SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
JORE CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
* Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
[LOGO]
April 12, 2000
Dear Shareholder:
You are cordially invited to attend the first annual meeting of shareholders
of Jore Corporation, which will be held at the Boone & Crockett Club,
250 Station Drive, Missoula, Montana, on May 17(th), 2000, at 1:30 p.m. We look
forward to greeting as many of our shareholders as possible.
Details of the business to be conducted at the annual meeting are set forth
in the attached Notice of Annual Meeting and Proxy Statement. At the meeting,
you will have an opportunity to ask questions about the Company and its
operations.
We welcome and encourage you to attend and vote your shares in person.
Whether or not you attend the annual meeting, it is important that your shares
be represented and voted at the meeting. Therefore, I urge you to sign, date,
and promptly return the enclosed proxy card in the enclosed postage-paid
envelope.
On behalf of the Board of Directors and myself, I would like to express our
appreciation for your continued interest in the affairs of the Company.
Very truly yours,
/s/ Matthew B. Jore
Matthew B. Jore
President & CEO
JORE CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 17(TH), 2000
------------------------
Dear Shareholder:
The annual meeting of the shareholders of Jore Corporation will be held at
the Boone & Crockett Club, 250 Station Drive, Missoula, Montana, on May 17(th),
2000, at 1:30 p.m., for the following purposes:
1. To elect eight directors to serve until the next annual meeting of
shareholders and until their respective successors are elected and
qualified;
2. To approve the Jore Corporation 1999 Employee Stock Purchase Plan;
3. To approve an amendment to the Amended and Restated Jore Corporation
1997 Stock Plan to increase the number of shares of common stock reserved
for issuance thereunder by 1,300,000 shares;
4. To ratify the appointment of Deloitte & Touche LLP as our independent
accountants for the fiscal year ending December 31, 2000; and
5. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on March 9, 2000 are
entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David H. Bjornson
David H. Bjornson, Secretary
JORE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 2000
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Q: Why did you send me this Proxy Statement?
A: We sent you this Proxy Statement and the enclosed proxy card
because Jore Corporation's Board of Directors is soliciting
your proxy to vote at the 2000 Annual Meeting of
Shareholders.
This Proxy Statement summarizes the information regarding
the matters to be voted upon at the Annual Meeting. You do
not need to attend the Annual Meeting, however, to vote your
shares. You may simply complete, sign and return the
enclosed proxy card.
If you owned shares of our common stock at the close of
business on March 9, 2000, our record date, you are entitled
to vote the shares that you owned as of that date. On the
record date, there were 13,840,887 shares of our common
stock outstanding. We mailed this Proxy Statement to all
shareholders entitled to vote their shares at the Annual
Meeting on or about April 17, 2000.
Q: How many votes do I have?
A: You have one vote for each share of Jore common stock that
you owned on the record date.
Q: How do I vote by proxy?
A: If you properly fill in your proxy card and deliver it to us
by the time of the Annual Meeting on May 17, 2000, your
"proxy" (one of the individuals named on your proxy card)
will vote your shares as you have directed. If you sign the
proxy card but do not make specific choices, your proxy will
vote your shares as recommended by the Board as follows:
- "FOR" electing all eight nominees for director;
- "FOR" approving our 1999 Employee Stock Purchase Plan;
- "FOR" amending the our Amended and Restated 1997 Stock
Plan to increase the number of shares reserved for issuance
under the plan; and
- "FOR" ratifying Deloitte & Touche LLP as our independent
accountants for the fiscal year ending December 31, 2000.
If any other matter is presented at the Annual Meeting, your
proxy will vote in accordance with his best judgment. At the
time we printed this Proxy Statement, we knew of no matters
that needed to be acted on at the Annual Meeting other than
those discussed in this Proxy Statement.
Q: May my broker vote for me?
A: Under the rules of the National Association of Securities
Dealers, if your broker holds your shares in its "street"
name, the broker may vote your shares on Proposals 1 and 4
even if it does not receive instructions from you.
Q: May I revoke my proxy?
A: Yes. You may change your mind after you send in your proxy
card by following these procedures. To revoke your proxy:
1. Send in another signed proxy with a later date;
2. Send a letter revoking your proxy to our corporate
secretary at our offices in Ronan, Montana; or
3. Attend the Annual Meeting and vote in person.
Q: What is the quorum requirement for the meeting?
A: The quorum requirement for holding the meeting and
transacting business is a majority of the outstanding shares
entitled to be voted. The shares may be present in person or
represented by proxy at the meeting. Both abstentions and
broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Generally, broker
non-votes occur when shares held by a broker for a
beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting
instructions from the beneficial owner, or (2) the broker
lacks discretionary voting power to vote such shares.
Q: What is the effect of abstentions and broker non-votes?
A: Abstentions and broker non-votes will have no effect on the
election of directors or the voting on the other three
proposals to be voted upon by shareholders at the Annual
Meeting.
Q: How do I vote in person?
A: If you plan to attend the Annual Meeting and vote in person,
we will give you a ballot when you arrive. If your shares
are held in the name of your broker, bank or other nominee,
you must bring an account statement or letter from that
broker, bank or nominee. The account statement or letter
must show that you were the direct or indirect (beneficial)
owner of the shares on March 9, 2000, the record date for
voting.
Q: What vote is required to approve each proposal?
A: The eight nominees for director who receive the most votes
will be elected. So, if you do not vote for a nominee, or
you indicate "withhold authority to vote" for a nominee on
your proxy card, your vote will not count either "for" or
"against" the nominee.
A majority of the shares of our common stock voting at the
Annual Meeting is required to approve the 1999 Employee
Stock Purchase Plan, and amend the Amended and Restated 1997
Stock Plan. So, if you do not vote, or abstain from voting,
it has no effect on this vote.
A majority of the shares of our common stock voting at the
Annual Meeting is required to ratify the selection of
Deloitte & Touche LLP as our accountants for fiscal year
2000. So, if you do not vote, or if you abstain from voting,
it has no effect on this vote.
Q: Is voting confidential?
A: We keep all the proxies, ballots and voting tabulations
private as a matter of practice. We only let our Inspector
of Election examine these documents. We will not disclose
your vote to management unless it is necessary to meet legal
requirements. We will forward to management, however, any
written comments that you make on the proxy card or
elsewhere.
Q: What are the costs of soliciting these proxies?
A: We will pay all the costs of soliciting these proxies.
Although we are mailing these proxy materials, our officers
and employees may also solicit proxies by telephone, by fax
or other electronic means of communication, or in person. We
will reimburse banks, brokers, nominees and other
fiduciaries for the expenses they incur in forwarding the
proxy materials to you.
Q: Who should I call if I have any questions?
A: If you have any questions about the Annual Meeting or
voting, or your ownership of Jore Corporation's common
stock, please contact David H. Bjornson at (406) 676-4900,
ext. 381.
JORE CORPORATION
PROXY STATEMENT
TABLE OF CONTENTS
PAGE
--------
/ / Proposal No. 1--Election of Directors and Management
Information............................................ 1
- Nominees.............................................. 1
- Meetings of the Board of Directors of the Company..... 2
- Board Committees...................................... 3
- Compensation of Directors............................. 3
- Compensation Committee Interlocks and Insider
Participation......................................... 3
- Security Ownership of Management and Other Beneficial
Owners................................................ 3
- Executive Officer Compensation........................ 5
- Option Grants in 1999................................. 5
- Aggregated Option Values as of Year-End 1999.......... 6
- Matthew B. Jore Employment Agreement.................. 6
- Report of Compensation Committee on Executive
Compensation.......................................... 6
- Comparison of Three Month Cumulative Total Return..... 8
- Certain Relationships and Related Transactions........ 8
- Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 10
/ / Proposal No. 2--For Adoption of the 1999 Employee Stock
Purchase Plan.......................................... 11
- Background............................................ 11
- Administration and Eligibility........................ 11
- Participation and Terms............................... 11
- Amendment and Termination............................. 12
- Federal Income Tax Consequences....................... 12
- Other Information..................................... 12
- Vote Required and Board Recommendation................ 12
/ / Proposal No. 3--For Amendment of the Amended and
Restated Jore Corporation 1997 Stock Plan.............. 13
- Background............................................ 13
- Reasons for the Amendment............................. 13
- Activity Under the Stock Plan......................... 13
- Summary of the Stock Plan............................. 13
- Federal Tax Information............................... 14
- Vote Required and Board Recommendation................ 14
/ / Proposal No. 4--For Ratification of Independent
Accountants............................................ 14
/ / Other Matters.......................................... 15
- Other Business........................................ 15
- Solicitation of Proxies............................... 15
- List of Shareholders.................................. 15
PAGE
--------
- Proposals of Shareholders............................. 15
- Additional Information................................ 16
IMPORTANT
Whether or not you expect to attend in person, we urge you to vote your proxy at
your earliest convenience. VOTING YOUR PROXY WILL ENSURE THE PRESENCE OF A
QUORUM AT THE MEETING AND WILL SAVE THE COMPANY THE EXPENSES AND EXTRA WORK OF
ADDITIONAL SOLICITATION. Voting your proxy will not prevent you from voting your
stock at the meeting if you desire to do so, as your proxy is revocable at your
option.
JORE CORPORATION
45000 HIGHWAY 93 SOUTH
RONAN, MONTANA 59864
------------------------
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 17, 2000
------------------------
This Proxy Statement, which was first mailed to shareholders on or about
April 17, 2000, is furnished in connection with the solicitation of proxies by
the Board of Directors of Jore Corporation (the "Company"), to be voted at the
annual meeting of the shareholders of the Company, which will be held at the
Boone & Crockett Club, 250 Station Drive, Missoula, Montana, on May 17(th),
2000, at 1:30 p.m., for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Shareholders who execute proxies retain the
right to revoke them at any time prior to the exercise of the powers conferred
thereby, by delivering a signed statement to the Secretary of the Company at or
prior to the annual meeting, by executing another proxy dated as of a later
date, or by attending the meeting and voting in person. The cost of solicitation
of proxies will be borne by the Company.
Shareholders of record at the close of business on March 9, 2000 will be
entitled to vote at the meeting on the basis of one vote for each share held. On
March 9, 2000, there were 13,840,887 shares of common stock outstanding, held of
record by 91 shareholders.
1. ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The Company's Board of Directors currently consists of eight members. Eight
directors are to be elected at the annual meeting, to hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. It is intended that the accompanying proxy will be voted in favor of
the following persons to serve as directors unless the shareholder indicates to
the contrary on the proxy card. Management expects that each of the nominees
will be available for election, but if any of them is not a candidate at the
time the election occurs, it is intended that such proxy will be voted for the
election of another nominee to be designated by the Board of Directors to fill
any such vacancy.
The eight nominees for director who receive the most votes will be elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES NAMED BELOW
FOR DIRECTORS OF THE COMPANY.
NOMINEES
MATTHEW B. JORE, age 37, is the founder of Jore Corporation. He has served
as President since June 1990, Chief Executive Officer since March 1999 and a
Director since its inception in February 1990. He holds a B.S. degree in
Economics from the University of Montana.
MICHAEL W. JORE, age 40, has served as Executive Vice President since
November 1998 and Director of Jore Corporation since February 1990. From
June 1990 to November 1998, he was the Vice President of Jore Corporation.
Before joining Jore Corporation, he worked for Plum Creek Timber, L.L.C. for ten
years. Matthew and Michael Jore are brothers.
DAVID H. BJORNSON, age 43, has served as General Counsel and Corporate
Secretary since November 1998 and as a Director since May 1998. He has served as
Executive Vice President since March 2000, and served as Chief Financial Officer
of Jore from November 1998 to March 2000. From
1993 to 1998, Mr. Bjornson was a Partner at Boone, Karlberg & Haddon, a
Missoula, Montana law firm, serving also as outside counsel of Jore since 1994.
From 1985 to 1993, he practiced law with firms in Seattle, Washington, focusing
his practice in business transactions, corporations, and tax law. He also acts
as director of Sun Mountain Sports, Inc., a manufacturer of golf bags, golf bag
carts and golf related apparel, and EndoBiologics International, Inc., a
biomedical firm. He holds an LL.M. (Masters of Laws) degree in taxation from New
York University, and a J.D. and a B.A. degree in Business Administration from
the University of Montana, both with honors. Mr. Bjornson also holds a Certified
Public Accountant Certificate.
THOMAS E. MAHONEY, age 58, has served as a Director of Jore Corporation
since February 1999. From 1965 until 1999, The Stanley Works employed him in
various positions. From 1997 to 1999, he was the President of The Stanley Works,
Consumer Sales Americas. From 1995 to 1997, he was the President and General
Manager, Customer Support Division and VP of Corporate Marketing and Advertising
at Stanley. From 1992 to 1995, he was the President and General Manager,
Hardware and Home Decor Division of Stanley. From 1987 to 1992, he was the
President and General Manager, National Hand Tools Division of Stanley. He has a
B.A. Degree from the University of Massachusetts.
R. BRUCE ROMFO, age 62, has served as a Director of Jore Corporation since
May 1998. He has served as the President of Printing Press, Inc. a packaging and
Printing Company since 1983, and currently serves as a Director. Mr. Romfo holds
a B.A. degree from Minot State University and a Masters degree in Accounting
from the University of Idaho.
WILLIAM M. STEELE, age 67, has served as a director of Jore Corporation
since May 1998. He is a founder and a managing member of Manufacturers' Sales
Associates, LLC, Jore Corporation's sales and marketing representative. Prior to
that, Mr. Steele spent 12 years with Makita USA, as Senior Vice President, and
as General Manager of Makita's Outdoor Power Equipment Division. Mr. Steele
holds a B.A. degree from the University of Connecticut.
A. BLAINE HUNTSMAN, age 63, has served as a Director of Jore Corporation
since June 1999. He is a Trustee of The Achievement Funds Trust, a family of
equity and bond mutual fund. Mr. Huntsman served as Chairman and Chief Executive
Officer of Olympus Capital Corporation, a holding company for Olympus Bank, from
1988 to 1995, when Olympus merged with Washington Mutual. Prior to that, he
served as Dean of the Graduate School of Business and College of Business,
University of Utah, from 1975 to 1980 and is retired as a Professor of Finance
at the David Eccles School of Business at the University of Utah. Mr. Huntsman
has also served as a director for several publicly held companies, including
Geneva Steel, Dean Witter Reynolds, Inc., Kahler Realty Corporation, Arcata
Corporation and others. He holds a B.S. degree from the University of Utah and a
Ph.D. in Economics from the University of Pennsylvania.
JAMES P. MATHIAS, age 49, has served as a Director of Jore Corporation since
June 1999. He serves as the Vice Chairman and Director of Corporate Strategy and
Product Development of The JPM Company, a publicly held wire harness and cable
assembly company, since August 1981. Mr. Mathias has also served on The JPM
Company's Board of Directors since 1978. From 1977 to 1981, he held various
positions at The JPM Company, including Production Engineer, Production Control
and Inventory Manager, Vice President of Operations and Chief Operating Officer.
Prior to that, Mr. Mathias owned and operated a contracting business from 1972
to 1977.
MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY
During 1999, the Board met five times. All incumbent directors attended 75%
or more of the total meetings of the Board and the committees on which they
served during 1999.
2
BOARD COMMITTEES
The Board of Directors maintains three standing committees, an Audit
Committee, a Compensation Committee and a Plan Administration Committee.
AUDIT COMMITTEE. In June 1999, the Board of Directors formed the Audit
Committee for the purpose of reviewing our internal accounting procedures and
consulting with and reviewing the services provided by our independent public
accountants. Messrs. Mahoney, Mathias and Huntsman currently serve on the Audit
Committee. This Committee met twice during 1999.
COMPENSATION COMMITTEE. In June 1999, the Board of Directors formed the
Compensation Committee. The Compensation Committee reviews and recommends to the
Board the compensation and benefits of all our officers and reviews general
policy relating to compensation and benefits of our employees. Messrs. Mathias,
Huntsman and Matthew Jore currently serve on the Compensation Committee. This
Committee met once during 1999.
