<PAGE> 1
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 240.14a-11(c) or 240.14a-12
OROAMERICA, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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> 2
OROAMERICA, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1999
To the Stockholders of OroAmerica, Inc.:
The Annual Meeting of Stockholders of OroAmerica, Inc., a Delaware
corporation, will be held on Monday, June 14, 1999, at 10:00 a.m., P.D.T., at
The Four Seasons Hotel, 300 South Doheny Drive, Beverly Hills, California, for
the following purposes:
(1) To elect a Board of Directors;
(2) To consider and act upon a proposal to amend the 1998 Incentive Stock
Option Plan to (a) permit the grant of stock options with exercise
prices lower than the current market price on the date of grant and (b)
increase the limit on the number of shares subject to stock options
that may be granted to any individual during a calendar year from
50,000 to 100,000;
(3) To consider and act upon a proposal to amend the 1994 Chief Executive
Officer Bonus Plan to change the bonus formula under such plan;
(4) To consider and act upon a proposal to ratify the selection of
auditors; and
(5) To transact any other business that may properly come before the
meeting.
Only stockholders of record at the close of business on May 7, 1999 are
entitled to notice of and to vote at the meeting and any adjournments thereof.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving of
your proxy will not affect your right to vote in person should you later decide
to attend the meeting.
By Order of the Board of Directors
/s/ BETTY SOU
Betty Sou
Secretary
Burbank, California
May 14, 1999
<PAGE> 3
OROAMERICA, INC.
443 NORTH VARNEY STREET
BURBANK, CALIFORNIA 91502
(818) 848-5555
------------------------
PROXY STATEMENT
MAY 14, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of OroAmerica, Inc. ("OroAmerica" or the
"Company") for the Annual Meeting of Stockholders to be held on June 14, 1999
and any postponements or adjournments thereof. This Proxy Statement and the
accompanying Notice of Annual Meeting and form of proxy were first mailed to
stockholders on or about May 14, 1999.
The execution and return of the enclosed proxy will not in any way affect a
stockholder's right to attend the Annual Meeting in person. Any stockholder
giving a proxy may revoke it before it is voted by so notifying the Secretary of
OroAmerica in writing before or at the meeting, by providing a proxy bearing a
later date or by attending the meeting and expressing a desire to vote in
person. Your cooperation in promptly returning the enclosed proxy will reduce
OroAmerica's expenses and enable its management and employees to continue their
normal duties for your benefit with minimum interruption for follow-up proxy
solicitation.
Only stockholders of record at the close of business on May 7, 1999 are
entitled to receive notice of and to vote at the meeting. On that date,
OroAmerica had outstanding and entitled to vote at the Annual Meeting 6,123,378
shares of Common Stock, each of which is entitled to one vote at the meeting,
except as noted below with respect to the election of directors. The presence at
the Annual Meeting, either in person or by proxy, of the holders of a majority
of the shares of Common Stock outstanding on the record date is necessary to
constitute a quorum for the transaction of business.
A plurality of the votes cast is required for the election of directors.
The affirmative vote of a majority of the votes cast is required to approve each
of the other matters to be acted upon at the Annual Meeting. Mr. Benhamou, who
owns 3,473,560 shares of Common Stock, representing 56.7% of the votes entitled
to be cast at the Annual Meeting, has advised the Board of Directors that he
intends to vote all of his shares for the election of each of the Board's
nominees and in favor of each of the other proposals identified in the
accompanying Notice of Annual Meeting.
Abstentions and broker non-votes (which occur if a broker or other nominee
does not have discretionary authority and has not received voting instructions
from the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of the votes cast on
proposals presented to the stockholders and have the same legal effect as a vote
against a particular proposal. Broker non-votes are not taken into account for
purposes of determining whether a proposal has been approved by the requisite
stockholder vote.
All proxies will be voted as directed by the stockholder on the proxy card.
IF NO CHOICE IS SPECIFIED, PROXIES WILL BE VOTED "FOR" THE DIRECTORS NOMINATED
BY THE BOARD OF DIRECTORS, "FOR" THE AMENDMENTS TO THE 1998 INCENTIVE STOCK
OPTION PLAN, "FOR" THE AMENDMENTS TO THE 1994 CHIEF EXECUTIVE OFFICER BONUS PLAN
AND "FOR" THE RATIFICATION OF THE SELECTION OF AUDITORS.
If any other matters are properly presented at the Annual Meeting,
including, among other things, consideration of a motion to adjourn the Annual
Meeting to another time or place for the purpose of soliciting additional
proxies, the persons named in the enclosed form of proxy and acting thereunder
will have discretion to vote on those matters in accordance with their best
judgment, subject to direction by the Board of Directors, to the same extent as
the person signing the proxy. It currently is not anticipated that any other
matters will be raised at the Annual Meeting.
<PAGE> 4
The cost of preparing, printing and mailing the Proxy Statement, the Notice
and the enclosed form of proxy, as well as the cost of soliciting proxies
relating to the Annual Meeting, will be borne by OroAmerica. The original
solicitation of proxies by mail may be supplemented by telephone, telegram and
personal solicitation by officers and other regular employees of OroAmerica, but
no additional compensation will be paid to such individuals on account of such
activities. OroAmerica will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to their principals.
ELECTION OF DIRECTORS
NOMINEES AND VOTING
The Company is incorporated under the laws of the State of Delaware. Under
Delaware law and the Company's Certificate of Incorporation and Bylaws, the
Company's Board of Directors, which currently consists of five members, is
divided into three classes, with one class of directors elected at each annual
meeting of stockholders for a three-year term and until their respective
successors are elected and qualified. However, since the Company's Common Stock
is held by less than 800 stockholders, a majority of the Common Stock is held by
persons with California addresses and the Company has substantial business
contacts with the State of California, the Company is subject to Section 2115 of
the California Corporation Code. As a result, certain legal matters, including
provisions relating to the election of directors, are governed by California law
and not by Delaware law or the Company's Certificate of Incorporation and
Bylaws. Under applicable California law, all directors of the Company are
required to be elected each year.
Cumulative voting also could apply under applicable California law. This
means that, in the election of directors, each stockholder is entitled to a
number of votes equal to the number of his or her shares of stock multiplied by
the number of directors to be elected. A stockholder may cast all of such votes
for a single nominee or distribute them among the nominees as he or she sees
fit. However, no stockholder is entitled to cumulate votes for a nominee unless
the nominee's name has been placed in nomination prior to the vote and a
stockholder has given notice at the meeting, prior to the voting, of the
stockholder's intention to cumulate his or her votes. If any one stockholder
gives such notice, all stockholders may cumulate their votes for nominees. The
persons named in the enclosed form of Proxy may, in their discretion, cumulate
votes pursuant to the proxies for any one or more nominees.
The Board of Directors has nominated for election as directors the five
persons named below, all of whom are incumbent directors. All of the nominees
have indicated that they are able and willing to serve as a directors.
If the Company continues to be subject to Section 2115 of the California
Corporations Code at the time of the next annual meeting of stockholders, the
directors elected at the Annual Meeting will hold office until the next annual
meeting and until their respective successors are elected and qualified.
However, if at the time of the next annual meeting the Company no longer is
subject to Section 2115, Mr. Shao and Mr. Katz will be deemed to have been
elected as Class III directors to serve for a term of three years and until
their successors are elected and qualified, and Mr. Massing will be deemed to
have been elected as a Class II director to serve for a term of two years and
until his successor is elected and qualified. The terms of Mr. Benhamou and Mr.
Rousso will expire at the next annual meeting and upon the election and
qualification of their successors whether or not the Company continues to be
subject to Section 2115.
The Board of Directors recommends that the stockholders vote "FOR" the
election of its nominees. Unless otherwise instructed, the Board's proxies
intend to vote the shares of Common Stock represented by the proxies in favor of
the election of these nominees. If for any reason any of these nominees will be
unable to serve, the Board's proxies will vote instead for such other person or
persons as the Board of Directors may recommend.
2
<PAGE> 5
The following table sets forth certain information as of May 7, 1999 with
respect to the Board's nominees:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Class I
Guy Benhamou............................................... 47 1977
David Rousso............................................... 58 1995
Class II
Bertram K. Massing......................................... 65 1987
Class III
Shiu Shao.................................................. 47 1993
Ronald A. Katz............................................. 63 1993
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS DURING THE PAST FIVE YEARS
Guy Benhamou is a co-founder of the Company and has been its President,
Chief Executive Officer and a member of its Board of Directors since its
inception in January 1977. Mr. Benhamou was appointed Chairman of the Board in
May 1993.
