SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TRM Copy Centers Corporation
- ---------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Robert A. Bruce
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 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:*
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total free paid:
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/ / Fee paid previously with preliminary materials.
Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
TRM COPY CENTERS CORPORATION
Notice of Annual Meeting of Shareholders
October 22, 1996
To Our Shareholders:
The annual meeting of the shareholders of TRM Copy Centers
Corporation, an Oregon corporation (the "Company"), will be held on
Tuesday, October 22, 1996 at 9 a.m. at the U.S. Bancorp Tower, 41st Floor,
John Elorriaga Auditorium, 111 S.W. Fifth Avenue, Portland, Oregon 97204,
for the following purposes:
1. To elect two members of the Board of Directors for three-year
terms.
2. To approve the Company's 1996 Stock Option Plan.
3. To ratify the appointment by the Board of Directors of KPMG Peat
Marwick LLP as the Company's independent auditors for the current
fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All shareholders are invited to attend the meeting. Holders of record
of the Company's Common Stock at the close of business on September 13,
1996 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Robert A. Bruce
Secretary
Portland, Oregon
September 16, 1996
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the annual
meeting, please promptly sign and date your enclosed proxy and return it in
the postage paid envelope.
A shareholder who completes and returns the proxy and subsequently
attends the meeting may elect to vote in person, since a proxy may be
revoked at any time before it is voted. Retention of the proxy is not
necessary for admission to the meeting.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of TRM Copy
Centers Corporation (the "Company") for use at the annual meeting of
shareholders to be held on Tuesday, October 22, 1996 at 9 a.m. at the U.S.
Bancorp Tower, 41st Floor, John Elorriaga Auditorium, 111 S.W. Fifth
Avenue, Portland, Oregon 97204, and at any adjournments thereof.
The cost of soliciting proxies will be borne by the Company, including
expenses in connection with the preparation and mailing of the proxy
statement, form of proxy and any other material furnished to the
shareholders by the Company in connection with the annual meeting. In
addition to the solicitation of proxies by mail, employees of the Company
may also solicit proxies by telephone and personal contact. The Company has
retained Corporate Investor Communications, Inc. to assist in the
solicitation of proxies from brokers and other nominees at an estimated
cost of $3,000. The Company's Annual Report to Shareholders covering its
fiscal year ended June 30, 1996, which includes financial statements, is
being mailed to shareholders together with these proxy materials on or
about September 17, 1996.
Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before its exercise. The
proxy may be revoked by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later date. The
proxy may also be revoked by affirmatively electing to vote in person while
attending the meeting. However, a shareholder who attends the meeting need
not revoke the proxy and vote in person unless he or she wishes to do so.
All valid proxies will be voted at the meeting in accordance with the
instructions given. A shareholder may strike the names of the persons
designated as proxies on the enclosed proxy and insert names of his or her
own choosing. If no instructions are given, the proxies will be voted for
the election of the nominees for director, to approve the Company's 1996
Stock Option Plan and in favor of the ratification of KPMG Peat Marwick LLP
as the Company's independent auditors. At the meeting, the presence in
person or by proxy of the holders of a majority of the shares issued and
outstanding will constitute a quorum for the transaction of business.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Holders of record of the Company's Common Stock at the close of
business on September 13, 1996 will be entitled to vote on each matter
presented at the annual meeting. On that date, 6,491,291 shares of Common
Stock were issued and outstanding. Each share of Common Stock is entitled
to one vote on every matter submitted at the meeting. The Common Stock does
not have cumulative voting rights.
The following table shows the ownership of the Company's Common Stock
on June 30, 1996 by (i) each person who, to the knowledge of the Company,
beneficially owns more than 5 percent of the outstanding shares, (ii) each
of the Company's directors, (iii) each of the Company's named executive
officers and (iv) the Company's directors and executive officers as a
group.
<TABLE>
<CAPTION>
Shares
Beneficial Owner Address Beneficially Owned (1) Percent
---------------- ------- ------------------ -------
<S> <C> <C> <C>
Frederick O. Paulsell (2) c/o 5208 N.E. 122nd Avenue 912,030 13.9%
Portland, OR 97230-1074
Laifer Capital Management, 45 West 45th Street, 9th Floor 605,350 9.3%
Inc. (3) New York, NY 10036
Wellington Management 75 State Street 599,400 9.2%
Company (4) Boston, MA 02109
- ---------------------------
(footnotes on following page)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficial Owner Address Beneficially Owned (1) Percent
---------------- ------- ------------------ -------
<S> <C> <C> <C>
Edwin S. Chan (5) c/o 5208 N.E. 122nd Avenue 617,076 8.9%
Portland, OR 97230-1074
Marcia W. Zech (6) 3041 60th Avenue, S.E. 480,430 7.4%
Mercer Island, WA 98040
Dimensional Fund 1299 Ocean Avenue, 11th Floor 348,100 5.4%
Advisors, Inc. (7) Santa Monica, CA 90401
Michael D. Simon 279,335 4.1%
Donald L. Van Maren (8) 163,369 2.5%
Sherman M. Coe 147,288 2.3%
Ralph R. Shaw 34,250 *
Robert A. Bruce 30,607 *
James W. Perris 15,794 *
Danial J. Tierney 7,315 *
Directors and executive 2,207,064 29.9%
officers as a group (9
persons)
<FN>
* Represents less than 1 percent of the outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission (the "SEC"), and includes voting
power and dispositive power with respect to shares. Shares are held with
sole voting and dispositive power unless otherwise indicated. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days are deemed outstanding for computing the percentage for
the person holding such options, but are not deemed outstanding for
computing the percentage for any other person. The numbers of shares
that may be obtained upon exercise of options that are currently
exercisable or exercisable within 60 days of June 30, 1996 are as
follows: Mr. Paulsell, 77,500 shares; Mr. Chan, 415,000 shares; Mr.
Simon, 275,000 shares; Mr. Van Maren, 21,000 shares; Mr. Coe, 36,500
shares; Mr. Shaw, 34,250 shares; Mr. Bruce, 25,000 shares; Mr. Perris,
15,000 shares; Mr. Tierney, 7,000 shares; and all executive officers and
directors as a group, 906,250 shares.
(2) The information provided includes 4,000 shares owned by Mr. Paulsell's
wife and minor stepson. The information excludes shares owned by Mr.
Paulsell's children, all of whom are adults. The information excludes
480,430 shares owned by his former wife, Marcia W. Zech. Mr. Paulsell
disclaims beneficial ownership of all such shares.
(3) This information is based upon a Schedule 13D filed with the Securities
and Exchange Commission (the "SEC") on April 3, 1996, reporting that
Laifer Capital Management, Inc. ("Laifer") had (i) sole voting power
with respect to 455,050 shares and shared voting power with respect to
no shares and (ii) sole dispositive power with respect to 404,450
shares and shared dispositive power with respect to 200,900 shares. The
shares beneficially owned by Laifer include 328,050 shares beneficially
owned by Laifer in its capacity as general partner of and investment
adviser to Hilltop Partners, L.P. and 277,300 shares beneficially owned
by Laifer in its capacity as investment adviser to various other
clients.
