SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12
AMCOR Capital Corporation
-------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
______________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
______________________________________________________________
(2) Form, Schedule or Registration Statement No.:
______________________________________________________________
(3) Filing Party:
______________________________________________________________
(4) Date Filed:
______________________________________________________________
<PAGE>
AMCOR CAPITAL CORPORATION
52300 Enterprise Way
Coachella, California 92236
December 24, 1997
To Our Stockholders:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of AMCOR Capital Corporation (the "Company") which will be held at 12:30 p.m. on
January 29, 1998, at the Irvine Hilton Hotel, 18800 MacArthur Boulevard,
Irvine, California 92612 (the "Annual Meeting"). All holders of the Company's
outstanding common stock as of December 19, 1997 are entitled to vote at the
Annual Meeting.
Enclosed is a copy of the Notice of Annual Meeting of Stockholders, Proxy
Statement and Proxy Card. A current report on the business operations of the
Company will be presented at the meeting, and the stockholders will have an
opportunity to ask questions.
We hope you will be able to attend the Annual Meeting. Whether or not you
expect to attend, it is important you complete, sign, date and return the
Proxy Card in the enclosed envelope in order to make certain that your shares
will be represented at the Annual Meeting.
Sincerely,
/S/Fred H. Behrens
------------------
Fred H. Behrens
Chairman of the Board and
Chief Executive Officer
<PAGE>
AMCOR CAPITAL CORPORATION
52300 Enterprise Way
Coachella, California 92236
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held January 29, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of AMCOR
Capital Corporation, a Delaware corporation (the "Company"), will be held at
12:30 p.m., Pacific Standard Time, on January 29, 1998, at the Irvine Hilton
Hotel, 18800 MacArthur Boulevard, Irvine, California 92612 (the "Annual
Meeting") for the following purposes:
1. To elect five directors to the Board of Directors;
2. To approve the adoption of the Company's 1997 Stock Option Plan;
3. To ratify the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning September 1, 1997; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 19,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/S/Fred H. Behrens
------------------
Fred H. Behrens
Chairman of the Board and
Chief Executive Officer
Dated: December 24, 1997
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN
ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE
YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE
ATTACHED PROXY STATEMENT.
<PAGE>
AMCOR CAPITAL CORPORATION
52300 Enterprise Way
Coachella, California 92236
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
To Be Held January 29, 1998
VOTING AND PROXY
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of AMCOR Capital Corporation (the
"Company") for use at the 1998 Annual Meeting of Stockholders to be held at
12:30 p.m., Pacific Standard Time, on January 29, 1998, at the Irvine Hilton
Hotel, 18800 MacArthur Boulevard, Irvine, California 92612 (the "Annual
Meeting"), and at any adjournments thereof. When such proxy is properly executed
and returned, the shares it represents will be voted in accordance with any
directions noted thereon. If no specification is indicated, the shares will be
voted "FOR" the election as directors of the five nominees listed thereon. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted by written notice to the Secretary of the Company, by issuance of a
subsequent proxy or by voting at the Annual Meeting in person.
At the close of business on December 19, 1997, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 7,578,819 shares of Common
Stock, $.002 par value per share ("Common Stock"). Each share of Common Stock
entitles the holder of record thereof to one vote on any matter coming before
the Annual Meeting. Only stockholders of record at the close of business on
December 19, 1997 are entitled to notice of and to vote at the Annual Meeting
or at any adjournments thereof.
Under Delaware law and the Company's Bylaws, a majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum
at a meeting of stockholders. Generally, if a quorum is present, the
affirmative vote of a majority of the shares represented and voting on any
matter will constitute the act of the stockholders provided the number of
shares voting in favor of any proposal equals at least a majority of the
quorum. Although abstentions and "broker non-votes" are not counted either
"for" or "against" any proposals, if the number of abstentions or "broker
non-votes" results in the votes "for" a proposal not equaling at least a
majority of the quorum required for the meeting, the proposal will not be
approved. This will be the case even though the number of votes "for" the
proposal exceeds the votes "against" the proposal.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling and mailing the proxy
solicitation materials. Proxies may be solicited personally, or by mail or by
telephone, by directors, officers and regular employees of the Company who will
not be additionally compensated therefor. It is anticipated that this proxy
statement and accompanying proxy card will be mailed on or about December 26,
1997 to all stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
Directors are elected annually and hold office until the next annual
meeting of stockholders or until their respective successors are elected and
qualify. It is intended that the proxies solicited by the Board of Directors
will be voted for election of the five nominees listed below unless a contrary
instruction is made on the proxy. If for any reason one or more of these
nominees should be unavailable as a candidate for director, an event which is
not anticipated, the person named in the accompanying proxy will vote for
another candidate or candidates nominated by the Board of Directors. All
of the nominees for director are, at present, directors of the Company.
The following table sets forth certain information with respect to (i) each
nominee for director of the Company, (ii) the named executive officers in the
Summary Compensation Table on p. 9 and (iii) all director nominees and
executive officers of the Company as a group at December 1, 1997, including
the number of shares of Common Stock beneficially owned by each of them. The
persons named hold sole voting and investment power with respect to the shares
shown opposite their respective names, unless otherwise indicated. The
information with respect to each person specified is as supplied or confirmed
by such person or based upon statements filed with the Securities and Exchange
Commission ("SEC").
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percent of
of Beneficial Class of
Name or Director Ownership of Common
Identity of Group Age Since Common Stock(1) Stock
- --------------------- --- -------- --------------- ----------
<S> <C> <C> <C> <C>
Fred H. Behrens(2)(3) 56 1988 1,107,492 14.15%
Robert A. Wright(2)(4) 61 1988 864,507 11.15%
Marlene Tapie(5) 42 1988 89,167 1.17%
Dale P. Paisley(6) 55 1997 10,000 *
Marlin T. McKeever(7) 57 1997 10,000 *
All Director Nominees and 2,176,564 26.81%
Executive Officers of the
Company as a Group
(8 persons)(8)
<FN>
_______________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Shares of Common Stock subject to
options currently exercisable, or exercisable within 60 days after December
1, 1997, are deemed to be outstanding in calculating the percentage
ownership of a person or group but are not deemed to be outstanding as to
any other person or group.
(2) Executive officer of the Company.
(3) Includes 713,682 shares of Common Stock held by Behrens Partners, Ltd., a
family limited partnership controlled by Mr. Behrens. Also includes (i)
135,355 shares of Common Stock held in escrow on behalf of Mr. Behrens
pursuant to a stock purchase transaction with a former executive officer of
the Company, (ii) 11,500 shares held in an IRA account, and (iii) 246,955
shares of Common Stock underlying options which are exercisable as of
December 1, 1997 or within 60 days after such date.
(4) Includes (i) 182,654 shares of Common Stock held by Wright Family Partners,
Ltd., a family limited partnership controlled by Mr. Wright, (ii) 375,533
shares of Common Stock held in escrow on behalf of Mr. Wright pursuant to a
stock purchase transaction with a former executive officer of the Company,
(iii) 130,392 shares held in an IRA account, and (iv) 175,928 shares of
Common Stock underlying options which are exercisable as of December 1, 1997
or within 60 days after such date.
(5) Includes 57,917 shares of Common Stock which Ms. Tapie owns of record. Also
includes 31,250 shares of Common Stock underlying options which are
exercisable as of December 1, 1997 or within 60 days after such date.