David Rousso was appointed to the Board of Directors in November 1995. Mr.
Rousso has been a professional investor since January 1991, and is the President
and sole stockholder of DPR Investments, a financial consulting firm. Mr. Rousso
also is Chairman of the Board of CreditCheck, Inc., a privately held financial
software company.
Bertram K. Massing has been a partner in the law firm of Ervin, Cohen &
Jessup LLP, which represents the Company in a variety of legal matters, for more
than the past five years.
Shiu Shao has been employed by the Company since April 1981. Mr. Shao
served as Controller of the Company from 1981 to 1984 and Vice President -
Finance from 1984 until September 1991, when he was appointed Chief Financial
Officer. Mr. Shao also has served as a director of the Company since May 1993
and was appointed a Vice President of the Company in May 1994 and the Chief
Operating Officer of the Company in October 1998.
Ronald A. Katz is the Chief Executive Officer of Ronald A. Katz Technology
Licensing, L.P., a patent licensing company. He served as Special Advisor to the
Chairman of First Data Corporation, an affiliate of American Express, from
August 1992 to October 1994, and served as Vice Chairman of American Express
Information Services Corporation from August 1989 to August 1992. From 1970 to
1988, Mr. Katz was involved in a variety of business ventures, including the
formation of Light Signatures, Inc., a developer of counterfeit prevention
technology. Mr. Katz also was a co-founder of Telecredit, Inc., a payment
services company, and served as an executive officer of Telecredit from 1961 to
1970.
No family relationships exist between any of the directors or officers of
OroAmerica.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
OroAmerica maintains an Audit Committee whose current members are Messrs.
Massing, Katz and Rousso. The Audit Committee's responsibilities include
approval of the selection and engagement of independent accountants and review
of the plan and scope of their audit for each year, the results of such audit
when completed and their fees for services performed. The Audit Committee also
assists and makes recommendations to the Board of Directors in fulfilling the
Board's responsibilities relating to OroAmerica's accounting, financial
reporting and internal control functions and reviews and passes upon all
transactions with affiliates and other persons having a material financial
interest in OroAmerica. The Audit Committee met once during fiscal 1999.
OroAmerica maintains a Compensation Committee whose current members are Mr.
Katz and Mr. Rousso. The Compensation Committee approves the compensation of the
executive officers of
3
<PAGE> 6
OroAmerica, formulates and reviews significant compensation policies and
decisions and administers OroAmerica's employee benefit plans. The Compensation
Committee met three times during fiscal 1999.
OroAmerica's Board of Directors met seven times during fiscal 1999. Each
director attended at least 75% of the meetings of the Board of Directors and of
any committees on which he served. OroAmerica does not maintain a nominating
committee.
COMPENSATION OF DIRECTORS
Since September 30, 1993, directors who are not employees of OroAmerica
have been paid an annual fiscal year retainer of $10,000 plus $1,000 for each
Board meeting attended. The same compensation arrangements will apply in fiscal
2000. All directors are reimbursed for their travel expenses incurred in
attending Board or committee meetings.
Pursuant to the provisions of the OroAmerica, Inc. 1994 Directors' Stock
Option Plan (the "Directors' Plan"), each new non-employee director, on the date
of his or her election to the Board of Directors (whether elected by the
stockholders or the Board of Directors), automatically will be granted a stock
option to purchase 10,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of grant. Only one grant
may be made under the Directors' Plan to each non-employee director.
On April 14, 1998, the Board of Directors adopted the Supplemental
Non-Employee Directors' Stock Option Plan (the "Supplemental Plan"), which
provides for automatic grants to each non-employee director of stock options to
purchase 1,000 shares of Common Stock on April 14, 1998, and each time a
non-employee director is re-elected to the Board of Directors following the 1998
Annual Meeting. In accordance with the Supplemental Plan, effective April 14,
1998, Messrs. Katz, Massing and Rousso were each granted a stock option to
purchase 1,000 shares of Common Stock at an exercise price of $7.00 per share,
the fair market value of the Common Stock on the date of grant. Assuming their
re-election to the Board of Directors at the 1999 Annual Meeting, Messrs. Katz,
Massing and Rousso will each receive an additional 1,000 share option on June
14, 1999.
4
<PAGE> 7
OWNERSHIP OF COMMON STOCK
The following table sets forth information with respect to the beneficial
ownership of OroAmerica Common Stock as of May 7, 1999 by (i) each person who is
known by OroAmerica to be the beneficial owner of more than five percent (5%) of
the outstanding Common Stock, (ii) each director of OroAmerica, (iii) the
executive officers named in the Summary Compensation Table below and (iv) all
directors and executive officers as a group. Unless otherwise indicated, each of
the entities and persons named in the table has sole voting and investment power
with respect to all shares of Common Stock beneficially owned by it or him,
except to the extent that authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------
NAME AND ADDRESS NUMBER PERCENT
---------------- --------- -------
<S> <C> <C>
Guy Benhamou............................................. 3,473,560 56.73%
443 North Varney Street
Burbank, CA 91502
Dimensional Fund Advisors Inc............................ 408,400 6.67%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Shiu Shao................................................ 113,750 1.84%
David Rousso............................................. 66,333 1.08%
David Wu................................................. 29,830 *
Claudia Hollingsworth.................................... 23,000 *
Bertram K. Massing....................................... 16,333 *
Ronald A. Katz........................................... 13,333 *
Marc Kesten.............................................. 1,000 *
All directors and executive officers as a group (10
persons)............................................... 3,750,140 59.78%
</TABLE>
- ---------------
* Indicates ownership of less than one percent.
(1) Includes shares which may be purchased upon the exercise of options which
are exercisable as of May 7, 1999, or become exercisable within 60 days
thereafter, for the following: Mr. Benhamou -- 0 shares; Mr. Shao -- 53,000
shares; Mr. Rousso -- 6,333 shares; Mr. Wu -- 28,000 shares; Ms.
Hollingsworth -- 23,000 shares; Mr. Massing -- 12,333 shares; Mr.
Katz -- 13,333 shares; Mr. Kesten -- 1,000 shares; and all directors and
executive officers as a group -- 150,000 shares.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation paid by OroAmerica during
the fiscal years ended January 29, 1999, January 30, 1998 and January 31, 1997
to (a) OroAmerica's Chief Executive Officer and (b) OroAmerica's four other most
highly paid executive officers who were serving as executive officers at the end
of the fiscal year ended January 29, 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
---------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(1) COMPENSATION(2)
--------------------------- ---- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Guy Benhamou.......................... 1999 $650,000 $155,141 -- $7,469
Chairman of the Board 1998 650,000 177,434 -- 7,421
President and Chief Executive
Officer 1997 637,500 -- -- 6,530
Shiu Shao............................. 1999 231,555 103,914 -- 7,469
Chief Operating Officer, 1998 230,776 108,641 -- 7,421
Chief Financial Officer and 1997 211,554 -- 10,000 6,530
Vice President
Claudia Hollingsworth................. 1999 192,794 90,373 -- 3,333
Senior Vice President -- Sales 1998 190,395 94,330 -- 3,167
1997 167,321 -- 10,000 2,375
David Wu.............................. 1999 161,550 78,264 -- 3,333
Senior Vice President -- 1998 164,931 82,264 -- 3,167
Manufacturing 1997 140,197 -- 10,000 2,375
Marc Kesten(3)........................ 1999 117,014 19,623 2,500 1,980
General Counsel and 1998 -- -- -- --
Assistant Secretary 1997 -- -- -- --
</TABLE>
- ---------------
(1) Number of shares of Common Stock underlying options granted under the
Amended and Restated OroAmerica, Inc. 1988 Incentive Stock Option Plan (the
"1988 Plan") and, in the case of Mr. Kesten, under the 1998 Incentive Stock
Option Plan (the "1998 Plan"). No SARs may be granted under either the 1988
Plan or the 1998 Plan.
(2) Consists of contributions by the Company to a defined contribution 401(k)
plan for each of the named executive officers. The amounts indicated for Mr.
Benhamou and Mr. Shao also include premiums for medical and dental insurance
coverage for their dependents of $4,136 for fiscal 1999, $4,254 for fiscal
1998 and $4,155 for fiscal 1997.
