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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
MONACO COACH CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/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:
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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 paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MONACO COACH CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
Monaco Coach Corporation (the "Company"), a Delaware corporation, will be held
on May 18, 2000 at 10:00 a.m., local time, at the Company's headquarters,
located at 91320 Industrial Way, Coburg, Oregon, for the following purposes:
1. To elect three Class I directors to serve for two-year terms
expiring upon the 2002 Annual Meeting of Stockholders or until their
successors are elected.
2. To amend the Company's 1993 Director Option Plan (the "Director
Plan") to (i) decrease the initial option grants to directors from 27,000 to
8,000 shares and the annual option grants to directors from 5,400 to 3,500
shares; (ii) remove the current limitation on certain directors from
participating in the Director Plan; and (iii) provide that a stock split
will not result in an adjustment to the number of shares subject to
automatic option grants occurring after the date of the stock split.
3. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending
December 30, 2000.
4. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 24, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
RICHARD E. BOND
SECRETARY
Coburg, Oregon
April 20, 2000
<PAGE>
MONACO COACH CORPORATION
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Monaco Coach Corporation (the "Company") for use at the 2000 Annual Meeting of
Stockholders to be held May 18, 2000 at 10:00 a.m., local time (the "Annual
Meeting"), or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Company's principal executive offices, located at 91320
Industrial Way, Coburg, Oregon 97408, and its telephone number at that location
is (541) 686-8011.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended January 1, 2000, including financial statements,
were mailed on or about April 20, 2000 to all stockholders entitled to vote at
the meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 24, 2000 are
entitled to notice of and to vote at the meeting. At the record date, 18,893,397
shares of the Company's Common Stock, $0.01 par value, were issued and
outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at the Company's principal executive offices a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the record date. Shares that are voted "FOR,"
"AGAINST" or "WITHHOLD AUTHORITY" with respect to a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business, and (ii) the total number of Votes
<PAGE>
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company's Bylaws require that proposals of stockholders of the Company
which are intended to be presented by such stockholders at the Company's 2001
Annual Meeting must be received by the Company no later than December 21, 2000,
whether or not they are to be included in the Company's proxy statement and form
of proxy relating to that meeting.
PROPOSAL ONE--ELECTION OF DIRECTORS
NOMINEES
The authorized number of directors is currently established at six. The
Company's Certificate of Incorporation provides that the directors shall be
divided into two classes, with the classes serving for staggered, two-year
terms. Currently there are three directors in each of Class I and Class II. Each
of the three Class II directors elected at the 1999 Annual Meeting will hold
office until the 2001 Annual Meeting or until his successor has been duly
elected and qualified. The three Class I directors are to be elected at the
Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named below, each of whom is
currently a director of the Company. In the event that any nominee of the
Company becomes unable or declines to serve as a director at the time of the
Annual Meeting, the proxy holders will vote the proxies for any substitute
nominee who is designated by the current Board of Directors to fill the vacancy.
It is not expected that any nominee listed below will be unable or will decline
to serve as a director.
The names of the three Class I nominees for director and certain information
about each of them are set forth below. The names of, and certain information
about, the current Class II directors with unexpired terms are also set forth
below. All information is as of the record date.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- -------- ------------------------------------------------ --------
<S> <C> <C> <C>
NOMINEES FOR CLASS I DIRECTORS:
Kay L. Toolson................. 56 Chairman of the Board, Chief Executive Officer 1993
and President of the Company
Michael J. Kluger.............. 42 Managing Director of Liberty Capital 1993
Partners, Inc.
Lee Posey...................... 65 Chairman of Palm Harbor Homes 1997
CONTINUING CLASS II DIRECTORS:
Carl E. Ring, Jr............... 61 Managing Director of Liberty Capital 1993
Partners, Inc.
Richard A. Rouse............... 54 Private Investor 1993
Roger A. Vandenberg............ 53 President of Cariad Capital, Inc. 1993
</TABLE>
2
<PAGE>
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers of
the Company.
MR. TOOLSON has served as Chief Executive Officer of the Company and the
Predecessor since 1986 and as Chairman of the Company since 1993. He has served
as President of the Company since 1986 except for the periods from October 1995
to January 1997 and August 1998 to September 1999. From 1973 to 1986,
Mr. Toolson held executive positions with two motor coach manufacturers. He
holds a B.S. degree in Business Administration and Computer Science and an
M.B.A. degree, both from Utah State University.
MR. KLUGER has served as a director of the Company since March 1993. He is a
founding partner of Liberty Partners, L.P., whose general partner is Liberty
Capital Partners, Inc., a New York investment management firm, where he has
served as a Managing Director since September 1992. For five years prior
thereto, Mr. Kluger was a Director and Senior Vice President of Merrill Lynch
Interfunding Inc., a subsidiary of Merrill Lynch & Co., an investment banking
and brokerage firm. Mr. Kluger is also a director and stockholder of Liberty
Capital Partners, Inc.
MR. POSEY has served as a director of the Company since July 1997.
Mr. Posey currently serves as Chairman of the Board for Palm Harbor Homes, a
Dallas, Texas based producer of multi-section manufactured homes, a position he
has held since December 1977. Additionally, he was the President of Palm Harbor
Homes from December 1977 to December 1993. Mr. Posey is a graduate of Alma
College in Alma, Michigan.