(6) Represents 10,000 shares of Common Stock underlying options which are
exercisable as of December 1, 1997 or within 60 days after such date.
(7) Represents 10,000 shares of Common Stock underlying options which are
exercisable as of December 1, 1997 or within 60 days after such date.
(8) Includes 539,133 shares of Common Stock underlying options which are
exercisable as of December 1, 1997 or within 60 days after such date.
</TABLE>
3
<PAGE>
Nominees for Directors
Fred H. Behrens, CPA, has served as the Chairman, Chief Executive Officer,
and a director of the Company since 1988 and Treasurer and Chief Financial
Officer of the Company since 1990. Mr. Behrens also serves as the Chairman and
a director of Sun Goddess Farms, Inc. ("SGF"), a wholly-owned subsidiary of the
Company. Mr. Behrens has been actively involved with the Company and its
affiliates since August 1979. From 1966 to 1971, Mr. Behrens was on the audit
staff of Arthur Andersen & Co.; between 1971 and 1973, he was a principal in a
real estate development company; and from 1973 to August 1979, he was employed
as a Vice President of an agricultural management company. Mr. Behrens holds a
Bachelor of Science degree from the University of Minnesota School of Business
Administration. Mr. Behrens is a general partner of Rancho California Partners
II, a California limited partnership (the "Partnership"), which filed a
voluntary Chapter 11 Reorganization Petition under the federal Bankruptcy Act to
resolve certain issues with the Riverside County Tax Assessor's Office on or
about March 20, 1996. The decision to file for reorganization was made to
protect certain real property owned by the Partnership from foreclosure while
the property was being reappraised. The issues raised in the Petition have been
favorably resolved and the Partnership has dismissed the Petition.
Robert A. Wright has served as the President, Chief Operating Officer, and
a director of the Company since 1988. Mr. Wright also serves as the President
and a director of SGF. During the past 25 years Mr. Wright has been, and
continues to be, a principal in and the President of a farm equipment
manufacturing company located in central Illinois. Mr. Wright also served as
general partner or co-general partner for several agricultural real estate
partnerships which were not organized by the Company or its affiliates.
Mr. Wright holds a Bachelor of Science degree in Business (Management and
Finance) from the University of Colorado. Mr. Wright is a general partner of
the Partnership which filed a voluntary Chapter 11 Reorganization Petition under
the federal Bankruptcy Act to resolve certain issues with the Riverside County
Tax Assessor's Office on or about March 20, 1996. The decision to file for
reorganization was made to protect certain real property owned by the
Partnership from foreclosure while the property was being reappraised. The
issues raised in the Petition have been favorably resolved and the Partnership
has dismissed the Petition.
Marlene A. Tapie has served as a director of the Company since 1988.
Between 1979 and 1994, she served in various capacities including Vice
President, Executive Secretary to the Chairman and Office Administrator. From
1992 through 1995, Ms. Tapie owned and operated a clothing company, Marlene &
Company. In October 1994 she and her husband, Alan Tapie, a PGA golf
professional, purchased a controlling interest in Buena Park Golf Center, a
golf course and driving range located in Buena Park, California. Ms. Tapie also
acts as Director of Operations for Morgan Rae, Inc., a publishing company
located in Mission Viejo, California, which specializes in greeting cards and
other paper gift items that are marketed and distributed worldwide.
4
<PAGE>
Dale P. Paisley has served as a director of the Company since February
1997. From October 1995 to April 1997, he was a director and Chief Financial
Officer of TravelMax International, Inc. From May 1993 to October 1995, Mr.
Paisley provided accounting and financial consulting services to Pacific Snax
Corporation. From mid-1991 through mid-1993, Mr. Paisley was Chief Operating
Officer of CMS Capital Ventures, a Newport Beach, California firm specializing
in providing financial and asset-management services to the Resolution Trust
Corporation and the Federal Deposit Insurance Corporation. During the past 5
years, Mr. Paisley has also provided financial consulting services to
companies such as Telluride Management Solutions, Directors Mortgage Loan
Company and Admor Memory Corporation. From 1977 to 1991, Mr. Paisley was a
partner in the "Big 6" accounting firm of Coopers & Lybrand. Mr. Paisley
directed that firm's mergers and acquisitions practice and was responsible for
services provided to Shearson Lehman Brothers. Mr. Paisley holds a Bachelor of
Arts degree in Accounting from San Diego State University and is a CPA. On
August 15, 1997, a complaint for damages was filed by TravelMax International,
Inc. in the Superior Court of Orange County, California which alleges that
certain conduct by the therein specified defendants, including Mr. Paisley,
purportedly resulted in damages to TravelMax International, Inc. in an
unascertained amount, but believed to be in excess of $13,000,000. The causes
of action alleged in that complaint against Mr. Paisley are (i) fraud, (ii)
breach of fiduciary duty, (iii) negligence, (iv) conversion, (v)
misappropriation of funds, (vi) money had and received, (vii) unjust
enrichment, and (viii) determination of a constructive trust. Mr. Paisley
denies the allegations specified in that complaint. Moreover, Mr. Paisley
believes he has been released by TravelMax International, Inc. for his conduct
while in its service.
Marlin T. McKeever has served as a director of the Company since February
1997. Mr. McKeever has been the Vice President of Sales at Andreini & Company,
an insurance brokerage firm located in Orange County, California, since 1989.
Prior to that Mr. McKeever was Vice President of another insurance brokerage
firm, Johnson & Higgins, also located in Orange County, California. Mr. McKeever
was also a professional football player with the Los Angeles Rams from 1961
through 1973. Mr. McKeever holds a Bachelors Degree in Finance from the
University of Southern California, a Masters Degree in Business from the
University of Southern California and has been licensed as an insurance broker
in California since 1974.
Other Executive Officers
Barry Goverman has served as a Vice President of the Company since 1983
and maintains an office in Stoughton, Massachusetts, located near Boston. Mr.
Goverman has been active with the Company and its affiliates since 1981.
Between 1977 and 1981, Mr. Goverman was a principal of a management consulting
firm specializing in researching investments for brokers, accountants,
attorneys, and financial advisors. During 1976, Mr. Goverman was on the staff
of a national consulting firm providing management consulting and research to
agencies of federal and state governments. From 1967 to 1975, Mr. Goverman was
a management advisor to various officials in the Massachusetts state
government. Mr. Goverman holds a Bachelor of Arts degree and a Master of
Public Administration degree from Northeastern University.
5
<PAGE>
Jacques Genicot has served as a Vice President of the Company since 1996,
having joined the Company in 1993 to assist with banking and international
investor relations. From 1990 to mid-1992, Mr. Genicot was Managing Director of
Translink SA, an investment banking firm located in Paris, France. From mid-1992
through 1993, Mr. Genicot was self-employed as an independent consultant to
various financial institutions and businesses. From 1983 to 1986, Mr. Genicot
served as General Manager and Director of Canadian Imperial Bank of Commerce SA
in Paris. In 1982 he was employed by Canadian Imperial Bank of Commerce Limited
in London as Associate Director for Loan Syndications and Capital Markets. He
was employed by Citibank from 1974 to 1982 in various capacities, including as
Manager of Corporate Banking, in Brussels, London, Liege and Paris. Mr.
Genicot holds a Bachelors degree in Business from Hautes Etudes Commerciales
(Brussels) and an MBA in Finance from U.S. International University. Mr.
Genicot has also been a member of the Treasury Management Association since
1995 and speaks French, English, Dutch and Italian.