(3) Mr. Kesten has been employed by OroAmerica since May 1997, and was appointed
General Counsel and Assistant Secretary in June 1998.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information as of January 29, 1999,
and for the fiscal year then ended, with respect to stock options granted to the
individuals named in the Summary Compensation Table. No stock options were
granted at an option price below the fair market value of the Common Stock on
the date of grant.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENTAGE VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATE OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED FISCAL 1999 SHARE(2) DATE 5% 10%
---- ---------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Guy Benhamou................... -- -- -- -- -- --
Shiu Shao...................... -- -- -- -- -- --
Claudia Hollingsworth.......... -- -- -- -- -- --
David Wu....................... -- -- -- -- -- --
Marc Kesten(1)................. 2,500 7.14% $7.00 4/13/08 $11,006 $27,890
</TABLE>
- ---------------
(1) The options were granted on April 14, 1998 under the 1998 Plan and are
subject to vesting over a four-year period, with 20% of the options
exercisable on the date of grant and an additional 20% of the options
becoming exercisable on each successive anniversary of the date of grant.
The vesting of the options will be accelerated upon a sale of substantially
all of OroAmerica's assets, the dissolution of OroAmerica or upon a change
in the controlling stockholder interest in OroAmerica resulting from a
tender offer, reorganization, merger or consolidation.
(2) At the discretion of the Compensation Committee, the exercise price may be
paid by delivery of already-owned shares of Common Stock valued at the fair
market value on the date of exercise, and the tax withholding obligations
related to the exercise of the stock options, if any, may be satisfied by
offset of the underlying shares, subject to certain conditions. The
Compensation Committee retains the discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options.
(3) The potential realizable values shown under these columns represent the
future value of the options (net of exercise price) assuming the market
price of the Common Stock appreciates annually by 5% and 10%, respectively.
The 5% and 10% rates of appreciation are prescribed by the Securities and
Exchange Commission and are not intended to forecast possible future
appreciation of OroAmerica's Common Stock.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUE
The following table sets forth information for the named executive officers
regarding the exercise of stock options during fiscal 1999 and the unexercised
stock options held by them as of January 29, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARE JANUARY 29, 1999 JANUARY 29, 1999(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE UNEXERCISABLE EXERCISABLE
---- -------------- -------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Guy Benhamou........... -- -- -- -- -- --
Shiu Shao.............. 60,750 $304,965 51,000 4,000 $31,875 $21,250
Claudia
Hollingsworth........ 5,000 34,063 21,000 4,000 5,313 21,250
David Wu............... -- -- 24,000 4,000 31,875 21,250
Marc Kesten............ -- -- 500 2,000 1,500 6,000
</TABLE>
- ---------------
(1) Represents the difference between the market price of the underlying shares
of Common Stock at exercise and the exercise price.
(2) Based on the closing price on the Nasdaq National Market of OroAmerica
Common Stock on that date ($10.00), minus the exercise price.
7
<PAGE> 10
EMPLOYMENT AGREEMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Since September 30, 1993, Mr. Benhamou has served as Chairman, Chief
Executive Officer and President pursuant to an employment agreement that
automatically renews for successive one-year periods unless terminated by either
party. Under the terms of the agreement, Mr. Benhamou receives an annual salary
of $650,000 and a bonus in an amount determined by the Compensation Committee of
the Board of Directors. Effective February 1, 1999, Mr. Benhamou's salary was
increased to $750,000 per annum by the Compensation Committee. Mr. Benhamou also
is entitled to a bonus pursuant to the 1994 Chief Executive Officer Bonus Plan
approved by stockholders in July 1994. See "Compensation Committee Report on
Executive Compensation". In addition to salary and bonus, OroAmerica is required
to provide Mr. Benhamou with the use of an automobile and pay all expenses
incurred in connection therewith.
In August 1996, OroAmerica entered into agreements with Mr. Shao, Ms.
Hollingsworth and Mr. Wu, which provide for payments to them in the event of a
change in control of OroAmerica. Under the agreements, the executive officer
will be entitled to certain payments from OroAmerica if the executive officer's
employment is terminated following a change in control of OroAmerica, unless
such termination is (i) because of the executive officer's death or disability,
(ii) by OroAmerica for "Cause" (as defined in the agreements) or (iii) by the
executive officer other than for "Good Reason" (as defined in the agreements).
The agreement with Mr. Shao provides for a payment of three times the average of
his annual salary and bonus for the three fiscal years immediately preceding the
change in control, reduced to the extent necessary to prevent the payments made
to Mr. Shao from exceeding the limits imposed by Section 280G of the Internal
Revenue Code of 1986. The agreements with Ms. Hollingsworth and Mr. Wu provide
for a payment of $150,000. No termination benefit is required to be paid if the
executive officer's employment terminates prior to a change in control. In
addition, Mr. Shao's agreement may be terminated by OroAmerica at any time after
August 7, 1999, while the agreements with Ms. Hollingsworth and Mr. Wu may now
be terminated by OroAmerica at any time.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established on
September 30, 1993, and currently consists of Messrs. Katz and Rousso, each of
whom is a non-employee director. The Compensation Committee sets OroAmerica's
compensation policies applicable to executive officers and administers
OroAmerica's bonus plans and stock option plans. The Compensation Committee does
not administer the Directors' Plan or the Supplemental Plan, both of which are
administered by the Board. The Compensation Committee has prepared the following
report for inclusion in this Proxy Statement.
Compensation Policy for Executive Officers
The policy of the Compensation Committee is to provide each executive
officer current cash compensation that is reasonable and consistent with
OroAmerica's size, industry and performance, and long-term incentive
compensation, in the form of stock options, based on the increase in value of
OroAmerica's Common Stock. In addition to salary, current cash compensation
includes a bonus based in part on OroAmerica's current annual performance and in
part on the executive's individual performance.
Compensation of Chief Executive Officer
Since the completion of OroAmerica's initial public offering in September
1993, Mr. Benhamou's salary ($650,000 per year) has been fixed by his employment
agreement, and he is entitled under the contract to a bonus determined by the
Board of Directors or the Compensation Committee in its discretion. The Board
has delegated this responsibility to the Compensation Committee.
In keeping with the Compensation Committee's objective of rewarding
executive officers based on corporate performance, and in order to assure the
deductibility to OroAmerica of amounts paid to Mr. Benhamou, in March 1994, the
Compensation Committee adopted the 1994 Chief Executive Officer Bonus Plan (the
"Bonus Plan"), which was approved by stockholders in July 1994. The Bonus Plan
provides for the payment to Mr. Benhamou of an annual bonus based on a
percentage of the amount by which income
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<PAGE> 11
before income taxes (before the payment of Mr. Benhamou's bonus) ("Pretax
Income") for the applicable year exceeds $5.0 million, calculated as follows: 2%
of Pretax Income in excess of $5.0 million up to $8.0 million; plus 4% of Pretax
Income in excess of $8.0 million up to $15.0 million; plus 6% of Pretax Income
in excess of $15.0 million. A bonus of $155,141 was paid to Mr. Benhamou
pursuant to the Bonus Plan for fiscal 1999.
In view of OroAmerica's performance and Mr. Benhamou's contribution to such
performance, effective February 1, 1999, the Compensation Committee approved a
$100,000 increase in Mr. Benhamou's base salary under his employment agreement,
from $650,000 per year to $750,000 per year. In addition, the Compensation
Committee approved amendments to the Bonus Plan, subject to stockholder
approval, in order to change the bonus formula currently contained in the Bonus
Plan by increasing the percentage of Pretax Income payable to Mr. Benhamou. See
"Approval of Amendments to the 1994 Chief Executive Officer Bonus Plan", below.
Mr. Benhamou has not been awarded any stock options by OroAmerica, although
he is eligible to participate in OroAmerica's option plans. Mr. Benhamou also
participates in OroAmerica's defined contribution plan.
Compensation of Other Executive Officers
For fiscal 1999, compensation paid to OroAmerica's executive officers other
than Mr. Benhamou consisted of a base salary, bonuses and contributions to a
defined contribution plan. The base salaries of executive officers other than
Mr. Benhamou for fiscal 1999 were determined by the Compensation Committee,
based on Mr. Benhamou's recommendations. In determining salaries, Mr. Benhamou
and the Compensation Committee considered available information about the pay
scales of other companies in the jewelry industry. The Compensation Committee
believes that the salaries of these executive officers are comparable to the
salaries of executives with similar experience and responsibilities in the
jewelry industry.
