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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
WILSHIRE TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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WILSHIRE TECHNOLOGIES, INC.
5861 EDISON PLACE
CARLSBAD, CALIFORNIA 92008
March 23, 2001
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Wilshire Technologies, Inc. (the "Company") which will be held at 10:00 a.m. on
May 25, 2001 at the Marriott Hotel, 4240 La Jolla Village Drive, La Jolla,
California 92037. All holders of the Company's outstanding Common Stock as of
March 13, 2001 are entitled to vote at the meeting.
Enclosed is a copy of the Notice of Annual Meeting of Shareholders, Proxy
Statement and Proxy Card. A current report on the business operations of the
Company will be presented at the meeting and shareholders will have an
opportunity to ask questions.
We hope you will be able to attend. Whether or not you expect to attend,
it is important that you complete, sign, date and return the proxy card in the
enclosed envelope in order to make certain that your shares will be represented
at the Annual Meeting.
Sincerely,
Kevin T. Mulvihill
Chief Executive Officer
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WILSHIRE TECHNOLOGIES, INC.
5861 EDISON PLACE
CARLSBAD, CALIFORNIA 92008
(760) 929-7200
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Wilshire Technologies, Inc., a California corporation (the
"Company"), will be held at 10:00 a.m. on May 25, 2001 at the Marriott Hotel,
4240 La Jolla Village Drive, La Jolla, CA 92037 for the following purposes:
1. To elect five directors;
2. To consider and act upon a proposal, heretofore adopted by the Board of
Directors, to increase the number of shares on which options may be granted
under the Company's 1995 Stock Option Plan by 500,000 shares; and
3. To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 13, 2001,
as the record date for the determination of shareholders entitled to notice of
and vote at the Meeting and all adjournments thereof.
By Order of the Board of Directors
Kevin T. Mulvihill
Chief Executive Officer
Dated: March 23, 2001
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU
MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
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WILSHIRE TECHNOLOGIES, INC.
5861 EDISON PLACE
CARLSBAD, CALIFORNIA 92008
(760) 929-7200
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PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2001
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VOTING AND PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Wilshire Technologies, Inc. (the "Company")
for use at the Annual Meeting of Shareholders to be held at 10:00 a.m. on May
25, 2001 at the Marriott Hotel, 4240 La Jolla Village Drive, La Jolla,
California 92037 (the "Meeting") and at any adjournments thereof. When such
proxy is properly executed and returned, the shares it represents will be voted
in accordance with any directions noted thereon. If no specification is
indicated, the shares will be voted "FOR" the election as directors of the five
nominees listed thereon and FOR the increase in the share reserve under the
Company's 1995 Stock Option Plan discussed under Proposal 2 in this Proxy
Statement. Any shareholder giving a proxy has the power to revoke it at any time
before it is voted by written notice to the Secretary of the Company, by
issuance of a subsequent proxy or by voting at the Meeting in person.
At the close of business on March 13, 2001, the record date for
determining shareholders entitled to notice of and to vote at the Meeting, the
Company had issued and outstanding 12,953,385 shares of Common Stock, no par
value per share (the "Common Stock"). Each share of Common Stock entitles the
holder of record thereof to one vote on any matter coming before the Meeting. In
voting for directors, however, if any shareholder gives notice at the Meeting,
prior to voting, of an intention to cumulate votes, then each shareholder has
the right to cumulate votes and to give any one or more of the nominees whose
name has been placed in nomination prior to the voting a number of votes equal
to the number of directors to be elected (i.e., five) multiplied by the number
of shares which the shareholder is entitled to vote. The nominees (up to the
number to be elected) receiving the highest number of votes will be declared
elected. Discretionary authority to cumulate votes and distribute such votes
among some or all of the nominees in the event that cumulative voting is invoked
by any shareholder is solicited by the Board of Directors. Only shareholders of
record at the close of business on March 13, 2001 are entitled to notice of and
to vote at the Meeting or at any adjournments thereof.
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The Company will pay the expenses of soliciting proxies for the Meeting,
including the cost of preparing, assembling, and mailing the proxy solicitation
materials. Proxies may be solicited personally, or by mail or by telephone, by
directors, officers and regular employees of the Company who will not be
additionally compensated therefor. The Company has retained Corporate Investor
Communications, Inc. to assist in distributing materials for the Meeting at a
fee of $1,500 plus out-of-pocket expenses. It is anticipated that this proxy
statement and accompanying proxy card will be mailed on or about March 28, 2001
to all shareholders entitled to vote at the Meeting.
The matters to be considered and acted upon at the Meeting are referred to
in the preceding notice and are more fully discussed below.
PROPOSAL 1: ELECTION OF DIRECTORS
Directors are elected annually and hold office until the next annual
meeting of shareholders or until their respective successors are elected and
shall qualify. It is intended that the proxies solicited by the Board of
Directors will be voted for election of the five persons listed under "Nominees
for Director" unless a contrary instruction is made on the proxy. If for any
reason one or more of these nominees should be unavailable as a candidate for
director, an event which is not anticipated, the persons named in the
accompanying proxy will vote for another candidate or candidates nominated by
the Board of Directors.
The table on page 5 sets forth certain information as of March 13, 2001
with respect to (i) the present directors, who are also the nominees and (ii)
the stock ownership of the executive officers and of all directors and executive
officers of the Company. Directors are elected by a plurality of the votes cast
by the shareholders. Therefore, shares not voted, whether by abstaining or
broker non-vote (in instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned a proxy) do
not affect the election of directors. Votes will be cast pursuant to the
enclosed Proxy in such a way as to effect the election of such nominees, or as
many as possible under the rules of cumulative voting. In the event that any of
the nominees should be unable to serve as a director, it is intended that the
Proxy will be voted for the election of such substitute nominee, if any, as
shall be designated by the Board of Directors. Management has no reason to
believe that any nominee will become unavailable.
The securities "beneficially owned" by an individual shown in the table
are determined in accordance with the definition of "beneficial ownership" set
forth in the regulations of the Securities and Exchange Commission and,
accordingly, may include securities owned by or for, among others, the spouse
and/or minor children of the individual and any other relative who has the same
residence as such individual, as well as other securities as to which the
individual has or shares voting or investment power or which the individual has
the right to acquire before May 14, 2001 (60 days after the March 13, 2001
record date) under stock options or warrants. Beneficial ownership may be
disclaimed as to certain of the securities. Except as otherwise noted, each
person named in the table has sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by him, except to the
extent that authority is shared by spouses under applicable law.
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NUMBER OF PERCENT OF
SHARES CLASS OF
BENEFICIALLY COMMON
NAME AGE OWNED(1) DIRECTOR SINCE STOCK
- ---- --- ------------ -------------- ----------
Ronald W. Cantwell 57 25,000(2) December 6, 1996 *
John Van Egmond 51 139,500 December 31, 1996 *
Charles H. Black 74 83,500 June 23, 1997 *
Joe E. Davis 66 83,500 June 23, 1997 *
David L. Heavenridge 54 25,000(2) May 1, 2000 *
Executive Officers
Kevin Mulvihill 250,000 *
Kathleen E. Terry 183,333 *
Derek Warneke 33,333 *
All Directors and Executive 823,166 6%
Officers of the Company as a
Group (eight persons)
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*Less than 1% of the 12,953,385 shares outstanding on March 13, 2001.