PLAN ADMINISTRATION COMMITTEE. In February 2000, the Board of Directors
formed the Plan Administration Committee to administer both the 1997 Stock Plan
and the 1999 Employee Stock Purchase Plan. David H. Bjornson and Matthew Jore
currently serve on the Plan Administration committee. This Committee did not
meet in 1999, as it was formed in 2000.
COMPENSATION OF DIRECTORS
Matthew B. Jore, Michael W. Jore, David H. Bjornson and William M. Steele
receive no cash or other compensation for serving on the Board and its
committees. Non-employee outside directors receive the following compensation
for services rendered as members of our Board of Directors and its various
committees: (i) annual fees of $12,000; (ii) committee fees of $1,000 per year;
(iii) fees for acting as committee chairperson of $2,500 per year;
(iv) director meeting attendance fees of $1,000 per meeting; (v) committee
meeting attendance fees of $500 per meeting, and (vi) an annual grant of options
to acquire 5,000 shares of stock exercisable at the fair market value on the
date of grant. Jore Corporation also reimburses the directors for reasonable
out-of-pocket expenses incurred in connection with their attendance at Board and
committee meetings. For a description of payments to directors unrelated to
their service as directors, see "Certain Relationships and Related Transactions"
beginning on page 8.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to June 1999, Jore Corporation's Board of Directors did not maintain a
Compensation Committee of the Board of Directors, and the entire Board
participated in all decisions regarding compensation of our executive officers.
None of our executive officers serve as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our Board of Directors or Compensation Committee.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHER BENEFICIAL OWNERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 15, 2000, by: (i) each director;
(ii) each of the executive officers of the Company named in the Summary
Compensation Table under "Executive Officer Compensation" on page 5 (the "Named
Executive Officers"); (iii) all executive officers and directors of the Company
as a
3
group; and (iv) all shareholders known by the Company to be beneficial owners of
more than five percent of its Common Stock:
BENEFICIAL OWNERSHIP(1)
------------------------
PERCENT
NUMBER OF OF
BENEFICIAL OWNER SHARES TOTAL
- --------------------------------------------------- --------- -----
Matthew B. Jore.................................... 8,195,284(2) 59.2%
Michael W. Jore.................................... 2,281,144(3) 16.5%
David H. Bjornson.................................. 47,149(4) *
Thomas E. Mahoney.................................. 6,378(5) *
R. Bruce Romfo..................................... 24,143(6) *
William M. Steele.................................. 165,125(7) 1.2%
A. Blaine Huntsman................................. 33,000(8) *
James P. Mathias................................... 5,000(9) *
Executive Officers and Directors as a group (12
persons)......................................... 8,656,452 61.2%
- ------------------------
* Less than 1%.
(1) This table is based upon information supplied by officers, directors and
principal shareholders and pursuant to Schedules 13D filed with the
Securities and Exchange Commission ("SEC"). Beneficial ownership is
determined in accordance with SEC rules and generally requires that the
shareholder have voting or investment power with respect to the securities
in question. Shares of common stock issuable upon exercise or conversion of
options or warrants that are exercisable or convertible within 60 days of
March 15, 2000 are deemed to be beneficially owned by the holder of such
options or warrants but are not outstanding for the purpose of computing the
percentage ownership of any other shareholder. Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the shareholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned thereby. Applicable percentages are based on
13,840,887 shares outstanding on March 15, 2000.
(2) Excludes 536,441 shares owned by Michael W. Jore, as Trustee of the Matthew
Jore Family Trust, as to which shares Matthew B. Jore disclaims beneficial
ownership; includes an aggregate of 1,280,000 shares that may be acquired
within 60 days of March 15, 2000, pursuant to outstanding stock option
agreements with Merle B. Jore and Michael W. Jore; and includes an aggregate
of 929,147 shares owned by Matthew B. Jore's brothers and sisters, from whom
he holds proxies.
(3) Excludes 536,441 shares owned by Matthew B. Jore, as Trustee of the Michael
Jore Trust, as to which shares Michael W. Jore disclaims beneficial
interest.
(4) Includes 40,535 shares issuable upon exercise of vested options.
(5) Includes 6,378 shares issuable upon exercise of vested options.
(6) Includes 6,378 shares issuable upon exercise of vested options.
(7) Includes 155,532 shares issuable upon exercise of vested options and 9,593
shares owned by a retirement plan of which Mr. Steele is a co-trustee and a
partial beneficiary.
(8) Includes 3,000 shares issuable upon exercise of vested options; 10,000
shares issuable upon exercise of outstanding warrants; 10,000 shares
issuable upon exercise of outstanding warrants held by Evergreen Investment
Utah, LLC, a Colorado limited liability company in which Mr. Huntsman is a
non-managing member with a 2.7% interest; and 5,000 shares owned by
Evergreen Investment Utah, LLC.
(9) Includes 4,000 shares issuable upon exercise of vested options.
4
EXECUTIVE OFFICER COMPENSATION
The following table discloses compensation paid to the Company's Chief
Executive Officer and the other executive officers of the Company whose total
compensation exceeded $100,000 during the fiscal year ended December 31, 1999
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- ---------------------------- -------- -------- -------- ------------ ---------------
Matthew B. Jore........................ 1999 $250,000 $ 0 0 $12,449
Chairman of the Board; President; 1998 141,617 0 0 18,694
Chief Executive Officer; Director 1997 109,039 800,000 0 8,071
Michael W. Jore........................ 1999 200,000 0 0 17,339
Executive Vice President; 1998 138,491 0 0 21,823
Director 1997 104,615 0 0 7,546
David H. Bjornson...................... 1999 143,715 0 50,678 3,764
Executive Vice President; 1998 3,846 0 0 0
General Counsel; Secretary; Director 1997 0 0 0 0
- ------------------------
(1) Includes Company contributions under the Company's 401(k) plan, health
insurance premiums, life insurance premiums and, for years prior to 1999,
auto allowances.
OPTION GRANTS IN 1999
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the fiscal year ended
December 31, 1999:
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS CURRENT PRESENT
GRANTED GRANTED TO EXERCISE OR EXPIRATION VALUE AT DATE OF
(# OF SHARES) EMPLOYEES IN BASE PRICE DATE GRANT
NAME (1)(2) 1999 ($/SH) (3) (4)
- ---- ------------- ------------ ----------- ---------- ----------------
Matthew B. Jore................. 0 0 N/A N/A N/A
Michael W. Jore................. 0 0 N/A N/A N/A
David H. Bjornson............... 31,322 4.7% $8.41 01/01/2009 0
17,356 2.6% $9.10 06/14/2009 45,681
2,000 0.3% $7.06 12/15/2009 3,558
- ------------------------
(1) These are options to acquire stock granted under the Amended and Restated
1997 Jore Corporation Stock Plan.
(2) These options were granted at fair market value at the date of grant. Other
than the options to acquire 2,000 shares which expire on December 15, 2009,
and which were fully vested on the date of grant, the options vest 20% upon
date of grant, and 20% on the same date each year thereafter until fully
vested on the date four years after the date of grant.
(3) These options could expire earlier in certain situations.
(4) The value was computed using the Black Scholes method of valuation, with the
following assumptions for the three grants reflected, in order of their
expiration dates: expected volatility: 0%, 0%, and 36.33%; risk-free rate of
return: 4.66%, 5.855% and 6.6062%; dividend yield: 0%, 0% and 0%; and time
of exercise: 6, 6 and 2 years. There are no adjustments made for
nontransferability or risk of forfeiture.
5
AGGREGATED OPTION VALUES AS OF YEAR-END 1999
The following table provides information regarding the aggregate number of
options exercised during the fiscal year ended December 31, 1999, by each of the
Named Executive Officers and the number of shares subject to both exercisable
and unexercisable stock options as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999
AND 1999 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT END OF 1999 OPTIONS AT END OF 1999(1)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Matthew B. Jore................ 0 0 N/A N/A N/A N/A
Michael W. Jore................ 0 0 N/A N/A N/A N/A
David H. Bjornson.............. 0 0 24,264 57,736 $43,973 $67,098
- ------------------------
(1) The value of unexercised in-the-money options is based on the difference
between the fair market value of the shares of common stock underlying the
options at December 31, 1999, based on the closing price of $7.8125 per
share of the Company's common stock as reported on the Nasdaq National
Market, and the exercise price of such options.
MATTHEW B. JORE EMPLOYMENT AGREEMENT
In June 1999, the Company entered into an employment agreement with
Matthew B. Jore, the Chief Executive Officer. During the five-year term of the
agreement, Mr. Jore will be paid an annual salary of $250,000, and will be
entitled to all employer-paid and subsidized benefits commonly provided to all
full-time employees, including medical insurance, as well those benefits
provided to officers of the Company, including disability and life insurance
benefits. In addition, the employment agreement contains a non-competition
provision that prohibits Mr. Jore from participating in the business of
manufacturing or distributing tool accessories for one year following his
termination of employment with the Company.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee of the Board of Directors is comprised of two
outside directors and Matthew B. Jore, the Chief Executive Officer. The
Compensation Committee is responsible for evaluating compensation levels and
compensation programs for executives and for making recommendations to the Board
regarding appropriate compensation awards for executive management.
The executive compensation program of the Company is designed to attract,
retain and motivate executive officers capable of leading the Company to meet
its business objectives, to incentivize executive management, to enhance long
term shareholder value and to reward executive management based on contributions
to both the short and long term success of the Company. The Compensation
Committee's philosophy is for the Company to use compensation policies and
programs that align the interests of executive management with those of the
shareholders and to provide compensation programs that incentivize and reward
both the short and long term performance of the executive officers based on the
success of the Company in meeting its business objectives.
EXECUTIVE COMPENSATION COMPONENTS
BASE SALARY. Recommendations for base salaries for executive officers are
made at levels believed by the Compensation Committee to be sufficient to
attract and retain qualified executive officers based
6
on the stage of development of the Company and the market practices of other
companies. A change in base salary of an executive officer is based on an
evaluation of the performance of the executive, prevailing market practices, and
the performance of the Company as a whole. In determining recommended base
salaries, the Compensation Committee not only considers the short term
performance of the Company, but also the success of the executive officers in
developing and executing the Company's strategic plans, developing management
employees and exercising leadership in the development of the Company.
INCENTIVE BONUS. The Compensation Committee believes that a portion of the
total cash compensation for executive officers should be based on the Company's
success in meeting its short term performance objectives and contributions by
the executive officers that enable the Company to meet its long term objectives,
and has structured the executive compensation program to reflect this
philosophy. This approach creates a direct incentive for executive officers to
achieve desired short term corporate goals that also further the long term
objectives of the Company, and places a portion of each executive officer's
annual compensation at risk. The incentive bonus portion of the executive
compensation program is first being fully designed and implemented in 2000 and
later years.
STOCK OPTIONS. The Compensation Committee believes that equity
participation is a key component of the Company's executive compensation
program. Stock options are awarded by the Board of Directors to executive
officers primarily based on potential contributions to the Company's growth and
development and marketplace practices. These awards are designed to retain
executive officers and to motivate them to enhance shareholder value by aligning
the financial interests of executive officers with those of shareholders. Stock
options provide an effective incentive for management to create shareholder
value over the long term because the full benefits of the option grants cannot
be realized unless an appreciation in the price of the Company's common stock
occurs over a number of years.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
From January 1, 1999 to June 1999, Matthew Jore received an annualized
salary of $250,000. In June 1999, in order to formalize the agreements between
Mr. Jore and the Company in preparation for the Initial Public Offering of its
Common Stock, the Company and Mr. Jore entered into the employment agreement
referred to above.
COMPENSATION COMMITTEE
James P. Mathias
A. Blaine Huntsman
Matthew B. Jore
7
COMPARISON OF THREE MONTH CUMULATIVE TOTAL RETURN
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on an
initial $100 investment in our common stock since September 23, 1999*, the date
our common stock began trading on the Nasdaq National Market, to four indices:
the Nasdaq Stock Market Index, S & P Manufacturing (Specialized), 11 selected
tool and hardware manufacturers in Jore Corporation's industry segment, and
S & P Hardware & Tools. The past performance of our common stock is not an
indication of future performance. We cannot assure you that the price of our
common stock will appreciate at any particular rate or at all in future years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
JORE CORPORATION PEER GROUP NASDAQ STOCK MARKET (U.S.) S&P HARDWARE & TOOLS
9/23/1999 100.00 100.00 100.00 100.00
12/31/1999 78.13 101.11 147.46 105.30
DOLLARS
*$100 INVESTED ON 9/23/00 IN STOCK OR ON
8/31/99
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
S&P MANUFACTURING (SPECIALIZED)
9/23/1999 100.00
12/31/1999 109.69
DOLLARS
*$100 INVESTED ON 9/23/00 IN STOCK OR ON
8/31/99
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
* This graph is based on an initial stock price of $10.00 per share, the price
at which our common stock was offered in our initial public offering; the
closing price on the Nasdaq National Market on the first day of trading was
$12.31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MONTANA AMERICAN EQUIPMENT, LLC
On January 1, 1999, Jore Corporation acquired the assets of Montana American
Equipment, LLC, an entity that had leased manufacturing equipment to the Company
in prior fiscal years. Four of our directors and several members of Matthew and
Michael Jore's immediate family were among the owners of Montana American
Equipment. The Company issued an aggregate of 452,774 shares of Jore
8
Corporation common stock to the owners of Montana American Equipment in
consideration for its assets, including:
- 316,951 shares of common stock to Matthew Jore;
- 14,212 shares of common stock to Michael Jore;
- 10,954 shares of common stock to Rick Jore, the brother of Matthew and
Michael Jore;
- 17,766 shares of common stock to R. Bruce Romfo, one of our directors; and
- 9,593 shares of our Common Stock to the MSM Retirement Plan, a retirement
plan of which William Steele, one of our directors, is a primary
beneficiary and trustee.
JORE LAND, LLC
On February 1, 1999, Jore Land, LLC, a Montana limited liability company
owned 100% by Matthew B. Jore, entered into an option agreement with Jore
Corporation under which the Company had an option to acquire approximately 40
acres of land and the constructed improvements thereon at fair market value. The
Company exercised that option on June 28, 1999 and, in satisfaction of the
purchase price, paid approximately $2.7 million, which represented the
approximate cost of the land and improvements to Jore Land. The purchase price
included forgiveness of a receivable in the amount of $1.4 million relating to
advanced construction costs, and assumption of approximately $1.3 million of
existing debt that Jore Corporation previously had guaranteed. Prior to the
purchase and sale, the land and buildings had been leased to the Company under
both operating and financing leases and, during 1999, the Company paid $42,000
to Jore Land.
MANUFACTURERS' SALES ASSOCIATES, LLC / WILLIAM M. STEELE
Manufacturers' Sales Associates, LLC ("MSA"), a limited liability company in
which William M. Steele, one of the Company's directors, has a 20% membership
interest, markets Jore Corporation products under a Sales and Marketing
Agreement under which it receives a percentage of certain sales of the Company.
During 1999, the commissions accrued to MSA were $1.2 million. As of
December 31, 1999, the Company had prepaid commissions to MSA of $298,608.
In February 1999, we granted to Mr. Steele an option to purchase 155,532
shares of our common stock at an exercise price of $9.26 per share.
CONSULTING AGREEMENT / THOMAS E. MAHONEY
In 1999, we entered into an agreement with Thomas E. Mahoney, one of the
Company's directors, pursuant to which Mr. Mahoney will provide consulting
services relating to Jore Corporation's business development activities. We have
agreed to pay Mr. Mahoney $100,000 in 2000 for such services. This Agreement has
been extended through October 2001 for additional consulting fees of $115,000 to
be paid in 2001.