(4) This information is based upon a Schedule 13G dated February 9, 1996
and filed with the SEC, reporting that Wellington Management Company
had (i) sole voting power with respect to no shares and shared voting
power with respect to 499,900 shares and (ii) sole dispositive power
with respect to no shares and shared dispositive power with respect to
all 599,400 shares.
(5) The information provided includes 30,641 shares owned by Mr. Chan's
wife and minor children.
(6) The information provided excludes shares owned by Mrs. Zech's children
and other relatives, all of whom are adults. The information also
excludes 912,030 shares beneficially owned by her former husband,
Frederick O. Paulsell. Mrs. Zech disclaims beneficial ownership of all
such shares.
(7) This information is based upon a Schedule 13G dated February 7, 1996
and filed with the SEC, reporting that Dimensional Fund Advisors Inc.
had (i) sole voting power with respect to 245,100 shares and shared
voting power with respect to 103,000 shares and (ii) sole dispositive
power with respect to all 348,100 shares.
(8) Mr. Van Maren's shares are held jointly with his wife.
</FN>
</TABLE>
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
three-year terms. The terms of office of Messrs. Simon and Van Maren expire
in 1998. The terms of office of Messrs. Paulsell and Chan expire in 1997.
The terms of office of Messrs. Coe and Shaw expire in 1996.
Messrs. Coe and Shaw are nominated for three-year terms. Descriptions
of the two nominees for election follow. For a description of the
continuing directors, see "Background Information About Continuing
Directors and Executive Officers."
Sherman M. Coe, 53, has served as a director since 1985. He has been
Vice President of Gene Juarez Salons, Inc., a chain of beauty salons, since
1977.
Ralph R. Shaw, 58, was elected to the Board of Directors in 1991. He
previously served as a director of the Company from 1985 through 1986.
Since March 1995, Mr. Shaw has been Co-Chairman of Shaw, Glasgow & Co.,
L.L.C., a venture capital firm. Prior to that and since 1980, he served as
President of Shaw Management Company, an investment counseling firm. Mr.
Shaw is also the general partner of three venture capital firms: Shaw
Venture Partners, formed in 1983; Shaw Venture Partners II, formed in 1987;
and Shaw Venture Partners III, formed in 1994. He serves on the Boards of
Directors of Schnitzer Steel Industries, Inc. and several privately held
companies. During fiscal 1993, Mr. Shaw entered into a Settlement Agreement
with the Securities and Exchange Commission relating to alleged violations
of Section 16(a) of the Securities Exchange Act of 1934 and rules
thereunder due to failure to report transactions in the common stock of two
issuers other than the Company on a timely basis. As part of the Settlement
Agreement, Mr. Shaw must permanently cease and desist from any further
violations of such provisions.
IT IS THE INTENTION OF THE PERSONS NAMED IN THE ACCOMPANYING FORM OF
PROXY TO VOTE FOR THE TWO NOMINEES, UNLESS OTHER INSTRUCTIONS ARE GIVEN.
PROXIES CANNOT BE VOTED FOR MORE THAN TWO NOMINEES. DIRECTORS ARE ELECTED
BY THE VOTE OF A PLURALITY OF THE SHARES CAST IN PERSON OR BY PROXY AT THE
MEETING. ACCORDINGLY, THE TWO NOMINEES RECEIVING THE MOST VOTES AT THE
MEETING WILL BE ELECTED DIRECTOR TO SERVE FOR THREE-YEAR TERMS. Abstentions
and broker non-votes will have no effect on the results of the vote. If any
nominee is unable to stand for election for any reason, proxies will be
voted for the election of a substitute proposed by the Board of Directors.
3
<PAGE>
BACKGROUND INFORMATION ABOUT
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
Frederick O. Paulsell, 57, has served as a director since 1984 and was
elected Chairman of the Board in 1985. Since January 1995, Mr. Paulsell has
been a partner at Olympic Capital Partners, P.L.L.C., a Seattle-based
investment banking firm. From 1992 to 1994, he served as President of
Paulsell & Reed, a Seattle investment firm. From 1987 to 1991, Mr. Paulsell
served as President of Foster, Paulsell & Baker, Inc., also a Seattle
investment firm. Mr. Paulsell serves on the Board of Directors of Price
Costco, Inc. and several privately held companies. He was Chairman of the
Board of Ballard Computer, Inc., a Seattle-based computer hardware and
software retailer that filed bankruptcy in March 1995. He was Chairman of
the Board of Strategic Direct Inc., a direct mail advertising company that
filed for bankruptcy in September 1991. Ballard and Strategic Direct Inc.
are not affiliated in any way with the Company.
Edwin S. Chan, 64, has been a director of the Company since 1985, and
was elected Vice Chairman in February 1995. He served as President and
Chief Executive Officer of the Company from 1985 until retiring as an
executive officer and becoming Vice Chairman. He also served as the
Company's Chief Financial Officer from 1984 until becoming President.
Michael D. Simon, 52, was elected President, Chief Executive Officer
and a director in February 1995. From July 1994 until becoming President,
he served the Company as an outside consultant. Prior to joining TRM and
beginning in 1986, Mr. Simon was employed by Sequent Computer Systems,
Inc., a high performance computer company. His responsibilities over time
at Sequent included executive responsibilities in marketing, sales,
service, legal, corporate development and strategic planning. Most
recently, he was a Senior Vice President at Sequent. Mr. Simon holds a B.S.
degree from Pratt Institute and a Masters degree from Columbia University,
both in electrical engineering.
Donald L. Van Maren, 62, has served as a director of the Company since
1983. Mr. Van Maren is a private investor and has been President of Gems
International, Inc., a gem broker, since 1979. Mr. Van Maren was
self-employed as an optometrist through 1983.
Robert A. Bruce, 39, was elected Chief Financial Officer and Vice
President of Finance of the Company in 1991 and Corporate Secretary in May
1995. He was employed as a certified public accountant by Price Waterhouse,
an accounting firm, from 1980 through October 1991, most recently as a
senior manager in the firm's audit and small business groups. He holds a
B.B.A. degree from the University of Oklahoma and an M.B.A. from the
University of Chicago.
James W. Perris, 39, was elected Chief Operating Officer and Vice
President of Operations of the Company in April 1995. Prior to joining TRM
and since 1991, Mr. Perris was General Manager of Calbag Metals Co., a
privately held manufacturer and broker of nonferrous metals. From 1984
through 1991, he was employed at First Interstate Bank of Oregon in
positions of growing responsibility. Mr. Perris holds a B.A. degree from
Stanford University and an M.B.A. from the University of Oregon.
Danial J. Tierney, 40, was named Vice President of Corporate Sales of
the Company in July 1996. Prior to that and since January 1995, Mr. Tierney
served the Company as Vice President of Sales and Marketing. For 16 years
prior to joining TRM, Mr. Tierney was employed by Spectra Physics Scanning
Systems, Inc. and its affiliates in various locations and in positions of
increasing responsibility, most recently in Eugene, Oregon, as Director of
Marketing. He holds a B.S. degree from the University of California,
Berkeley, and an M.B.A. from the University of Santa Clara.
