AMPLICON, INC.
5 Hutton Centre Drive, Suite 500
Santa Ana, CA 92707
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 29, 1999
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of
Directors of Amplicon, Inc. (the "Company" or "Amplicon") for use
at the Company's Annual Meeting of Shareholders to be held at the
Company's corporate offices at 5 Hutton Centre Drive, Suite 500,
Santa Ana, California on Friday, October 29, 1999, 10:00 a.m.,
local time, and at any and all adjournments thereof. All shares
represented by each properly executed, unrevoked proxy received
in time for the Annual Meeting will be voted in the manner
specified therein. Where no specification is made on a properly
executed and returned proxy, and unless otherwise indicated in
this proxy statement, the shares will be voted FOR the election
of all nominees for Directors named in the proxy. Any shareholder
has the power to revoke his or her proxy at any time before the
Annual Meeting. A proxy may be revoked by delivering a written
notice of revocation to the Secretary of the Company, by a
subsequent proxy executed by the person executing the proxy and
presented to the Annual Meeting or by attendance at the Annual
Meeting and voting in person by the person executing the proxy.
This Proxy Statement is being mailed to the Company's
shareholders on or about October 11, 1999. The solicitation of
proxies will be made by mail and expenses will be paid by the
Company, and will include forwarding solicitation materials
regarding the meeting to beneficial owners of the Company's
Common Stock. Further solicitation of proxies may be made by
telephone or oral communication with some shareholders. All such
further solicitation will be made by the Company's regular
employees who will not receive additional compensation for that
solicitation. The mailing address of the Company's principal
executive office is 5 Hutton Centre Drive, Suite 500, Santa Ana,
California 92707.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 11,721,218 shares of the
Company's Common Stock outstanding at the close of business on
September 24, 1999, the record date with respect to this
solicitation, will be entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. In order to
constitute a quorum for the conduct of business at the Annual
Meeting, a majority of the outstanding shares of Common Stock of
the Company entitled to vote at the meeting must be represented
in person or by proxy at the Meeting. Shares represented by
proxies that reflect abstentions or "broker non-votes" (shares
held by a broker or nominee which are represented at the Meeting,
but with respect to which the broker or nominee is not empowered
to vote on a particular proposal) will be counted as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions are counted in tabulations of
the votes cast on proposals presented to shareholders, and
therefore will have the same effect as a negative vote, whereas
broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
No shareholder will be entitled to cumulate votes (i.e.,
cast for any candidate for election to the Board of Directors, a
number of votes greater than the number of the shareholders'
shares) unless the names of the candidate or candidates for whom
votes will be cumulated have been placed in nomination prior to
the voting and the shareholder has given notice at the meeting,
prior to voting, of the shareholder's intention to cumulate
votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates who have
been nominated. If voting for directors is conducted by
cumulative voting, each share will be entitled to a number of
votes equal to the number of directors to be elected and
<PAGE>
the votes may be cast for a single candidate or may be
distributed among two or more candidates in such proportions as
the shareholder may determine. In the event of cumulative
voting, the proxy holders intend to distribute the votes
represented by the proxies solicited hereby in such proportions
as they see fit. If the voting is not conducted by cumulative
voting, each share will be entitled to one vote and the holders
of the majority of the shares voting at the meeting will be able
to elect all of the directors if they choose to do so. The
candidates receiving the highest number of votes, up to the
number of directors to be elected, will be elected. On all other
matters, each share is entitled to one vote.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of September 24, 1999,
certain information as to the number of shares of the Company's
Common Stock beneficially owned by each person who is known by
the Company to beneficially own more than five percent of the
outstanding shares of the Company's Common Stock and by all
directors and officers as a group.
<TABLE>
<CAPTION>
Amount of the Percent of the
Name and Address of Company's Common Stock Company's Common Stock
Beneficial Owners Beneficially Owned Beneficially Owned
- ------------------- ------------------------ ------------------------
<S> <C> <C>
Patrick E. Paddon 6,545,578 (1,2) 54.4%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Glen T. Tsuma 1,356,772 11.6%
c/o Amplicon, Inc.
