persons). Proposed regulations provide that when an incentive option is
exercised using previously acquired stock, a later Disqualifying Disposition
of the shares received will be deemed to have been a disposition of the
shares having the lowest basis first.
If a grantee pays the exercise price of an incentive option in whole or in
part with previously acquired Common Stock that was acquired upon the
exercise of an incentive option and that has not been held for the Required
Holding Periods, the grantee will recognize ordinary income (but not capital
gain) under the rules applicable to Disqualifying Dispositions. The Company
will be entitled to a corresponding deduction. The grantee's basis in the
shares received in exchange for the shares surrendered will be increased by
the amount of ordinary income the grantee recognizes.
One Million Dollar Compensation Limit. If an employee's total compensation
from the Company (including compensation related to options) exceeds $1
million in any given year, such compensation in excess of $1 million may not
be tax deductible by the Company under Section 162(m) of the Code. Affected
employees are generally the Company's Chief Executive Officer and the four
other most highly compensated executive officers at the end of the Company's
taxable year. Excluded from the calculation of total compensation for this
purpose is compensation that is "performance-based" within the meaning of
Section 162(m) of the Code. The Company intends that compensation realized
upon the exercise of an option, SAR or other award granted under (i) the
Incentive Plan, (ii) the Omnibus Equity Plan, (iii) the Directors Stock
Option Plan and (iv) the Designated Executive Plan be regarded as
"performance-based" under Section 162(m) of the Code and that such
compensation be deductible without regard to the limits of Section 162(m) of
the Code.
Approval Required
The affirmative vote of a majority of the votes cast by the holders of
shares of Common Stock represented in person or by proxy at the meeting is
required for approval of the Incentive Plan. Approval of the Incentive Plan
is required for grants of options and SARs made pursuant thereto to qualify
as performance-based compensation deductible by the Company without
limitation under Section 162(m) of the Code.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE INCENTIVE PLAN
DIRECTORS' COMPENSATION, COMMITTEES OF THE BOARD OF DIRECTORS
AND CERTAIN MEETINGS
The Company's Board of Directors held 14 meetings, one of which was outside
Directors only, in fiscal 1998. Each member of the Board of Directors,
including employees of the Company, received $1,000 for each Board meeting
attended. During the year ended August 31, 1998, no director attended fewer
than 75% of the aggregate of (1) the total number of meetings of the Board
and (2) the total number of meetings of all the Committees of the Board on
which he served.
The Company has an Executive Committee, an Audit Committee and a
Compensation Committee; it does not have a Nominating Committee.
The Executive Committee, which exercises, to the extent permitted by Florida
law, all the powers of the Board of Directors during intervals between Board
meetings, consists of Ben Hill Griffin, III and W. Bernard Lester. The
Executive Committee met 10 times during fiscal 1998. No compensation is paid
for executive committee meetings.
The Audit Committee, which was composed of Lloyd G. Hendry, W. E. Blount,
Jr., K. E. Hartsaw and Thomas E. Oakley, met once during the fiscal year.
The principal functions of the Audit Committee are to recommend to the Board
of Directors the engagement of the Company's independent public accountants,
to review with such accountants the plan for and results of their
examination of the financial statements of the Company, to determine the
independence of such accountants, and to review the adequacy of the system
of internal accounting controls, procedures and practices. Each outside
director received $1,000 for the meeting of the committee.
The Compensation Committee reviews the compensation of the executive
officers of the Company and makes recommendations to the Board of Directors
regarding such compensation. The members of the Compensation Committee were
Walker E. Blount, Jr., Lloyd G. Hendry, K. E. Hartsaw and Thomas E. Oakley.
No compensation was paid for compensation committee meetings.
Compensation Committee Report
The Company's general compensation philosophy aims to provide base
compensation comparable with similar Florida businesses, allowing the
Company to attract and retain qualified employees. In addition, the Company
provides incentive compensation through a bonus program which is dependent
on the individual's performance and which will also vary with the Company's
performance. Accordingly, while the executive compensation program provides
an overall level of compensation that is competitive within the Florida
agribusiness industry, actual compensation levels in any given year may be
greater or less than average competitive levels in comparable companies,
depending on the Company's overall performance for such year and on the
specific individual's performance or contribution to the Company.
The Compensation Committee, comprised of all the independent directors on
the Company's Board of Directors, reviews executive compensation and
determines compensation levels which it then recommends to the Board of
Directors. In determining the base compensation and any bonuses to be
awarded to its executives, the Compensation Committee uses no set formula
but rather evaluates a series of factors, including but not limited to
(i) industry performance for such year, (ii) the Company's performance as
compared to others in the industry that year, (iii) The Company's
performance for such year as compared to the Company's performance with the
previous year, and (iv) the individual's performance or contributions for
such year as compared with such individual's performance or contributions
the previous year, if applicable. In addition, the Compensation Committee
will, in its discretion, evaluate other external and internal factors
affecting performance, including individual circumstances.