Bonuses to executive officers other than Mr. Benhamou are awarded pursuant
to OroAmerica's Executive/Key Employee Bonus Plan, which was adopted based on
the recommendations of a compensation consulting firm. Under this plan,
participating executives and key employees may receive a cash bonus calculated
as a percentage of their base salary, with the applicable percentage determined
by reference to the income before income taxes of OroAmerica for the applicable
fiscal year and individual performance measures which are intended to recognize
individual contributions as reflected by the level of the executive's
responsibilities, his or her effectiveness in overseeing the matters under his
or her supervision and the degree to which he or she has contributed to the
accomplishment of major corporate goals. For each of the named executive
officers, 50% of the bonus is based on company performance, and 50% of the bonus
is based on individual performance. For certain other executive officers, the
bonus is based 25% on company performance and 75% on individual performance. For
the fiscal year ended January 29, 1999, the income before income taxes targets
and the individual performance measures were determined by the Compensation
Committee, based on Mr. Benhamou's recommendations.
Stock Option Plan
OroAmerica's stock option program provides additional incentives to key
employees to maximize stockholder value and provides a link between the
interests of senior managers and stockholders. By utilizing vesting periods, the
option program encourages key employees to remain in the employ of OroAmerica
and provides a long-term perspective to the compensation available under the
option program. The Compensation Committee determines the number of option
shares to be granted to each participating employee based upon his or her level
of responsibility, a review of OroAmerica's overall performance and prior
grants. Stock options were awarded to two executive officers during fiscal 1999.
Internal Revenue Code Provisions
The Compensation Committee will continue to consider the anticipated tax
treatment to OroAmerica regarding the compensation and benefits paid to the
Chief Executive Officer and the four other most highly
9
<PAGE> 12
compensated executive officers of OroAmerica in light of Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)"). The Compensation
Committee from time to time will consider amendments to OroAmerica's
compensation programs necessary to preserve the deductibility of all
compensation paid by OroAmerica which is subject to Section 162(m). While
OroAmerica does not expect to pay its executive officers compensation in fiscal
2000 in excess of the Section 162(m) deductibility limit, the Board of Directors
and the Compensation Committee retain discretion to authorize the payment of
compensation that does not qualify for income tax deductibility under Section
162(m).
Ronald A. Katz
David Rousso
10
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the cumulative stockholder return on
OroAmerica Common Stock from January 28, 1994 through January 29, 1999, based on
the market price of the Common Stock, with the cumulative total return of the
Nasdaq Market Value Index and the Media General Recreational Goods -- Other
Index. The graph assumes that the value of the investment in OroAmerica Common
Stock and each index was $100 on January 28, 1994 and that all dividends, if
any, were reinvested. The comparisons in this table are not intended to forecast
or be indicative of possible future price performance.
COMPARISON OF CUMULATIVE STOCKHOLDER RETURN OF OROAMERICA, INC.,
NASDAQ MARKET VALUE INDEX AND MEDIA GENERAL RECREATIONAL GOODS -- OTHER INDEX
<TABLE>
<CAPTION>
OROAMERICA, INC. INDUSTRY INDEX BROAD MARKET
---------------- -------------- ------------
<S> <C> <C> <C>
01/28/94 100.00 100.00 100.00
01/27/95 48.21 110.04 94.51
02/2/96 32.59 129.32 132.32
01/31/97 33.93 104.71 174.14
01/30/98 33.48 108.61 205.11
01/29/99 71.43 139.02 320.12
</TABLE>
CERTAIN TRANSACTIONS
In August 1998, OroAmerica loaned $190,000 to Mr. Shao to assist him in the
exercise of an incentive stock option which was about to expire. The loan is
evidenced by a full recourse promissory note issued by Mr. Shao, is due and
payable in a lump sum in August 2001 and bears interest at 7.35% per annum. In
addition, the loan is secured by a security interest in the 60,750 shares of
Common Stock purchased by Mr. Shao upon the exercise of the stock option, and is
due in full upon the termination of Mr. Shao's employment with OroAmerica for
any reason, including termination without cause.
11
<PAGE> 14
APPROVAL OF AMENDMENTS TO THE
1998 INCENTIVE STOCK OPTION PLAN
INTRODUCTION
The OroAmerica, Inc. 1998 Incentive Stock Option Plan (the "1998 Plan") was
adopted by the Board of Directors on April 14, 1998 and thereafter was approved
by the stockholders. The 1998 Plan enables the Compensation Committee to grant
to executive officers and other key employees of OroAmerica and its subsidiaries
options to purchase shares of Common Stock. The maximum number of shares of
Common Stock issuable upon the exercise of options granted under the 1998 Plan
(sometimes called "Option Shares" herein) is 500,000.
The stockholders are being asked to vote on a proposal to amend the 1998
Plan to (a) permit the grant of stock options with exercise prices lower than
the current market price on the date of grant and (b) increase the limit on the
number of shares subject to stock options that may be granted to any individual
during a calendar year from 50,000 to 100,000. The amendments were adopted by
the Board of Directors on February 5, 1999, subject to stockholder approval, in
order to permit the Compensation Committee to grant a 30,000 share stock option
to each of Ms. Hollingsworth and Mr. Wu, and a 100,000 share stock option to Mr.
Shao, each with an exercise price of $7.50 per share. This price was consistent
with market conditions on October 23, 1998, the effective date of such persons'
appointment to additional executive offices at OroAmerica, rather than the
current market price of the Common Stock on the date of grant ($9.94 per share).
The Board of Directors believes that Mr. Shao, Ms. Hollingsworth and Mr. Wu
were instrumental in the results achieved by OroAmerica over the last several
years, and that these options would provide them special incentive to continue
such efforts. In addition, the Board of Directors believes that other
circumstances may arise where it may be appropriate, in the discretion of the
Compensation Committee, to provide special incentives over and above the
incentives provided by the grant of a stock option at fair market value or for
more than 50,000 Option Shares in any calendar year, or both. Accordingly, the
Board of Directors recommends that stockholders vote "FOR" the amendments to the
1998 Plan.
The full text of the 1998 Plan, as amended and restated in order to include
the foregoing amendments, is set forth as Exhibit A hereto, and stockholders are
urged to refer to it for a complete description. The summary of the principal
features of the 1998 Plan which follows is qualified in its entirety by
reference to the complete text of the 1998 Plan.
PRINCIPAL FEATURES OF THE PLAN
Stock options granted under the 1998 Plan are intended to qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), if so designated on the date of
grant. Stock options that are not designated or do not qualify as incentive
stock options are nonstatutory stock options and are not eligible for the tax
benefits applicable to incentive stock options.
No stock options may be granted under the 1998 Plan after April 13, 2008.
If a stock option expires, terminates or is cancelled for any reason without
having been exercised in full, the shares of Common Stock not purchased
thereunder are available for future grants.
The 1998 Plan is administered by the Compensation Committee, all of whose
members are non-employee Directors. Members of the Compensation Committee are
eligible to receive and have received awards under the Directors' Plan and the
Supplemental Plan, but are not eligible to receive awards under the 1998 Plan.
The Compensation Committee has complete authority, subject to the express
provisions of the 1998 Plan, to approve the employees nominated by the
management of OroAmerica to be granted stock options, to determine the number of
stock options to be granted to employees, to set the terms and conditions of
stock options, to remove or adjust any restrictions and conditions upon stock
options and to adopt such rules and regulations, and to make all other
determinations, deemed necessary or desirable for the administration of the 1998
Plan.
12
<PAGE> 15
In selecting optionees, consideration is given to factors such as
employment position, duties and responsibilities, ability, productivity, length
of service, morale, interest in OroAmerica and supervisor recommendations.
Awards may be granted to the same employee on more than one occasion. Each stock
option is evidenced by a written option agreement in a form approved by the
Compensation Committee.
The purchase price (the "Exercise Price") of Option Shares will be
determined by the Compensation Committee in its discretion, but in no event may
the Exercise Price be less than $1.00 per share. If the proposed amendments are
approved, the Exercise Price will no longer have to be equal to the fair market
value of the underlying shares on the date of grant. The stock option term is
for a period of ten years from the date of grant or such shorter period as is
determined by the Compensation Committee. Each stock option may provide that it
is exercisable in full or in cumulative or noncumulative installments, and each
stock option is exercisable from the date of grant or any later date specified
therein, all as determined by the Compensation Committee. The Compensation
Committee's authority to take certain actions under the 1998 Plan includes
authority to accelerate vesting schedules and to otherwise waive or adjust
restrictions applicable to the exercise of stock options.