(1) Represents shares which may be acquired on exercise of options that are
exercisable, or become exercisable before May 14, 2001.
(2) Messrs. Cantwell and Heavenridge disclaim direct beneficial ownership of
9,416,430 shares of Common Stock and of Warrants to purchase 1,298,717
shares of Common Stock owned by Trilon Dominion Partners, L.L.C.
("Trilon"). Mr. Cantwell is the holder of 100% of the capital stock of VC
Holdings, Inc. which is the sole manager of and owns 100% of the voting
Class A membership interest in Trilon. Until May, 2000 Mr. Heavenridge was
President and Chief Executive Officer of Dominion Capital, Inc. which
holds a 50% non-voting preferred interest in Trilon.
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INFORMATION CONCERNING THE NOMINEES AND EXECUTIVE OFFICERS
NOMINEES FOR DIRECTOR
RONALD W. CANTWELL has been a Director and Chairman of the Board of the Company
since December 6, 1996, and has served as President of Trilon Dominion Partners,
L.L.C. since its inception in June 1995. Prior to joining Trilon Dominion, Mr.
Cantwell served as the President of The Catalyst Group, Inc. where he
successfully executed a variety of merchant banking activities and managed the
operations of a diverse mix of utility assets. Approximately $2 billion of these
assets were successfully divested under Mr. Cantwell's direction. In addition,
he has been involved in advising numerous mergers and acquisitions and
restructuring matters for the Edper Group, the principal investor in Catalyst.
Prior to joining Catalyst, Mr. Cantwell spent 19 years in the practice of public
accounting, most recently with Ernst & Young where he was a tax partner and
headed the Dallas-based Mergers and Acquisitions practice. While at Ernst &
Young, Mr. Cantwell was instrumental in structuring mergers, acquisitions,
recapitalizations, and dispositions on behalf of several Fortune 500 and many of
the southwest's most acquisition-oriented entities. Mr. Cantwell is a Certified
Public Accountant. Mr. Cantwell presently is a director of EPL Technologies,
Inc., a publicly owned company.
JOHN VAN EGMOND was President and Chief Executive Officer from December 31, 1996
to January 31, 1999 and has been a director of the Company since December 31,
1996. Mr. Van Egmond also was affiliated with Trilon Dominion Partners, L.L.C.
and he has been President, Chief Executive Officer and a director of Century
Power Corporation from 1989 to January 1999. Prior to 1989, Mr. Van Egmond was
Vice President and Controller of Century. Prior to joining Century, Mr. Van
Egmond held various financial positions from 1972 to 1984 with Tucson Electric
Power Company. Mr. Van Egmond is a Certified Public Accountant and holds a B.S.
from Montana State University.
CHARLES H. BLACK rejoined the Board in June, 1997. He had been a director of the
Company from February, 1993 until August, 1996. Mr. Black is a private investor
who serves on the Board of Governors of the Pacific Stock Exchange and is a
director of Investment Company of America, and Anworth Mortgage Asset Corp.
Previously, Mr. Black was Executive Vice President and Chief Financial Officer
of Kaiser Steel Corporation, Executive Vice President and Chief Financial
Officer of Great Western Savings & Loan, and Vice President and Treasurer of
Litton Industries.
JOE E. DAVIS rejoined the Board in June, 1997. He had been a director of the
Company from February 1993 until November, 1996. Mr. Davis is a private investor
who serves as a director for BMC Industries, Inc., Anworth Mortgage Securities,
Inc. and Natural Alternatives, Inc., and is a Trustee of American Funds
Insurance Series. Previously, Mr. Davis was the President and Chief Executive
Officer of National Health Enterprises, Inc.
DAVID L. HEAVENRIDGE was president and chief executive officer of Dominion
Capital, Inc. (DCI) from March 1994 to May 2000. DCI is the financial service
and investment subsidiary of Dominion Resources, Inc. In May 2000 Mr.
Heavenridge left the Dominion Group to become a self-employed consultant.
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Mr. Heavenridge serves on the Board of Associates and the Executive Advisory
Board at the University of Richmond and is on the Executive Committee and the
board of directors of Richmond Renaissance. He has previously served on the
board of the Richmond Police Athletic League, as well as Junior Achievement of
Richmond, and has served in various positions in the Richmond United Way. A
native of Danville, Illinois, Mr. Heavenridge received his bachelor's degree
from the University of Richmond in 1969 where he was elected to membership in
Alpha Kappa Psi, Beta Gamma Sigma and Omicron Delta Kappa honor societies. He
attended the Executive program at University of Virginia in 1980 and received
the Alumni Achievement award in 1993 from the University of Richmond. Mr.
Heavenridge is married to the former Kathi Miller of Richmond. They live in
Richmond, VA with their family.
OTHER EXECUTIVE OFFICERS
KEVIN MULVIHILL (age 50) has been President and CEO since February 1, 1999. Mr.
Mulvihill joined the Company in August 1998 as Executive Vice President. Prior
to joining Wilshire, Mr. Mulvihill held various senior management positions that
include Vice President and General Manager for Fisher Scientific (1996 to August
1998) and Vice President of Sales and Marketing and other positions with Devon
Industries (1985-1996). Mr. Mulvihill holds B.S. and ED.M. degrees from Temple
University.
KATHLEEN E. TERRY (age 47) joined the Company on February 8, 1999 as Vice
President and Chief Financial Officer. From February 1997 to December 1998, Ms.
Terry was Vice president and Chief Financial Officer for Advanced BioResearch
Associates, a privately held FDA regulatory and clinical consulting firm.
Previously, Ms. Terry has held various Chief Financial Officer positions with
both public and privately held companies, including Norris Communications Inc.
(May 1996 to February 1997), BioSafety Systems (March 1995 to May 1996) and IRT
Corporation. Ms. Terry is a Certified Public Accountant and holds a B.S. of
Accounting from San Diego State University.
DEREK WARNEKE (age 37) joined the Company as Vice President of Operations and
Technology on November 13, 2000. Mr. Warneke was previously Director of
Development for the Scientific Glove Products Division of Kimberly
Clark/Safeskin where he was responsible for the development of glove products
for critical environments (February 1998 to November 2000). From October 1994 to
February 1998 Mr. Warneke was Director of Manufacturing at Absolute Quality
Leadership, a manufacturer of specialty critical environment gloves. Mr. Warneke
holds a B.S. of Mechanical Engineering from California Polytechnic State
University.
OTHER SIGNIFICANT EMPLOYEES
FRED PISACANE (age 44) joined the Company in July, 1991, and is Vice President
of Sales and Marketing. Prior to joining the Company, Mr. Pisacane spent twelve
years with Baxter Scientific Products, a leading distributor of clean room
products.
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BOARD OF DIRECTORS MEETINGS; DIRECTORS COMPENSATION.