4
<PAGE>
CORPORATE GOVERNANCE
The Board of Directors has an Executive Committee, a Nominating
Committee, an Audit Committee and a Compensation Committee. Messrs.
Paulsell, Shaw and Simon currently serve on the Executive Committee. The
function of the Executive Committee is to act on an interim basis for the
full Board. Messrs. Chan, as chairman, Paulsell and Simon currently serve
on the Nominating Committee. The Nominating Committee was established
during fiscal 1996 to assist, as needed, with finding qualified candidates
to serve on the Company's Board of Directors. Messrs. Coe, as chairman, and
Van Maren currently serve on the Audit Committee. The Audit Committee has
the responsibility of recommending the Company's independent auditors,
reviewing the scope and results of audits, and overseeing such other
matters relating to the integrity of the Company's finances and financial
statements, as the Committee may consider appropriate. Messrs. Shaw, as
chairman, and Paulsell currently serve on the Compensation Committee. The
functions of the Compensation Committee are to approve the executive
officers' compensation and to administer the Company's Restated 1986 Stock
Incentive Plan, when the full Board is not administering such Plan, and its
Employee Stock Purchase Plan.
The Board of Directors held four meetings during fiscal 1996. The
Executive Committee met three times during the year, while the Nominating
Committee did not meet. The Audit Committee met once and the Compensation
Committee met once. During fiscal 1996, each incumbent director attended at
least 75 percent of all meetings of the Board and Committees on which the
director served, except Sherman M. Coe.
Directors who are not employees of the Company are paid fees of $2,000
per year plus $500 for each Board or Committee meeting attended. Members of
the Executive Committee who are not employees receive an additional annual
fee of $2,000. If Board and Committee meetings are held on the same day,
only one attendance fee is paid. Pursuant to the Company's Restated 1986
Stock Incentive Plan and the proposed 1996 Stock Option Plan (see Proposal
2), each nonemployee director will automatically be granted a nonstatutory
stock option for 5,000 shares of the Company's Common Stock on the date of
each annual shareholder meeting held during the time he or she serves as a
nonemployee director. Each nonemployee director who is serving on the
Executive Committee of the Board will automatically be granted an
additional nonstatutory stock option for 2,500 shares on the date of each
annual shareholder meeting held during the time the director serves as a
member of the Executive Committee. The exercise price for all options
granted to nonemployee directors under the Plan will be the fair market
value of the Company's Common Stock on the date of grant. Each such option
will have a 10-year term and will become fully exercisable on the first
anniversary of the option grant, provided the director is then serving on
the Board and, if applicable, on the Executive Committee.
During fiscal 1996, nonemployee directors received the fees and
automatic stock option grants described in the preceding paragraph. For
serving as Chairman of the Board and as a member of the Executive
Committee, Mr. Paulsell also received $3,000 a month during fiscal 1996.
Mr. Shaw also received $2,500 a month beginning in January 1996 for serving
as a member of the Executive Committee.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid to those persons serving
as Chief Executive Officer of the Company during fiscal 1996 and to certain
other executive officers of the Company.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------------------ ---------------------
Name and Securities Underlying Other
Principal Position Year Salary Bonus Options (#) Compensation (1)
------------------ ---- ------ ----- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Michael D. Simon 1996 $300,000 $138,258 116,000 $3,640
President and Chief 1995 $267,500 (2) -- 300,000 --
Executive Officer
James W. Perris 1996 $110,000 $ 22,500 -- $1,456
Chief Operating Officer 1995 $ 18,333 $ 5,000 75,000 --
and Vice President of
Operations
Robert A. Bruce 1996 $100,000 $ 23,750 25,000 $3,640
Chief Financial Officer 1995 $ 88,500 $ 14,063 50,000 (3) $3,754
and Vice President of 1994 $ 82,500 -- -- $4,901
Finance
Danial J. Tierney 1996 $110,000 $ 12,000 -- $2,438
Vice President of 1995 $ 55,000 $ 7,500 75,000 --
Corporate Sales
<FN>
(1) Reflects contributions by the Company to the Company's Profit Sharing
Retirement Plan.
(2) Includes consulting fees paid from July 1994 until January 31, 1995
and salary after Mr. Simon was elected President and Chief Executive
Officer on February 1, 1995.
(3) Includes an option for 25,000 shares granted at fair market value in
substitution for an option originally granted in 1992.
</FN>
</TABLE>
6
<PAGE>
Stock Option Grants in Last Fiscal Year
- ---------------------------------------
The following table provides information regarding stock options granted to
certain executive officers in 1996.
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------------------
Percent of
Total Potential Realizable Value at
Numbers of Options Assumed Annual Rates of Stock
Shares Granted to Price Appreciation for Option
Underlying Employees in Exercise Term (2)
Options Fiscal Price per Expiration -------------------------------
Name Granted (1) Year Share Date 5% 10%
---- ----------- ------------ --------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Simon 116,000 (3) 59.0% $10.375 3/15/06 $756,875 $1,918,069
Robert A. Bruce 25,000 (4) 12.7% $10.375 3/15/06 $163,120 $ 413,377
<FN>
(1) Under terms of the option agreements, the options are subject to
accelerated vesting in the event of a future change in control of the
Company.
(2) In accordance with rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "option spreads" that
would exist for the respective options based on assumed rates of
annual compound stock price appreciation of 5% and 10% from the date
the options were granted over the full option term.
(3) The option vests 40% the first year, 30% the second year, 20% the
third year and 5% the fourth and fifth years and the option vests in
full on termination without cause, death, disability, or a significant
change in job responsibilities.
(4) The option vests 20% a year over five years from the date of grant.
</FN>
</TABLE>
Option Exercises and Holdings
- -----------------------------
The following table indicates (i) stock options exercised by the executive
officers during the last fiscal year, (ii) the number of shares subject to
exercisable (vested) and unexercisable (unvested) stock options as of June
30, 1996 and (iii) the fiscal year-end value of "in-the-money" unexercised
options.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-The-Money Options
Year End (#) at Fiscal Year End (2)
----------------------------- -------------------------------
Shares Acquired
on Value
Name Exercise (#) Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Simon -- -- 250,000 166,000 $1,770,313 $1,182,750
James W. Perris -- -- 15,000 60,000 $ 71,250 $ 285,000
Robert A. Bruce -- -- 25,000 50,000 $ 163,750 $ 148,750
Danial J. Tierney 8,000 $51,000 7,000 60,000 $ 49,000 $ 420,000
<FN>
(1) Aggregate market value of the shares covered by the option, less the
aggregate price paid by the executive.