PRINTING PRESS INCORPORATED / R. BRUCE ROMFO
Printing Press Incorporated is a printing and packaging company in which
R. Bruce Romfo, one of the Company's directors, has a 30% ownership interest.
Jore Corporation purchased $2.6 million in printing and packaging material from
Printing Press in 1999, and likely will continue to purchase a substantial
volume of printed and packaging material from this vendor in 2000. The related
accounts payable balance at December 31, 1999 was $256,775.
9
In September 1998, July 1999, and February 2000, we granted Mr. Romfo
options to purchase an aggregate of 20,000 shares of our common stock at a
weighted average exercise price of $6.25 per share.
S CORPORATION DIVIDEND; NOTES RECEIVABLE FROM SHAREHOLDERS
We terminated our S corporation status upon completion of the initial public
offering on September 23, 1999, and distributed to our shareholders on that date
a final amount representing our previously taxed but undistributed S corporation
earnings through the S corporation termination date. The amount of the
distribution was $3.6 million. In anticipation of the final computation of the
amount of such distribution, $4.0 million was distributed to such shareholders,
and the difference between such amount and the actual final amount of the
distribution ($395,719) is reflected as notes receivable from such shareholders
as of December 31, 1999.
During the fiscal year ended December 31, 1999, each of the following
shareholders was indebted to us in the amount set forth opposite his or her
respective name in connection with shareholder and member advances related to
his or her shareholdings in Jore Corporation and membership interests in Montana
American Equipment. The table below sets forth the amount of such indebtedness
outstanding as of December 31, 1999. Notes that bear interest annually at the
applicable federal rate evidence outstanding indebtedness:
INDEBTEDNESS
PRINCIPAL AMOUNT OF OUTSTANDING AS OF
SHAREHOLDER SHAREHOLDER INDEBTEDNESS DECEMBER 31, 1999
- ----------- ------------------------ -----------------
Matthew B. Jore........................ $938,786 $750,584
Michael W. Jore........................ 541,121 541,121
Rick Jore*............................. 103,975 11,221
Roger Jore*............................ 114,615 23,440
Maxine Schneider*...................... 62,862 8,268
- ------------------------
* Member of the immediate family of Matthew and Michael Jore
DIRECTOR PARTICIPATION IN BRIDGE LOAN
In June 1999, A. Blaine Huntsman, one of the Company's directors, and an
affiliate of Mr. Huntsman loaned Jore Corporation $500,000 at a rate of 6.5% per
annum, with the loan maturing on the earlier of December 1, 1999 or within five
days following the closing of the initial public offering. In connection with
the loan, the Company also issued Mr. Huntsman and his affiliate warrants to
purchase an aggregate of 20,000 shares of common stock at an exercise price of
$9.10 per share. The principal amount of the loan, together with interest of
$10,507, was repaid in October 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors, executive officers and greater-than-10% shareholders file
reports with the SEC relating to their initial beneficial ownership of Jore's
securities and any subsequent changes. They must also provide us with copies of
the reports. Based on copies of reports furnished to us, each of these reporting
persons complied with their filing requirements during 1999 except for
Mr. Huntsman, who failed to timely file one report relating to one acquisition
of shares of Jore common stock.
10
2. PROPOSAL FOR ADOPTION OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN
BACKGROUND
The Board of Directors believes it is in the best interests of the Company
to encourage stock ownership by employees of the Company. Accordingly, on
October 25, 1999, the Board of Directors adopted, subject to shareholder
approval, the Jore Corporation 1999 Employee Stock Purchase Plan (the "Stock
Purchase Plan"). Initially, an aggregate of 1,000,000 shares of the Company's
Common Stock (subject to adjustment for any dividend, stock split or other
relevant changes in the Company's capitalization, and to increase as described
below) (the "Shares") may be sold pursuant to the Stock Purchase Plan. The
maximum number of shares of Common Stock available for issuance under the Plan
is (a) 1,000,000 shares, plus (b) an annual increase, during the term of the
Stock Purchase Plan, to be added beginning in 2001 on the first day of the
Company's fiscal year equal to the least of (i) 100,000 shares of Common Stock,
or (ii) 1.5% of the adjusted average shares of Common Stock outstanding of the
Company used to calculate fully diluted earnings per share as reported in the
Company's annual financial statements for the preceding fiscal year, or (iii) a
lesser amount determined by the Board; provided, however, that any shares from
any increases in previous years that are not actually issued shall be added to
the aggregate number of shares available for issuance under the Plan. The text
of the Stock Purchase Plan has been filed electronically with the Securities and
Exchange Commission, but is not included in the printed version of this Proxy
Statement. A copy of the Stock Purchase Plan is available from the Company's
Secretary at 45000 Highway 93 South, Ronan, Montana 59864. The following is a
summary of the material provisions of the Stock Purchase Plan.
ADMINISTRATION AND ELIGIBILITY
The Stock Purchase Plan is administered by Plan Administration Committee of
the Board of Directors (the "Committee"). The Committee has the authority to
make rules and regulations governing the administration of the Stock Purchase
Plan.
Substantially all full-time employees of the Company and designated
subsidiaries, including the executive officers of the Company, are eligible to
participate in the Stock Purchase Plan, except that the following may be
excluded at the discretion of the committee: (i) employees whose customary
employment is 20 hours or less per week; and (ii) employees whose customary
employment is for not more than 5 months per year. As of March 15, 2000,
approximately 622 employees were eligible to participate in the Stock Purchase
Plan.
PARTICIPATION AND TERMS
An eligible employee may elect to participate in the Stock Purchase Plan as
of any Enrollment Date. "Enrollment Dates" occur on the first day of the
offering period, which is currently set at six-month intervals. To participate
in the Stock Purchase Plan, an employee must complete an enrollment and payroll
deduction authorization form provided by the Company which indicates the amounts
to be deducted from his or her salary and applied to the purchase of the Shares
on the Purchase Date (as hereinafter defined). The payroll deduction must be
within limits set by the Stock Purchase Plan.
A payroll deduction account is established for each participating employee
by the Company and all payroll deductions made on behalf of each employee are
credited to each such employee's respective payroll deduction account. On the
last trading day of each offering period (the "Purchase Date"), the amount
credited to each participating employee's payroll deduction account is applied
to purchase as many shares as may be purchased with such amount at the
applicable purchase price.
The purchase price for the Shares will not be less than the lesser of 85% of
the closing price of shares of Common Stock as reported on the Nasdaq National
Market (i) on the first trading day of the
11
applicable offering period or (ii) on the Purchase Date. Employees may purchase
shares through the Stock Purchase Plan only by payroll deductions.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend the Stock Purchase Plan at
any time, provided that if shareholder approval is required for the plan to
continue to comply with the requirements of applicable rules under the
Securities Exchange Act of 1934 or the Internal Revenue Code (the "Code"), such
amendment shall not be effective unless approved by the Company's shareholders
within twelve months after the date of the adoption by the Board of Directors.
The Stock Purchase Plan may be terminated by the Board of Directors at any
time.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to be an "employee stock purchase plan"
as defined in Section 423 of the Code. As a result, an employee participant will
pay no federal income tax upon enrolling in the Stock Purchase Plan or upon
purchase of the shares. A participant may recognize income and/or gain or loss
upon the sale or other disposition of Shares purchase under the plan, the amount
and character of which will depend on whether the Shares are held for two years
from the first day of the offering period.
If the participant sells or otherwise disposes of the Shares within that
two-year period, the participant will recognize ordinary income at the time of
disposition in an amount equal to the excess of the market price of the Shares
on the date of purchase over the purchase price and the Company will be entitled
to a tax deduction for the same amount.
If the participant sells or otherwise disposes of the Shares after holding
the Shares for the two-year period, the participant will recognize ordinary
income at the time in an amount equal to the lesser of (i) the excess of the
market price of the Shares on the first day of the offering period over the
purchase price, or (ii) the excess of the market price of the Shares at the time
of disposition over the purchase price. The Company will not be entitled to any
tax deduction with respect to Shares purchased under the Stock Purchase Plan if
the Shares are held for the requisite two-year period.
The employee may also recognize capital gain or loss at the time of
disposition of the Shares, either short-term or long-term, depending on the
holding period for the Shares.
OTHER INFORMATION
The Stock Purchase Plan went into effect on December 31, 1999, subject to
shareholder approval. As of December 31, 1999, the closing price of the
Company's Common Stock was $7.8125.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the Stock Purchase Plan requires more votes in favor of adoption
of the plan than those against adoption.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE STOCK
PURCHASE PLAN.
12
3. PROPOSAL FOR AMENDMENT OF THE AMENDED AND RESTATED JORE CORPORATION 1997
STOCK PLAN
BACKGROUND
The Company's Amended and Restated 1997 Stock Plan (the "Stock Plan") was
originally adopted by the Board of Directors and shareholders of the Company in
1997 and amended and restated in June 1999. In October 1999, the Board approved
a proposal to amend the Stock Plan to increase the number of shares reserved for
issuance by 1,100,000 shares, from 1,300,000 shares to 2,400,000 shares.
REASONS FOR THE AMENDMENT
The Company relies upon the Stock Plan as one of the benefits necessary to
attract, reward and retain skilled employees. The Board of Directors believes it
is in the Company's best interests to increase the shares reserved for issuance
under the Stock Plan so that the Company may continue to attract and retain the
services of qualified employees by providing employees an opportunity to
purchase the Company's common stock through option grants.
ACTIVITY UNDER THE STOCK PLAN
The Company believes that its Stock Plan is an important factor in
attracting and retaining skilled personnel. From time to time, the Company
reviews the number of shares available for issuance under the Stock Plan and,
based on the Company's estimates of the number of shares expected to be issued
under the Stock Plan, management presents to the Board of Directors a
recommendation for the addition of shares reserved for issuance. The Board
reviews such recommendation and, if approved by the Board, presents a proposal
for the shareholders' approval. As of December 31, 1999, 3,220 shares of common
stock had been issued upon exercise of stock options, options to purchase an
aggregate of 1,504,062 shares were outstanding at a weighted average exercise
price of $7.68 per share, and 892,718 shares remained available for future
issuance under the Stock Plan.
SUMMARY OF THE STOCK PLAN
The purpose of the Stock Plan is to enhance the long term shareholder value
of Jore Corporation by offering opportunities to selected employees, directors,
officers, consultants, agents, advisors, and independent contractors of Jore
Corporation to participate in our growth and success, to encourage them to
remain in our service, and to own our stock. Subject to shareholder approval,
the Company has authorized 2.4 million shares of common stock for issuance under
the Stock Plan, subject to certain adjustments. For all grants under the Stock
Plan, the date of grant or award, number of options, option price, vesting
period and other terms specific to the options or awards are to be determined by
the plan administrator, which at this time is Plan Administration Committee of
the Board of Directors.
The Stock Plan provides for the grant of both incentive stock options, or
ISOs, that qualify under Section 422 of the Internal Revenue Code, and
nonqualified stock options or NQSOs. ISOs may be granted only to Company
employees or employees of a parent or subsidiary. NQSOs and all other awards
other than ISOs may be granted to Company employees, directors and other third
parties who render services to the Company or any parent or subsidiary that are
not in connection with the offer and sale of securities in a capital-raising
transaction. The exercise price of ISOs must be at least equal to the fair
market value of the common stock on the date of grant. The exercise price of
NQSOs must be at least equal to 85% of the fair market value of the common stock
on the date of grant. Options granted under the Stock Plan have a maximum term
of 10 years.
Options granted under the Stock Plan generally expire three months after the
termination of the optionee's service, except in the case of death or
disability, in which case the options generally may be exercised up to
12 months following the date of death or termination of service due to
disability.
13
Options will generally terminate immediately upon termination for cause. If Jore
Corporation is dissolved or liquidated or has a "change in control" transaction,
outstanding awards may be assumed or substituted by the successor corporation,
if any. If a successor corporation does not assume or substitute the awards, the
Compensation Committee may accelerate the vesting of the awards prior to the
effectiveness of the transaction.
The Stock Plan also provides for the issuance of stock awards to eligible
participants of the Stock Plan with terms, conditions, and restrictions
established by the plan administrator in its sole discretion. Generally, stock
issued pursuant to an award is restricted stock. Subject to certain
restrictions, holders of stock awarded under the Stock Plan have all the rights
of other shareholders.
All grants and awards under the Stock Plan may not be transferred other than
by will or by the laws of descent and distribution and generally must be
exercised during the lifetime of the recipient only by the recipient.
FEDERAL TAX INFORMATION
Options granted under the Stock Plan may be either ISOs or NQSOs. An
optionee who is granted an ISO will not recognize taxable income either at the
time the option is granted or upon its exercise, although the exercise may
subject the optionee to the alternative minimum tax. Upon the sale or exchange
of the shares more than two years after grant of the option and one year after
exercise of the option, any gain or loss will be treated as long-term capital
gain or loss. If these holding periods are not satisfied, the optionee will
recognize ordinary income at the time of sale or exchange equal to the
difference between the exercise price and the lower of (i) the fair market value
of the shares at the date of the option exercise or (ii) the sale price of the
shares. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income will be characterized
as long-term, or short-term capital gain or loss, depending on the holding
period. A different rule for measuring ordinary income upon such a premature
disposition may apply if the optionee owns more than ten percent of the
outstanding common stock of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
All of the options which do not qualify as ISOs are referred to as NQSOs. An
optionee will not recognize any taxable income at the time he is granted an
NQSO. However, upon its exercise, the optionee will recognize taxable income
generally measured as the excess of the then fair market value of the shares
purchased over the purchase price. Any taxable income recognized in connection
with an option exercise by an optionee who is also an employee of the Company
will be subject to tax withholding by the Company. The Company will be entitled
to a tax deduction in the same amount as the ordinary income recognized by the
optionee. Upon disposition of such shares by the optionee, any difference
between the sales price and the optionee's purchase price, to the extent not
recognized as taxable income as described above, will be treated as long-term or
short-term capital gain or loss, depending on the holding period.
VOTE REQUIRED AND BOARD RECOMMENDATION
The affirmative vote of a majority of the votes cast will be required to
approve the amendment to the Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE COMPANY'S
AMENDED AND RESTATED 1997 STOCK PLAN.
4. PROPOSAL FOR RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP as independent
accountants of the Company for the fiscal year ending December 31, 2000, and has
further directed that the selection of
14
such independent accountants be submitted for ratification by the shareholders
at the Annual Meeting. The Company has been advised by Deloitte & Touche LLP
that neither that firm nor any of its associates has any relationship with the
Company other than the usual relationship that exists between independent
accountants and clients. Deloitte & Touche LLP will have one or more
representatives at the Annual Meeting who will have an opportunity to make a
statement and will be available to respond to appropriate questions from
shareholders.
Ratification of the appointment of Deloitte & Touche LLP requires more votes
in favor of ratification than against ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000.
The Company's Bylaws do not require that shareholders ratify the selection
of Deloitte & Touche LLP as our independent accountants. We are seeking
shareholder ratification because we believe it is a matter of good corporate
practice. If the votes cast in favor of ratification of the appointment of
Deloitte & Touche LLP as independent accountants do not exceed the votes cast
against such action, the selection of other independent accountants will be
considered by the Board of Directors.
5. OTHER MATTERS
OTHER BUSINESS
The Board of Directors does not intend to bring any other business before
the meeting, and knows of no other matters to be brought before the meeting. If,
however, other matters are presented for a vote at the meeting, the proxy
holders (the individuals designated on the proxy card) will vote your shares
according to their judgment on those matters.
SOLICITATION OF PROXIES
The Board of Directors of the Company solicits the proxy accompanying this
Proxy Statement. Officers, directors, and regular supervisory and executive
employees of the Company, none of whom will receive any additional compensation
for their services, may solicit proxies. Such solicitations may be made
personally, or by mail, facsimile, telephone, messenger, or via the Internet.
The Company will pay persons holding shares of common stock in their names or in
the names of nominees, but not owning such shares beneficially, such as
brokerage houses, banks, and other fiduciaries, for the expense of forwarding
solicitation materials to their principals. The Company will pay all of the
costs of solicitation of proxies.
