SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [XX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[XX] Preliminary Proxy Statement [ ] Confidential For Use of
the Commission Only (as
[ ] Definitive Proxy Statement Permitted by Rule 14a-6(e) (2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE INTERGROUP CORPORATION
(Name of Registrant as Specified In Its Charter)
THE INTERGROUP CORPORATION
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: ___ (set forth amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(3) Date Filed:
<PAGE>
THE INTERGROUP CORPORATION
2121 AVENUE OF THE STARS, SUITE 2020
LOS ANGELES, CALIFORNIA 90067
(310) 556-1999
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 27, 1998
To the Shareholders of
The InterGroup Corporation
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The
InterGroup Corporation (the "Company") will be held in the Park Hyatt Los
Angeles Hotel, 2151 Avenue of the Stars, Century City, California, on January
27, 1999 at 2:00 P.M. for the following purposes:
(1) to elect two Class B Directors to serve until the 2001 Annual
Meeting and until their successors shall have been duly elected and
qualified;
(2) to ratify the retention of Price WaterhouseCoopers LLP as
independent public accountants for the Company;
(3)to ratify the 1998 Stock Option Plan for Non-Employee Directors;
(4)to ratify the 1998 Stock Option Plan for Selected Key Officers,
Employees and Consultants ; and
(5) to transact such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
Only Shareholders of record at the close of business on November 30, 1998
are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
Your proxy is important whether you own a few or many shares. Please
check the appropriate boxes in the enclosed proxy and sign, date and mail it
today in the accompanying self-addressed postage-paid envelope. Return the
proxy even if you plan to attend the meeting. You may always revoke your
proxy and vote in person.
Dated: December 11, 1998
By order of the Board of Directors,
Gary N. Jacobs
Secretary
<PAGE>
THE INTERGROUP CORPORATION
2121 AVENUE OF THE STARS, SUITE 2020
LOS ANGELES, CALIFORNIA 90067
(310) 556-1999
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1999
This Proxy Statement is furnished by the Board of Directors (the "Board") of
The InterGroup Corporation (the "Company"), a corporation formed under the
laws of the State of Delaware, in connection with the solicitation of proxies
for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be
held on January 27, 1999 or at any adjournment or adjournments thereof. At
such meeting, the Shareholders will consider and act on the proposals
enumerated in the foregoing Notice of Meeting. Only Shareholders of record at
the close of business on November 30, 1998 are entitled to notice of, and to
vote, at the Annual Meeting.
Each shareholder is entitled to cast, in person or by proxy, one vote for each
share held of record at the close of business on November 30, 1998. As of
November 30, 1998 there were outstanding 2,105,113 shares of common stock, par
value $.01 per share (the "Common Stock"), the only outstanding voting
security of the Company. The shares were held of record by approximately
1,325 Shareholders as of November 30, 1998. Of the total 2,105,113 shares
outstanding, a majority, or 1,052,557, voting shares will constitute a quorum
for the transaction of business at the meeting.
The Annual Meeting will address business pertaining to the fiscal year ended
June 30, 1998 (the "1998 Fiscal Year"). The proxies named in the accompanying
Form of Proxy will vote the shares represented thereby if the proxy appears to
be valid on its face, and where specification is indicated as provided in such
proxy, the shares represented will be voted in accordance with such
specification. If no specification is made, the shares represented by proxies
in the form solicited will be voted (1) to elect two Board nominees for Class
B Directors for a three-year term expiring at the 2001 Annual Meeting of
Shareholders; (2) for the ratification of the retention of Price
WaterhouseCoopers LLP as the Company's independent public accountants for the
fiscal year ending June 30, 1999; (3) to ratify the 1998 Stock Option Plan for
Non-Employee Directors; (4) to ratify the 1998 Stock Option Plan for Selected
Key Officers, Employees and Consultants.
A Shareholder may revoke his or her Proxy at any time before it is exercised
by filing with the Secretary of the Company at its principal executive offices
in Los Angeles, California a written notice of revocation or a duly executed
Proxy bearing a later date, or by appearing in person at the Annual Meeting
and expressing a desire to vote his or her shares in person.
This Proxy Statement and the accompanying Proxy are expected to be sent or
given to the Shareholders beginning on or about December 21, 1998.
<PAGE>
PROPOSAL I
Election of Class A Directors
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of not more than nine nor less than five members. The
exact number of Directors, presently six, is fixed by the Board prior to each
year's Annual Meeting of Shareholders. The Board is divided into three
staggered classes, each class having not less than one nor more than three
members. Each Director is elected to serve for a three-year term, and until
the election and qualification of his or her successor. When vacancies on the
Board occur, due to resignation or otherwise, the Directors then in office may
continue to exercise the powers of the Directors and a majority of such
directors may select a new Director to fill the vacancy. Any Director may
resign at any time. Any Director may be removed by the vote of, or written
consent of, the holders of a majority of the shares of Common Stock
outstanding at a special meeting called for the purpose of removal or to
ratify the recommendation of a majority of the Directors that such Director be
removed.
The term of the Class B Directors expires at the Annual Meeting. The Board
proposes Mr. Gary N. Jacobs and Mr. William J. Nance as Class B Directors to
serve until the 2001 Annual Meeting and until the election and qualification
of their successors. The Board of Directors has been informed that the
nominees have consented to being named as nominees and are willing to serve as
Directors if elected. However, if any nominee should be unable, or declines
to serve, it is intended that the proxies will be voted for such other person
as the proxies shall, in their discretion, designate. Unless otherwise
directed in the accompanying Proxy, the person's name therein will vote FOR
the election of this nominee. Election requires the affirmative vote of a
majority of the shares represented and voted at the annual meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company:
Position with
Name the Corporation Age Term to Expire
Class A Directors
John V. Winfield(1)(4)(5)(6)(7) Chairman of the 52 2000 Annual Meeting
Board; President and
Chief Executive
Officer;
Josef A. Grunwald(2)(3)(5)(7) Director 50 2000 Annual Meeting
Class B Director
Gary N. Jacobs(1)(6)(7) Secretary; Director 52 1998 Annual Meeting
William J. Nance(1)(2)(3) Treasurer; Director 54 1998 Annual Meeting
(4)(6)(7)
<PAGE>
Class C Director
Mildred Bond Roxborough(2) Director 71 1999 Annual Meeting
John C. Love (3)(4) Director 58 1999 Annual Meeting
Other Executive Officer
Gregory C. McPherson Executive Vice 39 N/A
President; Assistant
Secretary and
Assistant Treasurer
______________
(1) Member of the Executive Committee
(2) Member of the Administrative and Compensation Committee
(3) Member of the Audit and Finance Committee
(4) Member of the Real Estate Investment Committee
(5) Member of the Nominating Committee
(6) Member of the Securities Investment Committee
(7) Member of the Special Strategic Options Committee
Business Experience:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as
follows:
John V. Winfield -- Mr. Winfield was first appointed to the Board in 1982.