The Chief Executive Officer's compensation is established using the same
criteria as set forth above generally for executive compensation. For fiscal
1998, Mr. Ben Hill Griffin, III's base salary was comparable to that of the
previous year, with a bonus award reflecting the Company's performance vis
a vis comparable businesses and Mr. Griffin's contribution to such
performance.
Certain non-performance-based compensation to executives of public companies
in excess of $1,000,000 is not deductible for tax purposes. It is the
responsibility of the Compensation Committee to determine whether any
actions with respect to this compensation limit should be taken by the
Company. During fiscal year 1998 no executive officers of the company
received any compensation in excess of this limit nor is it anticipated that
any executive officer will receive any such compensation during fiscal year
1999. Therefore, the Compensation Committee has not taken any action to
date to comply with this limit.
WALKER E. BLOUNT, JR.
LLOYD G. HENDRY
K. E. HARTSAW
THOMAS E. OAKLEY
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid or to be paid by
the Company to the executive officers of the Company, identifying those
whose cash compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
Annual Compensation All Other
Name and Principal Position Year Salary (1) Bonus (2) Compensation (3)
Ben Hill Griffin, III 1998 $169,000 $185,000 $ 45,703
Chairman and 1997 156,000 125,000 48,240
Chief Executive Officer 1996 150,000 94,000 43,593
W. Bernard Lester 1998 157,000 170,000 57,090
President and 1997 146,000 100,000 58,246
Chief Operating Officer 1996 140,000 75,000 54,987
All Executive Officers 1998 382,300 371,425 122,813
as a group (3) 1997 356,800 236,900 123,827
1996 343,600 180,250 115,801
(1) Represents total cash compensation earned.
(2) Represents compensation for discretionary cash bonuses which are based
on individual and company performance.
(3) Represents Company contributions to the Employees' Profit Sharing Plan,
a nonqualified defined benefit retirement plan and Directors' Fees for
Messrs. Griffin, III and Lester (1998 - $14,000 and $13,000, respectively;
1997 - $12,000 each and 1996 - $10,000 and $11,000, respectively).
Common Stock Performance
The following graph compares the value of $100 invested on September 1, 1993
in the Company's common stock, the S&P 500 and a Company-constructed peer
group. The S&P 500 index represents a broad equity index and the peer group
index consists of four companies, all of which are agribusiness concerns,
two of which are based in Florida: Alexander and Baldwin Inc., Consolidated
Tomoka Land Co., Orange-co, Inc. and Tejon Ranch Co. The total return
includes the reinvestment of dividends. There can be no assurance that the
Company's stock performance will continue in the future with the same or
similar trends depicted in the graph below:
1993 1994 1995 1996 1997 1998
Alico, Inc. 100 92.17 96.89 113.93 132.72 99.87
S&P 500 Index 100 105.47 128.09 152.08 213.90 231.21
Peer Group 100 107.34 104.77 120.81 149.89 118.58
(1) Total return calculations for the S&P 500 Index were performed by
Standard & Poor's Compustat Services, Inc.
(2) Total return calculations for the peer group index (consisting of four
companies) were performed by Standard and Poor's Compustat Services, Inc.
Contingent Compensation
Pension and Profit Sharing
The Company operates a Profit Sharing Plan under Section 401(a) of the
Internal Revenue Code (the "Plan"). Under this Plan a regular employee of
the Company becomes eligible to participate upon employment provided he or
she continues such employment through the following August 31. Vesting of
the Plan begins after three (3) years of service with the Company at which
time an employee becomes 20% vested. Vesting increases by 20% with each
additional year of service. Employees become fully vested upon completion
of 7 years service.
The Plan is fully funded by contributions by the Company, except for such
contributions of employees electing to take advantage of the salary
reduction feature (Section 401(k) Internal Revenue Code). Contributions by
the Company are determined by its Board of Directors from time to time with
allocations to employee accounts based on each participant's salary. The
Plan also includes a voluntary employee contribution provision pursuant to
Section 401(k) of the Internal Revenue Code which allows employees to
contribute up to 20% of their salary, or a maximum of $10,000. All 401(k)
accounts are 100% vested.
Employees will be deemed 100% vested and receive full benefits from the
Plan, regardless of their standing on vesting schedules, upon retirement on
or after age 65, death or permanent disability. Benefits commence within 60
days after request following one of the qualifying events, referred to
above, and can be taken as periodic payments or in a lump sum. For the year
ended August 31, 1998, the Company contributed a total of $296,368 to the
Profit Sharing Plan.
Additional Plan
The Company has a nonqualified defined benefit retirement plan. The Plan
covers officers of the Company, as well as certain management and key
personnel. The Plan is being funded by the purchase of insurance contracts
and is designed to provide a set monthly benefit after the participant
reaches age 65. The participants are required to pay a portion of the cost
of the Plan and the Company pays the remaining amount. The expense and
monthly benefit amount are based on the participant's annual salary and age
at the date of entry into the Plan.