LIST OF SHAREHOLDERS
A list of shareholders entitled to vote at the meeting will be available for
examination at Jore Corporation's corporate headquarters, 45000 Highway 93
South, Ronan, Montana 59864, for ten days before the 2000 Annual Meeting, and at
the Annual Meeting.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company no later than
December 15, 2000 to be included in the Company's Proxy Statement and form of
proxy related to that meeting. Shareholders who intend to present a proposal at
the 2001 Annual Meeting of Shareholders without inclusion of such proposal in
the Company's proxy materials are required to provide notice of such proposal to
the Company no later than March 3, 2001. Shareholders are advised to review the
Company's Bylaws, which contain
15
additional advance notice requirements, including requirements with respect to
advance notice of shareholder proposals and director nominations.
ADDITIONAL INFORMATION
The Company's Annual Report for the fiscal year ended December 31, 1999 was
first mailed to the shareholders of the Company with this Proxy Statement on or
about April 17, 2000. The Annual Report is not to be treated as part of the
proxy solicitation material or as having been incorporated by reference herein.
A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SEC, EXCLUDING EXHIBITS, MAY BE OBTAINED BY
SHAREHOLDERS WITHOUT CHARGE BY WRITTEN REQUEST TO INVESTOR RELATIONS, JORE
CORPORATION, 45000 HIGHWAY 93 SOUTH, RONAN, MONTANA 59864. THE REPORT IS ALSO
AVAILABLE THROUGH THE COMPANY'S WEBSITE, WWW.JORECORPORATION.COM.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement is incorporated by reference into
any other filing by Jore Corporation under the Securities Act of 1933 or the
Securities Exchange Act of 1934, the sections of this Proxy Statement entitled
"Report of Compensation Committee on Executive Compensation" and Comparison of
Three Month Cumulative Total Return "Stock Performance Graph" will not be deemed
incorporated, unless otherwise specifically provided in such filing.
Ronan, Montana
By order of the Board of Directors,
/s/ David H. Bjornson
David H. Bjornson
SECRETARY
16
APPENDIX A
JORE CORPORATION
AMENDED & RESTATED 1997 STOCK PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The purpose of the Plan is to offer selected individuals an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. ADMINISTRATION.
(a) COMMITTEES OF THE BOARD OF DIRECTORS. The Plan may be administered by
one or more Committees. Each Committee shall consist of one or more members of
the Board of Directors who have been appointed by the Board of Directors. Each
Committee shall have such authority and be responsible for such functions as the
Board of Directors has assigned to it. If no Committee has been appointed, the
entire Board of Directors shall administer the Plan. Any reference to the Board
of Directors in the Plan shall be construed as a reference to the Committee (if
any) to whom the Board of Directors has assigned a particular function.
(b) AUTHORITY OF THE BOARD OF DIRECTORS. Subject to the provisions of the
Plan, the Board of Directors shall have full authority and discretion to take
any actions it deems necessary or advisable for the administration of the Plan.
All decisions, interpretations and other actions of the Board of Directors shall
be final and binding on all Purchasers, all Optionees and all persons deriving
their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
(a) GENERAL RULE. Only Employees, Outside Directors and Consultants shall
be eligible for the grant of Options or the direct award or sale of Shares. Only
Employees shall be eligible for the grant of ISOs.
(b) TEN-PERCENT SHAREHOLDERS. An individual who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company,
its Parent or any of its Subsidiaries shall not be eligible for the grant of an
ISO unless (i) the Exercise Price is at least 110% of the Fair Market Value of a
Share on the date of grant and (ii) such ISO by its terms is not exercisable
after the expiration of five years from the date of grant. For purposes of this
Subsection (b), in determining stock ownership, the attribution rules of Section
424(d) of the Code shall be applied.
SECTION 4. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. Shares offered under the Plan may be authorized but
unissued Shares. The aggregate number of Shares that may be issued under the
Plan (upon exercise of Options or other rights to acquire Shares) shall not
exceed 2,400,000 Shares, subject to adjustment pursuant to Section 8. The number
of Shares that are subject to Options or other rights outstanding at any time
under the Plan shall not exceed the number of Shares that then remain available
for issuance under the Plan. The
Stock Plan 1
Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
right of repurchase or right of first refusal, such Shares shall again be
available for the purposes of the Plan, except that the aggregate number of
Shares which may be issued upon the exercise of ISOs shall in no event exceed
1,300,000 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the Plan
(other than upon exercise of an Option) shall be evidenced by a Stock Purchase
Agreement between the Purchaser and the Company. Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Board of Directors deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) PURCHASE PRICE. The Purchase Price shall be determined by the Board of
Directors at its sole discretion. The Purchase Price shall be payable in a form
described in Section 7.
(d) WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
(e) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares awarded or sold under
the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the Board
of Directors may determine. Such restrictions shall be set forth in the
applicable Stock Purchase Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.
(f) ACCELERATED VESTING. Unless the applicable Stock Purchase Agreement
provides otherwise, and except as set forth below, any right to repurchase a
Purchaser's Shares at the original Purchase Price (if any) upon termination of
the Purchaser's Service shall lapse and all of such Shares shall become vested
if:
(i) The Company is subject to a Change in Control before the
Purchaser's Service terminates; and
(ii) Either (A) the repurchase right is not assigned to the entity
that employs the Purchaser immediately after the Change in Control or to
its parent or subsidiary or (B) the Purchaser is subject to an Involuntary
Termination within 12 months following such Change in Control.
A Stock Purchase Agreement may also provide for accelerated vesting in the
event of the Optionee's death or disability or other events.
Stock Plan 2
Notwithstanding the above, if the Company and the other party to the
transaction constituting a Change in Control agree that such transaction is to
be treated as a "pooling of interests" for financial reporting purposes, and if
such transaction in fact is so treated, then the acceleration of vesting shall
not occur to the extent that the Company's independent public accountants and
such other party's independent public accountants separately determine in good
faith that such acceleration would preclude the use of "pooling of interests"
accounting.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than 100% of the Fair
Market Value of a Share on the date of grant, and a higher percentage may be
required by Section 3(b). Subject to the preceding sentence, the Exercise Price
under an Option shall be determined by the Board of Directors at its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with the disposition of Shares acquired by
exercising an Option.
(e) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. The
exercisability provisions of a Stock Option Agreement shall be determined by the
Board of Directors at its sole discretion.
(f) ACCELERATED EXERCISABILITY. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if:
(i) The Company is subject to a Change in Control before the
Optionee's Service terminates; and
(ii) Either (A) such Options do not remain outstanding, such Options
are not assumed by the surviving corporation or its parent, and the
surviving corporation or its parent does not substitute options with
substantially the same terms for such Options or (B) the Optionee is
subject to an Involuntary Termination within 12 months following such
Change in Control.
Notwithstanding the above, if the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be treated as
a "pooling of interests" for financial reporting purposes, and if such
transaction in fact is so treated, then the acceleration of exercisability shall
not occur to the extent that the Company's independent public accountants and
such other party's independent public accountants separately determine in good
faith that such acceleration would preclude the use of "pooling of interests"
accounting.
Stock Plan 3
(g) BASIC TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, and in the
case of an ISO a shorter term may be required by Section 3(b). Subject to the
preceding sentence, the Board of Directors at its sole discretion shall
determine when an Option is to expire. A Stock Option Agreement may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee's Service or death.
(h) NONTRANSFERABILITY. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(i) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
(k) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of
an Option shall be subject to such special forfeiture conditions, rights of
first refusal and other transfer restrictions as the Board of Directors may
determine. Such restrictions shall be set forth in the applicable Stock Option
Agreement and shall apply in addition to any restrictions that may apply to
holders of Shares generally.
SECTION 7. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) SERVICES RENDERED. At the discretion of the Board of Directors, Shares
may be awarded under the Plan in consideration of services rendered to the
Company, a Parent or a Subsidiary prior to the award. At the discretion of the
Board of Directors, Shares may also be awarded under the Plan in consideration
of services to be rendered to the Company, a Parent or a Subsidiary after the
award, except that the par value of such Shares, if newly issued, shall be paid
in cash or cash equivalents.
(d) PROMISSORY NOTE. To the extent that a Stock Option Agreement or Stock
Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. However, the par value of the Shares shall
be paid in cash or cash equivalents. The Shares shall be pledged as security for
payment
Stock Plan 4
of the principal amount of the promissory note and interest thereon. The
interest rate payable under the terms of the promissory note shall not be less
than the minimum rate (if any) required to avoid the imputation of additional
interest under the Code. Subject to the foregoing, the Board of Directors (at
its sole discretion) shall specify the term, interest rate, amortization
requirements (if any) and other provisions of such note.
(e) EXERCISE/SALE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) EXERCISE/PLEDGE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
SECTION 8. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company (if
the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by
the surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for such outstanding Options; or
(iv) The cancellation of each outstanding Option after payment
to the Optionee of an amount in cash or cash equivalents equal to (A) the
Fair Market Value of the Shares subject to such Option at the time of the
merger or consolidation minus (B) the Exercise Price of the Shares subject
to such Option.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
Stock Plan 5
SECTION 9. SECURITIES LAW REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares comply with (or are exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange or other securities
market on which the Company's securities may then be traded.
SECTION 10. NO RETENTION RIGHTS.
Nothing in the Plan or in any right or Option granted under the Plan shall
confer upon the Purchaser or Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are
hereby expressly reserved by each, to terminate his or her Service at any time
and for any reason, with or without cause.
SECTION 11. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by the Board of Directors and may be terminated on any
earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's shareholders.
Shareholder approval shall not be required for any other amendment of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 12. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "CAUSE" shall mean (i) the unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company, (ii) indictment of, conviction
of, or a plea of "guilty" or "no contest" to, a felony under the laws of the
United States or any state thereof, (iii) gross negligence or (iv) continued
failure to perform assigned duties after receiving written notification from the
Board of Directors. The foregoing, however, shall not be deemed an exclusive
list of all acts or omissions that the Company (or a Parent or Subsidiary) may
consider as grounds for the discharge of an Optionee or Purchaser.
Stock Plan 6
(c) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not shareholders of the
Company immediately prior to such merger, consolidation or other
reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(f) "COMPANY" shall mean Jore Corporation, a Montana corporation.
(g) "CONSULTANT" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
(h) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(k) "INVOLUNTARY TERMINATION" shall mean the termination of the Optionee's
or Purchaser's Service by reason of:
(i) The involuntary discharge of the Optionee or Purchaser by the
Company (or the Parent or Subsidiary employing him or her) for reasons
other than Cause; or
(ii) The voluntary resignation of the Optionee or Purchaser following
(A) a change in his or her position with the Company (or the Parent or
Subsidiary employing him or her) that materially reduces his or her level
of authority or responsibility or (B) a reduction in his or her
compensation (including base salary, fringe benefits and participation in
bonus or incentive programs based on corporate performance) by more than
10%.
(l) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(m) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(n) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(o) "OPTIONEE" shall mean an individual who holds an Option.
Stock Plan 7
(p) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who
is not an Employee.
(q) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
(r) "PLAN" shall mean this Jore Corporation Amended & Restated 1997 Stock
Plan.
(s) "PURCHASE PRICE" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Board of Directors.
(t) "PURCHASER" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).
(u) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
(v) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(w) "STOCK" shall mean the Common Stock of the Company.
(x) "STOCK OPTION AGREEMENT" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to the Optionee's Option.
(y) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(z) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors, the Company
has caused its authorized officer to execute the same.
JORE CORPORATION,
a Montana corporation
By:
--------------------------------
Title:
-----------------------------
Stock Plan 8
JORE CORPORATION
AMENDED & RESTATED 1997 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
You have been granted the following option to purchase Common Stock of Jore
Corporation (the "Company"):
Name of Optionee: __________________________________________
Total Number of Shares Granted: __________________________________________
Type of Option: / / Incentive Stock Option
/ / Nonstatutory Stock Option
Exercise Price Per Share: $_________________________________________
Date of Grant: __________________________________________
Date Exercisable: This option may be exercised with respect
to the first __% of the Shares subject to
this option when the Optionee completes __
months of continuous Service after the
Vesting Commencement Date. This option may
be exercised with respect to an additional
__% of the Shares subject to this option
when the Optionee completes each month of
continuous Service thereafter.
Vesting Commencement Date: __________________________________________
Expiration Date: __________________________________________
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the Amended & Restated 1997 Stock Plan and the Stock
Option Agreement, both of which are attached to and made a part of this
document.
OPTIONEE: JORE CORPORATION
By:
- ----------------------------- -----------------------------
Title:
- ----------------------------- --------------------------
Print Name
Stock Option Agreement 1
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
JORE CORPORATION
AMENDED & RESTATED 1997 STOCK PLAN
STOCK OPTION AGREEMENT
SECTION 1. GRANT OF OPTION.
(a) OPTION. On the terms and conditions set forth in the Notice of Stock
Option Grant and this Agreement, the Company grants to the Optionee on the Date
of Grant the option to purchase at the Exercise Price the number of Shares set
forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at
least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair
Market Value if Section 3(b) of the Plan applies). This option is intended to be
an ISO or a Nonstatutory Option, as provided in the Notice of Stock Option
Grant.
(b) STOCK PLAN AND DEFINED TERMS. This option is granted pursuant to the
Plan, a copy of which the Optionee acknowledges having received. The provisions
of the Plan are incorporated into this Agreement by this reference. Capitalized
terms are defined in Section 13 of this Agreement, unless otherwise defined in
Section 12 of the Plan.
SECTION 2. RIGHT TO EXERCISE.
(a) EXERCISABILITY. Subject to Subsections (b) and (c) below and the other
conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant.
(b) $100,000 LIMITATION. If this option is designated as an ISO in the
Notice of Stock Option Grant, then the Optionee's right to exercise this option
shall be deferred to the extent (and only to the extent) that this option
otherwise would not be treated as an ISO by reason of the $100,000 annual
limitation under Section 422(d) of the Code, except that the Optionee's right to
exercise this option shall no longer be deferred if (i) the Company is subject
to a Change in Control before the Optionee's Service terminates, (ii) this
option does not remain outstanding, (iii) this option is not assumed by the
surviving corporation or its parent and (iv) the surviving corporation or its
parent does not substitute an option with substantially the same terms for this
option.
(c) SHAREHOLDER APPROVAL. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's shareholders.
SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this option and the rights
and privileges conferred hereby shall not be sold, pledged or otherwise
transferred (whether by operation of law or otherwise) and shall not be subject
to sale under execution, attachment, levy or similar process.
Stock Option Agreement 2
SECTION 4. EXERCISE PROCEDURES.
(a) NOTICE OF EXERCISE. The Optionee or the Optionee's representative may
exercise this option by giving written notice to the Company pursuant to Section
13(c). The notice shall specify the election to exercise this option, the number
of Shares for which it is being exercised and the form of payment. The notice
shall be signed by the person exercising this option. In the event that this
option is being exercised by the representative of the Optionee, the notice
shall be accompanied by proof (satisfactory to the Company) of the
representative's right to exercise this option. The Optionee or the Optionee's
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under Section 5 for the full amount of the
Purchase Price.
(b) ISSUANCE OF SHARES. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Shares as
to which this option has been exercised, registered in the name of the person
exercising this option (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship). The Company
shall cause such certificate or certificates to be deposited in escrow or
delivered to or upon the order of the person exercising this option.
(c) WITHHOLDING TAXES. In the event that the Company determines that it is
required to withhold any tax as a result of the exercise of this option, the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
this option.
SECTION 5. PAYMENT FOR STOCK.
(a) CASH. All or part of the Purchase Price may be paid in cash or cash
equivalents.