(2) Based on the fair market value of the Company's stock as of June 30,
1996. Values are stated on a pretax basis.
</FN>
</TABLE>
7
<PAGE>
Stock Options Repriced In the Last Ten Years
- --------------------------------------------
<TABLE>
<CAPTION>
Length of
Securities Market Price Exercise Original Option
Underlying of Stock at Price at New Term Remaining
Options Time of Time of Exercise at Date of
Name Date Repriced (#) Repricing Repricing Price Repricing
- --------------------- -------- -------------- --------------- -------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Bruce 11/15/94 25,000 $4.13 $6.00 $4.13 83 months
Chief Financial
Officer and Vice
President of
Finance
</TABLE>
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
Compensation Committee
- ----------------------
Most of the actions regarding compensation of executive officers of
the Company in fiscal 1996 were taken by the Compensation Committee of the
Board of Directors (the "Committee"), which is composed of two outside
directors. Pursuant to authority delegated by the Board, the Committee
makes determinations concerning compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company
and is responsible for developing and making recommendations to the Board
of Directors with respect to the Company's executive compensation policies.
During fiscal 1996, the Committee also administered the Company's Restated
1986 Stock Incentive Plan.
Chief Executive Officer Compensation
- ------------------------------------
In January 1995, Michael D. Simon and the Company entered into an
employment letter agreement whereby Mr. Simon was appointed President and
Chief Executive Officer of the Company for the period from February 1, 1995
to September 30, 1996. The agreement provides a base annual salary of
$300,000 and bonus incentive payments based on increases in the price of
the Company's Common Stock through January 1997. In May 1996, Mr. Simon's
employment letter agreement was revised to extend Mr. Simon's employment
until September 30, 2001. The revised agreement provides that Mr. Simon's
base compensation will continue at $300,000 per year and any cash bonuses
for periods beginning after February 1, 1997 will be at the discretion of
the Board of Directors. As a part of the revised agreement, Mr. Simon was
granted options to purchase 116,000 shares at an exercise price of $10.375
(which was the fair market value of the stock on the date of grant). The
revised agreement also provides that Mr. Simon will be granted options to
purchase 59,000 shares of Common Stock with an exercise price equal to the
fair market value of the stock at the date of the 1996 Annual Meeting. The
terms of the revised employment agreement reflect negotiations between the
Company and Mr. Simon and the Committee's evaluation of Mr. Simon's
performance as Chief Executive Officer, including his efforts to enhance
long-term shareholder value and his contributions to improving profits and
revenues and the long-term growth prospects for the Company. The number of
shares granted to Mr. Simon was based on negotiations between the Company
and Mr. Simon and the directors' subjective determination of the number of
shares needed to adequately compensate Mr. Simon and to provide a
significant incentive for him to exert his best efforts on the Company's
behalf and to continue with the Company on a longer-term basis.
8
<PAGE>
Executive Officer Compensation
- ------------------------------
The Company's executive compensation program consists of base salary,
annual cash incentive compensation in the form of discretionary bonuses and
discretionary long-term incentive compensation in the form of stock
options. This program is designed to reflect pay for performance that is
tied to the Company's, as well as individual performance.
The fiscal 1996 salaries established for executive officers other than
the Chief Executive Officer were determined by the Committee after
considering the Company's size and complexities relative to other public
companies. In determining salaries, the Committee took into account job
responsibilities, individual experience and individual performance.
Discretionary bonuses were paid to each executive officer other than
the Chief Executive Officer for fiscal 1996 based on Company and individual
performance.
The Company has a stock option plan in which key employees of the
Company, including executive officers, are eligible to participate. The
Board of Directors believes that the availability of stock incentives is an
important factor in the Company's ability to attract and retain key
employees, to provide an incentive for them to exert their best efforts on
behalf of the Company and to further align their interests with
shareholders. In addition to Mr. Simon's grants, stock options were granted
to Robert A. Bruce during fiscal 1996, as reflected in the Summary
Compensation Table and in the stock option tables.
Section 162(m) of the Internal Revenue Code of 1986 limits to
$1,000,000 per person the amount that the Company may deduct for
compensation paid to any of its most highly compensated officers in any
year after 1993. It is anticipated that the levels of salary and bonus to
be paid by the Company will not exceed that limit.
Compensation Committee Report Submitted By:
Ralph R. Shaw, Chairman
Frederick O. Paulsell
9
<PAGE>
Stock Performance Graph
- -----------------------
The following graph provides a comparison of the cumulative total
shareholder return for the period December 18, 1991 (the date of the
Company's initial public offering) through June 30, 1996 for (i) the
Company's Common Stock, (ii) the Nasdaq Stock Market (US) and (iii) the
Nasdaq Retail Trade Index, in each case assuming the investment of $100 on
December 18, 1991 and the reinvestment of any dividends.
[Graphic line chart depicting performance]
<TABLE>
<CAPTION>
=================================================================================================================================
12/18/91 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/31/94 6/30/95 12/31/95 6/30/96
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TRM 100.000 155.882 152.941 141.176 132.353 67.647 61.765 76.471 123.529 130.882
- ---------------------------------------------------------------------------------------------------------------------------------
Nasdaq (US) 100.000 106.277 128.722 133.653 147.763 134.931 144.437 180.108 204.244 231.229
- ---------------------------------------------------------------------------------------------------------------------------------
Nasdaq Retail 100.000 90.964 103.435 96.657 109.145 96.221 99.437 108.348 109.614 131.767
=================================================================================================================================
</TABLE>
10
<PAGE>
PROPOSAL 2
APPROVAL OF 1996 STOCK OPTION PLAN
In 1986, the Company adopted the 1986 Stock Incentive Plan (the "1986
Plan"). The 1986 Plan had a 10 year term, which expired on September 9,
1996.
Under the 1986 Plan, the Company initially reserved 1,000,000 shares
of Common Stock for issuance. The 1986 Plan was amended and restated in
1993 to, among other changes, add an additional 300,000 shares. The Board
of Directors of the Company believes that the availability of stock options
is an important factor in the Company's ability to attract and retain
qualified key employees and to provide an incentive for them to exert their
best efforts on behalf of the Company. As of August 1, 1996, 216,950 shares
of stock had been issued under the 1986 Plan upon exercise of stock
options, 1,083,050 shares were subject to outstanding options and no shares
were available for future grants. In August 1996 the Board of Directors
adopted the 1996 Stock Option Plan (the "1996 Plan"), subject to
shareholder approval, and reserved 700,000 shares for issuance upon
exercise of options granted under the 1996 Plan.
Certain provisions of the 1996 Plan are summarized below. The complete
text of the 1996 Plan, as proposed, is attached to this proxy statement as
Appendix A.
Description of the 1996 Plan
- ----------------------------
Eligibility. All employees, consultants, independent contractors,
officers and directors of the Company and its subsidiaries are eligible to
participate in the 1996 Plan.
Administration. The 1996 Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"), which will designate
from time to time the individuals to whom options are granted under the
1996 Plan, the number of shares subject to options and all other terms and
conditions of the grants. Subject to the provisions of the 1996 Plan, the
Committee may adopt and amend rules and regulations relating to the
administration of the 1996 Plan. Only the Board of Directors may amend,
modify or terminate the 1996 Plan.
Shares Available. The 1996 Plan permits the grants of incentive stock
options and nonstatutory stock options. If an option granted under the 1996
Plan expires, terminates or is cancelled, the shares again become available
for issuance under the Plan. 700,000 shares of Common Stock are available
for grant under the 1996 Plan. In addition, shares available for grant
under the 1986 Plan or subject to outstanding options under the 1986 Plan
on the effective date of the 1996 Plan and are not issued under the 1986
Plan due to termination or cancellation of such options shall be available
for grant under the 1996 Plan.