Robin Swanson has served as Corporate Secretary of the Company since May
1996. Ms. Swanson is also the Company's Office Administrator. From 1993 to 1996,
Ms. Swanson served as the Office Manager for Swanson Financial Group, LLP in
Palm Desert, California. From 1982 to 1993, Ms. Swanson worked in the capacity
of Executive Secretary and Office Manager in Houston, Texas for The Horne
Company Realtors, Real Vest Corporation, Eastdil Realty, Inc. and Nevins, Inc.
From 1979 to 1982, Ms. Swanson served as Purchasing Agent for Phi-Technologies
located in Oklahoma City, Oklahoma.
Board of Directors Meetings
The Board of Directors of the Company held six meetings during the fiscal
year ended August 31, 1997, and took action by unanimous written consent on 34
occasions. Each incumbent director attended at least 75% of the aggregate of (a)
the total number of meetings of the Board of Directors held during the fiscal
year ended August 31, 1997 (held during the period for which he has been a
director) and (b) the total number of meetings held by all committees of the
Board of Directors on which he served during the fiscal year ended August 31,
1997 (held during the period that he served).
All directors hold office until the next annual meeting of stockholders of
the Company and the election and qualification of their successors. Officers
are appointed by, and serve at the discretion of, the Board of Directors.
Committees
The Board of Directors has established an Audit Committee and Compensation
Committee. The Board of Directors has no nominating committee. Selection of
nominees for the Board of Directors is made by the entire Board of Directors.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by the Company's independent auditors,
reviews the Company's financial statements for each interim period, and reviews
and evaluates the Company's internal audit and control functions. The Audit
Committee currently consists of Mr. Behrens, Ms. Tapie and Mr. Paisley. The
Audit Committee held two meetings during the fiscal year ended August 31, 1997.
The Compensation Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation for employees and consultants of
the Company. The Compensation Committee currently consists of Mr. McKeever, Ms.
Tapie and Mr. Wright. The Compensation Committee held two meetings during the
fiscal year ended August 31, 1997.
6
<PAGE>
The Stock Option Committee selects the persons entitled to receive options
under the Company's Stock Option Plan and establishes the number of shares,
exercise price, vesting period and other terms of the options granted under the
1994 Stock Option Plan. The Stock Option Committee consists of Messrs. McKeever
and Wright. The Stock Option Committee held two meetings during the fiscal year
ended August 31, 1997.
Directors' Compensation
The Company's outside directors receive $500 per meeting of the Board of
Directors or any committee thereof. In addition, Messrs. Paisley and McKeever
have each received options to purchase up to 10,000 shares of the Company's
Common Stock.
Compliance with Beneficial Ownership Reporting Rules
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's executive officers and directors, and persons who
beneficially own more than 10% of a registered class of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the SEC. Such officers, directors and stockholders are required by SEC
regulations to furnish the Company with copies of all such reports that they
file.
Based solely upon a review of copies of such reports furnished to the
Company during its fiscal year ended August 31, 1997 and thereafter, or any
written representations received by the Company from a director, officer or
beneficial owner of more than 10% of the Company's Common Stock ("reporting
persons") that no other reports were required, the Company believes that,
during the Company's 1997 fiscal year, all Section 16(a) filing requirements
applicable to the Company's reporting persons were complied with except that
Mr. Behrens, the Company's Chairman, Chief Executive Officer and Chief
Financial Officer, inadvertently failed to file on a timely basis a Form 4 with
respect to the sale of 100,000 shares of Common Stock in July 1997, Mr. Wright,
the Company's President and Chief Operating Officer, inadvertently failed to
file on a timely basis Form 4s with respect to the acquisition of 5,925 shares
of Common Stock in June 1997 and the sale of 100,000 shares of Common Stock in
July 1997, and Messrs. Behrens and Wright failed to file on a timely basis Form
4s with respect to the repricings of certain stock options as described in the
Report on Repricing of Options on p. 10. In December 1997, Messrs. Behrens and
Wright filed late Form 5s reflecting these acquisitions, dispositions and
repricings.
7
<PAGE>
Principal Stockholders
The following table sets forth as of December 1, 1997, the identity of each
person known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and the respective beneficial ownerships of those
persons.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Ownership Percent of Class
of Beneficial Owner of Common Stock(1) of Common Stock
- ------------------- ----------------------- ----------------
<S> <C> <C>
Fred H. Behrens(2) 1,107,492 14.15%
52300 Enterprise Way
Coachella, California 92236
Robert A. Wright(3) 864,507 11.15%
52300 Enterprise Way
Coachella, California 92236
Gus and Susan Franklin 406,109 5.36%
12815 Imperial Highway
Santa Fe Springs, California 90670
All Directors and Executive
Officers as a group (8 persons)(4) 2,176,564 26.81%
<FN>
_______________
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Shares of Common Stock subject to
options currently exercisable, or exercisable within 60 days after December
1, 1997, are deemed to be outstanding in calculating the percentage
ownership of a person or group but are not deemed to be outstanding as to
any other person or group.
(2) Includes 713,682 shares of Common Stock held by Behrens Partners,
Ltd., a family limited partnership controlled by Mr. Behrens. Also includes
(i) 135,355 shares of Common Stock held in escrow on behalf of Mr. Behrens
pursuant to a stock purchase transaction with a former executive officer of
the Company, (ii) 11,500 shares held in an IRA account, and (iii) 246,955
shares of Common Stock underlying options which are exercisable as of
December 1, 1997 or within 60 days after such date.
(3) Includes (i) 182,654 shares of Common Stock held by Wright Family Partners,
Ltd., a family limited partnership controlled by Mr. Wright, (ii) 375,533
shares of Common Stock held in escrow on behalf of Mr. Wright pursuant to a
stock purchase transaction with a former executive officer of the Company,
(iii) 130,392 shares held in an IRA account, and (iv) 175,928 shares of
Common Stock underlying options which are exercisable as of December 1, 1997
or within 60 days after such date.
(4) Includes 539,133 shares of Common Stock underlying options which are
exercisable as of December 1, 1997 or within 60 days after such date.
</TABLE>
8
<PAGE>
Executive Compensation
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company of the Company's
Chief Executive Officer and the only other executive officer of the Company
whose aggregate cash compensation exceeded $100,000 (collectively, the "Named
Executives") during the fiscal years ended August 31, 1995, 1996 and 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------------------
<CAPTION>
Other Annual
Name and Salary Bonus Compensation(1)
Principal Position Year ($) ($) ($)
- ------------------------ ---- ------- ----- ----------------
<S> <C> <C> <C> <C>
Fred H. Behrens 1997 120,000 - 5,724
Chairman and Chief 1996 120,000 - 8,994
Executive Officer 1995 120,000 - 8,994
Robert A. Wright 1997 120,000 - 11,519
President 1996 120,000 - 23,038
1995 120,000 - 23,038
<FN>
_______________
(1) Represents premiums paid by the Company pursuant to $2.0 million key
person insurance policies on each of the lives of Messrs. Behrens and
Wright. According to the provisions of those policies, $2.0 million would
be paid upon the death of either Messrs. Behrens or Wright, of which $1.0
million would be paid to the Company and $1.0 million would be paid to each
insured's beneficiaries.