MR. RING has served as a director of the Company since March 1993. He is a
founding partner of Liberty Partners, L.P., whose general partner is Liberty
Capital Partners, Inc., a New York investment management firm, where he has
served as a Managing Director since September 1992. From June 1991 to
September 1992, he was President of Eden, Miller & Co., Incorporated, an
investment banking firm. For more than five years prior thereto, Mr. Ring was a
Managing Director of Lehman Brothers Inc., an investment banking and brokerage
firm. Mr. Ring is also a director and stockholder of Liberty Capital Partners,
Inc.
MR. ROUSE has served as a director of the Company since July 1993. He is
currently a private investor. From 1991 to 1998, Mr. Rouse served as Chairman of
Emergency Road Service, Inc., a privately-held nationwide roadside assistance
company. From 1988 to 1991, he was President of Trailer Life Enterprises, Inc.,
a publisher and sponsor of recreational vehicle publications and clubs.
MR. VANDENBERG has served as a director of the Company since March 1993. He
currently serves as the President of Cariad Capital, Inc., which he founded in
January 1992, and as a Managing Director of Narragansett Capital, Inc., a
private investment firm, a position he has held since 1986. Mr. Vandenberg is
also a general partner of the general partner of Narragansett Capital Partners
- -A and -B, L.P. ("NCPAB"), related venture capital funds, and a general partner
of the general partner of Narragansett First Fund, a venture capital fund.
Mr. Vandenberg is also a director of Wellman, Inc., a polyester fiber
manufacturer, and general partner of Monaco Capital Partners.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
fiscal 1999. Other than Mr. Kluger, no director attended fewer than 75% of the
meetings of the Board of Directors and its committees upon which such director
served. The Board of Directors has an Audit Committee and a Compensation
Committee. The Board of Directors has no nominating committee or any committee
performing similar functions.
The Audit Committee of the Board of Directors currently consists of
Directors Ring and Rouse, and held one meeting during the last fiscal year. The
Audit Committee recommends engagement of the Company's independent accountants,
and is primarily responsible for approving the services performed by
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the Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently consists of
Directors Ring, Rouse and Vandenberg, and held two meetings during the last
fiscal year. The Compensation Committee establishes the policies upon which
compensation of and incentives for the Company's executive officers will be
based, reviews and approves the compensation of the Company's executive
officers, and administers the Company's stock option and stock purchase plans.
COMPENSATION OF DIRECTORS
The Company's directors who are not employees of the Company received
$25,000 in 1999 for service on the Board of Directors and any committee thereof.
The Company's directors are also reimbursed for certain expenses in connection
with attendance at board and committee meetings.
Each non-employee director of the Company, other than directors affiliated
with Liberty Investment Partners II, L.P., Liberty Partners, L.P., Monaco
Capital Partners or Cariad Capital, Inc., is currently entitled to participate
in the Company's 1993 Director Option Plan (the "Director Plan"). The Board of
Directors and the stockholders have authorized a total of 135,000 shares of
Common Stock for issuance pursuant to the Director Plan. Under the current terms
of the Director Plan, each eligible non-employee director is automatically
granted an option to purchase 27,000 shares of Common Stock (the "Initial
Option") on the later of the effective date of the Company's initial public
offering or the date on which the optionee first becomes a director of the
Company. Thereafter, each optionee is automatically granted an additional option
to purchase 5,400 shares of Common Stock (a "Subsequent Option") on
September 30 of each year if, on such date, the optionee has served as a
director of the Company for at least six months. Each Initial Option vests over
five years at the rate of 20% of the shares subject to the Initial Option at the
end of each anniversary following the date of grant. Each Subsequent Option
vests in full on the fifth anniversary of its date of grant. The exercise price
of each option is the fair market value of the Common Stock as determined by the
closing price reported by the New York Stock Exchange on the date of grant. By
mutual agreement with the Company, Messrs. Rouse and Posey were each granted a
Subsequent Option to purchase 2,500 shares on September 30, 1999 at an exercise
price of $24.375 per share. No directors other than Messrs. Rouse and Posey were
granted options under the Director Plan in 1999. The Company is proposing
certain amendments to the Director Plan--See Proposal Two.
VOTE REQUIRED
The three nominees receiving the highest number of votes of the shares
entitled to be voted for them shall be elected as directors. Votes withheld from
any director will be counted for purposes of determining the presence or absence
of a quorum for the transaction of business at the meeting, but have no other
legal effect upon election of directors under Delaware law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
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PROPOSAL TWO--AMENDMENT OF THE 1993 DIRECTOR OPTION PLAN
At the Annual Meeting, the stockholders are being requested to consider and
approve amendments to the Company's 1993 Director Option Plan, as amended (the
"Director Plan"), to amend the Company's Director Plan to (i) decrease the
initial option grants to directors from 27,000 to 8,000 shares and the annual
option grants to directors from 5,400 to 3,500 shares; (ii) remove the current
limitation on certain directors from participating in the Director Plan; and
(iii) amend the Director Plan to provide that a stock split will not result in
an adjustment to the number of shares subject to automatic option grants
occurring after the date of the stock split.
TERMS OF DIRECTOR PLAN PRIOR TO AMENDMENT
The Director Plan was adopted by the Board of Directors and by the
stockholders in August 1993. Under the terms of the Director Plan, the Company
may grant options to purchase shares of the Company's Common Stock to certain
Outside Directors (as defined in the Director Plan). The Director Plan is
administered by the Company's Board of Directors. The number of shares of Common
Stock subject to each option grant is subject to adjustment to reflect changes
in the Company's capitalization. The Director Plan provides for the grant of
options covering an aggregate of 135,000 shares of the Company's Common Stock,
which reflects changes in the Company's capitalization since the inception of
the Director Plan. Any Common Stock subject to an option that is not exercised
prior to expiration or that otherwise terminates or which has been conveyed back
to the Company pursuant to the terms of the option grant will thereafter be
available for further grant under the Director Plan. Each option grant is priced
at the fair market value, which is the closing sales price of the stock as
quoted on the New York Stock Exchange on the date of grant. The fair market
value of the Common Stock as of the close of trading on March 24, 2000 was
$19.125 per share. Under the terms of the Director Plan, the option grants have
a term of ten years from the date of grant. The options are granted to the
Outside Directors in consideration for their service on the board of directors.