Pension expense for the additional retirement benefits was approximately
$345,000, $217,000 and $191,000 for the years ended August 31, 1998, 1997
and 1996, respectively.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Effective November 2, 1983, the Company entered into a continuing marketing
contract covering the majority of its citrus crop with Ben Hill Griffin,
Inc., a company which is controlled by Ben Hill Griffin, III, the Company's
Chairman of the Board and Chief Executive Officer. This contract provides
for modifications to meet changing conditions and cancellation by either
party by giving notice prior to August first preceding the next fruit
season. Modifications to the terms of the contract are made upon the mutual
agreement of both parties and can relate to numerous provisions of the
contract including the quantity of fruit to be delivered and service fees to
be collected by Ben Hill Griffin, Inc. Such modifications may be necessary
depending on factors such as weather and general market conditions. During
the year ended August 31, 1998 approximately 89 percent of the Company's
crop was marketed under this contract. Under the terms of this contract, the
Company's fruit is harvested, packed and/or otherwise processed and sold
along with fruit from other growers, including Ben Hill Griffin, Inc., and
the proceeds distributed on a pro rata basis as sales of the finished
product are made by the buyer. The Company bears the costs of harvesting.
The co-mingling of fruit with other growers permits Alico to participate in
the negotiation of higher prices from buyers that would not likely be
available if price negotiations were limited only to Alico's fruit. The
marketing contract also permits Alico's fruit to be sold in either fresh or
processed form, in whichever market will provide the highest return.
Historically this contract has provided highly competitive returns. Ben Hill
Griffin, Inc. receives a handling fee and a marketing fee out of the sales
proceeds. The assistance provided for by the contract is considerable and
reduces the number of staff which the Company would otherwise have to
employ. Additionally, the Company may receive advances on sales which are
then deducted from its share of the distributed proceeds. Substantially all
of the 1998-99 citrus crop will be marketed under the terms of this
contract; also, Ben Hill Griffin, Inc. provides harvesting services for
citrus sold to unrelated processors. The total amount paid to Ben Hill
Griffin, Inc., under the terms of the marketing contract, for harvesting
and other costs was $7,610,639 during the year ended August 31, 1998. In
addition, Griffin was paid $758,370 for harvesting citrus sold to an
unrelated processor. These charges are comparable to similar services
available in the industry.
The Company purchased from Ben Hill Griffin, Inc., on a competitive bid
basis, fertilizer, spray, herbicides and other miscellaneous supplies at a
total cost of $4,650,867 during the year.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP, Certified Public Accountants, 111 North
Orange Avenue, Orlando, Florida 32802, has served as the Company's
independent certified public accountants since January 1, 1984. In addition
to performing the year-end audit of the financial statements, the
independent public accountant: (1) performs a limited review of the
quarterly financial statements, reviews the financial information included
in the annual report to shareholders and the Forms 10-Q and 10-K filed with
the Securities and Exchange Commission; and (2) prepares the federal and
state income tax returns. All services performed by the independent
accountants are approved by the Audit Committee of the Board of Directors
prior to performance.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting of Stockholders and will be given an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions from stockholders. Upon the Audit Committee's recommendation, the
Board of Directors' reaffirmed continuation of KPMG Peat Marwick LLP as
auditors.
SHAREHOLDERS' PROPOSALS
Shareholders' proposals intended to be presented at the next annual meeting
should be sent by certified mail, return receipt requested, and must be
received by the Company at its principal executive offices (Attention:
Corporate Secretary) by July 13, 1999 for inclusion in the proxy statement
and the form of proxy for that meeting. Such proposals may be made only by
persons who are shareholders, beneficially or of record, on the date the
proposals are submitted and who continue in such capacity through the 1999
annual meeting date, of at least 1% or $1,000 in market value of securities
entitled to be voted at the meeting, and have held such securities for at
least one year.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be presented
for action at the meeting. If any other matter requiring a vote of the
shareholders properly comes before the meeting, the persons authorized under
management proxies will vote and act according to their best judgment.
By Order of the Board of Directors
Beatrice W. Boyle
Secretary
FORM 10-K
A copy of the 1998 Annual Report on Form 10-K for the fiscal
year ended August 31, 1998, as filed with the Securities and
Exchange Commission, may be obtained upon request and without
charge, by writing:
Alico, Inc.
Post Office Box 338
La Belle, Florida 33975
APPENDIX A
ALICO, INC.
1998 INCENTIVE EQUITY PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
(a) "Affiliate" shall mean any entity other than the Company and its
Subsidiaries which the Board designates as an "Affiliate" for purposes of
this Plan.
(b) "Agreement" shall mean an agreement between the company and a
Participant pursuant to which the terms and conditions of any Options, SARs
or Restricted Stock granted to such Participant are specified.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the United States Internal Revenue Code of 1986, as
amended, including effective date and transition rules (whether or not
codified). Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision
of future law.