He currently serves as the Company's Chairman of the Board, President and
Chief Executive Officer, having first been appointed as such in 1987. Mr.
Winfield also serves as President, Chairman and Chief Executive Officer of
Santa Fe Financial Corporation ("Santa Fe") and Portsmouth Square, Inc.
("Portsmouth") and Chairman of the Board of Healthy Planet Products, Inc.
Josef A. Grunwald -- Mr. Grunwald is an industrial, commercial and residential
real estate developer. He serves as Chairman of PDG N.V. (Belgium), a hotel
management company, and President of I.B.E. Services S.A. (Belgium), an
international trading company. Mr. Grunwald was first elected to the Board in
1987. Mr. Grunwald is also a Director of Portsmouth.
William J. Nance -- Mr. Nance is a Certified Public Accountant and private
consultant to the real estate and banking industries. He also serves as
President of Century Plaza Printer, Inc. Mr. Nance was first elected to the
Board in 1984. He was appointed Treasurer, Chief Operating Officer and Chief
Financial Officer in 1987. Mr. Nance resigned as Chief Operating Officer and
Chief Financial Officer in January 1990 but continues to serve as Treasurer.
Mr. Nance is also a Director of Santa Fe, Portsmouth and Healthy Planet
Products, Inc.
<PAGE>
Mildred Bond Roxborough -- Ms. Roxborough was Director of Development and
Special Programs of the National Association for the Advancement of Colored
People (NAACP) from 1986 to 1997. She also served as Vice Chairman of the
Board of Directors of America's Charities Federation, Chairman of its
Membership and Personnel Committees and member of its Long Range Planning
Committee; and Member of the Board of Directors of Morningside Health and
Retirement Service, Member of Personnel Committee of Morningside Heights
Housing Corporation. Since 1997 Ms. Roxborough has served as a consultant to
the NAACP. Ms. Roxborough was first appointed to the Company's Board in 1984
and served as Vice Chairman from 1987 through 1994.
Gary N. Jacobs -- Mr. Jacobs was appointed to the Board and as Secretary in
1998. Mr. Jacobs is a senior partner of the law firm of Christensen, Miller,
Fink, Jacobs, Glaser, Weil & Shapiro, LLP, where he heads the corporate
department. Mr. Jacobs graduated summa cum laude from Brandeis University and
from Yale Law School, where he was Order of the Coif. He is a Trustee of the
Natural History Museum of Los Angeles County and a member of the Board of
Overseers of Brandeis University's Graduate School of International Economics
and Finance. Mr. Jacobs is Secretary of You Bet International, Inc.
John C. Love -- Dr. Love was appointed to the Board in 1998. He is an
independent consultant to the hospitality and tourism industries and was
formerly a general partner in the national CPA and consulting firm of Pannell
Kerr Forster. He is Chairman Emeritus of the Board of Trustees of Golden Gate
University in San Francisco. Dr. Love is also a Director of Santa Fe and
Portsmouth.
Gregory C. McPherson -- Mr. McPherson joined the Company in 1993. Prior to
joining the Company Mr. McPherson was a private financial and strategic
advisor, served as Vice President in the Investment Banking and Corporate
Finance Department of Kemper Securities Group, Inc., was with Prudential Bache
Capital Funding in their Mergers and Acquisitions and Financial Restructuring
Group and was a manager at the public accounting firm of
PriceWaterhouseCoopers LLP. Mr. McPherson received an M.B.A. from the Harvard
Business School and is a Certified Public Accountant.
Committees
The Company has an Executive Committee which meets in lieu of the Board upon
the request of the Chairman of the Committee. Mr. Winfield is Chairman of the
Executive Committee. The Committee held no meetings during the 1998 Fiscal
Year.
Mr. Nance serves as Chairman of the Company's Administrative and Compensation
Committee, which reviews executive salaries and any stock based compensation
plans. This committee held no meetings during the 1998 Fiscal Year.
The Audit and Finance Committee is chaired by Mr. Nance. It held two meetings
during the 1998 Fiscal Year. This committee meets with the Company's
personnel and with representatives of the Company's independent public
accountants to review internal auditing procedures and matters relating to the
annual audit of the Company's financial statements, and recommends to the
Board the appointment of the independent certified public accountants.
<PAGE>
The Company has a Real Estate Investment Committee which is chaired by Mr.
Nance. This committee held five meetings during the 1998 Fiscal Year. The
Real Estate Investment Committee reviews potential acquisitions and
dispositions of property.
The Company's Nominating Committee is chaired by Mr. Grunwald. The committee
held two meetings during the 1998 Fiscal Year. The Nominating Committee
selects nominees for election or re-election of directors and officers.
The Company's Securities Investment Committee is chaired by Mr. Winfield.
This committee held seven meetings during the 1998 Fiscal Year. The
Securities Investment Committee oversees and establishes certain investment
procedures and reports to the Board on a quarterly basis.
The Company's Special Strategic Options Committee is chaired by Mr. Winfield.
This committee held no meetings during the 1998 Fiscal Year. The Special
Strategic Options Committee reviews and considers the Company's strategic
options and provides guidance to accomplish its goals considering both current
and prospective investment opportunities.
The Board held eight meetings during the 1998 Fiscal Year. No Director
attended (whether in person, telephonically, or by written consent) less than
75% of all meetings held during the period of time he or she served as
Director during the 1997 Fiscal Year.
EXECUTIVE COMPENSATION
Executive Officers Compensation
The following table provides certain summary information concerning
compensation paid to or accrued by the Company to the Executive Officers and
one employee of the Company who earned more than $100,000 (salary and bonus)
for all services rendered to the Company for fiscal years 1998, 1997 and 1996.
Estimated annual benefits upon retirement will include allocations under the
ESOP (defined below). Such benefits are not currently determinable because
the plan is voluntary and employee contributions and allocations under the
plan are discretionary. There are currently no employment contracts with the
Executive Officers. No Long-Term Compensation Award or Payouts were made, and
no Options or Stock Appreciation Rights ("SARs") were granted during fiscal
year 1998, 1997 or 1996.
Name and Principal Other Annual
Position Year Salary Bonus Compensation
John V. Winfield 1998 $102,080(1) $43,193(2)
Chairman; President 1997 $102,078 $29,693(2)
and Chief Executive Officer 1996 $195,650 $36,622(2)
Gregory C. McPherson 1998 $ 97,656(3) $10,000
Executive Vice President; 1997 $ 97,082(3)
Assistant Secretary and 1996 $191,655
Assistant Treasurer
<PAGE>
David G. Gonzalez 1998 $105,000 $60,000
Controller
____________________
(1) Mr. Winfield is the President and Chairman of the Board of Santa Fe and
Portsmouth, and received $102,084 of compensation from those entities during
fiscal year 1998.