(b) SURRENDER OF STOCK. All or any part of the Purchase Price may be paid
by surrendering, or attesting to the ownership of, Shares that are already owned
by the Optionee. Such Shares shall be surrendered to the Company in good form
for transfer and shall be valued at their Fair Market Value on the date when
this option is exercised. The Optionee shall not surrender, or attest to the
ownership of, Shares in payment of the Purchase Price if such action would cause
the Company to recognize compensation expense (or additional compensation
expense) with respect to this option for financial reporting purposes.
(c) EXERCISE/SALE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.
(d) EXERCISE/PLEDGE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
(e) PROMISSORY NOTE. With the consent of the Board of Directors, all or
part of the Purchase Price may be paid with a full-recourse promissory note.
However, the par value of the Shares shall be paid in cash or cash equivalents.
The Shares shall be pledged as security for payment of the principal amount of
the promissory note and interest thereon. The interest rate payable under the
terms of the promissory note shall not be less than the minimum rate (if any)
required to avoid the imputation of
Stock Option Agreement 3
additional interest under the Code. Subject to the foregoing, the Board of
Directors (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.
SECTION 6. TERM AND EXPIRATION.
(a) BASIC TERM. This option shall in any event expire on the expiration
date set forth in the Notice of Stock Option Grant, which date is 10 years after
the Date of Grant (five years after the Date of Grant if this option is
designated as an ISO in the Notice of Stock Option Grant AND Section 3(b) of the
Plan applies).
(b) TERMINATION OF SERVICE (EXCEPT BY DEATH). If the Optionee's Service
terminates for any reason other than death, then this option shall expire on the
earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (a) above;
(ii) The date 30 days after the termination of the Optionee's Service
for any reason other than Cause, retirement or Disability;
(iii) The date of the termination of the Optionee's Service for Cause;
or
(iv) The date 12 months after the termination of the Optionee's
Service by reason of retirement or Disability.
The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's Service terminated. When the
Optionee's Service terminates, this option shall expire immediately with respect
to the number of Shares for which this option is not yet exercisable and with
respect to any Restricted Shares. In the event that the Optionee dies after
termination of Service but before the expiration of this option, all or part of
this option may be exercised (prior to expiration) by the executors or
administrators of the Optionee's estate or by any person who has acquired this
option directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's Service terminated.
(c) DEATH OF THE OPTIONEE. If the Optionee dies while in Service, then
this option shall expire on the earlier of the following dates:
(i) The expiration date determined pursuant to Subsection (a) above;
or
(ii) The date 12 months after the Optionee's death.
All or part of this option may be exercised at any time before its
expiration under the preceding sentence by the executors or administrators of
the Optionee's estate or by any person who has acquired this option directly
from the Optionee by beneficiary designation, bequest or inheritance, but only
to the extent that this option had become exercisable before the Optionee's
death. When the Optionee dies, this option shall expire immediately with respect
to the number of Shares for which this option is not yet exercisable and with
respect to any Restricted Shares.
(d) LEAVES OF ABSENCE. For any purpose under this Agreement, Service shall
be deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing and if continued crediting of
Service for such purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).
Stock Option Agreement 4
(e) NOTICE CONCERNING ISO TREATMENT. If this option is designated as an
ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax
treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
SECTION 7. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event that the Optionee proposes to
sell, pledge or otherwise transfer to a third party any Shares acquired under
this Agreement, or any interest in such Shares, the Company shall have the Right
of First Refusal with respect to all (and not less than all) of such Shares. If
the Optionee desires to transfer Shares acquired under this Agreement, the
Optionee shall give a written Transfer Notice to the Company describing fully
the proposed transfer, including the number of Shares proposed to be
transferred, the proposed transfer price, the name and address of the proposed
Transferee and proof satisfactory to the Company that the proposed sale or
transfer will not violate any applicable federal or state securities laws. The
Transfer Notice shall be signed both by the Optionee and by the proposed
Transferee and must constitute a binding commitment of both parties to the
transfer of the Shares. The Company shall have the right to purchase all, and
not less than all, of the Shares on the terms of the proposal described in the
Transfer Notice (subject, however, to any change in such terms permitted under
Subsection (b) below) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection (a) shall be freely
assignable, in whole or in part.
(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of
First Refusal within 15 days after the date when it received the Transfer
Notice, the Optionee may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Shares subject to the
Transfer Notice on the terms and conditions described in the Transfer Notice,
provided that any such sale is made in compliance with applicable federal and
state securities laws and not in violation of any other contractual restrictions
to which the Optionee is bound. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Optionee, shall again be subject to the Right of First
Refusal and shall require compliance with the procedure described in Subsection
(a) above. If the Company exercises its Right of First Refusal, the parties
shall consummate the sale of the Shares on the terms set forth in the Transfer
Notice within 30 days after the date when the Company received the Transfer
Notice (or within such longer period as may have been specified in the Transfer
Notice); provided, however, that in the event the Transfer Notice provided that
payment for the Shares was to be made in a form other than cash or cash
equivalents paid at the time of transfer, the Company shall have the option of
paying for the Shares with cash or cash equivalents equal to the present value
of the consideration described in the Transfer Notice.
(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 7 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 7. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 7.
Stock Option Agreement 5
(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 7 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Optionee desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Optionee shall have no
obligation to comply with the procedures prescribed by Subsections (a) and (b)
above.
(e) PERMITTED TRANSFERS. This Section 7 shall not apply to (i) a transfer
by beneficiary designation, will or intestate succession or (ii) a transfer to
the Optionee's spouse, children or to a trust established by the Optionee for
the benefit of the Optionee or the Optionee's spouse, children or grandchildren,
provided in either case that the Transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement. If
the Optionee transfers any Shares acquired under this Agreement, either under
this Subsection (e) or after the Company has failed to exercise the Right of
First Refusal, then this Section 7 shall apply to the Transferee to the same
extent as to the Optionee.
SECTION 8. LEGALITY OF INITIAL ISSUANCE.
No Shares shall be issued upon the exercise of this option unless and until
the Company has determined that:
(a) It and the Optionee have taken any actions required to register the
Shares under the Securities Act or to perfect an exemption from the registration
requirements thereof;
(b) Any applicable listing requirement of any stock exchange or other
securities market on which Stock is listed has been satisfied; and
(c) Any other applicable provision of state or federal law has been
satisfied.
SECTION 9. NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.
SECTION 10. RESTRICTIONS ON TRANSFER.
(a) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and
sale of Shares under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
(b) MARKET STAND-OFF. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial public
offering, the Optionee shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, any Shares acquired under this Agreement
without the prior written consent of the Company or its underwriters. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
following the date of the final prospectus for the offering
Stock Option Agreement 6
as may be requested by the Company or such underwriters. In no event, however,
shall such period exceed 180 days. The Market Stand-Off shall in any event
terminate two years after the date of the Company's initial public offering. In
the event of the declaration of a stock dividend, a spin-off, a stock split, an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of consideration,
any new, substituted or additional securities which are by reason of such
transaction distributed with respect to any Shares subject to the Market
Stand-Off, or into which such Shares thereby become convertible, shall
immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect to the
Shares acquired under this Agreement until the end of the applicable stand-off
period. The Company's underwriters shall be beneficiaries of the agreement set
forth in this Subsection (b). This Subsection (b) shall not apply to Shares
registered in the public offering under the Securities Act, and the Optionee
shall be subject to this Subsection (b) only if the directors and officers of
the Company are subject to similar arrangements.
(c) INVESTMENT INTENT AT GRANT. The Optionee represents and agrees that
the Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.
(d) INVESTMENT INTENT AT EXERCISE. In the event that the sale of Shares
under the Plan is not registered under the Securities Act but an exemption is
available which requires an investment representation or other representation,
the Optionee shall represent and agree at the time of exercise that the Shares
being acquired upon exercising this option are being acquired for investment,
and not with a view to the sale or distribution thereof, and shall make such
other representations as are deemed necessary or appropriate by the Company and
its counsel.
(e) LEGENDS. All certificates evidencing Shares purchased under this
Agreement shall bear the following legend:
"The shares represented hereby may not be sold, assigned, transferred,
encumbered or in any manner disposed of, except in compliance with the
terms of a written agreement between the company and the registered holder
of the shares (or the predecessor in interest to the shares). Such
agreement grants to the company certain rights of first refusal upon an
attempted transfer of the shares. The secretary of the company will upon
written request furnish a copy of such agreement to the holder hereof
without charge."
All certificates evidencing Shares purchased under this Agreement in an
unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be transferred
except pursuant to an effective registration under the Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
company, qualifies as an exempt transaction under the act and the rules and
regulations promulgated thereunder."
(f) REMOVAL OF LEGENDS. If, in the opinion of the Company and its counsel,
any legend placed on a stock certificate representing Shares sold under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
Stock Option Agreement 7
(g) ADMINISTRATION. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 10 shall be
conclusive and binding on the Optionee and all other persons.
SECTION 11. ADJUSTMENT OF SHARES.
In the event of any transaction described in Section 8(a) of the Plan, the
terms of this option (including, without limitation, the number and kind of
Shares subject to this option and the Exercise Price) shall be adjusted as set
forth in Section 8(a) of the Plan. In the event that the Company is a party to a
merger or consolidation, this option shall be subject to the agreement of merger
or consolidation, as provided in Section 8(b) of the Plan.
SECTION 12. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the Optionee's
representative shall have any rights as a shareholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Purchase Price pursuant to Sections 4 and 5.
(b) NO RETENTION RIGHTS. Nothing in this option or in the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without
cause.
(c) NOTICE. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.
(d) ENTIRE AGREEMENT. The Notice of Stock Option Grant, this Agreement and
the Plan constitute the entire contract between the parties hereto with regard
to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) which relate to the subject matter hereof.
(e) CHOICE OF LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Montana, as such laws are applied to
contracts entered into and performed in such State.
SECTION 13. DEFINITIONS.
In addition to the definitions set forth in the Plan, the following terms
shall have the meanings ascribed herein (in the event a conflict exists, the
meaning set forth in this Agreement shall prevail):
(a) "AGREEMENT" shall mean this Stock Option Agreement.
(b) "DATE OF GRANT" shall mean the date specified in the Notice of Stock
Option Grant, which date shall be the later of (i) the date on which the Board
of Directors resolved to grant this option or (ii) the first day of the
Optionee's Service.
Stock Option Agreement 8
(c) "DISABILITY" shall mean that the Optionee is 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.
(d) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of this option, as specified in the Notice of Stock
Option Grant.
(e) "NOTICE OF STOCK OPTION GRANT" shall mean the document so entitled to
which this Agreement is attached.
(f) "OPTIONEE" shall mean the individual named in the Notice of Stock
Option Grant.
(g) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the
number of Shares with respect to which this option is being exercised.
(h) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 7.
(i) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(j) "TRANSFEREE" shall mean any person to whom the Optionee has directly
or indirectly transferred any Share acquired under this Agreement.
(k) "TRANSFER NOTICE" shall mean the notice of a proposed transfer of
Shares described in Section 8.
Stock Option Agreement 9
JORE CORPORATION
AMENDED & RESTATED 1997 STOCK PLAN
SUMMARY OF STOCK PURCHASE AGREEMENT
By your signature and the signature of the Company's representative below,
you and the Company agree that you are purchasing shares subject to the terms
and conditions of the Amended & Restated 1997 Stock Plan and the Stock Purchase
Agreement, both of which are attached to and made a part of this document.
Name of Purchaser: ___________________________________________
Total Number of Purchased Shares: ___________________________________________
Purchase Price Per Share: $__________________________________________
Date of Purchase: ___________________________________________
Vesting Commencement Date: ___________________________________________
Vesting Schedule: The Right of Repurchase shall lapse with
respect to the first __% of the Purchased
Shares when the Purchaser completes __ months
of continuous Service after the Vesting
Commencement Date. The Right of Repurchase
shall lapse with respect to an additional __%
of the Purchased Shares when the Purchaser
completes each month of continuous Service
thereafter.
PURCHASER: JORE CORPORATION:
By:
- ----------------------------- ------------------------------
Print Name: Title:
------------------ ---------------------------
Stock Purchase Agreement 1
JORE CORPORATION
AMENDED & RESTATED 1997 STOCK PLAN
STOCK PURCHASE AGREEMENT
SECTION 1. ACQUISITION OF SHARES.
(a) TRANSFER. On the terms and conditions set forth in the Summary of
Stock Purchase and this Agreement, the Company agrees to transfer to the
Purchaser the number of Shares set forth in the Summary of Stock Purchase. The
transfer shall occur at the offices of the Company on the date of purchase set
forth in the Summary of Stock Purchase or at such other place and time as the
parties may agree.
(b) CONSIDERATION. The Purchaser agrees to pay the Purchase Price set
forth in the Summary of Stock Purchase for each Purchased Share. The Purchase
Price is agreed to be at least 100% of the Fair Market Value of the Purchased
Shares. Payment shall be made on the transfer date in cash or cash equivalents.
(c) STOCK PLAN AND DEFINED TERMS. The transfer of the Purchased Shares is
subject to the Plan, a copy of which the Purchaser acknowledges having received.
The provisions of the Plan are incorporated into this Agreement by this
reference. Capitalized terms not otherwise defined in the Plan are defined in
Section 12 of this Agreement (in the event a conflict exists, the meaning set
forth in this Agreement shall prevail).
SECTION 2. RIGHT OF REPURCHASE.
(a) SCOPE OF REPURCHASE RIGHT. All Purchased Shares initially shall be
Restricted Shares and shall be subject to a right (but not an obligation) of
repurchase by the Company. The Purchaser shall not transfer, assign, encumber or
otherwise dispose of any Restricted Shares, except as provided in the following
sentence. The Purchaser may transfer Restricted Shares (i) by beneficiary
designation, will or intestate succession or (ii) to the Purchaser's spouse,
children or grandchildren or to a trust established by the Purchaser for the
benefit of the Purchaser or the Purchaser's spouse, children or grandchildren,
provided in either case that the Transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement. If
the Purchaser transfers any Restricted Shares, then this Section 2 shall apply
to the Transferee to the same extent as to the Purchaser.
(b) CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable only during the 60-day period next following the date when the
Purchaser's Service terminates for any reason, with or without cause, including
(without limitation) death or disability.
(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse with
respect to the Purchased Shares in accordance with the vesting schedule set
forth in the Summary of Stock Purchase. In addition, the Right of Repurchase
shall lapse and all of the remaining Restricted Shares shall become vested if:
(i) The Company is subject to a Change in Control before the
Purchaser's Service terminates; and
(ii) Either (A) the Right of Repurchase is not assigned to the
entity that employs the Purchaser immediately after the Change in Control
or to its parent or subsidiary or (B) the Purchaser is subject to an
Involuntary Termination within 12 months following such Change in Control.
Stock Purchase Agreement 2
Notwithstanding the above, if the Company and the other party to the
transaction constituting a Change in Control agree that such transaction is to
be treated as a "pooling of interests" for financial reporting purposes, and if
such transaction in fact is so treated, then the acceleration of vesting shall
not occur to the extent that the Company's independent public accountants and
such other party's independent public accountants separately determine in good
faith that such acceleration would preclude the use of "pooling of interests"
accounting.
(d) REPURCHASE COST. If the Company exercises the Right of Repurchase, it
shall pay the Purchaser an amount equal to the Purchase Price for each of the
Restricted Shares being repurchased.
(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Purchaser prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Purchaser the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Purchaser in the purchase of the Restricted Shares. The Right of Repurchase
shall terminate with respect to any Restricted Shares for which it has not been
timely exercised pursuant to this Subsection (e).
(f) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. Appropriate adjustments shall also, after each such
transaction, be made to the price per share to be paid upon the exercise of the
Right of Repurchase in order to reflect any change in the Company's outstanding
securities effected without receipt of consideration therefor; provided,
however, that the aggregate purchase price payable for the Restricted Shares
shall remain the same.