(e) "Company" shall mean ALICO, INC., a Florida corporation, and any
successor to it.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any employee of the Company or any Subsidiary of
the Company, and any Director who also serves as an Officer and whose duties
as such involve a significant time commitment beyond that associated with
preparation for and attendance at meetings of the Board and committees
thereof.
(h) "Employer" shall mean the corporation that employs an Optionee.
(i) "Fair Market Value" of the shares of Stock on any date shall mean:
(i) the closing sales price, or in the absence thereof, the mean of
the last reported bid and asked quotations, on such date on the exchange
having the greatest volume of trading in the shares during the thirty-day
period preceding such date (or if such exchange was not open for trading on
such date, the next preceding date on which it was open); or
(ii) if there is no price as specified in (i), the final reported
sales price, or if not reported, in the following manner, the mean of the
closing high bid and low asked prices, in the over-the-counter market for
the shares as reported by The Nasdaq National Market or, if such
organization is not in existence, by an organization providing similar
services, on such date (or if such date is not a date for which such system
or organization generally provides reports, then on the next preceding date
for which it does so); or
(iii) if there also is no price as specified in (ii), the price
determined by the Board by reference to bid-and-asked quotations for the
shares provided by members of an association of brokers and dealers
registered pursuant to subsection 15(b) of the 1934 Act, which members make
a market in the shares, for such recent dates as the Board shall determine
to be appropriate for fairly determining current market value; or
(iv) if there also is no price as specified in (iii), the amount
determined in good faith by the Board based on such relevant facts, which
may include opinions of independent experts, as may be available to the
Board.
(j) "ISO" shall mean an Option that complies with and is subject to the
terms, limitations and conditions of Code section 422 and any regulations
promulgated with respect thereto.
(k) "1934 Act" shall mean the Securities Exchange Act of 1934, as the same
may be amended from time to time.
(l) "Officer" shall mean a person who constitutes an officer of the Company
for the purposes of Section 16 of the 1934 Act, as determined by reference
to such Section 16 and to the rules, regulations, judicial decisions, and
interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set
forth from time to time.
(m) "Option" shall mean a contractual right to purchase Stock granted
pursuant to the provisions of Article VI hereof.
(n) "Optionee" shall mean a person to whom an Option has been granted
hereunder.
(o) "Option Price" shall mean the price at which an Optionee may purchase
a share of Stock pursuant to an Option.
(p) "Parent" shall mean any corporation (other than the corporation with
respect to which the determination is being made) in an unbroken chain of
corporations ending with the corporation with respect to which the
determination is being made if, at the time of the grant (or modification)
of the Option, each of the corporations other than the corporation with
respect to which the determination is being made owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
(q) "Participant" shall mean a person to whom an Option, SAR or Stock
Appreciation Right has been granted hereunder.
(r) "Plan" shall mean the Alico, Inc., 1998 Incentive Equity Plan as set
forth herein and as amended from time to time.
(s) "Purchasable," when used to describe Stock, shall refer to Stock that
may be purchased by an Optionee under the terms of this Plan on or after a
certain date specified in the applicable Stock Option Agreement.
(t) "Reload Option" shall mean an Option that is granted, without further
action of the Board, (i) to an Optionee who surrenders or authorizes the
withholding of shares of Stock in payment of amounts specified in paragraphs
6.7(c) or 6.7(d) hereof, (ii) for the same number of shares as is so paid,
(iii) as of the date of such payment and at an Option Price equal to the
Fair Market Value of the Stock on such date, and (iv) otherwise on the same
terms and conditions as the Option whose exercise has occasioned such
payment, subject to such contingencies, conditions or other terms as the
Board shall specify at the time such exercised Option is granted.
(u) "Restriction Period" shall mean the period of time during which shares
of Stock awarded to a Participant pursuant to Article VIII remain subject to
the restrictions referred to in Section 8.2.
(v) "Restricted Stock" shall mean an award of shares of stock that is
subject to restrictions under Article VIII.
(w) "SAR" shall mean stock appreciation right.
(x) "Stock" shall mean the $1.00 par value common stock of the Company or,
in the event that the outstanding shares of such stock are hereafter changed
into or exchanged for shares of a different class of stock or securities of
the Company or some other corporation, such other stock or securities.
(y) "Stock Appreciation Right" shall mean the rights granted under Article
VII to surrender to the Company all or a portion of a stock appreciation
right in exchange for a payment in cash or Stock.
(z) "Stock Option Agreement" shall mean an agreement between the Company
and an Optionee setting forth the terms of an Option.