</TABLE>
9
<PAGE>
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to the number of shares of the
Company's Common Stock acquired upon exercise of options, the value realized
therefor, the number of unexercised options at August 31, 1997 and the value
of unexercised in-the-money options at August 31, 1997 for the Named
Executives in the Summary Compensation Table above. The Named Executives did
not hold any stock appreciation rights during fiscal 1997.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Shares Options at Fiscal Options at Fiscal
Acquired on Value Year-End(#) Year-End($)
Name Exercise(#) Realized($) Exercisable/ Exercisable/
Unexercisable Unexercisable
(1)
- ---------------- ----------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Fred H. Behrens - - 246,955 $1,173,036.20/$0
Robert A. Wright - - 175,928 $835,658/$0
<FN>
_______________
(1) Based upon the closing price of the Company's Common Stock on August 29,
1997.
</TABLE>
Report on Repricing of Options
The Board of Directors has issued the following explanation in connection
with adjustments to the exercise price of non-qualified stock options
("Options") previously awarded to the Named Executives:
"On July 2, 1990, the Company's Board of Directors granted Options to the
Named Executives to purchase up to an aggregate of 845,766 shares of Common
Stock (calculated prior to the 1-for-2 reverse stock split effectuated on
February 24, 1997) at an exercise price of $.80 per share. On April 9, 1995,
the Board of Directors resolved to decrease the exercise price of these
options to $.375 per share. Because of (i) recent increases in price of the
Company's Common Stock and (ii) the approval by the stockholders in 1995 of a
proposal to extend for one year the expiration date of certain other options
held by each of the Named Executives, and at the request of the Named
Executives, the Board of Directors on February 21, 1997 resolved to increase
the exercise price of these Options to $.80 per share. On February 21, 1997,
the Company's stockholders ratified the action taken by the Board of Directors
on February 21, 1997."
10
<PAGE>
APPROVAL OF 1997 STOCK OPTION PLAN
(Proposal 2)
1994 and 1997 Stock Option Plans
On May 3, 1994, the Board of Directors adopted the Company's 1994 Stock
Option Plan (the "1994 Plan") by action taken without a meeting of the directors
by written consent. On February 17, 1995, the 1994 Plan was approved by the
stockholders of the Company. On November 14, 1997, the Board of Directors
adopted the 1997 Stock Option Plan (the "1997 Plan") at a meeting of the Board
of Directors. The 1994 Plan and the 1997 Plan are sometimes referred to
collectively as the "Plans." The Plans are designed to enable the Company to
offer an incentive based compensation system to employees, officers and
directors of the Company and to employees of companies who do business with
the Company. The Plans provide for the grant of incentive stock options
("ISOs"), nonqualified stock options ("NQOs") and the 1994 Plan provides for
the grant of director nonqualified stock options ("Director NQOs") (ISOs, NQOs
and Director NQOs, collectively called "Options"). As of November 7, 1997, the
Company had a total of 69 employees, officers and directors, eligible to
receive Options under the Plans.
As of December 1, 1997, a total of 247,500 NQOs granted under the 1994 Plan
were outstanding and a total of 20,000 Director NQOs granted under the 1994 Plan
were outstanding. No NQOs have been granted under the 1997 Plan. An aggregate of
30,000 shares of the Company's Common Stock have been issued pursuant to the
exercise of NQOs granted under the 1994 Plan.
The Company plans to register, at the Company's expense, with the SEC on
a Form S-8 Registration Statement the shares of Common Stock issuable under the
1994 Plan and 1997 Plan.
The following summary description of the Plans are qualified in its entirety
by reference to the full text of the Plans. A copy of the 1997 Plan is attached
to this proxy statement as Exhibit A.
Shares Subject to the Plans
A total of 250,000 shares of the Company's Common Stock are authorized for
issuance under the 1994 Plan. A total of 500,000 shares of the Company's
Common Stock are authorized for issuance under the 1997 Plan. Any shares of
Common Stock which are subject to an Option but are not used because the
Option is terminated due to termination of the optionee's employment with the
Company or is otherwise not exercised, or in the case of an ISO, because the
terms and conditions of the ISO are not met, may again be used for Options
under the Plans.
Administration
The Plans are administered by a Committee ("Committee") of not less than
two nor more than five persons appointed by the Board of Directors, each of
whom must be a director of the Company. The 1994 Plan provides that members of
the Committee are not eligible to receive Options under the 1994 Plan (other
than Director NQOs). It is the intent of the Plans that they be administered in
a manner such that option grants and exercises would be "exempt" under Rule
16b-3 of the Exchange Act. The Committee is currently comprised of Messrs.
McKeever and Wright.
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The Committee is empowered to select those eligible persons to whom Options
shall be granted under the Plans; to determine the time or times at which each
Option shall be granted, whether Options will be ISOs or NQOs, and the number
of shares to be subject to each Option; and to fix the time and manner in
which each such Option may be exercised, including the exercise price and
option period, and other terms and conditions of such Options, all subject to
the terms and conditions of the Plans. The Committee has sole discretion to
interpret and administer the Plans, and its decisions regarding the Plans are
final.
Option Terms
ISOs granted under the Plans must have an exercise price of not less than
100% of the fair market value of the Common Stock on the date the ISO is granted
and must be exercised within ten years from the date of grant. In the case of
an ISO granted to an optionee who owns more than 10% of the total voting
securities of the Company on the date of grant, such exercise price shall be
not less than 110% of fair market value on the date of grant, and the option
period may not exceed five years. NQOs granted under the Plans must have an
exercise price of not less than 85% of the fair market value of the Common
Stock on the date the NQO is granted.
Options may be exercised during a period of time fixed by the Committee
except that no Option (other than an ISO granted to a stockholder owning more
than 10% of the voting securities of the Company) may be exercised more than
ten years after the date of grant. In the discretion of the Committee, payment
of the purchase price for the shares of stock acquired through the exercise of
an Option may be made in cash, shares of the Company's Common Stock or a
combination of cash and shares of the Company's Common Stock.
Amendment and Termination
The Plans may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the Board of
Directors. The Board of Directors may not (i) materially impair any outstanding
Options without the express consent of the optionee or (ii) materially increase
the number of shares subject to the Plans, materially increase the benefits
acquiring to optionees under the Plans, materially modify the requirements as
to eligibility to participate in the Plans or alter the method of determining
the Option exercise price without stockholder approval. No Option may be
granted under the 1994 Plan and the 1997 Plan after May 2, 2004 and November
14, 2007, respectively.
Federal Income Tax Consequences
NQOs.
Holders of NQOs do not realize income as a result of a grant of the Option,
but normally realize compensation income upon exercise of an NQO to the extent
that the fair market value of the shares of Common Stock on the date of
exercise of the NQO exceeds the exercise price paid. The Company will be
required to withhold taxes on ordinary income realized by an optionee upon the
exercise of a NQO.
In the case of an optionee subject to the "short-swing" profit recapture
provisions of Section 16(b) of the Exchange Act, the optionee realizes income
only upon the lapse of the six-month period under Section 16(b), unless the
optionee elects to recognize income immediately upon exercise of his Option.
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ISOs.
Holders of ISOs will not be considered to have received taxable income
upon either the grant of the Option or its exercise. Upon the sale or other
taxable disposition of the shares, long-term capital gain will normally be
recognized on the full amount of the difference between the amount realized
and the Option exercise price paid if no disposition of the shares has taken
place within either (a) two years from the date of grant of the Option or (b)
one year from the date of transfer of the shares to the optionee upon exercise.