The Board of Directors of the Company held four meetings during the fiscal
year ended November 30, 2000. At its November 17, 1999 meeting, the Board of
Directors resolved that the Compensation Committee should be terminated as of
that date and that its functions should henceforth be performed by the full
Board of Directors. The Board of Directors has an Audit Committee (which in
fiscal 2000 consisted of Directors Black and Davis) that reviews the results and
scope of the audit and other services provided by the Company's independent
auditors. During the fiscal year ended November 30, 2000 the Audit Committee
held three meetings. The Board of Directors does not have a Nominating
Committee. All directors attended at least 75% of the aggregate number of
meetings of the Board and of the Committees on which they serve.
All directors hold office until the next annual meeting of shareholders of
the Company and the election and qualification of their successors. Officers are
elected annually by, and serve at the discretion of, the Board of Directors.
Directors are reimbursed for out-of-pocket expenses in connection with
attendance at Board of Directors meetings and during fiscal 2000 received $500
for each meeting attended. Mr. Cantwell's director's fees were paid during the
fiscal year ended November 30, 2000 to VC Holdings, Inc. in accordance with the
policies of Trilon Dominion Partners, L.L.C. On May 1, 2000 all Directors
received a non-qualified stock option under the Company's 1995 Stock Option Plan
to purchase 25,000 shares of common stock at $.19 per share, the fair market
value of the stock on the date of grant. The options became exercisable on the
date of grant and expire on May 1, 2005.
Beginning with the current fiscal year, the Directors will receive an
annual fee of $4,000 plus the above-mentioned $500 meeting fees and
reimbursement of expenses
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for providing independent, objective
oversight of the Company's independent auditors, accounting functions and
internal controls. The Audit Committee consists of Directors Black and Davis,
who are independent under the listing standards of the American Stock Exchange.
The Audit Committee does not act under a written charter.
The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The Audit
Committee also received and reviewed written disclosures and a letter from the
accountants concerning their independence as required under applicable standards
for auditors of public companies. The Audit Committee discussed with the
accountants the contents of such materials, the accountants' independence and
the additional matters required under Statement of Auditing Standards No. 61.
Based on such review and discussions, the Audit Committee recommended that the
Company's Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-KSB for the year ended
November 30, 2000 for filing with the Securities and Exchange Commission.
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The Audit Committee has determined that BDO Seidman, LLP's provision of
the services referred to below under "Principal Accounting Firm Fees" to the
Company is compatible with maintaining BDO Seidman's independence.
AUDIT COMMITTEE
Charles H. Black
Joe E. Davis
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"),
THAT MIGHT INCORPORATE BY REFERENCE PREVIOUS OR FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOREGOING REPORT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY OF SUCH FILINGS.
CHANGE IN ACCOUNTANTS.
As previously reported in the Company's Proxy Statement dated March 14,
2000, the independent accounting firm of Ernst & Young LLP declined to bid for
the Company's audit of its fiscal year ending November 30, 2000. The Company
also informed its shareholders in such Proxy Statement that, at that date, no
accounting firm had been selected to replace Ernst & Young LLP as the Company's
independent auditors.
On May 1, 2000, the Board of Directors approved the selection of BDO
Seidman, LLP ("BDO"), as the Company's new auditors, pending the completion of
the client approval process and acceptance of the Company as a client by BDO.
On June 23, 2000, BDO notified the Company of the acceptance of Wilshire
Technologies, Inc. as a client. During the last two fiscal years and subsequent
interim period of the Company, the Company did not contact BDO regarding (i) the
application of accounting principles to a specified transaction, or the type of
audit opinion that might be rendered on the Company's financial statements, or
(ii) any matter that was the subject of a disagreement (as defined in Item
304(a)(1)(iv) of Securities and Exchange Commission Regulation S-K) or was a
reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
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The reports on the Company's financial statements for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements for each of
the two fiscal years ended November 30, 1998 and November 30, 1999,
respectively, and in the subsequent interim period, there were no disagreements
with Ernst & Young LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of Ernst & Young LLP would have caused Ernst &
Young LLP to make reference to the matter in their report.
EXECUTIVE COMPENSATION.
The table that follows shows the annual and long-term compensation for
services in all capacities to the Company for the fiscal year ended November 30,
2000.
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------- ----------------------------------------
AWARDS PAYOUTS
----------------------- --------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION
POSITION (A) YEAR (B) ($)(C) ($)(D) ($)(E) ($)(F) ($)(G) (#)(H) ($)(I)
-------------- -------- ------ ------ -------- ---------- ---------- ------- ---------
KEVIN 2000 $185,000 $27,600(2)
MULVIHILL, 1999 $187,000 $27,600(2)
PRESIDENT(1) 1998 $ 43,350 500,000 $27,600(2)
KATHLEEN 2000 $123,038 100,000
TERRY, CHIEF 1999 $ 91,000 150,000
FINANCIAL
OFFICER(3)
DEREK 2000 $ 5,085 100,000 $ 600(5)
WARNEKE,
VICE
PRESIDENT(4)
PAUL 2000 $107,000 $7,200(5)
FENNELL, 1999 $103,539 $7,200(5)
VICE 1998 $ 50,000 $4,200(5)
PRESIDENT
OPERATIONS(6)
JOHN VAN 2000 $9,421(8)
EGMOND(7) 1999 $148,000 12,500 $1,826(8)
1998 $140,673 $2,000(9)
(1) Mr. Mulvihill joined the Company in August 1998.
(2) Represents a non-accountable car allowance of $600 per month and the
cost of a furnished apartment pending Mr. Mulvihill's relocation. See
"Employment Agreements" below.
(3) Ms. Terry joined the Company in February 1999.
(4) Mr. Warneke joined the Company in November 2000.
(5) Represents a non-accountable car allowance.
(6) Mr. Fennell joined the Company in October 1998 and terminated his
employment in December 31, 2000.
(7) Mr. Van Egmond was Chief Executive Officer and President in 1998 and
1999.
(8) Represents directors fees and a consulting fee.
(9) Represents director fees paid to VC Holdings, Inc., an affiliate of
Trilon Dominion Partners, L.L.C.
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OPTION GRANTS
The following table shows stock options granted pursuant to the Company's
Stock Option Plan during the fiscal year ended November 30, 2000, to those
executive officers named in the Summary Compensation Table above who were
granted options. No stock appreciation rights were granted.
PERCENT OF TOTAL
OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR (PER SHARE) DATE
- ---- ------- ---------------- -------------- -----------------
Kathleen E. Terry 100,000 19% $0.19 May 1, 2010
Derek Warneke 100,000 19% $0.10 November 13, 2010
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The table that follows shows the number of shares of the Company's Common
Stock acquired upon exercise of options, the value realized therefor, the number
of unexercised options at November 30, 2000 and the value of unexercised
in-the-money options at November 30, 2000 (based on a closing price of $0.09375
per share) for the executive officers named in the Summary Compensation Table
above, none of whom received any stock appreciation rights during fiscal 2000 or
held any at November 30, 2000.
Value of Unexercised
Shares Number of Unexercised In-the-Money Options
Acquired Options at November 30, 2000 at November 30, 2000(1)
on Exercise Value ----------------------------- --------------------------
Name (Number) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- -------------- ----------- -------------
John Van Egmond 0 $0 139,500 -0- $0 $0
Kevin Mulvihill 0 $0 250,000 250,000 $0 $0
Kathleen E. Terry 0 $0 133,333 116,667 $0 $0
Derek Warneke 0 $0 None 100,000 $0 $0
Paul Fennell 0 $0 150,000 50,000 $0 $0
- ------------
(1) Represents the amounts by which the market price of the Common Stock of the
Company on November 30, 2000 exceeded the exercise prices of unexercised options
multiplied by the number of shares subject to the options.