The purposes of the Director Plan are to attract and retain the best
available personnel for service as Outside Directors of the Company, to provide
an additional incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board of Directors.
The Board of Directors believes that the Company's Director Plan serves as an
incentive to current Directors and helps align their interests with those of the
Company's stockholders.
A copy of the Director Plan, which includes the proposed amendments, is
attached hereto as Exhibit A.
PURPOSE AND EFFECT OF AMENDMENTS TO SECTION FOUR OF THE DIRECTOR PLAN
The purpose of the proposed amendments to Section Four to the Director Plan
is to decrease the number of options issued to Outside Directors under the
Director Plan and to make additional Directors eligible for issuance of grants
under the Director Plan. The Board of Directors believes that the proposed
amendments are in the best interests of the Company and its stockholders. The
effect of the proposed amendments to Section Four of the Director Plan will be
to reestablish the initial option grant at 8,000 shares as originally stated in
the Director Plan and to fix the subsequent annual grants at 3,500 shares,
higher than the 1,600 shares originally stated in the Director Plan but less
than the 5,400 shares currently existing as a result of stock splits. The
purpose of the change is to negate the unintended effect of prior stock splits,
but also to provide initial and annual grants at levels which the Company
believes are reasonable and will serve to attract and retain qualified persons
to serve on the Board of Directors.
Under the current terms of the Director Plan, each Outside Director of the
Company, other than directors affiliated with Liberty Investment Partners II,
L.P., Liberty Partners, L.P., Monaco Capital Partners or Cariad Capital, Inc.,
is automatically granted an option to purchase 27,000 shares of Common Stock,
which reflects changes in the Company's capitalization since the inception of
the Director Plan, on
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the date on which the optionee first becomes a director of the Company.
Thereafter, each Outside Director other than directors affiliated with Liberty
Investment Partners II, L.P., Liberty Partners, L.P., Monaco Capital Partners or
Cariad Capital, Inc. is automatically granted an additional option to purchase
5,400 shares of Common Stock, which reflects changes in the Company's
capitalization since the inception of the Director Plan, on September 30 of each
year if, on such date, the optionee has served as a director of the Company for
at least six months.
Under the proposed amended terms of the Director Plan each Outside Director
of the Company, regardless of affiliation, would be automatically granted an
option to purchase 8,000 shares of Common Stock on the date on which the
optionee first becomes a director of the Company. Thereafter, each Outside
Director, regardless of affiliation, would be automatically granted an option to
purchase 3,500 shares of Common Stock on September 30 of each year if, on such
date, the optionee has served as a director of the Company for at least six
months. The current Directors affiliated with Liberty Investment Partners II,
L.P., Liberty Partners, L.P., Monaco Capital Partners or Cariad Capital, Inc.,
Roger A. Vandenberg, Carl E. Ring, Jr. and Michael J. Kluger, will not be
entitled to any retroactive or other initial option grant to purchase 8,000
shares of Common Stock.
PURPOSE AND EFFECT OF AMENDMENTS TO SECTION TEN OF THE DIRECTOR PLAN
The purpose of the proposed amendment to Section Ten to the Director Plan is
to revise Section 10(a) such that a stock split by the Company will not result
in an adjustment to the number of shares covered by options granted to Outside
Directors under the Directors Plan subsequent to the stock split. Such a stock
split will merely cause an adjustment in the number of shares subject to options
granted prior to the split and outstanding at the time of the split. The Board
of Directors believes that the proposed amendment is in the best interests of
the Company and its stockholders for a number of reasons. The Company believes
that the proposed changes discussed above to Section Four of the Director Plan
will provide the Outside Directors with adequate compensation and will serve to
attract and retain qualified persons to serve on the Board of Directors. In
addition, the Company believes that when the Company's Shareholders adopted the
Director Plan, they did not intend to have a stock split increase the grants to
the Outside Directors under the Director Plan with respect to future option
grants.
Under the current terms of Section Ten of the Director Plan, a change in
capitalization of the Company, including a stock split, results in a
proportionate adjustment in the number of shares represented by each option
grant issued to the Outside Directors of the Company. The proposed terms of the
Director Plan will provide that a stock split will not result in a proportionate
adjustment in the number of shares granted subsequent to such stock split to the
Outside Directors with respect to the annual or initial option grants issued to
the Outside Directors of the Company.
BENEFITS UNDER AMENDED DIRECTOR PLAN
If the benefits resulting from the proposed amendments to Sections Four and
Ten of the Director Plan are approved, then for the next fiscal year, each
Outside Director will receive an annual grant for options to purchase 3,500
shares of Common Stock and none of the Outside Directors will receive an initial
grant for options to purchase 8,000 shares of Common Stock. The Company's
Outside Directors include Carl E. Ring, Jr., Richard A. Rouse, Roger A.
Vandenberg, Lee Posey and Michael J. Kluger. Mr. Kluger and Mr. Posey are the
only Outside Directors nominated for election at this annual meeting.
FEDERAL TAX CONSEQUENCES OF DIRECTOR PLAN
Options granted under the plan are non-statutory stock options. The Director
Plan is not subject to the provisions of Section 401(a) of the Internal Revenue
Code of 1986, as amended.