Each stock option may be exercised in whole or in part (but not as to
fractional shares) by delivering a notice of exercise to OroAmerica, together
with payment of the Exercise Price. The Exercise Price may be paid in cash, by
cashier's or certified check or, if the Compensation Committee authorizes
payment in stock, by surrender of previously owned shares of Common Stock.
Except as otherwise provided below, an optionee may not exercise a stock
option unless from the date of grant to the date of exercise the optionee
remains continuously in the employ of OroAmerica. If the employment of the
optionee terminates for any reason other than death or disability, the stock
options then currently exercisable remain exercisable for a period of three
months after such termination of employment, subject to earlier expiration at
the end of their fixed term. If the employment of the optionee terminates
because of death, the stock options then currently exercisable remain in full
force and effect and may be exercised at any time during the option term
pursuant to the provisions of the 1998 Plan. If the employment of the optionee
terminates because of disability, the stock options then currently exercisable
remain exercisable for a period of twelve months after such termination of
employment, subject to earlier expiration at the end of their fixed term.
An employee may receive incentive stock options covering Option Shares of
any value, provided that the value of all Option Shares subject to one or more
of such incentive stock options which are first exercisable in any one calendar
year may not exceed the maximum amount permitted under Section 422 of the Code
(currently $100,000). If the proposed amendments are approved, no employee may
be granted incentive or nonstatutory stock options in any calendar year with
respect to more than 100,000 Option Shares, an increase from the 50,000 limit
previously contained in the 1998 Plan. The limit on the number of shares that
may be granted to any individual during a calendar year is included in the 1998
Plan in order to qualify for one of the exceptions provided in Section 162(m),
and Section 162(m) requires that this limit be approved by stockholders.
Each stock option granted under the 1998 Plan is exercisable during an
optionee's lifetime only by such optionee or by such optionee's legal
representative. Incentive stock options are transferable only by will or the
laws of intestate succession, but the Compensation Committee has the discretion
to grant non-statutory stock options free of such restrictions.
The Board of Directors may at any time suspend, amend or terminate the 1998
Plan. Stockholder approval is required, however, to materially increase the
benefits accruing to optionees, materially increase the number of securities
which may be issued (except for adjustments under anti-dilution clauses) or
materially modify the requirements as to eligibility for participation. The 1998
Plan authorizes the Compensation Committee to include in stock options
provisions which permit the acceleration of vesting in the event of a change in
control of OroAmerica resulting from certain occurrences. OroAmerica intends to
maintain a current registration statement under the Securities Act of 1933 with
respect to the shares of Common Stock issuable upon the exercise of stock
options granted under the 1998 Plan.
13
<PAGE> 16
SUMMARY OF OPTION GRANTS
There are currently 392 employees eligible to participate in the 1998 Plan.
As of May 7, 1999, stock options covering an aggregate of 35,000 Options Shares
were outstanding under the 1998 Plan, excluding the stock options issued to Mr.
Shao, Ms. Hollingsworth and Mr. Wu in February 1999. The outstanding stock
options are held by seven employees, including two executive officers, have
exercise prices ranging from $7.00 per share to $9.94 per share and expire ten
years from the date of grant. The outstanding stock options are incentive stock
options and are subject to vesting over a four-year period, with 20% of the
options immediately exercisable when granted and an additional 20% of the
options becoming exercisable on each successive anniversary of the date of
grant.
On February 5, 1999, the Compensation Committee granted, subject to
stockholder approval of the amendments to the 1998 Plan, stock options to
purchase an aggregate of 160,000 Option Shares at an exercise price of $7.50 per
share. Based on the closing price of the Common Stock on the Nasdaq National
Market at the close of business on February 4, 1999, the fair market value of
the Common Stock was $9.94 on the date of grant. On May 7, 1999, the last sales
price of the Common Stock, as reported on the Nasdaq National Market, was $8.375
per share.
The following table sets forth certain information with respect to options
granted, subject to stockholder approval, as a result of the amendments to the
1998 Plan. Future grants under the 1998 Plan will be made at the discretion of
the Compensation Committee and are not yet determinable.
NEW PLAN BENEFITS TABLE
AMENDED AND RESTATED OROAMERICA, INC.
1998 INCENTIVE STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME OR GROUP OPTIONS GRANTED
------------- ---------------
<S> <C>
Guy Benhamou................................................ 0
Shiu Shao................................................... 100,000
Claudia Hollingsworth....................................... 30,000
David Wu.................................................... 30,000
Marc Kesten................................................. 0
Executive Group............................................. 160,000
Non-Executive Director Group................................ 0
Non-Executive Officer Employee Group........................ 0
</TABLE>
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
The following is a short summary of the Federal income tax consequences of
the grant and exercise of stock options under the 1998 Plan.
Tax Consequences to Optionees
Incentive Stock Options. An optionee recognizes no taxable income upon the
grant of an incentive stock option. In addition, there will be no taxable income
recognized by the optionee at the time of exercise of an incentive stock option
provided the optionee has been in the employ of OroAmerica at all times during
the period beginning on the date of grant and ending on the date three months
before the date of exercise.
Gain recognized upon a disposition of the Option Shares generally will be
taxable as long-term capital gain if the shares are not disposed of within (i)
two years from the date of grant of the incentive stock option and (ii) one year
from the exercise date. If both of these conditions are not satisfied, the
disposition is a "disqualifying disposition". In that event, gain equal to the
excess of the fair market value of the Option Shares at the exercise date over
the Exercise Price generally will be taxed as ordinary income and any further
gain will be taxed as long-term capital gain if the shares were held more than
12 months. Different rules apply if an optionee exercises a stock option by
surrendering shares of Common Stock which were previously
14
<PAGE> 17
acquired upon the exercise of an incentive stock option and with respect to
which the optionee has not satisfied certain holding periods.
Shares acquired upon the exercise of an incentive stock option by the
payment of cash will have a basis equal to the Exercise Price of the stock
option. Different rules apply if an optionee exercises a stock option by
surrendering previously owned shares of Common Stock.
Upon the exercise of an incentive stock option, an amount equal to the
excess of the fair market value of the Option Shares at the exercise date over
the Exercise Price is treated as alternative minimum taxable income for purposes
of the alternative minimum tax.
Incentive stock options exercised by an optionee who has not satisfied the
applicable requirements as to continuous employment do not qualify for the tax
treatment discussed above. Instead, the exercise of such options will be subject
to the rules which apply to the exercise of nonstatutory stock options.
Nonstatutory Stock Options. An optionee recognizes no taxable income upon
the grant of a nonstatutory stock option. In general, upon the exercise of a
nonstatutory stock option, the optionee will recognize ordinary income in an
amount equal to the excess of the fair market value of the Option Shares on the
exercise date over the Exercise Price.
Shares acquired upon the exercise of a nonstatutory stock option by the
payment of cash will have a basis equal to their fair market value on the
exercise date and have a holding period beginning on the exercise date.
Different rules apply if an optionee exercises a stock option by surrendering
previously owned shares of Common Stock. Gain or loss recognized on a
disposition of the Option Shares generally will qualify as long-term capital
gain or loss if the shares have a holding period of more than 12 months.
OroAmerica generally must collect and pay withholding taxes upon the
exercise of a nonstatutory stock option. Withholding tax obligations arising
from the exercise of a nonstatutory stock option may be satisfied by any payment
method deemed appropriate by the Compensation Committee, including by
withholding from the Option Shares otherwise issuable upon the exercise of the
nonstatutory stock option the number of Option Shares having a fair market value
equal to the amount of the withholding tax obligation. If Option Shares are
withheld upon exercise in order to satisfy withholding taxes, such withholding
will be treated as though the optionee had received the withheld Option Shares
upon the exercise of the nonstatutory stock option and immediately sold them to
OroAmerica at their fair market value on the exercise date. The optionee
accordingly must recognize ordinary income in an amount equal to the excess of
the fair market value of the withheld Option Shares on the exercise date over
the amount he or she is deemed to have paid for them, in addition to the
ordinary income attributable to the Option Shares which were not withheld.
Tax Consequences to OroAmerica
OroAmerica generally is allowed an income tax deduction for amounts that
are taxable to optionees as ordinary income under the foregoing rules. Amounts
deemed to be compensation to executive officers as a result of the exercise of
stock options or the sale of Option Shares will not be taken into account in
determining whether the compensation paid to the executive exceeds the limits on
deductibility imposed under Section 162(m) of the Code.