5 Hutton Centre Drive
Santa Ana, CA 92707
Donald P. Moriarty 1,087,650 9.3%
c/o McGrath, Doyle & Phair
150 Broadway
New York, NY 10038
Wellington Management Company 649,300 (3) 5.5%
75 State Street
Boston, MA 02109
Goldman Sachs Group 598,800 5.1%
85 Broad Street
New York, NY 10004
All Directors and 8,085,125 (2,4) 66.3%
Officers as a Group
(6 persons)
- ----------------------
(1) Includes options to purchase 300,000 shares which are
exercisable within 60 days of September 24, 1999.
(2) Does not include 27,890 shares of Common Stock held by
Mr. Paddon's children, as to which Mr. Paddon disclaims
any beneficial interest.
(3) Wellington Management Company, in its capacity as
investment adviser, may be deemed to have beneficial
ownership of such shares that are owned by numerous
investment advisory clients, none of which is known to
have such interest with respect to more than five percent .
(4) Includes options to purchase 465,000 shares which are
exercisable within 60 days of September 24, 1999.
</TABLE>
ITEM 1
ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of Shareholders
and hold office until their respective successors are duly
elected and qualified. It is the intention of the persons named
in the enclosed form of proxy, unless the proxy specifies
otherwise, to vote the shares represented by the proxy FOR the
election of the nominees set forth below. Although it is
anticipated that each nominee will be available to serve as
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<PAGE>
a director, should any nominee become unavailable to serve, the
proxies will be voted for such other person as may be designated
by the Company's Board of Directors.
The nominees for the Board of Directors are Patrick E.
Paddon, Glen T. Tsuma, Michael H. Lowry, and Harris Ravine.
Certain information as of September 24, 1999 with respect to the
nominees for election as directors, including the number of
shares of the Company's Common Stock beneficially owned by each
of them as of September 24, 1999, is set forth under "Directors
and Executive Officers" below.
The Board of Directors met four times during the year ended
June 30, 1999. The Board has established an Audit Committee. The
Audit Committee consists of Messrs. Tsuma, Lowry and Ravine. The
Audit Committee has responsibility for consulting with the
Company's officers regarding the scope of the auditor's
examination and review of the annual financial statements and
accounting policies of the Company. The Audit Committee met two
times during the year ended June 30, 1999. Effective January
1997, the entire Board of Directors reviews and approves the
granting of stock options. Three stock option meetings were held
during the year ended June 30, 1999. All board and committee
meetings were attended by each director. The entire Board of
Directors of the Company serves as the Compensation Committee.
Directors who are employees of the Company do not receive
any fees for their services as directors. Directors of the
Company who are not employees are paid a quarterly retainer of
$2,500 plus expenses. Directors are entitled to participate in
the Company's 1995 Stock Option Plan. During the year ended June
30, 1999, Michael Lowry was awarded an option dated August 8,
1998 to purchase 10,000 shares of Common Stock at a price of
$15.75 per share and Harris Ravine was awarded an option dated
April 29, 1999 to purchase 10,000 shares of Common Stock at a
price of $13.31 per share. Both options granted become
exercisable over a five year period at 20 percent per year and
expire ten years from the date of the grant.
DIRECTORS AND EXECUTIVE OFFICERS
Current members of the Board of Directors and executive
officers, together with certain information regarding them, are
as follows:
<TABLE>
<CAPTION>
Shares of Percent of
Common Stock Common Stock
Beneficially Beneficially
Name Age Position Owned Owned
- ---- --- -------- ------------ ------------
<S> <C> <C> <C> <C>
Patrick E. Paddon 48 Chief Executive 6,545,570 (1) 54.4%
Officer, President,
Director
Glen T. Tsuma 46 Chief Operating 1,356,772 11.6%
Officer,
Secretary,
Director
Michael H. Lowry 54 Director 26,000 (2) *
Harris Ravine 57 Director 20,000 (3) *
S. Leslie Jewett 44 Chief Financial 111,775 (4) *
Officer
Neil G. Kenduck 44 General Counsel 25,000 (5) *
- ---------------------------
* Less than one percent
1) Includes options to purchase 300,000 shares which are exercisable
within 60 days of September 24, 1999 but excludes 27,890 shares held
by Mr. Paddon's children, as to which Mr. Paddon disclaims any
beneficial interest.