(2) Amounts include an auto allowance, imputed interest on a note due the
Company and compensation for portion of the salary of an assistant. The auto
allowance was $29,193, $29,693 and $12,622 during fiscal year 1998, 1997 and
1996, respectively. The amount of compensation relating to interest on the
note was approximately $24,000 during fiscal year 1996. The amount of
compensation relating to the assistant was approximately $14,000 during fiscal
year 1998.
(3) Mr. McPherson is a consultant of Portsmouth and received consulting fees
of $88,200 and $86,282 during fiscal year 1998 and 1997, respectively.
Employee Stock Ownership Plan and Trust ("ESOP")
In April 1986, the Company established an Employee Stock Ownership Plan and
Trust ("ESOP" or the "Plan"), effective July 1985, which enabled eligible
employees to receive an ownership interest in stock of the Company. The
Company made $816 in ESOP contributions during fiscal year 1998 and no
contributions in fiscal year 1997 and fiscal year 1996. The Company made
distributions of 1,680 shares (adjusted for split) of Common Stock during
fiscal year 1998, made no distributions during fiscal year 1997 and made
distributions of 16,273 shares (adjusted for split) of Common Stock during
fiscal year 1996. The Company terminated the ESOP effective November 15,
1998.
Phantom Stock Program
The Company maintains a "phantom" stock program that provides for the issuance
of 90,000 units (adjusted for split) with each unit being equivalent to one
share of Common Stock. Participating members of the program are credited with
the incremental value in shares of common stock and dividend equivalents over
a five-year period from the date of award. One-fifth of such credits to
participants' accounts will vest on the first anniversary date of the award
and an additional one-fifth vest on each of the next four anniversary dates.
No units were granted in fiscal year 1998 or fiscal year 1997. As of June 30,
1998, no units were outstanding. The Company terminated the phantom program
effective December 3, 1998.
<PAGE>
Stock Incentive Plan
In 1987, the Board approved a Stock Incentive Plan providing for the issuance
of up to 281,250 shares (adjusted for split) of the Company's Common Stock
pursuant to the exercise of the stock options granted under the plan. The
Plan also provided for the issuance of SARs that may be granted in connection
with or without relation to the stock options. The plan was approved by the
Company's shareholders in 1988. In conjunction with the Stock Incentive Plan,
the Board and shareholders approved the grant of an option to the Company's
President for the purchase of 281,250 shares (adjusted for split) of Common
Stock at an exercise price of $5.11 (adjusted for split). During fiscal year
1996, the Company's President fully exercised his option. No additional
options or SARs were granted under this plan, and no options to purchase
shares of Common Stock remain outstanding. The plan expired August 1, 1998.
Compensation of Directors
The Company's arrangements for compensation of Directors is as follows: the
Chairman of the Board of Directors is eligible to receive $9,000 per annum;
each Director is eligible to receive a fee of $6,000 per annum and a fee of
$500 for each Board or committee meeting attended; and each Director who is a
chairman of a committee of the Board of Directors is eligible to receive $600
for each committee meeting which he or she chairs. The Directors who are also
Executive Officers do not receive any fee for attending either meetings of the
board or of any Board committee. As an Executive Officer, the Company's
Chairman has also elected to forego his annual board fee.
Except for the foregoing, there are no other arrangements for compensation of
Directors and there are no employment contracts between the Company and its
Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1998, certain information
with respect to the beneficial ownership of Common Stock owned by (i) those
persons or groups known by the Company to own more than five percent of the
outstanding shares of Common Stock, (ii) each Director and Executive Officer,
and (iii) all Directors and Executive Officers as a group.
Name and address of Amount and Nature
Beneficial Owner of Beneficial Owner(1) Percentage(2)
John V. Winfield 925,938(3) 44.0%
2121 Avenue of the Stars
Los Angeles, CA 90067
Josef Grunwald 73,045 3.5%
2121 Avenue of the Stars
Los Angeles, CA 90067
William J. Nance 38,250 1.8%
2121 Avenue of the Stars
Los Angeles, CA 90067
Mildred Bond Roxborough 2,350 *
2121 Avenue of the Stars
Los Angeles, CA 90067
<PAGE>
Gary N. Jacobs 2,250 *
2121 Avenue of the Stars
Los Angeles, CA 90067
John C. Love 0 *
2121 Avenue of the Stars
Los Angeles, CA 90067
Gregory C. McPherson 8,994(4) *
2121 Avenue of the Stars
Los Angeles, CA 90067
All Directors and Executive
Officers as a Group (7 persons) 1,050,827 49.9%
___________________
* Ownership does not exceed 1%.
(1) Unless otherwise indicated and subject to applicable community property
laws, each person has sole voting and investment power with respect to the
shares beneficially owned.
(2) Percentages are calculated on the basis of 2,105,113 shares of Common
Stock outstanding at November 30, 1998.
(3) Includes 31,113 shares allocated to Mr. Winfield under the ESOP. Does
not include an additional 15,151 shares held by the ESOP with respect to which
Mr. Winfield, as trustee, would have the power to vote if voting instructions
are not provided by the participants on a timely basis.
(4) Includes 3,594 shares allocated to Mr. McPherson under the ESOP.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1996, the Company's President paid in full the $830,173 outstanding
balance of the note relating to his 1986 exercise of stock options.
In May 1996, the Company's President exercised an option to purchase 281,250
shares of Common Stock at a price of $5.11 per share through a full recourse
note due the Company on demand, but in no event later than May 2001. The note
bears interest floating at the lower of 10% or the prime rate (8.50% at June
30, 1998) with interest payable quarterly. During fiscal year 1998, the
Company's President made interest payments of approximately $122,000 in
connection with the note relating to his 1996 exercise of stock options. The
balance of the note receivable at June 30, 1998 was $1,437,500.
<PAGE>
Effective October 1, 1998 the Board of Directors approved an increase in the
salary of the President and Chief Executive Officer of the Company to $270,000
per year. The increase is intended to set Mr. Winfield's salary at a level
commensurate with chief executive officers of similar public companies and for
his additional services to the Company, including his management of the
Company's securities portfolio. The increase also restores the salary to a
level which Mr. Winfield had previously reduced voluntarily.
Effective October 1, 1998 Mr. Winfield's compensation from Santa Fe and
Portsmouth was increased to $150,000 and $90,000 per year, respectively.
The Company's Chairman and President directs the investment activity of the
Company, Santa Fe and Portsmouth in public and private markets pursuant to
authority granted by the Board of Directors of each entity. Depending on
certain market conditions and various risk factors, the President and members
of his immediate family may at times invest in the same companies in which the
Company, Santa Fe and Portsmouth invest. The Company, Santa Fe and Portsmouth
encourage such investments because it places personal resources of the
President and his family members at risk in connection with investment
decisions made on behalf of the Company, Santa Fe and Portsmouth. Following
allegations concerning the President made by a former officer and director of
the Company, the Board of Directors authorized committees of the Board to
conduct a thorough and independent review of such matters, including the
Company's practices in this regard. The committee advised the Board of
Directors that it found the material allegations of improprieties made by the
former officer and director could not be substantiated. The committee made
recommendations that the Company institute certain modifications to its
existing procedures to reduce the potential for conflicts of interest. The
Company's Board of Directors has adopted these recommendations.