If the shares are sold or otherwise disposed of before the end of the one-year
or two-year periods, the holder of the ISO must include the gain realized as
ordinary income to the extent of the lesser of (1) the fair market value of
the Option stock minus the Option price, or (2) the amount realized minus the
Option price. Any gain in excess of these amounts, presumably, will be treated
as capital gain. The Company will be entitled to a tax deduction in regard to
an ISO only to the extent the optionee has ordinary income upon the sale or
other disposition of the Option shares.
Upon the exercise of an ISO, the amount by which the fair market value of
the purchased shares at the time of exercise exceeds the Option price will be an
"item of tax preference" for purposes of computing the optionee's alternative
minimum tax for the year of exercise. If the shares so acquired are disposed of
prior to the expiration of the one-year or two-year periods described above,
there should be no "item of tax preference" arising from the Option exercise.
Possible Anti-takeover Effects
Although not intended as an anti-takeover measure by the Board of
Directors, one of the possible effects of the Plans could be to place
additional shares, and to increase the percentage of the total number of
shares outstanding, in the hands of the directors and officers of the Company.
Such persons may be viewed as part of, or friendly to, incumbent management
and may, therefore, under certain circumstances be expected to make investment
and voting decisions in response to a hostile takeover attempt that may serve
to discourage or render more difficult the accomplishment of such attempt.
In addition, Options may, in the discretion of the Committee, contain a
provision providing for the acceleration of the exercisability of outstanding,
but unexercisable, installments upon the first public announcement of a tender
offer, merger, consolidation, sale of all or substantially all of the assets
of the Company, or other attempted changes in the control of the Company. In
the opinion of the Board of Directors, such an acceleration provision merely
ensures that optionees under the Plans will be able to exercise their Options
as intended by the Board of Directors and stockholders of the Company prior to
any such extraordinary corporate transaction which might serve to limit or
restrict such right. The Board of Directors is, however, presently unaware of
the possibility of any hostile takeovers involving the Company.
Required Vote of Stockholders
The favorable vote of a majority of the shares of Common Stock voting in
person or by proxy at the Annual Meeting is required to approve the 1997 Plan.
As noted, the Board has approved the 1997 Plan. Stockholders should be aware,
however, that the Board may be viewed as having a conflict of interest in
approving, and recommending that stockholders approve, the 1997 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1997 PLAN.
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INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors has selected the certified public accounting firm of
Kelly & Company to audit and comment on the Company's financial statements for
the fiscal year ending August 31, 1998, and conduct whatever audit functions
are deemed necessary pursuant thereto. Kelly & Company audited the Company's
1997 financial statements included in the 1997 Annual Report to stockholders.
It is anticipated that a representative of Kelly & Company will be present
at the Annual Meeting and will be given the opportunity to make a statement, if
desired, and to respond to appropriate questions, if any, concerning their
engagement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between 1981 and 1986, the Company, in its capacity as general partner
and/or placement agent, raised approximately $200 million in private placement
syndications. This syndication activity resulted in the formation of
approximately 137 limited partnerships, which acquired real estate for
agribusiness or development and resale purposes. Partnership liquidations have
reduced this total to 21 limited partnerships as of August 31, 1997. As a
result of the liquidation of various partnerships, the Company acquired much
of the acreage of those liquidated partnerships for (i) payment of promissory
notes payable to the Company from those liquidated partnership, (ii) Common
Stock of the Company, (iii) preferred stock of the Company, or (iv) purchase
money promissory notes from the Company. Much of the Company's business
consists of managing the (i) operating vineyard properties acquired from those
liquidated partnerships and (ii) remaining affiliated limited partnerships.
Therefore, much of the Company's revenues are derived from agribusiness land
management and management of land acquired for development or resale. The
Company also participates in any appreciation, subject to certain provisions
relating to limited partners' returns, realized in the sale of land acquired
for development or resale.
Pursuant to the Company's management relationship with the remaining
affiliated limited partnerships, those partnerships are often indebted to the
Company in the form of promissory notes, accounts receivable and other advances.
Accounts receivable by the Company from limited partnerships consist primarily
of farming costs incurred by the Company on behalf of those limited partnerships
and advances to those limited partnerships collateralized by accounts receivable
from crop sales. Those costs and advances totaled $11,857,748 at August 31,
1997, are due on demand, and are without interest. The Company has promissory
notes and advances payable to the limited partnerships occurring from farming
activities. On August 31, 1997, the advances and notes payable to limited
partnerships were $620,000 and $2,196,027, respectively, compared with
$414,530 of advances and $2,407,423 of notes payable at August 31, 1996.
The August 31, 1997 balance sheet includes an unsecured promissory note payable
in November 1998 to an employee in the amount of $450,000, with interest at 2.7%
during fiscal 1997.
On November 30, 1995, the Company acquired a 50% interest in PS III Farms,
L.L.C., which leases 6,490 acres to one of the limited liability company
members which is not affiliated with the Company. The remaining lease term is
for 28 months, with a renewal option with terms subject to mutual agreement.
The primary crop grown on the farm is potatoes.
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The Company holds a 99% ownership interest in Las Palomas Country Club
Estates LLC, a California limited liability company, which acts as the
development entity for the golf course owned by an affiliated partnership and
a residential building lot development in Texas which is owned by Lake Valley
Realty Partners ("Lake Valley"). Fred H. Behrens, Chairman, Chief Executive
Officer, Chief Financial Officer, director, and principal shareholder of the
Company holds a 1% ownership interest in Las Palomas Country Club Estates LLC.
The Company also holds a 99% ownership interest in AMCOR Builders LLC, a
California limited liability company, which manages the construction operations
of the Company in Texas. Robert A. Wright, President, director and principal
shareholder of the Company holds a 1% ownership interest in AMCOR Builders LLC.
The Company holds a 99% ownership interest in AMCOR Biomass Farms LLC. EPC owns
442 limited partnership interests issued by Lake Valley. Mr. Behrens and Mr.
Wright are the only general partners of Lake Valley. There are 2,600 limited
partnership interests of Lake Valley presently issued and outstanding.
Therefore, by attribution of their ownership interests in EPC, Messrs. Behrens
and Wright jointly own 17% of the issued and outstanding limited partnership
interests of Lake Valley.
In May 1997, the Company issued an aggregate of 176,187 shares
of Common Stock at $5.92 per share to an affiliated partnership in connection
with the acquisition of certain real estate from that partnership. In
addition, in May 1997, the Company issued an aggregate of 414,554 shares of
Common Stock at $4.16 per share in connection with the retirement of certain
indebtedness of the Company.
In June 1997, the Company issued an aggregate of 161,052 shares of Common
Stock at $5.00 per share to an affiliated partnership in connection with the
redemption of 52,575 shares of the Company's Series A Convertible Preferred
Stock (now Series B Convertible Preferred Stock). In addition, in June 1997,
the Company issued an aggregate of 74,094 shares of the Company's Common Stock
at $4.73 per share in connection with the retirement of certain indebtedness
of the Company.
In July 1997, the Company acquired and then retired 200,000 shares of the
Company's Common Stock from an affiliate in settlement of an amount due to the
Company of $850,467.
In August 1997, the Company issued an aggregate of 94,830 shares of Common
Stock at $4.16 per share to an affiliated partnership in connection with the
acquisition of certain real estate from that partnership. In addition, in August
1997, the Company issued an aggregate of 423,974 shares of the Company's Common
Stock at $4.05 per share in connection with the retirement of certain
indebtedness of the Company.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the Annual
Meeting, it is the intention of the person named in the proxy to vote such
proxy in accordance with his judgment on such matters.