Term of Plan. The 1996 Plan will continue until all shares available
for issuance under the plan have been issued and all restrictions on such
shares have lapsed. The Board of Directors may suspend or terminate the
1996 Plan at any time.
Stock Options. The Committee will determine the person to whom options
are granted, the option price, the number of shares subject to each option,
the period of each option and the times at which options may be exercised
and whether the option is an Incentive Stock Option ("ISO"), as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
or an option other than an ISO (a "Nonstatutory Stock Option" or "NSO"). If
the option is an ISO, the option price cannot be less than the fair market
value of the Common Stock on the date preceding the date of grant. If an
optionee of an ISO at the time of grant owns stock possessing more than 10%
of the combined voting power of the Company, the option price may not be
less than 110% of the fair market value of the Common Stock on the date
preceding the date of grant. If the option is an NSO, the option price
cannot be less than 100% of the fair market value of the Common Stock on
the date preceding the date of grant. The fair market value of such shares
shall be deemed to be the closing price of the Common Stock as reported in
The Wall Street Journal on the valuation date, or if there has been no sale
on that date, on the last preceding date
11
<PAGE>
on which a sale occurred, or such other reported value of the Common Stock,
or average closing prices for a period of up to 10 trading dates including
or preceding the valuation date, as shall be specified by the Committee. No
ISO may be granted on or after the tenth anniversary of the date that the
Plan was adopted by the Board of Directors. No employee may be granted
options for more than an aggregate of 300,000 shares of Common Stock in any
calendar year. The aggregate fair market value, on the date of the grant,
of the stock for which ISOs are exercisable for the first time by an
employee during any calendar year may not exceed $100,000. The Committee
may not reprice outstanding options. No monetary consideration is paid to
the Company upon the granting of options. On August 1, 1996, the closing
price of the Common Stock of the Company on the Nasdaq National Market
System was $11 per share.
Options granted under the 1996 Plan generally continue in effect for
the period fixed by the Committee, except that ISOs are not exercisable
after the expiration of 10 years from the date of grant or five years in
the case of 10% shareholders. Options are exercisable in accordance with
the terms of an option agreement entered into at the time of grant and,
except as otherwise determined by the Committee with respect to a NSO
granted to a person who is neither an officer nor a director of the
Company, are nontransferable except on death of a holder or pursuant to a
qualified domestic relations order. Options may be exercised only while an
optionee is employed by or in the service of the Company or a subsidiary or
within 12 months following termination of employment by reason of death of
physical disability or three months following termination for any other
reason. The 1996 Plan provides that the Committee may extend the exercise
period for any period up to the expiration date of the option and may
increase the number of shares for which the option may be exercised up to
the total number underlying the option. The purchase price for each share
purchased pursuant to exercise of options must be paid in cash, or, with
the consent of the Committee, in whole or in part, in shares of Common
Stock valued at fair market value. Upon the exercise of an option, the
number of shares subject to the option and the number of shares available
under the 1996 Plan for future option grants are reduced by the number of
shares with respect to which the option is exercised, less any shares
surrendered in payment or withheld to satisfy withholding obligations.
Stock Option Grants to Nonemployee Directors. Each Nonemployee
Director automatically receives annual grants of options to purchase 5,000
shares of Common Stock at the close of each annual meeting of shareholders
and each Nonemployee Director who is a member of the Executive Committee
receives an additional option to purchase 2,500 shares. Options granted to
Nonemployee Directors have an exercise price equal to 100% of fair market
value on the date of grant and generally are governed by the terms
discussed above, except that the options become exercisable one year from
the date of grant and expire 10 years after the date of grant. "Nonemployee
Director" is a director who is not an employee of the Company or any
subsidiary. Nonemployee Directors are eligible to receive other grants
under the 1996 Plan.
Foreign Qualified Option Grants. Options under the 1996 Plan may be
granted to eligible persons residing in foreign jurisdictions. The
Committee may adopt such supplements to the 1996 Plan as may be necessary
to comply with the applicable laws of such foreign jurisdictions and to
afford participants favorable treatment under such laws except that no
grant shall be granted under any such supplement with terms which are more
beneficial to the participants than the terms permitted by the 1996 Plan.
Changes in Capital Structure. The 1996 Plan provides that if the
outstanding Common Stock of the Company is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
recapitalization, stock split or certain other transactions, appropriate
adjustment will be made by the Committee in the number and kind of shares
available for grants under the Plan. In addition, the Committee will make
appropriate adjustments to outstanding options. In the event of dissolution
of the Company or a merger, consolidation or plan of exchange affecting the
Company, in lieu of the foregoing treatment for options, the Committee may,
in its sole discretion, provide a 30-day period prior to such event during
which optionees shall have the right to exercise options in whole or in
part without any limitation on exercisability and upon the expiration of
such 30-day period all unexercised options shall immediately terminate.
12
<PAGE>
Amendments. The Board of Directors may at any time amend the 1996
Plan, without shareholder approval, in such respects as it shall deem
advisable because of changes in the law while the 1996 Plan is in effect or
for any other reason. Current Nasdaq rules and IRS rules would require
shareholder approval of certain amendments to the 1996 Plan.
Tax Consequences. Certain options authorized to be granted under the
1996 Plan are intended to qualify as ISOs for federal income tax purposes.
Under federal income tax law currently in effect, the optionee will
recognize no income upon grant or upon a proper exercise of the ISO. If an
employee exercises an ISO and does not dispose of any of the option shares
within two years following the date of grant and within one year following
the date of exercise, then any gain realized upon subsequent disposition of
the shares will be treated as income from the sale or exchange of a capital
asset. If an employee disposes of shares acquired upon exercise of an ISO
before the expiration of either the one-year holding period or the two-year
waiting period, any amount realized will be taxable as ordinary
compensation income in the year of such disqualifying disposition to the
extent that the lesser of the fair market value of the shares on the
exercise date or the fair market value of the shares on the date of
disposition exceeds the exercise price. The Company will not be allowed any
deduction for federal income tax purposes at either the time of the grant
or exercise of an ISO. Upon any disqualifying disposition by an employee,
the Company will generally be entitled to a deduction to the extent the
employee realized ordinary income.
Certain options authorized to be granted under the 1996 Plan will be
treated as NSOs for federal income tax purposes. Under federal income tax
law presently in effect, no income is realized by the grantee of an NSO
pursuant to the 1996 Plan until the option is exercised. At the time of
exercise of an NSO, the optionee will realize ordinary compensation income,
and the Company will generally be entitled to a deduction, in the amount by
which the market value of the shares subject to the option at the time of
exercise exceeds the exercise price. The Company's deduction is conditioned
upon withholding on the income amount. Upon the sale of shares acquired
upon exercise of an NSO, the excess of the amount realized from the sale
over the market value of the shares on the date of exercise will be
taxable.