Mr. Jacobs is a senior partner of Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP which provided legal services to the Company during the
year ended June 30, 1998. During the year ended June 30, 1998, the Company
made payments of approximately $86,000 to Christensen, Miller, Fink, Jacobs,
Glaser, Weil & Shapiro, LLP.
PROPOSAL II
Ratification of Appointment of Auditors
The Board has appointed PriceWaterhouseCoopers LLP, Certified Public
Accountants, to continue as the Company's auditors and to audit the books of
account and other records of the Company and its consolidated operating
subsidiaries for the fiscal year ending June 30, 1999. The Board expects that
representatives of PriceWaterhouseCoopers LLP will be present at the Annual
Meeting to respond to appropriate questions from Shareholders, and the Board
will provide these representatives with an opportunity to make a statement if
they desire to do so.
<PAGE>
The appointment of PriceWaterhouseCoopers LLP as the Company's auditors for
the fiscal year ending June 30, 1999 is being submitted to the Shareholders
for ratification. The Board recommends that the Shareholders vote FOR the
ratification of the appointment of PriceWaterhouseCoopers LLP. Ratification
requires the affirmative vote of a majority of the shares represented and
voted at the Annual Meeting. If the appointment of PriceWaterhouseCoopers LLP
is not ratified by the Shareholders, the Board will consider the appointment
of other auditors for the fiscal year ending June 30, 1999.
PROPOSAL III
Ratification and Approval of 1998 Stock Option Plan for Non-Employee Directors
On December 8, 1998, the Board of Directors of the Company adopted, subject to
stockholder approval and ratification, a 1998 Stock Option Plan for Non-
employee Directors (the "Plan"). The purpose of the Plan is to promote the
interests of the Company, its subsidiaries and stockholders by encouraging
non-employee directors of the Company to acquire a proprietary interest in the
Company. Such investments should increase the personal interest and special
effort of such persons in providing for the success and progress of the
business of the Company and should enhance the Company's efforts to attract
and retain competent non-employee directors. The text of the Plan is set forth
as Exhibit A to this Proxy Statement and the following summary is qualified in
its entirety by reference to that text.
The stock to be offered under the Plan shall be shares of the Company's Common
Stock, par value $.01 per share, which may be unissued shares or treasury
shares. Subject to certain adjustments upon changes in capitalization, the
aggregate number of shares to be delivered upon exercise of all options
granted under the Plan shall not exceed 100,000 shares. The Plan shall
terminate on the earliest to occur of (i) the dates when all of the Common
Stock available under the Plan shall have been acquired through the exercise
of options granted under the Plan; (ii) 10 years after the date of adoption of
the Plan by the Board; or (iii) such other date that the Board may determine.
Pursuant the Plan, each non-employee director as of the adoption date of the
Plan shall be granted on the date thereof: (i) if he or she became a non-
employee director prior to January 1, 1998, an option to purchase 8,000 shares
of Common Stock; and (ii) if he or she became a non-employee director on or
after January 1, 1998, an option to purchase 4,000 shares of Common Stock.
Each new non-employee director who is elected to the Board shall automatically
be granted an option to purchase 4,000 shares of Common Stock upon the initial
date of election to the Board. On each July 1 following the adoption date,
each non-employee director shall be granted an option to purchase 2,000 shares
of Common Stock provided he or she holds such position on that date and the
number of Common Shares available for grant under the Plan is sufficient to
permit such automatic grant.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at
the time of the grant of the option. The term of the option shall be for ten
years. Options granted to any non-employee director will not vest 100% until
such person has been a member of the Board for four (4) years or more. Non-
employee directors who have been a member of Board less than four (4) years,
shall be vested with respect to 20% of the options on the date of grant and
20% on each anniversary of such person having become a member of the Board,
provided that the optionee is on each such date serving as a member of the
Board or as an employee or consultant to the Company.
<PAGE>
Pursuant to the plan, the following non-employee directors of the Company were
granted options, subject to shareholder approval, to purchase shares of Common
Stock: Josef A. Grunwald (8,000 shares); William J. Nance (8,000 shares);
Mildred Bond Roxborough (8,000 shares); Gary N. Jacobs (4,000 shares); and
John C. Love (4,000 shares). The exercise price for the options is $12.00 per
share, which was the closing price of the Company's Common Stock on the Nasdaq
National Market System as of the date of grant on December 8, 1998.
An optionee will not recognize any taxable income at the grant of the option,
but will generally realize ordinary income for federal income tax purposes at
the time of exercise of such options equal to the difference between the fair
market value of the Common Stock on the date of the exercise and the exercise
price. Any taxable income recognized in connection with an option exercised
by an optionee who is an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as described above, will be treated as
long-term, mid term or short term capital gain or loss, depending on the
holding period. The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to
shares acquired upon the exercise of an option.
The affirmative vote of a majority of the issued and outstanding shares of
Common Stock of the Company is required to approve the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION OF
THE 1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
PROPOSAL IV
Ratification and approval of 1998 Stock Option Plan for Selected Key Officers,
Employees and Consultants
On December 8, 1998, the Board of Directors of the Company adopted, subject to
shareholder approval and ratification, a 1998 Stock Option Plan for selected
key officers, employees and consultants (the "Key Employee Plan"). The
purpose of the Key Employee Plan is to promote the interests of the Company,
its subsidiaries and stockholders by encouraging selected key officers,
employees and consultants of the Company to acquire a proprietary interest in
the Company. Such investments should increase the personal interest and
special effort of such persons in providing for the success and progress of
the business of the Company and should enhance the Company's efforts to
attract and retain competent key employees. The text of the Key Employee Plan
is set forth as Exhibit B to this Proxy Statement and the following summary is
qualified in its entirety by reference to that text.
The stock to be offered under the Key Employee Plan shall be shares of the
Company's Common Stock, par value $.01 per share, which may be unissued shares
or treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise
of all options granted under the Key Employee Plan shall not exceed 200,000
shares. The Key Employee Plan shall terminate on the earliest to occur of (i)
the dates when all of the Common Stock available under the Key Employee Plan
shall have been acquired through the exercise of options granted under the Key
Employee Plan; (ii) 10 years after the date of adoption of the Key Employee
Plan by the Board; or (iii) such other date that the Board may determine.
<PAGE>
The Key Employee Plan shall be administered by a Committee appointed by the
Board of Directors which shall consist of two or more disinterested persons
within the meaning of Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). Persons eligible to receive
options under the Key Employee Plan shall be employees who are selected by the
Committee. In determining the Employees to whom options shall be granted and
the number of shares to be covered by each option, the Committee shall take
into account the duties of the respective employee, their present and
potential contribution to the success of the Company, their anticipated number
of years of active service remaining and other factors as it deems relevant in
connection with accomplishing the purposes of the Key Employee Plan. An
employee who has been granted an option may be granted an additional option or
options as the Committee shall so determine.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at
the time of the grant of the option. The term of the option shall not exceed
10 years from the date on which the option is granted. The vesting schedule
for the options and the method or time that when the option may be exercised
in whole or in part shall be determined by the Committee. However, in no
event shall an option be exercisable within six months of the date of grant in
the case of an optionee subject to Section 16(b) of the Exchange Act. Subject
to certain exceptions, the option shall terminate six months after the
optionee's employment with the Company terminates.