2) Includes options to purchase 22,000 shares which are exercisable
within 60 days of September 24, 1999.
3) Includes options to purchase 20,000 shares which are exercisable
within 60 days of September 24, 1999.
4) Includes options to purchase 100,000 shares which are exercisable
within 60 days of September 24, 1999.
5) Includes options to purchase 23,000 shares which are exercisable
within 60 days of September 24, 1999.
</TABLE>
Patrick E. Paddon founded Amplicon in 1977 and has served
as the President and a Director of the Company since its
inception. Prior to 1977, Mr. Paddon was the Manager of
Corporate Planning and Budgets at Business Systems Technologies,
a manufacturer of IBM plug-compatible peripheral equipment. Mr.
Paddon is the spouse of Ms. Jewett.
3
<PAGE>
Glen T. Tsuma joined the Company in May 1981 and has been
Chief Operating Officer since August 1989 and Secretary since
October 1991. Prior to joining Amplicon, he was an audit manager
with Arthur Young & Company.
Michael H. Lowry was elected to the Board of Directors in
August 1992. Mr. Lowry is a Managing Director of Nomura
Securities International, Inc., an investment banking firm. Prior
to joining Nomura Securities in February 1994, Mr. Lowry had been
employed by the investment banking firm of Bear Stearns & Co.,
Inc. from 1991 to 1993 and by the investment banking firm of
Kidder, Peabody & Co., Incorporated from 1970 to 1990.
Harris Ravine was elected to the Board of Directors in
February 1994. Mr. Ravine is the Chairman and Chief Executive
Officer of Andataco/IPL Systems, Inc. since May 1997. Mr. Ravine
had been Managing Director of BI Capital, Limited and Technology
Investment Officer with The Broe Companies, a real estate
investment company from June 1994 to April 1997. Prior thereto,
Mr. Ravine was employed by Storage Technology Corporation, a
computer manufacturer, in various capacities, including Executive
Vice President, Chief Administrative Officer and Group Officer
for Midrange Markets from June 1992 to January 1994, Executive
Vice President -- Europe, Africa and Middle-East from March 1991
to June 1992, and Executive Vice President and Chief Financial
Officer from June 1989 to March 1991.
S. Leslie Jewett joined the Company in September 1991 as
Vice President - Finance. In April 1994, Ms. Jewett was named
Chief Financial Officer of the Company. From 1981 to 1990, she
held various management positions at Kidder, Peabody & Co.,
Incorporated, including Senior Vice President, Corporate Finance.
Ms. Jewett has a BA from Swarthmore College and an MBA from
Stanford University. From 1991 through May 1995, Ms. Jewett was a
director of Geonex Corporation which entered into Chapter 11
bankruptcy in 1995. Ms. Jewett is the spouse of Mr. Paddon.
Neil G. Kenduck joined the Company in September 1991 as
General Counsel. From 1986 to 1991 he was an attorney with the
law firm of Rutter, O'Sullivan, Greene & Hobbs. Prior to that,
he was an attorney with O'Melveny & Myers from 1982 to 1986. Mr.
Kenduck graduated with honors from Hofstra Law School and was
editor of the law review.