(g) TERMINATION OF RIGHTS AS STOCKHOLDER. If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with
this Section 2, then after such time the person from whom such Restricted Shares
are to be repurchased shall no longer have any rights as a holder of such
Restricted Shares (other than the right to receive payment of such consideration
in accordance with this Agreement). Such Restricted Shares shall be deemed to
have been repurchased in accordance with the applicable provisions hereof,
whether or not the certificate(s) therefor have been delivered as required by
this Agreement.
(h) ESCROW. Upon issuance, the certificates for Restricted Shares shall be
deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be delivered
to the Company to be held in escrow, but only to the extent the Purchased Shares
are at the time Restricted Shares. All regular cash dividends on Restricted
Shares (or other securities at the time held in escrow) shall be paid directly
to the Purchaser and shall not be held in escrow. Restricted Shares, together
Stock Purchase Agreement 3
with any other assets or securities held in escrow hereunder, shall be (i)
surrendered to the Company for repurchase and cancellation upon the Company's
exercise of its Right of Repurchase or Right of First Refusal or (ii) released
to the Purchaser upon the Purchaser's request to the extent the Purchased Shares
are no longer Restricted Shares (but not more frequently than once every six
months). In any event, all Purchased Shares which have vested (and any other
vested assets and securities attributable thereto) shall be released within 60
days after the earlier of (i) the Purchaser's cessation of Service or (ii) the
lapse of the Right of First Refusal.
SECTION 3. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event that the Purchaser proposes to
sell, pledge or otherwise transfer to a third party any Purchased Shares, or any
interest in such Purchased Shares, the Company shall have the Right of First
Refusal with respect to all (and not less than all) of such Purchased Shares. If
the Purchaser desires to transfer Purchased Shares, the Purchaser shall give a
written Transfer Notice to the Company describing fully the proposed transfer,
including the number of Purchased Shares proposed to be transferred, the
proposed transfer price, the name and address of the proposed Transferee and
proof satisfactory to the Company that the proposed sale or transfer will not
violate any applicable federal or state securities laws. The Transfer Notice
shall be signed both by the Purchaser and by the proposed Transferee and must
constitute a binding commitment of both parties to the transfer of the Purchased
Shares. The Company shall have the right to purchase all, and not less than all,
of the Purchased Shares on the terms of the proposal described in the Transfer
Notice (subject, however, to any change in such terms permitted under Subsection
(b) below) by delivery of a notice of exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was received by the
Company. The Company's rights under this Subsection (a) shall be freely
assignable, in whole or in part.
(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Purchaser may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Purchased Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice, provided that any such sale is made in compliance with
applicable federal and state securities laws and not in violation of any other
contractual restrictions to which the Purchaser is bound. Any proposed transfer
on terms and conditions different from those described in the Transfer Notice,
as well as any subsequent proposed transfer by the Purchaser, shall again be
subject to the Right of First Refusal and shall require compliance with the
procedure described in Subsection (a) above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Purchased Shares
on the terms set forth in the Transfer Notice within 60 days after the date when
the Company received the Transfer Notice (or within such longer period as may
have been specified in the Transfer Notice); provided, however, that in the
event the Transfer Notice provided that payment for the Purchased Shares was to
be made in a form other than cash or cash equivalents paid at the time of
transfer, the Company shall have the option of paying for the Purchased Shares
with cash or cash equivalents equal to the present value of the consideration
described in the Transfer Notice.
(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Purchased Shares subject to this Section 3 or
into which such Purchased Shares thereby become convertible shall immediately be
subject to this Section 3. Appropriate adjustments to reflect the distribution
of such securities or property shall be made to the number and/or class of
Purchased Shares subject to this Section 3.
Stock Purchase Agreement 4
(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 3 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Purchaser desires to transfer Purchased
Shares, the Company shall have no Right of First Refusal, and the Purchaser
shall have no obligation to comply with the procedures prescribed by Subsections
(a) and (b) above.
(e) PERMITTED TRANSFERS. This Section 3 shall not apply to (i) a transfer
by beneficiary designation, will or intestate succession or (ii) a transfer to
the Purchaser's spouse, children or grandchildren or to a trust established by
the Purchaser for the benefit of the Purchaser or the Purchaser's spouse,
children or grandchildren, provided in either case that the Transferee agrees in
writing on a form prescribed by the Company to be bound by all provisions of
this Agreement. If the Purchaser transfers any Purchased Shares, either under
this Subsection (e) or after the Company has failed to exercise the Right of
First Refusal, then this Section 3 shall apply to the Transferee to the same
extent as to the Purchaser.
(f) TERMINATION OF RIGHTS AS STOCKHOLDER. If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be purchased in accordance with this
Section 3, then after such time the person from whom such Purchased Shares are
to be purchased shall no longer have any rights as a holder of such Purchased
Shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such Purchased Shares shall be deemed to have
been purchased in accordance with the applicable provisions hereof, whether or
not the certificate(s) therefor have been delivered as required by this
Agreement.
SECTION 4. OTHER RESTRICTIONS ON TRANSFER.
(a) PURCHASER REPRESENTATIONS. In connection with the issuance and
acquisition of Shares under this Agreement, the Purchaser hereby represents and
warrants to the Company as follows:
(i) The Purchaser is acquiring and will hold the Purchased Shares
for investment for his or her account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of
the Securities Act.
(ii) The Purchaser understands that the Purchased Shares have not
been registered under the Securities Act by reason of a specific exemption
therefrom and that the Purchased Shares must be held indefinitely, unless
they are subsequently registered under the Securities Act or the Purchaser
obtains an opinion of counsel, in form and substance satisfactory to the
Company and its counsel, that such registration is not required. The
Purchaser further acknowledges and understands that the Company is under no
obligation to register the Purchased Shares.
(iii) The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission under the Securities Act, which permits
limited public resales of securities acquired in a non-public offering,
subject to the satisfaction of certain conditions, including (without
limitation) the availability of certain current public information about
the issuer, the resale occurring only after the holding period required by
Rule 144 has been satisfied, the sale occurring through an unsolicited
"broker's transaction," and the amount of securities being sold during any
three-month period not exceeding specified limitations. The Purchaser
acknowledges and understands that the conditions for resale set forth in
Rule 144 have not been satisfied and that the Company has no plans to
satisfy these conditions in the foreseeable future.
(iv) The Purchaser will not sell, transfer or otherwise dispose
of the Purchased Shares in violation of the Securities Act, the Securities
Exchange Act of 1934, or the rules promulgated
Stock Purchase Agreement 5
thereunder, including Rule 144 under the Securities Act. The Purchaser
agrees that he or she will not dispose of the Purchased Shares unless and
until he or she has complied with all requirements of this Agreement
applicable to the disposition of Purchased Shares and he or she has
provided the Company with written assurances, in substance and form
satisfactory to the Company, that the proposed disposition does not require
registration of the Purchased Shares under the Securities Act or all
appropriate action necessary for compliance with the registration
requirements of the Securities Act or with any exemption from registration
available under the Securities Act (including Rule 144) has been taken.
(v) The Purchaser has been furnished with, and has had access to,
such information as he or she considers necessary or appropriate for
deciding whether to invest in the Purchased Shares, and the Purchaser has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the issuance of the Purchased Shares.
(vi) The Purchaser is aware that his or her investment in the
Company is a speculative investment which has limited liquidity and is
subject to the risk of complete loss. The Purchaser is able, without
impairing his or her financial condition, to hold the Purchased Shares for
an indefinite period and to suffer a complete loss of his or her investment
in the Purchased Shares.
(b) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and
sale of Shares under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of the Purchased Shares (including the placement of appropriate legends
on stock certificates or the imposition of stop-transfer instructions) if, in
the judgment of the Company, such restrictions are necessary or desirable in
order to achieve compliance with the Securities Act, the securities laws of any
state or any other law.
(c) MARKET STAND-OFF. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial public
offering, the Purchaser shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, any Purchased Shares without the prior
written consent of the Company or its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time following the
date of the final prospectus for the offering as may be requested by the Company
or such underwriters. In no event, however, shall such period exceed 180 days.
The Market Stand-Off shall in any event terminate two years after the date of
the Company's initial public offering. In the event of the declaration of a
stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to
any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Purchased Shares until the end of the
applicable stand-off period. The Company's underwriters shall be beneficiaries
of the agreement set forth in this Subsection (c). This Subsection (c) shall not
apply to Shares registered in the public offering under the Securities Act, and
the Purchaser shall be subject to this Subsection (c) only if the directors and
officers of the Company are subject to similar arrangements.
(d) RIGHTS OF THE COMPANY. The Company shall not be required to (i)
transfer on its books any Purchased Shares that have been sold or transferred in
contravention of this Agreement or (ii) treat as the owner of Purchased Shares,
or otherwise to accord voting, dividend or liquidation rights to, any transferee
to whom Purchased Shares have been transferred in contravention of this
Agreement.
Stock Purchase Agreement 6
SECTION 5. SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided to the contrary, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns and be binding upon the Purchaser and the
Purchaser's legal representatives, heirs, legatees, distributees, assigns and
transferees by operation of law, whether or not any such person has become a
party to this Agreement or has agreed in writing to join herein and to be bound
by the terms, conditions and restrictions hereof.
SECTION 6. NO RETENTION RIGHTS.
Nothing in this Agreement or in the Plan shall confer upon the Purchaser
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Purchaser) or of the
Purchaser, which rights are hereby expressly reserved by each, to terminate his
or her Service at any time and for any reason, with or without cause.
SECTION 7. TAX ELECTION.
The acquisition of the Purchased Shares may result in adverse tax
consequences that may be avoided or mitigated by filing an election under Code
Section 83(b). Such election may be filed only within 30 days after the date of
purchase set forth in the Summary of Stock Purchase. The form for making the
Code Section 83(b) election is attached to this Agreement as an Exhibit. The
Purchaser should consult with his or her tax advisor to determine the tax
consequences of acquiring the Purchased Shares and the advantages and
disadvantages of filing the Code Section 83(b) election. The Purchaser
acknowledges that it is his or her sole responsibility, and not the Company's,
to file a timely election under Code Section 83(b), even if the Purchaser
requests the Company or its representatives to make this filing on his or her
behalf.
SECTION 8. LEGENDS.
All certificates evidencing Purchased Shares shall bear the following
legends:
"The shares represented hereby may not be sold, assigned, transferred,
encumbered or in any manner disposed of, except in compliance with the
terms of a written agreement between the company and the registered holder
of the shares (or the predecessor in interest to the shares). Such
agreement grants to the company certain rights of first refusal upon an
attempted transfer of the shares and certain repurchase rights upon
termination of service with the company. The secretary of the company will
upon written request furnish a copy of such agreement to the holder hereof
without charge."
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be transferred
except pursuant to an effective registration under the Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
company, qualifies as an exempt transaction under the act and the rules and
regulations promulgated thereunder."
If required by the authorities of any state in connection with the issuance
of the Purchased Shares, the legend or legends required by such state
authorities shall also be endorsed on all such certificates.
Stock Purchase Agreement 7
SECTION 9. NOTICE.
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit
with the United States Postal Service, by registered or certified mail, with
postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Purchaser at the address that he or she
most recently provided to the Company.
SECTION 10. ENTIRE AGREEMENT.
The Summary of Stock Purchase, this Agreement and the Plan constitute the
entire contract between the parties hereto with regard to the subject matter
hereof. They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.
SECTION 11. CHOICE OF LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Montana, as such laws are applied to contracts entered into
and performed in such State.
SECTION 12. DEFINITIONS.
(a) "AGREEMENT" shall mean this Stock Purchase Agreement.
(b) "PURCHASED SHARES" shall mean the Shares purchased by the Purchaser
pursuant to this Agreement.
(c) "PURCHASE PRICE" shall mean the amount for which one Share may be
purchased pursuant to this Agreement, as specified in the Summary of Stock
Purchase.
(d) "PURCHASER" shall mean the individual named in the Summary of Stock
Purchase.
(e) "RESTRICTED SHARE" shall mean a Purchased Share that is subject to the
Right of Repurchase.
(f) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 3.
(g) "RIGHT OF REPURCHASE" shall mean the Company's right of repurchase
described in Section 2.
(h) "SUMMARY OF STOCK PURCHASE" shall mean the document so entitled to
which this Agreement is attached.
(i) "TRANSFEREE" shall mean any person to whom the Purchaser has directly
or indirectly transferred any Purchased Share.
(j) "TRANSFER NOTICE" shall mean the notice of a proposed transfer of
Purchased Shares described in Section 3.
Stock Purchase Agreement 8
APPENDIX B
JORE CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1.
PURPOSE: The purposes of the Jore Corporation 1999 Employee Stock
Purchase Plan (the "Plan") are (a) to assist employees of Jore Corporation, a
Montana corporation (the "Company"), and its designated subsidiaries in
acquiring a stock ownership interest in the Company pursuant to a plan that is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended, and (b) to encourage employees
to remain in the employ of the Company and its subsidiaries.
SECTION 2.
DEFINITIONS: For purposes of the Plan, the following terms shall be
defined as set forth below:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Company's Compensation Committee.
"Common Stock" means the common stock, without par value, of the
Company.
"Company" means Jore Corporation, a Montana corporation.
"Corporate Transaction" means either of the following events: (a)
consummation of any merger or consolidation of the Company with or into another
corporation; or (b) consummation of any sale, lease, exchange or other transfer
in one transaction or a series of related transactions of all or substantially
all of the Company's assets or outstanding securities other than a transfer of
the Company's assets or securities to a majority-owned Subsidiary Corporation.
"Designated Subsidiary" has the meaning set forth under the definition
of "Eligible Employee" in this Section 2.
"Effective Date" has the meaning set forth in Section 23.
"Eligible Compensation" means all base salary and wages. Eligible
Compensation does not include overtime, cash bonuses, commissions, severance
pay, hiring and relocation bonuses, pay in lieu of vacations, sick leave, gain
from stock option exercises or any other special payments.
"Eligible Employee" means any employee of the Company or any
Subsidiary Corporation designated by the Board or the Committee (a "Designated
Subsidiary"), who is in the employ of the Company (or any Designated
Subsidiary) on one or more Offering Dates and who meets the following criteria:
(a) the employee does not, immediately after the option is granted, own stock
(as defined by the Code) possessing 5% or more of the total combined voting
1
power or value of all classes of stock of the Company or of a Parent
Corporation or Subsidiary Corporation of the Company; (b) the employee's
customary employment is for 20 hours or more per week; provided, however, that
the Plan Administrator may decrease this minimum requirement for any future
Offering so long as the required number of hours does not exceed 20; (c) if
specified by the Plan Administrator for a future Offering, the employee
customarily works a minimum of 5 months per year or any lesser number of months
established by the Plan Administrator; and (d) if specified by the Plan
Administrator for a future Offering, the employee has been employed for a
certain minimum period of time prior to an Offering Date; provided, however,
that any such minimum employment period may not exceed two years. If the
Company permits any employee of a Designated Subsidiary to participate in the
Plan, then all employees of that Designated Subsidiary who meet the
requirements of this paragraph shall also be considered Eligible Employees.
"Enrollment Deadline" has the meaning set forth in Section 7.1.
"ESPP Broker" has the meaning set forth in Section 10.
"Fair Market Value" shall be as established in good faith by the Plan
Administrator, or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market on the Offering Date or the
Purchase Date, as applicable, or (b) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, the average of the high and
low per share sales prices for the Common Stock as such price is officially
quoted in the composite tape of transactions on such exchange on the Offering
Date or the Purchase Date, as applicable. If there is no such reported price for
the Common Stock for the date in question, then such price on the last preceding
date for which such price exists shall be determinative of Fair Market Value.
"Offering" has the meaning set forth in Section 5.1.
"Offering Date" means the first day of an Offering.
"Option" means an option granted under the Plan to an Eligible Employee
to purchase shares of Common Stock.
"Parent Corporation" means any corporation, other than the Company, in
an unbroken chain of corporations ending with the Company, if, at the time of
the granting of the Option, each of the corporations, other than the Company,
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"Participant" means any Eligible Employee who has elected to
participate in an Offering in accordance with the procedures set forth in
Section 7.1 and who has not withdrawn from the Plan or whose participation in
the Plan is not terminated.