An optionee will not recognize any taxable income at the grant of the option,
but will generally realize ordinary income for federal income tax purposes at
the time of exercise of such options equal to the difference between the fair
market value of the Common Stock on the date of the exercise and the exercise
price. Any taxable income recognized in connection with an option exercised
by an optionee who is an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as described above, will be treated as
long-term, mid term or short term capital gain or loss, depending on the
holding period. The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to
shares acquired upon the exercise of an option.
The affirmative vote of a majority of the issued and outstanding shares of
Common Stock of the Company is required to approve the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION OF
THE 1998 STOCK OPTION PLAN FOR SELECTED KEY OFFICERS, EMPLOYEES AND
CONSULTANTS.
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission, Directors and Executive Officers of the Company, as well
as persons holding more than 10% of the Company's Common Stock, are required
to file reports showing their initial ownership of the Company's Common Stock
and any subsequent changes in that ownership with the Securities and Exchange
Commission and all exchanges on which the Company's securities are registered
by certain specified due dates. Based solely on the Company's review of
copies of such reports furnished to the Company and written representations
that no other reports were required to be filed during Fiscal 1998, all such
reports that were required were filed on a timely basis.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board does not know of any matters
to be presented at the Annual Meeting other than those set forth in the
attached Notice of Annual Meeting. If any other matters properly come before
the Annual Meeting including matters incident to the conduct of the Annual
Meeting, the holders of the proxies will vote on those matters at their
discretion.
SHAREHOLDER PROPOSALS
It is presently anticipated that the 1999 Annual Meeting of Shareholders will
be held on or around January 26, 2000. Shareholders desiring to exercise
their rights under the Proxy Rules of the Securities and Exchange Commission
to submit proposals for consideration by the Shareholders at the 1999 Annual
Meeting are advised that their proposals must be received by the Company no
later than August 23, 1999 in order to be eligible for inclusion in the
Company's Proxy Statement and Form of Proxy relating to that meeting.
GENERAL
The Company will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement and the enclosed form of Proxy, and of soliciting
Proxies. The Company will request banks and brokers to solicit their
customers who beneficially own shares listed of record in names of nominees,
and will reimburse those banks and brokers for their reasonable out-of-pocket
expenses in connection with those solicitations. The original solicitation of
Proxies by mail may be supplemented by telephone, telegram and personal
solicitation by officers and other regular employees of the Company, but no
additional compensation will be paid to such individuals.
A copy of the Company's Form 10-KSB for the 1998 Fiscal Year will be
furnished, upon request, to any Shareholder. A copy of the 1998 Annual Report
is being sent to the Shareholders with this Proxy Statement. The Annual
Report is not to be considered part of the soliciting material.
<PAGE>
By Resolution of the Board of Directors
THE INTERGROUP CORPORATION
Gary N. Jacobs, Secretary
Dated: Los Angeles, California
December 11, 1998
<PAGE>
EXHIBIT A
THE INTERGROUP CORPORATION
1998 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose of Plan. The purpose of this 1998 Stock Option Plan for Non-
Employee Directors is to promote the interests of The InterGroup Corporation,
its subsidiaries and stockholders, by encouraging non-employee directors of
the Corporation to acquire a proprietary interest in the Corporation. Such
investments should increase the personal interest and the special effort of
such persons in providing for the success and progress of the business of the
Corporation and should enhance the Corporation's efforts to attract and retain
competent non-employee directors.
2. Definitions. The following terms when used herein shall have the
meanings set forth below, unless a different meaning is plainly required by
the context:
(a) Adoption Date. December 8, 1998.
(b) Board. The Board of Directors of the Corporation.
(c) Committee. The Committee provided for in Section 6.
(d) Common Stock. Shares of the Corporation's common stock, par
value $.01 per share.
(e) Corporation. The InterGroup Corporation, a Delaware
corporation.
(f) Employee. An employee of the Corporation or any of its
subsidiaries who receives compensation in that capacity in excess of $30,000
per calendar year from the Corporation and/or any of its subsidiaries (not
including compensation received in his or her capacity as a member of the
Board or any committee of the Board).
(g) Fair Market Value. The fair market value of a share of
Common Stock on a given date, as determined by the Committee; provided,
however, that if the Common Stock on such date is (i) traded on the NASDAQ
national market system, the Fair Market Value shall be the closing price of
the Common Stock on such system; or (ii) traded on an established securities
exchange, the Fair Market Value shall be the closing price of the Common Stock
in the reported consolidated trading of such exchange. If there are no Common
Stock transactions reported for such date, the determination shall be made as
of the last immediately preceding date on which the Common Stock transactions
were reported. If there shall be any material alteration in the present
system of reporting sales prices of the Common Stock, or if the Common Stock
shall no longer be traded or listed as set forth above, the Fair Market Value
of the Common Stock as of a particular date shall be determined under such
method as shall be determined by the Committee.
<PAGE>
(h) Non-Employee Director. A member of the Board who is not an
Employee of the Corporation or any of its subsidiaries.
(i) Option. An option granted to an Optionee pursuant to the
Plan.
(j) Option Agreement. A written agreement between the
Corporation and an Optionee evidencing the grant of an Option and containing
terms and conditions concerning the exercise of the Option.
(k) Option Price. The price to be paid for shares to be
purchased pursuant to the exercise of an Option.
(l) Optionee. A Non-Employee Director who has been granted an
Option or the personal representative, heir or legatee of an Optionee who has
the right to exercise the Option under the death of the Optionee.
(m) Plan. This 1998 Stock Option Plan for Non-Employee
Directors, as it may be amended from time to time.
3. Eligibility and Participation.
(a) Each Non-Employee Director as of the Adoption Date shall
be granted on the date hereof: (i) if he or she became a Non-Employee
Director prior to January 1, 1998, an Option to purchase 8,000 shares of
Common Stock; and (ii) if he or she became a Non-Employee Director on or after
January 1, 1998, an Option to purchase 4,000 shares of Common Stock.
(b) Each new Non-Employee Director who is elected to the Board
subsequent to the Adoption Date shall automatically be granted an Option to
purchase 4,000 shares of Common Stock upon the initial date of election to the
Board, provided the number of shares of Common Stock available for grant under
the Plan is sufficient to permit such automatic grant.
(c) On each July 1 following the Adoption Date, each Non-
Employee Director shall automatically be granted an Option to purchase 2,000
shares of Common Stock, provided he or she holds such position on that date
and the number of shares of Common Stock available for grant under the Plan is
sufficient to permit such automatic grant.