Section 162(m) of the Code, as adopted in 1993, limits to $1,000,000
per person the amount that the Company may deduct for compensation paid to
any of its most highly compensated officers in any year after 1993. Under
the regulations, compensation received through the exercise of an option
will not be subject to the $1,000,000 limit if the option and the plan
pursuant to which it is granted meet certain requirements of the exception
for performance-based compensation. One such requirement is that
shareholders approve per-employee limits on the number of shares as to
which options may be granted each year. Other requirements of the exception
for performance-based compensation are that the option be granted by a
committee of at least two outside directors and that the exercise price of
the option or the stock appreciation right be not less than fair market
value of the Common Stock on the date of grant. The Committee is composed
of two outside directors and, thus, meets the requirements of the proposed
regulations. The Company believes that the options will be in compliance
with the above requirements.
Proposed Grants
- ---------------
In accordance with the terms of Mr. Simon's revised employment
agreement, it is contemplated that of the shares reserved for the 1996
Plan, 59,000 option shares will be granted to Michael D. Simon at an
exercise price equal to fair market value of the stock on the date of the
1996 Annual Meeting.
Recommendation by the Board of Directors
- ----------------------------------------
The proposal to approve the 1996 Stock Option Plan must be approved by
the holders of at least a majority of the outstanding shares of Common
Stock present, or represented by proxy, and entitled to vote on the matter
at the annual meeting. Abstentions have the effect of "no" votes in
determining whether the amendment is approved. Broker nonvotes are counted
for purposes of determining whether a quorum exists at the annual meeting
but are not counted and have no effect on the results of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE 1996 STOCK OPTION PLAN.
13
<PAGE>
PROPOSAL 3
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as
independent auditors for the Company for the fiscal year ending June 30,
1997. The selection is being submitted to the shareholders for their
approval. This firm has served as the Company's auditors since 1987. The
decision of the Board of Directors is based on the recommendation of the
Audit Committee. Representatives of KPMG Peat Marwick LLP are expected to
be present at the annual meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Reports of all transactions in the Company's Common Stock by insiders
are required to be filed with the SEC pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In fiscal
1996, Mr. Van Maren was late in filing one report on Form 4 in connection
with one transaction. Stock transactions relating to stock owned by Mr.
Paulsell's wife and minor stepson were reported late for fiscal 1996 (three
reports on Form 4 in connection with three transactions) and for fiscal
1995 (three reports on Form 4 in connection with seven transactions).
SHAREHOLDER PROPOSALS
A proposal by a shareholder for inclusion in the Company's proxy
statement and form of proxy for the 1997 annual meeting of shareholders
must be received by the Company at 5208 N.E. 122nd Avenue, Portland, Oregon
97230 on or before May 20, 1997 in order to be eligible for such inclusion.
OTHER MATTERS
The notice of annual meeting of shareholders provides for transaction
of such other business as may properly come before the meeting. As of the
date of this proxy statement, the Board of Directors has been advised of no
matters to be presented for discussion at the meeting. However, the
enclosed proxy gives discretionary authority to the persons named in the
proxy in the event that any other matters should be properly presented to
the shareholders.
Portland, Oregon
September 16, 1996
14
<PAGE>
APPENDIX A
TRM COPY CENTERS CORPORATION
1996 STOCK OPTION PLAN
1. PURPOSE. The purpose of this 1996 Stock Option Plan (the "Plan") is
to enable TRM Copy Centers Corporation (the "Company") to attract and
retain the services of selected key employees, consultants, independent
contractors, officers and directors of the Company.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below
and in paragraph 9, the shares to be offered under the Plan shall consist
of Common Stock of the Company, and the total number of shares of Common
Stock that may be issued under the Plan shall not exceed 700,000 shares
plus any shares that were available for grant or subject to outstanding
options under the Company's Restated 1986 Stock Incentive Plan (the "1986
Plan") on the effective date of the Plan and are not issued under the 1986
Plan due to termination or cancellation of such options. If an option
granted under the Plan expires, terminates or is cancelled, the unissued
shares subject to such option shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) Effective Date. The Plan shall become effective when adopted by
the Board of Directors; provided, however, that prior to shareholder
approval of the Plan, any grants shall be subject to and conditioned on
approval of the Plan by a majority of the votes cast at a meeting of
shareholders at which a quorum is present. Options may be granted under the
Plan at any time after the effective date and before termination of the
Plan.
(b) Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions
on such shares have lapsed. The Board of Directors may suspend or terminate
the Plan at any time except with respect to options then outstanding under
the Plan. Termination shall not affect any outstanding options.
4. ADMINISTRATION.
(a) Except as specified in paragraph 4(b) the Plan shall be
administered by the Board of Directors of the Company, which shall
determine and designate from time to time the individuals to whom option
grants shall be made and all terms and conditions of the grants. Subject to
the provisions of the Plan, the Board of Directors may from time to time
adopt and amend rules and regulations relating to administration of the
Plan, accelerate any exercise date, provide for automatic acceleration upon
the occurrence of specified events, waive or modify any restriction
applicable to grants (except those restrictions imposed by law) and make
all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The
interpretation and construction of the provisions of the Plan and related
agreements by the Board of Directors shall be final and conclusive. The
Board of Directors may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any related agreement in the
manner and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final judge of such expediency.
(b) The Board of Directors, if it so determines, may delegate to a
committee of the Board of Directors constituting of one or more members
(the "Committee") any or all authority for administration of the Plan;
provided, however, that only the Board of Directors may amend or terminate
the Plan as provided in paragraphs 3 and 11. If a Committee is appointed,
all references to the Board of Directors in the Plan shall mean and relate
to such Committee except as limited by the immediately preceding sentence
and unless the context requires otherwise.
A-1
<PAGE>
5. TYPES OF AWARDS; ELIGIBILITY; LIMITATIONS ON CERTAIN AWARDS. The
Board of Directors may, from time to time, take the following actions,
separately or in combination, under the Plan: (i) grant Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), as provided in paragraphs 6(a) and 6(b); (ii) grant
options other than Incentive Stock Options ("Nonstatutory Stock Options")
as provided in paragraphs 6(a) and 6(c); and (iii) grant foreign qualified
options as provided in paragraph 7. Any such grants may be made to
employees, consultants, independent contractors, officers and directors,
provided, however, that only employees of the Company shall be eligible to
receive Incentive Stock Options under the Plan. Except as for options
granted pursuant to paragraph 8, the Board of Directors shall select the
individuals to whom grants shall be made and shall specify the action taken
with respect to each individual to whom a grant is made. The Board of
Directors may not reprice outstanding options, other than adjustments made
pursuant to paragraph 9. No individual may be granted options under the
Plan for more than an aggregate of 300,000 shares of Common Stock in any
calendar year.
6. OPTION GRANTS.
(a) General Rules Relating to Options.
(i) Terms of Grant. With respect to each option grant (except
for options granted pursuant to paragraph 8), the Board of
Directors shall determine the number of shares subject to the
option, the option price, the period of the option, the time or
times at which the option may be exercised and whether the
option is an Incentive Stock Option or a Nonstatutory Stock
Option.