The Company believes that the grant of a non-statutory stock option under
the Director Plan will not be subject to federal income tax. Upon exercise, the
optionee generally will recognize ordinary income in
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an amount equal to the excess of the fair market value of the Common Stock on
the date of exercise over the exercise price. Gain or loss on the subsequent
sale of Common Stock received on exercise of a non-statutory stock option
generally will be capital gain or loss (with the maximum federal income tax rate
determined by reference to the holding period of the Common Stock as noted
above). Upon exercise of a non-statutory stock option, the Company generally
will be entitled to a compensation deduction for federal income tax purposes in
the year and in the same amount as the optionee or grantee is considered to have
recognized ordinary income tax.
VOTE REQUIRED
The approval of the amendments to Section Four and Section Ten to the
Director Plan requires the affirmative vote of a majority of the votes cast on
this Proposal Two, provided that the total vote cast on this Proposal Two
represents over 50% in interest of all securities entitled to vote on this
Proposal Two. An abstention or non-vote is not an affirmative vote and,
therefore, will have the same effect as a vote against the proposal.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
AMENDMENTS TO THE COMPANY'S DIRECTOR PLAN: TO AMEND THE COMPANY'S DIRECTOR PLAN
TO (I) DECREASE THE INITIAL OPTION GRANTS TO DIRECTORS FROM 27,000 TO 8,000
SHARES AND THE ANNUAL OPTION GRANTS TO DIRECTORS FROM 5,400 TO 3,500 SHARES;
(II) REMOVE THE CURRENT LIMITATION ON CERTAIN DIRECTORS FROM PARTICIPATING IN
THE DIRECTOR PLAN; AND (III) PROVIDE THAT A STOCK SPLIT WILL NOT RESULT IN AN
ADJUSTMENT TO THE NUMBER OF SHARES SUBJECT TO AUTOMATIC OPTION GRANTS OCCURRING
AFTER THE DATE OF THE STOCK SPLIT.
PROPOSAL THREE--PROPOSAL RATIFICATION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 30, 2000, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting of Stockholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
ratify PricewaterhouseCoopers LLP as the Company's independent auditors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 30, 2000.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
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EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The table below sets forth information for the three most recently completed
fiscal years concerning the compensation of the Chief Executive Officer of the
Company and the four other most highly compensated executive officers of the
Company (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
- --------------------------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Kay L. Toolson...................................... 1999 $211,000 $1,440,000 15,001
Chief Executive Officer, President and Chairman 1998 205,000 1,245,000 16,879
1997 200,000 912,939 16,875
John W. Nepute...................................... 1999 $110,000 $ 440,000 9,000
Executive Vice President, Treasurer, and Chief 1998 105,000 340,000 10,800
Financial Officer 1997 100,000 205,607 10,125
Richard E. Bond..................................... 1999 $117,000 $ 270,000 7,500
Senior Vice President, Secretary and Chief 1998 113,000 200,000 8,100
Administrative Officer 1997 100,833 107,370 8,100
Irvin M. Yoder...................................... 1999 $ 84,000 $ 298,000 6,750
Vice President and Director of Indiana Manufacturing 1998 80,000 225,000 7,088
1997 70,000 98,590 6,750
Martin W. Garriott.................................. 1999 $ 86,000 $ 290,000 6,750
Vice President and Director of Oregon Manufacturing 1998 82,500 220,000 7,088
1997 75,000 113,224 6,750
</TABLE>
OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants to the Named Executive Officers during the fiscal year ended
January 1, 2000. In accordance with the rules of the Securities and Exchange
Commission (the "SEC"), also shown below is the potential realizable value over
the term of the option (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation from the option exercise price of
5% and 10%, compounded annually. These amounts are based on certain assumed
rates of appreciation and do not represent the Company's estimate of future
stock price. Actual gains, if any, on stock option exercises will be dependent
on the future performance of the Common Stock.
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
# INDIVIDUAL GRANTS (1)
----------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO OPTION TERM
GRANTED EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME (#) IN 1999 PRICE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson.................... 15,001 10.0 $15.37 3/31/09 $145,001 $367,462
John W. Nepute.................... 9,000 6.0 15.37 3/31/09 86,995 220,462
Richard E. Bond................... 7,500 5.0 15.37 3/31/09 72,496 183,719
Irvin M. Yoder.................... 6,750 4.5 15.37 3/31/09 65,246 165,347
Martin W. Garriott................ 6,750 4.5 15.37 3/31/09 65,246 165,347
</TABLE>
- ------------------------
(1) These options were granted pursuant to the Company's 1993 Incentive Stock
Option Plan. These options have terms of ten years and vest over five years
at the rate of 20% of the shares subject to the options at the end of each
anniversary following the date of grant of such options.
OPTION VALUES
The following table sets forth information with respect to the number and
value of securities underlying exercisable and unexercisable options held by
each of the Named Executive Officers on January 1, 2000:
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR END FISCAL YEAR END (1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson............. 33,750 $488,261 3,379 48,751 $ 47,112 $751,741
John W. Nepute............. 8,475 155,368 56,460 28,779 1,278,876 442,974
Richard E. Bond............ -- -- 7,290 20,460 140,424 300,035
Irvin M. Yoder............. -- -- 6,142 17,821 117,954 258,945
Martin W. Garriott......... -- -- 5,939 19,780 114,424 300,352
</TABLE>
- ------------------------
(1) Value of unexercised options is based on the last reported sale price of the
Company's Common Stock on the New York Stock Exchange of $25.5625 per share
on December 31, 1999 (the last trading day for the fiscal year ended
January 1, 2000) minus the exercise price.