4. Shares Subject to the Plan. The stock to be offered under the
Plan shall be shares of Common Stock, which shares may be unissued shares or
treasury shares. Subject to the adjustments provided for in Section 7, the
aggregate number of shares to be delivered upon exercise of all Options
granted under the Plan shall not exceed 100,000 shares. Shares of Common
Stock subject to, but not delivered under, an Option terminating or expiring
for any reason prior to its exercise in full shall be deemed available for
Options to be granted thereafter during the term of the Plan.
<PAGE>
5. Terms and Conditions of Options. All Options granted hereunder
shall be subject to the following terms and conditions, which shall be set
forth in the Option Agreement for all Options to the extent applicable:
(a) To Whom Options May Be Granted. Options shall be granted
only to Non-Employee Directors.
(b) Non-Transferability of Option. Options shall not be
transferable by the Optionee otherwise than by bequest or the laws of descent
and distribution, and shall be exercisable during the Optionee's lifetime only
by the Optionee.
(c) Termination of Option. The Option shall terminate ten (10)
years from the date of grant, and shall be exercisable, to the extent vested,
whether or not such Non-Employee Director is at the time of exercise a member
of the Board, and, in the event of the death of the Non-Employee Director, may
be exercised by his or her estate.
(d) Number of Shares of Common Stock. The number of shares of
Common Stock to which the Option pertains.
(e) Exercise Price. The exercise price of the Option, which
shall not be less than 100% of the Fair Market Value of the Common Stock at
the time of the grant of the Option.
(f) The Term of Option. The term of the Option, which shall be
ten (10) years.
(g) How Exercised; Vesting. The method or time when the Option
may be exercised in whole or in part. Options granted to any Non-Employee
Director who, on the date of grant, has been a member of the Board for: (i)
four (4) years or more, shall be vested with respect to 100% of the Options on
the date of grant; (ii) three (3) years but less than four (4) years, shall be
vested with respect to 80% of the Options on the date of grant and 20% of the
Options on the fourth anniversary of such person having become a member of the
Board; (iii) two (2) years but less than three (3) years, shall be vested with
respect to 60% of the Options on the date of grant and 20% of the Options on
each of the third and fourth anniversaries of such person having become a
member of the Board; (v) one (1) year but less than two (2) years, shall be
vested with respect to 40% of the Options on the date of grant and 20% of the
Options on each of the second, third and fourth anniversaries of such person
having become a member of the Board; and (v) less than one (1) year shall be
vested with respect to 20% of the Options on the date of grant and 20% of the
Options on each of the first, second, third and fourth anniversaries of such
person having become a member of the Board, in each case, provided that
Optionee is on such date serving as a member of the Board or as an Employee or
consultant to the Corporation.
<PAGE>
The Option Price shall be paid in cash or check at the time
of exercise (which may include delivery of such documentation as the Committee
and Optionee's broker, if applicable, shall require to effect an exercise of
the Option and delivery to the Corporation of the sale or loan proceeds
required to pay the Option Price), except that in lieu of all or part of such
payment, the Optionee may tender to the Corporation Common Stock owned by the
Optionee having a Fair Market Value equal to the exercise price, less any
amount paid by cash, check, sale or loan proceeds. The Fair Market Value of
such tendered shares of Common Stock shall be determined as of the close of
the business day immediately preceding the day on which the Option is
exercised.
6. Administration. The Plan shall be administered by the Board or a
Committee consisting of at least three members selected by, and serving at the
pleasure of, the Board (in either case, the "Committee"). The Committee shall
meet at such times and places as it determines and may meet through a
telephone conference call. A majority of its members shall constitute a
quorum, and the decision of the majority of those present at any meeting at
which a quorum is present shall constitute the decision of the Committee. Any
decision reduced to writing and signed by a majority of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. No discretion concerning decisions under the Plan shall be
afforded to a person who is not a disinterested person. All decisions,
determinations and selections made by the Committee pursuant to the provisions
of the Plan shall be final. Each Option granted shall be evidenced by an
Option Agreement containing such terms and conditions as may be approved by
the Committee and which shall not be inconsistent with the Plan.
7. Adjustments Upon Changes in Capitalization. Notwithstanding the
limitations set forth in Section 4, in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the Committee shall
make an appropriate adjustment in the maximum number of shares available under
the Plan or to any one individual and in the number, kind and Option Price of
Common Stock subject to Options granted under the Plan.
8. Amendment and Discontinuance. The Board may discontinue, amend,
alter or suspend the Plan; provided, that any amendment requiring stockholder
approval under Rule 16b-3 promulgated pursuant to the Securities Exchange Act
of 1934, as amended, as in effect from time to time, shall not be made without
obtaining such approval. Section 3 shall not be amended more than once every
six months, other than to comply with changes in the Internal Revenue Code or
the regulations thereunder. Any Option which is outstanding under the Plan at
the time of its amendment or termination shall remain in effect in accordance
with its terms and conditions and those of the Plan as in effect when the
Option was granted.
<PAGE>
9. Merger, Consolidation, Etc.
(a) Conversion on Merger. In the event the Corporation merges
or consolidates with another corporation, or all or substantially all of the
Corporation's capital stock or assets are acquired by another corporation, and
the surviving or acquiring corporation issues shares of its stock to the
Corporation's shareholders in connection with the merger, consolidation or
acquisition, the surviving or acquiring corporation shall adopt the Plan and,
upon the exercise of an Option, the Optionee shall, at no additional cost
(other than the Option Price), be entitled to receive, in lieu of the number
of shares of Common Stock to which such Option is then exercisable, the number
and class of shares of stock, other securities and other consideration to
which the Optionee would have been entitled pursuant to the terms of the
merger, consolidation or acquisition, if immediately prior thereto the
Optionee had been the holder of record of the number of shares of Common Stock
equal to the number of shares of Common Stock as to which the Option shall
then be exercisable, provided that if such merger, consolidation or
acquisition is structured to take place through more than one step (i.e.
tender offer and merger), upon exercise of an Option, the Optionee shall, at
no additional cost (other than the Option Price) be entitled to receive the
number and class of shares of stock, other securities and other consideration
to which the Optionee would have been entitled had the Optionee been the
holder of record of the number of shares of Common Stock equal to the number
of shares of Common Stock as to which the Option was exercisable immediately
prior to the consummation of the first step of such merger, consolidation or
acquisition.
(b) No Conversion on Certain Mergers. In the event that the
Corporation merges or consolidates with another corporation, or all or
substantially all of the Corporation's capital stock or assets are acquired by
another corporation, and the surviving or acquiring corporation does not issue
shares of its stock to the Corporation's shareholders in connection with the
merger, consolidation or acquisition, then, notwithstanding any other
provision of the Plan to the contrary, no Option may be exercised after the
effective date of the merger, consolidation or acquisition.
10. Effectiveness and Termination of the Plan.
(a) The Plan shall become effective upon adoption by the Board.