(ii) Exercise of Options. Except as provided in paragraphs
6(a)(iv) and 8 or as determined by the Board of Directors, no
option granted under the Plan may be exercised unless at the
time of such exercise the optionee is employed by or in the
service of the Company or any subsidiary of the Company and
shall have been so employed or provided such service
continuously since the date such option was granted. Absence on
leave or on account of illness or disability under rules
established by the Board of Directors shall not, however, be
deemed an interruption of employment or service for this
purpose. Unless otherwise determined by the Board of Directors,
vesting of options shall not continue during an absence on
leave (including an extended illness) or on account of
disability. Except as provided in paragraphs 6(a)(iv), 8 and 9,
options granted under the Plan may be exercised from time to
time over the period stated in each option in such amounts and
at such times as shall be prescribed by the Board of Directors,
provided that options shall not be exercised for fractional
shares. Unless otherwise determined by the Board of Directors,
if the optionee does not exercise an option in any one year
with respect to the full number of shares to which the optionee
is entitled in that year, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any
subsequent year during the term of the option.
(iii) Nontransferability. Each Incentive Stock Option and,
unless otherwise determined by the Board of Directors, each
other option granted under the Plan by its terms shall be
nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the
optionee's domicile at the time of death, and each option by
its terms shall be exercisable during the optionee's lifetime
only by the optionee; provided, however, that a Nonstatutory
Stock Option shall also be transferable pursuant to a qualified
domestic relations order as defined under the Code or Title I
of the Employee Retirement Income Security Act.
A-2
<PAGE>
(iv) Termination of Employment or Service.
(A) General Rule. Unless otherwise determined by the Board
of Directors, except as provided in paragraph 8, in the event the
employment or service of the optionee with the Company or a
subsidiary terminates for any reason other than because of physical
disability or death as provided in subparagraphs 6(a)(iv)(B) and
(C), the option may be exercised at any time prior to the
expiration date of the option or the expiration of three months
after the date of such termination, whichever is the shorter
period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(B) Termination Because of Physical Disability. Unless
otherwise determined by the Board of Directors, except as provided
in paragraph 8, in the event of the termination of employment or
service because of physical disability (within the meaning of
Section 22(e)(3) of the Code), the option may be exercised at any
time prior to the expiration date of the option or the expiration
of 12 months after the date of such termination, whichever is the
shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of such termination.
(C) Termination Because of Death. Unless otherwise
determined by the Board of Directors, except as provided in
paragraph 8, in the event of the death of an optionee while
employed by or providing service to the Company or a subsidiary,
the option may be exercised at any time prior to the expiration
date of the option or the expiration of 12 months after the date of
such death, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date
of such termination and only by the person or persons to whom such
optionee's rights under the option shall pass by the optionee's
will or by the laws of descent and distribution of the state or
country of domicile at the time of death.
(D) Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or at any
time thereafter, may extend the 90-day and 12-month exercise
periods any length of time not later than the original expiration
date of the option, and may increase the portion of an option that
is exercisable, subject to such terms and conditions as the Board
of Directors may determine.
(E) Failure to Exercise Option. To the extent that the
option of any deceased optionee or of any optionee whose employment
or service terminates is not exercised within the applicable
period, all further rights to purchase shares pursuant to such
option shall cease and terminate.
(v) Purchase of Shares. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an
option granted under the Plan only upon receipt by the Company
of notice in writing from the optionee of the optionee's
intention to exercise, specifying the number of shares as to
which the optionee desires to exercise the option and the date
on which the optionee desires to complete the transaction,
which shall not be more than 30 days after receipt of the
notice, and if required in order to comply with the Securities
Act of 1933, as amended, containing a representation that it is
the optionee's present intention to acquire the shares for
investment and not with a view to distribution. On or before
the date specified for completion of the purchase of shares
pursuant to an option, the optionee must have paid the Company
the full purchase price of such shares in cash or, with the
consent of the Board of Directors, in whole or in part, in
Common Stock of the Company valued at fair market value. The
fair market value of Common Stock provided in payment of the
purchase price shall
A-3
<PAGE>
be the closing price of the Common Stock as reported in The
Wall Street Journal on the day preceding the date that the
option is exercised, or such other reported value of the Common
Stock as shall be specified by the Board of Directors. No
shares shall be issued until full payment therefor has been
made. Each optionee who has exercised an option shall
immediately upon notification of the amount due, if any, pay to
the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If
additional withholding is or becomes required beyond any amount
deposited before delivery of the certificates, the optionee
shall pay such amount to the Company on demand. If the optionee
fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the
optionee, including salary, subject to applicable law. With the
consent of the Board of Directors an optionee may satisfy this
obligation, in whole or in part, by having the Company withhold
from the shares to be issued upon the exercise that number of
shares that would satisfy the withholding amount due or by
delivering Common Stock to the Company to satisfy the
withholding amount. Upon the exercise of an option, the number
of shares reserved for issuance under the Plan shall be reduced
by the number of shares issued upon exercise of the option.
(b) Incentive Stock Options. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(i) Limitation on Amount of Grants. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair
market value, on the date preceding the date of grant, of the
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any
calendar year under the Plan and under any other incentive
stock option plan (within the meaning of Section 422 of the
Code) of the Company or any parent or subsidiary of the Company
exceeds $100,000.
(ii) Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an
employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of any
parent or subsidiary of the Company only if the option price is
at least 110 percent of the fair market value of the Common
Stock subject to the option on the date preceding the date it
is granted, as described in paragraph 6(b)(iv), and the option
by its terms is not exercisable after the expiration of five
years from the date it is granted.
(iii) Duration of Options. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall
continue in effect for the period fixed by the Board of
Directors, except that no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the date it
is granted.
(iv) Option Price. The option price per share shall be
determined by the Board of Directors at the time of grant.
Except as provided in paragraph 6(b)(ii), the option price
shall not be less than 100 percent of the fair market value of
the Common Stock covered by the Incentive Stock Option at the
date the option is granted. The fair market value shall be
deemed to be the closing price of the Common Stock as reported
in The Wall Street Journal on the day preceding the date the
option is granted, or if there has been no sale on that date,
on the last preceding date on which a sale occurred, or such
other value of the Common Stock as shall be specified by the
Board of Directors.
A-4
<PAGE>
(v) Limitation on Time of Grant. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the date
the Plan was adopted by the Board of Directors.
(vi) Conversion of Incentive Stock Options. The Board of
Directors may at any time without the consent of the optionee
convert an Incentive Stock Option to a Nonstatutory Stock
Option.
(vii) Limit on Shares. Subject to adjustment as provided in
paragraph 9, the total number of Common Shares that may be
issued under the Plan upon exercise of Incentive Stock Options
shall not exceed 700,000 plus up to 200,000 shares that may
become available from the 1986 Plan.