(aa) "Subsidiary" shall mean any corporation (other than the corporation
with respect to which the determination is being made) in an unbroken chain
of corporations beginning with the corporation with respect to which the
determination is being made if, at the time of the grant (or modification)
of the Option, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
ARTICLE II
THE PLAN
2.l Name. This plan shall be known as the "Alico, Inc., 1998 Incentive
Equity Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its stockholders, and any Subsidiary of the Company, by offering
certain Participants an opportunity to acquire or increase their proprietary
interests in the Company by granting such persons Options, Stock
Appreciation Rights and/or Restricted Stock. These grants will promote the
growth and profitability of the Company, and any Subsidiary of the Company,
because Participants will be provided with an additional incentive to
achieve the Company's objectives through participation in its success and
growth.
2.3 Effective Date. The Plan shall become effective on the date of its
adoption by the Board (the "Effective Date"). No Option, SAR or Restricted
Stock granted under the Plan shall become exercisable or vested, however,
until the Plan is approved by the affirmative vote of the holders of a
majority of the shares of common stock represented at a stockholders meeting
at which a quorum is present and grants under the Plan prior to such
approval shall be conditioned on and subject to such approval. Subject to
this limitation, Options, SARs and Restricted Stock may be granted under the
Plan at any time after the Effective Date and before termination of the
Plan.
2.4 Termination Date. No further Options, SARs and/or Restricted Stock
shall be granted hereunder on or after the date which is ten (10) years
after the Effective Date, but all Options, SARs and/or Restricted Stock
granted prior to that time shall remain in effect in accordance with their
terms; provided, however, that the Plan shall terminate, and all Options,
SARs and Restricted Stock theretofore granted shall become void and may not
be exercised, on October 30, 1999 if the stockholders of the Company shall
not by that date have approved the Plan's adoption.
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall consist only of those
individuals, Board members and employees whose participation the Board
determines is in the best interests of the Company.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Board in Administering the Plan. The Plan
shall be administered by the Board. In administering the Plan, the Board's
actions and determinations shall be binding on all interested parties. The
Board shall have the power to grant Options, SARs and/or Restricted Stock in
accordance with the provisions of the Plan. Subject to the provisions of the
Plan, the Board shall have the discretion and authority to determine those
individuals to whom Options, SARs and/or Restricted Stock will be granted
and in the case of Options whether such Options shall be accompanied by the
right to receive Reload Options, the number of shares of Stock subject to
each Option, SAR or Restricted Stock, such other matters as are specified
herein, and any other terms and conditions of the Agreement applicable
thereto. To the extent not inconsistent with the provisions of the Plan,
the Board shall have the authority to amend or modify an outstanding
Agreement relative to an Option, SAR or Restricted Stock (having due regard
for possible tax implications to the Company and the Participant of such
amendment or modification), or to waive any provision thereof, provided that
the Participant consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of the Plan,
the Board also shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to
determine the details and provisions of each Agreement, and to make all
other determinations necessary or advisable in the administration of the
Plan, including, without limitation, the amending or altering of any
Options, SARs or Restricted Stock granted hereunder as may be required to
comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. No member of the Board shall be liable to any person for
any act or determination made in good faith with respect to the Plan or any
Option, SAR or Restricted Stock granted hereunder.
4.4 Company Assistance. The Company shall supply full and timely
information to the Board on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of
employment, and such other pertinent facts as the Board may require. The
Company shall furnish the Board with such clerical and other assistance as
is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that
may be issued and sold hereunder shall be 650,000 shares. Shares subject to
an Option or issued pursuant to a Restricted Stock grant may be either
authorized and unissued shares or shares issued and later acquired by the
Company; provided, however, that shares of Stock with respect to which an
Option has been exercised or Restricted Stock which has become vested shall
not again be available for issuance hereunder. The shares covered by (i) any
unexercised portion of an Option that has terminated for any reason, or (ii)
any Restricted Stock which has been forfeited, may again be granted under
this Plan, and such shares shall not be considered as having been optioned
or issued in computing the number of shares of Stock remaining available for
grant hereunder.
5.2 Antidilution.
(a) In the event that the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of
the Company by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares,
stock split or stock dividend, or in the event that any spin-off, spin-out
or other distribution of assets materially affects the price of the
Company's stock:
(i) The aggregate number and kind of shares of Stock for which
Options, SARs and/or Restricted Stock may be granted hereunder shall be
adjusted proportionately by the Board; and
(ii) The rights of Participants (concerning the number of shares
subject to Options and SARs and the Option Price) under outstanding Options
and SARs shall be adjusted proportionately by the Board.