The Plan shall be rescinded and all Options granted hereunder shall be null
and void unless within 12 months from the date of the adoption of the Plan by
the Board it shall have been approved by the holders of a majority of the
outstanding Common Stock present or represented and entitled to vote on the
Plan at a stockholder's meeting
<PAGE>
(b) Termination Date. The Plan shall terminate on the earliest
to occur of (i) the dates when all the Common Stock available under the Plan
shall have been acquired through the exercise of Options granted under the
Plan; (ii) 10 years after the date of adoption of the Plan by the Board; or
(iii) such other date as the Board may determine.
11. Governing Law. The provisions of the Plan shall be
construed, administered and enforced according to the laws of the State of
California.
DATED: December 8, 1998
THE INTERGROUP CORPORATION
/s/ John V. Winfield
Chairman and Chief Executive Officer
EXHIBIT B
THE INTERGROUP CORPORATION
1998 STOCK OPTION PLAN
1. Purpose of Plan. The purpose of this 1998 Stock Option Plan is to
promote the interest of The InterGroup Corporation its subsidiaries and
stockholders, by encouraging selected key officers, employees and consultants
of the Corporation to acquire a proprietary interest in the Corporation. Such
investments should increase the personal interest and the special effort of
such persons in providing for the continued success and progress of the
business of the Corporation and should enhance the Corporation's efforts to
attract and retain competent key employees.
2. Definitions. The following terms when used herein shall have the
meanings set forth below, unless a different meaning is plainly required by
the context:
(a) Board. The Board of Directors of the Corporation.
(b) Committee. The Committee provided for in Section 7.
(c) Common Stock. Shares of the Corporation's common
stock, par value $.01 per share.
(d) Corporation. The InterGroup Corporation, a Delaware
corporation.
(e) Disability. Permanent and total disability within the
meaning of section 22(e)(3) of the Internal Revenue Code of 1986, as it may be
amended from time to time.
<PAGE>
(f) Employees. Officers, employees and consultants of the
Corporation and/or its subsidiaries, as determined by the Committee from time
to time.
(g) Fair Market Value. The fair market value of a share of
Common Stock on a given date, as determined by the Committee; provided,
however, that if the Common Stock on such date is (i) traded on the NASDAQ
national market system, the Fair Market Value shall be the closing price of
the Common Stock on such system; or (ii) traded on an established securities
exchange, the Fair Market Value shall be the closing price of the Common Stock
in the reported consolidated trading of such exchange. If there are no Common
Stock transactions reported for such date, the determination shall be made as
of the last immediately preceding date on which Common Stock transactions were
reported. If there shall be any material alteration in the present system of
reporting sales prices of the Common Stock, or if the Common Stock shall no
longer be traded or listed as set forth above, the Fair Market Value of the
Common Stock as of a particular date shall be determined under such method as
shall be determined by the Committee.
(h) Option. An option granted to an Optionee pursuant to
the Plan.
(i) Option Agreement. A written agreement between the
Corporation and an Optionee evidencing the grant of an Option and containing
terms and conditions concerning the exercise of the Option.
(j) Option Price. The price to be paid for shares to be
purchased pursuant to the exercise of an Option.
(k) Optionee. An Employee who has been granted an Option
or the personal representative, heir or legatee of an Optionee who has the
right to exercise the Option upon the death of the Optionee.
(l) Plan. This 1998 Stock Option Plan, as it may be
amended from time to time.
3. Eligibility and Participation. Persons eligible to receive
Options under the Plan shall be Employees who are selected by the Committee.
In determining the Employees to whom Options shall be granted and the number
of shares to be covered by each Option, the Committee shall take into account
the duties of the respective Employees, their present and potential
contribution to the success of the Corporation, their anticipated number of
years of active service remaining and such other factors as it deems relevant
in connection with accomplishing the purposes of the Plan. An Employee who
has been granted an Option may be granted an additional Option or Options as
the Committee shall so determine.
<PAGE>
4. Shares Subject to the Plan. The stock to be offered under the
Plan shall be shares of Common Stock, which shares may be unissued shares or
treasury shares. Subject to the adjustments provided for in Section 8, the
aggregate number of shares to be delivered upon exercise of all Options
granted under the Plan shall not exceed 200,000 shares. Shares of Common
Stock subject to, but not delivered under, an Option terminating or expiring
for any reason prior to its exercise in full shall be deemed available for
Options to be granted thereafter during the term of the Plan.
5. Terms and Conditions of Options. All Options granted hereunder
shall be subject to the following terms and conditions:
(a) To Whom Options May Be Granted. Options shall be
granted only to Employees.
(b) Non-Transferability of Option. The Option shall not be
transferable by the Optionee otherwise than by bequest or the laws of descent
and distribution, and shall be exercisable during the Optionee's lifetime only
by the Optionee.
(c) Termination of Option Upon Termination of Employment.
(i) If the Optionee's employment by the Corporation shall terminate for any
reason other than death, Disability or termination for cause, the Option shall
terminate six months after the Optionee's employment terminates (unless the
Optionee dies during such period), or on the Option's expiration date, if
earlier, and shall be exercisable during such period after termination of
employment only with respect to the number of shares which the Optionee was
entitled to purchase on the day preceding the termination of the Optionee's
employment, except that the Committee may, in specific cases, and in its sole
discretion, permit exercise by an Optionee of all, or a part of, the
unexercised Option within the period referred to above after the Optionee's
employment terminates. If the Optionee's employment shall terminate because
of discharge for cause, the Option shall terminate on the date of the
Optionee's discharge.
(d) Termination of Option Upon Death or Disability. In the
event of the Optionee's death or Disability while in the employ of the
Corporation, or Optionee's death within six months after the termination of
the Optionee's employment (other than by reason of discharge for cause) the
Option shall terminate upon the earliest to occur of (i) 12 months after the
date of the Optionee's death or Disability or such other date as shall be
specified in the Option Agreement, or (ii) the Option's expiration date. The
Option shall be exercisable during such period after the Optionee's death or
Disability with respect to the number of shares as to which the Option shall
have been exercisable on the date preceding the Optionee's death or
Disability, as the case may be.
<PAGE>
6. Other Terms and Conditions of Option Agreements. The Committee
shall have the power, subject to the limitations contained in the Plan, to
prescribe any terms and conditions regarding the grant or exercise of any
Option under the Plan and in particular shall prescribe the following terms
and conditions which shall be contained in the Option Agreement for all
Options:
(a) Number of Shares of Common Stock. The number of
shares of Common Stock to which the Option pertains.
(b) Exercise Price. The exercise price of the Option,
provided that with respect to Options granted subject to stockholder approval
of the Plan pursuant to Section 12(a), the exercise price shall be not less
than 100% of the Fair Market Value at the time of grant of the Option.
(c) The Term of Option. The term of the Option, which
shall not exceed 10 years from the date on which the Option is granted.