FORM 10-KSB REPORT
A copy of the Company's annual report to the SEC on Form 10-KSB is
available without charge to stockholders and may be obtained by writing to
Robin E. Swanson, Secretary, AMCOR Capital Corporation, 52300 Enterprise Way,
Coachella, California 92236.
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STOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's Annual Meeting must be received by the Company at its principal
executive offices on or before August 29, 1998, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
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Exhibit A
AMCOR CAPITAL CORPORATION
1997 STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this 1997 Stock Option Plan ("Plan") of
AMCOR CAPITAL CORPORATION, a Delaware corporation ("Company"), is to provide
the Company with a means of attracting and retaining the services of highly
motivated and qualified directors and key personnel. The Plan is intended to
advance the interests of the Company by affording to directors and key
employees, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity
for investment in the Company and the incentives inherent in stock ownership
in the Company. In addition, the Plan contemplates the opportunity for
investment in the Company by employees of companies that do business with the
Company. For purposes of this Plan, the term Company shall include
subsidiaries, if any, of the Company.
2. Legal Compliance. It is the intent of the Plan that all options granted under
it ("Options") shall be either "Incentive Stock Options" ("ISOs"), as such term
is defined in Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or non-qualified stock options ("NQOs"); provided, however, ISOs shall
be granted only to employees of the Company. An Option shall be identified as an
ISO or an NQO in writing in the document or documents evidencing the grant of
the Option. All Options that are not so identified as ISOs are intended to be
NQOs. In addition, the Plan provides for the grant of NQOs to employees of
companies that do business with the Company. It is the further intent of the
Plan that it conform in all respects with the requirements of Rule 16b-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"). To the extent that any aspect of the Plan or its
administration shall at any time be viewed as inconsistent with the requirements
of Rule 16b-3 or, in connection with ISOs, the Code, such aspect shall be deemed
to be modified, deleted or otherwise changed as necessary to ensure continued
compliance with such provisions.
3. Administration of the Plan.
3.1 Plan Committee. The Plan shall be administered by a committee
("Committee"). The members of the Committee shall be appointed from time to time
by the Board of Directors of the Company ("Board") and shall consist of not less
than two (2) nor more than five (5) persons. Such persons shall be directors of
the Company.
3.2 Grants of Options by the Committee. In accordance with the provisions of
the Plan, the Committee, by resolution, shall select those eligible persons to
whom Options shall be granted ("Optionees"); shall determine the time or times
at which each Option shall be granted, whether an Option is an ISO or an NQO and
the number of shares to be subject to each Option; and shall fix the time and
manner in which the Option may be exercised, the Option exercise price, and
the Option period. The Committee shall determine the form of option agreement
to evidence the foregoing terms and conditions of each Option, which need not
be identical, in the form provided for in Section 7. Such option agreement may
include such other provisions as the Committee may deem necessary or desirable
consistent with the Plan, the Code and Rule 16b-3.
<PAGE>
3.3 Committee Procedures. The Committee from time to time may adopt such
rules and regulations for carrying out the purposes of the Plan as it may deem
proper and in the best interests of the Company. The Committee shall keep
minutes of its meetings and records of its actions. A majority of the members
of the Committee shall constitute a quorum for the transaction of any business
by the Committee. The Committee may act at any time by an affirmative vote of a
majority of those members voting. Such vote may be taken at a meeting (which
may be conducted in person or by any telecommunication medium) or by written
consent of Committee members without a meeting.
3.4 Finality of Committee Action. The Committee shall resolve all questions
arising under the Plan and option agreements entered into pursuant to the Plan.
Each determination, interpretation, or other action made or taken by the
Committee shall be final and conclusive and binding on all persons, including,
without limitation, the Company, its shareholders, the Committee and each of
the members of the Committee, and the directors, officers and employees of the
Company, including Optionees and their respective successors in interest.
3.5 Non-Liability of Committee Members. No Committee member shall be liable
for any action or determination made by him or her in good faith with respect
to the Plan or any Option granted under it.
4. Board Power to Amend, Suspend, or Terminate the Plan. The Board may, from
time to time, make such changes in or additions to the Plan as it may deem
proper and in the best interests of the Company and its shareholders. The Board
may also suspend or terminate the Plan at any time, without notice, and in its
sole discretion. Notwithstanding the foregoing, no such change, addition,
suspension, or termination by the Board shall (i) materially impair any option
previously granted under the Plan without the express written consent of the
optionee; or (ii) materially increase the number of shares subject to the Plan,
materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
Section 8, without shareholder approval.
5. Shares Subject to the Plan. For purposes of the Plan, the Committee is
authorized to grant Options for up to 500,000 shares of the Company's common
stock ("Common Stock"), or the number and kind of shares of stock or other
securities which, in accordance with Section 13, shall be substituted for such
shares of Common Stock or to which such shares shall be adjusted. The
Committee is authorized to grant Options under the Plan with respect to such
shares. Any or all unsold shares subject to an Option which for any reason
expires or otherwise terminates (excluding shares returned to the Company in
payment of the exercise price for additional shares) may again be made subject
to grant under the Plan.
6. Optionees. Options shall be granted only to officers, directors or key
employees of the Company or employees of companies that do business with the
Company designated by the Committee from time to time as Optionees. Any Optionee
may hold more than one option to purchase Common Stock, whether such option is
an Option held pursuant to the Plan or otherwise. An Optionee who is an employee
of the Company ("Employee Optionee") and who holds an Option must remain a
continuous full or part-time employee of the Company from the time of grant of
the Option to him until the time of its exercise, except as provided in Section
10.3.
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7. Grants of Options. The Committee shall have the sole discretion to grant
Options under the Plan and to determine whether any Option shall be an ISO or
an NQO. The terms and conditions of Options granted under the Plan may differ
from one another as the Committee, in its absolute discretion, shall determine
as long as all Options granted under the Plan satisfy the requirements of the
Plan. Upon determination by the Committee that an Option is to be granted to an
Optionee, a written option agreement evidencing such Option shall be given to
the Optionee, specifying the number of shares subject to the Option, the Option
exercise price, whether the Option is an ISO or an NQO, and the other
individual terms and conditions of such Option. Such option agreement may
incorporate generally applicable provisions from the Plan, a copy of which
shall be provided to all Optionees at the time of their initial grants under
the Plan. The Option shall be deemed granted as of the date specified in the
grant resolution of the Committee, and the option agreement shall be dated as
of the date of such resolution. Notwithstanding the foregoing, unless the
Committee consists solely of non-employee directors, any Option granted to an
executive officer, director or 10% beneficial owner for purposes of Section 16
of the Securities Exchange Act of 1934, as amended ("Section 16 of the 1934
Act"), shall either be (a) conditioned upon the Optionee's agreement not to
sell the shares of Common Stock underlying the Option for at least six (6)
months after the date of grant or (b) approved by the entire Board or by the
shareholders of the Company.
8. Option Exercise Price. The price per share to be paid by the Optionee at the
time an ISO is exercised shall not be less than one hundred percent (100%) of
the Fair Market Value (as hereinafter defined) of one share of the optioned
Common Stock on the date on which the Option is granted. No ISO may be granted
under the Plan to any person who, at the time of such grant, owns (within the
meaning of Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any parent thereof, unless the exercise price of such ISO is at least
equal to one hundred and ten percent (110%) of Fair Market Value on the date of
grant. The price per share to be paid by the Optionee at the time an NQO is
exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date on which the NQO is granted, as determined by the Committee.