"Plan" means the Jore Corporation 1999 Employee Stock Purchase Plan.
2
"Purchase Date" means the last day of each Purchase Period.
"Purchase Period" has the meaning set forth in Section 5.2.
"Purchase Price" has the meaning set forth in Section 6.
"Subscription" has the meaning set forth in Section 7.1.
"Subsidiary Corporation" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company, if,
at the time of the granting of the Option, each of the corporations, other than
the last corporation in the unbroken chain, owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 3.
ADMINISTRATION:
3.1 PLAN ADMINISTRATOR: The Plan shall be administered by the Board or
the Committee or, if and to the extent the Board or the Committee designates an
executive officer of the Company to administer the Plan, by such executive
officer (each, the "Plan Administrator"). Any decisions made by the Plan
Administrator shall be applicable equally to all Eligible Employees.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR:
Subject to the provisions of the Plan, the Plan Administrator shall have the
authority, in its sole discretion, to determine all matters relating to Options
granted under the Plan, including all terms, conditions, restrictions and
limitations of Options; provided, however, that all Participants granted Options
pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423 of the Code.
The Plan Administrator shall also have exclusive authority to interpret
the Plan and may from time to time adopt, and change, rules and regulations of
general application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Plan Administrator pursuant to the Plan, unless
reserved to the Board or the Committee, shall be conclusive and binding on all
parties involved or affected. The Plan Administrator may delegate administrative
duties to such of the Company's other officers or employees as the Plan
Administrator so determines.
SECTION 4.
STOCK SUBJECT TO PLAN: Subject to adjustment from time to time as
provided in Section 21, the maximum number of shares of Common Stock which shall
be available for issuance under the Plan shall be (a) 1,000,000 shares plus (b)
an annual increase to be added on the first day of each fiscal year beginning
January 1, 2001 equal to the least of (i) of 100,000 shares of Common Stock, or
(ii) 1.5% of the adjusted average common shares outstanding of the
3
Company used to calculate fully diluted earnings per share as reported in the
Company's annual financial statements for the preceding fiscal year, or (iii) a
lesser amount determined by the Board; provided, however, that any shares from
any increases in previous years that are not actually issued shall be added to
the aggregate number of shares available for issuance under the Plan. Shares
issued under the Plan shall be drawn from authorized and unissued shares or
shares now held or subsequently acquired by the Company as treasury shares.
SECTION 5.
OFFERING DATES AND PURCHASE PERIODS:
5.1 OFFERINGS:
(a) Except as otherwise set forth below, the Plan shall be implemented
by a series of two-year Offerings (each, an "Offering"). Offerings shall
generally commence on February 15 and August 15 of each year and end on the
second February 15 and August 15, respectively, occurring thereafter; provided,
however, that the first Offering shall begin on December 31, 1999 (instead of
February 15, 2000) and shall end on February 15, 2002.
(b) The first day of each Offering shall be an "Offering Date." On each
Offering Date, each Eligible Employee is hereby granted an Option subject to the
terms and conditions of the Plan to purchase shares of Common Stock on the
Purchase Dates for the Offering for the price determined under Section 6
exclusively through payroll deductions authorized under Section 9.
(c) Notwithstanding the foregoing, the Plan Administrator may establish
(i) a different term for one or more Offerings, and (ii) different commencing
and ending dates for such Offerings; provided, however, that an Offering may not
exceed 27 months.
(d) In the event the first or the last day of an Offering is not a
regular business day, then the first or last day of the Offering shall be deemed
to be the next regular business day.
5.2 PURCHASE PERIODS:
(a) Except as otherwise set forth below, each Offering shall consist of
four consecutive purchase periods of six months' duration (each, a "Purchase
Period"). The last day of each Purchase Period shall be the Purchase Date for
such Purchase Period. Except as otherwise set forth below, a Purchase Period
shall commence on February 15 and August 15 of each year and end on the next
August 15 and February 15, respectively, occurring thereafter; provided,
however, that the first Purchase Period for the first Offering shall begin on
December 31, 1999 (instead of February 15, 2000) and shall end on August 15,
2000.
(b) Notwithstanding the foregoing, the Plan Administrator may establish
(i) a different term for one or more Purchase Periods, and (ii) different
commencing and ending dates for any such Purchase Period.
4
(c) In the event the first or last day of a Purchase Period is not a
regular business day, then the first or last day of the Purchase Period shall be
deemed to be the next regular business day.
5.3 GOVERNMENTAL APPROVAL: Notwithstanding any other provision of the
Plan to the contrary, an Option granted pursuant to the Plan shall be subject to
obtaining all necessary governmental approvals and qualifications of the Plan
and of the issuance of Options and sale of Common Stock pursuant to the Plan.
SECTION 6.
PURCHASE PRICE:
6.1 "Purchase Price" at which Common Stock may be acquired on any
Purchase Date in an Offering pursuant to the exercise of all or any portion of
an Option granted under the Plan shall be 85% of the lesser of (a) the Fair
Market Value of the Common Stock on the Offering Date of such Offering, and (b)
the Fair Market Value of the Common Stock on the Purchase Date.
6.2 Notwithstanding the foregoing, if an increase in the number of
shares authorized for issuance under the Plan (other than an annual increase
pursuant to Section 4 and other than the initial authorization on the Effective
Date) is approved and all or a portion of such additional shares are to be
issued during one or more Offerings that are underway at the time of shareholder
approval of such increase (the "Additional Shares"), then, if as of the date of
such shareholder approval, the Fair Market Value of a share of Common Stock is
higher than the Fair Market Value on the Offering Date for any such Offering,
the Purchase Price for the Additional Shares shall be 85% of the lesser of (i)
the Common Stock's Fair Market Value on the date of such shareholder approval,
and (ii) the Fair Market Value of the Common Stock on the Purchase Date.
SECTION 7.
PARTICIPATION IN THE PLAN:
7.1 INITIAL PARTICIPATION: If a person is an Eligible Employee on the
Offering Date for an Offering, such person may become a Participant in the
Offering by delivering to the Company on or prior to the Enrollment Deadline for
such Offering a subscription (the "Subscription"): (a) indicating the Eligible
Employee's election to participate in the Plan; (b) authorizing payroll
deductions and stating the amount to be deducted regularly from the
Participant's pay; and (c) authorizing the purchase of Common Stock for the
Participant in each Purchase Period. Unless otherwise determined by the Plan
Administrator, the "Enrollment Deadline" for each Offering shall be 10 days
prior to the Offering Date; provided, however, that the "Enrollment Deadline"
for the first Offering shall be February 15, 2000. An Eligible Employee who does
not deliver a Subscription as provided above on or prior to the Enrollment
Deadline shall not participate in the Plan for that Offering or for any
subsequent Offering unless such Eligible Employee subsequently enrolls in the
Plan by filing a Subscription with the Company on or prior to the Enrollment
Deadline for such subsequent Offering. Except as provided in Section 7.2, an
5
employee who becomes eligible to participate in the Plan after an Offering has
commenced shall not be eligible to participate in such Offering but may
participate in any subsequent Offering, provided that such employee is still an
Eligible Employee as of the commencement of any such subsequent Offering.
Eligible Employees may not participate in more than one Offering at a time.
7.2 ALTERNATIVE INITIAL PARTICIPATION: Notwithstanding any other
provisions of the Plan, the Board or the Committee may provide for any future
Offering that any employee of the Company or any Designated Subsidiary who first
becomes an Eligible Employee during the course of an Offering shall, on a date
or dates specified in the Offering which coincides with the date on which such
person first meets such requirements or occurs on a specified date thereafter,
receive an Option under that Offering which Option shall thereafter be deemed to
be a part of that Offering. Such Option shall have the same characteristics as
any Options originally granted under that Offering, except that: (a) the date on
which such Option is granted shall be the "Offering Date" of such Option for all
purposes, including determining the Purchase Price of such Option; provided,
however, that if the Fair Market Value of the Common Stock on the date on which
such Option is granted is less than the Fair Market Value of Common Stock on the
first day of the Offering, then, solely for the purpose of determining the
Purchase Price of such Option, the first day of the Offering shall be the
"Offering Date" for such Option; (b) the Purchase Period(s) for such Option
shall begin on its Offering Date and end coincident with the remaining Purchase
Date(s) for such Offering; and (c) the Board or the Committee may provide that
if such employee first meets such requirements within a specified period of time
before the end of a Purchase Period for such Offering, he or she will not
receive any Option for that Purchase Period.
7.3 CONTINUED PARTICIPATION: A Participant shall automatically
participate in the next Offering until such time as such Participant withdraws
from the Plan pursuant to Section 11.2 or 11.3 or terminates employment as
provided in Section 13.
SECTION 8.
LIMITATIONS ON RIGHT TO PURCHASE SHARES:
8.1 NUMBER OF SHARES PURCHASED:
(a) No Option granted under the Plan shall permit an employee's right
to purchase Common Stock under the Plan (and all other employee stock purchase
plans of the Company, any Parent Corporations and any Subsidiary Corporations to
which Section 423 of the Code applies) to accrue at a rate that exceeds $25,000
of fair market value of shares (determined at the Offering Date) for each
calendar year in which such Option is outstanding.
(b) No Participant shall be entitled to purchase more than 4,000 shares
of Common Stock (or such other number as the Board or the Committee shall
specify for a future Offering) under the Plan in any single Purchase Period.
6
(c) For a future Offering, the Board or the Committee may specify a
maximum number of shares that may be purchased by any Participant, as well as a
maximum aggregate number of shares that may be purchased by all Participants
pursuant to such Offering. In addition, for a future Offering with more than
one Purchase Date, the Board or the Committee may specify a maximum aggregate
number of shares that may be purchased by all Participants on any given
Purchase Date under the Offering.
8.2 PRO RATA ALLOCATION: In the event the number of shares of Common
Stock that might be purchased by all Participants in the Plan exceeds the number
of shares of Common Stock available in the Plan or available for any Offering or
Purchase Date, the Plan Administrator shall make a pro rata allocation of the
remaining shares of Common Stock in as uniform a manner as shall be practicable
and as the Plan Administrator shall determine to be equitable. Fractional shares
may not be issued under the Plan unless the Plan Administrator determines
otherwise for any future Offering.
SECTION 9.
PAYMENT OF PURCHASE PRICE:
9.1 GENERAL RULES SUBJECT TO SECTION 9.11: Common Stock that is
acquired pursuant to the exercise of all or any portion of an Option may be paid
for only by means of payroll deductions from the Participant's Eligible
Compensation. Except as set forth in this Section 9, the amount of compensation
to be withheld from a Participant's Eligible Compensation during each pay period
shall be determined by the Participant's Subscription.
9.2 PERCENT WITHHELD: The amount of payroll withholding for each
Participant for purchases pursuant to the Plan during any pay period shall be at
least 1% but shall not exceed 15% of the Participant's Eligible Compensation for
such pay period. Amounts shall be withheld in whole percentages only.
9.3 PAYROLL DEDUCTIONS: Payroll deductions shall commence on the first
payday following the Offering Date and shall continue through the last payday of
the Offering unless sooner altered or terminated as provided in the Plan;
provided, however, that with respect to the first Offering payroll deductions
shall commence (a) on January 24, 2000 for an Eligible Employee who delivers his
or her Subscription to the Company on or prior to January 19, 2000, (b) on
February 7, 2000 for an Eligible Employee who delivers his or her Subscription
to the Company on or prior to February 2, 2000, and (c) on February 21, 2000 for
an Eligible Employee who delivers his or her Subscription to the Company on or
prior to February 15, 2000.
9.4 MEMORANDUM ACCOUNTS: Individual accounts shall be maintained for
each Participant for memorandum purposes only. All payroll deductions from a
Participant's compensation shall be credited to such account but shall be
deposited with the general funds of the Company. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose.
7
9.5 NO INTEREST: No interest shall be paid on payroll deductions
received or held by the Company.
9.6 ACQUISITION OF COMMON STOCK: On each Purchase Date of an Offering,
each Participant shall automatically acquire, pursuant to the exercise of the
Participant's Option, the number of shares of Common Stock arrived at by
dividing the total amount of the Participant's accumulated payroll deductions
for the Purchase Period by the Purchase Price; provided, however, that the
number of shares of Common Stock purchased by the Participant shall not exceed
the number of whole shares of Common Stock so determined, unless the Plan
Administrator has determined for any future Offering that fractional shares may
be issued under the Plan; and provided, further, that the number of shares of
Common Stock purchased by the Participant shall not exceed the number of shares
for which Options have been granted to the Participant pursuant to Section 8.1.
9.7 REFUND OF EXCESS AMOUNTS: Any cash balance remaining in the
Participant's account at the termination of each Purchase Period shall be
refunded to the Participant as soon as practical after the Purchase Date
without the payment of any interest; provided, however, that if the Participant
participates in the next Purchase Period, any cash balance remaining in the
Participant's account because it was less than the amount required to purchase
a whole share shall be applied to the purchase of Common Stock in the new
Purchase Period, provided such purchase complies with Section 8.1.
9.8 WITHHOLDING OBLIGATIONS: At the time the Option is exercised, in
whole or in part, or at the time some or all of the Common Stock is disposed of,
the Participant shall make adequate provision for federal and state withholding
obligations of the Company, if any, that arise upon exercise of the Option or
upon disposition of the Common Stock. The Company may withhold from the
Participant's compensation the amount necessary to meet such withholding
obligations.
9.9 TERMINATION OF PARTICIPATION: No Common Stock shall be purchased on
behalf of a Participant on a Purchase Date if his or her participation in the
Offering or the Plan has terminated on or before such Purchase Date.
9.10 PROCEDURAL MATTERS: The Company may, from time to time, establish
(a) limitations on the frequency and/or number of any permitted changes in the
amount withheld during an Offering, as set forth in Section 11.1, (b) an
exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, (c) payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections and (d) such other
limitations or procedures as deemed advisable by the Company in the Company's
sole discretion that are consistent with the Plan and in accordance with the
requirements of Section 423 of the Code.
9.11 LEAVES OF ABSENCE: During leaves of absence approved by the
Company and meeting the requirements of the applicable Treasury Regulations
promulgated under the Code, a Participant may elect to continue participation in
the Plan by delivering cash payments to the Company on the Participant's normal
paydays equal to the amount of his or her payroll deduction under the Plan had
the Participant not taken a leave of absence. Currently, the
8
Treasury Regulations provide that a Participant may continue participation in
the Plan only during the first 90 days of a leave of absence unless the
Participant's reemployment rights are guaranteed by statute or contract.
SECTION 10.
COMMON STOCK PURCHASED UNDER THE PLAN:
10.1 ESPP BROKER: If the Plan Administrator designates or approves a
stock brokerage or other financial services firm (the "ESPP Broker") to hold
shares purchased under the Plan for the accounts of Participants, the following
procedures shall apply. Promptly following each Purchase Date, the number of
shares of Common Stock purchased by each Participant shall be deposited into an
account established in the Participant's name with the ESPP Broker. Each
Participant shall be the beneficial owner of the Common Stock purchased under
the Plan and shall have all rights of beneficial ownership in such Common
Stock. A Participant shall be free to undertake a disposition of the shares of
Common Stock in his or her account at any time, but, in the absence of such a
disposition, the shares of Common Stock must remain in the Participant's
account at the ESPP Broker until the holding period set forth in Section 423 of
the Code has been satisfied. With respect to shares of Common Stock for which
the holding period set forth above has been satisfied, the Participant may move
those shares of Common Stock to another brokerage account of the Participant's
choosing or request that a stock certificate be issued and delivered to him or
her. Dividends paid in the form of shares of Common Stock with respect to
Common Stock in a Participant's account shall be credited to such account. A
Participant who is not subject to payment of U.S. income taxes may move his or
her shares of Common Stock to another brokerage account of his or her choosing
or request that a stock certificate be delivered to him or her at any time,
without regard to the holding period required by Section 423 of the Code.