APPROVAL OF AMENDMENTS TO THE
1994 CHIEF EXECUTIVE OFFICER BONUS PLAN
The 1994 Chief Executive Officer Bonus Plan (the "Bonus Plan") was adopted
by the Board of Directors on March 29, 1994 and thereafter was approved by the
stockholders. The Bonus plan provides for the payment to Mr. Benhamou,
OroAmerica's Chief Executive Officer, of an annual bonus based on a percentage
of the amount by which OroAmerica's income before income taxes (before the
payment of Mr. Benhamou's bonus) ("Pretax Profit") for the applicable year
exceeds $5 million, calculated as follows: 2% of Pretax Income in excess of $5.0
million up to $8.0 million; plus 4% of Pretax Income in excess of $8.0 million
up to $15.0 million; plus 6% of Pretax Income in excess of $15.0 million.
15
<PAGE> 18
The Bonus Plan was adopted in order to assure the deductibility for federal
income tax purposes of bonuses paid to Mr. Benhamou in light of the 1993
amendments to Section 162(m), which, in general, denies a publicly held
corporation a deduction for federal income tax purposes for otherwise deductible
compensation in excess of $1.0 million per year paid to its chief executive
officer or any of the four other executive officers whose compensation is
disclosed in its proxy statement, subject to certain exceptions. One of these
exceptions excludes from the $1.0 million limit any compensation that is
contingent on the attainment of one or more objective, pre-established
performance goals if a person with knowledge of the relevant facts would be able
to calculate the maximum amount payable to any executive under the plan. In
addition, prior to any payments, the plan must be approved by the corporation's
stockholders, and the corporation's compensation committee must certify that the
performance goals have been met.
The stockholders are being asked to vote on a proposal to amend the Bonus
Plan in order to change the bonus formula currently contained in the Bonus Plan
by increasing the percentage of Pretax Income payable to Mr. Benhamou. As
amended, the bonus payable to Mr. Benhamou for each year would be calculated as
follows: 4% of Pretax Income in excess of $5.0 million up to $8.0 million; plus
5% of Pretax Income in excess of $8.0 million up to $15.0 million; plus 6% of
Pretax Income in excess of $15.0 million. In order for the sum of Mr. Benhamou's
current annual salary ($750,000) and the amount of the bonus payable under the
revised bonus formula to exceed $1.0 million, Pretax Income for the applicable
year must exceed $10,600,000, as opposed to $12,750,000 under the existing
formula. If Pretax Income is less than $5.0 million in any year, no bonus will
be payable to Mr. Benhamou under the Bonus Plan for that year.
If the stockholders approve the amendments to the Bonus Plan, the revised
bonus formula will be used to determine the amount of Mr. Benhamou's bonus for
fiscal 2000 and subsequent fiscal years, unless and until the Compensation
Committee determines otherwise. Payments under the Bonus Plan will be made as
soon as practicable after the Compensation Committee certifies that the
performance goals have been met. Participation in the Bonus Plan is not
exclusive and will not prevent Mr. Benhamou from participating in other
compensation plans of OroAmerica or from receiving other compensation from
OroAmerica. If the amendments to the Bonus Plan are not approved by stockholders
at the Annual Meeting, the existing bonus formula will be maintained.
The Board of Directors believes that an annual bonus for Mr. Benhamou is an
important part of his overall compensation and that Mr. Benhamou has been
instrumental in the results achieved by OroAmerica over the last several years.
The Board further believes that amending the bonus formula will provide Mr.
Benhamou with additional incentive to continue his efforts. Accordingly, the
Board of Directors recommends that stockholders vote "FOR" the amendments to the
Bonus Plan.
The Bonus Plan covers only Mr. Benhamou. The compensation payable for
fiscal 2000 to the other four executives named in the Summary Compensation Table
is not expected to exceed the limitations set forth in Section 162(m).
The following table sets forth the annual bonus that would have been
payable under the Bonus Plan to Mr. Benhamou for fiscal 1999 assuming the
revised bonus formula had been in effect.
NEW PLAN BENEFITS
AMENDED 1994 CHIEF EXECUTIVE OFFICER BONUS PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE OF
NAME AND POSITION FISCAL 1999 BONUS
----------------- -----------------
<S> <C>
Guy Benhamou................................................ $238,926
Chairman of the Board, President and Chief Executive
Officer
</TABLE>
16
<PAGE> 19
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the accounting firm of
PricewaterhouseCoopers LLP to serve as independent auditors for the current
fiscal year, subject to ratification by the stockholders. PricewaterhouseCoopers
LLP has served as OroAmerica's independent auditors since 1983.
The Board of Directors recommends a vote "FOR" ratification of this
selection. Stockholder ratification of the selection of auditors is not required
under the laws of the State of Delaware, but the Board has determined to
ascertain the position of the stockholders on the selection. The Board of
Directors will reconsider the selection if it is not ratified by the
stockholders.
It is anticipated that representatives of PricewaterhouseCoopers LLP will
be present at the Annual Meeting, and such representatives will be given the
opportunity to make a statement, if they so desire, and to answer appropriate
questions.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
of Stockholders must be received by OroAmerica by January 15, 2000 to be
considered by OroAmerica for inclusion in OroAmerica's proxy statement and form
of proxy relating to that meeting. Such proposals should be directed to the
attention of the Secretary, OroAmerica, Inc., 443 North Varney Street, Burbank,
California 91502.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires OroAmerica's
executive officers and directors, and persons who own more than ten percent of a
registered class of OroAmerica's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten percent stockholders are required by Securities
and Exchange Commission regulations to furnish OroAmerica with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
OroAmerica, or written representations that no Forms 5 were required, OroAmerica
believes that all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten-percent beneficial owners were complied
with during fiscal 1999.
OTHER MATTERS
Neither OroAmerica nor any of the persons named as proxies knows of any
matters to be voted on at the Annual Meeting other than as described in this
Proxy Statement. However, if any other matters are properly presented at the
meeting, it is the intention of the persons named as proxies to vote in
accordance with their judgment on such matters, subject to direction by the
Board of Directors.
The 1999 Annual Report to Stockholders accompanies this Proxy Statement,
but is not to be deemed a part of the proxy soliciting material.
WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN AND RETURN THE
ENCLOSED PROXY CARD.
17
<PAGE> 20
EXHIBIT A
AMENDED AND RESTATED
OROAMERICA, INC.
1998 INCENTIVE STOCK OPTION PLAN
1. PURPOSE. This Amended and Restated OroAmerica, Inc. 1998 Incentive
Stock Option Plan (the "Plan") is intended to allow designated employees,
executive officers and other corporate and divisional officers (all of whom are
sometimes collectively referred to herein as "Employees") of OroAmerica, Inc., a
Delaware corporation ("OroAmerica"), and Subsidiaries which it may have from
time to time (OroAmerica and such Subsidiaries being together referred to herein
as the "Company") to receive certain options under the Plan ("Stock Options") to
purchase OroAmerica's common stock ("Common Stock") as herein provided.
"Subsidiary" shall mean each corporation which is a "subsidiary corporation" of
OroAmerica, within the definition contained in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code"). The purpose of the Plan is to
provide Employees with additional incentives to make significant and
extraordinary contributions to the long-term performance and growth of the
Company and to attract and retain Employees of exceptional ability.
2. ADMINISTRATION.
2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of OroAmerica (the "Board"). Each member
of the Committee shall be a "Non-Employee Director" as that term is defined in
Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), but no action of the Committee shall be invalid if this
requirement is not met. The Committee shall select one of its members as
Chairman and shall act by vote of a majority of a quorum or by unanimous written
consent. A majority of its members shall constitute a quorum. The Committee
shall be governed by the provisions of OroAmerica's Bylaws and of Delaware law
applicable to the Board, except as otherwise provided herein or determined by
the Board.
2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of the Plan: to approve the
Employees nominated by the management of the Company to be granted Stock
Options; to determine the number of Stock Options to be granted to an Employee;
to determine the time or times at which Stock Options shall be granted; to
establish the exercise prices and other terms and conditions upon which Stock
Options may be exercised; to remove or adjust any restrictions and conditions
upon Stock Options; to specify, at the time of grant, provisions relating to the
exercisability of Stock Options and to accelerate or otherwise modify the
exercisability of any Stock Options; to reprice Stock Options; and to adopt such
rules and regulations and to make all other determinations deemed necessary or
desirable for the administration of the Plan. All interpretations and
constructions of the Plan by the Committee, and all of its actions hereunder,
shall be binding and conclusive on all persons for all purposes.