For purposes of the Plan, the "Fair Market Value" of a share of the Company's
Common Stock as of a given date shall be: (i) the closing price of a share of
the Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on the day immediately
preceding such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if the
Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or
a successor quotation system, (1) the last sales price (if the Common Stock is
then listed as a National Market Issue under the Nasdaq National Market System)
or (2) the closing representative bid price (in all other cases) for the Common
Stock on the day immediately preceding such date as reported by Nasdaq or such
successor quotation system; or (iii) if the Company's Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the closing bid price for the Common Stock on such date as
determined in good faith by the Committee; or (iv) if the Company's Common
Stock is not publicly traded, the fair market value established by the
Committee acting in good faith. In addition, with respect to any ISO, the Fair
Market Value on any given date shall be determined in a manner consistent with
any regulations issued by the Secretary of the Treasury for the purpose of
determining fair market value of securities subject to an ISO plan under the
Code.
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9. Ceiling of ISO Grants. The aggregate Fair Market Value (determined at the
time any ISO is granted) of the Common Stock with respect to which an Optionee's
ISOs, together with incentive stock options granted under any other plan of the
Company and any parent, are exercisable for the first time by such Optionee
during any calendar year shall not exceed $100,000. If an Optionee holds such
incentive stock options that become first exercisable (including as a result
of acceleration of exercisability under the Plan) in any one year for shares
having a Fair Market Value at the date of grant in excess of $100,000, then
the most recently granted of such ISOs, to the extent that they are
exercisable for shares having an aggregate Fair Market Value in excess of such
limit, shall be deemed to be NQOs.
10. Duration, Exercisability, and Termination of Options.
10.1 Option Period. The option period shall be determined by the Committee
with respect to each Option granted. In no event, however, may the option period
exceed ten (10) years from the date on which the Option is granted, or five (5)
years in the case of a grant of an ISO to an Optionee who is a ten percent (10%)
shareholder at the date on which the Option is granted as described in Section
8.
10.2 Exercisability of Options. Each Option shall be exercisable in whole or
in consecutive installments, cumulative or otherwise, during its term as
determined in the discretion of the Committee.
10.3 Termination of Options due to Termination of Employment, Disability, or
Death of Optionee; Termination for "Cause", or Resignation in Violation of an
Employment Agreement. All Options granted under the Plan to any Employee
Optionee shall terminate and may no longer be exercised if the Employee Optionee
ceases, at any time during the period between the grant of the Option and its
exercise, to be an employee of the Company; provided, however, that the
Committee may alter the termination date of the Option if the Optionee transfers
to an affiliate of the Company. Notwithstanding the foregoing, (i) if the
Employee Optionee's employment with the Company shall have terminated for any
reason (other than involuntary dismissal for "cause" or voluntary resignation in
violation of any agreement to remain in the employ of the Company, including,
without limitation, any such agreement pursuant to Section 15), he may, at any
time before the expiration of three (3) months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option (to
the extent that the Option was exercisable by him on the date of the termination
of his employment); (ii) if the Employee Optionee's employment shall have
terminated due to disability (as defined in Section 22(e)(3) of the Code and
subject to such proof of disability as the Committee may require), such Option
may be exercised by the Employee Optionee (or by his guardian(s), or
conservator(s), or other legal representative(s)) before the expiration of
twelve (12) months after such termination or before expiration of the Option,
whichever shall first occur (to the extent that the Option was exercisable by
him on the date of the termination of his employment); (iii) in the event of
the death of the Employee Optionee, an Option exercisable by him at the date of
his death shall be exercisable by his legal representative(s), legatee(s), or
heir(s), or by his beneficiary or beneficiaries so designated by him, as the
case may be, within twelve (12) months after his death or before the expiration
of the Option, whichever shall first occur (to the extent that the Option was
exercisable by him on the date of his death); and (iv) if the Employee
Optionee's employment is terminated for "cause" or in violation of any
agreement to remain in the employ of the Company, including, without
limitation, any such agreement pursuant to Section 14, his Option shall
terminate immediately upon termination of employment, and such Option shall be
deemed to have been forfeited by the Optionee. For purposes of the Plan,
"cause" may include, without limitation, any illegal or improper conduct (1)
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which injures or impairs the reputation, goodwill, or business of the Company;
(2) which involves the misappropriation of funds of the Company, or the misuse
of data, information, or documents acquired in connection with employment by
the Company; or (3) which violates any other directive or policy promulgated
by the Company. A termination for "cause" may also include any resignation in
anticipation of discharge for "cause" or resignation accepted by the Company
in lieu of a formal discharge for "cause."
11. Manner of Option Exercise; Rights and Obligations of Optionees.
11.1 Written Notice of Exercise. An Optionee may elect to exercise an Option
in whole or in part, from time to time, subject to the terms and conditions
contained in the Plan and in the agreement evidencing such Option, by giving
written notice of exercise to the Company at its principal executive office.
11.2 Cash Payment for Optioned Shares. If an Option is exercised for cash,
such notice shall be accompanied by a cashier's or personal check, or money
order, made payable to the Company for the full exercise price of the shares
purchased.
11.3 Stock Swap Feature. At the time of the Option exercise, and subject to
the discretion of the Committee to accept payment in cash only, the Optionee may
determine whether the total purchase price of the shares to be purchased shall
be paid solely in cash or by transfer from the Optionee to the Company of
previously acquired shares of Common Stock, or by a combination thereof. If the
Optionee elects to pay the total purchase price in whole or in part with
previously acquired shares of Common Stock, the value of such shares shall be
equal to their Fair Market Value on the date of exercise, determined by the
Committee in the same manner used for determining Fair Market Value at the time
of grant for purposes of Section 8.
11.4 Investment Representation for Non-Registered Shares and Legality of
Issuance. The receipt of shares of Common Stock upon the exercise of an Option
shall be conditioned upon the Optionee (or any other person who exercises the
Option on his or her behalf as permitted by Section 10.3) providing to the
Committee a written representation that, at the time of such exercise, it is
the intent of such person(s) to acquire the shares for investment only and not
with a view toward distribution. The certificate for unregistered shares issued
for investment shall be restricted by the Company as to transfer unless the
Company receives an opinion of counsel satisfactory to the Company to the effect
that such restriction is not necessary under then pertaining law. The providing
of such representation and such restrictions on transfer shall not, however, be
required upon any person's receipt of shares of Common Stock under the Plan in
the event that, at the time of grant of the Option relating to such receipt or
upon such receipt, whichever is the appropriate measure under applicable federal
or state securities laws, the shares subject to the Option shall be (i) covered
by an effective and current registration statement under the Securities Act of
1933, as amended, and (ii) either qualified or exempt from qualification under
applicable state securities laws. The Company shall, however, under no
circumstances be required to sell or issue any shares under the Plan if, in the
opinion of the Committee, (i) the issuance of such shares would constitute a
violation by the Optionee or the Company of any applicable law or regulation of
any governmental authority, or (ii) the consent or approval of any governmental
body is necessary or desirable as a condition of, or in connection with, the
issuance of such shares.