10.2 NOTICE OF DISPOSITION: By entering the Plan, each Participant
agrees to promptly give the Company notice of any Common Stock disposed of
within the later of one year from the Purchase Date and two years from the
Offering Date for such Common Stock, showing the number of such shares disposed
of and the Purchase Date and Offering Date for such Common Stock. This notice
shall not be required if and so long as the Company has a designated ESPP
Broker.
SECTION 11.
CHANGES IN WITHHOLDING AMOUNTS AND VOLUNTARY WITHDRAWAL:
11.1 CHANGES IN WITHHOLDING AMOUNTS:
(a) Unless the Plan Administrator establishes otherwise for a future
Offering, a Participant may elect to decrease or increase the amount withheld
from his or her Eligible Compensation up to two times during any Purchase Period
by completing and filing with the Company an amended Subscription authorizing a
change in the payroll deduction rate. The
9
change in rate shall be effective as of the next payday following the date of
filing the amended Subscription if the amended Subscription is filed at least
10 days prior to such payday (the "Change Notice Date") and, if not, as of the
next succeeding payday. All payroll deductions accrued by a Participant as of a
Change Notice Date shall continue to be applied toward the purchase of Common
Stock on the Purchase Date, unless a Participant withdraws from an Offering or
the Plan, pursuant to Section 11.2 or Section 11.3 below. An amended
Subscription shall remain in effect until the Participant changes such
Subscription in accordance with the terms of the Plan.
(b) Unless otherwise determined by the Plan Administrator for a future
Offering, a Participant may elect to increase or decrease the amount to be
withheld from his or her compensation for a future Offering by completing and
filing with the Company an amended Subscription on or prior to the Enrollment
Deadline for such Offering.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Code Section 423 and Section 8.1, a Participant's payroll deductions may
be decreased during any Purchase Period to 0%. Payroll deductions shall
re-commence at the rate provided in such Participant's Subscription at the
beginning of the first Purchase Period in which the Participant can participate
in compliance with Code Section 423 and Section 8.1, unless the Participant
terminates participation in the Offering or the Plan as provided in Section
11.2 or Section 11.3 below.
11.2 WITHDRAWAL FROM AN OFFERING: A Participant may withdraw from an
Offering by signing and delivering to the Company a written notice of withdrawal
on a form provided by the Company for such purpose. Such withdrawal must be
elected at least 10 days prior to the end of the Purchase Period for which such
withdrawal is to be effective or by any other date specified by the Plan
Administrator for any future Offering. Withdrawal shall not affect Common Stock
previously acquired by the Participant under the Plan. Unless otherwise
indicated, withdrawal from an Offering shall not result in a withdrawal from the
Plan or any succeeding Offering therein. A Participant is prohibited from again
participating in the same Offering at any time upon withdrawal from such
Offering. The Company may, from time to time, impose a requirement that the
notice of withdrawal be on file with the Company for a reasonable period prior
to the effectiveness of the Participant's withdrawal.
11.3 WITHDRAWAL FROM THE PLAN: A Participant may withdraw from the Plan
by signing a written notice of withdrawal on a form provided by the Company for
such purpose and delivering such notice to the Company. Such notice must be
delivered at least 10 days prior to the end of the Purchase Period for which
such withdrawal is to be effective or by any other date specified by the Plan
Administrator for any future Offering. In the event a Participant voluntarily
elects to withdraw from the Plan, the Participant may not resume participation
in the Plan during the same Offering, but may participate in any subsequent
Offering under the Plan by again satisfying the definition of Eligible Employee
and timely delivering a Subscription. The Company may impose, from time to time,
a requirement that the notice of withdrawal be on file with the Company for a
reasonable period prior to the effectiveness of the Participant's withdrawal.
10
11.4 RETURN OF PAYROLL DEDUCTIONS: Upon withdrawal from an Offering
pursuant to Section 11.2 or from the Plan pursuant to Section 11.3, the
withdrawing Participant's accumulated payroll deductions that have not been
applied to the purchase of Common Stock shall be returned as soon as practical
after the withdrawal, without the payment of any interest, to the Participant
and the Participant's interest in the Offering shall terminate. Such accumulated
payroll deductions may not be applied to any other Offering under the Plan.
SECTION 12.
AUTOMATIC WITHDRAWAL: If the Fair Market Value of the Common Stock on
any Purchase Date of an Offering is less than the Fair Market Value of the
Common Stock on the Offering Date for such Offering, then every Participant
shall automatically (a) be withdrawn from such Offering after the acquisition of
the shares of Common Stock on such Purchase Period, and (b) be enrolled in the
Offering commencing on such Purchase Date, provided the Participant is eligible
to participate in the Plan and has not elected to terminate participation in the
Plan pursuant to Section 11.2 or 11.3.
SECTION 13.
TERMINATION OF EMPLOYMENT: Termination of a Participant's employment
with the Company for any reason, including retirement, death or the failure of a
Participant to remain an Eligible Employee, shall immediately terminate the
Participant's participation in the Plan. The payroll deductions credited to the
Participant's account since the last Purchase Date shall, as soon as practical,
be returned to the Participant or, in the case of a Participant's death, to the
Participant's legal representative or designated beneficiary as provided in
Section 14.2, and all of the Participant's rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a Participant pursuant
to this Section 13.
SECTION 14.
RESTRICTIONS ON ASSIGNMENT:
14.1 TRANSFERABILITY: An Option granted under the Plan shall not be
transferable and such Option shall be exercisable during the Participant's
lifetime only by the Participant. The Company will not recognize, and shall be
under no duty to recognize, any assignment or purported assignment by a
Participant of the Participant's interest in the Plan, of his or her Option or
of any rights under his or her Option.
14.2 BENEFICIARY DESIGNATION: The Plan Administrator may permit a
Participant to designate a beneficiary who is to receive any shares and cash, if
any, from the Participant's account under the Plan in the event the Participant
dies after the Purchase Date for an Offering but prior to delivery to such
Participant of such shares and cash. In addition, the Plan Administrator may
permit a Participant to designate a beneficiary who is to receive any cash from
the Participant's account under the Plan in the event that the Participant dies
before the Purchase Date for an Offering. Such designation may be changed by the
Participant at any time by written notice to the Company.
11
SECTION 15.
RESERVED.
SECTION 16.
NO RIGHTS AS SHAREHOLDER UNTIL SHARES ISSUED: With respect to shares
of Common Stock subject to an Option, a Participant shall not be deemed to be a
shareholder of the Company, and he or she shall not have any of the rights or
privileges of a shareholder. A Participant shall have the rights and privileges
of a shareholder of the Company when, but not until, a certificate or its
equivalent has been issued to the Participant for the shares following exercise
of the Participant's Option.
SECTION 17.
LIMITATIONS ON SALE OF COMMON STOCK PURCHASED UNDER THE PLAN: The Plan
is intended to provide Common Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any Participant in
the conduct of his or her own affairs. A Participant, therefore, may sell
Common Stock purchased under the Plan at any time he or she chooses, subject to
compliance with any applicable federal and state securities laws. A Participant
assumes the risk of any market fluctuations in the price of the Common Stock.
SECTION 18.
AMENDMENT OR TERMINATION OF THE PLAN:
18.1 The Board may amend the Plan in such respects as it shall deem
advisable; provided, however, that, to the extent required for compliance with
Section 423 of the Code or any applicable law or regulation, shareholder
approval will be required for any amendment that will (i) increase the total
number of shares as to which Options may be granted under the Plan, (ii) modify
the class of employees eligible to receive Options, or (iii) otherwise require
shareholder approval under any applicable law or regulation.
18.2 The Plan shall continue in effect indefinitely until it is
terminated or suspended by the Board. The Board may terminate or suspend the
Plan at any time and for any reason. During any period of suspension or upon
termination of the Plan, no Options shall be granted.
18.3 Except as provided in Section 21, no such termination of the Plan
may affect Options previously granted, provided that the Plan or an Offering
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering and a Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering is in the best interests of the Company and the shareholders or if
continuation of the Plan and/or the Offering would cause the Company to incur
adverse
12
accounting charges as a result of a change after the Effective Date of the Plan
in the generally accepted accounting rules applicable to the Plan.
SECTION 19.
NO RIGHTS AS AN EMPLOYEE: Nothing in the Plan shall be construed to
give any person (including any Eligible Employee or Participant) the right to
remain in the employ of the Company or a Parent or Subsidiary Corporation or to
affect the right of the Company or a Parent or Subsidiary Corporation to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time with or without cause.
SECTION 20.
EFFECT UPON OTHER PLANS: The adoption of the Plan shall not affect any
other compensation or incentive plans in effect for the Company or any Parent
or Subsidiary Corporation. Nothing in the Plan shall be construed to limit the
right of the Company, or any Parent Corporation or Subsidiary Corporation, to
(a) establish any other forms of incentives or compensation for employees of
the Company, a Parent Corporation or Subsidiary Corporation, or (b) grant or
assume options otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
SECTION 21.
ADJUSTMENTS:
21.1 ADJUSTMENT OF SHARES: In the event that, at any time or from time
to time, a stock dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to shareholders
other than a normal cash dividend, or other change in the Company's corporate
or capital structure results in (a) the outstanding shares, or any securities
exchanged therefor or received in their place, being exchanged for a different
number or kind of securities of the Company or of any other corporation, or (b)
new, different or additional securities of the Company or of any other
corporation being received by the holders of shares of Common Stock, then
(subject to any required action by the Company's shareholders), the Board or
the Committee, in its sole discretion, shall make such equitable adjustments as
it shall deem appropriate in the circumstances in (i) the maximum number and
kind of shares of Common Stock subject to the Plan as set forth in Section 4,
(ii) the number and kind of securities that are subject to any outstanding
Option and the per share price of such securities, and (iii) the maximum number
of shares of Common Stock that may be purchased by a Participant in a Purchase
Period. The determination by the Board or the Committee as to the terms of any
of the foregoing adjustments shall be conclusive and binding. Notwithstanding
the foregoing, a Corporate Transaction, dissolution or liquidation of the
Company shall not be governed by this Section 21.1 but shall be governed by
Sections 21.2 and 21.3, respectively.
13
21.2 MERGER OR ASSET SALE OF THE COMPANY: In the event of a proposed
Corporate Transaction, each outstanding Option shall be assumed or continued or
an equivalent option substituted by the surviving corporation, the successor
corporation or its parent corporation, as applicable (the "Successor
Corporation"). In the event that the Successor Corporation refuses to assume,
continue or substitute for the Option, the Offering then in progress shall be
shortened by setting a new Purchase Date. The new Purchase Date shall be a
specified date before the date of the Company's proposed sale or merger.
The Board shall notify each Participant in writing, at least 10
business days prior to the new Purchase Date, that the Purchase Date for the
Participant's Option has been changed to the new Purchase Date and that the
Participant's Option shall be exercised automatically on the new Purchase Date,
unless prior to such date the Participant has withdrawn from the Offering or
the Plan as provided in Section 11.
21.3 DISSOLUTION OR LIQUIDATION OF THE COMPANY: In the event of the
proposed dissolution or liquidation of the Company, the Offering then in
progress shall be shortened by setting a new Purchase Date and shall terminate
immediately prior to the consummation of such proposed dissolution or
liquidation, unless provided otherwise by the Board. The new Purchase Date
shall be a specified date before the date of the Company's proposed dissolution
or liquidation. The Board shall notify each Participant in writing, at least 10
business days prior to the new Purchase Date, that the Purchase Date for the
Participant's Option has been changed to the new Purchase Date and that the
Participant's Option shall be exercised automatically on the new Purchase Date,
unless prior to such date the Participant has withdrawn from the Offering or
the Plan as provided in Section 11.
21.4 LIMITATIONS: The grant of Options will in no way affect the
Company's right to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
SECTION 22.
REGISTRATION; CERTIFICATES FOR SHARES: The Company shall be under no
obligation to any Participant to register for offering or resale under the
Securities Act of 1933, as amended, or register or qualify under state
securities laws, any shares of Common Stock. The Company may issue certificates
for shares with such legends and subject to such restrictions on transfer and
stop-transfer instructions as counsel for the Company deems necessary or
desirable for compliance by the Company with federal and state securities laws.
SECTION 23.
EFFECTIVE DATE: The Plan's Effective Date is December 31, 1999.
14
- -----------------------------------------------------------------------------------------------------------------------------------
JORE CORPORATION
PROXY
ANNUAL MEETING, MAY 17, 2000
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned (reverse side) hereby appoints Matthew B. Jore and David H. Bjornson, and each of them, proxies with power of
substitution to vote, on behalf of the undersigned, all shares that the undersigned may be entitled to vote at the annual meeting of
shareholders of Jore Corporation (the "Company") to be held on May 17, 2000 and at any adjournments thereof, with all powers that
the undersigned would possess if personally present, with respect to the following:
- -----------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
- -----------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as
indicated in /X/
this example
FOR all WITHHOLD
nominees AUTHORITY
(except as (to vote for
marked to the all nominees
contrary below) listed below) FOR AGAINST ABSTAIN
1. Election of Directors / / / / 2. Approval of the Company's 1999 Employee / / / / / /
Stock Purchase Plan.
(Instructions: To withhold authority FOR AGAINST ABSTAIN
to vote for any individual, strike a 3. Amendment of the Company's 1997 Amended / / / / / /
line through the nominee's name below.) and Restated Stock Plan to increase the
total number of shares of Company common
Matthew B. Jore stock reserved for issuance under such
Michael W. Jore plan from 1,300,000 to 2,400,000.
David H. Bjornson FOR AGAINST ABSTAIN
Thomas E. Mahoney 4. Ratification of Deloitte & Touche LLP as / / / / / /
R. Bruce Romfo the Company's independent accountants.
William M. Steele FOR AGAINST ABSTAIN
A. Blaine Huntsman 5. Transaction of any business that properly / / / / / /
James P. Mathias comes before the meeting or any
adjournments thereof. A majority of the
votes present at the meeting, including
proxies or substitutes at the meeting,
may generally transact such business.
Proxies or substitutes at the meeting may
exercise all the powers granted hereby in
transacting such business.
PLEASE NOTE: ANY SHARES OF STOCK OF THE COMPANY HELD IN THE NAME
OF FIDUCIARIES, CUSTODIANS OR BROKERAGE HOUSES FOR THE BENEFIT OF
THEIR CLIENTS MAY ONLY BE VOTED BY THE FIDUCIARY, CUSTODIAN OR
BROKERAGE HOUSE ITSELF -- THE BENEFICIAL OWNER MAY NOT DIRECTLY
VOTE OR APPOINT A PROXY TO VOTE THE SHARES AND MUST INSTRUCT THE
PERSON OR ENTITY IN WHOSE NAME THE SHARES ARE HELD HOW TO VOTE
THE SHARES HELD FOR THE BENEFICIAL OWNER. THEREFORE, IF ANY SHARES
OF STOCK OF THE COMPANY ARE HELD IN "STREET NAME" BY A BROKERAGE
HOUSE, AT THE INSTRUCTION OF ITS CLIENT, MAY VOTE OR APPOINT A
PROXY TO VOTE THE SHARES.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
HEREON, BUT IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH OF THE PROPOSALS. THE PROXIES MAY VOTE IN THEIR DISCRETION
AS TO OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
THE ANNUAL MEETING OF JORE CORPORATION WILL BE HELD ON MAY 17, 2000,
AT 1:30 P.M. (MDT) AT THE BOONE & CROCKETT CLUB, 250 STATION DRIVE,
MISSOULA, MONTANA 69801.
Signature(s):_____________________________________ Signature if held jointly___________________________ Dated:_______________, 2000
Please date and sign as imprinted hereon, including designation as executor, trustee, etc., if applicable. A corporation must sign
its name by its president or other authorized officer.
- -----------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *