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 Section 240.14a-11(c) or Section 240.14a-12
PHOENIX GOLD INTERNATIONAL, INC.
- - - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.
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3) Filing Party:
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4) Date Filed:
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<PAGE>
PHOENIX GOLD INTERNATIONAL, INC.
9300 North Decatur
Portland, Oregon 97203
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 18, 1997
----------------------
To Our Shareholders:
The Annual Meeting of Shareholders of Phoenix Gold International, Inc., an
Oregon corporation (the "Company"), will be held at 2:30 p.m., Pacific Time, on
Tuesday, February 18, 1997 at the Company's executive offices, 9300 North
Decatur Street, Portland, Oregon, for the following purposes:
1. Electing directors to serve for the following year and until their
successors are elected and qualified;
2. Amending the Company's 1995 Stock Option Plan to increase the total
number of shares of Common Stock reserved for award from 315,000 to 515,000 and
to make certain other changes to conform to current laws;
3. Ratifying the appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal 1997; and
4. Transacting such other business as may properly come before the meeting.
Only holders of the Company's Common Stock at the close of business on
December 16, 1996 are entitled to notice of, and to vote at, the meeting and any
adjournments or postponements thereof. Shareholders may vote in person or by
proxy.
By Order of the Board of Directors,
/s/ Timothy G. Johnson
-----------------------------------
Timothy G. Johnson
Secretary
Portland, Oregon
January 15, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
<PAGE>
PHOENIX GOLD INTERNATIONAL, INC.
9300 North Decatur
Portland, Oregon 97203
------------------
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Phoenix Gold International, Inc., an Oregon
corporation (the "Company"), of proxies to be voted at the 1997 Annual Meeting
of Shareholders of the Company (the "Meeting") to be held at 2:30 p.m., Pacific
Time, on Tuesday, February 18, 1997 at the Company's executive offices, 9300
North Decatur, Portland, Oregon 97203, and at any adjournments or postponements
thereof. If proxies in the accompanying form are properly executed, dated and
returned prior to the voting at the Meeting, the shares of Common Stock
represented thereby will be voted as instructed on the proxy. If no instructions
are given on a properly executed and returned proxy, the shares of Common Stock
represented thereby will be voted for election of the directors named in this
proxy statement, for approval of amendments to the Company's 1995 Stock Option
Plan as described in this proxy statement, for ratification of the appointment
of the independent auditors named in the proxy and in support of the
recommendations of management on such other business as may properly come before
the Meeting or any adjournemtns or postponements thereof.
This proxy statement and form of proxy are first being mailed to
shareholders on or about January 15, 1997. The Company's fiscal year ends on the
last Sunday in September. For presentation convenience, the Company's financial
statements indicate that its fiscal year ends on September 30.
Any proxy may be revoked by a shareholder prior to its exercise by
delivering a written notice of revocation to the Secretary of the Company, by
delivering a duly executed proxy bearing a later date or by the vote of the
shareholder cast in person at the Meeting. The cost of soliciting proxies will
be borne by the Company. In addition to solicitation by mail, proxies may be
solicited personally by the Company's officers and regular employees or by
telephone, facsimile transmission or express mail. The Company will reimburse
brokerage houses, banks and other custodians, nominees and fiduciaries for their
reasonable expenses incurred in forwarding proxies and proxy material to their
principals.
<PAGE>
VOTING
------
Holders of record of the Company's Common Stock on December 16, 1996 will
be entitled to vote at the Meeting or any adjournments or postponements thereof.
As of that date, there were 3,454,605 shares of Common Stock outstanding and
entitled to vote. A majority, or 1,727,303, of these shares will constitute a
quorum for the transaction of business at the Meeting. Each share of Common
Stock entitles the holder to one vote on each matter that may properly come
before the Meeting. Shareholders are not entitled to cumulative voting in the
election of directors or any other matter. Abstentions will be counted in
determining whether a quorum is present for the Meeting and will be counted as a
vote "against" any proposal. Broker non-votes will also be counted in
determining whether a quorum is present, but will not be counted either for or
against the proposal at issue.
PROPOSAL 1: ELECTION OF DIRECTORS
---------------------------------
The Board of Directors currently consists of four members. The Board of
Directors has nominated the following persons for election as directors to serve
until the annual meeting of shareholders in 1998, or until their respective
successors are elected and qualified: Keith A. Peterson, Timothy G. Johnson,
Frank G. Magdlen and Matthew W. Chapman. Directors are elected by a plurality of
the votes of the shares present in person or represented by proxy at the Meeting
and entitled to vote on the election of directors. The four nominees for
director receiving the highest number of votes will be elected to the Board of
Directors.
Unless marked otherwise, proxies received will be voted FOR the election of
each of the nominees named above.
If any nominee is unable or unwilling to serve as a director at the date of
the Meeting or any postponement or adjournment thereof, the proxies may be voted
by the proxy holders named on the enclosed proxy card for a substitute nominee
recommended by the present Board of Directors to fill such vacancy, or the
number of directors may be reduced accordingly. The Board of Directors has no
reason to believe that any of the nominees named above will be unwilling or
unable to serve if elected a director.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
PETERSON, JOHNSON, MAGDLEN AND CHAPMAN.
The following table sets forth certain information about the Company's
directors and executive officers as of January 2, 1997:
Director or Expiration of
Name Age Positions Officer Since Current Term
---- --- --------- ------------- -------------
Keith A. Peterson 43 Chairman, President 1991 1997
and Chief Executive
Officer and Director
Timothy G. Johnson(1) 51 Executive Vice President, 1991 1997
Chief Operating Officer,
Secretary and Director
Kurt W. Ruttum 37 Vice President and 1996 --
General Counsel
Joseph K. O'Brien 39 Chief Financial Officer 1997 --
David D. Bills 38 Vice President - Finance 1995 --
Stephen P. Bettini 35 Vice President - Operations 1996 --
Flor O. Fernandez, Jr. 44 Vice President - 1996 --
Manufacturing
Frank G. Magdlen(2) 49 Director 1995 1997
Matthew W. Chapman(2) 46 Director 1995 1997
- - - - --------------------------
(1) Member of the Audit Committee.
(2) Member of both the Compensation and Audit Committees.
<PAGE>
Keith A. Peterson has been President and a director of the Company since
its incorporation in 1991. He was appointed Chairman and Chief Executive Officer
in January 1995. Mr. Peterson was Vice President of XTI-Xonix Technologies, Inc.
("XTI"), a retail and wholesale consumer electronics company, from 1986 to 1990,
and was marketing manager of the Phoenix Gold division of XTI from 1990 to 1991.
In 1985, Mr. Peterson founded Xonix, Inc., an audio and video cable and
accessories distributor. Mr. Peterson received a B.S. degree in International
Marketing from Oregon State University. In 1974 and 1975, he attended Waseda
University in Tokyo, Japan, where he studied Japanese. XTI filed a voluntary
petition for reorganization under Chapter 11 of the federal Bankruptcy Code in
October 1991, which was subsequently converted to a Chapter 7 liquidation
proceeding.
Timothy G. Johnson has served as Vice President and Secretary and as a
director of the Company since its incorporation in 1991. He was appointed
Executive Vice President and Chief Operating Officer in January 1995. Mr.
Johnson was operations manager of the Phoenix Gold division of XTI from 1987 to
1991.
Kurt W. Ruttum was appointed Vice President and General Counsel of the
Company in October 1996. He practiced corporate law with the firm of Tonkon,
Torp, Galen, Marmaduke & Booth in Portland, Oregon from 1986 through August
1996. Mr. Ruttum received a J.D. degree from the University of Chicago Law
School and a B.A. degree in economics from the University of Colorado.
Joseph K. O'Brien was appointed Chief Financial Officer of the Company
effective January 2, 1997. From 1982 through December 1996, Mr. O'Brien was an
accountant with Deloitte & Touche LLP, most recently as a Senior Audit Manager.
Mr. O'Brien, a certified public accountant, received B.S. and M.B.A. degrees
from Portland State University.
David D. Bills served as the controller of the Company from 1992 to 1995.
He was appointed Vice President - Finance of the Company in February 1995. He
was the controller of XTI from 1989 to 1992. Mr. Bills, a certified public
accountant, received a B.S. degree in accounting from the University of Oregon.
<PAGE>
Stephen P. Bettini was appointed Vice President - Operations of the Company
in December 1996. From February 1996 to December 1996, he was the manufacturing
manager of the components group of FEI Company, which designs, manufactures and
sells focused ion beam workstations and components using field emission
technology. He was the manager of an LCD flat panel display assembly operation
for Sharp Microelectronics Technology, Inc. from August 1992 to February 1996.
From March 1992 to August 1992, he was a manufacturing manager for Landa
Incorporated, a pressure washer manufacturer. Mr. Bettini received a B.S. degree
in management from Marylhurst College.
Flor O. Fernandez, Jr. joined the Company in May 1995 as general manager of
manufacturing and was appointed Vice President - Manufacturing in March 1996.
Mr. Fernandez was the Chief Operating Officer of OECO Corporation, a
manufacturer of power conversion products, from 1993 to April 1995. He was a
general manager at Spacelabs Medical Corporation, a medical device manufacturer,
from 1987 to 1993. Mr. Fernandez received a B.S.E.E. degree from Cal Poly State
University. For personal reasons, Mr. Fernandez has tendered his resignation to
the Company to be effective March 31, 1997.
Frank G. Magdlen became a director of the Company in January 1995. Mr.
Magdlen has been a Vice President of U.S. Bancorp since 1990. Since 1993 he has
been responsible for the investment management of private company equity
interests held in trust by the Trust Departments of certain bank subsidiaries of
U.S. Bancorp. From 1988 to 1993, he was a Vice President of United States
National Bank of Oregon where he worked in the Corporate Finance/Merchant
Banking Division. Mr. Magdlen received a B.B.A. in finance from the University
of Portland and an M.B.A. in finance from the University of Southern California.
Matthew W. Chapman became a director of the Company in June 1995. Mr.
Chapman has been the Chief Executive Officer and a director of CFI ProServices,
Inc. ("CFI") since 1987. CFI is a supplier of software to the financial services
industry for processing customer transactions. Prior to joining CFI, Mr. Chapman
practiced law for thirteen years, representing financial institutions in Oregon
and Washington. Mr. Chapman has a B.A. from the University of Portland in
economics and a J.D. from the University of Oregon.
<PAGE>
Pursuant to the Company's Articles of Incorporation, at any time when the
Board of Directors consists of six or more members, the Board will be divided
into three classes serving staggered three-year terms. Directors are otherwise
elected to serve one year terms. Executive officers serve at the discretion of
the Board of Directors.
During fiscal 1996, the Board of Directors held seven meetings. Keith A.
Peterson attended fewer than 75 percent of these meetings. The Company maintains
a standing Audit Committee and Compensation Committee, but does not maintain a
standing nominating committee. The Audit Committee and the Compensation
Committee each held two meetings during fiscal 1996.
The Audit Committee consists of Messrs. Magdlen (Chairman), Chapman and
Johnson. The function of the Audit Committee is to review and make
recommendations to the Board of Directors with respect to the selection of the
Company's independent auditors and the terms of their engagement; to review the
Company's internal controls and management with respect to maintaining the
Company's books and records; and to review with the independent auditors, upon
completion of their audit, the results of the audit and any recommendations the
auditors may have with respect to the Company's financial accounting or internal
control systems.
The Compensation Committee consists of Messrs. Magdlen and Chapman. The
Compensation Committee considers and makes recommendations to the Company's
Board of Directors regarding the compensation of the senior executives of the
Company; considers, reviews and grants stock options and administers the
Company's 1995 Stock Option Plan; and considers matters of director
compensation, benefits and other forms of remuneration.
COMPENSATION OF DIRECTORS
Pursuant to the Company's 1995 Stock Option Plan (the "Plan"), upon initial
election to the Company's Board of Directors, each director who is not an
employee or officer of the Company (a "nonemployee director") is automatically
granted an option to purchase 5,775 shares of Common Stock and is automatically
granted an option to purchase 1,400 shares of Common Stock at each subsequent
meeting of the shareholders of the Company at which such director is re-elected
to the Board of Directors, provided that no director may be granted
automatically options to purchase more than an aggregate of 8,575 shares of
Common Stock under the Plan. The exercise price for these options is the fair
market value of the Common Stock on the date of grant. These options have a term
of five years and become exercisable in three equal installments beginning on
the first anniversary of the date of grant. Upon their respective elections to
the Board of Directors in January 1995 and June 1995, Messrs. Magdlen and
Chapman were each automatically granted options to purchase 5,775 shares of
Common Stock. Messrs. Magdlen and Chapman were each automatically granted
options to purchase 1,400 shares of Common Stock on February 12, 1996 following
the 1996 annual meeting of the shareholders of the Company. See "Proposal 2:
Amendment and Approval of 1995 Stock Option Plan." Nonemployee directors of the
Company receive an annual retainer of $2,500 and an additional fee of $500 for
each meeting of the Board of Directors attended.
<PAGE>
EXECUTIVE COMPENSATION
- - - - ----------------------
COMPENSATION PAID TO CERTAIN EXECUTIVE OFFICERS
The following table summarizes the compensation earned by or paid to the
Company's Chief Executive Officer and each of the Company's executive officers
who received compensation in excess of $100,000 for services rendered to the
Company in all capacities for fiscal years 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Long-term Compensation
----------------------------------------
Annual Compensation Awards Payouts
----------------------------------- -------------------------- -----------
Restricted Securities
Name and Other Annual Stock underlying LTIP All Other
Principal Compensation Awards Options/SARS Payouts Compensation
Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- - - - ---------------- -------- ---------- --------- ------------ ---------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Keith A. Peterson, 1996 230,000 - - - - - -
Chairman, President 1995 200,000 - - - - - -
and Chief Executive 1994 176,410 - - - - - -
Officer
Timothy G. Johnson 1996 201,250 - - - - - -
Executive Vice 1995 175,000 - - - 96,000 - -
President, Chief 1994 151,201 - - - - -
Operating Officer
and Secretary
</TABLE>
<PAGE>
The following table summarizes the stock options held by the persons named
in the Summary Compensation Table as of September 30, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money Options/SARs
Underlying Unexercised at
Shares Options/SARs at FY-End (#) FY-End($)
Acquired on Value ----------------------------- ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - - - --------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Timothy G. Johnson - - 72,000 24,000 155,760 44,400
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1996, certain
information as to the stock ownership of (i) each person known by the Company to
own beneficially 5 percent or more of the Company's outstanding Common Stock,
(ii) by each director of the Company, (iii) the executive officers named in the
Summary Compensation Table, and (iv) all executive officers and directors as a
group. The Company believes each named beneficial owner has sole voting and
investment power with respect to the shares listed.
Name and Address of Amount and Nature Percent
Beneficial Owner Of Beneficial Ownership of Class
- - - - ------------------------ ---------------------------- --------------------------
Keith A. Peterson(1) 1,642,911 47.6%
Timothy G. Johnson(1)(2) 585,814 16.6%
Gruber & McBain Capital 229,500 6.6%
Management, Inc.
50 Osgood Place
San Francisco, CA 94133
Frank G. Magdlen(1)(3) 5,832 *
Matthew W. Chapman(1)(4) 1,925 *
All executive officers and 2,262,877 63.4%
directors as a group
(7 persons)(5)
- - - - -------------------------------------
* less than 1%
(1) Messrs. Peterson's and Johnson's address is 9300 North Decatur Street,
Portland, Oregon 97203. Mr. Magdlen's address is Suite 1500, 111 S.W. Fifth
Avenue, Portland, Oregon 97208. Mr. Chapman's address is 400 S.W. Sixth
Avenue, Portland, Oregon 97204.
(2) Includes 84,000 shares issuable pursuant to options exercisable within 60
days after November 30, 1996.
(3) Includes 4,332 shares issuable pursuant to options exercisable within 60
days after November 30, 1996.
<PAGE>
(4) Consists of 1,925 shares issuable pursuant to options exercisable within 60
days after November 30, 1996.
(5) Includes 113,652 shares issuable pursuant to options exercisable within 60
days after November 30, 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who own more than 10 percent of the Company's Common Stock to file with
the Securities and Exchange Commission reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company. Such
persons are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such reports furnished to the Company or
written representations from certain of these persons that no other reports were
required, the Company believes that during fiscal 1996 all filing requirements
applicable to its directors, executive officers and greater than 10 percent
owners were complied with, except that David D. Bills did not file timely a Form
4 with respect to a sale of shares of Common Stock which occurred in May 1996,
and Frank G. Magdlen and Matthew W. Chapman each failed to file timely Forms 5
with respect to automatic grants made to them in February 1996 under the
Company's 1995 Stock Option Plan of options to purchase shares of Common Stock.
<PAGE>
PROPOSAL 2: AMENDMENT AND APPROVAL OF 1995 STOCK OPTION PLAN
------------------------------------------------------------
The Company maintains the 1995 Stock Option Plan (the "Plan") to provide
incentives to the Company's key employees, consultants and outside directors.
The Board of Directors believes the availability of stock incentives is an
important factor in the Company's ability to attract and retain experienced and
competent personnel and to provide an incentive for them to exert their best
efforts on behalf of the Company. The Plan was adopted by the Board of Directors
and approved by the shareholders in January 1995.
As of July 1, 1996 out of a total of 315,000 shares of Common Stock
reserved for issuance under the Plan, only 9,530 shares remained available for
grant. The Board of Directors believes additional shares will be needed under
the Plan to provide appropriate incentives to key employees and others.
Accordingly, on July 16, 1996, the Board of Directors approved an amendment to
the Plan, subject to shareholder approval, to reserve an additional 200,000
shares for issuance under the Plan, thereby increasing the total number of
shares reserved for issuance under the Plan from 315,000 to 515,000.
On December 23, 1996, the Board of Directors also approved amendments to
the Plan to reflect recent changes to Rule 16b-3 under the Exchange Act, to
conform the Plan to the requirements under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and to modify certain provisions
of the Plan.
Certain provisions of the Plan are described below. The complete text of
the Amended and Restated 1995 Stock Option Plan, as amended by the Board of
Directors on July 16, 1996 and December 23, 1996, is attached to this proxy
statement as Appendix A.
<PAGE>
DESCRIPTION OF THE PLAN AND AMENDMENTS
ELIGIBILITY; NUMBER OF SHARES RESERVED. Employees, directors and
consultants of the Company are eligible to participate in the Plan. Article VI
of the Plan has been amended by the Board of Directors to increase to a total of
515,000, from 315,000, the number of shares of Common Stock that have been
reserved for issuance under the Plan. As of November 30, 1996, options to
purchase 399,470 shares had been granted and were outstanding or had been
exercised under the Plan, and 115,530 shares remained available for issuance
under future awards.
ADMINISTRATION. The Plan is administered by a committee of nonemployee
directors appointed by the Board of Directors. Section II, paragraph (o) of the
Plan has been amended to incorporate by reference the definition of "Nonemployee
Director" in Rule 16b-3, as such Rule may be amended from time to time; the
paragraph previously defined a nonemployee director as a director who was not an
employee of the Company. Rule 16b-3 defines a "Nonemployee Director," for
purposes of the Company, to be a person who is not currently an officer or
employee of the Company; who does not receive compensation, directly or
indirectly, from the Company for services rendered as a consultant or in any
capacity other than as a director, except for specified immaterial dollar
amounts; who does not possess any interest in any material transaction with the
Company; and who is not engaged in any material business relationship with the
Company.
The Board of Directors has delegated to the Compensation Committee of the
Board (the "Committee") general authority for making awards under the Plan. The
Committee determines the individuals to whom awards are made under the Plan and
the price and terms of any such awards. Article IV of the Plan has been amended
to eliminate the prior requirement that Committee members could only receive
automatic, nondiscretionary grants of options under Article IX of the Plan.
Article V of the Plan has also been amended to permit discretionary awards to
Committee members.
TERM OF PLAN. The Plan will continue in effect until all awards granted
under it have been satisfied or have expired. No further awards may be granted
under the Plan after January 26, 2005.
<PAGE>
STOCK OPTIONS. Options granted under the Plan may be nonqualified options
("NSOs")or incentive stock options ("ISOs"). The exercise price per share of
ISOs may not be less than the fair market value per share of the Common Stock on
the date of grant. In the case of ISOs granted to persons who own more than 10
percent of the voting power of the Company's Common Stock on the date of grant,
the price per share must be at least 110 percent of the fair market value of the
Common Stock on the date of grant. The Plan limits the amount of ISOs that may
become exercisable under the Plan in any year to $100,000 per optionee (based on
the fair market value of the Common Stock on the date of grant). In order to
comply with Section 162(m) of the Code, described below, Article V of the Plan
has been amended to provide that no employee may be granted options or
restricted stock awards for more than an aggregate of 100,000 shares of Common
Stock in connection with the hiring of the employee or 50,000 shares of Common
Stock in any calendar year otherwise. See "Tax Consequences." No monetary
consideration is paid to the Company upon the granting of options.
Options granted under the Plan generally continue in effect for the period
fixed by the Committee, except that ISOs are not exercisable after the
expiration of 10 years from the date of grant. Options are exercisable in
accordance with the terms of an option agreement entered into at the time of
grant and are generally nontransferable except on death of a holder. Options
generally may be exercised only while an optionee is employed by or provides
services to the Company or within one year following termination of employment
or service by reason of death or disability or three months following
termination for any other reason. The Committee may extend the exercise period
for any period up to the expiration date of the option and may increase the
number of shares for which the option may be exercised up to the total number
underlying the option. In the discretion of the Committee, the exercise price of
an option may be paid with certain types of consideration other than cash. Upon
the exercise of an option, the number of shares subject to the option and the
number of shares available under the Plan for future awards are reduced by the
number of shares with respect to which the option is exercised.
Article VII of the Plan has been amended to delete the requirement that
persons subject to Section 16 of the Exchange Act may not sell shares underlying
an option within six months after the grant of the option.
STOCK OPTION GRANTS TO NONEMPLOYEE DIRECTORS. Pursuant to the terms of the
Plan, each individual who becomes a nonemployee director automatically receives
a NSO to purchase 5,775 shares of Common Stock when the individual becomes a
director. In addition, each nonemployee director automatically is granted an
annual nondiscretionary NSO to purchase 1,400 shares of Common Stock, provided
that no nonemployee director may automatically be granted options under the Plan
for more than an aggregate of 8,575 shares. See "Proposal 1: Election of
Directors -- Compensation of Directors."
<PAGE>
RESTRICTED STOCK AWARDS. The Plan permits the grant of restricted stock
awards in such amounts, for such consideration, subject to such restrictions and
on such terms as the Committee may determine. Article VIII of the Plan has been
amended to delete the requirement that persons subject to Section 16 of the
Exchange Act may not sell shares subject to a restricted stock award within six
months after the grant of the award.
CHANGES IN CAPITAL STRUCTURE. The Plan provides that if the outstanding
Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation, plan
of exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Committee in the number and kind of shares available for awards under the
Plan. Article X, paragraph A of the Plan has been amended to clarify that the
price of options can be adjusted in connection with changes in the Company's
capital structure by providing that the Committee shall make appropriate
adjustment in the number and kind of shares as to which outstanding options
shall be exercisable, the option price of outstanding options and any and all
other matters deemed appropriate by the Committee, so that the holder's
proportionate interest and economic value before and after the occurrence of the
event is maintained. In the event of dissolution of the Company or a merger,
consolidation or plan of exchange affecting the Company, in lieu of providing
for options as provided above, the Committee may, in its sole discretion,
provide a 30-day period prior to such event during which holders would have the
right to exercise options without any limitation on exercisability after which
all unexercised options would immediately terminate.
TERMINATION OR AMENDMENT OF PLAN. The Board of Directors may terminate or
amend the Plan at any time with respect to shares for which awards have not been
granted, provided that certain material amendments require the approval of the
shareholders. Article XI, paragraph (b) of the Plan has been amended to clarify
that the price of options can be changed under Article X without shareholder
approval. Article XI has also been amended to delete the provision that
shareholder approval would be required to reduce any authority granted to the
Committee under the Plan in contravention of Rule 16b-3 because Rule 16b-3 no
longer requires a Committee with specified authority.
MISCELLANEOUS. Article XII has been amended to delete the provision that
the Plan is intended to qualify under Rule 16b-3 because Rule 16b-3 no longer
requires a plan to meet specified conditions.
Article II, paragraph l has been amended to provide that the fair market
value of the Company's Common Stock shall be determined for purposes of the Plan
by reference to the reported closing sale price of the Common Stock rather than
the average between the high and low sales prices or between the closing bid and
asked prices on the reference date.
<PAGE>
TAX CONSEQUENCES
Certain options granted under the Plan are intended to qualify as ISOs for
federal income tax purposes. Under federal income tax law currently in effect,
the optionee generally will recognize no income upon grant or upon a proper
exercise of the ISO. If an employee exercises an ISO and does not dispose of any
of the option shares within two years following the date of grant and within one
year following the date of exercise, any gain realized on subsequent disposition
of the shares will be treated as income from the sale or exchange of a capital
asset. If an employee disposes of shares acquired upon exercise of an ISO before
the expiration of either the one-year holding period or the two-year waiting
period, any amount realized will be taxable as ordinary compensation income in
the year of such disqualifying disposition to the extent that the lesser of the
fair market value of the shares on the exercise date or the fair market value on
the date of disposition exceeds the exercise price. The Company will not be
allowed any deduction for federal income tax purposes at either the time of the
grant or exercise of an ISO. However, upon any disqualifying disposition by an
employee, the Company will generally be entitled to a deduction to the extent
the employee realizes ordinary income. The tax treatment for persons subject to
the alternative minimum tax may be substantially different from that described
above.
Certain options authorized to be granted under the Plan will be treated as
NSOs for federal income tax purposes. Under federal income tax law currently in
effect, no income is realized by the grantee of an NSO until the option is
exercised. At the time of exercise of an NSO, the optionee will realize ordinary
compensation income, and the Company will generally be entitled to a deduction,
in the amount by which the market value of the shares subject to the option at
the time of exercise exceeds the exercise price. The Company is required to
withhold on the income amount. Upon the sale of shares acquired upon exercise of
an NSO, the excess of the amount realized from the sale over the market value of
the shares on the date of exercise will be taxable.
<PAGE>
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt. If the
shares are nontransferable and subject to forfeiture at the timpe of receipt,
the employee will realize taxable income in each year in which the shares become
transferable or are not subject to forfeiture, unless the employee makes an
election under Section 83(b) of the Code within 30 days after the original
transfer. The Company will generally be entitled to a tax deduction in the
amount includable as income by the employee at the same time or times as the
employee recognizes income with respect to the shares. The Company is required
to withhold on the income amount.
Section 162(m) of the Code limits to $1 million per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year. Under Treasury Department regulations,
compensation received from the exercise of an option is not subject to the $1
million limit if the option and the Plan meet certain requirements. One
requirement is shareholder approval at least once every five years of
per-employee limits on the number of shares as to which options may be granted.
Other requirements are that the option be granted by a committee of at least two
outside directors and that the exercise price of the option be not less than the
fair market value of the Common Stock on the date of grant.
RECOMMENDATION BY THE BOARD OF DIRECTORS
A vote for Proposal 2 will approve the amendments to the Plan described
above and will approve the Plan, as amended, for purposes of Section 162(m) of
the Code. Approval of this proposal requires that the number of votes cast for
approval exceeds the number of votes cast against it. Unless marked otherwise,
proxies received will be voted FOR approval of the amendments to the Plan and of
the Plan itself. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF AUDITORS
---------------------------------------------------
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending September 30, 1997. A representative of Deloitte & Touche LLP
is expected to be present at the Meeting, will have the opportunity to make a
statement, and will be available to respond to appropriate questions.
<PAGE>
Unless marked to the contrary, proxies received will be voted FOR
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
FISCAL 1997.
OTHER BUSINESS
--------------
The Board of Directors knows of no other matters that will be presented for
action at the Meeting. However, the enclosed proxy gives discretionary authority
to the persons named in the proxy in the event that any other matters should be
properly presented at the Meeting.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
---------------------------------------------
To be eligible for inclusion in the Company's proxy materials for the 1998
annual meeting of shareholders, a proposal intended to be presented by a
shareholder for action at that meeting must, in addition to complying with the
shareholder eligibility and other requirements of the Company's Amended and
Restated Bylaws and of the Securities and Exchange Commission's rules governing
such proposals, be received not later than September 18, 1997 by the Secretary
of the Company at the Company's principal executive offices, 9300 North Decatur
Street, Portland, Oregon 97203.
A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM 10-KSB WILL BE AVAILABLE
TO ANY SHAREHOLDER WITHOUT CHARGE UPON WRITTEN REQUEST TO: KURT W. RUTTUM, VICE
PRESIDENT AND GENERAL COUNSEL, PHOENIX GOLD INTERNATIONAL, INC., 9300 NORTH
DECATUR, PORTLAND, OREGON 97203.
By order of the Board of Directors,
/s/ Timothy G. Johnson
-----------------------------------
Timothy G. Johnson
Secretary
Dated: January 15, 1997
<PAGE>
APPENDIX A
----------
PHOENIX GOLD INTERNATIONAL, INC.
(FORMERLY, JISHUDOKURITSU, INC.)
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
I. PURPOSE
----------
The purpose of the Plan is to provide a means by which selected Employees,
Nonemployee Directors and Consultants may be given an opportunity to acquire
stock of the Company. The Company, by means of the Plan, seeks to retain the
services of persons who are currently Employees, Nonemployee Directors or
Consultants, to secure and retain the services of new Employees, Nonemployee
Directors and Consultants, and to provide incentives for such persons to exert
maximum efforts for the success of the Company. Accordingly, the Plan provides
for granting Incentive Stock Options, Nonstatutory Stock Options and Restricted
Stock Awards, or any combination of the foregoing, as is best suited to the
circumstances of the particular person as provided herein.
II. DEFINITIONS
---------------
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
a) "1934 Act" means the Securities Exchange Act of 1934, as amended and in
effect from time to time, or any successor statute.
b) "Award" means, individually or collectively, any Option, Restricted
Stock Award or Nonemployee Director Option.
c) "Board" means the Board of Directors of the Company.
d) "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, or any successor statute. Reference in the Plan to any
section of the Code shall be deemed to include any amendments or successor
provisions to any such section.
e) "Committee" means not less than two members of the Board who are
selected by the Board as provided in Paragraph A of Article IV.
f) "Common Stock" means the Common Stock, without par value, of the
Company.
<PAGE>
g) "Company" means Phoenix Gold International, Inc., an Oregon corporation.
Company" means Phoenix Gold International, Inc., an Oregon corporation.
h) "Consultant" means any person, including an adviser, engaged by the
Company to render services and who does not render such services as an
Employee or Nonemployee Director.
i) "Director" means an individual elected to the Board by the shareholders
of the Company or by the Board under applicable corporate law who is serving on
the Board on the date the Plan is adopted by the Board or is elected to the
Board after such date.
j) "Disability" means the condition of being permanently "disabled" within
the meaning of Section 22(e)(3) of the Code, namely being unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months.
k) "Employee" means any person (including a Director) in an employment
relationship with the Company.
l) "Fair Market Value" means, as of any specified date, the reported
closing sale price of the Common Stock on the composite tape on that date, or if
no such price is reported on that date, on the last preceding date on which such
price of the Common Stock is so reported. If the Common Stock is traded over the
counter at the time a determination of its fair market value is required to be
made hereunder, its fair market value shall be deemed to be equal to the closing
sale price of Common Stock on that date, or if no such price is reported on that
date, on the last preceding date on which such price of Common Stock is so
reported. In the event Common Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the determination
of its fair market value shall be made by the Committee in such manner as it
deems appropriate.
m) "Holder" means an Employee, Consultant or a Nonemployee Director who has
been granted an Award.
n) "Incentive Stock Option" means an incentive stock option within the
meaning of Section 422 of the Code.
o) "Nonemployee Director" means a Nonemployee Director as defined in Rule
16b-3, as such Rule may be amended from time to time.
p) "Nonemployee Director Option" means an Award described in Article IX of
the Plan.
<PAGE>
q) "Nonemployee Director Option Agreement" means a written agreement
between the Company and a Holder with respect to a Nonemployee Director Option.
r) "Nonstatutory Stock Option" means a stock option other than an Incentive
Stock Option.
s) "Option" means an Award described in Article VII of the Plan.
t) "Option Agreement" means a written agreement between the Company and a
Holder with respect to an Option.
u) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
v) "Plan" means the Amended and Restated 1995 Stock Option Plan of the
Company, as set forth herein and as may be hereafter amended from time to time.
w) "Restricted Stock Agreement" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.
x) "Restricted Stock Award" means an Award described in Article VIII of the
Plan.
y) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the 1934 Act, as such may be amended from time to time, and any
successor rule, regulation or statute fulfilling the same or similar function.
z) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code; namely, any corporation in
which the Company directly or indirectly controls 50 percent or more of the
total combined voting power of all classes of stock having voting power.
<PAGE>
III. EFFECTIVE DATE AND DURATION OF THE PLAN
--------------------------------------------
The Plan shall be effective as of January 27, 1995, the date of its
adoption by the Board and the shareholders of the Company. No further Awards may
be granted under the Plan after January 26, 2005. The Plan shall remain in
effect until all Awards granted under the Plan have been satisfied or expired.
IV. ADMINISTRATION
------------------
A. Composition of Committee. The Plan shall be administered by a committee
which shall (i) be appointed by the Board and (ii) consist of Nonemployee
Directors.
B. Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have sole authority, in its discretion, to determine (i) which
Employees, Nonemployee Directors and Consultants shall receive Awards, (ii) the
time or times when Awards shall be granted, (iii) the type or types of Awards to
be granted, and (iv) the number of shares of Common Stock which may be issued
under each Award. In making such determinations the Committee may take into
account the nature of the services rendered by the respective individuals, their
present and potential contribution to the success of the Company, and such other
factors as the Committee in its discretion shall deem relevant. The Committee
shall also have such additional powers as are delegated to it by the Plan.
Subject to the express provisions of the Plan, the Committee is authorized to
construe the Plan and the respective agreements executed thereunder, to
prescribe such rules and regulations relating to the Plan as it may deem
advisable to carry out the Plan, and to determine the terms, restrictions and
provisions of each Award, including such terms, restrictions and provisions as
shall be requisite in the judgment of the Committee to cause designated Options
to qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in any agreement
relating to an Award in the manner and to the extent it shall deem expedient to
carry it into effect. The determinations of the Committee on the matters
referred to in this Article IV shall be conclusive.
<PAGE>
C. Liability of Committee Members. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award.
D. Costs of Plan. The costs and expenses of administering the Plan shall be
borne by the Company.
V. ELIGIBILITY
--------------
Employees, Nonemployee Directors and Consultants are eligible to receive
Options and Restricted Stock Awards; provided, however, only Employees are
eligible to receive Incentive Stock Options. Only Nonemployee Directors are
eligible to receive Nonemployee Director Options. Any Award may be granted on
more than one occasion to the same person, and may include an Incentive Stock
Option, a Nonstatutory Stock Option, a Restricted Stock Award, or any
combination thereof. No employee may be granted options or Restated Stock Awards
under the Plan for more than an aggregate of 100,000 shares of Common Stock in
connection with the hiring of the employee or 50,000 shares of Common Stock in
any calendar year otherwise.
VI. SHARES SUBJECT TO THE PLAN
------------------------------
A. Aggregate Number of Shares. Subject to Article X, the aggregate number
of shares of Common Stock that may be issued under the Plan shall not exceed
515,000 shares, after giving effect to a 109-to-one stock split declared by the
Board on January 27, 1995. Shares shall be deemed to have been issued under the
Plan only (i) to the extent actually issued and delivered pursuant to an Award,
or (ii) to the extent an Award is settled in cash. To the extent that an Award
lapses or the rights of its Holder terminate, any shares of Common Stock subject
to such Award shall again be available for the grant of an Award.
B. Stock Offered. The stock to be offered pursuant to the grant of any
Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.
<PAGE>
VII. OPTIONS
------------
A. Option Period. The term of each Option shall be as specified by the
Committee at the date of grant, except that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the date of grant of such
Incentive Stock Option.
B. Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
C. Special Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by an individual during any
calendar year under all incentive stock option plans of the Company exceeds
$100,000, such Incentive Stock Options shall be treated as options which do not
constitute Incentive Stock Options. The Committee shall determine, in accordance
with applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of a Holder's Options will not constitute
Incentive Stock Options because of such limitation and shall notify the Holder
of such determination as soon as practicable after such determination. No
Incentive Stock Option shall be granted to an individual if, at the time the
Option is granted, such individual owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company, unless
(i) at the time such Option is granted the exercise price is at least 110
percent of the Fair Market Value of the Common Stock subject to the Option and
(ii) such Option by its terms is not exercisable after the expiration of five
years from the date of grant.
D. Separate Stock Certificates. Separate stock certificates shall be issued
by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
a Nonstatutory Stock Option.
E. Option Agreement. Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under Section 422 of
the Code. An Option Agreement may provide for the payment of the exercise price,
in whole or in part, by the delivery of a number of shares of Common Stock (plus
cash if necessary) having a Fair Market Value (as of the exercise date of the
Option) equal to such exercise price. Moreover, an Option Agreement may provide
for a "cashless exercise" of the Option by establishing procedures whereby the
Holder, by a properly executed written notice, directs (i) an immediate market
sale or margin loan respecting all or a part of the shares of Common Stock to
which the Holder is entitled upon exercise of the Option, (ii) the delivery of
the shares of Common Stock from the Company directly to a brokerage firm and
(iii) the delivery of the exercise price from sale or margin loan proceeds from
the brokerage firm directly to the Company. Such Option Agreement may also
include, without limitation, provisions relating to (a) vesting of Options, (b)
tax matters (including provisions covering any applicable employee wage
withholding requirements), and (c) any other matters not inconsistent with the
terms and provisions of this Plan that the Committee shall in its sole
discretion determine. The terms and conditions of the respective Option
Agreements need not be identical.
F. Exercise Price and Payment. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall be determined by the
Committee, but such exercise price (i) shall not be less than the Fair Market
Value of a share of Common Stock on the date such Option is granted if the
Option is an Incentive Stock Option and (ii) shall be subject to adjustment as
provided in Article X. An Option or portion thereof may be exercised by delivery
of an irrevocable notice of exercise to the Company. The exercise price of an
Option or portion thereof shall be paid in full in the manner prescribed by the
Committee.
<PAGE>
G. Termination of Employment or Service.
1. In the event the employment or service of a Holder of an Option by
the Company terminates for any reason other than because of Disability or
death, such Option may be exercised at any time prior to the expiration
date of the Option or the expiration of three months after the date of such
termination, whichever is the shorter period, but only if and to the extent
the Holder was entitled to exercise the Option at the date of such
termination.
2. In the event the employment or service of a Holder of an Option by
the Company terminates because of Disability, such Option may be exercised
at any time prior to the expiration date of the Option or the expiration of
one year after the date of such termination, whichever is the shorter
period, but only if and to the extent the Holder was entitled to exercise
the Option at the date of such termination.
3. In the event of the death of a Holder of an Option while employed
by or providing service to the Company, such Option may be exercised at any
time prior to the expiration date of the Option or the expiration of one
year after the date of such death, whichever is the shorter period, but
only if and to the extent the Holder was entitled to exercise the Option on
the date of death, and only by the person or persons to whom such Holder's
rights under the Option shall pass by the Holder's will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.
4. The Committee, at the time of grant or at any time thereafter, may
extend the three-month and one-year expiration periods any length of time
not later than the original expiration date of the Option, and may increase
the portion of the Option that is exercisable, subject to such terms and
conditions as the Committee may determine.
5. To the extent that the Option of any deceased Holder or of any
Holder whose employment or service terminates is not exercised within the
applicable period, all further rights to purchase Common Stock pursuant to
such Option shall cease and terminate.
H. Rights As a Shareholder. The Holder of an Option under the Plan shall
have no rights as a shareholder with respect to the Common Stock subject to such
Option until the date of issue to the Holder of a stock certificate for such
shares. Except as otherwise expressly provided in the Plan, no adjustment shall
be made for dividends or other rights for which the record date occurs prior to
the date such stock certificate is issued.
<PAGE>
I. Options in Substitution for Stock Options Granted by Other Corporations.
Options may be granted under the Plan from time to time in substitution for
stock options held by individuals employed by corporations who become Employees
as a result of a merger or consolidation of the employing corporation with the
Company, or the acquisition by the Company of the assets of the employing
corporation, or the acquisition by the Company of stock of the employing
corporation with the result that such employing corporation becomes a
Subsidiary.
VIII. RESTRICTED STOCK AWARDS
-----------------------------
A. Restriction Period. At the time a Restricted Stock Award is granted, the
Committee shall establish a period of time (the "Restriction Period") applicable
to such Award. Each Restricted Stock Award may have a different Restriction
Period, in the discretion of the Committee. The Restriction Period applicable to
a particular Restricted Stock Award shall not be changed except as permitted by
Paragraph B of this Article VIII or Article X.
B. Other Terms and Conditions. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive dividends during the Restriction Period, to vote Common Stock
subject thereto and to enjoy all other shareholder rights, except that (i) the
Holder shall not be entitled to delivery of the stock certificate until the
Restriction Period shall have expired, (ii) the Company shall retain custody of
the stock certificate during the Restriction Period, (iii) the Holder may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock
during the Restriction Period, and (iv) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement shall
cause a forfeiture of the Restricted Stock Award. Stock dividends issued with
respect to Common Stock awarded pursuant to a Restricted Stock Award shall be
treated as additional Common Stock covered by the Restricted Stock Award. At the
time of such Award, the Committee may, in its sole discretion, prescribe
additional terms, conditions or restrictions relating to Restricted Stock
Awards, including, but not limited to, rules pertaining to the termination of
employment or service (by retirement, Disability, death or otherwise) of a
Holder prior to expiration of the Restriction Period. Such additional terms,
conditions or restrictions shall be set forth in a Restricted Stock Agreement
made in conjunction with the Award. Such Restricted Stock Agreement may also
include, without limitation, provisions relating to (i) vesting of Awards, (ii)
tax matters (including provisions (x) covering any applicable employee wage
withholding requirements and (y) prohibiting an election by the Holder under
Section 83(b) of the Code), and (iii) any other matters not inconsistent with
the terms and provisions of this Plan that the Committee shall in its sole
discretion determine.
<PAGE>
C. Exercise Price and Payment. The Committee shall determine the amount and
form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that in the absence of such a determination, a Holder shall not
be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.
D. Restricted Stock Agreement. At the time any Award is granted under this
Article VIII, the Company and the Holder shall enter into a Restricted Stock
Agreement setting forth each of the matters contemplated hereby and such other
matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.
IX. NONEMPLOYEE DIRECTOR OPTIONS
--------------------------------
A. Exercise Price. The price at which a share of Common Stock may be
purchased upon exercise of a Nonemployee Director Option shall be the Fair
Market Value of a share of Common Stock on the date such Nonemployee Director
Option is granted.
B. Term and Limitations on Exercise. Each Nonemployee Director Option shall
be a Nonstatutory Stock Option and shall have a five-year term from the date of
grant, unless earlier terminated as provided in Paragraph G of Article VII or
Article X. Each Nonemployee Director Option shall become exercisable at the rate
of one-third per year on each of the first three anniversaries of the date of
grant, subject to earlier exercise pursuant to Article X. If a Holder ceases to
be a Director for any reason, including death or Disability, the exercise of the
Option shall be subject to Paragraph G of Article VII.
<PAGE>
C. General Rules. Nonemployee Director Options shall be governed by the
provisions of Article VII to the extent such provisions are not inconsistent
with this Article IX. Each Nonemployee Director Option shall be evidenced by a
Nonemployee Director Option Agreement.
D. Automatic Grants. Immediately after the close of each shareholder
meeting at which a Nonemployee Director is first elected to the Board, such
Nonemployee Director shall automatically be granted a Nonemployee Director
Option to purchase 5,775 shares of Common Stock. Immediately after the close of
each shareholder meeting thereafter at which such Nonemployee Director is
re-elected to the Board, such Nonemployee Director shall automatically be
granted a Nonemployee Director Option to purchase 1,400 shares of Common Stock.
Notwithstanding the foregoing, no Nonemployee Director shall be granted
Nonemployee Director Options covering, in the aggregate, more than 8,575 shares
of Common Stock.
X. CHANGES IN CAPITAL STRUCTURE
-------------------------------
A. If the outstanding Common Stock is hereafter increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable in
shares, appropriate adjustment shall be made by the Committee in the number and
kind of shares available for Awards. In addition, the Committee shall make
appropriate adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, the option
price of outstanding Options and any and all other matters deemed appropriate by
the Committee, so that the Holder's proportionate interest and economic value
before and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Committee shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Committee. Any such adjustments made by the Committee
shall be conclusive. Any adjustment provided for in this Paragraph A of Article
X shall be subject to any required shareholder action. In the event of
dissolution of the Company or a merger, consolidation or plan of exchange
affecting the Company, in lieu of providing for Options as provided above in
this Paragraph A of Article X or in lieu of having the Options continue
unchanged, the Committee may, in its sole discretion, provide a 30-day period
prior to such event during which Holders shall have the right to exercise
Options in whole or in part without any limitation on exercisability and upon
the expiration of which 30-day period all unexercised Options shall immediately
terminate.
B. The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company, or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.
<PAGE>
C. Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Awards theretofore granted or the exercise
price per share, if applicable.
XI. AMENDMENT AND TERMINATION OF THE PLAN
-----------------------------------------
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Awards have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, that no change in any Award theretofore granted may be made
which would impair the rights of the Holder without the consent of the Holder;
provided further, that the provisions of Article IX shall not be amended more
than once during any period of six calendar months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder; and provided further, that the Board may not,
without approval of the shareholders, amend the Plan:
<PAGE>
(a) to increase the maximum number of shares which may be issued on
grant or exercise of an Award, except as provided in Article X;
(b) to change the price at which an Award may be granted or exercised,
except as provided in Article X;
(c) to change the class of individuals eligible to receive Awards; or
(d) to extend the maximum period during which Awards may be granted
under the Plan.
XII. MISCELLANEOUS
------------------
A. No Right To An Award. Neither the adoption of the Plan by the Company
nor any action of the Board or the Committee shall be deemed to give an
Employee, a Consultant or a Nonemployee Director any right to be granted an
Award or any of the rights hereunder except as may be evidenced by an Award or
by an Option Agreement, Restricted Stock Agreement or Nonemployee Director
Option Agreement duly executed on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein.
B. No Employment Rights Conferred. Nothing in the Plan shall (i) confer
upon any Employee any right with respect to continuation of employment with the
Company or (ii) interfere in any way with the right of the Company to terminate
the Employee's employment (or service as a Director, in accordance with
applicable corporate law, or service as a Consultant) at any time for any
reason, with or without cause.
C. Other Laws; Withholding. The Company shall not be obligated to issue any
Common Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933, as amended, and such other state and federal laws, rules or regulations
as the Company or the Committee deems applicable and, in the opinion of legal
counsel for the Company, there is no exemption from the registration
requirements of such laws, rules or regulations available for the issuance and
sale of such shares. No fractional shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional shares be paid. The Company shall have
the right to deduct in connection with all Awards any taxes required by law to
be withheld and to require any payments required to enable it to satisfy its
withholding obligations.
<PAGE>
D. No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company from taking any corporate action which is
deemed by the Company to be appropriate or in its best interest, whether or not
such action would have an adverse effect on the Plan or any Award granted under
the Plan. No Employee, Consultant, Director, beneficiary or other person shall
have any claim against the Company as a result of any such action.
E. Restrictions on Transfer. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution; provided, however, that
with the consent of the Committee, Nonstatutory Stock Options may be assigned or
transferred pursuant to a qualified domestic relations order (a "QDRO") as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. An Award may be exercisable during
the lifetime of the Holder only by such Holder, the Holder's guardian or legal
representative or the Holder's permitted assignee or transferee under a QDRO.
F. Governing Law. To the extent that federal laws (such as the Code and the
federal securities laws) do not otherwise control, the Plan shall be construed
in accordance with the laws of the state of Oregon.
G. Headings. Headings contained in the Plan are for reference purposes and
shall not affect the meaning or interpretation of the Plan.
<PAGE>
APPENDIX B
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Form of Proxy
Proxy PHOENIX GOLD INTERNATIONAL, INC. Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON FEBRUARY 18, 1997
The undersigned appoints Keith A. Peterson and Timothy G. Johnson, and each
of them, proxies for the undersigned, each with full power of substitution, to
attend the Annual Meeting of Shareholders of Phoenix Gold International, Inc. to
be held on February 18, 1997 at 2:30 p.m., Pacific Time, and at any adjournments
or postponements of the Annual Meeting, and to vote as specified in this Proxy
all the shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present. This Proxy when properly executed will
be voted in accordance with your indicated directions. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR APPROVAL OF
AMENDMENTS TO THE 1995 STOCK OPTION PLAN AND FOR THE RATIFICATION OF AUDITORS.
IN ADDITION, THE PROXIES MAY VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
The Board of Directors recommends a vote FOR the election of Directors, FOR
approval of amendments to the 1995 Stock Option Plan and FOR the ratification of
auditors, as noted in proposals 1, 2 and 3, respectively.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY
ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE
(Continued and to be signed on reverse side.)
<PAGE>
------------------------------------------------------------
PHOENIX GOLD INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY: / /
1. ELECTION OF DIRECTORS -- FOR WITHHOLD
Nominees: Keith A. Peterson ALL ALL FOR ALL (EXCEPT
Timothy G. Johnson, Frank G. NOMINEE(S)
Magdlen, Matthew W. Chapman / / / / WRITTEN BELOW)
----------------------------
2. Proposal to approve amend- FOR AGAINST ABSTAIN
ments to 1995 Stock Option / / / / / /
Plan
3. Proposal to ratify the FOR AGAINST ABSTAIN
appointment of Deloitte & / / / / / /
Touche LLP as the Company's
auditors for fiscal 1997
THE UNDERSIGNED ACKNOWLEDGES
RECEIPT OF THE NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
AND OF THE PROXY STATEMENT
Dated: , 1997
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Signature(s)
------------------
------------------------------
Please sign exactly as your
name appears. Joint owners
should each sign personally.
Where applicable, indicate
your official position or
representation capacity.