2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each employee of the Company, and the estate and heirs of
such Committee member or employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees, which such
Committee member or employee or his or her estate or heirs may suffer as a
result of his or her responsibilities, obligations or duties in connection with
the Plan, to the extent that insurance, if any, does not cover the payment of
such items.
3. ELIGIBILITY AND PARTICIPATION. Employees eligible under the Plan shall
be approved by the Committee from those Employees who, in the opinion of the
management of the Company, are in positions which enable them to make
significant and extraordinary contributions to the long-term performance and
growth of the Company. In selecting Employees to whom Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
A-1
<PAGE> 21
4. GRANTS. The Committee may grant Stock Options in such amounts, at such
times, and to such Employees nominated by the management of the Company as the
Committee, in its discretion, may determine; provided, however, that, subject to
adjustment as provided in paragraph 11, the maximum number of shares of Common
Stock for which Stock Options may be granted to any one Employee during any one
calendar year shall be 100,000. Stock Options granted under the Plan shall
constitute "incentive stock options" within the meaning of Section 422 of the
Code, if so designated by the Committee on the date of grant. The Committee
shall also have the discretion to grant Stock Options which do not constitute
incentive stock options and any such Stock Options shall be designated
non-statutory stock options by the Committee on the date of grant. The aggregate
fair market value (determined as of the time an incentive stock option is
granted) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by any Employee during any one calendar year
(under all plans of the Company and any parent or subsidiary of the Company) may
not exceed the maximum amount permitted under Section 422 of the Code (currently
$100,000.00). Non-statutory stock options shall not be subject to the
limitations relating to incentive stock options contained in the preceding
sentence. Subject to the provisions of paragraph 11 hereof, the number of shares
of Common Stock issued and issuable pursuant to the exercise of Stock Options
granted hereunder shall not exceed 500,000. Each Stock Option shall be evidenced
by a written agreement (the "Option Agreement") in a form approved by the
Committee, which shall be executed on behalf of the Company and by the Employee
to whom the Stock Option is granted. If a Stock Option expires, terminates or is
cancelled for any reason without having been exercised in full, the shares of
Common Stock not purchased thereunder shall again be available for purposes of
the Plan.
5. PURCHASE PRICE. The purchase price (the "Exercise Price") of shares of
Common Stock subject to each Stock Option ("Option Shares") which is an
incentive stock option shall equal the fair market value ("Fair Market Value")
of such shares on the date of grant of such Stock Option. Notwithstanding the
foregoing, the Exercise Price of Option Shares subject to an incentive stock
option granted to an Employee who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of any parent or Subsidiary shall be at least equal to 110% of the
Fair Market Value of such shares on the date of grant of such Stock Option. The
purchase price of Option Shares subject to each Stock Option that is not an
incentive stock option shall be determined by the Committee in its sole and
absolute discretion, and may be less than the Fair Market Value of the Option
Shares on the date of grant, but shall not be less than $1.00 per share. The
Fair Market Value of a share of Common Stock on any date shall be equal to the
closing price of the Common Stock for the last preceding day on which
OroAmerica's shares were traded, and the method for determining the closing
price shall be determined by the Committee.
6. OPTION PERIOD. The Stock Option period (the "Term") shall commence on
the date of grant of the Stock Option and shall be ten years or such shorter
period as is determined by the Committee. Notwithstanding the foregoing, the
Term of an incentive stock option granted to an Employee who at the time of
grant owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any parent or subsidiary shall not
exceed five years. Each Stock Option shall provide that it is exercisable over
its term in such periodic installments as the Committee in its sole discretion
may determine. Such provisions need not be uniform. If an Employee shall not in
any period purchase all of the Option Shares which the Employee is entitled to
purchase in such period, the Employee may purchase all or any part of such
Option Shares at any time prior to the expiration of the Stock Option.
7. EXERCISE OF OPTIONS.
7.1 Each Stock Option may be exercised in whole or in part (but not
as to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Vice President, Administration, at the principal
office of the Company, together with payment of the Exercise Price and an
executed Notice and Agreement of Exercise in the form prescribed by paragraph
7.2. Payment may be made in cash, by cashier's or certified check or by
surrender of previously owned shares of the Company's Common Stock valued
pursuant to paragraph 5 (if the Committee authorizes payment in stock).
7.2 Exercise of each Stock Option is conditioned upon the agreement
of the Employee to the terms and conditions of this Plan and of such Stock
Option as evidenced by the Employee's execution and delivery of
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a Notice and Agreement of Exercise in a form to be determined by the Committee
in its discretion. Such Notice and Agreement of Exercise shall set forth the
agreement of the Employee that: (a) no Option Shares will be sold or otherwise
distributed in violation of the Securities Act of 1933 (the "Securities Act") or
any other applicable federal or state securities laws; (b) each Option Share
certificate may be imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions; (c) the Company may comply
with said securities law restrictions and issue "stop transfer" instructions to
its Transfer Agent and Registrar without liability; (d) if the Employee is
subject to the reporting requirements of Section 16(a) of the Exchange Act (a
"Section 16 Reporting Person"), the Employee will furnish to the Company a copy
of each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws; and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
7.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then, if the exercise of such Stock Option is duly tendered before its
expiration, such Stock Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any Registration
Statement covering resales of Option Shares.
8. CONTINUOUS EMPLOYMENT. Except as provided in paragraph 10 below, an
Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise such Employee remains continuously in the employ of the
Company. For purposes of this paragraph 8, the period of continuous employment
of an Employee with the Company shall be deemed to include (without extending
the term of the Stock Option) any period during which such Employee is on leave
of absence with the consent of the Company, provided that such leave of absence
shall not exceed three (3) months and that such Employee returns to the employ
of the Company at the expiration of such leave of absence. If such Employee
fails to return to the employ of the Company at the expiration of such leave of
absence, such Employee's employment with the Company shall be deemed terminated
as of the date such leave of absence commenced. The continuous employment of an
Employee with the Company shall also be deemed to include any period during
which such Employee is a member of the Armed Forces of the United States,
provided that such Employee returns to the employ of the Company within ninety
(90) days (or such longer period as may be prescribed by law) from the date such
Employee first becomes entitled to discharge. If an Employee does not return to
the employ of the Company within ninety (90) days (or such longer period as may
be prescribed by law) from the date such Employee first becomes entitled to
discharge, such Employee's employment with the Company shall be deemed to have
terminated as of the date such Employee's military service ended.
9. RESTRICTIONS ON TRANSFER. Incentive stock options granted under this
Plan shall be transferable only by will or the laws of descent and distribution.
The Committee shall have discretion to grant non-statutory stock options that
are not subject to the restrictions on transfer relating to incentive stock
options contained in the preceding sentence; provided, however, that
non-statutory stock options granted to a Section 16 Reporting Person shall be
subject to such restrictions on transfer as may be required to qualify for the
exemption provided for in Rule 16b-3 or otherwise imposed by the Committee in
its sole and absolute discretion. No interest of any Employee under the Plan
shall be subject to attachment, execution, garnishment, sequestration, the laws
of bankruptcy or any other legal or equitable process. Each Stock Option shall
be exercisable during an Employee's lifetime only by such Employee and, in the
case of non-statutory stock options, such Employee's permitted transferees.
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10. TERMINATION OF EMPLOYMENT.
10.1 Subject to the discretion of the Committee with respect to
non-statutory Stock Options, upon termination of an Employee's employment with
the Company by reason of death, all outstanding Stock Options to the extent
exercisable on the date of death of the Employee shall remain in full force and
effect and may be exercised pursuant to the provisions thereof at any time prior
to expiration at the end of the fixed term thereof. Upon termination of an
Employee's employment with the Company by reason of Disability, all outstanding
Stock Options to the extent exercisable on the date of termination of employment
may be exercised pursuant to the provisions thereof at any time until the
earlier of the end of the fixed term thereof and the expiration of twelve months
following termination of the Employee's employment. Unless otherwise provided by
the Committee, all Stock Options to the extent not presently exercisable by such
Employee at the date of death or termination of employment by reason of
Disability shall terminate as of the date of death or such termination of
employment and shall not be exercisable thereafter.