(d) How Exercised; Vesting. The vesting schedule for the
Options and the method or time when the Option may be exercised in whole or in
part, including, but not limited to, whether it may be exercised by delivery
of previously owned shares of Common Stock and the procedures to be followed
whereby the Option Price may be satisfied through loan and/or sales proceeds
derived from the shares of Common Stock to which the Option pertains.
However, in no event shall an Option be exercisable within six months of the
date of grant in the case of an Optionee subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) Withholding of Taxes. The provisions for the
withholding of Federal, state and local income or other taxes which are due in
connection with the exercise of the Option.
7. Administration. The Plan shall be administered by the Committee
appointed by the Board which shall consist of two or more disinterested
persons (within the meaning of Rule 16b-3 promulgated pursuant to the Exchange
Act ("Rule 16b-3")). In accordance with and subject to the provisions of the
Plan, the Committee shall have full power and authority to interpret the
provisions and supervise the administration of the Plan. All decisions,
determinations and selections made by the Committee pursuant to the provisions
of the Plan shall be final. Each Option granted shall be evidenced by an
Option Agreement containing such terms and conditions as may be approved by
the Committee and which shall not be inconsistent with the Plan.
8. Adjustments Upon Changes in Capitalization. Notwithstanding the
limitations set forth in Section 4, in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the Committee shall
make an appropriate adjustment in the maximum number of shares available under
the Plan or to any one individual and in the number, kind and Option Price, of
Common Stock subject to Options granted under the Plan.
<PAGE>
9. Time of Granting Options. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board or by the stockholders of the
Corporation, and no action taken by the Committee (other than the granting of
a specific Option), shall constitute the granting of an Option hereunder. The
granting of an Option pursuant to the Plan shall take place only on the date
such Option is approved by the Committee.
10. Amendment and Discontinuance. The Board may discontinue, amend,
alter or suspend the Plan; provided, however, that any amendment requiring
stockholder approval under Rule 16b-3, as in effect from time to time, shall
not be made without obtaining such approval. Unless amended in accordance
with the amended Plan with the consent of the Optionee, any Option which is
outstanding under the Plan at the time of its amendment or termination shall
remain in effect in accordance with its terms and conditions and those of the
Plan as in effect when the Option was granted.
11. Merger, Consolidation, Etc.
Conversion on Merger. In the event the Corporation merges or
consolidates with another corporation, or all or substantially all of the
Corporation's capital stock or assets are required by another corporation, and
the surviving or acquiring corporation issues shares of its stock to the
Corporation's shareholders in connection with the merger, consolidation or
acquisition, the surviving or acquiring corporation shall adopt the Plan and,
upon the exercise of an Option, the Optionee shall, at no additional cost
(other than the Option Price), be entitled to receive, in lieu of the number
of shares of Common Stock to which such Option is then exercisable, the number
and class of shares of stock, other securities and other consideration to
which the Optionee would have been entitled pursuant to the terms of the
merger, consolidation or acquisition if immediately prior thereto the Optionee
had been the holder of record of the number of shares of Common Stock equal to
the number of shares of Common Stock as to which the Option shall then be
exercisable, provided that if such merger, consolidation or acquisition is
structured to take place through more than one step (i.e. tender offer and
merger), upon exercise of an Option, the Optionee shall, at no additional cost
(other than the Option Price) be entitled to receive the number and class of
shares of stock, other securities and other consideration to which the
Optionee would have been entitled had the Optionee been the holder of record
of the number of shares of Common Stock equal to the number of shares of
Common Stock as to which the Option was exercisable immediately prior to the
consummation of the first step of such merger, consolidation or acquisition.
(a) No Conversion on Certain Mergers. In the event that
the Corporation merges or consolidates with another corporation, or all or
substantially all of the Corporation's capital stock or assets are acquired by
another corporation, and the surviving or acquiring corporation does not issue
shares of its stock to the Corporation's shareholders in connection with the
merger, consolidation or acquisition, then, notwithstanding any other
provision of the Plan to the contrary, no Option may be exercised after the
effective date of the merger, consolidation or acquisition.
<PAGE>
12. Effectiveness and Termination of the Plan.
(a) Effective Date. The Plan shall become effective upon
adoption by the Board. The Plan shall be rescinded and all Options granted
hereunder shall be null and void unless within 12 months from the date of the
adoption of the Plan by the Board it shall have been approved by the holders
of a majority of the outstanding Common Stock present or represented and
entitled to vote on the Plan at a stockholders' meeting.
(b) Termination Date. The Plan shall terminate on the earliest
to occur of (i) the date when all the Common Stock available under the Plan
shall have been acquired through the exercise of Options granted under the
Plan, (ii) 10 years after the date of adoption of the Plan by the Board or
(iii) such other date as the Board may determine.
13. Governing Law. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the State of California.
DATED: December 11, 1998 THE INTERGROUP CORPORATION
/s/ John V. Winfield
Chairman & Chief Executive Officer
<PAGE>
FORM OF PROXY
This Proxy is Solicited on Behalf of the Board of Directors of
THE INTERGROUP CORPORATION
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of The InterGroup Corporation to be held on January
27, 1999 at 2:00 P.M. at the Park Hyatt Los Angeles Hotel, 2151 Avenue of the
Stars, Century City, CA 90067 and the Proxy Statement in connection therewith
each dated December 11, 1998; (b) appoints John V. Winfield and Gary N.
Jacobs, as proxies, each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side of this Form of Proxy, all of the shares of Common Stock of The
Intergroup Corporation held of record by the undersigned on November 30, 1998
at the Annual Meeting of Shareholders to be held on January 27, 1999 or at any
adjournment thereof.
(To be Signed on Reverse Side)
<PAGE>
- - ------------------------------------------------------------------------------
Please mark your
votes as in this
example.
WITHHOLD AUTHORITY
FOR NOMINEE TO VOTE FOR NOMINEE
LISTED AT RIGHT LISTED AT RIGHT
Nominee:
1. Election
of Class B Gary N. Jacobs
Directors ______ ______ William J. Nance
INSTRUCTION: To withhold authority to vote for any individual nominee,
Strike through the nominee's name at right.
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE RETENTION
OF PRICE WATERHOUSE COOPERS LLP
as the independent public accountants
of The InterGroup Corporation. ___ ___ ___
3. PROPOSAL TO APPROVE THE 1998 STOCK
OPTION PLAN FOR NON-EMPLOYEE DIRECTORS. ___ ____ ___
4. PROPOSAL TO APPROVE THE 1998 STOCK
OPTION PLAN FOR SELECTED KEY OFFICERS,
EMPLOYEES AND CONSULTANTS. ___ ___ ___
5. In their discretion , the Proxies are autho-
rized 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 shareholder. If no direction is made, this Proxy
will be voted FOR Proposals 1, 2, 3, 4 AND 5.
Please date, sign, and return this proxy in the enclosed envelope.
SIGNATURE__________________ DATE ______ SIGNATURE__________________DATE_____
Signature if held jointly
NOTE: When shares are held by joint 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.