Executive Compensation
The following table discloses compensation paid by the
Company to the Chief Executive Officer and the remaining most
highly-paid executive officers for the three fiscal years ended
June 30, 1999:
<TABLE>
<CAPTION>
Long-Term
Name and Principal Annual Compensation Compensation Other
Position Year Salary Bonus Options Compensation (1)
- ------------------ ---- -------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Patrick E. Paddon 1999 $375,000 -- -- $2,000
Chief Executive 1998 375,000 -- -- 2,000
Officer 1997 375,000 -- -- 2,000
Glen T. Tsuma 1999 $180,000 -- -- $2,000
Chief Operating 1998 180,000 -- -- 2,000
Officer 1997 180,000 -- -- 2,000
S. Leslie Jewett 1999 $120,000 -- -- $2,000
Chief Financial 1998 180,000 -- -- 2,000
Officer 1997 180,000 -- -- 2,000
Neil G. Kenduck 1999 $205,000 $52,460 -- $2,000
General Counsel 1998 176,000 30,000 -- 2,000
1997 160,000 20,000 -- 2,000
- ----------------
1) Company contribution under the Company's 401(k) Plan, subject
to certain vesting restrictions.
</TABLE>
4
<PAGE>
Option Grants in Last Fiscal Year
During fiscal 1999, Neil Kenduck was the only named
executive officer to receive a stock option grant.
<TABLE>
<CAPTION>
% of Total
Options Granted Grant Date
Options to Employees in Exercise Expiration Present
Name Granted Fiscal Year Price Date Value (1)
- ---- ------- --------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Neil G. Kenduck 20,000 10.2% $13.50 10/26/08 $113,200
1) Based on the Black-Scholes Option Pricing model. The
Company's use of this model should not be construed as an
endorsement of its accuracy in valuing options or of the
assumptions used in the model. The actual value, if any, an
executive may realize from any option depends upon the actual
performance of Amplicon common stock during the applicable
period.
</TABLE>
Aggregate Option Exercises and Fiscal Year End Option Value
The following table sets forth information with respect to
the unexercised options held by the executive officers as of the
end of the fiscal year:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-Money
Options at June 30, 1999 Options at June 30, 1999 (1)
------------------------ ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick E. Paddon 300,000 -- $3,150,000 --
Glen T. Tsuma -- -- -- --
S. Leslie Jewett 100,000 -- 562,498 --
Neil G. Kenduck 23,000 20,000 103,750 $22,000
__________________________
1) Represents the difference between the most recent closing price
of the Common Stock as of June 30, 1999 as reported by NASDAQ
and the exercise price of the options.
</TABLE>
Board of Directors Report on Executive Compensation
Amplicon has not established a standing compensation
committee but instead all executive compensation issues are
subject to the review of the entire Board of Directors. The
compensation of the Company's Chief Executive Officer has been
reviewed and approved by the Company's Board of Directors. The
compensation of other key officers has generally been established
by the Chief Executive Officer, subject to the review of the
Board of Directors. Mr. Paddon and Mr. Tsuma, as executive
officers and directors of the Company, therefore participate in
all board executive compensation decisions. Mr. Paddon and
Mr. Tsuma also review all stock option grants, however, neither
of them has received any stock option grants in the last five
years.
The Company's compensation practices have generally been
designed to bind the interests of the Company's key executives to
the long-term performance of the Company and its shareholders.
Compensation for all executives is comprised primarily of 1) base
salary and 2) equity participation through common stock
ownership or common stock options. Annual bonuses have been paid
to certain executives from time to time. Base salaries are
established according to the particular position of the
individual executive, the current economic and business
circumstances of the Company, and competitive conditions in the
employment marketplace. Bonus amounts are determined based upon
an analysis of individual and Company performance, but generally
are not tied to any direct quantitative or qualitative
performance factors. To assess the 1999 compensation level of
Amplicon's key executives relative to their peers, the Company
examined the compensation plans of other public leasing
companies, comparable financial service firms and similar
emerging growth companies. In fiscal 1999, the base salary for
Mr. Kenduck was increased from the prior year. This increase
reflects efforts to maintain such compensation at competitive
levels. The Company believes that the cash compensation paid to
the Company's executive officers is generally less than that paid
to others in comparable positions. However, the equity
participation of Amplicon's executive officers, both through
direct ownership and common stock
5
<PAGE>
options, is generally greater than other comparable companies.
The executive officers of Amplicon beneficially own approximately
66% of the Company's common stock outstanding. Through having a
substantial portion of each executive's long-term compensation
derived from participation in the Company's common stock, the
Board of Directors believe that the Company has aligned the
financial interests of the executive officers with those of the
Company's other shareholders.
CEO Compensation
Patrick E. Paddon's, Chief Executive Officer, cash
compensation was set at $375,000 for fiscal 1999. Mr. Paddon's
compensation in fiscal 1999 was not specifically tied to any
measures of return on equity or earnings targets. Mr. Paddon's
compensation was set at $375,000 by the Board of Directors
several years ago based upon a review of compensation levels at
comparable public companies. Following the most recent review,
the Board of Directors believes Mr. Paddon's compensation is
still reasonable and determined at that time that his
compensation in fiscal 2000 would remain at $375,000.
Common Stock Performance Graph
The graph below shows a comparison of five-year cumulative
return among Amplicon, the NASDAQ Composite Index and a peer
group of public leasing companies comprised of Comdisco, Inc.,
DVI, Inc. and Electro Rent Corporation, each of which are engaged
in the equipment leasing industry as a substantial part of their
business, and whose shares have traded publicly for at least five
years.
PERFORMANCE GRAPH OMITTED. REPRESENTED BY THE FOLLOWING TABLE:
<TABLE>
<CAPTION>
6/30/94 9/30/94 12/31/94 3/31/95 6/30/95 9/30/95 12/31/95
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
AMPI 100 95 90 79 77 79 78
NASD Comp 100 108 107 117 133 150 151
Peer Average 100 109 117 140 147 163 187
(con't)
3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97
------- ------- ------- -------- ------- ------- -------
AMPI 77 82 91 100 109 117 152
NASD Comp 158 171 177 186 176 208 244
Peer Average 187 214 209 218 208 242 304
(con,t)
12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99
-------- ------- ------- ------- -------- ------- -------
AMPI 161 234 127 139 147 101 137
NASD Comp 228 267 274 248 322 359 393
Peer Average 325 424 400 259 312 260 339
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public
accountants for the year ended June 30, 2000 because its Audit
Committee has not yet made a recommendation. Representatives of
PricewaterhouseCoopers LLP, the Company's independent public
accountants for the year ended June 30, 1999, are expected to be
present at the Annual Meeting and will be available to respond to
appropriate questions and to make such statements as they may
desire.
6
<PAGE>
ANNUAL REPORT AND OTHER SEC FILINGS
The Company's Annual Report, containing audited financial
statements for the fiscal years ended June 30, 1999 and 1998,
accompanies this Proxy Statement. Upon written request, the
Company will send to any shareholder, without charge, a copy of
the Annual Report on Form 10-K for the fiscal year ended June 30,
1999, including the financial statements and schedules thereto,
which the Company has filed with the Securities and Exchange
Commission. The written request must be directed to the
attention of the Secretary of the Company, at the address of the
Company set forth on the first page of this Proxy Statement.
Based solely on a review of the copies of Forms 3, 4 and 5
and amendments thereto furnished to the Company, the Company
believes that during fiscal 1999 no officer, director or more-
than 10% beneficial owner failed to file on a timely basis all
reports required by Section 16(a) of the Securities and Exchange
Act of 1934, except that Mr. Paddon and Ms. Jewett filed the Form
5 Annual Statement of Changes in Beneficial Ownership 45 days
after its required filing date.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at
the Company's 2000 Annual Meeting of Shareholders must be
directed to the attention of and received by the Secretary of the
Company, at the address of the Company set forth on the first
page of this Proxy Statement, before June 30, 2000 if they are to
be considered for inclusion in the Proxy Statement and form of
Proxy used in connection with the meeting, in accordance with the
rules and regulations of the Securities and Exchange Commission.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the
Board of Directors knows of no other matters which will be acted
upon at the Annual Meeting. If any other matters are properly
presented for action at the Annual Meeting or any adjournment
thereof, proxies will be voted with respect thereto in accordance
with the best judgment and in the discretion of the proxy
holders.
By Order of the Board of Directors
Glen T. Tsuma
Secretary
Santa Ana, California
September 24, 1999
7
<PAGE>