10.2 Subject to the discretion of the Committee with respect to
non-statutory Stock Options, upon the termination of the Employee's employment
with the Company for any reason other than the reasons set forth in paragraph
10.1 hereof, the Stock Option may be exercised during the period of three months
following the date of such termination of employment, but only to the extent
that such Stock Option was outstanding and exercisable on such date of
termination of employment. Unless otherwise provided by the Committee, all Stock
Options to the extent not then presently exercisable by such Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter.
10.3 For purposes of this Plan, "Disability" shall mean total and
permanent incapacity of an Employee, due to physical impairment or legally
established mental incompetence, to perform the usual duties of such Employee's
employment with the Company, which disability shall be determined: (i) on
medical evidence by a licensed physician designated by the Committee; or (ii) on
evidence that the Employee has become entitled to receive primary benefits as a
disabled employee under the Social Security Act in effect on the date of such
disability.
11. ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
11.1 The number and class of shares subject to each outstanding
Stock Option, the Exercise Price thereof (but not the total price) and the
maximum number of Stock Options that may be granted under the Plan shall be
proportionately adjusted in the event of any increase or decrease in the number
of the issued shares of Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that upon exercise of the Stock Option, the Employee shall receive the number
and class of shares such Employee would have received had such Employee been the
holder of the number of shares of Common Stock for which the Stock Option is
being exercised upon the date of such change or increase or decrease in the
number of issued shares of the Company.
11.2 Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which OroAmerica is not the
surviving corporation or in which OroAmerica survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the property of the Company to another corporation, or any dividend or
distribution to stockholders of more than ten percent (10%) of the Company's
assets, adequate adjustment or other provisions shall be made by the Company or
other party to such transaction so that there shall remain and/or be substituted
for the Option Shares provided for herein, the shares, securities or assets
which would have been issuable or payable in respect of or in exchange for such
Option Shares then remaining, as if the Employee had been the owner of such
Option Shares as of the applicable date. Any securities so substituted shall be
subject to similar successive adjustments.
11.3 In the sole discretion of the Committee, Stock Options may
include provisions, on terms (which need not be uniform) authorized by the
Committee in its sole discretion, that accelerate the
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Employees' rights to exercise Stock Options upon a "Change in Control" (as
defined by the Committee in its sole discretion) of the Company.
12. WITHHOLDING TAXES. The Company shall have the right at the time of
exercise of any Stock Option to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise ("Tax Liability"), to ensure the payment
of any such Tax Liability. The Company may provide for the payment of any Tax
Liability by any of the following means or a combination of such means, as
determined by the Committee in its sole and absolute discretion in the
particular case: (i) by requiring the Employee to tender a cash payment to the
Company; (ii) by withholding from the Employee's salary; (iii) by withholding
from the Option Shares which would otherwise be issuable upon exercise of the
Stock Option that number of Option Shares having an aggregate fair market value
(determined in the manner prescribed by paragraph 5) as of the date the
withholding tax obligation arises that is equal to the Employee's Tax Liability;
or (iv) by any other method deemed appropriate by the Committee. Satisfaction of
the Tax Liability of a Section 16 Reporting Person may be made by the method of
payment specified in clause (iii) above upon satisfaction of such additional
conditions as the Committee shall deem in its sole and absolute discretion as
appropriate in order for such withholding of Option Shares to qualify for the
exemption provided for in Section 16b-3 of the Exchange Act.
13. RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS. Stock Options granted
hereunder shall not be deemed to be salary or other compensation to any Employee
for purposes of any pension, thrift, profit-sharing, stock purchase or any other
employee benefit plan now maintained or hereafter adopted by the Company.
14. AMENDMENTS AND TERMINATION. The Board of Directors may at any time
suspend, amend or terminate this Plan. No amendment or modification of this Plan
may be adopted, except subject to stockholder approval, which would materially
increase the number of securities which may be issued under this Plan (except
for adjustments pursuant to paragraph 11 hereof) or change the designation of
Employees eligible to receive incentive stock options under the Plan.
15. SUCCESSORS IN INTEREST. The provisions of this Plan and the actions
of the Committee shall be binding upon all heirs, successors and assigns of the
Company and of Employees.
16. OTHER DOCUMENTS. All documents prepared, executed or delivered in
connection with this Plan shall be, in substance and form, as established and
modified by the Committee or by persons under its direction and supervision;
provided, however, that all such documents shall be subject in every respect to
the provisions of this Plan, and in the event of any conflict between the terms
of any such document and this Plan, the provisions of this Plan shall prevail.
All Stock Options shall be evidenced by written agreements executed by the
Company and the Employees to whom the Stock Options have been granted.
17. NO OBLIGATION TO CONTINUE EMPLOYMENT. This Plan and grants hereunder
shall not impose any obligation on the Company to continue to employ any
Employee. Moreover, no provision of this Plan or any document executed or
delivered pursuant to this Plan shall be deemed modified in any way by any
employment contract between an Employee (or other employee) and the Company.
18. MISCONDUCT OF AN EMPLOYEE. Notwithstanding any other provision of
this Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
materially inimical to the best interests of the Company, as determined by the
Committee, in its sole and absolute discretion, such Employee shall forfeit all
rights and benefits under this Plan.
19. TERM OF PLAN. This Plan was adopted by the Board effective April 14,
1998. No Stock Options may be granted under this Plan after April 13, 2008.
20. GOVERNING LAW. This Plan shall be construed in accordance with, and
governed by, the laws of the State of Delaware.
21. STOCKHOLDER APPROVAL. The Plan was approved by the stockholders of
OroAmerica on June 23, 1998, and amended by the Board on February 5, 1999 (the
"Amendment"). No Stock Option that does not conform to the provisions of the
Plan as in effect prior to the Amendment shall be exercisable unless and until
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the stockholders have approved the Amendment and all other legal requirements
have been fully complied with.
22. PRIVILEGES OF STOCK OWNERSHIP. The holder of a Stock Option shall not
be entitled to the privileges of stock ownership as to any shares of Common
Stock not actually issued to such holder.
IN WITNESS WHEREOF, this Amended and Restated Plan has been executed
effective as of February 5, 1999.
OROAMERICA, INC.
By: /s/ Guy Benhamou
------------------------------------
Guy Benhamou
Chairman of the Board
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OROAMERICA, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 14, 1999
The undersigned, revoking any previous proxies for such stock, hereby
appoints Guy Benhamou and Shiu Shao, and each of them, proxies of the
undersigned with full power of substitution to each, to vote all shares of
Common Stock of OROAMERICA, INC. which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of OroAmerica, Inc. to be held on June 14,
1999, and all postponements or adjournments thereof, with all the power the
undersigned would possess if personally present, with authority to vote (i) as
specified by the undersigned below and (ii) in the discretion of any proxy upon
such other business as may properly come before the meeting.
Vote this proxy as follows:
1. Election of directors:
FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD VOTE [ ]
(except as marked to the contrary below) (for both nominees)
Guy Benhamou, Shiu Shao, Bertram K. Massing, Ronald A. Katz and David Rousso
INSTRUCTION: TO WITHHOLD VOTE FOR A NOMINEE, MARK THROUGH THE NOMINEE'S NAME IN
THE ABOVE LIST.
2. Proposal to approve the amendments to the 1998 Incentive Stock
Option Plan:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to approve the amendments to the 1994 Chief Executive
Officer Bonus Plan:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to ratify the selection of PricewaterhouseCoopers LLP as
independent auditors:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS, FOR THE
AMENDMENTS TO THE 1998 INCENTIVE STOCK OPTION PLAN, FOR THE AMENDMENTS TO THE
1994 CHIEF EXECUTIVE OFFICER BONUS PLAN, FOR THE RATIFICATION OF AUDITORS AND
OTHERWISE IN THE DISCRETION OF ANY OF THE PERSONS ACTING AS PROXIES.
<PAGE> 27
IMPORTANT: Please date this proxy and sign exactly as your name or names appear
hereon. If stock is held jointly, each should sign. Executors, administrators,
trustees, guardians and others signing in a representative capacity, please give
your full title(s). If this proxy is submitted to a corporation or partnership,
it should be executed in the full corporate or partnership name by a duly
authorized person.
Dated: _______________, 1999 _________________________________________
_________________________________________
(Signature of stockholder)
IMPORTANT: PLEASE SIGN PROXY EXACTLY
AS YOUR NAME OR NAMES APPEAR HEREON.