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11.5 Shareholder Rights of Optionee. Upon exercise, the Optionee (or any
other person who exercises the Option on his behalf as permitted by Section
10.3) shall be recorded on the books of the Company as the owner of the shares,
and the Company shall deliver to such record owner one or more duly issued stock
certificates evidencing such ownership. No person shall have any rights as a
shareholder with respect to any shares of Common Stock covered by an Option
granted pursuant to the Plan until such person shall have become the holder of
record of such shares. Except as provided in Section 13, no adjustments shall
be made for cash dividends or other distributions or other rights as to which
there is a record date preceding the date such person becomes the holder of
record of such shares.
11.6 Holding Periods for Tax Purposes. The Plan does not provide that an
Optionee must hold shares of Common Stock acquired under the Plan for any
minimum period of time. Optionees are urged to consult with their own tax
advisors with respect to the tax consequences to them of their individual
participation in the Plan.
12. Successive Grants. Successive grants of Options may be made to any Optionee
under the Plan.
13. Adjustments.
(a) If the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of a
recapitalization, reclassification, reorganization, merger, consolidation,
share exchange, or other business combination in which the Company is the
surviving parent corporation, stock split-up, combination of shares, or
dividend or other distribution payable in capital stock or rights to acquire
capital stock, appropriate adjustment shall be made by the Committee in the
number and kind of shares for which options may be granted under the Plan. In
addition, the Committee shall make appropriate adjustment in the number and
kind of shares as to which outstanding and unexercised options shall be
exercisable, to the end that the proportionate interest of the holder of the
option shall, to the extent practicable, be maintained as before the
occurrence of such event. Such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of the
option but with a corresponding adjustment in the exercise price per share.
(b) In the event of the dissolution or liquidation of the Company, any
outstanding and unexercised options shall terminate as of a future date to be
fixed by the Committee.
(c) In the event of a Reorganization (as hereinafter defined), then,
(i) If there is no plan or agreement with respect to the
Reorganization ("Reorganiza- tion Agreement"), or if the Reorganization
Agreement does not specifically provide for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash or
other property or securities of another corporation, then any outstanding and
unexercised options shall terminate as of a future date to be fixed by the
Committee; or
(ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash or
other property or securities of another corporation, then the Committee shall
adjust the shares under such outstanding and unexercised options, and shall
adjust the shares remaining under the Plan which are then available for the
issuance of options under the Plan if the Reorganization Agreement makes
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specific provisions therefor, in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change, conversion, or
exchange of such options and shares.
(d) The term "Reorganization" as used in this Section 13 shall mean any
reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or
lease of all or substantially all of the assets of the Company. Nothing herein
shall require the Company to adopt a Reorganization Agreement, or to make
provision for the adjustment, change, conversion, or exchange of any options,
or the shares subject thereto, in any Reorganization Agreement which it does
adopt.
(e) The Committee shall provide to each optionee then holding an outstanding
and unexercised option not less than thirty (30) calendar days' advanced written
notice of any date fixed by the Committee pursuant to this Section 13 and of the
terms of any Reorganization Agreement providing for the adjustment, change,
conversion, or exchange of outstanding and unexercised options. Except as the
Committee may otherwise provide, each optionee shall have the right during such
period to exercise his option only to the extent that the option was exercisable
on the date such notice was provided to the optionee.
Any adjustment to any outstanding ISO pursuant to this Section 13, if
made by reason of a transaction described in Section 424(a) of the Code, shall
be made so as to conform to the requirements of that Section and the regulations
thereunder. If any other transaction described in Section 424(a) of the Code
affects the Common Stock subject to any unexercised ISO theretofore granted
under the Plan (hereinafter for purposes of this Section 13 referred to as the
"old option"), the Board of Directors of the Company or of any surviving or
acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or
to assume the old option.
(f) No modification, extension, renewal, or other change in any option
granted under the Plan may be made, after the grant of such option, without
the optionee's consent, unless the same is permitted by the provisions of the
Plan and the option agreement. In the case of an ISO, optionees are hereby
advised that certain changes may disqualify the ISO from being considered as
such under Section 422 of the Code, or constitute a modification, extension,
or renewal of the ISO under Section 424(h) of the Code.
(g) All adjustments and determinations under this Section 13 shall be
made by the Committee in good faith in its sole discretion.
14. Continued Employment. As determined in the sole discretion of the Committee
at the time of grant and if so stated in a writing signed by the Company, each
Option may have as a condition the requirement of an Employee Optionee to remain
in the employ of the Company, or of its affiliates, and to render to it his or
her exclusive service, at such compensation as may be determined from time to
time by it, for a period not to exceed the term of the Option, except for
earlier termination of employment by or with the express written consent of the
Company or on account of disability or death. The failure of any Employee
Optionee to abide by such agreement as to any Option under the Plan may result
in the termination of all of his or her then outstanding Options granted
pursuant to the Plan. Neither the creation of the Plan nor the granting of
Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee
shall be and shall remain subject to discharge by the Company as though the
Plan had never come into existence. Except as specifically provided by the
Committee in any particular case, the loss of existing or potential profit in
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options granted under this Plan shall not constitute an element of damages in
the event of termination of the employment of an employee even if the
termination is in violation of an obligation of the Company to the employee by
contract or otherwise.
15. Tax Withholding. The exercise of any Option granted under the Plan is
subject to the condition that if at any time the Company shall determine, in
its discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as
a condition of, or in connection with, such exercise or a later lapsing of time
or restrictions on or disposition of the shares of Common Stock received upon
such exercise, then in such event, the exercise of the Option shall not be
effective unless such withholding shall have been effected or obtained in a
manner acceptable to the Company. When an Optionee is required to pay to the
Company an amount required to be withheld under applicable income tax laws in
connection with the exercise of any Option, the Optionee may, subject to the
approval of the Committee, which approval shall not have been disapproved at
any time after the election is made, satisfy the obligation, in whole or in
part, by electing to have the Company withhold shares of Common Stock having a
value equal to the amount required to be withheld. The value of the Common
Stock withheld pursuant to the election shall be determined by the Committee,
in accordance with the criteria set forth in Section 8, with reference to the
date the amount of tax to be withheld is determined. The Optionee shall pay to
the Company in cash any amount required to be withheld that would otherwise
result in the withholding of a fractional share. The election by an Optionee
who is an officer of the Company within the meaning of Section 16 of the 1934
Act, to be effective, must meet all of the requirements of Section 16 of the
1934 Act.
16. Term of Plan.
16.1 Effective Date. Subject to shareholder approval, the Plan shall become
effective as of November 14, 1997.
16.2 Termination Date. Except as to options granted and outstanding under
the Plan prior to such time, the Plan shall terminate at midnight on November
14, 2007, and no Option shall be granted after that time. Options then
outstanding may continue to be exercised in accordance with their terms.The Plan
may be suspended or terminated at any earlier time by the Board within
the limitations set forth in Section 4.
17. Non-Exclusivity of the Plan. Nothing contained in the Plan is intended to
amend, modify, or rescind any previously approved compensation plans, programs
or options entered into by the Company. This Plan shall be construed to be in
addition to and independent of any and all such other arrangements. Neither the
adoption of the Plan by the Board nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt, with or without
shareholder approval, such additional or other compensation arrangements as the
Board may from time to time deem desirable.
18. Governing Law. The Plan and all rights and obligations under it shall be
construed and enforced in accordance with the laws of the State of California.
19. Information to Optionees. Optionees under the Plan who do not otherwise
have access to financial statements of the Company will receive the Company's
financial statements at least annually.
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