COMPENSATION COMMITTEE REPORT
The information contained in the following report shall not be deemed to be
"soliciting material" or to be filed with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
INTRODUCTION
The Compensation Committee of the Board of Directors (the "Committee") was
established in July 1993 and is comprised solely of outside directors. In
general, the Committee is responsible for reviewing and recommending for
approval by the Board of Directors the Company's compensation
9
<PAGE>
practices, including executive salary levels and variable compensation programs,
both cash-based and equity-based. With respect to the compensation of the
Company's Chief Executive Officer, the Committee reviews and approves the
various elements of the Chief Executive Officer's compensation. With respect to
other executive officers, the Committee reviews the recommendations for such
individuals presented by the Chief Executive Officer and the bases therefore and
approves or modifies the compensation packages for such individuals. Base salary
levels for executive officers of the Company are generally established at or
near the start of each fiscal year, and final bonuses for executive officers are
determined at the end of each fiscal year based upon such individual's
performance and the performance of the Company.
EXECUTIVE COMPENSATION
The Company's compensation program consists of two principal components:
cash-based compensation, both fixed and variable, and equity-based compensation.
These two principal components are intended to attract, retain, motivate and
reward executives who are expected to manage both the short-term and long-term
success of the Company.
CASH-BASED COMPENSATION
Executive officers of the Company receive cash compensation in the form of
annual salaries and bonus payments. A principal goal of the Committee is to tie
a substantial part of each executive officer's cash compensation to the
Company's performance, and to reward executive officers for the Company's
success. In 1999, the group was eligible to receive a bonus from a pool of 10%
of its EBITDA in excess of $3 million each quarter. (EBITDA is defined as the
Company's net income before interest expense, taxes, management fees, and
depreciation and amortization.) This compares to 15% of its EBITDA in excess of
$3 million for each quarter in 1998 and 1997. One half of each quarterly
allocation, other than the amount allocated to the Chief Executive Officer (as
described below), was paid to participants in the pool other than the Chief
Executive Officer, at the end of each quarter. At the discretion of the
Committee, the participants, other than the Chief Executive Officer, are
eligible for the remainder to be paid after the year-end, based on the Company's
annual EBITDA from the Company's audited annual financial statements. The
allocation of the bonus pool, other than the amount allocated to the Chief
Executive Officer, is recommended by the Chief Executive Officer, for approval
by the Committee, and is based on subjective factors, including the achievement
by each participant in the pool of specifically defined objectives and the
particular contributions of each participant to the Company's revenue and
profitability. The Committee also considers the compensation of similarly
situated executives in the Company's peer group in the recreational vehicle
industry. The Chief Executive Officer also recommends to the Committee the
performance objectives for each executive officer for the ensuing year.
EQUITY-BASED COMPENSATION
The Committee administers an option program pursuant to which members of
management, including the Company's executive officers, may receive annual
option grants as of March 31 each year from a pool of shares set aside by the
Committee. The purpose of the option program is to provide additional incentive
to executives and other key employees of the Company to work to maximize
long-term return to the Company's stockholders. The allocation of the option
pool, other than the shares allocated to the Chief Executive Officer, is
recommended by the Chief Executive Officer for approval by the Committee. The
allocation of shares from the option pool to the Chief Executive Officer is
determined by the Committee. In granting stock options to the executive
officers, the Chief Executive Officer and the Committee consider a number of
subjective factors, including the executive's position and responsibilities at
the Company, such executive's individual performance, the number of options held
(if any) and other factors that they may deem relevant. Options generally vest
over a five-year period to encourage option holders to continue in the employ of
the Company. The exercise price of options is the market price on the date of
grant, ensuring that the option will acquire value only to the extent that the
price of the Company's Common
10
<PAGE>
Stock increases relative to the market price at the date of grant. In 1999, the
Committee set aside a pool of 150,151 shares for grants to management, of which
options to purchase 51,751 shares were granted to the executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 1999,
Mr. Toolson received a base salary of $211,000 for serving as the chief
executive officer of the Company. As a participant in the Company's Executive
Variable Compensation Plan approved by the stockholders in fiscal 1999,
Mr. Toolson was eligible to receive an annual bonus equal to 3.14% of the
Company's EBITDA in excess of $12 million, payable at the discretion of the
Committee after review of the Company's audited annual financial statements.
This compares to 5% of the Company's EBITDA in excess of $12 million in 1998 and
1997. Mr. Toolson received a bonus for 1999 of $1,440,000. In 1999 the
Compensation Committee also granted Mr. Toolson an option to purchase 15,001
shares of the Company's Common Stock.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. Under this legislation, the Company may deduct
such compensation with respect to any of these individuals only to the extent
that during any fiscal year such compensation does not exceed $1 million or
meets certain other conditions (such as shareholder approval). The Company's
policy is to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax laws. However, the Committee
believes that its primary responsibility is to provide a compensation program
that will attract, retain and reward the executive talent necessary to the
Company's success. Consequently, the Committee recognizes that the loss of a tax
deduction may be necessary in some circumstances. In 1999, the Company's
stockholders approved the Executive Variable Compensation Plan under which
bonuses may be paid to participating executive officers. This Plan, which
provides for performance-based compensation, is intended to be exempt from the
deduction limits under Section 162(m) of the Internal Revenue Code.
SUMMARY
The Committee believes that its compensation program to date has been fair
and motivating, and has been successful in attracting and retaining qualified
employees and in linking compensation directly to the Company's success. The
Committee intends to review this program on an ongoing basis to evaluate its
continued effectiveness.