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EMPLOYMENT AGREEMENTS
On August 17, 1998 the Company entered into an employment agreement with
Mr. Kevin Mulvihill as Executive Vice President, for a term of one year with a
provision for one-year renewals at an annual compensation of $165,000. When Mr.
Mulvihill became the Company's President and Chief Executive Officer on February
1, 1999, his salary was increased to $185,000 and certain other amendments were
made to the employment agreement. Effective January 1, 2001 Mr. Mulvihill's
salary was increased to $200,000. The amended Agreement provides that the
Company may terminate Mr. Mulvihill's employment under the Agreement at any time
without cause. In that event, or if the Company does not agree to renew the
Employment Agreement, Mr. Mulvihill will receive as severance pay an amount
equal to twelve months of his then salary, payable in twelve equal monthly
installments as well as full medical and dental coverage for that period. Mr.
Mulvihill will also receive an allowance of up to $10,000 for out-placement
services. Pursuant to the contract Mr. Mulvihill was granted an option covering
500,000 shares with an exercise price of $0.50 per share, being the fair market
value of the common stock on the effective date of the Agreement. Mr. Mulvihill
is also eligible for a bonus up to 30% of base salary based upon a Board
approved sales and profitability plan. If Mr. Mulvihill relocates his residence
to San Diego, the Company is committed to reimburse Mr. Mulvihill for closing
costs, and any additional interest points paid to reduce the mortgage rate on a
30-year fixed mortgage of $320,000 to 7.625%.
On February 8, 1999 the Company entered into an employment agreement with
Ms. Kathleen Terry as Vice President and Chief Financial Officer for a term of
one year, at an annual compensation of $115,000 (increased to $125,000 as of
February 8, 2000 and to $140,000 as of January 1, 2001), with a provision for
one-year renewals. The Agreement provides that the Company may terminate Ms.
Terry's employment at any time without cause. In that event, or if the Company
does not agree to renew the Employment Agreement, Ms. Terry will receive as
severance pay an amount equal to six months of her then salary, payable in six
equal monthly installments as well as full medical and dental coverage for that
period. Ms. Terry will also receive an allowance of up to $10,000 for
out-placement services. Ms. Terry is also eligible for a bonus of up to 40% of
base salary based upon a Board of Directors approved sales and profitability
plan and upon meeting certain Board approved management objectives. Pursuant to
the Agreement, Ms. Terry was granted a ten-year non-qualified stock option
covering 50,000 shares with an exercise price of $0.39 per share, being the fair
market value of the common stock on the effective date of the Agreement.
On November 13, 2000, the Company entered into an employment agreement
with Mr. Derek Warneke as Vice President of Operations and Technology for a term
of one year, at an annual compensation of $125,000 with a provision for one-year
renewals. The Agreement provides that the Company may terminate Mr. Warneke's
employment at any time without cause. In that event, or if the Company does not
agree to renew the Employment Agreement, Mr. Warneke will receive as severance
pay an amount equal to six months of his then salary payable in six equal
monthly installments as well as full medical and dental coverage for that
period. Mr. Warneke will also receive an allowance of up to $10,000 for
out-placement services. Pursuant to the Agreement, Mr. Warneke was granted a
ten-year non-qualified stock option covering 100,000 shares with an exercise
price of $0.10 per share, being the fair market value of
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the common stock on the effective date of the Agreement. The Agreement provides
that Mr. Warneke will receive similar stock options, each on 50,000 shares, on
May 27, 2001 and on November 27, 2001, with exercise prices equal to the then
fair market value of the common stock, subject to approval by the Company's
President based on Mr. Warneke's performance. Mr. Warneke is also eligible for a
bonus of up to 40% of base salary based upon a Board of Directors approved sales
and profitability plan and upon meeting certain Board approved management
objectives.
Mr. Mulvihill, Ms. Terry and Mr. Warneke are also entitled to participate
in the Company's compensation and benefit programs available to officers at
their respective levels.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On March 31, 1998, the Company and Trilon Dominion Partners, L.L.C.
("Trilon") completed an Amended and Restated Credit Agreement and Revolving Line
of Credit (the "Amended Agreement") which included principal of $4,000,000 from
a previous agreement, $750,000 from Demand Notes, accrued interest and
management fees of $543,297 on the Agreement and Demand Notes, and new a credit
line commitment of $2,200,000. Under the terms of the Amended Agreement, the
principal of $7,493,297 was due on December 31, 1998, and interest was payable
quarterly at an annual rate of 11.5%. From March 1998 to November 1998, the
Company issued Demand Notes totaling $930,000 at an interest rate of 11.5% under
the credit line agreement.
In December of 1998, the Company amended the credit line agreement to
extend the terms to January 31, 2000. The Company further extended the credit
line agreement to June 30, 2000, to January 31, 2001 and to January 31, 2002, in
December 31, 1999, June 30, 2000 and January 31, 2001 amendments, respectively.
In fiscal 1999, the Company issued Demand Notes totaling $3,510,000 under the
line of credit agreement and capitalized debt issuance costs of $18,000. Of the
notes issued in fiscal 1999, $2,010,000 of notes bear interest at a rate of
11.5% annually; the remaining $1,500,000 of demand notes bear interest at a rate
of prime plus 3% (13.0% at November 30, 2000). In fiscal 2000, the Company
issued demand notes totaling $2,813,000 under the line of credit agreement. The
notes issued in fiscal 2000 bear interest at a rate of prime plus 3% (13.0% at
November 30, 2000). All of the notes are due on demand.
As of February 15, 2001, the Company has used its current credit
facilities and anticipates continuing negative cash flow from operating and
investing activities through fiscal 2001. The Company has projected its cash
flow needs to be approximately $2.3 Million for the year ending November 2001.
Trilon, the Company's largest shareholder with over 73% of the shares
outstanding, has acknowledged the Company's cash flow needs and has indicated
its commitment to provide financial support to the Company through fiscal year
2001 to the extent of such budgeted cash flow requirements. However, given that
no written commitment exists, the Company is exposed to the substantial risk
that it will not receive the funds from Trilon to fund present and future
working capital needs.
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Trilon's ownership of shares and warrants on March 13, 2001 is shown under
"Principal Shareholders".
The Company has been informed that the members of Trilon are (i) VC
Holdings, Inc. ("VCH"), a Delaware corporation that is Trilon's sole manager and
holds 100% of the voting Class A membership interest in Trilon and (ii) Dominion
Capital, Inc., which holds 100% of the non-voting Class B membership interest in
Trilon. Director Cantwell is the holder of 100% of the capital stock of VC
Holdings, Inc. Until May 2000, Director Heavenridge was President and Chief
Executive Officer of Dominion Capital, Inc.
In the second quarter of fiscal 2000, the Company completed the sale of
certain assets and selected liabilities of the Company's Wilshire Contamination
Control division (the "Division") to Foamex Asia Co. LTD (the "Buyer" or
"Foamex"), an affiliate of Foamex International (FMXI:NASDAQ) for a potential
sales price of $2,500,000 or more. Substantially all of the historic revenues
reported by the Company related to this Division.
Foamex International is an international developer, manufacturer and
supplier of high-quality foam, including key materials utilized in contamination
control environments. Foamex Asia Co. Ltd., located in Singapore and in
Thailand, is currently a major supplier of specialty foam products to the Asian
market.
Steve Scibelli, President of Foamex Asia Co. Ltd. served as Chief
Executive Officer of Wilshire Technologies from 1994 until 1996. Mr. Scibelli
currently owns 96,073 shares of Company stock. In addition, the Company is
contingently obligated to pay certain benefits to Mr. Scibelli.
Payments are due from the Buyer on a quarterly basis based on fixed
percentage of sales by the Buyer of certain products, as defined in the asset
purchase agreement, subject to certain cash flow provisions.
As no proceeds were due to the Company on the date of closing, the Company
has recorded a $945,000 receivable, which equates to the net book value of the
net assets sold. The Company has a secured interest in the net assets sold. All
payments of the sales price will be applied against the receivable, under the
cost recovery method, with no recognition of gain until the receivable is paid
in full. The Company believes that the asset recorded is not impaired.
In addition to the sale of assets, the Buyer and the Company entered into
an agreement pursuant to which the Company agreed to provide Foamex, for due
consideration, certain labor, facilities, services, personnel and other items
with respect to Foamex's ongoing operation of the Division's business. The
agreement commenced on May 19, 2000 and continues until December 31, 2001.
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PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 13, 2001 the identity of each
person known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and its beneficial ownership.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF PERCENT OF CLASS OF
BENEFICIAL OWNER COMMON STOCK COMMON STOCK
---------------- ----------------------- -------------------
Trilon Dominion Partners, LLC 9,416,430 72.70%
Six Landmark Square
4th Floor, Suite 400
Stamford, CT 06901
Trilon Dominion Partners, L.L.C. also owns warrants entitling it to
purchase the following number of shares of the Company's Common Stock:
Exercise Date Expiration Date Shares Exercise Price
------------- --------------- --------- --------------
September 30, 1996 September 30, 2001 110,541 $1.20
June 30, 1997 September 30, 2001 27,635 $0.79
April 15, 1997 April 15, 2002 100,000 $0.44
September 19, 1997 September 19, 2002 110,541 $0.89
December 31, 1997 April 15, 2002 25,000 $0.47
March 31,1998 March 31, 2003 650,000 $0.41
June 30, 1998 September 19, 2002 25,000 $0.34
December 31, 1998 December 31, 2003 250,000 $0.42
---------
TOTAL 1,298,717
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SECTION 16 DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission. Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended November 30,
2000 all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were complied with.
PROPOSAL 2: AMENDMENT OF 1995 STOCK OPTION PLAN
TO INCREASE NUMBER OF SHARES THAT MAY BE
ISSUED UPON EXERCISE OF OPTIONS GRANTED
UNDER THE PLAN BY 500,000 TO 2,250,000
The Board of Directors has approved an amendment of the Company's 1995
Stock Option Plan (the "Plan") to increase the aggregate number of shares that
may be issued upon the exercise of options granted under the Plan by 500,000,
and the shareholders are being asked to approve the same increase at the
meeting. At March 13, 2001, options on 23,500 shares of Common Stock (excluding
the 500,000 shares now proposed for shareholder approval) were available for
grant under the Plan and options on an additional 106,000 shares were available
for grant under the Company's 1993 Stock Option Plan.
The Board believes that the adoption of this proposal is in the best
interests of the Company for the reasons discussed below.
The Company seeks to attract, motivate and retain talented and
enterprising employees, directors, consultants and advisors by rewarding
performance and encouraging behavior that will improve the Company's
profitability. The Company believes that the Plan plays an important role in
achieving these objectives. The Company's primary incentive program is through
equity compensation. The Company believes that equity-based incentive programs
for key employees help ensure a tight link between the interests of the
shareholders and the interests of our employees, and enhance our ability to
continue recruiting and retaining top talent. Management believes that the
continued operation of the Plan necessitates an increase in the number of shares
that may be issued upon the exercise of options granted under the Plan.
The Plan was approved by the shareholders on August 1, 1995 for 500,000
shares. At their May 20, 1996 meeting the shareholders approved an amendment of
the Plan, theretofore approved by the Company's Board of Directors, to increase
the number of shares from 500,000 shares to 1,750,000 shares. The Plan, as
amended, is annexed to this Proxy Statement as Exhibit
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A and should be carefully reviewed. The following summary of the Plan provisions
is not intended to be complete, and reference should be made to Exhibit A for a
complete statement.
Purpose of Plan. The Plan provides for the grant of options to purchase
shares of the Company's Common Stock to selected directors and officers and
other employees of the Company and its present or future subsidiaries
("Subsidiaries") and to certain consultants and independent contractors to the
Company and its Subsidiaries.
The purpose of the Plan is to attract and retain directors, officers and
other employees, consultants and independent contractors of ability and
experience and to furnish them maximum incentive to improve operations and
increase profits of the Company.
The options that may be granted under the Plan may be those that qualify
as incentive stock options ("Incentive Options") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), or those that do not so
qualify ("Non-Qualified Options"). Options granted under the Plan are not
transferable, except by the laws of descent and distribution, in the event of
death.
Administration of the Plan. The authority to grant options is vested in
the Board of Directors of the Company or in such Committee of the Board as may
be appointed from time to time by the Board (which Committee is hereinafter
referred to as the "Committee".) At the present time the Plan is administered by
the Board of Directors. Subject to the provisions of the Plan, the Board or the
Committee shall determine the persons to whom, and the time at which, options
shall be granted, whether these shall be Incentive Options or Non-Qualified
Options; the number of shares to be subject to each option; the term of each
option and the other terms and provisions of each option.
The Board has not yet determined when or to which group (directors,
officers, non-officer employees, consultants or advisors) the additional options
may be granted, or the number of options to be granted.
The Board or the Committee may interpret the Plan, prescribe regulations
relating to the Plan and amend the Plan, subject to certain limitations.
Maximum Number of Shares Subject To Options and Adjustments. The aggregate
number of shares that may be issued upon the exercise of options granted under
the Plan is 1,750,000 shares. If Proposal 2 is approved, this number will become
2,250,000 shares. The aggregate number and kind of shares issuable under the
Plan is subject to appropriate adjustment to reflect changes in the Company's
capitalization such as by stock dividend, stock split or other circumstances
deemed by the Board or by the Committee to be similar. Shares covered by the
unexercised portion of any option that has terminated by its terms may be
subject to a subsequent option granted under the Plan. No options may be granted
under the Plan after December 1, 2004.
Eligibility. Incentive Options or Non-Qualified Options may be granted to
any employee of the Company or its Subsidiaries. Non-Qualified Options may be
granted to any director of or consultant or independent contractor to the
Company.
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The option exercise price must be at least 100% of the fair market value
of the shares on the date of grant (110% if the option is an Incentive Option
and the optionee at the time the option was granted owns, or under the Code is
considered to own, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company). The option exercise price is
payable in full at the time the option is exercised. Payment may be made in
cash, shares of Common Stock of the Company, or a combination of both.
Options are exercisable at such times and for such period as may be fixed
by the Board or the Committee at the date of grant. However, no incentive stock
option may be exercisable after ten years from the date of grant. In case of an
optionee who at the time the option is granted, owns or under the provisions of
the Code is considered to own, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, no Incentive
Option may be exercisable more than five years after the date of grant.
If an optionee ceases to be an officer, employee or director of the
Company for any reason other than death or termination for cause, the optionee
may exercise his options only for 90 days after such cessation (but not beyond
the option period). Any such exercise may be only to the extent of the full
number of shares the optionee was entitled to purchase on the date of such
cessation, plus a portion of the additional number of shares he would have
become entitled to purchase on the next anniversary of the date of grant of the
option following such cessation.
If an optionee ceases to be an officer, employee or director of the
Company because of his death, any options held by the optionee will continue in
effect and may be exercised for a period of 12 months from the date of death
(but not beyond the option period). Any exercise of options after such death may
be only to the extent of the number of shares the optionee was entitled to
purchase on the date of death plus a portion of the additional number of shares
he would have become entitled to purchase on the next anniversary of the date of
grant of the option.
If termination of an optionee's position as an officer or employee is for
cause, his option shall thereupon be canceled.
Federal Income Tax Consequences. Set forth below is a brief summary of
certain federal income tax consequences of the grant and exercise of options
under the Plan.
(i) Non-Qualified Options. There will be no federal income tax
consequences to either the optionee or the Company on the grant of a
Non-Qualified Option. On the exercise of a Non-Qualified Option, the optionee
has taxable ordinary income equal to the excess of the fair market value of the
shares received on the exercise date over the option exercise price of the
shares. The Company will be entitled to a federal income tax deduction in an
amount equal to such excess, provided the Company complies with applicable
withholding requirements.
An optionee who surrenders shares in payment of the exercise price of a
Non-Qualified Option will not recognize gain or loss on his surrender of such
shares (but will recognize ordinary income on the exercise of the Non-Qualified
Option as described above.)
(ii) Incentive Stock Options. An optionee will not realize taxable income
by reason of the grant or the exercise of an Incentive Option. If an optionee
exercises an Incentive Option and
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does not dispose of the shares until the later of two years from the date the
option was granted and one year from the date shares were transferred to the
optionee, the entire gain, if any, realized upon disposition of such shares will
be taxable to the optionee as long-term capital gain, and the Company will not
be entitled to any deduction. If an optionee disposes of the shares within such
one-year or two-year period in a manner so as to violate the holding period
requirements, the optionee generally will realize ordinary income in the year of
disposition, and, provided the Company complies with applicable withholding
requirements, the Company will receive a corresponding deduction in an amount
equal to the excess of (1) the lesser of (a) the amount, if any, realized on the
disposition and (b) the fair market value of the shares on the date the option
was exercised over (2) the option price. Any additional gain realized on the
disposition will be long-term or short-term capital gain and any loss will be
long-term or short-term capital loss.
An optionee who surrenders shares as payment of the exercise price of his
Incentive Option generally will not recognize gain or loss on his surrender of
such shares. The surrender of shares previously acquired upon exercise of an
Incentive Option in payment of the exercise price of another Incentive Option,
is, however, a "disposition" of such shares. If the Incentive Option holding
period requirements described above have not been satisfied with respect to such
stock, such disposition will be a disqualifying disposition that may cause the
optionee to recognize ordinary income as discussed above.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors unanimously recommends that you VOTE FOR APPROVAL
OF THE AMENDMENT TO THE PLAN because it believes that it will advance the
interests of the Company and its shareholders by strengthening the ability of
the Company to attract, retain and motivate directors, officers and other
employees and consultants and advisors to the Company and its Subsidiaries.
APPROVAL OF THE PLAN REQUIRES A FAVORABLE VOTE BY THE HOLDERS OF A
MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK. ABSTENTIONS
AND BROKER NON-VOTES (IN INSTANCES WHERE BROKERS ARE PROHIBITED FROM EXERCISING
DISCRETIONARY AUTHORITY FOR BENEFICIAL OWNERS WHO HAVE NOT RETURNED A PROXY)
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSAL.
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PRINCIPAL ACCOUNTING FIRM FEES
AUDIT FEES
The aggregate fees and expenses billed by BDO Seidman, LLP for
professional services rendered for the audit of the Company's annual financial
statements for fiscal year 2000 and the reviews of the financial statements
included in the Company's Forms 10-Q for fiscal year 2000 were $57,345.
ALL OTHER FEES
The aggregate fees billed for services rendered by BDO Seidman, LLP to the
Company, other than the services referred to above, for fiscal year 2000 were
$37,450.
AUDIT COMMITTEE'S DETERMINATION
After due consideration, the Company's Audit Committee has determined that
BDO Seidman, LLP's provision of the services referenced above under "All Other
Fees" to the Company is compatible with maintaining BDO Seidman's independence.
See "Proposal 1: Election of Directors - Audit Committee Report", above.
PERCENTAGE OF AUDIT WORK ATTRIBUTED TO OUTSIDE EMPLOYEES
All of the hours expended on the principal accountant's engagement to
audit the Company's consolidated financial statements for the fiscal year ended
November 30, 2000 were attributed to work performed by persons that are the
principal accountant's full-time permanent employees.
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ANNUAL REPORT AND FORM 10-KSB
The audited financial statements of the Company are included in the Annual
Report to Shareholders for the year ended November 30, 2000, enclosed with this
Proxy Statement. The Annual Report is not to be regarded as proxy soliciting
material or as a communication by means of which any solicitation is made.
The Board of Directors selected the independent accounting firm of BDO
Seidman, LLP to act as the Company's auditors for the 2001 fiscal year. It is
anticipated that representatives of BDO Seidman will be present at the Meeting
to make a statement if they so desire and respond to appropriate questions
presented at the Meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB IS AVAILABLE WITHOUT CHARGE TO SHAREHOLDERS AND MAY BE
OBTAINED BY WRITING TO MS. KATHLEEN E. TERRY, CHIEF FINANCIAL OFFICER, WILSHIRE
TECHNOLOGIES, INC., 5861 EDISON PLACE, CARLSBAD, CALIFORNIA 92008. EXHIBITS TO
FORM 10-KSB WILL ALSO BE FURNISHED UPON REQUEST FOR THE COST OF REPRODUCTION.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Meeting. However, if other matters should come before the Meeting, it is the
intention of each person named in the proxy to vote such proxy in accordance
with his judgment on such matters.
SHAREHOLDER PROPOSALS
Any proposals of shareholders that are intended to be presented at next
year's Annual Meeting of Shareholders must be received by the Company at its
principal executive offices before January 10, 2002, in order to be considered
for inclusion in the Company's proxy materials relating to that meeting.
By Order of the Board of Directors
Kevin T. Mulvihill
Chief Executive Officer
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EXHIBIT A
WILSHIRE TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
1. Establishment and Purpose of Plan.
Wilshire Technologies, Inc. (hereinafter referred to as the "Company")
proposes to grant to selected directors and officers, and other employees of the
Company and its subsidiaries, and to certain consultants and independent
contractors to the Company and its subsidiaries, non-qualified stock options or
incentive stock options or a combination of each to purchase shares of the
Company's Common Stock ("Common Stock"), for the purpose of attracting and
retaining directors, employees, consultants and independent contractors of
ability and experience and to furnish them maximum incentive to improve
operations and increase profits of the Company. Such options will be granted
pursuant to the plan herein set forth which shall be known as the "1995 Stock
Option Plan" (hereinafter referred to as the "Plan"). As used in the Plan, the
term "incentive stock option" means an option described in Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"). The term "non-qualified
stock option" means a stock option other than an incentive stock option. The
term "Company" as used in Sections 4 and 8 hereof shall include the Company and
any subsidiary of the Company.
2. Maximum Number of Shares Subject to Options.
A maximum of 1,750,000 [NOTE: IF PROPOSAL 2 IS APPROVED, THIS FIGURE WILL
BECOME 2,250,000] shares of Common Stock (subject to adjustment in accordance
with Section 6 below) may be issued upon exercise of the options granted under
the Plan. Subject to the foregoing limitation upon the number of shares which
may be issued upon exercise of options, shares covered by the unexercised
portion of any option which has terminated by its terms may be subject to a
subsequent option granted under the Plan.
3. Administration of the Plan.
The authority to grant options under the Plan shall be vested in the Board
of Directors of the Company (hereinafter referred to as the "Board") or in such
committee as may be appointed from time to time by the Board (which committee is
hereinafter referred to as the "Committee"). Subject to the provisions of the
Plan, the Board, or the Committee, from time to time on the recommendation of
the chief executive officer of the Company, shall determine the persons to whom,
and the time or times at which, options shall be granted; whether such options
shall be incentive stock options; the number of shares to be subject to each
option; the period of each option; and other terms and provisions of each
option. Options need not be identical. The terms of each option granted
hereunder shall be set forth in a written stock option agreement between the
optionee and the Company which shall clearly identify each option as an
incentive stock option or as a non-qualified option, as the case may be. The
terms of incentive stock options and non-qualified stock options granted
hereunder must be set forth in separate stock option agreements. The Board may
also interpret the Plan; prescribe, amend and rescind rules and regulations
relating to the Plan; amend the Plan from time to time (subject to the
limitations set
25
forth in Section 11) and make all other determinations necessary or advisable
for the administration of the Plan.
4. Eligibility.
a. Incentive stock options or non-qualified stock options may be granted
to any employee of the Company or its subsidiaries. Non-qualified stock options
may be granted to any director of, or consultant or independent contractor to,
the Company or its subsidiaries.
b. Any person who has been granted an option under this or any other stock
option plan of the Company may be granted an additional option or options under
this or any other such plan; subject, however, to any restrictions that may be
contained in any other such plan.
5. Exercise Price.
The price to be paid for shares covered by each option shall be not less
than 100% (110% if the optionee at the time an incentive stock option is granted
owns or, under the provisions of Section 424(d) of the Code is considered to own
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company) of the Fair Market Value of such shares, as determined
by the Board of Directors or the Committee on the date the option is granted
(the "Date of Grant"), determined as provided in Section 15, subject to
adjustment as provided in Section 6. The price of any shares purchased upon
exercise of an option shall be paid in full at the time of each such exercise.
Such price shall be payable in cash or by delivery to the Company of other
shares of Common Stock of the Company owned by the optionee, pursuant to Section
14.
6. Adjustments.
The number of shares subject to the Plan and to options granted under the
Plan shall be adjusted as follows:
a. in the event that the Company's outstanding Common Stock is changed by
any stock dividend, stock split or combination of shares, the number of shares
subject to the Plan and to options granted thereunder shall be proportionately
adjusted;
b. except as provided in subsection (d) hereof, in the event of any
merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable basis as
determined by the Board, for each share of Common Stock then subject to the
Plan, whether or not at the time subject to outstanding options, the number and
kind of shares of stock or other securities to which the holders of Common Stock
of the Company will be entitled pursuant to the transaction;
c. in the event of any other relevant change in the capitalization of the
Company, the Board shall provide for an equitable adjustment in the number of
shares of Common Stock then subject to the Plan, whether or not then subject to
outstanding options. In the event of any such adjustment the purchase price per
share shall be proportionately adjusted;
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d. in the event of a merger described in section 368 (a) (2) (E) of the
Code in which the Company is the surviving corporation, all options granted
under the Plan shall terminate and thereupon become null and void but only if
the "controlling corporation," as defined in that section, shall agree to
exchange its options for options granted under the Plan; provided, however, that
the optionee shall have the right, immediately prior to such merger, to exercise
any such option, without regard to any otherwise applicable restriction as to
time of exercise, other than expiration of the Option Period; and
e. upon the dissolution of the Company, all options granted under the Plan
shall terminate and thereupon become null and void; but the optionee shall have
the right, immediately prior to such dissolution, to exercise any such option
without regard to any otherwise applicable restriction as to time of exercise,
other than expiration of the Option Period.
7. Option Period and Limitation on Exercise.
Options shall be exercisable at such times and for such period (the
"Option Period") as may be fixed by the Board or the Committee at the Date of
Grant; provided, however, that no incentive stock option shall be exercisable
after the expiration of ten years from the Date of Grant; and provided further
that in the case of an optionee who, at the time the option is granted, owns or,
under the provisions of section 424(d) of the Code, is considered to own stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, no incentive stock option shall be exercisable after the
expiration of five years from the Date of Grant.
8. Effect of Termination of Employment/Effect of Death.
a. If an optionee who is an officer, employee or director of the Company
ceases to be such for any reason other than death or termination for cause, such
optionee may exercise his options in accordance with their terms only for a
period of ninety days after such cessation (but not beyond the Option Period).
Any exercise of options after such cessation may be only to the extent of the
full number of shares the optionee was entitled to purchase under the option on
the date of such cessation, plus a portion of the additional number of shares,
if any, he would have become entitled to purchase on the next anniversary date
of the Date of Grant of the option following such cessation, such portion to be
determined by multiplying such additional number of shares by a fraction, the
numerator of which shall be the number of days from the anniversary date of the
Date of Grant preceding such cessation to the date of such cessation and the
denominator of which shall be 365. Such portion shall be rounded, if necessary,
to the nearest whole share.
b. If the termination of an optionee's position as an officer or employee
of the Company is for cause (as determined in the sole judgment of the Board),
his option or options shall thereupon be cancelled and such optionee shall have
no right to exercise any part of such option or options after such termination.
c. Options shall not be affected by authorized leaves of absence or by any
change of employment so long as the optionee continues to be an officer or
employee of the Company.
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d. Nothing in the Plan or in any option shall be deemed to interfere with
or limit in any way the right of the Company to terminate an optionee's
employment at any time, nor confer upon any optionee any right to continue in
the employ of the Company.
e. If an optionee dies, any options held by the deceased optionee will
continue in effect and may be exercised in accordance with their terms for a
period of twelve (12) months from the date of the optionee's death (but not
beyond the Option Period) by the executor or administrator of such optionee's
estate, or in the event there is no such executor or administrator (or the
person holding such position has been discharged), then by the person or persons
to whom the optionee's rights under the option shall pass by will or the laws of
descent and distribution. Any exercise of options after such death may be only
to the extent of the full number of shares the optionee was entitled to purchase
under the option on the date of death, plus a portion of the additional number
of shares, if any, he would have become entitled to purchase on the next
anniversary date of the Date of Grant of the option following such death, such
portion to be determined by multiplying such additional number of shares by a
fraction, the numerator of which shall be the number of days from the
anniversary date of the Date of Grant preceding such death to the date of death
and the denominator of which shall be 365. Such portion shall be rounded, if
necessary, to the nearest whole share.
9. Nontransferability of Options.
Options granted hereunder shall not be transferable except to the executor
or administrator of the optionee's estate or to the optionee's heirs or
legatees, and shall be exercisable during the optionee's lifetime only by the
optionee. Options may, however, be surrendered to the Company for cancellation
for such consideration and upon such terms as may be mutually agreed upon by the
Company and the holder of such options.
10. Effective Date and Expiration of the Plan.
The Plan shall become effective upon its adoption by the Board subject to
approval by a majority of the outstanding voting shares of the Company within 12
months thereafter of (i) the Plan, and (ii) any options granted by the Board
prior to such shareholder approval. Unless sooner terminated, the Plan shall
expire as to any options not theretofore granted on December 1, 2004.
11. Amendment and Termination of Plan Prior to Expiration Date.
At any time prior to the expiration of the Plan, the Board may terminate,
suspend, modify or amend the Plan, provided that no such modification or
amendment shall, without the approval of the holders of a majority of the
Company's outstanding voting shares, increase the total number of shares which
may be issued upon exercise of options granted under the Plan (except as
provided in Section 6), change the class of persons to whom options may be
granted under the Plan or reduce the minimum exercise price as provided in
Section 5, and in no event shall any termination, suspension, modification or
amendment of the Plan alter or impair, without the consent of the respective
optionees, any rights or obligations under options theretofore granted under the
Plan, subject only to cancellation as provided in Section 6 and in the following
Section 12.
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28
12. Compliance with Applicable Law.
This Plan, options granted hereunder, and the issuance of Common Stock
upon exercise of such options are or may be subject to compliance with various
applicable laws and the rules, regulations and policies of various regulatory
bodies and agencies, including the Securities and Exchange Commission and the
California Department of Corporations, as now in effect or as may hereafter be
adopted or amended. The grant of options under the Plan and the issuance of
Common Stock upon the exercise thereof are each expressly conditioned upon
compliance with all such laws, rules, regulations and policies. In the event
that the Company, after making reasonable efforts to do so, shall be unable to
obtain any necessary authorization or permit required in order to implement this
Plan or to issue Common Stock upon exercise of options granted hereunder, or is
otherwise unable to comply with any such applicable law, rule, regulation or
policy, the Company may decline to allow the exercise of any option until all
such permits or authorizations are issued or until it can effect such
compliance. If it is ultimately determined, in the sole judgment of the Board,
that the Company can not reasonably obtain any such permit or authorization or
effect such compliance, unexercised options affected thereby shall thereupon be
cancelled upon notice to the holders of such options, all without any liability
whatsoever of the Company to any optionee.
13. Access to Information.
The Company shall transmit or cause to be transmitted to all optionees who
do not otherwise receive such material as stockholders of the Company, at the
time and in the manner such material is sent to its stockholders, copies of all
reports, proxy statements and other communications distributed to its
stockholders generally.
14. Optional Form of Payment for Shares.
Payment for any number of shares of stock of the Company purchased
pursuant to the exercise of options granted hereunder may, at the election of
the optionee, be made by delivering to the Company a number of shares of the
Common Stock of the Company, which the optionee has owned for at least six
months, having a Fair Market Value (on the date such option is exercised) equal
to the option exercise price for such shares. Payment of the option exercise
price with shares of the Common Stock of the Company shall not increase the
number of shares of the Common Stock which may be issued under the Plan.
15. Definition of Fair Market Value.
As used in this Plan, "Fair Market Value" shall mean the average of the
high and low prices of the Company's Common Stock on the American Stock Exchange
on the relevant date or, if such stock is not then listed on such Exchange, then
on the Exchange on which such stock is listed or, if such stock is not then
listed on an Exchange, the mean between the bid and asked prices for such stock
on the inter-dealer quotation system on which such stock is authorized to be
quoted. In the event that no public market exists for such stock, the Fair
Market Value thereof shall be determined solely by the Board or the Committee.
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29
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
WILSHIRE TECHNOLOGIES, INC.
MAY 25, 2001
Please Detach and Mail in the Envelope Provided
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
Vote FOR
the election of WITHHOLD from
all directors voting for election
named at right of directors NOMINEES: Ronald W. Cantwell 2. To approve increasing the number of shares
Charles H. Black that may be issued under the Company's 1995
[ ] [ ] Joe E. Davis Stock Option Plan by 500,000 shares to 2,250,000
David L. Heavenridge shares.
John Van Egmond FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. ELECTION
OF 3. The transaction of such other business as may
DIRECTORS: properly come before the Annual Meeting or any
adjournment thereof.
INSTRUCTION: To withhold authority to vote for
any nominee write that nominee's name in the Proposal (1) and (2) are discussed in the
space provided below. accompanying Proxy Statement dated March 23,
2001.
______________________________________________
PLEASE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE
U.S.A.
SIGNATURES________________ DATE_____ SIGNATURES_________________ DATE_________
(SIGNATURE OF STOCKHOLDER) (SIGNATURE OF STOCKHOLDER)
NOTE: Please sign exactly as your name or names appear. If more than one name
appears, all persons so designated should sign. For joint accounts, each
joint owner should sign. Executors, administrators, trustees, guardians
and attorneys should so indicate when signing.
30
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF
WILSHIRE TECHNOLOGIES, INC.
The undersigned Stockholder of Wilshire Technologies, Inc., a California
corporation, hereby appoints Kevin T. Mulvihill and Kathleen E. Terry and each
of them (to act by a majority of those present), or __________________________ ,
the attorneys and proxies of the undersigned, with power of substitution, to
attend the Annual Meeting of Stockholders of said Corporation to be held at the
Marriott Hotel, 4240 La Jolla Village Drive, La Jolla, California 92037 on May
25, 2001 at 10 o'clock A.M. and at any adjournment or adjournments thereof, and
to vote the number of shares the undersigned would be entitled to vote if
personally present with respect to:
This Proxy will be voted as you specify on the reverse. UNLESS OTHERWISE MARKED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF SOME OR ALL OF THE PERSONS NAMED IN
THE ACCOMPANYING PROXY STATEMENT WHO WERE NOMINATED BY THE BOARD OF DIRECTORS
FOR ELECTION AS DIRECTORS OF WILSHIRE TECHNOLOGIES, INC. AND FOR APPROVAL OF
PROPOSAL (2). In the election of directors said proxies shall have discretion
and authority to distribute the votes represented by this proxy in such
proportions as they shall see fit among the nominees named in the Proxy
Statement. If any such nominee is unable or unwilling to serve or is otherwise
unavailable, said proxies shall have discretion and authority to vote in
accordance with their judgment for other nominees or to distribute such votes in
such proportions as they shall see fit among all nominees.
(TO BE SIGNED ON REVERSE SIDE)