(b) If the Company shall be a party to any reorganization in which it does
not survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Board, in its discretion,
may:
(i) declare that all Options and SARs granted under the Plan shall
become exercisable immediately and that all Restricted Stock shall become
vested notwithstanding the provisions of the respective Agreements regarding
exercisability or vesting, and that all such Options and SARs shall
terminate 30 days after the Board gives written notice of the immediate
right to exercise all such Options and SARs and of the decision to terminate
all Options and SARs not exercised within such 30-day period; or
(ii) notify all Participants that all Options and SARs granted under
the Plan and all Restricted Stock Agreements shall be assumed by the
successor corporation or substituted with Options, SARs or Restricted Stock
issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in connection with a
reorganization described in paragraph 5.2(b), the provisions of such
paragraph shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall cause (i) every Option and
SAR outstanding under the Plan to terminate to the extent not exercised
prior to the adoption of the plan of dissolution or liquidation by the
stockholders, provided that the Board in its discretion may declare all
Options and SARs granted under the Plan to be exercisable at any time on or
before the fifth business day following such adoption notwithstanding the
provisions of the respective Agreements regarding exercisability and (ii)
every share of Restricted Stock to vest. The Board's actions under this
provision and the Participant's exercise of Options and SAR's under this
provision shall be subject, however, to the limitations set forth in
Articles VI and Article VII hereof.
(d) The adjustments described in paragraphs (a) through (c) of this
Section 5.2, and the manner of their application, shall be determined solely
by the Board, and any such adjustment may provide for the elimination of
fractional share interests. The adjustments required under this Article V
shall apply to any successors of the Company and shall be made regardless of
the number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. Within the limitations provided herein,
Options may be granted to one Participant at one or several times or to
different Participants at the same time or at different times, in either
case under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of the Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or any other
factor the Board deems relevant.
6.2 Option Grant and Agreement. Each Option granted or modified hereunder
shall be evidenced (a) by either minutes of a meeting or a written consent
of the Board, and (b) by a written Stock Option Agreement executed by the
Company and the Participant. The terms of the Option, including the Option's
duration, time or times of exercise, exercise price, whether the Option is
intended to be an ISO, and whether the Option is to be accompanied by the
right to receive a Reload Option, shall be stated in the Stock Option
Agreement. Separate Stock Option Agreements shall be used for Options
intended to be ISO's and those not so intended.
6.3 Optionee Limitations.
The Board shall not grant an ISO to any person who, at the time the ISO
would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more than 10% of the
total combined voting power of all classes of stock of the Employer, or any
Parent or Subsidiary of the Employer; provided, however, that this
limitation shall not apply if at the time an ISO is granted the Option Price
is at least 110% of the Fair Market Value of the Stock subject to such
Option and such Option by its terms would not be exercisable after the
expiration of five years from the date on which the Option is granted.
For the purpose of this paragraph (b), a person shall be considered to own
(i) the stock owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors and lineal
descendants, (ii) the stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust in proportion to such person's
stock interest, partnership interest or beneficial interest therein, and
iii) the stock which such person may purchase under any outstanding options
of the Employer or of any Parent or Subsidiary of the Employer.
6.4 $100,000 Limitation. Except as provided below, the Board shall not
grant an ISO to, or modify the exercise provisions of outstanding ISO's held
by, any person who, at the time the ISO is granted (or modified), would
thereby receive or hold any incentive stock options (as described in Code
section 422) of the Employer and any Parent or Subsidiary of the Employer,
such that the aggregate Fair Market Value (determined as of the respective
dates of grant or modification of each option) of the stock with respect to
which such incentive stock options are exercisable for the first time during
any calendar year is in excess of $100,000; provided, that the foregoing
restriction on modification of outstanding ISO's shall not preclude the
Board from modifying an outstanding ISO if, as a result of such modification
and with the consent of the Optionee, such Option no longer constitutes an
ISO; and provided that, if the $100,000 limitation described in this Section
6.4 is exceeded, an Option that otherwise qualifies as an ISO shall be
treated as an ISO up to the limitation and the excess shall be treated as an
Option not qualifying as an ISO. The preceding sentence shall be applied by
taking options intended to be ISO's into account in the order in which they
were granted.
6.5 Option Price. The Option Price under each Option shall be determined
by the Board. However, the Option Price shall not be less than 50% of the
Fair Market Value of the Stock, or in the case of an ISO less than the Fair
Market Value of the Stock, in each case on the date that the Option is
granted (or, in the case of an ISO that is subsequently modified, on the
date of such modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Board, but the Stock Option Agreement
with respect to each Option intended to be an ISO shall provide that such
Option shall not be exercisable after the expiration of ten years from the
date of grant (or modification) of the Option. In addition, no Option
granted to a Participant who is also an Officer or Director shall be
exercisable prior to the expiration of six months from the date such Option
is granted, other than in the case of the death or disability of such
Participant.
6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement, an Option may
be exercised at any time or from time to time during the term of the Option
as to any or all whole shares that have become Purchasable under the
provisions of the Option, but not at any time as to less than 100 shares
unless the remaining shares that have become so Purchasable are less than
100 shares. The Board shall have the authority to prescribe in any Stock
Option Agreement that the Option may be exercised only in accordance with a
vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the Treasurer of the
Company at its principal office of written notice of exercise with respect
to a specified number of shares of Stock, and (ii) payment to the Company at
that office of the full amount of the Option Price for such number of
shares.