THE COMPENSATION COMMITTEE
Carl E. Ring, Jr.
Richard A. Rouse
Roger A. Vandenberg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was established in
July 1993 and consists of Directors Ring, Rouse and Vandenberg, none of whom
have interlocking relationships as defined by the Securities and Exchange
Commission.
11
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 24, 2000 (except
as otherwise indicated), by: (i) each person who is known by the Company to own
beneficially more than five percent of the Common Stock, (ii) each of the Named
Executive Officers, (iii) each of the Company's directors, and (iv) all
directors and executive officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIAL OWNER SHARES (1) PERCENTAGE
- ---------------- ---------- ----------
<S> <C> <C>
Kay L. Toolson (2).......................................... 1,407,239 7.45%
c/o Monaco Coach Corporation
91320 Industrial Way
Coburg, Oregon 97408
Wesley Richard Guylay (3)................................... 1,110,000 5.88%
30 Rockefeller Plaza
Suite 4535
New York, NY 10112
Liberty Partners Holdings 2, L.L.C. (4)..................... 562,792 2.98%
1177 Avenue of the Americas
New York, New York 10036
Michael J. Kluger (5)....................................... 566,167 3.00%
Lee A. Posey................................................ 391,325 2.07%
Carl E. Ring, Jr. (5)....................................... 562,792 2.98%
Richard A. Rouse (2)........................................ 99,537 *
Roger A. Vandenberg......................................... 652,459 3.45%
John W. Nepute (2).......................................... 136,569 *
Richard E. Bond (2)......................................... 20,831 *
Irvin M. Yoder (2).......................................... 13,978 *
Martin W. Garriott (2)...................................... 12,928 *
All directors and executive officers as a group (11
persons)(6)................................................. 3,305,592 17.36%
</TABLE>
- ------------------------
* Less than one percent.
(1) Applicable percentage of beneficial ownership is based on 18,893,397 shares
of Common Stock outstanding as of March 24, 2000 together with applicable
options for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable within
60 days after March 24, 2000 are deemed outstanding for purposes of
computing the percentage ownership of the person holding such options, but
are not deemed outstanding for computing the percentage of any other
stockholder.
(2) Includes the number of shares subject to options which are exercisable
within 60 days of March 24, 2000 by the following persons: Mr. Toolson
(19,879 shares), Mr. Rouse (32,400 shares), Mr. Nepute (57,821 shares),
Mr. Bond (12,840 shares), Mr. Yoder (10,935 shares) and Mr. Garriott (12,218
shares).
12
<PAGE>
(3) Information based solely on a joint Schedule 13G filed on February 28, 2000
by inter alia: Wesley Guylay Capital Management, L.P. ("WGCM"), Wesley
Guylay Capital Management III, L.P. ("WGCM III") and Wesley Richard Guylay,
General Partner of WGCM and WGCM III. Because of Mr. Guylay's position as
general partner of WGCM and WGCM III, Mr. Guylay may be deemed to be the
beneficial owner of the shares.
(4) Information based partly on a joint Schedule 13G/A (the "Liberty 13G") filed
on February 11, 2000 by, inter alia: Liberty Partners Holdings 2, L.L.C.
("LLC"); Liberty Partners, L.P. ("LP"), the manager of LLC; Liberty Capital
Partners, Inc. ("LCP"), LP's general partner; and Carl E. Ring, Jr. and
Michael J. Kluger, who are directors and stockholders of LCP. The reporting
persons in the Liberty 13G expressly disclaim any assertion or presumption
that one or more of such persons constitute a "group" for purposes of
Section 13(g) of the Exchange Act of 1934. Information also based on
correspondence between the Company and LCP.
(5) Includes, solely for purposes of this table, 562,792 shares owned by Liberty
Partners Holdings 2, L.L.C. and covered by the Liberty 13G. See footnote 4
above. For Mr. Kluger, also includes 3,375 shares held directly. The address
for Messrs. Kluger and Ring is c/o Liberty Capital Partners, Inc., 1177
Avenue of the Americas, New York, New York 10036.
(6) Includes 150,480 shares subject to options which are exercisable within 60
days of March 24, 2000.
13
<PAGE>
PERFORMANCE GRAPH
The following line graph shows a comparison of cumulative total stockholder
return for the Company's Common Stock, the New York Stock Exchange Composite
Index and a peer group of companies selected by the Company (the "Peer Group"),
whose primary business is recreational vehicles. The Peer Group consists of
Coachmen Industries, Inc., National RV Holdings, Inc., Fleetwood Enterprises,
Inc., Thor Industries, Inc., SMC Corporation and Winnebago Industries, Inc. The
graph assumes that $100 was invested on December 31, 1994 at the closing price
for the Company's stock on such date, and that all dividends are reinvested. In
accordance with the guidelines of the SEC, the stockholder return for each
entity in the Peer Group has been weighted on the basis of market capitalization
as of each measurement date set forth in the graph. Historic stock price
performance should not be considered indicative of future stock price
performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO STOCKHOLDERS
<S> <C> <C> <C>
(ASSUMES $100 INVESTMENT ON 12/30/94)
Monaco Coach Peer Group NYSE Composite
12/30/94 $100.00 $100.00 $100.00
3/31/95 $104.87 $116.16 $107.95
6/30/95 $104.87 $102.48 $116.20
9/29/95 $82.74 $101.89 $124.77
12/29/95 $59.03 $124.29 $131.27
3/29/96 $93.45 $126.77 $138.18
6/28/96 $81.95 $155.07 $143.03
9/30/96 $83.63 $169.46 $146.34
12/31/96 $106.55 $164.39 $156.24
3/31/97 $117.17 $139.62 $158.72
6/30/97 $158.94 $155.54 $184.21
9/30/97 $154.87 $177.83 $198.04
12/31/97 $167.17 $214.15 $203.61
3/31/98 $257.26 $245.87 $228.17
6/30/98 $287.61 $226.53 $230.55
9/30/98 $248.32 $176.18 $200.93
12/31/98 $390.88 $332.90 $237.36
3/31/99 $340.18 $283.31 $240.46
6/30/99 $624.12 $377.43 $258.20
9/30/99 $539.31 $324.68 $233.54
12/30/99 $565.58 $328.77 $259.06
</TABLE>
14
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors and persons who own more
than ten percent of a registered class of the Company's equity securities to
file an initial report of ownership on Form 3 and changes in ownership on Form 4
or Form 5 with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. Such persons are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended January 1, 2000, all filing requirements
applicable to its officers, directors and ten percent stockholders were met,
except as follows. Lee Posey, Michael J. Kluger and Carl E. Ring, Jr. did not
timely file one Form 4 during 1999, each filing covering one transaction. Kay
Toolson did not timely file one Form 4 during 1999, covering two transactions.
FOR THE BOARD OF DIRECTORS
RICHARD E. BOND
SECRETARY
April 20, 2000
15
<PAGE>
MONACO COACH CORPORATION
1993 DIRECTOR OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 10, 2000
1. PURPOSES OF THE PLAN. The purposes of this 1993 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be "non-statutory stock options."
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" means the Common Stock of the Company.
(d) "COMPANY" means Monaco Coach Corporation, a Delaware corporation.
(e) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of any interruption
or termination of service as a Director.
(f) "DIRECTOR" means a member of the Board.
(g) "EMPLOYEE" means any person, including officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(i) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common
Stock shall be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date of
grant, as reported in The Wall Street Journal or such other source as the
Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the bid and asked
prices for the Common Stock on the day of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
(j) "OPTION" means a stock option granted pursuant to the Plan.
(k) "OPTIONED STOCK" means the Common Stock subject to an Option.
(l) "OPTIONEE" means an Outside Director who receives an Option.
A-1
<PAGE>
(m) "OUTSIDE DIRECTOR" means a Director who is not an Employee.
(n) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "PLAN" means this 1993 Director Option Plan.
(i) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.
(p) "SUBSIDIARY" means a "subsidiary corporation", whether now or hereafter
existing, as defined in Section 424(f) of the Internal Revenue Code of 1986.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is one hundred thirty five thousand (135,000) Shares (the "Pool")
of Common Stock. The Shares may be authorized but unissued, or reacquired Common
Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) ADMINISTRATOR. Except as otherwise required herein, the Plan shall be
administered by the Board.
(b) PROCEDURE FOR GRANTS. The provisions set forth in this Section
4(b) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to
be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Initial
Option to purchase eight thousand (8,000) Shares (the "First Option") on the
date on which the later of the following events occurs: (A) the effective
date of the Company's initial underwritten public offering of its Common
Stock pursuant to a registration statement filed under the Securities Act of
1933, as amended, or (B) the date on which such person first becomes a
Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy.
(iii) Commencing on September 30, 1994, each Outside Director shall be
automatically granted a subsequent Option to purchase three thousand five
hundred (3,500) Shares (a "Subsequent Option") on September 30 of each year
after the date of the First Option grant, provided such Outside Director
shall have served on the Board for at least six months prior to the date of
the Subsequent Option grant and remains an Outside Director on such date.
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any exercise of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 16 hereof shall
be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be as follows:
(A) the term of the First Option shall be ten (10) years.
(B) the First Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in
Section 8 hereof.
A-2
<PAGE>
(C) the exercise price per Share shall be 100% of the fair market
value per Share on the date of grant of the First Option.
(D) the First Option shall become exercisable in installments
cumulatively as to twenty percent (20%) of the Shares subject to the
First Option one (1) year from its date of grant and as to twenty percent
(20%) each year thereafter if, on each such date, the Optionee has
maintained his Continuous Status as a Director.
(vi) The terms of a Subsequent Option granted hereunder shall be as
follows:
(A) the term of the Subsequent Option shall be ten (10) years.
(B) the Subsequent Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in
Section 8 hereof.
(C) the exercise price per Share shall be 100% of the fair market
value per Share on the date of grant of the Subsequent Option.
(D) the Subsequent Option shall become exercisable as to one hundred
percent (100%) of the Shares subject to the Subsequent Option five
(5) years from its date of grant if, on such date, the Optionee has
maintained his Continuous Status as a Director.
(vii) In the event that any Option granted under the Plan would cause
the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options
to the Outside Directors on a pro rata basis. No further grants shall be
made until such time, if any, as additional Shares become available for
grant under the Plan through action of the stockholders to increase the
number of Shares which may be issued under the Plan or through cancellation
or expiration of Options previously granted hereunder.
(c) POWERS OF THE BOARD. Subject to the provisions and restrictions of the
Plan, the Board shall have the authority, in its discretion: (i) to determine,
upon review of relevant information and in accordance with Section 2(i) of the
Plan, the Fair Market Value of the Common Stock; (ii) to interpret the Plan;
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (v) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final.
5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company
as described in Section 16 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. FORM OF CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash, (ii) check,
(iii) promissory note, (iv) other shares which (x) in the case of Shares
acquired upon
A-3
<PAGE>
exercise of an Option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (v) delivery of a properly executed
exercise notice together with such other documentation as the Board and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, (vi) any combination of the foregoing methods of payment, or
(vii) such other consideration and method of payment for the issuance of Shares
to the extent permitted under applicable law.
8. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4(b)
hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) RULE 16B-3. Options granted to Outside Directors must comply with the
applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any
successor thereto and shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption from Section
16 of the Exchange Act with respect to Plan transactions.
(c) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within three (3) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(d) DISABILITY OF OPTIONEE. In the event Optionee's Continuous Status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Option granted hereunder to such Optionee
shall become vested and exercisable for the full number of Shares covered by the
Option. The Optionee may exercise his or her Option, at any time within twelve
(12) months from the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
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<PAGE>
(e) DEATH OF OPTIONEE. In the event of the death of an Optionee, the Option
shall become vested and exercisable for the full number of Shares covered by the
Option. The Option held by the Optionee at the time of death may be exercised at
any time within twelve (12) months following the date of death by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance. In no event shall an Option be exercised later than the
expiration of the term of the Option, as set forth in the Option agreement. If,
after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
9. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option and the number of Shares which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option. In addition, a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company shall not result in an
adjustment to the number of shares granted to Outside Directors pursuant to
Section 4(b)(ii) and Section 4(b)(iii) of the Plan subsequent to such stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously
exercised, it will terminate immediately prior to the consummation of such
proposed action. The Board may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option as to all
or any part of the Optioned Stock, including Shares as to which the Option would
not otherwise be exercisable.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option shall
be substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the Board
shall, in lieu of such assumption or substitution, provide for the Optionee to
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If the Board makes an
Option fully exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and the Option will terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the option or right confers
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<PAGE>
the right to purchase, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Board may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. Except as set forth in Section 4, the Board
may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
14. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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<PAGE>
MONACO COACH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MAY 18, 2000
10:00 A.M.
91320 INDUSTRIAL WAY,
COBURG, OREGON
MONACO COACH CORPORATION
91320 INDUSTRIAL WAY, COBURG, OREGON PROXY
- ------------------------------------------------------------------------------
The undersigned stockholder of Monaco Coach Corporation, a Delaware
corporation, (the "Company") hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, each dated April 20,
2000, and the 1999 Annual Report to Stockholders, and hereby appoints Kay L.
Toolson and John W. Nepute, or either of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of Monaco Coach Corporation to be held on May 18, 2000, at 10:00
a.m. local time, at the Company's headquarters, located at 91320 Industrial
Way, Coburg, Oregon, and at any adjournment(s) thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if
then and there personally present, on the matters set forth below, and, in
their discretion, upon such other matter or matters which may properly come
before the meeting and any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, FOR THE AMENDMENT TO THE COMPANY'S DIRECTOR PLAN TO AMEND THE
COMPANY'S 1993 DIRECTOR OPTION PLAN TO (I) DECREASE THE INITIAL OPTION GRANTS
TO DIRECTORS FROM 27,000 TO 8,000 SHARES AND THE ANNUAL OPTION GRANTS TO
DIRECTORS FROM 5,400 TO 3,500 SHARES; (II) REMOVE THE CURRENT LIMITATION ON
CERTAIN DIRECTORS FROM PARTICIPATING IN THE DIRECTOR PLAN; AND (III) PROVIDE
THAT A STOCK SPLIT WILL NOT RESULT IN AN ADJUSTMENT TO THE NUMBER OF SHARES
SUBJECT TO AUTOMATIC OPTION GRANTS OCCURRING AFTER THE DATE OF THE STOCK
SPLIT AND FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
Please detach here
<TABLE>
<S><C>
1. Election of directors: 01 Kay L. Toolson 03 Lee Posey / / Vote FOR / / Vote WITHHELD
02 Michael J. Kluger all nominees from all nominees
(except as indicated to the contrary below)
-----------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
-----------------------------------------
2. PROPOSAL TO AMEND THE COMPANY'S 1993 DIRECTOR OPTION PLAN TO (I) DECREASE / / FOR / / AGAINST / / ABSTAIN
THE INITIAL OPTION GRANTS TO DIRECTORS FROM 27,000 TO 8,000 SHARES AND THE
ANNUAL OPTION GRANTS TO DIRECTORS FROM 5,400 TO 3,500 SHARES; (II) REMOVE THE
CURRENT LIMITATION ON CERTAIN DIRECTORS FROM PARTICIPATING IN THE DIRECTOR
PLAN; AND (III) PROVIDE THAT A STOCK SPLIT WILL NOT RESULT IN AN ADJUSTMENT
TO THE NUMBER OF SHARES SUBJECT TO AUTOMATIC OPTION GRANTS OCCURRING AFTER
THE DATE OF THE STOCK SPLIT.
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS / / FOR / / AGAINST / / ABSTAIN
THE INDEPENDENT ACCOUNTANTS OF THE COMPANY:
And in their discretion, upon such other matter or matters which may properly come before the meeting, and any
adjournment(s) thereof.
MARK HERE FOR ADDRESS CHANGE / / Dated
AND NOTE BELOW: --------------------------------
Signature(s) of Stockholder or Authorized
Signatory
-----------------------------------------
-----------------------------------------
(This Proxy should be marked, dated, signed
by the stockholder(s) exactly as his or her
name appears hereon, and returned promptly
in the enclosed envelope. Persons signing
in a fiduciary capacity should so indicate.
If shares are held by joint tenants or as
community property, both should sign.)
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED RETURN ENVELOPE SO THAT YOUR SHARES
MAY BE REPRESENTED AT THE MEETING.
</TABLE>