(c) Nonstatutory Stock Options. Nonstatutory Stock Options, other
than options granted pursuant to paragraph 8, shall be subject to the
following additional terms and conditions:
(i) Option Price. The option price for Nonstatutory Stock
Options shall be determined by the Board of Directors at the
time of grant and may be any amount determined by the Board of
Directors not less than 100% of the fair market value in the
date preceding the date of grant. The fair market value of such
shares shall be deemed to be the closing price of the Common
Stock as reported in The Wall Street Journal on the valuation
date, or if there has been no sale on that date, on the last
preceding date on which a sale occurred, or such other reported
value of the Common Stock, or average closing prices for a
period of up to 10 trading dates including or preceding the
valuation date, as shall be specified by the Board of
Directors.
(ii) Duration of Options. Nonstatutory Stock Options granted
under the Plan shall continue in effect for the period fixed by
the Board of Directors.
7. FOREIGN QUALIFIED OPTION GRANTS. Options under the Plan may be
granted to such officers and employees of the Company and its subsidiaries
and such other persons described in paragraph 1 residing in foreign
jurisdictions as the Board of Directors may determine from time to time.
The Board of Directors may adopt such supplements to the Plan as may be
necessary to comply with the applicable laws of such foreign jurisdictions
and to afford participants favorable treatment under such laws; provided,
however, that no option shall be granted under any such supplement with
terms which are more beneficial to the participants than the terms
permitted by the Plan.
8. OPTION GRANTS TO NONEMPLOYEE DIRECTORS.
(a) Grants to Nonemployee Directors. Immediately after the close of
each annual shareholder meeting (commencing with the 1996 annual meeting),
each person then serving as a Nonemployee Director, including any such
person who is elected at such meeting, shall automatically be granted a
Nonstatutory Stock Option to purchase 5,000 shares of Stock. A "Nonemployee
Director" is a director of the Company who is not an employee of the
Company or of any parent or subsidiary of the Company on the date the
option is granted.
(b) Additional Grants to Nonemployee Directors Who Serve on
Executive Committee. Immediately after the close of each annual shareholder
meeting (commencing with the 1996 annual meeting), each person who is then
serving as a Nonemployee Director and who also is serving on the Executive
Committee of the Board of Directors shall automatically be granted a
Nonstatutory Stock Option to purchase an additional 2,500 shares of Stock.
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(c) Terms of Options. The exercise price for options granted under
this paragraph 8 shall be the fair market value of the shares covered by
the option on the date preceding the date of grant, determined pursuant to
paragraph 6(b)(iv). Each such option shall have a 10-year term from the
date of grant, unless earlier terminated as provided in 6(a)(iv). Each such
option shall become fully exercisable one year after the date of grant,
subject to earlier exercise pursuant to paragraph 9. If an optionee ceases
to be a director of the Company for any reason, including death or
disability, the exercise of the option shall be subject to 6(a)(iv).
Options may be exercised in accordance with paragraph 6. Options granted
under this paragraph 8 shall be governed by all other applicable provisions
of the Plan.
9. CHANGES IN CAPITAL STRUCTURE. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of
the Company or of another corporation by reason of any reorganization,
merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable
in shares, appropriate adjustment shall be made by the Board of Directors
in the number and kind of shares available for grants under the Plan. In
addition, the Board of Directors shall make appropriate adjustment in the
number and kind of shares as to which outstanding options or portions
thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. Notwithstanding the foregoing, the Board of Directors shall
have no obligation to effect any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from
any adjustment may be disregarded or provided for in any manner determined
by the Board of Directors. Any such adjustments made by the Board of
Directors shall be conclusive. In the event of dissolution of the Company
or a merger, consolidation or plan of exchange affecting the Company, in
lieu of providing for options as provided above in this paragraph 9 or in
lieu of having the options continue unchanged, the Board of Directors, may,
in its sole discretion, provide a 30-day period prior to such event during
which optionees shall have the right to exercise options in whole or in
part without any limitation on exercisability and upon the expiration of
such 30-day period all unexercised options and stock appreciation rights
shall immediately terminate.
10. CORPORATE MERGERS, ACQUISITIONS, ETC. The Board of Directors may
also grant options under the Plan having terms, conditions and provisions
that vary from those specified in this Plan provided that any such awards
are granted in substitution for, or in connection with the assumption of,
existing options granted by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation to which the
Company or a subsidiary is a party.
11. AMENDMENT OF PLAN. The Board of Directors may at any time, and
from time to time, modify or amend the Plan in such respects as it shall
deem advisable because of changes in the law while the Plan is in effect or
for any other reason. Except as provided in paragraphs 6(a)(iv) and 9
however, no change in an option already granted shall be made without the
written consent of the holder of such award. Current Nasdaq rules and IRS
rules would require shareholder approval of certain amendments to the 1996
Plan.
12. APPROVALS. The obligations of the Company under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take
steps required by state or federal law or applicable regulations, including
rules and regulations of the Securities and Exchange Commission and any
stock exchange on which the Company's shares may then be listed, in
connection with the grants under the Plan. The foregoing notwithstanding,
the Company shall not be obligated to issue or deliver Common Stock under
the Plan if such issuance or delivery would violate applicable state or
federal securities laws.
13. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere
in any way with the right of the Company or any subsidiary by whom such
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employee is employed to terminate such employee's employment at any time,
for any reason, with or without cause, or to decrease such employee's
compensation or benefits, or (ii) confer upon any person engaged by the
Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.
14. RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock
until the date of issue to the recipient of a stock certificate for such
shares. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
15. APPLICABLE LAW. The law of the State of Oregon will govern all
matters relating to this Plan except to the extent it is superseded by the
laws of the United States.
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TRM COPY CENTERS CORPORATION
5208 N.E. 122nd Avenue - Portland, Oregon 97230
PROXY - SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
1996 ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 22, 1996
The undersigned hereby appoints Frederick O. Paulsell and Michael
D. Simon, and each of them, as proxies with full power of substitution,
and authorizes them to represent and to vote on behalf of the
undersigned all shares which the undersigned would be entitled to vote
if personally present at the 1996 Annual Meeting of Shareholders of TRM
COPY CENTERS CORPORATION to be held on October 22, 1996, and any
adjournments thereof, with respect to the following:
1. ELECTION OF DIRECTORS
Sherman M. Coe and Ralph R. Shaw to serve for three-year terms;
/ / FOR ALL NOMINEES
/ / WITHHOLD ALL NOMINEES
Instructions: To withhold authority to vote for any individual
nominee, place an "X" in this box / / and strike a line through
the nominee's name listed above.
2. APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE COMPANY
/ / FOR / / AGAINST / / ABSTAIN
................................................................................
Either or both of the proxies (or substitutes) present at the meeting
may exercise all powers granted hereby.
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 PROPOSAL 1, NOMINEES FOR DIRECTOR,
FOR PROPOSAL 2, APPROVAL OF 1996 STOCK OPTION PLAN AND FOR PROPOSAL 3,
APPROVAL OF THE APPOINTMENT OF AUDITORS. IN ADDITION, THE PROXIES MAY
VOTE AT THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
Dated: _______________________, 1996
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(Signature or Signatures)
Please date and sign above exactly as your name or names appear
hereon. If more than one name appears, all should sign. Joint owners
should each sign personally. Corporate proxies should be signed in full
corporate name by an authorized officer and attested. Persons signing
in a fiduciary capacity should indicate their full title and authority.