(c) The Option Price shall be paid in full upon the exercise of the
Option; provided, however, that the Board may provide in a Stock Option
Agreement that, in lieu of cash, all or any portion of the Option Price may
be paid by tendering to the Company shares of Stock duly endorsed for
transfer and owned by the Optionee, to be credited against the Option Price
at the Fair Market Value of such shares on the date of exercise (however,
no fractional shares may be so transferred, and the Company shall not be
obligated to make any cash payments in consideration of any excess of the
aggregate Fair Market Value of shares transferred over the aggregate option
price).
(d) In addition to and at the time of payment of the Option Price, the
Optionee shall pay to the Company in cash the full amount of any federal,
state and local income, employment or other taxes required to be withheld
from the income of such Optionee as a result of such exercise; provided,
however, that in the discretion of the Board any Stock Option Agreement may
provide that all or any portion of such tax obligations, together with
additional taxes not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise,may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value
on the date of exercise equal to the amount of such taxes thereby being
paid, and subject to such restrictions as to the approval and timing of any
such election as the Board may from time to time determine to be necessary
or appropriate to satisfy the conditions of the exemption set forth in Rule
16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the rights of a
stockholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to him upon the exercise of
the Option.
6.8 Nontransferability of Option. No Option or any rights therein shall be
transferable by an Optionee otherwise than by will or the laws of descent
and distribution. During the lifetime of an Optionee, an Option granted to
that Optionee shall be exercisable only by such Optionee (or by such
Optionee's guardian or other legal representative, should one be appointed).
6.9 Termination of Employment. The Board shall have the power to specify,
with respect to the Options granted to any particular Optionee, the effect
upon such Optionee's right to exercise an Option of the termination of such
Optionee's employment under various circumstances, including but not
limited to the death or disability of the Optionee which effect may include
immediate or deferred termination of such Optionee's rights under an Option,
or acceleration of the date at which an Option may be exercised in full.
6.10 Employment Rights. Options granted under the Plan shall not be
affected by any change of employment so long as the Optionee continues to be
an employee or Board member. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of
the Company or any Subsidiary of the Company, or shall interfere in any way
with the right of the Company or any such Subsidiary to terminate such
person's employment at any time.
6.11 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code section 422, and any regulations
promulgated with respect thereto, an Option issued in respect of an option
held by a Participant to acquire stock of any entity acquired, by merger or
otherwise, by the Company (or any Subsidiary of the Company) may contain
terms that differ from those stated in this Article VI, but solely to the
extent necessary to preserve for any such Participant the rights and
benefits contained in such predecessor option, or to satisfy the
requirements of Code section 425(a).
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such rights may be granted either
at or after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that,
unless otherwise determined by the Board at the time of grant, a Stock
Appreciation Right granted with respect to less than the full number of
shares covered by a related Stock Option shall not be reduced until the
number of shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by a Participant,in accordance
with Section 7.2, by surrendering the applicable portion of the related
Stock Option in accordance with procedures established by the Board for such
purposes. Upon such exercise and surrender, the Participant shall be
entitled to receive an amount determined in a manner prescribed in Section
7.1. Stock Options which have been so surrendered shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised.
7.2 Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions
of the Plan, as shall be determined from time to time by the Board,
including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate are
exercisable, in accordance with the provisions of Article VI and Article VII
of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, a Participant shall
be entitled to receive an amount in cash and/or shares of Stock in the
aggregate equal in value to the excess of the Fair Market Value of one share
of Stock over the option price per share specified in the related Stock
Option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Board having the
right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only when and to the
extent that the underlying Stock Option would be transferable under
Article VI of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or
part thereof to which Stock Appreciation Right is related shall be deemed to
have been exercised for the purpose of the limitation set forth in Article V
of the Plan on the number of shares of Stock to be issued under the Plan,
but only to the extent of the number of shares of Stock issued under the
Stock Appreciation Right based on the value of the Stock Appreciation Right.
(v) The Board may provide, at the time of grant, that such Stock
Appreciation Right can be exercised only in the event of a Change in Control
and/or a Potential Change in Control, subject to such terms and conditions
as the Board may specify at grant.
(vi) The Board may also provide that, in the event of a Change in Control
and/or a Potential Change in Control, the amount to be paid upon the
exercise of a Stock Appreciation Right shall be based on the Change in
Control Price, subject to such terms and conditions as the Board may specify
at grant.
ARTICLE VIII
AWARDS OF RESTRICTED STOCK
8.1 Administration. Shares of Restricted Stock may be issued either alone
or in addition to other awards granted under the Plan. The Board shall
determine the Participants to whom, and the time or times at which, such
grants will be made, the number of shares to be awarded, the price (if any)
to be paid under Section 8.2(i) by the recipient of a Restricted Stock
Award, the time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards.
The Board may condition grants of Restricted Stock upon the attainment of
specified performance goals or such other factors or criteria as the Board
may determine.
The provisions of Restricted Stock Awards need not be the same with respect
to each recipient.
8.2 Restrictions and Conditions. Restricted Stock Awards shall be subject
to the following restrictions and conditions:
(i) The purchase price for shares of Restricted Stock may be equal to or
less than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60 days
(or such shorter periods as the Board may specify at grant) after the award
date, by executing a Restricted Stock Agreement and paying whatever price
(if any) is required under Section 8.2(i).
The prospective recipient of a Restricted Stock Award shall not have
any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such award.
(iii) Each Participant receiving a Restricted Stock Award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such Participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Alico, Inc. 1998 Incentive Equity Plan and an Agreement
entered into between the registered owner and Alico, Inc. Copies of such
Plan and Agreement are on file in the offices of Alico, Inc., La Belle,
Florida."
The Board may require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock Award,
the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(iv) Subject to the provisions of this Plan and the applicable award
agreement, during a period set by the Board commencing with the date of such
award (the "Restriction Period"), the Participant shall not be permitted to
sell, transfer, pledge, assign or otherwise encumber shares of Restricted
Stock awarded under the Plan.
Based on service, performance and/or such other factors or criteria as the
Board may determine, the Board may, however, at or after grant provide for
the lapse of such restrictions in installments and/or may accelerate or
waive such restrictions in whole or in part.
(v) Except as provided in this Section 8.2, unless otherwise determined by
the Board the recipient shall have, with respect to the shares of Restricted
Stock covered by any award, all of the rights of a stockholder of the
Company, including the right to vote the shares, and the right to receive
any dividends.
(vi) Except as otherwise provided in this Section 8.2 and in the applicable
award agreement, upon termination of a participant's employment with the
Company or any Subsidiary or Affiliate for any reason during the Restriction
Period for a given award, all shares still subject to restriction shall be
forfeited by the participant, provided, however, the Board may provide for
waiver of the restrictions in the event of termination of employment due to
death, disability or retirement.
(vii) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Subsidiary or Affiliate
is involuntarily terminated, the Board may waive in whole or in part any or
all remaining restrictions with respect to any or all of the Participant's
Restricted Stock, based on such factors and criteria as the Board may deem
appropriate.
(viii) If and when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period, unrestricted
certificates for such shares shall be delivered to the participant.
ARTICLE IX
CONDITIONS TO ISSUING STOCK,
SAR OR RESTRICTED STOCK AWARD
The Company shall not be required to issue or deliver any Stock purchased
(i) pursuant to any Restricted Stock Award or (ii) upon the full or partial
exercise of any Option or SAR granted hereunder prior to fulfillment of all
of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares that the Company shall determine to be necessary or advisable under
any federal or state law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory
body, or the Company's determination that an exemption is available from
such registration or qualification;
(c) The obtaining of any approval or other clearance from any federal or
state governmental agency that the Company shall determine to be necessary
or advisable; and
(d) The lapse of such reasonable period of time following exercise as
shall be appropriate for reasons of administrative convenience.
Unless the shares of Stock covered by the Plan shall be the subject of an
effective registration statement under the Securities Act of 1933, as
amended, stock certificates issued and delivered to Participants shall bear
such restrictive legends as the Company shall deem necessary or advisable
pursuant to applicable federal and state securities laws.
ARTICLE X
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, (i) cause the Board to cease granting Options or
Restricted Stock Awards, (ii) terminate the Plan, or (iii) in any respect
amend or modify the Plan; provided, however, that the Board (unless its
actions are approved or ratified by the stockholders of the Company within
twelve months of the date the Board amends the Plan) may not amend the Plan
to:
(a) Increase the number of shares of Stock subject to the Plan beyond the
amount previously approved or ratified by the stockholders; or
(b) Change or modify the class of persons that may participate in the
Plan.
No termination, amendment or modification of the Plan shall affect
adversely the rights of a Participant under any outstanding Option, SAR or
Restricted Stock Award without the consent of the Participant or his legal
representative.
ARTICLE XI
MISCELLANEOUS
11.1 Replacement Grants. At the sole discretion of the Board, a Participant
may be given an election to surrender an Option, SAR or Restricted Stock
Award in exchange for a new Option, SAR or Restricted Stock Award.
11.2 Forfeiture for Competition. If a Participant provides services to a
competitor of the Company or any of its Subsidiaries, whether as an
employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected
to involve the skills and experience used or developed by the Participant
while an Employee, then that Participant's rights under any Options, SARs or
Restricted Stock Awards outstanding hereunder shall be forfeited and
terminated, subject to a determination to the contrary by the Board.
11.3 Plan Binding on Successors. The Plan shall be binding upon the
successors of the Company.
11.4 Gender. Whenever used herein, the masculine pronoun shall include the
feminine gender.
11.5 Headings No Part of Plan. Headings of Articles and Sections hereof are
inserted for convenience and reference, and do not constitute a part of the
Plan.
